23 CFR § 1.9 - Limitation on Federal participation.
(a) Federal-aid funds shall not participate in any cost which is not incurred in conformity with applicable Federal and State law, the regulations in this title, and policies and procedures prescribed by the Administrator. Federal funds shall not be paid on account of any cost incurred prior to authorization by the Administrator to the State highway department to proceed with the project or part thereof involving such cost.
(b) Notwithstanding the provisions of paragraph (a) of this section the Administrator may, upon the request of a State highway department, approve the participation of Federal-aid funds in a previously incurred cost if he finds:
(1) That his approval will not adversely affect the public,
(2) That the State highway department has acted in good faith, and that there has been no willful violation of Federal requirements,
(3) That there has been substantial compliance with all other requirements prescribed by the Administrator, and full compliance with requirements mandated by Federal statute,
(4) That the cost to the United States will not be in excess of the cost which it would have incurred had there been full compliance, and
(5) That the quality of work undertaken has not been impaired.
(c) Any request submitted under paragraph (b) of this section shall be accompanied by a detailed description of the relevant circumstances and facts, and shall explain the necessity for incurring the costs in question.