Back in August 2013, the court ruled that the Authority abused its discretion and did not comply with Prop 1A. They erroneously approved a funding plan without the completion of the environmental work from Madera to the San Fernando Valley (Initial Operating Segment South [IOS]) and did not have the funding to complete this first required segment. This is a civil case known as the Prop 1A case (Tos/Fukuda/ Kings County) and here’s the article about the court ruling.
The court then asked both sides to submit briefs about how these violations might be addressed and suggest what remedy the court might impose on the Rail Authority correct the issues.
We’ve now heard from both the plaintiffs (Prop 1A-Tos/Fukuda/Kings County) and the defendants (the HSR Authority represented by the Attorney General’s office) The plaintiffs offered various actions that the court could take including invalidating the funding plan, invalidating construction contracts and possibly imposing a preliminary injunction designed to maintain the status quo until the court hears all the evidence. http://www.examiner.com/article/remedies-offered-to-get-the-train-on-the-right-track
The state’s brief failed to address any remedies that the court might use to “right the wrong.” Instead they told the court that indeed they could start construction since they were using only federal funds. They also argue that the FRA agreements say “ state match,” and not specifically Prop 1A funds as that match. According to the FRA funding agreement in force now, the state is required to start spending with “Prop1A catch up funds,” in the April 2014 timeframe. It’s tough for the state to argue they are not obligating state bond funds with that language. Check Pages 95-96 of the most current, the 5th edition of the FRA funding agreement. Note: It is possible that a new FRA agreement will be issued, loosened some of the previous requirements as they have done in the past.
In the original ruling the Court stated that prior to committing or expending bond funds for construction of the project, a second funding plan would have to be prepared.
The Rail Authority also disclosed in their brief filed two weeks ago, they have a credit that will count for their requirement to match federal dollars. The AG’s office contends the FRA will allow them to reach back as early as 1996 to categorize monies spent on the high-speed rail project as state matching funds. The first ARRA contract was signed in January 2010. Whether this concept will be allowed to stand or not, they still need cash. Spent money or credit from the past may be allowed to count toward the 50% state match, but it is still a problem when you need additional funding.
Also those past dollars many years ago were spent on many other segments between San Francisco and Los Angeles and it’s strange they can all apply to the Central Valley at this time.
Plaintiffs Last Word:
The plaintiffs had 15 days to respond after the Attorney General filed their remedies brief. They get the last word because they brought the suit. They believe the state must have misunderstood the court’s ruling and instructions since they offered no remedies. Regarding the AG’s brief, the plaintiffs believe there are omissions regarding the use of federal funding and guidelines concerning the use of that money.
And while the state went into great detail about how much money they spent, they did not disclose that ARRA funds have to be spent in the Fresno to Bakersfield segment, which is not yet environmentally cleared. The 130 miles the Authority wanted to build crosses two segments and has two environmental documents and so far it has only 26- 29 miles cleared.
The contracts for Tutor Perini for the completion of engineering and construction of the first 29 miles and the Caltrans contract for the relocation of Highway 99 are part of the Madera to Fresno segment.
A little history- the Tutor contract could have been expanded if the environmental work was completed for segment two, Fresno to Bakersfield but it’s many months away from finality. It will also be an uphill battle since there are war drums beating in Kings County that will surely slow down completion of the environmental work.
It’s also important to note that unless and until the second segment is environmentally cleared, the state cannot comply with the federal requirement for independent utility and they chose to re-route the current Amtrak line to fulfill that requirement. Many people vigorously disagree with this decision.
According to the plaintiffs brief filed October 24th, “none of the Federal ARRA funds may be used for either the Caltrans or the Tutor Perini contract. If in fact the plaintiffs are right and the state can’t use the ARRA funds, the only recourse the Authority has is to use 2010 grant funds, which do not restrict where the grant is spent and offer no spending deadline. Thus, if used, the total federal funding available for these two contracts is the $928,620,000 from the 2010 Grant (DOB at 5:1.) However, the total design and construction cost for the two contracts is $1,195,888,000.00. “ Where’s the rest coming from?
It also may destroy the plan to spend the 2010 grant dollars last since the ARRA funds are the ones with the September 2017 deadline.
What the Legislature approved:
The Legislature approved only Prop 1A matching funds to be used for the project. Senator Leno’s speech shows the intent of the legislature at the time of the vote in the summer of 2012.
“Senator Mark Leno: “This really is a rare opportunity for California. We don’t see, in a certain sense, stars align as they are right now -- to have the authority and the reputation of the offices of the President of the United States, the leader of the House of Representatives, the governor of the largest in the country -- all in support of moving forward with voter approved bond monies matched by federal dollars to create hundreds of thousands of jobs over the course of the project. This doesn't happen all that often.” (California State Senate Floor approving SB 1029 on July 8, 2012)
Any other source for the spending of state funds would have to be approved by the state legislature.
Mike Brady co-counsel on the Prop 1A offers, “because of the continuing violations by the Authority, the plaintiffs will be asking the judge to make the Authority rescind its illegal funding plan, cure the defects, and stop (injunction) all illegal spending and financial commitments until the illegal violations are cured, which will be very difficult for the Authority to do. All that the plaintiffs are trying to do is make the state comply with its own laws, nothing more, nothing less.”
The court date is set for November 8, 2013 but the answer might not come until February 2014 since the judge has 90 days to decide.
The date for Part 2 of the Prop 1A lawsuit, which will look at other promises, made to the voters in Prop 1A has not yet been scheduled but should be heard sometime in late winter or early spring 2014.
The plaintiffs newest brief filed on October 24th can be found here.
See previous articles written by this author who has followed the project for four years now. http://www.examiner.com/transportation-policy-in-san-francisco/kathy-hamilton