Transportation Secretary Duffy Orders Investigation Into $4 Billion Of Federal Funding For California High-Speed Rail

U.S. Secretary of Transportation Sean Duffy announced Thursday that the Federal Railroad Administration will begin a compliance review of funding for the California High-Speed Rail Authority, with $4 billion of federal funding now at stake for California.

Speaking from inside Union Station in Los Angeles, Duffy called out the high-speed rail project for being grossly mismanaged and said that the Federal Railroad Administration will be conducting a compliance review of $4 billion promised by former President Joe Biden to help build out the Merced to Bakersfield part of the track. Should the agency take it away, it would only be the latest funding blow to the project and would cause the state to scramble to fill in the funding gap.

“It was going to be done by 2020, and it was going to cost $33 billion. And people were excited,” said Duffy on Thursday. “Where are we today? Well, today, we are severely, no pun intended, off track.

“The federal government has invested $2.7 billion for this project. California has invested the rest. Joe Biden has promised another $4 billion. The problem is California is still short $6.5 billion. California doesn’t have the money to complete the project, even with the federal promises that were made by the last administration. So the question becomes, ‘What do we do?’.

“For too long, taxpayers have subsidized the massively over-budget and delayed California High-Speed Rail project. If not, I will have to consider whether that money could be given to deserving infrastructure projects elsewhere in the United States.

“The FRA review is going to help determine whether billions of dollars in taxpayer money should remain committed to California high-speed rail. We’re going to look at whether California High-Speed Rail has actually complied with the agreements that they’ve signed 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.”

However, Duffy didn’t rule out federal spending on all high speed rail, specifically citing the Los Angeles to Las Vegas Brightline West project as being worthy of federal funding.

Originally estimated to cost $33 billion in 2008 with a San Francisco to Los Angeles line  to open by 2028, the California high speed rail system has since ballooned to $128 billion, and $135 billion+, with an estimated partial completion somewhere in the late 2030’s. And last year, CHRSA actually confirmed that the system still needed $100 billion to link up San Francisco and Los Angeles. The true cost may also be much higher than anticipated, with some estimates during the Governorship of Jerry Brown putting that figure at around $350 billion.

President Trump announced earlier this month that he would be launching an investigation into CHSRA, fulfilling a promise his administration made to look into the system. Specifically, he noted that the high cost of the program was mind-boggling, echoing decades of criticisms within California that the project has been nothing more than a boondoggle.

CHSRA responded rather curtly, saying in a post to just “Ignore the noise”. In addition, they added that “every dollar has been accounted for” and that the project is now past a point of no return to be completed. Some later even expressed doubt that the federal government would even go beyond an investigation threat.

This led to a speech by Transportation Secretary Duffy on Thursday.

Trump Administration Goes after $4 billion in funding

In a later press release, the DOT further clarified what they would be looking for in their investigation.

“As recently noted by the California High-Speed Rail Office of the Inspector General, just the Merced-to-Bakersfield segment has a funding gap of at least $6.5 billion,” said the DOT. “That gap remains despite California being due to receive over $4 billion from the Biden Administration. The CHSRA Inspector General also found that even this limited project, with barely 2 million in annual projected ridership because it fails to connect California’s larger cities, is unlikely to be completed by 2033.

“At the direction of Secretary Duffy, FRA will review CHSRA and the progress on the Merced-to-Bakersfield Corridor. The detailed review will look at CHSRA’s compliance under the FRA-administered grant agreements to determine whether CHSRA has fully met its obligations under the award terms.”

In addition, a small group of protestors was at the event, and interrupted the conference several times. Signs were seen seen saying “Build the rail,” “Duffy, go home” and “We pay taxes, we want trains.”

As of Thursday at noon, CHSRA has yet to respond to Duffy’s announcement. Other state officials like Governor Gavin Newsom have also not responded yet to both the announcement and where the state would get the $4 billion needed to make up for the potentially lost funding.

“The High Speed Rail Authority has been on guard since November when Trump was elected, and then on red alert, so to speak, after Trump said that he wanted to investigate them,” said transportation industry accountant Derrick Clark to the Globe on Thursday. “And $4 billion in lost funding, not to mention the Trump administration not wanting to fork over anything else to them for the next four years, is a big blow. These budgets, money is usually spoken for well beforehand. So making up that $4 billion, that’s a doozy.

“You can bet California is going to fight tooth and nail to keep it. They need all the money they can get for it right now. High Speed Rail said that they’re at the point of no return. This would seriously challenge that.”