Judge weighs arguments over Valley high-speed rail plans

The Fresno BeeMay 31, 2013 

— Five years after voters approved Proposition 1A, a $9.9 billion bond for high-speed rail, attorneys Friday were arguing in a courtroom here whether plans for the train system comply with the law.

Attorneys for Kings County and two of its residents are convinced that a financing plan delivered to the Legislature in November 2011 fails to live up to Prop. 1A. They got their day in court Friday to ask Sacramento County Superior Court Judge Michael Kenny to rule that the plan -- and the Legislature's subsequent approval of money to begin construction -- are invalid.

Lawyers with the state Attorney General's Office, representing the California High-Speed Rail Authority, argued vigorously that the funding plan is legal, and said that just because the plaintiffs are not satisfied is no reason to order a costly and time-consuming do-over.

It could take a couple of weeks -- or a couple of months -- for Kenny to issue a ruling. The judge has 90 days to render a decision.

At the root of the lawsuit, filed in late 2011 by Hanford farmer John Tos, homeowner Aaron Fukuda and the Kings County Board of Supervisors, is whether language in Prop. 1A intended for a detailed funding plan to represent a promise to voters, or if the plan was merely one of several reporting requirements to the Legislature as the basis for it to approve or deny funds for the project. Also at issue is a mandate for the authority to have all of the necessary environmental approvals before construction commences.

"When voters see something on a ballot, it means what it says," said Stuart Flashman, one of two attorneys representing the Kings County plaintiffs. "A bond measure is a contract between the agency and the voters."

The lawsuit represents a potentially crucial obstacle to the rail authority as the agency's board expects next week to authorize a billion-dollar contract to design and build the first section of construction on the statewide system -- a 29-mile stretch from the northeastern outskirts of Madera to the south edge of Fresno.

If Kenny were to rule in favor of the Kings County plaintiffs by declaring the 2011 funding plan invalid, it could have the effect of nullifying the Legislature's vote last summer -- based on lawmakers' reliance on the plan -- to allocate more than $2.6 billion of Prop. 1A bond money and $3.4 billion in federal stimulus and transportation funds for the start of construction in the San Joaquin Valley.

However -- and whenever -- Kenny rules on this portion of the lawsuit, there is still more that will need to be decided, potentially by a jury. Tos, Fukuda and Kings County also allege that the authority's latest plans for the high-speed train system will be unable to live up to other provisions of Prop. 1A. Those provisions include requiring the system to operate without public subsidies and that the trains be able to make a nonstop, one-seat trip between Los Angeles and San Francisco in 2 hours 40 minutes.

Clashing opinions

Flashman said the law requires the funding plan to specify where the authority anticipated receiving all of the money it would need to build its "initial operating segment" from Merced to the San Fernando Valley. But he argued that the plan falls short because it did not identify any realistic source of expected funds beyond the $6 billion available for the rail authority to build a 130-mile stretch from Madera to Bakersfield.

"The authority had a duty to approve a funding plan that meets the requirements of Prop. 1A," Flashman told the judge. "We're not saying the authority actually had to have all of the funds in hand to complete the segment. ... (but) you have to have a reasonable understanding that you will be able to get the funds."

Given the Republican majority in Congress in November 2011, when GOP lawmakers were pledging to block future federal money for California's high-speed train, Flashman added, "it was pretty clear that there was not a reasonable expectation of any more federal funding."

Michelle Inan, a deputy with the state Attorney General's Office, responded that the funding plan "was for the benefit of the Legislature," not a guarantee to voters.

"The authority had a duty to submit the funding plan, and it did that. It had a duty to provide the information requested in the statute, and it did that," she said. "The plaintiffs' complaint is about the quality of the information. They don't think it satisfies the requirement. But that was a decision for the Legislature to decide, and it decided. ... It's up to the Legislature to decide what is sufficient and what is not sufficient and what risk it's willing to take."

Flashman and Inan also clashed over whether environmental certifications provided by the authority as part of the funding plan met Prop. 1A requirements. The ballot measure required that in the funding plan, the agency certify that it "had completed all project-level environmental clearances necessary to proceed with construction."

In November 2011, when the plan was submitted to the Legislature, the rail authority "didn't, at that point, have any environmental clearances," Flashman said. "It's very clear that they were not in a position to make the certification that the ballot measure required."

Instead, the agency certified that "the authority will have, prior to expending bond proceeds ... completed all necessary project-level environmental clearances necessary to proceed to construction."

Flashman said it was unrealistic for the agency to certify something in advance when unforeseen circumstances might intervene. "That can be a promise, but it can't be a certification," he said.

Inan countered that the certification was intended to assure legislators that no section would be built unless the rail authority first had the needed environmental approvals. But the judge followed up on the distinction as he pressed Inan on whether Prop. 1A was, in fact, being fulfilled. "The language in the statute is past tense; the certification is in future tense," Kenny said. "So by its very nature, satisfaction can't have occurred."

"There is not a precise match between the certification made and the certification requirement," Inan allowed. "However, there is certainly substantial compliance if you consider the purpose of that certification" to assure that no construction would take place before the environmental clearances were in hand.

"There is no requirement for 100% precision between the intended use of bond proceeds and the proposed uses," she said of case law. "The language of those cases is about substantial compliance and significant differences. ... In this case, the bond act is not about a funding plan, it's about constructing a high-speed rail system."

Exuding confidence

Both sides were upbeat following Friday's hearing, but neither would venture a guess on when Kenny would issue a ruling.

"I think it's a pretty persuasive job we made of saying they haven't complied, (and that) consequently, both the authority's approval of the funding plan and everything that flows out of it is improper," Flashman said.

If the judge rules in favor of Tos, Fukuda and Kings County, "it's enough to stop the project for the time being certainly until they go back and do things right," Flashman said. "The court has the authority to say, 'Undo that and go back and do it right.' "

Tom Fellenz, chief counsel for the rail authority, declined to comment on the issues raised Friday in the hearing, but praised Inan for her presentation. "The attorney general did a superb job making arguments on behalf of the authority, and we look forward to the judge's decision," he said.

Fellenz added that he did not believe the lawsuit represented any more of a threat to the start of construction than that faced by any other major public works project. "I think we have a lot of challenges, as all infrastructure projects do," he said, "and I think we'll get through this and start building the project this summer."

The reporter can be reached at tsheehan@fresnobee.com or at (559) 441-6319 or on Twitter @tsheehan

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