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Feds Cancel High-Speed Rail Grant, Explore Return Of $2.5B

WASHINGTON -- Making good on President Trump's call last week for California to return billions of dollars in federal funds intended for the high-speed rail project, the U.S. Department of Transportation announced Tuesday it would cancel nearly a billion dollars in grant funds yet to be paid to the project.

The press release issued by the Department of Transportation said the Federal Railroad Administration (FRA) planned to cancel $929 million in federal grant funds that have not yet to been paid towards the California high-speed rail project connecting the Los Angeles basin to the San Francisco Bay Area.  

Additionally, the Department announced it was actively exploring legal options to seek the return of $2.5 billion in federal funds the FRA previously granted for the project.

FRA Administrator Ronald L. Batory notified the California HSR Authority (CHSRA) head Brian Kelly of the action in a letter sent Tuesday.

Governor Gavin Newsom quickly issued a response to the announcement Tuesday afternoon. The statement read:

It's no coincidence that the Administration's threat comes 24 hours after California led 16 states in challenging the President's farcical "national emergency." The President even tied the two issues together in a tweet this morning. This is clear political retribution by President Trump, and we won't sit idly by.  This is California's money, and we are going to fight for it.

The President first demanded that federal funds be reimbursed on Twitter in the wake of Governor Newsom's State of the State address last week.

The President posted the pointed criticism on his preferred social media outlet early Wednesday evening, tweeting that the state needs to repay $3.5 billion to the federal government in the wake of the Governor's comments on high-speed rail during the State of the State address Tuesday.

Within the hour, Newsom had responded, tweeting that the President's post was "fake news."

The Governor posted a statement saying that the money belongs to the state and has been allocated by Congress for the still ongoing project. He also added a dig about the President "desperately searching for some wall $$" at the end of the tweet.

During last Tuesday's address, Newsom confirmed that the state would continue work to finish the high-speed rail link between Merced and Bakersfield, dismissing critics who would call it a "train to nowhere" and citing the need to reduce air pollution in the Central Valley and tap into the region's economic potential.

The Governor's office later clarified that Newsom was still fully committed to building a high-speed rail connection between San Francisco and Los Angeles, despite there not currently being a path to do so.

The state got $3.5 billion in federal funding to complete the Merced to Bakersfield line. If it is not complete by 2022, that money must be refunded.

During his address, Newsom specifically made note of the federal funding that the state had received for the project.

"I am not interested in sending $3.5 billion in federal funding that was allocated to this project back to Donald Trump," Newsom said.

"President Trump obviously wants to derail high speed rail in California and in the Golden State those are fighting words," said Carl Guardino of the California Transportation Commission.

"These are serious issues that impact the economy and quality of life in the Golden State, and we always hope for and expect more from our federal government."

Andrew Mendonsa, who was taking a train from San Jose to Sacramento, said he was disappointed to hear about the plans to keep the high speed rail limited to the Central Valley.

"I think the destination now to Central Valley, I don't know if a lot of business gets done in the Central Valley," he said. "I might be wrong, but I just don't see a big need for that right now."

He said he agrees with the governor and Guardino that California should not have to pay back the $2.5 billion; that the money took a one-way ticket to California and not a round trip back to Washington D.C.

President Trump and the governor have been at odds since before Newsom took office. While Gov. Newsom told KPIX 5 anchor Ken Bastida during an interview last month that he is not trying to pick fights with the President, earlier this week, the governor redeployed several hundred National Guard troops from the state's southern border with Mexico in defiance of the Trump administration's request for support.


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