California sues to challenge Trump's $4 billion high-speed rail clawback

- Governor calls termination of grants 'illegal,' political

- Project criticized as long-delayed and way over budget

- Rail authority says program has created 15,500 jobs

Washington (Reuters) - California Governor Gavin Newsom on Thursday vowed to fight the "illegal" move by President Donald Trump's administration to cancel some $4 billion in federal grants for the state's ambitious but much-delayed high-speed rail project.

A lawsuit challenging the cancellation as an "arbitrary and capricious" abuse of authority was filed on Thursday at the U.S. District Court in Los Angeles by the California High Speed Rail Authority, which oversees the project.

The legal dispute stemming from Trump's announcement on Wednesday added yet another hurdle to the 16-year effort to link Los Angeles and San Francisco by a three-hour train ride, a project that would deliver the fastest passenger rail service in the United States.

Newsom said the move by Trump's Transportation Department came as the high-speed rail project was on the verge of laying track, with construction well under way on the initial 171-mile segment between Bakersfield and Merced in California's politically conservative Central Valley.

The governor said termination of the grants amounted to "petty, political retribution, motivated by President Trump's personal animus toward California and the high-speed rail project, not the facts on the ground."

The rail system, whose first $10 billion bond issue was approved by California voters in 2008, has built more than 50 major railway structures, including bridges, overpasses, under-crossings and viaducts, and completed 70 miles (113 km) of guideway, according to the lawsuit.

"California is putting all options on the table to fight this illegal action," Newsom said in a statement hours before the suit was filed.

U.S. Transportation Secretary Sean Duffy told reporters earlier he was confident the Trump administration will defeat any lawsuit challenging the rescission.

"We have to pull the plug," he told reporters outside the department's headquarters.

Asked about the court action later in the day, a spokesperson for Duffy said, "Naturally, Gavin Newsom's plan is to waste even more taxpayer dollars defending this boondoggle." He added: "See you in court, Gavin."

The funding cancellation marked the latest confrontation between the Republican president and a Democratic governor widely viewed as a leading contender for his party’s 2028 White House nomination.

The two men have clashed over issues from transgender athletes and electric car rules to the use of National Guard troops during Los Angeles protests and even egg prices.

Ian Choudri, chief executive officer of the California High Speed Rail Authority, said that canceling the federal rail grants "without cause isn't just wrong, it's illegal."

"These are legally binding agreements, and the authority has met every obligation, as confirmed by repeated federal reviews, as recently as February 2025," Choudri said, adding that the program has created some 15,500 jobs.

The Federal Railroad Administration issued a 315-page report last month finding the project was plagued by missed deadlines, budget shortfalls and questionable ridership projections.

Choudri's rail authority has called those conclusions "misguided," saying they failed to reflect "substantial progress made to deliver high-speed rail in California."

Although Duffy chided the project for having yet to lay any track after spending $15 billion over 16 years, Choudri said installing track is a final step after land acquisition, environmental review and construction of supporting structures.

Still, the project has faced its share of setbacks.

The San Francisco-to-Los Angeles route was initially supposed to be completed by 2020 for $33 billion. But the projected cost has since risen to $89 billion to $128 billion, and the start of service is expected by 2033.

As designed, the system would feature electric locomotives traveling at up to 220 mph (354 kph), powered entirely by renewable energy. Planners said it would eliminate 200 million miles driven by vehicles on highways, contributing significantly to reduced greenhouse emissions from transportation.

A second phase of the project called for extending the rail line north to Sacramento and south to San Diego. A separate project plans to link Los Angeles and Las Vegas with high-speed rail.

A previous move by Trump during his first term in 2019 to revoke $929 million in federal grants was challenged by the state, leading to a settlement in June 2021 under Democratic President Joe Biden restoring the full amount.

State Assembly member Corey Jackson, a Democrat who has questioned the project's soaring costs, said Newsom's call to fight the funding cut could galvanize support for Democrats from organized labor and voters in the area where the first railway jobs would be created despite its Republican leanings.

"The people of San Joaquin Valley will now know that their economic engine is coming from the Democratic Party," Jackson said. "This is also a message to our labor friends. Democrats continue to deliver these high-paying jobs. Republicans continue to try to kill them."

The U.S. government's investment in high-speed rail is tiny compared with other modes of transportation, according to the California rail authority.

It also pales compared with sums spent in other countries, including China, which opened its first high-speed train service in 2008 and has invested more than $1.4 trillion to build a network spanning nearly 28,000 miles, the agency said.

(Reporting by David Shepardson in Washington and Steve Gorman in Los Angeles; Additional reporting by Peter Henderson in San Francisco; Editing by Aurora Ellis, David Gregorio, Cynthia Osterman and Raju Gopalakrishnan)