High-Speed Rail Officials Discuss Setbacks In Funding, Environmental Reviews

SACRAMENTO (AP) — California high-speed rail officials sought to allay concerns about the future of the project Thursday after a series of legal and regulatory rulings that appear to jeopardize some parts of the $68 billion plan.

Despite the recent setbacks, they said engineering work and state hiring are on pace and that construction will begin in the new year using federal money.

At a meeting of the board that oversees the California High-Speed Rail Authority, board members voted in closed session to start work on a new request for blanket approval from the courts to sell $8.6 billion in voter-approved bonds, after a Sacramento County judge denied such a request last week.

"We are moving into the construction phase of the high-speed rail project with a staff that can get it done," board Chairman Dan Richard said after a presentation about the rail authority's ongoing hiring.

One of the rulings by Superior Court Judge Michael Kenny prevented the state from selling construction bonds for now. He also ordered the authority to write a new funding plan and demonstrate that all environmental clearances are in place for the first 300 miles of the line in the Central Valley.

Then on Wednesday, the federal Surface Transportation Board rejected a request from the rail board to exempt a segment of the rail line from a lengthy review. High-Speed Rail Authority CEO Jeff Morales said the federal board's ruling had created confusion but was by no means a setback.

"We've seen some combination of that action being misunderstood, misreported ... including that it's a major blow to our project, and frankly there's no basis or credence to that," he said.

Rail officials have said they will not have trouble complying with the judge's order to file a new funding plan.

The judge previously ruled that the 2011 funding plan did not keep the promises made to voters when they approved Proposition 1A in 2008 that the rail line would have the money and environmental approvals for the first 300 miles before starting construction. The judge sided with Central Valley farmers and residents who sued over the funding plan.

It's hard to see how the rail authority could strictly meet the requirements, however, because officials have identified only enough federal and state money for the first 130 miles, a stretch that would run from Merced to Bakersfield. They also have environmental approvals for just 28 miles of track, from Merced to Fresno.

The judge's ruling also created uncertainty about what happens next. The rail authority submitted its initial funding plan to the state Legislature for approval, so lawmakers could again be asked to determine whether it now complies with the 2008 ballot measure. The Democratic-controlled Legislature overwhelmingly backs the high-speed rail project, as does Gov. Jerry Brown, also a Democrat.

Or, the board overseeing the project could adopt a new plan, which would send both sides back to court, possibly for years.

Richard declined to say how the board would comply with the judge's decision that environmental approval is needed for the first 300 miles of track, citing the closed-door legal discussions.

The board voted Thursday to begin the steps needed to re-file a so-called validation action seeking state permission to sell the voter-approved bonds.

"The judge said, 'You guys didn't put enough information on the record,'" Richard told reporters after the meeting. "The easiest thing in the world to do is to go back and put more information on the record."

Richard said the board would have to first give public notice of its intentions, then vote in a public meeting on whether to re-file the legal claim. He said no other decisions were made on how to respond to the judge's rulings.

In the meantime, rail officials are spending up to $3.3 billion in federal money to start engineering work and buy property along the first section of the project. The federal money is contingent upon eventual state matching funds.

Richard said the federal money would likely last through late spring, but there are "a lot of other ways to deal with this" if the money runs out.

After repeated delays, officials hope to start construction in January or February.

(© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)