California High-Speed Rail Authority CEO Brian Kelly worked over the summer to reassure anxious state lawmakers that a new management team could revive the troubled bullet-train project. He also proceeded to push out key officials overseeing contract and property decisions.

Yet the changes haven’t stopped a new wave of bad news in September for the project, which was once envisioned as a statewide network of high-speed rail but has been downsized to a 119-mile link between Bakersfield and Merced expected to cost in the range of $20 billion. 

A Los Angeles Times report outlined the huge problems still facing the rail authority’s land-acquisition efforts after seven years in the Central Valley. Not only does the agency need to buy about 300 more properties to be able to build the train, the Times reported that consultants believe at least an additional 488 parcels will need to be bought to deal with complex issues related to easements on sites with infrastructure owned by Pacific Gas & Electric and other utilities as well as AT&T, railroads and irrigation districts.

This adds new doubts about the rail authority’s projection it could finish construction of the Central Valley route by 2026.

One project manager, after warning of severe delays, told the Times that “I am going to ride this train, but I am afraid it is going to be my ashes in an urn. I told my kids to take my ashes on the bullet train.”

The Times also noted that the rail authority had been forced to buy larger lots than it needed to accommodate the rail route to such an extent that it now owns hundreds of properties – including “toxic waste sites, vacant lots and rental homes” – that it must manage. The list includes at least 466 acres of cultivated agriculture fields.

San Jose area critics push for costly elevated lanes

There was also bad news for the project from Northern California. At a rail authority board meeting held in San Jose, trustees voted unanimously to approve a route connecting the San Joaquin Valley with San Jose after the Central Valley initial segment is built. Yet testimony at the hearing showed the intensity of opposition to building any new rail route that didn’t minimize disruptions to the neighborhoods and communities it traveled through.

According to a Fresno Bee report, speakers complained to the rail board that early promises that elevated rail lines would be built had given way to plans for regular, surface rail lines. But since elevated rail costs two to four times more per mile, choosing it would make project costs explode – and Gov. Gavin Newsom has already said there’s not nearly enough funding likely to be available to complete the $78 billion statewide project advocated by his predecessor, Jerry Brown.

That argument didn’t move San Jose resident Danny Garza. According to the Bee, he said that not building elevated tracks in his neighborhood was “a bait-and-switch” given past guarantees of minimal impacts. “Please don’t use our neighborhood to balance your budget,” he told the board.

San Jose Mayor Sam Liccardo told trustees that his city could drop its support for the project if the rail authority didn’t use “best practices”  to “provide our community with the safety it deserves.”

The section of the proposed route in the San Joaquin Valley also drew complaints, according to the Bee. Rick Ortega, general manager of the Grassland Water and Resource Conservation Districts, said the staff report “contains no design detail on how the authority intends to mitigate impacts through the ecological area.” The Grassland Environmental Area is a 160,000-acre site mostly in Merced County that the U.S. Fish & Wildlife Service has repeatedly said must be preserved because of the crucial ecological importance of its wetlands.

Ortega also said elevated tracks were necessary – or that the rail authority should change its planned route.

Board members said the staff would consider the complaints, but offered no promises about the nature of possible mitigation efforts, according to the Bee.

The California High-Speed Rail Authority – the agency in charge of building the state’s bullet train system – has already faced a tough year, with Gov. Gavin Newsom signaling in February that he’s not confident the full system can ever be built. But now the rail authority has two new public relations headaches on its hands.

In the Central Valley, farmers were already upset over state use of eminent domain to seize their property for construction of the project’s first segment – a 110-mile route from Bakersfield to Merced projected to cost $12.2 billion. But a recent report in the Los Angeles Times documented how slow the rail authority was in paying for seized land and in refunding farmers for the cost of the train project’s effects on their businesses.

The Times’ story focused on a kiwi farmer who lost 70 acres of land to the project more than a year ago and who since has gone unpaid for $250,000 incurred in “relocating wells, removing trees, building a road and other expenses.” It also noted farmers who had been owed $1.9 million and $630,000 for three years, and two others owed $500,000 and $150,000, though for shorter periods of time.

State officials questioned by the Times had no explanation for the delays beyond saying the project was complex in its legal and engineering challenges.

A follow-up story by Fox News emphasized why the delayed payments are particularly upsetting to many Central Valley residents. Not only is there a chance the initial segment between Bakersfield and Merced will never be completed because the state doesn’t have enough funds, there is a good chance that even if the segment is finished, some of the property that has been seized won’t be used for the project. That’s because even now – more than five years after the administration of Gov. Jerry Brown decided to start the bullet train’s construction in the Central Valley – authority officials still haven’t agreed on the exact details of the final route.

“The property owners are very frustrated that the High-Speed Rail Authority [doesn’t] seem to know what they actually need,” Sacramento attorney Mark Wasser said. “We have farmers who the authority has come back four times to change where they want to take.” Wasser has more than 70 clients affected by the rail authority’s Central Valley project.

Audit warnings validated by ethics probe

Meanwhile, state audits which have long warned that it is problematic for the rail authority to rely so heavily on outside consultants have been vindicated with what appears to be evidence of a conflict-of-interest scandal.

Recently, the authority’s deputy chief operating officer – Roy Hill – was suspended pending an investigation by the state Fair Political Practices Commission. Hill is a top executive with the WSP consulting firm employed by the authority. Evidence suggests that Hill approved a $51 million increase in a bullet-train contract held by the Spanish firm Dragados despite his apparent ownership of more than $100,000 in stock in Jacobs Engineering, a multibillion-dollar multinational corporation that is providing key services to Dragados on the California project.

The FPPC approved the request of Assemblyman Jim Patterson, R-Fresno, to investigate Hill, his actions and his personal economic interests.

“This is such a deep conflict that it calls into question whether the entire High-Speed Rail Authority and the contractors they have put together are involved in a massive corruption,” Patterson told Fresno TV station KMJ.

The rail authority says it will cooperate with the FPPC probe.

Hill has not yet commented publicly on the matter.

In a sign of frustration over the state’s transportation priorities, several board members with the high-profile Los Angeles County Metropolitan Transportation Authority have made the argument that it makes far more sense to use money that Gov. Gavin Newsom wants to spend on a bullet train route in the Central Valley on Los Angeles-area projects instead.

Newsom made international headlines in February when he pulled back from predecessors Jerry Brown’s and Arnold Schwarzenegger’s commitment to have the California High-Speed Rail Agency build a statewide high-speed rail network. Instead of continuing to try to secure all the funds needed for the $77 billion project, Newsom said the state should focus on completing a 110-mile segment from Merced to Bakersfield that is expected to cost $12.2 billion.

Five L.A. Metro board members – Hilda Solis and Kathryn Barger, both Los Angeles County supervisors, Inglewood Mayor James Butts, Los Angeles Councilman Paul Krekorian and Glendale Mayor Ara Najarian – think that’s a bad idea.

At a recent Metro board committee meeting, Solis said that “many, many projects” in the Los Angeles region would be more helpful in meeting state transportation goals.

In a motion they crafted for the Metro board’s consideration, they wrote that the Central Valley segment “has little value for public transportation and limited greenhouse gas reductions. Regional rail transit improvements in the Los Angeles region would be more cost effective with more substantial mobility benefits.”

The Curbed Los Angeles website reported that the five decided not to ask the full Metro board to endorse the motion, evidently after being reassured that the state would help fund some of the local projects that Solis had praised. But the sharp criticism from five board members of Metro – one of the nation’s largest transportation agencies, serving 10 million people in a 1,400-square-mile region – is a powerful reminder that even with Newsom’s scaled-back version, the state’s bullet-train project faces considerable skepticism.

Cost, viability of Central Valley segment questioned

The Central Valley route faces two of the same key criticisms that the statewide project did under Brown.

Its initial cost estimate of $6 billion has more than doubled, just as the statewide plan’s cost soared from $34 billion to $77 billion.

Under Proposition 1A, the 2008 ballot measure providing $9.95 billion in bond funding for the project, every segment is supposed to generate enough revenue to be self-supporting, with taxpayer subsidies banned. But assumptions that linking Merced, population 83,000, with Bakersfield, population 380,000, will lead to ridership that is heavy enough to cover the cost of bullet-train operations is tough to square with the fact that presently, there are only six conventional train trips daily between the cities with an average ticket price of $27.

Questionable assumptions about ridership have been common from the state rail authority. For example, in 2015, the Los Angeles Times reported that the authority projected annual ridership of up to 31 million passengers after the Los Angeles-San Francisco route was complete. That’s about the same number of annual riders as Amtrak, which operates in 46 states.

On Wednesday, the rail authority is expected to release more detailed plans from the Newsom administration for the Merced-Bakersfield segment.

Gov. Gavin Newsom’s announcement in his State of the State speech in February that he didn’t believe California had the resources to complete its $77 billion statewide bullet-train project produced a backlash that Newsom didn’t seem to expect. Within hours after the speech, his aides said the media was inaccurately reporting that Newsom’s only commitment was to build a $12.2 billion, 119-mile high-speed link between Merced and Bakersfield in the Central Valley and nothing more. They said he remained a supporter of the full project.

But nearly two months later, the initial reaction to Newsom’s speech remains the enduring takeaway for most Capitol watchers: He’s off the bullet train bandwagon. Building unions and green lawmakers who believe in the statewide project’s potential to help in the fight against climate change remain among the most upset.

Yet easily the most intense reaction is in the area where Newsom still wants the project to proceed: the Central Valley.

Coverage from The Bakersfield Californian, the Los Angeles Times and small newspapers in the region reflect anger over how the valley has been treated. Valuable farmland and family homes have been acquired with eminent domain for a project that no longer will link the area with the rest of the state – despite promises from Govs. Arnold Schwarzenegger and Jerry Brown.

‘My mouth was just open with shock’

“I don’t want to talk political because I don’t do it very well,” Fairmead resident Vickie Ortiz told the Times. “But you know, you had a governor that was pushing-pushing-pushing for the high-speed train, and we started getting used to the idea that we can’t stop a train but maybe we can use it to help the community. But then you get another governor and he says: ‘No, I don’t want to do that any more.’ My mouth was just open with shock.”

In the Antelope Valley Press, retiree Bill Deaver, a former official in the Federal Railroad Administration, blasted the “politics and ignorance” of project critics who he blamed for Newsom’s decision.

“Politicians used [high-speed rail] to score political points rather than supporting something that will be able to handle huge increases in traffic projected in coming years. That sort of behavior is one of the biggest barriers to progress.”

Newsom’s decision didn’t surprise some in the Central Valley who never believed a statewide bullet train would get built. “People lost their homes and businesses. And for what?” Visalia farmer Randy Van Eyk told the Times.

Some see commitment to help region

But other remarks the governor made about the Central Valley have resonated more positively – and created an expectation that he will do more than past governors to help the region.

“The people of the Central Valley endure the worst air pollution in America as well as some of the longest commutes. And they have suffered too many years of neglect from policymakers here in Sacramento. They deserve better,” Newsom said in the same speech in which he outlined his views on the bullet-train project’s future.

Bakersfield Californian columnist Robert Price said if Newsom was serious, he should help Kern County diversify its economy away from “two industries under assault in the Central Valley: agriculture and, especially, oil and gas.”

Anna Smith, another columnist for the Californian, also said Newsom should promote economic diversification. But she also called on him to address the Central Valley’s social ills, including “high rates of illiteracy and obesity, lack of access to quality education and health care (especially in rural communities), water contamination and extreme poverty.”

California High-Speed Rail Authority Chief Executive Brian Kelly sent two letters defending Gov. Gavin Newsom’s January remarks that he would focus on completing a 119-mile segment now being built in the Central Valley – backing away from a promise to state voters in 2008 and to the federal government in 2009 and 2010 to build a statewide bullet-train system. Kelly said the state was comporting with key federal regulations.

The limited segment linking Bakersfield and Merced is expected to cost up to $18 billion. Were it ever built, the costs of the originally envisioned statewide bullet-train system – ranging along the coast from San Francisco to Los Angeles to San Diego and inland to Sacramento – could have been 10 times as much or more. The cost of each end of the Los Angeles to San Francisco segment was so extreme that in 2012, the rail authority gave up on true high-speed rail in those links – opting for a “blended” system that relied on regular rail to cover the final 45 miles or so into each of the population centers.

The Trump administration has already canceled a $929 million grant issued to the project in 2010 by the Obama administration. It has indicated it hopes to recover $2.5 billion the federal government has already allocated to California as part of the 2009 economic stimulus package on the grounds that the project is far behind schedule and no longer meets promises of sound planning and financial viability made to secure the $2.5 billion.

But Kelly argued that the Federal Railroad Administration under the Obama administration and for the first two years of Trump’s administration concluded that the project was meeting minimum benchmarks to qualify for federal funding.

“Any clawback of federal funds already expended on this project would be disastrous policy,” Kelly wrote. “It is hard to imagine how your agency – or the taxpayers – might benefit from partially constructed assets sitting stranded in the Central Valley of California.”

LAO questioned project’s finances in 2010

Kelly’s letter hinted at but did not explicitly suggest the DOT’s attempts to recover the $2.5 billion were motivated by President Donald Trump’s two-year-plus war of words with California’s governors, which began under Jerry Brown and has continued with Gavin Newsom. In that span, state Attorney General Xavier Becerra has filed or joined in nearly 50 lawsuits against the Trump administration. Newsom has called the targeting of California’s project politically motivated.

Kelly’s argument that the “clawback” of that much in federal funds would be unprecedented appears correct. But the state’s arguments are weakened by the difficulty it will face in asserting it acquired the federal funds while acting in good faith. Despite telling the U.S. Department of Transportation repeatedly, beginning in 2009, that the bullet-train project was in good shape financially, rail authority officials couldn’t persuade state watchdogs that was the case in the same time frame.

In January 2010, the Legislative Analyst’s Office warned the authority didn’t have a legal business plan because it anticipated that revenue or ridership guarantees could be provided to attract private investors to help fund the project. Because such guarantees amounted to a promise of subsidies if forecasts weren’t met, they were illegal under Proposition 1A, the 2008 state ballot measure providing $9.95 billion in bond seed money for the then-$33 billion project.

The LAO and the California State Auditor’s Office have been uniformly critical of the project for a decade.

Rep. McCarthy: Move $ to other transportation projects

If the Trump administration takes steps to recover the $2.5 billion by withholding unrelated federal dollars bound for California, the dispute seems certain to end up in federal court.

Meanwhile, the California congressman whose district has arguably been most affected by early construction of the bullet train on Thursday introduced a bill that would “repurpose” all $3.4 billion in federal funds for the project to water infrastructure projects in California and other Western states. The measure by House Minority Leader Kevin McCarthy, R-Bakersfield, faces long odds in a chamber in which Democrats retook control in January.

“This is clear political retribution by President Trump, and we won’t sit idly by,” Gov. Gavin Newsom said in a statement issued soon after the Transportation Department announcement. “This is California’s money, and we are going to fight for it.”

Newsom’s depiction of the decision as a Trump vendetta can be buttressed by the president’s repeated clashes with California over federal policies, but the state may face more of a difficult fight to retain bullet-train funding than top officials are willing to admit. While $929 million of the federal funding was directly approved by Congress – the other $2.5 billion came from the massive economic stimulus bill of 2009 – both chunks of money are covered by Federal Railroad Administration (FRA) rules that are meant to ensure federal funds are used properly.

Lack of ‘reasonable progress’ can trigger refund demand

One such provision specifically applies to the $2.5 billion that the Department of Transportation may want refunded: “Any failure to make reasonable progress on the project or other violation of this agreement that significantly endangers substantial performance of the project shall provide sufficient grounds for the FRA to terminate this agreement.”

As the Los Angeles Times reported in November, the California High-Speed Rail Authority was 13 years behind schedule in completing the now-$77 billion project. Citing a lack of available funding, Newsom has at least for now suspended moves to build the train beyond a route already under construction in the Central Valley and forced out longtime rail board chairman Dan Richard.

Yet the project isn’t just on shaky grounds on the question of proper use of federal funding. In mid-2009, in its application for federal stimulus dollars, the state of California made representations to the U.S. Department of Transportation about the project’s solid financing, careful planning and strong accountability provisions that have been repeatedly belied by state audits and reviews as well as independent reporting.

The Obama administration – which was disappointed that California was the only state to accept federal high-speed rail funding – was content to extend deadlines to try to help the Golden State project find its way. Under Obama, rail officials also rejected complaints from California House Republicans that the state project was breaking federal rules.

State claimed it had sound project in requesting stimulus funds

But if the U.S. DOT chooses to go after the California High-Speed Rail Authority, it has a wealth of examples that it can site to show the state’s 2009 grant request made false claims about the soundness of the state project. The short list:

— In January 2010, the Legislative Analyst’s Office concluded that the rail authority didn’t have a legal business plan because it anticipated using promises of subsidies if revenue estimates fell short to attract investors. Such subsidies were explicitly banned by Proposition 1A, the 2008 state ballot measure providing $9.95 billion in bond seed money for the then-$34 billion project. This is why the project has never attracted outside investors, unlike projects in Europe in which governments promised to share the risk if revenue goals weren’t met.

— In April 2012, to reduce the cost of the project – which had ballooned to $98 billion – Gov. Jerry Brown and rail authority officials announced that they would instead pursue a $64 billion “blended” rail system in which high-speed trains shared much-slower regular tracks for approximately 45 miles in the crowded urban areas on each end of the primary San Francisco-Los Angeles route. But as critics – including former state Sen. Quentin Kopp, considered the father of the state’s bullet train project – immediately noted, this meant that what the state wanted to build wasn’t actually a high-speed rail line linking San Francisco and Los Angeles. That’s what was promised to state voters in 2008 and the federal government in 2009.

— In October 2015, the Los Angeles Times reported that it had obtained documents that showed primary contractor Parsons Brinckerhoff had warned the rail authority in 2013 that a $9 billion cost overrun was likely on the project’s initial phase from Burbank to Merced. The authority didn’t disclose this to the public or revise cost estimates upward – decisions that could have been prosecuted if done by publicly held corporations.

What happens next from here is murky. But as the Associated Press noted, the federal government doesn’t need California to write it a check to get its money back. If the Department of Transportation concludes the state didn’t live up to its commitments with federal funds, it could withhold federal dollars on unrelated projects until it gets back all the money that it believes was misspent.

When Gavin Newsom is sworn in as California governor on Jan. 7, he’s already indicated he will take criticisms of the state’s troubled $77 billion high-speed rail project seriously.

That’s in sharp contrast to outgoing Gov. Jerry Brown, who described project critics as “declinists” with no vision for what the Golden State could become. Brown only offered vague pronouncements when asked about giant cost overruns and the $50 billion or more gap between available funding and what’s needed to build the high-speed rail linking Los Angeles and San Francisco.

If Newsom lives up to his word, he’s going to need to respond to profound issues raised by project watchers in and out of the state government over the last two months.

In November, state Auditor Elaine Howle issued a harsh report on poor management practices in the California High-Speed Rail Authority, especially the billions in cost overruns due to the decision to launch construction of the project’s $10.6 billion, 119-mile first segment in the Central Valley before the authority was fully ready. Howle’s audit led Newsom to tell a Fresno audience that he might shake up the leadership of the rail authority.

Among the few specifically positive observations that Newsom has made in recent months about the project was that the first segment held promise to link Silicon Valley workers with less expensive housing in the Central Valley.

Project seen as ‘notoriously unpopular’ in Central Valley

But a Dec. 23 Sacramento Bee analysis found that even though the bullet train project was generating thousands of jobs in the agricultural region, it was “notoriously unpopular” among residents.

“They resent how construction has carved up their farms and scrambled their highways,” the Bee reported. “Completion of just a partial segment through the Valley is still years away, and residents doubt the project will ever get finished. They question the promises that high-speed rail will lift the Valley out of its economic doldrums.”

This skepticism is increasingly shared by elected Democrats both in the Central Valley and the rest of the state.

A Dec. 28 Los Angeles Times report quoted Assembly Speaker Anthony Rendon as saying problems with the bullet train are so widespread that it should “be paused for a reassessment.” Rendon said the prospect that the project would run out of money before ever reaching the Los Angeles region left voters in the area feeling deceived.

Assembly Transportation Committee Chairman Jim Frazier, D-Oakley, has made clear that he will work to have rail authority chairman Dan Richard ousted because of cost overruns and management issues.

The bullet train’s image has also deteriorated among state pundits.

When California voters approved $9.95 billion in bond seed money for the then-$45 billion project in 2008, the ballot initiative was broadly supported by newspaper editorial boards.

“Americans who visit Japan or Europe and hop a bullet train get a stunning reminder of how far behind much of the industrialized world we are in swift, clean, efficient transportation,” the San Jose Mercury-News editorial page declared on Oct. 18, 2008. “Californians can change that by approving Proposition 1A, a bond to begin construction of a high-speed rail system that would whisk passengers from Los Angeles to the Bay Area through downtown San Jose in a mere 2 1/2 hours. It will be a catalyst for the economic growth of California and this region over the next 100 years.”

An editorial printed last month in the Mercury-News showed a 180-degree swing in opinion: “The incompetence and irresponsibility at the California High-Speed Rail Authority are staggering. … It’s time to end this fiasco to stop throwing good money after bad.”

Decision on cap-and-trade funding may signal Newsom’s intentions

An early sign of Newsom’s level of enthusiasm for continuing on Brown’s path is likely in coming weeks as initial work is done on the 2019-20 state budget. The California Air Resources Board reported pulling in $813 million from its Nov. 14 auction of cap-and-trade air pollution credits – a heavy haul.

If Newsom opposes diverting 25 percent of cap-and-trade revenue to the bullet-train project – as has been done since 2015 – that will be the clearest indication yet that he is ready to back away from the troubled project.

The Republican candidates – Assemblyman Travis Allen of Huntington Beach and Rancho Santa Fe businessman John Cox – reflect the GOP consensus that the project is a boondoggle that’s unlikely to ever be completed. But the major Democratic hopefuls – Lt. Gov. Gavin Newsom, former Los Angeles Mayor Antonio Villaraigosa, state Treasurer John Chiang and former Superintendent of Public Instruction Delaine Eastin – have all indicated they would continue with rail project, albeit with little of the enthusiasm shown by present Gov. Jerry Brown.

While the new business plan was depicted by the California High-Speed Rail Authority’s new CEO, Brian Kelly, as a constructive step toward salvaging the project, the plan’s key details were daunting:

The estimated cost of the project, which has yo-yoed from $34 billion to $98 billion to $64 billion, changed once again. The business plan abandoned the previous $64 billion estimate for an estimate of $77 billion – accompanied by a warning that the cost could go as high as $98 billion.

Even at the lower price tag, the state didn’t have adequate funds to complete a first $20 billion-plus bullet-train segment linking populated areas. The present plan for a Central Valley route has an eastern terminus in a remote agricultural field north of Shafter. That’s because the $9.95 billion in bond seed money that state voters provided in 2008 has only been buttressed to a relatively slight degree by additional public dollars from cap-and-trade pollution permits.

The business plan cites the possibility of additional federal funds beyond the $3.3 billion allocated by Washington early in the Obama administration. It doesn’t note, however, that domestic discretionary spending has plunged in recent years amid congressional concern about the national debt blowing past $20 trillion.

The business plan also promotes the possibility of outside investors. It doesn’t mention that such investors have passed on the project for years because state law bars the California High-Speed Rail Authority from offering them a revenue or ridership guarantee.

From 5 years behind schedule to 10 years behind

The initial operation of a bullet-train link serving California residents went from five years behind schedule, in the estimate of the Los Angeles Times, to 10 years behind schedule. The business plan said the project would begin operations no sooner than 2029.

The potential immense cost overrun of the bullet train segment in the mountains north of Los Angeles was fully acknowledged for the first time. A 2015 Times story laid out the “monumental” challenge.

Democratic candidates to succeed Brown have chosen to focus on housing, single-payer health care, immigration and criticism of President Donald Trump in most early forums and campaign appearances. But front-runners Newsom and Villaraigosa in particular seem likely to be pressed on how they can square their claims to be experienced, tough-minded managers with support for a project which seems less likely to be completed with every passing year.

Proposition 70 on the June primary ballot also will keep the bullet train on the campaign’s front burner, to some extent. It was placed on the ballot as part of a 2017 deal cut by the governor to extend the state’s cap-and-trade program until 2030. If Proposition 70 passed, it would require a one-off vote in 2024 in which cap-and-trade proceeds could only be used for specific needs with two-thirds support of each house of the Legislature. Republicans may be able to use these votes to shut off the last ongoing source of new revenue for the high-speed rail project.

The cost of the 119-mile segment was originally estimated at $6 billion. But the main consulting firm on the project, WSP (formerly Parsons Brinckerhoff), told the California High-Speed Rail Authority’s board at a recent meeting that it was now projected at $10.6 billion – a 77 percent increase.

The fact that the overrun was so high on the part of the statewide project with the least-challenging geography appeared to startle some rail authority board members and some Democratic state lawmakers.

On Tuesday, Assemblyman Jim Patterson, R-Fresno – a longtime bullet train skeptic – was joined by Sen. Jim Beall, D-San Jose, in a letter asking for a formal state audit of the $67 billion project. Beall is chairman of the Senate transportation committee.

The letter was sent to Assemblyman Al Muratsuchi, the Torrance Democrat who chairs the Joint Legislative Audit Committee. It has the authority to direct state Auditor Elaine Howle to audit the bullet-train project without the blessing of the governor, who in 2016 vetoed a bill that would have increased oversight of the project and the rail authority. Previous calls for an audit have been blocked by Democratic lawmakers.

While the bullet train has been regularly scrutinized by the nonpartisan Legislative Analyst’s Office, its reports tend to note problems without offering harsh criticisms or sweeping judgments.

State audit could influence vote on June bullet-train ballot measure

By contrast, Howle takes no prisoners if she believes she has evidence of incompetent management, deceit or secrecy. In the past two years, her scathing criticism of the University of California over admissions policies that more than tripled out-of-state students at UC campuses and over UC President Janet Napolitano’s aides’ interference with her office’s attempts to gather information led to admission policy changes and to a state law barring such interference by state agencies.

If the state auditor was directed to review the bullet train project in coming weeks and completes her report faster than usual, it could affect a bullet train-related measure on the June primary ballot.

Last July, then-Assembly Republican leader Chad Mayes of Yucca Valley agreed to help Democrats round up enough GOP votes to extend the state’s cap-and-trade program until 2030 in return for the Legislature ordering the placement of a Mayes-drafted constitutional amendment before state voters in the primary.

If it won approval, the amendment would mandate that in 2024, the Legislature must have an up-or-down vote on whether to continue allowing the state government to use cap-and-trade revenue on the bullet train – with a two-thirds threshold for approval in both the Assembly and Senate.

Cap-and-trade auction funds are the only firm source of revenue the rail authority will have after spending the remaining $10 billion in funds left from a $3.3 billion grant from the Obama administration and the original $9.95 billion in state bond funds that voters approved for the project in 2008.

Cutting off the bullet train’s access to cap-and-trade dollars could kill the project without it ever having carried a passenger – leaving a massive white elephant in the Central Valley. Even before the overrun was reported, authority officials said in 2016 that they didn’t have enough money to build their planned segment linking San Jose with Bakersfield. Officials told a U.S. House subcommittee hearing that the project’s eastern terminus would be an almond orchard about 30 miles northwest of Bakersfield.

The California High-Speed Rail Authority’s rough year continues with the departure of another top executive at the agency overseeing the state’s $64 billion bullet-train project.

Jon Tapping, the agency’s director of risk management since 2012, is leaving, the Los Angeles Times reported in a story that quoted an unnamed agency official describing internal “chaos.” Authority Chief Executive Jeff Morales left in June. Morales’ second-in-command, Dennis Trujillo, quit in late 2016.

This leaves the authority with three high-profile vacancies as it tries to move ahead with a long-troubled project that’s taken a series of hits throughout 2017. Among the bad news:

– On Oct. 1, the Times printed a report that internal authority documents showed the initial 119-mile segment being built in the Central Valley would cost $8 billion, 27 percent more than the authority’s public declarations that the segment would cost $6.3 billion. The overrun estimate may prove low. In January, documents surfaced that showed federal rail officials expected an overrun in the 50 percent range.

– On Sept. 24, a critical Fresno Bee analysis showed how the authority’s original plan to complete a Merced-to-Bakersfield segment by Sept. 30, 2017, had long since been abandoned because of the authority’s unrealistic expectations about how quickly property could be obtained and environmental approvals be secured. The analysis also cited ongoing lawsuits. The Bee noted that the starting date for passenger service was now projected to be 2025 – 17 years after California voters approved $9.95 billion in bond seed money for the project, initially estimated to cost $32 billion.

Court ruling clears way for potent CEQA lawsuits

– On July 27, the California Supreme Court overturned a lower-court ruling and said state-owned rail projects were not completely exempt from the California Environmental Quality Act and other state environmental laws. The case involved another state project besides the bullet train, but legal analysts said there was no question it would apply.

CEQA has been a powerful tool against projects large and small in California for decades. The state Supreme Court ruling paves the way for a wave of CEQA lawsuits by deep-pocketed interest groups against now-pending environmental impact reports for bullet-train segments in Silicon Valley and the Los Angeles area.

Even individual citizens without high-powered legal teams can stall projects using CEQA. San Francisco’s plan to add bicycle lanes to encourage bicycle commuting was delayed for five years by a self-described “dishwasher from Mendocino.”

– On July 17, the Legislature approved a measure to extend the state’s emissions cap-and-trade program by 10 years, with a handful of Republicans providing crucial support after then-Assembly GOP leader Chad Mayes of Yucca Valley secured support for a provision that could eventually halt the bullet-train project.

“The concession … places a constitutional amendment drafted by Mayes before state voters in June 2018,” CalWatchdog reported in July. “If passed, it would lead to a one-time up-and-down vote in the Legislature in 2024 on whether to continue allowing the use of cap-and-trade revenue to fund the project. But the threshold wouldn’t be a simple majority. A two-thirds vote would be required to allow continued use of the funds – presumably giving GOP lawmakers a prime chance to pull the plug.

This amounts to a bet that the bad news about the project would continue. With the exodus of top staff, the confirmation of major cost overruns and the new certainty about another round of legal challenges, so far that’s what’s come to pass.

Train company owned by Germany may win key contract

Rail authority officials, however, say critics of the project ignore the steady progress it is making, with more than 400 small businesses and 1,400-plus “craft workers” proceeding in building the initial segment.

The rail authority board is likely to make a crucial decision at its meeting Thursday. DB Engineering & Consulting USA, a subsidiary of Deutsche Bahn AG, is expected to be given a $30 million contract to design and operate the initial segment from San Jose to the Central Valley.

Deutsche Bahn AG, which is owned by the German government, is competing with companies from Spain, Italy and China for the contract. In 2015, it was the world’s largest railway company based on revenue and the ninth-biggest carrier of global freight, according to industry reports.