Companion Guide to Video August 2012

www.fhwa.dot.gov/federal-aidessentials

Today, we think nothing of our ability to easily 

drive into the city for work, or taking the family on 

vacation and using an Interstate highway to get 

there. In 1955, President Dwight David 

Eisenhower told Congress it was essential to the 

unity of our country to have a transportation 

system that provided for “the easy transportation 

of people and goods.” His vision has evolved into 

nearly 4 million miles of roads and streets open to 

public travel in the United States. One small piece 

is known as the National Highway System, which 

includes the Interstate system. The National 

Highway System carries a majority of the 

movement of traffic and freight serving economic 

and strategic priorities. Collectively, the Federal 

Highway Administration (FHWA), State 

departments of transportation (State DOTs), and 

you, as a local public agency (LPA), work together 

by delivering transportation projects to keep these 

systems working.

You can think of the national road system like a 

triangle that has been divided into sections. The 

Federal government is responsible for about 

181,000 miles located in national parks and other 

federally owned properties, the smallest portion 

and the apex of the triangle. That is only a fraction 

of the nearly 800,000 miles that are under State 

control represented by the middle section. 

However, LPAs, such as yours, are responsible for 

the greatest portion at the bottom with about 2.7 

million miles of the Nation’s roads. Since the vast 

majority of the Nation’s roadways are under the 

control of State and local government agencies, the 

responsibility for planning, constructing, operating 

and maintaining roads and highways fall to the 

State and local governments.

The FHWA and the State DOTs have administered 

the Federal-aid Highway Program for many years. 

Jointly, they are tasked with carrying out the 

Federal-aid program to maintain the national 

highways.

Federal-Aid Program Overview

Stewardship and Oversight

Federal-aid stewardship and oversight are vital to maintaining 

public trust of LPA-administered projects
Federal-aid Essentials for Local Public Agencies

Exercising sound judgment and 

good decision-making while 

managing Federal funds is the basis 

of what is called stewardship.

Congress and the public hold FHWA accountable 

for ensuring that the Federal-aid Highway Program 

is both efficient and effective. The FHWA is tasked 

with ensuring highway projects approved for 

Federal funding are consistent with applicable 

laws, regulations and policies. This lays the 

foundation for what is known as oversight. 

However, in 1991, in recognition of the significant 

role the States have of maintaining the national 

road system, the role of State DOTs was formally 

increased. Legislation made it possible for FHWA 

to formally assign some of its responsibilities for 

the Federal-aid program to the State DOTs. While 

this is true, FHWA is still responsible for ensuring 

compliance with Federal requirements in the 

delivery of the Federal-aid program. These 

legislative changes affect how FHWA implements 

this responsibility. The law allows State DOTs to 

act on behalf of FHWA by taking the 

responsibilities for project development, as well as 

administering the construction and inspection of 

many Federal-aid projects. 

The FHWA provides assistance to States and LPAs 

in constructing, preserving, and improving 

transportation for the movement of people and 

goods. The Federal-aid program provides the 

financial resources and mechanism to perform 

these activities. Tax dollars are allocated and 

distributed by FHWA directly to the State DOTs, as 

a direct-recipient for Federal-aid projects or LPAs

like yours, as sub-recipients, for “eligible” activities. 

In turn, the State DOTs provide oversight of LPA 

projects and ensure that local agencies that receive 

and deliver federally funded projects comply with 

Federal and State requirements.

In recognition of FHWA’s assignment of 

responsibilities to the State DOTs, Congress 

requires that a formal written agreement be 

established between FWHA and each State DOT 

with regard to the use of Federal-aid dollars. The 

jointly developed Stewardship-Oversight 

Agreement for each State documents the extent to 

which the State assumes the responsibilities of 

FHWA for the highway program. This agreement 

governs the partnership between FHWA and State 

DOTs. It also establishes how the Federal-aid 

program will be administered for each State.

To explain the meaning of stewardship and 

oversight, stewardship is the efficient and effective 

management of public funds that have been 

entrusted to FHWA. Stewardship involves the 

activities to deliver the Federal-aid program such 

as leadership, technology deployment, technical 

assistance, problem-solving, program 

administration and oversight. The FHWA division 

office and State DOTs are jointly responsible for 

how the Federal-aid program is developed and 

implemented. 
Federal-aid Essentials for Local Public Agencies

Oversight means the act of ensuring that the 

Federal-aid program is delivered consistent with 

laws, regulations and policies. Oversight is the 

compliance or verification component of 

stewardship activities. Oversight activities enable 

FHWA and State DOTs to ensure the Federal-aid 

program is delivered effectively. The StewardshipOversight Agreement also provides details of how 

the State will handle its oversight responsibilities.

So, what does all of this have to do with you as an

LPA? It is important that you are familiar with the 

Stewardship-Oversight Agreement implemented in 

your State to understand the oversight 

responsibilities for your local Federal-aid projects.

The Stewardship-Oversight Agreement describes 

your State DOT’s approval and oversight 

responsibilities on locally administered Federal-aid 

projects. 

The State DOT, acting on behalf of FHWA, is 

expected to exercise judgments similar to FHWA 

based on Federal laws, regulations, and policies. 

Examples of these responsibilities apply to:

• Transportation planning activities

• Assessing environmental impacts

• Project design requirements

• Civil rights protections

• The purchase of rights-of-way

• Administering construction projects

• Maintenance activities

These responsibilities provide assurance that 

approval actions will be performed in accordance 

with State policies, practices and standards and all 

requirements of federal law.

In summary, much of the authority for administering 

the Federal-aid program falls to the State DOTs,

which are responsible for providing oversight and to 

ensure compliance with Federal and State 

requirements. Becoming more familiar with your 

State’s Stewardship-Oversight Agreement will help 

you as an LPA to understand the various 

responsibilities and authority when delivering 

Federal-aid projects. Contact your State DOT for 

more information on the Stewardship-Oversight 

Agreement that governs your locally administered 

Federal-aid projects.
Federal-aid Essentials for Local Public Agencies

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• Information and links to stewardship-oversight agreements by State

http://www.fhwa.dot.gov/federalaid/stewardship/