Turlock Republican Denham seeks review of high-speed rail grants

11/28/2013 10:21 PM

11/28/2013 10:22 PM

Rep. Jeff Denham wants a government watchdog agency to take a second look at grant agreements for more than $3 billion in federal stimulus and transportation funds for California’s high-speed rail project.

In a letter Tuesday to the U.S. Comptroller General, Denham, R-Turlock, joined with Rep. Tom Latham, R-Iowa, to ask the Government Accountability Office to review the agreements. The letter came a day after a Sacramento Superior Court judge denied a request by the California High-Speed Rail Authority to validate the sale of about $8 billion in bonds from Proposition 1A, a high-speed rail bond measure approved by California voters in 2008.

Under the grant agreements, California is obligated to put up about $2.7 billion to match the federal contributions for the initial construction of the high-speed rail project from Madera to just north of Bakersfield. That money is expected to come from the Proposition 1A bonds.

Earlier this year, the state rail agency approved a $985 million contract to design and build the first 29-mile stretch of the proposed statewide high-speed train line between Madera and the south end of Fresno.

In the letter to Comptroller General Gene Dodaro, Denham, an outspoken critic of the state rail agency, and Latham expressed concern over how the judge’s bond validation ruling affects the state’s ability to match the federal grants. “Without these bonds, California will have to find other funding sources to comply” with the grant requirements, the congressmen wrote.

Denham, who leads the House Subcommittee on Railroads, Pipelines and Hazardous Materials, and Latham, who leads an Appropriations subcommittee on transportation, housing and urban development, also have questions about changes made to the grant agreements by the Federal Railroad Administration, which allow the state to spend the federal money before putting up the matching funds. That, the Denham letter stated, is “a departure from standard federal/local cost-share agreements where funds must be spent concurrently.”

In a statement issued Tuesday, Denham said the judge’s bond ruling potentially puts the federal government on the hook for spending without recovering any of the state’s share. “The authority has already spent hundreds of millions of federal taxpayer dollars and now has no identified state matching funds,” the congressman said.

Denham and Latham are asking the GAO to examine several questions, including whether the court’s ruling puts the state rail authority “on the verge of violating its grant agreements,” or whether the Federal Railroad Administration is violating U.S. law by allowing its federal money to be spent without the state putting up its share.

The rail authority’s leadership said the project has already undergone intensive scrutiny by both federal and state officials.

“The last time the project was reviewed, the Government Accountability Office validated our ridership and cost projections,” Dan Richard, the authority’s board chairman, said Wednesday. “Congressman Denham continues to look for reasons to oppose the high-speed rail project despite the tremendous employment, economic and rail transportation benefits it would bring to his district and the state.”

Read the letter from Reps. Denham and Latham at www.documentcloud.org/documents/842839-denham-gao-letter-11-26-2013.html.

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