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Caltrans reports progress but warns FHWA rule changes raise risk of de‑obligation
Summary
Caltrans reported a substantial reduction in federally inactive obligations but said new FHWA rules — shorter inactivity windows and a lower inactive‑dollar target — left the state unlikely to fully meet an accelerated August deadline without de‑obligations.
Denis (Denix) Sandia, division chief for local assistance at Caltrans, briefed the commission on federally funded “inactive projects” — federally obligated projects that have not processed invoices within the agency’s expected timeframes.
Sandia said California had reduced inactive obligations from more than 12% four years earlier to compliance with FHWA’s 5% target in five of the last six quarters. He reported that FHWA has introduced five changes that shortened the inactivity window and tightened targets: projects with $50,000–$500,000 that had not invoiced within 12 months are now deemed inactive (previously 24 months); the statewide inactive dollar target was lowered from 5% to 3.2%; a target for the number of inactive projects was added; review frequency moved from quarterly to monthly; and FHWA signaled it would unilaterally de‑obligate projects above the target in August unless states acted.
Sandia said the department initially identified 765 projects (over $500 million) that could be inactive under the new standard; after a short, intensive push with regional partners and local agencies the state had reduced that list but expected to miss the new FHWA target by about 62 projects and $21 million (projected 238 projects for $145 million vs. new FHWA target of 176 projects for $124 million). He said Caltrans is coordinating with regional transportation planning agencies and local sponsors to identify projects that can obligate or reprogram remaining funds and will seek to move any de‑obligated funds to other eligible projects to avoid state loss of federal funds.
Sandia said the changes and the compressed schedule imposed hardship on local agencies and the department and noted FHWA’s announced intent to unilaterally de‑obligate funds is “in direct contrast to federal regulations stating that the obligations will not occur during August redistribution without consent from the state.”
Caltrans will continue outreach to original sponsors of unobligated earmarked projects (71 projects worth $43 million) to see if funds can be used on the original projects; any leftover money would be identified for reprogramming.
