The board that oversees California's embattled $68 billion high-speed rail project was meeting Thursday to discuss how to respond to a series of legal setbacks involving funding and environmental reviews.
In a ruling last week, a judge prevented the state from selling $8.6 billion in bonds for the project and ordered officials to write a new funding plan and ensure that all environmental clearances are in place for the first 300 miles of track in the Central Valley before more state money is spent.
On Wednesday, federal regulators rejected a request to exempt a segment in the Central Valley from a lengthy planning review.
The three-member Surface Transportation Board said state officials hadn't presented any compelling reason why conditional approval should be given before an environmental impact review is completed.
The decision could force a delay in designing and building a five-mile stretch of the route in Fresno. However, the California High-Speed Rail Authority said no delays were anticipated.
"With their decision today, the board opted for the same process used in their approval of the Merced to Fresno project section and all of our ongoing work and contracts proceed as they have been," said Jeff Morales, CEO of the rail authority.
The $68 billion project would run trains from Los Angeles to San Francisco by about 2028. The federal board approved the 24-mile, Merced-Fresno portion of the rail line earlier this year after it underwent environmental review, and state officials awarded a $1 billion contract for its first 29-mile construction segment.
But without the board's support for the remaining five-mile section, the contract will likely have to be renegotiated, state officials said.
The decision was the latest blow for the ambitious project. A Sacramento County judge last week rejected a request from the rail authority to sell $8 billion in voter-approved bonds because it didn't comply with legal requirements.
The judge also ordered the agency to redo its funding plan, a process that could take months or years. Rail authority officials, however, say the revamp shouldn't take that long.
The federal board's vice chairman Ann Begeman on Wednesday called for an analysis of the project's "financial fitness."
"Today's decision acknowledges the growing controversy regarding California's bond funding process," Begeman said in a statement.