An important part of the process is consultation with the State Historic Preservation Office (SHPO) about the potential effects of federal projects. In Virginia, the SHPO is the Department of Historic Resources (DHR). If DHR and the federal agency agree that a project that no historic property will be effected by the project, the project may proceed without further consultation. When the department and the federal agency agree that a project may have an effect, the federal agency must seek ways to mitigate the effect. The Section 106 review process ends when an agreement is reached.
What is a federal undertaking? An "undertaking" means a project, activity, or program funded in whole or in part under the direct or indirect jurisdiction of a federal agency. "Federal" means under the direct or indirect jurisdiction of a federal agency. Federal undertakings usually take one of four forms:
A state or local government project that is undertaken without federal funding, licensing, or permits is not subject to Section 106 review, even if it affects historic properties. It may, however, be subject to state or local preservation regulations.
What triggers the Section 106 review process? It is the nature of the project (that it is federally funded, licensed, or permitted), not the presence of a historic property, that triggers the review process.
What are the responsibilities of the federal agency? Although federal agencies are responsible for completion of all steps of the Section 106 process, certain federal agencies transfer some of these responsibilities to others. For example, applicants for federal financial assistance or for federal permits may be required to provide information about the project directly to the SHPO and to complete the step of identification in consultation with the SHPO.
Who must find out if historic properties are in the project area?
The federal agency is responsible for making a reasonable and good-faith effort to locate historic properties that may be affected by an undertaking. In addition to reviewing information on properties already listed in the National Register of Historic Places, the agency must consult other sources, like local preservation groups, that might have knowledge about historic properties that are documented but have not yet been considered for listing. DHR is a primary source of information. The agency must also ask the department's opinion about whether previously unidentified resources exist in the affected area. After reviewing available information and the opinion of DHR, the agency may take further actions, such as conducting surveys to locate historic properties.

A federal "undertaking" is any project, activity, or program that can result in changes in the character or use of historic properties.
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