California calls Trump administration threat to freeze funds ‘unwarranted’

California’s high speed rail agency pushed back Wednesday against Trump administration threats to pull federal funding, arguing the project has already “reshaped the Central Valley” with “momentous achievements” and contending it would be able to close a large funding shortfall with state and private investments.

The 14-page letter comes two weeks after the Federal Railroad Administration released a report that said endless delays and budget overruns amount to an event of default on $4 billion of federal grants. The FRA gave the authority a month to present evidence in support of retaining the federal dollars.

“Termination of the [grant agreements] is unwarranted and unjustified,” said California High Speed Rail Authority CEO Ian Choudri in the letter, which asks the FRA to withdraw the termination threat. “FRA’s conclusions are based on an inaccurate, often outright-misleading, presentation of the evidence.”

The largest public infrastructure project in the country, originally pitched as a way to connect Los Angeles and San Francisco with electric trains traveling 220 miles per hour, has come under repeated criticism from Republicans as its cost have ballooned to $128 billion from $33 billion. The Trump administration, in its first term, rescinded nearly $1 billion in federal aid, which was later restored under the Biden administration.

The full route’s shortfall is as high as $99 billion, according to a March 2024 report from the watchdog California High-Speed Rail Peer Review Group.

Despite the controversy, an April poll by Politico and UC Berkeley’s Jack Citrin Center for Public Opinion Research showed that 67% of registered California voters support continuing the high-speed rail project.

Choudri, who took over as CEO last August, said state and potential private investment would be sufficient to finish construction on the initial $33.5 billion Bakersfield to Merced segment, despite the estimated $7 billion gap.

Choudri’s plan relies on a fresh infusion of funds from the state’s cap-and-trade program, proposed by Gov. Gavin Newsom, which would bring in at least $1 billion annually through 2045.

The authority would securitize the cap-and-trade funds to leverage private investment, potentially through a public-private partnership, Choudri said. The authority is preparing a Request for Expressions of Interest to engage private partners “for potential innovative and creative partnerships that could improve cost and schedule” of the project, the letter said.

“In fact, the authority has several options and opportunities for addressing funding needs,” Choudri said in the letter. “At the very least, it is premature to conclude that sufficient funding will not be available.”

In another potential revenue source, the state Senate in early June passed a bill that calls for a study to “assess funding potential across a variety of funding mechanisms that can support the high-speed rail capital program or discrete system elements.” The legislation now heads to the Assembly.

The authority has secured around $7.2 billion in federal grants since 2009, including a $3.1 billion grant in December 2023 from the Infrastructure Investment and Jobs Act.

In a construction update released this week, the authority said 53 of the 93 structures required for the first phase had finished construction, and that 30 additional structures are currently under construction.