Denham Request Leads to Audit of High-Speed Rail Spending

Courtesy of California High Speed Rail|

The U.S. Department of Transportation’s Office of the Inspector General announced Wednesday that the Federal Railroad Administration’s high-speed intercity passenger rail grant amendment will be audited, following a response to a request from U.S. Rep. Jeff Denham (R-Turlock).

As Chairman of the Transportation and Infrastructure Subcommittee on Railroads, Pipelines, and Hazardous Materials, Denham has campaigned against what he views as the FRA’s irresponsible support of the California High-Speed Rail Authority’s use of funds in building California’s proposed high-speed rail system.

In December 2012, the FRA changed the grant agreement to allow the Authority to continue to receive federal funds without providing the originally required matching funds until April 1, 2014.

“The Federal Railroad Administration is protecting the Authority yet again and putting California taxpayers at greater risk,” said Denham at a meeting in late February. “In December 2012, the FRA changed their agreement to allow for a tapered match rather than the standard concurrent match. Now they’ve changed the agreement again. With billions in federal taxpayer dollars on the line, what changes are next from the FRA? The American people – and Californian taxpayers – deserve to see their money used responsibly.”

The most recent change to which Denham refers is a new due date for the required state match, an extension of the first payment until July 1.

“It is obvious that the Authority is determined to build at any cost despite their failure to get court approval and provide a business plan that passes muster,” said Denham.

In mid-January, Denham moved to suspend federal funding to the project, which then would then prevent taxpayer’s dollars from matching funds spent. The legislation, known as The Responsible Rail and Deterring Deficiency Act, received support of each member of the California Republican delegation.

In November when a Sacramento County Superior Court judge failed to approve the sale of over $8 billion in bonds from Proposition 1A, intended to provide those matching funds. Following the decision, state treasurer Bill Lockyer decided he would refrain from the sale of bonds that had not yet been validated.

Denham was pleased to see the announcement of the audit, as his months of campaigning have done little to prevent progress on the project.

“The FRA has twice altered their grant agreement with the California High-Speed Rail Authority, putting taxpayer dollars at risk,” said Denham. “I’ve received no reassurance that they won’t repeat the process, and their recklessness has put other California funding priorities at risk. As I and the subcommittee work to protect taxpayer funds, this audit will be another tool to ensure the FRA is doing the same.”

In a letter to the FRA, Mitchell Behm, the Department of Transportation’s Assistant Inspector General for Rail, Maritime, Hazmat Transport, and Economic Analysis, wrote that a “lack of an effective grants administration framework may be putting Federal funds at risk” and that he plans “to evaluate FRA’s policies, procedures, and processes for (1) amending HSIPR grant agreements, and (2) identifying and mitigating funding risks to federally-funded HSIPR projects.”

According to Denham’s office, the audit is expected to begin immediately.

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