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Derailed High Speed Rail Shifts Legal Strategy

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By William Peacock, Esq. on November 11, 2013 3:02 PM

Back in August, we couldn't help but wonder: is this the end of the California High Speed Rail? The "train to nowhere" project, which plans to build its first section of track between Bakersfield and Madera, has faced increasing scrutiny as the price tag has exploded to $68 billion, while the authorizing legislation, Proposition 1A, only provides for $9.95 billion.

In August, Judge Michael Kenny held that the state had broken its promises to voters by failing to have a viable financing plan, with actual (rather than theoretical) sources of money, and by failing to complete the required environmental reports. On Friday, the state shifted tactics, and argued that only the legislature could shut down the project, and that construction could commence on federal funds alone  -- a proposition which would trigger massive state funding obligations.

Separation of Powers

This is a tough one. Prop. 1A was passed by voters, and required a funding plan to be in place before construction begins. The legislature passed funding last year, approving the much criticized plan, and authorized commencement of construction. And Judge Kenny held, earlier this year, that the plan failed.

Three voices. Who wins? According to The Associated Press, the state is arguing that the legislature is the only body with power to stop the train, and that Prop. 1A implicitly left the power to approve the financing plan to the legislature.

Forced Federal Funding

The other argument laid forth by the state was that they don't need the state's money, or a financial plan, to start construction. They can simply use the allotted federal funds while working on a tenable plan.

According to the Los Angeles Times, such a plan complies with the federal grant agreements. The Obama administration modified the grants last year to allow the state to spend federal funds first, but if they do, it triggers an obligation to either repay the funds or to find sufficient funding to complete the project.

In short, while the state may technically be able to start with federal funds, it would trigger billions of dollars in state funding obligations, regardless of whether the project is ever finished.

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