The US state of California has sued the Trump administration over its decision to cancel $929m of federal funding for the high-speed rail project.
The California high-speed rail authority filed the lawsuit just days after the US Federal Railroad Administration (FRA) withdrew funds granted by the Obama administration in 2010.
In the lawsuit filed in the San Francisco federal court, California sought an injunction against the federal decision, claiming that the FRA lacks the authority to cancel the funds.
The petition also sought an immediate preventive order to stop the federal agency from channelising the funds to other projects.
Last week, the FRA cancelled the California high-speed rail project funding citing a lack of progress and failure to comply with the terms of allocation.
Besides cancelling the allocation, FRA is assessing options to claw back the already awarded $2.5bn federal funds.
The step was taken after California Governor Gavin Newsom announced plans to substantially scale-back the high-speed project in February.
Governor Newsom announced that the current under-construction 119-mile (191km) rail link section between Merced and Bakersfield will be completed, dropping the originally planned 520-mile (826.8km) high-speed rail system between Los Angeles and San Francisco.
Overall, the US Government has sanctioned around $3.5bn for the project. An additional $10bn in bond proceeds were approved by California voters.
Recently, the California High-Speed Rail Authority revised the total cost of the project, increasing it by nearly $2bn to $79bn. The increase was attributed to changes to the project scope and higher allocation to contingencies.