California: Pulling federal high-speed rail funds would be 'disastrous'

[March 05, 2019]  By David Shepardson

WASHINGTON (Reuters) - California's High-Speed Rail Authority on Monday urged the Trump administration to abandon plans to withhold $929 million in funding and seek to claw back $2.5 billion the state has already received for a rail project, calling the effort "disastrous" and "unlawful."

Brian Kelly, chief executive of the authority, told the Federal Railroad Administration in a letter that seeking the return of funds already spent by California would be "disastrous policy" and could put 2,600 people out of work. He formally asked the agency to reconsider ahead of a March 5 deadline.

The administration last month moved to end funding after California Governor Gavin Newsom said the state would scale back the planned $77.3 billion high-speed rail project after cost hikes, delays and management concerns, but would finish a smaller section.

Kelly told the FRA that withholding the $929 million awarded by the Obama administration in 2010 "would be unwarranted, unprecedented, and legally indefensible, and it would gravely harm a historic project."

The FRA said in a letter last month it wanted to halt funding because the state had "failed to make reasonable progress." It cited Newsom's announcement to scale back the project.

Kelly on Monday asked the FRA to reconsider its "rash and unlawful action" and discuss its concerns with the state authority. The FRA decision will not be finalized until it reviews California's protest.

The U.S. Transportation Department, which oversees FRA, had no immediate comment because it had not seen the letters from California.

The traffic-choked state had planned to build a 520-mile (836.8 km) system in the first phase that would allow trains to travel at up to 220 miles per hour (354 kph) from Los Angeles to San Francisco and begin full operations by 2033.

California Democratic gubernatorial candidate Gavin Newsom speaks after being elected governor of the state during an election night party in Los Angeles, California, U.S. November 6, 2018. REUTERS/Mike Blake/File Photo

Newsom said last month the state would instead complete a 119-mile high-speed link between Merced and Bakersfield in the state's Central Valley.

"There simply isn’t a path to get from Sacramento to San Diego, let alone from San Francisco to (Los Angeles). I wish there were," Newsom said last month.

Kelly told FRA that Newsom is not abandoning high-speed rail but "proposing billions of dollars in additional state funding to expand the initial construction project in the Central Valley."

He added that ending funding "would cause massive disruption, dislocation, and waste, damaging the region and endangering the future of high-speed rail in California."

The Obama administration awarded California $3.5 billion in 2010 and California voters in 2008 approved nearly $10 billion in bond proceeds.

In March 2018, the state forecast project costs had jumped by $13 billion to $77 billion and warned costs could be as much as $98.1 billion.

(Reporting by David Shepardson; Editing by Susan Thomas and Meredith Mazzilli)

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