California officials fight Trump's bid to pull funding for high-speed rail project

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Trump, Newsom spar over funding for California's high-speed rail project

The White House is exploring taking back federal rail funds from the state in a move the governor is calling political retribution for their lawsuit against the president's national emergency declaration; Jeff Paul reports.

The head of California’s controversial high-speed rail project hit back this week at President Trump’s bid to halt federal funding to the railway and force the state to pay back money already doled out.

Calling the administration’s move not only illegal but “disastrous” and “wasteful,” California Rail Authority CEO Brian Kelly penned two letters to the Federal Railroad Administration amid a heated debate over whether or not the $77 billion project is living up to expectations.

“Governor [Gavin] Newsom I committed to building a transformative, visionary high-speed rail project in full compliance with federal grant requirements,” Kelly wrote in one of his letters. “Second, the California High Speed Rail Authority is making progress and has met its commitments under its federal grants agreements.”

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So far, the FRA has given California $2.5 billion to construct a high-speed railway between Los Angeles and San Francisco, with another $929 million pledged. But federal authorities – and the president – claim the terms of the grant have not been met and have threatened to withhold any future payments while demanding repayment for the funds already doled out to California.

The project, long championed by Newsom's predecessor, Jerry Brown, is years behind schedule with the latest estimate for completion set for 2033.

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Tensions between Sacramento and the White House over the project flared when Newsom declared during his State of the State address last month that, for the time being, he was shelving plans for the Los Angeles-San Francisco line and instead focusing on construction of a high-speed railway through the state’s Central Valley.

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Trump was quick to label the entire high-speed rail project a “disaster” and call for Sacramento to return the funds given to the state by the federal government.

“California has been forced to cancel the massive bullet train project after having spent and wasted many billions of dollars,” Trump tweeted in February. “They owe the Federal Government three and a half billion dollars. We want that money back now. Whole project is a ‘green’ disaster!”

Later in the month, the administration announced it is exploring "every legal option" to reclaim the federal funds spent by California on the rail project, and intends to cancel $928 million in federal grants not yet paid for the project.

In his letter to the FRA, Kelly issued a point-by-point rebuttal to claims that California had violated the grant agreement – noting that Newsom had no plans to totally abandon the project to link the state’s two largest metropolitan areas, but that the Central Valley line, connecting Merced to Bakersfield, was “a pragmatic approach to using the funding now committed to this project.”

“Laying this groundwork will enable us to ultimately connect a revitalized Central Valley to Silicon Valley and Southern California,” he added.

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After it was widely reported that Newsom planned to pull the plug on the high-speed rail connection between Los Angeles and San Francisco, a spokesman for the governor clarified that the administration is only prioritizing the Central Valley line first and will “continue undertaking the broader project.”

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Kelly noted that the state could not finish the Merced-Bakersfield line without the federal funding and requested that a dialogue be opened between state and federal officials to clear up any confusion over funding.

“We owe it to the residents of the Central Valley, state and federal taxpayers, and the nation as a whole to continue cooperating on our historic and transformative high-speed rail project,” Kelly wrote.

Fox News’ Gregg Re contributed to this report.