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UPDATE 2-U.S. Justice Department in talks with California to settle high-speed rail suit

·2 min read

(Adds high-speed rail agency confirming talks, background on February announcement)

By David Shepardson

WASHINGTON, March 22 (Reuters) - The U.S. Justice Department said on Monday it is in settlement talks with California to resolve a 2019 lawsuit filed by the state after the Trump administration canceled a nearly $1 billion federal grant for a high-speed rail project hobbled by extensive delays.

California's lawsuit claimed the U.S. Transportation Department lacked legal authority to withhold the $929 million the Obama administration allocated nearly a decade ago but had remained untapped.

The Justice Department and the California Attorney General's Office said in a joint court filing they had "engaged in initial settlement discussions and exchanged settlement correspondence" and asked the case be put on hold during talks to resolve the matter.

A spokeswoman for California's High-Speed Rail authority confirmed the talks.

California says the train system will travel from San Francisco to the Los Angeles basin at speeds capable of over 200 miles per hour (322 kph) by 2033 and eventually extend to the state capital, Sacramento, and San Diego.

The Trump administration agreed not to shift California's grant to another project, pending resolution of the lawsuit. The Federal Railroad Administration under Republican President Donald Trump said California had “failed to make reasonable progress on the project."

California argued the cancellation stemmed from Trump's "overt hostility to California."

Trump ridiculed the project. By contrast, Democratic President Joe Biden strongly supports high-speed rail and has vowed to ensure the United States "has the cleanest, safest, and fastest rail system in the world."

California voters approved the initial $10 billion bond for the project in 2008, and $3.5 billion in federal money was allocated two years later. California previously received $2.5 billion of the award.

By March 2018, total costs projected by the state had jumped to $77 billion, with analysts warning the tally could ultimately exceed $98 billion.

California said in February it plans to initially build a single track in the initial 171-mile (275-km) Merced to Bakersfield segment in order to validate the system. It plans to later build a second track.

The system's current cost estimate ranges from $69 billion to $99.8 billion and aims to be completed in the 2030s. (Reporting by David Shepardson; Editing by Himani Sarkar and Peter Cooney)