Revision of Stewardship and Oversight Agreement Template

Revision of Stewardship and Oversight Agreement Template

Publication: Federal Register
Agency: Federal Highway Administration
Byline: Shailen P. Bhatt
Date: 13 November 2023
Subjects: American Government

, Roads & Highways

[Federal Register Volume 88, Number 217 (Monday, November 13, 2023)]
[Notices]
[Pages 77657-77664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-24960]

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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

[Docket No. FHWA-2022-0013]

Revision of Stewardship and Oversight Agreement Template

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

ACTION: Notice.

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SUMMARY: This final notice announces the availability of a revised
Stewardship and Oversight (S&O) Agreement template. The S&O Agreement
defines the roles and responsibilities of FHWA and each State
department of transportation (State DOT) with respect to project
approvals and related responsibilities under title 23, United States
Code (U.S.C.), and title 23, Code of Federal Regulations (CFR), and
documents methods that will be used for Federal-aid Highway Program
(FAHP) oversight activities. This template will be used by each of the
52 FHWA Division Offices and their respective State DOTs to develop and
execute a new S&O Agreement within 1 year of the date this notice is
published in the Federal Register.

FOR FURTHER INFORMATION CONTACT: For questions about this notice,
please contact Mr. Steve Mills, Office of Infrastructure, (502) 682-
3534, or via email at Steve.Mills@dot.gov. For legal questions, please
contact Mr. David Serody, FHWA Office of Chief Counsel, (202) 366-4241,
or via email at David.Serody@dot.gov. Office hours for FHWA are from
8:00 a.m. to 4:30 p.m. ET, Monday through Friday, except Federal
holidays.

SUPPLEMENTARY INFORMATION:

Background

In enacting 23 U.S.C. 106(c), as amended, Congress established
authority for States to enter into agreements with FHWA under which the
States carry out certain project responsibilities traditionally handled
by FHWA. Congress also recognized the importance of a risk-based
approach to FHWA oversight of the FAHP by establishing requirements in
23 U.S.C. 106(g). The S&O Agreement is a key element of FHWA's risk-
based S&O approach. The S&O Agreements are formal instruments executed
between each FHWA Division Office and its corresponding State DOT. The
S&O Agreement defines the roles and responsibilities of FHWA and the
State DOT with respect to title 23, U.S.C. project approvals and
related responsibilities, and documents methods that will be used for
FAHP oversight activities.
In response to DOT Office of Inspector General (OIG)
recommendations,\1\ FHWA revised its national S&O procedures to require
use of a uniform template for developing an S&O Agreement. In 2015,
FHWA issued the template currently in use. Each of the 52 FHWA Division
Offices and their respective State DOTs executed a new S&O Agreement
based on the 2015 S&O Agreement template.
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\1\ ``Improvements to Stewardship and Oversight Agreements Are
Needed to Enhance Federal-aid Highway Program Management,'' OIG,
DOT, Report Number MH-2013-001 (October 1, 2012), available at:
https://www.oig.dot.gov/library-item/28742.
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The FHWA began initiating updates to the 2015 S&O Agreement
template due to changes to applicable statutes and regulations and
after identifying improvements to the template. In addition, section
11307 of the Bipartisan Infrastructure Law (BIL) (Pub. L. 117-58)
directed the Secretary of Transportation to publish a template created
by the Secretary for Federal-State S&O Agreements in the Federal
Register along with a notice requesting public comment on ways to
improve the template. In accordance with this requirement, FHWA
published a notice and request for comments regarding FHWA's revised
S&O Agreement template on December 21, 2022, at 87 FR 78193.
Section 11307(c)(1) of BIL requires FHWA to consider comments
received in response to the Federal Register notice and publish a
notice in the Federal Register that (A) describes any proposed changes
to be made to the template, and any alternatives to such changes; (B)
addresses comments in response to which changes were not made to the
template; and (C) prescribes a schedule and a plan to execute a process
for implementing the changes to the template. In accordance with
section 11307(c)(3) of BIL, FHWA will modify the template as stated in
this notice and will update existing agreements with

[[Page 77658]]

State DOTs according to this template by no later than November 12,
2024.

Discussion of Comments

I. Summary

The FHWA received 10 comments in response to the notice and request
for comments from the American Association of State Highway and
Transportation Officials (AASHTO); 7 separate comments from 7 State
DOTs; Georgia (GDOT), New York (NYSDOT), Oklahoma (ODOT), South
Carolina (SCDOT), Maryland (MDOT), Texas (TxDOT), and Pennsylvania
(PennDOT); 1 joint comment from 5 State DOTs (Idaho, Montana, North
Dakota, South Dakota, and Wyoming) (``Joint States''); and 3 comments
from 1 individual. The FHWA considered each comment in publishing this
notice. The following discussion describes changes made to the proposed
template and addresses comments that did not lead to changes, in
accordance with BIL, section 11307(c)(1)(A)-(B).

II. Analysis and Response to Comments

Comments and responses are listed by section of the proposed
template. General comments are listed after the section comments.

Section I. Background and Information

Comment: The SCDOT commented on a proposed change to the first
sentence of section I. In the 2015 template, the FAHP was described as
``a federally-assisted program of Stateselected projects.'' The FHWA
proposed changing this language to read: ``The Federal-aid Highway
Program (FAHP) provides for a Federally-assisted State program.'' The
SCDOT commented that the proposed revision could be misconstrued and
recommended that the language used in the 2015 template be restored.
The FHWA Response: The language in the 2015 template did not
account for other entities that are involved in the selection of
projects, such as metropolitan planning organizations, and FHWA does
not believe that defining the FAHP as a ``federally-assisted program of
State-selected projects,'' as stated in the 2015 template, is
completely accurate. The FHWA, however, agrees with SCDOT that the
proposed language could still be misconstrued and is deleting the
sentence ``The Federal-aid Highway Program (FAHP) provides for a
Federally-assisted State program'' from the proposed template entirely.
A general description of the FAHP is not necessary for S&O agreements.

Section II. Intent and Purpose of Agreement

No comments were received related to section II.

Section III. Permissible Areas of Assumption Under 23 U.S.C. 106(c)

Comment: The MDOT recommended revising the description of
``design'' used in section III.A of the template to be consistent with
what MDOT claimed was the latest guidance from FHWA on design. Instead
of stating that design ``includes preliminary engineering, engineering,
and design-related services directly relating to the construction of a
FAHP-funded project, including engineering, design, project development
and management, construction project management and inspection,
surveying, mapping (including the establishment of temporary and
permanent geodetic control in accordance with specifications of the
National Oceanic and Atmospheric Administration), and architectural-
related services,'' MDOT suggested that the template state that design
``includes preliminary design, final design, and design-related
services directly relating to the construction of a FAHP-funded
project, including design, project development and management,
construction project management and inspection, surveying, mapping
(including the establishment of temporary and permanent geodetic
control in accordance with specifications of the National Oceanic and
Atmospheric Administration), and architectural/engineering-related
services.''
The FHWA Response: The FHWA does not agree with this comment. The
description of design used in section III.A of the proposed template
closely matches the description of activities under the definition of
``construction'' in 23 U.S.C. 101(a)(4)(A). The FHWA notes that some
changes are needed to align the definition of ``design'' in section
III.A of the template with the definition used in 23 U.S.C.
101(a)(4)(A), which was revised by BIL, section 11103(1)(A) to include
``assessing resilience.'' Accordingly, FHWA has modified section III.A
of the proposed template to add the phrase ``assessing resilience'' to
the list of design activities.
Comment: The AASHTO, NYSDOT, and ODOT commented on the statement in
the last paragraph of section III of the proposed template: ``The
[State DOT] is to exercise any and all assumptions of the FHWA's
responsibilities in accordance with the Federal laws, regulations,
policies, Executive Orders, and procedures that would apply if the
responsibilities were carried out by FHWA. For all projects and
programs carried out under Title 23, the [State DOT] will comply with
Title 23 and all applicable non-Title 23 Federal-aid program
requirements.'' These commenters objected to State DOTs being required
to follow Executive Orders, claiming that before FHWA implements an
Executive Order, FHWA must implement the Executive Order through a
directive or policy; that some Executive Orders require further
analysis before implementation; and that specifically including mention
of Executive Orders is unnecessary because these Orders will be covered
by FHWA policies. The ODOT commented that including ``procedures'' was
unnecessary because it claimed that FHWA policies are already covered
by the template's mention of ``regulations'' and ``policies.'' The ODOT
further claimed that requiring the assumption of responsibilities in
accordance with FHWA internal procedures is inconsistent with the
requirement in section 11307(e)(1) of BIL that FHWA ``shall not enforce
or otherwise require a State to comply with approval requirements that
are not required by Federal law (including regulations) in a Federal-
State stewardship and oversight agreement.'' \2\ Finally, AASHTO
suggested removing mention that a State DOT is to exercise assumed
responsibilities in accordance with all applicable non-Title 23
Federal-aid program requirements, as AASHTO claimed that S&O Agreements
are only executed under Title 23, U.S.C.
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\2\ The ODOT's comment refers to ``Section 11306(c)(3)(e)'' of
BIL. ODOT, Comment Letter on Notice of Revision of Stewardship and
Oversight Template (Feb. 21, 2023), at 3, https://downloads.regulations.gov/FHWA-2022-0013-0010/attachment_1.pdf.
Because BIL does not contain a section 11306(c)(3)(e) and the
statutory language ODOT quotes is from BIL section 11307(e)(1), FHWA
assumes that ODOT intended to cite section 11307(e)(1) in its
comment.
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The FHWA Response: The FHWA does not agree with these comments.
When a State DOT performs an assumed FHWA responsibility, they perform
the responsibility as though it was performed by FHWA. This includes
following applicable Executive Orders (E.O.), FHWA procedures, and non-
Title 23 Federal-aid program requirements. An alternative
interpretation would mean that different requirements would apply to
projects based on whether a State DOT assumes a responsibility from
FHWA or whether FHWA takes on that responsibility itself, which FHWA
does not believe is the intent of 23 U.S.C. 106(c).

[[Page 77659]]

In addition, FHWA disagrees with several assumptions made by these
commenters. In terms of EOs, FHWA is not always required to issue a
directive or policy to implement an E.O. The EOs may, in certain cases,
have the force of law, with agencies then implementing those EOs. See
Ass'n for Women in Science v. Califano, 566 F.2d 339, 344 (D.C. Cir.
1977). In addition, FHWA does not believe it is accurate to assume that
all future EOs will inherently be covered by other FHWA policies. The
FHWA also disagrees with ODOT's comment that including a requirement to
comply with ``procedures'' in addition to Federal regulations and
policies in section III is unnecessary. This comment relies on
specific, legally significant definitions that ODOT ascribes to the
words ``policies'' and ``procedures,'' but these definitions do not
have a basis in Federal law. The language at issue reflects FHWA's
intent that when a State DOT assumes an FHWA responsibility that is
described in an FHWA policy, procedure, or regulation, the same
requirements that would apply if FHWA maintained that responsibility
will apply to the State DOT. Finally, FHWA disagrees with ODOT that
requiring the assumption of responsibilities in accordance with FHWA
procedures is inconsistent with section 11307(e)(1) of BIL. That
section refers to ``approval requirements,'' and carrying out
assumptions of FHWA responsibilities in accordance with FHWA policies
does not necessarily involve FHWA approvals.

Section IV. Assumption of Responsibilities for Federal-Aid Projects on
the NHS

Comment: The AASHTO and ODOT commented that stewardship and
oversight plans for specific projects, which are mentioned in sections
IV, V, and VI, are not well defined in the template and the template
does not provide any limits on the scope, content, or frequency with
which these plans might be used. These commenters stated that these
plans could allow the relevant FHWA Division Office, at its sole
discretion, to supersede the delegation of responsibilities to the
State for specific projects or even entire programs. Commenters
recommended that more detail be provided on these plans, including why
and how often a FHWA Division Office would supersede the delegation of
responsibilities to the State, the scope of these plans, and their
content. These commenters further argued that the State DOT should have
input into the development of these plans.
The FHWA Response: The FHWA agrees that clarification is needed on
when these plans may be used, their scope, and content. To address
concerns around why and how often these plans might be implemented,
FHWA is adding a statement to section VI stating that projects will be
selected for risk-based FHWA project involvement and S&O activities
``based on a risk assessment and the responses to identified threats
and opportunities.'' In response to concerns over the ambiguous scope
of these S&O plans, FHWA is including language in section VI.D that
these plans may, in some instances such as responses to elevated risks,
supersede responsibilities a State DOT would otherwise assume from FHWA
on a project-by-project basis. In terms of content, as now described in
section VI.D, the plan will include documented actions that the FHWA
Division Office will undertake to respond to identified risks.
In addition, in terms of allowing States to have input into the
development of these project specific S&O plans, FHWA agrees that good
communication between FHWA and State DOTs is important, and FHWA
Division Offices will continue to seek and consider State DOT input in
the process. However, FHWA does not believe that adding language to the
template that requires State DOT input in the development of these
plans would be appropriate. The FHWA intends for project specific S&O
plans to apply an additional layer of oversight over State DOTs when
needed. The FHWA does not believe it appropriate to have the State
DOTs, who are the subject of such oversight, to play a substantial role
in determining how FHWA exercises its oversight duties. To make this
point clear, FHWA is revising language in sections IV.B and V.B to
state that S&O plans are ``developed by'' the FHWA rather than merely
being ``adopted by'' the FHWA, as was stated in the proposed template.
Comment: The Joint States suggested that FHWA clarify that a
State's assumption of FHWA responsibilities is superseded ``when and
only to the extent'' that it is superseded by provisions of a
stewardship and oversight plan.
The FHWA Response: The FHWA agrees that clarification is needed.
The FHWA modified sections IV, V, and VI to clarify that program wide
assumptions are superseded by S&O plans for specific projects only on a
``project-by-project basis'' by provisions contained in the S&O plan.
Comment: The Joint States also commented that the proposed
provision regarding high-risk categories that are designated in
accordance with 23 U.S.C. 106(c)(4) should be revised to clarify the
applicability of such a designation and that FHWA should better define
the extent that a high-risk designation supersedes a State's general
assumption of FHWA's responsibilities.
The FHWA Response: The FHWA agrees that clarification is needed.
The FHWA modified section IV.C to clarify the applicability of high-
risk categories. A State DOT may not assume responsibilities for
Interstate projects in a designated high-risk category, as laid out in
23 U.S.C. 106(c)(4). While FHWA has not designated any high-risk
categories to date, if FHWA makes a future high-risk designation that
applies to a State, that designation will immediately supersede the
assumptions of responsibilities in that State's S&O Agreement only to
the extent of that high-risk designation.

Section V. Assumption of Responsibilities for Federal-Aid Projects Off
the NHS

[[Page 77660]]

may be different for different projects and may change from time to
time.

Section VI. FHWA Oversight Program Under 23 U.S.C. 106(g)

Comment: As stated above when discussing comments made regarding
section IV, several commenters raised concerns related to the
stewardship and oversight plans mentioned in sections IV, V, and VI.
The FHWA Response: The FHWA repeats the response made above when
discussing comments regarding section IV. In section VI, FHWA is
clarifying that FHWA Division Offices select projects for a S&O plan
based on a risk assessment and the responses to identified threats and
opportunities. The FHWA Division Office then documents actions that it
will undertake to respond to the risks in the S&O plan. In section VI.D
FHWA is also clarifying that for the selected projects, the plan
supersedes the assumption of project approval actions under Attachment
A.
Comment: The AASHTO, MDOT, ODOT, an individual, and the Joint
States commented on Attachment B and the description of Attachment B
included in section VI.B. Commenters recommended that a list of
documents required by regulation or statute be provided and that
clarification is needed regarding: (a) the documents that are intended
for inclusion in Attachment B; (b) FHWA approval of documents included
in Attachment B; and (c) how to handle updating documents included in
Attachment B.
The FHWA Response: Attachment B is intended to list manuals,
agreements and other control, monitoring, and reporting documents the
State DOT uses on Federal-aid projects. The FHWA intends to provide a
listing of documents that are required to be submitted to or approved
by FHWA based on statute or regulation, with instructions to aid State
DOTs and FHWA Divisions in developing Attachment B. Each Attachment B
must include, at a minimum, the list of documents identified by FHWA
that are required to be submitted to or approved by FHWA based on
statute or regulation, and, based upon an agreement between the State
DOT and FHWA Division Office, any other documents used on Federal-aid
projects. The FHWA is adding language to this effect in section VI.B
and to the instructions in Attachment B.
Finally, with respect to updating documents included in Attachment
B, the format of Attachment B is optional and there are several
acceptable ways of handling updated documents. Attachment B can be
updated as a ``minor revision'' in accordance with section VIII.B.2 to
indicate an updated document. Alternatively, the documents can be
listed as ``current version'' without indicating an approval date or
version. The format should be agreed to by the State DOT and its
respective FHWA Division Office.
Comment: The PennDOT commented that the language describing the two
options related to Stewardship and Oversight Indicators in section VI.C
is unclear and questioned the need for Stewardship and Oversight
Indicators.
The FHWA Response: Individual States and their respective FHWA
Division Offices have the option of establishing S&O Indicators to help
monitor performance of responsibilities assumed under this S&O
Agreement. These indicators are not required, as Option 2 demonstrates;
however, if the FHWA Division Office and the State wish to use them to
monitor performance, Option 1 gives them that ability.

Section VII. State DOT Oversight Responsibilities

Comment: The AASHTO, MDOT, NYSDOT, ODOT, and the Joint States all
raised concerns over the proposed template's statement that the State
DOT ``will provide information'' to the FHWA Division Office ``upon
request.'' These commenters expressed concern that this language could
lead to a large volume of requests, the request of irrelevant
information, and that this language did not specify any timeframe for
the State DOT to provide the information. Commenters suggested placing
boundaries to frame the potential extent of information requests and
that the template state that the timeframe for the State DOT to provide
the information will be agreed to by the State DOT and FHWA Division
Office.
The FHWA Response: By requiring States to provide information upon
request, FHWA is not instituting any new requirements. The FHWA has the
authority to request any and all information deemed desirable in
administering the FAHP program pursuant to 23 CFR 1.5. The FHWA will
continue to take into consideration the burden and workload associated
with requests for information and the time required to fulfill
requests, but FHWA will not add language to the template limiting
requests for information that it deems necessary for the S&O of the
FAHP or to stipulate that timeframes for requests will be agreed to by
the respective State DOT.
Comment: Many commenters expressed concerns over the paragraph in
section VII titled ``Subrecipient Oversight.'' The AASHTO, NYSDOT, and
ODOT commented that the paragraph describing State DOT responsibility
for oversight of subrecipients does not provide for a State DOT to use
a risk-based approach in monitoring subrecipients. In addition, an
individual commenter stated that the proposed language, unlike language
from the 2015 template which stated that a State DOT is responsible and
accountable for local public agency compliance with all applicable
Federal laws and requirements, would encourage State DOTs to shirk
their responsibilities under the S&O Agreement.
The FHWA Response: The FHWA agrees with the commenters suggesting
that State DOTs should be allowed to use a risk-based approach to
monitor subrecipients, and FHWA modified the paragraph describing SDOT
responsibility for oversight of subrecipients to clarify that,
consistent with the uniform administrative requirements for Federal
awards in 2 CFR part 200, State DOTs are able to use a risk-based
approach in monitoring subrecipients, so long as the State DOT ensures
that its subrecipients meet all applicable Federal requirements. As
this paragraph makes clear that a State DOT remains responsible for
ensuring that subrecipients meet all applicable Federal requirements,
FHWA disagrees with the individual commenter that this language should
be further modified.
Comment: The GDOT commented that a Stewardship and Oversight
Indicators sub-section like that included in section VI with similar
options should also be included in section VII.
The FHWA Response: The FHWA disagrees with this suggestion. The
description of S&O Indicators in section VI is sufficient and does not
need to be repeated in section VII.
For readability, FHWA is also modifying the organization of section
VII to better mirror that of other sections. The FHWA is also refining
the citations in section VII.C to better convey the precise source of
the information.

Section VIII. Agreement Execution and Modifications

Comment: The AASHTO, the Joint States, and NYSDOT all stated that
future updates to the S&O Agreement template should be prohibited
without notice and comment to be consistent with section 11307 of BIL.
The FHWA Response: The FHWA acknowledges that BIL, section 11307
requires that an update to the S&O Agreement template be published in
the Federal Register, for FHWA to provide

[[Page 77661]]

for a comment period, and for FHWA to publish a notice laying out a
final template after consideration of these comments. The FHWA complied
with this requirement by issuing a notice, along with the proposed S&O
Agreement template, for public comments on December 21, 2022 (87 FR
78193), and by publishing this notice. The FHWA does not agree,
however, that the intent of Congress in passing section 11307 was to
require any future change to the S&O Agreement template to go through
that same process. The notice and comment process in section 11307(b)-
(c) describes singular events that are tied to specific dates after the
enactment of BIL. The FHWA does not believe that the carefully crafted
process in section 11307(b)-(c) describing how the template should be
updated after the enactment of BIL reflects Congress's intent that all
future updates to the template follow this same procedure. The FHWA
will seek notice and comment through the Federal Register, as well as
through other methods as appropriate, to seek input and communicate any
potential future changes. The FHWA appreciates the feedback received
from AASHTO, SDOTs, and other transportation stakeholders and intends
to continue good communication.
Comment: The AASHTO further commented that section VIII provides
processes for making amendments and modifications to individual S&O
Agreements, which can be used to address incremental changes in Federal
requirements, rather than requiring FHWA to introduce a new template.
The AASHTO and NYSDOT stated that the template should only be updated
when there are significant, substantive changes in Federal regulations
or requirements.
The FHWA Response: The FHWA agrees that going through the amendment
process, rather than issuing a new template, may be more appropriate
for incorporating incremental changes in Federal requirements into S&O
Agreements. The FHWA anticipates that the issuance of future revisions
to the template will be based on substantive changes in Federal
regulations or requirements, such as after the adoption of a new
Federal transportation bill. There may be other times, however, where
FHWA may find it more appropriate to issue a new template rather than
to have FHWA Division Offices and State DOTs agree to amendments and
then have FHWA process each amendment in accordance with section
VIII.B.2.
Comment: The Joint States commented that section VIII.B.2 should be
titled ``Amendments that would not change the substance of the
template'' instead of just ``Amendments'' and further commented that
this section should be revised to state that Amendments ``would not
change the substance of the template.''
The FHWA Response: The FHWA does not find these changes necessary.
To start, amendments are between the State DOT and FHWA Division
Office. While they may change the content of that specific S&O
Agreement, they would not affect the S&O Agreement template. In
addition, FHWA believes that it is appropriate for amendments to make
substantive changes to an individual S&O Agreement. Without this
ability, it is unclear how individual S&O Agreements could be changed
to account for the circumstances of specific States. The FHWA observes
that section VIII.B.1 provides an opportunity for a State DOT and its
division office to make minor, non-substantive changes to the S&O
Agreement.
Comment: The AASHTO, the Joint States, and NYSDOT also objected to
language in proposed section VIII.C which would have required an S&O
Agreement be replaced in its entirety at the request of the FHWA Office
of Infrastructure. The commenters stated that this provision allows
FHWA too much authority to unilaterally make changes without notice or
comment and is inconsistent with the intent of section 11307 of BIL.
The FHWA Response: As previously stated, FHWA does not believe that
section 11307 of BIL requires that additional future revisions to the
S&O Agreement template go through the procedure laid out in that
section. The FHWA, however, does agree that allowing the Office of
Infrastructure to unilaterally replace an S&O Agreement for any reason
may not be appropriate, as this could disrupt the delivery of the FAHP.
The FHWA has modified the proposed language to clarify the reasons a
new S&O Agreement would be required, which are changes to regulations
or statutes or upon issuance of a revised template.

Section IX. Agreement Term and Termination

Comment: The AASHTO, ODOT, SCDOT, and TxDOT all opposed the
proposed change to section IX stating that an S&O Agreement would have
a term of no greater than 6 years and that a new S&O Agreement must be
executed before the expiration of the current S&O Agreement, claiming
that there would be consequences if an S&O Agreement expires before a
new S&O Agreement is executed. Commenters suggested modifying this
provision to allow existing S&O Agreements to remain effective until a
new superseding S&O Agreement is executed.
The FHWA Response: The FHWA agrees with the commenters that a
situation in which an S&O Agreement expires could disrupt the
administration of the FAHP and should be avoided. The intent of the
proposed term was to ensure S&O Agreements are updated on a regular
basis, such as every 6 years. After reviewing the comments received,
FHWA now expects that future changes to statute and regulation will
prompt updates to S&O Agreements without the need for a set term. The
FHWA therefore agrees with commenters that this provision should be
removed.
Comment: The FHWA also proposed in section IX to allow the FHWA
Division Office to terminate an S&O Agreement at any time if the FHWA
Division Office determines that the S&O Agreement is no longer in the
public interest. The AASHTO, the Joint States, ODOT, and TxDOT all
opposed this provision. Commenters stated that a termination of an S&O
Agreement would be catastrophic to the delivery of Federal-aid projects
and programs, that the language used was vague, and that this provision
indicates a level of mistrust that does not serve to foster a
cooperative relationship needed to ensure a successful joint agreement.
These commenters argued that decisions on the termination or
replacement of an agreement should be made jointly between the State
DOT and FHWA.
The FHWA Response: The FHWA agrees with the commenters that the
termination of an S&O Agreement would have a negative impact on the
delivery of the FAHP and should be avoided. The intent of this
provision was to provide FHWA a means to expediently address an
unforeseen extraordinary circumstance that could impair the ability of
a State DOT to effectively carry out the project approvals and related
responsibilities pursuant to an S&O Agreement. Upon careful
reconsideration of the intent of this provision, FHWA acknowledges that
should such circumstances ever arise, there are other statutory and
regulatory actions FHWA may take on a project or programmatic basis to
protect the Federal interest in the S&O of the FAHP. The FHWA therefore
agrees with commenters that this provision should be removed.
Lastly, FHWA proposed section IX with a final provision that stated
that expiration or termination of an S&O Agreement would mean that the
assumption of project approvals by a State DOT would be automatically

[[Page 77662]]

revoked. Because FHWA is removing all provisions related to the
expiration or termination of an S&O Agreement, this language is
unnecessary and will be removed, which fully deletes proposed section
IX.
Attachment A. Project Responsibility Matrix
Comment: The AASHTO, NYSDOT, and ODOT commented that a distinction
has been historically made in Attachment A between the assumptions of
responsibilities on Interstate facilities and those on other National
Highway System (NHS) facilities.
The FHWA Response: The flexibility for FHWA to retain selected
approvals on the Interstate System while the State DOT assumes those
approvals on non-Interstate NHS projects has traditionally been
exercised, and FHWA is not proposing to change or limit this
flexibility. The FHWA agrees that this flexibility is not made clear in
the template and intends to clarify this flexibility in instructions
for developing revised S&O Agreements based on the revised template.
Comment: The AASHTO and ODOT commented that Attachment A should
include all responsibilities that must be retained by FHWA as well as
those that can be delegated per law or regulation.
The FHWA Response: The primary purpose of Attachment A is to
describe the responsibilities that the State assumes from FHWA pursuant
to 23 U.S.C. 106(c) and other legal authorities. To meet that purpose,
Attachment A includes all FHWA project approvals that can be assumed by
the State. In addition, FHWA included some actions that cannot be
assumed to clarify a distinction with an action that can be assumed,
clarify that a specific action cannot be assumed, or to otherwise avoid
ambiguity. The purpose of the S&O Agreement is not to provide a
comprehensive list of every FHWA project approval.
Comment: The NYSDOT commented that a statement should be added to
Attachment A stating that projects selected by the FHWA for
risk[hyphen]based FHWA project involvement are not covered by the
Attachment A matrix.
The FHWA Response: The FHWA agrees that this is an important point
to make and has added language in section VI.D to clarify this.
Project-specific S&O plans will distinguish which Attachment A
assumptions are superseded by the project-specific plan. Attachment A
assumptions that are not superseded by the project plan remain in
effect.
Comment: The Joint States suggested that the third sentence of the
introductory text to Attachment A should be modified to clarify that
``all'' elements of a FAHP project do not need to be eligible for FAHP
funding. The commenter suggested language be added to clarify that only
elements of the project that are to be supported by FAHP funding must
be eligible for FAHP funding.
The FHWA Response: The FHWA agrees that a clarification is needed
and modified this sentence to state that the State is responsible for
ensuring that all applicable, rather than individual, elements of a
project need to be eligible for FAHP funding. The FHWA disagreed with
the suggested language as in certain situations, such as advance
construction, the eligibility of elements not supported by FAHP funds
is significant.
Comment: The FHWA proposed action 18 in table 3 as reading:
``Approve any betterment to be incorporated into the project and for
which emergency relief funding is requested.'' The PennDOT commented
that the ``and'' in this statement should be deleted.
The FHWA Response: The FHWA agrees and has modified Attachment A
accordingly.
Comment: The GDOT commented on action 23 in table 4, which FHWA
proposed would read: ``Determine use of more costly signing, pavement
marking and signal materials (or equipment) is in the public
interest.'' The GDOT stated that 23 CFR 655.606 uses the term
``approved'' instead of ``determined''.
The FHWA Response: The FHWA agrees and replaced the term
``determined'' with ``approved'' to match 23 CFR 655.606.
Comment: The PennDOT commented that action 25 in table 4, which
FHWA proposed to read, ``Determination that a United States Coast Guard
Permit is not required for bridge construction,'' should be modified to
limit this approval to when the bridge construction is over navigable
water.
The FHWA Response: The FHWA disagrees with this suggested revision.
To prevent conflicts with other documents, actions listed in Attachment
A are clearly and concisely described without providing additional
information or additional guidance on the action.
Additional Changes to Attachment A: In the process of reviewing
comments and drafting a revised template, FHWA made several revisions
to the language for actions 28, 29, 30 and 31 in Table 5. These changes
were made to better align the language with language used in other
actions in Attachment A and the associated regulations.
Major Projects: The major projects action in the proposed template
``Review and accept initial financial plan and annual updates for
Federal major projects [23 U.S.C. 106(h)]'' (proposed action 1) was
split into two actions, ``Review and accept initial financial plan for
Federal major projects [23 U.S.C. 106(h)]'' and ``Review and accept
financial plan annual updates for Federal major projects [23 U.S.C.
106(h)]'' for clarity. The major projects action in the proposed
template ``Review cost estimates for Federal major projects [23 U.S.C.
106(h)]'' (proposed action 2) was deleted as FHWA determined that this
action was intrinsically part of the review of the initial financial
plan and financial plan annual updates and therefore duplicitous of
other actions in Attachment A.
Further, in response to comments urging FHWA to maintain maximum
flexibility in terms of allowing State DOTs to assume actions, FHWA
undertook a review of proposed Attachment A to determine whether there
were any actions that could be assumed by State DOTs. The FHWA
determined that actions related to major projects, ``Review and accept
initial financial plan for Federal major projects [23 U.S.C. 106(h)]'',
``Review and accept financial plan annual updates for Federal major
projects [23 U.S.C. 106(h)]'', and ``Approve project management plan
for Federal major projects [23 U.S.C. 106(h)]'' could be assumed by
States and modified Attachment A accordingly.
Attachment B. Manuals, Agreements, Control, Monitoring, and Reporting
Documents
Comment: Several commenters provided suggestions on Attachment B,
which FHWA has reviewed and responded to in section VI above. In
addition, an individual commenter suggested that FHWA should retain its
approval authority for all manuals, policies, and procedures used by a
State DOT, regardless of whether such approval is contemplated by
specific statute or regulation.
The FHWA Response: The FHWA cannot require State DOTs to submit
manuals, policies, and procedures for approval by FHWA if such approval
is not required by statute or regulation, in accordance with section
11307(e)(1) of BIL. Further, in line with section 1316(a) of the Fixing
America's Surface Transportation (FAST) Act (Pub. L. 114-94), FHWA
believes it appropriate to

[[Page 77663]]

allow a State to assume responsibilities ``to the maximum extent
practicable.''
Attachment C. Stewardship and Oversight Indicators
Comment: The GDOT commented that language should be added to the
Attachment C heading paragraph that explains how to document when
indicators are not included in the S&O Agreement.
The FHWA Response: The FHWA has clarified in Attachment C that
establishing S&O Indicators is optional and that Attachment C should be
used only when they are established. If a State DOT and FHWA Division
Office have not established S&O Indicators, FHWA expects Attachment C
to not be included in any S&O Agreement between them.
Comment: The PennDOT commented that the example Stewardship and
Oversight Indicators in Attachment C do not seem directly related to
how well a State DOT's assumption of responsibilities is functioning.
The FHWA Response: The Attachment C included in the proposed
template is a drafting example, which is provided to demonstrate
acceptable methods of showing S&O Indicators and examples of the type
of information to include. Regarding the Indicator examples included,
some are directly related to an assumable action, such as the example
Indicator ``Number of projects with conditional ROW,'' which is
directly related to the conditional ROW actions in Attachment A. Other
examples are indirectly related to an assumable action, such as the
example Indicator ``Percent of DBE goal achieved,'' which is indirectly
related to project award actions in Attachment A.
General Comments
Comment: The AASHTO, NYSDOT, and ODOT commented that individual
FHWA Division Offices and State DOTs should have the flexibility to
modify their S&O Agreement and add State-specific attachments to
address such aspects as specific State responsibilities, delegation of
State assumed responsibilities on subrecipient projects, or the
oversight of subrecipients.
The FHWA Response: The FHWA disagrees with allowing flexibility to
modify the template body or Attachment A. The template body includes
provisions that apply to all States and modification in individual S&O
Agreements would defeat the purpose of a single template that applies
to all 52 FHWA Division Offices and State DOTs.
Similarly, FHWA does not believe that States should have the
flexibility to modify Attachment A beyond allowing States to assume
responsibilities where allowed per Attachment A. Attachment A describes
actions that FHWA has determined are assumable based on the language of
23 U.S.C. 106(c), and FHWA does not believe that allowing for
additional assumable actions would be appropriate.
Additional attachments to individual S&O Agreements are allowable.
Additional attachments, however, cannot conflict with provisions in the
template and must meet FHWA guidelines for public posting, including
compliance with section 508 of the Rehabilitation Act of 1973.
Comment: The PennDOT commented that if funds are not being
``passed'' through the State DOT, the State DOT does not have a
responsibility because the recipient would be executing an agreement
directly with the FHWA.
The FHWA Response: The S&O Agreements are not applicable to non-
State DOT recipients and issues associated with non-State DOT
recipients are not discussed here. The template and resulting S&O
Agreements are not intended to provide program-specific guidance beyond
what is necessary to establish the roles and responsibilities of the
FHWA Division Office and the State DOT with respect to certain project
approvals, related responsibilities, and FAHP oversight activities.
Comment: The AASHTO, NYSDOT, ODOT, and PennDOT commented that the
template does not specifically address the wider range of potential
subrecipients anticipated in various programs within the BIL. These
commenters stated that the template should allow for means of
addressing the delegation to and oversight of non-State DOT
subrecipients. The PennDOT added that it was concerned over the impact
to the agency regarding responsibility over such recipients. The NYSDOT
commented that the template should provide greater guidance and
flexibility in administering new programs.
The FHWA Response: The FHWA agrees that the template does not
specifically address the range of potential subrecipients involved in
specific programs. The template and resulting S&O Agreements are not
intended to provide program specific guidance beyond what is necessary
to establish the roles and responsibilities of the FHWA Division Office
and the State DOT with respect to certain project approvals, related
responsibilities, and FAHP oversight activities pursuant to 23 U.S.C.
106. To the extent that such entities are subrecipients of a State DOT,
section VII of the template addresses the State DOT's responsibility
for overseeing its subrecipients. The FHWA does not find it necessary
to lay out specific means of addressing the delegation to and oversight
of such subrecipients, as that is the responsibility of the State DOT.
Part of this responsibility is to evaluate each subrecipient's risk of
ensuring compliance and determining the appropriate oversight and
monitoring in accordance with 2 CFR 200.332(b). The FHWA acknowledges
that new programs under BIL may involve a wider range of potential
subrecipients and that risks will be different from traditional
subrecipients who possess more experience administering FAHP projects.
Comment: An individual commenter expressed concern with State DOTs
misapplying provisions of S&O Agreements under the current template and
provided what he stated was an example of this occurring. This
commenter argued that FHWA should provide a more detailed description
of State DOT responsibilities in any revised template, particularly
with respect to State DOT responsibilities for projects on the NHS that
do not utilize Federal funds. This commenter also stated that FHWA
should take extra care to ensure that entrenched commitment to
erroneous views of the law and the duties imposed by Title 23, U.S.C.
and the S&O Agreement is corrected, contained, and not adopted by other
public officials or contractors, and that FHWA should include
additional language to reflect the need for State DOTs to perform or
directly supervise construction projects on the NHS, including those
undertaken by its subrecipients, such as Local Public Agencies (LPA).
The FHWA Response: The FHWA agrees that it is important for State
DOTs to recognize responsibilities on the NHS for projects that may not
use Federal funds. The S&O Agreements, however, are not meant to lay
out every responsibility a State DOT has that might be related to the
FAHP; instead, they are meant to define the roles and responsibilities
of FHWA and each State DOT regarding project approvals and related
responsibilities under Title 23, U.S.C., and document methods of
oversight. For example, S&O Agreements are not the place to discuss the
relationship between State DOTs and LPAs, apart from the relationship
that might exist when a State DOT provides a subaward to the LPA. The
FHWA therefore disagrees with the commenter that S&O Agreements are
appropriate places to define State DOT

[[Page 77664]]

responsibilities in detail, such as State DOT responsibilities for
projects that do not use Federal funds, which are not related to the
purpose of an S&O Agreement.
The FHWA also agrees that it is important for State DOTs to
supervise construction projects on the NHS, including those undertaken
by its subrecipients. The FHWA does not, however, believe that the S&O
Agreement needs to include additional language to reflect this need.
Section VII of the template includes language stating that the State
DOT is responsible for ensuring that its subrecipients meet applicable
Federal requirements. The FHWA does not believe it appropriate or
necessary to explicitly state that this oversight must be done by
directly supervising construction of projects on the NHS.
Schedule To Implement Changes
In accordance with section 11307(c)(1) of BIL, FHWA has considered
all comments received on its proposed S&O Agreement template. Through
this notice, FHWA is describing the proposed changes to be made to that
proposed template and is addressing comments in response to which
changes were not made to the template. In accordance with sections
11307(c)(1)(C) and 11307(c)(3)(A) of BIL, FHWA is updating its S&O
Agreement template, which can be found at: https://www.fhwa.dot.gov/federalaid/stewardship/. Pursuant to section 11307(c)(3)(B) of BIL,
FHWA will ensure that this revised template is used to update existing
S&O Agreements not later than November 12, 2024.
Authority: 23 U.S.C. 106(c); section 11307, Pub. L. 117-58, 135
Stat. 532; 49 CFR 1.85.

Shailen P. Bhatt,
Administrator, Federal Highway Administration.
[FR Doc. 2023-24960 Filed 11-9-23; 8:45 am]
BILLING CODE 4910-22-P