Legal Setbacks Slow California High-Speed Rail

WASHINGTON (Stateline.org) -

The biggest public works project in the country — high-speed rail between Los Angeles and San Francisco — is still on track despite several recent setbacks, California officials say. Other observers are increasingly concerned.

The $68 billion venture is the first of its kind in the United States, and its success or failure could shape American transportation policy for decades to come. As a result, the project is under intense scrutiny from Congress, taxpayers and transportation experts around the world.

It would be a major engineering feat to whisk passengers between the two cities in less than three hours, which is the goal. To succeed, California leaders must find their way through a maze of deadlines, lawsuits and regulations that threaten the project.

A Sacramento trial judge recently raised serious questions about two fundamental aspects of the project: Its business plan and a major funding source. The rulings did not stop work, but they bolstered opponents who argue the whole scheme is unworkable. Some outside observers also raised doubts.

“The rulings raise so many questions about whether this project still makes financial sense,” Joe Nation, a public policy professor at Stanford University, told the San Jose Mercury News. “This could turn into a real nightmare.”

The project is now unpopular with California voters, too, even though they were the ones who got the project off the ground in 2008 when they approved a $10 billion bond measure to help pay for it.

Despite the setbacks, Dan Richard, chair of the California High Speed Rail Authority, said the project will go forward.

“Rather than flouting the law, we’re insisting that we can comply with the judge’s order. This judge for a second time denied demands by opponents of high-speed rail to stop the project or void contracts for work now underway,” he wrote in a letter to The Wall Street Journal.

From its beginning, the California high-speed rail effort has been held up as a model for the rest of the country. The 2008 bond measure provided far less money than the project’s full cost, but it marked the first time that voters had approved public borrowing for high-speed rail.

President Obama’s economic stimulus package, passed the next year, included $8 billion for high-speed rail, which the administration hailed as “transformational.” Including stimulus money, the Federal Railroad Administration under Obama has awarded $9.9 billion in high-speed rail money to 34 states and the District of Columbia.

California secured by far the biggest share, with $4.2 billion. Illinois, the president’s home state, came in second with $1.9 billion. Together, the two states captured more than three out of every five dollars dedicated to high-speed rail.

California and Illinois, along with other states, received a bigger share after newly elected Republican governors in Florida, Ohio and Wisconsin pulled the plug on high-speed rail efforts in their states.

California still has not laid any new track for its high-speed rail system, but it has been busy preparing, especially along the 130-mile segment slated to be built first.

The first stretch is in a relatively flat area far from either Los Angeles or San Francisco, because planners wanted to build it quickly in time to use the federal stimulus funds before they expire in 2017. It would run from Madera through Fresno south to Bakersfield.

The California High Speed Rail Authority, which is in charge of the project, has held hundreds of meetings with local residents about the exact route of the rail and its potential environmental impacts. It has excavated parts of downtown Fresno for archaeology studies. Farther south, it is studying how to deliver electricity to trains as they pass through mountains.

But starting in central California means construction would begin in an area where the project is particularly unpopular. Kings County, where part of the track would be built, and local taxpayers sued to block construction.

Last year a Sacramento judge dealt the project two substantial setbacks. In November, Superior Court Judge Michael Kenny ruled against top state officials who voted last March to sell $8.6 billion in bonds for the project, a move that could effectively freeze state funding until it is resolved.

California Treasurer Bill Lockyer said he would not sell the bonds until a court validated that the process of approving the bonds was done properly, which is normally a routine precaution against future lawsuits.

But the judge declined to validate it. The problem, he said, was that the group of state officials tasked with reviewing the bond request essentially rubber-stamped the request from the high-speed rail agency, rather than evaluating the request themselves. By doing so, Kenny said, they did not live up to the 2008 ballot measure that set up the group as “an independent decision-maker, protecting the interests of taxpayers by acting as the ultimate keeper of the checkbook.”

The rail authority plans to continue to use federal money while the legal issues over the state money are resolved.

The same judge ruled that the high-speed rail agency must revise its finance plans and secure far more extensive environmental approvals. Kenny faulted the state for finding financing only for the first phase of construction, rather than for the first operable route, as specified by the 2008 ballot measure.

The problems continued for the project in December, when a federal agency ruled against the California high-speed rail agency. The state wanted to get tentative approval for its 114-mile line between Fresno and Bakersfield — the second phase of construction — without first completing an environmental review. The federal Surface Transportation Board said it found no reason to do so.


 

Federal High-Speed Rail Grants

The Federal Railroad Administration has approved $9.9 billion in grants to promote high-speed rail since President Barack Obama took office. These were the 10 states that secured the most money:

California: $4.2 billion

Illinois: $1.9 billion

Washington: $795 million

North Carolina: $573 million

New York: $496 million

New Jersey: $488 million

Michigan: $401 million

Connecticut: $191 million

Massachusetts: $126 million

Virginia: $119 million

Source: Federal Railroad Administration