LOS ANGELES (AP) — The U.S. Department of Transportation has suspended its review of a $5.5 billion loan request that is essential for building a private bullet train between a Southern California desert community and the Las Vegas Strip, leaving the future of the project in jeopardy.
The Obama administration has been eager to develop new high-speed rail corridors across the U.S., and former Transportation Secretary Ray LaHood had publicly blessed the proposed train, known as XpressWest. But the project stalled in part because of a snag over federal rules that call for the line to be constructed and run with American-made materials.
The government expects loan recipients "to purchase steel, iron and other manufactured goods produced in the United States for their projects," LaHood wrote in the two-page letter to the company, which was released by the agency Tuesday.
After long-running negotiations, he said the company's plan "does not meet our expectations" and did not justify departing from domestic-manufacturing rules.
"After several years of engagement with no resolution ... and the significant uncertainties still surrounding the project, we have decided to suspend further consideration of XpressWest's loan request," LaHood wrote in the June 28 letter, parts of which were redacted.
The decision to suspend the review represents a major setback for a project that has been alternately described as glimpse of America's transportation future or a waste of taxpayer dollars.
XpressWest said in a statement that the project remains under federal review and it is awaiting more information from the government. Federal Railroad Administration spokesman Kevin Thompson said the application is no longer under review, although XpressWest could revive it by making significant revisions.
The vast park-and-ride project hinges on the untested idea that Southern Californians will drive to the high desert community of Victorville, about 100 miles east of Los Angeles, pull off Interstate 15 and board a train for the final 180 miles to the famous Strip. The 150 mph train's projected price tag has soared toward $7 billion, and XpressWest wants a $5.5 billion government loan to cover the bulk of the cost, with the remainder covered by private financing.