Transportation Secretary Sean P. Duffy criticized California’s high-speed rail project for “mismanagement” and announced an investigation into the use of a $3.1 billion federal grant. He expressed concerns over escalating costs—tripling to over $30 billion for a curtailed starter line—and warned of potential federal funding withdrawal, which could jeopardize the project. Governor Newsom’s scaled-back plans aim to connect Merced and Bakersfield, but funding gaps persist, complicating progress. Despite ongoing audits and some support, many argue the project lacks popular backing and threatens state funding for other essential needs, like wildfire prevention and water infrastructure.
Transportation Secretary Sean P. Duffy criticized the “mismanagement” of California’s struggling high-speed rail initiative on Thursday, announcing an investigation into how the state is utilizing a $3.1 billion federal grant, which he described as being “severely — no pun intended — off track.”
In correspondence with the state High Speed Rail Authority, the Federal Railroad Administration indicated it would carry out inspections, evaluate activities, and scrutinize financial documents. The agency cautioned that the state might be held responsible for any future federal expenditures under the grant sanctioned by the Biden administration if they are not found to be adhering to the grant’s stipulations.
The potential loss of such a significant federal allocation could seriously jeopardize a project already facing financial challenges, threatening to slow down the implementation of essential electrical systems and train acquisition — both critical components.
Initially, the project aimed to connect Los Angeles and San Francisco in just 2 hours and 40 minutes with 220-mile-per-hour trains, among the fastest globally, for a total estimated cost of $33 billion. However, Mr. Duffy pointed out that costs have since surged threefold, with the project failing to meet its original objectives.
At a news conference at Los Angeles Union Station, Mr. Duffy declared, “The project is not going to happen. There is no timeline for establishing a high-speed rail between Los Angeles and San Francisco.”
This initial vision has already been downsized by Gov. Gavin Newsom, who, in 2019, pledged to develop a starter line running from Merced to Bakersfield through the Central Valley. However, the projected cost of that scaled-back system has soared from an estimated $22.9 billion to over $30 billion, resulting in a $6.5 billion funding shortage, even with the anticipated $3.1 billion federal grant.
If the Trump administration were to annul the grant, it could deal a devastating blow to the project. It would leave the initiative reliant on a state revenue stream of roughly $1 billion per year from the greenhouse gas auction program, which is barely sufficient to sustain the historical expenditure pace of $3 million daily.
Ian Choudri, the chief executive of the rail authority, remarked that the project had already contributed significantly to California’s economic activity and job creation, even prior to the launch of the first trains.
“We welcome this investigation and the chance to collaborate with our federal partners,” he stated. “With numerous independent federal and state audits completed, every dollar is transparent, and we affirm the progress and significance of this project.”
Despite the challenges, the project maintains a dedicated group of supporters in California, some of whom demonstrated at a lively rally that disrupted Mr. Duffy’s press conference.
However, C. William Ibbs, a professor emeritus of civil engineering at the University of California, Berkeley, noted that rail projects in Europe have historically enjoyed much broader public support. He has advised on bullet train initiatives internationally and chairs the state-appointed peer review panel for this project.
“Our preference is not for rail systems,” he commented. “We are advocates of automobiles.”
The absence of widespread political backing has adversely affected the project. Mr. Newsom has refrained from endorsing additional substantial state funding, even when the state had a surplus of billions of dollars. When voters passed a $9 billion bond measure in 2008, it was intended to finance one-third of the project, with private investors and the federal government expected to contribute the remainder. However, private investment interest has since dwindled.
Over the years, project costs have consistently escalated due to inflation, design changes, increased land acquisition expenses, the Covid pandemic, and erroneous cost estimates, all of which have outpaced the search for new funding sources. Consequently, the funding gap has only widened.
“This highlights the fundamental issue that it is unmanageable without sufficient funding,” asserted Louis S. Thompson, a seasoned railroad expert who led the state-appointed peer review group until the previous year. “Should federal funding be withdrawn, managing the project will only become more challenging.”
Some analysts suggest that a complete loss of federal funding could necessitate the project to run lower-speed diesel trains along the newly constructed tracks. This contingency plan was originally included in grants issued during the Obama administration, which mandated that any construction have “independent utility” if a bullet train system did not materialize.
Mr. Duffy’s announcement is not the first indication of issues with the project. Earlier this month, the inspector general for the initiative, Benjamin Belnap, expressed skepticism about the feasibility of completing the Bakersfield-to-Merced line by 2030 or even by 2033, warning of additional risks of delay.
Mr. Belnap’s strongly worded report reignited longstanding concerns that the optimistic timelines set by the rail authority were not grounded in reality, further fueling President Trump’s efforts to scrutinize the project. Trump previously targeted the initiative during his tenure, causing the Federal Railroad Administration to rescind a $1 billion grant allocated to the project by the Obama administration. California subsequently sued for the funds, which former President Joseph R. Biden Jr. reinstated upon taking office.
The California rail authority sought an additional $8 billion under Mr. Biden’s ambitious national infrastructure strategy, but those funds did not materialize, although the $3.1 billion grant was secured.
Earlier this month, Mr. Trump indicated his desire for an investigation into the rail project. Several Republican state lawmakers, typically oppositional to substantial high-speed rail funding, expressed their support for such an inquiry via a letter, stating they “stand with you.”
“By all measures, the High-Speed Rail is a tremendous failure,” they noted. “The $1 billion that the state allocates annually to the High-Speed Rail could be better utilized for protecting lives, homes, and jobs from wildfires and other natural disasters, as well as for securing water infrastructure to foster economic growth.”