Highway Emergency Relief: Strengthened Oversight of Project Eligibility Decisions Needed
Published: 2011-11-08T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Federal Highway Administration (FHWA), within the U.S. Department of Transportation (DOT), administers the Emergency Relief Program to provide funds to states to repair roads damaged by natural disasters and catastrophic failures. In 2007, GAO reported that in recent years states' annual demand for emergency relief funds often exceeded the program's $100 million annual authorization from the Highway Trust Fund and required supplemental appropriations from general revenues to address a backlog of funding requests from states. GAO recommended that FHWA tighten eligibility standards and coordinate with states to withdraw unneeded emergency relief funds, among other actions. For this report, GAO reviewed (1) Emergency Relief Program funding trends since 2007, (2) key program changes made in response to GAO's 2007 report, and (3) the extent to which selected emergency relief projects were approved in compliance with program eligibility requirements. GAO reviewed projects in New York, Texas, and Washington state, states selected based on the amount and frequency of funding allocations since 2007, among other factors.
section_title: What GAO Found
paragraphs: From fiscal years 2007 through 2010, the Emergency Relief Program received about $2.3 billion, of which $1.9 billion came from three supplemental appropriations compared with about $400 million authorized from the Highway Trust Fund. FHWA allocated this funding to 42 states and 3 territories to reduce the backlog of funding requests, with $485 million in unfunded requests remaining as of June 2011. This backlog list did not include funding requests for August 2011 damages from Hurricane Irene. Because the program lacks time frames to limit states from requesting funds years after events occur, the June 2011 backlog list includes about $90 million for events that occurred prior to fiscal year 1994. Without time limits for emergency relief funding requests, FHWA's ability to anticipate and manage future program costs is hindered. In response to GAO's 2007 report, FHWA withdrew about $367 million of unobligated emergency relief funds from states and redistributed most of this funding for other emergency relief needs. However, additional funding remains unused, including (1) at least $63 million allocated to states before fiscal year 2007 that has yet to be obligated to projects and (2) $341 million obligated between fiscal years 2001 and 2006 that remains unexpended. Due to a lack of time frames for states to close-out completed projects, FHWA lacks project status information to determine whether unexpended funding is no longer needed and could be deobligated. FHWA has not addressed GAO's 2007 recommendation to revise its regulations to limit the use of emergency relief to fully fund projects that have grown in scope and cost as a result of environmental or community concerns. The Emergency Relief Program faces the continued risk of escalating costs due to projects that have grown in scope beyond the program's goal of restoring damaged facilities to predisaster conditions. GAO's review of 83 emergency relief project files in three FHWA state offices found many instances of missing or incomplete documentation--as such, GAO was unable to determine the basis by which FHWA made many eligibility determinations. For example, about half of the project files did not include required repair cost estimates, and 39 of 58 (67 percent) emergency repair projects approved for 100 percent federal funding did not contain documentation of completion within 180 days--a requirement for states to receive 100 percent federal funding. FHWA lacks clear requirements for how states submit and FHWA approves key project documentation, which has resulted in FHWA state offices applying eligibility guidelines differently. Establishing standardized procedures for reviewing emergency relief documentation and making eligibility decisions would provide greater assurance that projects are in fact eligible and that FHWA makes eligibility determinations consistently and transparently.
section_title: What GAO Recommends
paragraphs: GAO makes several recommendations including that FHWA establish (1) time frames to limit states' requests for emergency relief funds and to close completed projects and (2) standardized procedures for reviewing emergency relief documentation and making eligibility decisions. DOT provided technical comments on project time frames and costs which GAO incorporated as appropriate.

section_title: Letter
paragraphs: In recent years, many states have experienced natural disasters, such as  hurricanes, floods, and storms, which have caused catastrophic damage  to transportation infrastructure and overwhelmed the capacity of state and  local governments to respond and recover. Reconstruction after these  events can cost taxpayers billions of dollars. As part of the continuing  federal role in responding to and recovering from natural disasters and  similar events, the Federal Highway Administration (FHWA), within the  U.S. Department of Transportation (DOT), administers the Emergency  Relief Program which provides funding to repair or reconstruct federal-aid  highways and roads on federal lands damaged or destroyed by natural  disasters and other catastrophic events.
Since 1972, Congress has authorized $100 million annually in contract  authority for FHWA’s Emergency Relief Program to be paid from the  Highway Trust Fund. However, in recent years the Highway Trust Fund has not been the only source of funds for the Emergency Relief Program.  The $100 million annual authorization of contract authority has remained  constant since 1972, and due to inflation, it has declined in real value.  States’ need for assistance from fiscal years 1998 through 2006  consistently exceeded the $100 million annual authorization of contract  authority, resulting in a backlog of funding requests that reached $740  million in 2004. As a result, the program has relied on supplemental  appropriations for 86 percent of its funding from fiscal years 1998 through  2006. In past years, supplemental appropriations were drawn from the  Highway Trust Fund. However, with the enactment of the Safe,  Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for  Users (SAFETEA-LU) in August 2005, Congress authorized additional  necessary funding for the Emergency Relief Program in excess of the  $100 million annual contract authority to be appropriated from general  revenues.
In our 2007 report, we identified a significant fiscal imbalance between  available funds and eligible projects in the Emergency Relief Program.  We found that FHWA was not recapturing or redistributing unused  Emergency Relief Program allocations to states with immediate program  needs, as specified in FHWA’s program guidance. We also raised  concerns about the use of emergency relief funds to fully finance projects  whose scope and costs had grown as a result of environmental and  community concerns. We made several recommendations to FHWA to  improve its management, including ensuring that unneeded emergency  relief allocations were withdrawn on a timely basis so the backlog of  unfunded requests could be addressed, and to revise program  regulations to tighten the eligibility criteria for emergency relief funding,  among other recommendations.
As requested and in light of these concerns, this report reviews (1) FHWA  Emergency Relief Program funding trends since our 2007 report, (2) key  changes to the Emergency Relief Program implemented in response to  concerns raised in our 2007 report, and (3) the extent to which selected  emergency relief projects were approved in compliance with program  eligibility requirements.
To identify Emergency Relief Program funding trends and key changes  made to the program since our 2007 report, we reviewed federal statutes,  including supplemental appropriation acts, and FHWA data on emergency  relief allocations to states from fiscal years 2007 through 2010. Our scope  of work did not include any Emergency Relief Program activities in  response to Hurricane Irene, which occurred in August 2011. We also  reviewed and analyzed financial data from FHWA’s fiscal management  information system (FMIS) on emergency relief allocations and  obligations to states as of May 31, 2011, as well as funds that were  obligated to and expended by states for events occurring from fiscal years  2001 through 2010. We reviewed the procedures used by FHWA to enter  and verify data into FMIS, and we found the data to be sufficiently reliable  for our purposes. We also reviewed FHWA Emergency Relief Program  regulations and guidance, including FHWA’s Emergency Relief Manual as  revised in 2009. We interviewed FHWA officials in the Office of Program  Administration to determine why and how specific changes were made to  the program.
To determine the extent to which selected emergency relief projects were  approved in compliance with program eligibility requirements, we  reviewed federal statutes, regulations, and FHWA guidance on  emergency relief eligibility requirements and examined a sample of  emergency relief project files in three FHWA division offices. We selected  a nongeneralizable sample of 88 emergency relief project files from  FHWA division offices in three states—New York, Texas, and Washington  state—to demonstrate the range of practices and projects that the  Emergency Relief Program funds across the country. Five of the 88  projects in our review had been withdrawn by states because, in part,  FHWA had determined them ineligible for emergency relief funds,  bringing the total number of projects reviewed to 83. We selected New  York, Texas, and Washington state because they were among the states  receiving the most funding allocations from fiscal years 2007 through  2010, among other factors. We chose the files according to several  criteria, including a criterion to examine a mix of active and closed  projects that were obligated more than $1 million in emergency relief  funds. Prior to our site visits, we requested that the division offices  provide all documentation they maintain for each of the projects selected  in our sample, which represented approximately 67 percent of all  emergency relief funds that FHWA obligated to those states during that  time period. We reviewed all the documentation provided during our site  visits, and requested follow-up information as necessary. To gather  additional information on the project files, we reviewed the procedures  used to manage and oversee emergency relief projects and interviewed  officials in the FHWA division offices and state departments of  transportation for all three states. We provided the results of our file  review to FHWA for their comment and incorporated their responses as  appropriate.
We conducted this performance audit from November 2010 to November  2011 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives. Appendix I provides a  more detailed description of our scope and methodology.
We provided a copy of this report to DOT for review and comment. DOT  officials provided technical comments by e-mail, including information on  Emergency Relief Program time frames and growth of project costs. We  incorporated this information into the draft as appropriate.
subsections: section_title: Background
paragraphs: The Emergency Relief Program, authorized by section 125 of title 23 of  the U.S. Code, provides assistance to repair or reconstruct federal-aid  highways and roads on federal lands that have sustained serious damage  from natural disasters or catastrophic failures. Congress has provided  funds for this purpose since at least 1938. Examples of natural disasters  include floods, hurricanes, earthquakes, tornadoes, tsunamis, severe  storms, and landslides. Catastrophic failures qualify if they result from an  external cause that leads to the sudden and complete failure of a major  element or segment of the highway system that has a disastrous impact  on transportation. Examples of qualifying causes of catastrophic failures  include acts of terrorism or incidents such as a barge striking a bridge pier  causing the sudden collapse of the structure or a truck crash resulting in a  fire that damages the roadway. For natural disasters or other events to be  eligible for emergency relief funding, the President must declare the event  to be an “emergency” or a “major disaster” under the Robert T. Stafford  Disaster Relief and Emergency Assistance Act or the governor must  declare an emergency with the concurrence of the Secretary of  Transportation.
Since 1972, Congress has authorized $100 million annually in contract  authority for the Emergency Relief Program to be paid from the Highway  Trust Fund. Accordingly, FHWA may obligate up to $100 million in any  one fiscal year for the program. Any unobligated balance remains  available until expended.
Additionally, obligations to a single state resulting from a single natural  disaster or a single catastrophic failure may not exceed $100 million. In  some cases, Congress has enacted legislation lifting this cap for large- scale disasters. Moreover, as provided in FHWA’s regulations, states are  eligible for assistance under the Emergency Relief Program if the cost of  the damage from a single event exceeds $700,000 for emergency  assistance.sites in any state affected by the disaster. According to FHWA guidance,  each prospective damage site must have at least $5,000 of repair costs to  qualify for funding assistance—a threshold intended to distinguish  unusually large expenses eligible for emergency relief funding from costs  that should be covered by normal state maintenance funding.
section_title: Supplemental Appropriations Comprise Most Emergency Relief Funding Provided to States, and a Backlog of Funding Requests Remains
subsections: section_title: From Fiscal Years 2007 through 2010, Congress Provided More than $2.3 Billion for Emergency Relief Events and to Address a Backlog of Unfunded Requests
paragraphs: From fiscal years 2007 through 2010, Congress provided more than $2.3  billion to the Emergency Relief Program, including more than $1.9 billion  in three supplemental appropriations from general revenues and about  $400 million in contract authority paid from the Highway Trust Fund (see  fig. 3). The supplemental appropriations represented 83 percent of the  program’s funding over that time period. This percentage has been fairly  consistent over time: 86 percent of the total Emergency Relief Program  funding provided from fiscal years 1990 through 2006 came from  supplemental appropriations.
Two of the supplemental appropriations that Congress provided to the  Emergency Relief Program since fiscal year 2007 were used to address  the backlog of unfunded emergency relief requests from states. In May  2007, Congress provided $871 million to help clear a backlog of $736  million in funding requests from 46 states. In September 2008, when the  backlog list reached more than $560 million, Congress provided $850  million to address this backlog and provide additional funds for future  requests. In December 2007, Congress provided $195 million for the  reconstruction of the Interstate 35 West Bridge in Minnesota.
FHWA has allocated all of the $2.3 billion provided to the program since  fiscal year 2007, as well as an additional $100 million carried over from  previously provided program funding, among 42 states and three  territories.  Sixty-five percent of the allocations (almost $1.6 billion) went  to six states—California, Louisiana, Minnesota, North Dakota, Texas, and  Washington state (see fig. 4). California received almost $538 million, the  most of all states, and most of this was a result of the 2005–2006 winter  storms. Washington state was allocated almost $166 million in response  to 10 events ranging from a single event estimated to cost $1 million to  about $58 million to respond to flooding caused by severe rains in  December 2007.
Of the $2.4 billion that FHWA allocated to states from fiscal years 2007 through 2010,  about 59 percent ($1.4 billion) was allocated for events that occurred during those years.  FHWA allocated the remaining 41 percent ($988 million) for events that occurred from  fiscal years 2001 through 2006.
This amount includes $195 million made available through the December 2007  supplemental appropriation. the lake. Starting in the early 1990s, the lake level has risen  dramatically, threatening adjacent roadways. Although Emergency  Relief Program regulations define a natural disaster as a sudden and  unusual natural occurrence, FHWA determined that the gradual and  predictable basin flooding at Devils Lake is eligible for Emergency  Relief Program funding. In 2005, through SAFETEA-LU, Congress  authorized up to $10 million of Emergency Relief Program funds to be  expended annually, up to a total of $70 million, to address an  additional problem at Devils Lake and make repairs to certain roads  which were impounding water and acting as dams. In the absence  of other authority, this funding must come out of the $100 million  annual authorization of contract authority, effectively reducing the  annual emergency relief funding available to other states. As of March  2010, the Emergency Relief Program has provided more than $256  million for projects related to Devils Lake flooding.
section_title: Emergency Relief Faces Risk from Escalating Costs of Events Occurring in Past Years
paragraphs: In recent years, Congress has provided significant supplemental funding  to the Emergency Relief Program, but as of June 2011, a $485 million  backlog of funding requests from states remained. This backlog did not  include funding requests for August 2011 damages from Hurricane Irene.  The backlog list provides a snapshot of states’ funding requests at a  given time and is subject to change as states experience new eligible  events. According to guidance in FHWA’s Emergency Relief Manual,  requested amounts are based on the states’ anticipated need for  emergency relief for the current fiscal year and may be less than the total  emergency relief needs for any specific event.
The June 2011 backlog list contained almost $90 million in formal funding  requests for several events that occurred between 1983 and 1993 that  were previously determined to be eligible by FHWA. Specifically,  California requested almost $83 million for a single, long-term project in  response to a 1983 rockslide, known as Devil’s Slide, and an additional  $6.5 million for four other events from fiscal years 1990 through 1993.
According to FHWA, these requests are for approved emergency relief  events with projects that have had delays due to environmental issues or  cost overruns.
Once an event has been approved for emergency relief by FHWA, current  program rules do not establish a time limit in which states must submit all  funding requests for repairs.  Although FHWA requires states to submit a  list of projects within three months of approving a state’s application for  emergency relief, eligibility stemming from an approved event does not  lapse, and a state’s list of projects may be amended at any time to add  new work. Consequently, FHWA faces the risk of receiving  reimbursement requests from states for projects years after an event  occurs, including requests for projects that have experienced significant  delays and cost increases over time, due to environmental or community  concerns. The June 2011 backlog list included project funding requests  for two events that occurred more than 10 years ago and which  demonstrate FHWA’s risk of escalating long-term costs due to older  events.
The Transportation Equity Act for the 21st Century (TEA-21), Pub. L. No. 105-178, §  1217(a), 112 Stat. 107, 214 (1998). review, the tunnel alternative was selected in 2002 and construction of a  pair of 4,200-foot-long, 30-foot-wide tunnels began in 2006—23 years  after the originating emergency relief event.
Construction of the tunnel is ongoing, with a planned completion in March  2013. To date, FHWA has obligated about $555 million in emergency  relief funds to the Devil’s Slide tunnel project out of an estimated cost of  $631 million. The $631 million total project cost estimate includes the $83  million requested on the June 2011 backlog list—which is for work  completed during fiscal year 2011—as well as an additional $120 million  to be requested in the future to fully reimburse Caltrans to complete the  project.
Alaskan Way Viaduct in Seattle, Washington. The June 2011 backlog  list also contained a “pending” request of $40.5 million from Washington  state in response to a February 2001 earthquake which damaged the  Alaskan Way Viaduct—a 2-mile double-deck highway running along  Seattle’s waterfront. In the months after the event, FHWA approved  $3.6 million for emergency relief repairs to cracks in several piers  supporting a section of the viaduct, which were completed by December  2004. At the time of the earthquake, the Washington State Department of  Transportation (WSDOT) had begun considering options for replacing the  viaduct, which was approaching the end of its design life. After continued  monitoring, WSDOT found that the viaduct had experienced accelerated  deterioration as a result of the earthquake and requested $2 billion in  emergency relief to replace the viaduct. Congress directed FHWA and  state and local agencies to determine the specific damages caused by  the earthquake and the amount eligible for emergency relief.response, FHWA found that while the replacement of the entire viaduct  was not eligible for emergency relief, the project was eligible to receive  $45 million to replace the section of the viaduct damaged by the   In  earthquake.forward with a more comprehensive replacement project for the entire  facility, the estimated amount of emergency relief eligibility could be  applied to that project. WSDOT now plans to replace the entire viaduct  with a bored tunnel under downtown Seattle, with an estimated cost of  almost $2 billion. According to FHWA’s Washington state division office,  the $40.5 million listed on the June 2011 emergency relief backlog list will  be obligated toward the construction of the larger replacement project for  the viaduct.
FHWA further found that if WSDOT decided to move  The lack of a time limit for states to submit emergency relief funding  requests raises the risk of states filing claims for additional funding years  after an event’s occurrence, particularly for projects that grow significantly  in cost or scope over time.  States may have good reasons for submitting  funding requests years after an event—particularly for larger-scale  permanent repairs that may take years to complete—but such projects  can grow unpredictably. The example of the relocation of S.R.1 away  from Devil’s Slide and the cost and scope increases that resulted from  more than two decades of delays to complete lengthy environmental  reviews and address community concerns is case and point. The  absence of a time limit for states to submit funding requests hinders  FHWA’s ability to manage future claims to the program and creates a  situation where Congress may be asked to provide additional  supplemental appropriations for emergency relief years after an event  occurs. Furthermore, states requesting emergency relief funds for  projects many years after an event raises questions as to whether the  repairs involved meet the goal of the Emergency Relief Program to  restore damaged facilities to predisaster conditions.
In 2007 we recommended that FHWA revise its regulations to tighten  program eligibility criteria, which could include limitations on the use of  emergency relief funds to fully finance projects that grew in scope and  cost as a result of environmental and community concerns.  In July 2011,  DOT’s regulatory agendaEmergency Relief Program that would, among other actions, consider   included a planned rulemaking for the  specific time restrictions for states when filing a claim for emergency relief  eligible work. However, in October 2011, FHWA withdrew this planned  item from its agenda.  According to an FHWA official, the planned  rulemaking was withdrawn because it was premature and because FHWA  is still determining what changes if any are needed to address GAO’s  2007 recommendations.
section_title: FHWA’s Program Revisions Have Not Fully Addressed Prior Concerns
subsections: section_title: FHWA Now Has Procedures to Withdraw Some Unused Emergency Relief Allocations from States, But Lacks Information to Verify Whether Additional Unused Allocations Are Still Needed
paragraphs: Since our 2007 report, FHWA has implemented a process to withdraw  unused allocations and reallocate funding to benefit other states. FHWA  undertook these actions in response to our recommendation to require  division offices to annually coordinate with states to identify and withdraw  unused allocations that are no longer needed so funds may be used to  reduce the backlog of other program requests.based its allocations on a state’s estimate of anticipated emergency relief  obligations for the fiscal year. Prior to fiscal year 2007, FHWA’s policy  was to allocate the full amount of each state’s emergency relief request,  based on total available program funds.
Since 2007, FHWA has  In fiscal years 2010 and 2011, FHWA division offices coordinated with  states to identify and withdraw unused allocations representing  approximately $367 million in emergency relief funds from a total of 25  states and 2 territories. To withdraw unused funds from states, FHWA  reviews its financial database, FMIS, to identify the amount allocated to  each state that has not been obligated to specific projects. FHWA then  asks each state to identify remaining fiscal year need for new obligations  and the amount of any allocations that will no longer be needed. FHWA  then withdraws the amount determined by the state to be no longer  needed and reallocates that amount to other nationwide emergency relief  needs, such as unfunded requests on the backlog list. Most of the  withdrawn allocations were originally allocated to states from fiscal years  2003 to 2006, as shown in figure 5. Of the $299 million that was  withdrawn for events occurring from fiscal years 2003 to 2006, about  $230 million was withdrawn from Florida.
FHWA reallocated $295 million of the $367 million withdrawn from states   According to FHWA, the remaining $72  for other nationwide requests.million that was withdrawn but not yet reallocated will be made available  to states in future allocations.
As of the end May 2011, $493 million that FHWA allocated to states in  response to events occurring since 1989 remains unobligated. A  significant portion of this amount likely reflects the recent allocation of  $320 million in April 2011. However, at least $63 million of the  unobligated balance is for older allocations, provided prior to fiscal year  2007. Specifically, New York’s unobligated balance includes almost $52  million provided after the September 11, 2001, terrorist attacks for  roadway repairs delayed due to ongoing building construction around the   FHWA’s New York division reported that these  World Trade Center site.repairs are not expected to be completed until 2014. In addition,  California maintained an unobligated balance of more than $11 million  from the October 1989 Loma Prieta earthquake. According to FHWA  California division officials, FHWA sought to withdraw some of this  allocation, but Caltrans and local officials indicated that this allocation was  necessary to complete environmental mitigation and bike path projects  that were part of reconstruction of the collapsed Bay Bridge connecting  San Francisco and Oakland in California.
Although the Emergency Relief Manual states that FHWA division offices  are to identify and withdraw unused program funding allocations annually,  we found several instances in which division offices applied unused  allocations from existing events to new events in the same state without  requesting a new allocation. Specifically, our file review at the FHWA  Washington state and New York state division offices identified three  events from fiscal years 2009 and 2010 that the division offices approved  as eligible and funded with allocations that were no longer needed from  previous events. This practice, which was permitted in the 1989 version of  the Emergency Relief Manual, limits FHWA’s ability to track unobligated  balances for specific events and determine whether those funds are no  longer needed and may be withdrawn. FHWA took steps to limit divisions  from using this practice by removing language permitting the practice in  the 2009 Emergency Relief Manual. According to FHWA, this change was  made so that funds could be more equitably distributed across the nation  to address the backlog of funding requests, rather than allowing states to  hold unused funds in reserve for future events.
Although FHWA removed the language permitting this practice from the  manual, FHWA has not provided written guidance to its divisions to  prohibit them from applying unused allocations to new events in the same  state, and the practice is still being used. For example, in February 2011,  FHWA’s headquarters allowed the Washington state division to shift  unused funds from a prior event to a new event, and in doing so, the  division office did not submit a request for an allocation of funds for those  new events and FHWA headquarters did not provide an allocation for  those events. Consequently, FHWA headquarters did not have a record  for the events, nor did it know the amount of funds made available by the  division for these events. Furthermore, FHWA headquarters officials were  unable to determine how prevalent this practice was across division  offices. As a result, FHWA headquarters lacks information on what  funding was made available and remains unobligated to states for specific  events. Because Emergency Relief Program funding is not subject to the  annual limits that the regular federal-aid highway program is, states have  an incentive to retain as much emergency relief funding as possible by  not returning unused funds. The lack of information on the amount of  funds that could be made available for specific events could prevent  FHWA from verifying whether allocations provided to states are still  needed or may be withdrawn and used to meet current needs.
section_title: In Addition to Unused Allocations, Obligated Funds Remain Unexpended
paragraphs: In addition to the unused allocations, substantial amounts of obligated  emergency relief funding have not been expended. About $642 million in  emergency relief funding obligated for states from fiscal years 2001  through 2010 remains unexpended as of May 2011—including about  $341 million in emergency relief funds obligated from fiscal years 2001  through 2006. In total for the Emergency Relief Program, 8 percent of all  funding obligated from fiscal years 2001 through 2006 has yet to be  expended (see table 2).
Almost half of the unexpended balance from fiscal years 2001 through  2006 is for projects in response to several extraordinary events that  occurred during those years, including the September 11, 2001, terrorist  attacks in New York and Gulf Coast Hurricanes Katrina, Rita, and Wilma  in 2005. Specifically, about $45 million of the $46 million that remains  unexpended for fiscal year 2001 is for repair projects to facilities around  the World Trade Center site in New York City. Of the $188 million that  remains unexpended for fiscal year 2005, about $118 million is for  projects in Louisiana in response to Hurricane Katrina. As of the end of  May 2011, FHWA obligated about $952 million to 155 emergency relief  projects in Louisiana for this event and has since made reimbursements  to the state for all but 1 of these projects, providing approximately 88  percent of the amount obligated.
Although substantial unexpended obligated funding remains, FHWA lacks  information to determine the amount that is unneeded and could be  deobligated because there is no time frame for closing out completed  emergency relief projects. FHWA division officials in New York and Texas  reported that many emergency relief projects are administered by local  public agencies, including towns and counties, and these entities are  often slow to process their reimbursement requests through the state  department of transportation. As such, FHWA lacks information on the  status of these projects and whether projects are ongoing or have been  completed. For example, in Texas, 28 of 30 projects since 2007 included  in our file review were listed as active in FHWA’s national database,  FMIS. However, according to Texas Department of Transportation  (TXDOT) officials, construction on 23 of the 28 active projects was in fact  completed and waiting to be closed out. FHWA division office officials  reported that FMIS is not a project management system and does not  provide the actual status of the construction of projects. As such, states  may have completed some emergency relief projects but not processed  reimbursement requests from local public agencies or completed final  project financial audits. Projects remain active in FMIS until final vouchers  have been processed to reimburse states. DOT’s Office of Inspector  General and external independent auditors have both identified inactive  or unexpended obligations as a significant concern within FHWA.  Without clear time frames for states to close out completed emergency  relief projects, FHWA lacks important information on the status of projects  and whether unexpended project funds are no longer needed and may be  deobligated to be made available for other emergency relief projects.
section_title: Prior Concerns about Project Eligibility Have Yet to Be Addressed
paragraphs: FHWA has yet to address our longstanding concern about, and our 2007  recommendation for addressing, the use of emergency relief funds to  finance projects that have grown in scope beyond the original intent of the  program, which is to restore damaged facilities to predisaster   conditions. In 1996, we questioned FHWA’s decision to use more than  $1 billion in emergency relief funds to replace the Cypress Viaduct in  Oakland, California, which collapsed as a result of the Loma Prieta   FHWA engineers initially estimated that  earthquake in October 1989.replacing the destroyed structure along its predisaster alignment would  cost $306 million. In response to public concern, Caltrans identified  several alternative alignments that it studied in a 2-year environmental  review. In 1991, Caltrans and FHWA decided to replace the destroyed  1.5-mile structure, which had bisected a residential area, with a new 5- mile structure running through active rail yards. This cost estimate later  increased to more than $1.1 billion at the time of our 1996 report—an  increase of almost $800 million from FHWA’s initial estimate of $306  million to restore the facility to its predisaster condition. As such, we  questioned whether the improvements and costs resulting from the  significant relocation and changes in scope should have been funded  through the Emergency Relief Program rather than the regular federal-aid  highway program. We recommended that FHWA modify its guidance to  clearly define what costs can be funded through the Emergency Relief  Program, particularly when an environmental review recommends  improvements or changes to the features of a facility from its predisaster  condition in a manner that adds costs and risks to the project.
In response to our recommendation, FHWA amended its guidance to more clearly  indicate when limits should be placed on emergency relief funding, and when full funding  is appropriate, and we closed this recommendation. to restore damaged facilities to predisaster conditions. First, we noted  that relocating California S.R.1 at Devil’s Slide could have been  addressed through the state’s regular federal-aid highway program, rather  than through the Emergency Relief Program. If the regular federal-aid  highway program had been used, the project would not have been eligible  for 100 percent federal funding, and the federal government would have  saved an estimated $73 million. Second, we reported that the  reconstruction of the U.S. Highway 90 Biloxi Bay Bridge in Mississippi— which was destroyed in August 2005 during Hurricane Katrina—grew in  scope and cost by $64 million as a result of community concerns.  Specifically, in response to a concern raised by a local shipbuilder about  the proposed height of the new bridge, Mississippi department of  transportation expanded the scope of the bridge reconstruction to  increase the bridge height to allow for future ships to pass under the  bridge. The original design was to provide an 85-foot clearance at a cost  of $275 million, but this scope was expanded to its current design to  provide a 95-foot clearance at a cost of $339 million.
FHWA has clarified its definition of an eligible damage site as we  recommended in 2007, through its revisions to its Emergency Relief  Manual in 2009.  Specifically, FHWA’s 2009 revisions clarified that  grouping damages to form an eligible site based solely on a political  subdivision (i.e., county or city boundaries) should not be accepted. This  change addressed our concern that FHWA division offices had different  interpretations of what constituted a site, such that damage sites that  were treated as eligible for emergency relief in one state may have not  been eligible in another state.
section_title: Incomplete Information in Emergency Relief Project Files in Three States Raises Concerns about FHWA’s Eligibility Decisions and Program Oversight
subsections: section_title: Documentation for Many Project Files We Reviewed Was Missing, Incomplete, or Inconsistent
paragraphs: In our review of 83 selected emergency relief project files in three FHWA  division offices, we found that many of the project files reviewed did not  contain documentation called for in the Emergency Relief Manual to  support FHWA decisions that projects met program eligibility  requirements. Of the 83 projects in our review (totaling about $198.5  million in federal funds), 81 projects (about $192.8 million in federal  funds) had at least one instance of missing or incomplete documentation.  As a result of this missing information, we were unable to determine the  basis of FHWA’s eligibility decisions for many of the projects in our file  review.
The Emergency Relief Manual directs FHWA division offices to maintain  files containing information on the methods used to evaluate disasters  and FHWA’s assessment of damages and estimates of cost. According to  the Emergency Relief Program regulations, program data should be  sufficient to identify the approved disaster and permit FHWA to determine  the eligibility of the proposed work.several areas of concern with FHWA’s eligibility determinations based on   In our file review, we identified  missing, incomplete, or inconsistent documentation, as illustrated in table  3 and described below (see app. III for detailed results of our file review).
Forty-seven of 83 project files (57 percent) lacked documentation for on- site damage inspections. In particular, they did not include a detailed  damage inspection report (DDIR) or the DDIR was not complete.  According to the Emergency Relief Manual, on-site detailed damage  inspections are conducted by the applicant or a state department of  transportation representative if the applicant is a local public agency, and  an FHWA representative, if available, to determine the extent of damage,  scope of repair work, preliminary estimate of the repair cost, and whether  a project is eligible for emergency relief funding. FHWA provides its  division offices with a DDIR form that states may use to document their  inspections and provide critical information necessary for determining  project eligibility, such as a listing of preliminary repair cost estimates for  equipment, labor, and materials for both emergency and permanent  repairs. Without such information on file for some projects, we could not  confirm that FHWA had that information to make emergency relief project  eligibility determinations.
These documents may be missing due to lack of clear requirements from  FHWA. FHWA requires documented on-site damage inspections but does  not have a clear requirement for how states submit the inspections to  FHWA officials or for how they approve inspection reports; as a result, the  three division offices we visited applied the Emergency Relief Manual  guidelines differently. For example, none of the 28 project files we  reviewed in Texas included a DDIR because FHWA’s Texas division  office relies instead on a “program of projects,” which is a spreadsheet of  all projects requesting emergency relief funds. In response to a draft  version of this report, FHWA’s Office of Program Administration explained  that state departments of transportation may use any format to submit the  data necessary for FHWA to make an eligibility determination. FHWA’s  Texas division officials stated that they find the program of projects useful  and believed it to be an FHWA requirement; however, we found that the  Emergency Relief Manual guidance was ambiguous and did not directly  state that this document can be used in place of DDIRs. One section the  Emergency Relief Manual indicates that the state department of  transportation is to submit the program of projects to the FHWA division  office, but it also states that the program of projects should relate the  damage to that described in the DDIRs. Furthermore, the manual  suggests in an appendix that the program of projects is actually a  package of all DDIRs resulting from the detailed damage inspections.
In addition, our file review found that the project descriptions in the  program of projects did not always provide the detailed information  regarding damages and proposed repairs outlined in the Emergency  Relief Manual and found on a DDIR. For example, for one Texas project  totaling close to $1.7 million in both emergency and permanent repairs,  the project description was the same for both emergency and permanent  repairs and did not indicate what specific repair activities were conducted  for each repair type. Differentiation between emergency and permanent  repairs is important because emergency repairs are eligible for a higher  federal share and do not require prior FHWA authorization. Without  documentation showing a clear distinction between the emergency and  permanent repairs—information that should be identified and documented  on a DDIR per program guidance—we could not determine the basis for  FHWA’s decision that this project met the eligibility requirements for both  repair types. Overall, we found the program of projects was less useful  than the DDIR for evaluating the full range of information necessary to  determine the basis for FHWA’s eligibility determinations.
We found that about half of the projects in our sample (42 of 83) did not  include repair cost estimates. The Emergency Relief Manual states that at  a minimum the division office’s project file should contain copies of the  FHWA field engineer’s assessments on damage and estimates of cost.
Officials in each of the FHWA division offices that we visited reported that  the state’s department of transportation is responsible for preparing repair  cost estimates, but that FHWA area engineers also conduct some on-site  inspections to verify the cost estimates provided. In total, 42 projects in  our sample did not include any repair cost estimates; thus, we could not  confirm that FHWA officials had this information to make eligibility  determinations for those projects. For example, a portion of two projects  in our sample for emergency and permanent repairs was to remove sand  from drainage ditches and was initially approved by the FHWA Texas  division office for reimbursement of up to $1.3 million, although the project  file included no repair cost estimate for any of the work associated with  the project. Additionally, no information was available in the project file to  explain the FHWA Texas division office’s decision to later approve a  nearly 40 percent increase from $1.3 million to the final approved amount  of $1.85 million. In responding to a draft of this report, DOT stated that the  cost of the project increased because more sand was removed from the  drainage ditches than originally estimated. However, no documentation of  this change was included in FHWA’s project files.
FHWA officials reported that the division office in Texas reviews a sample  of preliminary cost estimates based on risk, among other factors, prior to  making any eligibility decisions. According to the officials, FHWA’s Texas  division office reviewed preliminary cost estimates of at least 10 of the 30  projects included in our file review before determining eligibility. The  officials also reported that this sampling approach is consistent with  FHWA’s stewardship agreement with TXDOT and the fact that states  have assumed oversight responsibility for design and construction of  many federal-aid highway projects, including emergency relief projects.  FHWA also reported that TXDOT’s oversight responsibilities do not  extend to determining whether particular projects are eligible for federal  funds. Furthermore, the Emergency Relief Manual states that Emergency  Relief Program eligibility determinations reside with FHWA, and estimated  repair costs should be documented to determine eligibility. As such, the  practice of reviewing a sample of preliminary cost estimates does not  appear to be consistent with the requirements in the Emergency Relief  Manual, and as a result, we could not determine the basis of FHWA’s  eligibility decisions for those project cost estimates it did not review.
We found other cases in which cost increases were not documented  according to the internal policies established by each of the division  offices we visited. In New York and Texas, FHWA division officials stated  they require additional documentation to justify cost increases of 25  percent or more. In Washington state, FHWA division office officials  stated they require additional documentation if costs increase by 10  percent or more. Yet 14 percent of the project files we reviewed (12 of 83)  showed total cost increases that exceeded the limits established by the  three division offices and no additional documentation was on file to  support the increases.
The majority of the emergency repair project files that we reviewed did  not include documentation demonstrating that emergency repairs were  completed within 180 days from the event to be eligible for 100 percent  federal reimbursement. included emergency repairs approved to receive 100 percent federal  funding reimbursement if repairs were completed within 180 days of the  event occurrence. However, 39 of the 58 (67 percent) did not have  documentation on file to show the completion date of those repairs (see  table 3). In total, only 14 of 58 (24 percent) emergency repair projects  provided a completion date that was within 180 days of the event’s  occurrence. For the majority (39 of 58) of projects, we were unable to  confirm whether the emergency repairs were completed within 180 days  and whether these projects were eligible to receive 100 percent federal  reimbursement.
Emergency repairs must be completed within 180 days from the event to be eligible for  100 percent federal funding. See 23 U.S.C. § 120(e); also see the FHWA regulation 23  C.F.R. § 668.107(a). completion. As such, FHWA lacks a standardized process for verifying  the completion of emergency repairs within 180 days on projects for  which it does not exercise full oversight. By law, states assume oversight  responsibility for the design and construction of many federal-aid highway  projects, including the vast majority of emergency relief projects in the  three divisions we visited. As such, the states—rather than FHWA—were  responsible for conducting final inspections of emergency relief projects.  States are required to conduct a final inspection for all federal-aid  highway projects under state oversight, and these inspections could be  useful to determine federal share eligibility of emergency repairs if they  provide project completion dates. While officials in each of the three state  departments of transportation told us that they conduct final inspections of  emergency repairs, we found only two final inspection reports prepared  by states in FHWA’s records to confirm the completion of emergency  repairs within the required time frame. In addition, when we reviewed final  inspection reports from one of the state departments of transportation in  our review, we were frequently unable to verify completion dates.  Specifically, 11 of the 12 final inspections performed by officials at New  York State Department of Transportation for projects in our review did not  include project completion dates. Although the Emergency Relief Manual  states that FHWA division offices reserve the right to conduct a final  inspection of any emergency relief project, only the FHWA Texas division  reported conducting spot inspections for a sample of emergency relief  projects.
In commenting on a draft of this report, DOT stated that the FHWA New  York state division office uses other means to verify completion of  emergency repairs within 180 days. According to DOT, the state often  submits its DDIRs to FHWA after emergency repairs are completed,  which allows FHWA to verify the eligibility and completion of an  emergency repair when it reviews the DDIR. DOT reported that the  FHWA division office does not sign the DDIR until it confirms the work is  completed, and that its signature indicates verification that the work was  performed within the required time frame. However, our file review found  that 14 of the 18 emergency repair projects in New York that were  approved for 100 percent federal funding did not have an FHWA  signature on the DDIR.
In addition to a lack of documentation, we found eight instances in which  permanent repair projects may have incorrectly received 100 percent  federal share reimbursement. According to the Emergency Relief  Manual, absent specific legislative approval, permanent repair work is not  to be considered emergency repair work even if it is completed within 180  days. However, we found instances in which projects were determined to  be permanent repairs based on information in the project files, but were  later authorized to receive 100 percent federal share. For example, in one  project in our review, FHWA’s Washington state division office approved  permanent repairs to a state highway for $2.6 million in estimated  damages caused by a landslide. Our review of FHWA financial records  for this project indicates that FHWA later authorized a federal  reimbursement of $5.3 million, roughly 99 percent of the total project cost  of nearly $5.4 million. FHWA Washington state division officials reported  that this project was considered to be a permanent repair performed as  an incidental part of emergency repair work. However, the project files  did not include any emergency repair work to accompany the approved  permanent repairs. According to these officials, the FHWA Washington  state division interpreted the 2003 version of the Emergency Relief  Manual as allowing incidental permanent work to be funded at 100  percent federal share either with or as emergency repair work. However,  the manual states that during the 180 day period following the disaster,  permanent repair work is reimbursed at the normal pro rata share unless  performed as an incidental part of emergency repair work. As such,  based on the program guidance, this project should have been  reimbursed at 86.5 percent federal share.
A primary purpose of the Emergency Relief Program is to restore highway  facilities to predisaster conditions, not to provide improvements or added  protective features to highway facilities. However, according to FHWA  regulations and the Emergency Relief Manual, such improvements may  be considered eligible betterments if the state provides economic  justification, such as a benefit-cost analysis that weighs the cost of the  betterment against the risk of eligible recurring damage and the cost of  future repair through the Emergency Relief Program. In our file review  we identified two areas of concern regarding betterments, including  instances of missing documentation of benefit-cost analyses:
Lack of documentation of required benefit-cost analyses. Six of the 15  projects (40 percent) identified as betterments in our review did not  contain the required benefit-cost analyses in their files to justify the   As a result we were unable to determine the basis on betterment. which FHWA approved these six betterments. We also found one  instance in which the benefit-cost analyses used to justify an  approved betterment did not meet Emergency Relief Program  requirements. Specifically, FHWA’s New York division office approved  a betterment of almost $1.6 million to repair and improve a damaged  roadway and shoulder caused by an April 2007 storm. However, we  found that the report prepared to justify the betterment did not weigh  the cost of the proposed betterment against the risk of future  damages and repair costs to the Emergency Relief Program, as  required by program regulations. Consequently, we were unable to  determine the basis on which FHWA approved the $1.6 million  betterment.
Lack of documentation indicating whether projects include  betterments. We found that it was often difficult to determine which  projects included betterments, as FHWA lacks a standard process for  where and how betterments should be identified in project  documentation. The Emergency Relief Manual states that betterments  must receive prior FHWA approval and that further development of  contemplated betterments should be accomplished with FHWA  involvement, necessitating that proposed betterments are specifically  identified. We found eight project files with indications that the projects  may have included betterments that were not identified explicitly in  project documentation or by FHWA officials. For example, following  the completion of emergency repairs to remove debris and protect a  bridge against erosion caused by a landslide, the FHWA Washington  state division office approved an additional $3.7 million in permanent  repairs in response to continued erosion and movement of the hillside.  The documentation in the project file indicated that this permanent  work was added to stabilize the slide area in anticipation of future  flooding. According to officials from the FHWA Washington state  division, this slide stabilization project was a betterment, but the  project file did not contain documentation to indicate that this project  was in fact a betterment.
FHWA provides considerable discretion to its division offices to tailor the  Emergency Relief Program within states and lacks a standard mechanism  to specifically identify whether a project includes a betterment. FHWA’s  Office of Asset Management has developed an Economic Analysis Primer  for FHWA division offices to use when evaluating benefit-cost analyses  for federal-aid program projects. However, neither the Emergency Relief  Manual nor the Economic Analysis Primer provide sample benefit-cost  analyses or specific guidance on what information should be included in  the benefit-cost analysis to demonstrate that the proposed betterment will  result in a savings in future recurring repair costs under the Emergency  Relief Program. Because we had found betterments without  documentation of the required benefit-cost analyses on file and identified  possible betterments that were not explicitly identified as such, we could  not confirm that federal funds were being reimbursed in accordance with  the requirements of the Emergency Relief Program. Further, absent  specific guidance for identifying and approving betterments to its division  offices, FHWA cannot be assured that the Emergency Relief Program is  being administered consistently.
section_title: Conclusions
paragraphs: The federal government plays a critical role in providing financial  assistance to states in response to natural disasters and other  catastrophic events. Given the costs of these events and the significant  fiscal challenges facing both states and the federal government, it is  increasingly necessary that federal financial support be delivered in an  effective, transparent, and accountable manner so that limited funds are  put to their best use. FHWA’s stewardship of the Emergency Relief  Program could be better structured to meet that necessity.
First, because some emergency relief projects can be delayed for many  years due to environmental or community concerns and projects can  grow significantly in scope and cost, the federal government faces the risk  of incurring long-term costs for such projects. FHWA has limited tools to  control its exposure to the costs of older events and ensure that as  projects grow in scope and cost that they do not go beyond the original  intent of the program, which is to assist states to restore damaged  facilities to their predisaster conditions. Once an event has been  approved for emergency relief by FHWA, the Emergency Relief Program  as currently structured does not limit the time during which states may  request additional funds and add projects, which increase the size of  FHWA’s backlog list. Because Emergency Relief Program funding is not  subject to the annual limits of the regular federal-aid highway program,  states have an incentive to seek as much emergency relief funding as  possible. Consequently, without reasonable time limits for states to  submit funding requests for such older events, FHWA’s ability to  anticipate and manage future costs to the Emergency Relief Program is  hindered, as is Congress’ ability to oversee the program. Furthermore,  without specific action by FHWA to address the recommendation from our  2007 report that it revise its emergency relief regulations to tighten  eligibility criteria, the Emergency Relief Program will continue to face the  risk of funding projects with scopes that have expanded beyond the goal  of emergency relief and may be more appropriately funded through the  regular federal-aid highway program.
Second, while FHWA has taken some important steps in response to our  2007 report to manage program funding by withdrawing unobligated  balances from states, it faces challenges in tracking allocations that have  been provided to states. In particular, because FHWA division offices  have allowed states to transfer unobligated allocations from an existing  event to new events, and because FHWA headquarters is not tracking  which divisions have done so, FHWA headquarters does not have the  information needed to identify and withdraw all unneeded funds. In  addition, without time frames to expedite the close-out of completed  emergency relief projects, FHWA lacks useful information to help  determine whether obligated but unexpended program funds are no  longer needed and could be deobligated.
Finally, the fact that we could not determine the basis of FHWA’s eligibility  decisions in three states on projects costing more than $190 million raises  questions about whether emergency relief funds are being put to their  intended use and whether these issues could be indicative of larger  problems nationwide. While federal law allows states to assume oversight  over design and construction of much of the federal-aid highway program,  including many emergency relief projects, FHWA is ultimately responsible  for ensuring that federal funds are efficiently and effectively managed and  that projects receiving scarce emergency relief funds are in fact eligible.  This is especially important in light of the fact that emergency relief funds  have been derived principally from general revenues in recent years and  that the funds that states receive are above and beyond the funding limits  for their regular federal-aid highway program funds.  Without clear and  standardized procedures for divisions to make and document eligibility  decisions—including documenting damage inspections and cost  estimates, verifying and documenting the completion of emergency repair  projects within the required time frame, and evaluating information  provided to justify proposed betterments—FHWA lacks assurance that  only eligible projects are approved, and that its eligibility decisions are  being made and documented in a clear, consistent, and transparent  manner.
section_title: Recommendations for Executive Action
paragraphs: To improve the accountability of federal funds, ensure that FHWA’s  eligibility decisions are applied consistently, and enhance oversight of the  Emergency Relief Program, we recommend that the Secretary of  Transportation direct the FHWA Administrator to take the following four  actions:
Establish specific time frames to limit states’ ability to request  emergency relief funds years after an event’s occurrence, so that  FHWA can better manage the financial risk of reimbursing states for  projects that have grown in scope and cost.
Instruct FHWA division offices to no longer permit states to transfer  unobligated allocations from a prior emergency relief event to a new  event so that allocations that are no longer needed may be identified  and withdrawn by FHWA.
Establish clear time frames for states to close out completed projects  in order to improve FHWA’s ability to assess whether unexpended  program funds are no longer needed and could be deobligated.
Establish standardized procedures for FHWA division offices to follow  in reviewing emergency relief documentation and making eligibility  decisions.  Such standardized procedures should include: clear requirements that FHWA approve and retain detailed  damage inspection reports for each project and include detailed  repair cost estimates; a requirement that division offices verify and document the  completion of emergency repairs within 180 days of an event to  ensure that only emergency work completed within that time frame  receives 100 percent federal funding; and consistent standards for approving betterments, including  guidance on what information the benefit-cost analyses should  include to demonstrate that the proposed betterment will result in  a savings to the Emergency Relief Program, and a requirement  that FHWA approval of funding for betterments be clearly  documented.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOT for review and comment. DOT  officials provided technical comments by email which we incorporated into  the report, as appropriate. In response to our finding that the Emergency  Relief Program lacks a time limit for states to submit emergency relief  funding requests, and our recommendation to establish specific time  frames to limit states’ ability to request emergency relief funds years after  an event’s occurrence, DOT noted that the program does include general  time frames for states to submit an application and have work approved.   We incorporated this information into the final report; however, since a  state’s list of projects may be amended at any time to add new work, we  continue to believe that FHWA’s ability to anticipate and manage future  costs to the Emergency Relief Program is hindered absent specific time  frames to limit states’ requests for additional funds years after an event’s  occurrence. Such time frames would provide FHWA with an important  tool to better manage program costs.
DOT also commented that its ability to control the costs of some of the  projects cited in the report that have grown in scope and cost over the  years is limited in some cases by the fact that DOT received statutory  direction from Congress to fund these projects. For example, Congress  directed FHWA to provide100 percent federal funding for all emergency  relief projects resulting from Hurricane Katrina in 2005. We incorporated  additional information to recognize this statutory direction; however, a  determination by Congress that a particular event should qualify for relief  under the Emergency Relief Program, or for other individual actions, does  not relieve FHWA of its stewardship and oversight responsibilities. Except  as Congress otherwise provides, this includes its responsibility to  determine whether enhancements to projects or betterments are  consistent with its regulations and the intent of the Emergency Relief  Program to restore damaged facilities to predisaster conditions. We  continue to believe that, as a steward of public funds, FHWA generally  has the discretion to take reasonable steps to limit the federal  government’s exposure to escalating costs from projects that grow in  scope over time.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution of this report until 30  days from the report date. At that time, we will send copies of this report  to the appropriate congressional committees and the Secretary of  Transportation. In addition, this report will be available at no charge on  GAO’s website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-2834 or herrp@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To identify Emergency Relief Program funding trends since our 2007  report, we reviewed federal statutes, including supplemental  appropriations to the Emergency Relief Program made since 2007, and  Federal Highway Administration (FHWA) documentation on annual  funding authorizations to the program. We also reviewed FHWA data on  emergency relief funds allocated to states in response to emergency relief  events from fiscal years 2007 through 2010, as provided by FHWA’s  Office of Program Administration. We interviewed FHWA officials in the  Office of Program Administration to gather specific information on how  data on allocations was collected and we also reviewed FHWA financial  data on total allocations to states from FHWA’s fiscal management  information system (FMIS). We interviewed officials from FHWA Federal  Lands Highway, FHWA’s North Dakota Division Office, and the North  Dakota state department of transportation concerning funding and project  activities for the Devils Lake, North Dakota, emergency relief projects. To  gather additional information on the Devil’s Slide project in California, we  interviewed the FHWA California division office and reviewed information  on the estimated project costs.
To identify key changes to the Emergency Relief Program implemented in  response to concerns raised in our 2007 report, we reviewed  recommendations made to FHWA in our 2007 report and FHWA  Emergency Relief Program regulations and guidance, including FHWA’s  Emergency Relief Manual, as revised in 2009. We compared information  in the current version of the Emergency Relief Manual with information in  the previous version to determine which elements were revised. We  interviewed FHWA officials in the Office of Program Administration to  determine why specific changes were made, and we interviewed officials  in three FHWA division offices to determine how program changes were  implemented. To corroborate information provided by FHWA regarding its  process of withdrawing unused Emergency Relief Program funds from  states, we reviewed FMIS data on the emergency relief funds that were  allocated among all states and territories, obligated to specific projects,  and the remaining unobligated balance for all active Emergency Relief  Program codes as of May 31, 2011. To determine other amounts of  program funding that remained unused, we reviewed data in FMIS on the  amount of emergency relief funding obligated to specific projects and  expended by all states and territories for events occurring from fiscal  years 2001 through 2010. We provided FHWA officials with our  methodology for gathering data from FMIS to ensure that our data queries  were accurate. To ensure the reliability of data collected in FMIS we  interviewed FHWA officials on the procedures used by FHWA and states’  departments of transportation to enter and verify financial information  entered into FMIS. We found these data to be sufficiently reliable for our  purposes.
To determine the extent to which selected emergency relief projects were  awarded in compliance with program eligibility requirements, we reviewed  federal statutes and regulations, and FHWA guidance on emergency  relief eligibility requirements. We selected a nongeneralizable sample of  state department of transportation and FHWA division offices in three  states—New York, Texas, and Washington state. The states selected are  not representative of the conditions in all states, the state departments of  transportation, or FHWA division offices, but are intended to be examples  of the range of practices and projects being funded by the Emergency  Relief Program across the country. These states were selected based on  several criteria:  1.  The overall amount of emergency relief funding allocated to a state  from fiscal years 2007 through 2010, to identify those states that were  allocated the most funding (at least $15 million) over that period,  based on allocation data provided by FHWA headquarters. 2.  Frequency of funding requests to identify those states that requested  funds for three or more fiscal years from 2007 through 2010. 3.  The occurrence of an eligible emergency relief event since FHWA  updated its Emergency Relief Manual in November 2009. For our  purposes, we used emergency relief eligible events beginning  October 1, 2009, as a proxy for identifying states with emergency  relief events since the November 2009 manual update.
A total of 10 states met all three criteria. We narrowed our selection down  by eliminating those states that experienced outlier events, such as North  Dakota’s reoccurring basin flooding at Devils Lake and the catastrophic  failure of the Interstate 35 West bridge in Minnesota. We judgmentally  selected New York, Texas, and Washington state to reflect a geographic  dispersion of states.
We reviewed a sample of emergency relief project files in the FHWA  division office in each of these states to determine whether the project  files included required or recommended documentation cited in federal  statute, regulations, and FHWA program guidance. Such documentation  included the President or state governors’ proclamation of a disaster,  detailed damage inspection reports, cost estimates for repairs,  photographs of the damage, and other information. Across the three  division offices, we selected a nongeneralizable sample of 88 Emergency  Relief Program files out of a total universe of 618 project files for  emergency relief projects approved by FHWA in those states from fiscal  years 2007 through 2010. Among the 88 projects in our review, 5 projects  had been withdrawn by states as FHWA had determined them ineligible  for emergency relief funds, or they were reimbursed through a third party  insurance settlement, bringing the total number of projects reviewed to  83. The project files we reviewed represented approximately 67 percent  of all emergency relief funds obligated to those states during that time  period. Those projects were selected based on the following criteria:  1.  All projects with more than $1 million in obligated federal funds  between fiscal years 2007 and 2010, including a mix of active and  closed projects and various event or disaster types. 2.  Projects with more than $1 million in obligated federal funds for events  from fiscal years 2001 through 2006 on the list of formal emergency  relief funding requests as of March 7, 2011, that were either currently  active or were completed more than five years after the event  occurred. 3.  Projects that had other characteristics that we determined to warrant  further review, such as events with $0 amounts listed in FHWA’s  FMIS database for total cost or which had expended relatively small  amounts of funding compared with the obligated amounts in FMIS.
Prior to our site visits, we requested that the division offices provide all  documentation they maintain for each of the projects selected in our  sample. We reviewed all the documentation provided during our site  visits, and requested follow-up information as necessary. In conducting  our file review, a GAO analyst independently reviewed each file and  completed a data collection instrument to document the eligibility  documentation that was included for each file. A second reviewer  independently reviewed the file to verify whether the specific information  identified by the first reviewer was present in the file. The analysts met to  discuss and resolve any areas of disagreement until a consensus was  reached on whether the required information was included in the file. To  gather additional information on the project files we reviewed and the  procedures used to manage and oversee emergency relief projects, we  interviewed officials in the FHWA division offices and the departments of  transportation in our three selected states. We provided the results of our  file review to FHWA for their comment and incorporated their responses  as necessary within our analysis.
Lastly, we contacted state and local audit organizations through the  National Association of State Auditors, Comptrollers, and Treasurers for  the three states we reviewed, as well as North Dakota, to obtain reports  or analyses that were conducted on FHWA’s Emergency Relief Program.  None of the states in our review had conducted substantive work on the  Emergency Relief Program.
We conducted this performance audit from November 2010 to November  2011 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Summary of Emergency Relief Funding for Projects at Devils Lake, North Dakota
paragraphs: Devils Lake in North Dakota lies in a large natural basin and lacks a  natural outlet for rising water to flow out of the lake. Starting in the early  1990s, the lake level has risen dramatically—nearly 30 feet since 1992— which has threatened the roadways near the lake which were built in the  1930s and 1940s when lake water levels were lower. In April 2000,  FHWA issued a memorandum that authorized raising the roads at Devils  Lake in response to a predicted rise in the water level of the lake that was  within 3 feet of causing inundation, as forecasted by the National Weather  Service or U.S. Geological Survey. This allowance to repair roadways  prior to damages incurred by an event is a unique provision for the FHWA  Emergency Relief Program, which otherwise funds only post-disaster  repair or restoration. The basin flooding events at Devils Lake also  precipitated a related problem at Devils Lake, as some communities  around the lake plugged culverts under roadways to impound rising water  and protect property from flooding, which increased the roadways’ risk of  failure. These roads were subsequently referred to as “roads-acting-as- dams” which required additional improvements to ensure their structural  integrity to serve as dams.
Devils Lake projects involve multiple stakeholders, depending on the  location and type of roadway. FHWA’s North Dakota division office is  responsible for overseeing the Emergency Relief Program projects  administered by North Dakota department of transportation. FHWA’s  Office of Federal Lands Highway is responsible for the oversight of the  Emergency Relief on Federally Owned Roads program, which covers  projects on the Spirit Lake Tribe Indian Reservation. The Central Division  of Federal Lands Highway leads the overall coordination among the  federal, state, and local agencies. FHWA reported that the two FHWA  offices are working together to address the roads-acting-as dams projects  which affect state highways and roads on the Sprit Lake Tribe Indian  Reservation. The North Dakota department of transportation and the  Spirit Lake Tribe are responsible for administering the construction  projects on their respective roads.
To ensure the integrity of the roads at Devils Lake, Congress included  funding provisions in Safe, Accountable, Flexible, Efficient Transportation  Equity Act: A Legacy for Users (SAFETEA-LU) to raise the roadways and  make improvements to roads-acting-as-dams. Through SAFETEA-LU,  Congress authorized up to $10 million of Emergency Relief Program  funds to be expended annually, up to a total of $70 million, for work in the  Devils Lake region of North Dakota to address the roads-acting-as-dams  situation. These funds are known as section 1937 funds for the provision  in SAFETEA-LU which authorized them. In the absence of other authority,  this $10 million must come out of the $100 million annual authorization of  contract authority that funds the Emergency Relief Program, effectively  reducing the annual emergency relief funding available to other states to  $90 million. SAFETEA-LU also included language that exempted the work  in the Devils Lake area from the need for further emergency declarations  to qualify for emergency relief funding.
According to a June 24, 2011, FHWA policy memo, the final allocation of  section 1937 funds was made on March 16, 2011, and the $70 million  limit has been reached. Although rising water levels at Devils Lake are  expected to continue into the future, no further federal-aid highway funds  are eligible to raise roads-acting-as-dams or to construct flood control and  prevention facilities to protect adjacent roads and lands.
section_title: Appendix III: Results of GAO’s File Review of Emergency Relief Project Documentation Available in Three FHWA Division Offices
paragraphs: Figure 6 represents the results of our review of 88 selected project files  from FHWA’s division offices in New York, Texas, and Washington state.  Our data collection instrument was used to collect the values for each  field during our file review, and that information was summarized and  analyzed by at least two GAO analysts (see app. I for a complete  discussion of our file review methodology).
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, other key contributors to this  report were Steve Cohen, Assistant Director; Hiwotte Amare; Matt  Barranca; Melinda Cordero; Lorraine Ettaro; Colin Fallon; Bert Japikse;  Catherine Kim; Hannah Laufe; Kelly Liptan; Scott McNulty; Josh Ormond;  and Tina Won Sherman.