Two House bills introduced this month by Republicans from California seek to redirect federal funds from the state's high-speed rail project and use the money for other purposes. The Trump administration in February demanded funds back from the controversial project, which has been plagued by cost overruns and delays.
A bill introduced by House Minority Leader Kevin McCarthy would "repurpose" about $3.5 billion worth of federal funds for the rail system to water infrastructure projects to help the state cope with future droughts. A second piece of legislation, dubbed the "High-Speed Refund Act" and introduced by Rep. Doug LaMalfa, requires that any funds the Transportation Department provided to the high-speed rail development go instead to "important freight and highway projects."
"The California high-speed rail project is a boondoggle that California and American taxpayers must move on from," McCarthy said earlier this month. "Since its inception, the project's costs have ballooned while oversight and accountability within the California High-Speed Rail Authority has been nonexistent."
Last month, Gov. Gavin Newsom during his State of the State address said construction of the planned high-speed rail from the San Francisco Bay Area to Los Angeles will "cost too much and take too long."
Yet Newsom in the Feb. 12 remarks stopped short of calling for a full halt of the massive project, saying: "I am not interested in sending $3.5 billion in federal funding that was allocated to this project back to Donald Trump." The governor ordered "new transparency measures" on the rail project and approved going ahead with part of the rail link — a 119-mile stretch in the Central Valley between Merced and Bakersfield.
Wasting little time, President Donald Trump weighed in on Newsom's reduction of the high-speed rail project in a tweet Feb. 13: "We want that money back now," the president wrote, calling the planned bullet train "a 'green' disaster!"
The Trump administration formally notified the state last month that the Federal Railway Administration is seeking return of $2.5 billion in funds for what it termed "this now-defunct project." The U.S. government also announced it intends to terminate the grant of another $929 million in funding, claiming the state's high-speed rail agency failed to stay in compliance under terms of the Obama-era grant agreement.
Earlier this month, California sent a letter to FRA and rebutted the federal government's assertion that the state was out of compliance.
"We have not heard back from the federal government yet," Melissa Figueroa, a spokesperson for the California State Transportation Agency, told CNBC on Thursday.