Trump administration withdraws $4 Billion in federal funding for California’s high-speed rail project

Last Updated on July 17, 2025 by The HD Post Staff

7/17/2025: Article updated to include statement from CHSRA CEO Ian Choudri.

CALIFORNIA – U.S. Transportation Secretary Sean P. Duffy announced, July 16, that the Federal Railroad Administration (FRA) terminated approximately $4 billion in unspent federal funding for California’s High Speed Rail project.

After 16 years and approximately $15 billion in spending, the California High-Speed Rail Authority (CHSRA) has yet to complete any high-speed track.

Duffy said federal dollars are not a blank check.

“After over a decade of failures, CHSRA’s mismanagement and incompetence has proven it cannot build its train to nowhere on time or on budget,” said Duffy.

FRA listed 9 reasons for termination

The decision follows a detailed FRA review and two response opportunities provided to CHSRA under the grant terms.

FRA said neither response addressed its significant concerns.

The termination letter cited the following reasons:

CHSRA has issued multiple costly change orders due to project delays and expects more.
It missed the deadline for finalizing rolling stock procurement.
There is an estimated $7 billion funding shortfall to complete the initial operating agreement (EOS) without a plan to close it.
CHSRA has no viable plan to finish the EOS by the 2033 deadline.
The project relies heavily on unstable non-federal funding sources like California’s cap-and-trade program.
CHSRA has underbudgeted time and funds needed for full electrification by 2033.
Contingency funds are insufficient to cover expected contractor delay claims.
Ridership projections have been significantly overstated.
CHRSA currently lacks the capacity to complete the EOS on time.

“CHSRA simply cannot meet its obligations under the grant agreement,” wrote FRA.

Transportation may clawback funding related to rail project

Along with canceling $4 billion in unspent funds to CHRSA, Duffy has ordered a review of other related grants.

The Department of Transportation will consult with the Justice Department on FRA’s findings, including potentially clawing back funding related to California’s rail project and other potential issues under Federal law.

“Canceling grants is illegal”

CHRSA CEO Ian Choudri said canceling the grants without cause isn’t just wrong — it’s illegal.

“These are legally binding agreements, and the Authority has met every obligation, as confirmed by repeated federal reviews, as recently as February 2025,” said Choudri.

Governor Gavin Newsom said the cancelation comes as the project enters the track laying phase.

Construction is actively underway across 171 miles, with more than 50 major railway structures – including bridges, overpasses, and viaducts built and over 60 miles of guideway completed.

Newsom said California is putting all options on the table to fight the action.