A US federal judge has rejected the Trump administration’s request to block the California High-Speed Rail Authority (CHSRA) lawsuit against the decision to cancel more than USD 4 billion in federal funding for the high-speed rail project between Los Angeles and San Francisco.
Judge Dale Drozd of the US District Court in Sacramento ruled that his court had jurisdiction over the case and rejected the Justice Department’s arguments that the lawsuit should have been filed in the US Court of Federal Claims, a court specializing in contract disputes with the federal government.
Court: case can be heard in federal district court
The Trump administration argued that the dispute concerns contractual relations and therefore cannot be heard by a district court.
Judge Drozd rejected this interpretation, emphasizing that the agreements between the federal authorities and CHSRA are cooperation agreements, not classic contracts, and that the rights invoked by the State of California are statutory and constitutional in nature, not purely contractual.
In his reasoning, the judge pointed out that the Federal Railroad Administration’s (FRA) decision to withdraw funds is not “left solely to the discretion of the agency” and can be reviewed in court under the Administrative Procedure Act, which allows for judicial review of administrative decisions deemed “arbitrary and capricious.”
CHSRA: cancellation of funds is “arbitrary and capricious”
The California Railroad Authority challenges the federal government’s decision, arguing that the cancellation of funding is an abuse of authority and that the procedures set out in the funding agreements were not followed.
According to the CHSRA, the FRA should have followed intermediate steps and provided an opportunity to correct any non-compliance before withdrawing the funds.
Judge Drozd also noted that the latest annual assessment of the project, completed on October 28, 2024, had not identified any issues requiring corrective action. However, just days after the start of President Donald Trump’s second term, the project has once again become the target of political criticism.
At stake: over USD 4 billion in federal funds
The lawsuit seeks to cancel over USD 4 billion in federal grants, plus a subsequent decision by the Department of Transportation to withdraw another USD 175 million for four related high-speed rail projects.
If the court rules in California’s favor, the federal government could be forced to reinstate the funding.
A project marked by delays and rising costs
California’s high-speed rail project has been in development for 16 years, after state voters approved a USD 10 billion bond issue in 2008. Since then, the project authority has completed more than 50 major rail structures and approximately 113 kilometers of guideway infrastructure.
However, the estimated costs have risen significantly: from an initial USD 33 billion to a range of USD 89 billion to USD 128 billion, and commissioning is now estimated for 2033.
In November, CHSRA launched a USD 3.5 billion request for proposals for the delivery of track and rail systems.
Political context and precedent from Trump’s first term
The decision to withdraw funding was announced in July by Transportation Secretary Sean Duffy, who harshly criticized the project, arguing that the California authority “cannot deliver the promised results.” The FRA also initiated a review of other grants, including the possibility of recovering funds already allocated.
This is not the first legal confrontation on this issue. 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.
Judge Drozd’s decision now allows the lawsuit to proceed and prolongs the uncertainty surrounding the future of one of the most ambitious rail projects in the United States.
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