California high-speed rail agency sues Trump administration for canceling grant

A construction crew works May 8 on part of the high-speed railway line that will cross beneath Highway 180 in Fresno.

May 21, 2019 11:09 AM PT

California’s high-speed rail agency announced Tuesday it is suing the U.S. Department of Transportation and its senior officials over the Trump administration’s decision to terminate a $929-million grant for the state’s beleaguered bullet train.

In a 20-page complaint filed in U.S. District Court, the state effectively accuses the administration of playing politics with a decision that contradicts federal regulations and makes faulty allegations about the project’s lack of progress.

The decision this month by the Federal Railroad Administration, a part of the Transportation Department, was made “in violation of its own procedures and policies, was arbitrary and capricious, an abuse of discretion, and contrary to law, and threatens to wreak significant economic damage on the Central Valley and the State,” the complaint says.

The lawsuit further escalates the conflict between California and the Trump administration over a project that aims to make the state a leader in advanced transportation but has been hobbled by lengthy delays and massive cost overruns. The suit names as defendants Transportation Secretary Elaine Chao and FRA Chief Ronald Batory.

Gov. Gavin Newsom’s office said the state will also seek a temporary restraining order that will argue that “the real motive underlying FRA’s action was political: to punish California for opposing President Trump’s proposed border wall.”

The complaint filed Tuesday details the sequence of events on Feb. 19, a day after California and 15 other states sued to invalidate Trump’s border emergency declaration. The complaint notes that Trump tweeted that the lawsuit was led by California, “the state that has wasted billions of dollars on their out of control Fast Train, with no hope of completion.” The complaint notes, “Later that same day, in a curt, three-page letter, the FRA abruptly notified the authority of its intent to terminate the grant agreement.”

But the FRA has argued that Newsom, in his State of the State speech in February, substantially curtailed the scope of the project to focus on a Central Valley operating segment, and pushed the original goal of a Los Angeles-to-San Francisco system into the indefinite future. Chao later called Newsom’s plan a “classic bait and switch.”

The state complaint, however, argues that Newsom “confirmed that he shared the ambitious vision for high-speed rail” of prior governors.” The suit also says that the federal action contradicts the grant terms and federal practice, which requires that both parties work to help correct problems within grants, take modest initial steps to withhold funds and terminate a grant only as a last resort.

The lawsuit, filed by California Atty. Gen. Xavier Becerra on behalf of Gov. Gavin Newsom and the California High-Speed Rail Authority wasn’t completely unexpected, since Newsom vowed last week to commence legal action after the FRA announced it was terminating the $929-million grant.

The grant has not been paid out and the state had not expected to begin tapping the money until about 2021.

Newsom, after holding a news conference in Oakland on homelessness, blasted Trump on Tuesday as a “petulant president” who is concerned only about ginning up fodder for his political rallies. Newsom noted that the courts have blocked many of the president’s actions, and he expects that to happen again regarding the funding for California’s high-speed rail system.

“The money’s been appropriated. Basically, it puts every large-scale infrastructure project in the United States of America at risk. You would have no trust or confidence in an appropriation,” Newsom said.

The FRA had justified its termination in a 25-page letter to state officials, outlining what it believed were a wide range of violations of a 2010 agreement with the state. It noted that the agency had rejected the project’s budgets and funding plans since 2016, because they were flawed.

But California rail officials said the FRA had failed to make the state aware of any problems in its execution of the project or its relationship with federal regulators.

The suit asks for a decision setting aside the termination of the grant and a permanent injunction against the possibility that the money could go to another project, which the FRA had threatened in its termination letter.

The Trump administration has vowed to also claw back a $2.5-billion grant for the bullet train, which was fully spent by the state by 2017.

Separately, the state Assembly’s Transportation Committee held a three-hour hearing on the Newsom plan Tuesday, taking in testimony from eight witnesses. Rail authority Chairman Lenny Mendonca said the accounting firm KPMG and the German rail firm Deutsche Bahn would further review the ridership and business assumptions of Newsom’s plan to build a high-speed-rail operating segment from Bakersfield to Merced by 2027.

Members of a state-appointed peer review panel and the Legislative Analyst’s Office said the Newsom plan faces a wide range of risks that could affect its construction cost, funding and future ridership. Lou Thompson, chairman of the peer review panel, noted that the plan would require a large bridge loan to complete construction by 2027, since some of the funds for the work would not arrive until 2030. The loss of the $929-million grant is another unknown.

“We are all making decisions on imperfect information, but the more information we get, the more the project seems imperfect,” said Assemblyman Vince Fong (R-Bakersfield), a critic of the project.

Times staff writer Phil Willon in Oakland contributed to this report.

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