Surface Transportation Project Delivery Program; TxDOT Audit Report

Gregory G. Nadeau
Federal Highway Administration
16 August 2016

[Federal Register Volume 81, Number 158 (Tuesday, August 16, 2016)]
[Notices]
[Pages 54648-54658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19476]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

[FHWA Docket No. FHWA-2016-0003]


Surface Transportation Project Delivery Program; TxDOT Audit 
Report

AGENCY: Federal Highway Administration (FHWA), Department of 
Transportation (DOT).

ACTION: Notice.

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SUMMARY: The Surface Transportation Project Delivery Program (23 U.S.C. 
327) allows a State to assume FHWA's environmental responsibilities for 
review, consultation, and compliance for Federal-aid highway projects. 
When a State assumes these Federal responsibilities, the State becomes 
solely responsible and liable for carrying out the responsibilities it 
has assumed, in lieu of FHWA. Prior to the Fixing America's Surface 
Transportation (FAST) Act of 2015, the program required semiannual 
audits during each of the first 2 years of State participation to 
ensure compliance by each State participating in the program. This 
notice presents the findings of the second audit report for the Texas 
Department of Transportation's (TxDOT) participation in accordance to 
these pre-FAST Act requirements.

FOR FURTHER INFORMATION CONTACT: Dr. Owen Lindauer, Office of Project 
Development and Environmental Review, (202) 366-2655, 
owen.lindauer@dot.gov, or Mr. Alan Strasser, Office of the Chief 
Counsel, (202) 366-1373, alan.strasser@dot.gov, Federal Highway 
Administration, Department of Transportation, 1200 New Jersey Avenue 
SE., Washington, DC 20590. Office hours are from 8:00 a.m. to 4:30 
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 
specific docket page at www.regulations.gov.

Background

    The Surface Transportation Project Delivery Program (or NEPA 
Assignment Program) allows a State to assume FHWA's environmental 
responsibilities for review, consultation, and compliance for Federal-
aid highway projects (23 U.S.C. 327). When a State assumes these 
Federal responsibilities, the State becomes solely responsible and 
liable for carrying out the responsibilities it has assumed, in lieu of 
FHWA. The TxDOT published its application for assumption under the 
National Environmental Policy Act (NEPA) Assignment Program on March 
14, 2014, at Texas Register 39(11): 1992, and made it available for 
public comment for 30 days. After considering public comments, TxDOT 
submitted its application to FHWA on May 29, 2014. The application 
served as the basis for developing the Memorandum of Understanding 
(MOU) that identifies the responsibilities and obligations TxDOT would 
assume. The FHWA published a notice of the draft of the MOU in the 
Federal Register on October 10, 2014, at 79 FR 61370 with a 30-day 
comment period to solicit the views of the public and Federal agencies. 
After the close of the comment period FHWA and TxDOT considered 
comments and proceeded to execute the MOU. Since December 16, 2014, 
TxDOT has assumed FHWA's responsibilities under NEPA, and the 
responsibilities for the NEPA-related Federal environmental laws.
    Prior to December 4, 2015, 23 U.S.C. 327(g) required 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 to ensure compliance by each State participating in the 
program. The results of each audit were required to be presented in the 
form of an audit report and be made available for public comment. On 
December 4, 2015, the President signed into law the FAST Act (Pub. L. 
114-94, 129 Stat. 1312 (2015)). Section 1308 of the FAST Act amended 
the audit provisions by limiting the number of audits to one audit each 
year during the first 4 years of a State's participation. However, FHWA 
had already conducted the second audit in September 2015 regarding 
TxDOT's program participation. The FHWA received one response from the 
TxDOT as a result of the public notice of the draft report and has 
considered the TxDOT comments in finalizing this audit report. The 
TxDOT's comments reflect actions it has taken in response to the 
report's observations. Only one comment has resulted in a non-
substantial change in this report. This notice provides the final draft 
of the report for second audit for TxDOT conducted prior to the FAST 
Act.

    Authority:  Section 1313 of Public Law 112-141; Section 6005 of 
Public Law 109-59; 23 U.S.C. 327; 49 CFR 1.48.

    Issued on: August 8, 2016.
Gregory G. Nadeau,
Administrator, Federal Highway Administration.
Surface Transportation Project Delivery Program

[[Page 54649]]

FHWA Audit #2 of the Texas Department of Transportation
June 16, 2015 through December 16, 2015

Executive Summary

    This report summarizes the results of Audit #2 of the performance 
by the Texas Department of Transportation (TxDOT) regarding its 
assumption of responsibilities and obligations, as assigned by Federal 
Highway Administration (FHWA) under a memorandum of understanding (MOU) 
whose term began on December 16, 2014. From that date, TxDOT assumed 
FHWA National Environmental Policy Act (NEPA) responsibilities and 
liabilities for the environmental review and compliance for highway 
projects that require a Federal action in Texas (NEPA Assignment 
Program). The FHWA's role in the NEPA Assignment Program in Texas 
includes program review through audits, as specified in 23 U.S.C. 327 
and in the MOU. The status of the Audit #1 observations (including any 
implemented corrective actions) is detailed at the end of this report.
    The FHWA Audit #2 team (team) was formed in June 2015 and met 
regularly to prepare for the on-site portion of the audit. Prior to the 
on-site visit, the team: (1) performed reviews of TxDOT project file 
NEPA documentation in TxDOT's Environmental Compliance Oversight System 
(ECOS), (2) examined the TxDOT pre-Audit #2 information request 
responses, and (3) developed interview questions. The on-site portion 
of this audit, comprised of TxDOT and other agency interviews, was 
conducted September 8-9, 2015, and September 20-25, 2015.
    The TxDOT continues to make progress developing, revising, and 
implementing procedures and processes required to implement the NEPA 
Assignment Program. Overall, the team found evidence that TxDOT is 
committed to establishing a successful program. This report summarizes 
the team's assessment of the current status of several aspects of the 
NEPA Assignment Program, including successful practices and 17 total 
observations that represent opportunities for TxDOT to improve its 
program. The team identified three non-compliance observations that 
TxDOT will need to address as corrective actions in its next self-
assessment and subsequent report.
    While TxDOT has continued to make progress toward meeting all the 
responsibilities it has assumed in accordance with the MOU, the 
recurring non-compliance observations require corrective action by 
TxDOT. By taking corrective action and considering changes based on the 
observations in this report, TxDOT will continue to move the program 
toward success.

Background

    The Surface Transportation Project Delivery Program allows a State 
to assume FHWA's environmental responsibilities for review, 
consultation, and compliance for Federal highway projects. This program 
is codified at 23 U.S.C. 327. When a State assumes these Federal 
responsibilities, the State becomes solely responsible and liable for 
carrying out the obligations it has assumed, in lieu of FHWA.
    The State of Texas was assigned the responsibility for making 
project NEPA and other related environmental decisions for highway 
projects on December 16, 2014. In enacting Texas Transportation Code, 
Sec.  201.6035, the State has waived its sovereign immunity under the 
11th Amendment of the U.S. Constitution and consents to defend any 
actions brought by its citizens for NEPA decisions it has made in 
Federal court.
    The FHWA responsibilities assigned to TxDOT are varied and tied to 
project level decisionmaking. These laws include, but are not limited 
to, the Endangered Species Act (ESA), Section 7 consultations with the 
U.S. Fish and Wildlife Service (USFWS) and the National Oceanic and 
Atmospheric Administration National Marine Fisheries Service, and 
Section 106 consultations regarding impacts to historic properties. Two 
Federal responsibilities were not assigned to TxDOT and remain with 
FHWA: (1) making project-level conformity determinations under the 
Federal Clean Air Act and (2) conducting government-to-government 
consultation with federally recognized Indian tribes.
    Prior to December 4, 2015, FHWA was required to conduct semiannual 
audits during each of the first 2 years of State participation in the 
program and audits annually for 2 subsequent years as part of FHWA's 
oversight responsibility for the NEPA Assignment Program. The reviews 
assess a State's compliance with the provisions of the MOU and all 
applicable Federal laws and policies. They also are used: to evaluate a 
State's progress toward achieving its performance measures as specified 
in the MOU; to evaluate the success of the NEPA Assignment Program; and 
to inform the administration of the NEPA Assignment Program. On 
December 4, 2015, the President signed into law the Fixing America's 
Surface Transportation (FAST) Act of 2015, which amended the audit 
provisions of the program by changing the frequency to one audit per 
year during the first 4 years of the State's participation. However, 
this audit was conducted prior to the passage of the FAST Act, and this 
report is being prepared and made available under the audit provisions 
as they existed prior to the passage of the FAST Act. This report 
summarizes the results of the second audit, and updates the reader on 
the status and corrective actions for the results of the first audit.

Scope and Methodology

    The overall scope of this audit review is defined both in statute 
(23 U.S.C. 327) and the MOU (Part 11). An audit generally is defined as 
an official and careful examination and verification of accounts and 
records, especially of financial accounts, by an independent unbiased 
body. With regard to accounts or financial records, audits may follow a 
prescribed process or methodology, and be conducted by ``auditors'' who 
have special training in those processes or methods. The FHWA considers 
this review to meet the definition of an audit because it is an 
unbiased, independent, official, and careful examination and 
verification of records and information about TxDOT's assumption of 
environmental responsibilities. The team that conducted this audit has 
completed special training in audit processes and methods.
    The diverse composition of the team, the process of developing the 
review report, and publishing it in the Federal Register help ensure an 
unbiased audit process and establish the audit as an official action 
taken by FHWA. The team for Audit #2 included NEPA subject matter 
experts from the FHWA Texas Division Office and FHWA offices in 
Washington, DC, Atlanta, GA, Columbus, OH, and Salt Lake City, UT. In 
addition, the team included an FHWA Professional Development Program 
trainee from the Texas Division office and one individual from FHWA's 
Program Management Improvement Team who provided technical assistance 
in conducting reviews.
    Audits, as stated in the MOU (Parts 11.1.1 and 11.1.5), are the 
primary mechanism used by FHWA to oversee TxDOT's compliance with the 
MOU, ensure compliance with applicable Federal laws and policies, 
evaluate TxDOT's progress toward achieving the performance measures 
identified in the MOU (Part 10.2), and collect information needed for 
the Secretary's annual report to Congress. These audits also must be 
designed and conducted to evaluate TxDOT's technical competency and 
organizational capacity, adequacy of the financial resources committed 
by TxDOT to administer the

[[Page 54650]]

responsibilities assumed, quality assurance/quality control (QA/QC) 
process, attainment of performance measures, compliance with the MOU 
requirements, and compliance with applicable laws and policies in 
administering the responsibilities assumed. The four performance 
measures identified in the MOU are: (1) compliance with NEPA and other 
Federal environmental statutes and regulations, (2) QC and QA for NEPA 
decisions, (3) relationships with agencies and the general public, and 
(4) increased efficiency, timeliness, in the completion of the NEPA 
process.
    The scope of this audit included reviewing the processes and 
procedures used by TxDOT to reach and document project decisions. The 
team conducted a careful examination of highway project files and 
verified information on the TxDOT NEPA Assignment Program through 
inspection of other records and through interviews of TxDOT and other 
staff. The team gathered information that served as the basis for this 
audit from three primary sources: (1) TxDOT's response to a pre-Audit 
#2 information request, (2) a review of a random sample of project 
files with approval dates subsequent to the execution of the MOU, and 
(3) interviews with TxDOT, the U.S. Army Corps of Engineers (USACE), 
and the U.S. Coast Guard (USCG) staff. The TxDOT provided information 
in response to FHWA questions and requests for all relevant reference 
material. That material covered the following six topics: (1) program 
management, (2) documentation and records management, (3) QA/QC, (4) 
legal sufficiency review, (5) performance measurement, and (6) 
training. The team subdivided into working groups that focused on each 
of the six topics.
    The intent of the review was to check that TxDOT has the proper 
procedures in place to implement the MOU responsibilities assumed, 
ensure that the staff is aware of those procedures, and that staff 
implement the procedures appropriately to achieve NEPA compliance. The 
review is not intended to evaluate project-specific decisions, or to 
second guess those decisions, as these decisions are the sole 
responsibility of TxDOT.
    The team defined the timeframe for highway project environmental 
approvals subject to this second audit to be between March 2015 and 
June 2015. The focus on the second review included the 3 to 4 months 
after FHWA's audit #1 highway project file review concluded. The second 
audit intended to: (1) evaluate whether TxDOT's NEPA decisionmaking and 
other actions comply with all the responsibilities it assumed in the 
MOU, and (2) determine the current status of observations in the Audit 
#1 report and required corrective actions (see summary at end of this 
report). The team established a population of 598 projects subject to 
review based on lists of NEPA approvals (certified compliant by TxDOT 
as required in MOU Part 8.7.1) reported monthly by TxDOT. The NEPA 
approvals included categorical exclusion (CE) determinations, 47 other 
types of environmental approvals including approvals to circulate an 
environmental assessment (EA), findings of no significant impacts 
(FONSI), re-evaluations of EAs, Section 4(f) decisions, approvals of a 
draft environmental impact statement (EIS), and a record of decision 
(ROD). In order to attain a sample with a 95 percent confidence 
interval, the team randomly selected 83 CE projects. In addition, the 
team reviewed project files for all 47 approvals that were not CEs. The 
sample reviewed by the team was 130 approval actions.
    The interviews conducted by the team focused on TxDOT's leadership 
and staff at Environmental Affairs Division (ENV) Headquarters in 
Austin and nine TxDOT Districts. To complete the interviews of District 
staff, the team divided into three groups of four to conduct face-to-
face interviews at TxDOT Districts in Dallas, Paris, Tyler, Lubbock, 
Childress, Amarillo, Houston, Beaumont, and Bryan. With these 
interviews completed, FHWA has interviewed staff from 60 percent (15 of 
25) of the TxDOT District offices. The FHWA anticipates interviewing 
staff from the remaining TxDOT District offices over the next year.

Overall Audit Opinion

    The team recognizes that TxDOT is still implementing changes to 
address and improve its NEPA Assignment Program and that its programs, 
policies, and procedures may need revision. The TxDOT's efforts are 
appropriately focused on establishing and refining policies and 
procedures (especially in regards to the non-compliance observations 
made by FHWA), training staff, assigning and clarifying changed roles 
and responsibilities, and monitoring its compliance with assumed 
responsibilities. The team has determined that TxDOT continues to make 
reasonable progress despite some noted delays (pending ECOS upgrades) 
as the program matures beyond the start-up phase of NEPA Assignment 
operations. In addition, the team believes TxDOT is committed to 
establishing a successful program. The team's analysis of project file 
documentation and interview information identified several non-
compliance observations, and several other observations including 
evidence of good practice. One non-compliance observation is recurrent 
from Audit #1, relating to ``conditional clearances,'' that appears to 
reflect a misunderstanding on the part of TxDOT on when and whether 
information at hand is sufficient to support a NEPA decision that 
complies with the requirements of the MOU. This is a point of concern 
for FHWA and if necessary, this issue will be a focus of future audits.
    The TxDOT staff and management have engaged FHWA and have received 
constructive feedback from the team to revise TxDOT's standard 
operating procedures. By considering and acting upon the observations 
contained in this report, TxDOT should continue to improve upon 
carrying out its assigned responsibilities to ensure the success of its 
NEPA Assignment Program.

Non-Compliance Observations

AUDIT #2

    Non-compliance observations are instances where the team found the 
State was out of compliance or deficient with regard to a Federal 
regulation, statute, guidance, policy, or the terms of the MOU 
(including State procedures for compliance with the NEPA process). Such 
observations may also include instances where the State has failed to 
maintain adequate personnel and/or financial resources to carry out the 
responsibilities assumed. Other observations that suggest a persistent 
failure to adequately consult, coordinate, or take into account the 
concerns of other Federal, State, tribal, or local agencies with 
oversight, consultation, or coordination responsibilities could be non-
compliant. The FHWA expects TxDOT to develop and implement corrective 
actions to address all non-compliance observations as soon as possible. 
The TxDOT has already informed the team it is implementing some 
recommendations made by FHWA to address non-compliance and other 
observations. The FHWA will conduct follow up reviews of the non-
compliance observations as part of Audit #3, and if necessary, future 
audits.
    The MOU (Part 3.1.1) states ``pursuant to 23 U.S.C. 327(a)(2)(A), 
on the Effective Date, FHWA assigns, and TxDOT assumes, subject to the 
terms and conditions set forth in 23 U.S.C. 327 and this MOU, all of 
the DOT Secretary's responsibilities for

[[Page 54651]]

compliance with the National Environmental Policy Act of 1969 (NEPA), 
42 U.S.C. 4321 et seq. with respect to the highway projects specified 
under subpart 3.3. This includes statutory provisions, regulations, 
policies, and guidance related to the implementation of NEPA for 
Federal highway projects such as 23 U.S.C. 139, 40 CFR parts 1500-1508, 
DOT Order 5610.1C, and 23 CFR part 771 as applicable.'' Also, the 
performance measure in MOU Part 10.2.1(A) for compliance with NEPA and 
other Federal environmental statutes and regulations commits TxDOT to 
maintaining documented compliance with requirements of all applicable 
statutes, regulations, procedures, and processes set forth in the MOU. 
The following non-compliance observations were found by the team based 
on documentation (or lack thereof) in project files and other 
documentation.

Audit #2 Non-Compliance Observation #1

    Non-compliance Observation #1 is an instance (1 out of 130 actions 
reviewed) where TxDOT made a CE determination for a project before all 
regulatory criteria for a CE determination were met. The TxDOT followed 
a State procedure relating to the NEPA approval subject to 
``conditional clearances'' that allowed the project to proceed to 
construction. Audit #1 Non-compliance Observation #2 also was an 
instance where a CE determination was made by TxDOT staff before all 
environmental requirements had been satisfied (i.e., project level air 
quality conformity and listing in the Statewide Transportation 
Improvement Program (STIP)) following the same TxDOT procedure. 
Discovery of this second instance of non-compliance tied to conditional 
clearance approvals triggered additional requests for information by 
the team and gathering information through informal interviews.
    The Non-compliance Observation was that an ECOS project record 
showed that a TxDOT decisionmaker made a CE determination decision 
before the consultation for the project was completed. The completion 
of the consultation would have confirmed that a required constraint for 
the CE was met. This instance involved the determination of whether a 
project qualified for CE (c)(26). The FHWA's regulation at 23 CFR 
771.117(c)(26) restricts the use of the CE to projects that meet all 
the constraints in 23 CFR 771.117(e). The constraint in 23 CFR 
771.117(e)(3) prohibits the use of the CE if it involves a finding of 
``adverse effect'' to a historic property or the use of a resource 
protected under Section 4(f), except for actions resulting in de 
minimis impacts. The ECOS record shows that at the time of the CE 
determination, these impacts were presumed, but consultation was not 
yet initiated in writing nor documented as completed such that the 
application of that CE could be justified. Later in time, after the CE 
determination was used to allow the project to proceed to a point where 
TxDOT made a request to FHWA to proceed to construction with Federal 
funding, the project record contained Texas Historical Commission (THC) 
concurrence that the effect was not adverse, and that a de minimis 
impact determination was supported. The TxDOT should not have applied a 
CE to a project before confirming that all conditions and constraints 
for use of that CE were met. By proceeding in this manner, TxDOT has 
not complied with the requirements for use of that CE, as specified in 
regulation. Also, the actions taken by TxDOT that lead to the 
''conditional clearance'' do not comply with FHWA's Section 4(f) 
regulation, 23 CFR 774, where the CE determination was made when 
outcome of the Section 4(f) impact was not determined.
    At the team's request for additional information on projects 
processed with ``conditional clearances,'' TxDOT provided a list of 18 
projects that included the non-compliant project identified in Audit #1 
and described above. Eight project files showed documentation that a CE 
determination was made before the period for tribal consultation was 
complete. The TxDOT, FHWA, and Indian Tribes with an interest in Texas 
have executed programmatic agreements that define for which projects 
TxDOT would consult and the manner of consultation. Those agreements 
commit TxDOT to send information to a Tribe and allow for a 30-day 
period for the Tribe to respond. If the Tribe does not respond after 
the 30 days, TxDOT may proceed to the next step of the process. These 
agreements commit TxDOT and FHWA to a manner of consultation that was 
not followed for eight projects. The TxDOT's assumption of FHWA's NEPA 
responsibilities does not permit TxDOT to disregard commitments it has 
made (along with FHWA) to complete tribal consultation before moving to 
the next step (making a CE determination). These actions are a 
violation of MOU Part 5.1.1 where TxDOT is subject to the same 
procedural and substantive requirements in interagency agreements, such 
as programmatic agreements. Additionally, TxDOT's completion of NEPA 
decisionmaking prior to completing tribal consultation violates MOU 
Part 7.2.1 where TxDOT has committed to ensure that it has processes 
and procedures in place that provide for proactive and timely 
consultation to carry out responsibilities assumed under the MOU.
    The TxDOT has a Standard Operating Procedure (SOP) for issuing a 
Letter of Authority (LOA) dated April 1, 2015, that enables the project 
to proceed to the next step in project development after a 
decisionmaker has made a NEPA decision based on incomplete information. 
Issuance of a LOA allows a project to proceed to the bidding process. 
For the 18 projects in the list provided, TxDOT certified to FHWA that 
the project's NEPA requirements were satisfied. The TxDOT has noted in 
the project record that the project was ``conditionally cleared'' for 
letting. Upon review, the team identified 11 projects of the 18 
reviewed that did violate MOU Part 8.7.1 because the NEPA certification 
included projects that either did not conform to required conditions to 
apply CEs or did not complete required consultation requirements. Also, 
TxDOT's SOP for issuing a LOA does not comply with MOU Part 5.2.1 in 
that TxDOT's procedures did not result in compliance with Federal 
regulations. The remaining 7 projects on the list of 18 ``conditional 
clearance'' projects advanced by TxDOT did not indicate an instance of 
an unjustified NEPA approval, but rather were for actions that occurred 
post-NEPA approval (e.g., 404 permit issuance, Interstate Access 
Justification, and right-of-way (ROW) purchase).
    As a result, FHWA has asked that TxDOT immediately refrain from 
issuing LOAs based on ``conditional clearances.'' The TxDOT has begun 
the process of revising the subject SOP. The FHWA will review the SOP 
to ensure that it satisfactorily complies with FHWA policy and the MOU. 
In addition, FHWA has requested that TxDOT report any projects that use 
the revised SOP to FHWA in advance of FHWA project authorization until 
further notice.

Audit #2 Non-Compliance Observation #2

    Two projects reviewed by the team were in error regarding NEPA 
decision reporting. The MOU Part 8.2.6 requires the listing of any 
approvals and decisions made. One CE determination was reported to FHWA 
as an action that would utilize less than $5 million of Federal funds 
(CE (c)(23)) where the project file listed the CE determination for an 
action that would take place

[[Page 54652]]

entirely within the existing operational ROW (CE (c)(22)). A second 
project was correctly reported on the monthly list, but a review of the 
project file lacked documentation for this determination. Even though 
these may result from data entry errors, TxDOT should make every effort 
to ensure the decisions it reports monthly are accurate and project 
files are complete.

Audit #2 Non-Compliance Observation #3

    Twelve project file records were missing information that appeared 
to be out of compliance with TxDOT's procedures or documentation 
policy. One project's CE Determination Form did not identify the 
approver's title. Another project file lacked the Public Involvement 
summary. Nine project files lacked records, or included forms that 
lacked signatures where TxDOT procedures indicated that signatures were 
required. These included signatures on a Biological Evaluation form, 
Project Coordination Request form, and a Public Hearing Certification. 
One project file noted a public involvement process, but the event 
lacked documentation on what was presented. The implication of the 
TxDOT procedure is that the signature or information on the form is 
part of the review and approval of the report or form. Project files 
with missing information may suggest that a NEPA decision was based on 
incomplete or ambiguous information. The TxDOT has informed FHWA that 
it will review the files for these projects and take corrective action.

Observations and Successful Practices

    This section summarizes the team's observations about issues or 
practices that TxDOT may want to consider as areas to improve and 
practices the team believes are successful that TxDOT may want to 
continue or expand in some manner. Further information on these 
observations and practices is contained in the following subsections 
that address the six topic areas identified in FHWA's team charter and 
work plan to perform this audit.
    Throughout the following subsections, the team lists 14 remaining 
observations that FHWA urges TxDOT to act upon in order to make 
improvements. The FHWA's suggested methods of action include: 
corrective action, targeted training, revising procedures, continued 
self-assessment, or some other means. The team acknowledges that, by 
sharing this draft audit report with TxDOT, TxDOT has the opportunity 
to begin the process of implementing actions to address the 
observations to improve its program prior to the publication of this 
report. The FHWA will consider the status of these observations as part 
of the scope of Audit #3. The team will also include a summary 
discussion that describes progress since the last audit in the Audit #3 
report.

1. Program Management

Successful Practices

    The team recognized four successful program management practices. 
First, it was evident through interviews that TxDOT has employed many 
highly qualified staff for its program. Second, the team saw evidence 
of strong communication between TxDOT's ENV and District staff with 
regard to explaining roles and responsibilities associated with 
implementation of the MOU for NEPA Assignment. Third, based on the 
response to the pre-Audit #2 information request and interview 
questions, the team recognized TxDOT ENV's efforts to develop and 
update procedures, guidance, and tools as necessary or required to 
assist Districts in meeting requirements of the MOU. Finally, District 
staff understands and takes pride in and ownership of their CE 
determinations. The ENV likewise takes pride in their responsibility 
for EA and EIS decisionmaking and oversight for the NEPA Assignment 
Program.
    In addition, the team found evidence of six successful program 
management practices through information provided by TxDOT and through 
interviews. The team recognizes the TxDOT project Core Team concept, 
which provides joint ENV and District peer reviews for EAs and EISs as 
a good example of TxDOT utilizing its existing staff to analyze NEPA 
documents and correct compliance issues on higher level of NEPA 
documentation and procedures before project approval. Many Districts 
appreciate the efforts of and results from the project Core Team and 
credit them for assuring their projects are compliant.
    The ``NEPA Chat'' continues to be a notable example of TxDOT's 
effort to achieve a compliant NEPA Assignment Program with enhanced 
communication among TxDOT environmental staff statewide. The NEPA Chat, 
led by ENV, provides a platform for complex issues to be discussed 
openly, and for Districts to learn about statewide NEPA Assignment 
Program issues, and new policies and procedures. To date, the NEPA Chat 
has proven to be an effective vehicle to disseminate relevant NEPA 
information quickly and selectively to the TxDOT District Environmental 
Coordinators.
    Also, based on interviews and the response to the pre-audit 
information request, almost all of the ENV and District staff feel 
there is sufficient staff to deliver a successful NEPA Assignment 
Program at the ENV and District level. This is further supported by 
ENV's willingness to shift responsibilities to better align with the 
needs of the NEPA Assignment Program. After interviewing the various 
Districts, they indicated that ENV is available to assist the Districts 
whenever they need help.
    The ENV Self-Assessment Branch (SAB) fosters regular and productive 
communication with District staff after environmental decisions are 
made. The SAB staff prepares and transmits a summary of the results of 
their reviews of project documentation, both positive and negative, and 
follows up with the District Environmental Coordinator responsible for 
the project via telephone. They provided this feedback within 2 weeks 
of their review, which resulted in early awareness of issues and 
corrective action, where necessary, and positive feedback.
    The refinement of the pilot ``Risk Assessment'' tool (a ``smart pdf 
form'') for environmental documents is a successful, but optional, 
procedure that may become part of ECOS during the scheduled upgrades. 
Based on the team's interviews, when District staff use the form, they 
are better able to understand the resources to be considered, what 
resources should receive further analysis, and the resulting output 
serves as documentation for District decisions. Even though this tool 
is not yet currently integrated within ECOS, it can be uploaded when 
used.
    The TxDOT noted that it had recently developed a QA/QC Procedures 
for Environmental Documents Handbook (March 2015), and it is used by 
the project Core Team to develop EA and EIS documents. Through TxDOT's 
response to pre-Audit #2 questions and through interviews with various 
staff, TxDOT has continued to demonstrate that it has provided a good 
base of tools, guidance, and procedures with associated and timely 
updates to assist in meeting the terms of the MOU and still takes pride 
in exercising its assumed responsibilities.
    The team considers three observations sufficiently important to 
note below. The FHWA urges TxDOT to consider ongoing and/or additional 
improvements or corrective actions to project management in its NEPA 
Assignment Program to address these observations.
AUDIT #2 Observations

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Audit #2 Observation #1

    Based on interviews with the USACE and USCG, FHWA would like to 
draw TxDOT's attention to several items. The team found that USCG had 
multiple ENV and District points of contact and preferred to deal with 
only one ENV point of contact at TxDOT. A single point of contact was 
the practice prior to the NEPA Assignment Program when issues needed to 
be elevated. The TxDOT has indicated that it identified a point of 
contact for USCG in August of this year, but will follow up in writing. 
The USACE noted that with the final rule the USACE opinion may change 
with regard to how it conducts its own regulatory process. This may 
prove to be problematic for applicants like TxDOT. Generally, it is 
important for TxDOT to maintain and strengthen relationships with 
Federal agencies including the State Historic Preservation Officer that 
processes Section 106 actions. This may be considered critical under 
NEPA Assignment as TxDOT is acting as a Federal agency.

Audit #2 Observation #2

    The team found in a legacy project (i.e., a project that began with 
FHWA as the lead agency and was transferred to be TxDOT-led after NEPA 
Program Assignment) that an ESA ``no effect'' determination was made by 
TxDOT to support a FONSI. Previously, when acting as the lead agency, 
FHWA had requested that TxDOT resolve issues identified in the USFWS 
correspondence for the project. In this instance, the project record 
initially reflects a ``may affect'' determination by FHWA that later 
changed to a ``no effect'' determination by TxDOT. The team was unable 
to find documentation in the project file to justify why such a change 
occurred. The team is currently working with TxDOT to review the 
process by which TxDOT makes ``no effect'' determinations for ESA. If 
concerns remain after this collaboration, FHWA may invite our USFWS 
liaison to review this issue in more depth as part of Audit #3.

Audit #2 Observation #3

    One project file contained information about an 8-mile detour 
categorized as not a ``major traffic disruption.'' An interviewee at a 
different District identified what they considered a different standard 
(i.e., 2-mile detour) for a ``major traffic disruption.'' These 
observations suggest TxDOT's approach to defining 23 CFR 771.117(e)(4) 
for major traffic disruption may be inconsistent. The FHWA recognizes 
that the context of when a disruption is considered to be ``major'' is 
important and may depend on local conditions. The FHWA urges TxDOT to 
develop guidance and a set of examples for rural, urban, and 
metropolitan Districts to align when major traffic disruption occurs.

2. Documentation and Records Management

    The team relied on information in ECOS, TxDOT's official file of 
record, to evaluate project documentation and records management. The 
ECOS is a tool for information records, management, and disclosure 
within TxDOT District Offices, between Districts and ENV, and between 
TxDOT and the public. The strength of ECOS is its potential for 
adaptability and flexibility. The challenge for TxDOT is to maintain 
and update the ECOS operating protocols (for consistency of use and 
document/data location) and to educate its users on updates in a timely 
manner.

Successful Practices

    A number of best practices demonstrated by TxDOT were evident as a 
result of the documentation and records management review. The ECOS has 
demonstrated system-wide improvements in usage by Districts since Audit 
#1, most notably in the areas of download speed and interface. The ECOS 
has improved in areas of connectivity and speed, and technical support 
for ECOS is rated as being very high and responsive. The team 
recognizes the need for continuous updates and maintenance for the ECOS 
system and ENV's upcoming plans for additional NEPA compliance and 
documentation related improvements in five phases. The team also 
recognized that TxDOT Districts are making good use of the Project Risk 
Assessment Forms to Develop Project Scope and help guide the 
environmental process.
    Based on examination of the 130 sample files reviewed, the team 
identified five general observations that are mostly issues where 
record keeping and documentation could be improved or clarified. The 
team used a documentation checklist to verify the presence of 
information required by regulation and review the files of the 130 
sampled projects.

Audit #2 Observation #4

    One project shows a NEPA clearance date that occurs after the LOA 
clearance date. The TxDOT has indicated that this was a data entry 
error that was preserved ``in order to understand the progression of 
project development.'' The NEPA clearance must occur before a date of 
LOA clearance according to TxDOT process.
    During the interviews, the team learned that ECOS files may be 
deleted by their author and leave no trace of that deletion in ECOS. In 
addition, the team learned through interviews that deleted files may 
not be recovered. The FHWA is concerned about this lacking 
functionality and urges TxDOT to consider that if decisional 
information can be deleted, especially if the deletion occurs after the 
NEPA decision document is signed, the project record would not support 
the decisions made.

Audit #2 Observation #5

    The team reviewed files for one project where the NEPA decision may 
be an example of a potential inconsistency in NEPA document content for 
a single project. The scope in the EA document described both a road 
widening with bridge replacement and widening without bridge 
replacement. The FONSI document project scope was described as roadway 
widening, the file documentation was unclear as to the status of the 
intent to replace the bridge. The team urges TxDOT to carefully compare 
the project description in an EA and any resulting FONSI and to explain 
in the FONSI any project description changes from the EA.
    The team found there were 15 out of 83 project files where criteria 
for a specific CE category remained either undocumented or unclear for 
certain CEs (c)(26)-(28). Examples included a project that may not 
conform to 23 CFR 771.117(e)(4) due to major traffic disruption, a 
(c)(22) operational ROW project stated both ``rehab lanes'' and ``widen 
lanes,'' and (c)(23) projects not to exceed $5 million in Federal 
funds.

Audit #2 Observation #6

    The FHWA is generally interested in how TxDOT fulfills its 
environmental commitments, which TxDOT records through an Environmental 
Permits, Issues and Commitments (EPIC) sheet. Such sheets become part 
of both the project record and often, the project bid package. In 
reviewing project files, the ECOS commitment tab defaults to the 
following note ``No EPICs exist for this project'' while the same file 
contained uploaded EPIC sheets in the ECOS documentation tab. Since the 
EPIC sheet is the way TxDOT implements its environmental commitments, 
the team would like to draw TxDOT's attention to occasional 
contradictory information on EPICs in its project files. The team 
acknowledges that TxDOT has recognized this issue and created a joint

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District and ENV team to address this problem.

Audit #2 Observation #7

    The team found two examples of a single project that had multiple 
CE approvals. Each decision document had a different approval date, 
however the project was unchanged. The approval documents (with 
different dates) otherwise appeared to be identical, with the exception 
of minor editorial changes, such as adding a position title or 
utilizing an updated form. After interviews with SAB staff, the team 
learned that this practice was used to correct editorial mistakes or 
when new forms were released. The team could not determine the 
appropriate NEPA approval date. If a decision document (CE, FONSI, or 
ROD) needs to be revisited, FHWA regulations require a re-evaluation. A 
re-evaluation does not create a new NEPA approval date, it just 
analyzes if the original decision remains valid in light of the new 
information. The TxDOT might clarify its project files by including a 
journal entry in ECOS to explain the correction of errors on forms.

Audit #2 Observation #8

    One type of decision reviewed by the team was a sequence of re-
evaluations on the same project change that occurred after a NEPA 
approval has been made. The team found one project that had three 
partial re-evaluations in succession for the same design change (a 
sidewalk relocation) for adjacent parcels and a construction easement 
in each separate re-evaluation consultation checklist. The TxDOT 
indicated in its comment on this observation that the project was 
proceeding under a design-build contract that led to a number of 
changes. The FHWA is concerned that this TxDOT activity could possibly 
lead to segmenting the review of new impacts if this practice were to 
continue.

Audit #2 Observation #9

    In general the team views the continuing delay in implementing 
needed substantive ECOS upgrades (i.e., outdated CE terminology and 
EPIC documentation contradiction, since CE MOU approval on February 12, 
2014) and the current schedule to implement upgrades over 5 years to be 
too long a timeframe as recurring errors may result. The team urges 
TxDOT to implement the upgrades with the timeframe of FHWA audits, as 
it has continued to make recurring observations on project 
recordkeeping during audits.

3. Quality Assurance/Quality Control

    The team considers the QA/QC program to be generally in compliance 
with the provisions of TxDOT's QA/QC Plan. The team was pleased to see 
that many of the positive items mentioned and observed in Audit #1 
appear to be continuing to occur.

Successful Practices

    The team observed four areas of successful practices currently in 
place that align with TxDOT's QA/QC Control Procedures for 
Environmental Documents. First, during the team site visits to the 
TxDOT Districts it learned that one District (Houston) has one person 
dedicated to reviewing the NEPA documents in order to review 
documentation for quality and completeness (QC as it occurs before the 
decision is made), and heard in an interview from another District 
(Dallas) they are planning to do the same.
    Second, the team learned that the Core Team concept (QC) appears to 
be working and is well received by the District offices visited during 
the audit. The opportunity of District Environmental Coordinators to 
work with an ENV person early in the process to identify potential 
issues should result in efficient document preparation, an expectation 
of a quality document, complete project file, and improved project 
delivery.
    Third, the team received a lot of positive comments from the 
Districts visited regarding the SAB of TxDOT. The District staffs 
stated that the SAB feedback (QA that occurs after the decision is 
made) was quick and resulted in a great training tool to improve 
documentation on future projects. The team urges TxDOT to continue this 
practice and encourages TxDOT to consider more focused and timely input 
at the pre-decision stage of project development process during QC. It 
is possible that the non-compliance observations cited in this report 
could have been identified and corrected if an enhanced pre-decisional 
(QC) process related check were implemented.
    Fourth, since the beginning of 2015, TxDOT has created over 31 tool 
kits, guidance, forms, handbooks, and procedures to improve consistency 
and compliance of its NEPA documents and decisions. Feedback during 
interviews indicated that the TxDOT staff appreciated the effort from 
ENV to create user friendly forms and procedures to ensure compliance 
and reduce errors in their documentation.
    As a result of the team's file reviews and interviews, it considers 
three observations as sufficiently important to urge TxDOT to consider 
improvements or corrective actions in its approach to QA/QC.

Audit #2 Observation #10

    During the audit file reviews, the team occasionally found 
difficulty locating information in project files and could not 
determine whether environmental requirements were addressed but not 
documented. Based on what the team found in ECOS records, TxDOT appears 
to lack a statewide standard or guidance on ECOS naming conventions or 
ECOS file management. The FHWA reviewers found file names that were not 
intuitive for conducting efficient or comprehensive reviews. During 
interviews with the Districts visited, TxDOT staff at times also had 
trouble locating information in ECOS and was uncertain of the details 
of projects when questioned. This lack of consistency statewide is an 
issue that TxDOT acknowledged in a closeout meeting with the team and 
stated that it was working toward resolving the issue internally. The 
team will continue to monitor this issue in Audit #3.

Audit #2 Observation #11

    Based on the recurring non-compliance observations from Audits #1 
and #2, the team urges TxDOT to focus effort on its QA/QC actions. In a 
few instances, the team found documentation in the project files that 
was the result of QC, especially when a form was in error and had to be 
redone. But generally, the team found no entries in project files that 
showed projects had been reviewed for QC. The team could not determine 
for the project files reviewed for this audit whether TxDOT's actions 
effectively implemented QA/QC actions that were agreed to in MOU Part 
8.2.4. The FHWA will focus efforts in Audit #3 on how TxDOT applies QC 
and implementing QA strategies to individual projects.

4. Legal Sufficiency Review

    From interviews the team learned there are two attorneys in TxDOT's 
Office of General Counsel (OGC) who provide legal services on 
environmental issues. The OGC has an ongoing process to fill the third 
environmental attorney position in OGC. In addition, OGC has had an 
outside contract attorney providing legal assistance on environmental 
issues for a number of years. The OGC recently completed its biannual 
procurement of outside legal services for environmental issues, and has 
now obtained legal services from a total of three law firms. Legal 
counsel (both OGC staff and outside counsel) are primarily dedicated to 
serve as a

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resource providing legal assistance in project development, review of 
environment documents, and legal sufficiency reviews.
    Assistance from OGC (who assisted in developing the sections) is 
guided by ENVs Project Delivery Manual Sections 303.080 through 
303.086. These sections provide guidance on requesting legal 
sufficiency, legal sufficiency review of FHWA projects, and review of 
publishing a Notice of Intent (NOI) to prepare an EIS and Notice of 
Availability in the Federal Register. Per the guidance, legal 
sufficiency is required prior to approval of:
    (1) NOI to prepare an EIS
    (2) Final Environmental Impact Statement (FEIS)
    (3) Individual 4(f) Statement (programmatic or de minimis 4(f) 
evaluations do not require legal sufficiency review)
    (4) Notice that a permit, license, or approval is final under 34 
U.S.C. 139(1).
    The OGC is available as a resource to ENV and the Districts to 
answer questions on NEPA issues and specific questions on projects. 
Requests for assistance are made through ENV and the vehicle for 
communication is primarily email. The guidance states that 
communications between OGC and ENV for the purpose of rendering legal 
services or advice are protected by the attorney-client privilege.
    Based on a report provided by OGC, since January 1, 2015, it has 
reviewed or has been involved in providing legal review for 15 project 
actions. These included five 139(l) notices, an FEIS/ROD, three RODs, 
one NOI, an EA, a public hearing and response report, an FEIS, and an 
FEIS errata sheet. The OGC provided legal sufficiency reviews for all 
139(l) reviews, the FEIS errata sheet, and the FEIS.
    Currently, ENV project managers request the review of documents 
and/or materials by OGC. The lead attorney in OGC assigns the project 
to staff based on workload and issues. He works with the project 
managers to agree upon an acceptable review timeframe. Per OGC, reviews 
are only done after the technical reports have been reviewed and 
approved by ENV. Comments from the attorney are provided in the usual 
comment/response matrix to ENV, which incorporates them into the 
overall comment/response matrix that is sent to the project Core Team 
to address. Once any comments are adequately addressed, the attorney 
will issue a legal sufficiency statement. The OGC does not maintain a 
separate project file as it completes review of a project.
    In reviewing the document for legal sufficiency the OGC attorneys 
rely on Federal regulations and guidance, TxDOT toolkits and manuals, 
and discussions with project delivery managers. The OGC relies on the 
subject matter experts to ensure the technical reports are adequate, 
and only does an in-depth review of a technical report if warranted. In 
general, the attorneys are looking for consistent, well written 
documents that are reader friendly and clearly document the NEPA 
decision. After reviewing the document, there is a consultation between 
the lead attorney and staff attorney concerning the review results 
before a legal sufficiency finding is issued. Copies of emails 
providing comments on Federal and State register notices, the legal 
sufficiency reviews of several Section 139(l) notices, and an FEIS were 
provided to the team.
    The lead attorney for OGC has 11 years of transportation experience 
with TxDOT but until NEPA assignment process began, only limited NEPA 
experience. The other OGC attorney's NEPA experience also began with 
the NEPA Assignment process. The contract attorney has had 
approximately 12 years of experience working NEPA issues and lawsuits 
in Texas. The OGC may hire outside law firms to provide assistance on 
an as-needed basis. All such firms have extensive transportation and 
NEPA experience.
    The OGC indicated that there has been some early involvement in 
project familiarization and information gathering so that it is aware 
of potential issues, impacts, and timeframes during project initiation 
and scoping. The OGC is making a concerted effort also to attend public 
hearings and other project meetings as the project development process 
progresses. The OGC wants to be considered a resource for the ENV and 
TxDOT Districts from early on in project development as opposed to only 
being contacted when there are major issues.
    Based on the team interviews and review of documentation, the 
requirements for legal sufficiency under the MOU are being adequately 
fulfilled. In FHWA's experience, legal staff can expand their role by 
inserting themselves into the project development process and promoting 
their availability as a resource to TxDOT staff.

Audit #2 Observation #12

    Neither in the project delivery manual nor elsewhere does OGC 
provide an expectation for the time frame necessary for a legal review. 
The team urges TxDOT to establish a review time frame for legal 
sufficiency, develop some education and outreach materials to the TxDOT 
Districts regarding the OGC role, especially as a resource, and 
suggested additions to the legal sufficiency documentation.

5. Performance Measurement

    Part 10 of the MOU identifies performance measures to be reported 
by TxDOT that FHWA would consider in conducting audits. The FHWA did 
not independently verify the measures reported by TxDOT. The TxDOT's 
first Self-Assessment Summary Report (since implementing NEPA 
Assignment) discusses progress made toward meeting the four performance 
measures. These measures provide an overall indication of TxDOT's 
discharge of its MOU responsibilities. In addition, in collecting data 
related to the reporting on the performance measures, TxDOT monitors 
its overall progress in meeting the targets of those measures and 
includes this data in self-assessments provided under the MOU (Part 
8.2.5). The four performance measures are: (1) compliance with NEPA and 
other Federal environmental statutes and regulations, (2) QA/QC for 
NEPA decisions, (3) relationships with agencies and the general public, 
and (4) increased efficiency and timeliness in completion of the NEPA 
process.
    The TxDOT reports three measures of compliance with NEPA and other 
Federal laws and regulations: (1) percent of complete NEPA Assignment 
Program Compliance Review Reports submitted to FHWA on schedule, (2) 
percent of identified corrective actions that are implemented, and (3) 
percent of final environmental documents that contain evidence of 
compliance with requirements of Section 7, Section 106, and Section 
4(f). The measured results range between 97 percent and 100 percent 
complete.
    The TxDOT considered QA/QC for NEPA decisions with three measures: 
(1) percent of FEISs and individual Section 4(f) determinations with 
legal sufficiency determinations that pre-date environment document 
approval, (2) percent of EAs and EISs with completed environmental 
review checklists in the file, and (3) percent of sampled environmental 
project files determined to be complete and adequate for each self-
assessment period. These measured results range between 94.3 and 100 
percent.
    The TxDOT is still in the process of assessing its measure of 
relationships with agencies and the general public. Since the 
completion of Audit #1, TxDOT has prepared and distributed a survey to 
agencies it interacts with as part of NEPA. The survey asked agency 
staff to respond to TxDOT's capabilities,

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responsiveness, efficiency, communications, and quality. The TxDOT 
proposes to poll agencies each year and report comparisons in future 
self-assessments. The TxDOT's measure of its relationship with the 
public is to compare the number of complaints received year to year. 
The TxDOT reports no complaints from the public received since assuming 
NEPA Assignment. A second measure for public relationship is the 
percent of signed final EA or EIS projects where a public meeting or 
hearing was conducted and the associated documentation was in the file. 
The TX DOT reports a measure of 92.3 percent because one EA file had a 
missing signed public hearing certification page. A third measure of 
relationships considered by TxDOT is the time between beginning a 
formal conflict resolution process and the date of resolution. The 
TxDOT reports there was no conflict resolution process initiated during 
the team's review period.
    The TxDOT provided its initial measures of increased efficiency and 
timeliness in completion of the NEPA process in the Self-Assessment 
Summary Report. Its first of three measures is to compare the median 
time to complete CEs, EAs, and EISs before and after assignment. The 
TxDOT reports that it needs more time to compile post-NEPA assignment 
data. The TxDOT reports that the pre-NEPA assignment median time frame 
to complete an EA is 1060 days (35.33 months) and 3,351 days (111.7 
months) to complete an EIS. The second measure is the median time frame 
from submittal of biological assessment to receipt of biological 
opinion. The TxDOT reports that the pre-NEPA Assignment median time 
frame for completing a biological opinion is 43 days, and 16 days to 
complete informal consultation. The TxDOT reported a time frame of 65 
days for a single biological opinion since NEPA Assignment. The 10 
informal consultations since assignment had a median time frame of 28 
days (12 days longer).

Successful Practices

    In interviews, the team learned of several best practices from the 
TxDOT CE Self-Assessment Report. The TxDOT's QA/QC process generates 
measures of error rates that provide useful information to improve the 
overall program management and efficiency. The TxDOT has used 
performance measures to evaluate the effectiveness of the SAB Feedback 
Program, and has demonstrated reduced error rates over its limited 
review time frames. Also, some of the measures closely correlated with 
follow up training which demonstrated its utility. One individual 
stated in an interview that the initial rate was initially in the high 
single digit percentiles (c.f., if CE determinations were signed or 
not). The team then considered three periods of data corresponding to 
rough quarter yearly time frames. In the initial quarter, people who 
made mistakes and were then mentored through a phone call showed a drop 
in number of errors over time. The same people were, for the most part, 
no longer making the same errors after the third quarter.
    Another practice the team learned about through interviews was that 
TxDOT had collected and considered many measures of its performance in 
addition to the ones in the Self-Assessment Report Summary. The team 
requested more information about these additional measures from TxDOT 
and has received some details (TxDOT's CE Self-Assessment Report). The 
team hopes to see more. The team encourages TxDOT to generate 
performance measures in addition to the ones reported and to share 
those measures with the team as part of FHWA's overall review of NEPA 
assignment.

Audit #2 Observation #13

    The team continues to be concerned that the measure for the TxDOT 
relationship with the public may be too limited by focusing on the 
number of complaints, and urges TxDOT to continue thoughtful 
consideration of the development of this measure. The team learned 
through interviews that the CSTAR database is where complaints get 
recorded and distributed to different parts of TxDOT, but that it 
apparently was not consulted to compute a baseline measure to use for 
comparison. Also, public complaints, according to District staff, come 
into individual District offices which may not be tabulated in CSTAR. 
The team urges TxDOT to consider the measure of public relationship in 
more refined detail than agency-wide scale to distinguish concerns that 
are tied to a particular project and those tied to program management 
and decisionmaking. The FHWA acknowledges that public comments and 
complaints were and will continue to be an important consideration in 
project level decisionmaking. The performance measure for public 
relationship should address TxDOT's consideration of project specific 
concerns (not just the number of complaints) and concerns about the 
environmental program.

6. Training Program

    The team recognizes the following successful practices. The team 
learned of resource sharing within the Houston District of Subject 
Matter Resource (SMR) staff who serve as in-house sources of knowledge 
and expertise. The SMR staff also commit to attend formal training and 
perform self-study in their resource areas, which allows them to 
provide training and mentor other staff on subjects within or related 
to the resource area.
    A second best practice described to the team was that TxDOT 
conducted a survey of its staff in the summer of 2015 to determine 
needs and issues related to training. The TxDOT provided the survey 
results, and the team found these data to be both detailed and 
informative. The TxDOT reported during the pre-Audit #2 that this 
information was used to identify training needed by ENV staff to 
professionally develop Division staff and maintain expertise in their 
respective subject areas. The survey results from District staff 
identified training needed for District environmental staff to perform 
job duties. The team looks forward to reviewing TxDOT's progressive 
training plan and the updated training plan based on the new data.
    A third best practice the team learned through interviews is that 
the TxDOT tool kit (available to consultants, local government staff, 
and the public) provides training opportunities for documentation and 
record keeping. When a consultant raises a question or concern in 
response to a TxDOT document review comment, staff can refer to the 
tool kit in order to support the TxDOT position. Finally, the ENV 
Director said in his interview that the tool kits contribute to 
increased consistency throughout the process (e.g., comments on 
documents, format, and content), resulting in a more predictable 
project development process. That consistency is appreciated across the 
board in Districts and LPAs.

Audit #2 Observation #14

    The FHWA recognizes that TxDOT's annual environmental conference is 
its primary outreach to Local Public Agencies (LPA) and consultants to 
address a wide array of environmental topics that reinforce existing 
and new environmental policies and procedures. However, the 2015 
conference was not well attended by LPA staff, a fact acknowledged by 
the Director of ENV in his interview. He also indicated that he was 
thinking of reaching out to large metropolitan planning organizations 
and the Association of Texas

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Metropolitan Planning Organizations in a meaningful way in coordination 
with TxDOT's training coordinator. The team also learned through 
interviews that some, especially rural District local government staff, 
were uninformed of the changes with TxDOT NEPA Assignment. The team 
encourages the Director of ENV and the training coordinator to 
implement ways to train local government staff.

Status of Observations since the Last Audit (December 2015)

Non-Compliant Observations

    Audit #1 identified two non-compliance observations. One was 
related to the application of a CE action that related to a program 
that TxDOT did not have. The TxDOT acknowledges this non-compliance 
observation and has taken corrective action to prevent future non-
compliance. Accordingly, a stand-alone noise wall project using 23 CFR 
771.117(c)(6) is no longer a possible selection of CE actions that any 
TxDOT District can make. The other was an instance where a CE 
determination was made (called a conditional NEPA approval or 
``conditional clearance'') before all environmental requirements had 
been satisfied. Since Audit #1, TxDOT has continued to make NEPA 
approvals ``conditionally,'' and those actions have been identified as 
non-compliant in this report. The TxDOT drafted an update of an SOP to 
address this issue. The FHWA expects TxDOT to prepare a corrective 
action so that its program would comply with the MOU. The FHWA will 
review the corrective action and indicate to TxDOT whether it 
satisfactorily addresses this concern. Also, FHWA requested that TxDOT 
take additional steps to prevent any future non-compliance in this 
regard.

Observations

    1. Updates to ECOS, the TxDOT File of Record
    The TxDOT ran into further delays in implementing its ECOS upgrade 
contract. The TxDOT has a plan in place that outlines five phases of 
work to be performed to upgrade ECOS over many years. Substantive ECOS 
upgrades are still pending as of the development of this draft report. 
This is leading to continued observations by FHWA, and inconsistencies 
within ECOS by TxDOT users. A lack of mandatory filing and naming 
conventions by ENV contributes to this issue. Of concern to FHWA is the 
ability for TxDOT users to potentially delete files and approvals in 
ECOS without an archive of such actions. This could be problematic as 
it differs from the FHWA's previous understanding of ECOS security 
measures in place from Audit #1.
    2. Addressing Conflicts and Disputes
    Since Audit #1, TxDOT has implemented conflict resolution training 
for its ENV and District staff. This training has been well received 
and should help prepare staff to recognize when conflicts may occur and 
to take steps to address issues before they develop into disputes. 
Interviews conducted for Audit #2 suggest that TxDOT and resource 
agency staff may need to focus on improving communication in order to 
foster and nurture relationships.
    3. Local Public Agency Project Reviews
    This observation continues as is. The LPA were invited to the TxDOT 
Environmental Coordinators Conference (ECC), but TxDOT ENV confirmed 
that few LPAs attended. It was further noted by TxDOT that perhaps the 
ECC may not be the best training venue for LPAs that need more than 
introductory information or refreshers on NEPA related topics. 
Furthermore, some rural Districts indicated that they remain Department 
Delegate on local projects when LPAs can or should be project sponsors, 
because LPAs in the rural areas are sometimes unaware of what to do to 
develop their projects. The situation seems to be different in 
metropolitan areas where LPAs are more sophisticated and can perform 
well as project sponsors.
    4. Recording and Implementing Environmental Commitments
    The team continued to find issues with the EPIC sheet and 
commitments in Audit #2. A total of 21 instances were found where 
inconsistencies in EPIC reporting were noted. Primarily, there was the 
fundamental problem of EPICs being required (and sometimes uploaded 
under the documentation tab) for a project but a notice stating ``No 
EPICs Exist for this project'' under the EPIC tab in ECOS was 
frequently found. The TxDOT has formed an internal team to address this 
issue.
    5. Inadequate Project Description
    The TxDOT has begun to address the issue of inadequate project 
descriptions by providing training on expectations for what should be 
in a project description in its 2015 environmental conference. The 
training instructors included individuals from FHWA and TxDOT. The team 
continued to find project descriptions that were unclear or may not 
have supported the decisions made in project files. The team suggests 
that TxDOT apply QA/QC to this issue. The TxDOT acknowledges this is a 
continuing issue and has indicated that it will continue to address it 
in NEPA chats and training.
    6. Project File Organization and Completeness Issues
    The team continued to find outdated terms in project files (e.g., 
BCE/PCE) and have occasional difficulty in finding information in 
project files with no consistent file labeling protocol or expectations 
for where to find specific information. For example, resource agency 
coordination letters were sometimes found as individual documents in a 
file and other times they were appended to a NEPA document. The TxDOT 
indicated that it formed a workgroup in the summer of 2015 that meets 
to address inconsistencies regarding filing and naming conventions.
    7. Public Disclosure of ECOS Project Records
    The TxDOT has not taken any actions on this item other than to make 
information available upon request or at public meetings/hearings for a 
project.
    8. No EAs or EIS Being Reviewed by the SAB Team
    The team learned that SAB only performs post decision (QA) reviews 
and provides feedback to both the Districts directly and the Corrective 
Action Team at ENV to consider if any process or procedural changes are 
needed. The FHWA believes there is a function that SAB or others could 
serve before the decision is made that would add value to the upfront 
QC process for both document content and procedural compliance. The 
FHWA understands the expected benefits of Core Team reviews but 
believes something more is needed and it would be helpful to Districts.
    9. Sampling Approach for QA/QC
    The team learned in Audit #2 that there is a risk-based sampling 
method applied to choosing projects types that are selected for more 
detailed reviews, and that the number of staff available for the 
reviews dictates the number of reviews that are completed. The review 
sample is based on a computer generated model that chooses some of the 
projects randomly. There is no established sampling methodology for 
self-assessing the effectiveness of TxDOT's standards or guidance. The 
FHWA would like to see more clarification from TxDOT on the 
effectiveness of its current practice and be provided data to verify 
TxDOT claims of compliance.
    10. Confusion in Understanding Quality Control, Quality Assurance, 
and Self-Assessment
    Most of the confusion within TxDOT regarding these terms has been 
cleared up. The FHWA believes that additional

[[Page 54658]]

internal (QC) review (beyond the Core Team concept for project 
documentation) for NEPA process-related checks by TxDOT before the 
decisions were made would add value to the process, help ensure NEPA 
compliance, and assist with FHWA's requirement to make informed and 
fully compliant project authorization decisions.
    11. Narrow Definition of the QA/QC Performance Measure
    The team's Observation #11 was that the QA/QC measure for NEPA 
decisions focused only on EA and EIS projects. The team urges TxDOT to 
consider evaluating a broader range of NEPA related decisions 
(including, but not limited to CEs, re-evaluations, Section 4(f), and 
STIP/Transportation Improvement Program (TIP) consistency). Note that 
the recurring non-compliance observations occurred on CEs with either 
STIP/TIP or Section 4(f) items that were not ready for a decision to be 
made. In recent interviews with TxDOT staff, the team learned that 
TxDOT will examine other measures on an ongoing basis for internal use. 
The team believes that if the QA/QC refocuses attention not only on the 
documentation, but also on the required sequential NEPA process related 
items, that improved efficiencies related to TxDOT's NEPA decision and 
FHWA project authorization could result. The team believes that a more 
relevant focus on process could potentially help avoid non-compliance 
actions by TxDOT under the MOU and FHWA non-compliance observations in 
future audits.
    12. Performance Measure Utility
    Observation #12 was that the utility of several of the performance 
measures was difficult to determine. Also, the team was concerned that 
the measure for the TxDOT relationship with the public may be too 
limited by focusing on the number of complaints. Through recent 
interviews, the team learned that TxDOT staff agree with FHWA's 
concerns about utility. Quantifying changes in relationships with the 
public or agencies is possible, but the number is hard to interpret. 
Regarding the survey of agencies, TxDOT staff indicated that they did 
not know if agencies have higher expectations of TxDOT compared with 
other agencies. Considering the TxDOT relationship with the public, 
staff told the team that, during the preparation of their application, 
they considered various sorts of surveys and social media outreach. 
Given the cost of these approaches, TxDOT was not convinced of their 
utility and so decided not to use any of them. This leaves the 
performance measure difficult to address for TxDOT and may be a 
recurring FHWA observation until it is resolved.
    13. TxDOT Reliance on the California Department of Transportation 
(Caltrans) Training Plan
    The team's Observation #13 was that the Caltrans training plan, 
which served as a basis for the TxDOT training plan, may not adequately 
meet the needs of TxDOT. The team urged TxDOT to consider other State 
DOT approaches to training. The TxDOT staff said in a recent interview 
that they had reviewed training plans from Virginia, Ohio, Alaska, and 
Florida. They also indicated that prior to Audit #2, TxDOT had 
completed a survey of staff in District offices and at ENV to assess 
training needs. The team was told that the surveys would be used to 
update the training plan in the spring of 2016.
    14. Adequacy of Training for non-TxDOT Staff
    Observation #14 urged TxDOT to assess whether the proposed training 
approach for non-TxDOT staff (relying heavily upon the annual ECC) is 
adequate and responsive enough to address a need to quickly disseminate 
newly developed procedures and policy. Through interviews, the team 
learned that TxDOT does not prioritize training classes specifically 
for non-TxDOT staff. The Director of ENV acknowledged that the training 
session at the recent ENV conference for LPA staff was not well 
attended and was thinking of reaching out to large planning 
organizations. The TxDOT concluded that its priority for training is 
first for TxDOT staff internally (ENV and District staff), second for 
consultants that TxDOT hires for environmental work, and third for 
LPAs. In years three and beyond of the TxDOT NEPA Assignment, the 
training plan may start to focus on the second, and eventually third, 
priority groups of individuals.
    15. What Training is Mandatory
    Observation #15 resulted in a team suggestion that the progressive 
training plan clearly identify the training required for each job 
classification. The TxDOT training coordinator told the team that the 
progressive training plan will address training required to meet State 
law (16 hours of training) and job task certification. This plan will 
be developed at the end of 2015.
    16. Training Plan, Consideration of Resource Agency Recommendations
    The team learned in a recent interview that in the fall of 2015 (as 
in the fall of 2014), TxDOT subject matter experts planned to reach out 
to resource agencies to ask what training they would like to see 
conducted for TxDOT staff. Previously, USACE staff said that TxDOT 
needed Section 404 training. The TxDOT scheduled and completed Section 
404 training in two different locations during October 2015. The TxDOT 
will continue to schedule Section 404 training.

Finalization of Report

    The FHWA received one response from the TxDOT during the 30-day 
comment period for the draft report. The team has considered the TxDOT 
comments in finalizing this audit report. The TxDOT's comments reflect 
actions it has taken in response to the report's observations. The FHWA 
will address these follow up actions in the third audit report, now in 
preparation. Only one comment has resulted in a non-substantial change 
in this report. Observation #1 mentioned a possible communication issue 
with the THC. The FHWA agrees that the comment may not reflect the 
official position of the agency and has deleted the sentence mentioning 
the THC.
    The TxDOT made several comments disputing non-compliance 
observation #1. Representatives from FHWA and TxDOT met to discuss non-
compliance observation #1 on May 11, 2016. The TxDOT, via an email, has 
subsequently decided to withdraw their comments on this non-compliance 
observation. The final report discussion of non-compliance observation 
#1 has not been revised.
    The FHWA has finalized the draft Audit #2 report previously 
published in the Federal Register without substantive changes.

[FR Doc. 2016-19476 Filed 8-15-16; 8:45 am]
 BILLING CODE 4910-22-P