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High-Speed Rail bond authorization upheld

Martha Bridegam on
Aug 5, 2014

Fresh from its major Atherton win (see Bill Fulton's writeup at http://www.cp-dr.com/articles/node-3540), the High-Speed Rail Authority won another key ruling July 31 that upheld the validity of its authorization to issue bonds for the project and said the project's preliminary funding plan did not need to be redone.

Presiding Justice Vance Raye of the Third District Court of Appeal issued an opinion that started ominously, though it quickly narrowed its scope to something the court could approve: "Substantial legal questions loom in the trial court as to whether the high-speed rail project the California High-Speed Rail Authority... seeks to build is the project approved by the voters in 2008. Substantial financial and environmental questions remain to be answered... But those questions are not before us in these validation and mandamus proceedings."

Joined by Justices Ronald Robie and M. Kathleen Butz, Justice Raye wrote that the necessary findings were appropriately made to support issuance of the high-speed rail project bonds under 2008's statewide Proposition 1A, and the preliminary funding plan created under 1A had already "served its purpose" of providing guidance to the Legislature -- hence could not be undone nor redone. The 49-page appellate opinion is helpfully thorough with procedural history.

Raye's opinion reversed November 2013 rulings by Sacramento Superior Court Judge Michael P. Kenny. Kenny's Superior Court orders had invalidated the bonds and ordered the High-Speed Rail Authority to rescind and redo its preliminary funding plan -- meanwhile preventing issuance of the bonds.

Raye found no basis for Kenny's "highly unusual scrutiny of the Finance Committee's determination that it is 'necessary or desirable' to grant the Authority's request to authorize the issuance of bonds." He wrote that Kenny expected too much of the 1A-appointed Finance Committee, whereas Raye found nothing that required the Finance Committee to make factual findings, nor to hold a public hearing. He wrote that it was not the business of the trial judge to decide if the project was "necessary or desirable" because the Finance Committee had "exceptionally broad discretion" to make that decision. In Raye's view, too-close judicial scrutiny of such matters was not only unwarranted but also began to create a separation of powers problem.

The appellate opinion offered leeway for the tendency of large public works projects to change after their approval, notably citing a ruling in East Bay Municipal Utility District v. Sindelar (1971), 16 Cal.App.3d 910, that validated a late additional issue of bonds under an approval granted by voters years before for a "water development project" although the construction work was essentially done and the expected 10-year project duration had gone by.

As to the preliminary funding plan, Raye's decision found the challenge to it "was too late to have any practical effect," while "it is too early to challenge a yet-to-be approved final funding plan" as further required by Proposition 1A. It found the rail authority had no "clear and present ministerial duty to redo the preliminary funding plan" at a point after the Legislature had already appropriated funds to be raised by the bonds. And it found that Judge Kenny properly rejected a late-raised request to undo the appropriation decision, in part on separation of powers grounds.

The LA Times writes up the case and its significance at http://lat.ms/1tRpccu and Streetsblog LA discusses the updated state of high-speed rail funding at http://bit.ly/1v2TY3C. Streetsblog says the decision "has removed the most significant legal impediment" to the high-speed rail project.

The online docket is at http://bit.ly/1p74WAL. The case is California High-Speed Rail Authority v. Superior Court, No. C075668 and the decision is at http://www.courts.ca.gov/opinions/documents/C075668.PDF. The appeal followed from two companion cases in Sacramento Superior Court, both titled there as California High-Speed Rail Authority v. Tos, with case numbers 34-2011-00113919 and 34-2013-00140689. Online indices for the cases can still be viewed free at https://services.saccourt.ca.gov/PublicCaseAccess/ but the case documents at trial court level are subject to the Sacramento County Superior Court's new download fees.

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