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What's coming up regarding California HSR Project in early 2014

Will this small segment be built using federal dollars
Will this small segment be built using federal dollars
Photo Club, K. Hamilton member

This is a year-end update on various high-speed rail (HSR) subjects and actions that have not been dormant in this month of holiday cheer. Watch for fireworks early next year on various fronts. Here are a few that are ripe for action.

House Transportation Committee will question the FRA and HSR Board Chairman.

January 15th, the Subcommittee on Railroads, Pipelines and Hazardous Materials of the Committee on Transportation on Rail, of which Congressman Jeff Denham chairs, will hold a hearing in which both HSR Authority Chairman Dan Richard and Federal Railroad Administration Administrator Joseph Szabo will appear and answer questions as to the state of the project. Szabo, who has a strong union background, appeared before the same committee two years ago. At that time he was a strong defender of the project and when questioned about the location of the project stated, it was impossible to shift the location of the project away from the Central Valley and meet the requirements of the law.

No doubt the key concern is now the current court rulings against the project. They may quiz Szabo on whether or not a federal law violation has occurred or is on the verge of doing so by front loading federal funding without assurances that the Federal Government will see ever see the 50% match California promised. They may well question him on why there was the need to change the Funding agreements to date, five times.

In addition the Congressmen Jeff Denham and Tom Latham requested an investigation by the General Accounting Office (GAO) about California’s High-Speed Rail project and wondering if federal law has been broken or close to being broken. The law in question could be the Antideficiency Act and details can be found at the GAO site. http://www.examiner.com/article/denham-requests-goa-investigation-on-the-california-high-speed-rail-court-ruling

Attorney General Office drags feet on Part 2 of the Tos case:

What was supposed to be an informal case management conference on December 12th for the purpose to assign a date for the start of part 2 of the Tos case, turned into an attempt from the Attorney General’s office to totally dismiss the second part of the Tos/Fukuda/Kings County case.

Before the proceedings started nearly 2 years ago, the judge and both sides of counsel agreed they would present evidence for the Writ side of the case first, basically about more obscure points of law which focused on the funding plan. The next part of the case was to be tried next. It was supposed to address the violations in the bond measure such as travel time, the requirement that the train would run without subsidy and the constitutionality of selling bonds for purposes they were not intended etc.

This informal conference on December 12th was not the proper forum to rule on arguments the AG’s office brought up so the Judge asked that the complaints be property briefed. Both sides have been required to do that in January and whether or not Part 2 of the Tos case will proceed, will be heard on Valentines Day February 14th.

In the meantime, the judge is scheduled to issue what is called the Writ of Mandamus to complete his ruling from Part 1 of the project. From that point the Authority will have 60 days to rescind the first funding plan and show its hand of how it will remedy the funding plan deficiencies as ruled by the court. In essence, where's the money coming from for the initial operating segment and is all the environmental work complete.

Bond Sale for the HSR Project in the Spring?

The State Treasurer representative Tom Dressler said that the state cannot sell bonds for the rail project at this time considering the legal state of affairs. Dressler said if the validation lawsuit is resolved, treasury would be in a position to sell bonds.

It’s no secret that the Authority needs to correct this action and will attempt to be ready for the Spring bond sale because the Federal Railroad Administration is nervous that the state won’t be able to match. They are required to begin matching April 2014 the dollars that the FRA has already front-loaded. The “how” they will do it is a bigger secret.

But is it possible to begin matching federal contributions in time for an April 2014 timeframe? Probably not. The validation suit has to be re-filed. Assuming that the Authority Board keeps the same operating segment for the project, they have to advertise it to the public, pass a resolution at a public HSR board meeting then they have resubmit the paperwork to the Treasury Group and provide reasons that prove why this project is necessary or desirable.

Treasury’s Tom Dressler believes that the action of the high-speed train finance committee is administrative. How it’s done under normal circumstances is the lead agency and the leadership huddles and they agree what bond funds are needed and the Treasury sells the bonds. That’s what happened the last time. But actually the judge ruled against validating the bonds, the first time in state history, because there was more to it. The court essentially said the actions of the committee were not a rubber stamp. The committee was supposed to listen to evidence and weigh it and decide if it was necessary or desirable to sell the bonds. See article about the rulings.

In any event, going through the process again will take time and if the bonds are validated that does not mean that the High-Speed Rail Authority can spend them. Those amounts specifically sold for construction cannot be spent until the first funding plan is corrected and the Authority creates a second funding plan with more details prior to construction.

One wonders if when the second Treasury hearing for the validation of the bond is conducted if the decision of the court will be in evidence. Remember if the Authority is required to provide a corrected funding plan that identifies the source of the cash and completion of the environmental work for the 300-mile segment to the San Fernando Valley. Certainly opponents will make their objections loud and clear if the funding plan isn’t corrected first.

Treasury and the High-Speed Rail Authority are aware that the Judge Kenny ruling means no state bond funds can be spent on the High-Speed Rail Project for construction unless the court approves a revised Funding plan and the Authority prepares the second required funding plan before construction can start.

It will be interesting to see what the amount of the request is if they choose to go to the court to validate the bonds. State bond funds for construction expenditures make up the bulk of the $9 billion dollars, only about 9% are tagged for administrative, planning costs and environmental work. The rest of the money is for construction expenditures now forbidden.by the Tos court ruling. Last time the Authority asked for approximately $8 billion in bonds but that included construction money. There is now less than $500 million in bonds left for planning purposes and that’s all the Authority can legally spend.

As Mike Brady, co-counsel for the Tos/Fukuda/Kings County case, said, It is one thing to have the bonds validated, it’s another to spend the money for construction of the HSR project, which the Tos decision forbids. If state bonds are sold for this project they are not specifically for the high-speed rail project, they are general obligation (GO) bonds.

Department of Transportation (DOT) employees leave for Parsons Brinckerhoff:

Parsons Brinkerhoff snags one more DOT people. Add John Porcari to the list of recent defections to PB. The first person, Roy Kienitz departed late November 2011 and has been working on the project. Both were letter writers about California’s High-Speed Rail Project. Kienitz told the High-Speed Rail Authority they could not spend federal money first, the tune changed when he went to Parsons Brinckerhoff. John Porcari wrote to the Authority January 2012 that they can’t change the route and it must be in the Central Valley.

Porcari will leave this month and will be a Senior VP and National Director of strategic consulting for Parsons Brinckerhoff. His job description will be to oversee efforts to integrate the firm's technical expertise with the strategic thinking needed by owners, developers and operators of transportation infrastructure.

State Public Works Board approves the first eminent domain action requested by the HSR Authority:

Despite court rulings against the project and public comment as to why they shouldn’t, the State Public Works Board took out their rubber stamp and approved an eminent domain procedure on one property located in Fresno at 2222 G Street and is owned by Frank Solomon, Jr. of San Rafael. It is leased to the California Department of Corrections. Mr. Solomon did not show up for the court proceedings. It could still be months before the Authority takes possession.

Surface Transportation Board (STB)

For those of you following this rather obscure subject, the STB has granted another extension for opponents to bring forth their views. It went from zero to December 24th to February 14th. See the latest STB decision

The Authority wanted an early exemption, prior to environmental clearance, to allow construction on the Fresno to Bakersfield segment Opponents argue the segment needs more review and does not deserve an exemption for a construction permit. This is another bothersome and possibly expensive issue for the Rail Authority since their construction contract included five miles for this segment, which wasn’t environmentally cleared and not included in the first exemption they received for the Madera to Bakersfield segment. See the latest background article on this subject.

Conclusion:

The first half of 2014 will prove very interesting for the high-speed rail project and may well determine if the rail project is stopped in its tracks or it moves forward.

Links to all legal briefs can be found at http://transdef.org/HSR/Taxpayer.html

Kathy Hamilton has written several recent articles on the current lawsuits and many other subjects concerning the High-Speed Rail Authority. See a brief synopsis by title on her site: http://www.examiner.com/transportation-policy-in-san-francisco/kathy-ham...