The U.S. Department of Transportation on June 4 released a Federal Railroad Administration (FRA) Compliance Review Report finding that the California High-Speed Rail Authority (CHSRA) high speed rail project is “in default” of the terms of two federal grants totaling $4 billion. CHSRA has up to 37 days to respond, “after which the grants could be terminated,” USDOT said. CHSRA immediately responded, calling FRA’s report “misguided” and not reflecting “the substantial progress made.” The Authority on June 12 issued a strongly worded rebuttal calling the FRA report “unfounded,” “outright misleading” and full of “disingenuous assertions and methodologies,” citing some elements of the review as “nothing more than rhetoric aimed at justifying a pre-ordained conclusion.”
USDOT Assault
The 310-page report (download below), the latest in what are widely believed to be a series of USDOT initiatives to scuttle the project, “contains nine key findings including missed deadlines, budget shortfalls and overrepresentation of projected ridership,” the agency said.
“On Feb. 20, 2025, the FRA initiated a compliance review of the California High-Speed Rail Authority under two FRA-administered grants totaling more than $4 billion [a $929 million Cooperative Agreement from 2010 and a $3.07 billion Cooperative Agreement from 2024] to determine whether CHSRA had met its commitments to FRA under the funding agreements over the period June 15, 2021, to Jan. 31, 2025, or whether action was necessary to protect the federal taxpayer from potential misuse of federal funds,” FRA said in the report’s Executive Summary. “Since FRA initially obligated federal funds for the CHSR Project, there have been numerous reports of CHSRA’s mismanagement of the project, which has resulted in significant delay and substantial cost overruns. In October 2024, FRA executed a grant totaling $3.07 billion in federal funds under a Federal-State Partnership for Intercity Passenger Rail (FSP) Agreement to CHSRA to continue to advance the CHSR Project and advance completion of high-speed rail service in the Central Valley between Merced and Bakersfield, Calif. (referred to as the ‘Early Operating Segment or ‘EOS’). Shortly after, in February 2025, CHSRA’s Office of the Inspector General (CHSRA IG) published a report revealing that CHSRA would likely not be able to complete the EOS due to a $7 billion funding gap with no plan to address the gap. In addition, CHSRA notified FRA that its rolling stock procurement would be delayed, missing the target of Dec. 31, 2024 agreed to in the FSP Agreement. CHSRA’s actions raised concerns about whether CHSRA would continue to meet its obligations under the FSP Agreement and whether CHSRA had the capacity to meet its obligations. As such, FRA initiated a review of CHSRA’s performance under both the FSP Agreement and a previous $929 million agreement, executed in November 2011 (FY10 Agreement). This report outlines FRA’s compliance review, during which FRA reviewed project documents, consulted with State oversight entities, conducted a risk analysis, and regularly met with CHSRA officials.”
In the report’s opening letter to CHSRA CEO Ian Choudri, FRA Acting Administrator Drew Feeley said the agency “identified a trail of project delays, mismanagement, waste and skyrocketing costs. The project has received approximately $6.9 billion in federal dollars in roughly 15 years but has not laid a single high-speed track. Even with continued federal support, the project is far short of the funding needed to finish just a fraction of the track.”
FRA’s “nine key findings”:
- “CHSRA has executed numerous change orders and will likely have many more change orders in the near future to account for contractor expenses as a result of project delays.
- “CHSRA has already missed its deadline for finalizing its rolling stock procurement.
- “CHSRA has at least a $7 billion funding gap to complete the EOS, with no credible plan to secure additional funds.
- “CHSRA does not have a viable path to complete the EOS by 2033 per its commitment in the FY10 Agreement and the FSP Agreement.
- “CHSRA relies on volatile non-federal funding sources, which present significant project risk.
- “CHSRA lacks time and money to electrify the EOS by 2033.
- “CHSRA’s budget contingency is inadequate to cover anticipated contractor delay claims.
- “CHSRA has overrepresented its ridership projections for the EOS substantially.
- “CHSRA lacks the capacity to deliver the EOS by 2033.”
FRA said it “contacted state oversight entities, visited construction sites, conducted a risk analysis, met with CHSRA officials and reviewed several thousand documents.
Additional report excerpts:
- “Given CHSRA’s past performance, including substantial change orders, numerous contractor delay claims, protracted third-party arrangements, failure to account adequately for project risk, and lack of a credible plan to close the $7 billion funding gap, CHSRA is not likely to complete the Early Operating Segment (EOS) by 2033. In executing the FSP Agreement and reobligating the FY10 Agreement, FRA relied on CHSRA’s representations, which were included as commitments in the funding agreements, that CHSRA would deliver the EOS by 2033.
- “To secure substantial Federal funding, CHSRA represented that it could connect major metropolitan cities in California, but can now only deliver a system that is reduced substantially and delayed significantly, which may connect two random endpoints.
- “As such, CHSRA’s inability to deliver the EOS by 2033 renders the CHSR Project inconsistent with the goals of the HSIPR Program and constitutes a Project Material Change under the FSP Agreement. These findings support a conclusion that CHSRA is in default under the FSP Agreement and the CHSR Project no longer effectuates the goals of the funding programs, which may give rise to an action under the funding agreements, which could include termination.
- “Similarly, in 2008, the CHSR System was represented as a two-phase visionary system connecting Los Angeles to San Francisco and later north to Sacramento and south to San Diego. Since then, the project footprint has been [drastically] reduced from an 800-mile segment to a 171-mile segment to the current vision—119-miles.
- “Despite substantial federal support and funding, CHSRA does not have the capacity to deliver the full CHSR System. This 2025 compliance review demonstrates that CHSRA has not learned from its mistakes and mismanagement and has therefore failed to create an organization capable of effectively and efficiently managing project delivery.
- “Despite the substantial scope reduction, the CHSR Project still continues to face numerous delays and cost overruns. At this rate, CHSRA will never complete the CHSR System. Further, CHSRA has not acted in good faith in making representations to FRA regarding its ability complete the EOS with a reasonable budget and schedule. This not only gives rise to the conditions creating default under the agreement but also raises a reasonable question about whether continued federal investment in the CHSR System is a prudent use of taxpayer dollars.”
CHSRA Fires Back
“The Authority strongly disagrees with the FRA’s conclusions, which are misguided and do not reflect the substantial progress made to deliver high-speed rail in California,” a CHSRA spokesperson said. “We remain firmly committed to completing the nation’s first true high-speed rail system connecting the major population centers in the state. While continued federal partnership is important to the project, the majority of our funding has been provided by the state. To that end, the Governor’s budget proposal, which is currently before the Legislature, extends at least $1 billion per year in funding for the next 20 years, providing the necessary resources to complete the project’s initial operating segment. The Authority will fully address and correct the record in our formal response to the FRA’s notice.”
That response came on June 12. CHSRA CEO Ian Choudri issued what the Authority calls “a firm and detailed rebuttal” to the proposed termination of two major funding agreements in a letter to FRA Acting Administrator Drew Feeley this week. Choudri’s 14-page response (download below) “corrects the record on the FRA’s unfounded, outright misleading and disingenuous assertions and methodologies, highlighting elements of the review as nothing more than rhetoric aimed at justifying a pre-ordained conclusion.”
“Termination of the Cooperative Agreements is unwarranted and unjustified,” said Choudri. “FRA’s conclusions are based on an inaccurate, often outright-misleading, presentation of the evidence. Among other things, the FRA distorts data that the Authority has furnished to the FRA, includes citations to reports that do not support its conclusions, and employs opaque and disingenuous methodologies. I must also take this opportunity to dispute, in the strongest possible terms, the misleading claim that the Authority has made ‘minimal progress to advance construction, The Authority’s work has already reshaped the Central Valley. We have built many of the viaducts, overpasses, and underpasses on which the first 119 miles of high-speed rail track will run. Major structures completed include the 4,741-foot San Joaquin River Viaduct in Fresno and the Hanford Viaduct in Kings County, the largest high-speed rail structure in the Central Valley, spanning the length of twenty-one football fields. A railyard for materials laydown and logistics to allow for high-speed rail construction is under construction and scheduled for completion this year. These are momentous achievement. Combining feats of engineering, complex logistical and legal coordination, and, on average, the labor of more than 1,700 workers in the field every day, mostly in Fresno, Kings, and Tulare Counties. In total, 53 structures and 69 miles of guideway have been completed.”
CHSRA also said it “rejected the FRA’s claim that it lacks a plan to close a projected $7 billion funding gap,” pointing to Governor Gavin Newsom’s proposed extension of California’s Cap-and-Trade program, now referred to as Cap-and-Invest, “which would guarantee at least $1 billion annually through 2045.” The Authority also noted its forthcoming Request for Expressions of Interest (RFEI) “to engage private partners for potential innovative and creative partnerships that could improve cost and schedule of project delivery.”
Choudri also took issue with the review process, stating that the FRA’s own monitoring report in October 2024 “found no significant compliance issues, and that the FRA’s new position is outwardly inconsistent with its own prior findings. There have been no meaningful changes in the past eight months that justify FRA’s dramatic about-face. Instead, the FRA has looked at essentially the same facts it considered in the fall of 2024 and simply reached a different conclusion. Hostility to public investments in high-speed rail, and to California’s leadership—hostility that dates back to FRA’s initial attempt to revoke federal funding to the Program in May 2019—appears to be the real basis for the proposed determination.”
The letter also “underscores that environmental clearance is complete from downtown San Francisco to downtown Los Angeles and that electrification of the Caltrain corridor between San Francisco and San Jose is finished.”
Choudri concluded his response by calling on the agency to withdraw its proposed termination. “I hope that FRA and the Authority can move forward to work together to support this Program—a project with a big future and great promise to better the lives of Californians and spur economic growth in the state and across the nation.”
