	Background

Congress authorized the Emergency Relief program in Title 23, United  States Code, Section 125, to provide for the repair or reconstruction of  federal-aid highways and roads on federal lands that have sustained  serious damage resulting from natural disasters or catastrophic failures  from an external cause. Permanent repairs restore seriously damaged  highway facilities to predisaster conditions. As part of its responsibilities, FEMA provides funds to state and local  governments to repair and replace roads damaged as a result of disasters  that are not on the federal-aid highway system. Extraordinary Events Determine Which States Receive Most Emergency Relief Allocations

During the 10-year period 1997 through 2006, FHWA has allocated over $8  billion to the states, the District of Columbia, Puerto Rico, U.S. territories,  and other federal agencies to repair or replace highway facilities damaged  by natural or man-made events. Of this total, 70 percent has gone to five  especially hard-hit states that have experienced extraordinary or multiple  disasters—California, Florida, Louisiana, Mississippi, and New York. Despite the program’s long- term fiscal imbalance and a depleting Highway Trust Fund, FHWA is not  recapturing unused program funds. Funding needs for  extraordinary events—those events needing more than $100 million in  funding—have averaged about $460 million annually since 1998, the  earliest year for which FHWA has data on individual disaster events. The Emergency Relief program has  been funded with an annual authorization of $100 million through contract  authority from the Highway Trust Fund, with a $100 million per event  obligation limit imposed since 1972. 5). However, the Highway Trust Fund authorization is limited to  $100 million, and under SAFETEA-LU, additional supplemental funds are  to be appropriated from the General Fund. In the past, because the Highway Trust Fund maintained  significant unexpended balances, the Emergency Relief program’s  supplemental appropriations have been funded through the Highway Trust  Fund. However, environmental requirements,  community concerns, congressional direction, and unique localized  circumstances have increased the scope and costs of projects, increased  the portion of project costs funded by the program, expanded the  definition of program-eligible events, and resulted in projects that go  beyond the original intent of the program. Additionally, the program is not intended to supplant  other federal or state funds for correction of preexisting nondisaster- related deficiencies. Definition of a Disaster Has Been Expanded, and New Types of Work Have Been Authorized

In the Emergency Relief program regulations, a natural disaster is  described as a sudden and unusual natural occurrence, and a catastrophic  failure is described as the sudden failure of a segment of the highway  system due to an external cause. FHWA’s next  Emergency Relief Manual revision in 1998 identified basin flooding as an  Emergency Relief-eligible disaster. We found that different FHWA  division offices accepted differing definitions of what constituted a site. From this perspective, the Emergency Relief program faces  sustainability concerns in the future, exacerbated by the gradual  expansion of eligibility criteria that should be addressed. Matters for Congressional Consideration

In order to put the Emergency Relief program on a sound financial footing,  Congress should consider the expected future demands on the program  and reexamine the appropriate level and sources of funding—including  whether to increase the $100 million annual authorized funding and  whether the Highway Trust Fund, the General Fund, or some combination  would allow the program to accomplish its purpose in a fiscally  sustainable manner. Appendix I: Objectives, Scope, and Methodology

The objectives of this report were to review (1) the total amount of  Emergency Relief program funding allocated to the states in recent years,  how this funding was distributed among the states, and the events for  which it was allocated; (2) the sources of funding used to finance these  emergency relief allocations and the financial challenges facing the  program; and (3) the scope of activities eligible for funding and the extent  to which the scope of eligible activities has changed in recent years. We identified congressional waivers  of program requirements such as the requirement for state matching funds  and the $100 million maximum limit on program funding that could be  provided to a single state per fiscal year.
Why GAO Did This Study

Since 1972, Congress has authorized $100 million a year for highway disaster recovery needs through the Federal Highway Administration's (FHWA) Emergency Relief (ER) program. Increasingly, the program's actual costs have exceeded this amount, and Congress has provided additional funding. Because of this fiscal imbalance between program funding and program needs, we reviewed ER under the Comptroller General's authority to determine the (1) total funding, distribution of funds among the states, and disaster events funded; (2) sources of funding provided and financial challenges facing the program; and (3) scope of activities eligible for funding and how the scope of eligible activities has changed in recent years. GAO's study is based on financial data, document analysis, stakeholder interviews, and site visits, among other methods.

What GAO Found

During the 10-year period of 1997 to 2006, ER provided about $8 billion to states, the District of Columbia, Puerto Rico, American territories, and federal agencies, a total of 56 states and other jurisdictions. About 70 percent of these funds has gone to 5 states--California, Florida, Louisiana, Mississippi, and New York--that have been especially affected by major disaster events, such as Hurricane Katrina. Since 1990, 86 percent of the ER program has been funded through supplemental appropriations as the program's annual demands have exceeded the $100 million annual authorization. Even excluding extraordinary disasters, those exceeding $100 million in eligible damage per event, the program still needed $271 million per year for smaller eligible events. Meanwhile, the program has been authorized at a constant $100 million level since 1972, resulting in the current authorization being worth about one-fourth the authorization level of 1972. Until Hurricane Katrina, Congress funded extraordinary disasters through the Highway Trust Fund, but with Trust Fund balances dwindling, in 2005, Congress designated the General Fund as the source of future ER supplemental funding. But the nation faces a pending fiscal crisis, raising concerns about future use of the General Fund and financial sustainability of the ER program. Despite funding concerns, FHWA does not routinely recapture unused program funds by reviewing the program's state balances to identify potentially unneeded funds. GAO also identified $62 million in potentially unneeded statutory allocations from past disasters that could be recaptured. Activities eligible for ER funding include the repair or reconstruction of highways and roads that are supported by the Federal-aid Highway program, and of roads on federal lands that have suffered serious damage from natural disasters or catastrophic failures due to external causes. ER funds are not intended to replace other federal-aid, state, or local funds to increase capacity, correct nondisaster-related deficiencies, or make other improvements. However, contributing to future financial sustainability concerns is the fact that the scope of eligible activities funded by the ER program has expanded in recent years with congressional or FHWA waivers of eligibility criteria or changes in definitions. As a result, some projects have been funded that go beyond repairing or restoring highways to predisaster conditions--such as the $441 million Devil's Slide project and $811 million I-880 project in California--projects that grew in scope and cost to address environmental and community concerns. Also, Congress and FHWA have expanded eligibility to allow additional types of work, such as a gradual flooding of a lake basin, to be funded. Congress has also directed that in some cases the program fully fund projects rather than requiring a state match. Finally, varying interpretations of what constitutes a damage site have led to inconsistencies across states in FHWA's application of ER eligibility standards.