California High-Speed Rail Authority v. Superior Court

Filed 7/31/14

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

----

CALIFORNIA HIGH-SPEED RAIL AUTHORITY et C075668

al.,

(Super. Ct. Nos.

Petitioners, 34201100113919CUMCGDS,

34201300140689CUMCGDS)

v.

THE SUPERIOR COURT OF SACRAMENTO

COUNTY,

Respondent;

JOHN TOS et al.,

Real Parties in Interest.

ORIGINAL PROCEEDING in mandate. Alternative writ of mandate issued.

Kamala D. Harris, Attorney General, Kathleen A. Kenealy, Chief Assistant

Attorney General, Douglas J. Woods, Senior Assistant Attorney General, Constance L.

LeLouis, Tamar Pachter, Sharon L. O’Grady, Paul Stein, and Stephanie F. Zook, Deputy

Attorneys General, for Petitioners.

Hanson Bridgett, David J. Miller, and Julia H. Veit for Peninsula Corridor Joint

Powers Board and San Mateo County Transit District as Amici Curiae on behalf of

Petitioners.

1

Adrienne D. Weil for Metropolitan Transportation Commission as Amicus Curiae

on behalf of Petitioners.

Robert Fabela for Santa Clara Valley Transportation Authority as Amicus Curiae

on behalf of Petitioners.

Therese M. Stewart, Chief Deputy City Attorney, for City and County of San

Francisco as Amicus Curiae on behalf of Petitioners.

Altshuler Berzon, Scott A. Kronland, and Connie K. Chan for State Building and

Construction Trades Council of California, AFL-CIO, as Amicus Curiae on behalf of

Petitioners.

Gresham Savage Nolan & Tilden, Ellen Berkowitz, Stefanie G. Field, Daniel F.

Freedman; Kelly Crane Law and Peter D. Kelly, III, for the Hon. Cathleen Galgiani,

California State Senator, as Amicus Curiae on behalf of Petitioners.

John F. Krattli, County Counsel, Charles M. Safer, Assistant County Counsel, and

Richard P. Chastang, Principal Deputy County Counsel, for Los Angeles County

Metropolitan Transportation Authority as Amicus Curiae on behalf of Petitioners.

Joanna G. Africa for Southern California Association of Governments as Amicus

Curiae on behalf of Petitioners.

No appearance for Respondent.

Howard Jarvis Taxpayers Foundation, Jonathan M. Coupal and Timothy A. Bittle

for Real Party in Interest Howard Jarvis Taxpayers Association.

Griswold, LaSalle, Cobb, Dowd & Gin, and Raymond L. Carlson for Real Parties

in Interest Kings County Water District and Citizens for California High-Speed Rail

Accountability.

Law Offices of Stuart M. Flashman, Stuart M. Flashman; and Michael J. Brady for

Real Parties in Interest John Tos, Aaron Fukuda, and County of Kings.

Theresa A. Goldner, County Counsel, Mark L. Nations, Chief Deputy County

Counsel, and Nicole M. Misner, Deputy County Counsel, for Real Party in Interest

County of Kern.

Pillsbury Winthrop Shaw Pittman, Andrew D. Bluth, Michael R. Barr, Kevin M.

Fong, and Blaine I. Green for Real Party in Interest Union Pacific Railroad Company.

2

Pacific Legal Foundation, Meriem L. Hubbard, Harold E. Johnson, and Ralph W.

Kasarda for Real Party in Interest First Free Will Baptist Church.

Substantial legal questions loom in the trial court as to whether the high-speed rail

project the California High-Speed Rail Authority (Authority) seeks to build is the project

approved by the voters in 2008. Substantial financial and environmental questions

remain to be answered by the Authority in the final funding plan the voters required for

each corridor or usable segment of the project. (Sts. & Hy. Code, § 2704.08, subd. (d).)1

But those questions are not before us in these validation and mandamus proceedings.

The scope of our decision is quite narrow. Applying time-honored principles of statutory

construction, separation of powers, and the availability of extraordinary writ relief, we

conclude:

1. Contrary to the trial court’s determination, the High-Speed Passenger Train

Finance Committee properly found that issuance of bonds for the project was necessary

or desirable.

2. The preliminary section 2704.08, subdivision (c) funding plan was intended to

provide guidance to the Legislature in acting on the Authority’s appropriation request.

Because the Legislature appropriated bond proceeds following receipt of the preliminary

funding plan approved by the Authority, the preliminary funding plan has served its

purpose. A writ of mandamus will not lie to compel the idle act of rescinding and

redoing it.

We therefore will issue a peremptory writ of mandate directing the trial court to

enter judgment validating the authorization of the bond issuance for purposes of the 2008

voter approved Safe, Reliable High-Speed Passenger Train Bond Act. (Bond Act)

1 Further undesignated statutory references are to the Streets and Highways Code.

3

(§ 2704 et seq.; see § 2704.04, subd. (a).) Further challenges by real parties in interest to

the use of bond proceeds are premature. The writ will also compel the trial court to

vacate its rulings requiring the Authority to perform the idle act of redoing the

preliminary section 2704.08, subdivision (c) funding plan after the Legislature

appropriated the bond funds.

FACTUAL AND PROCEDURAL CONTEXT2

On November 4, 2008, the voters of California passed Proposition 1A, the Bond

Act, “to initiate the construction of a high-speed train system that connects the San

Francisco Transbay Terminal to Los Angeles Union Station and Anaheim, and links the

state’s major population centers, including Sacramento, the San Francisco Bay Area, the

Central Valley, Los Angeles, the Inland Empire, Orange County, and San Diego . . . .”

(§ 2704.04, subd. (a); see § 2704 et seq.) The Bond Act authorizes the issuance and sale

of $9.95 billion in general obligation bonds “upon appropriation by the Legislature”

(§ 2704.04, subd. (b)(1); see § 2704.10) to begin construction of a high-speed train

system in California “consistent with the [A]uthority’s certified environmental impact

reports of November 2005 and July 9, 2008, as subsequently modified pursuant to

environmental studies conducted by the [A]uthority” (§ 2704.06).

The Bond Act sets forth specific criteria for the bond proceeds as well as for the

design and capacity of the system. For instance, no more than $950 million of bond

proceeds can be used for non-high-speed rail connectivity with high-speed rail lines.

(§ 2704.095.) High-speed rail, the Act provides, will feature electric trains capable of

operating at speeds of 200 miles per hour or greater, guaranteed maximum travel times

between major destinations, and achievable operating headway (time between successive

trains) of five minutes or less. (§ 2704.09, subds. (a), (b) & (c).)

2 We refer to the parties throughout this opinion by their appellate court designations.

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The Authority is the administrative body with primary responsibility for

overseeing the planning and construction of the high-speed rail system. (Sts. & Hy.

Code, § 2704.01, term (b); Pub. Util. Code, § 185020.) The Authority is subject to the

terms of the financing program set forth in article 2 and the fiscal provisions set forth in

article 3 of the Bond Act. (Sts. & Hy. Code, §§ 2704.04 et seq., 2704.10 et seq.) The

Argument in favor of Proposition 1A promised the voters: “Proposition 1A will protect

taxpayer interests. [¶] • Public oversight and detailed independent review of financing

plans. [¶] • Matching private and federal funding to be identified BEFORE state bond

funds are spent. [¶] • 90% of the bond funds to be spent on system construction, not

more studies, plans, and engineering activities.” (Voter Information Guide, General Elec.

(Nov. 4, 2008) argument in favor of Prop. 1A, p. 6.)

The Bond Act incorporates by reference the State General Obligation Bond Law,

Government Code section 16720 et seq. (Bond Law), which provides a uniform

procedure for authorizing the issuance, sale, and repayment of general obligation bonds

on behalf of the state. (Sts. & Hy. Code, § 2704.11.) The Bond Act designates the

Authority to act as the “board” for purposes of all Bond Law procedures (Sts. & Hy.

Code, § 2704.12, subd. (b)), including the authority to request that the “[c]ommittee”

authorize the issuance of bonds (Gov. Code, § 16722, term (d)). The Bond Act also

creates a High-Speed Passenger Train Finance Committee (Finance Committee) to serve

in the same capacity as the “[c]ommittee” named in the Bond Law, “[s]olely for the

purpose of authorizing the issuance and sale of the bonds authorized by [the Bond Act].”

(Sts. & Hy. Code, § 2704.12, subd. (a).)

Article 2, section 2704.08 is at the heart of the writ proceeding now before us.

Pursuant to subdivision (a) of section 2704.08, the bond proceeds cannot be used for

more than 50 percent of the total cost of construction for each usable segment or corridor.

“Corridor,” as used in the Bond Act, is “a portion of the high-speed train system as

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described in Section 2704.04” (§ 2704.01, term (f)),3 and “usable segment” is “a portion

of a corridor that includes at least two stations” (§ 2704.01, term (g)). Section 2704.08

compels the Authority to prepare a preliminary funding plan (§ 2704.08, subd. (c)) before

the Legislature appropriates the funds and a final funding plan (§ 2704.08, subd. (d))

before the proceeds of bonds are committed for expenditure.4 We must determine

whether a writ of mandamus is an appropriate remedy when, despite receipt of an

allegedly deficient preliminary funding plan, the Legislature appropriates the requested

funds, thereby authorizing the issuance and sale of bonds.

Streets and Highways Code section 2704.08, subdivision (c) provides as follows:

“(c)(1) No later than 90 days prior to the submittal to the Legislature and the Governor of

3 Seven corridors are described:

(A) Sacramento to Stockton to Fresno.

(B) San Francisco Transbay Terminal to San Jose to Fresno.

(C) Oakland to San Jose.

(D) Fresno to Bakersfield to Palmdale to Los Angeles Union Station.

(E) Los Angeles Union Station to Riverside to San Diego.

(F) Los Angeles Union Station to Anaheim to Irvine.

(G) Merced to Stockton to Oakland and San Francisco via the Altamont Corridor.

4 We acknowledge that the statute does not characterize the Streets and Highways Code

section 2704.08, subdivision (c) detailed funding plan as “preliminary” or the

section 2704.08, subdivision (d) detailed funding plan as “final.” A contextual reading of

the Bond Act, however, reveals that the two funding plans are part of a comprehensive

legislative scheme: the first to be presented to the Legislature before the appropriation of

bond funds and the second to be approved before the actual expenditure of bond

proceeds. The inclusion of the subdivision (d) plan is an explicit recognition that new,

and possibly different, information will be needed to supplement or augment the

preappropriation subdivision (c) plan, and further, that the preappropriation or

“preliminary” plan is in no way intended to be a final or conclusive administrative action.

Indeed, the Legislature characterized the subdivision (c) funding plan as the

“preappropriation review process” and the subdivision (d) funding plan as the

“preexpenditure review process.” (Pub. Util. Code, § 185033, subd. (b)(2).) For these

reasons, we will refer to the section 2704.08, subdivision (c) plan as preliminary and the

section 2704.08, subdivision (d) plan as final.

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the initial request for appropriation of proceeds of bonds authorized by this chapter for

any eligible capital costs on each corridor, or usable segment thereof . . . the authority

shall have approved and submitted to the Director of Finance, the peer review group

established pursuant to Section 185035 of the Public Utilities Code, and the policy

committees with jurisdiction over transportation matters and the fiscal committees in both

houses of the Legislature, a detailed funding plan for that corridor or a usable segment

thereof.

“(2) The plan shall include, identify, or certify to all of the following:

“(A) The corridor, or usable segment thereof, in which the authority is proposing

to invest bond proceeds.

“(B) A description of the expected terms and conditions associated with any lease

agreement or franchise agreement proposed to be entered into by the authority and any

other party for the construction or operation of passenger train service along the corridor

or usable segment thereof.

“(C) The estimated full cost of constructing the corridor or usable segment thereof,

including an estimate of cost escalation during construction and appropriate reserves for

contingencies.

“(D) The sources of all funds to be invested in the corridor, or usable segment

thereof, and the anticipated time of receipt of those funds based on expected

commitments, authorizations, agreements, allocations, or other means.

“(E) The projected ridership and operating revenue estimate based on projected

high-speed passenger train operations on the corridor or usable segment.

“(F) All known or foreseeable risks associated with the construction and operation

of high-speed passenger train service along the corridor or usable segment thereof and the

process and actions the authority will undertake to manage those risks.

“(G) Construction of the corridor or usable segment thereof can be completed as

proposed in the plan.

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“(H) The corridor or usable segment thereof would be suitable and ready for high-

speed train operation.

“(I) One or more passenger service providers can begin using the tracks or stations

for passenger train service.

“(J) The planned passenger service by the authority in the corridor or usable

segment thereof will not require a local, state, or federal operating subsidy.

“(K) The authority has completed all necessary project level environmental

clearances necessary to proceed to construction.”

Section 2704.08, subdivision (d) requires a final, preexpenditure funding plan as

follows: “Prior to committing any proceeds of bonds described in paragraph (1) of

subdivision (b) of Section 2704.04 for expenditure for construction and real property and

equipment acquisition on each corridor, or usable segment thereof, other than for costs

described in subdivision (g), the authority shall have approved and concurrently

submitted to the Director of Finance and the Chairperson of the Joint Legislative Budget

Committee the following: (1) a detailed funding plan for that corridor or usable segment

thereof that (A) identifies the corridor or usable segment thereof, and the estimated full

cost of constructing the corridor or usable segment thereof, (B) identifies the sources of

all funds to be used and anticipates time of receipt thereof based on offered commitments

by private parties, and authorizations, allocations, or other assurances received from

governmental agencies, (C) includes a projected ridership and operating revenue report,

(D) includes a construction cost projection including estimates of cost escalation during

construction and appropriate reserves for contingencies, (E) includes a report describing

any material changes from the plan submitted pursuant to subdivision (c) for this corridor

or usable segment thereof, and (F) describes the terms and conditions associated with any

agreement proposed to be entered into by the authority and any other party for the

construction or operation of passenger train service along the corridor or usable segment

thereof; and (2) a report or reports, prepared by one or more financial services firms,

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financial consulting firms, or other consultants, independent of any parties, other than the

authority, involved in funding or constructing the high-speed train system, indicating that

(A) construction of the corridor or usable segment thereof can be completed as proposed

in the plan submitted pursuant to paragraph (1), (B) if so completed, the corridor or

usable segment thereof would be suitable and ready for high-speed train operation,

(C) upon completion, one or more passenger service providers can begin using the tracks

or stations for passenger train service, (D) the planned passenger train service to be

provided by the authority, or pursuant to its authority, will not require operating subsidy,

and (E) an assessment of risk and the risk mitigation strategies proposed to be employed.

The Director of Finance shall review the plan within 60 days of its submission by the

authority and, after receiving any communication from the Joint Legislative Budget

Committee, if the director finds that the plan is likely to be successfully implemented as

proposed, the authority may enter into commitments to expend bond funds that are

subject to this subdivision and accept offered commitments from private parties.”

Proposition 1A also established the Finance Committee, which consists of five

senior government officials: the California State Treasurer; the Director of the

Department of Finance; the California State Controller; the Secretary of Business,

Transportation and Housing; and the chairperson of the Authority. (§ 2704.12, subd. (a).)

The Finance Committee is the administrative body with primary responsibility for

authorizing the issuance of bonds that will be used to finance initial construction of the

high-speed rail system. (Ibid.) Section 2704.13 provides, in relevant part: “The

committee shall determine whether or not it is necessary or desirable to issue bonds

authorized pursuant to this chapter in order to carry out the actions specified in

Sections 2704.06 and 2704.095 and, if so, the amount of bonds to be issued and sold.

Successive issues of bonds may be issued and sold to carry out those actions

progressively, and it is not necessary that all of the bonds authorized be issued and sold at

any one time. The committee shall consider program funding needs, revenue projections,

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financial market conditions, and other necessary factors in determining the term for the

bonds to be issued. In addition to all other powers specifically granted in this chapter and

the State General Obligation Bond Law, the committee may do all things necessary or

convenient to carry out the powers and purposes of this article, including the approval of

any indenture relating to the bonds, and the delegation of necessary duties to the

chairperson and to the Treasurer as agent for the sale of the bonds.”

The peer review group plays another significant role in providing financial

oversight and monitoring the feasibility of the Authority’s plans. Public Utilities Code

section 185035 provides, in relevant part: “(a) The authority shall establish an

independent peer review group for the purpose of reviewing the planning, engineering,

financing, and other elements of the authority’s plans and issuing an analysis of

appropriateness and accuracy of the authority’s assumptions and an analysis of the

viability of the authority’s financing plan, including the funding plan for each corridor

required pursuant to subdivision (b) of Section 2704.08 of the Streets and Highways

Code. [¶] . . . [¶] (c) The peer review group shall evaluate the authority’s funding plans

and prepare its independent judgment as to the feasibility and reasonableness of the plans,

appropriateness of assumptions, analyses, and estimates, and any other observations or

evaluations it deems necessary.”

The Authority is also required to “prepare, publish, adopt, and submit to the

Legislature, not later than January 1, 2012, and every two years thereafter, a business

plan. At least 60 days prior to the publication of the plan, the authority shall publish a

draft business plan for public review and comment. The draft plan shall also be

submitted to the Senate Committee on Transportation and Housing, the Assembly

Committee on Transportation, the Senate Committee on Budget and Fiscal Review, and

the Assembly Committee on Budget.” (Pub. Util. Code, § 185033, former subd. (a), as

amended by Stats. 2009, ch. 618, § 1.) “The business plan shall identify all of the

following: the type of service the authority anticipates it will develop, such as local,

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express, commuter, regional, or interregional; a description of the primary benefits the

system will provide; a forecast of the anticipated patronage, operating and maintenance

costs, and capital costs for the system; an estimate and description of the total anticipated

federal, state, local, and other funds the authority intends to access to fund the

construction and operation of the system; and the proposed chronology for the

construction of the eligible corridors of the statewide high-speed train system. The

business plan shall also include a discussion of all reasonably foreseeable risks the

project may encounter, including, but not limited to, risks associated with the project’s

finances, patronage, right-of-way acquisition, environmental clearances, construction,

equipment, and technology, and other risks associated with the project’s development.

The plan shall describe the authority’s strategies, processes, or other actions it intends to

utilize to manage those risks.” (Ibid.)

The Authority certified the preliminary funding plan two days after issuing the

“Draft 2012 Business Plan” (draft business plan). The draft business plan identified the

“corridor, or usable segment thereof,” as one of two alternative initial operating sections

(IOS): IOS-North, a usable segment of approximately 290 miles from Bakersfield in the

south to San Jose in the north, or IOS-South, an alternative usable segment of

approximately 300 miles from Merced in the north to the San Fernando Valley in the

south. To the consternation of the peer review group, the preliminary funding plan

expressly incorporated the draft business plan and proposed an investment of $2.684

billion in bonds authorized under Proposition 1A, the amount needed to supplement the

$3.316 billion in federal funds awarded for construction of the initial construction section

(ICS), a 130-mile conventional rail portion of the system. Because of the stringent 60-

day deadline to complete its assessment of the preliminary funding plan, the peer review

group was put “in the position of reaching findings and conclusions on the Funding Plan

based upon the content of a foundational Business Plan document that is still in draft

form.” (See Pub. Util. Code, § 185035.)

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On November 14, 2011, John Tos, Aaron Fukuda, and County of Kings (the Tos

real parties) filed their initial complaint for declaratory relief, injunctive relief, and for

relief pursuant to Code of Civil Procedure section 526a and the private attorney general

doctrine (Tos action), alleging, among other things, that the preliminary funding plan

violated the Bond Act. On December 13, 2011, the complaint was amended to add a

cause of action seeking relief in the form of a writ of mandamus/prohibition. On

January 3, 2012, the peer review group submitted a report to the Legislature outlining

weaknesses in the preliminary funding plan and draft business plan, and offering a

number of suggestions to improve the viability of the high-speed rail project.

On April 19, 2012, the Authority adopted the “Revised 2012 Business Plan”

(revised business plan). The revised business plan identifies a 300-mile “usable

segment” from Merced to the San Fernando Valley (IOS-South), but unlike the draft

business plan, the revised business plan commits “to build not just an initial construction

segment but in fact an Initial Operating Section (IOS) of high-speed rail.” Moreover, the

revised business plan introduced a “blended systems” approach that integrates high-speed

rail with existing commuter lines in various urban areas. The revised business plan

states: “Passengers will have more options, faster travel times, and greater reliability and

safety. . . . [¶] Benefits will be delivered faster through the adoption of the blended

approach and through investment in the bookends. Across the state, transportation

systems will be improved and jobs will be created through the implementation of those

improvements.”

On April 17, 2012, the Legislative Analyst’s office (LAO) issued a report

providing a negative critique of the revised business plan for the Legislature. The report

states: “In April 2012, the [Authority] released its most recent business plan that

estimates the cost of constructing the first phase of the high-speed train project at

$68 billion. However, the [Authority] only has secured about $9 billion in voter

approved bond funds and $3.5 billion in federal funds. Thus, the availability of future

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funding to construct the system is highly uncertain.” (Legis. Analyst, The 2012-13

Budget: Funding Requests for High-Speed Rail, Apr. 17, 2012, p. 1.) Thus, the LAO

concludes: “We find that [the Authority] has not provided sufficient detail and

justification to the Legislature regarding its plan to build a high-speed train system.

Specifically, funding for the project remains highly speculative and important details

have not been sorted out. We recommend the Legislature not approve the Governor’s

various budget proposals to provide additional funding for the project. However, we

recommend that some minimal funding be provided to continue planning efforts that are

currently underway.” (Ibid.)

On July 18, 2012, nearly four years after adoption of the Bond Act and after

extensive studies, planning, public hearings, and debate, the Legislature enacted Senate

Bill No. 1029 (Stats. 2012, ch. 152), thereby appropriating state funds and federal grants

for high-speed rail as follows:

A total of $819,333,000 “for capital improvement projects to intercity and

commuter rail lines and urban rail systems that provide direct connectivity to the high-

speed train system and its facilities . . . .” (Stats. 2012, ch. 152, §§ 1, 2.)

“Bookend” funding of $1.1 billion “for expenditure for state operations, local

assistance, or capital outlay . . . .” (Stats. 2012, ch. 152, § 3.)

A total of $48,354,000 “[f]or capital outlay, High-Speed Rail Authority, payable

from the Federal Trust Fund . . . .” (Stats. 2012, ch. 152, §§ 4, 6.)

A total of $204,173,000 “[f]or capital outlay, High-Speed Rail Authority, payable

from the High-Speed Passenger Train Bond Fund . . . .” (Stats. 2012, ch. 152, §§ 5, 7.)

To acquire and build the IOS, $3,240,676,000, payable from the Federal Trust

Fund. (Stats. 2012, ch. 152, § 8.)

To acquire and build the IOS, $2,609,076,000, payable from the High-Speed

Passenger Train Bond Fund. (Stats. 2012, ch. 152, § 9.)

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As will be described in further detail, post, the Legislature itself enforced the rigid

reporting provisions of section 2704.08, subdivision (c) of the Bond Act by requiring the

Authority to submit additional reports and obtain additional approvals before the funds

appropriated could be encumbered. (Stats. 2012, ch. 152, § 3.)

On March 18, 2013, the Authority adopted Resolution # HSRA 13-03 requesting

the Finance Committee “to authorize issuance of bonds and commercial paper notes

under the Bond Act to provide funds for the projects as authorized in sections 2704.04

and 2704.06 of the California Streets and Highways Code in the aggregate principal

amount of $8,599,715,000.” That same day, the Finance Committee, consistent with

section 2704.13, adopted Resolution IX (2013) declaring that it was necessary and

desirable “to authorize the issuance hereunder of $8,599,715,000 in [the] principal

amount (the ‘Authorized Amount’) of general obligation bonds (the ‘Bonds’) and other

obligations pursuant to this Resolution to carry out the purposes” of the Bond Act.

If our arithmetic is correct, therefore, in 2012 the Legislature appropriated a total

of $4,732,582,000 in Bond Act funds and $3,289,030,000 from the Federal Trust Fund to

finance high-speed rail in California. Of the $8,021,609,000 total funds appropriated by

the Legislature, approximately $6.1 billion was appropriated to finance IOS-South. In

2013 the Authority requested, and the Finance Committee authorized, the issuance of

bonds under the Bond Act in the aggregate principal amount of $8,599,715,000.

The following day, March 19, 2013, the Authority and the Finance Committee

filed a validation action to obtain a judgment validating the bonds so they could be sold

on the capital markets. (Code Civ. Proc., § 860 et seq.; Gov, Code, § 17700.) John Tos,

Aaron Fukuda, County of Kings, Howard Jarvis Taxpayers Association, Kings County

Water District, Citizens for California High-Speed Rail Accountability, Eugene Voiland,

County of Kern, and First Free Will Baptist Church opposed the action; Union Pacific

Railroad Company filed a responsive pleading as an interested party in the validation

action (collectively, real parties in interest).

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The trial court bifurcated the writ of mandate issues from the other remedies the

Tos real parties sought in the Tos action. Over time, the Tos real parties had amended

their complaint several times, with the operative allegations contained in the second

amended complaint, which set forth 12 sweeping causes of action. However, at the first

hearing on May 31, 2013, the scope of the petition for a writ of mandamus was narrowed

to two deficiencies in the preliminary funding plan, which are at issue before us in this

appeal.

First, the Tos real parties allege that it will cost at least an additional $20 billion to

complete the last 170 miles of the 300-mile usable segment, and contrary to the

mandatory terms of Proposition 1A, the sources of these funds have not been identified

and committed. (§ 2704.08, subd. (c)(2)(D) [“(2) The [preliminary funding] plan shall

include, identify, or certify to all of the following: [¶] . . . [¶] (D) The sources of all

funds to be invested in the corridor, or usable segment thereof, and the anticipated time of

receipt of those funds based on expected commitments, authorizations, agreements,

allocations, or other means.”].)

Second, the Tos real parties complain that the Authority failed to obtain the

necessary environmental clearances before approving the preliminary funding plan.

(§ 2704.08, subd. (c)(2)(K) [“(2) The [preliminary funding] plan shall include, identify,

or certify to all of the following: [¶] . . . [¶] (K) The Authority has completed all

necessary project level environmental clearances necessary to proceed to construction.”].)

“[The Tos real parties] specifically allege that the environmental review process required

by Proposition 1A is far from complete, it is in its infancy with respect to the section

between Fresno and Bakersfield. In addition, major environmental litigation has just

been filed in the Central Valley challenging the adequacy of some of the environmental

studies. Additionally, [the Tos real parties] allege that the environmental clearances

necessary for defendants to commence construction of the Central Valley project have

15

not been obtained from the U.S. Corps of Engineers, the U.S. Fish and Wildlife Service,

and the San Joaquin Valley Air Pollution Control District.”

On August 16, 2013, the trial court issued a 15-page ruling explaining that the

preliminary funding plan submitted by the Authority to the Legislature did not comply

with the Bond Act. (§ 2704.08, subd. (c)(2)(D) & (K).)

There is no dispute that the Authority identified the necessary funding sources for

the ICS, amounting to approximately $6 billion in combined federal and state funding.

The court pointed out, however, that section 2704.08, subdivision (c)(2)(D) requires

identification of funding sources for the entire IOS, and the full cost of completing IOS-

South was projected to be in excess of $26 billion. In the trial court’s view,

subdivision (c)(2)(D) “required the Authority to identify sources of funds that were more

than merely theoretically possible, but instead were reasonably expected to be actually

available when needed. This is clear from the language of the statute requiring the

Authority to describe the ‘anticipated time of receipt of those funds based on expected

commitments, authorizations, agreements, allocations, or other means.’ (Emphasis added

[by trial court].) Such language, especially the use of the highlighted terms ‘anticipated’

and ‘expected’, indicates that the identification of funds must be based on a reasonable

present expectation of receipt on a projected date, and not merely a hope or possibility

that such funds may become available.”

The trial court quoted at some length from the draft business plan, rather than the

revised business plan. The court noted the draft business plan explicitly stated “that

funds for construction of the remainder of the IOS would be identified at a later time

(‘not later than 2015’)” and “candidly acknowledged that committed funding for

construction of the IOS in the years 2015 to 2021 ‘is not fully identified’, and that ‘the

mix, timing, and amount of federal funding for later sections of the [high-speed rail] is

not known at this time.” The court concluded, “This language demonstrates that the

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funding plan failed to comply with the statute, because it simply did not identify funds

available for the completion of the entire IOS.”

Rejecting arguments lodged by the Attorney General construing the statute to

allow completion of all environmental clearances before construction rather than before

the preliminary funding plan is approved, the trial court held: “Subsection (K), on its

face, requires the Authority to certify that it has completed all necessary project level

environmental clearances necessary to proceed to construction. As the language from the

funding plan quoted above demonstrates, the plan does not address project level

environmental clearances for the entire IOS at all, but only addresses the ICS. Moreover,

the funding plan explicitly states that project level environmental clearances have not yet

been completed even for the ICS. It is therefore manifest that the funding plan does not

comply with the plain language of the statute.”

Although the trial court found the preliminary funding plan was deficient, the

court remained uncertain whether a writ of mandate would lie to compel the Authority to

rescind it in light of its conclusion that a writ would not issue to invalidate the legislative

appropriation both on substantive and procedural grounds.

Substantively, the court explained: “Nothing in Section 2704.08[,

subdivision] (c)(2), or elsewhere in Proposition 1A, provides that the Legislature shall not

or may not make an appropriation for the high-speed rail program if the initial funding

plan required by Section 2704.08[, subdivision] (c)(2) fails to comply with all the

requirements of the statute. Lacking such a consequence for the Authority’s non-

compliance, Proposition 1A appears to entrust the question of whether to make an

appropriation based on the funding plan to the Legislature’s collective judgment. The

terms of Proposition 1A itself give the Court no authority to interfere with that exercise

of judgment.”

Procedurally, the court pointed out that the Tos real parties did not seek

invalidation of the legislative appropriation in the second amended complaint and raised

17

the issue for the first time in their reply brief. The court subscribed to the general rule

that, in fairness to petitioners, arguments raised for the first time in reply would not be

considered.

If, as the trial court found, the appropriation was not subject to challenge, the

question posed is whether a writ of mandate to rescind the preliminary funding plan

would have any real and practical effect. The court asked for supplemental briefing to

determine whether the writ could invalidate any subsequent approvals by the Authority or

any of the other petitioners. If so, the court intimated that a writ might offer a real and

practical benefit.

A second hearing was held on November 8, 2013, and the court issued its second

ruling on November 25, 2013. The trial court issued a writ of mandate directing the

Authority to rescind its approval of the November 3, 2011, preliminary funding plan

because “the preparation and approval of a detailed funding plan that complies with all of

the requirements of Streets and Highways Code section 2704.08[, subdivision] (c) is a

necessary prerequisite for the preparation and approval of a second detailed funding plan

under subdivision (d) of the statute, which in turn is a necessary prerequisite to the

Authority’s expenditure of any bond proceeds for construction or real property and

equipment acquisition, other than for costs described in subdivision (g).” Thus, the trial

court concluded, the writ would have a real and practical effect.

The court, however, denied the Tos real parties the many other remedies they

sought. It refused to issue a writ to invalidate any subsequent approvals made by the

Authority in reliance on the November 3, 2011, preliminary funding plan, including

contracts with Caltrans and Tutor-Perini-Parsons, because there was insufficient evidence

the Authority, in utilizing federal grant money, had violated any of the limitations set by

Proposition 1A and the contracts contained termination clauses to assure that the state did

not transgress those limitations. The court also refused to (1) enjoin the Authority from

submitting a final funding plan until its preliminary funding plan complies with

18

section 2704.08, subdivision (c); (2) issue a temporary restraining order to prohibit the

Authority from using federal grant money; and (3) order an accounting of past and

projected expenditures on the high-speed rail project.

On the same day the trial court issued its ruling in the Tos action, it denied the

Authority and Finance Committee’s request for a validation judgment approving the

issuance of more than $8 billion in bonds. The court found that the Finance Committee’s

determination that issuance of the bonds was necessary or desirable was a quasi-

legislative act that must be supported by evidence in the record. The court explained that

it could “find no evidence in the record of proceedings submitted by [the Authority and

the Finance Committee] that supports a determination that it was necessary or desirable

to authorize the issuance of more than eight billion dollars in bonds under Proposition 1A

as of March 18, 2013. The record of proceedings in this matter consists of little more

than the Authority’s Resolution requesting that the Finance Committee authorize issuance

of bonds, and the Finance Committee’s Resolutions doing so. The Finance Committee’s

Resolutions contain bare findings of necessity and desirability which contain no

explanations of how, or on what basis, it made those findings. Specifically, the findings

contain no summary of the factors the Finance Committee considered and no description

of the content of any documentary or other evidence it may have received and

considered. Thus the findings themselves do not assist the Court in determining whether

those findings are supported by any evidence.”

The Authority, the Finance Committee, and others thereafter filed a petition for a

writ of mandamus for relief in both cases.5 Petitioners ask us to issue a peremptory writ

5 Petitioners also include Governor Edmund G. Brown, Jr.; State Treasurer Bill Lockyer;

Director of the Department of Finance, Michael Cohen; and Secretary of the State

Transportation Agency, Brian Kelly. Petitioners initially filed their petition with the

California Supreme Court. The Supreme Court transferred the case to us.

19

of mandate directing the trial court to vacate its writ in the Tos action and to vacate its

ruling in the validation case, and to enter a judgment validating the bonds authorized by

the Finance Committee.

DISCUSSION

I

The Validation Action

Neither the Bond Law, the Bond Act, nor any of the validation cases we could find

support the trial court’s highly unusual scrutiny of the Finance Committee’s

determination that it is “necessary or desirable” to grant the Authority’s request to

authorize the issuance of the bonds. The Attorney General, supported by amici curiae,

argues the trial court’s notion that the voters intended the Finance Committee to serve as

the “ ‘ “keeper of the checkbook” ’ ” not only thwarts progress building a high-speed rail

system in California, but jeopardizes the financing of public infrastructure throughout the

state by interfering with the Legislature’s exercise of its appropriation authority, invents

judicial remedies where none are provided by law, and subverts the very purpose of the

validation statutes. We agree.

Validation actions embody a strong public policy to facilitate a public agency’s

ability to finance infrastructure for the public good. Recognizing that litigation often

impairs a public agency’s ability to sell bonds on the capital market, the validation

statutes place great importance on the need for a speedy and single dispositive final

judgment. We must construe the validating statutes so as to effectuate their purpose.

(Friedland v. City of Long Beach (1998) 62 Cal.App.4th 835, 842-843.)

By refusing to validate the authorization of bonds due to a lack of evidence “in the

record of proceedings” before the Finance Committee, the court imposed requirements on

the Finance Committee that do not appear in any of the governing statutes and thereby

denied the Authority the speedy, dispositive judgment the validation action was designed

to provide. Neither the Bond Law nor the specific Bond Act requires the Finance

20

Committee to make any factual findings or to explain the basis for its determination.

Similarly, real parties in interest do not point to any statute that requires the Finance

Committee to hold an evidentiary hearing. Without limitation or restriction, the Bond

Act and the Bond Law grant the Finance Committee broad discretion to determine

whether it is “necessary or desirable” to authorize the issuance of bonds to carry out the

purposes of the Bond Act. (Sts. & Hy. Code, § 2704.13; Gov. Code, §§ 16722, subd. (a),

16730.)

Cases construing the “necessary or desirable” language uniformly recognize the

breadth of discretion it confers upon an administrative or legislative body. In construing

the “necessary or desirable” language, the Fourth District Court of Appeal wrote that the

words “are probably so elastic as not to impose any substantive requirements.” (Boelts v.

City of Lake Forest (2005) 127 Cal.App.4th 116, 128, fn. 13 (Boelts).) Similarly, over

eight decades ago, the Second Appellate District held that a legislative body’s discretion

should not be curtailed by implying requirements that it justify its determination of

necessary or desirable. (City of Monrovia v. Black (1928) 88 Cal.App. 686, 690.) The

court concluded, “In the absence of any such requirement in the statute, the determination

of the legislative body that the fact exists on which their power to act depends is

sufficiently indicated by their proceeding to act.” (Ibid.)

And as far back as 1947, the Second District Court of Appeal characterized the

law as “well settled” and explained: “[T]he question as to whether such a rule is

‘necessary and desirable’ is not a judicial question. The courts are not charged with the

responsibility of determining the wisdom of the rule. That question was for the board to

determine. And as the trial judge observed, ‘That the board deemed the rule desirable is

evidenced conclusively by its adoption.’ ” (Perez v. Board of Police Commrs. (1947)

78 Cal.App.2d 638, 643.)

The Authority does not suggest that the validity of bond authorization is never

subject to judicial review, that a bond finance committee can or should approve every

21

request for bond authorization as a matter of course, or that courts must validate every

authorization of bonds for which validation is sought. Rather, the Authority focuses on

the exceptionally broad discretion conferred on any administrative or legislative body

charged with making the mere determination that an action is desirable. Given such

unencumbered discretion, there is little room for judicial intervention. Real parties in

interest simply fail to appreciate the critical distinction between other types of challenges

to validation and the very specific determination made by the Finance Committee that the

issuance of the bonds was necessary or desirable. Thus, their reliance on Boelts, supra,

127 Cal.App.4th 116 and Poway Royal Mobilehome Owners Assn. v. City of Poway

(2007) 149 Cal.App.4th 1460 (Poway) misses the mark.

Indeed, Boelts highlights the distinction real parties in interest ignore. The case

involved a reverse validation action challenging the validity of an amendment to a

redevelopment plan. (Boelts, supra, 127 Cal.App.4th at p. 125.) The community

redevelopment laws required the city to make a finding that the project area was blighted

“based on clearly articulated and documented evidence.” (Health & Saf. Code, § 33367,

subd. (d); see Boelts, at p. 127.) Because the governing statute expressly circumscribed

the legislative body’s discretion by requiring evidence to support the finding, the court

invoked the familiar substantial evidence standard of review. (Boelts, at p. 134.) By

contrast, the statutory requirement that the legislative body find that an amendment to a

redevelopment plan was “ ‘necessary or desirable’ ” was not substantive and did not limit

the city’s discretion. (Id. at p. 128, fn. 13.) The “necessary or desirable” determination

was not subject to judicial review in Boelts.

Poway, supra, 149 Cal.App.4th 1460 also is inapposite. According to pertinent

federal law, the city was required to hold a public hearing before the bond qualified to be

used for a residential rental project for low income residents. (26 U.S.C.

§ 147(f)(2)(B)(i); Poway, at p. 1482.) The city noticed a hearing and thereafter adopted

resolutions approving the sale of a mobile home park to the redevelopment agency.

22

(Poway, at p. 1482.) The homeowners association challenged a judgment in the ensuing

validation action, claiming the city presented no evidence at the hearing to support the

sale. (Ibid.) Because the city was compelled by law to hold a hearing, the Court of

Appeal invoked the substantial evidence standard of review. “We examine the

administrative record to determine whether substantial evidence supports the trial court’s

findings.” (Id. at p. 1479.)

Finance committees under the Bond Law, and the Finance Committee established

by the Bond Act, are given the statutory charge to determine when the issuance of bonds

is “necessary or desirable,” but they are not required to conduct a hearing, take evidence,

or make findings. The Bond Act does not require the Authority to provide any support to

the Finance Committee for its request for authorization of the issuance of the bonds,

apparently contemplating that all the necessary support is provided through the reports

the Authority is required by section 2704.08 to submit to the Legislature. Real parties in

interest have cited no statute that imposes duties on a finance committee commensurate

with the evidentiary requirements compelled by the statutes applicable in Boelts and

Poway. As a result, real parties in interest offer neither a statute nor an analogous case to

support the novel proposition that a “necessary or desirable” determination must be

supported by substantial evidence in the administrative record.

Moreover, such an intrusive standard would offend the fundamental separation of

powers between the legislative and judicial branches of government. The Supreme Court

has cautioned courts to exercise a highly deferential and limited review, “out of deference

to the separation of powers between the Legislature and the judiciary, to the legislative

delegation of administrative authority to the agency, and to the presumed expertise of the

agency within its scope of authority.” (California Hotel & Motel Assn. v. Industrial

Welfare Com. (1979) 25 Cal.3d 200, 211-212.) Where, as here, the administrative

agency performs a discretionary quasi-legislative act, judicial review is at the far end of a

continuum requiring the utmost deference. (Carrancho v. California Air Resources

23

Board (2003) 111 Cal.App.4th 1255, 1265.) An agency’s exercise of discretionary

legislative power will be disturbed “only if the action taken is so palpably unreasonable

and arbitrary as to show an abuse of discretion as a matter of law. This is a highly

deferential test. [Citation.]” (Ibid.)

There is no support for real parties in interest’s allegation that the Finance

Committee’s determination was arbitrary, capricious, or palpably unreasonable as a

matter of law. The only basis required by the Bond Act for the Finance Committee to act

is the Authority’s request to the Finance Committee. (Sts. & Hy. Code, § 2704.11,

subd. (a), incorporating Gov. Code, § 16730; Sts. & Hy. Code, § 2704.13.) The request

contained all the information that the Finance Committee needed to authorize bonds for

validation–the fact that the Authority was requesting the authorization of bonds pursuant

to the Bond Act and only for purposes authorized by the Bond Act. The Finance

Committee also had before it a draft resolution detailing the authorization of the bonds

and the structure of the eventual sales, including that the bonds sold would not exceed the

appropriation authorized by the Legislature. As a result, the Finance Committee’s

determination that it is “necessary or desirable” to authorize issuance of the bonds to

carry out the purposes of the Bond Act rests on the draft resolution and the Finance

Committee’s assessment of need, unencumbered by the need to identify the facts or

express reasons for supporting the determination. Real parties in interest would have us

impose more of an evidentiary burden on the Finance Committee than is required by the

governing statute, and thus would have us cramp the broad discretion the Finance

Committee is afforded by the applicable statutes and intrude into the quasi-legislative role

it was assigned by the voters. We reject the invitation to embark upon such an

unwarranted and unwise intrusion into the administrative process.

Real parties in interest make two arguments we can summarily dismiss. First, they

assert that the Finance Committee’s determination “whether or not” issuance of the bonds

is necessary or desirable is subject to a substantial evidence standard of review, insisting

24

that the addition of the two words “or not” alters the calculus on the amount of discretion

the Finance Committee wields and therefore the quantum of evidence needed to justify

the exercise of that discretion. The argument is without merit. The term “whether”

necessarily means “whether or not.” Either way, the Finance Committee must decide if

issuance is necessary or desirable, and the mere redundancy of the language does not

thereby increase the scrutiny a court must give to that determination.

Second, real parties in interest suggest that to allow the Finance Committee utmost

discretion in determining whether issuance is necessary or desirable is to allow it to

operate as a mere “rubber stamp.” Real parties in interest further contend that in that case

there is no purpose for the Finance Committee and we should not assume the voters

would engage in the idle act of creating a meaningless decision-making body. Their

argument requires us to presume that the State Treasurer, the Director of the Department

of Finance, the Controller, the Secretary of Business, Transportation and Housing, and

the Chairperson of the Authority, all members of the Finance Committee with

considerable public finance expertise, would shirk their responsibility to prudently

control the timing of the authorization of the bonds. We do not agree that the creation of

a Finance Committee with considerable discretion to employ its expertise would act as a

mere rubber stamp. Rather, by enacting the Bond Act, the voters decided to mimic the

same bifurcation of roles included in the Bond Law; that is, the voters intended to

establish one body with expertise over managing the project and a second body with

considerable public finance expertise to exercise its discretion over the timing and

amount of the issuance of the bonds. Our deference to the Finance Committee’s

determination as to when the bonds are necessary or desirable does not render the voters’

reliance on its expertise an idle act.

Real parties in interest insist that even if we reject their argument that the

“necessary or desirable” finding was not supported by substantial evidence, we should

not enter judgment validating the bonds because the Authority improperly requested the

25

Legislature to appropriate bond funds for a project that has morphed into something

materially different from the project approved by the voters. Real parties in interest ask

us to remand the validation to the trial court to make this determination. Their challenges

are premature.

It is true that a bond act approved by the voters can, by its terms, limit the

purposes for which the bond proceeds can be spent. (O’Farrell v. County of Sonoma

(1922) 189 Cal. 343, 348-349 (O’Farrell).) “Whether the limitation be deemed to be

contractual [citation] or of a status analogous to such relation [citation] or a restriction

implied by the requirement of popular approval of the bonds [citation], it does restrict the

power of the public body in the expenditure of the bond issue proceeds, and hence in the

nature of the project to be completed and paid for.” (Mills v. S.F. Bay Area Rapid Transit

Dist. (1968) 261 Cal.App.2d 666, 668 (Mills).) More importantly, article XVI, section 1

of the California Constitution requires that the works funded by a bond measure shall be

“distinctly specified” in the measure presented to the voters, and that any bonds to be

issued as authorized by the bond act approved by the voters “shall be applied only to the

specific object therein stated.”

Real parties in interest acknowledge that there is no published appellate decision

denying validation of a bond authorization before there has been an actual bond

expenditure for a project differing significantly from the project approved by the voters.6

There are, however, many cases in which the courts have broadly construed the purpose

of the relevant bond act to allow projects to proceed that would appear to be either at

6 The cases real parties in interest cite, as well as an opinion of the Attorney General, are

inapposite because they did not involve challenges to mere authorizations of bond

issuance solely for purposes authorized by the voters in the Bond Act. (California

Statewide Communities Development Authority v. All Persons Interested etc. (2007)

40 Cal.4th 788, 795; Morgan Hill Unified School Dist. v. Amoroso (1988)

204 Cal.App.3d 1083, 1086-1087; 92 Ops.Cal.Atty.Gen. 1 (2009).) Nor do real parties in

interest here raise any constitutional challenge to the authorization.

26

odds with, or beyond the scope of, the articulated purpose of the act or the description of

the project on the ballot.

For example, in East Bay Mun. Util. Dist. v. Sindelar (1971) 16 Cal.App.3d 910

(EBMUD), the voters approved a measure allowing the utility district to incur a bonded

indebtedness to finance a 10-year “Water Development Project for the East Bay Area” in

1958. (Id. at pp. 914-915.) By 1967 the construction of its physical components had

been completed, with $84 million in authorized but unissued bonds remaining. The

district celebrated the completion of the project. But in 1970 the board of directors

authorized the issuance and sale of another $12 million in bonds based on its

determination the bonds “ ‘were deemed necessary and desirable . . . to provide

additional moneys to finance the Water Development Project for East Bay Area as

authorized at . . . [the 1958 bond] . . . election.’ ” (Id. at pp. 915-916.) The district

treasurer refused to sign the duly authorized bonds on the following grounds:

“ ‘1. That . . . [the district] . . . is without authority to issue said Bonds of Series G or any

part thereof for the reason that the Water Development Project for East Bay Area has

been fully constructed and completed and that no authority exists for the issuance of said

bonds purely for the expansion of the water system of the District based upon the

expanded area and increased water demand of the District since the date of . . . [the

1958 bond] . . . election, to wit, since June 3, 1958. 2. That it was generally understood

by the electors of the District voting upon the proposition for the issuance of said bonds

that the construction program would end within a period of ten years and that no

additional bonds would be issued or sold more than ten years after the date of said

election and that the authority to issue and sell said bonds accordingly expired on June 3,

1968, to wit, ten years from the date of said election. 3. That more than twelve years

have elapsed since the date of said election and by reason solely of the lapse of time the

authority granted by the electors for the issuance and sale of the bonds has ceased to have

27

any effect and the authority of the District to issue and sell said bonds has accordingly

expired.’ ” (Id. at p. 917.)

The Court of Appeal issued a peremptory writ of mandate to compel the treasurer

to execute the bonds. (EBMUD, supra, 16 Cal.App.3d at p. 920.) Despite the fact that

the construction of the water system was complete and the language of the promotional

materials for the ballot measure represented that the construction program would end

within 10 years and no additional bonds would be issued or sold, the court found the

bond proposition had been submitted to the voters “in broad and general terms.” (Id. at

p. 919.) Quoting the rationale of Clark v. Los Angeles (1911) 160 Cal. 317, 320, the

court stated: “ ‘The purpose for which . . . [bond] . . . elections are required is to obtain

the assent of the voters to a public debt, to the amount, and for the object, proposed. The

amount must, of course, be stated on the ballot; the general purpose must be stated with

sufficient certainty to inform the voters and not mislead them, as to the object intended;

but the details of the proposed work or improvement need not be given at length in the

ballot.’ [Citation.] Thus, the language of the district’s Ordinance No. 191, and of the

ballot proposition which it addressed to the electorate, was sufficiently specific as to the

object and purposes of the bonds proposed.”

The courts have been particularly attuned to the fluidity of the planning process

for large public works projects. In fact, the Supreme Court has allowed substantial

deviation between the preliminary plans submitted to the voters and the eventual final

project, admonishing: “[T]he authority to issue bonds is not so bound up with the

preliminary plans as to sources of supply upon which the estimate is based that the

proceeds of a valid issue of bonds cannot be used to carry out a modified plan if the

change is deemed advantageous.” (Cullen v. Glendora Water Co. (1896) 113 Cal. 503,

510.) Similarly, the court broadly construed the purpose of the proposition approving the

Bay Area Rapid Transit District and sanctioned the relocation of one of the terminal

stations. The court wrote, “Obviously, the statutes, the notice of election and the ballot

28

proposition itself contemplate a broad authority for construction of a three-county rapid

transit system. In the wide scope of this substantial transit project, the deviation of

1 1/2 miles in location of a single station is but a minor change in the tentative plan which

was relied upon only to forecast feasibility of the project as a whole.” (Mills, supra,

261 Cal.App.2d at p. 669.)

The development of a high-speed rail system for the state of California is even

more complex than a regional water or transportation system. The Authority is obligated

to prepare preliminary and final funding plans as well as business plans every two years

as it fine-tunes the construction of the project. Thus, it may be that the specifics of the

project deviate from some of the preliminary planning documents or constitute minor

changes from tentative plans. We cannot and should not decide whether any future use of

bond funds will stray too far from the express language used in Proposition 1A to

describe the purpose and parameters of the Bond Act. The pleadings and the trial court’s

rulings, in fact, were extremely limited in scope.

The complaint filed by the Authority and the Finance Committee was limited to

the validity of the issuance of the bonds for any purpose authorized by the Bond Act, and

as a consequence, it did not identify any particular use of the bond proceeds. Nor did the

bond resolutions identify any particular use. Because there is no final funding plan and

the design of the system remains in flux, as does the funding mechanism to support it, we

simply cannot determine whether the project will comply with the specific requirements

of the Bond Act and whether any future deviations will be considered significant or

trivial.7 To allow real parties in interest to prematurely challenge future potential uses of

7 We reject the First Free Will Baptist Church’s contention that Senate Bill No. 1029 and

the revised business plan set forth the uses of the bond proceeds and those documents

demonstrate that the high-speed rail system to be built is not the same project approved

by the voters. Senate Bill No. 1029 expressly requires the Authority to prepare many

more reports, approvals, and certifications, and the revised business plan is subject to

29

the bonds would undermine the purpose of the validation action and interpose an infinite

number of obstacles to the public financing of public projects.

The Attorney General points out that whether or not any particular later

expenditure of bond funds would comply with the Bond Act is not relevant to the validity

of bond authorization and, as the cases cited by real parties in interest demonstrate, can

be adjudicated in separate actions. (See, e.g., Tooker v. San Francisco Bay Area Rapid

Transit Dist. (1972) 22 Cal.App.3d 643, 649, 652.) The trial court agreed. “Issues

regarding the use of proceeds are separate from the issue raised in this validation action,

which is whether the bonds were properly authorized.” In denying requests for judicial

notice of documents from the Tos action because they were irrelevant, the court

recognized that the only statutes and documents it would consider in the validation action

were those relating to bond authorization. The court ruled that “[t]he issue before the

Court in this validation proceeding is strictly limited to whether the Finance Committee’s

determination that issuance of bonds was necessary and desirable as of March 18, 2013 is

supported by any evidence in the record. . . . [¶] . . . [¶] Because this ruling disposes of

the validation action, the Court finds it unnecessary to address or resolve any of the other

arguments raised by the [real parties in interest] in opposition to the complaint.” Thus,

the trial court did not rule on the issue real parties in interest urge us to decide.

The validity of the authorization, therefore, is the only issue framed by the

pleadings and decided by the trial court. The final funding plan and additional reports

required by section 2704.08, subdivision (d) are yet to be prepared and approved by the

Authority, let alone submitted to and approved by the Director of the Department of

Finance. It is unclear, therefore, whether the final funding plan will recommend the

expenditure of bond funds to “be applied only to the specific object” described in

biennial revision and updates. Moreover, the final funding plan has not been submitted.

Simply put, it is too soon to determine how the Authority will specifically use the bond

proceeds. At issue is authorization, not expenditure.

30

Proposition 1A. (Cal. Const., supra, art. XVI, § 1.) In other words, it is too soon to

determine whether the project will be consistent with the parameters the voters approved.

Real party in interest Union Pacific Railroad Company urges us to expressly limit

the scope of the validation judgment. We agree that an introductory paragraph describing

the “Nature of the Action” in the validation complaint is at odds with the position the

Authority has taken in its briefing submitted to this court and, together with a few overly

broad phrases in one paragraph of the prayer, justifies Union Pacific’s concerns that a

judgment validating authorization might also validate future unlawful expenditures. The

paragraph reads: “[Petitioners] further request a judgment declaring that all proceedings

taken by [petitioners] in connection with the issuance and sale of the bonds, the

commercial paper notes, and the refunding bonds are in conformity with the applicable

provisions of all laws and enactments at any time in force or controlling upon such

proceedings, whether imposed by constitution, statute, regulation, or otherwise; and that

once declared valid, any challenges (including pending challenges) based on uses of

proceeds of the bonds, commercial paper notes, or refunding bonds will not affect the

determination of validity of the bonds, commercial paper notes, and refunding bonds, or

the determination of validity of any contracts related to the issuance and sale of the

bonds, commercial paper notes, or refunding bonds.”

The prayer, for the most part, is more carefully crafted. Each of the following

paragraphs limits the validation to the actual authorization and all the “conditions, things,

and acts required by law to exist, happen, or be performed” before the authorization:

“[3.]a. All conditions, things, and acts required by law to exist, happen, or be

performed precedent to the adoption of the Resolutions, and the terms and conditions

thereof, including the authorization for the issuance and sale of the Bonds, Notes, and any

Refunding Bonds, have existed, happened, and been performed in the time, form, and

manner required by law.

31

“b. [Petitioners] are legally existing and have the authority under the law to cause

the issuance and sale of the Bonds and Notes and to cause the issuance and sale of

Refunding Bonds to refund Bonds, Notes, or Refunding Bonds previously issued, as

authorized by the Bond Act and the Resolutions; [¶] . . . [¶]

“d. The Bonds, Notes, and Refunding Bonds to be issued pursuant to the Bond

Act, when executed and delivered, will constitute valid and binding general obligations of

the State, and any contracts related to the issuance and sale of the Bonds, Notes, or

Refunding Bonds will constitute valid and binding obligations of the State, under the

Constitution and laws of the State of California[.]”

Paragraph 3.c., however, gives rise to the same concern as the introductory

paragraph. The first part of paragraph 3.c. is consistent with the argument the Authority

has advanced throughout these proceedings, and that is, the validation judgment does not

determine the validity of future uses of the bond proceeds. The innocuous language

reads: “All proceedings by and for [petitioners] in connection with the Bonds, Notes, and

Refunding Bonds to be issued pursuant to the Bond Act, including the adoption of the

Resolutions and the authorization of the Bonds, Notes, and any Refunding Bonds, were,

are . . . .” But then the language becomes susceptible to Union Pacific’s charge that it is

dangerously overbroad, with the potential to foreclose future challenges to unlawful uses

of the bond proceeds. The paragraph finishes as follows: “and will be valid and binding,

and were, are, and will be in conformity with the applicable provisions of all laws and

enactments in force or controlling upon such proceedings, whether imposed by law,

Constitution, statute, regulation, or otherwise[.]”

By contrast, paragraph 3.e. expressly limits the validation judgment to the

authorization of the bonds and not to use of the proceeds. Paragraph 3.e. states: “Any

challenges (including pending challenges) based on uses of proceeds of the Bonds, Notes,

or Refunding Bonds will not affect the determination of validity of the Bonds, Notes, and

any Refunding Bonds to be issued and sold, or the determination of validity of any

32

contracts related to the issuance and sale of the Bonds, Notes, or Refunding Bonds.”

Despite the plain language of paragraph 3.e., the overly broad language used in the last

phrases of paragraph 3.c. gives rise to unnecessary ambiguity and potential mischief. To

ensure there is no ambiguity, we will direct the trial court to delete this language as set

forth in our disposition.

II

The Tos Action

Petitioners ask us to direct the trial court to vacate the peremptory writ of mandate

commanding them to rescind the preliminary funding plan and to redo that plan.

(§ 2704.08, subd. (c).) Although we agree with the Tos real parties that the voters clearly

intended to place the Authority in a financial straitjacket by establishing a mandatory

multistep process to ensure the financial viability of the project, we agree with petitioners

that issuance of the writ violates very basic principles circumscribing when and against

whom a writ of mandate may issue. In short, the Tos real parties’ challenge to the

preliminary funding plan was too late to have any practical effect, and it is too early to

challenge a yet-to-be approved final funding plan as required by section 2704.08,

subdivision (d).

A. What are the guiding legal principles?

Four simple words resolve the issues before us: clear, present, ministerial, and

duty. The refrain is a familiar one. To obtain writ relief under Code of Civil Procedure

section 1085, a petitioner must demonstrate that the respondent has a clear, present, and

ministerial duty that inures to the petitioner’s benefit. (County of San Diego v. State of

California (2008) 164 Cal.App.4th 580, 593 (County of San Diego); Carrancho, supra,

111 Cal.App.4th at pp. 1264-1265; Agosto v. Board of Trustees of Grossmont-Cuyamaca

Community College Dist. (2010) 189 Cal.App.4th 330, 335-336; Tomra Pacific, Inc. v.

Chiang (2011) 199 Cal.App.4th 463, 491.) From this general principle, several others

follow. A writ is not available to enforce abstract rights (Gardner v. Superior Court

33

(2010) 185 Cal.App.4th 1003, 1008), to command futile acts with no practical benefits

(County of San Diego, supra, 164 Cal.App.4th at pp. 595-596; Associated Students of

North Peralta Community College v. Board of Trustees (1979) 92 Cal.App.3d 672, 680-

681), or to intermeddle in the preliminary stages of an administrative planning process

(California Water Impact Network v. Newhall County Water Dist. (2008)

161 Cal.App.4th 1464 (C-WIN).) Nor will a writ lie if the respondent has an obligation to

act under another law (City of Fremont v. San Francisco Bay Area Rapid Transit Dist.

(1995) 34 Cal.App.4th 1780, 1790), the petitioner’s rights are otherwise protected

(Duncan v. Superior Court (1935) 3 Cal.2d 143, 145), or in the absence of prejudice

(Board of Supervisors v. Rechenmacher (1951) 105 Cal.App.2d 39, 43; In re C. T. (2002)

100 Cal.App.4th 101, 111). In other words, a writ of mandate must be necessary

(Duncan, supra, 3 Cal.2d at p. 145); courts will not issue a useless or unenforceable writ

(County of San Diego, supra, 164 Cal.App.4th at pp. 595-596). A writ is not to be used

to control the exercise of discretion, but to ensure that ministerial duties have been

fulfilled. (California School Bds. Assn. v. State of California (2011) 192 Cal.App.4th

770, 797.)

The Tos real parties insist that the Authority had a ministerial duty to prepare a

preliminary funding plan that includes, identifies, or certifies each of the 11 components

set forth in the statute. (§ 2704.08, subd. (c)(2)(A)-(K).) Where, as here, the purported

duty is defined in a statute enacted by the people, a pure question of law is presented and

well-worn principles of statutory construction guide our review. (California Chamber of

Commerce v. Brown (2011) 196 Cal.App.4th 233, 248-249.) Statutory construction is an

inherently judicial task and our review is de novo. (Carrancho, supra, 111 Cal.App.4th

at p. 1266.) “ ‘Whether a particular statute is intended to impose a mandatory duty,

rather than a mere obligation to perform a discretionary function, is a question of

statutory interpretation for the courts.’ [Citation.]” (Haggis v. City of Los Angeles

(2000) 22 Cal.4th 490, 499.)

34

As pointed out by the Tos real parties, ascertaining the will of the electorate is

paramount. (County of Los Angeles v. State of California (1987) 43 Cal.3d 46, 56.)

Statutes adopted by the voters must be construed liberally in favor of the people’s right to

exercise their reserved powers, and it is the duty of the courts to jealously guard the right

of the people by resolving doubts in favor of the use of those reserved powers. (Shaw v.

People ex rel. Chiang (2009) 175 Cal.App.4th 577, 596 (Shaw).) “The voters as well as

the bondholders have an interest in the continued integrity of voter-ratified bond

proposals.” (Veterans of Foreign Wars v. State of California (1974) 36 Cal.App.3d 688,

692.) And, as the Tos real parties remind us, an administrative agency cannot change

course after the electors have voted. (O’Farrell, supra, 189 Cal. 343, 344, 349.)

Yet the same basic rules of statutory construction apply to statutes enacted by the

voters as to statutes passed by the Legislature. (Professional Engineers in California

Government v. Kempton (2007) 40 Cal.4th 1016, 1037.) We must look to the plain

language of the statute to determine the intent of the electors (Terminal Plaza Corp. v.

City and County of San Francisco (1986) 186 Cal.App.3d 814, 826); but the words of the

statute are given their ordinary meaning in the context of the statute as a whole and in

light of the entire statutory scheme (Professional Engineers, supra, 40 Cal.4th at p. 1037;

Doe v. Albany Unified School Dist. (2010) 190 Cal.App.4th 668, 675-676).

The question posed is whether there was a clear and present ministerial duty

imposed by the Bond Act on the Authority to redo the preliminary funding plan at the

time the trial court issued the writ, given that the Legislature appropriated the funds

despite the Authority’s failure to submit a preliminary funding plan in compliance with

the Bond Act.

B. Is there a clear and present ministerial duty to redo the preliminary funding

plan?

The parties present opposing views about the intent of the voters and the scope of

the duties they created under the Bond Act. The Attorney General argues the voters

35

approved the act to construct a high-speed rail system as quickly as possible to reduce

traffic congestion and greenhouse gasses and to create jobs. (Stats. 2008, ch. 267, § 8.)

While the Attorney General concedes the voters imposed more financial restraints on the

Authority than in more typical infrastructure projects, she insists the duty to prepare a

preliminary funding plan mandated by section 2704.08, subdivision (c) was for the

exclusive benefit of the Legislature, not the voters or the bondholders. In her view, the

preliminary funding plan informed the Legislature about the Authority’s projections and

progress and generated additional input from the peer review group and others. Thus, it

achieved the purpose envisioned by the voters, and there is no language in the statute to

evidence an additional intent to curtail the Legislature’s prerogative to approve the

appropriation in spite of a deficient preliminary funding plan.

The Tos real parties, on the other hand, discount the environmental and economic

benefits the voters sought to achieve and emphasize the extraordinary duties the voters

imposed on the Authority to substantiate the financial and environmental viability of the

project before the bonds could be authorized, sold, and spent. The Tos real parties further

contend the mandatory language of the statute was designed for the express benefit of the

voters; that is, the voters insisted on an elaborate financial mechanism to ensure they

would not be obligated to subsidize a boondoggle or pay for a stranded segment of the

rail system. Because high-speed rail is the most expensive public infrastructure project in

the state’s history, the Tos real parties passionately argue that the voters were only

willing to bear such an enormous cost by minimizing the risk, imposing a clear and

nondiscretionary “High-Speed Passenger Train Financing Program” on the Authority,

and mandating a number of other restrictive fiscal protections.

As a matter of statutory construction, there is merit to many of the Tos real parties’

arguments. We give effect, as we must, to the plain language of article 2 as an

indispensable part of the entire Bond Act. Article 2 is dedicated exclusively to the

“High-Speed Passenger Train Financing Program.” As described above, the Authority is

36

required to prepare and certify not one, but two, different funding plans. The preliminary

funding plan, at issue in these proceedings, must be prepared and submitted to the

Legislature at least 90 days before the Authority requests the Legislature to appropriate

bond funds. (§ 2704.08, subd. (c).) The preliminary funding plan also must be submitted

to a peer review group, the Director of the Department of Finance, the policy committees

with jurisdiction over transportation matters, and the fiscal committees in both houses of

the Legislature. (Ibid.) The Authority did, in fact, submit its preliminary funding plan to

each of the designated groups or committees, many of whom unabashedly registered their

concerns and dissent.

The Tos real parties point to glaring deficiencies in the preliminary funding plan.

The trial court denied the Authority’s motion for judgment on the pleadings on many of

the Tos real parties’ substantive claims raised in their complaint, which remain pending

in the trial court, including a number of ways in which the Tos real parties assert the

preliminary funding plan is deficient. We denied the Authority’s petition for a writ of

mandate to compel the trial court to grant the motion for judgment on the pleadings, and

as a result, those issues are proceeding to trial. (Cal. High-Speed Rail Authority v. Super.

Ct. (Apr. 15, 2014, C076042 [petn. den. by order].) As described in our statement of

facts, the writ proceeding before this court involves only two specific deficiencies: (1)

the Authority failed to identify all the sources for funding the initial usable segment of

the project, and (2) it failed to complete all necessary project-level environmental

clearances necessary to proceed to construction.

The language of section 2704.08, subdivisions (c)(2)(D) and (K) appears

unambiguous and mandatory. The duty to identify the sources of funding and to

complete the environmental clearances is consistent with the very purpose of article 2;

that is, the voters designed a financing program to ensure that construction of a segment

would not begin until potential financial or environmental obstacles were cleared.

37

Nevertheless, mandate does not lie to vindicate abstract rights. Mandamus is

steeped in practicality. For this reason, there must be a present duty for a writ of

mandamus to issue. Here the question is not whether the Authority had a mandatory and

ministerial duty to issue a preliminary funding plan compliant with section 2704.08,

subdivisions (c)(2)(D) and (K) at the time the plan was approved and then submitted to

the Legislature, for that critical time period has passed. Rather, the question is whether

the Authority has a mandatory ministerial duty to rescind the plan and redo it after the

Legislature appropriated the funds for issuance of the bonds approved by the voters. It is

the intervening appropriation by the Legislature that presents an insurmountable hurdle

for the Tos real parties. We explain this practical impediment in light of the whole

statutory scheme.

The Bond Act compels the Authority to prepare a preliminary funding plan for

submission to the Legislature and the Governor and a final funding plan for approval by

the Director of the Department of Finance before committing any proceeds of bonds.

The Tos real parties focus on the mandatory language indicating that the preliminary

funding plan shall identify the sources of all the funding for the usable segment and shall

certify that all environmental clearances have been obtained. But under the Bond Act,

bond funds cannot be committed and spent until the second and final funding plan is

approved by the Authority and submitted to the Director of the Department of Finance

and the Chairperson of the Joint Legislative Budget Committee, and an independent

financial consultant prepares a report. This latter report is particularly significant in that

the independent consultant must certify that construction can be completed as proposed

and is suitable for high-speed rail; the planned passenger train service will not require an

operating subsidy; and upon completion, passenger service providers can begin using the

tracks or stations. (§ 2704.08, subdivision (d).) As a result, the first funding plan,

outlined in section 2704.08, subdivision (c), is indeed “preliminary” since commitments

cannot be made and construction cannot begin until a second, final funding plan is

38

approved, an independent report attests to the financial integrity of the plan, the Joint

Legislative Budget Committee reviews it, and the Director of the Department of Finance

finds “the plan is likely to be successfully implemented.” (§ 2704.08, subd. (d).)

Furthermore, the Legislature attached conditions to its appropriation of over

$8 billion to finance high-speed rail. As to the $1.1 billion appropriation for “Bookend”

funding, the Legislature restricted the encumbrance of the funds to ensure the final

funding plan was compliant with the Bond Act and all the necessary environmental

clearances had been obtained. As enacted, Senate Bill No. 1029 provides:

“5. No funds appropriated in this item shall be encumbered prior to the High-

Speed Rail Authority submitting a detailed funding plan for the project or projects in

accordance with subdivision (d) of Section 2704.08 of the Streets and Highways Code to

(a) the Department of Finance, (b) the Chairperson of the Joint Legislative Budget

Committee, and (c) the peer review group established pursuant to Section 185035 of the

Public Utilities Code.

“6. No funds appropriated in this item shall be encumbered for construction of a

project prior to completion of all project-level environmental clearances necessary to

proceed to construction and the final notices being contained in the funding plan for the

project.

“7. Prior to the obligation of funds to any specific project, and subject to the

approval of the Department of Finance, the High-Speed Rail Authority Board shall

develop an accountability plan, consistent with Executive Order S-02-07, to establish

criteria and procedures to govern the expenditure of the bond funds in this appropriation,

and the outcomes that such expenditures are intended to achieve, including a detailed

project description and project cost. The procedures shall ensure that the investments

comply with requirements of applicable state and federal laws, and are consistent with

and advance the state high-speed train system. . . .” (Stats. 2012, ch. 152, § 3,

provisions 5-7, approved by Governor July 18, 2012.)

39

This multilayer approval process is reminiscent of the statutory scenario in C-WIN,

supra, 161 Cal.App.4th 1464. Before the developer could begin construction of a large

industrial/business park in the city of Santa Clarita (City), two reports were necessary: a

water supply assessment (WSA) and an environmental impact report (EIR).8 (Id. at

pp. 1471-1472.) The California Water Impact Network (C-WIN) sought a writ of

mandate to set aside the WSA prepared by the water district at the request of the City

before the EIR had been approved and certified. (Id. at p. 1471.) C-WIN argued it was

entitled to directly challenge the WSA because it was a final determination by the water

supplier concerning the sufficiency of the water supply for a proposed project. (Ibid.)

The Court of Appeal disagreed. (Ibid.)

Pursuant to the so-called “WSA law” (Wat. Code, §§ 10910-10915), the water

supplier most likely to serve the project must, at the request of the lead agency under the

California Environmental Quality Act (CEQA; Pub. Resources Code, § 21000 et seq.),

prepare the WSA. (C-WIN, supra, 161 Cal.App.4th at pp. 1478-1480.) The Water Code

specifically mandates what information the WSA must include, and like the Tos real

parties here, C-WIN asserted the assessment was fatally deficient because it did not

satisfy the statutory requirements and was therefore subject to attack under either

administrative or traditional mandamus. (C-WIN, at pp. 1480, 1483-1484.) The Court of

Appeal held that the petition failed to satisfy prerequisites common to both forms of

mandamus relief. (Id. at p. 1484.) In short, the WSA was not a final determination,

finding, or decision as necessary to obtain relief by mandamus of either variety. (Id. at

p. 1485.)

The court explained: “Thus, in our view the WSA is . . . a technical, informational

advisory opinion of the water provider. Though the WSA is required by statute to

8 The WSA would become a part of the EIR.

40

include an assessment of certain statutorily identified water supply issues and is required

to be included in the EIR, the WSA’s role in the EIR process is akin to that of other

informational opinions provided by other entities concerning potential environmental

impacts–such as traffic, population density or air quality. The fact that the duties of the

water provider in preparing the WSA and responsibility of the lead agency in requesting

the WSA are committed to statute does not change the fundamental nature of the WSA

itself as an advisory and informational document.” (C-WIN, supra, 161 Cal.App.4th at

p. 1486.)

In determining the propriety of mandamus relief, the Bond Act bears considerable

similarity to the Water Code and CEQA provisions at issue in C-WIN. The preliminary

funding plan submitted to the Legislature, like the WSA, “is but an interlocutory and

preliminary step in [a multistep] process, and in general, interim determinations are not

subject to mandamus review.” (C-WIN, supra, 161 Cal.App.4th at p. 1486.) In C-WIN,

the court concluded that the lead agency, and not the water supplier, made the final

determination for mandamus purposes about the sufficiency of the water supply. (Ibid.)

The WSA must be incorporated into the final EIR, and the lead agency is not required to

accept the WSA’s conclusions. (Id. at p. 1487.) “The power to ‘evaluate’ the WSA

necessarily invests the lead agency with the authority to consider, assess and examine the

quality of the information in the WSA and endows the lead agency with the right to pass

judgment upon the WSA.” (Ibid.)

Similarly, the preliminary funding plan plays an equally interlocutory and

advisory role midstream in the approval process. The Authority must submit the plan to a

number of groups, committees, and agencies, including the Legislature, but bond

proceeds cannot be committed and construction cannot begin until the final funding plan

is sent to the Joint Legislative Budget Committee and approved by the Director of the

Department of Finance. And as pointed out above, the Director of the Department of

Finance must simultaneously review a report prepared by an independent financial

41

consultant. Thus, the Tos real parties would have us intermeddle in the fluid

intermediary steps involved in studying the financial viability of high-speed rail in

California.

We concede there are differences between the WSA law and the Bond Act,

including the very different roles of the lead agency from the roles of the Legislature and,

ultimately, the Director of the Department of Finance. But those differences do not

diminish or detract from the basic principle that mandamus must be used only to review a

final determination, and a writ can issue only if there is a present statutory duty to act.

Here, the preliminary funding plan under attack, like the WSA, helped an intermediate

body make an informed decision. But it is the second and final funding plan, like the

final EIR, that will provide the ultimate decision maker with the most important and

expansive information necessary to make the final determination whether the high-speed

rail project is financially viable. The Authority now has a clear, present, and mandatory

duty to include or certify to all the information required in subdivision (d) of

section 2704.08 in its final funding plan and, together with the report of the independent

financial consultant, to provide the Director of the Department of Finance with the

assurances the voters intended that the high-speed rail system can and will be completed

as provided in the Bond Act. The Legislature appropriated the bond proceeds based on

the preliminary funding plan, however deficient, and there is no present duty to redo the

plan. The writ therefore should not have been issued.

C. Did the trial court err by refusing to issue a writ compelling rescission of the

legislative appropriation?

The Tos real parties have been tepid in challenging the Legislature’s appropriation

and for a very good reason. Judicial intrusion into legislative appropriations risks

violating the separation of powers doctrine. “ ‘[T]he entire law-making authority of the

state, except the people’s right of initiative and referendum, is vested in the Legislature,

and that body may exercise any and all legislative powers which are not expressly or by

42

necessary implication denied to it by the Constitution. . . . [A]ll intendments favor the

exercise of the Legislature’s plenary authority: “If there is any doubt as to the

Legislature’s power to act in any given case, the doubt should be resolved in favor of the

Legislature’s action.” ’ ” (Shaw, supra, 175 Cal.App.4th at p. 595.)

The trial court found that the Tos real parties did not challenge the legislative

appropriation until filing a reply brief, and on that basis alone, the trial court rejected the

argument. The court, however, also rejected the Tos real parties’ argument on

substantive grounds. The court explained: “Nothing in Section 2704.08 (c)(2), or

elsewhere in Proposition 1A, provides that the Legislature shall not or may not make an

appropriation for the high-speed rail program if the initial funding plan required by

Section 2704.08 (c)(2) fails to comply with all the requirements of the statute. Lacking

such a consequence for the Authority’s non-compliance, Proposition 1A appears to

entrust the question of whether to make an appropriation based on the funding plan to the

Legislature’s collective judgment. The terms of Proposition 1A itself give the Court no

authority to interfere with that exercise of judgment.”

Urging us to reverse the trial court’s ruling, the Tos real parties argue that the

Legislature cannot appropriate funds for high-speed rail when the preliminary funding

plan it considered did not comply with the Bond Act. We disagree. “[L]egislative

restraint imposed through judicial interpretation of less than unequivocal language would

inevitably lead to inappropriate judicial interference with the prerogatives of a coordinate

branch of government. Accordingly, the only judicial standard commensurate with the

separation of powers doctrine is one of strict construction to ensure that restrictions on

the Legislature are in fact imposed by the people rather than by the courts in the guise of

interpretation.” (Schabarum v. California Legislature (1998) 60 Cal.App.4th 1205, 1218

(Schabarum).) We return, as we must, to the plain language of the statute. As the trial

court aptly noted, there is nothing in the statute compelling the Legislature to ensure that

the preliminary funding plan was compliant; nothing in the statute defining any

43

ministerial duties the Legislature was obliged to perform; and there is nothing in the

statute describing any consequences to the Authority for failing to produce a preliminary

funding plan certifying that each of the 11 components have been included.

We agree with the trial court that the Bond Act provides no basis for allowing the

judiciary to interfere with the collective judgment of the Legislature in approving the

issuance of bonds even if the funding plan it considered did not meet the letter of the law.

Rather, the legislative judgment to move forward with the project before all funding

sources were identified and all environmental clearances were obtained involves the type

of decision making peculiar to the discretionary power of a legislative body. “ ‘Mandate

will not issue to compel action unless it is shown the duty to do the thing asked for is

plain and unmixed with discretionary power or the exercise of judgment. [Citation.]’ ”

(County of San Diego, supra, 164 Cal.App.4th at p. 596.)

We accept the Tos real parties’ argument, as we expressed in Shaw, that courts

have the power to invalidate an unconstitutional legislative appropriation. (Shaw, supra,

175 Cal.App.4th at p. 596.) But in Shaw, the voters made clear what the Legislature

could and could not do. The approved ballot measure expressly stated the Legislature

could amend the statute only if the amendment was consistent with, and furthered the

purpose of, the section. (Id. at p. 597.) Here the Bond Act does not curtail the exercise

of the Legislature’s plenary authority to appropriate. The fact that the Bond Act requires

the Authority to prepare a preliminary funding plan and to present it to the Legislature

before an appropriation is made does not evidence an intent to prevent the Legislature

from acting if the preliminary funding plan is not perfectly compliant with the Bond Act.

Beyond the plain language of the Bond Act, we are obliged to respect the separate

constitutional role of the Legislature. (Cal. Const., art. III, § 3; Butt v. State of California

(1992) 4 Cal.4th 668, 695.) “Respect for the Legislature’s constitutional role demands

that the courts refuse to judge the wisdom of legislation or the motives of the legislators.”

(Schabarum, supra, 60 Cal.App.4th at p. 1219.) In particular, the separation-of-powers

44

principles limit judicial authority over appropriations. (Newton-Enloe v. Horton (2011)

193 Cal.App.4th 1480, 1491.) Thus, in deference to a coordinate branch of government

and in the absence of a clear directive from the people to constrain the discretion of the

Legislature, we will not circumscribe legislative action or intrude on the Legislature’s

inherent right to appropriate the funding for high-speed rail. The trial court properly

refused to issue a writ dictating if, or how, the Legislature should act in the face of a

deficient preliminary funding plan. We too must defer to the legislative prerogative to

control appropriations.

In sum, we conclude as follows: 1) as a matter of statutory construction, the

voters intended to impose mandatory financial restraints on the Authority, including the

duty to prepare two funding plans, each of which included specific criteria outlined in

section 2704.08, subdivisions (c) and (d), respectively; 2) applying well-established

principles restraining the issuance of writs of mandamus, the trial court erred by

compelling the Authority to rescind the preliminary funding plan when there had been no

final determination, finding, or decision and a second and final funding plan will be

forthcoming; there was no present duty to redo an informational, interlocutory plan after

the Legislature had authorized the issuance of the bonds; and to require such an idle act

would merely vindicate an abstract right with no practical effect; and 3) applying the

inviolate constitutional restraint imposed on the judiciary by the separation of powers

doctrine, we cannot dictate to the Legislature how it should utilize a deficient preliminary

funding plan.

D. Additional arguments.

The Tos real parties and amici curiae raise a number of additional arguments that

are without merit. Echoing the trial court’s creative reasoning, the Tos real parties

attempt to make the efficacy of the final funding plan contingent on the preliminary

funding plan. In other words, the argument goes, the Authority cannot meet its

mandatory ministerial duty to approve a final funding plan as required by

45

section 2704.08, subdivision (d) if it does not generate a statutorily compliant

section 2704.08, subdivision (c) funding plan. The trial court expressed its concern that

the Authority could begin construction of high-speed rail in the absence of the necessary

environmental clearances because subdivision (d), unlike subdivision (c), did not require

the Authority to certify that the environmental clearances had been obtained. As a result,

the trial court concluded the project could evade environmental review once the

Legislature overlooked the deficiency and approved the sale of the bonds. Not so.

Once again, we begin with a careful examination of the language of the statute.

Simply put, the Bond Act does not require a fully compliant preliminary funding plan

before a final plan may be approved. There is nothing in the statute connecting the two

plans. Moreover, it is reasonable to infer, as the Attorney General suggests, that the two

plans serve very different purposes–the preliminary plan to inform the Legislature of the

progress made before it authorizes the issuance of bonds, and the final plan to ensure the

financial integrity of the project before proceeds of the bonds are committed.

Second, a writ of mandate does not lie if the public agency has an obligation to

perform under another law. (City of Fremont, supra, 34 Cal.App.4th at p. 1790.) The

Authority has repeated frequently that it will have all the requisite environmental

clearances before construction begins. CEQA certainly demands nothing less. The Tos

real parties, in fact, concede that state and federal law require environmental clearance

before starting construction. Because the Authority must comply with CEQA before the

project proceeds, a writ of mandate is not necessary.

Third, the Legislature forewarned the Authority to complete all the project-level

environmental clearances. Indeed, as to the appropriation to finance improvements to the

“Bookends,” “[n]o funds appropriated in this item shall be encumbered for construction

of a project prior to completion of all project-level environmental clearances necessary to

proceed to construction and the final notices being contained in the funding plan for the

project.” (Stats. 2012, ch. 152, § 3, provision 6.) The Legislature thereby compelled the

46

Authority to complete its responsibility to obtain the environmental clearances it had not

obtained at the time it drafted its preliminary funding plan before it could encumber the

appropriated bond funds. In effect, the Legislature simply gave the Authority an

extension of time to complete its section 2704.08, subdivision (c)(2)(K) duty and assured

it would be able to certify to the environmental clearances within the section 2704.08,

subdivision (d) final funding plan.

Finally, section 2704.08, subdivision (d) requires a report describing any material

changes from the section 2704.08, subdivision (c) preliminary funding plan. Given that

CEQA requires the environmental clearances described in subdivision (d), the report

undoubtedly will describe how and when the clearances were obtained in the period of

time between the approval of the preliminary and final funding plans. In addition, the

independent financial consultant must indicate that the construction “can be completed as

proposed.” (§ 2704.08, subd. (d).) The construction cannot be completed if the

environmental clearances have not been obtained. The environmental clearance

provision does not render the two funding plans interdependent, and in the absence of the

writ issued by the trial court, the project will not evade environmental review.

The Kings County Water District contends it was prejudiced by petitioners’

unreasonable two-month delay in filing the writ petition after entry of the ruling, and

therefore, their petition is barred by laches and estoppel. The water district points out

that the court did not sign the order until January 3, 2014, and it was not served on them

until January 16, just eight days before petitioners filed their petition, originally before

the Supreme Court. Their delay was not unreasonable, and the water district fails to

demonstrate how it suffered prejudice. Nor is there any merit in the water district’s claim

that federal preemption is involved in either the Tos action or the validation action. The

estoppel claim is utterly without merit.

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DISPOSITION

Let a peremptory writ of mandate issue directing respondent court to 1) vacate its

order of November 25, 2013, and the peremptory writ of mandate issued thereon

requiring the Authority to rescind and reissue its preliminary funding plan under Streets

and Highways Code section 2704.08, subdivision (c), and 2) enter judgment on the

complaint for validation filed by the Authority and the Finance Committee, as follows:

1. All conditions, things, and acts required by law to exist, happen, or be

performed precedent to the adoption of the resolutions, and the terms and conditions

thereof, including the authorization for the issuance and sale of the bonds, notes, and any

refunding bonds, have existed, happened, and been performed in the time, form, and

manner required by law.

2. Petitioners are legally existing and have the authority under the law to cause the

issuance and sale of the bonds and notes and to cause the issuance and sale of refunding

bonds to refund bonds, notes, or refunding bonds previously issued, as authorized by the

Bond Act and the resolutions.

3. All proceedings by and for petitioners in connection with the bonds, notes, and

refunding bonds to be issued pursuant to the Bond Act, including the adoption of the

resolutions and the authorization of the bonds, notes, and any refunding bonds, were and

are valid and binding.

4. The bonds, notes, and refunding bonds to be issued pursuant to the Bond Act,

when executed and delivered, will constitute valid and binding general obligations of the

state, and any contracts related to the issuance and sale of the bonds, notes, or refunding

bonds will constitute valid and binding obligations of the state, under the Constitution

and laws of the state of California.

5. Any challenges (including pending challenges) based on uses of proceeds of

the bonds, notes, or refunding bonds will not affect the determination of validity of the

bonds, notes, and any refunding bonds to be issued and sold, or the determination of the

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validity of any contracts related to the issuance and sale of the bonds, notes, or refunding

bonds.

The stay previously ordered is vacated upon finality of this decision. The parties

shall share costs in this original proceeding. (Cal. Rules of Court, rule 8.493(a), (b).)

RAYE , P. J.

We concur:

ROBIE , J.

BUTZ , J.

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