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[[File:Elaine Chao large.jpg|thumb|upright|left|Secretary of Transportation [[Elaine Chao]] deferred expected federal funding for the electrification project just before construction was about to commence.]]
In early 2016, the CHSRA had selected a route that required extensive tunneling and so the initial operating segment for high-speed rail was redirected north.<ref name=SFC-160218>{{cite news |url=http://www.sfgate.com/bayarea/matier-ross/article/High-speed-rail-on-fast-track-to-Bay-Area-6830444.php |title=High-speed rail on fast track to Bay Area |author1=Matier, Phil |author2=Ross, Andrew |date=18 February 2016 |newspaper=San Francisco Chronicle |accessdate=25 March 2017}}</ref> By February 2017, the electrification project had secured $1.3 billion in state, local, and regional funding, with the remaining funding gap to be closed by a $647 million grant from the [[Federal Transit Administration]]’s (FTA) Core Capacity program.<ref name=PCEP-CCE>{{cite web |url=https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/CA%20San%20Carlos%20Caltrain%20Peninsula%20Corridor%20Electrification%20Project%20Profile.pdf |title=Peninsula Corridor Electrification Project Core Capacity Engineering |author=<!--Staff writer(s); no by-line.--> |date=August 2016 |publisher=Federal Transit Administration |accessdate=4 April 2017}}</ref><ref>{{cite report |url=https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/FY17_Annual_Report.pdf |title=Annual Report on Funding Recommendations, Fiscal Year 2017 |author=<!--Staff writer(s); no by-line.--> |date=2016 |publisher=Federal Transit Administration |accessdate=4 April 2017}}</ref><ref>{{citeweb|url=http://www.caltrain.com/about/MediaRelations/news/Caltrain_Statement__Electrification_Must_Move_Forward.html|title=Caltrain Statement: Electrification Must Move Forward|publisher=Caltrain|date=February 8, 2017|accessdate=March 29, 2017}}</ref> The grant had undergone a two-year review process starting in November 2015 under the [[Obama Administration]] and received a "medium-high" rating from the FTA in August 2016,<ref name=PCEP-CCE /> and was waiting for a signature from the newly-appointed [[Trump Administration]] Secretary of Transportation [[Elaine Chao]] after a 30-day review period to secure a Final Funding Grant Agreement (FFGA).<ref name="contractextension">{{citeweb|url=http://www.mercurynews.com/2017/02/28/caltrain-agreement-with-contractors-to-extend-deadline-keeps-electrification-project-alive/|title=Caltrain: Agreement with contractors to extend deadline keeps electrification project alive|publisher=''[[San Jose Mercury News]]''|author=Green, Jason|date=February 28, 2017|accessdate=March 29, 2017}}</ref><ref name=SMDJ-170218 /><ref name=DemocraticLetter /><ref name=SFC-170317>{{cite news |url=http://www.sfgate.com/politics/article/Trump-transportation-plan-could-derail-Bay-Area-11009336.php |title=Trump transportation plan could derail Bay Area transit projects |author=Brekke, Dan |date=17 March 2017 |newspaper=San Francisco Chronicle |accessdate=25 March 2017}}</ref> However, during the review period, the 14 [[Republican Party (United States)|Republican party]] [[United States House of Representatives|U.S. House]] representatives from California sent a letter on January 24, 2017 to Secretary Chao,<ref name=RepublicanLetter>{{cite letter |url=http://www.mercurynews.com/wp-content/uploads/2017/02/2017_01_24-ca-delegation-letter-to-secretary-chao-on-high-speed-rail-1.pdf |author1=Denham, Jeff |author2=McCarthy, Kevin |author3=Walters, Mimi |author4=Lamalfa, Doug |author5=Royce, Ed |author6=McClintock, Tom |author7=Hunter, Duncan |author8=Rohrabacher, Dana |author9=Issa, Darrell |author10=Cook, Paul |author11=Valadao, David G. |author12=Calvert, Ken |author13=Knight, Steve |author14=Nunes, Devin |date=24 January 2017 |recipient=The Honorable [[Elaine Chao]], Secretary of Transportation |subject=CA Republican Delegation HSR Letter to Secretary Chao |accessddate=28 March 2017}}</ref> urging her to deny funding due to the project's ties with high-speed rail, which they opposed.<ref name=RepublicanLetter /><ref name=SFC-170206>{{cite news |url=http://www.sfchronicle.com/bayarea/matier-ross/article/With-Trump-in-charge-Republicans-target-Caltrain-10907794.php |title=With Trump in charge, Republicans target Caltrain |author=Matier, Phil |author2=Ross, Andrew |date=6 February 2017 |newspaper=San Francisco Chronicle |accessdate=4 April 2017}}{{subreq}}</ref>
The letter from the Republican delegation called out "yet another cost overrun in the consistently maligned [high-speed rail] project", quoting from a January 13, 2017 ''[[Los Angeles Times]]'' article written by Ralph Vartabedian.<ref name=RepublicanLetter /> In the January article, Vartabedian reported on a confidential FRA risk analysis showing a potential budget overrun of $3.6 billion for the first {{convert|118|mi|adj=on}} CHSRA operating segment from Merced to Shafter.<ref>{{cite news |url=http://www.latimes.com/local/california/la-me-bullet-cost-overruns-20170106-story.html |title=California's bullet train is hurtling toward a multi-billion-dollar overrun, a confidential federal report warns |author=Vartabedian, Ralph |date=13 January 2017 |newspaper=Los Angeles Time |accessdate=4 April 2017}}</ref> CHSRA responded to the ''Times'' article in an open letter to the California legislature on that same day, January 13, by noting the true cost estimate was $7.8 billion, which included $900 million in contingencies, and the ''Times'' article had mischaracterized the nature of the risk analysis report.<ref>{{cite letter |url=http://hsr.ca.gov/docs/newsroom/2017_Letter_to_Legislature_LA_Times_Article.pdf |last=Richard |first=Dan |recipient=Members of the California Legislature |subject=Correction of serious msicharacterization and misrepresentation of information |date=13 January 2017 |publisher=California High-Speed Rail Authority |accessdate=4 April 2017}}</ref> The Republican letter of January 24 went on to ask the pending PCEP grant for $650 million be halted, calling it "an irresponsible use of taxpayer dollars".<ref name=RepublicanLetter /><ref name=LAT-170206>{{cite news |url=http://www.latimes.com/local/california/la-me-bullet-train-trump-20170206-story.html |title=California Republicans ask Trump administration to block bullet train funding |author=Vartabedian, Ralph |date=6 February 2017 |newspaper=Los Angeles Times |accessdate=28 March 2017}}</ref><ref name="grant">{{citeweb|url=https://www.nytimes.com/2017/03/06/us/trump-and-republicans-block-caltrain-grant.html|title=In Silicon Valley, Caltrain Upgrade Is Imperiled as Trump Withholds Funds|publisher=''[[The New York Times]]''|date=March 6, 2017|accessdate=March 29, 2017}}</ref><ref name=SJMN-170207>{{cite news |url=http://www.mercurynews.com/2017/02/07/california-republicans-want-trump-to-block-caltrain-electrification/ |title=Political battle threatens to halt Caltrain electrification project |author=Murphy, Katy |date=7 February 2017 |newspaper=San Jose Mercury News |accessdate=4 April 2017}}</ref>
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Several signatories to the House Republican letter were asked why they would block funding for California.<ref name=SJMN-170207 /> Dan Morain pointed out that despite regularly soliciting campaign funds from Silicon Valley business leaders, Representative [[Kevin McCarthy (California politician)|Kevin McCarthy]] (R-[[California's 23rd congressional district|CA23]]) was targeting a project that benefited the region directly.<ref>{{cite news |url=http://www.sacbee.com/opinion/opn-columns-blogs/dan-morain/article134903629.html |title=Kevin McCarthy displays his clout, for good and ill |author=Morain, Dan |date=24 February 2017 |newspaper=Sacramento Bee |accessdate=28 March 2017}}</ref> Representative [[Devin Nunes]] (R-[[California's 22nd congressional district|CA22]]) was unmoved by arguments on infrastructure benefits, saying in late February that he wasn't going "to feel too bad about one of the richest places on the planet not having a train."<ref>{{cite web |url=http://www.politico.com/tipsheets/california-playbook/2017/02/trump-electrifies-ca-republicans-issas-evolution-nunes-doubles-down-on-caltrain-218921 |title=TRUMP electrifies CA REPUBLICANS — ISSA's EVOLUTION — NUNES doubles down on CALTRAIN |author1=Siders, David |author2=Marinucci, Carla |author3=Ocasio, Bianca Padro |date=27 February 2017 |website=California Playbook |publisher=Politico |accessdate=28 March 2017 |quote=In response [to] questions from POLITICO on Saturday, Nunes said the federal government shouldn’t pay for a project in “one of the richest places on the planet.” — “I don’t know much about the transit system there in Silicon Valley, so I’m a little bit out of my realm to answer this,’’ Nunes said. “But I err on the side of the federal government really shouldn’t be involved in those issues, like high speed rail.” Told the project represents 10,000 jobs and potentially millions of dollars of impact to the economy, Nunes said: “I don’t see them crying about the 30 percent unemployment in Mendota … I don’t see them trying to help the farmworkers … So you’re not going to get me to feel too bad about one of the richest places on the planet not having a train.”}}</ref> Representative [[Jeff Denham]] (R-[[California's 10th congressional district|CA10]]) defended the letter, saying PCEP and CHSRA were closely intertwined because PCEP derived some funding under the "blended plan" agreement of 2012.<ref name=SJMN-170207 /> Representative [[Tom McClintock]] (R-[[California's 4th congressional district|CA04]]) reiterated his opposition to high-speed rail without addressing PCEP: "I have never supported a dollar of state funding going for [high-speed rail], and would never support a dollar of federal funding."<ref name=SJMN-170207 /> Representative [[Mimi Walters]] (R-[[California's 45th congressional district|CA45]]) also made a statement that she was not opposed to PCEP, but instead held "serious concerns about the use of taxpayer funds for a project that is tied to high speed rail".<ref name=Slate-Grabar /> ''The Independent'' stated the deferral stood in contradiction to "President Trump's vow to improve American infrastructure, but is consistent with criticisms that he is friendly [with] the oil and gas lobby," going on to note he "is know[n] for his value of loyalty and recoils at criticism," speculating it may have been retaliation for Governor Brown's criticism of his policies.<ref>{{cite news |url=http://www.independent.co.uk/news/world/americas/donald-trump-california-clean-energy-electric-rail-project-caltrain-high-speed-a7593956.html |title=Donald Trump's administration kills funding for California's clean energy electric rail project |author=Garcia, Feliks |date=22 February 2017 |newspaper=The Independent |accessdate=4 April 2017}}</ref>
Secretary Chao heeded the Republican letter's arguments, and deferred the grant in a letter written by FTA Executive Director Matthew Welbes to Caltrain which stated the FTA needed "additional time to complete review of this significant commitment of Federal resources".<ref name="contractextension"/><ref name=SMDJ-170218>{{cite news |url=http://www.smdailyjournal.com/articles/lnews/2017-02-18/electrification-funds-in-peril-federal-transit-administration-delays-647-million-caltrain-decision/1776425176103.html |title=Electrification funds in peril: Federal Transit Administration delays $647 million Caltrain decision |author=Weigel, Samantha |date=18 February 2017 |newspaper=San Mateo Daily Journal |accessdate=4 April 2017}}</ref><ref name=SFC-170217>{{cite news |url=http://www.sfgate.com/bayarea/matier-ross/article/Trump-administration-deals-a-big-setback-to-10941880.php |title=Trump administration deals a big setback to Caltrain |author1=Matier, Phil |author2=Ross, Andrew |date=17 February 2017 |newspaper=San Francisco Chronicle |accessdate=25 March 2017}}</ref><ref>{{cite news |url=http://www.fresnobee.com/news/local/article133473194.html |title=Feds delay grant approval for Bay Area rail electrification |author=Sheehan, Tim |date=17 February 2017 |newspaper=Fresno Bee |accessdate=4 April 2017}}</ref> Caltrain had expected Secretary Chao to approve the grant and sign the FFGA by March 1, which is normally a ''[[pro forma]]'' step performed after the 30-day comment period for a highly-rated project, and had already awarded construction contracts.<ref name="contractextension"/><ref name="SV">{{citeweb|url=http://www.eastbaytimes.com/2017/03/24/trump-chao-get-an-earful-on-caltrain-funds/|title=Trump, Chao get an earful on Caltrain funds from Silicon Valley leaders|publisher=''East Bay Times''|author=Richards, Gary|date=March 24, 2017|accessdate=March 29, 2017}}</ref> [[Balfour Beatty Construction]] and [[Stadler Rail]] had already begun preparations to upgrade the existing tracks and build electrical trainsets, respectively. Caltrain negotiated an emergency four-month contract extension at a potential cost of $20 million.<ref name="contractextension"/><ref name=SFC-170227>{{cite news |url=http://www.sfgate.com/bayarea/article/Caltrain-acts-to-keep-electrification-plan-alive-10964012.php |title=Caltrain acts to keep electrification plan alive |author=Cabanatuan, Michael |date=27 February 2017 |newspaper=San Francisco Chronicle |accessdate=25 March 2017}}</ref><ref name=BCNC-170227>{{cite news |url=http://www.sfgate.com/news/bayarea/article/Contractors-Agree-To-3-Month-Deadline-Extension-10963828.php |title=Contractors Agree To 3-Month Deadline Extension With Caltrain On Electrification Project |author=<!--Staff writer(s); no by-line.--> |date=27 February 2017 |newspaper=Bay City News Service |accessdate=25 March 2017}}</ref> Under the preliminary budget proposal released in mid-March 2017, the [[United States Department of Transportation]]'s Capital Investment Grant Program would be eliminated, although projects holding a completed FFGA would continue to be funded.<ref name=SFC-170317 /> Since Secretary Chao had withheld approval of the FFGA for PCEP,<ref>{{cite web |url=https://www.transit.dot.gov/funding/grant-programs/capital-investments/current-capital-investment-grant-cig-projects |title=Current Capital Investment Grant (CIG) Projects |author=<!--Staff writer(s); no by-line.--> |date=2017 |publisher=Federal Transit Administration |accessdate=4 April 2017}}</ref> the project's future was questionable.<ref name=SFC-170317 />
In response to the grant deferral, various local officials traveled to [[Washington D.C.]] in order to lobby federal officials to release the money. Editorials in local newspapers urged approval of the grant, including the ''Sacramento Bee'', who called the deferral "a petty attack";<ref>{{cite news |url=http://www.sacbee.com/opinion/editorials/article140446843.html |title=House Republicans launch a petty attack on a smart rail project |author=Editorial Board |date=24 March 2017 |newspaper=Sacramento Bee |accessdate=28 March 2017}}</ref> and the ''East Bay Times'', a noted CHSRA detractor.<ref>{{cite news |url=http://www.eastbaytimes.com/2017/02/24/editorial-feds-should-electrify-caltrain-kill-bullet-train/ |title=Editorial: Feds should electrify Caltrain, kill bullet train |author=Editorial Board |date=24 February 2017 |newspaper=East Bay Times |accessdate=28 March 2017}}</ref> Henry Grabar noted the grant deferral could be "an early test of a simmering fear that the state's outspoken political opposition to the Trump administration might come with a price".<ref name=Slate-Grabar>{{cite web |url=http://www.slate.com/blogs/moneybox/2017/02/16/will_elaine_chao_axe_federal_funding_for_caltrain.html |title=If Elaine Chao Axes This Bay Area Rail Funding, We'll Know She's Politicizing Transportation |author=Grabar, Henry |date=16 February 2017 |website=Moneybox (blog) |publisher=Slate |accessdate=28 March 2017}}</ref> San Jose Mayor [[Sam Liccardo]] met with Department of Transportation officials, urging them to upgrade a system that "was built under the presidency of [[Abraham Lincoln]]". Additionally, more than 120 Silicon Valley business leaders sent a letter to Secretary Chao, asking her to explain "the last-minute attempt to derail two decades of work".<ref name="SV"/><ref name=SVLG>{{cite letter |url=http://svlg.org/caltrain-letter-32317 |last=Silicon Valley Leadership Group |first= |recipient=President Trump and Transportation Secretary Chao |subject=Letter to President Trump and Transportation Secretary Chao |date=23 March 2017 |accessdate=4 April 2017}}</ref> In early March, California Governor [[Jerry Brown]] sent a letter to Secretary Chao, asking to discuss the funding grant;<ref name=EBT-170303>{{cite news |url=http://www.eastbaytimes.com/2017/03/03/call-me-jerry-brown-urges-trump-administration-to-fund-caltrain-project/ |title=Call me? Jerry Brown urges Trump administration to fund Caltrain project |author=Murphy, Katy |date=3 March 2017 |newspaper=East Bay Times |accessdate=28 March 2017}}</ref> on March 21, he subsequently met with Secretary Chao and House Majority Leader Kevin McCarthy, author of the House Republican letter to Chao, urging them to reconsider the funding deferral, saying afterward that he was "cautiously optimistic" that the money would be released.<ref>{{citeweb|url=http://www.sacbee.com/news/politics-government/capitol-alert/article139943463.html|title=Jerry Brown meets with Republicans, ‘cautiously optimistic’ about Caltrain approval|publisher=''[[Sacramento Bee]]''|date=March 21, 2017|accessdate=March 29, 2017}}</ref><ref name=SFC-170321>{{cite news |url=http://www.sfgate.com/bayarea/article/Brown-cautiously-optimistic-about-federal-11018255.php |title=Brown 'cautiously optimistic' about federal Caltrain funding |author=Lochhead, Carolyn |date=21 March 2017 |newspaper=San Francisco Chronicle |accessdate=25 March 2017}}</ref>
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