Transportation auditors announced Wednesday that they will examine the Federal Railroad Administration's oversight of high-speed rail grants nationwide, including about $3.9 billion in stimulus and transportation funds for California's bullet-train project.
In a letter to the federal rail agency, the Office of Inspector General for the U.S. Department of Transportation said the audit will begin immediately at FRA headquarters in Washington, D.C., and possibly other locations.
The audit is being undertaken at the request of Rep. Jeff Denham, R-Turlock, who chairs the House Subcommittee on Railroads, Pipelines and Hazardous Materials. Denham has been a harsh critic of the California High-Speed Rail Authority and its plans for a 520-mile line running from Los Angeles to San Francisco through the central San Joaquin Valley.
The auditors said Congress has set aside more than $10 billion for high-speed rail efforts nationwide. Most of that has been committed by the FRA through grant agreements, and about $1.4 billion has actually been spent. California has received the largest share of the six rail corridors to which money has been granted.
"We have previously reported that FRA's lack of an effective grants administration framework may be putting federal funds at risk," Assistant Inspector General Mitchell Behm wrote in a letter to FRA Administrator Joseph Szabo.
Denham asked the Inspector General's Office for the audit in December. His request included asking for an examination of the FRA's process for negotiating and amending its grant agreements and how it oversees recipients' compliance with the terms .
"I am pleased to see the Inspector General undertaking this audit of the FRA's agreement process," Denham said in a statement issued Wednesday. "The FRA has twice altered their grant agreement with the California High-Speed Rail Authority, putting taxpayer dollars at risk. I've received no reassurance that they won't repeat the process, and their recklessness has put other California funding priorities at risk. As I and the subcommittee work to protect taxpayer funds, this audit will be another tool to ensure the FRA is doing the same."
Since the federal government first announced that California would be receiving stimulus and transporation money for its high-speed rail project, grant amendments have included provisions that allowed the state to postpone its obligation to put up matching funds and accelerate the use of federal money.
Behm said the audit will take a look at the rail agency's policies and procedures for amending grant agreements and identifying financial risks to projects receiving federal grants.