„After careful consideration, the Federal Railway Administration (FRA) has entered into the co-operative contract FR-HSR-0118-12-01-01 (the GJ10 agreement) with the California High-Speed Rail Authority (CHSRA) and will announce the $928,620,000 in funding under this agreement. The decision follows the FRA`s notification of the termination and review of the information provided by CHSRA on 4 March 2019. The FRA notes that CHSRA has repeatedly violated the terms of the GJ10 agreement and has not made appropriate progress on the project. In addition, California abandoned its original vision of a high-speed intermediate passenger train between San Francisco and Los Angeles, which was essential for its FRA grant applications. The FRA continues to consider all options for the $2.5 billion return on the American Recovery and Reinvestment Act (ARRA) FONDS that are granted to CHSRA. The letter also states that the termination provision follows a DOT settlement that allows DOT to terminate grants if the fellow „does not materially comply with a provision of an arbitration award, whether in a federal regulation or regulation, insurance, plan or application for the state, arbitration declaration or elsewhere.“ The letter will continue for 19 pages describing CHSRA`s alleged violations of the grant agreement, including: will the FRA be able to do so? Of course, it will end up in court, but the FRA certainly has the advantage. The fact that the FRA never awarded the $929 million means that a judge should assign a mandate to the FRA to draft a review, with the Charge being imposed on California to prove initially that the decision is verifiable and if it is verifiable, it does not constitute a substantial violation of the grant agreement. Fortunately for California, they had no plans to spend the $929 million by fiscal year 2021, which would give time for a lawsuit to proceed. The GAO`s legal opinion on ARRA`s $2.55 billion for the project presents some interesting parallels here. With respect to ARRA money, the FRA initially insisted that California immediately reconcile every dollar of ARRA money with its corresponding dollar. Fra then changed his mind and decided to have all ARRA money spent in California immediately, then spend his national game years later.
The GAO found that the FRA was allowed to change its mind because it had a „recognizable rational basis“ for the decision, the standard set by federal courts. In court, the FRA must show that CHSRA found a substantial violation of the letter of the grant agreement and that the decision was neither arbitrary nor whimsical. Yesterday, the Federal Railroad Administration of the California High Speed Rail Authority (CHSRA) officially announced that the FRA is cancelling a $929 million grant agreement signed by the Obama administration eight years ago and will not give the money to CHSRA. Instead, the FRA will formally „deobligat“ the money that, in accordance with the law appropriating the money, will allow the FRA to organize a new competition and allocate the $929 million to other applicants for high-speed trains, intercity trains or subsidies for rail congestion.