The Trump administration’s plan, announced this week, to terminate $4 billion in grants to California’s bullet train project could delay the start of even limited passenger operations on the nation’s largest infrastructure project for what some analysts said could be as long as a decade.
Even if the state can eventually win a legal challenge or a future president elects to restore the money, the project, already plagued with delays and funding shortages, is facing one of the most serious setbacks in its 17-year history.
The project to link Los Angeles and San Francisco with a high-speed train that could make the trip in two hours and 40 minutes has already been scaled back numerous times, as costs spiraled and construction schedules faced repeated delays. Until now, however, the California High-Speed Rail Authority always had enough money in the bank to take incremental steps forward.
But over the last four years, the state has drawn down almost all of a $9 billion bond that voters approved in 2008. Losing the federal grants will put the project on a near starvation diet to complete even the limited, 171-mile initial segment in the Central Valley, linking Merced and Bakersfield, both of which are far from the state’s major population centers.
“I don’t think we are going to see electric trains running on track from Merced to Bakersfield for a long, long time,” said Louis Thompson, a railroad veteran who spent more than a decade as chairman of a state-appointed peer review panel for the rail project. “Not in 10 years with no federal money. This is reality, and reality is painful.”
If the Transportation Department moves forward with terminating the grants next month, as it has said it intends to do, it is likely that California will file suit to challenge the decision, a case that could drag on for years.
Even if the political landscape changes after President Trump leaves office and a future president delivers a new bundle of cash, it would take years from then to issue contracts for electrical systems and high-speed trains. Delivery and testing of those items would take years more.
State officials said this week that they would press on, relying on state funding as they have for most of the project’s history. At the slower pace required, the project becomes even more vulnerable to annual inflation, sending total costs higher.
The plan as originally envisioned called for deploying 220-mile-per-hour trains between the state’s two largest population centers at a cost of $33 billion by 2020.
Today, building the full system is a distant goal and could cost as much as $128 billion if it ever happens.
The initial segment in the Central Valley will cost up to $35 billion, more than the original estimate for the entire system. Even if the federal grant is not terminated, the initial segment would still have a funding shortfall of about $7 billion.
A lengthy compliance review by the Federal Railroad Administration this week made nine findings that the project was not complying with grant agreements, noting that it had failed to meet deadlines, incurred significant change orders and reported ridership estimates that exceeded what was likely. It said there was no “viable path” to completing the initial segment in the Central Valley by a 2033 deadline set under the grant.
In reviewing $1.6 billion in change orders on construction, the agency told state officials that “the sheer volume and frequency of these change orders shows waste through an inexcusable combination of poor planning, implementation, or mismanagement of contractors, insufficient legal authority and technical expertise, and other factors.”
The high-speed rail authority rejected the criticism and said the project would continue to move forward.
“The authority strongly disagrees with the F.R.A.’s conclusions, which are misguided and do not reflect the substantial progress made to deliver high-speed rail in California,” a spokeswoman said in a statement. “We remain firmly committed to completing the nation’s first true high-speed rail system connecting the major population centers in the state.”
Authority officials also sharply disagreed with analysts’ predictions of a possible 10-year delay. They said that they believed the state would ultimately be allowed to keep the federal grants and that they would be moving ahead with a plan to lay high-speed track within the next year.
They noted that Gov. Gavin Newsom has proposed that the project continue to receive $1 billion annually through 2030 from the state’s greenhouse gas program, although that money is already accounted for in the state’s current plans.
State authorities did not directly address, however, what delays the project might face if the state did, in fact, lose access to the federal money.
Many experts on the construction project said that while the state might be able to hobble along with construction under existing funding, it appeared highly unlikely that it would be able to deliver an operational train within the next decade. When the state adopted the plan for the scaled-back Central Valley system in 2019, it was supposed to start service by 2028.
In his first term, Mr. Trump terminated a $928 million grant to the project dating back to the Obama administration. California sued, but before the case went to trial, Joseph R. Biden Jr. became president and restored the grant. Still, the state had not been able to draw on the money because of milestones that had to be passed first. The funding Mr. Trump is seeking to terminate includes not only the $3.1 billion grant issued under Mr. Biden but that earlier $928 million in funding.
The authority has about $4 billion in cash on hand, mostly from its share of California’s greenhouse gas auction program. That is enough to make some progress in completing construction that is already underway along 119 miles of farmland, but hardly enough to begin operations.
“Having this money taken away could potentially mean that they won’t be able to continue to construct it, at least at anywhere near the pace and scale they’ve been at,” said Ethan Elkind, director of the climate program at the University of California, Berkeley School of Law, who has been a supporter of the high-speed rail project.
“If there is a big gap in funding, it is going to mean layoffs and stalling the project at a certain point,” he said.
Conservatives have long supported cuts to funding for California high-speed rail. Transportation Secretary Sean Duffy last week called the project a “boondoggle.”
Diana Furchtgott-Roth, a deputy assistant secretary for research at the Transportation Department during Mr. Trump’s first term, said that the system, if it is ever built, had no hope of being profitable and that people were not likely to want to use it.
She noted the substantial decline in public transportation users since the coronavirus pandemic. “They prefer driving,” she said.
The California bullet train was originally expected to carry about 100 million passengers a year, but the estimate was later slashed by two-thirds. Estimated ridership on the mini system in the Central Valley was reduced by 25 percent in recent years.
But Mr. Elkind and other supporters have said the project could improve the quality of life in California and help drive the economy. “You’re just really greatly increasing mobility and connecting the economy, and in ways that no other mode of transport really could do as efficiently, and you’re doing it all in a very low-carbon way,” he said.
The state has 30 days to respond to the Trump administration’s notice. The rail authority said in its statement that it would “fully address and correct the record in our formal response to the F.R.A.’s notice.”
Legal analysts said that if the state sues, as Mr. Newsom promised, it is not clear that the state would prevail.
The Trump administration appears to have been careful to set up a legal basis for cutting the funding, making a lawsuit challenging, some analysts said.
But Eloise Pasachoff, a Georgetown University law professor who specializes in federal grant law, noted that the proposed funding cut “comes against the backdrop of the Biden administration doing a review of the exact same project last year and awarding another $3 billion in federal grants.” California, she said, will most likely challenge the termination on many grounds, including that the administration was “arbitrary and capricious” in its decision to revoke the money.
It is not enough, she added, for the administration to assert that funding a high-speed rail system is not a policy priority. Such a decision should go back to Congress, she said.
David Freeman Engstrom, a law professor at Stanford University, said the longstanding political antagonism between California’s Democratic governor and Mr. Trump might have been a factor in the decision to pull the grant, but it was unlikely to form a basis for a successful legal challenge.
If California argues that the termination is “just an effort to get back at Governor Newsom, an enemy of the administration, I’m not sure that a court’s going to be willing to credit that argument here,” he said.
Still, he said, there appeared to be little doubt that the termination, apart from the legal issues, was seen in Washington as a way to “stick it” to Mr. Newsom.
“By returning to the high-speed rail issue, Trump is once again lifting up a powerful symbol that liberal California is the problem, not the solution, and needs to get its own house in order.”
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