California High-Speed Rail Protects $4B in Federal Funding Amid Lawsuit
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
California officials have reached an agreement with the Federal Railroad Administration that places $4 billion in federal grants for the state's high-speed rail project into a legal trust while a lawsuit challenging the funding cancellation moves through court.
The agreement, which the California High-Speed Rail Authority confirmed to Newsweek, would set aside the funding while state authorities worked to prevent President Donald Trump's funding revocation.
Why It Matters
Years of delays and an inflated budget have damaged public and political faith in California's high-speed rail project, but the past few years have seen progress, with construction happening throughout the state and tracklaying set to begin later this year. Proponents of the project say that to call if off now, as many of its detractors in the White House desire, would waste years of advancement.
That has not stopped Trump, a long-standing critic of the project, from regularly threatening to take away the federal funding that has been vital to the project's progress, a threat he and Transportation Secretary Sean Duffy carried out in July.
An Amtrak Pacific Surfliner train headed north arrives at the Moorpark Train Station in Moorpark, California, on June 15, 2024.
An Amtrak Pacific Surfliner train headed north arrives at the Moorpark Train Station in Moorpark, California, on June 15, 2024.
Getty Images
What To Know
The agreement with the Federal Railroad Administration places the contested $4 billion into a legal trust, which state officials said would prevent the funds from being redirected while the legal challenge proceeded.
The California High-Speed Rail Authority, which does not comment on pending litigation, confirmed to Newsweek that the agreement had been reached.
The authority has previously called the Trump administration's funding decision an "unwarranted and unjustified" move that was "based on an inaccurate, often outright-misleading, presentation of the evidence."
The project has faced long-running delays and cost increases since voters approved it in 2008, with early estimates near $33 billion and more recent estimates ranging broadly in reporting between roughly $128 billion and $135 billion.
The authority and state officials have pointed to continuing construction milestones. Officials said the project had entered or neared a tracklaying phase, with 171 miles under active construction and more than 50 major structures completed.
What People Are Saying
California Senator Dave Cortese, the chair of the Senate Transportation Committee, said in a statement on the agreement: "I'm encouraged that the California High-Speed Rail Authority has reached an agreement with the Federal Railroad Administration to prevent $4 billion in federal high-speed rail funding from being lost while litigation is pending.
"These funds were terminated under the Trump Administration following a compliance review, despite no findings of fraud, waste, or abuse. The Authority promptly challenged that decision in court, and this agreement ensures that the funding will remain available until the legal process is resolved.
"As Chair of the California Senate Transportation Committee, I will continue to defend our progress on high-speed rail, and efforts like my bill SB 545 will help secure opportunities for major residential and commercial development along the high-speed rail corridor, creating the kind of public-private synergy that can help fund the infrastructure of the project itself and deliver long-overdue economic benefits to communities across the state."
What Happens Next
The state's lawsuit challenging the federal withdrawal was filed in U.S. District Court. Initial litigation is expected to proceed in the coming months, with the trust arrangement intended to keep the grants intact until the court resolves the dispute.
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'However, consumers continue to expect both inflation and unemployment to deteriorate in the future.' US stocks mixed at the open US stocks were mixed on Friday at the open as Wall Street tempered its hopes for the Fed to cut interest rates in September, as economic data this week showed higher than expected wholesale inflation and a rise in July retail sales. The Dow Jones Industrial Average (^DJI) rose around 0.5%, putting the index on track for its first record since December. The benchmark S&P 500 (^GSPC) rose less than 0.1%, and the tech-heavy Nasdaq Composite (^IXIC) fell below the flatline. US stocks were mixed on Friday at the open as Wall Street tempered its hopes for the Fed to cut interest rates in September, as economic data this week showed higher than expected wholesale inflation and a rise in July retail sales. The Dow Jones Industrial Average (^DJI) rose around 0.5%, putting the index on track for its first record since December. 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"As Intel's prospects have dimmed, the idea of support (governmental or otherwise) has gained traction, understandable given the company, for better or worse, remains the only US-headquartered prospect for leading edge semiconductor chips and processes; it seems like Trump may have been persuaded to see the light," Bernstein analyst Stacy Rasgon wrote in a note to investors Friday. It's not the first time the Trump administration has allegedly floated ideas to prop up Intel. In February, a news report said the US was pitching proposals to its rival TSMC to help support its turnaround by establishing a joint venture with Intel. Read more here. Intel (INTC) stock spiked more than 7% Thursday and continued to climb 3% before the market open on Friday, following a report that the US government is considering taking a stake in the troubled chipmaker. Bloomberg reported that the Trump administration is in talks with Intel about the deal, which would help the company complete its Ohio factory expansion that had been put on hold. The report follows a meeting between President Trump and Intel CEO Lip-Bu Tan earlier this week, which came after the president called for the CEO's resignation due to his ties with China. "As Intel's prospects have dimmed, the idea of support (governmental or otherwise) has gained traction, understandable given the company, for better or worse, remains the only US-headquartered prospect for leading edge semiconductor chips and processes; it seems like Trump may have been persuaded to see the light," Bernstein analyst Stacy Rasgon wrote in a note to investors Friday. It's not the first time the Trump administration has allegedly floated ideas to prop up Intel. In February, a news report said the US was pitching proposals to its rival TSMC to help support its turnaround by establishing a joint venture with Intel. Read more here. Retail sales climb less than expected in July Retail sales rose 0.5% in July from the prior month, according to data from the US Census Bureau released Friday — marking the second monthly gain in a row, as consumer spending steadies following a dramatic drop in earlier in the year. Still, the jump was less than the 0.6% gain expected by economists surveyed by Bloomberg. Excluding auto and gas sales, retail sales were up 0.2%, also less than the 0.3% projected. An even narrower slice of retail sales called the 'control group' — a more precise measure of consumer spending that excludes certain sales such as those from office supply and tobacco stores — climbed 0.5%, ahead of the 0.4% expected. Retail sales rebounded in June, a sign that consumer spending habits were remaining resilient despite President Trump's tariffs. Read more here. Retail sales rose 0.5% in July from the prior month, according to data from the US Census Bureau released Friday — marking the second monthly gain in a row, as consumer spending steadies following a dramatic drop in earlier in the year. Still, the jump was less than the 0.6% gain expected by economists surveyed by Bloomberg. Excluding auto and gas sales, retail sales were up 0.2%, also less than the 0.3% projected. An even narrower slice of retail sales called the 'control group' — a more precise measure of consumer spending that excludes certain sales such as those from office supply and tobacco stores — climbed 0.5%, ahead of the 0.4% expected. Retail sales rebounded in June, a sign that consumer spending habits were remaining resilient despite President Trump's tariffs. Read more here. Investors want rate cut 'validation,' but the Fed's dilemma won't go away Yahoo Finance's Hamza Shaban writes in today's Morning Brief: Read more here. Yahoo Finance's Hamza Shaban writes in today's Morning Brief: Read more here. Good morning. Here's what's happening today. Economic data: Retail sales (July); Export prices (July); Industrial production (July); University of Michigan consumer sentiment (August preliminary) Earnings: No notable earnings. Here are some of the biggest stories you may have missed overnight and early this morning: 'Striking while the iron is hot' Investors want rate cut 'validation,' but the Fed's dilemma remains Applied Materials' shares sink on weak China demand, tariff risks UnitedHealth jumps as Buffett's Berkshire buys 5M shares BofA's Hartnett sees profit-taking in stocks after Jackson Hole AI exacerbates tech divide with smaller stocks languishing A trader's guide to the Alaska talks between Trump and Putin China's economy slows in July on tariffs, weak property market Economic data: Retail sales (July); Export prices (July); Industrial production (July); University of Michigan consumer sentiment (August preliminary) Earnings: No notable earnings. Here are some of the biggest stories you may have missed overnight and early this morning: 'Striking while the iron is hot' Investors want rate cut 'validation,' but the Fed's dilemma remains Applied Materials' shares sink on weak China demand, tariff risks UnitedHealth jumps as Buffett's Berkshire buys 5M shares BofA's Hartnett sees profit-taking in stocks after Jackson Hole AI exacerbates tech divide with smaller stocks languishing A trader's guide to the Alaska talks between Trump and Putin China's economy slows in July on tariffs, weak property market Applied Materials' shares sink on weak China demand, tariff risks Shares in Applied Materials (AMAT) sank 14% before the bell on Friday after the chip equipment maker issued weak fourth-quarter forecasts on sluggish China demand, fueling concerns over tariff-related risks. Reuters reports: Read more here. Shares in Applied Materials (AMAT) sank 14% before the bell on Friday after the chip equipment maker issued weak fourth-quarter forecasts on sluggish China demand, fueling concerns over tariff-related risks. Reuters reports: Read more here. UnitedHealth stock soars as Buffett's Berkshire buys 5M shares UnitedHealth Group stock rose 12% before the bell on Friday after Warren Buffett's Berkshire Hathaway (BRK-B, BRK-A) acquired 5 million shares in the company. A regulatory filing showed the purchase on Thursday. Reuters reports: Read more here. UnitedHealth Group stock rose 12% before the bell on Friday after Warren Buffett's Berkshire Hathaway (BRK-B, BRK-A) acquired 5 million shares in the company. A regulatory filing showed the purchase on Thursday. Reuters reports: Read more here. Sign in to access your portfolio
