Cal. Sts. & Hy. Code § 2360
Funds apportioned by the United States Secretary of Transportation to public entities in California for federal-aid urban system projects shall be obligated by the recipient public entity within three years of the year of the apportionment of the funds to the state by the secretary.
Any federal-aid urban funds that are not obligated within the three-year period shall be reapportioned by the department to other projects under terms and conditions established by the department and approved by the FAU Systems Advisory Committee. The public entity receiving a reapportionment shall compensate the recipient of the original apportionment in an amount equal to at least 60 percent of the amount of the reapportionment.
The director shall notify each public entity six months prior to the end of the three-year period in which the public entity is required to obligate the funds that the department intends to reapportion under this section. A public entity receiving notification may request a hearing before the FAU Systems Advisory Committee for an extension of the three-year requirement. The FAU Systems Advisory Committee may grant the public entity an extension of time in which to obligate the funds if it makes a finding that the public entity has shown that the extension is justified.
The department, in cooperation with the FAU Systems Advisory Committee, shall certify that a recipient agency will be able to expend funds based on project readiness and its ability to meet funding requirements. The department shall provide to the commission all information relating to the reallocation of federal-aid urban funds on the state highway system. The commission may amend the state transportation improvement plan to reflect changes deemed appropriate by the commission resulting from reallocations.
This section applies to federal-aid urban funds apportioned prior to January 1, 1986, but the three-year period for any funds apportioned prior to January 1, 1986, shall begin on that date.
Ca. Sts. and High. Code § 2360