CHSRA Launches Preemptive Bond Lawsuit
So, this is an interesting legal tactic:
The state of California has filed a civil case against everyone — literally, the whole world — seeking to validate $8.6 billion in voter-approved bonds for its $69 billion high-speed rail project.
The lawsuit, titled “High-Speed Rail Authority v. All Persons Interested,” is meant as a pre-emptive strike so the state can confirm that it’s definitely legal to issue some of the bonds needed to begin bullet train construction this summer. By citing a somewhat obscure California civil code, the state can use the “sue now or forever hold your peace” strategy to prevent a string of future lawsuits and, instead, deal with the legal issues in one fell swoop.
Anyone interested in trying to block the project can sign up with the court, put their endless hours of “Law & Order” watching to use, wear their best suit and show up at a hearing to argue their case. They would join lawyers who are already suing the rail authority in other cases and go toe-to-toe with the state Attorney General’s Office, which is representing the rail authority….
Lawyers say this “validation” process, while not well known, isn’t necessarily uncommon among public agencies that want to create a legal shield against future lawsuits to calm investors interested in their bonds.
The city of San Jose did it in 2009, for example, before issuing bonds to expand its convention center. Even then, that case ended up being tied up for a year because a gadfly signed up to challenge it, before the city won, said City Attorney Rick Doyle.
Attorney General Kamala Harris is the one technically filing the suit, so her office is on board with this unusual but perfectly legal strategy.
Personally I think it’s a smart approach. Rather than get bogged down by a Gulliver-style series of endless lawsuits over the project, they’re going for a battle royale – a thunderdome, if you will – over the possible legal issues surrounding the bond release. Potential opposition gets consolidated into a single case, though it’s unclear if the Peninsula NIMBY/Kings County lawsuit charging that the blended plan is illegal under Prop 1A would be folded in as well.
The downside risk is that enough people take up the challenge that the court case drags on for a year or more. But the Attorney General and the Authority were likely expecting that more legal challenges would be brought anyway, so they might as well get it over and done with in this way.
I still don’t see a strong legal argument against the HSR plan as it stands today, including the blended plan, and I expect that the Authority will prevail in court. Let’s hope that this consolidation move ensures that their court victory comes sooner rather than later.