OPPORTUNITIES TO FREE UP UNNEEDED 

FHWA FUNDS FOR USE IN HURRICANE 

RECOVERY EFFORTS 

Federal Highway Administration 

Report Number: MH-2007-037 

Date Issued: March 6, 2007 
U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

ACTION: Opportunities to Free Up Unneeded 

FHWA Funds for Use in Hurricane Recovery Efforts 

Subject: 

Report No. MH-2007-037 

Date: March 6, 2007 

From: Kurt W. Hyde 

Assistant Inspector General 

 for Surface and Maritime Programs 

Reply to 

Attn. of: JA-40 

To: Federal Highway Administrator 

This report presents the results of our audit to identify funds earmarked by 

Congress that could be freed up and used for hurricane recovery efforts. In 

August and September of 2005, Hurricanes Katrina and Rita struck the Gulf States 

of Alabama, Florida, Louisiana, Mississippi, and Texas, causing loss of life, 

injury, and extensive physical damage. The recovery efforts, including repairs to 

severely damaged highways and bridges, will cost billions of dollars to complete. 

Funds earmarked by Congress to specific highway projects remain available until 

expended by states or localities unless Congress rescinds the funds. Further, the 

funds cannot be applied to other projects without express congressional approval. 

In light of the need to replace damaged or destroyed transportation infrastructure, 

it is important to identify any Federal funds that could be freed up and redirected 

to such efforts. 

Our audit objective was to assist the Federal Highway Administration (FHWA) 

and the hurricane-affected states identify earmarked funds that are dedicated to 

congressionally directed projects but are no longer needed for their original 

purposes. We limited our audit to all earmarked projects in the five Gulf States, a 

total of 203, that were designated in legislation on or before October 23, 2000, and 

had unobligated or unexpended funds remaining as of December 31, 2005. The 

practice of earmarking has received substantial attention recently. However, it 

was not within the scope of our audit to second guess or to otherwise assess the 

justification of any particular congressionally earmarked funds. 

We consulted with state, local, and Federal highway officials to determine whether 

certain funds were no longer needed and could be redirected. We conducted this 
2

performance audit in accordance with Generally Accepted Government Auditing 

Standards prescribed by the Comptroller General of the United States, and we 

performed such tests as we considered necessary to detect fraud, waste, and abuse. 

A detailed description of our scope and methodology is in Exhibit A. 

RESULTS IN BRIEF 

Using data provided by FHWA, we identified 203 earmarked highway projects 

authorized on or before October 23, 2000, in the five Gulf States affected by 

Hurricanes Katrina and Rita (Alabama, Florida, Louisiana, Mississippi, and 

Texas). Of those 203 projects, 19 projects retain approximately $10.7 million1

 in 

unneeded earmarked funds that could be put to better use by redirecting the funds 

to hurricane recovery efforts (see Exhibit B). 

According to officials in FHWA Division Offices and state departments of 

transportation, 17 of the 19 projects have been completed but excess funds remain. 

For example, more than $500,000 remains from a $2.3 million earmark for a 

Florida interchange project that was completed in 2005. In addition, two other 

projects will not proceed at this time. For example, a $205,000 earmark to help 

build an expressway across New Orleans’ Ninth Ward is not needed because the 

area was devastated by Hurricane Katrina. Congressional action is required to 

withdraw or redirect these unneeded funds. 

Further, during our audit we identified two areas in which FHWA could easily 

assist states in redirecting other idle earmarked funds without congressional action 

and help Congress identify earmarked highway funds that could be freed up for 

other purposes. First, section 1603 of the 2005 Safe, Accountable, Flexible, 

Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) granted 

FHWA the authority to allow states to redirect excess or inactive funds for 

earmarked projects designated in legislation before fiscal year (FY) 1991 without 

congressional action. However, more than a year after SAFETEA-LU was 

enacted, FHWA has yet to issue guidance to states on how to implement this 

provision. At the time of our audit, FHWA was still preparing the guidance. 

Redirecting the excess or inactive funds would allow states to use the funds for 

other transportation projects within the states. For example, 3 of the 19 earmarks 

that we identified in our audit as having unneeded funds appear to be eligible for 

release without congressional approval under section 1603. Consequently, it is 

imperative that FHWA move quickly to provide this guidance to states so that they 

can free up unneeded funds and use them for other pressing highway projects. 

 

1

 Our estimate of $10.7 million is based on earmarked funds remaining on these 19 projects as of May 11, 2006. 

According to FHWA, these projects may undergo final closeout procedures, and the total funds available for 

redirection may be adjusted. 
3

Second, FHWA could assist in freeing up idle funds by providing Congress with a 

list of unneeded highway earmarks on a regular basis. In response to a 2004 

recommendation of the U.S. Government Accountability Office (GAO), FHWA 

compiled such a list in 2005 in coordination with its Division Offices and state 

departments of transportation. However, it has not transmitted the list to 

Congress. It would be useful if FHWA were to compile such a list regularly, as 

Congress would benefit as it seeks to identify Federal dollars that could be applied 

to other pressing needs. 

To address these issues, we are recommending that FHWA: 

• Coordinate with the five Gulf State departments of transportation to promptly 

identify how the earmarked funds in the 19 projects we identified in our audit 

could best be redirected for use in hurricane recovery efforts. FHWA should 

also formally alert Congress that approximately $10.7 million in earmarked 

funds are available for redirection to hurricane recovery efforts within these 

same states. If necessary, FHWA should also coordinate with Congress 

regarding the legislative requirements of each earmark in order to identify the 

best method for redirecting these funds. 

• Promptly issue guidance on Section 1603 of SAFETEA-LU to allow the states 

to redirect, without congressional action, certain eligible, unneeded highway 

earmarked funds to other transportation projects in their states. 

• Continue to regularly compile a list of earmarked highway funds that states no 

longer need and transmit that list to Congress for legislative consideration. 

Our recommendations and a summary of FHWA’s comments and the OIG 

response can be found beginning on page 9 of this report. 

BACKGROUND 

An earmark is a congressional directive in legislation to spend a specific amount 

of money (or up to a maximum level) for a specific project in a specific location (a 

state or locality). Many highway earmarks originate in the Department of 

Transportation’s (DOT) multi-year surface transportation program reauthorization 

bills, but others may have their inception in appropriations bills or accompanying 

conference reports.2

 In highway legislation, earmarked projects are usually 

designated as “demonstration projects” or “high priority projects.” The term 

“earmark” does not usually appear in legislation, even though it is commonly 

used. 

 

2

 Explanatory statements within conference reports do not have the force of law, but they explain the intent of the bill 

language for the guidance of executive agencies. 
4

Unlike most Federal-aid funds that are available for obligation for four fiscal 

years, congressionally directed earmarked funds generally remain available until 

expended and can be used only for the specifically designated project. 

Congressional action is required to release any unneeded earmarked funds—

through either a rescission (withdrawal of funds) or a redirection (a change in the 

purpose of funds). The legislative nature of each earmark may differ, which will 

affect how Congress can act on unneeded earmarked funds. For example, most 

transportation earmarks are funded by the Federal Highway Trust Fund, but some 

are funded from other sources such as the Federal Government’s General Fund. In 

addition, some earmarked projects are subject to obligation limitations. 

Accordingly, FHWA and Congress will have to determine if any unneeded 

earmarked funds are limited as a result. 

In the past 25 years, the number and total amount of congressional earmarks for 

highway projects designated in the last five transportation reauthorization bills

have risen dramatically. The number increased from 10 “demonstration projects” 

in the Surface Transportation Assistance Act of 1982 (STAA) to more than 5,500 

“high priority projects” and “transportation improvement projects” in SAFETEALU, which was enacted in 2005. The total amount of highway earmarks also 

rose—from $410 million, or less than 1 percent of all Title I Federal-aid highway 

funds authorized in 1983, to $17.4 billion,3

 or nearly 9 percent of all highway 

funds authorized in 2005. 

At the same time that the number and total amount of highway earmarks rose, the 

average amount earmarked for each project decreased. As Figure 1 shows, 

projects authorized in 1983 by STAA received an average of $41 million each. 

This amount fell in the 1987 and 1991 reauthorization bills to between $9 million 

and $12 million. In the 1998 Transportation Equity Act for the 21st Century 

(TEA-21), the average amount for each project dropped to $5 million, and in 

SAFETEA-LU, with more than 5,500 projects, the average earmark fell to about 

$3 million. 

 

3

 The dollar figures identified for each reauthorization bill have not been adjusted for inflation. 
5

Figure 1. Average Amount per Earmark Declines as Total 

Number of Earmarks Increases, by Authorizing Legislation

0

5

10

15

20

25

30

35

40

45

STAA

(1983)

STURAA

(1987)

ISTEA

(1991)

TEA-21

(1998)

SAFETEALU (2005)

Millions Average Amount per Earmark

0

1,000

2,000

3,000

4,000

5,000

6,000

No. of Earmarks

Average Amount per Earmark Total Number of Earmarks

Source: Authorizing legislation and FHWA documents. 

Additional information on the highway earmark trends is available in Exhibit C. 

FINDINGS 

19 Projects With About $10.7 Million in Idle Earmarked Highway 

Funds Could be Redirected 

Using data provided by FHWA, we initially developed a list of 203 earmarked 

highway projects in the five states that were authorized on or before October 23, 

2000. Of the 203 projects, we identified 19 earmarks with approximately 

$10.7 million in unneeded funds in the five Gulf States affected by Hurricanes 

Rita and Katrina. Key state transportation officials from the five states agreed that 

those funds were no longer needed for their original purpose and could be released 

and redirected toward hurricane recovery efforts in their respective states. FHWA 

officials concurred with their decisions. (See Exhibit B for a list and description 

of the 19 projects.) 

Of the 19 earmarks with unneeded funds, 3 are located in Alabama, 7 in Florida, 

6 in Louisiana, 1 in Mississippi, and 2 in Texas. Although about half of the 

earmarks were enacted in the 1998 reauthorization bill (TEA-21), six date back to 
6

the 1987 and 1991 reauthorization bills and the remaining earmarks were 

authorized in various highway appropriations bills from 1990 through 2001. 

State transportation officials indicated that 17 of the 19 projects in our review have 

been completed but excess funds remain because the project costs were less than 

expected. For example, a $2.3 million earmark that Florida received in 1991 to 

help construct an interchange in Sarasota had approximately $517,000 in excess 

funds when it was completed in 2005. In Texas, a $1.4 million earmark 

authorized in 1998 to construct a road extension in Nacogdoches had about 

$16,000 remaining when it was completed in 2003. Finally, a $10 million earmark 

for improvements on U.S. 84 in Franklin and Lincoln Counties in Mississippi was 

completed in June 2006, leaving about $848,000 in excess funds. 

State officials told us that 2 of the 19 projects—1 in Alabama and 1 in 

Louisiana—are not moving ahead because of insufficient funding or because they 

were overcome by events. Specifically, Alabama officials decided to release the 

full amount of a $5 million earmark received in 2000 to relocate railway tracks 

and improve highway rail crossings in two towns because the rail company and 

local towns were not able to come up with the unusually high amount of matching 

funds ($3.7 million) required to begin the project. In another example, Louisiana 

officials also agreed that a 1998 earmark for $205,000 to help build a $600 million 

expressway across the Ninth Ward in New Orleans was no longer needed because 

the project was cancelled after Hurricane Katrina inflicted heavy damage in the 

area. 

In Louisiana, state officials originally agreed to release approximately $5 million 

from a 1998 earmark because a feasibility study showed that the cost (about 

$18 million) to connect two highways through an existing 4-lane tunnel under the 

New Orleans International Airport far exceeded the available earmarked funds. 

Moreover, the highways were already linked by a nearby interchange. Louisiana 

transportation officials recently decided that these funds were still needed after all 

to complete a project similar to the one described in the legislation that provided 

the earmark. FHWA Division staff told us they have reviewed the proposed 

project and determined it is a proper use of the earmarked funds and that the 

project has just been added to the state’s transportation improvement plan. These 

funds are no longer available for redirection. Accordingly, our estimate of funds 

available for redirection was revised from about $15.7 million (20 projects) to 

about $10.7 million (19 projects). 

According to FHWA and state officials, earmarked funds have remained idle for 

several years because of the absence of a process within states to identify 

unneeded earmarked funds and the time and effort required to get funds released 

through legislative action. For example, state transportation officials in Louisiana 

and Texas said they have no procedures to systematically identify projects that 
7

have been completed but still have earmarked funds remaining. Currently, 

earmarked funds that are no longer needed have to be rescinded or redirected for 

other purposes through congressional action. This contrasts with unneeded funds 

associated with regular Federal-aid grants, which a state can release by 

deobligating4

 them and making them available for active transportation projects 

elsewhere within that state. 

FHWA Can Take Additional Steps to Help Congress and States Free 

Up Idle Earmarked Highway Funds 

We have identified two areas in which FHWA could easily take action to assist 

states in redirecting unneeded earmarked funds without congressional action and 

help Congress identify idle earmarked funds that could be freed up for other 

purposes. First, a provision of SAFETEA-LU granted the Secretary of 

Transportation the authority to allow states to redirect highway earmarks 

authorized before FY 1991 without congressional action, but more than a year 

after the law was enacted, FHWA has yet to issue guidance to states on how to 

implement this provision. Second, in response to a 2004 recommendation made 

by GAO, FHWA in 2005 compiled a list of earmarked funds that states no longer 

needed, but it has not made this list available to Congress. 

Section 1603 of SAFETEA-LU allows the states to request FHWA to redirect 

excess or inactive earmarked funds designated in legislation before FY 1991 to 

any project eligible under the Surface Transportation Program. FHWA, however, 

must issue guidance on how this provision will be implemented before states can 

make use of it.5

 Section 1603 also requires the states to certify that any inactive 

funds they want to keep are still necessary for their original purpose. The 

certification must include a project status report and an estimated date of 

completion. 

Although congressional action will be required to withdraw or redirect the 

unneeded balances for most of the 19 earmarked projects in our audit, 3 projects, 

with a combined balance of about $190,000, appear to fall under Section 1603 of 

SAFETEA-LU. One example is an $11 million earmark that Florida received in 

1987 to construct an interchange on Interstate 4 and State Route 46 in Sanford. 

The project now has $165,649 in excess funds that could be redirected easily when 

FHWA issues guidance to the states. 

 

4

 When the Federal Government obligates funds, it makes a legal commitment to pay or reimburse the states for the 

Federal share of a project’s eligible costs. Deobligation of funds removes the legal commitment to the state. For 

instance, if the actual cost of a project turns out to be less than the estimated cost for that project, states can request 

that FHWA deobligate funds that are not needed for payment and make them available for new projects. 5

 Specifically, the new provision allows the Secretary of Transportation, at the request of a state, to obligate or 

deobligate and reobligate any excess or inactive funds authorized in a public law or accompanying report for a 

specific transportation project or activity that was allocated before FY 1991. Projects authorized after FY 1991 do 

not fall under this provision. 
8

According to FHWA, if Section 1603 is implemented promptly, funds remaining 

from most old highway earmarks (pre-1991) could be redirected to projects 

eligible under the Surface Transportation Program. Yet, FHWA officials, after 

nearly 18 months, are still in the process of preparing guidance to assist the states 

in determining which projects are eligible under Section 1603. The guidance must 

describe what states must do to redirect excess or unneeded funds to other 

transportation projects or to certify that funds are still necessary for their original 

purpose, as called for in this provision. FHWA officials indicated that they hoped 

to have the guidance in place by February 28, 2007 and on March 5, 2007 stated 

that issuance was imminent. It is imperative that FHWA provide this guidance to 

states as soon as possible because, according to SAFETEA-LU, funds that the 

states choose to redirect will be available for obligation only until the end of FY 

2008. 

In conjunction with this provision of SAFETEA-LU legislation, FHWA is 

required to submit an annual report to Congress on actions taken under Section 

1603. The first report was due not later than 1 year after the passage of 

SAFETEA-LU, which was signed into law on August 10, 2005. FHWA officials 

are finalizing the first report but according to officials, the report will not contain 

any information on states’ activities regarding Section 1603 because FHWA has 

not finalized and issued the guidance to the states. 

A second area where FHWA could assist in freeing up idle funds is to provide 

Congress with a list of unneeded highway earmarks. FHWA compiled such a list 

in 2005 in response to a GAO recommendation and plans to compile another one. 

However, FHWA has not transmitted the 2005 list to Congress. GAO has issued 

three reports that identified unneeded highway funds associated with 

congressional earmarks authorized in legislation enacted between 1976 and 2000.6

 

In its 2004 report, GAO recommended that FHWA regularly compile a list of 

highway projects that have unneeded, unobligated balances that were available for 

rescission. GAO concluded that submission of this information to Congress could 

result in more timely rescissions of unobligated balances that the states no longer 

need, freeing up funds for other purposes. As a result of that recommendation, 

FHWA officials compiled its first list of earmarked projects with funds that the 

states indicated they no longer needed in 2005. Although FHWA agreed to 

compile a list annually, FHWA did not compile a second list in FY 2006 although 

it does plan to compile one this year. 

 

6

 U.S. General Accounting Office, “Highway Projects: Extent of Unobligated Balances for Demonstration Projects,” 

(GAO-01-985R, Aug. 17, 2001); U.S. General Accounting Office, “Highway Projects: Extent of Unobligated 

Balances for Demonstration Projects as of March 31, 2002” (GAO-02-721R, June 5, 2002); and U.S. Government 

Accountability Office, “Highway Projects—Extent of Unobligated Balances for Demonstration Projects as of April 

30, 2004,” (GAO-04-935R, Aug. 18, 2004). The agency changed its name to U.S. Government Accountability 

Office in July 2004. 
9

In March 2006, GAO again requested information from FHWA on unneeded 

earmarked funds. FHWA used the list of projects it had prepared in 2005 to help 

prepare its response, in which it estimated that $12.2 million was available 

nationwide for rescission. According to FHWA officials, they plan to compile 

another list of earmarked projects with unneeded funds in the near future, but they 

do not plan to forward the list directly to Congress. Instead, they anticipate that 

FHWA will use the list during its annual budget preparation process. FHWA is to 

be commended for compiling this list, and it should continue to do so regularly to 

identify unneeded earmarked funds. Nevertheless, the list is of minimal use unless 

it is provided to Congress so that appropriate legislative action can be taken. The 

list would be beneficial to Congress as it seeks to identify Federal dollars that 

could be applied to other pressing needs. 

RECOMMENDATIONS 

We recommend that FHWA: 

1. Coordinate with the five Gulf State departments of transportation to promptly 

identify how the earmarked funds in the 19 projects we identified in our audit 

could best be redirected for use on hurricane recovery efforts. FHWA should 

also formally alert Congress that approximately $10.7 million in earmarked 

funds are available for redirection to hurricane recovery efforts within these 

same states. If necessary, FHWA should also coordinate with Congress 

regarding the legislative requirements of each earmark in order to identify the 

best method for redirecting these funds. 

2. Promptly issue guidance on Section 1603 of SAFETEA-LU to allow the states 

to redirect, without congressional action, certain eligible, unneeded highway 

earmarked funds to other transportation projects in their states. 

3. Continue to regularly compile a list of earmarked highway funds that states no 

longer need and transmit that list to Congress for legislative consideration. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

A draft of this report was provided to the FHWA Administrator on December 15, 

2006 for comment. On February 9, 2007, FHWA provided us with its formal 

response, which is contained in its entirety in the Appendix. Although FHWA 

generally concurred with our recommendations, in its response to recommendation 

1, it stated that it should coordinate with the five Gulf States before notifying 

Congress of available funds. Also, from its response, it is unclear how FHWA 

will implement recommendation 3. Therefore, we request that FHWA provide us 
10

within 30 calendar days, additional information on how it will meet the intent of 

recommendations 1 and 3. 

Recommendation 1: FHWA partially concurred and stated it will coordinate 

with the five Gulf State departments of transportation by February 28, 2007 to 

identify how earmarked funds identified in this audit could best be directed to 

hurricane recovery efforts. However, FHWA deferred a decision on further action 

to formally alert Congress that approximately $10.7 million in earmarked funds 

are available for redirection until after FHWA completes its coordination with the 

five Gulf States. 

OIG Response: Although FHWA didn’t complete the action by the February 28, 

2007 milestone, its planned action to complete coordination with the five Gulf 

States meets with the intent of this portion of our recommendation. However, it is 

unclear whether FHWA intends to formally alert Congress that approximately 

$10.7 million is available for redirection to hurricane recovery efforts. As stated 

in our report, most of the unneeded earmarked funds identified in our audit cannot 

be redirected to hurricane recovery efforts without legislative action by Congress. 

In addition, to identify projects with funds available for redirection, we conferred 

with appropriate state and local transportation officials and FHWA Divisions to 

reach a consensus that these funds were available for redirection. Furthermore, 17 

of the 19 projects we identified as having unneeded earmarked funds were 

completed, some years ago. Accordingly, we request that FHWA reconsider its 

plan of action and alert Congress that about $10.7 million in earmarked funds is 

available for redirection to hurricane recovery efforts within the five Gulf States. 

Recommendation 2: FHWA concurred with this recommendation and stated that 

the target date for issuing guidance to state departments of transportation on 

Section 1603 of SAFETEA-LU was February 28, 2007. 

OIG Response: FHWA’s planned action meets the intent of our 

recommendation. Although the guidance was not issued by February 28, 2007, 

FHWA indicated that issuance was imminent. 

Recommendation 3: FHWA agreed with this recommendation and stated that it 

would monitor the use of earmarked highway funds that states no longer need and 

periodically alert Congress that certain funds are no longer needed for their 

statutorily intended purpose. 

OIG Response: FHWA’s response generally meets the intent of our 

recommendation. However, FHWA’s use of the term “periodic” is unclear. The 

intent of our recommendation was that FHWA provide an annual list to Congress 

of earmarked highway funds states no longer need. In response to a GAO request, 

FHWA already has agreed to compile an annual list. We agree with GAO’s report 
11

that the value of such a list is in providing Congress with information that will 

allow it to make more timely rescissions of funds that states no longer need. 

Therefore, we request FHWA to reconsider its response and clarify how often it 

intends to alert Congress that certain unneeded funds are available. 

ACTIONS REQUIRED 

In accordance with DOT Order 8000.1C, we request that FHWA provide us with 

additional information, within 30 calendar days from the date of this final report, 

on how it will meet the intent of recommendations 1 and 3. FHWA’s response 

should identify FHWA’s plan of action and set a timetable for alerting Congress 

that about $10.7 million in earmarked funds is available for redirection to 

hurricane recovery efforts in the five Gulf States. The response should also clarify 

how often FHWA intends to alert Congress that certain unneeded funds are 

available. 

We appreciate the courtesies and cooperation of Federal Highway Administration 

representatives during this audit. If you have any questions concerning this report, 

please call me at (202) 366-5630 or Tom Yatsco, Program Director, at 

(202) 366-1302. 

# 

cc: Assistant Secretary for Budget and Programs and 

 Chief Financial Officer 

 Martin Gertel, OST Audit Liaison 

 Frederick G. Wright, Jr., FHWA Executive Director 

 King W. Gee, FHWA Associate Administrator for Infrastructure 

 Dwight A. Horne, FHWA Director Office of Program Administration 

 Albert T. Park, FHWA Chief Financial Officer 
12

EXHIBIT A. SCOPE AND METHODOLOGY 

To identify earmarked funds, in five Gulf States affected by Hurricanes Katrina 

and Rita, that are no longer needed for their original purpose and to determine the 

amount of funds that could be freed up and redirected with congressional 

approval, we reviewed laws, regulations, reports, authorizing legislation, and 

annual appropriations acts. We also examined FHWA’s processes, guidance, 

fiscal management data, and other relevant information to get an understanding of 

Federal and state requirements for the use of earmarked funds. 

We conducted audit work at FHWA Headquarters and Division Offices and at 

state departments of transportation in the five Gulf States of Alabama, Florida, 

Louisiana, Mississippi, and Texas. We interviewed FHWA and state officials on 

issues related to congressional earmarking, state and Federal roles and 

responsibilities, requirements, and compliance. We also interviewed 

representatives of local area metropolitan planning organizations. 

Our audit focused on unobligated and unexpended balances for earmarked 

transportation projects in the five Gulf States that were designated in legislation 

enacted on or before October 23, 2000, the date when the FY 2001 appropriations 

bill (Pub. L. No. 106-346) was signed into law. We requested that FHWA provide 

us with a report from its Fiscal Management Information System (FMIS) listing all 

demonstration and high priority projects for the five states meeting these criteria. 

Specific data fields included Demo ID number,7

 description, program code, public 

law, Federal funds allocated, obligated amount, unobligated amount, total 

expenditures, unexpended balance, and dates of last obligation and expenditure as 

of September 30, 2005. We excluded earmarked projects that had no unobligated 

and unexpended balances, which reduced the number of projects in our universe 

from 278 to 205. In addition, we excluded earmarked projects that previously had 

been rescinded but that were still listed in FMIS as being active. Our final 

universe was 203 projects. We reviewed all 203 projects. These 203 projects 

received a total of $2.2 billion in allocated earmarked funds that were within the 

scope of our review. As of December 31, 2005, about $1.8 billion had been 

obligated by the states. 

Our examination of 203 projects identified 19 projects with approximately 

$10.7 million in excess earmarked funds that could be redirected to hurricane 

recovery efforts in the Gulf States. We also identified three additional projects 

that had a total of less that $10 remaining. Because of materiality, these three 

projects are not identified in this report; however, we have provided information 

regarding them to FHWA. During our audit, FHWA and Gulf State officials 

 

7

 FHWA assigns a Demo ID number to certain earmarked projects in order to identify the funds as being designated by 

Congress for use on a specific project, and track the obligation and expenditure of those funds in FMIS. 

Exhibit A. Scope and Methodology 
13

provided evidence that the remaining 181 of 203 projects were proceeding and the 

earmarked funds would be required to complete these projects. Therefore, our 

report does not address those projects. 

Most of the earmarked highway projects within the scope of our audit originated 

in two reauthorization bills enacted in the 1990s (see Table 1 below), the 

Intermodal Surface Transportation Efficiency Act of 1991 and TEA-21. Another 

10 projects were initially earmarked in two reauthorization bills passed in the 

1980s, STAA and the Surface Transportation and Uniform Relocation Assistance 

Act of 1987. The remaining 22 projects originated in annual or supplemental 

transportation appropriations bills. Although Table 1 reflects only the initial 

earmark provided for a highway project, it is important to note that some of the 

203 projects included in our audit sample received additional earmarked funds in 

subsequent legislation. 

Table 1. Number of Demonstration and High Priority Projects 

Included in Our Audit, by Initial Authorizing or Appropriating 

Legislation 

Initial Legislation 

Public 

Law 

Date 

Enacted 

No. of 

Projects 

Surface Transportation Assistance Act of 

1982 (STAA) 97-424 1/6/1983 2 

Department of Transportation and Related 

Agencies Appropriations Act, 1987 99-591 10/30/1986 1 

Surface Transportation and Uniform 

Relocation Assistance Act of 1987 

(STURAA) 100-17 4/2/1987 8 

Department of Transportation and Related 

Agencies Appropriations Act, 1989 100-457 9/30/1988 2 

Department of Transportation and Related 

Agencies Appropriations Act, 1991 101-516 11/5/1990 6 

Intermodal Surface Transportation 

Efficiency Act of 1991 (ISTEA) 102-240 12/18/1991 36 

Making supplemental appropriations, 

transfers, and rescissions for the fiscal year 

ending September 30, 1992, and for other 

purposes 102-368 9/23/1992 5 

Department of Transportation and Related 

Agencies Appropriations Act, 1993 102-388 10/6/1992 1 

Department of Transportation and Related 

Agencies Appropriations Act, 1994 103-122 10/27/1993 1 

Department of Transportation and Related 

Agencies Appropriations Act, 1995 103-331 9/30/1994 2 

Transportation Equity Act for the 21st 

Century, 1998 105-178 6/9/1998 135 

Department of Transportation and Related 

Agencies Appropriations Act, 2001 106-346 10/23/2000 4 

 Total 203 

Exhibit A. Scope and Methodology 
14

We did not review highway earmarks from any appropriations bills enacted after 

FY 2000 nor from SAFETEA-LU, which provides for highway, transit, and safety 

programs through 2009. 

Based on the findings of a prior Office of Inspector General (OIG) audit,8

 we did 

not conduct reliability testing for FMIS. The prior audit concluded that although 

significant general and security weaknesses exist in FMIS, the accuracy of the data 

could be substantiated by comparing FMIS data with that maintained by the states. 

During our site visits, we verified the data FHWA provided to us with data its 

Divisions maintained and with project records the states kept. The approximate 

$10.7 million that was identified as unneeded funds available for redirection was 

based upon the FMIS data and verified by the states as of December 31, 2005. We 

updated the figures on May 11, 2006, using FMIS records. 

We examined legislation to verify legislative requirements for earmarks within the 

scope of our review and to gain general knowledge about certain transportation 

earmarks identified in SAFETEA-LU. We considered the review criteria, states’ 

comments, and the number of years a project had Federal funds remaining 

unobligated or unexpended on each project in order to make a preliminary 

assessment of whether these funds were still needed by the states or were available 

for redirection. 

We conducted this performance audit from November 2005 through December 

2006 in accordance with Generally Accepted Government Auditing Standards 

prescribed by the Comptroller General of the United States, and we performed 

such tests as we considered necessary to detect fraud, waste, and abuse. 

 

8

 OIG Report FI-2004-039, “Inactive Obligations, Federal Highway Administration,” March 31, 2004. OIG reports 

can be found on our website: www.oig.dot.gov. 

Exhibit A. Scope and Methodology 
15

EXHIBIT B. 19 PROJECTS WITH UNNEEDED FUNDS THAT ARE 

AVAILABLE FOR REDIRECTION 

Demo 

ID Project Description Total Allocated 

Public Law, Section, 

Related Report, and 

Date of Enactment 

Total Amount 

to Release 

Reason for 

Releasing 

Funds 

Amount 

Eligible for 

Section 1603, 

SAFETEA-LU 

AL004 Alabama Highway Bypass 

Demo: relocate U.S. 78 

Jasper Bypass 

$34,172,889 Pub. L. No. 102-143 

(1991) 

$218 Completed 

with excess 

funds 

 $0 

 

 

Pub. L. No. 102-388 

(1992) 

$99,934 

AL026 Construct East Foley 

Corridor Project from 

Baldwin County Highway 

20 to State Highway 59 in 

Alabama 

$7,175,697 Pub. L. No. 105-178 

(1998) Section 1602 

Numbers 857, 1501, 

1833 

$175,778 Completed 

but additional 

expenses 

may be 

identified 

 $0 

AL043 Capital costs associated 

with track relocation, 

construction and rehab 

highway-rail separation 

activities, including ROW 

acquisition and utility 

relocation, and signal 

improvements in Muscle 

Shoals, Tuscumbia, and 

Sheffield, Alabama 

$4,989,000 Pub. L. No. 106-346 

(2000) Section 375 

$4,989,000 Project will 

not proceed 

because 

matching 

funds are not 

available 

 $0 

FL004 Sanford: SR 46/I-4 

interchange 

$11,169,197 Pub. L. No. 100-017 

(1987) Section 149 

(A)(12) 

$165,649 Completed 

with excess 

funds 

$165,649 

FL006 Bridge Improvement 

Demo: Blount Island 

(Florida) 

$17,288,000 Pub. L. No. 101-164 

(1989) 

$640 Completed 

with excess 

funds 

$640 

FL018 Sarasota: To construct a 

bridge interchange at U.S. 

301 and University 

Parkway 

$2,341,029 Pub. L. No. 102-240 

(1991) Section 1106 

(b)42 

$517,122 Completed 

with excess 

funds 

$0

FL022 Brevard County: Design 

and engineer 

improvements for SR-3 

between SR 520 and SR 

528 

$156,069 Pub. L. No. 102-240 

(1991) Section 1106 

(a)55 

$12,232 Completed 

with excess 

funds 

$0

FL037 Purchase and install I-275 

traffic management 

system in Pinellas 

County, Florida 

$768,825 Pub. L. No. 105-178 

(1998) Section 1602 

Number 518 

$7,955 Completed 

with excess 

funds 

$0

FL044 Construct County Road 

470 interchange with 

Florida Turnpike 

$6,150,596 Pub. L. No. 105-178 

(1998) Section 1602 

Number 706 

$223,686 Completed 

with excess 

funds 

$0

FL049 Widen Gunn Highway 

between Erlich Road and 

South Mobley Road in 

Hillsborough County 

$1,537,649 Pub. L. No. 105-178 

(1998) Section 1602 

Number 888 

$170,967 Completed 

with excess 

funds 

$0

Exhibit B. 19 Projects With Unneeded Funds That Are Available For 

Redirection 
16

Demo 

ID Project Description Total Allocated 

Public Law, Section, 

Related Report, and 

Date of Enactment 

Total Amount 

to Release 

Reason for 

Releasing 

Funds 

Amount 

Eligible for 

Section 1603, 

SAFETEA-LU 

LA008 Southeast Baton Rouge 

Reconstruct Siegen Lane 

$4,148,559 Pub. L. No. 100-017 

(1987) Section 149 

(A)(88) 

$11,625 Completed 

with excess 

funds 

$23,229 

 Pub. L. No. 100-017 

(1987) Section 149 

(A)(88) 

$11,604 

LA014 Bossier City: study grade 

separations along Kansas 

City railroad along U.S. 

71 

$156,069 Pub. L. No. 102-240 

(1991) 1106 A(74) 

$48,413 Completed 

with excess 

funds 

$0

LA020 New Orleans, I-10/I-610 

intersection 

$10,000,000 Pub. L. No. 103-331 

(1994) 

$2,925 Completed 

with excess 

funds 

$0

LA021 Replace Ferry in 

Plaquemine Parish 

$1,652,973 Pub. L. No. 105-178 

(1998) Section 1602 

Number 21 

$189,497 Completed 

with excess 

funds 

$0

LA035 Florida Avenue 

Expressway 

St. Bernard/Orleans 

parishes. 

$205,020 Pub. L. No. 105-178 

(1998) Section 1602 

Numbers 750 and 1589 

$205,020 Project will 

not proceed 

due to 

hurricane 

damage 

$0

LA049 Tchopitoulas Corridor, 

New Orleans 

$4,612,948 Pub. L. No. 105-178 

(1998) Section 1602 

Number 1597 

$2,988,206 Completed 

with excess 

funds 

$0

MS010 Franklin/Lincoln Counties: 

Improvements on 

Highway 84 

$9,971,328 Pub. L. No. 102-240 

(1991) Section 1106 (A) 

24 

$847,586 Completed 

with excess 

funds 

$0

TX059 Conduct feasibility study 

on upgrading SH 16 in 

South Texas. 

$192,206 Pub. L. No. 105-178 

(1998) Section 1602 

Number 694 

$448 Completed 

with excess 

funds 

$0

TX083 Construct extension of 

West Austin Street (FM 

2609) between Old Tyler 

Road and Loop 224, 

Nacogdoches 

$1,383,885 Pub. L. No. 105-178 

(1998) Section 1602 

Number 1467 

$15,630 Completed 

with excess 

funds 

 $0 

Total 

 

$118,071,939 

 

$10,684,135 $189,518 

Exhibit B. 19 Projects With Unneeded Funds That Are Available For 

Redirection 
17

EXHIBIT C. HIGHWAY EARMARK TRENDS 

Recent Trends in Highway Earmarks 

During the last 25 years, the number and total amounts of congressional earmarks 

for highway projects designated in the last five transportation reauthorization bills 

have increased. Table 2 below shows this growth, as well as the change in the 

percentage of earmarked funds relative to Federal-aid highway spending provided 

in the last five reauthorization bills. 

Table 2. Number and Total Amount of Earmarks and Their 

Percentage of Federal-Aid Highway Program, by Recent 

Reauthorizing Legislation 

Reauthorizing 

Legislation 

Authorization 

Period 

(in years) 

Number of 

Demonstration 

and High 

Priority 

Projects* 

Total Amount 

of 

Demonstration 

and High 

Priority 

Projects* 

Percent of 

Total 

FederalAid 

Highway 

Program 

Surface Transportation 

Assistance Act of 1982 

(STAA) 

4 10 $410,200,000 0.9 

Surface Transportation 

and Uniform Relocation 

Assistance Act of 1987 

(STURAA) 

5 154 $1,418,510,130 2.1 

Intermodal Surface 

Transportation Efficiency 

Act of 1991 (ISTEA) 

6 538 $6,228,640,000 5.2 

Transportation Equity Act 

for the 21st Century 

(TEA-21), 1998 

6 1,850 $9,359,850,000 5.5 

Safe, Accountable, 

Flexible, Efficient 

Transportation Equity Act: 

A Legacy for Users 

(SAFETEA-LU), 2005 

6 5,557 $17,387,236,000 8.7 

*

 The earmarked projects included in the table are those to which FHWA has assigned a Demo ID number and, 

consequently, can be tracked in FMIS. These projects are identified in the legislation as follows: STAA, Section 

131; STURAA, Section 149; ISTEA, Sections 1103 through 1108; TEA-21, Section 1601; and SAFETEA-LU, 

Sections 1702 and 1934. The dollars have not been adjusted for inflation. 

Exhibit C. Highway Earmark Trends 
18

EXHIBIT D. MAJOR CONTRIBUTORS TO THIS REPORT 

THE FOLLOWING INDIVIDUALS CONTRIBUTED TO THIS REPORT.

Name Title 

Kurt W. Hyde Assistant Inspector General for 

Surface and Maritime Programs 

Tom Yatsco Program Director 

Michael Ralph Program Director 

Joan Becker Project Manager 

Nancy Benco Senior Analyst 

Scott Williams Analyst 

Harriet Lambert Writer-Editor 

Exhibit D. Major Contributors to this Report 
U.S. Deportment 

of Transportation 

Federal Highway 

Administration 

Memorandum 

Subject: INFORMATION: Federal Highway Administration 

Response to Office of Inspector General (OIG) Draft 

From: 

~e~brt, "Opportunities to~ree Up Unneeded FHWA 

~unds for use in 

J. Richard Capka 

Administrator 

Calvin L. Scovel 111 

Inspector General (JA-40) 

Date February 9, 2007 

Reply to 

Attn. of: HIPA- 10 

Thank you for the opportunity to review and comment on the OIG Draft Report, "Opportunities 

to Free Up Unneeded FHWA Funds for Use in Hurricane Recovery Efforts." This audit focuses 

on unobligated and unexpended balances for earmarked transportation projects in the five Gulf 

States that were designated in legislation. This funding was authorized by Congress for specific 

highway projects or activities in authorization acts, as well as in annual transportation 

appropriation acts. In addition, the legislation usually provides that the funds are available until 

expended. 

Since these projects have been designated in legislation for a specific project or activity, and the 

funds authorized for these projects cannot be utilized for any other purpose unless the 

authorizing legislation is amended, there are balances of unobligated andlor unexpended 

obligations that remain after they are no longer needed. There is currently no enacted statute that 

directs the Secretary to provide this information to Congress. However, as a matter of comity, 

the information is provided upon request from Congress. 

Taking into consideration the points mentioned above, the following are ow comments and 

planned actions on the specific audit report recommendations. 

Recommendation l(a): "Coordinate with the five Gulf State departments of transportation to 

promptly identify how the earmarked funds in the 19 projects we identified in our audit could 

best be redirected for use on hurricane recovery efforts." 

Response: The FHWA concurs in this recommendation. The target date for completion is 

February 28,2007. 
Recommendation l(b): "FHWA should also formally alert Congress that $10.7 million in 

earmarked funds are available for redirection to hurricane recovery efforts within these same 

states. If necessary, FHWA should also coordinate with Congress regarding the legislative 

requirements of each earmark in order to identify the best method for redirecting these funds." 

Response: The FHWA believes that we should await the completion of our coordination with 

the five Gulf States before determining our next step. 

Recommendation 2: "Promptly issue guidance on Section 1603 of SAFETEA-LU to allow the 

states to redirect, without congressional action, certain eligible, unneeded highway earmarked 

hds to other transportation projects in their states." 

Response: The FHWA concurs in this recommendation. The target date for completion is 

February 28,2007. 

Recommendation 3: "Continue to regularly compile a list of earmarked highway hnds that 

states no longer need and transmit that list to Congress for legislative consideration." 

Response: The FHWA agrees that it should monitor the use of earmarked highway funds to 

identify knds that States no longer need. The FHWA will alert Congress periodically that 

certain funds are not needed for their statutorily intended purpose. 

The efforts of the OIG auditors are greatly appreciated. If you have any questions or comments 

regarding this response, please contact Mr. Joseph Taylor, at (202) 366-1654. 
21

The following page contains a textual version of the graph found in this document. 

This page was not in the original document but has been added here to assist 

screen readers.
22

Figure 1. Average Amount per Earmark Declines as Total Number of 

Earmarks Increases, by Authorizing Legislation 

Authorizing 

Legislation 

Average Amount 

Per Earmark 

Number of 

Demonstration and 

High Priority Projects 

STAA (1983) $41,020,000 10

STURAA (1987) $9,211,105 154

ISTEA (1991) $11,577,398 538

TEA-21 (1998) $5,059,378 1,850

SAFETEA-LU (2005) $3,128,889 5,557

Source: Authorizing legislation and FHWA documents.