USDOT considers clawing back $4 billion for California high speed rail

The Trump administration said Thursday it would launch a probe into California’s long-struggling bullet train to determine whether it should rescind $4 billion in federal grants.

Transportation Secretary Sean Duffy said he ordered the Federal Railroad Administration to launch a formal review of the California High-Speed Rail Authority, which oversees the project, to find whether it has complied with the federal government.

“We can’t just say we’re going to give money and then not hold states accountable to how they spend that money — how they spend it per the agreements that they made with the federal government,” Duffy said Thursday at a press conference in Los Angeles. “If California wants to continue to invest, that’s fine, but we in the Trump administration are going to take a look at whether this project is worthy of a continual investment.”

Duffy said the review would focus on “whether the CHSRA has followed through on the commitments it made to receive billions of dollars in federal funding.” Depending on the findings, the review “may result in remedial action up to and including withholding of reimbursement and termination of cooperative agreements. Please be advised that any work completed from the date of this notice forward is at the risk of CHSRA,” the FRA’s letter to the authority said.

The authority has secured around $7.2 billion in federal grants since 2009, including a $3.1 billion grant in December 2023 from the Infrastructure Investment and Jobs Act. The Trump administration, in its first term, rescinded nearly $1 billion in federal aid, which was later restored under the Biden administration.

The authority has said previously that it needs at least $8 billion in federal grants for the first segment. The DOT said the CHRSA has so far spent $15.7 billion while the authority pegs the total at $13 billion.

Voters in 2008 approved $10 billion for the rail line, which carried a $33 billion price tag and was estimated to be completed by 2020. After years of delays and cost overruns, the estimated cost has ballooned to $128 billion with no clear completion date on the full San Francisco to Los Angeles route.

The megaproject has become a favorite target of Republicans and was repeatedly criticized by Trump on the campaign trail. A group of California GOP lawmakers on Feb. 13 sent a letter to Trump asking him to investigate following a report from the CHSRA’s inspector general warning that the first segment, from Merced to Bakersfield, faces a $6.5 billion funding gap and that it’s “increasingly unlikely” it will be complete by the 2033 target date.

“It’s been 17 years and nearly $16 billion dollars and no rail has been built,” Duffy said at the press conference, where he sometimes had to shout to be heard over protesters yelling “build the train!

“They’re yelling at us because they’re angry and they want a rail project,” he said, referring to the protestors. “But they should go to the people who are making the decisions, who have wasted your money,” he said. “What the hell happened? How did this happen? Who got rich off this project? Where did those billions of dollars go?”

The CHSRA said it welcomes the investigation. “With multiple independent federal and state audits completed, every dollar is accounted for, and we stand by the progress and impact of this project,” said CEO Ian Choudri in a statement, adding that the project has so far generated $22 billion in economic impact, mostly in the Central Valley.

In addition to federal funds, the CHSRA relies on the state’s cap-and-trade program to fund the project.

The full route’s shortfall is as high as $99 billion, according to the watchdog California High-Speed Rail Peer Review Group.

In July, the authority approved final environmental clearance needed for the full 463-mile route.

The administration’s announcement follows its move Wednesday to withdraw approval of New York City’s controversial congestion toll program.