The March court ruling suggests that plaintiffs could renew their legal challenge once the authority finalizes its funding plan to trigger use of state bond money. [Court ruling can be found at the bottom of the page.] Plaintiffs have not announced if they will appeal the court’s decision. The authority can use federal tax dollars to purchase land in the meantime, and has purchased more than a third of the 1,505 parcels needed, according to authority documents.

Incompatible with bond measure

Plaintiffs, including Kings County and other landowners affected by the project, argued that the authority’s plan is contrary to what was sold to the voters. Plaintiffs said the authority’s estimated train speeds, funding mechanisms and plan to use existing tracks don’t comply with the bond measure that funded the project.

Voters in 2008 approved $9.95 billion in bonds to fund the rail service from Southern California to Sacramento and the San Francisco Bay Area. The rail project faces other legal challenges focused on the state’s use of cap-and-trade proceeds.

Sacramento County Superior Court Judge Michael Kenny ruled that project opponents’ allegations were premature. The case, originally filed in 2011, questioned whether the authority was complying with the 2008 Prop. 1A bond measure.

Project opponents questioned three promises: whether an express train can travel from Los Angeles to San Francisco in two hours and 40 minutes, whether the project is financially viable and whether a plan to share existing tracks and facilities was permitted by the bond measure.

Though the judge ruled that the case was premature, he hinted that there were potential problems with evidence presented by the Rail Authority.

Attorney Stuart Flashman believes that what the judge said “fired a shot across the bow,” warning the Rail Authority that he had issues with travel times required in Prop. 1A, particularly through the peninsula between San Francisco and San Jose. Trains must be able to travel that segment in 30 minutes or less.

Revised trip times

In January 2013, the authority’s consultants estimated trip times of 30 minutes at 125 mph or 32 minutes at 110 mph, according to the court ruling. A month later, a revised memo listed a faster time, 30 minutes at 110 mph.

“There is no clear explanation for this change in conclusions,” the ruling says.

The judge also warned the Rail Authority that they used the wrong location in San Francisco.

The Rail Authority used 4th and King instead of Transbay Terminal as the northern point to measure the 30-minute travel time to San Jose. The difference from 4th and King to Transbay Terminal is 1.3 miles but a very slow and expensive gap. It has twists and turns, which will greatly restrict speed and which experts estimate could cost as much as $4.5 billion.

Deputy Attorney General Susan O’Grady argued that Prop. 1A did not indicate that Transbay Terminal was the northern measuring point for travel time. The judge disagreed.

Additional challenges

There are many other challenges that the Rail Authority must meet in the immediate future. Its newest business plan, released in February, changed construction direction. While still starting in the Central Valley, construction would now extend north instead of south.

Two lawsuits are pending concerning the rail project’s use of funds from the state’s cap-and-trade program. One, presented by the Pacific Legal Foundation, challenges the program’s existence since it did not pass by a two-thirds vote. The foundation considers the cap-and-trade proceeds an improper tax. The other suit, brought by the nonprofit group TRANSDEF, argues the project is ineligible since it will take decades for it to offset the greenhouse gases it produces as it is built. Assembly Bill 32, the state’s sweeping climate change policy passed in 2006, requires a reduction of greenhouse gases to 1990 levels by 2020, and the first high-speed rail segment will not be operational until 2025.

Kenny found that the California High-Speed Rail Authority hadn’t met two safeguards spelled out in Proposition 1A, the 2008 ballot initiative providing $9.95 billion in bond funds as seed money for a $43 billion state bullet-train network.

After his ruling, the state was expected to either contest his conclusions or offer remedies to allay his concerns. Instead, the state’s remedies brief, released in October 2013, offered no remedies.

I wrote about this odd development here:

Kenny held that the state failed to meet mandates that construction could not begin until the state had both a solid financing plan and all environmental clearances for the project’s entire initial operating segment — a 300-mile span from Merced to the San Fernando Valley.

The segment’s cost is estimated at $31 billion, more than double the $13 billion in combined state and federal funds available for the project. Given the state’s inability to attract private financing without the revenue or ridership guarantees that are banned by Proposition 1A and the drying up of federal funds, this appears to doom the venture.

In a 20-page brief filed Friday, Attorney General Kamala Harris and her staff didn’t challenge Kenny’s conclusion that the project’s financial and environmental deficiencies broke state law. Instead, the brief contended that nothing the rail authority had done so far violated Proposition 1A because federal funds had been used instead of state bond funds on certain expenditures.

“It ignores the fundamental basis of the [Aug. 16] decision,” said Mike Brady, attorney for Kings County and two Central Valley landowners, plaintiffs in the lawsuit before Kenny.

State: Federal rules trump state law

This month, however, we may have gotten an answer as to why the state didn’t think compliance with state environmental rules mattered. This is from the Fresno Bee.

The California High-Speed Rail Authority is facing seven lawsuits over its approval of the Fresno-Bakersfield segment of its statewide bullet-train line. Now the agency is asking the federal Surface Transportation Board — which oversees rail lines in the U.S. and gave a green light to the project over the summer — to declare that those lawsuits should not be able to seek a California judge’s order to block construction.

The authority’s petition to the federal board, filed earlier this month, [argues] that federal jurisdiction over the project essentially overrides portions of the California Environmental Quality Act. The lawsuits challenging the state’s approval of the Fresno-Bakersfield segment allege that the state’s environmental analysis of the route was inadequate and does not provide enough measures to make up for anticipated harm to residents, farmers, businesses and communities along the route.

The Surface Transportation Board, made up of three presidential appointees, is giving project supporters and opponents until Nov. 6 to respond to the rail authority’s petition.

But even if federal jurisdiction trumps state law, this is still outrageous. As I detail in this editorial for U-T San Diego, voters were promised in 2008 that CEQA would be followed.

If this tactic works, however, Gov. Jerry Brown and the rail authority still have to at some point “remedy” the other shortcoming identified by Kenny: the lack of a solid funding source to pay for the $31 billion initial operating segment.

That’s not nearly as easy to finesse as the environmental approvals. That’s a lot of money — money that’s not forthcoming from the federal government or from the contractors that rail authority officials ludicrously describe as potential investors.

In a controversial decision late this July, the California Court of Appeal for the Third District brushed aside claims that ballot wording and voters’ intent carried legal weight that legislators’ plans did not. Now the Pacific Legal Foundation has joined the original Kings County plaintiffs in appealing that verdict, hoping to be heard by the California Supreme Court.

In the case summary posted on its website, PLF lawyers described two lines of argument they’ll make before the court, if the appeal is accepted. First, PLF alleged, state officials “attempted to evade meaningful oversight” of the high-speed rail project. The evidence before past courts, PLF claimed, has been “insufficient” to justify “even the most lenient judicial review of the High Speed Rail Finance Committee’s decision to authorize issuance of the bonds.”

Billions on the line

Those bonds are at the heart of the fight over the bullet train’s future. The plaintiffs arrayed against their authorization have maintained that at least $8.6 billion of bonds cannot be sold unless the terms set out in Prop. 1A have been fulfilled. Stu Flashman, the attorney representing plaintiffs from Kings County, said the ballot measure’s language was “clearly intended to protect the state from the financial risk” the train might create. According to plaintiffs, courts must recognize that voters approved Prop. 1A in accordance with the plain reading of its text, not because they supported the more vague or general goal of high-speed rail.

Previously, Sacramento County Superior Court Judge Michael Kenny had agreed, ruling against the bullet train in three ways across two separate decisions. He held that California’s preliminary funding plan fell short of Prop. 1A by fudging its funding sources. Furthermore, he held that California could not issue a so-called “blanket validation” for train bonds because it had not properly determined whether the issuance was currently “necessary and desirable.” Additionally, Kenny determined that the state could not start building out the train’s infrastructure without official clearance on potential environmental issues.

Pivoting off the first two elements of Kenny’s rulings, PLF has prepared arguments for the state Supreme Court that assert a “bait and switch” pulled on California taxpayers. The state, PLF alleged, has failed to show the courts “that the current, significantly modified project outline is consistent with the design that was presented to voters when they approved bonds for the High Speed Rail project” with an affirmative vote for Prop. 1A.

A reversal in the courts

But the appellate judges who recently reversed Judge Kenny disagreed. “Instead of deciding whether the state had, in fact, violated Proposition 1A as the project’s opponents claimed, the appellate judges ruled that the contentious funding plan was valid regardless because the state Legislature approved it,” the San Jose Mercury-News reported in August, as preliminary construction for the project got under way.

This line of legal reasoning threw plaintiffs a curveball. In addition to arguing to the California Supreme Court that Prop. 1A plainly imposes requirements the state failed to meet, they must also argue that the language of Prop. 1A must take legal precedence over Sacramento’s legislative stamp of approval.

That is why PLF has taken pains to claim state officials have tried to “evade meaningful oversight” of the train’s funding and construction. In an additional wrinkle, the actual access to the train’s funds raises a separate legal question that plaintiffs have threatened to bring before the higher court.

Michael Brady, attorney for Kings County farmer John Tos, told Bloomberg he could “challenge the legality” of trying to “access the monies in the bond fund.” Officials, he indicated, must apply for the funds through a section of the law that’s “actually much tougher” than other provisions when it comes to showing compliance with the state’s legal authorization.

The next action will be for the Supreme Court to take or deny the appeal.

On July 31, the Sacramento-based 3rd District Court of Appeal overturned Sacramento Superior Court Judge Michael Kenny’s rulings that required the California High-Speed Rail Authority to rescind its funding plan and blocked the validation of bonds for the rail project.

Kenny had concluded that the authority had failed to meet two requirements established by Proposition 1A, the 2008 ballot measure providing $9.95 billion in bond funds to the bullet train project.  The requirements were that before the funding plan was submitted to the legislature that the state have adequate funds identified or in hand to build the 300-mile operating segment.  It was also to have completed all environmental reviews. Today, the state has only a fraction of the $31 billion its business plan estimates for its Initial operable segment and is still not complete with the environmental review though the funding plan was submitted in November 2011.  

Kenny also refused to validate the state’s sale of bonds because the authority failed to bring evidence to the High-Speed Passenger Train finance committee that showed why it was necessary or desirable to appropriate bonds for the rail project, as required by state law. At the committee’s March 18, 2013, meeting,  members read the motion, had zero discussion and rubber-stamped the authority’s request for bond allocation in one minute and 43 seconds.

Attorneys for Kings County said that by overturning Kenny’s decisions, the appeals court imperiled California’s bond initiative process. If allowed to stand as precedent, it would allow future Legislatures to go back on promises made to voters about stringent protections for ballot bond measures.

Appellate court deferred to state lawmakers

In its ruling overturning Kenny’s decisions, the appellate court said there was nothing it could do since the Legislature had voted on the funding plan, deficient as it was, and there are no consequences for the authority which submitted the deficient plan.  The court said the bond measure did not have explicit language that forbids legislative tampering. The court said it had no choice due to the separation of powers doctrine, which forbids it from interfering with the legislators’ decision. Only if there was very particular language in the bond measure that forbid the Legislature from changing the terms, the appeals panel held, could it have disallowed the funding plan.

But in their request for Supreme Court review, Kings County attorneys strongly disagreed with that characterization of the court’s role.

In a past case, they noted that a California court “held that the provisions of the governing statutes at the time the bonds were approved, even though they were not expressly placed on the ballot before the voters, were part of the conditions under which the bonds were approved, and could not be modified later. Specifically, the court rejected the argument that a later act of the Legislature permissibly modified the voter-approved bond provisions.”

The brief goes on to say, “This principle, that the terms and conditions placed before the voters in a bond measure may not be unilaterally modified, even by the Legislature, after the voters’ approval, has been confirmed multiple times in subsequent decisions.”

Kings County co-counsel Stuart Flashman said,  “The Court of Appeal ruling overturns long-standing precedents in the interpretation of bond measures. If these decisions stand, voters will lose trust in future bond measures.”

Appellate court: Try again after second funding plan

The appeals court, however, said that the time to challenge the legality of the project was when a second funding plan was put forth — one that approves construction spending.

Flashman says that doesn’t make sense.

“If the purpose were solely to prevent construction, a single funding plan, to be submitted and approved prior to the expenditure of construction funds, would have sufficed. Yet the bond measure required not one, but two funding plans, the Initial Funding plan and a second, follow-up pre-expenditure Funding Plan. Logically, if the pre-expenditure funding plan was intended to prevent expenditure of funds unless the required conditions in that plan had been met, the conditions in the first funding plan had to be aimed at the appropriation of funds, not their expenditure.”

He noted the context in which Proposition 1A was presented to voters: “As perhaps the biggest public works project in California’s history and a project committing almost $10 billion of public funds, the high-speed rail project raised significant concern in both the Legislature and among the voters, causing the Legislature to include in the bond measure a series of stringent provisions that the Court of Appeal itself called a ‘financial strait-jacket.’”

Despite this acknowledgment, the appeals court ruled for the state.

The silver lining in the appellate decision

But while attorneys for Kings County decried the appellate ruling for the precedent it set, they also said much of its language affirmed restrictions and conditions that would doom the rail authority’s bullet-train project in the long run.

On Tuesday, lead counsel Michael Brady said,  “The authority is now on life support; it has been granted a stay of execution by the Court of Appeal. Today’s filing seeks to lift that stay.”

Brady thinks the appellate ruling really wasn’t a green light for the project to go forward — just a decision that gave the rail authority more time to assemble a second funding plan in order for them to obtain access to bond funds for construction. The authority still has two huge hurdles to clear.

1) It must complete all environmental reviews for the initial 300-mile segment before construction begins.

2) An independent financial consultant must attest the funding plan is a viable, plausible way to pay for the $31 billion initial operating segment.

The rail authority has had six years to find an investor in the project and has found no one willing to partner with the state on a big project without revenue or ridership guarantees, which are illegal under Proposition 1A. Now it appears to be pinning its hopes on the use of pollution-rights fees that the private sector pays to the state under AB32’s cap-and-trade program. This budget cycle, the Legislature diverted $250 million in cap-and-trade funds to the project, with more promised — but not guaranteed — in future budgets.

But even under a scenario in which one-third of these funds went to the bullet train, that still would be far short of the $31 billion the state needs to finish the initial 300-mile segment. Lou Thompson, chairman of the official high-speed rail peer review committee, says the state would still be $13 billion to $14 billion short. You can see his remarks in the first minutes of this You Tube clip of a high-speed rail hearing.

To see Kings County’s full 86-page petition for a California Supreme Court review, go to here.

Correction: The paragraph beginning “Kenny had concluded” has been modified from the original to make it more clear.  Note: Both the funds had to be identified  and the environmental work at the project level before the Authority submitted their first funding plan, not before construction.

Kathy Hamilton is the Ralph Nader of high-speed rail, continually uncovering hidden aspects of the project and revealing them to the public.  She started writing in order to tell local communities how the project affects them and her reach grew statewide.  She has written more than 225 articles on high-speed rail and attended hundreds of state and local meetings. She is a board member of the Community Coalition on High-Speed Rail; has testified at government hearings; has provided public testimony and court declarations on public records act requests; has given public testimony; and has provided transcripts for the validation of court cases.

This EIR is supposed to have far more details about the impacts of the project on affected communities and the environment. But the new lawsuit — filed by the County of Kings, Citizens for California High-Speed Rail Accountability and the Kings County Farm Bureau — alleges that there are major conflicts and omissions between the old EIR and the new one. It also alleges that the California High-Speed Rail Authority, in preparing the new EIR, routinely minimized environmental impacts and the need for mitigation measures despite knowing of contrary evidence.

The lawsuit, which can be read here, was prepared by attorneys Douglas P. Carstens and Michelle Black of the Chatten-Brown & Carstens law firm based in Hermosa Beach. It contends that the shortcomings of the EIR are so numerous and significant that the document should be “recirculated” to allow the commenting process on potential impacts to start anew. It asks that construction be blocked until an adequate, fully legal EIR is completed.

The case will be before Judge Allen Sumner,  who was first appointed to the bench by Gov. Gray Davis. It is expected to have its initial hearing late this year.

This litigation is separate from a lawsuit involving mostly the same plaintiffs that led another Sacramento Superior Court judge, Michael Kenny, to rule in November that the state government had an inadequate financing plan and insufficient environmental reviews to legally begin work on the bullet train project’s 300-mile “initial operating segment.” A state appellate court is now considering Kenny’s decision, acting on an expedited basis at Gov. Jerry Brown’s request.

Vast list of problems detailed

Here are some of the key problems cited in the new lawsuit:

Railroad impacts: The new EIR includes “no mention regarding the need for expansion of the electrical grid or the recent objections UPRR and BNSF railroads have voiced to the California Public Utilities Commission about electro-magnetic fields and the possible interference of the freight rail and their positive train control systems.” Plaintiffs say the problems were well-known before the new EIR was certified in April.

Another ignored problem: ”The EIR failed to adequately analyze and mitigate impacts caused by the Section’s interference with existing rail transportation. BNSF Railway Company commented that the Authority’s preferred alignment, a substantial portion of which would run adjacent to BNSF’s right-of-way, would adversely impact BNSF’s ability to maintain and use its current right-of-way, would limit opportunities to construct new spurs to serve clients, and would raise height clearance issues.”

EIR was premature: The plaintiffs also contend that the rail authority jumped the gun with the new EIR. Rail officials “are only 15-30 percent finished with the first segment that is Madera to Fresno, and at this time does not even have a vendor selected to create the design for the Fresno to Bakersfield segment.”

The lawsuit contends this goes against established standards on how much design and planning work must be done before a credible environmental review can be completed.

“According to the Authority’s predecessor agency, the Intercity High Speed Rail Commission, in its High Speed Rail Summary Report and Action Plan, at least a 35 percent level of design is necessary to conduct environmental review,” the lawsuit notes.

“Similarly, the U.S. Army Corps of Engineers and U.S. Environmental Protection Agency state that a 60 percent level of design is necessary for the environmental analysis to be sufficient for issuing a Clean Water Act section 404 Permit. By relying on an insufficiently detailed design, the Authority failed to provide enough information necessary for environmental review under CEQA.”

Effects on plants and species: A key goal of an environmental impact report is assessing the likely impact on sensitive plants and species in the project area. Once again, the plaintiffs contend the rail authority cut corners and didn’t follow standard practices.

“EIR preparers conducted an assessment of the possible presence of an endangered species (Fresno Kangaroo Rat) by attempting to recreate land use from the aerial photographs provided within Google Earth. Although such a method might be useful for targeting surveys, it is not a substitute for protocol-level surveys in appropriate habitat, which should have been done before certification of the project-level EIR,” the lawsuit states.

“The survey extent for many biological resources was too small because the area studied was usually within 250 feet of the Section footprint. Because one major impact of the project is fragmentation of existing habitat and decreased landscape connectivity, the study area should have been much larger.”

Geological and seismic risks hidden: Among the most serious allegations in the lawsuit are that the new EIR purposefully ignored the rail authority’s own report about the riskiness of its route.

On Sept. 12, 2013, in response to a California Public Records Act request by Californians Advocating Responsible Rail Design, the rail authority released an internal report on geologic and seismic hazards facing the Fresno-Bakersfield route.

According to the lawsuit, the report  “concluded that the risks of ground rupture, seismically induced ground deformations, shallow groundwater, soil corrosivity, and land subsidence were moderate to high along the Section alignment. The Report determined that most of these geotechnical hazards are distributed across the Central Valley or run perpendicular to the section alignment.”

But the new EIR did not acknowledge the rail authority’s own findings that geologic and seismic hazards were probably unavoidable on the planned route. Instead, the EIR concluded such risks were only in “localized areas.”

Plaintiffs argue that this “demonstrates the EIR’ s failure to disclose the Section’s system-wide potentially adverse impacts to decision-makers and the public.”

Less intrusive alternatives not considered: The rail authority had an obligation to examine other route options to see whether they were less problematic but did not do so with several different issues, according to the plaintiffs. These issues include geologic/seismic risk; noise and vibration risks to Mercy Hospital in Bakersfield; and using tunnels instead of above-ground tracks in “urban centers” such as Hanford.

Major impacts cited for first time: The lawsuit alleges that the new EIR — for the first time — mentions heretofore undisclosed new impacts from the project. Perhaps the most notable:

— “New significant impacts to historic resources in downtown Fresno, including subterranean historic resources. These significant historic resources included residential features and privies associated with Chinatown. These features are eligible for the National Register of Historic Places.”

— “Approximately 96 active and inactive oil, gas, and water wells that would be impacted within 50 feet of the Section’s right-of-way.” Plaintiffs say that the rail authority acknowledges the “substantial increase in severity of this impact,” yet identifies “no mitigation measures.”

Under state law, a project’s environmental impact report must be “recirculated” for new comments when there are newly discovered “significant new impacts to landowners.”

The law “requires recirculation when: (1) a new significant environmental impact would result from the project or from a new mitigation measure proposed to be implemented; (2) a substantial increase in the severity of an environmental impact would result unless mitigation measures are adopted that reduce the impact to a level of insignificance; or (3) a feasible project alternative or mitigation measure considerably different from others previously analyzed would clearly lessen the environmental impacts of the project, but the project’s proponents decline to adopt it.”

The lawsuit cites problems that fit each of these categories — at least if Judge Sumner agrees.

Kathy Hamilton is the Ralph Nader of high-speed rail, continually uncovering hidden aspects of the project and revealing them to the public.  She started writing in order to tell local communities how the project affects them and her reach grew statewide.  She has written more than 225 articles on high-speed rail and attended hundreds of state and local meetings. She is a board member of the Community Coalition on High-Speed Rail; has testified at government hearings; has provided public testimony and court declarations on public records act requests; has given public testimony; and has provided transcripts for the validation of court cases. 

March 17 marks the next critical date in legal action surrounding California’s high-speed rail project. By that date, the office of California’s Attorney General Kamala Harris, which represents the High-Speed Rail Authority, is expected to file a new appeal.

At issue before the Court of Appeal will be a March 4 ruling by Superior Court Judge Michael Kenny that allowed the continuance of the lawsuit by Kings County and two residents affected by the project, John Tos and Aaron Fukuda. Both residents own property that would be taken to build the project.

Kenny’s action was a blow to the California High-Speed Rail Authority, which had asked the court to dismiss the case.

Within 48 hours of Kenny’s new ruling, Harris’ office notified Stuart Flashman, who is representing Kings County and the residents, that the CHSRA was going to ask the Court of Appeal for a writ to again stop the case.

And CHSRA Spokeswoman Lisa Marie Alley told CalWatchdog.com, “We disagree with the March 4 Sacramento Superior Court’s ruling and are preparing to seek a review by the Court of Appeal.”

The CHSRA is asking for an “ex parte” decision by the Court of Appeal. Flashman explained to CalWatchdog.com, “Ex parte means a decision would be made without the usual about 20 days’ advance notice to the opposing parties of the intent to seek court action. Here, they’re wanting expedited handling of a motion asking for a stay of the trial court proceedings.”

Flashman said he doesn’t understand the need for urgency. He said it’s like someone yelling, “My house is on fire! My house is on fire! You have to do something!” Yet when firefighters arrive, they find the fire is only on a barbeque grill.

“There’s no fire here,” Flashman said. “Nothing has been decided. What is the damage? What is the harm? There is no decision.  It’s not as if there is an injunction in effect.”

Kenny’s March 4 ruling only gave the CHSRA the right to have its case heard in court, not halt the project.

Reasons

Flashman expects the next court filing by the CHSRA will show why it thinks the ruling to move forward with a trial is such an urgent matter.  He believes that, if the Court of Appeal decides the case based on the law, the court will summarily deny this latest request for extraordinary writ review.

This next hearing will review specific promises made in Proposition 1A, which authorized the high-speed rail project when voters approved it in 2008. Kings County and the two residents insist that parts of the project are not in compliance with those promises, such as mandated high-speed travel times between Los Angeles and San Francisco and the likelihood that an operational subsidy will be required, something strictly forbidden in Prop. 1A.

Flashman explained, “Our position is simply that if the Authority wants to use the bond funds, it has to build what it promised the voters. Our complaint says that the Authority’s project doesn’t meet requirements for the high-speed rail system that were set when California voters approved Proposition 1A.  Judge Kenny’s ruling means we get our day in court to prove our case.  If we’re successful, it will mean the Authority can’t use the bond funds to build its noncompliant project.”

The appeals court ruling is expected this spring at the earliest. It will decide whether to permanently overturn Kenny’s ruling.

Curiously, Harris’ brief before the court in this matter included a Washington Post article by editorial writer Charles Lane. Lane asked, “Who is more powerful, the president of the United States or Michael P. Kenny of Sacramento?”

That seemed to favor advancing high-speed rail through executive clout. But Lane continued:

“As it happens, Kenny’s ruling on the California rail plan was almost certainly correct; the Brown and Obama administrations have never plausibly explained where they would get the $68 billion needed to build the whole California system. Even if completed, high-speed rail would not enhance productivity; rather, it would consume subsidies, as it does in other countries. With teleconferencing a reality and driverless cars on the way, bullet trains don’t seem so cutting-edge anymore, anyway. …

“In 2009, Obama lauded high-speed rail in Europe and Asia, and declared: ‘There’s no reason why we can’t do this. This is America.’

“Actually, countries that have high-speed rail — China, Japan, France and Taiwan, for example — also tend to have much more centralized government than the United States.

“In other words, one reason we don’t have national high-speed rail, and probably never will, is that this is America.”

Ironically, Lane’s article, although submitted by Harris’ office, well could provide the Court of Appeal a reason to side against the CHSRA’s case, not for it.

After an August court ruling from Sacramento Superior Court Judge Michael Kenny that the massive project didn’t have a legal business plan because it had inadequate financing and environmental reviews, the Attorney General’s Office filed a “remedies” brief that included no remedies. It didn’t dispute Kenny’s conclusion that the business plan was illegal. Instead, the state argued that the project could continue for the time being using federal funds.

As I wrote for CWD in October …

“It seems awfully problematic for the state to concede its plans break the law yet still want to proceed with a $68 billion project.”

Then came round two of legal filings in January, this one appealing Kenny’s rulings. This time the Attorney General’s Office argued that Kenny’s August and November decisions on the illegality of the business plan were flat-out wrong and an assault on the prerogatives of the state’s executive and legislative branches.

Arguments not raised at trial can’t be brought up on appeal

There’s been another funding twist for the California bullet-train project. The Federal Railroad Administration has agreed to delay the due date for $180 million in state matching funds for the project from April 1 to July 1,  according to a press release from Rep. Jeff Denham’s office.

This gives Gov. Jerry Brown and the California High-Speed Rail Authority breathing room to work with the Legislature and try to convince lawmakers to allocate $250 million in state cap-and-trade auction revenues for the rail project.

Denham, a Turlock Republican, considers the move risky.  This is from his Feb. 21 press release:

“The Federal Railroad Administration [FRA] is protecting the Authority yet again and putting California taxpayers at greater risk. It has long been clear that the Authority would be unable to provide the funds required in their grant agreement. In December 2012, the FRA changed their agreement to allow for a tapered match rather than the standard concurrent match. Now they’ve changed the agreement again. With billions in federal taxpayer dollars on the line, what changes are next from the FRA? The American people – and Californian taxpayers – deserve to see their money used responsibly.”

But there are also additional important changes in the federal funding agreement outlined in the letter that rail authority CEO Jeff Morales released Feb. 20. The new funding contribution plan shifts a large amount of funding responsibility in coming years to the federal government, with a significant decrease in California’s contribution compared with the original plan, according to bullet-train financial expert William Warren. (Along with William Grindley, Warren has co-authored numerous briefing papers regarding rail-authority data.)

U.S. taxpayers at risk for single-state project

These changes leave the U.S. taxpayers in all 50 states with more exposure while pushing a troubled, legally questionable California state project forward.

The state has been receiving federal funds upfront for planning and environmental work for the past year, with the state’s required match delayed until later.  The original funding plan required a simultaneous match, according to a May 25, 2011, letter to the state from Roy Kienitz, who was then undersecretary of policy for the U.S. Department of Transportation. “On the matter of using federal funds up front to postpone use of the State’s matching funds, we hope you will understand why this is not feasible,” Kienitz wrote. ” Both the fiscal year 2010 appropriations law and the FRA grant commitments require matching funds as a prerequisite for this project to go forward.  California was awarded funding based in part on the impressive state match promised in the grant applications.  Withholding these matching funds would put the California’s high-speed rail project in serious jeopardy.”

Kienitz left the agency and, within a year, joined Parson Brinckerhoff, the primary consultant on the high-speed rail  project.  Shortly thereafter, in 2012, a revised federal funding plan — the fifth version — was published. It said the federal funds could be spent first and matching state bond funds could be spent starting in April 2014.

It had been expected that the rail authority would have access to state bond funds by April 2014, but two November  court decisions by Sacramento Superior Court Judge Michael Kenny dashed those hopes. The judge found the state had failed to meet its legal obligation under Proposition 1A to identify firm funding and complete environmental reviews for the entire initial operating segment of 300 miles before beginning construction. He also ruled the state could not begin selling state bonds funded by the proposition because they had not followed procedural safeguards related to bond sales.

State wants strings taken off some federal funds

Morales has also asked for a shift of $145 million in federal funds from construction to the planning and environmental category.  The feds had construction dollars in their funding agreement with the state, but the rail authority had to get specific permission to use those funds.  Judge Kenny’s rulings effectively halted the spending of state bond funds for construction, but they did not forbid the spending of federal funds — even for construction.

This request for the shift of funds might be because the Federal Railroad Administration usually releases grant funds as a project progresses, a little at time.  The authority is not ready for construction yet and needs more funds to move the project forward. It also has a lot of old bills to clear up — $63 million, it was revealed at the rail authority board’s Feb. 11 meeting.

In his letter to the FRA, Morales wrote that the authority does not anticipate using state Proposition 1A funds until July 1, 2015.  It is not explained whether that is because the authority doesn’t think it will need the state funds until then or because that’s when officials expect the funds to become available after legal challenges are resolved. But the American Recovery and Reinvestment Act of 2009 (ARRA) requires all federal funding to be used by September 2017 or the state will forfeit unspent funds.

While the governor wants to use cap-and-trade dollars as a state source of funding, only the Legislature can approve an appropriation. Many lawmakers appear to question the legality of using cap-and-trade fees for the bullet train.  Environmental groups also object.

Nevertheless, Dan Richard, chairman of the rail authority board, said at a Jan. 15 House transportation committee hearing that he had promising talks with environmental groups on using the cap-and-trade funds for the rail project.

Meanwhile, above and beyond the maneuvering on federal and state funding, the 3rd District Court of Appeal is now reviewing the Nov. 16 decision by Judge Kenny requiring the authority to rescind its funding plan. The appeals court is reviewing the ruling at the direction of the California Supreme Court, which was asked by the Brown administration to expedite a review of the ruling because of the administration’s contention that Kenny’s decision imperiled the project.

Kenny objected to the idea the state could treat prospective federal funding and private-sector investment as dependable and likely sources of money. What does the 2014 business plan point to for future funding? More money from the federal government and private-sector investment.

As the kids say, epic fail. In the sequester era of declining discretionary domestic spending, the chance that Congress will play for one state’s hugely expensive infrastructure project is distant at best. The chances for private investment are even worse. As the LAO pointed out in 2010, such investments are very unlikely without a revenue or ridership guarantee. But such guarantees are illegal under Prop 1A, the 2008 state ballot measure that gave $9.95 billion in seed money to the bullet-train project.

Incredibly, the Fresno Bee wrote a 1,000-word story that never mentioned the financing angle. The Los Angeles Times at least mentioned the angle, though it never specifically noted that the state still has a business plan that Judge Kenny will find deficient.

Want to let state know your view of bullet train? Here’s how

I look forward to leaving a pungent voicemail. Your means of commenting:

— Online comment form through the Draft 2014 Business Plan website at:
www.hsr.ca.gov/About/Business_Plans/Draft_2014_Business_Plan.html

— By email at 2014businessplancomments@hsr.ca.gov

— Voice mail comment at 916-384-9516

Back to the MSM coverage of the biz plan. Maybe the LAT reporter just assumes that it’s impossible for the state to meet Kenny’s hard-financing requirement, so he doesn’t dwell on the angle. But how can the Fresno Bee not even mention this? Bizarro.

“Geologists began drilling holes and collecting soil sam- ples Tuesday in downtown Fresno in preparation for the first stages of construction on California’s proposed high-speed train project.

“The first soil borings by Earth Mechanics Inc. took place along H Street, under the Stanislaus Street overpass that spans H Street, the Union Pacific Railroad tracks and G Street. It’s the first of more than two dozen locations between the northeast edge of Madera and the south end of Fresno where the company will test the subsurface soil conditions.

“The tests offer a mole’s-eye view to geologists, and the results will help engineers determine what kind of foundations will be required for new overpasses and other structures needed for the first 29-mile stretch of high-speed rail construction, said Michael Hoshiyama, a staff geologist with Orange County-based EMI.”

Where never is heard a discouraging word

But in 650 words, the Fresno Bee story never:

1) mentions the huge court setbacks that imperil the project. The reader would never know it’s in trouble just from this story.

2) quotes a project opponent about the wisdom of spending one dime on a project with an illegal business plan and an irreconcilable $25 billion shortfall.

What’s going on here?

Maybe Sheehan doesn’t want to be seen as a “naysayer” by Fresno Bee bosses. That’s the label the paper’s editorial page stuck on Central Valley congressional critics of the project back in April. Criticism isn’t valid, you see. It’s just “naysaying.”

Fresno residents deserve better.