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The Third District Court of Appeal reversed a Sacramento Superior Court Judge’s ruling that prohibited the High Speed Rail Authority (HSRA) from selling bonds under  Proposition 1A to construct the High Speed Rail Project (the Project) and ordered the HSRA to draft a new funding plan for the construction and operation of the Project.  (See California High-Speed Rail Authority v. The Superior Court of Sacramento County, No. C075668 (Cal. Ct. App. 3d Dist., July 31, 2014).)

Proposition 1A, originally approved by voters in 2008, authorized the HSRA to issue and sell general obligations bonds (upon appropriation by the Legislature), to begin construction of the Project.  Pursuant to Proposition 1A, the HSRA prepared, published, adopted, and submitted a preliminary funding plan to the Legislature that was also made available for public review and comment.  The plan included the total anticipated federal, state, local, and other funds the HSRA intended to access to fund the construction and operations of the system.  A final funding plan must also be approved by the Director of the Department of Finance before committing any bond proceeds, but such a plan has not yet been prepared by the HSRA.

In 2013, the HSRA requested, and the Legislature appropriated, the issuance of $8.6 billion in general obligation bonds for the Project.  In order to preclude any future lawsuits, the HSRA filed a validation action in Sacramento Superior Court to obtain a judgment validating the bonds to be sold on the capital markets.  Subsequently, several real-parties-in-interest filed a responsive pleading requesting that the court issue a writ of mandate directing the HSRA to rescind the preliminary funding plan for failure to comply with statutory requirements.  On November 25, 2013, the trial court issued a writ of mandate directing the HSRA to rescind its approval of the preliminary funding plan for failing to comply with the statutory requirements.  On the same day, Judge Kenny issued a ruling denying the request for a validation judgment on grounds that the Legislature’s determination to issue the bonds was not supported by evidence in the record.…

Continue Reading Court Signals Green to $8.6bn California High-Speed Rail Bond Issuance

Last Friday, Governor Brown’s administration (the “Petitioners”) filed a petition for extraordinary writ of mandate and application for temporary stay with the California Supreme Court, challenging Superior Court Judge Michael Kenney’s decision last November to halt construction of the high-speed rail project.  On Wednesday, the California Supreme Court declined to consider the petition and instead transferred…

A ruling by the Sacramento County Superior Court has presented a major roadblock to the California High-Speed Rail Authority’s (“Authority”) high-speed rail project (“Project”).  On November 25, 2013, Judge Michael Kenny ruled that the Authority was not authorized to sell $8 billion of the $10 billion in state bonds designated for project funding under Proposition…

The parties in a pending Sacramento Superior Court action, Tos, et. al. v. California High Speed Rail Authority, et al., have submitted supplemental briefing in preparation for a hearing next week.  The supplemental briefing addresses the Court’s uncertainty as to whether the issuance of a writ of mandate invalidating the High Speed Rail Authority’s…

The California High-Speed Rail Authority (“Authority”) had a major setback on Friday when Sacramento County Superior Court Judge Michael Kenny ruled that the Authority had “abused its discretion by approving a funding plan that did not comply with the requirements of [Proposition 1A]” and failed to identify “sources of funds that were more than merely theoretically possible.”

Proposition 1A, which voters passed in 2008, requires the Authority to identify the funding for the entire first segment of the high-speed rail project and clear all environmental review prior to commencing construction. Last summer, lawmakers authorized selling $2.6 billion in state bonds for construction of the first segment, the 130 miles from Madera to Fresno, and allowed the state to tap $3.3 billion in federal matching funds. During the hearing, the Authority argued that it had complied with Proposition 1A because the requirements only apply to the construction of the first 130-mile segment.
Continue Reading California High-Speed Rail Authority Violated Proposition 1A

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As environmental lawyers practicing throughout the State of California, with offices in Sacramento, San Diego, San Francisco, and Truckee, we cover the spectrum of legal issues involving environmental and natural resources law. We created this blog in order to inform clients and readers about developing environmental stories that impact the California business community. Expect our posts to address not only what happened but also the “what now” from a business perspective.