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High Speed Rail Funding Overturned by Judge

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The project is not completely derailed but the funding plan for California's proposed bullet train is under fire.

A Sacramento Superior court judge rejected a request from the California High-Speed Rail Authority to sell $8 Billion of the $10 Billion dollars in bonds which would have helped pay for the state's bullet train project.

The rail authority must now redo its $68 billion funding plan before continuing construction.

Critics of the plan are applauding the ruling but the high speed rail authority is not giving up on the project, in a statement, the board chairman, Dan Richard says,

"We are reviewing both decisions to chart our next steps, but it is important to stress that the court again declined the opposition's request to stop the high-speed rail project from moving forward."

Putting together a new funding plan for the project could take months or even years to complete.


(FOX /AP) A Sacramento judge on Monday tore up California's funding plans for its bullet train project in separate orders that could force the state to spend months or years redrawing its plans for the $68 billion rail line.

Judge Michael Kenny rejected a request from the California High-Speed Rail Authority to sell $8 billion of the $10 billion in bonds approved by voters in 2008, saying there was no evidence it was "necessary and desirable" to start selling the bonds when a committee of state officials met last March.

He said the committee was supposed to act as "the ultimate `keeper of the checkbook"' for taxpayers, but instead relied on a request from the high-speed rail authority to start selling bonds as sufficient evidence to proceed.

 In a separate lawsuit, Kenny ordered the rail authority to redo its $68 billion funding plan before continuing construction, a process that could take months or years. He had previously ruled that the authority abused its discretion by approving a funding plan that did not comply with the requirements of the law. The judge said the state failed to identify "sources of funds that were more than merely theoretically possible."

Proposition 1A, which voters approved in 2008, required the rail authority to specify the source of the funding for the first operable segment of the high-speed rail line -- a 300 mile stretch -- and have all the necessary environmental clearances in place. Kenny had said the agency did not comply with either mandate in approving the start of construction from Madera to Fresno, about 30 miles.

"The court said, look, you've only got 28 miles with completed environmental clearances. I order that you have to have 300 miles of environmental clearances," said Michael Brady, an attorney for Central Valley residents who had sued to halt the project. "It's taken them 5 years to do 28 miles, so how long will it take them to do 300 miles?"

Still, Kenny stopped short of blocking the project altogether, and rail authority officials characterized Monday's rulings as a setback rather than a fatal blow.

 "Like all transformative projects, we understand that there will be many challenges that will be addressed as we go forward in building the nation's first high-speed rail system," authority board Chairman Dan Richard said in a written statement.

 The rail authority had argued that it has already updated its funding plan and that it intends to spend $3.2 billion in federal money before tapping the state bonds. It also argued that only the state Legislature could intervene to stop the project.

The plaintiffs had also asked Kenny to block spending of the federal funds and rescind construction contracts, including a $1 billion deal signed this fall, but the judge declined to do so on Monday.

According to the state treasurer's office, California has already issued more than $705 million in Proposition 1A bonds, about $400 million for high-speed rail and about $305 million for related rail-improvement projects that could eventually be connected.

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