Judge Declines to Block HSR Construction – For Now
Judge Michael Kenny made his long awaited ruling in the case brought by Central Valley high speed rail opponents – and it’s not good. Judge Kenny finds that the California High Speed Rail Authority violated Proposition 1A by not identifying all the funds needed to construct the Initial Operating Segment and by not getting all environmental clearances completed. Judge Kenny is not blocking HSR construction, however, but that issue is not yet settled.
Here’s the nut of Judge Kenny’s ruling:
Having exercised its independent judgment in this matter as authorized by law, the Court concludes that the Authority abused its discretion by approving a funding plan that did not comply with the requirements of law. Specifically, the identification of the sources of all funds to be invested in the IOS and the certification regarding completion of necessary project level environmental clearances did not comply with the requirements set forth in the plain language of Section 2704.08(c)(2), subsections (D) and (K).
Judge Kenny goes on to argue that Prop 1A required funds to be identified for the entire Initial Operating Segment (Merced to Los Angeles, or San Francisco to Bakersfield), not just the Initial Construction segment (near Fresno). He said that funds had been identified for the latter but not the former – and by “identified” he meant something very specific:
the identification of funds must be based on a reasonable present expectation of receipt on a projected date, and not merely a hope or possibility that such funds may become available.
Judge Kenny’s findings on the environmental clearances issue is similar, saying that while the Authority met the standard for the Initial Construction Segment, Prop 1A requires them to be met for an Initial Operating Segment.
In other words, Judge Kenny appears to be rejecting the idea that anything other than an Initial Operating Segment meets the standard under Prop 1A, that the concept of an “Initial Construction Segment” won’t be sufficient.
So the CHSRA has lost on the merits, that much is clear. And while I don’t agree with Judge Kenny’s ruling, the question is now what effect this will have on the project.
Judge Kenny did not invalidate the Legislature’s July 2012 approval of the release of the Prop 1A bond funds, as the plaintiffs had asked. He pointed out that there is no remedy for the Authority’s non-compliance when it comes to the Legislature – basically, if the Legislature says the Authority’s plan is OK, it’s OK.
He also said he will not provide a blanket invalidation of future action by the Authority to approve funding and therefore approve construction. But he does leave open the possibility that he might block a specific action by the Authority – perhaps an authorization to a contractor to proceed to construction, but that’s my own speculation. A hearing will be held to determine what happens as a result of this ruling.
What we do know is that the California high speed rail project, and the CHSRA, are being held responsible for the actions of Congressional Republicans. It is they who are blocking further federal funding for high speed rail, jeopardizing the federal contributions identified in the 2012 Business Plan – exactly the shortcoming that Judge Kenny used as the centerpiece of his ruling. Republican obstruction has serious consequences, as anyone suffering from the sequester knows. This ruling may well be a big victory for that Republican strategy.
The loser, then, isn’t the Authority but the thousands of Central Valley residents who are being denied jobs by their Congressional representatives who are blocking further funding.
Lawyers and policymakers will parse the ruling in the hours and days to come. The outcome may not be so bad. Judge Kenny ruled against the Authority before, siding with HSR critics in an August 2009 ruling. Yet he did not meaningfully block the project’s progress, allowing the Authority to continue working on the project as they revised the EIR to address the judge’s concerns. It’s possible that Judge Kenny will again allow the Authority to proceed while they find a remedy.
But this ruling is a much more serious threat to the project. The clock is already ticking on the stimulus funds, which must be spent by September 2017. That’s four short years away. The HSR project can handle a few more months of delay, but probably not much beyond that. And while an EIR can be amended and revised, it will be harder to come up with a solid source for the other funds needed to complete the Initial Operating Segment should Judge Kenny and other appeals courts insist on that.
Ultimately the real effect of this ruling may well be that HSR supporters begin to write off the possibility of meaningful federal funding in the near future and seek to identify other sources. As long as the House of Representatives is in Republican hands HSR, along with numerous other major projects, agencies, institutions, and even the American economy as a whole remain in jeopardy. California can pay for HSR itself – and today’s ruling may make it urgent for Sacramento to begin going down that path.
UPDATE: Juliet Williams of the AP adds that the judge may defer to the Legislature on whether the funding plan is sufficient:
Kenny said the agency did not comply with either of those mandates, but Proposition 1A appears to leave it up to lawmakers to decide whether the funding plan is sufficient to warrant funding….
Deputy Attorney General Michele Inan, who represented the rail authority in court, had argued that lawmakers who evaluated the business plan determined that the funding identified to date “was sufficient for the state to take the risk to invest an initial sum of money.”
The issues raised in the judge’s ruling are not new and were well known to the Legislature when they made their decision in July 2012. If the judge leaves it up to the Legislature to act on any remedies, then it may turn out that the ruling has no teeth. But we will see what happens.