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California High-Speed Rail Bond Sales Can Resume After Appellate Court Rulings

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SACRAMENTO, Calif. (AP) – A state appellate court on Thursday overturned two lower court rulings that had stalled funding for California’s $68 billion bullet train, handing a big win to Gov. Jerry Brown’s signature project and allowing the state to resume selling bonds to pay for it.

The court overturned rulings by Sacramento County Superior Court Judge Michael Kenny last year in which he said the high-speed rail project no longer complies with the promises made to voters in 2008 when they approved selling nearly $10 billion in bonds. In siding with Kings County and Central Valley landowners, Kenny invalidated the sale of $8.6 billion in state bonds and ordered the California High-Speed Rail Authority to write a new funding plan.

READ THE RULING: July 31 High-Speed Rail Decision

Attorneys for the plaintiffs had argued that the state failed to identify all the funding for the first full segment of the rail line in the Central Valley, a cost of about $26 billion, and instead had found just $6 billion to pay for construction. They also argued the state did not have all the necessary environmental clearances as voters were promised.

But the three-judge panel said it was up to the Legislature to decide if there was enough detail in the draft funding plan lawmakers received before they approved the first phase of the planned 800-mile rail line in 2012. That allowed the state to begin selling bonds for construction of the first 130-mile stretch and tap $3.3 billion in federal matching funds.

The judges also urged that deference should be given to a state finance committee that considers state bond sales, saying they could not find any legal precedent for “the trial court’s highly unusual scrutiny of the finance committee’s determination that it is ‘necessary or desirable’ to grant the authority’s request to authorize the issuance of the bonds.”

Dan Richard, chairman of the board that oversees high-speed rail, said officials are committed to “building a modern high-speed rail system that will connect the state, precisely as the voters called for when they passed Proposition 1A.”

The appellate panel acknowledged there are legal questions about whether the project complies with promises made to voters about the financing and environmental review of the project, but it said those questions were beyond the scope of its ruling.

“Substantial legal questions loom in the trial court as to whether the high-speed rail project the California High-Speed Rail Authority seeks to build is the project approved by the voters in 2008,” they wrote. “But those questions are not before us.”

Stuart Flashman, an attorney for the plaintiffs, said the ruling “sends a really terrible message to Californians about whether they can trust what’s on the ballot.” He had argued that the requirement for a valid funding plan would not have been included in the ballot measure if it was not paramount to protecting the public interest.

“What this says, essentially, if I was your average voter and I was looking at a ballot measure, I’m going to vote no,” he said. “I don’t care what they promise me, I don’t believe it.”

The California High-Speed Rail Authority has said that while the state money is tied up, it is spending the federal funds for pre-construction work that includes engineering, surveying and acquiring land along the first 28-mile segment from Merced to Fresno. Attorneys for the state argued that it was premature for the plaintiffs to ask for an updated funding plan because no state money was being spent yet.

The landowners also argue that the compromises made to bring the price tag for the package down to $68 billion – namely, using a “blended approach” in which the high-speed trains would share tracks with other rail lines in urban areas – will make it impossible for high-speed rail to meet with the travel times promised to voters in 2008.

Copyright 2014 The Associated Press.

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