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California: Trump plan to take back rail money 'disastrous'

Leaders of California's high-speed rail project told the Trump administration Monday its plans to take back $2.5 billion in federal money and withhold another $1 billion earmarked for the project are "disastrous policy" and "legally indefensible."

Terminating the money "would cause massive disruption, dislocation, and waste, damaging the region and endangering the future of high-speed rail in California and elsewhere in the nation," Brian Kelly, the chief executive for the project, wrote in a letter to Jamie Rennert of the Federal Railroad Administration.

Kelly's letter is in response to a February threat by the U.S. Department of Transportation to withhold a $929 million grant for California's project to build a high-speed rail line between Los Angeles and San Francisco and possibly take back $2.5 billion in federal money the state has already spent. The grants require California to complete 119 miles of track in the Central Valley and environmental reviews on the full line by 2022.

The threat to withhold money was an escalation in the ongoing feud between the Trump administration and California. It's also yet another headache for the $77 billion project, which has been plagued by delays and cost overruns. If California were to lose the $3.5 billion, it likely couldn't finish the first leg of the project in the Central Valley, Kelly said.

"Termination would create uncertainty over the future of a project that has created 2,600 jobs in the Central Valley, a region that has struggled economically, and ultimately may leave that area strewn with unfinished bridges, overpasses and viaducts," Kelly wrote.

Congress and the Obama administration approved the money almost a decade ago.

Trump left the project alone during the first two years of his tenure, when former Gov. Jerry Brown led California. Brown was a staunch advocate for the train, shrugging aside its problems to argue it would be transformational for the state.

Newsom, though, stated those problems outright during his February State of the State address, when he said the project as planned would cost too much and take too long. He proposed doubling down on the state's efforts in the Central Valley, extending the 119 miles (192 kilometers) of track already under construction to a 171-mile (275-kilometer) line between Bakersfield and Merced.

Newsom said there wasn't currently a way to build the train between Los Angeles and San Francisco. But he pledged to continue environmental reviews and said he hoped to access private money in the future to finish the full line.

"And by the way, I am not interested in sending $3.5 billion in federal funding that was allocated to this project back to Donald Trump," he said.

Trump seized on the comments, arguing the project had failed, and immediately moved to take the money back. His U.S. Department of Transportation argued California had fundamentally changed the project, wasn't meeting its deadlines and couldn't complete the Central Valley line by 2022 as required.

Kelly challenged those claims in a lengthy response letter, arguing that Newsom was making an even stronger commitment to the Central Valley segment than previous governors had.

He argued the federal government wouldn't have doled out $2.5 billion already if the project weren't making progress and meeting benchmarks. While at least one monthly spending goal had been missed, he said that wasn't enough to argue the entire project was doomed to miss its deadline. He also blamed the federal government for slow-walking state requests related to environmental reviews.

Kelly invited rail officials to come to California to see the project before making a final decision.

"(The Federal Railroad Administration) has received the California High-Speed Rail Authority's response and is reviewing the information," according to a Department of Transportation spokesperson.

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