[Federal Register Volume 77, Number 90 (Wednesday, May 9, 2012)]
[Pages 27273-27277]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-11119]



Federal Highway Administration

[FHWA Docket No. FHWA-2012-0005]

Surface Transportation Project Delivery Pilot Program; Caltrans 
Audit Report

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Final report.


SUMMARY: Section 6005 of the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users (SAFETEA-LU) established 
the Surface Transportation Project Delivery Pilot Program, codified at 
23 U.S.C. 327. To ensure compliance by each State participating in the 
Pilot Program, 23 U.S.C. 327(g) mandates semiannual audits during each 
of the first 2 years of State participation. This final report presents 
the findings from the sixth FHWA audit of the California Department of 
Transportation (Caltrans) under the pilot program.

FOR FURTHER INFORMATION CONTACT: Ms. Ruth Rentch, Office of Project 
Development and Environmental Review, (202)-366-2034, 
[email protected], or Mr. Michael Harkins, Office of the Chief 
Counsel, (202) 366-4928, [email protected], 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.


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    Section 6005 of SAFETEA-LU (codified at 23 U.S.C. 327) established 
a pilot program to allow up to five States to assume the Secretary of 
Transportation's responsibilities for environmental review, 
consultation, or other actions under any Federal environmental law 
pertaining to the review or approval of highway projects. In order to 
be selected for the pilot program, a State must submit an application 
to the Secretary.
    On June 29, 2007, Caltrans and FHWA entered into a Memorandum of 
Understanding (MOU) that established the assignments to and assumptions 
of responsibility to Caltrans. Under the MOU, Caltrans assumed the 
majority of FHWA's responsibilities under the National Environmental 
Policy Act, as well as the FHWA's responsibilities under other Federal 
environmental laws for most highway projects in California.
    To ensure compliance by each State participating in the Pilot 
Program, 23 U.S.C. 327(g) requires the Secretary to conduct semiannual 
audits during each of the first 2 years of State participation; and 
annual audits during each subsequent year of State participation. The 
results of each audit must be presented in the form of an audit report 
and be made available for public comment. The FHWA solicited comments 
on the sixth audit report in a Federal Register Notice published on 
February 22, 2012, at 77 FR 10599. The FHWA received one comment from 
Caltrans. This notice provides the final draft of the sixth FHWA audit 
report for Caltrans under the pilot program.

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

    Dated: Issued on: April 26, 2012.
Victor M. Mendez,

Surface Transportation Project Delivery Pilot Program Federal Highway 
Administration Audit of California Department of Transportation October 
17-21, 2011

Overall Audit Opinion

    Based on the information reviewed, it is the Federal Highway 
Administration (FHWA) audit team's opinion that as of October 21, 
2011, the California Department of Transportation (Caltrans) 
continued to make progress toward meeting all responsibilities 
assumed under the Surface Transportation Project Delivery Pilot 
Program (Pilot Program), as specified in the Memorandum of 
Understanding (MOU) \1\ with FHWA and in Caltrans' Application for 
Assumption (Application).

    \1\ Caltrans MOU between FHWA and Caltrans available at: http://environment.fhwa.dot.gov/strmlng/safe_cdot_pilot.asp.

    The FHWA commends Caltrans for its implementation of corrective 
actions in response to previous FHWA audit report findings. The FHWA 
also observed that Caltrans continued to identify and implement on a 
statewide Pilot Program basis best practices in use at individual 
Caltrans Districts (Districts).
    With the completion of FHWA's sixth audit, Caltrans has now 
operated under the Pilot Program for 4 years. In compliance with the 
time specifications for the required audits, FHWA completed four 
semiannual audits in the first 2 years of State participation and is 
now conducting the annual audit cycle, which began with the fifth 
audit in July 2010 and includes this sixth audit in October 2011. 
Collectively, the FHWA audits have included on-site audits to 
Caltrans headquarters offices, 10 of the 12 Caltrans Districts, and 
to the Caltrans Regional Offices supporting the remaining 2 
Districts. The audit team continues to identify significant 
differences across the Districts in terms of implementing Pilot 
Program policies, procedures, and responsibilities. Examples of such 
differences include: resource availability and allocation; methods 
of implementation; methods of process evaluation and improvement; 
and levels of progress in meeting all assumed

[[Page 27274]]

responsibilities. It is the audit team's opinion that the highly 
decentralized nature of operations across Districts continues to be 
a major contributing factor to the variations observed in the Pilot 
Program. As a result of this organizational structure, Caltrans 
Headquarters must provide clear, consistent, and ongoing oversight 
over Districts' implementation and operation of the Pilot Program 
responsibilities. Implementation of a robust oversight program will 
help foster the exchange of information and the sharing of best 
practices and resources between Districts and will put the entire 
organization in a better position to more fully implement all 
assumed responsibilities and meet all Pilot Program commitments.
    Due to the multiyear timeframes associated with most complex and 
controversial projects, the full lifecycle of the environmental 
review aspect of project development (proceeding from initiation of 
environmental studies and concluding with the issuance of a Record 
of Decision (ROD) or equivalent decision document) has yet to be 
realized within the Pilot Program to date. Caltrans continues to 
gain experience in understanding the resource requirements and 
processes necessary to administer its Program. It is the audit 
team's opinion that Caltrans needs to continue to refine its 
approaches and use of resources to meet all Pilot Program 
commitments, especially given the increasing resource demands 
associated with managing ever-more complex and controversial 
projects under the Pilot Program under recent resource constraints.

Requirement for Transition Plan

    The Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users (SAFETEA-LU) Section 6005(a) established the 
Pilot Program, codified at 23 U.S.C. 327. Under the provisions of 23 
U.S.C 327(i)(1), as enacted in SAFETEA-LU, ``the program shall 
terminate on the date that is 6 years after the date of enactment of 
this section,'' which was August 10, 2011. However, section 2203(c) 
of the Surface Transportation Extension Act of 2010, Part II, Public 
Law 111-322, amended 23 U.S.C 327(i)(1) to require the Pilot Program 
to terminate 7 years after the date of the enactment of SAFETEA-LU 
or August 10, 2012. The MOU between FHWA and Caltrans was amended 
August 8, 2011, to include this new date and to update related 
provisions. Specifically, the provisions in the amended MOU provide 
that Caltrans and FHWA must jointly ``develop a plan to transition 
the responsibilities that Caltrans has assumed back to the FHWA so 
as to minimize disruption to the project, minimize confusion to the 
public, minimize burdens to other affected Federal, State, and local 
agencies...'' The amended MOU further provides that the transition 
plan must be completed and approved by both Caltrans and FHWA no 
later than March 10, 2012.

Effective Practices

    The FHWA audit team observed the following effective practices 
during the sixth audit:
    1. The creation of a statewide Community Impacts working team 
that holds monthly calls to share Community Impact Assessment (CIA) 
and Environmental Justice information. Caltrans has also developed 
new CIA guidance.
    2. Improved level of consistency in implementing processes and 
documenting information, largely due to the use of the Standard 
Environmental Reference (SER) and templates.
    3. Improved Section 4(f) de minimis letters to the officials 
with jurisdiction, with good examples from local agencies in 
District 4.
    4. Increased access to training, including the availability of 
on-demand training, PowerPoint, Webinars and videoconferencing.
    5. Complete and well-organized project files in District 10.
    6. Assumptions and Risk statements included in early project 
development/scoping that list possible consequences, effects and 
costs of not complying with all environmental requirements and 
    7. Caltrans' Standard Specifications for Construction 2010 
(recently released) requires environmental stewardship to be 
included in all construction contracts, which should aid in 
environmental mitigation implementation.
    8. The new Caltrans Standard Tracking and Exchange Vehicle for 
Environmental Systems (STEVE) supports tracking of the environmental 
review process and sharing of project status across project teams 
and includes an internal dispute resolution process.


    The Pilot Program allows the Secretary of Transportation 
(Secretary) to assign, and the State to assume, the Secretary's 
responsibilities under the National Environmental Policy Act (NEPA) 
for one or more highway projects. Upon assigning NEPA 
responsibilities, the Secretary may further assign to the State all 
or part of the Secretary's responsibilities for environmental 
review, consultation, or other action required under any Federal 
environmental law pertaining to the review of a specific highway 
project. When a State assumes the Secretary's responsibilities under 
this program, the State becomes solely responsible and is liable for 
carrying out the responsibilities it has assumed, in lieu of the 
    To ensure compliance by each State participating in the Pilot 
Program, 23 U.S.C. 327(g) mandates that FHWA, on behalf of the 
Secretary, conduct semiannual audits during each of the first 2 
years of State participation; and annual audits during each 
subsequent year of State participation. The focus of the FHWA audit 
process is four-fold: (1) To assess a Pilot State's compliance with 
the required MOU and applicable Federal laws and policies; (2) to 
collect information needed to evaluate the success of the Pilot 
Program; (3) to evaluate Pilot State progress in meeting its 
performance measures; and (4) to collect information for use in the 
Secretary's annual Report to Congress on the administration of the 
Pilot Program. Additionally, 23 U.S.C. 327(g) requires FHWA to 
present the results of each audit in the form of an audit report 
published in the Federal Register. This audit report must be made 
available for public comment, and FHWA must respond to public 
comments received no later than 60 days after the date on which the 
period for public comment closes.

Scope of the Audit

    This is the sixth FHWA audit of Caltrans participation in the 
Pilot Program. The on-site portion of the audit was conducted in 
California from October 17 through October 21, 2011. As required in 
SAFETEA-LU, each FHWA audit must assess compliance with the roles 
and responsibilities assumed by the Pilot State in the MOU. The 
audit also includes recommendations to assist Caltrans in successful 
participation in the Pilot Program.
    Prior to the on-site audit, FHWA completed telephone interviews 
with Federal resource agency staff at the U.S. Army Corps of 
Engineers, the U.S. Fish and Wildlife Service (FWS), the National 
Park Service, the National Oceanic and Atmospheric Administration, 
the Advisory Council on Historic Preservation, and the Environmental 
Protection Agency. The on-site audit included visits to the Caltrans 
Offices in District 2 (Redding), District 3/North Region 
(Marysville), District 4 (Oakland), District 6 (Fresno), District 10 
(Stockton), and Headquarters (Sacramento).
    This report documents findings within the scope of the audit as 
of the completion date of the on-site audit on October 21, 2011.

Audit Process and Implementation

    The intent of each FHWA audit completed under the Pilot Program 
is to ensure that the Pilot State complies with the commitments in 
its MOU with FHWA. The FHWA does not evaluate specific project-
related decisions made by the State; these decisions are the sole 
responsibility of the Pilot State. However, the FHWA audit scope 
does include the review of the processes and procedures (including 
documentation) used by the Pilot State to reach project decisions in 
compliance with MOU Section 3.2.
    In addition, Caltrans committed in its Application (incorporated 
by reference in MOU Section 1.1.2) to implement specific processes 
to strengthen its environmental procedures in order to assume the 
responsibilities assigned by FHWA under the Pilot Program. The FHWA 
audits review how Caltrans is meeting each commitment and assess 
Pilot Program performance in the core areas specified in the Scope 
of the Audit section of this report.
    The Caltrans' Pilot Program commitments address:
     Organization and Procedures under the Pilot Program
     Expanded Quality Control Procedures
     Independent Environmental Decisionmaking
     Determining the NEPA Class of Action
     Consultation and Coordination with Resource Agencies
     Issue Identification and Conflict Resolution Procedures
     Record Keeping and Retention
     Expanded Internal Monitoring and Process Reviews
     Performance Measures to Assess the Pilot Program

[[Page 27275]]

     Training to Implement the Pilot Program
     Legal Sufficiency Review.
    The FHWA team for the sixth audit included representatives from 
the following offices or agencies:
     FHWA Office of Project Development and Environmental 
     FHWA Office of the Chief Counsel
     FHWA Alaska Division Office
     FHWA Resource Center Environmental Team
     Volpe National Transportation Systems Center
     U.S. FWS.
    During the onsite audit, the audit team interviewed more than 60 
staff from 5 Caltrans District and headquarters offices. The audit 
team also reviewed project files and records for over 55 projects 
managed by Caltrans under the Pilot Program.
    The FHWA acknowledges that Caltrans identified specific issues 
during its sixth self-assessment performed under the Pilot Program 
(required by MOU section 8.2.6), and is working on corrective 
actions to address the identified issues. Some issues described in 
the Caltrans self-assessment may overlap with FHWA findings 
identified in this audit report.
    In accordance with MOU Section 11.4.1, FHWA provided Caltrans 
with a 30-day comment period to review this draft audit report. The 
FHWA reviewed comments received from Caltrans and revised sections 
of the draft report, where appropriate, prior to publishing it in 
the Federal Register for public comment.

Limitations of the Audit

    The conclusions presented in this report are opinions based upon 
interviews of selected persons knowledgeable about past and current 
activities related to the execution of the Pilot Program at 
Caltrans, and a review of selected documents over a limited time 
period. The FHWA audit team's ability to conduct each audit and make 
determinations of Caltrans' compliance with assumed responsibilities 
and commitments under the Pilot Program has been further limited by 
the following:
     Select Districts visited by FHWA audit team. The FHWA 
audit team has not visited each District during the audit process. 
Each audit (including this audit) has consisted of visits to 
Districts with significant activity under the Pilot.
     Caltrans staff availability during audits. Some 
Caltrans staff selected to be interviewed by the audit team were out 
of the office and unavailable to participate in the onsite audit, 
including participation in scheduled interviews, despite Caltrans 
having been notified ahead of time. This limited the extent of 
information gathering.
     Limited scope of Pilot Program project development 
activity. Caltrans has not operated under the Pilot Program for a 
sufficient period of time to manage the full lifecycle of most 
Environmental Impact Statements (EIS) and other complex 
environmental documents. Therefore, FHWA is not yet able to fully 
determine how Caltrans will comply with its responsibilities assumed 
under the Pilot Program for these project situations.
     Insufficient data to determine time savings reported by 
Caltrans in the completion of environmental documents. Due to the 
relatively short period of time that the Pilot Program has been in 
place, Caltrans has not completed the environmental process for a 
sufficient number of projects of varying complexities to adequately 
support a determination on the potential time savings resulting from 
participation in the Pilot Program.
     Continued errors in the quarterly reports. As has been 
the case in every audit, the quarterly reports prepared by Caltrans 
listing environmental approvals and decisions made under the Pilot 
Program continue to contain omissions and errors. It is difficult 
for FHWA to exercise full oversight on Pilot Program projects 
without a complete accounting of all NEPA documents produced under 
the Pilot.

Status of Findings Since the Last Audit (July 2010)

    As part of the sixth audit, FHWA evaluated the corrective 
actions implemented by Caltrans in response to the ``Deficient'' and 
``Needs Improvement'' findings in the fifth FHWA audit report.
    Deficient audit finding status:
    1. Quarterly Reports--The quarterly reports Caltrans provided to 
FHWA under MOU Section 8.2.7 continued to include inaccuracies 
related to environmental document approvals and decisions made under 
the Pilot Program. The audit team acknowledges that Caltrans has 
recently implemented the STEVE environmental database system on a 
statewide basis to assist in the development of a comprehensive 
database of environmental projects and milestones.
    2. Section 4(f) Documentation--As noted in the past two audits, 
inconsistencies in Section 4(f) compliance and documentation have 
been observed by the audit team. The FHWA acknowledges that Caltrans 
continues to provide Section 4(f) training and assistance to the 
Districts to improve the understanding of the Section 4(f) statute 
and regulations. However, training implementation is inconsistent 
with staff implementing Section 4(f) across Districts.
    3. Quality Assurance/Quality Control (QA/QC) Certification 
Process--Project file reviews completed during the sixth audit 
continued to identify incorrect and incomplete QC certification 
forms. Caltrans continues to address inadequacies in this process 
through staff-specific training when inconsistencies are identified, 
most notably during the self-assessment process.
    Needs Improvement audit findings status:
    1. Maintenance of Project and General Administrative Files--
Caltrans has instituted specific procedures for maintaining project 
files in accordance with the Uniform Filing System and has provided 
training on these procedures. Inconsistencies in the application of 
these procedures, reported in previous audit findings, were also 
identified in this audit.
    2. Performance Measure--FHWA recommended that Caltrans share 
with FHWA the specific agencies' rating information so that specific 
issues could be identified. Caltrans has provided this information 
to FHWA.
    3. Coordination with Resource Agencies--Conversations with 
Federal resource agencies prior to the onsite audit indicated that 
relationships between the agencies and Caltrans are generally 
considered to be effective; however, the audit team noted an issue 
regarding insufficient information being initially submitted to the 
resource agencies.
    4. Procedural and Substantive Requirements--There were 
identified instances of incomplete documentation regarding the 
Endangered Species Act Section 7 process. This was also an area of 
irregularities identified in the Caltrans Self Assessment. Section 7 
compliance continues to be a topic addressed by the Biological 
Consultancy group and, included as part of the STEVE, there is an 
elevation process for Section 7 conflicts.
    5. Re-evaluation Process--Project file reviews and staff 
interviews continue to indicate varying degrees of compliance with 
the re-evaluation process and procedures.
    6. Section 4(f) Consistency Issue--Project file reviews and 
interviews with Caltrans staff confirmed continuing inconsistencies 
in the implementation of the Section 4(f) process as well as with a 
general understanding required in carrying out Section 4(f) 
provisions. The audit team does acknowledge that a Section 4(f) 
evaluation training on demand module was recently posted for use by 
Caltrans staff.
    7. Training--As in past audits, the audit team observed 
inconsistencies in the use of tools to identify training needs, 
ensure training is received, and to track employees' training 
histories. The audit team also determined there was no method for 
employees to track completion of any online training available on 
the Caltrans Web site.

Findings Definitions

    The FHWA audit team carefully examined Pilot Program areas to 
assess compliance in accordance with established criteria in the MOU 
and Application. The time period covered by this audit report is 
from the start of the Caltrans Pilot Program (July 1, 2007) through 
completion of the sixth onsite audit (October 21, 2011) with the 
focus of the audit on the most recent 15-month period. This report 
presents audit findings in three areas:
     Compliant--Audit verified that a process, procedure, or 
other component of the Pilot Program meets a stated commitment in 
the Application and/or MOU.
     Needs Improvement--Audit determined that a process, 
procedure or other component of the Pilot Program as specified in 
the Application and/or MOU is not fully implemented to achieve the 
stated commitment or the process or procedure implemented is not 
functioning at a level necessary to ensure the stated commitment is 
satisfied. Action is recommended to ensure success.
     Deficient--Audit was unable to verify if a process, 
procedure or other component of the Pilot Program met the stated 
commitment in the Application and/or MOU. Action is required to 
improve the process, procedure or other component prior to the next 


    Audit determined that a process, procedure or other component of 
the Pilot Program did

[[Page 27276]]

not meet the stated commitment in the Application and/or MOU. 
Corrective action is required prior to the next audit.


    Audit determined that for a past Needs Improvement finding, the 
rate of corrective action has not proceeded in a timely manner; is 
not on the path to timely resolution of the finding.

Summary of Findings--October 2011


    Caltrans was found to be compliant in meeting the requirements 
of the MOU for the key Pilot Program areas within the scope and the 
limitations of the audit, with the exceptions noted in the Deficient 
and Needs Improvement findings in this audit report set forth below.

Needs Improvement

    (N1) Training--Inconsistent Level of Training for Staff--MOU 
Section 12.1.1 requires Caltrans to ensure that its staff is 
properly trained and that training will be provided ``in all 
appropriate areas with respect to the environmental responsibilities 
Caltrans has assumed.'' Section 4.2.2 of the MOU also requires that 
Caltrans maintain adequate staff capability to effectively carry out 
the responsibilities it has assumed.
    The audit team found the following inconsistencies across the 
Districts regarding the level of needed trainings received by 
Caltrans staff:
    (a) Several of the Section 4(f) District Points of Contact (POC) 
have very little, if any experience with writing or reviewing a 
Section 4(f) document and have had little training in Section 4(f). 
The audit team learned that the specific roles and responsibilities 
for the POCs had not yet been determined. Also, it has not been 
decided if there will be the formation of a working/peer group of 
these POCs or how they should proceed in becoming ``expert'' in this 
    (b) The audit team learned through interviews that the number 
and variety of available online, on-demand trainings have increased. 
However, the lack of a system to track those taking these trainings 
creates difficulties in identifying staff training needs;
    (c) Interviews with staff reflected instances where staff had to 
cancel their attendance at trainings due to resource limitations, or 
schedule demands; and
    (d) Interviews with staff indicated a large staff turnover in 
certain Districts. The loss of experienced staff increases the 
importance of the training needed for new employees, which is 
uncertain due to resource restrictions in these same Districts.
    (N2) Training--Inconsistent Understanding of Required 
Processes--MOU Section 4.2.2 requires Caltrans to maintain adequate 
organizational and staff capacity to effectively carry out the 
responsibilities it has assumed under MOU Section 3. Good 
communication among all staff levels is essential for this to be 
accomplished. The following inconsistencies in lack of knowledge and 
inconsistent understanding were noted during interviews with 
Caltrans staff:
    (a) Interviews with Caltrans staff in varying positions in three 
Districts revealed a lack of understanding of the FHWA fiscal 
constraint requirements and its relationship to NEPA documents;
    (b) A majority of Caltrans staff members interviewed indicated 
that there is a lack of understanding of the definitions for the 
following Section 4(f) terms: Section 4(f) use; temporary occupancy; 
avoidance alternatives; least overall harm analysis; and 
constructive use of a Section 4(f) resource.
    (c) Interviews with Caltrans staff reflected that there was a 
lack of understanding for determining a de minimis impact on a 
Section 4(f) resource;
    (d) Several Caltrans staff members interviewed indicated a lack 
of knowledge regarding the identification of officials with 
jurisdiction over Section 4(f) resources; and
    (e) Interviews with Caltrans District 4 staff reflected that 
there was a lack of communication among all staff concerning the 
District's new requirement to hold public hearings for all 
environmental assessments (EA).
    (N3) Air Quality Conformity Determinations--Section 8.5.1 of the 
MOU and SER Chapter 38 require Caltrans staff to document the air 
quality conformity analysis for each project by submitting a request 
to FHWA for a formal conformity determination, as required by 23 
U.S.C. 327(a)(2)(B)(ii)(I). The request for the conformity 
determination should be submitted to FHWA as soon as possible after 
the preferred alternative is identified. The FHWA conformity 
determination must be received before the final NEPA action is 
    Through interviews and project file reviews, the audit team 
identified an EA that was approved without a project-level 
conformity determination letter from FHWA. This determination letter 
was later obtained from FHWA and a re-evaluation was performed by 
Caltrans and included in the project file.


    (D1) Reports Listing Approvals and Decisions (i.e., Quarterly 
Reports)--MOU Section 8.2.7 requires Caltrans to submit a report 
listing all Pilot Program approvals and decisions made with respect 
to responsibilities assumed under the MOU with FHWA (each quarter 
for the first 2 years and no less than every 6 months after the 
first 2 years). Caltrans has chosen to continue to provide quarterly 
reports to FHWA after the first 2 years. As was identified in every 
previous FHWA audit report, inaccurate project reporting was 
identified in this audit and it continues to be an ongoing issue 
affecting the quarterly report process.
    Among the reporting errors identified in this audit were the 
omission of two completed decisions--one ROD and one Finding of No 
Significant Impact (FONSI).
    The FHWA acknowledges that the STEVE has recently been 
implemented throughout the Districts, and Caltrans anticipates that 
this new system will improve the accuracy of information provided in 
the quarterly reports provided to FHWA.
    (D2) QA/QC Certification Process--MOU Section 8.2.5 and SER 
Chapter 38 require Caltrans staff to review each environmental 
document in accordance with the policy memorandum titled, 
``Environmental Document Quality Control Program under the NEPA 
Pilot Program'' (July 2, 2007). As was identified in past audits, 
incomplete and incorrectly completed QC certification forms 
continued to be identified in this audit. During project file 
reviews by the audit team, the following instances of incomplete or 
incorrect QC certification forms were observed:
    (a) Four Internal QC certification forms (for three projects) 
were completed and signed and dated by reviewers after the approval 
date of the document;
    (b) One class of action determination form was signed on the 
same date that the document was approved;
    (c) Five QC certification forms contained undated review 
signatures or the signatures were not obtained in the proper 
sequence in accordance with the Caltrans established QA/QC 
processes. This included four projects where external QC 
certification forms contained signatures that were obtained after 
the internal QC certification form signatures; and
    (d) Five QC certification forms were missing the signatures of 
required reviewers.
    (D3) QA/QC Certification Process--MOU Section 8.2.5 and SER 
Chapter 38 require Caltrans staff to review each environmental 
document in accordance with the policy memorandum titled, 
``Environmental Document Quality Control Program under the NEPA 
Pilot Program'' (July 2, 2007). The policy memorandum included the 
revision to the quality control program that includes the addition 
of a NEPA QC Review. The purpose of this review component is to 
ensure that the environmental document complies with FHWA policies 
and guidance and the requirements of all applicable Federal laws, 
executive orders, and regulations.
    Interviews with Caltrans staff and project file reviews in one 
District indicated that a NEPA QC reviewer was directed by the 
Office Chief of Environmental Affairs and the District Director to 
sign the internal certification form without having reviewed the 
final version of the environmental document in order to meet the 
project schedule. The NEPA QC reviewer had noted in the project file 
that there were two items, previously identified to be addressed, 
that had not yet been addressed in the document that was signed.
    Since the determination of this finding, the audit team and 
Caltrans have had several discussions concerning the finding. 
Additionally, Caltrans has provided additional information through a 
comment posted by them on the docket during the comment period of 
the draft audit report. An internal investigation has been completed 
by Caltrans Audits and Investigations staff concerning the reported 
circumstances in the finding. Caltrans has determined that the NEPA 
QC reviewer was not directed or instructed by the Office Chief of 
Environmental Review and/or the District Director to sign the 
internal certification form. They determined that the memo written 
by this QC reviewer was ``ambiguous'' and gave an inaccurate 
impression of events. The audit team

[[Page 27277]]

acknowledges that the situation cited in this finding has been 
    (D4) Re-evaluation Process--MOU Section 5.1 requires Caltrans to 
be subject to the same procedural and substantive requirements that 
apply to the U.S. Department of Transportation (DOT) in carrying out 
the responsibilities assumed under the Pilot Program. This includes 
the process and documentation for conducting NEPA re-evaluations to 
comply with 23 CFR 771.129. Additionally, SER Chapter 33 discusses 
revalidations and re-evaluations. As in past audits, project file 
reviews and staff interviews identified varying degrees of 
understanding of, and compliance with, these procedures and the 
improper use of reevaluation documentation to serve another project 
development purpose. Project file reviews identified the following 
inconsistencies with regards to re-evaluations:
    (a) A re-evaluation is done to determine if the approved 
environmental document or the Categorical Exclusion (CE) designation 
remains valid. In the re-evaluation process, the original decision 
and analysis needs to be reviewed for its validity. A re-evaluation 
was used to increase the scope of the original EA/FONSI. The FHWA 
re-evaluation process does not accommodate such an approach. The 
supporting documentation and project files for this project were not 
available for review; and
    (b) In a second project, the NEPA document was identified in the 
Quarterly Report as a re-evaluation. This project was identified as 
an intersection improvement that was to be added to a larger 
project, already under construction. The project file contained both 
re-evaluation forms and CE checklist forms. Under NEPA, the project 
should have been a stand-alone CE, as it was not a part of the 
original project.
    (D5) Section 4(f) Documentation--MOU Section 5.1.1 affirms that 
Caltrans is subject to the same procedural and substantive 
requirements that apply to DOT in carrying out the responsibilities 
assumed under the Pilot Program. The SER Chapter 20, Section 4(f) 
and Related Requirements, sets forth procedures for documenting 
impacts to Section 4(f) properties in Caltrans-assigned 
environmental documents. As was also noted in the fourth and fifth 
FHWA audits of the Pilot Program, project file reviews and 
interviews with staff conducted during this audit identified 
inconsistencies with the implementation and documentation 
requirements for carrying out the Section 4(f) provisions.
    In the case of Section 4(f) evaluations, the audit team found 
the following:
    (a) Two of three evaluations did not contain a required Section 
4(f) avoidance alternative analysis.
    (b) Two of the three evaluations did not provide a required 
Least Overall Harm Analysis.
    (D6) Statement Regarding Assumption of Responsibility--MOU 
section 3.2.5 requires language regarding Caltrans' assumption of 
responsibility under 23 U.S.C. 327 be included on the cover page of 
each environmental document for all assumed Pilot Program projects. 
The audit teams' project file reviews found the following 
inconsistencies with this requirement:
    (a) The cover page for one EA reviewed during the audit did not 
include this required statement;
    (b) The cover page for one Final EIS had been modified from the 
language agreed to in the MOU; and
    (c) The cover page for three California Environmental Quality 
Act only document contained the FHWA assumption statement, even 
though there was no FHWA involvement in this document.

Response to Comments and Finalization of Report

    The FHWA received one comment from Caltrans during the 30-day 
comment period for the draft audit report. Caltrans submitted its 
comment regarding finding D3. Caltrans had been informed of this 
finding by the audit team through initial draft findings shared with 
them, as per the provisions of the MOU and then also through the 
draft audit report published in the Federal Register for the 30-day 
comment period. There have been several discussions between FHWA and 
Caltrans concerning the details of this finding. Since the audit 
team made and verified this finding, Caltrans has done its own 
internal investigation into the situation reported. Caltrans's 
investigation determined that the NEPA QC reviewer was not directed 
or instructed to by the Office Chief of Environmental Review and/or 
the District Director to sign the internal certification form. They 
determined that the memo written by this QC reviewer was 
``ambiguous'' and gave an inaccurate impression of events.
    Caltrans stated that they do not concur with the deficient 
finding and request that the finding be revised to reflect the 
situation they have determined to accurate from their 
investigations. The FHWA has revised finding D3 to address the 
Caltrans comment.

[FR Doc. 2012-11119 Filed 5-8-12; 8:45 am]