Court clears way for California to sell $8 billion of bullet-train bonds

[August 01, 2014]  (Reuters) - A California appeals court has ruled a state authority may issue $8 billion in bonds to help finance a high-speed rail system in the most populous U.S. state, removing a substantial obstacle to the proposed $68 billion plan.

In overturning on Thursday a state court's 2013 ruling, the three-judge panel in Sacramento said the California High-Speed Rail Authority, which is overseeing the high-speed rail project, "properly found that issuance of bonds for the project necessary or desirable," court documents show.

The panel also vacated a lower court order that the state re-do its financial plan for the project.

The rail project has been dogged by questions over its planned routes, ridership estimates and projected costs.

The plan to build an 800-mile high-speed rail system between San Francisco and Los Angeles is a priority for California Governor Jerry Brown.

Last year, Sacramento County Superior Court judge Michael Kenney ruled there was too little information to support a decision by the authority overseeing the project to move forward with the sale of the bonds. He also ordered the state to re-do its financial plan for the project.

The appeals court in February agreed to a request by the state to expedite its review of the lower court ruling.

Thursday's ruling does not remove all obstacles to the rail project. The authority still needs to answer "substantial financial and environmental questions ..." the court said. "But those questions are not before us."

The court also said, "Substantial legal questions loom in the trial court as to whether the high-speed rail project the California High-Speed Rail Authority seeks to build is the project approved by the voters in 2008."

(Reporting by Eric M. Johnson; Editing by Larry King)

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