Last week, a Sacramento County Superior Court judge drove what may have been a golden spike through the heart of the state’s $68-billion high-speed rail project when he ruled the state needed, but did not have, a real plan for financing it, and couldn’t tap $8.6 billion in bond funds because it didn’t properly explain how it would spend the money.

This week, the federal Surface Transportation Board twisted the spike a bit when it refused (pdf) to give the project an exemption from environmental review of the segment between Bakersfield and Fresno. The board, which oversees virtually all major rail projects in the country, was reportedly ignored by the state until earlier this year. State officials might not ignore it now, after being denied conditional grant authority to build a 5-mile stretch of track within the 114-mile second stage.

Board Vice Chairman Ann Begeman called for a comprehensive financial analysis of the project and cited the “growing controversy regarding California's bond funding process.”

The three-member board’s rejection was based on a simple principle: no permit to proceed until environmental reviews have been completed. It takes a compelling reason for the board to break that rule and the state offered none. That could set the project back a long time and cost a lot of money.    

Or not.

While news coverage of the board ruling indicated it would throw a yet another roadblock in front of the bullet train, California High-Speed Rail Authority CEO Jeff Morales said, “With their decision today, the board opted for the same process used in their approval of the Merced to Fresno project section and all of our ongoing work and contracts proceed as they have been.”

The state has already signed a multi-billion construction contract to begin work in Fresno. When voters approved the project in November 2008, there was hope that the federal government would pay a lot of the freight. President Barack Obama had encouraged states to initiate big-ticket construction projects that would shore up the nation’s tottering infrastructure, move the country into the 21st Century, stimulate the foundering economy and put people to work.

But the stimulus money needed to make that happen was tied up in Congress after an initial short burst of energy. The independent state Legislative Analyst’s Office warned in 2011 that additional funding assumed in a 2009 business plan was “highly uncertain” and, more specifically, “Federal funding assumptions appear unrealistic.”

While critics of the project appeared confident that the project, proposed and promoted by Governor Jerry Brown, would not survive its latest troubles, California High-Speed Rail Authority Chairman Dan Richard said the state would break ground on it next month.

“We see a pathway forward with this project, even though I can't stand here today and tell you exactly what we’re going to do,” Richard told the San Jose Mercury News.

Michael Brady, a lawyer representing opponents of the project, said Richard knows better. “He pretends not to appreciate the significance of a setback like this one, but I know he's totally full of it. Right now, they're in a serious box.”

–Ken Broder

To Learn More:

Bullet Train: Rail Authority Says It’s Full-Speed Ahead for Project (by Jessica Calefati, San Jose Mercury News)

High-Speed Rail Officials Respond to Setbacks (by Juliet Williams, Associated Press)

California Bullet-Train Contract Imperiled by Federal Regulators (by Michael B. Marois, BloombergBusinessweek)

California Bullet Train Project Handed Another Setback (by Ralph Vartabedian, Los Angeles Times)

Judge Puts Two Roadblocks in the Way of High-Speed Rail Project (by Ken Broder, AllGov California)