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The Metropolitan Transit Authority of Harris County, Texas, (METRO) has settled two disputed contracts with CAF USA Inc. regarding the building of light-rail cars for the north and southeast lines, authority officials said Friday.

The two sides agreed to cancel the contracts, and CAF agreed to refund $14 million to METRO and forgo additional payments for unpaid work. The METRO board ratified the agreement Friday. CAF is a subsidiary of Spanish firm Construcciones y Auxiliar de Ferrocarriles S.A.

In September, the Federal Transit Administration (FTA) found that the contracts negotiated by CAF and former METRO management broke federal procurement law and "Buy America" requirements. The contracts jeopardized $900 million in federal transportation grants for the rail lines, so METRO’s new management ordered CAF to stop construction of the cars.

"By avoiding costly and protracted litigation with CAF and cooperating with our partners at the FTA, we can move forward in the most fiscally responsible way," said METRO Chairman Gilbert Garcia in a prepared statement.

METRO expects to bid out a new rail-car procurement contract in January.