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California high-speed rail grinds on as troubles mount

By Jim Christie

SAN FRANCISCO (Reuters) - Dan Richard is determined to keep California's plan for building an 800-mile (1,300-km) high-speed rail system on track despite two recent court rulings against it and rising criticism of the effort.

"It's nowhere near as dire as the opponents are making it," said Richard, chairman of the California High-Speed Rail Authority, the agency in charge of plans for building the system, which at an estimated cost of $68 billion would be the state's most expensive infrastructure project.

The project has been dogged by controversy as critics have questioned its planned routes, ridership estimates and projected costs, while lawsuits have sought to hold it up.

Two lawsuits recently went against the authority.

Late last month, Judge Michael Kenny of Sacramento County Superior Court decided there was too little information to support the authority's decision to move forward with the sale of more than $8 billion state bonds slated to help fund the project.

In another decision, Kenny ordered the authority to rescind its funding plan for the system but did not halt the project, which has more than $3 billion in federal funds at its disposal.

The authority will comply with Kenny's rulings even as it moves forward with federal funds to break ground in California's Central Valley as soon as next month, Richard told Reuters in a telephone interview.

"It's just a question of how to organize this information and put it back out there," Richard said. The authority will revise its funding plan and renew its effort to unlock state bonds for its rail project, which would be built through 2029.

As it presses on, the authority will come under increased fire from critics, including ones in Washington like U.S. Rep. Jeff Denham. A Republican from the Central Valley, Denham chairs a House subcommittee on railroads and plans to hold a hearing on whether the authority is complying with Proposition 1A.

"I think our committee is very frustrated," said Denham, who like many other House Republicans sees the project as a boondoggle instead of a transformative infrastructure effort touted by the Obama administration.

Former U.S. Transportation Secretary Ray LaHood countered that the authority can count on Democrats in Washington for ongoing political support, along with California Governor Jerry Brown and fellow Democrats who control the state's legislature.

"People should not be writing off this project," said LaHood, a cabinet secretary from 2009 til earlier this year. "This project is going to go ahead. It simply will."

TROUBLE ON THE TRACKS

California voters have cooled to the ambitious project since approving it in 2008 by endorsing Proposition 1A, a measure asking for nearly $10 billion in state bonds to fund the effort.

A recent USC Dornsife/Los Angeles Times Poll found seven out of 10 California voters want another vote on the project, with 52 percent saying it should be stopped.

The project's various cost estimates have allowed critics to argue that its projected $68 billion price tag is overly optimistic, and they point out the authority has locked in only a fraction of the funds needed to build its planned system.

They also point to problems for the authority in Washington beyond House Republicans, noting that federal regulators recently denied a request by the authority for an exemption from reviews for a planned line in the Central Valley.

The rail project's opponents also say it will be more of a bumpy ride for the authority in court.

Litigation will hang over the project, keeping any sales on state bonds for it on hold, even as the authority works to comply with Judge Kenny's orders, said Stuart Flashman, the lawyer for Kings County, which objects to the authority's plan for a route through its farmlands.

Kenny will next year take up a lawsuit over whether the project can meet its requirements in the measure voters approved for its bonds, such as travel times between Los Angeles and San Francisco of less than three hours, said Flashman.

"If they can't meet those times then they can't use the bonds the voters approved," Flashman said.

The authority should rethink its overall plan, now based on starting construction in the Central Valley, where Washington required its money for the project be spent first as part of its economic stimulus effort, said Quentin Kopp, a retired judge and former state senator who served as the authority's chairman when voters approved its bond measure.

Kopp said high-speed rail service should be targeted first at more densely populated coastal Southern California to produce the kind of ticket sales to attract private investors to help fund the system. "This plan should be changed geographically," he said. "The first phase should be San Diego to LA."

That's not feasible, said Richard, noting the authority risks losing federal funds if they are not used soon for building in the Central Valley: "If we don't spend the majority of these federal dollars they turn into a pumpkin in 2017."

(Reporting by Jim Christie; Editing by Leslie Gevirtz)

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