California Sues Trump Administration Over Termination of High-Speed Rail Funding

The state alleges $4 billion in federal grants were cut for political reasons as the project enters the track-laying phase.

A drone view of a California High-Speed Rail bridge where it crosses through Fresno, Calif., on June 8, 2025. REUTERS/Fred Greaves/File Photo

California sued the Trump administration on July 17 over its decision to revoke $4 billion in federal grants for the state’s high-speed rail project, calling the move politically motivated and illegal.

Gov. Gavin Newsom announced the lawsuit in a statement, accusing the administration of using the federal grant termination as retribution against California. The state claims that the Federal Railroad Administration (FRA) ended two grant agreements without cause, despite that the project met its obligations under federal oversight.

“In reality, this is just a heartless attack on the Central Valley that will put real jobs and livelihoods on the line,” Newsom said in the statement. “We’re suing to stop Trump from derailing America’s only high-speed rail actively under construction.”

The California High-Speed Rail Authority (CHSRA), which filed the suit, said in a post on X that “canceling these grants without cause isn’t just wrong, it’s illegal.”

CHSRA said it has met every requirement under its agreements, pointing to multiple federal reviews—including one as recent as February—that found the project to be in compliance.

The lawsuit argues that President Donald Trump’s actions are part of a long-running pattern of political retaliation, pointing to his first administration’s attempt to revoke high-speed rail funding the day after California sued to block his emergency declaration for a border wall.

In both instances, California claims, the timing and public remarks show that the decisions were driven by personal animus, not project performance.

The state also claims that the FRA ignored its own oversight record. As recently as October 2024, the agency completed an annual monitoring review and “made no findings for which corrective measures were needed,” according to the suit.

The lawsuit says the abrupt reversal in Trump’s second term was unjustified and that CHSRA was given inadequate time to respond.

Transportation Secretary Sean Duffy announced the termination on July 16, following what the FRA described as an exhaustive compliance review. He said CHSRA failed to meet critical benchmarks, citing a $7 billion funding gap, missed procurement deadlines, and a lack of capacity to deliver the project’s first operating segment by 2033.

“This is California’s fault,” Duffy said in a statement. “Governor Newsom and the complicit Democrats have enabled this waste for years. Federal dollars are not a blank check–they come with a promise to deliver results. After over a decade of failures, CHSRA’s mismanagement and incompetence have proven it cannot build its train to nowhere on time or on budget. It’s time for this boondoggle to die.”

The administration argues that the funds would be better spent on projects with clearer timelines and viable completion plans. The FRA said CHSRA’s responses to its findings were inadequate and did not address concerns outlined in a 300-page review.

The lawsuit, however, says the FRA’s case rests on a mischaracterization of CHSRA’s own inspector general. After the agency cited the inspector general’s report to support its funding gap concerns, the Office of the Inspector General-California High Speed Rail (OIG-HSR) issued a letter disavowing that interpretation.

“We have identified no citations by the FRA supporting its assertion that the OIG-HSR ever made this conclusion,” the letter said.

CHSRA says it is nearing the track-laying phase, with 171 miles under active construction, more than 50 major structures completed, and more than 15,000 jobs created. Environmental reviews for 463 miles of the corridor are complete, and the agency expects passenger service to begin between 2030 and 2033.

The rail project, initially pitched in 2008 as an 800-mile line connecting San Francisco and Los Angeles by 2020, has since been scaled back to a 171-mile segment from Merced to Bakersfield. Projected costs have risen to an estimated $135 billion, according to the Department of Transportation.

Last month, the department warned that federal funding was at risk if California failed to resolve what it called a pattern of mismanagement and unrealistic projections. CHSRA rejected those claims, arguing that the project remained on track with state support and that federal findings ignored recent progress.

In this week’s lawsuit, California asked the court to block the FRA’s termination decision and allow the state to retain the remaining federal grant funds.

The Epoch Times has contacted the White House for comment.