This is the first of a three part series in which we will explore the latest happenings for the California High-Speed Rail project, their recent court challenges, where the project stands today and if it can be built with so little money available for construction. Regardless of the outcome of court actions, the project could implode on its own especially due to the lack of progress especially with the Federal funding grant deadline fast approaching in September 2017. Anything not spent by then can’t be accessed.
Part 1: Supreme Court
On September 2, Attorneys for the Tos/Fukuda/Kings County plaintiffs held a press conference outside the Supreme Court Building in San Francisco. The Tos attorneys announced they had filed a Petition for Review with the California Supreme Court, seeking to have them review the Court of Appeal’s decision in regard to the California High-Speed Rail Project.
The reason that this Petition for Review is so important is because it effects the Bond Measure process in California. When the public votes for a bond measure, do they get what they voted for or do they willingly and knowingly give the legislature the authority to completely change the ballot measure terms? The current decision by the Appellate Court believes the Legislature had that authority because instructions to the contrary weren’t specifically outlined in the bond measure. That court decision also sets a precedent, which would allow public agencies to act with no review from the courts in effect giving them unfettered control with no accountability.
There are many aspects of the High-Speed Rail case that demonstrate why the Appellate court came to the wrong conclusion. Here are a few reasons.
Unintended consequences: Appellate ruling inflicts fraud against the public
A section of the Tos document to the court says this, “While neither the Authority, nor the Legislature, nor the Court of Appeal may have intended it, the effect of the Court of Appeal’s decision is exactly what this Court cautioned against in Peery, supra, 187 Cal. at 767, essentially a fraud on the voters.
With the voters’ intent not having been met, it was improper for the Legislature to release bond funds for the Authority’s use, regardless of the second, pre-expenditure Funding Plan. For that reason, the appropriation should have been declared invalid and the Authority should have been required to correct its misfeasance before the appropriation could be allowed. The Court of Appeal’s decision essentially allowed the Authority and the Legislature to rewrite Prop. 1A contrary to the intent of the voters.”
The Court of Appeal’s decision allows the Authority and the Legislature to escape in a Houdini-like fashion from a financial straightjacket intended by the bond measure:
Stuart Flashman, co-counsel for the Tos case wrote in his plea to the Supreme Court, “The Court of Appeal’s decision, however, allows the Authority – and the Legislature – to escape, Houdini-like, from that [financial] straitjacket, undercutting the intent of the voters and raising questions about whether voters can put their trust in clear, mandatory provisions placed in a bond measure.”
Flashman continues, “If the Court of Appeal’s decision is allowed to stand, the trust and confidence of California’s voters in the integrity and credibility of the constitutional provisions governing bond measures, as well as in the electoral process itself, will be seriously undermined. This could have further serious repercussions by undermining the willingness of voters to approve future bond measures, which, in turn, would jeopardize the financial viability of future publicly funded capital projects.”
In Tos counsel request, co-counsel Stuart Flashman explains to the Supreme Court the clear requirements of the first funding plan:
“As the Court of Appeal acknowledged, the Bond Measure included clear, mandatory requirements for the Initial Funding Plan (IFP). In particular, there were clear requirements that the IFP identify the sources of all funds to be invested in the usable segment that the requested appropriation would help fund and construct, along with the anticipated time of receipt for those funds and that it include a certification by the Authority that it had obtained all necessary project level environmental clearances necessary to proceed to construction of that usable segment (Id., subd). (c)(2)(K).). The Court of Appeal also frankly acknowledged that the IFP prepared and submitted to the Legislature by the Authority was woefully deficient in both these respects. (Slip Opinion at 37)”
The Appellate Court said they couldn’t do anything because the Legislature had voted to accept the funding plan as inadequate as it was.
But there were cases that had very similar circumstances, for instance, the case called Peery that came up with a different decision.
“The court held that the provisions of the governing statutes at the time the bonds were approved, even though they were not expressly placed on the ballot before the voters, were part of the conditions under which the bonds were approved, and could not be modified later. Specifically, the court rejected the argument that a later act of the legislature permissibly modified the voter-approved bond provisions.”
The Tos brief stated, “This principle, that the terms and conditions placed before the voters in a bond measure may not be unilaterally modified, even by the Legislature, after the voters’ approval, has been confirmed multiple times in subsequent decisions.”
Another key point raised in the legal documents sent to the Supreme Court: Why not just have one funding plan?
“If the purpose were solely to prevent construction, a single funding plan, to be submitted and approved prior to the expenditure of construction funds, would have sufficed. Yet the Bond Measure required not one, but two funding plans, the Initial Funding plan and a second, follow-up pre-expenditure Funding Plan. Logically, if the pre-expenditure funding plan was intended to prevent expenditure of funds unless the required conditions in that plan had been met, the conditions in the first funding plan had to be aimed at the appropriation of funds, not their expenditure.”
The voters required that the Authority guarantee and certify that the environmental work was completed.
Flashman writes, “By making an improper certification, the Authority undercut the voters’ intent in setting this requirement. By holding that no remedy was available to address that improper certification, the Court of Appeal even further undercut the voters’ intent.”
What does the High-Speed Rail Authority think of the challenges?
It’s too early to tell since the Attorney General’s office hasn’t sent in their reply to the Opponents Supreme Court Request for Review but we can get hints from Chairman Dan Richard as to the overall displeasure in his Op-Ed published this month.
Dan Richard, HSR Authority Chairman published his commentary on August 18, 2014 for the San Jose Mercury news. It shows the Rail Authority Chairman’s reaction when Tos Attorneys Stuart Flashman and Mike Brady questioned the appellate court’s conclusion. While not addressing a Supreme Court challenge it’s safe to assume Mr. Richard is not pleased with the Tos filing for a review by the State Supreme Court. Richard’s comments:
“According to opponents’ lawyers, Stuart Flashman and Michael Brady, the court ignored voter protections requiring a precise choreography (emphasis added) of how the bonds could be accessed. Flashman said that “the Court has essentially allowed the Authority to ignore promises … made to California’s voters. It bodes ill for voters’ willingness to trust such promises in the future.” Mr. Brady added that “respect for the protection of the voters in the initiative process” had been “brushed aside” by the court. Such dire assertions are not only baseless but constitute the height of hypocrisy.
Richard continues, “The truth is that the High-Speed Rail Authority is building the fast, clean and self-sustaining rail network voters expected when they passed Proposition 1A. In contrast, Flashman and Brady and those they represent have consistently tried to thwart the will of the people with an incessant stream of litigation and political activism.”
So suffice it to say, Dan Richard isn’t happy about the Supreme Court challenge either.
Next article will explore the Validation case which gives us a taste of the Attorney General’s thinking.