Watchdog Finds DOT May Impede Infrastructure Grants

Up to 21% of applicants for federal infrastructure grants — including states, cities and port authorities — may overestimate how much they need to contribute to their projects because of poor communications from the U.S. Department of Transportation, according to a federal regulator.

That lack of communication, as detailed in a report released Thursday by the Government Accountability Office (GAO), could mean applicants have to hunt for more money in the face of tight budgets, or discourage them from applying for federal project grants altogether.

GAO’s assessment comes after the grant program in question — Rebuilding America’s Infrastructure With Sustainability and Equity (RAISE) — was approved by Congress for fiscal year 2022 at $2.2 billion, the largest single-year funding since the beginning of the year program in 2009.

“Better communication by DOT on how it calculates the federal portion for RAISE eligibility and whether DOT considers the requested federal portion of an application when awarding grants would improve the transparency of DOT grant decisions,” GAO said. “Such communication would also help applicants make informed decisions about how to allocate scarce non-government funds while applying for federal funds.”

RAISE grant eligibility requirements allow state and local project sponsors to obtain funding for multi-modal, multi-jurisdictional projects that DOT says are more difficult to support through traditional DOT programs, with the money being used for all types of freight projects based on Accelerating cargo through the supply chain.

For example, the most recent award of RAISE grants, awarded in August, funded 166 projects — including $25 million for a freeway project that will solve a freight bottleneck in Tucson, Arizona; $16 million for a freight improvement in PortMiami, Florida and $10 million for a BNSF railroad sever in Oklahoma.

“RAISE can provide capital directly to any public entity, including municipalities, counties, port authorities and MPOs [metropolitan planning organizations] or others, as opposed to traditional federal programs that provide funding to very specific groups of applicants (mostly state DOTs and transit agencies),” explains DOT.

“This flexibility allows RAISE and our traditional state and local partners to work directly with a variety of entities that own, operate and maintain much of our transportation infrastructure but are otherwise unable to turn to the federal government for support. “

However, according to the GAO, this flexibility has been undermined because the DOT has not been fully transparent in explaining eligibility requirements in the Notice of Funding Opportunities (NOFO), which is issued when the DOT begins accepting applications each year.

“Specifically, DOT has not disclosed anything in its NOFOs [for FY2015 through 2021] that its calculation to verify an applicant’s eligibility for the federal share requirement did not include federal funds other than the RAISE application in an applicant’s project budget or total project costs,” GAO stated.

The NOFOs issued by the DOT for fiscal years 2019-2021 indicated that the federal portion of project costs eligible for a grant, as determined by Congress, cannot exceed 80% for city projects. “However, RAISE NOFOs for these years and prior years have not defined the federal portion or how it is calculated, allowing applicants to decide whether the federal portion includes all federal funding sources or just RAISE funding,” the report states.

GAO emphasized that the omission of calculation information means that applicants could budget more non-government funds than are required to meet eligibility requirements for federal portions.

“If applicants had calculated their federal share based on the eligibility requirement provided in the FAQs — including all federal funding and total project costs — they could have assumed that they would need more non-federal funding to meet the 80% federal share requirement , as if they were using the calculation method used by DOT officials,” GAO explained.

“Our analysis of RAISE funding application data from fiscal years 2015 through 2021 found that approximately 21% of applications include other federal funds in their project budget.”

GAO recommended that DOT improve its procedures to ensure that its NOFOs explain how the federal portion of the RAISE grant is calculated for eligibility purposes and whether the amount of the federal portion requested by an applicant is used as a criterion for awarding the grant.

DOT agreed with GAO’s recommendations and provided technical comments “which GAO incorporated as appropriate,” the report said.

Click here to view more FreightWaves articles by John Gallagher.

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