California to FRA: Threat to take back rail grants is 'rash and unlawful'

The California High-Speed Rail Authority (CHSRA) issued its response to the Federal Railroad Administration (FRA), calling its effort to take back federal funds for the state's high-speed rail program "rash and unlawful."

In letters to the FRA, the CHSRA denied it has violated its cooperative agreement with the federal government regarding $3.5 billion in federal grants and are continuing to make progress toward building a high-speed passenger-rail service that would connect three of the largest cities in the state's Central Valley.

CHSRA Chief Executive Officer Brian Kelly yesterday sent the letters to FRA Administrator Ronald Batory and FRA Office of Program Delivery Director Jamie Rennert. Two weeks ago, Batory notified the CHSRA that the federal government intended to terminate a $929 million grant issued in 2010 for the high-speed rail program and was exploring ways to seek recovery of a $2.5 billion grant to the program in 2009 — money that the state has already spent.

Batory's notice followed California Gov. Gavin Newsom's announcement that the state would scale back initial plans to build a high-speed rail system between Los Angeles and San Francisco, and instead focus on a 171-mile partial segment from Bakersfield to Merced. Part of the system is already under construction.

After Newsom's announcement, President Donald Trump said his administration wanted the federal grants returned. Batory's noticed followed soon thereafter.

In his response to the FRA's notice, CHSRA's Kelly wrote that the authority is "committed to building a transformative, visionary high-speed rail project in full compliance with federal grant requirements." He added that the authority is making progress and has met its commitments under the grant agreements.

"I urge the FRA to reconsider the precipitous and unjustified action it is contemplating," stated Kelly's letter to the FRA. "Termination of FY2010 agreement would be unwarranted, unprecedented and legally indefensible, and it would gravely harm a historic project on which the FRA and CHSRA have collaborated productively for nearly a decade."

In addition, any "clawback" of federal funds already spent on the project would be "disastrous policy," Kelly wrote.

"It is hard to imagine how your agency — or the taxpayers — might benefit from partially constructed assets sitting stranded in the Central Valley," Kelly's letter stated. "It is equally difficult to imagine the policy benefit of sending home the more than 2,600 craft workers, men and women who have been dispatched to work on the 119-mile segment now under construction."