FRA compliance review report determines CHSRA in default of federal grant terms
A compliance review report from the Federal Railroad Administration (FRA) determined the California High-Speed Rail Authority (CHSRA) is in default of the terms of its federal grant awards. In a letter to CHSRA CEO Ian Choudri, FRA stated its proposed determination to terminate two cooperative agreements based on the findings in the report.
The FRA says the report contains nine key findings, including missed deadlines, budget shortfalls and overrepresentation of projected ridership. The two grants total roughly $4 billion in taxpayer money. As the letter notes, CHSRA has up to 37 days to respond, after which the grants could be terminated.
In the letter, FRA noted its report identified a trail of project delays, mismanagement, waste and rising costs. The letter says 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 short of the funding needed to finish a fraction of the track.
“I promised the American people we would be good stewards of their hard-earned tax dollars. This report exposes a cold, hard truth: CHSRA has no viable path to complete this project on time or on budget. CHSRA is on notice. If they can’t deliver on their end of the deal, it could soon be time for these funds to flow to other projects that can achieve President [Donald] Trump’s vision of building great, big, beautiful things again,” said U.S. Department of Transportation (USDOT) Secretary Sean Duffy. “Our country deserves high-speed rail that makes us proud, not boondoogle trains to nowhere.”
FRA’s report contains 9 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.
In February, Duffy announced that USDOT would be launching an investigation into the CHSRA’s high-speed rail project and reviewing two grants awarded to the project: a $929 million Cooperative Agreement from 2010 and a $3.07 billion Cooperative Agreement from last year. Under the secretary’s direction, FRA conducted a detailed review of CHSRA’s compliance with federal grant agreements related to over $4 billion in funding. As part of its investigation, the FRA has contacted state oversight entities, visited construction sites, conducted a risk analysis, met with CHSRA officials and reviewed several thousand documents.
The letter and full report is available here.
