California sues to challenge Trump's $4 billion high-speed rail clawback

Reuters

18-07-2025

WASHINGTON, July 17 (Reuters) - California Governor Gavin Newsom on Thursday vowed to fight the "illegal" move by President Donald Trump's administration to cancel more than $4 billion in federal grants for the state's ambitious but much-delayed high-speed rail project.
A lawsuit challenging the rescission as an "arbitrary and capricious" abuse of authority was filed on Thursday in U.S. District Court in Los Angeles by the California High Speed Rail Authority, which oversees the project.
Trump's announcement on Wednesday added yet another hurdle to the 16-year effort to link Los Angeles and San Francisco by a three-hour train ride, a project that would deliver the fastest passenger rail service in the United States.
Newsom said the move by Trump's Transportation Department came as the high-speed rail project was on the verge of laying track, with "active construction" under way on the initial 171-mile segment between Bakersfield and Merced in California's politically conservative Central Valley.
The governor said termination of the grants amounted to "petty, political retribution, motivated by President Trump's personal animus toward California and the high-speed rail project, not the facts on the ground."
The rail system, whose first $10 billion bond issue was approved by California voters in 2008, has built more than 50 major railway structures, including bridges, overpasses and viaducts, and completed more than 60 miles (97 km) of guideway, the governor said.
"California is putting all options on the table to fight this illegal action," Newsom said in a statement hours before the lawsuit was filed.
The funding cancellation marked the latest confrontation between the Republican president and a Democratic governor widely viewed as a leading contender for his party's 2028 White House nomination.
The two men have clashed over issues from transgender athletes and electric car rules to the use of National Guard troops during Los Angeles protests and even egg prices.
Ian Choudri, chief executive officer of the California High Speed Rail Authority, said that canceling the federal rail grants "without cause isn't just wrong, it's illegal."
"These are legally binding agreements, and the authority has met every obligation, as confirmed by repeated federal reviews, as recently as February 2025," Choudri said, adding that the program has created some 15,500 jobs.
The Federal Railroad Administration issued a 315-page report last month finding the project was plagued by missed deadlines, budget shortfalls and questionable ridership projections.
Choudri's rail authority has called those conclusions "misguided," saying they failed to reflect "substantial progress made to deliver high-speed rail in California."
Transportation Secretary Sean Duffy chided the project for having failed to lay a single mile of track after spending $15 billion over 16 years. But Choudri said installing track is a final step after land acquisition, environmental clearances and construction of supporting structures.
Still, the project has faced its share of setbacks.
The San Francisco-to-Los Angeles route was initially supposed to be completed by 2020 for $33 billion. But the projected cost has since risen to $89 billion to $128 billion, and the start of service is estimated no sooner than 2030.
As designed, the system would feature electric locomotives traveling at up to 220 mph (354 kph), powered entirely by renewable energy. Planners said it would eliminate 200 million miles driven by vehicles on highways.
A second phase of the project called for extending the rail line north to Sacramento and south to San Diego. A separate project plans to link Los Angeles and Las Vegas with high-speed rail.
Duffy said on Thursday that he was confident the Trump administration will defeat any lawsuit challenging the department's move.
"We have to pull the plug," he told reporters outside the department's headquarters.
In 2021, Democratic President Joe Biden restored a $929 million grant for the project that Trump revoked in 2019 during his first term in office after calling the project a "disaster."
State Assembly member Corey Jackson, a Southern California Democrat who has questioned the project's soaring costs, said Newsom's call to fight the funding cut could galvanize support for Democrats from organized labor and voters in the area where the first railway jobs would be created despite its Republican leanings.
"The people of San Joaquin Valley will now know that their economic engine is coming from the Democratic Party," Jackson said. "This is also a message to our labor friends. Democrats continue to deliver these high-paying jobs. Republicans continue to try to kill them."
Rufus Jeffris, senior vice president of the Bay Area Council, a business-sponsored policy group in the San Francisco area, pointed to economic benefits associated with high-speed rail and called the funding cut unfortunate.