Feds Pull Plug on $63.9M Texas High-Speed Rail Grant, Citing Cost and Risk

In a dramatic reversal for the long-embattled Texas high-speed rail project, the U.S. Department of Transportation announced Monday it is terminating a $63.9 million federal grant meant to support pre-construction work on a high-speed rail line between Dallas and Houston. 

The move, officials say, reflects concerns over ballooning costs and the increasing reliance on public funds for what was originally billed as a private-sector initiative.

U.S. Transportation Secretary Sean P. Duffy called the Texas Central Railway project a “waste of taxpayer funds” and a “distraction from Amtrak’s core mission,” stating that cost projections have surged past $40 billion, proposing an unrealistic and risky investment for the federal government.

“The Texas Central Railway project was proposed as a private venture,” Duffy said in a statement. “If the private sector believes this project is feasible, they should carry the pre-construction work forward, rather than relying on Amtrak and the American taxpayer to bail them out.”

The terminated grant was awarded through the Federal Railroad Administration’s (FRA) Corridor Identification and Development Program. The FRA, in coordination with Amtrak, agreed to withdraw funding and reallocate the remaining funds to more cost-effective rail initiatives across the country.

Despite the funding setback, private investors behind the project remain optimistic. Kleinheinz Capital Partners, the lead investment sponsor, welcomed the decision as an opportunity to reaffirm private-sector leadership. “We are proud to have stepped in as the private sector sponsor of the Texas high-speed rail,” the firm said in a statement. “This project is shovel-ready and will create significant new jobs and economic growth for Texas as part of President Trump’s efforts to boost the U.S. economy.”

The Texas Central project has faced years of delays, rising cost estimates, and increasing skepticism from both federal and state leaders. What began as a privately financed vision to connect two of Texas’ largest metropolitan areas has in recent years sought federal assistance amid growing financial challenges.

Critics of the project applauded the move. Texans Against High-Speed Rail President Judge Trey Duhon called the grant’s cancellation “a long-overdue step,” accusing the project of misleading taxpayers. “What was originally conceived as a ‘completely privately funded’ project was being foisted on taxpayers,” Duhon said.

ReRoute the Route, a coalition of Texas civic and business leaders, echoed the sentiment. “We have long known that this failed project is a complete waste of federal taxpayer money,” said spokesperson Jennifer Stevens, crediting the decision to strong advocacy by Texas lawmakers.

The FRA emphasized that the cancellation does not signal an end to federal interest in high-speed rail, but rather a recalibration. “Connecting Dallas and Houston remains one of the more exciting opportunities for new passenger rail in the United States,” said FRA Chief Counsel Kyle Fields. “But federalizing this particular proposal is not the best use of taxpayer funding.”

With federal support off the table, the future of Texas’ high-speed rail now rests squarely in the hands of private investors. Whether the project can survive and move forward without public backing remains to be seen.