SAN FRANCISCO—A large number of change orders and a lack of legal power in negotiations with third parties are two main factors that have bogged down California’s high-speed rail project with delays and cost overruns, according to a June 4 Federal Railroad Administration (FRA) report.

The compliance review report was sent to California High-Speed Rail Authority (CHSRA) CEO Ian Choudri along with a letter notifying him of the possible termination of unspent federal grants.

“These change orders have been a major factor in the project’s escalating costs, which have risen from an initial estimate of $33 billion to between $89 and $128 billion,” the report reads.

“Change order” is an industry term for an amendment to a construction contract. A change order usually increases the contract price, adjusts the amount of time the contractor has to complete the work, or both.

The CHSRA had approved more than 1,500 change orders as of June 4.

The rail segment currently under active construction is 119 miles from Madera to Wasco and is scheduled to be completed in 2026, according to the CHSRA’s 2024 business plan.

FRA staff found that there were “a substantial number of change orders” between June 2021 and April 2025 regarding construction in the Central Valley.

In Construction Package 2-3, a 65-mile segment from Fresno to near the Kern County line, 273 change orders by 2021 increased costs by $800 million, a 62 percent increase from the $1.2 billion contract bid, according to the report. Approximately 20 change orders related to the construction of protective barriers have exceeded $500 million.

“We don’t like inflation of costs, we don’t like change orders on public projects, but it hasn’t been that way,” state Sen. Dave Cortese, a Democrat and chair of the California Senate Transportation Committee, told The Epoch Times in a previous interview.

“We’ll obviously try to hold costs down, but what we do know is there’s a lot of people working right now. That money doesn’t go out of the window.”

Of the $13 billion spent on the high-speed rail project, 97 percent went to businesses and workers in California, according to a May 15 CHSRA statement.

More than $1.84 billion has been paid to more than 900 small businesses involved in the project, including $859 million to 296 certified disadvantaged businesses and $323 million to 107 certified disabled veteran businesses, according to the statement.

The FRA also discussed the CHSRA’s lack of legal power.

“The limits on CHSRA’s legal authority, including the authorizing legislation for the CHSR System, have severely curtailed CHSRA’s ability to deliver the CHSR Project effectively and efficiently, and has resulted in substantial delay and cost overruns,” the report reads.

Proposition 1A in 2008, which authorized $9.95 billion in bonds for the high-speed rail, required that the train system’s alignment “follow existing transportation or utility corridors” as much as possible.

With that restriction in place, the CHSRA must negotiate an agreement with each affected landowner to resolve conflicts.

The CHSRA is “politically hamstrung” and has no leverage to get property owners, city governments, or utilities to reach an agreement, causing significant delays that often take several months to resolve and can involve paying attorney fees for the involved third parties, according to the report.

A 400-foot section of a 22.5-mile guideway cannot be finished at this time because of a dispute with the owner of an irrigation canal, the report states. The issue could have been resolved with a canal relocation in June 2023; however, the parties involved had agreed to address land rights issues first, which led to a negotiation that has lasted nearly two years with no end in sight.

In another case mentioned in the report, the CHSRA spent $10 million to help relocate farm workers who lived in a complex next to the high-speed rail alignment, instead of paying for a simple sound barrier to reduce noise. The CHSRA also sought and received a $24 million federal Rebuilding American Infrastructure with Sustainability and Equity grant to redevelop the abandoned complex.

The FRA concluded that there is “no viable path” to complete the segment from Merced to Bakersfield by 2033 or to complete the full high-speed rail system.

The CHSRA “strongly disagrees” with these conclusions, a spokesperson for the organization responded in a statement.

“The Authority will fully address and correct the record in our formal response to the FRA’s notice,” the statement reads.

The CHSRA had a $7 billion deficit in its $35.3 billion budget to finish the 171-mile Merced-to-Bakersfield segment, according to a budget hearing in March.

The gap will increase if the FRA decides to terminate grants. The CHSRA has 30 days to dispute the FRA’s notice.

California Gov. Gavin Newsom’s budget proposal revision in May included an extension of the Cap-and-Trade Program that was supposed to expire in 2030.

“[This is] providing the necessary resources to complete the project’s initial operating segment,” the CHSRA said in the statement.