[Federal Register Volume 74, Number 96 (Wednesday, May 20, 2009)]
[Notices]
[Pages 23777-23784]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-11719]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

[FHWA Docket No. FHWA-2009-0051]


Surface Transportation Project Delivery Pilot Program; Caltrans 
Audit Report

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Notice; request for comment.

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SUMMARY: Section 6005 of the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users (SAFETEA-LU) established 
the Surface Transportation Project Delivery Pilot Program, codified at 
23 U.S.C. 327. To ensure compliance by each State participating in the 
Pilot Program, 23 U.S.C. 327(g) mandates semiannual audits during each 
of the first 2 years of State participation. This notice announces and 
solicits comments on the third audit report for the California 
Department of Transportation (Caltrans).

DATES: Comments must be received on or before June 19, 2009.

ADDRESSES: Mail or hand deliver comments to Docket Management Facility: 
U.S. Department of Transportation, 1200 New Jersey Avenue, SE., Room 
W12-140, Washington, DC 20590. You may also submit comments 
electronically at http://www.regulations.gov, or fax comments to (202) 
493-2251.
    All comments should include the docket number that appears in the 
heading of this document. All comments received will be available for 
examination and copying at the above address from 9 a.m. to 5 p.m., 
e.t., Monday through Friday, except Federal holidays. Those desiring 
notification of receipt of comments must include a self-addressed, 
stamped postcard or you may print the acknowledgment page that appears 
after submitting comments electronically. Anyone is able to search the 
electronic form of all comments in any one of our dockets by the name 
of the individual submitting the comment (or signing the comment, if 
submitted on behalf of an association, business, or labor union). You 
may review the DOT's complete Privacy Act Statement in the Federal 
Register published on April 11, 2000 (Volume 65, Number 70, Pages 
19477-78), or you may visit http://DocketsInfo.dot.gov.

FOR FURTHER INFORMATION CONTACT: Ms. Ruth Rentch, Office of Project 
Development and Environmental Review, (202)-366-2034, 
<a href="/cdn-cgi/l/email-protection#194b6c6d71374b7c776d7a71597d766d377e766f"><span class="__cf_email__" data-cfemail="8bd9feffe3a5d9eee5ffe8e3cbefe4ffa5ece4fd">[email protected]</span></a>, or Mr. Michael Harkins, Office of the Chief 
Counsel, (202) 366-4928, <a href="/cdn-cgi/l/email-protection#1e53777d767f7b7230567f6c7577706d5e7a716a30797168"><span class="__cf_email__" data-cfemail="662b0f050e07030a482e07140d0f08152602091248010910">[email protected]</span></a>, Federal Highway 
Administration, Department of Transportation, 1200 New Jersey Avenue, 
SE., Washington, DC 20590. Office hours are from 7:45 a.m. to 4:15 
p.m., e.t., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access

    An electronic copy of this notice may be downloaded from the Office 
of the Federal Register's home page at http://www.archives.gov and the 
Government Printing Office's Web site at http://www.access.gpo.gov.

Background

    Section 6005 of SAFETEA-LU (codified at 23 U.S.C. 327) established 
a pilot program to allow up to five States to assume the Secretary of 
Transportation's responsibilities for environmental review, 
consultation, or other actions under any Federal environmental law 
pertaining to the review or approval of highway projects. In order to 
be selected for the pilot program, a State must submit an application 
to the Secretary.
    On June 29, 2007, Caltrans and FHWA entered into a Memorandum of 
Understanding (MOU) that established the assignments to and assumptions 
of responsibility to Caltrans. Under the MOU, Caltrans assumed the 
majority of FHWA's responsibilities under the National Environmental 
Policy Act, as well as the FHWA's responsibilities under other Federal 
environmental laws for most highway projects in California.
    To ensure compliance by each State participating in the Pilot 
Program, 23 U.S.C. 327(g) requires the Secretary to conduct semiannual 
audits during each of the first 2 years of State participation; and 
annual audits during each subsequent year of State participation. The 
results of each audit must be presented in the form of an audit report 
and be made available for public comment. This notice announces the 
availability of the third audit report for Caltrans and solicits public 
comment on same.

    Authority: Section 6005 of Pub. L. 109-59; 23 U.S.C. 315 and 
327; 49 CFR 1.48.

    Issued on May 11, 2009.
Jeffrey F. Paniati,
Acting Deputy Federal Highway Administrator.

Surface Transportation Project Delivery Pilot Program; Federal Highway 
Administration Audit of California Department of Transportation; 
January 26-30, 2009

Introduction

Overall Audit Opinion

    Based on the information reviewed, it is the Federal Highway 
Administration (FHWA) audit team's opinion that as of January 30, 2009, 
the California Department of Transportation (Caltrans) continued to 
work toward meeting all responsibilities assumed under the Surface 
Transportation Project Delivery Pilot Program (Pilot Program), as 
specified in the Memorandum of Understanding (MOU) \1\ with FHWA and in 
the Caltrans Application for Assumption (Application).
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    \1\ Caltrans MOU between FHWA and Caltrans available at: http://environment.fhwa.dot.gov/strmlng/safe_cdot_pilot.asp.
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    With the completion of FHWA's third audit, the audit team has 
completed onsite audits of the majority of the Caltrans Districts. The 
audit team identified significant differences across the Districts in 
terms of the Pilot Program: resource availability and allocation, 
details of implementation, processes, and improvement and progress 
toward meeting all commitments. The highly decentralized nature of 
Caltrans operations is a major contributing factor to the variation 
observed. The decentralized nature of the organization necessitates 
clear, consistent and ongoing oversight by Caltrans Headquarters over 
District operations. A robust oversight program will help foster the 
exchange of information and the sharing of best practices and resources 
between Districts and will put the entire organization in a better 
position to more fully implement all assumed responsibilities and 
meeting all Pilot Program commitments.
    Due to the multiyear timeframes associated with more complex and 
controversial projects, the full lifecycle of project development 
(beginning with environmental studies and concluding

[[Page 23778]]

with the issuance of a record of decision) has yet to be fully realized 
by the Pilot Program. Caltrans continues to gain experience in 
understanding the resource requirements and processes necessary to 
administer its Pilot Program. It is the audit team's opinion that 
Caltrans needs to continue to refine its approaches and resources to 
meet all Pilot Program commitments, especially given the likelihood of 
increasing resource demands associated with exclusively managing more 
complex and controversial projects under the Pilot Program.
    During the onsite audit, Caltrans staff and management continued to 
express ongoing interest in receiving feedback from the FHWA audit team 
related to program successes and areas in need of improvement. By 
addressing all findings in this report, Caltrans will continue to move 
its program toward full compliance with all assumed responsibilities 
and meeting all Pilot Program commitments.

Background

    The Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users (SAFETEA-LU, Pub L. 109-59) section 6005(a) 
established the Pilot Program, codified at title 23, United States Code 
(U.S.C.), section 327. The Pilot Program allows the Secretary of 
Transportation (Secretary) to assign, and the State to assume, the 
Secretary's responsibilities under the National Environmental Policy 
Act (NEPA) for one or more highway projects. Upon assigning NEPA 
responsibilities, the Secretary may further assign to the State all or 
part of the Secretary's responsibilities for environmental review, 
consultation, or other action required under any Federal environmental 
law pertaining to the review of a specific highway project. When a 
State assumes the Secretary's responsibilities under this program, the 
State becomes solely responsible and liable for carrying out the 
responsibilities it has assumed, in lieu of the FHWA.
    To ensure compliance by each State participating in the Pilot 
Program, 23 U.S.C. 327(g) mandates that FHWA, on behalf of the 
Secretary, conduct semiannual audits during each of the first 2 years 
of State participation; and annual audits during each subsequent year 
of State participation. The focus of the FHWA audit process is four 
fold: (1) To assess a Pilot State's compliance with the required MOU 
and applicable Federal laws and policies, (2) to collect information 
needed to evaluate the success of the Pilot Program, (3) to evaluate 
Pilot State progress in meeting its performance measures, and (4) to 
collect information for use in the Secretary's annual report to 
Congress on the administration of the Pilot Program. Additionally, 23 
U.S.C. 327(g) requires FHWA to present the results of each audit in the 
form of an audit report that is published in the Federal Register. This 
audit report must be made available for public comment, and FHWA must 
respond to public comments received no later than 60 days after the 
date on which the period for public comment closes.
    Caltrans published its Application under the Pilot Program on March 
14, 2007, and made it available for public comment for 30 days. After 
considering public comments, Caltrans submitted its Application to FHWA 
on May 21, 2007, and FHWA, after soliciting the views of Federal 
agencies, reviewed and approved the Application. Then on June 29, 2007, 
Caltrans and FHWA entered into an MOU that established the assignments 
to and assumptions of responsibility to Caltrans, which became 
effective July 1, 2007. Under the MOU, Caltrans assumed the majority of 
FHWA's responsibilities under NEPA, as well as FHWA's responsibilities 
under other Federal environmental laws for most highway projects in 
California. Caltrans' participation in the Pilot Program will be 
effective through August 2011 (23 U.S.C 327(i)(1)).

Scope of the Audit

    This is the third FHWA audit of the Caltrans Pilot Program. The 
onsite portion of the audit was conducted in California from January 26 
through January 30, 2009. As required in SAFETEA-LU, each FHWA audit 
must assess compliance with the roles and responsibilities assumed by 
the Pilot State in the MOU. The audit also includes recommendations to 
assist Caltrans in administering a successful Pilot Program.
    The audit primarily focused on four key Pilot Program areas: (1) 
The Local Assistance (LA) program (Caltrans manages LA and Capital 
projects through independent organizational entities), (2) the role of 
the regional offices, (3) the effectiveness of and adherence to 
specified performance measures, and (4) the continued review of 
compliance with assumed responsibilities.
    Prior to the onsite audit, FHWA conducted telephone interviews with 
Federal resource agency staff at the U.S. Army Corps of Engineers 
(USACE) and U.S. Fish and Wildlife Service (USFWS) regional offices in 
California. The onsite audit included visits to the Caltrans 
Headquarters Office (HQ) in Sacramento and to four Caltrans District/
Regional Offices: District 3/North Region (Marysville), District 4 
(Oakland), District 6/Central Region (Fresno), and District 10 
(Stockton). The audit team also visited the USFWS and USACE offices in 
Sacramento.
    This report documents findings within the scope of the audit as of 
the completion date of the onsite audit (i.e., January 30, 2009).

Audit Process and Implementation

    The intent of each FHWA audit completed under the Pilot Program is 
to ensure that each Pilot State complies with the commitments in its 
MOU with FHWA. The FHWA does not evaluate specific project-related 
decisions made by the State because these decisions are the sole 
responsibility of the Pilot State. However, the FHWA audit scope does 
include the review of the processes and procedures used by the Pilot 
State to reach project decisions in compliance with MOU section 3.2.
    In addition, Caltrans committed in its Application (incorporated by 
reference in MOU section 1.1.2) to implement specific processes to 
strengthen its environmental procedures in order to assume the 
responsibilities assigned by FHWA under the Pilot Program. The FHWA 
audits review how Caltrans is meeting each commitment and assesses 
Pilot Program performance in the core areas specified in the Scope of 
the Audit section of this report.
    The Caltrans' Pilot Program commitments address:
    <bullet> Organization and Procedures Under the Pilot Program.
    <bullet> Expanded Quality Control Procedures.
    <bullet> Independent Environmental Decisionmaking.
    <bullet> Determining the NEPA Class of Action.
    <bullet> Consultation and Coordination with Resource Agencies.
    <bullet> Issue Identification and Conflict Resolution Procedures.
    <bullet> Record Keeping and Retention.
    <bullet> Expanded Internal Monitoring and Process Reviews.
    <bullet> Performance Measures to Assess the Pilot Program.
    <bullet> Training to Implement the Pilot Program.
    <bullet> Legal Sufficiency Review.
    The FHWA team for the third audit included representatives from the 
following offices or agencies:
    <bullet> FHWA Office of Project Development and Environmental 
Review.
    <bullet> FHWA Office of Chief Counsel.
    <bullet> FHWA Alaska Division Office.
    <bullet> FHWA Resource Center Environmental Team.

[[Page 23779]]

    <bullet> Volpe National Transportation Systems Center.
    <bullet> U.S. Fish and Wildlife Service.
    <bullet> U.S.D.A. Forest Service.
    During the onsite audit, FHWA interviewed more than 80 Caltrans 
staff (from both the Capital and LA programs) in four District/Region 
offices and Caltrans HQ. The audit team interviewed a cross-section of 
staff including top senior managers, senior environmental planners, 
generalists, associate planners, and technical experts. The audit team 
also reviewed project files and records for over 35 projects managed 
under the Pilot Program.
    The FHWA acknowledges that Caltrans identified specific issues 
during its third self-assessment performed under the Pilot Program 
(required by MOU section 8.2.6), and has established processes to 
address each issue. Some issues described in the Caltrans self-
assessment may overlap with FHWA findings identified in this audit 
report.
    In accordance with MOU section 11.4.1, FHWA provided Caltrans with 
a 30-day comment period to review the draft audit report. FHWA reviewed 
comments received from Caltrans and revised sections of the draft 
report, where appropriate, prior to publishing it in the Federal 
Register for public comment.

Status of Findings From the Last Audit

    As part of the third audit, FHWA evaluated the corrective actions 
implemented by Caltrans in response to the audit findings in the second 
audit report.
    The FHWA observed that Caltrans continues to demonstrate compliance 
with two areas identified as ``Compliant'' in either the first audit 
(January 2008) or second audit (July 2008); the establishment of Pilot 
Program policies and procedures and interagency agreements that involve 
other agencies as signatories.
    While previous audits also found Caltrans to be ``Compliant'' with 
its commitment to put in place a consistent process to conduct formal 
legal sufficiency reviews, limited information was available to support 
any finding determination during the third audit because only one 
formal finding of legal sufficiency had been completed.
    The FHWA also reviewed the current status of ``Deficient'' and 
``Needs Improvement'' audit findings identified during the second FHWA 
audit in July 2008.
    ``Deficient'' audit findings:
    (1) Performance Measure: ``Effectiveness of relationships with the 
general public''--Caltrans reported progress in its third self-
assessment on the performance measure ``effectiveness of relationships 
with agencies and the general public.'' Caltrans developed a method to 
evaluate its relationships with the general public by assigning a 
survey rating measuring the quality of public meeting materials. The 
survey was completed for 27 projects for which public meetings were 
held since the initiation of the Pilot Program. (See related findings 
N10 and D2 below.)
    (2) Quality Assurance/Quality Control (QA/QC) Certification 
Process--Through project files reviews, the FHWA audit identified one 
instance where the environmental branch chief was not the final 
document reviewer (based on the signature dates included on the form). 
The audit team did verify that the External QC Certification form was 
correctly completed prior to proceeding with the Internal QC 
Certification form.
    (3) Environmental Document Process--Class of Action 
Determinations--The audit team observed that the project files reviewed 
in this audit contained the required concurrence by the HQ 
Environmental Coordinator for Environmental Assessment (EA) and 
Environmental Impact Statement (EIS) class of action determinations. 
(See related finding D5 below.)
    ``Needs Improvement'' audit findings:
    (1) Commitment of Resources--The audit team is aware that Caltrans 
has systems in place designed to capture time spent by staff on various 
tasks and activities required under the Pilot Program. However, 
interviews with Caltrans District staff working on LA projects revealed 
that work hours associated with the Pilot Program are not consistently 
entered into the Expenditure Authorization system using the Pilot 
Program specific codes. Caltrans has not clearly identified how the 
information gathered by these time-recording systems helps Caltrans 
determine the sufficiency of staff resources needed under the Pilot 
Program.
    Resource tracking is an ongoing area of concern for the audit team. 
As the complexity of projects increases with maturation of the Pilot 
Program, the variability in reporting and tracking resource 
expenditures may affect the timely delivery and quality of 
environmental documents. (See related finding N5 below.)
    (2) District Training Approaches and Implementation--During the 
three FHWA audits, the audit team identified considerable variation in 
training needs assessments, approaches, and responsibilities across 
Districts and also within individual Districts. The observed variations 
in training approaches may result in potentially widely varying levels 
of competency among staff. In order to achieve a sufficient level of 
competency among all staff, Caltrans HQ environmental staff need to 
actively monitor each District's training methods and ensure that 
consistency is achieved in terms of training assessment and delivery. 
(See related findings N7 and N12 below.)
    (3) Pilot Program Performance Measures--These two performance 
measures have been addressed by Caltrans in the following manner:
    a) Performance Measure: ``Timely Completion of NEPA Process''--
Caltrans has expanded this performance measure to include tracking the 
time from initiating environmental studies to the approval date of the 
draft and final environmental documents. The performance measure also 
now differentiates the timeframes by EAs and EISs. Previously, project 
timeframes were reported in aggregate instead of by environmental 
document type.
    b) Performance Measure: ``Maintain documented compliance with 
requirements of all Federal laws and regulations being assumed.''--
Caltrans reported in its third self-assessment that 100 percent of 
final environmental documents contained documentation of: section 7 of 
the Endangered Species Act, as amended (section 7) biological opinions 
and letters of concurrence, State Historic Preservation Officer 
concurrences under section 106 of the National Historic Preservation 
Act (section 106), and section 4(f) of the U.S. Department of 
Transportation Act of 1966 (section 4(f)) findings and conclusions. 
(See related finding N8 below.)
    (4) Quarterly Reports--The quarterly reports Caltrans provides to 
FHWA under section 8.2.7 of the MOU continue to include inaccurate/
incomplete information on environmental document approvals and 
decisions under the Pilot Program. Each of the first five quarterly 
reports received by FHWA have been revised, some several times, to 
address data reporting errors including: omitted categorical 
exclusions, EAs, findings of no significant impacts, re-evaluations, 
section 4(f) analyses, and section 7 and section 106 consultations, as 
well as numerous consultations and categorical exclusions (CEs) 
reported in error. The third self-assessment reported that a quarterly 
report protocol was developed and implemented prior to preparing the 
fifth quarterly report. However, the audit team determined that the 
fifth

[[Page 23780]]

report also included errors and omissions (omitted EA, re-evaluation 
and notice of intent, and section 7 consultations reported in error) 
and a revised report was submitted. (See related finding D1 below.)
    (5) Varying Understanding of Section 6004/Section 6005 CEs--The 
audit team did not observe any misunderstanding of section 6004 and 
section 6005 SAFETEA-LU CE determinations in the District Offices 
visited in the third audit.
    (6) Creating and Maintaining Project Protocols and Project Files--
The Caltrans' third self-assessment reported that corrective action 
discussions were completed with staff managing projects with incomplete 
project files and/or those not conforming to the Uniform Environmental 
File System (UFS) protocol. Additionally, it was reported that 
discussions of the retention of electronic communications were 
completed with District staff. (See related findings C1 and N4 below.)
    (7) QA/QC Process Implementation--Caltrans' third self-assessment 
reported on the number of ways that Caltrans actively monitors 
conformance with the Pilot Program QC procedures. Methods include 
ongoing communication with senior environmental planners regarding the 
QC processes, discussions at staff meetings, review by senior 
environmental planners of environmental documents and HQ Environmental 
Coordinators actively monitoring conformance with the QC procedures. 
(See related finding C4 below.)

Key Elements of Implementation

    One purpose of each FHWA audit of a State Pilot Program is to 
identify and collect information on Pilot Program implementation 
practices for consideration by potential future Pilot Program 
participants. Key programmatic elements used by Caltrans to administer 
its Pilot Program include documenting policies and procedures in 
Standard Environmental Reference (SER) Chapter 38, annotated outlines 
for environmental documents, QC certification forms, environmental 
document review checklists, and monthly NEPA delegation statewide 
teleconferences.

Effective Practices

    The FHWA audit team observed during interviews and through project 
file reviews completed in Districts 3, 4, 6, 10 and the North and 
Central regions the following effective practices:
    (1) Central Region practices:
    (a) The environmental document template used for each project 
establishes the format and provides technical cues at locations where 
specific data should be entered by environmental document authors. The 
use of document templates helps to ensure compliance with environmental 
laws and to improve document consistency and quality.
    (b) For large projects, once the Preliminary Environmental Study 
(PES) form has been completed by Caltrans staff, environmental staffers 
perform joint field reviews with the local agencies and their 
consultants. This affords Caltrans and local agency staff the 
opportunity to discuss the NEPA process requirements and the required 
technical studies needed to complete the process.
    (c) Individual Development Programs (IDPs) are critical elements in 
the training process for Caltrans staff (in both the Capital and LA 
programs). Senior environmental planners regularly and consistently use 
IDPs to guide and track staff training.
    (2) The LA staff in District 10 use a work plan and tracking sheet 
that serves as a work flow chart for LA projects in the District. This 
tool is useful because it helps Caltrans and local governments 
understand the requirements, sequencing, and timing of environmental 
compliance activities throughout the project development process.

Findings Definitions

    The FHWA audit team carefully examined Pilot Program areas to 
assess compliance in accordance with established criteria (i.e., MOU, 
Application). The time period covered by this third audit report is 
from the start of the Caltrans Pilot Program (July 1, 2007) through 
completion of the third onsite audit (January 30, 2009) with the focus 
of the audit on the most recent 6 month period. This report presents 
audit findings in three areas:
    <bullet> Compliant--Audit verified that a process, procedure or 
other component of the Pilot Program meets a stated commitment in the 
Application and/or MOU.
    <bullet> Needs Improvement--Audit determined that a process, 
procedure or other component of the Pilot Program as specified in the 
Application and/or MOU is not fully implemented to achieve the stated 
commitment or the process or procedure implemented is not functioning 
at a level necessary to ensure the stated commitment is satisfied. 
Action is recommended to ensure success.
    <bullet> Deficient--Audit was unable to verify if a process, 
procedure or other component of the Pilot Program met the stated 
commitment in the Application and/or MOU. Action is required to improve 
the process, procedure or other component prior to the next audit; or 
Audit determined that a process, procedure or other component of the 
Pilot Program did not meet the stated commitment in the Application 
and/or MOU. Corrective action is required prior to the next audit.

Summary of Findings--January 2009

Compliant
    (C1) Completion of the PES form--As stated in Chapter 6 of the LA 
Procedures Manual, completing the PES form for each project is one of 
the roles and responsibilities of LA staff. The audit team learned 
through interviews with LA staff in the Central Region office that 
training had been provided on how to complete the PES form. The audit 
team also confirmed through file reviews that the PES forms in the 
Central Region were completed correctly.
    (C2) Tracking and Managing Projects--The Central Region office 
developed a sophisticated data management and tracking system using the 
File Maker software application for tracking and managing Capital 
projects (i.e., projects on the State Highway System (SHS)). The 
Central Region has standard practices to ensure that all projects are 
entered into the system and tracked appropriately. The system included 
data validation features such as color coded items to identify missed 
deadlines or inactive projects. The audit team found that all 
environmental staffers in the office appear to be able to input data 
into the system. The File Maker system is used to track, manage, and 
provide reports on the Capital projects in the Region. As a result, the 
audit team was able to determine that the Central Region office is 
compliant with section 8.2.7 of the MOU, requiring Caltrans to report 
to FHWA any approvals and decisions Caltrans makes with respect to the 
responsibilities it has assumed under the Pilot Program.
    (C3) Project Files/UFS--Section 8.2.4 of the MOU and procedures 
specified in SER Chapter 38 require that Caltrans staff maintain 
project files and general administrative files for all Capital and LA 
projects in accordance with the UFS.
    The audit team found that the North and Central Regions have taken 
additional steps to ensure that project files are organized correctly 
and that the proper information can be located easily. Additional sub-
tabs have been added to the UFS file tab system to improve the clarity 
and consistency across the Districts in these Regions. The new sub-tabs 
were added for topic

[[Page 23781]]

areas likely to contain large amounts of information (e.g., biology, 
special status species, coordination correspondence).
    (C4) QA/QC Process--The Central Region has established a QA/QC 
unit. The audit team interviewed members of this unit during the onsite 
visit at the Regional office. To ensure compliance with section 8.2.5 
of the MOU, the QA/QC unit implemented, for its Capital program staff, 
a QC process that involves an internal review and QA/QC branch chief 
signature that exceeds the requirements of the QC plan in the SER 
Chapter 38.
Needs Improvement
    (N1) QA/QC Certification Process--Section 8.2.5 of the MOU and SER 
Chapter 38 require Caltrans staff to review each environmental document 
in accordance with the policy memorandum titled ``Environmental 
Document Quality Control Program under the NEPA Pilot Program'' (July 
2, 2007). The audit team observed improvement since the previous audit 
(July 2008) in the completion of the QC certification forms. However, 
the audit team still identified incomplete and incorrectly completed QC 
certification forms. These inconsistencies were also identified in the 
third Caltrans self-assessment and corrective actions were discussed in 
that report.
    (N2) Self-Assessment and Process Reviews--Section 8.2.6 of the MOU 
and SER Chapter 38 require Caltrans to regularly perform an internal 
formal process review for environmental compliance, referred to by 
Caltrans as a self-assessment. A summary report of the Caltrans self-
assessment is provided to FHWA prior to each FHWA audit. The audit team 
has identified aspects of the self-assessment process that need 
improvement in order for this process to meet its stated intent. These 
areas include:
    (a) Review of projects during the self-assessment. To fully assess 
compliance with the project development process and responsibilities 
assumed under the Pilot Program, Caltrans needs to evaluate projects at 
all phases of project development, as well as compliance with project 
filing procedures. A complete review should include not only projects 
that have reached decision points and have been reported in the 
quarterly reports to FHWA, but also projects yet to reach a decision 
point.
    (b) More details on performance measures. As the self-assessment is 
the primary method of data collection and evaluation of success in 
meeting Pilot Program performance measures, more details and discussion 
regarding each performance measure should be included in the self-
assessments. Examples of areas that need further explanation include: 
(1) The sampling procedures used for checking EA/EIS project files 
organized according to the established filing system and (2) the 
sampling procedures used for checking the completeness of the QC 
certification forms.
    (c) Limited scope of the self-assessment review. A significant 
proportion of the third self-assessment focused on the effectiveness of 
corrective actions implemented by Caltrans to address deficiencies 
noted in its second self-assessment and actions taken to address FHWA 
Pilot Program audit findings. While an important component of the self-
assessment process, review of improvement regarding noted deficiencies 
from prior internal and external audits is only one aspect of a 
successful self-assessment process. The bulk of the self-assessment 
process should be focused on confirmation that all Pilot Program 
requirements are being fully met, including pursuit of newly occurring 
areas of weakness/ potential weakness.
    (d) To ensure that Caltrans is effectively reviewing all elements 
of assumed responsibility as stated in the MOU and Application, it must 
present a systematic review of all Pilot Program processes and 
procedures. Caltrans has yet to establish a methodology/approach to 
specify how it will conduct its self-assessment process. In particular, 
the process it is using and intends to use to determine, for each 
audit, what Pilot Program elements warrant review, the level of review 
to be performed on each selected element, the depth of the review 
(e.g., the sample size of documents reviewed, the number of districts 
contacted/staff interviewed, the frequency of reviews), and the 
coverage of each self-assessment (what parts of the Program have been/
need to be reviewed/re-reviewed). The current self-assessment process 
has yet to demonstrate that Caltrans is evaluating its Program in a 
manner that will determine for all applicable components if ``its 
process is working as intended, to identify any areas needing 
improvements in the process'' (MOU Section 8.2.6). Evidence to suggest 
that the self-assessment process needs improvement is demonstrated by 
new Needs Improvement and Deficient audit findings identified by the 
FHWA audit team in this audit in areas recently reviewed (but not 
identified) under Caltrans self-assessment. In addition, the FHWA audit 
team identified new Deficient findings in Pilot Program areas not 
evaluated by the self-assessment process.
    (N3) Air Quality Conformity Determinations--Section 8.5.1 of the 
MOU and SER Chapter 38 require Caltrans staff to document the air 
quality conformity analysis for each project by submitting a request to 
FHWA for a formal conformity determination. The request for the 
conformity determination should be submitted to FHWA as soon as 
possible after the preferred alternative is identified. The FHWA 
conformity determination must be received before the final NEPA action 
is completed.
    Through interviews and project file reviews in the Districts 
visited, the audit team identified a misunderstanding by the Caltrans 
staff regarding the air quality conformity determination process. This 
misunderstanding and confusion was not observed in the first two 
audits. Several Caltrans staff interviewed in both the North and 
Central Regions were not aware of their responsibilities to request 
formal FHWA conformity determinations for projects processed though the 
LA program. Interviews identified a lack of communication and 
misunderstandings between Caltrans staff and local agencies regarding 
air quality conformity analysis and determinations. In two of seven 
project files reviewed for air quality conformity determinations, FHWA 
conformity determination letters were missing. For another file, the 
conformity letter was not included in the project file but was 
subsequently located by Caltrans staff and included in the file during 
the audit.
    (N4) Project Files/UFS--Section 8.2.4 of the MOU and SER Chapter 38 
require Caltrans to maintain project files and general administrative 
files. To support statewide consistency in file content and 
organization, the UFS has been developed for mandatory use for all 
Capital and LA projects.
    Despite the ``Compliant'' finding regarding the North and Central 
regions described under item C3 above, the audit team identified that 
some project files were not established as soon as environmental 
studies had begun, as required by SER Chapter 38,
    Additional inconsistencies identified included:
    (a) Several instances where project files were missing UFS tabs and 
some sections contained no information or an explanation as to why the 
tabs were missing or tab sections were incomplete (i.e., empty).
    (b) Required project documentation was missing from several project 
files. Examples of missing documents include PES forms, QA/QC 
certification forms, air quality conformity determination

[[Page 23782]]

letters, State Historic Preservation Office concurrence letters for 
section 106 determinations, ``Plans, Specifications and Estimates'' 
information, and various transmittal letters.
    (c) Project file reviews identified unsigned/incomplete 
documentation including incomplete environmental document filing 
checklists, unsigned environmental document preparation and review 
tools, and unsigned LA EA document title pages.
    (N5) Commitment of Resources--Section 4.2.2 of the MOU requires 
Caltrans to maintain adequate organizational and staff capability 
effectively to carry out the responsibilities it has assumed, including 
devoting adequate staff resources to the Pilot Program. In the 
Districts/Regions visited, interviews with the Caltrans staff working 
on LA projects revealed the following:
    (a) Inconsistencies associated with charging time spent on Pilot 
Program activities to the official Work Breakdown Structure (WBS) code 
(6DELE). Staff interviews identified two main reasons for incomplete 
adherence to use of the WBS code: not having the time to determine the 
amount of time and enter it in the time sheet system; not tracking 
Pilot Program labor expenditures at all.
    (b) LA staffers expressed frustration to the audit team regarding 
the amount of work to be accomplished by current LA staff in the 
Districts. Concerns were frequently expressed regarding inadequate 
staffing, lack of timeliness in filling vacant positions, and the 
difficulty coping with the pressure to advance projects in a timely 
manner and on schedule.
    The audit team learned that Caltrans is considering updating and 
enhancing the LP 2000 system which should present an opportunity to 
improve resource tracking for LA staff, and projecting future staff 
needs.
    (N6) Adequate QA/QC Review of Technical Studies--The second 
Caltrans self-assessment identified that the peer review of the 
biological resources technical studies was sometimes less thorough than 
the same reviews performed for SHS projects. The audit team confirmed 
this finding through interviews with LA staff in one District visited. 
Caltrans has committed to ensure that the appropriate level of 
environmental analysis is conducted for all NEPA documents for projects 
on both the SHS and also on local streets and roads.
    A corrective measure was identified in the self-assessment to 
remind the staff biologists that the peer review of biological resource 
technical studies for the LA projects uses the same standard as for 
Capital projects. The audit team concurs in this corrective measure and 
also recommends that additional follow-up review occurs to ensure that 
it is being implemented.
    (N7) Training on Air Quality Conformity--MOU section 12.1.1 
requires Caltrans to provide training ``in all appropriate areas with 
respect to the environmental responsibilities that Caltrans has 
assumed.'' Three of four LA and Capital environmental planners 
interviewed in the Central Region office indicated an ongoing need for 
training in the area of air quality conformity, its role in the 
Statewide Transportation Improvement Program, the Transportation 
Improvement Plan, and emissions budgets. Interviewees indicated that 
additional training or primers by Caltrans' air quality specialists are 
needed for environmental planners due to this being such a dynamic area 
affecting many projects. Caltrans should assess if other environmental 
planners in other Districts/Region offices also find this area 
problematic and require additional training in this area. Air quality 
specialists should also work with environmental planners in their 
Districts to ensure that everyone understands their role and the 
required processes.
    (N8) Procedural and Substantive Requirements--MOU section 5.1.1 
requires Caltrans to be subject to the same procedural and substantive 
requirements that apply to FHWA in carrying out the responsibilities 
assumed. Through interviews with USACE and USFWS staff located in 
California, the audit team learned that there have been a few instances 
where environmental requirements were not completely and correctly 
implemented.
    (a) In at least one instance, based on the biological assessment of 
the project, take of threatened or endangered species was anticipated 
and quantified. However, Caltrans made a request for informal, not 
formal consultation, to the USFWS. This process decision is contrary to 
the implementing regulations of section 7 of the ESA.
    (b) In other instances, the USACE reported that environmental 
assessment documents prepared pursuant to NEPA and reviewed by the 
USACE under section 404 of the Clean Water Act, contained insufficient 
information to support decisionmaking and chosen alternatives. Further, 
as part of their Clean Water Act section 404 permit verification, the 
conclusions made by Caltrans in relation to ESA requirements were not 
supported. This noncompliance prevented the USACE from issuing its 
required permit without the proper consultation with the USFWS.
    It is the opinion of the audit team, based on these observations, 
that Caltrans staff and/or the consultants hired by Caltrans to conduct 
biological assessments, submit permit applications, and perform NEPA 
analyses, could benefit from training in various environmental laws and 
regulations. It is also noted that the technical reviews and other QC 
reviews should have identified these errors. The MOU section 10.2.1.C 
performance measure to monitor relationships with Federal resource 
agencies needs to be implemented.
    (N9) Assignments under the Pilot Program--MOU section 3.2.2 
requires Caltrans to comply with the requirements of all applicable 
environmental laws. Caltrans staff interviewed indicated a lack of 
understanding of the SAFETEA-LU section 6002 (Sec.  6002; 23 U.S.C. 
139) environmental review process definition and role of participating 
agencies, particularly in comparison to that of cooperating agencies.
    In a review by the audit team of four EIS project files, the audit 
team found that the cooperating and participating agency invitation 
letters sent by Caltrans were not totally accurate and were confusing. 
The letters were based on the template invitation letter provided in 
the SER, with links to the Local Assistance Manual. This template 
contains the following errors and confusing language:
    (a) The subject line for the letter only mentions an invitation to 
become a participating agency, with no indication of an invitation to 
also be a cooperating agency, when both apply. Yet, in the body of the 
letter, there is a combined discussion of cooperating agency status and 
participating agency status.
    (b) In the list of activities that will be occurring during the 
NEPA process, there are two instances listing both FHWA and Caltrans as 
providing various information. Under the Pilot Program, as stated in 
the first paragraph of the letter, FHWA is not involved in the project.
    (c) The letter does not clarify the different roles and 
responsibilities of participating and cooperating agencies. (d) The 
letter states that an agency will be a cooperating agency only if it 
has ``jurisdiction for permit.'' That is not in accordance with 40 CFR 
1598.5 which defines cooperating agency as, ``any Federal agency other 
than the lead agency which has jurisdiction by law or special expertise 
with respect to any

[[Page 23783]]

environmental impact involved in the proposal.''
    Caltrans needs to ensure that the SAFETEA-LU environmental review 
process (Sec.  6002; 23 U.S.C. 139) is fully and correctly implemented.
    (N10) Performance Measure--``Monitor relationships with the general 
public''--MOU section 10.2.1.C requires Caltrans to monitor 
relationships with the general public. This is the first audit to 
evaluate this performance measure as such a tool had not previously 
been developed for this performance measure. This measure is intended 
to assess the effectiveness of any changes in communication that could 
affect an existing relationship among Caltrans and the general public. 
The tool or indicator measure developed involves Caltrans staff and/or 
consultants performing self assessments to evaluate public meeting 
materials. To fully assess this relationship, however, the views of the 
other party must be considered as well. The current performance measure 
does not reflect the general public's views on communication with 
Caltrans regarding Federal-aid highway projects. More details need to 
be provided regarding the projects for which the public meeting 
materials are being evaluated. Different projects require different and 
appropriate materials depending on the scope and issues involved in the 
project. Using a generic rating for all projects, with no additional 
information or explanation may not truly reflect the desired outcome.
    (N11) Documentation of Class of Action Determinations--Through 
project file reviews, the audit team found inconsistencies in the class 
of action determination documentation. The SER Chapter 38 ``Defining 
the Class of Action'' requires for EAs and EISs, that either a Deputy 
District Director for Environmental (or designee) or a District Local 
Area (DLA) Engineer and a District senior environmental planner make a 
determination with the concurrence of the Division of Environmental 
Analysis Environmental Coordinator.
    Four of six EIS project files reviewed by the audit team did not 
include documentation on the class of action determination. For one 
project, the class of action was changed from an EIS to an EA, but no 
documentation was identified in the file to explain the change or to 
demonstrate concurrence on the decision to down scope the environmental 
document type. For another project, the project file did not contain an 
explanation for the change of action from an EA to an EIS.
    (N12) LA Training Plan--Under section 12.1.1 of the MOU, Caltrans 
is responsible for ensuring that its staff is properly trained and that 
training will be provided ``in all appropriate areas with respect to 
the environmental responsibilities Caltrans has assumed.'' This section 
of the MOU also states that ``Caltrans agrees to have all appropriate 
employees (including consultants hired for the purpose of carrying out 
the Secretary's responsibilities) attend such training.'' Additionally, 
the Application states that DLA environmental staffers ``will provide 
training to local agencies and their consultants to ensure that LA 
environmental documents follow statewide procedures and meet Federal 
requirements.''
    Section 12.1.2 of the MOU requires that a training plan be updated 
annually during Caltrans' participation in the Pilot Program. This 
training plan is shared with FHWA on an annual basis. The training 
plans submitted for Fiscal Year (FY) 07-08 and FY 08-09 included 
information only on Capital program training and did not include 
information on training for DLA staff or how staff will provide 
training to local agencies and consultants. The information gaps in the 
FY08-09 Training Plan include:
    (a) The lack of a formalized training plan for DLA staff on DLA-
specific processes--Four interviewees and pre-audit information 
collection revealed no evidence of a formal training plan to carry out 
the LA responsibilities under the Pilot Program, including training for 
DLA staff and staff in local agencies and consultants. Interviews in 
all Districts/Regions visited indicated varying training activities 
have occurred, however, this information--or an explanation on the 
approach--is not included in the training plan.
    (b) The lack of an ongoing training procedure for local agencies 
and consultants, including expected courses or outreach to be offered. 
Six interviewees stated that there is no formal approach being used by 
Caltrans Districts to ensure proper training or outreach is provided to 
local agencies and consultants. Given the very large number of LA 
projects in some Districts, and the typically high staff turnover 
within local agencies, Caltrans needs to formalize and implement an 
ongoing training plan to ensure that LA program staff can carry out the 
responsibilities under the Pilot Program and work with the local 
agencies and consultants to ensure compliance with statewide procedures 
and Federal requirements assumed by Caltrans.
Deficient
    (D1) Quarterly Reports--The quarterly reports Caltrans provides to 
FHWA under section 8.2.7 of the MOU continue to consistently include an 
inaccurate listing of all approvals and decisions under the Pilot 
Program. The quarterly reports received by FHWA for the first five 
quarters have all contained substantial errors and have had to be 
revised and resubmitted to FHWA by Caltrans.
    Discussions with Caltrans staff developing input for the quarterly 
reports identified inconsistent approaches and procedures in the 
processes leading to report production. Communication is not always 
timely between the project generalists and the staff responsible for 
project tracking and reporting. Additionally, two of the four Districts 
visited during the third audit were unable to readily produce a list of 
the projects within that District that fall under the Pilot Program. 
The audit team finds the quarterly reporting process and products 
deficient.
    (D2) Performance Measure--``Monitor relationships with Federal and 
State resource agencies''--MOU section 10.2.1.C requires Caltrans to 
``assess change in communication among Caltrans, Federal and State 
resource agencies.'' In all three Caltrans self-assessments (December 
2007, June 2008, and December 2008) under ``Progress in Meeting Pilot 
Program Performance Metrics'' Caltrans stated that this performance 
measure has not yet been implemented. The audit team understands that 
Caltrans has engaged a consultant to undertake a survey of Federal and 
State resource agencies to assess their relationships with Caltrans; 
however, the minimal degree of progress after 18 months of the Pilot 
Program renders Caltrans' performance on this requirement deficient at 
the time of the audit.
    (D3) Delegation of Signature Authority--In six of the eight 
Caltrans District Offices reviewed in this audit, the audit team 
learned of the delegation of signature authority for EISs and 
individual Section 4(f) Evaluations that occurred in October 2007.
    In September 2007, Caltrans asked for clarification of signature 
authority for EISs as stated in the Application and section 1.1.2 of 
the MOU. The FHWA responded with clarification of this signature 
authority through a letter from FHWA to Caltrans dated September 12, 
2007. This letter stated that the Draft EIS can be signed by either the 
Deputy District Director for Environmental Planning or the District 
Director, at the Caltrans' District discretion. Final EISs are to be 
signed by District Directors, and not further delegated. There was no 
request for clarification for individual Section 4(f) Evaluations and 
therefore,

[[Page 23784]]

that signature authority remains as agreed to with the Deputy District 
Director.
    During the audit, the audit team learned of two memos, dated 
October 2007, that delegated, for six Districts, the signature of 
individual Section 4(f) Evaluations to the Environmental Office Chiefs 
and the signature of EISs to the Environmental Division Chief or the 
District Director.
    This delegation is inconsistent with the FHWA clarification letter. 
Additionally, Chapter 38 of the SER is inconsistent regarding this 
delegation of signature authority for Draft EISs, indicating two 
different delegation signature authorities, one to the Deputy District 
Director and one to the Deputy District Director for Environmental 
Planning, in the sections ``Signature Authorities'' and ``Signature 
Protocols.''
    (D4) Assignment of Section 6002 Responsibility under the Pilot 
Program--Under MOU section 3.2.2, Caltrans is responsible for complying 
with the requirements of any applicable environmental law. Therefore, 
Caltrans is responsible for complying with SAFETEA-LU section 6002 (23 
U.S.C. 139) which defines provisions of the environmental review 
process. The SAFETEA-LU section 6002(d)(23 U.S.C. 139(d)) states that a 
Federal lead agency for a highway project conducting a NEPA process 
under section 6002, in this case Caltrans, ``shall identify, as early 
as practicable in the environmental review process for a project, any 
other Federal and non-Federal agencies that may have an interest in the 
project, and shall invite such agencies to become participating 
agencies in the environmental review process for the project.''
    In three of the six EIS project files reviewed, there were 
participating agency invitations sent out to only 5 to 10 agencies per 
project. For those projects, the audit team, thorough interviews and 
review of project files, learned that more local, State, Federal, or 
tribal governmental agencies, either may have or already had, expressed 
an interest in the project and were therefore required to be an invited 
participating agency.
    The Caltrans' third self-assessment included a section on 
``Understanding of Section 6002 Requirements,'' and did not report any 
finding that requires a corrective action.
    Based on its review of project files and interviews with Caltrans 
staff, the audit team finds Caltrans' compliance with its Pilot Program 
responsibilities to be deficient with regard to the intent and 
requirements of SAFETEA-LU section 6002 regarding inviting 
participating agencies.
    (D5) Corrective Action for Audit Deficiency--In three of the 
project files reviewed by the audit team that contained a class of 
action determination documentation, the class of action determination 
concurrence was issued the day before the third audit began, or 
actually, in two instances, the concurrence was issued during the 
audit. This is a failure to fully address the deficiency, 
``Environmental Document Process--Class of Action Determination,'' 
noted in the previous audit.

[FR Doc. E9-11719 Filed 5-19-09; 8:45 am]
BILLING CODE 4910-22-P


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