SACRAMENTO / WASHINGTON — California filed a federal lawsuit this week challenging the Trump administration’s decision to revoke $4 billion in federal funding for the state’s high-speed rail project—escalating a long-standing conflict between Sacramento and Washington over infrastructure, climate policy, and federal authority.
The lawsuit was filed on July 17 in the U.S. District Court for the Eastern District of California, based in Sacramento, and seeks to block the U.S. Department of Transportation and the Federal Railroad Administration (FRA) from rescinding grant agreements that state officials say are critical to completing the Merced-to-Bakersfield segment of the project.
Gov. Gavin Newsom and Attorney General Rob Bonta argue that the move is “arbitrary, capricious, and unlawful,” accusing the administration of terminating the grants without proper justification. They further allege that the revocation violates federal administrative law and risks derailing America’s only high-speed rail project currently under construction.
“Trump’s termination of federal grants for California high-speed rail reeks of politics,” Newsom said in a statement. “We’re suing to stop Trump from derailing America’s only high-speed rail actively being built.”
Federal review faults delays and cost escalation
The FRA officially terminated the grants on July 16, citing long delays, cost overruns, and unmet benchmarks. The agency’s review highlighted the absence of high-speed track more than 15 years after the project launched and pointed to a projected funding shortfall of at least $7 billion needed to complete the Central Valley line.
Transportation Secretary Sean Duffy referred to the project as a “boondoggle,” saying the state had failed to deliver on key obligations despite already spending $15 billion. The FRA also warned that further grant reviews and potential clawbacks may follow.
The full system was originally estimated to cost $33 billion but has since ballooned to projections exceeding $120 billion, depending on scope and inflation factors. California voters approved the project in 2008 through Proposition 1A.
The California High-Speed Rail Authority (CHSRA), which is leading construction, maintains that it has met its federal obligations and is progressing toward the next phase of development. Officials report that more than 15,000 construction jobs have been created and that over 60 miles of guideway and 50 major structures—bridges, viaducts, and overpasses—are complete.
Legal strategy and federal implications
The legal filing asserts that the revocation would inflict “irreparable harm,” including job losses, stalled contracts, and further delays in delivering a clean transportation alternative in one of the nation’s most heavily traveled corridors.
The FRA has given California 30 days to respond, after which it could move to recover federal dollars already awarded but not yet disbursed. Secretary Duffy has also ordered a broader review of all active California high-speed rail grants.
To sustain construction momentum, Gov. Newsom has proposed allocating $1 billion annually from California’s cap-and-trade revenues over the next 20 years. But even with that commitment, the project faces an estimated $7 billion gap for the Central Valley segment alone.
The state’s legal team argues that federal support remains essential to completing the project on time and that cutting the grants undermines years of planning, labor investment, and environmental progress.
Moving forward or off track?
The high-speed rail line was envisioned as a modern, climate-resilient transportation system connecting Northern and Southern California. But with billions now at risk and a legal showdown underway, the project’s fate may rest with the courts—and California’s ability to keep building without help from Washington.
