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Government Aims to Terminate CA Rail Funding

Friday, February 22, 2019

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On the heels of the state of California suing over President Donald J. Trump’s emergency declaration regarding the border, the Department of Transportation has announced it is seeking the return of $2.5 billion in federal funds that have gone to the state’s high-speed rail project.

According to The New York Times, Trump’s administration has made a similar announcement in terminating a $929 million federal grant to the California High-Speed Rail Authority. Earlier this month, Gov. Gavin Newsom noted that the “current project, as planned, would cost too much and take too long.”

Project History, Cost Overruns

In November, an audit indicated that cost overruns—currently totaling $600 million for three projects, with $1.6 billion total estimated to complete them—associated with the California high-speed rail project are largely due to poor planning and contract mismanagement.

According to the report from the state auditor, the California High-Speed Rail Authority’s choice to move forward with the bullet train project “cannot demonstrate that the large amounts it has spent on its contracts have been necessary or appropriate.”

The project, connecting northern and southern California, has doubled in cost and is now more than 11 years behind schedule. Earlier in 2018, the authority estimated that the first phase of the project would not open until 2029, and that costs had increased from $67 billion to $77.3 billion.

Phase 1, running 520 miles, is supposed to connect downtown San Francisco with the downtowns of Los Angeles and Anaheim, implementing the use of rail through Central Valley. Phase 2 is to involve an extension north from the Central Valley to Sacramento, also running east from Los Angeles through the Inland Empire and then to San Diego, totaling 800 miles. Construction firm Tutor Perini-Zachry-Parsons was selected for the Central Valley work.

According to The Fresno Bee, the decision to award construction contracts for work in the Valley before sufficient land purchases and planning had occurred was motivated by a 2017 deadline for project completion. In turn, this deadline was informed by an agreement between the state and the Federal Railroad Administration for $2.6 billion in federal funding. The agreement was later amended to require that the money be spent by September 2017, with project completion targeted for 2022.

Newsom’s Criticism

In Newsom’s first State of the State speech, which occurred earlier this month, the new California governor noted that there “simply isn’t a path” to connect the northern and southern parts of the state through the high-speed rail project without additional funding. Instead, Newsom is now calling for focus to be on connecting the Central Valley cities of Merced and Bakersfield; in the governor’s opinion, the area had long been neglected by lawmakers.

Along with promising further oversight for the project, Newsom also announced he would be appointing his economic development director, Lenny Mendonca, as the chair for the High Speed Rail Authority. Mendonca will be replacing Dan Richard, who stepped down earlier this month from the position.

Newsom added that the state is still on track for completing an environmental review for the proposed rail that would run between San Francisco and Los Angeles.

Funding at Issue

Though the president has disparaged the way the state has spent money on the project, a spokesperson for the White House declined to provide comment to The New York Times, instead directing questions to the DOT. An agency spokesperson noted that the rationale for canceling the $928.6 million grant was written in a letter from Ronald L. Batory, the administrator of the Federal Railroad Administration. In it, Batory notes that the Authority had failed to make “reasonable progress” on the endeavor.

The DOT also added in a separate announcement that it is exploring options to see the return of the $2.5 billion, though that move was not mentioned in Batory’s letter.

According to The New York Times, it remains uncertain whether the federal government can withhold the grant. The move is also likely to be challenged in court.

The $929 million in funding that is still up in the air has not yet been transferred to the state; the money has been allocated, but not disbursed. In order to gain access to those funds, California had to match a previous grant of $2.6 billion in stimulus money; as of earlier this month, the state had only matched 38 percent of that total.


Tagged categories: Government; Infrastructure; NA; North America; Ongoing projects; Program/Project Management; Project Management; Rail

Comment from john lienert, (2/22/2019, 5:08 AM) much $$$$$????....can our esteemed "representatives" throw away....retired governor moon-beam really stuck it to us!

Comment from peter gibson, (2/22/2019, 10:56 AM)

Finally the train has reached its destination.... a station called Nowhere. I knew it since day one. Fools.

Comment from Gordon Kuljian, (2/22/2019, 6:32 PM)

California is completely dysfunctional.

Comment from Tony Munson, (2/25/2019, 9:16 AM)

Connecticut is California's little sister and similarly dysfunctional.

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