California sues DOT for withholding nearly $1B high-speed rail funds

by Kim Boateng Posted on May 24th, 2019

Los Angeles: The State of California and California High-Speed Rail Authority filed a complaint Tuesday against the US Department of Transportation (DOT) for de-obligating nearly $1 billion previously allocated to a high-speed rail project in the California Central Valley.

According to the complaint, California has been pursuing a high-speed rail plan since 1993 to link Los Angeles and San Francisco. Federal investment in California’s high-speed rail plan came from the Federal Railroad Administration (FRA), a division of the DOT, as early as 2010. The agreement between California and the FRA stipulated a 50 percent matching program wherein for each dollar the FRA spent on the project, California would contribute one dollar of state funds. The total grant agreed to by California and the FRA provided for $2.5 billion in federal funding. Two additional grants were agreed to in 2010 and 2011 totaling around $928 million.

The complaint alleges that the FRA, while previously cooperative with the agreement, abruptly stopped cooperation in early 2018. The administration stopped reviewing the work or assisting in environmental clearances. Cooperation officially ceased in February 2019 when the FRA issued a letter terminating the agreement and all remaining money.

The complaint hints that the termination may be related to California’s lawsuit against President Trump’s national emergency declaration, but does not fully draw this conclusion. The complaint instead argues that the termination of the money is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law under the Administrative Procedure Act.

The complaint requests relief from the court in the form of setting aside the agency action and an injunction preventing the reallocation of funds owed to California by the agency. This again seems to be a veiled reference to potential reallocation of funding to the border wall, but is not stated straight out. The complaint now heads to the federal Northern District of California and will likely expect a response from the Trump Administration.

The Trump administration carried out its threat to cancel nearly $1 billion in funding for California’s troubled high-speed rail project after Gov. Gavin Newsom said he would scale back its scope.

In a letter to the head of the California High Speed Rail Authority, Federal Railroad Administrator Ronald Batory confirmed the move the administration had floated in February, officially terminating the Transportation Department’s agreement to provide an additional $928.6 million to help pay for the project.

According to a statement from the Federal Railroad Administration, California “failed to make reasonable progress” on the project. The agency also cited the state’s decision no longer to pursue plans for the rail service to connect San Francisco and Los Angeles.

The FRA will de-allocate $928.6 million for high-speed rail project which was originally projected to cost $77.3 billion but is now estimated at roughly $20 billion due to its substantially reduced footprint.

In addition, the FRA said it will “consider all options” to get $2.5 billion returned that was already given to the state for the project.

California Gov. Gavin Newsom announced in February that due to cost hikes, delays and management concerns, the state will reduce the size of the project.

The initial plan, which was set to be fully operational by 2033, would have built a 520-mile system from Los Angeles to San Francisco that would have allowed trains to travel up to 220 miles per hour.

However, the project will now only provide rall service between Merced and Bakerfield, both of which are in California’s Central Valley. The high-speed rail will be 119-miles long. Following Newsom’s announcement, the FRA threatened to revoke the more than $900 billion in funding for the project.

The FRA’s decision is the latest hit from President Donald Trump. California has repeatedly sued the Trump administration for its immigration policies. Earlier this year, California joined a multi-state lawsuit challenging a national emergency declared by the president to free up funds for a wall along the U.S.-Mexico border.

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