The California High-Speed Rail Authority on Monday lashed back at the Trump administration’s proposal to terminate $4 billion in grants for the state’s bullet train project, asserting that the action was based on misrepresentations, outdated information and flawed analysis.
The U.S. Transportation Department recommended the funding cutoff after it said a compliance review of its grants found that the state had incurred costly change orders on its contracts, sharply reduced ridership forecasts and failed to meet deadlines. It said there was no “viable path” to completing an initial segment by the 2033 deadline set as a condition of funding.
The grant termination is one of the largest federal funding revocations in history and will almost certainly lead to litigation that may take years to resolve. It comes amid an increasingly contentious relationship between the federal government and the nation’s largest state, as well as a long-running political dispute between President Trump and Gov. Gavin Newsom.
In its formal response on Monday to the federal government’s contention that the state had botched the project, California officials said the project was in compliance with federal grant requirements and would indeed meet the 2033 deadline to start limited passenger operations within the Central Valley.
“The state is in compliance,” the California rail authority’s chief executive, Ian Choudri, wrote in the state’s response, adding that the federal government “wholly fails to support its conclusion.”
The proposed termination covers two federal grants, one for $928 million issued in 2010 by the Obama administration and the other for $3.1 billion in 2024 by the departing Biden administration.
State officials appeared to bristle particularly over the federal government’s claims that the state had made only minimal progress on construction, describing the extensive work on overpasses, viaducts and underpasses across an initial 119 miles of construction. It said that 54 structures and 70 miles of rail bed — 59 percent of the total — had been completed.
The state also noted in its response that an electrified rail system between San Francisco and San Jose was also in place, with infrastructure currently used for the commuter rail system but intended for future high-speed operations. And it noted that environmental reviews were now complete for the entire expanse between the Bay Area and Southern California.
The original bullet train plan was to link Los Angeles and San Francisco with 220-mile-per-hour trains at a cost of $33 billion by 2020. Today, the full system is a distant goal, costing as much as $128 billion and scheduled for completion at some unknown future time.
The initial segment in the Central Valley will cost up to $35 billion, more than the original estimate for the entire system. Even with the federal grant that is being terminated, the initial segment has a funding shortfall of about $7 billion.
When the Federal Railroad Administration released the results of its compliance review on June 4, Mr. Newsom, a Democrat, rejected the findings and vowed, “We will litigate.”
A lawsuit could span much of the next three years of the Trump administration, even before any appeals — with resultant delays contributing to the existing funding shortfall and the cumulative inflation.
Federal officials have contended that the project is already $7 billion short of the needed funding, an assertion the state pushed back on, arguing that it has provided “numerous reports, plans and budgets that provide reasonable pathways” to finding more money.
The project has used up nearly all of a $9 billion bond approved by voters in 2008, with about $4 billion in funds remaining from the project’s share of greenhouse gas fees that the state collects. It will continue to collect $1 billion per year in those funds, leaving the state with an estimated $6 billion to $8 billion to ride out the next three years, according to analysts. Democratic presidential administrations have been wary of delays in the project but have generally kept federal funding flowing.
A termination in federal funding would put Mr. Newsom’s goal of building a high-speed rail system between Merced and Bakersfield in the Central Valley out of reach for the foreseeable future.
The state would probably struggle to complete construction along the 119-mile stretch already under construction from Madera to Wasco, including plans to install a track and signal system that could be used by existing diesel-powered passenger trains, said Lou Thompson, a railroad veteran who served for more than 10 years as chair of a state-appointed peer review panel for the project.
“They would have a hard time,” he said.
Whether a lawsuit could succeed in overturning the termination would depend on complex federal grant laws and grant regulations. The state’s response to the termination is a preview of some of the arguments that may frame such a lawsuit.
It noted that the Biden administration, faced with the same facts, had decided to grant additional billions of dollars to the project only eight months ago, and had made no finding of noncompliance with existing grants.
The state also said that the Trump administration’s proposal to pull back funding was “predetermined” and “pretextual.” It cited a long string of public statements by Mr. Trump and by Transportation Secretary Sean Duffy that were critical of the project.
It quoted Mr. Trump’s description of the project on May 6: “It’s hundreds of billions of dollars for this stupid project that should have never been built, and then they realized that it would have been a lot less costly if we just gave limousine service back and forth and gave it free. They would have saved hundreds of billions of dollars.”
The state said such statements reflected political opposition to the project, not a factual evaluation of the state’s progress.
“The secretary and the president, in their rush for sound bite over substance, ignored the authority’s well-documented progress and accomplishments,” the state said.
Federal officials will review the state’s response before making a final determination to pull funding for the project, but action is expected fairly quickly.
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