Notice2026-04353
Surface Transportation Project Delivery Program; Arizona Department of Transportation Final FHWA Audit Four Report
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 5, 2026
Issuing agencies
Transportation DepartmentFederal Highway Administration
Abstract
The Moving Ahead for Progress in the 21st Century Act (MAP-21) established the Surface Transportation Project Delivery Program (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 is the fourth audit of the responsibilities assigned to the Arizona Department of Transportation (ADOT) under the Program. This notice announces the final fourth audit report for ADOT.
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[Federal Register Volume 91, Number 43 (Thursday, March 5, 2026)]
[Notices]
[Pages 10847-10853]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-04353]
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DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
[FHWA Docket No. FHWA-2024-0017]
Surface Transportation Project Delivery Program; Arizona
Department of Transportation Final FHWA Audit Four Report
AGENCY: Federal Highway Administration (FHWA), U.S. Department of
Transportation (DOT).
ACTION: Notice.
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SUMMARY: The Moving Ahead for Progress in the 21st Century Act (MAP-21)
established the Surface Transportation Project Delivery Program
(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 is the fourth
audit of the responsibilities assigned to the Arizona Department of
Transportation (ADOT) under the Program. This notice announces the
final fourth audit report for ADOT.
FOR FURTHER INFORMATION CONTACT: Rebecca Yedlin, Office of Project
Development and Environmental Review, (480) 340-6270,
<a href="/cdn-cgi/l/email-protection#0c7e696e696f6f6d227569686065624c686378226b637a"><span class="__cf_email__" data-cfemail="fb899e999e98989ad5829e9f979295bb9f948fd59c948d">[email protected]</span></a>, Federal Highway Administration, U.S. Department
of Transportation, 1200 New Jersey Avenue SE, Washington, DC 20590, or
Michelle Andotra, Office of the Chief Counsel, (404) 562-3679,
<a href="/cdn-cgi/l/email-protection#204d494348454c4c450e414e444f54524160444f540e474f56"><span class="__cf_email__" data-cfemail="86ebefe5eee3eaeae3a8e7e8e2e9f2f4e7c6e2e9f2a8e1e9f0">[email protected]</span></a>, 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., EST, Monday
through Friday, except Federal holidays.
SUPPLEMENTARY INFORMATION:
Electronic Access
An electronic copy of this notice may be downloaded from the
specific docket page at <a href="http://www.regulations.gov">www.regulations.gov</a>.
Background
The Surface Transportation Project Delivery Program, codified at 23
United States Code (U.S.C.) 327, known commonly as Program Assignment,
allows a State to assume FHWA's environmental responsibilities for
review, consultation, and compliance for Federal-aid highway projects.
When a State assumes these Federal responsibilities, the State becomes
solely liable for carrying out the responsibilities it has assumed, in
lieu of FHWA. The ADOT published its application for NEPA assumption on
June 29, 2018, and solicited public comment. After considering public
comments, ADOT submitted its application to FHWA on November 16, 2018.
The application served as the
[[Page 10848]]
basis for developing a memorandum of understanding (MOU) that
identifies the responsibilities and obligations ADOT would assume. FHWA
published a notice of the draft MOU in the Federal Register on February
11, 2019, at 84 FR 3275, 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 ADOT considered comments and proceeded to
execute the MOU. Effective April 16, 2019, ADOT assumed FHWA's
responsibilities under NEPA, and the responsibilities for other 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. FHWA must make the results of each audit available
for public comment. FHWA published a notice in the Federal Register at
89 FR 85578 on October 28, 2024, soliciting comments for 30 days
pursuant to 23 U.S.C. 327(g). The audit report reflects the findings at
the time of the review and does not capture specific actions taken
after the review. This notice informs the public that the final report
of ADOT's fourth audit under the Program is available and may be
downloaded at <a href="http://www.regulations.gov">www.regulations.gov</a> under FHWA-2024-0017.
Authority: Section 1313 of Public Law 112-141; Section 6005 of
Public Law 109-59; 23 U.S.C. 327; 23 CFR 773.
Sean McMaster,
Administrator, Federal Highway Administration.
Surface Transportation Project Delivery Program
Final FHWA Audit #4 of the Arizona Department of Transportation
Executive Summary
This is Audit #4 of the Arizona Department of Transportation's
(ADOT) assumption of National Environmental Policy Act (NEPA)
responsibilities under the Surface Transportation Project Delivery
Program. Under the authority of 23 United State Code. (U.S.C.) 327,
ADOT and the Federal Highway Administration (FHWA) executed a
memorandum of understanding (MOU) on April 16, 2019, to define ADOT's
NEPA responsibilities and liabilities for Federal-aid highway projects
and other related environmental reviews for highway projects in
Arizona. This MOU covers environmental review responsibilities for
projects that require the preparation of environmental assessments
(EA), environmental impact statements (EIS), and unlisted (identified
as individual by ADOT) categorical exclusions (CE).
FHWA conducted the fourth audit of ADOT's performance according to
the terms of the MOU from March 27 to March 31, 2023. Prior to the
audit, the FHWA audit team reviewed ADOT's environmental manuals and
procedures, NEPA project files, ADOT's response to FHWA's pre-audit
information request (PAIR), and ADOT's NEPA Assignment Self-Assessment
Report. During the fourth audit, the audit team conducted interviews
with staff from ADOT's Office of Environmental Planning (EP), Civil
Rights Office, Construction Districts, Right-of-Way, Alternative
Delivery Group, and the Deputy Director, as well as the Salt River
Pima-Maricopa Indian Community Tribal Historic Preservation Officer
(THPO), the Arizona State Historic Preservation Officer (SHPO), and the
Arizona Attorney General's Office (AGO) and prepared preliminary audit
results. The audit team presented these preliminary results to ADOT EP
leadership on March 30, 2023, and to ADOT leadership on April 7, 2023.
The audit team found that ADOT has carried out the responsibilities
it assumed consistent with the terms of the MOU and ADOT's application.
The ADOT continues to develop, revise, and implement procedures and
processes required to deliver its NEPA Assignment Program. This report
describes several general observations and successful practices, as
well as identified non-compliance observations where ADOT must
implement corrective actions pursuant to MOU Part 13.2.2. This report
concludes with the status of FHWA's observations from the third audit
review. After the fourth year of ADOT's participation in the program,
FHWA will continue to monitor ADOT's compliance with the terms of this
MOU, in accordance with 23 U.S.C. 327(h).
Background
The purpose of the audits performed under the authority of 23
U.S.C. 327 is to assess a State's compliance with the provisions of the
MOU as well as all applicable Federal statutes, regulations, policies,
and guidance. FHWA's review and oversight obligation entails the need
to collect information to evaluate the success of the NEPA Assignment
Program; to evaluate a state's progress toward achieving its
performance measures as specified in the MOU; and to collect
information for the administration of the NEPA Assignment Program. This
report summarizes the results of the fourth audit in Arizona and ADOT's
progress towards meeting the program review objectives identified in
the MOU.
Scope and Methodology
The overall scope of this audit review is defined both in statute
(23 U.S.C. 327) and the MOU (Part 11). The definition of an audit is
one where an independent, unbiased body makes an official and careful
examination and verification of accounts and records. Auditors who have
special training with regard to accounts or financial records may
follow a prescribed process or methodology in conducting an audit of
those processes or methods. FHWA considers its review to meet the
definition of an audit because it is an unbiased, independent,
official, and careful examination and verification of records and
information about ADOT's assumption of environmental responsibilities.
The audit team consisted of NEPA subject matter experts from FHWA
Headquarters, Resource Center, Office of the Chief Counsel, and staff
from FHWA's Arizona Division. This audit is an unbiased official action
taken by FHWA, which included an audit team of diverse composition, and
followed an established process for developing the review report and
publishing it in the Federal Register.
The audit team reviewed six NEPA Assignment Program elements:
program management; documentation and records management; quality
assurance/quality control (QA/QC); performance measures; legal
sufficiency; and training. The audit team considered three additional
focus areas for this review: the project-level conformity procedures
outlined in 40 Code of Federal Regulations (CFR) 93; the Section 106
consultation procedures contained in the National Historic Preservation
Act of 1966 (36 CFR 800 et seq.); and ADOT's environmental commitment
tracking and implementation process. This report concludes with a
status update for FHWA's observations from the second and third audit
reports.
The audit team conducted a careful examination of ADOT policies,
guidance, and manuals pertaining to NEPA responsibilities, as well as a
representative sample of the ADOT project files. Other documents, such
as ADOT's PAIR responses and ADOT's Self-Assessment Report, also
informed this review. In addition, the audit team interviewed ADOT, the
Arizona AGO and THPO staff, as well as the Arizona SHPO in person and
via videoconference.
[[Page 10849]]
The timeframe defined for this fourth audit includes highway
project environmental approvals completed between January 1 and
December 31, 2022. During this timeframe, ADOT completed NEPA approvals
and documented NEPA decision points for seven projects. Due to the
small sample size, the audit team reviewed all seven projects. This
consisted of three EA re-evaluations, one EA with a Finding of No
Significant Impact, one draft EA that completed the public hearing and
review process, and two unlisted CEs. FHWA also reviewed information
pertaining to project tracking and mitigation commitment compliance for
all projects that have been processed by ADOT since the initiation of
the NEPA Assignment Program.
The PAIR submitted to ADOT contained 25 questions covering all 6
NEPA Assignment Program elements. The audit team developed specific
follow-up questions for the interviews with ADOT staff and others based
on ADOT responses to the PAIR. The audit team conducted a total of 18
interviews. Interview participants included staff from ADOT, a THPO and
the Arizona AGO, as well as the Arizona SHPO.
The audit team compared ADOT manuals and procedures to the
information obtained during interviews and project file reviews to
determine if ADOT's performance of its MOU responsibilities is in
accordance with ADOT procedures and Federal requirements. The audit
team documented individual observations and successful practices during
the interviews and reviews and combined these under the six NEPA
Assignment Program elements. The audit results are described below by
program element.
Overall Audit Opinion
The audit team found that ADOT has carried out the responsibilities
it has assumed consistent with the terms of the MOU. FHWA is notifying
ADOT of two non-compliance observations identified in this audit that
require ADOT to take corrective action. The ADOT must address these
non-compliance observations per MOU Part 13.2.2 and continue making
progress on non-compliance observations in the previous audits as a
section of the 327 MOU renewal process. Future monitoring reviews will
continue to report on ADOT's corrective actions. By addressing the
observations cited in this report, ADOT will continue to ensure a
successful program.
Successful Practices and Observations
Successful practices are practices that the team believes are
positive and encourages ADOT to consider continuing or expanding the
use of those practices in the future. While not accounting for all the
successful practices used by ADOT in implementing the NEPA Assignment
Program, the audit team identified four successful practices in this
report.
Observations are items the audit team would like to draw ADOT's
attention to, which may improve processes, procedures, and outcomes.
The audit team identified 13 general observations in this report.
Non-compliance observations are instances where the audit team
finds the State is not in compliance or is deficient with regard to a
Federal regulation, statute, guidance, policy, State procedure, or the
MOU. Non-compliance may also include instances where the State has
failed to secure or maintain adequate personnel or financial resources
to carry out the responsibilities they have assumed. FHWA expects the
State to develop and implement corrective actions to address all non-
compliance observations. The audit team identified three non-compliance
observations in this report.
Program Management
Successful Practice #1
The ADOT EP meets monthly with the Arizona (AZ) Division. This has
resulted in improved communication and contributes to the tracking and
ultimate resolution of issues.
Successful Practice #2
The audit team acknowledges the efforts to address lessons learned
on alternative delivery projects through the development of NEPA and
Public Private Partnership Guidance. These include improving
communication with ADOT EP and advancing environmental commitment
activities earlier for more successful projects.
Successful Practice #3
The ADOT has taken steps over the past year to improve Tribal
engagement. The ADOT EP sent letters to Tribes introducing the EP
Tribal Liaison and offered to meet. The ADOT created and filled a
Native Nations Ambassador for Infrastructure position in the State
Engineer's Office to improve communication with the Tribes and be a
point of contact for them regarding any issues. And finally, ADOT EP
developed the first project-specific Tribal Environmental Engagement
Plan which outlines communication protocols, outreach practices and
points of contact for a project that crosses into Tribal land.
Observations
Non-Compliance Observation #1: Incomplete Reporting to the Federal
Infrastructure Permitting Dashboard
The ADOT is responsible for inputting project information for
assigned projects into the Federal Infrastructure Permitting Dashboard
(Dashboard), per MOU Part 8.5.1. During the time period covered by this
audit, the audit team reviewed the Dashboard and found that it did not
include all Federal permit and authorization information for the
applicable projects assigned to ADOT. In addition, the audit team found
that not all active projects were included, updates appeared in draft
form or were not published. The audit team also found that milestone
dependencies, which are milestone dates on the Permitting Dashboard
that are contingent on the completion of another milestone found in the
permitting timetable, were not identified and there were
misidentifications of Major Infrastructure Projects which no longer
applied due to the recission of Executive Order 13807, Establishing
Discipline and Accountability in the Environmental Review and
Permitting Process for Infrastructure Projects. Per the Office of the
Secretary of Transportation Dashboard reporting standards, ADOT is
required to identify all Federal permits and authorizations that are
anticipated to be needed for the project to complete construction, and
to input target and actual milestone completion dates for those permits
and authorizations. In accordance with the Office of the Secretary of
Transportation Dashboard reporting standards, ADOT must take corrective
action to address this issue.
Observation #1: Deficiencies and Gaps in ADOT's Manuals and Procedures
The audit team reviewed ADOT's manuals and procedures. Part 4.2.4
of the MOU specifies that ADOT must implement procedures to support
appropriate environmental analysis and decisionmaking under NEPA and
associated laws and regulations. The audit team identified the
following deficiencies in ADOT's manuals and procedures which may
result in incomplete project documentation or analysis and increase the
risk for non-compliance:
<bullet> The ADOT manuals and procedures do not make a clear
statement that the 23 U.S.C. 327 MOU disclosure language is required in
the consultation that is completed as part of the NEPA process for
Local Public Agency (LPA)/
[[Page 10850]]
Certification Acceptance (CA) projects per MOU Parts 3.1.2 and 3.2.6.
<bullet> The ADOT EA/EIS Manual should be updated to clearly
indicate that a purpose and need statement should not include
discussion of the build alternative nor use the build alternative as
justification for the need to construct a transportation facility.
FHWA recommends an update to the ADOT EA/EIS Manual related to the
public involvement process for re-evaluations. While public circulation
is not required for re-evaluations, FHWA recommends that ADOT establish
a review process to determine if controversial projects or those of
public concern require public outreach, or at a minimum, to post the
NEPA document for public and stakeholder review.
Observation #2: Improvements to Tribal Engagement
Interviews with ADOT staff, the SHPO and a THPO identified the need
for ADOT to continue efforts to improve Tribal consultation practices
and relationships with Tribes. The SHPO encourages ADOT to engage
Tribes earlier, strengthen consultation processes, and build trust,
while emphasizing the need for more training of ADOT staff. The THPO
expressed continued communication and transparency issues with ADOT,
noting that ADOT lacked an understanding of Tribal consultation
requirements, frustration with continued violations of cultural
commitments during construction, and continued lack of trust. The audit
team acknowledges that ADOT seems to be attempting to work on some of
these issues, but the actions are inconsistent. FHWA recommends:
<bullet> ADOT seek input from THPOs and AZ SHPO on the
specification developed to address cultural resource commitment non-
compliance by construction contractors and advance the specification to
implementation.
<bullet> ADOT improve transparency regarding project information
for projects in Tribal land or of Tribal interest.
<bullet> ADOT build and maintain relationships with the Tribes.
<bullet> ADOT fully implement the FHWA/ADOT Tribal Consultation
Letter Agreement executed on August 5, 2022.
Observation #3: Incomplete Identification and Reporting of
Responsibilities Under the 327 MOU Assigned to Additional Divisions
Independent of ADOT EP
During Audit #3, the previous audit team identified that ADOT
divisions outside of EP have NEPA responsibilities and these divisions
have not been identified or addressed in the ADOT EP procedures; nor
were they included in the ADOT documentation and reporting. Based on
interviews of ADOT staff, the PAIR responses and review of ADOT's
manuals for this audit, ADOT has not taken corrective actions to
develop or implement procedures to apply the 327 MOU provisions to all
divisions of ADOT in accordance with MOU Part 1.1.2. In addition, the
audit team identified a lack of training and awareness of NEPA
assignment and MOU responsibilities within the other divisions, in
particular at management levels. The ADOT should identify methods to
ensure future compliance.
Non-Compliance Observation #2: Inadequate or Incomplete Documentation
and Implementation of Environmental Commitments
The ADOT is obligated to implement all committed environmental
impact mitigation measures (23 CFR 771.109(b)(2)) for projects funded
with Federal-aid. Therefore, it is also responsible for environmental
commitment tracking. The ADOT does not have a process manual or
consolidated report which documents the tracking of all environmental
commitments made during the environmental review process. Based on the
ADOT interviews, ADOT has taken steps to establish some tracking
mechanisms to cover environmental commitments which are the
responsibility of ADOT EP or the contractors. This includes official
use of the Environmental, Permits, Issues, and Commitments (EPIC)
tracking sheet. The ADOT Districts are inconsistent in how they
describe tracking commitments, and reporting whether they prepare
documentation demonstrating implementation of the remaining types of
environmental commitments. These gaps include commitment tracking that
are the responsibility of other divisions of ADOT, LPA/CA, and those
covered by a standard specification. Project file reviews indicated
that environmental commitments were not stated clearly or if they were
identified in environmental documentation, ADOT's record keeping did
not demonstrate how, when, and who is responsible for environmental
commitment documentation. The ADOT will need to take corrective actions
to address the lack of documentation, implementation and tracking of
environmental commitments and mitigation compliance.
Documentation and Records Management
Observations
Observation #4: Incomplete Project File Submission Based on a FHWA
Request for Information and Standard Folder Structure Issues
For this audit, FHWA requested all project files pertaining to the
NEPA approvals and documented NEPA decision points completed during the
audit review period. The audit review team received project file
information from ADOT, but this information was found to be incomplete
with attachments or other supporting information missing. FHWA worked
with ADOT Information Technology (IT) Group to ensure that project file
issues were not due to technology challenges resulting from the
transfer of electronic files between ADOT and FHWA. While FHWA had
fewer issues when attempting to access the files ADOT provided for the
audit than in past years, the audit team still found several
inconsistences between ADOT's procedures for maintaining project files
and the project file documentation provided to FHWA. Examples of
missing documentation included: public involvement plan (PIP); public
involvement summary report; signed noise analysis form; Section 404 and
408 documentation; Section 106 Closeout Memorandum; 327 air quality EA/
EIS checklist; authorization letters/NEPA certification approval;
Statewide Transportation Improvement Program/Transportation Improvement
Program verification; and email communication. In addition, there were
instances of missing or incomplete QC reviews, and environmental
commitments resulting from technical analysis or consultation that were
not included in the NEPA document. In these instances, the
determinations were not supported by the project file. The audit review
team could not reconcile information about project file completeness
and QC provided through interviews with the content of project files
supplied by ADOT. It may also be the case that there is a shortfall in
ADOT filing practices performed by an individual developing a project
file to ensure a project file is complete. By this observation the
audit review team is making ADOT aware that both by (1) implementing
sound internal controls related to project filing and records
retention, and (2) improving QCs, fewer ADOT files would contain errors
or omissions once the reviews are complete.
[[Page 10851]]
Observation #5: Deficiencies in Section 4(f) Analyses
The ADOT has a number of manuals and procedures that describe the
requirements for Section 4(f) analyses, consultation, and
documentation. Based on those requirements, the review team found some
of the project files to be deficient. Observations based on project
file reviews included: (1) no Section 4(f) form or memorandum; (2) lack
of documented communication with the official with jurisdiction; (3) no
research documentation to support the determinations; (4) an empty
Section 4(f) file folder; (5) a Section 4(f) resource that was not
accounted for in the project documentation; and (6) one instance where
the consultation letter did not determine whether the Section 4(f)
archeological resource had value for preservation in place. FHWA
recommends that ADOT personnel who have Section 4(f) training
identified as a requirement for their position take the training within
a year and that ADOT EP updates the Section 4(f) manual to increase
reviews and oversight of decisions made.
Observation #6: Continuing Issues With Air Quality Conformity Analysis
While ADOT has made progress regarding the level of communication
and coordination with FHWA and the U.S. Environmental Protection Agency
on project-level air quality conformity analysis, the audit team
identified areas in need of improvement. Per MOU Part 3.2.4, FHWA
retained responsibilities for conformity determinations. This authority
includes whether a conformity determination remains valid under 40 CFR
93.104(d). The ADOT does not include FHWA in the decisionmaking process
when it determines that project level conformity determinations remain
valid for re-evaluations, which conflicts with FHWA authority under 40
CFR 93.104(d). In addition, no interagency consultation is conducted by
ADOT for those decisions. Re-evaluations should be shared with
interagency consultation partners as early as possible so their input
can inform the FHWA determination of whether a conformity determination
remains valid. FHWA also recommends that, for interagency consultation,
when a consultation period ends, ADOT summarizes who responded, who did
not, and what follow-up ADOT did with those agencies that did not
provide a response. The ADOT should continue to build on the progress
made with the air quality conformity process and maintain communication
amongst all the interagency consultation partners.
Observation #7: Inconsistent Use and Absence of the 327 MOU Disclosure
Statement
Part 3.1.3 of the MOU specifies that ADOT shall include a
disclosure statement to the public, Tribes and agencies as part of
agency outreach and public involvement procedures. The audit team
project file reviews found the absence of the statement in agency
correspondence and technical reports, and public involvement materials,
as well as the wrong MOU reference when the statement was present. The
audit team found no consistent process or procedure for inclusion of
the 327 MOU disclosure statement in the current ADOT manuals or
guidance as required by MOU Part 3.1.3. The ADOT should strive to
achieve consistency in the placement of disclosure statements in
documents. The audit team acknowledges that the new ADOT PIP has
updated requirements and details to prevent instances in future public
involvement materials.
Observation #8: Deficiencies in Re-Evaluation Analyses and
Documentation
The ADOT has an EA/EIS guidance manual that contains EA re-
evaluation procedures. The manual states, ``the re-evaluation should
consider the entire project analyzed in the original NEPA document. All
environmental sections require re-evaluation to review whether impacts
have changed as compared with the previous NEPA document and whether
any impact changes result in new or significant impacts. . .
Documentation should be appropriate to the project changes,
environmental impacts from the changes, potential for controversy, and
length of time since the last NEPA document was completed.''
Observations based on project file reviews included (1) lack of
supporting documentation in the project files for all analyses
summarized in EA re-evaluation errata that support the outcome of the
re-evaluation, and (2) two project files with purpose and need
statements that changed from the original EA and did not document
whether that change affected the validity of the re-evaluation
conclusion. Based on the required procedures, the review team found
some of the project files to be deficient.
Observation #9: Inappropriate Purpose and Need Statement
The review team found that a draft EA purpose and need statement
contained a discussion of the build alternative throughout. The need
statement had a figure with the build alternative in it, travel demand
data that included the build alternative, and the connectivity
discussion referenced the build alternative. The purpose and need
statement serve as the basis for the alternatives analysis and should
not discuss alternatives. The alternatives analysis is the section of
the document to explain how the considered range of alternatives meet
the purpose and need. In addition, the purpose section of the draft EA
used population and employment growth as a justification but presented
no data.
Quality Assurance/Quality Control
Observations
Observation #10: QA/QC Procedures Lack Assessment of Compliance
The ADOT has procedures in place for QA/QC which are described in
the ADOT QA/QC Plan and the ADOT Project Development Procedures. When
implemented, ADOT focuses on the completeness of the project files, not
the accuracy or technical merits of the decisions documented by those
files. The ADOT does not appear to have an adequate process to review
and confirm compliance of the decision making according to its own
procedures and it is therefore unclear how the project-level QC reviews
inform the program. These observations were also found with Audits #1,
#2, and #3, and no updates were made to the ADOT QA/QC procedures in
response. The ADOT does not appear to have a process in place for
assessing the effectiveness of its QA/QC procedures to identify
opportunities to improve the processes and procedures in its program,
in ways that could help ensure improved compliance with MOU
requirements.
Performance Measures
Observations
Observation #11: Incomplete Development and Implementation of
Performance Measures To Evaluate the Quality of ADOT's Program
The audit team reviewed ADOT's development and implementation of
performance measures to evaluate their program as required in the MOU
(Part 10.2.1). The ADOT's QA/QC Plan, PAIR response, and self-
assessment report identified several performance measures and reported
the data for the review period. The ADOT's reporting data dealt
primarily with increasing efficiencies and reducing project delivery
schedules rather than measuring the quality of relationships with
agencies and the general public, and decisions made during the NEPA
process. The metrics ADOT has developed are not being used
[[Page 10852]]
to provide a meaningful or comprehensive evaluation of the overall
program. This observation was made in Audits #1, #2, and #3. FHWA
recommends the creation of new performance measures in the 327 renewal
MOU that ADOT would use to evaluate and improve their program.
Legal Sufficiency
During the audit period, ADOT had no formal legal sufficiency
reviews of assigned environmental documents. This is based on the
information provided by ADOT and interviews of the Assistant Attorneys
General (AAG) assigned to ADOT's NEPA Assignment Program. Currently,
ADOT retains the services of two AAGs for NEPA Assignment reviews and
related matters. The assigned AAGs have received formal and informal
training in environmental law matters and participated in a legal
sufficiency training conducted by FHWA Office of Chief Counsel in May
2023. The ADOT and the AGO also have the option to procure outside
counsel in accordance with 23 U.S.C. 327(a)(2)(G), but this was not
necessary during the audit period.
Successful Practice #4
Through the interviews, the audit team learned ADOT seeks to
involve lawyers early in the environmental review phase, with AAGs
participating in project coordination team meetings and reviews of
early drafts of environmental documents. The AAGs will provide legal
guidance at any time ADOT requests it throughout the project
development process. For formal legal sufficiency reviews, the process
includes a submittal package from ADOT's NEPA program manager
containing a request for legal sufficiency review. Various ADOT manuals
set forth legal sufficiency review periods, which involve typically a
30-day review period, and the AAGs coordinate with ADOT to ensure
timely completion of legal sufficiency reviews. In addition, the AAGs
regularly notify ADOT of relevant changes in Federal law and guidance
applicable to the NEPA Assignment Program.
Observations
Observation #12: Assertion of Attorney-Client Privilege Limits NEPA
Assignment Program Assessment
Since FHWA began auditing ADOT in 2020, the AGO's has regularly
cited attorney-client privilege when answering interview questions
posed by FHWA Office of Chief Counsel (HCC) staff about the legal
sufficiency process it employs when reviewing ADOT NEPA documents. The
ADOT's position is unique as compared to its peer NEPA Assignment
States in the West. FHWA's HCC interviewers have affirmed,
consistently, they seek only to understand the role of the AGO's in
implementing ADOT's NEPA Assignment Program and do not seek privileged
communications or advice. Nevertheless, the AGO's has maintained that
disclosing any specific information about its role in advising on legal
issues would constitute a waiver of attorney-client privilege under the
State's open records act and could present legal risks to their
clients. As a result, FHWA interviews of the AAG's have produced a
somewhat informative, but limited and incomplete understanding of the
AGO's role in NEPA Assignment matters in AZ.
Training
Observation #13: Training Gaps
The audit team reviewed ADOT's 2023 Training Plan, interview
responses, and ADOT's PAIR responses pertaining to its training
program. The ADOT's EP staff training matrix indicates that many staff
have not taken the required training. In addition, there is no data
regarding training from the other divisions within ADOT who have 327
MOU responsibilities. The ADOT made no changes to the ADOT training
plan in response to FHWA's previous training gap observations.
Status of Previous General Observations and Non-Compliance Observations
From the Audit #3 Report
This section describes the actions ADOT has taken or is taking in
response to observations made during the third audit. The ADOT was
provided the third audit draft report for review and provided comments
to FHWA on November 17, 2022.
Non-Compliance Observation #1: Incomplete Reporting to the Federal
Infrastructure Permitting Dashboard
During Audit #3, the audit team identified deficiencies in the
information ADOT is required to post on the Dashboard. The ADOT did
post some of the additional projects and missing project information to
the Dashboard but not until the week before audit week. The ADOT needs
to establish a consistent and ongoing process to maintain the project
information required to be inputted into the Dashboard.
Observation #1: Deficiencies and Gaps in ADOT's Manuals and Procedures
During Audit #3, the audit team identified deficiencies in ADOT's
manuals and procedures which may result in incomplete project
documentation or analysis and increase the risk for non-compliance. The
first was in the ADOT CE Checklist Manual and the EA/EIS Manual,
specifically the process for re-evaluations for EAs and EISs was not
well-defined. The other was that neither the ADOT EA/EIS Manual nor the
current 2017 ADOT PIP approved prior to NEPA assignment contained
procedures detailing the criteria ADOT uses to make the determination
on when to hold public hearings for EA-level projects and what criteria
will be used to make determinations on whether to hold a public hearing
when one is requested, as specified in 23 CFR 771.111(h)(2)(iii). The
ADOT EA/EIS Manual was not updated to address this deficiency and the
updated PIP was not approved at the time of the audit. The deficiencies
identified in Audit #3 were not addressed by ADOT, and additional
related issues were identified by the audit team in Audit #4.
Observation #2: Improvements to Tribal Engagement Are Warranted
The audit team observed in Audit #3 the need for improved
engagement with the Tribes for ADOT to develop procedures that identify
its responsibilities to coordinate and consult with Tribes in all
phases of project development, and implementation of the FHWA/ADOT
Tribal Consultation Letter Agreement executed on August 5, 2022. The
deficiencies identified in Audit #3 were not addressed completely by
ADOT, as the Letter Agreement was not fully implemented, and continued
issues were identified by the audit team in Audit #4. The ADOT staff
participated in the Section 106 and Tribal Consultation Training given
by the Advisory Council on Historic Preservation and FHWA staff on June
13 and June 14, 2023.
Non-Compliance Observation #2: Responsibilities Under the 327 MOU
Assigned to Additional Divisions Independent of ADOT EP
During Audit #3, the team identified ADOT divisions outside of EP
that have responsibilities under NEPA Assignment. These divisions have
not been identified by ADOT EP during the past review processes or
addressed in the ADOT EP procedures, manuals, or plans. The ADOT was
directed to develop and implement procedures to apply the 327 MOU
provisions to all divisions of ADOT who have responsibilities under the
327 MOU.
[[Page 10853]]
The current audit team did not observe any progress on this corrective
action.
Non-Compliance Observation #3: Deficiencies in Environmental Commitment
Tracking
During Audit #3, ADOT was unable to provide FHWA with a process
manual or consolidated report documenting the tracking of environmental
commitments made during the environmental review process. The ADOT was
unable to identify a meaningful tracking and monitoring system for
environmental commitments and mitigation compliance. Since the last
audit, ADOT has developed a spreadsheet for EP responsibilities and has
rolled out the EPIC tracking sheet process which covers the Contractor
responsibilities--non-standard specification commitments only. There is
still no process manual or consolidated reporting of all environmental
commitments required for each project.
Non-Compliance Observation #4: Incomplete Project File Submission and
Standard Folder Structure Issues
As was observed in previous audits, during Audit #3, the audit team
found several inconsistencies between ADOT's procedures for maintaining
project files and the project file documentation provided to FHWA.
Since that audit, ADOT's IT Group worked with the AZ Division to
resolve the project file issue on the technological side. The ADOT IT
Group determined that the electronic transfer process is working and is
therefore not the cause of the incomplete project file submissions.
Observation #3: Minor Edits Needed To Resolve Deficiency in Section
4(f) Evaluation of Archaeological Resources
During Audit #1 and #2, FHWA identified inconsistencies with ADOT's
Section 4(f) evaluation and documentation of archaeological sites. In
response to the Audit #2 finding, ADOT updated their Section 106
Federal-aid Programmatic Agreement Manual with new preservation in
place language and in Audit #3 FHWA recommended edits to the new
language. The ADOT has made the recommended edits.
Observation #5: Inconsistent Use and Absence of the 327 MOU Disclosure
Statement
During Audit #3, the audit team project file reviews found
inconsistent use of the disclosures statement on agency correspondence
and technical reports, as well as absence of the statement in public
involvement materials. The audit team found no consistent process or
procedure for inclusion of the 327 MOU disclosure statement in the ADOT
manuals and guidance as required by MOU Part 3.1.3. The ADOT has
drafted a new PIP that contains disclosure statement guidance, but no
updates were found in the ADOT EP manuals.
Observation #6: QA/QC Procedures Lack Assessment of Compliance and
Observation #8: QA/QC Procedures Do Not Inform the Performance Measures
The audit team identified continuing issues with ADOT's QA/QC
procedures, including the fact that ADOT does not check for compliance
of the decision making and it is therefore unclear how the project-
level QC reviews inform the program. These observations were also found
with Audits #1, #2, and #3. In addition, it is unclear how the QA/QC
procedures, such as the use of QC checklists, are informing ADOT about
the technical adequacy of the environmental analyses conducted for
projects and thereby inform the performance measures. No updates to the
ADOT QA/QC procedures were made.
Observation #8: Incomplete Development and Implementation of
Performance Measures
During Audit #2 and #3, the audit team reviewed ADOT's performance
measures and reporting data submitted for the review period and
concluded that ADOT had made progress toward developing and
implementing its performance measures. For Audit #4, FHWA continues to
identify this program objective as an area of concern, described in the
observations above, and will continue to evaluate this area in
subsequent audits.
Observation #9: Training Gaps
The audit team reviewed ADOT's 2021 training plan and ADOT's PAIR
responses pertaining to its training program. The ADOT's EP staff
training matrix indicates that while ADOT identifies the availability
of staff training, many staff have not taken advantage of the
opportunity for training, including other ADOT divisions subject to the
327 MOU provisions. The ADOT's training plan identifies that the
training interval for some topics, such as the NEPA Assignment Program,
is once only per staff member regardless of the period of time since
the previous round of training. Staff may benefit from regular
``refresher'' type training, especially as regulatory requirements and
policy may change over time. No changes in response to this observation
were made to the 2023 training plan.
Finalizing This Report
FHWA provided a draft of the audit report to ADOT for a 14-day
review and comment period pursuant to Part 11.4.1 of the MOU, as well
as notification of the non-compliance observations. The ADOT provided
comments which the audit team considered in finalizing this draft audit
report. The audit team acknowledges that ADOT has begun to address some
of the observations identified in this report and recognizes ADOT's
efforts toward improving their program. This includes an action plan
defined by ADOT and the AZ Division Office to address non-compliance
observations identified in the AZ Program reviews to date. FHWA
published the draft audit report for public comment pursuant to 23
U.S.C. 327(g)(2)(B) and no comments were received. FHWA is publishing
this notice in the Federal Register for the final audit report.
[FR Doc. 2026-04353 Filed 3-4-26; 8:45 am]
BILLING CODE 4910-22-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.