Judge Weighs Penalty For California's Bullet-Train Builder

SACRAMENTO (AP) — Attorneys for the California High-Speed Rail Authority argued Friday that Central Valley residents who sued the state over its bullet train plan have no grounds to stop the project, despite a judge's ruling that the state violated the promises made to voters in a 2008 ballot proposition.

Instead, it would be up to the state Legislature to step in if lawmakers believed the $68 billion funding plan does not comply with Proposition 1A, which authorized $10 billion in high-speed rail bonds, Deputy Attorney General Michele Inan said.

"The taxpayers are represented through the legislative process," Inan told Sacramento County Superior Court Judge Michael Kenny.

Kenny ruled in August that the rail authority "abused its discretion by approving a funding plan that did not comply with the requirements of the law." He further said it had failed to identify "sources of funds that were more than merely theoretically possible."

Still, Inan argued that since the Legislature approved spending the money to get started on high-speed rail, only the Legislature can undo it or ask for an updated funding plan.

The 2008 proposition required the rail authority to specify the source of the funding for the first operable segment of the high-speed rail line and have all the necessary environmental clearances in place. Kenny said in his previous ruling that the agency did not comply with either of those mandates, but Proposition 1A appears to leave it up to lawmakers to decide whether the plan is sufficient to warrant funding.

Friday's hearing was held for the judge to consider what penalty, if any, he should impose for the rail authority's failure to comply with the ballot initiative in its initial funding plan. The rail authority argues that the judge's ruling was based on an old funding plan that has since been revised.

Attorneys for affected landowners who are suing the state have asked Kenny to rescind construction contracts, including a $1 billion deal signed this fall, or prevent the state from spending any more of the voter-approved bonds.

Inan said the state is not spending any bond money now, anyway, and instead is relying on about $3.2 billion in federal money from the Obama administration.

But those are matching funds that eventually will require the state to spend an equal amount, meaning the state is committing the bond money now, said attorney Stuart Flashman, representing the plaintiffs.

"Where is the money?" Flashman asked. "If they're not using the bond funds, what other funds are they using? What other funds are they promising the feds they are using? There aren't any."

Rail authority contractors have begun the design and engineering work on the first 30-mile stretch from Madera to Fresno, but have yet to put shovels in the ground despite previous projections that construction would begin in July. Officials said Friday that they hoped it would begin "in the near future."

According to the state treasurer's office, California has already issued more than $705 million in Proposition 1A bonds, about $400 million for the high-speed rail project and about $305 million for so-called "connectivity" projects that will boost the performance of existing rail networks that eventually could link to high-speed rail.

John Tos, a Hanford farmer who is the lead plaintiff in the lawsuit, said the rail plan has changed so many times that voters should have another chance to review it.

"Now that it's beyond conceptual, now we know the facts, where it's going to go, what it's going to cost, the destruction that it's going to do and what have you, it needs to go back to the voters," Tos said outside court. "We need to let the voters vote on this again to see whether or not they really want this."

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