California high-speed rail funding dispute heads to court

California high-speed rail funding is now at the heart of a courtroom battle after a US federal judge declined to block the California High-Speed Rail Authority (CHSRA) lawsuit over the cancellation of more than USD 4 billion for the Los Angeles–San Francisco corridor, as reported by Railway Pro.

Court says California high-speed rail funding dispute belongs in district court

Judge Dale Drozd of the US District Court in Sacramento said his court has jurisdiction, rejecting the Justice Department’s push to move the case to the US Court of Federal Claims. The Trump administration argued the fight is essentially contractual and therefore not one for a district court. Drozd, however, found the agreements between federal authorities and CHSRA to be cooperation agreements rather than classic contracts, and he underscored that California’s claims are statutory and constitutional in nature.

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FRA decision and the “arbitrary and capricious” standard

Drozd’s ruling also noted that the Federal Railroad Administration (FRA) decision to withdraw funds is not “left solely to the discretion of the agency.” That leaves room for review under the Administrative Procedure Act, which allows courts to examine administrative actions alleged to be “arbitrary and capricious.”

CHSRA says the cancellation of funds is “arbitrary and capricious” and an abuse of authority. It also argues the procedures set out in the funding agreements were not followed, and that the FRA should have taken intermediate steps and offered a chance to correct any non-compliance before withdrawing the money.

Drozd also noted that the latest annual assessment of the project, completed on October 28, 2024, did not identify any issues requiring corrective action. Even so, just days after the start of President Donald Trump’s second term, the project again drew political criticism.

What’s at stake for the Los Angeles–San Francisco high-speed rail project?

The dispute involves more than USD 4 billion in federal grants, plus a subsequent Department of Transportation decision to withdraw another USD 175 million linked to four related high-speed rail projects. If the court rules in California’s favor, the federal government could be required to reinstate the funding.

The project has been in development for 16 years since California voters approved a USD 10 billion bond issue in 2008. CHSRA says it has completed more than 50 major rail structures and about 113 kilometers of guideway infrastructure. Costs have increased from an initial USD 33 billion estimate to a range of USD 89 billion to USD 128 billion, while commissioning is now estimated for 2033. In November, the authority launched a USD 3.5 billion request for proposals for the delivery of track and rail systems.

The funding pullback was announced in July by Transportation Secretary Sean Duffy, according to a US Department of Transportation briefing, and he criticized the project, saying the California authority “cannot deliver the promised results.” The FRA also began reviewing other grants, including the possibility of recovering funds already allocated.

This is not the first time the program has ended up in court. In 2019, during Donald Trump’s first term, the federal administration revoked USD 929 million in funding for the project. The dispute ended in 2021 when the Biden administration fully restored the funds, as previously covered by Railway Supply.

Drozd’s decision lets the lawsuit continue, leaving California high-speed rail funding—and the project’s next steps—uncertain.

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