California has dropped its lawsuit challenging the U.S. Department of Transportation’s withdrawal of $4 billion for the state’s stalled high-speed rail project. The rail authority said it will pursue private investment and other funding sources while relying on about $1 billion annually from the state’s cap-and-trade program through 2045. Officials framed the decision as an opportunity to adopt global best practices after federal officials questioned the project’s viability.
California Drops Lawsuit After Federal $4B Cut, Eyes Private Investment for Bullet Train
FILE - The Cedar Viaduct, designed to take high-speed trains over Cedar and North avenues and State Route 99, is shown in an aerial view, Tuesday, April 15, 2025, in Fresno, Calif. (AP Photo/Godofredo A. Vásquez, File)
California officials this week abandoned their lawsuit challenging the U.S. Department of Transportation’s decision to withdraw $4 billion in federal funding for the state’s long-delayed high-speed rail project connecting San Francisco and Los Angeles.
In July, the Transportation Department said it was cutting funds because the California High-Speed Rail Authority had "no viable plan" to complete a major segment through the farm-rich Central Valley. The authority promptly sued, and Gov. Gavin Newsom called the move "a political stunt to punish California."
This week the authority said it would drop the litigation and shift its focus to other financing options, including courting private investors. State estimates put the total cost to finish the system at more than $100 billion. The rail authority also pointed to a recent commitment of roughly $1 billion per year from California’s cap-and-trade program through 2045 as a key piece of near-term funding.
State Reaction and Next Steps
An authority spokesperson described the decision as pragmatic: "This action reflects the State’s assessment that the federal government is not a reliable, constructive, or trustworthy partner in advancing high-speed rail in California." Moving forward, officials said they plan to pursue financing structures and operational models used by modern high-speed systems around the world.
On his social platform Truth Social in July, President Donald Trump wrote: "The Railroad we were promised still does not exist, and never will. This project was Severely Overpriced, Overregulated, and NEVER DELIVERED."
How Cap-and-Trade Funding Works
California’s cap-and-trade program imposes a declining cap on greenhouse-gas emissions from major polluters. Companies must reduce emissions, purchase allowances from the state or other firms, or fund projects that offset emissions. Revenue from allowance sales is directed to climate initiatives, affordable housing, transportation projects and utility bill credits for residents.
The authority said the pivot away from reliance on federal support creates "a new opportunity" to adopt international best practices and private-sector approaches to deliver modern, efficient high-speed rail service.
Requests for comment from the Transportation Department were not returned.
