The Third District Court of Appeal had previously ruled that Prop. 1A, the 2008 $9.9 billion high-speed rail bond measure, created a "financial straitjacket" restricting the use of the bond funds. Plaintiffs allege in their suit that the Legislature's passage of AB 1889 created a tool that attempts to evade the bond measure's restrictions.
However, because AB 1889 fundamentally alters that voter-approved measure, plaintiffs allege it is unconstitutional, as are the funding plans that rely on it. Newly added as a plaintiff is retired judge and former CHSRA Chair Quentin Kopp, who helped write Prop. 1A and has joined the case to defend that measure as the voters approved it. Read More...
Because an operating subsidy is prohibited by Proposition 1A, that means that the proposed HSR system cannot be built. It also means the project should not be in construction now, because there is no way enough sections can be funded for there to be a viable system. For a discussion of the issue of adequate capital to construct the project, see What’s Wrong? Read More...
The legal team challenging the California High-Speed Rail Authority's compliance with the 2008 Proposition 1A High-Speed Rail Bond Measure filed a supplemental brief today. It explains the legal significance of a secret document recently uncovered by the Los Angeles Times. The Authority had resisted releasing it. Pressure from the State Assembly Republican Caucus and several Republican congressmen eventually forced the Authority to make it public. After the Authority capitulated, the court allowed the plaintiffs to file a supplemental brief.
Plaintiff Aaron Fukuda said "We hope this brief puts a stake in the heart of this boondoggle. The Authority's goal line defense to keep this document secret tells you just how damaging they knew it was."
Attorney Stuart Flashman said, "It’s understandable why the Authority wanted this evidence kept hidden. It directly contradicts the cost estimates in the Final 2014 Business Plan. The Business Plan’s deceptively lowered costs successfully pulled the wool over legislators’ eyes. Two months later, they gave the Authority billions of dollars in a multi-year gift of climate change mitigation funds. It’s hard to believe that would have happened had they known what a bottomless money pit the project had become."
A verdict for the plaintiffs would not only prevent HSR bond funds from being used for construction, it would shut off federal grants and state climate change funds as well. Read More...
Editorials in the Los Angeles Times and San Diego Union-Tribune called it out as a red flag for the HSR project. See the Taxpayer Lawsuit for further details on how this affects the challenge to CHSRA.
On October 9, 2014 the CHSRA petitioned the STB to block California courts from issuing injunctions that could stop construction of the HSR project. In an ugly turn of events, the STB issued a ruling on December 12, 2014 that blocked not only injunctions but all application of CEQA to the HSR project. Read More...
By running to the feds for protection, CHSRA has told the world it cannot and will not play by California rules.
In an earlier move seeking to protect its claim to federal preemption of environmental laws, CHSRA asked the Supreme Court to depublish the appellate decision in Town of Atherton II. See bottom of this page.
The Court also held that no evidence was needed to show that it was “necessary or desirable” to issue bonds, reversing the trial court ruling that had prevented the sale of bonds and effectively erasing that provision from the ballot measure.
Michael Brady, representing John Tos, Aaron Fukuda and Kings County, 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." Stuart Flashman, co-counsel added, "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."
The documents and related case materials are all available at the bottom of this page. Read More...
COURT OF APPEAL ALLOWS HIGH-SPEED RAIL TO VIOLATE BOND MEASURE
The Third District Court of Appeal late yesterday overturned two trial rulings that had hamstrung California’s still-embattled High-Speed Rail project. The Court ruled that "The Legislature appropriated the bond proceeds based on the preliminary funding plan, however deficient, and there is no present duty to redo the plan."
Plaintiff's lead counsel, Michael Brady, was disappointed with the ruling. He said "The voters approved Proposition 1A only because it included stringent requirements to protect the state from financial risk. The Court ruled that although the project did not meet the requirements, taxpayers have no remedy now. They can only sue after many more tens of millions of dollars are spent on design and analysis.”
Stuart Flashman, co-counsel added, "The court has essentially allowed the Authority to ignore promises it, and the legislature, made to California’s voters. It bodes ill for voters’ willingness to trust such promises in the future. Supreme Court review appears warranted.” Read More...
TRANSDEF’s attorney, Stuart Flashman, commented: “As a former scientist, I was disappointed that ARB ignored the scientific evidence. The huge spike in cement production needed to build all the viaducts and trackways for the Governor’s high-speed rail line will result in greenhouse gas emissions far outstripping any potential benefit from the line. Including high-speed rail in the Scoping Plan runs directly counter to the legislature’s intent in AB 32 and violates the direct mandate of the law." Read More...
The Court of Appeal will decide in the near future whether to call for further briefing or dismiss the petition.
The same Court of Appeal has ordered oral argument in the Atherton II appeal for May 20, 2014. It is possible the oral argument for the two Extraordinary Writ Petitions will be held then as well, as the cases are related.
The Sacramento Superior Court, Department 31, will hold a hearing on Friday, February 14 on the Defendant’s Motion for Judgment on the Pleadings. (See bottom of page for filings.)
The Court of Appeal has a Petition for Extraordinary Writ (initially filed with the Supreme Court) before it. A Preliminary Opposition was filed by the Tos Plaintiffs and Kern County. The Court of Appeal will decide in the near future whether to call for further briefing or dismiss the petition.
And finally, the Court of Appeal is also considering the issue of federal preemption of CEQA raised by the HSR Authority. Oral argument will be held, either prior to or consolidated with its hearing on the appeal of Atherton II.
Interestingly, both the Governor and the Chair of the Authority discounted the significance of the Superior Court ruling when it first came out, and continue to do so. Meanwhile behind the scenes, deputies in the Attorney General’s office were busily working away at a 50+ page brief: “The trial court’s approach to these issues cripples government’s ability to function. The rulings thwart the intent of the voters and the Legislature to finance the construction of high-speed rail...” (p. 2)
The petition is notable for its whining “the world is coming to an end” tone.
See the legal papers here.
Judge's decision also endangers $3.3 billion in federal funds
California high-speed rail plans stopped in tracks
High-speed rail financing struck down by judge, project in jeopardy
Bullet train snag could affect Transbay Terminal
Sacramento judge's ruling throws bullet train's future in doubt
Locals Participated in High-Speed Rail Court Case
EDITORIAL: Pump the brakes on ‘bullet’ train
Dan Walters: High-Speed Rail 'blended system' may help derail it: “It’s time for a backspace-delete. Brown should acknowledge that the project as now planned is doomed and either kill it or go back to the voters with a revision that includes realistic routes and costs and lays out how it will be financed.
“If it's worth doing -- a debatable point -- it's worth doing right and not with legal sleight-of-hand and pie-in-the-sky financing.”
Famous Last Words Department:
High speed rail chief says lawsuits won't stop project: “Jeff Morales, Californiaʼs high speed rail chief, says heʼs confident lawsuits filed by South Valley local officials will not stop the project.”
Best British Understatement Department:
The Economist: “California’s high-speed rail authority emphasised what the judge did not do, telling reporters it was "important to stress" that Mr Kenny did not cancel the project altogether. But if that is a victory, it is not clear how many more wins California high-speed rail can handle.”
1. The Train Riders Association of California (TRAC) strongly supports a modern High-Speed Rail (HSR) system for California. HSR will be critical in providing interregional mobility to a growing population at a lower environmental impact than widening highways and adding runways. Successful HSR should greatly benefit the economy.
2. Even if the currently proposed $6 billion Merced-Bakersfield project were successfully completed, no funding is available to build the rest of the HSR system. This would leave this very expensive track unused and unusable, except perhaps by Amtrak to save a few minutes on the San Joaquins.
3. Funding is a problem because the California High Speed Rail Authority's plans are not attractive to private investors. The Authority hopes that $26 billion of federal grants will lead to private investment, but the Sacramento Superior Court ruling found that “there is, in reality, no reasonably anticipated time of receipt for any of the potential new federal funds."
4. TRAC is grateful for the Sacramento Superior Court's ruling that the Authority's project does not meet the taxpayer protection requirements of the 2008 voter-approved HSR bond measure, Proposition 1A. Preventing the current project from spending bond funds illegally will preserve the potential for successful HSR in California.
Mercury News editorial: High-Speed Rail ruling is right on
A Superior Court judge Monday slowed the California bullet train boondoggle to a crawl.
It's about time. For more than two years, Gov. Jerry Brown and his puppet leading the California High-Speed Rail Authority board, Dan Richard, have overstepped their legal authority and disregarded the will of the voters by pushing ahead full-throttle.
Judge Michael Kenny had ruled in August that the authority "abused its discretion" by failing to secure funds and complete environmental reviews before authorizing expenditures.
This week, he sent the project back to the start by blocking the authority from implementing its 2011 spending plan and refusing to provide necessary legal blessing to the misguided issuance of $8.6 billion of construction bonds.
By any reasonable interpretation, this should put an end to Brown and Richard's bait-and-switch. But, when it comes to high-speed rail, those two aren't reasonable.
In a statement issued after the ruling, Richard tried to deceptively spin what the judge had said. True, as Richard notes, the judge did not stop the project. Rather he left it with no funding plan and the inability to borrow money. Read More...
In addition, the judge declined today to validate the issuance of High-Speed Rail bonds. The Authority had sought validation, a legal maneuver to protect bond investors from lawsuits challenging the issuance of bonds. Without validation, state Treasurer Bill Lockyer will not allow bonds to be issued, putting the future of the project even more in doubt. With today's ruling on non-compliance with 1A, it is questionable whether the requirements to authorize selling bonds can be met.
The Authority had assured the Court that it would be spending only federal funds to start construction, and that no state bond funds would be used on the project. However, because the federal funds must be matched with state funds, today's rulings mean that state bond funds will not be available to provide that match. That could cause the federal government to rethink whether to put its funds at risk. If the federal government withholds its funds, the project will never break ground. Read More...
The Authority asserted at the very last moment in the Atherton appeal that the Surface Transportation Board’s assertion of jurisdiction over the HSR project has resulted in the federal preemption of CEQA. The Authority is asking that the appeal be dismissed, because it claims that CEQA cannot be enforced. These claims have led to the filing of amicus briefs by prominent environmental organizations. Briefs in the Atherton appeal are available here.
A series of briefs were filed in the Tos case which dealt with proposed remedies for the violation of the requirements of Proposition 1A. Plaintiffs have asked that funds for the HSR project be shut off by the Court. Amicus briefs supported that proposal. The Authority’s Opposition Brief in effect claimed that no remedy was needed or even possible, as the construction contracts under way would be fully paid for using federal funds. Plaintiffs filed a devastating Reply Brief which proved that most of the federal funds could not even be used for the two contracts. It must have been extremely embarrassing for the HSR Authority. Read More...
The bottom line result of all this may be that the CHSRA badly miscalculated in trying to get around an ongoing CEQA appeal, and threw away the entire project. With three interrelated cases simultaneously before the bar, HSR’s legal status is complicated. Please contact us if you feel further explanation is needed.
An especially fascinating aspect to this validation suit is that the defendants are identified as “All Persons Interested in the Matter of the Validity of the Authorization and Issuance of General Obligation Bonds to be Issued Pursuant to the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century, and Certain Proceedings and Matters Related Thereto.”
Interestingly, the Authority asserts that a validation ruling will not affect the ability of a taxpayers’ suit to challenge the expenditure of bond funds.
Click here to see the major papers filed in the case.
High-Speed Rail Not Compliant with Bond
Sacramento Superior Court Judge
Michael Kenny issued a ruling Friday that the Funding
Plan for the $8 billion High-Speed Rail project in
the Central Valley is legally defective because it
fails to meet the requirements of Proposition 1A, the
High-Speed Rail Bond measure. The landmark
case, Tos v.
California High-Speed Rail
was filed by a farmer, a rural homeowner and Kings
The Court agreed that the Authority’s Funding Plan failed to validly certify that for the Merced to San Fernando Valley segment of the project, all environmental clearances had been completed and that sufficient funding sources to complete the segment had been identified. Further briefing was ordered to determine the appropriate remedy.
This brief involved a massive amount of gall, seeing as the High-Speed Rail Authority had not applied to the STB for permission to construct its project until very recently, long after all the briefing in this case had been filed. All materials related to the appeal are available here.
Two out of ten claims asserted by the plaintiffs will be argued on Friday, with the balance to be considered after a decision is issued. Plaintiffs assert the Authority’s Funding Plan failed to validly certify that for the Merced to San Fernando Valley segment of the project, all environmental clearances had been completed and that sufficient funding sources to complete the segment had been identified.
Proposition 1A included an elaborate set of requirements to protect taxpayers from having to pay for a money-losing unfinished project. By ignoring the statutory requirements, the Authority has set in motion a project likely to become incomplete and stranded.
The case carries great consequence for the High-Speed Rail project. If the Court rules the Authority did not comply with the Proposition, the next step would be to invalidate the Funding Plan and the appropriation. That would block the expenditure of high-speed rail bond funds and bring the $8 billion project currently being pursued by the Authority to an abrupt halt.
Click here for access to all the briefs filed in the case.
A ruling is expected within 90 days.
The next step will be Oral Argument at the Court of Appeal.
This case is significant, in that a victory for Appellants could invalidate the ridership model, which is the foundation of all the EIRs the CHSRA will rely on for its Central Valley project. It could also force a whole new EIR, which would review the alternative of an Altamont Corridor in a less-biased manner.
On October 15, 2012, petitioners in the Atherton I and Atherton II cases filed their Appellants Opening Brief, challenging several elements of a largely favorable court ruling back in February. For the brief, and details, see the bottom of this page.
Two days later, our team filed an Objection to the Authority’s Return on the Writ. This is a procedure in which the High-Speed Rail Authority, represented by the Attorney General’s office, is seeking to demonstrate that it has completed a series of actions ordered by the Court, back in February. The Authority claims that its April 2012 Partially Revised Final Program EIR complies with CEQA. Our Objection claims that the EIR violates CEQA because it refuses to analyze as an EIR alternative the Blended System described in the Revised 2012 Business Plan. For details, see this page. Read More...
After the Court sustained the Demurrer with leave to amend on June 22, Attorney Brady filed a Second Amended Complaint on July 6. Because the State Senate was debating a funding measure for High-Speed Rail that afternoon, he brought with him one version that included a reference to the Senate passing the measure, and a second one that did not. With the Clerk’s Office at the Court closing at 4:00 pm, and the Senate vote occurring at 3:59 pm, Attorney Brady filed the latter version. He will likely supplement the Complaint after the Governor signs the bill into law.
The Amended Complaint includes allegations that funds are currently being expended in support of construction, in violation of Proposition 1A and that adoption of the Funding Plan also violated Prop 1A. Now that the Legislature has actually appropriated bond funds, the Authority will have a hard time arguing that the suit is premature.
All the associated documents are available on this page.
After that action, the Board certified a Partially Revised Final Program EIR and adopted the Pacheco route. While the result was the same as its 2010 action, this time was different. Authority Board members went to great lengths to appear to seriously consider the Altamont route. This was a striking change from the arrogance of past Boards. Nonetheless, the outcome was the same: nothing has changed.
The Board heard strong testimony from environmentalists as to the merits of the Altamont route. The Board heard strong testimony from environmentalists as to the merits of the Altamont route. TRANSDEF provided this testimony, which criticized the EIR and called out the EIR preparers’ underhanded tricks: Read More...
These comments propose an entirely new Altamont route, based on the Altamont Corridor Rail Project Preliminary Alternatives Analysis Report. (See an earlier Newsletter for an overview of this exciting project.) By avoiding the environmental impacts identified in earlier DEIRs, this alternative poses a challenge to the Authority’s stubborn insistence on the Pacheco route: An unbiased evaluation would determine the new Altamont alternative to be environmentally superior to Pacheco.
The comment letters and attachments are posted at the bottom of the Altamont page.
The court found that the project’s Revised Environmental Impact Report had failed to discuss significant impacts, failed to consider information from the Authority’s parallel project-level studies, and failed to recirculate the document for public comments.
For the second time, the Court ordered the Authority to rescind its approvals selecting the Pacheco Pass alignment and its certification of the associated Revised Final Environmental Impact Report.
Gary Patton, co-counsel, stated that "The court's decision tells the California High-Speed Rail Authority that it can't keep ignoring the public's right to participate. The court's decision in the Atherton II case says that the Authority failed in its duty to recirculate the CEQA document to get public comments, and this was a violation of the law.”
Richard Tolmach, President of the California Rail Foundation, declared that “Twice in a row, the Authority ignored the requirements of environmental law. The Judge found they still have not done a proper study.”
Stuart Flashman, lead counsel, stated that “In rejecting the EIR, the Court has upheld the principle that significant project impacts cannot be swept under the rug for later consideration, after the key decisions have already been made.”
Because the EIR challenge was divided procedurally into two parts, there are two decisions: Atherton I and Atherton II. Read More...
The cities of Palo Alto, Menlo Park, and Atherton joined the California Rail Foundation, the Transportation Solutions Defense and Education Fund and the Planning and Conservation League. Palo Alto had not been a party in the previous challenge, although it filed a supportive brief. Also joining are two citizens’ groups centered in the San Francisco Peninsula: The Community Coalition on High-Speed Rail and Mid-Peninsula Residents for Civic Sanity. The Rail Authority’s chosen alignment would run through the Peninsula along the Caltrain/Union Pacific rail corridor.
Click here to see all the documents Read More...