UPDATE: Feds say state can build debated stretch of I-69

A federal highway administrator has told local officials they can't stop the state from building a hotly debated section of the Interstate 69 extension in southern Indiana without using federal money.

Bloomington-Monroe County Metropolitan Planning Organization has withheld its support for a planned stretch of the highway near Bloomington over environmental and traffic concerns. That has led to a standoff with state highway officials, who have threatened to withhold federal transportation funding to the community.

Bob Tally, Indiana division administrator of the Federal Highway Administration, told planning committee members on Wednesday that the panel could not stop the state from building the highway section because the federal agency already has approved that segment, The Herald-Times reported.

By leaving the I-69 extension out of its local transportation plan, the Bloomington panel can block the state from spending federal money on a 1.75-mile section of interstate's intended link with Indiana 37 near Bloomington.

However, Tally said federal officials couldn't prevent the state from using nonfederal resources on the highway.

Construction work is under way on much of a nearly 70-mile stretch of the highway's route from near Evansville to just outside the Crane Naval Surface Warfare Center southwest of Bloomington, with that section expected to be finished by the end of 2012.

State officials are aiming for construction to start in the coming months on the section from Crane to Bloomington, which is estimated to cost $387 million. The federal share of the segment being blocked near Bloomington is about $25 million.

Richard Martin, chairman of the planning group's I-69 subcommittee, said his worst fear was having interstate traffic "dumped" onto local roads because state officials have no timeline for completing I-69 between Bloomington and Indianapolis.

Martin said he wanted assurances that state and federal officials would consider local concerns such as intersection improvements on Indiana 37 and placement of noise barriers along the highway.

"We need more positive statements about how you intend to work with us," Martin said. "We're not getting those now."

Tally suggested the state and local agencies consider a formal agreement with the federal agency that would give local planners more involvement in the design process.

Martin said the subcommittee would give a report next week on its findings to the full policy committee.

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