Authored by Chase Smith via The Epoch Times (emphasis ours),

California’s long-delayed high-speed rail project is in default of federal grant agreements and may soon lose more than $4 billion in funding, the U.S. Department of Transportation said on June 4.

A report released by the department accuses the California High-Speed Rail Authority (CHSRA) of chronic mismanagement, unrealistic projections, and failure to meet key obligations, despite receiving billions in taxpayer money.

The Federal Railroad Administration (FRA) concluded that the bullet train has “no viable path” to finish the project’s first operational segment by 2033, the deadline outlined in federal agreements.

In a letter to Ian Choudri, CHSRA’s CEO, the FRA stated that the agency intends to terminate two grants totaling roughly $4 billion unless California responds with a satisfactory corrective plan. CHSRA has up to 37 days to avoid a final termination.

The letter outlines nine key findings from a 310-page compliance review, including a $7 billion funding gap, missed procurement deadlines, and what the FRA referred to as “substantially overrepresented” ridership forecasts.

The FRA letter called the rail project “a story of broken promises and of waste of Federal taxpayer dollars.” It noted that what began as a proposed 800-mile system was “first reduced to 500 miles, then became a 171-mile segment, and is now very likely ended as a 119-mile track to nowhere.”

Transportation Secretary Sean Duffy said the report justifies reprogramming the funds to other projects.

“This report exposes a cold, hard truth: CHSRA has no viable path to complete this project on time or on budget,” Duffy said in a statement.

“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 Trump’s vision of building great, big, beautiful things again. Our country deserves high-speed rail that makes us proud—not boondoggle trains to nowhere.”

The FRA report found that CHSRA has not yet laid a single mile of high-speed rail track, despite more than $6.9 billion in total federal funding since 2009. It also said that CHSRA continues to rely on unstable funding sources, such as California’s cap-and-trade auction revenues, to fill budget gaps.

According to the FRA, CHSRA has already spent about $1.6 billion on change orders over the past two years and still faces legal disputes and procurement delays and hasn’t started construction on key segments.

The state originally promised an 800-mile rail line connecting San Francisco and Los Angeles by 2020 for $33 billion. Estimates now range from $89 billion to $128 billion.

In a statement last month, CHSRA said construction is active on 119 miles in the Central Valley and has created more than 15,000 jobs. The agency also said it was making progress on a 171-mile segment from Merced to Bakersfield.

But FRA officials say even that scaled-back version may be unreachable. The agency noted that CHSRA’s internal inspector general found no credible plan to close the current $7 billion gap for the Merced-Bakersfield stretch.

A CHSRA Authority spokesperson told The Epoch Times in an email that they “strongly disagree” with the FRA’s conclusions, which they said are “misguided and do not reflect the substantial progress made to deliver high-speed rail in California.”

“We remain firmly committed to completing the nation’s first true high-speed rail system connecting the major population centers in the state,” the spokesperson said. “While continued federal partnership is important to the project, the majority of our funding has been provided by the state. To that end, the Governor’s budget proposal, which is currently before the Legislature, extends at least $1 billion per year in funding for the next 20 years, providing the necessary resources to complete the project’s initial operating segment. The Authority will fully address and correct the record in our formal response to the FRA’s notice.”

The compliance review concluded that continued federal support would not achieve the goals of the High-Speed Intercity Passenger Rail Program. The FRA said it may redirect unspent funds from the grants to other infrastructure projects and is not currently seeking repayment of the funds already used.

Reuters contributed to this report.