Both Ohio and Wisconsin have elected incoming Republican governors who oppose the rail projects. Those governors, whose states have been hit hard by the economic downturn, had asked if they could divert the money to other projects.
But LaHood said he was awarding the money to states that are eager to have it for their rail projects.
High-speed trains will not only improve transportation but reinvigorate manufacturing and put people back to work in jobs that pay well, LaHood predicted in a statement.
States gaining the most money include California, $624 million; Florida, $342 million; Washington, $161 million; and Illinois, $42 million. Other states receiving lesser amounts include New York, Maine, Massachusetts, Oregon, North Carolina, Iowa, Vermont and Indiana.
A commuter rail line in Wisconsin between Milwaukee and Chicago will still get about $2 million.
In Ohio, Gov.-elect John Kasich had declared dead a project that would have created passenger train service between Cincinnati, Columbus and Cleveland. He had requested that LaHood allow him to use the $400 million in federal funds on other transportation projects like road construction or freight lines.
The economic recovery law that authorized funding for high-speed rail projects stipulated that the funds can't be used for other purposes, however.
Kasich also sought to have the money returned to the federal treasury to reduce the deficit if it couldn't be used to meet other Ohio needs.
"He finds it tragic that instead of saving taxpayer money, they would simply waste it elsewhere," said Rob Nichols, Kasich's spokesman.
Kasich has said that the top speed of 79 miles per hour on the proposed Ohio project is too slow and questioned whether enough people would ride it.
But outgoing Ohio Gov. Ted Strickland, a Democrat, said he "can't understand the logic of giving up these vital, job-creating resources to California and Florida at a time when so many Ohioans need jobs."
Wisconsin Gov.-elect Scott Walker campaigned against a Madison-to-Milwaukee rail line, which would have received $810 million, as a waste of taxpayer money. Walker also said he didn't want to commit the state to annual operating subsidies once the line was complete, although the project's supporters predicted it would make money. Walker on Thursday called the death of the proposed line "a victory."
Walker had also sought to spend the money on other Wisconsin projects such as roads and bridges.
The loss of the rail project is "a tragic moment" for Wisconsin, said outgoing Gov. Jim Doyle, a Democrat.
Without rail between Milwaukee and Madison, it will be difficult for Midwestern leaders to fulfill their vision of having 110-mph trains linking Chicago, Milwaukee, Madison and Minneapolis-St. Paul. The route was a key segment in the Midwest Regional Rail Initiative effort by nine states.
Political leaders in states benefiting from the cancellation of the Wisconsin and Ohio projects have been lobbying for a share of the $1.2 billion since Election Day.
Democratic Sen. Dianne Feinstein of California said, "No other state is as ready, as able, or as determined to develop a high-speed rail system in the near future."
California is working toward the construction of a system that would extend some 800 miles, linking Sacramento and San Francisco to San Diego. Construction is expected to begin in late 2012.
In Florida, Gov.-elect Rick Scott, a Republican, has opposed spending state funds to help build an 84-mile bullet train line between Tampa and Orlando. But Sen. Ben Nelson, D-Fla., said that the new money _ combined with $280 million the state has already agreed to put up and $2 billion previously committed by the federal government _ is enough to fully cover the $2.65 billion price tag for construction.
"The federal government has stepped up and done its part," Nelson said in a statement. "There should be no reason now why this can't get done."