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By Matthew Robinson
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President Donald Trump has suffered a legal setback in his administration's push to cancel more than $4 billion in federal grants for California's high-speed rail project.
On Wednesday, U.S. District Judge Dale Drozd, based in Sacramento, California, rejected a bid by the Justice Department (DOJ) to throw out a July lawsuit brought by the California High-Speed Rail Authority over the federal grant cancellations.
The rail authority alleged in its lawsuit, filed in the U.S. District Court in Los Angeles, that the administration's funding cut was an "arbitrary and capricious abuse of authority."
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Newsweek contacted the U.S Department of Transportation and the DOJ for comment by email outside of regular working hours for comment.
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Why It Matters
Drozd's ruling allows California's legal challenge to proceed, intensifying a political and legal standoff over one of America's most ambitious transportation projects.
The outcome of the legal battle could determine the viability of future large-scale, federally funded infrastructure projects across the country, as well as the precedent for how federal grant agreements are enforced or terminated.
What To Know
The California High-Speed Rail Authority filed its lawsuit in July after the Federal Railroad Administration pulled more than $4 billion in grants originally designated for construction in the Central Valley.
The complaint said the Trump administration's decision was "arbitrary and capricious, an abuse of discretion, and contrary to law, and threatens to wreak significant economic damage on the Central Valley, the state, and the nation."
In August, the Department of Transportation also revoked an additional $175 million set for related projects.
A DOJ attorney argued in November that Drozd should dismiss California's case, arguing that a district court has no authority to adjudicate such issues, and that it should be resolved in the U.S. Court of Federal Claims.
But Drozd ruled on Wednesday that he did have jurisdiction over the case. "Because this court has jurisdiction to review plaintiff’s claim asserted in this action, and defendants' decision is not committed to exclusive agency discretion by law, the court will deny defendants' motion to dismiss," he wrote in his ruling.
What People Are Saying
A spokesperson for the California High-Speed Rail Authority told Newsweek: "California will keep building high-speed rail, and our communities will reap the transit, climate, and economic benefits that come along with it. High-speed rail supports thousands of jobs and critical infrastructure in the Central Valley and across our state. Washington should not punish Californians for choosing to lead on cleaner, faster transportation."
President Donald Trump wrote on Truth Social in July: "To the law abiding, tax paying, hardworking citizens of the United States of America, I am thrilled to announce that I have officially freed you from funding California's disastrously overpriced, 'HIGH SPEED TRAIN TO NOWHERE.' This boondoggle, led by the incompetent Governor of California, Gavin Newscum, has cost taxpayers hundreds of billions of dollars, and we have received NOTHING in return except cost overruns.
"The railroad we were promised still does not exist, and never will. This project was severely overpriced, overregulated, and NEVER DELIVERED. Thanks to Transportation Secretary Sean Duffy, not a SINGLE penny in Federal Dollars will go towards this Newscum SCAM ever again. This was an ill-conceived and unnecessary project, and a total waste of taxpayer money - but no more!"
California Governor Gavin Newsom said in July: "Trump’s termination of federal grants for California high-speed rail reeks of politics. It’s yet another political stunt to punish California.
"In reality, this is just a heartless attack on the Central Valley that will put real jobs and livelihoods on the line. We’re suing to stop Trump from derailing America’s only high-speed rail actively under construction."
What Happens Next
Following Drozd’s ruling, California's lawsuit to restore more than $4 billion in federal funds will continue in the district court. If the court sides with California and rules the grant cancellations were unlawful, the federal government could be required to reinstate funding.
Update 12/12/25 10.15 a.m. ET: This article was updated with a statement from the California High-Speed Rail Authority.
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