Federal Railroad Administrator Ronald Batory said in a letter Thursday to Brian Kelly, the chief executive officer of the state agency running the project, that California has failed to show progress and meet requirements under the agreements for the funds. Governor Gavin Newsom, through a spokesman, vowed a court fight.

“It is now clear that California has no foreseeable plans, nor the capability, to pursue that statewide HSR System as originally proposed,” Batory wrote.

Initially conceived as connecting San Francisco and Los Angeles with a high-speed train that would slash travel times and transform the state’s economy, the project has been beset by cost overruns and delays, causing its estimated price to balloon to $79 billion. Newsom, a Democrat who took office this year, said in February that the train as planned “would cost too much and take too long,” and he would focus on finishing roughly 170 miles of track already under construction in the Central Valley.

The announcement from Washington came the same day that a top California environmental regulator threatened to enact tougher pollution rules that could include a ban on vehicles that burn petroleum-based fuels in retaliation against a federal plan to relax vehicle emission standards. California’s leaders and Trump, who often criticizes the state’s policies in tweets, have fought over issues in court dozens of times.

“The Trump administration’s action is illegal and a direct assault on California, our green infrastructure, and the thousands of Central Valley workers who are building this project,” Nathan Click, a spokesman for Newsom, said by email. “Just as we have seen from the Trump administration’s attacks on our clean air standards, our immigrant communities, and in countless other areas, the Trump administration is trying to exact political retribution on our state.”

Newsom’s comments on the train in February were initially interpreted as walking away from the project that has been in the works for more than a decade, and the Trump administration subsequently seized on them to announce its intent to cancel the grant and claw back dollars already spent. The Federal Railroad Administration “continues to consider all options” regarding the return of $2.5 billion in federal funds already awarded to the project, the agency said in a statement Thursday.

Kelly argued in a March letter to the federal administration that Newsom’s proposal wasn’t a “fundamental change” and that it’s a “pragmatic approach” to ultimately connect the line to Silicon Valley and southern California.