REPORT TO CONGRESS ON THE SURFACE TRANSPORTATION PROJECT DELIVERY PILOT PROGRAM ACTIVITIES

Federal Highway Administration
August 11, 2006 – August 10, 2007

As stated in Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) Section 6005 (a), codified as 23 United States Code (U.S.C.) 327(h), the Federal Highway Administration (FHWA) shall submit an annual report to Congress on the administration of the Surface Transportation Project Delivery Pilot Program. This is the second report issued to Congress and provides information on the activities of the pilot program during its second year, from August 11, 2006 to August 10, 2007.

Introduction

The Surface Transportation Project Delivery Pilot Program, codified as 23 U.S.C. 327, establishes a program to allow the 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. (See Appendix A for a copy of this section of the legislation.) The Secretary may permit State departments of transportation (SDOT) in not more than five States, including the five States specifically identified in the statute, Alaska, California, Ohio, Oklahoma, and Texas—to participate in the pilot program. 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 liable for carrying out the responsibilities it has assumed, in lieu of FHWA.

The first report on the pilot program, which was issued to Congress on September 12, 2006, outlined the preliminary activities in implementing the pilot program. (See Appendix B for a copy of the 2005–2006 report.) This report details the activities in preparing for the administration of the program, ensuring ongoing communication, and coordination with the pilot States, and addressing the audit process.

Caltrans Enters Pilot Program

The Memorandum of Understanding (MOU) between FHWA and Caltrans concerning the State of California's participation in the pilot program was executed on June 29, 2007, to be effective July 1, 2007. Under this MOU, Caltrans assumed FHWA's responsibilities under NEPA, as well as FHWA's consultation and coordination responsibilities under other Federal environmental laws for most highway projects in California. The program will be effective through August 2011, assuming the California legislature extends the required waiver of sovereign immunity beyond the current expiration date of January 2009. The waiver makes the State subject to Federal court jurisdiction in place of FHWA in the event of a lawsuit. The MOU between FHWA and Caltrans is included in Appendix D.

Activities on Administration of Pilot Program

Rulemaking
The final rule for the pilot program, codified as 23 C.F.R Part 773, was published in the Federal Register on February 12, 2007 and went into effect on March 14, 2007. The final rule established the application requirements for State participation in the pilot program.

The preamble of the final rule discussed the comments collected from the notice of proposed rulemaking (NPRM). As reported in the first report to Congress, FHWA published its NPRM on April 5, 2006 at 71 FR 17040. In response to the NPRM, FHWA received 10 comments. The commenters included two Federal agencies, three SDOTs, one public interest group, two associations, and a consolidated group of comments from each of the SDOTs designated by the statutes as pilot program participants. One SDOT (AK) submitted two comments. The majority of the comments addressed several common issues.

Significant changes to the NPRM reflected in the final rule (by FHWA) based on comments received include the following:

Resource Agency Solicitation
23 U.S.C. 327(b)(5) requires FHWA to solicit the views of other affected Federal agencies before approving a State's application. In March 2007, FHWA contacted the designated liaisons in Federal resource agencies' Headquarters to inform them and request feedback on the developed process to solicit comments on State applications for the pilot program. The agencies contacted were the U.S. Army Corps of Engineers, U.S. Fish and Wildlife Service, U.S. Environmental Protection Agency, Advisory Council on Historic Preservation, the Council on Environmental Quality, and the National Oceanic and Atmospheric Administration. All agencies indicated support for the process and provided no comments.

Letter of Interest
As prescribed in Section 773.105 (b) of the final rule, the SDOTs of Alaska, California, Ohio, Oklahoma, and Texas were required to submit a statement of interest within 60 days of March 14, 2007, the date the rulemaking went into effect. The deadline to receive these letters was May 14, 2007.

Three of the five States — Alaska, California, and Oklahoma — submitted letters to their respective FHWA Division Offices stating their interest in participating in the pilot program. Two States — Ohio and Texas — declined to participate in the pilot program. The Ohio DOT declined participation in the pilot program in an email to FWHA dated March 30, 2007. The Ohio DOT (ODOT) explained that they were "unable to enact the necessary State legal authority to implement this program." In addition, ODOT has concerns with the State's inability to advance our transportation program with the use of State funds, which may offset any time savings realized from the delegation." TxDOT originally submitted a letter, March 5, 2007, indicating interest in participating in the pilot program. However, a letter was issued June 6, 2007, from TX DOT to the FHWA Texas Division Office declining participation at this time due to the fact that they were unable to obtain "required legislative authority."

To fill the open positions, a Federal Register notice was published July 9, 2007, to solicit interest from other States to participate in the pilot program. States were asked to indicate their interest by submitting a letter to FHWA by September 7, 2007. The Federal Register notice referred them to the Final Rule (23 CFR 773), which laid out the application requirements. The Federal Register notice can be found in Appendix C.

Application Process
The requirements for the pilot program application were defined in Section 773.106 in the Final Rule. FHWA Division Offices are working with the pilot program SDOTs to develop the State's application for FHWA. SDOTs may use the Final Rule's format outlining the requirements to shape their applications.

Based on experience gained to date, the biggest obstacle for States in preparing to submit an application is the difficulty that States have had in securing the legal authority under State law to waive their sovereign immunity and stand in FHWA's place in environmental litigation in Federal court. This is a prerequisite to submitting an application for participating in the pilot program. In most States, this requires new State legislation and can be a lengthy process under scrutiny by the State legislature.

After the State has waived its sovereign immunity and prior to submitting its application to FHWA, the SDOT is required to make its application available for public comment for 30 days. Section 773.106 (8)(i) explains that the SDOT must "solicit public comment by publishing the complete application of the State in accordance with the appropriate pubic notice law of the State." Copies of all comments received are also required to be submitted with the application.

At the time of this report, Caltrans is the only SDOT that has submitted an application. Caltrans published an application for public comment on March 14, 2007 and received 15 comments. Comments were received from three Federal agencies, six local government agencies, three Native American Tribes or organizations, and three citizens and interest groups.

The table below summarizes the status of the applications for SDOTs participating in the pilot program.

Application Status for SDOTs
SDOT Letter of Interest Submitted Sovereign Immunity Waived 30-day Public Comment Period Completed Application Submitted to FHWA Application Approved
Alaska May 14, 2007 X      
California March 15, 2007 X April 16, 2007 May 22, 2007 June 29, 2007
Ohio Declined participation, March 30, 2007
Oklahoma May 14, 2007        
Texas March 8, 2007 Declined participation, June 6, 2007


FHWA/DOT Pilot Program MOU
Upon FHWA approval of the SDOT's application, the State enters into a MOU with FHWA to formalize the State's application. This MOU will serve as the final, approved application. Over the past year, FHWA has worked on creating a generic and flexible format of the MOU for States to customize. The FHWA has shared this with the SDOTs and resource agencies for comment.

The MOU between Caltrans and FHWA was finalized June 29, 2007, and became effective July 1, 2007. All MOUs signed by a SDOT and FHWA will be posted on FHWA's Environmental Review Toolkit website at http://environment.fhwa.dot.gov/strmlng/es2safetealu.asp. The FHWA/Caltrans MOU is also included in Appendix D.

Performance Measurements
Performance measures were created and agreed to collaboratively by FWHA and participating FHWA Division Offices and SDOTs. The performance measures were incorporated into the MOU format and include the following four main categories:

  1. Compliance with NEPA and other Federal laws and regulations
  2. Attainment of supportable NEPA decisions
  3. Monitoring of relationships with agencies and the general public and
  4. Timely completion of NEPA process.

These four categories each have specific activities identified and further described in the MOU. The audit team will use the performance measure activities as one aspect to help assess each SDOT's compliance with the MOU.

Communication and Coordination

The FHWA has been working with each of the participating FHWA Division Offices and SDOTs to ensure proper communication and coordination necessary to achieve effective implementation of the pilot program. These Division Offices have in turn been communicating about the pilot program with their SDOTs as well as with the Federal and State resource agencies in their States.

Working Group
As reported in the first report to Congress, FHWA created a working group composed of representatives from the FHWA Office of Project Development and Environmental Review, FHWA Chief Counsel Office, and environmental staff in the pilot States' FHWA Division Offices. The working group has been holding weekly conference calls since September 2005 to discuss and work on all aspects of the implementation of the pilot program. In February 2007, FHWA began including the participating SDOTs in their calls. It was at this point that FHWA believed the participating States could greatly contribute to the discussion on planning for the application, MOU, and audits. The conference calls rotate between being solely FHWA, and FHWA and SDOTs. In early June 2007, the conference call schedule was changed to be on an as needed basis while the participating SDOTs began preparing their application. Since the MOU with Caltrans has been signed and, therefore, the audit schedule for that State has begun, weekly conference calls with the audit team for the first audit (to be scheduled in January 2008) will be held once the audit team members have been selected.

The FHWA also maintains constant communication with the FHWA Division Administrators of the participating States to discuss the implementation of the pilot program, the responsibilities of the division's environmental staff, and the impact of the pilot program on FHWA's overall environmental program.

Legal Training
As SDOTs began preparing for assuming NEPA responsibilities and liability, States expressed concern that their legal staff may not be properly trained in Federal statutes and the FHWA legal sufficiency review process. To address this, FHWA prepared a legal workshop for State attorneys and key practitioners. The workshop was held in Sacramento, California, April 17-19, 2007, and also provided a call-in number for those unable to travel to attend. The workshop provided an overview on legal sufficiency review, SAFETEA-LU Section 6002 (the Environmental Review Process) and NEPA, as well as provided time for open discussion. Four pilot States (California, Alaska, Oklahoma, and Texas) participated in the training, with over 40 people attending.

FHWA Roles and Responsibilities
In order to define the role of FHWA and participating Division Offices, FHWA created a document outlining the expected roles and responsibilities of FHWA staff. Division office staff provided comments on this document, and it was also shared with Division Administrators to clearly communicate expectations and be used as a reference. In April 2007, this document was also shared with the participating SDOTs to further clarify FHWA's role in the audit process and the coordination required with the SDOT to help prepare for the audits. See Appendix E for a copy of the document.

Website
The FHWA has created two websites to help support communication of the pilot program to the public and key participants. As mentioned above, all MOUs and related updates on the pilot program will be made available on the Environmental Review Toolkit at http://environment.fhwa.dot.gov/strmlng/es2safetealu.asp. In addition, a password-protected website has been created for the audit team to assist in managing the audit logistics, including pre- and post-audit documents, travel schedules, and meeting agendas.

The Audit Process and Related Activities

Audit Team
As described in the first report to Congress, Section 6005 of SAFETEA-LU (23 U.S.C. 327(g)) requires that FHWA conduct audits of each participating SDOT to ensure compliance by the SDOT in meeting all Federal laws for which the SDOT has been delegated responsibility. Semiannual audits will occur during each of the first 2 years of State participation in the pilot program; annual audits are to take place during each subsequent year of State participation. The audit team will include representatives from the following offices or agencies:

Each audit will include at least one member from the above offices. Only one resource agency member will be included in each audit team. This member will be selected based on the identified themes or issues of the audit visit, pre-audit information collected from the State's FHWA Division Office, and team member schedules.

Audit Training
SAFETEA-LU specified that FHWA perform compliance audits of the pilot States. In order to do this, FHWA contracted with consultants who had expertise in compliance auditing and training to assist FHWA in the development of their audit process and procedures for the pilot program.

This training and assistance has been done in two phases. The first phase resulted in three training sessions on the basics of compliance auditing. In January 2007, three, two-day audit training sessions were held at the following locations and included the following participants:

  1. Washington, DC — FHWA Headquarters and Federal resource agency Headquarters staff who will be members of the audit team pool.
  2. Austin, TX — FHWA and SDOT staff (Texas, Oklahoma, and Ohio).
  3. Sacramento, CA — for FHWA and SDOT staff (California and Alaska).

The second phase of this assistance began in May 2007 and involved the development of the pilot program audit process and procedures, which included the development of checklists to be used during the audits. Also, as part of this phase, State specific workshops are being planned to be held in each pilot program State to work on the State's specific procedures, based on that State's MOU, for the auditing in that State. These workshops will take place after each MOU is finalized and will include staff from FHWA and the SDOT. A "walk through" of the audit training on the process and procedures was held in FHWA Headquarters August 1-2, 2007. The FHWA Headquarters staff and Federal resource agency Headquarters staff who will be a part of the audit team "pool" attended this session. The session for the training of the audit process and procedures for Caltrans and the FHWA California Division Office was held in Sacramento, California, August 22-23, 2007.

Audit Reports
Audit reports will be made available for public comment during a 60-day comment period. The comments received, along with responses by FHWA, will become part of the audit report. An audit point of contact has been designated for each SDOT in the pilot program, as well as a point of contact for each FHWA Division Office in participating States.

Appendices (see attachment)

A. SAFETEA-LU Surface Transportation Project Delivery Pilot Program Legislation
B. 2005-2006 Report to Congress
C. Notice; solicitation of applications
D. Final Caltrans MOU
E. FHWA Roles and Responsibilities