Opponents of high-speed rail project petition California Supreme Court

Reuters News
Posted: Sep 02, 2014 9:52 PM

By Robin Respaut

(Reuters) - Opponents of California's controversial $68 billion high-speed rail project petitioned the California Supreme Court on Tuesday, arguing a court of appeals decision ignored the financial protections of voters.

The plaintiffs, which include a farmer, a landowner and Kings County, requested the state's Supreme Court examine an earlier appeals court decision that allowed municipal bonds to fund high-speed rail.

Also on Tuesday, the Third District Court of Appeal denied a request for rehearing the case.

Stuart Flashman, one of the attorneys for plaintiffs, said the California legislature had made specific promises to voters in Proposition 1A, a 2008 ballot measure that proposed to partially fund high-speed rail through almost $10 billion of bonds. Those promises had not been met, thereby breaking the contract between the government and voters, Flashman said.

In 2013, a lower court agreed with the plaintiffs and stopped the issuance of voter-approved bonds, finding that the project's plan failed to secure sufficient funding and meet environmental requirements. But the court of appeals overturned the decision in August.

"If this decision is allowed to stand, not only would billions of dollars of taxpayer funds be placed at risk in this project, but voters will lose confidence in promises made to them in future bond measures," Flashman said in a statement.

Financial analyst Tom Rubin warned the court's decision "ignores very specific safeguards that were included in the statewide ballot measure" and shows "agencies have freedom to ignore what they feel like ignoring." As a result, there would be broad repercussions from the $3.7 trillion U.S. municipal bond market, including reducing the value of California's outstanding debt and increasing the interest rates on future debts.

Proponents of California's largest infrastructure project, including San Francisco Mayor Ed Lee, on Tuesday called for an end to the legal saga, arguing that high-speed rail would move forward in compliance with the law and despite opponents' determination to use "any means possible" to stop the project.

"Opponents still hope to thwart the will of the people, yet we remained committed to this program and the environmental and economic benefits it brings to California," California High-Speed Rail Authority spokeswoman Lisa Marie Alley said in a statement.

Once completed in 2029, high-speed rail promises to transport passengers 500 miles (800 km) across the state in under three hours.

(Reporting by Robin Respaut; Editing by Lisa Shumaker)