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

Federal Highway Administration
August 11, 2009 – August 10, 2010

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 to Congress an annual report on the administration of the Surface Transportation Project Delivery Pilot Program (Pilot Program). This is the fifth report submitted to Congress and provides information on the activities of the Pilot Program during its fifth year, from August 11, 2009, to August 10, 2010.

California continues to be the only State participating in the Pilot Program. During the past year, the California Department of Transportation (Caltrans) has functioned successfully under the Pilot Program and has worked on continuous process and procedural improvements, in response to feedback from the FHWA audits and their self-assessments. See the Observations section below for more specifics.

Introduction

The 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. 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 to Congress on the Pilot Program, issued on September 12, 2006, outlined the preliminary activities in implementing the Pilot Program. The second Report to Congress, issued on October 10, 2007, discussed the activities in preparing for administering the program, ensuring ongoing communication and coordination with the pilot States, and addressing the audit process. The third Report to Congress, issued on April 29, 2009, detailed the administration by FHWA of California's participation in the Pilot Program and included the first FHWA audit report on the January 2008 audit. The fourth Report to Congress included the FHWA second audit report on the July 2008 audit and the FHWA third audit report on the January 2009 audit. This report will include the fourth FHWA audit report on the July 2009 audit (Appendix A), as well as discussing the fifth FHWA audit completed July 26-30. The audit report for that fifth audit is currently being drafted and finalized by FHWA. This report will also discuss the progress that Caltrans has made during the past 3 years of the Pilot Program and what FHWA has learned in those 3 years.

Observations

This Report to Congress occurs at the milestone marking the 3-year point of Caltrans' participation under the Pilot Program. The FHWA feels that it is appropriate and responsible to reflect on the past 3 years and to mention that in accordance with 23 U.S.C. 327(i)(1) “the program shall terminate on the date that is 6 years after the date of enactment of this section” which will be August 10, 2011.

Caltrans continues to respond and implement corrective measures for findings identified in the FHWA audits and also for findings from the Caltrans internal self assessments. Caltrans has found that there are process and procedural improvements that were needed, continue to be needed, and are working on improving these areas. These include: 1) implementation of the Uniform Filing System, 2) expanded Quality Assurance/Quality Control (QA/QC) process to include final review of the environmental document, 3) documentation process for the class of action determination, 4) legal sufficiency review process, 5) tracking history of changes made to the Standard Environmental Reference, 6) development of online training courses, 7) development of performance measures, and 8) sharing and implementing with all of Caltrans best practices identified in specific Caltrans Districts.

The FHWA, in its audit reports, has acknowledged the improvements that Caltrans has made in its processes and procedures. Caltrans, a very large and decentralized organization, encounters challenges with consistency across its 12 Districts. The audits have reflected this consistency issue, as findings for the same assumed responsibility greatly varied from District to District. In a situation like this, there is a strong need for a statewide management and quality assurance system to assure compliance. The audits conducted did not show that such a system exists within Caltrans. The FHWA has also identified other ongoing issues that have yet to be resolved. These include: comprehensive tracking of staff resources needed to carry out the responsibilities assumed, accuracy of quarterly reports sent to FHWA, and limitations of identified performance measures.

From the past 3 years of the Pilot Program participation by Caltrans, some lessons learned by FHWA are:

While the Pilot Program has not had the benefit of operating across different States, the variation across Caltrans' 12 Districts does provide insight into differing and effective approaches to the assumption of the Secretary's responsibilities. The variation across the Caltrans Districts provides a broader perspective for the Pilot Program than a State with a highly centralized or consistent approach would have. Lessons learned that should benefit other States who would be interested in participating in the Pilot Program are:

The Audit Process

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 audits is to assess pilot State compliance with the Memorandum of Understanding (MOU) for participation in the Pilot Program and the applicable Federal laws and policies, collect information needed to evaluate the success of the Pilot Program, evaluate pilot State progress toward achieving its performance measures, and collect information needed for the Secretary's annual Report to Congress on the administration of the Pilot Program. The FHWA is also required by 23 U.S.C. 327(g) to present the results of each audit in an audit report. The 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.

An effective audit process must assess compliance with program requirements, provide an independent perspective on the success of the program, and provide technical assistance, when possible. In the case of a Pilot Program, the audit process also should enable the development of lessons learned for other State departments of transportation (DOTs) that might participate in the Pilot Program or another similar program in the future.

Limitations of Audits Conducted To Date

The conclusions presented in the audit reports are opinions based upon interviews of selected persons at Caltrans who are knowledgeable about past and current activities related to the execution of the Pilot Program, and a review of selected documents over a limited time period. The FHWA audit team's ability to conduct the audits and make determinations of Caltrans' successful participation in having met its commitments under the Pilot Program has been further limited by the following:

Audit Team

The FHWA leads and conducts each compliance audit of a State DOT participating in the Pilot Program. The audit teams for the five completed audits have included representatives from the following FHWA offices and Federal agencies, with the only variable being the Federal resource agency representative:

Audit Reports

Following the completion of each on-site audit to a State DOT, an audit report is prepared by the audit team. The report consists of background, scope of the audit, audit process and implementation, overall audit opinion, and findings sections. Each audit report is developed by the audit team. The FHWA permits the State DOT to review and comment on the draft report before publishing it in the Federal Register.

The draft audit report is published in the Federal Register for public comment for a period of at least 30 days. Any comments received, with appropriate responses by FHWA, will be incorporated into the final audit report. The final audit report also is published in the Federal Register. The FHWA audit report includes all the comments received with the appropriate responses.

Fourth Caltrans Audit — July 27 - July 31, 2009

The FHWA audit team conducted the fourth onsite audit of Caltrans' participation in the Pilot Program from July 27 - 31, 2009. The FHWA audit team continued to examine Pilot Program areas to confirm compliance in accordance with the established criteria in the MOU and Caltrans' application for assumption, as well as to identify Pilot Program areas in need of improvement to meet the established criteria. The audit team focused its onsite visits to review of project files and compliance with all assumed responsibilities. The audit team visited Caltrans Districts 5, 7, 11 and 12. Prior to the onsite audits, and also during the onsite audits, interviews were conducted with agency staff in the following Federal resource and permitting agencies: the U.S. Army Corps of Engineers (USACE); the USFWS; the USFS; the National Oceanic and Atmospheric Administration (NOAA); and the Environmental Protection Agency (EPA) regional offices in California. During the on-site audit, interviews were conducted with 80 staff at the four Caltrans District offices visited, legal staff in Caltrans Headquarters, and USACE staff in the Los Angeles District office. The audit team also reviewed project files and records for over 45 projects under the Pilot Program.

The fourth audit report was published in the Federal Register for a 30-day comment period. There were no comments received by FHWA during the comment period. Therefore, the FHWA felt that there was no need to revise the draft audit report. The final audit report was published in the Federal Register March 3 and can be found at http://edocket.access.gpo.gov/2010/2010-4432.htm and also in Appendix A.

Fifth Caltrans Audit — July 26 - July 30, 2010

The FHWA audit team conducted the fifth onsite audit of Caltrans' participation in the Pilot Program from July 26-30. The FHWA audit team focused its onsite visits to the review of project files, compliance with Section 4(f) and other environmental laws, re-evaluations, training, and the impact of State furloughs and loss of staff. The audit team visited Caltrans Districts 3, 4, 5, 7, 8, and 12. Prior to the onsite audits, and also during the onsite audits, interviews were conducted with agency staff in the following Federal resource and permitting agencies: the USACE; the USFWS; the USFS; the NOAA; the National Park Service; ACHP; and the EPA. During the on-site audits, the FHWA team interviewed over 70 Caltrans staff and reviewed over 80 project files under the Pilot Program. The report for the fifth audit is currently being drafted and when finalized will be published in the Federal Register for a 30-day comment period.