[4910-22-P]
DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
[FHWA Docket No. FHWA-2023-0005]
Surface Transportation Project Delivery Program; Arizona Department of
Transportation Final FHWA Audit Report
AGENCY: Federal Highway Administration (FHWA), Department of Transportation
(DOT).
ACTION: Notice.
SUMMARY: The Moving Ahead for Progress in the 21stCentury Act established the
Surface Transportation Project Delivery Program (referred to as National Environmental
Policy Act (NEPA) Assignment Program), which allows a State to assume FHWA’s
environmental responsibilities for environmental review, consultation, and compliance
under NEPA. 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 third audit of
the Arizona Department of Transportation’s (ADOT) performance of its responsibilities
under the NEPA Assignment Program. This notice announces the final third audit report
for ADOT.
FOR FURTHER INFORMATION CONTACT: Owen Lindauer, PhD., RPA, Office
of Project Development and Environmental Review, (202) 633-2655,
owen.lindauer@dot.gov, Federal Highway Administration, U.S. Department of
Transportation, 1200 New Jersey Avenue, SE., Washington, DC 20590, or Ms. Michelle
Andotra, Office of the Chief Counsel, (404) 562-3679, michelle.andotra@dot.gov,
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 www.regulations.gov.
Background
The Surface Transportation Project Delivery Program, codified at Title 23, United
Sates Code (U.S.C.), section 327, commonly known as the NEPA Assignment Program,
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 basis for developing a memorandum of understanding
(MOU) that identifies the responsibilities and obligations that ADOT would assume. The
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. The FHWA must make the results of

each audit available for public comment. The FHWA published a notice in the Federal
Register at 88 FR 67424 on September 29, 2023, soliciting comments for 30 days
pursuant to 23 U.S.C. 327(g). As a result of the notice one non-substantive comment was
submitted. The FHWA removed what was Observation #4 because, on reflection,
ADOT’s Section 4(f) manual adequately explained the expected documentation. This
notice makes available the final report of ADOT’s third audit under the program. The
final audit report is available for download at www.regulations.gov under FHWA-20230005.
Authority: Section 1313 of Public Law 112-141; Section 6005 of Public Law 109-59;
23 U.S.C. 327; 23 CFR 773.

Shailen P. Bhatt,
Administrator,
Federal Highway Administration.

Surface Transportation Project Delivery Program
FHWA Audit #3 of the Arizona Department of Transportation
Executive Summary
This is Audit #3 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 Title 23, United States
Code (U.S.C.), Section 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).
The FHWA conducted a third audit of ADOT’s performance according to the terms of
the MOU from March 28 to April 1, 2022. 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 third audit, the audit team conducted
interviews with staff from ADOT’s Environmental Planning (EP), Civil Rights Office,
Communications, Construction Districts, Contracts & Specifications, as well as the Gila
River Indian Community Tribal Historic Preservation Office (THPO), the Hopi THPO,
the Salt River Pima-Maricopa Indian Community 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 leadership on April 1, 2022.
The audit team found that ADOT has carried out the responsibilities it assumed
consistent with the intent 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 prior to the next audit. While ADOT has expressed lack of
full agreement on some of the past audit observations, the audit team does recognize that
ADOT continues to act on those past observations. By doing so, ADOT continues to
assure successful program assignment.
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. The FHWA’s review and oversight
obligation requires FHWA 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 third 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. The 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 (SME) 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 four additional focus areas for this review: the procedures contained in 40
CFR part 93 for project-level conformity; the procedures contained in Section 4(f) of the
U.S. Department of Transportation Act of 1966, codified at 49 U.S.C. 303 and 23 U.S.C.
138 (otherwise known as Section 4(f)); environmental justice evaluations (Environmental
Justice per Executive Order (E.O.) 12898, Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations, and Tribal consultation per
the National Historic Preservation Act (NHPA) of 1966, 36 CFR 800 et seq., E.O. 13175,
Consultation with Indian Tribal governments); and additionally, ADOT’s environmental
commitment tracking process. This report concludes with a status update for FHWA’s
observations from the first and second 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
ADOT’s 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, Arizona AGO, Tribal THPO staff, as well as the Arizona SHPO via
videoconference.
The timeframe defined for this third audit includes highway project environmental
approvals completed between January 1 and December 31, 2021. During this timeframe,
ADOT completed NEPA approvals and documented NEPA decision points for six
projects. Due to the small sample size, the audit team reviewed all six projects. This
consisted of one Tier 1 EIS, one EA with a Finding of No Significant Impact, and four
unlisted CEs. The 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’s responses to the PAIR. The
audit team conducted a total of 23 interviews. Interview participants included staff from
ADOT, Tribal THPOs, 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 ADOT has carried out the responsibilities it has assumed consistent
with the intent of the MOU and ADOT’s application. The FHWA is notifying ADOT of
five non-compliance observations identified in this audit that require ADOT to take
corrective action. The ADOT must address these non-compliance observations and
continue making progress on non-compliance observations in the previous audits prior to
the next audit. 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. The
audit team identified successful practices in this report.
Observations are items the audit team would like to draw ADOT’s attention to, and for
which ADOT may consider improving processes, procedures, and/or outcomes. The
team identified nine 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 and/or financial resources to
carry out the responsibilities they have assumed. The FHWA expects the State to
develop and implement corrective actions to address all non-compliance observations.
The audit team identified five non-compliance observations in this report.
Program Management
Successful Practice #1
The ADOT’s PAIR response indicated, and interviews confirmed, that ADOT EP is
working with the ADOT Civil Rights Office (CRO) to develop an environmental justice
standard work process. This will establish the roles and responsibilities between the two
ADOT offices and ensure the CRO’s technical review of the environmental justice
analysis is completed.
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 Section 8.5.1.

During the audit, the audit team reviewed the Dashboard and found that it did not include
Federal permit and authorization information for any of the applicable projects assigned
to ADOT beyond NHPA Section 106 consultation. The audit team confirmed during
interviews that ADOT had identified the need for additional permits and authorizations
for these projects but had not uploaded the permit information in the Dashboard because
those activities were planned far in the future. 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. Target dates for milestones shall be based upon the best available
information. The ADOT must take corrective action to address this issue by the next
audit.
Observation #1: Deficiencies and gaps in ADOT’s manuals and procedures
The audit team reviewed ADOT’s manuals and procedures. Section 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 noncompliance:
• In Audit #2, the audit team identified an observation that the ADOT EA/EIS
Manual does not contain complete procedures for EA or EIS-level re-evaluations.
The EA/EIS Manual instead points to the ADOT Categorical Exclusion (CE)
Manual for direction, therefore the process for EA/EIS re-evaluations continues to
be incomplete and not well-defined. The FHWA requested the correction of the
EA or EIS-level re-evaluation section of the EA/EIS Manual in Audit #2. To
date, ADOT has not made the correction as requested by FHWA, therefore, this is
a continuing observation.
• The ADOT EA/EIS Manual and the current 2017 ADOT Public Involvement Plan
approved prior to NEPA assignment do not contain 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 has indicated in its response to the PAIR and in
interviews that they are in the process of updating the ADOT Public Involvement
Plan to include more specificity on, and fulfilling the requirements for, public
involvement under NEPA. The procedures should also be referenced in the
ADOT EA/EIS Manual.
The ADOT acknowledged the need for improvement regarding manuals/guidance and
version control. The FHWA recommended that ADOT revisit their current procedures
for updating manuals/guidance, from use of amendment tables to use of document dates
to reflect the latest/most current version.
Observation #2: Improvements to Tribal engagement warranted
Interviews with ADOT staff and THPOs identified the need for improvements to Tribal
consultation practices. The THPOs expressed frustration that ADOT’s approach to
engagement with the Tribes was lacking outside of Section 106, and engagement
completed under Section 106 did not constitute meaningful engagement.

The ADOT should develop procedures that identify their responsibilities to coordinate
and consult with Tribes in all phases of project development from planning through
construction. The FHWA recommends:
• ADOT improve transparency regarding project information;
• ADOT provide the Tribes with any SHPO Section 4(f) consultation as part of the
Tribal consultation package for individual projects; and
• All ADOT personnel with visibility on projects or who participate in meetings
with Tribes complete sensitivity training as well as training regarding the Federal
Government’s relationship to Tribes under Government-to-Government
consultation, per MOU Section 3.2.3.
The FHWA recommendations listed above are outlined in the FHWA/ADOT Tribal
Consultation Letter Agreement executed on August 5, 2022. The ADOT accepted
FHWA’s recommendations and added a Tribal Liaison position.
Non-compliance Observation #2: Responsibilities under the 327 MOU assigned to
additional divisions independent of ADOT EP
Based on interviews of ADOT staff, the PAIR responses, and review of ADOT’s 327
application, it was identified that ADOT divisions outside of EP have responsibilities
under NEPA Assignment. These divisions have not been identified or addressed in the
ADOT EP procedures, manuals, or plans. These responsibilities include environmental
commitment tracking, environmental review in the field, and completion of the necessary
training associated with those responsibilities. The ADOT must take corrective actions to
develop and implement procedures to apply the 327 MOU provisions to all divisions of
ADOT, per MOU Section 1.1.2 and ADOT Final Application for Assumption of FHWA
NEPA Responsibilities, by the next audit.
Non-compliance Observation #3: Deficiencies in environmental commitment tracking
The ADOT was unable to provide FHWA with a process manual or any type of
consolidated report which documents 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. The ADOT has stated that this NEPA requirement is the
responsibility of the ADOT district offices, which are outside the supervisory authority of
ADOT’s EP Office. Per MOU Section 1.1.2 and the ADOT Final Application for
Assumption of FHWA NEPA Responsibilities, ADOT is responsible for environmental
commitment tracking and all divisions that have identified and assumed FHWA NEPA
responsibilities must comply with all provisions of the 327 MOU and ADOT’s NEPA
application requesting assignment. The ADOT must take corrective actions to address
the tracking of environmental commitments and mitigation compliance by the next audit.
The ADOT does complete monitoring of environmental commitments associated with
contractor responsibilities that have funding line items. This is completed using their
Field Automated System (FAST) payment system, but that is only a small subset of
project commitments. The ADOT EP has begun taking measures to establish a procedure
or mechanism for tracking environmental commitments and mitigation compliance,
including hiring an Environmental Commitments Coordinator and through development
of the Environmental, Permits, Issues, and Commitments Tracking sheet.

Documentation and Records Management
Successful Practice #2
The ADOT staff identified a Historic Preservation Team tracking spreadsheet maintained
by ADOT’s Cultural Resources Program Manager. This spreadsheet is used to track and
verify that all cultural resource environmental commitments on projects are implemented
from identification to completion. If ADOT finds this tracking method to be effective,
they could consider implementing it more widely to other environmental commitments
throughout their program.
Observations
Non-compliance Observation #4: Incomplete project file submission and standard folder
structure issues
Pursuant to MOU Sections 8.2.2 and 8.2.3, FHWA requested all project files pertaining
to the NEPA approvals and documented NEPA decision points to be completed during
the audit review period. The audit team found several inconsistencies between ADOT’s
procedures for maintaining project files and the project file documentation provided to
FHWA. The FHWA continues to experience issues when attempting to access the files
ADOT provided for the audit, as they are either not in a format that can be opened, or
they are inaccessible because they are saved as a link to the internal ADOT system and
not the actual document. The MOU Sections 11.1.2 and 11.1.3 detail ADOT’s
responsibilities to provide FHWA any information FHWA reasonably considers
necessary to ensure that ADOT is adequately carrying out the responsibilities assigned,
and ADOT’s agreement to cooperate with FHWA in conducting audits including
providing access to all necessary information.
The ADOT’s procedures specify utilizing a standard folder structure for all projects and
saving all project documentation and supporting information in the project files. The
project files submitted by ADOT were incomplete, did not include all supporting
documentation, and the files were not organized in accordance with the ADOT standard
folder structure. It is unclear how ADOT is maintaining electronic project files and
administrative records in compliance with its procedures and the terms of the 23 U.S.C.
327 MOU as they apply to records retention. The ADOT must take corrective action by
the time of the next audit to ensure that the complete project file is provided to FHWA
upon request. The documentation must support all determinations made. It is FHWA’s
expectation that documentation to support a project’s decision will be included in
ADOT’s project files. The ADOT will also provide complete documentation to FHWA
upon request.
Observation #3: Minor edits needed to resolve deficiency in Section 4(f) evaluation of
archaeological resources
The ADOT’s Section 4(f) Manual (Sections 3.3 and 3.4.2) and FHWA regulations,
policies, and guidance provide information on determining the applicability of Section
4(f) to archaeological resources and determining if there is an exception, or potential use.
The ADOT’s Section 4(f) Manual (Sections 5.2 and 5.3) specify procedures for
documenting Section 4(f) uses of archaeological sites, exceptions per 23 CFR 774.13(b),
and “no use” determinations.

During Audit #1, FHWA identified inconsistencies with ADOT’s Section 4(f) evaluation
and documentation of archaeological sites. In Audit #2, the audit team observed similar
inconsistencies during the project file reviews and identified procedural deficiencies
relating to ADOT’s Section 4(f) evaluation and documentation. In response to the Audit
#2 finding, ADOT updated their Section 106 Federal-aid Programmatic Agreement
Manual (which also contains the Section 4(f) guidance) with new preservation in place
language. The FHWA recommends the following edits to the new language (identified in
italics and strikeouts):
“By law, transportation projects involving federal actions and / or funding require
assessment in accordance with Section 4(f) of the Department of Transportation Act (PL
89-670) and its implementing regulations at 23 CFR Part 774. In compliance with this
statute, ADOT is obligated to assess archaeological sites from a purely Western, sciencebased perspective. In doing so, ADOT has found that Site X derives its primary statutory
importance from its data potential, the nature and extent of which do not warrant
preservation in place. If your office has no objection to this finding, ADOT will
determine, in accordance with 23 CFR § 774.13, that site X meets the archaeological
exception from Section 4(f) consideration. ADOT understands and acknowledges that
while legally necessary, Western approaches to the identification, interpretation, and
valuation of archaeological sites Native American places are but one of many voices
regarding the significance of these resources. As part of the ongoing Section 106
consultation process, ADOT has sought, and continues to seek information from the State
Historic Preservation Office (SHPO), Section 106 Consulting Parties, Tribes, and the
public, as necessary, affiliated tribes with regard to this and other affected cultural
resources.”
Observation #4: Continued improvement in Air Quality Conformity communication
The ADOT has made progress regarding the level of communication and coordination
with FHWA on project-level air quality conformity analysis. The ADOT should continue
to build on that progress and keep the lines of communication open among all the
interagency consultation partners. It would be good practice for ADOT to share reevaluations requiring conformity determinations with interagency consultation partners
for their input before requesting an FHWA conformity determination.
Observation #5: Inconsistent use and absence of the 327 MOU disclosure statement
Section 3.1.3 of the MOU specifies that ADOT shall disclose the disclosure statement to
the public, Tribes, and agencies as part of agency outreach and public involvement
procedures. The audit team project file reviews found inconsistent use of the disclosure
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/guidance as required by MOU Section 3.1.3. The ADOT should strive to
achieve consistency in the placement of disclosure statements in documents.
Non-compliance Observation #5: Deficiencies in analysis of environmental impacts on
low-income and minority populations (environmental justice)
The ADOT’s EA/EIS Manual, CE Manual, and FHWA E.O., policies, and guidance
provide information on completing the environmental justice analysis required for

projects. The FHWA identified inconsistencies in ADOT’s Section EA/EIS Manual, CE
Manual, PAIR response, and interview responses regarding how ADOT completes
environmental justice analyses. The methodology described by ADOT is not in
compliance with FHWA policy and guidance because ADOT analyzes the effect prior to
identifying environmental justice populations in the project area. In addition, the CE
Manual describes evaluating census data, but no additional sources for environmental
justice population identification. The CE Manual also infers a default position that there
will be no disproportionately high and adverse impacts on low-income or minority
populations with CE-level projects. The audit team observed similar inconsistencies
during the project file reviews for this audit and identified the same environmental justice
analysis procedural deficiencies in the project documentation, as well as project files with
little or no analysis documentation. In addition, there were inconsistent degrees of
coordination with the ADOT CRO, who, according to the CE Manual and the PAIR
response, is to be consulted on all environmental justice analyses. Based on these
findings and a review of the ADOT Training Plan, additional environmental justice
training is needed, and ADOT’s manuals and procedures should be brought into
compliance with FHWA requirements. The ADOT must take corrective action to ensure
that environmental justice analysis and assessments are in compliance with E.O. 12898,
DOT Order 5610.2C, and FHWA policy and guidance by the next audit.
Quality Assurance/Quality Control
Observations
Observation #6: 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 completeness of the project files, not the accuracy or technical merits
of the decisions documented by those files. The ADOT does not check for compliance of
the decisionmaking and it is therefore unclear how the project-level QC reviews inform
the program. These observations were also found with Audits #1 and #2. The audit team
continues to be unable to fully assess the implementation of project-level QC procedures.
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 their program, in ways that could help ensure better compliance with MOU
requirements.
Observation #7: QA/QC procedures do not inform the performance measures
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 (MOU Section 10.2.1.B.c) and how the timing of QA/QC reviews influences
timeliness and efficiency in completion of the NEPA analysis. The QA/QC process as
documented does not include a review of the adequacy of the technical analyses
completed. The current performance measures do not provide QA/QC completion dates
to create meaningful datasets that allow assessment of the timeliness of QA/QC actions.
The FHWA recommends that a column be added to the current performance data matrix
that measures the adequacy of technical documentation, as well as date columns for the
completion of the draft QC, final QC, and QA checklists.
Performance Measures

Successful Practice #3
The ADOT Environmental Programs Manager identified team-level internal performance
measures used by ADOT EP to track timelines on biological decisions, improve
coordination with U.S. Fish and Wildlife Service, and inform the prioritization of
projects. The ADOT EP has made beneficial documentation changes based on these
internal leading performance measures for the quality and timeliness of biological
consultation. These could serve as an example of meaningful metrics that could be
integrated into the performance measures that ADOT is currently tracking.
Observations
Observation #8: 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
primarily dealt 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 to provide a meaningful or comprehensive evaluation of the overall program.
The FHWA was unable to determine how the ADOT QA/QC process is informing the
improvement of the NEPA procedures used by ADOT, nor how it demonstrates meeting
their performance measures. One area of concern is the lack of dates on key actions and
when determinations are made. The FHWA recommends that ADOT evaluate the
current performance measures matrix of other NEPA Assignment States DOTs (such as
Utah and Ohio) to assist in making meaningful changes in their current performance
measures tracking. This observation was also made in Audit #1 and Audit #2.
Legal Sufficiency
The ADOT had completed one formal legal sufficiency review of an assigned
environmental document during the audit period. The EIS received a formal legal
sufficiency finding, which was included in the project file. Currently, ADOT retains the
services of two Assistant Attorneys General (AAG) for NEPA Assignment reviews and
related matters. The assigned AAGs have received formal and informal training in
environmental law matters. 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
The 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, and the AAGs coordinate with ADOT to ensure timely
completion of legal sufficiency reviews. In addition, one of the AAGs has recently taken
an active role in Tribal matters, including participating in meetings with Tribes and
handling legal questions related to Tribal issues.
Training
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 needing 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 only once 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.
Status of Previous General Observations and Non-Compliance Observations from
the Audit # 2 Report
This section describes the actions ADOT has taken (or is taking) in response to
observations made during the second audit. The ADOT was provided the second audit
draft report for review and provided comments to FHWA on August 2, 2021.
Observation #1: Deficiencies and gaps in ADOT’s manuals and procedures
During Audit #2, 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. Although the team observed some improvements to the manuals in
Audit #3, the deficiency identified in Audit #2 was not resolved and is an observation
again in Audit #3. The other was the ADOT Section 4(f) Manual, documentation forms,
and desk reference/matrix containing information inconsistent with FHWA guidance and
regulation. The deficiencies identified in Audit #2 were addressed by ADOT, but
additional issues were identified by the audit team in Audit #3.
Non-compliance Observation #1: Deficiencies in Section 4(f) evaluation of
archaeological resources
The audit team observed similar inconsistencies as were observed in Audit #1 during the
project file reviews for Audit #2 and identified procedural deficiencies relating to
ADOT’s Section 4(f) evaluation. The consultation letter sent to the Arizona SHPO did
not state ADOT’s intent to apply the archaeological exception to sites or include other
Section 4(f) information regarding the sites identified. In Audit #3, the audit team
acknowledges changes were made to ADOT’s Section 106 Federal-aid Programmatic
Agreement Manual, but FHWA provided corrections to the draft language for ADOT to
incorporate.
Non-compliance Observation #2: Deficiencies in analysis of right-of-way impacts

The ADOT’s procedures (ADOT EA/EIS Manual) and FHWA’s regulations, policies,
and guidance provide information on how to consider right-of-way impacts in the NEPA
analysis. The FHWA’s regulations, policies, and guidance provide additional
information for how early property acquisitions should be considered with the right-ofway impacts analysis. In Audit #2 for the 327 MOU, the audit team found one project
file did not demonstrate that early acquisition of properties and previous relocations were
adequately addressed in the impact analysis in the NEPA document. The ADOT
submitted a letter to FHWA on April 28, 2022, detailing the steps ADOT will take within
60 days as a corrective action to address the right-of-way non-compliance observation.
On May 23, 2022, ADOT submitted to FHWA updated procedures regarding right-ofway impacts in their NEPA analyses and FHWA provided technical assistance to ADOT
regarding these procedures. This corrective action by ADOT resolves the noncompliance observation.
Observation #3: Inconsistencies in interagency consultation documentation
After completing the project file review in Audit #2, the audit team found several
inconsistencies with ADOT’s documentation of compliance with interagency
consultation requirements (per 40 CFR 93.105). It is unclear if interagency consultation
occurred for some projects since the project files did not include information on agency
responses, concurrence, and the comment resolution process. Therefore, it is unknown if
the interagency consultation agencies had an opportunity to participate in consultation or
if ADOT provided them an opportunity to review and comment on the materials as
required by 40 CFR 93.105 and MOU Section 7.2.1. During Audit #3, the audit team
found an increased amount of documentation providing evidence of interagency
consultation efforts by ADOT in the project files reviewed.
Observation #4: Incomplete development and implementation of performance measures
During Audit #2, 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 #3, 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.
Finalizing This Report
The FHWA provided a draft of the audit report to ADOT for a 14-day review and
comment period, as well as notification of the non-compliance observations. The ADOT
provided comments which the audit team considered in finalizing the 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.
The FHWA is publishing this notice in the Federal Register for the final audit report.
The FHWA considered the results of this audit in preparing the scope of the next annual
audit. The next audit report will include a summary that describes the status of ADOT’s
corrective and other actions taken in response to this audit’s conclusions.
[FR Doc. 2024-14501 Filed: 7/1/2024 8:45 am; Publication Date: 7/2/2024]