Judge Makes Unfavorable Ruling – But What Does It Mean For Project?
Judge Michael Kenny today delivered his ruling in not one but two cases involving the high speed rail project. The rulings invalidate the 2011 Business Plan, do not validate new bond sales, but also do not require a halt to construction using the available federal funds.
Despite some of the initial media reports, this ruling does not jeopardize the project. What it does is screw with its timeline, requiring the California High Speed Rail Authority to go back and revise the funding plan. But what that means is entirely unclear. So the Authority has work to do, but we don’t know whether that work is simple and therefore this ruling is a speed bump, or if that work is difficult and therefore this ruling is a bigger problem.
Tim Sheehan of the Fresno Bee has a good summary of the ruling:
Sacramento Superior Court Judge Michael Kenny denied a request by the California High-Speed Rail Authority to validate the sale of more than $8 billion in bonds from Proposition 1A, a high-speed rail measure approved by the state’s voters in 2008.
In a related case, the judge sided with Kings County farmer John Tos, Hanford homeowner Aaron Fukuda and the Kings County Board of Supervisors, who are suing the rail agency over its compliance with Prop. 1A. Kenny agreed to issue a writ of mandate ordering the rail agency to re-do its 2011 funding plan before spending any state bond money on construction of the proposed high-speed rail system.
Kenny did not, however, order the rail authority to rescind its approval of contracts for work on the first 29-mile construction stretch from northeast Madera to the south edge of Fresno.
Together, the two rulings appear to hamstring the rail authority by severely limiting its available state funds and by delaying its spending efforts. The effect may jeopardize the agency’s plans to use only federal transportation and stimulus funds to begin building the rail line in the central San Joaquin Valley.
Tos v. CHSRA is the lawsuit brought by Kings County, John Tos and Aaron Fukuda that hoped to stop the project dead in its tracks by claiming it was violating Prop 1A. They didn’t win on that claim. What they did get was a favorable ruling back in August that the Authority’s 2011 financing plan was flawed because:
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.
Specifically, he said the Authority needed to identify the funds for the entire Initial Operating Segment, whether Merced to Los Angeles or Bakersfield to San Francisco, and merely listing where those funds might come from isn’t sufficient.
The problem is that since Republicans seized control of the House of Representatives in 2011, they have denied all efforts at future federal HSR funding. Judge Kenny is basically holding the Authority responsible for this, rewarding obstructionists who denied more federal funding to the project and then complained that the project had been denied federal funding so it had to be killed. It’s a nice racket they have going.
Judge Kenny today ordered the Authority to write a new financing plan. In theory that doesn’t take very long. But the challenge will come in actually identifying the funds the project needs to build the Initial Operating Segment and satisfy the judge.
The other ruling was in the “CHSRA sues everybody in California” case, a preemptive strike by the Authority and the Attorney General to get a ruling that would allow the Authority to spend bond money even though CEQA review has not yet been completed for other Central Valley segments. Judge Kenny ruled that it would be premature to grant this validation. My understanding is that this does not necessarily present the same obstacles that the other ruling does, but it’s still something of a setback, especially as the September 2017 stimulus deadline approaches.
I don’t agree with the judge’s August ruling or today’s rulings, but they are what they are. The Authority, the Legislature, and the Governor will need to determine what the path forward looks like.
My takeaway is that this makes it more important than ever that California develop a plan to build HSR that doesn’t rely on federal funding. Such a plan is feasible, as SPUR showed last year. I suggested that the SPUR plan be broadened to fund many types of passenger rail across the state, not just HSR. We don’t know how much longer the Tea Party will maintain control of the House of Representatives. It may be until 2014, it may be until 2022, who knows. But for California’s sake, it’s time to start working hard on the plan for California to embrace its future without being held back by teabaggers.
Ultimately I don’t think this ruling is cause for panic, and it’s not true that the project is in mortal danger. This ruling isn’t what we wanted, but it can also be dealt with, we hope, without too much trouble or delay.