Trump administration rescinds $4B grant for California 'train to nowhere'

California High Speed Rail Authority

The Trump administration Wednesday announced the termination of $4 billion of federal grant agreements for California's beleaguered high-speed train.

The California High Speed Rail Authority, which oversees the project, could not meet binding obligations it made to receive federal funding, the Federal Railroad Administration said. The termination comes after the FRA completed a comprehensive compliance review that was launched in February.

The rescinded grants include $929 million promised in 2010 and $3 billion promised in 2023. The Department of Transportation said it may claw back other funds and was "consulting" with the Department of Justice on the compliance review findings.

"Federal dollars are not a blank check — they come with a promise to deliver results," Transportation Secretary Sean Duffy said in a statement Wednesday. "After over a decade of failures, CHSRA's mismanagement and incompetence has proven it cannot build its train to nowhere on time or on budget. It's time for this boondoggle to die."

The move comes as the CHSRA is seeking private investment to help complete the bullet train's initial operating segment. Gov. Gavin Newsom's latest budget proposes extending the state's cap-and-trade program through 2045 and carving out 25% for the HSRA. With the fresh cap-and-trade funding, the authority won't need federal funds, the authority's CEO Ian Choudri has said.

"Canceling these grants without cause isn't just wrong — it's illegal," said Choudri Wednesday in a statement. "These are legally binding agreements, and the authority has met every obligation, as confirmed by repeated federal reviews, as recently as February 2025."

Newsom's office said the state was "putting all options on the table to fight this illegal action."

"Trump wants to hand China the future and abandon the Central Valley. We won't let him," Newsom said in a statement.

Duffy announced in February he asked the FRA to launch a formal review of the CHSRA to find whether it has complied with the federal government. In June, the FRA released a report alleging that the endless delays and cost overruns plaguing the "Sisyphean endeavor" amount to an event of default on the $4 billion of federal grants.

The CHSRA pushed back against the findings in June, but failed to satisfy the administration.

Wednesday's termination letter said the project faces a $7 billion funding gap to complete the early operating segment from Bakersfield to Merced, with no credible plan to secure additional funds. The CHSRA has overrepresented its ridership projections for the initial operating segment, the FRA said.

The Trump administration, in its first term, rescinded nearly $1 billion in federal aid, which was later restored under the Biden administration.

President Trump on social media Wednesday called the project a boondoggle. "To the Law abiding, Tax paying, Hardworking Citizens of the United States of America, I am thrilled to announce that I have officially freed you from funding California's disastrously overpriced, 'HIGH SPEED TRAIN TO NOWHERE,'" Trump wrote in a post on his social media platform, Truth Social. 

Voters in 2008 approved $10 billion of GO bonds for the rail line, which at the time was envisioned as a Los Angeles to San Francisco line that would cost up to $33 billion and be operational by 2020. After years of delays and cost overruns, the estimated cost has ballooned to $128 billion.

The full route's shortfall is as high as $99 billion, according to the watchdog California High-Speed Rail Peer Review Group.