Part IV – Legal Challenges

The High-Speed Rail Authority, in collaboration with the California Legislature, has conspired to violate the terms of a voter-approved bond measure and of the California Constitution. These violations are the basis of some of the current high-speed rail litigation. Additional litigation is also likely to be triggered as work on current and proposed high-speed rail projects violate additional provisions of Prop. 1A.

Litigation over the validity of AB 1889

Previous litigation over the high-speed rail authority’s compliance with Proposition 1A, the November 2008 $9.9 billion high-speed rail general obligation bond, had identified approval of a “Final Funding Plan” for use of bond funds to construct a high-speed rail segment as the trigger for challenging compliance with Prop. 1A provisions.

After the Court of Appeal’s 2014 ruling, things paused for a little while. Construction of the first high-speed rail segment, a 119 mile section running from Madera to Shafter in the Central Valley, began in 2015. But that construction was initially funded entirely with federal grant funds. The problem was that Prop. 1A required, as part of the approval process for a final funding plan, that the Authority show that each segment being built with bond funds would, when completed in accordance with that funding plan, be “suitable and ready for high-speed train operation.” (Streets & Highways Code Section 2704.08(d)(2)(B).)

The Authority had plans to use Prop. 1A bond funds on two projects: one would be the Madera to Shafter high-speed rail segment currently being built with federal funds; the other would be to help fund the electrification of Caltrain, a conventional commuter rail line that would eventually share track with high-speed rail between San Jose and San Francisco. While in both cases, a usable high-speed rail segment might eventually result, there was, as yet, insufficient funding to construct either segment such that it would be “suitable and ready for high-speed train operation.”

AB 1889

Into this breach leapt California State Assembly Member Kevin Mullin, who represented a portion of Caltrain’s route down the San Francisco Peninsula. Mullin repurposed a bill he had introduced earlier in the session, AB 1889. As enacted by the Legislature, AB 1889 “clarified” the meaning of the phase “suitable and ready for high-speed train operation.” Why did it need “clarification?” Good question. Most people would think that the meaning of the phrase was abundantly clear. However, the Legislature had a different idea.

Under AB 1889, the phrase now had two quite different meanings. One is the obvious one – suitable and ready for high-speed train operation means that the segment is both suitable for – i.e., has the appropriate track, ballastless support, curvatures, slopes, tolerances, etc. to allow high-speed rail trains to run on it – and ready – meaning no further improvements are needed before it can be used for high speed train operation. The second, added, meaning under AB 1889 is something quite different. It says the segment is suitable and ready for high-speed train operation if it will be able to run high-speed trains “after additional planned investments are made” to the segment involved, AND, in the near term – before those improvements are made – the segment will benefit passenger train service providers. Note that under this new “clarified” meaning, the segment may never truly be ready for high-speed train operation. While the future investments have to be planned, there is no requirement that they ever actually be implemented.

The reason for the change is obvious. Assembly Member Mullin, acting at the request of Caltrain, was facilitating the use of high-speed rail bond funds to accomplish the electrification of the Caltrain corridor. Electrification was expected to cost somewhat over $2 billion. Making the segment truly “suitable and ready: for high speed train operation” would cost far more. Some segments would need to be straightened, new rail might need to be laid, signal systems and grade crossings would need to be upgraded, station platforms would need to be modified, etc. Indeed, there was not yet even an approved environmental review for this proposed high-speed rail segment. However, under AB 1889, none of that was needed. All that was needed was a benefit to the existing Caltrain service and some hand-waving towards “future planned capital improvements.”

Similarly, while the Madera – Shafter segment would not be truly “suitable and ready for high-speed train operation” with the planned construction, it would be usable for improving existing Amtrak operations along its Central Valley line.

The California High-Speed Rail Authority’s use of AB 1889

Sure enough, almost immediately upon AB 1889 becoming effective on January 1, 2017, the High-Speed Rail Authority approved both projects’ final funding plans and sent them on for the appropriate “expert consultant review” – making sure that the consultant was specifically instructed to evaluate whether the segments were suitable and ready for high-speed train operation through the lens of AB 1889’s “clarification” of Section 2704.08(d)(2)(B). Not surprisingly, the consultant, explicitly applying AB 1889’s definition, found both segments passed muster, and by April, both segments had been approved by the Director of Finance and the spigot of bond fund money was opened.

The AB 1889 Litigation

At that point, a lawsuit had already been filed. (John Tos et. al. v. California High Speed Rail Authority et al., Sacramento County Superior Court Case No. 34-2016-00204740.) The suit challenged the constitutionality of AB 1889 and the appropriateness of the approvals given for the two funding plans. It pointed to case law going back almost 100 years holding that once the voters had approved a bond measure, any change in meaning from what the voters had intended amounted to a partial repeal of the bond measure’s provisions and violated Article XVI Section 1 of the State Constitution. The 1922 California Supreme Court decision in O’Farrell v. County of Sonoma 189 Cal. 343 clearly stated a central point of that constitutional provision:

When the defendant board was contemplating a bond issue … … it had the statutory right to make its order just as broad, and just as narrow, and just as specific as it was willing to be bound by, so long as the provisions of the statute were complied with. … The electors are presumed to have known the law. … The order calling the election and the ratification of that order by the electors constituted a contract between the state and the individuals whose property was thereby affected.   After the contract had been made it could not be altered by one of the parties, only, but by all of the parties thereto. (Id. at pp. 347-348 [citations omitted, emphasis added].)

In other words, once the bond measure had been placed on the ballot and approved by the voters, the mutual intent of the public agency and the voters, as expressed in the ballot measure’s language, could not be changed except by the further mutual agreement of the agency and the voters.

After two attempt by the Attorney General seeking to have the lawsuit thrown out, in October 2018 an amended version of the challenge came before Judge Richard Sueyoshi for a determination of whether AB 1889 was unconstitutional on its face. Not only did he refuse to find that the statute was unconstitutional as a matter of law, he explicitly held that the statute was proper (even though the motion being ruled on didn’t get to that question). The case is now on appeal based on a stipulated judgment in favor of the defendants for the sole purpose of bringing the constitutionality of AB 1889 to the court of appeal as quickly as possible.

The issue raised in this lawsuit is central. Not only will it determine whether the high-speed rail project can move forward as currently proposed using Prop. 1A bond funding, but perhaps even more importantly it will tell voters whether they can trust promises made in bond measures. It’s usual for voters to expect that promises made in a ballot measure will be honored. If the Legislature can change a measure’s meaning after voter approval, that expectation will no longer hold. In other words, this case tests the basic trust of voters in our electoral system.

Other Future Legal Obstacles

Depending on the results of this lawsuit, further legal challenges may be waiting in the wings. These include: 1) Whether the current project violates Prop. 1A’s promise that any high-speed rail project built using bond funds would not require a public operating subsidy; 2) Whether the current project can meet Prop. 1A’s requirements for maximum travel time between SF and LA and between SF and San Jose; 3) Whether the current project is adequately funded to meet Prop. 1A’s requirement for being fully funded before construction begins; 4) Whether the environmental review of the Fresno-Bakersfield segment was legally adequate; 5) Whether the taking of property along the right-of-way in the Central Valley was adequately supported by a determination of the necessity of taking the property.

Conclusion

Former Governor Jerry Brown may have hoped he was starting an unstoppable juggernaut in 2015 when he authorized the beginning of construction. As former San Francisco Mayor Willie Brown famously said, “The idea is to get going. Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in.” On the other hand, Humorist and political commentator Will Rogers is also famously quoted as saying, ” If you find yourself in a hole, stop digging.”

California’s high-speed rail project is now at a figurative crossroads. It can either follow Willie Brown’s advice and look for enough money to finish its current project; or, it can stop and take stock, and then make a decision based on logic and common sense – not politics – about what is the most sensible way to proceed.