Tag: High Speed Rail

Supreme Court will hear Friends of the Eel River

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The California Supreme Court has granted a petition for review of Friends of the Eel River v. North Coast Railroad Authority. We previously wrote about the case here.

Friends of the Eel River and Town of Atherton created an appellate court split on the issue of federal preemption of railway projects. The court in Atherton held that the market participant doctrine, whereby proprietary state actions are protected from federal preemption, applies to the High Speed Rail. Friends of the Eel River disagreed. The court held that even if the decision to prepare an EIR were proprietary, a writ proceeding by a private group challenging the adequacy of that review would be regulatory, and not part of the proprietary action.

Recently, the Surface Transportation board issued a decision holding that federal law preempts application of CEQA to a portion of the High Speed Rail line. In reading this conclusion, the court sided with Friends of the Eel River and disagreed with Atherton on the market participant issue.

Appellants are set to file their opening brief on the merits at the end of February.

Surface Transportation Board rules that federal law preempts application of CEQA to a portion of the high-speed rail line.

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The Surface Transportation Board (STB) issued a ruling on December 12, 2014, concluding that 49 U.S.C. § 10501(b) preempts application of CEQA to the Fresno to Bakersfield segment of the state high-speed rail project. Under this statute, STB’s jurisdiction over transportation by rail carriers is exclusive, even if the tracks are located entirely in one state. Furthermore, the remedies provided with respect to regulation of rail transportation “are exclusive and preempt the remedies provided under Federal or State law.”

The issue before STB was whether a state court can, under CEQA, enjoin construction of a rail line that the Board has authorized. In 2013, STB found it had jurisdiction over the High Speed Train system. It subsequently granted petitions for exemption that permitted construction of the first segment of the rail line, between Merced and Fresno. After STB’s assertion of jurisdiction, the High Speed Rail Authority noted in its environmental documentation that it was not waiving the right to assert federal preemption in response to any potential legal challenge to its CEQA compliance.

STB stated that due to the conflicting appellate court opinions regarding CEQA preemption presented in the recent Town of Atherton and Friends of Eel River state appellate court decisions, the Board was uniquely qualified to resolve the preemption question. STB first determined that state permitting or preclearance requirements, such as CEQA, were categorically preempted as to any rail lines and facilities that are an integral part of rail transportation. STB found it difficult, as a practical matter, to separate CEQA’s injunctive remedies—the focus of opponents’ lawsuits—from a state court’s ability to enforce compliance with CEQA itself. Thus, the issue became whether CEQA as a whole is preempted with regard to the line. Applying “well-established preemption principles,” the Board concluded that it was.

STB noted that the line would be constructed and operated as part of the interstate rail network. Any implied agreement to comply with CEQA that potentially could have the effect of prohibiting the construction of a rail line authorized by the Board, therefore, would unreasonably interfere with interstate commerce by conflicting with the Board’s exclusive jurisdiction and preventing the Authority from exercising its power.

The Board noted that to the extent its preemption analysis conflicted with the court’s decision in Atherton, it respectfully disagreed with that opinion. STB did not believe that the market participant doctrine creates an exception to federal preemption in the context of a CEQA enforcement suit for a railroad project under the Board’s jurisdiction. The Board agreed with Eel River’s reasoning that even if a state agency’s action can be viewed as proprietary and the initial decision to prepare the EIR a component of that proprietary action, a writ proceeding by a private citizen’s group challenging the adequacy of the CEQA review is not part of that proprietary action. This is because the aspect of CEQA that allows a citizen’s group to challenge the adequacy of an EIR when CEQA compliance is required is regulatory in nature; a lawsuit against a government entity cannot be viewed as part of its proprietary action, even if the lawsuit challenges that proprietary action. This holding, the Board stated, does not infringe upon state sovereignty because the CEQA enforcement actions are not being brought by the state. It also held that whether Proposition 1A requires the Authority to comply with CEQA as a condition of its funding is a question of state law for a state court to decide. One commissioner dissented, arguing that the majority had gone further with its preemption holding than the Authority had requested.

The Supreme Court has granted review of Friends of Eel River. Briefing is currently set for the end of February 2015.

Supreme Court Declines Review of High-Speed Rail Bonds Suit

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The California High-Speed Rail project achieved another victory on October 15 when the state Supreme Court declined to hear a suit challenging the issuance of bonds for the rail system’s construction. The Court did not offer explanation for its decision.

A Sacramento Superior Court judge had ruled that the rail’s funding plan was inconsistent with Proposition 1A, the 2008 voter-approved initiative for the project that laid out initial funding, because the plan relied on uncertain future revenue sources. The Third District Court of Appeal disagreed in California High Speed Rail Authority v. Superior Court, and ordered the trial court to enter judgment validating the authorization of the bond issuance for purposes of the proposition.

The project is currently estimated to cost $68 billion. Earlier this year, the project secured future funding whereby it will receive a portion of the state’s cap-and-trade proceeds. Construction of the first rail segment is already underway in Fresno, where crews are demolishing buildings and relocating utilities to make way for the tracks. Opponents continue to challenge the project, but for now, the High-Speed Rail project is chugging ahead.

Court of Appeal Holds Federal Law Does Not Preempt CEQA for High-Speed Train Project; Upholds Program EIR for Bay Area to Central Valley Route

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The Third District Court of Appeal held that the application of CEQA to the California High-Speed Train project was not preempted by federal law in Town of Atherton v. California High Speed Rail Authority (July 24, 2014, Case No. C070877). On the merits, the Court ruled in favor of the Authority on all claims, finding that the Authority’s program EIR wholly complied with CEQA.

As California’s plans for a high-speed train system have developed over the past two decades, the system’s alignment from the Central Valley to the San Francisco Bay Area became an area of contention. The particular dispute was over the Authority’s decision that trains travelling between the Central Valley and the Bay should travel through the Pacheco Pass, which turns west from between Fresno and Merced, rather than farther north at the Altamont Pass, which turns west from the Central Valley south of Stockton. According to the Authority’s corridor evaluation report, the Altamont Pass would require additional tracks to provide train service to San Jose, resulting in less frequent service to San Francisco and San Jose absent the provision of additional trains. Based upon this determination, the Authority prepared an EIR identifying the Pacheco Pass as the preferred alternative.

After a legal challenge to the initial EIR, the Authority revised its program EIR and again selected the Pacheco Pass route as the preferred alternative. The South Bay town of Atherton challenged the adequacy of the revised EIR and approval of the Pacheco Pass alternative, arguing that the program EIR violated CEQA because it (1) provided an inadequate analysis of the vertical profile options for alignment (i.e., where to elevate the track) along the San Francisco Peninsula; (2) used a flawed revenue and ridership model; and (3) had an inadequate range of alternatives because it rejected an alternative proposed by one expert consulting company.

Preemption

Prior to oral argument, the Authority asked the court to dismiss the case, contending that federal law, specifically the Interstate Commerce Commission Termination Act (ICCTA), preempted any CEQA remedy. It argued that the ICCTA created exclusive federal regulatory jurisdiction and a federal agency, the Surface Transportation Board, had recently assumed jurisdiction over the High-Speed Train. The court found it did not need to decide whether the ICCTA preempts CEQA as to the train, however, because at least one exception to preemption applied here. Under the market participation doctrine, proprietary state actions are protected from federal preemption. The court found no evidence supporting the Authority’s contention that the market participant exception could only be asserted defensively. Accordingly, the court held that CEQA applies to the project and proceeded to address petitioners’ claims on the merits.

Adequacy of the Program EIR

The court next addressed petitioners’ claims regarding the adequacy of the program EIR. The court upheld the Authority’s use of a program EIR and held that the Authority properly deferred site-specific analysis, including the vertical alignment, to a later project EIR. The court stated that the precise vertical alignment of the train at specific locations is the type of site-specific consideration that must be examined in detail in a project-level EIR. Requiring such analysis at the program level, the court reasoned, would undermine the purpose of tiering and would create a burdensome level of detail in the larger-scale program EIR.

The court also held that the challenge to the revenue and ridership modeling presented a disagreement among experts that did not make the revised final project EIR inadequate. Petitioners failed to show that the Authority’s ridership model was “clearly inadequate or unsupported,” and the modelers had followed generally accepted professional standards. Thus, substantial evidence supported use of that model.

Finally, the court held that the Authority studied an adequate range of alternatives and was not required to analyze the Altamont Pass alternative proposed by petitioners’ consulting company, given that the alternative was substantially similar to the alternatives already studied and that range of alternatives was not shown to be inadequate.

California Supreme Court Moves High-Speed Rail Request to Court of Appeal

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The California Supreme Court ordered the Third District Court of Appeal to undertake an expedited review of two trial court rulings concerning the financing plan for California’s High-Speed Rail project, by transferring the state’s petition for writ of mandate to the lower court. The petition was filed by the state in late January asking the Supreme Court to step in and prevent the two recent lower court rulings from derailing construction of the High-Speed Rail project.  According to the state, the challenged trial court rulings “cast a cloud of uncertainty” over the project and put at risk billions of dollars in federal grants. The state sent a direct request to the California Supreme Court because the normal appeals process, it claimed, would take too long given the time-sensitive nature of the project and its funding.

Although it declined to consider the petition directly, the Supreme Court recognized that the petition should be a priority and decided expeditiously by the Court of Appeal. The transfer order directed the appellate court to “expedite its consideration of this matter” and set an expedited briefing schedule for the parties.

Further information on the previous trial court rulings and the state’s petition to the California Supreme Court can be found in our previous blog post here.

State asks Supreme Court to Set Aside Trial Court Rulings Stalling High-Speed Rail

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Governor Jerry Brown has asked the California Supreme Court to step in and prevent two recent lower court rulings from derailing construction of the state’s bullet train. The state sent a direct request to the California Supreme Court because the normal appeals process, it claims, would take too long given the time-sensitive nature of the project and its funding. The request took the form of a petition for extraordinary writ of mandate and application for temporary stay.

In the first Superior Court case, Tos, et al. v. California High-Speed Rail Authority, et al., Sacramento Superior Court Case No. 34-2011-00113919, the trial court refused to validate approximately $8.6 billion in bonds because it found no evidence that issuing the bonds was “necessary and desirable.” This ruling, the state argues in its petition, will disrupt the state’s ability to finance the high-speed rail system as well as other projects funded with general obligation bonds. Furthermore, the ruling will destroy the state’s ability to use the bond validation statutes to obtain speedy and final determinations of validity.

In the second Superior Court Case, High Speed Rail Authority, et al. v. All Persons Interested, Sacramento Superior Court Case No. 34-2013-00140689, the trial court directed the High Speed Rail Authority to rescind and re-adopt a preliminary funding plan intended for the Legislature’s consideration in deciding whether to appropriate bond proceeds to build the project. The state argues that this ruling “compels an idle act” by requiring the Authority to re-do an appropriation plan that has already been enacted.

The trial court’s approach to these issues, the state argues, “cripples government’s ability to function.” The rulings also “thwart the intent of the voters and the Legislature to finance the construction of a high-speed rail.” The petition notes that both decisions are “effectively unreviewable on appeal” given the timeframe; the Authority is faced with either pursuing appeals that will exacerbate delays and increase costs, or else attempt to move the project forward on the trial court’s terms. The state termed this a Hobson’s choice – i.e., not a real choice.

Despite these complaints, state officials assured Washington lawmakers that the project will stick to its planned timetable, with construction in the Central Valley slated to begin later this year. But if the trial court’s rulings are not overturned, officials warned, the project would take longer to build than voters and the Legislature intended, and future funding would be jeopardized.

 

Will Cap-and-Trade Money Fund the High Speed Rail?

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Governor Jerry Brown would like to fund a portion of California’s high-speed rail project with proceeds from cap-and-trade fees. Brown plans to propose directing millions of dollars garnered from carbon producers’ fees toward the $68 billion project. The governor would allocate hundreds of millions of dollars in 2014 alone.

California has already acquired $3.4 billion in federal funding to start constructing the rail. Project opponents, however, have challenged complementary state bond funding in court, creating a potential funding gap. In High Speed Rail Authority v. All Persons Interested, the Sacramento Superior Court declined to validate High Speed Rail Authority’s attempt to issue more than eight billion dollars in bonds to start construction. Construction, however, is still slated to begin early this year.

Governor Brown’s proposal will likely be included as part of his annual budget plan that will be released Friday, January 10, 2014.

Does Federal Law Preempt Further CEQA Review of the High-Speed Rail Project?

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The California Attorney General’s Office has filed a letter brief with the Third District Court of Appeal arguing that a federal interstate commerce law preempts CEQA review by the Third District in a pending challenge to the High-Speed Rail project. If the state’s arguments are successful, the High-Speed Rail project could face fewer environmental approval hurdles in the future. In particular, environmental review for the project could proceed solely under the National Environmental Policy Act (NEPA) and potentially occur more quickly than it would have under CEQA.

After petitioners/appellants in Town of Atherton, et al. v. California High-Speed Rail Authority (Case No. C070877) appealed the trial court’s dismissal of their suit, the Third District ordered all parties to brief whether federal law preempts state environmental law with respect to the rail project. On August 9, 2013, the California Attorney General’s Office, representing the California High-Speed Rail Authority, argued in its brief to the court that the federal Interstate Commerce Commission Termination Act (ICCTA) preempts CEQA and thus, the Third Appellate District lacks jurisdiction to impose CEQA remedies in the action.

The federal preemption argument is based on a June 13, 2013, decision by the federal Surface Transportation Board (STB) that it “has jurisdiction” over California’s rail project. The STB explained that California’s High-Speed Rail falls within its congressionally granted jurisdiction because it is an intrastate (i.e., between two or more points within California) “transportation by rail carrier” that “is carried out ‘as part of the interstate rail network.’” (California High-Speed Rail Authority-Construction Exemption-in Merced, Madera and Fresno Counties, Cal., Docket No. FD 35724, available at http://www.stb.dot.gov/decisions/readingroom.nsf/UNID/3DA3D75A2453DD2685257B8900680856/$file/43070.pdf.) The STB found that High-Speed Rail connects to Amtrak’s interstate rail lines, and thus is itself part of the interstate rail network.

According to the California Attorney General, the ICCTA established the STB and vested it with “exclusive regulatory jurisdiction over railroads involved in interstate commerce.” While acknowledging that the ICCTA “retains for the states the police powers reserved by the [U.S.] Constitution,” the Attorney General argues that the ICCTA contains express preemption language that preempts “state environmental preclearance laws,” including CEQA and CEQA remedies. This argument is supported by cites to federal case law, STB’s own decisions, and two California appellate cases.

If the Attorney General’s preemption argument is successful, California courts would lack subject matter jurisdiction over CEQA challenges to the High-Speed Rail project. This would affect not only the petitioners/appellants in currently pending cases, but also parties that may wish to bring suits against the future approvals of additional segments of the project. In this scenario, the High-Speed Rail project’s environmental review would only be subject to NEPA requirements.

On June 13, 2013, the STB approved and adopted the Final Environmental Impact Report/ Environmental Impact Statement, finding it took “the requisite ‘hard look’ at the potential environmental impacts associated with the proposed Project as required by NEPA.” For High-Speed Rail opponents, the options for challenging this NEPA decision are somewhat less attractive (i.e., less likely to result in significant delay or additional mitigation) than bringing CEQA claims.

Trial Court Holds High Speed Rail’s Funding Plan Violated Prop 1A But Refuses to Issue a Writ Invalidating Legislative Appropriation or Future Subsequent Approvals for the Rail Project For Now

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On August 16, 2013, Sacramento Superior Court Judge Michael Kenny issued a ruling in Tos v. California High Speed Rail Authority(Case No. 34-2011-00113919-CU-MC-GDS), finding that the High Speed Rail (HSR) Authority’s funding plan did not comply with Streets and Highways Code Section 2704.08, which was codified by Proposition 1A, approved by the statewide voters in 2008. But Judge Kenny ultimately concluded that no writ of mandate rescinding approval of the funding plan, invalidating the legislative appropriation, or invalidating subsequent project approvals should be issued at this time.

The Authority approved a funding plan for the HSR on November 3, 2011. Under S&W Code section 2704.08(c), the funding plan needed to identify the “sources of all funds to be invested in the corridor” and to certify that the “authority has completed all necessary project level environmental clearances necessary to proceed to construction.” Petitioners filed a complaint and petition on November 14, 2011, asserting that the funding plan did not comply with Section 2704.08. On July 18, 2012, before the trial court issued its ruling, the Legislature enacted Senate Bill 1029, appropriating state bond funds and available federal funds for the construction of one of two alternative Initial Operating Sections (IOS).

Although Judge Kenny found that the funding plan did adequately identify sources of funds for a segment of the IOS referred to as the Initial Construction Section (ICS) from Madera to just north of Bakersfield, he found the funding plan violated Section 2704.08 because it failed to do so for the entire IOS from Merced to Los Angeles. Additionally, Judge Kenny found the Authority had not properly certified that environmental clearances for the entire project were complete. At this time, only the Madera-to-Fresno segment has received final project-level environmental review.

Based on these findings, Judge Kenny concluded that he could issue a writ of mandate directing the Authority to rescind its approval of the funding plan. Nonetheless, the judge decided not to issue such a writ because it would have no “substantial or practical impact on the program” without a concurrent invalidation of the legislative appropriation for the HSR or subsequent approvals. Furthermore, Judge Kenny concluded that no writ should be made to invalidate legislative appropriation made through SB 1029, partly because petitioners did not seek such relief in their Second Amended Petition and Complaint, and they only raised the issue for the first time in their reply brief. Finally, the judge directed the parties to submit supplemental briefing on the issue of whether a writ should issue to invalidate subsequent approvals.

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