California’s High Speed Rail Project. Are We Done With the Drama?
Proponents of California’s high-speed rail project cleared a major hurdle this past week when the California Supreme Court declined to review a California Court of Appeals ruling which held that the state’s funding plan did not violate Proposition 1A, the voter-approved initiative passed in 2008, which provided initial funding for the project.
For those like me who have been following the fits and starts of California’s high-speed rail project, it may be hard to remember how it all got started, and how we got to where we are.
California’s High-Speed Rail Project
California’s high-speed rail project involves the construction of a high-speed passenger rail system running from Northern California to Southern California. The $68 billion system, expected to begin operation in 2029, will initially run from San Francisco to the Los Angeles basin in under 3 hours with train speeds capable of over 200 miles per hour. The system will eventually extend from Sacramento to San Diego covering a distance of approximately 800 miles with up to 24 stations.
According to the California High Speed Rail Authority, the state agency responsible for overseeing the project, in addition to the economic benefits of connecting travelers from Northern to Southern California, the project will create 67,000 new jobs annually for the next 15 years, reduce carbon dioxide emissions between 5 and 10 million metric tons between 2022 and 2040, and save 2 to 3.2 million barrels of oil annually starting in 2030.
Initial construction of the 130 mile segment from Madera to Fresno began in October 2013. The nearly $1 billion contract for the work was awarded to a joint venture comprised of Tutor-Perini, Zachary, and Parsons.
History of the Project
1980s – An Idea Conceived
The origins of California’s high-speed rail project began in 1981. Then (and now) Governor Jerry Brown first proposed a high-speed rail system connecting Northern and Southern California and in 1982 signed Assembly Bill 3647 which authorized the issuance of $1.25 billion in tax-exempt state revenue bonds for the project. However, following its passage, scrutiny over ridership projections used to justify the bill, and politics surrounding the legislation which would have given authority over the project to a private company rather than the California Department of Transportation, led to the project being scrapped.
1990s – An Idea Reborn
A decade later, concerns over California’s growing population and the successful implementation of high-speed rail systems in Japan and Europe spurred new interest in high-speed rail in California. In 1996, then Governor Pete Wilson signed Senate Bill 1420 which created the California High-Speed Rail Authority (“CHSRA”) with responsibility for designing a high-speed rail system in California.
2000s – A Foundation Laid
In 2002, then Governor Gray Davis signed Senate Bill 1856 authorizing the issuance of a $9.95 billion bond measure to finance a high-speed rail system in California.
In 2008, following several delays, Proposition 1A the “Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century” was approved by California voters by a vote of 52.62%. Proposition 1A allocates $9.95 billion to CHSRA, of which $9 billion is to be used to construct the core segments of the rail line from San Francisco to Los Angeles with the remaining funds to be spent on improvements to local railroad systems that will connect to the high-speed rail system. Proposition 1A also requires federal matching of funds.
In 2009, then Governor Arnold Schwarzenegger applied for $4.7 billion in federal funding for California’s high-speed rail project under the American Recovery and Reinvestment Act of 2009 (“ARRA”), the federal government’s stimulus package, which approved $831 billion in federal spending on infrastructure, education, health, and energy projects.
2010s – A Shaky Start
In January 2010, the federal government awarded California $2.35 billion of its ARRA request of which $2.25 billion was allocated specifically for California’s high-speed rail project. In October 2010, the federal government awarded CHSRA a further $900 million for passenger rail improvements, including $715 million specifically for California’s high-speed rail project, but with the requirement that it be used for the Central Valley segment of the project. And in December 2010, following reallocation of $1.2 billion federal high-speed rail funding from states that rejected stimulus funds, the federal government awarded CHSRA an additional $624 million again for use on the Central Valley segment of the project.
In 2011, after Florida rejected $2 billion in stimulus funding, the federal government awarded CHSRA an additional $300 million for the Central Valley segment of the project.
In 2012, Governor Brown signed Senate Bill 1029 which approved nearly $8 billion in federal and state funds for the construction of the first phase of the project in the Central Valley and local rail projects. The legislation approves $4.5 billion in bonds previously approved by voters, which in turn, freed $3.2 billion in federal funding which would have otherwise expired. Of the nearly $8 billion, $2.6 billion is to be used to fund the initial 130 mile segment from Madera to Fresno.
In November 2013, Sacramento County Superior Court Judge Michael Kenny issued a set of rulings which could have figuratively and literally derailed the project, holding that the state did not have a valid financing plan required by Proposition 1A and that the state had not properly approved the sale of bonds to finance the project.
On July 31, 2014, the California Court of Appeals for the 3rd District reversed the lower court ruling. And, as discussed, this past week, the California Supreme Court declined to review the decision of the California Court of Appeal.
And, with that, I think we’re caught up. Although, I don’t think we’re nearly at the end of the story.
California Construction Law Blog | Nomos LLP 
2 Responses to “California’s High Speed Rail Project. Are We Done With the Drama?”
Interesting. I spoke yesterday on the issue and will be repeating the presentation at the SuperConference in Los Vegas in December. I will have Maryland send you my slides on the issue.
Sent from my iPhone
Would love to see it.