Texas bullet train may be back in private hands, owner seeks financing

Soichiro Koriyama/Bloomberg

A Texas hedge fund manager who has taken control of a long-dormant Texas bullet train project believes the Trump administration will support the project despite the administration yanking a grant earlier this week, calling it a "waste of federal funds."

In a Thursday hearing before the Texas Transportation Committee, a representative for Texas Central, the private company behind the high-speed rail project, said the company plans to meet soon with Department of Transportation officials.

The comments came two days after Transportation Secretary Sean Duffy killed a $64 million planning grant that had been awarded to Amtrak to help plan the train. Amtrak took a lead role in the project in 2023 from Texas Central.

"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," Duffy said in a statement Tuesday. "The project capital cost is now believed to be over $40 billion — making construction unrealistic and a risky venture for the taxpayer."

It's the latest twist in the controversial plan to build a 240-mile bullet train between Dallas and Houston using Japanese Shinkansen technology that has seen repeated delays, lawsuits and leadership changes in Texas Central, which first pitched the idea 16 years ago.

The Texas project is one of several fledgling high-speed rail plans around the country. The Trump administration has shown a preference for private funding for the complex projects. In February, Duffy announced a probe into California's publicly funded train, which is years over budget and behind schedule, while praising the Brightline West train between Las Vegas and Los Angeles.

Fort Worth-based John Kleinheinz bought out the top Japanese investor in January and took a controlling interest in Texas Central, a move that became public during an April 3 Texas House Transportation Committee hearing.

Kleinheinz, who lives in Fort Worth, is the CEO of Kleinheinz Capital Partners, Inc., the investment advisor for the Global Undervalued Securities Fund.

At a follow-up hearing Thursday before the same committee, Texas Central representative Andy Gent outlined an ambitious schedule, which includes trying to nail down financing and federal permits by year's end with another "eighty to eighty-six months" to build out the train line.

The DOT's decision signals that the Trump administration does not want to "federalize" the project, Gent said.

"They don't want Amtrak leading this project and we also don't believe that's in the best interest of the state of Texas or this project," Gent said. "What happens with federalization of the project is it comes with a lot of so-called red tape on the procurement side and the processes that Amtrak must go through."

Amtrak's Request for Qualifications floated in late February is an example of that red tape, as the company was trying to re-bid for work that  Bechtel has already been doing. "DOT doesn't want them spending the money in that way," Gent said.

"Amtrak is under a lot of pressure generally with the Trump administration," he added. "We will be meeting with [the DOT] shortly and we'll get a better view of this project," he said. "They believe Dallas-Houston remains a very lucrative route they want to explore, so we're going to continue to explore it with them."

Thursday's hearing came after the Transportation Committee subpoenaed financial information from Texas Central following the April 3 hearing on House Bill 1402, authored by state Rep. Cody Harris, which would prevent the use of state or local funding to alter roadways for the construction of high-speed rail.

Gent told the committee at the April 3 hearing that Texas Central has acquired only about 25% of the land required for the rail line, according to local reports.

Longtime project opponents applauded the DOT's decision. U.S. Rep. Jake Ellzey, R-Tex., thanked Duffy in a press release titled "It's Over."

"Through numerous conversations and collaboration, it became clear that we share a commitment to ensuring that projects like the Texas Central Railway do not misuse federal resources," Ellzey said.

A spokesperson for ReRoute the Route, which opposes the use of eminent domain or public funds for the project, said, "We appreciate Congressman Jake Ellzey's leadership in Washington to persuade President Trump and Transportation Secretary Duffy to terminate the $63.9 million grant to Amtrak. They have all worked hard and successfully to put Texans and private property rights above special interests and wasted taxpayer monies."