Trump administration pulls plug on $925 million high speed rail grant, seeks $2.5 billion repayment

The Trump administration has told the California High-Speed Rail Authority (CHSRA) that it is ending its agreement to help fund the bullet train project, a setback that could cost the state almost a billion dollars in funding. As well, Transportation Secretary Elaine Chao says the federal government expects to be repaid $2.5 billion from a previous grant.

The Federal Railroad Administration (FRA) has made it clear that it wasn’t happy with CHRSA’s revised plans, and the slowness of completion of the project originally funded in 2010 during the Obama administration.

Image from Investing in California Small Business (from CHSRA site)

“Based on CHSRA’s repeated failure to submit critical required deliverables and its failure to make sufficient program to complete the Project . . . FRA has determined that CHSRA has violated the terms of the FY10 Agreement and has failed to make reasonable progress on the Project,” the FRA said in a letter delivered on May 16 to the state rail authority.

Last year, Gov. Gavin Newsom said the $77-billion project lacked a path to complete a statewide system, and proposed a much-less ambitious project within the Central Valley.

“The Trump Administration’s action is illegal and a direct assault on California, our green infrastructure, and the thousands of Central Valley workers who are building this project,” the governor said in a statement.

“Just as we have seen from the Trump Administration’s attacks on our clean air standards, our immigrant communities and in countless other areas, the Trump Administration is trying to exact political retribution on our state. This is California’s money, appropriated by Congress, and we will vigorously defend it in court.”

The rail project is $44 billion over budget and years behind schedule. A state audit in November blamed flawed decision-making, organizational faults and poor CHSRA contract management

The federal government issued notice in March that it intended to terminate the $929-million grant and was exploring options to seek recovery of the $2.5-billion grant issued in 2009. The notice asserted that the state had violated the terms of the grants, was not making adequate progress and would fail to meet a 2022 deadline to complete 119 miles of construction in the Central Valley.

The grants are vital for Newsom’s plan to build a 171-mile partial bullet-train segment from Bakersfield to Merced, a plan he unveiled after saying that a more ambitious Bay Area-to-Central Valley system would cost too much and take too long to complete. Even with the federal grants, the state will have a difficult time paying for the $16-billion to $18-billion partial system.