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Surface Transportation Project Delivery Program; Alaska Department of Transportation Third Audit Report

American Government

Surface Transportation Project Delivery Program; Alaska Department of Transportation Third Audit Report

Nicole R. Nason
Federal Highway Administration
7 December 2020

[Federal Register Volume 85, Number 235 (Monday, December 7, 2020)]
[Pages 78914-78918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-26790]



Federal Highway Administration

[FHWA Docket No. FHWA-2020-0014]

Surface Transportation Project Delivery Program; Alaska 
Department of Transportation Third Audit Report

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

ACTION: Notice; Request for comment.


SUMMARY: The Moving Ahead for Progress in the 21st Century Act (MAP-21) 
established the Surface Transportation Project Delivery Program that 
allows a State to assume FHWA's environmental responsibilities for 
environmental review, consultation, and compliance under the National 
Environmental Policy Act (NEPA) for Federal 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. This program mandates annual audits during 
each of the first 4 years of State participation to ensure compliance 
with program requirements. This notice announces and solicits comments 
on the third audit report for the Alaska Department of Transportation 
and Public Facilities (DOT&PF).

DATES: Comments must be received on or before January 6, 2021.

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 www.regulations.gov. 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 can 
search the electronic form of all comments in any 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). 
The DOT posts these comments, without edits, including any personal 
information the commenter provides, to www.regulations.gov, as 
described in the system of records notice (DOT/ALL-14 FDMS), which can 
be reviewed at www.dot.gov/privacy.

FOR FURTHER INFORMATION CONTACT: Mr. David T. Williams, Office of 
Project Development and Environmental Review, (202) 366-5074, 
David.Williams@dot.gov, or Mr. Jay Payne, Office of the Chief Counsel, 
(202) 366-4241, James.O.Payne@dot.gov; Federal Highway Administration, 
U.S. 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.


Electronic Access

    An electronic copy of this notice may be downloaded from the 
specific docket page at www.regulations.gov.


    The Surface Transportation Project Delivery Program, codified at 23 
U.S.C. 327, commonly known as the NEPA Assignment Program, allows a 
State to assume FHWA's environmental responsibilities for review, 
consultation, and compliance for Federal highway projects. When a State 
assumes these Federal responsibilities, the State becomes solely liable 
for carrying out the responsibilities it has assumed, in lieu of FHWA. 
The DOT&PF published its application for NEPA assumption on May 1, 
2016, and made it available for public comment for 30 days. After 
considering public comments, DOT&PF submitted its application to FHWA 
on July 12, 2016. The application served as the basis for developing a 
memorandum of understanding (MOU) that identified the responsibilities 
and obligations that the DOT&PF would assume. The FHWA published a 
notice of the draft MOU in the Federal Register on August 25, 2017, 
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 
DOT&PF considered comments and proceeded to execute the MOU. Effective 
November 13, 2017, DOT&PF assumed FHWA's responsibilities under NEPA, 
and the responsibilities for NEPA-related Federal environmental laws 
described in the MOU.
    Section 327(g) of title 23, U.S.C., requires the Secretary to 
conduct annual audits to ensure compliance with the MOU during each of 
the first 4 years of State participation and, after the fourth year, 
monitor compliance. The FHWA must make the results of each audit 
available for public comment. The second audit report of DOT&PF 
compliance was finalized on February 25, 2020. This notice announces 
the availability of the third audit report for DOT&PF and solicits 
public comment on same.

    Authority: Section 1313 of Public Law 112-141; Section 6005 of 
Public Law 109-59; 23 U.S.C. 327; 23 CFR 773.

Nicole R. Nason,
Administrator, Federal Highway Administration.

Surface Transportation Project Delivery Program, FHWA's Audit of the 
Alaska Department of Transportation

April 6-10, 2020

Executive Summary

    This report summarizes the results of the Federal Highway 
Administration's (FHWA) third audit of the Alaska Department of 
Transportation and Public Facilities' (DOT&PF) assumption of FHWA's 
project-level National Environmental Policy Act (NEPA) responsibilities 
and obligations pursuant to a 23 U.S.C. 327

[[Page 78915]]

Memorandum of Understanding (MOU). The DOT&PF entered the NEPA 
Assignment Program after more than 8 years of experience making FHWA 
NEPA Categorical Exclusion (CE) determinations pursuant to 23 U.S.C. 
326 (beginning September 22, 2009).
    Alaska's MOU became effective on November 13, 2017. Currently, 
FHWA's NEPA responsibilities in Alaska include the oversight and 
auditing of the DOT&PF's execution of the NEPA Assignment Program and 
certain activities excluded from the MOU, such as the NEPA reviews of 
projects advanced by direct recipients other than the DOT&PF.
    The FHWA audit team began to prepare for the site visit in November 
2019. The audit team reviewed DOT&PF's NEPA project files, DOT&PF's 
response to FHWA's pre-audit information request (PAIR), and considered 
DOT&PF's Self-Assessment Report. On April 6-10, 2020, the audit team 
conducted a completely virtual site visit rather than its traditional 
on-site visit due to national health emergency travel restrictions.
    The audit team appreciates DOT&PF's responsiveness to the questions 
regarding the status of general observations from the second audit. 
This report concludes with a status update for FHWA's observations from 
the second audit report.
    The audit team finds DOT&PF in substantial compliance with the 
terms of the MOU in meeting the responsibilities it has assumed. This 
report does not identify any non-compliance observations; it does 
identify two general observations and three successful practices.


    The NEPA Assignment Program allows a State to assume FHWA's 
environmental responsibilities for review, consultation, and compliance 
for highway projects. This program is codified at 23 U.S.C. 327. When a 
State assumes these Federal responsibilities for NEPA project 
decisionmaking, the State becomes solely responsible and solely liable 
for carrying out these obligations in lieu of and without further NEPA-
related approval by FHWA.
    The FHWA assigned responsibility for making project NEPA approvals 
and other related environmental decisions for highway projects to 
DOT&PF. The MOU documents these responsibilities. Examples of 
responsibilities DOT&PF has assumed in addition to NEPA include Section 
7 consultation under the Endangered Species Act and consultation under 
Section 106 of the National Historic Preservation Act.
    This is the third of four required annual audits pursuant to 23 
U.S.C. 327(g) and Part 11 of the MOU. The FHWA uses audits as the 
primary mechanism to oversee DOT&PF's compliance with the MOU and the 
NEPA Assignment Program requirements. This includes ensuring compliance 
with applicable Federal laws and policies, evaluating DOT&PF's progress 
toward achieving the performance measures identified in Section 10.2 of 
the MOU, and collecting information needed for the Secretary's annual 
report to Congress. The FHWA must present its audit results in a report 
and make it available for public comment in the Federal Register.
    The audit team included NEPA subject matter experts from FHWA 
Alaska Division Office, the Chief Counsel's Office, the Resource 
Center, and Headquarters Office of Project Development & Environmental 
Review and Infrastructure.

Scope and Methodology

    The audit team examined a sample of DOT&PF's NEPA project files, 
DOT&PF responses to the PAIR, and DOT&PF's Self-Assessment Report. The 
audit team also interviewed resource agencies and DOT&PF staff and 
reviewed DOT&PF policies, guidance, and manuals pertaining to NEPA 
responsibilities. All reviews focused on objectives related to the six 
NEPA Assignment Program elements: Program Management, Documentation and 
Records Management, Quality Assurance/Quality Control (QA/QC), 
Training, Performance Measures, and Legal Sufficiency.
    Project File Review: To consider DOT&PF staff adherence to program 
procedures and Federal requirements, the audit team selected a sample 
of individual project files for which the environmental review had been 
completed. The audit team evaluated DOT&PFs compliance with assumed 
responsibilities and adherence to their own processes and procedures 
for project-level environmental decisionmaking. The audit team did not 
evaluate DOT&PF's project-specific decisions. The 54 sampled files 
included programmatic CEs (actions approved in the regional offices as 
noted in DOT&PF's November 2017 NEPA Assignment Categorical Exclusion 
guidance), CEs and Environmental Assessments (approved in the Statewide 
Environmental Office (SEO)), and re-evaluations (approved by the same 
office as the original environmental document).
    PAIR Review: The audit team reviewed DOT&PF's responses to the 
PAIR, which consisted of 32 questions about specific elements in the 
MOU that DOT&PF must implement. The audit team used these responses to 
develop specific follow-up questions for interviews with DOT&PF staff.
    DOT&PF Self-Assessment Review: The audit team reviewed DOT&PF's 
January 2020 Self-Assessment Report and used it to develop specific 
follow-up questions for interviews with DOT&PF staff. The NEPA 
Assignment Program MOU Section 8.2.5 requires the DOT&PF to conduct 
annual self-assessments of its QA/QC procedures and performance.
    Interviews: The audit team conducted 21 interviews with DOT&PF 
staff. Interviewees included staff from each of DOT&PF's three regional 
offices and its SEO. The audit team invited DOT&PF staff and middle 
management to participate in interviews to ensure they represented a 
diverse range of staff expertise, experience, and program 
    In addition, the audit team conducted two phone interviews of 
attorneys with the Alaska Department of Law and five phone interviews 
with staff at the U.S. Army Corps of Engineers and the National Marine 
Fisheries Service (NMFS).
    Policy/Guidance/Manual Review: Throughout the document reviews and 
interviews, the audit team verified information on DOT&PF's NEPA 
Assignment Program including DOT&PF policies, guidance, manuals, and 
reports. This included the Environmental Program Manual (EPM), the NEPA 
Assignment QA/QC Plan, the NEPA Assignment Program Training Plan, and 
the NEPA Assignment Self-Assessment Report.

Overall Audit Opinion

    This report identifies two observations and three successful 
practices. The audit team finds DOT&PF is substantially in compliance 
with the provisions of the MOU, has carried out the environmental 
responsibilities it assumed through the NEPA Assignment Program, and 
has taken steps to address observations identified in the second audit.

Non-Compliance Observations

    The audit team did not make any non-compliance observations in the 
third audit.

Observations and Successful Practices

    This section summarizes the audit team's observations of DOT&PF's 
NEPA Assignment Program implementation,

[[Page 78916]]

and DOT&PF's successful practices. ``Observations'' are items the audit 
team would like to draw DOT&PF's attention to, which may benefit from 
revisions to improve processes, procedures, or outcomes. The DOT&PF may 
have already taken steps to address or improve upon the audit team's 
observations, but at the time of the audit they appeared to be areas 
where DOT&PF could make improvements. ``Successful practices'' are 
positive results that FHWA would like to commend DOT&PF on developing. 
These may include ideas or concepts that DOT&PF has planned but not yet 
implemented. Successful practices and observations are described under 
the six MOU topic areas: Program Management, Documentation and Records 
Management, QA/QC, Training, Performance Measures, and Legal 
    This audit report provides an opportunity for DOT&PF to take 
further actions to improve their program. The FHWA will consider the 
status of areas identified for potential improvement in this audit's 
observations as part of the scope of the fourth audit. The fourth audit 
report will include a summary discussion that describes progress since 
this audit.

Program Management

    Program Management includes the overall administration of the NEPA 
Assignment Program. The audit team noted the following successful 
practices and observations related to Program Management.

Successful Practice #1: Consultation With Resource Agencies

    The review team interviewed five staff from the U.S. Army Corps of 
Engineers (USACE) and three staff from NMFS. Under Section 3.2.1 of the 
MOU, the State assumed the DOT Secretary's responsibilities for highway 
projects under NEPA for environmental review, reevaluation, 
consultation, or other actions required under the Endangered Species 
Act, the Clean Water Act, and other environmental laws. The audit 
teams' assessment of DOT&PF's compliance with consultation and 
permitting requirements under this section of the MOU resulted in the 
following five conclusions:
    1. DOT&PF is submitting complete and accurate information to both 
the USACE and NMFS for consultation and permitting requirements.
    2. DOT&PF is very responsive when agencies request additional 
information or revisions.
    3. DOT&PF submits comprehensive and timely monitoring reports when 
they are required for projects.
    4. DOT&PF has improved their oversight of construction contractors' 
adherence to USACE permit conditions. The DOT&PF has self-reported 
permit violations and worked with the USACE to remedy the situation.
    5. DOT&PF has a good working relationship with USACE and NMFS. Some 
of the DOT&PF regions have set up regular meetings with the agencies to 
foster relationships and enhance communication. Resource agency 
interviews revealed that they think those meetings are helpful and 
would like them to continue.
    The USACE interviews identified an opportunity to increase the 
efficiency of interagency coordination. The DOT&PF should more clearly 
identify in the permitting package whether a project is a Federal 
undertaking or not, and identify what coordination it has completed.

Observation #1: Self-Assessment Procedures

    Section 8.2.5 of the MOU (Monitoring and Oversight), requires 
DOT&PF to perform annual self-assessments of its QA/QC process and 
performance to determine if the process is working as intended. Section 
10.1.3 of the MOU (Performance Measurement) requires DOT&PF to collect 
and maintain data related to the attainment of performance measures, 
monitor progress towards meeting performance measures, and include its 
progress in a self-assessment. The DOT&PF's 2018 NEPA Assignment 
Program Self-Assessment Procedures require that SEO develop the 
preliminary and final self-assessment report through coordination with, 
and input from, the Regional Environmental Managers. The audit team 
found that DOT&PF did not develop the January 2020 Self-Assessment 
report in accordance with their procedures, nor distributed the final 
report to the Regions. The audit team based this finding on interviews.

Documentation and Records Management

    Documentation and Records Management includes maintaining project 
files and other recordkeeping (whether hardcopy or electronic) 
pertaining to DOT&PF's discharge of the responsibilities it has assumed 
under the 23 U.S.C. 327 Program. From November 1, 2018, through October 
31, 2019, DOT&PF made 287 project decisions. Through employing both 
random and judgmental sampling procedures, the audit team identified 54 
project decisions to review, and did not identify any systemic issues 
warranting an observation.

Quality Assurance/Quality Control

    Under Section 8.2.4 of the MOU, DOT&PF agreed to carry out regular 
QA/QC activities in accordance with the MOU and DOT&PF procedures 
established to implement the NEPA Assignment Program. Based on the 
information evaluated by the audit team, DOT&PF is conducting regular 
QA/QC activities in accordance with the MOU, though opportunities exist 
to utilize trend data to continue improving the program.


    Under Sections 12.1 and 12.2 of the MOU, DOT&PF committed to 
implementing training necessary to carry out the environmental 
responsibilities assumed under the NEPA Assignment Program. The DOT&PF 
also committed to assessing its need for training, developing a 
training plan, and updating the training plan on an annual basis.

Successful Practice #2: Central Region Organizational Cross-Training 

    The central region has recently kicked off an organizational cross-
training initiative, called ``Share-The-Knowledge,'' that provides 
opportunities for environmental analysts to get exposure to informal 
training in other functional areas, such as transportation planning, 
realty, safety, highway design, operations, and construction. Cross-
training provides a general awareness of how and to what extent NEPA 
reviews can relate to project planning and inform Federal-aid highway 
project development.

Successful Practice #3: Taking Advantage of Training Opportunities

    Based on interviews, the audit team learned the South Coast Region 
invited Federal resource agency representatives to monthly meetings to 
encourage knowledge sharing and partnering. During a time when training 
budgets are limited, FHWA encourages DOT&PF to continue to take 
advantage of training opportunities that may be made available by 
Federal partners. One example was when DOT&PF staff participated in the 
recent NMFS acoustic training in Anchorage.

Performance Measures

    The DOT&PF continues to collect, maintain, and develop data towards 
monitoring its performance as required by Section 10.1.3 of the MOU. 
The audit

[[Page 78917]]

team noted the following observation related to Performance Measures.

Observation #2: Assessing Resource Agency Communication

    Section 10.2.1 C. of the MOU requires DOT&PF to ``Assess change in 
communication among DOT&PF, Federal and State agencies, and the public 
resulting from assumption of responsibilities under this MOU.'' The MOU 
allows DOT&PF to determine the method it will use to assess this 
change. The DOT&PF selected to use an annual resource agency poll. The 
DOT&PF identified this measure in its DOT&PF NEPA Assignment Program 
Performance Measures document located on its website. In addition, 
DOT&PF reported in this audit, and Audits 1 and 2, that an annual 
resource poll would be the method for collecting data towards 
monitoring this measure. The DOT&PF has not used a resource agency poll 
to date. Through the audit team's review of DOT&PF's Self-Assessment, 
PAIR, and audit interviews with DOT&PF, the audit team found that a 
poll was not a useful tool to assess changes in communication. The FHWA 
recommends that the DOT&PF consider changing the method for reporting 
this measure.

Legal Sufficiency

    Since 2017, the same attorney from the Alaska Department of Law 
(Alaska DOL), Transportation Section, has been assigned to the NEPA 
Assignment program. The assigned attorney has significant experience 
with Federal-aid highway projects and the Federal environmental 
process. The attorney works directly with DOT&PF staff on project 
environmental documents. Based on the interviews, the review process 
exceeded the standard set forth in the Environmental Procedures Manual 
(EPM), with the attorney being involved early in project development, 
normally reviewing a NEPA document before receiving a formal request 
for a legal sufficiency review. During the audit period, the attorney 
reviewed one Final Section 4(f) Evaluation and issued a finding of 
legal sufficiency in August 2019. The attorney did not review an 
environmental impact statement during the audit period.
    The Alaska DOL management stated during the interviews that while 
one attorney is currently assigned to the program, should workload 
increase significantly another attorney would be assigned to NEPA work, 
perhaps through the utilization of outside counsel per 23 U.S.C. 
    Based on these observations, the audit team finds that the DOT&PF 
meets the legal sufficiency determination and staffing requirements set 
forth in the DOT&PF EPM.

Status of Observations From Audit #2 Report (April 2019)

    This section describes the actions DOT&PF has taken (or is taking) 
in response to observations made during the second audit.

Observation #1: Applicability of Existing Interagency Agreements

    Section 5.1.3 of the MOU required the DOT&PF to work with FHWA and 
the resource agencies to modify existing interagency agreements within 
6 months of the effective date of the MOU. During Audit 2, the audit 
team determined that none of DOT&PF's existing agreements applied to 
the current NEPA Assignment Program under 23 U.S.C. 327. According to 
the January 2020 Self-Assessment Report, ``DOT&PF is not currently 
pursuing agency agreements per Section 5.1.4 of the MOU regarding 
appropriate processes and procedures.''

Observation #2: DOT&PF Delegation of Authority for NEPA Approvals

    Section 3.3.1 of the MOU requires DOT&PF to make NEPA approvals (CE 
determinations, findings of no significant impact, or records of 
decision). Audit 2 revealed inconsistencies regarding the delegation of 
NEPA approvals within DOT&PF. The DOT&PF's January 2020 Self-Assessment 
states that DOT&PF will incorporate a protocol that standardizes the 
delegation authority for NEPA approval in the regions in the February 
2020 update of its EPM. The DOT&PF has not made any changes to the EPM 
since February 2018 per the DOT&PF's response to Audit 3's Pre-Audit 
Information Request. Based on interviews conducted as part of Audit 3, 
DOT&PF now plans to incorporate this protocol into the EPM in May 2020. 
Currently, each region has its own delegation process. Generally, 
DOT&PF delegates the NEPA approvals to the senior staff and 
communicates that delegation via email to affected parties. Most staff 
interviewed understand their region's delegation process and new staff 
are becoming oriented with the process.

Observation #3: Staff Capacity

    Sections 4.2.1 and 4.2.2 of the MOU outline the requirements for 
the State's commitment of resources and adequate organizational staff 
capacity. Moderate to high staff turnover has been a recurring issue 
since the MOU went into effect (Audit #1 report Observation #3 and 
Audit #2 report Observation #3). According to the January 2020 Self-
Assessment Report, ``DOT&PF's staffing levels were a concern during 
this audit period and senior staff expended considerable effort to hire 
new qualified staff and to retain current staff. As a result of this 
effort, the regional offices are now fully or near fully staffed.'' The 
DOT&PF is aware of the issue and continues to track staffing impacts on 
the NEPA Assignment Program through the QA/QC process.

Observation #4: Documentation of Environmental Commitments

    Section 5.1.1 of the MOU requires the State to follow Federal laws, 
regulations, policies, and procedures to implement the responsibilities 
assumed. Audit 2 revealed inconsistencies regarding how DOT&PF was 
documenting environmental commitments and making sure that DOT&PF 
carries the environmental commitments through the project development 
process and into construction. The DOT&PF developed written guidance on 
the documentation of environmental commitments. According to the 
January 2020 Self-Assessment Report, the guidance was implemented on 
May 5, 2019. Based on the interviews conducted as part of Audit 3, 
DOT&PF staff understood who certified that the environmental 
commitments were included in the plan, specifications, and estimates, 
as well as their role in the certification process.

Observation #5: Inconsistency in Project Termini and Statewide 
Transportation Improvement Program (STIP)

    Section 3.3.1 of the MOU requires DOT&PF, at the time of NEPA 
approval (CE determination, finding of no significant impact, or record 
of decision), to ensure that the project's design concept, scope, and 
funding is consistent with current planning documents. During Audit 2, 
the audit team found one project file with an inconsistency between 
project termini shown in a project plan and that described in the STIP, 
and similar inconsistencies in the DOT&PF's Audit 2 Self-Assessment. 
Project scope inconsistencies were not found by the file review team 
during Audit 3. The DOT&PF's Audit 3 Self-Assessment identified one 
instance of a project description discrepancy that did not affect the 
scope of the project. Regional QC efforts appear to have improved this 
issue, although DOT&PF noted in their self-assessment that using the 
STIP project description as the project scope in environmental 
documents is not possible for all projects.

[[Page 78918]]

Observation #6: Training Plan Update

    Section 12.2 of the MOU commits DOT&PF and FHWA to update the 
DOT&PF training plan annually in consultation with other Federal 
agencies as appropriate. The DOT&PF did not update its Training Plan 
prior to or during the Audit 2 process. In their response to the Audit 
3 PAIR, DOT&PF stated ``the training plan was updated on October 29, 
2019 with minor revisions to Section 5. A list of proposed training has 
been added to this section and the RD&T2 [Research, Development, and 
Technology Transfer], FHWA, and Prior Training Requests subsections 
have been removed.'' Based on the information gathered through the PAIR 
and interviews, the audit team is satisfied that the DOT&PF addressed 
the training observation from the second audit. Moving forward, DOT&PF 
committed to coordinating with the Alaska Division Office for future 
annual updates of the Training Plan.

[FR Doc. 2020-26790 Filed 12-4-20; 8:45 am]

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