LOS ANGELES A U.S. Appeals Court heard arguments last week in a lawsuit that could resolve one of the last major legal roadblocks to construction of the middle portion of the six-lane, 15-mile San Joaquin Hills toll road in the coastal hills of Orange County, Calif.
A three-judge panel of the U.S. Ninth Circuit Court of Appeals adjourned after an hour-long hearing Tuesday at the court's Pasadena, Calif., office. The panel's ruling is expected within two months.
At issue in Laguna Greenbelt Inc., et al. v. U.S. Department of Transportation. is whether further federal studies are necessary before construction can begin on the tollway's controversial 4.5-mile middle section, which bisects scenic canyons near Laguna Beach, Calif.
More than $200 million has been spent so far on interchange construction at both ends of the roadway, which broke ground in September 1993. That roadwork. in Newport Beach and in San Juan Capistrano, is proceeding despite the current litigation.
"The Ninth Circuit has been very sensitive to our desire to get an early resolution of the issues," said John L. Flynn, a partner with Nossarman, Guthner, Knox & Elliott, bond counsel for the San Joaquin Hills Transportation Corridor Agency, which is building the tollway.
In March 1993, the corridor agency sold $1.1 billion of senior and junior lien toll road revenue bonds. Litigation-related delay was built into the issue's structure, according to market participants who have been closely following legal wrangling over the project.
Fitch Investors Service, which assigned a BBB rating to the senior portion of the toll road financing, "was aware from the stan of this project that there would likely be litigation from time to time," Said Amy S. Doppelt, a Fitch senior vice president, on Friday.
"We've been in contact with the agency. which feels strongly that it will succeed in this litigation."
In general, the corridor agency has successfully maneuvered throughout the laborious process of obtaining permits and overcoming litigation threats. An injunction issued June 15 by the Ninth Circuit Court barred all activity on the middle section of the project, but it was modified on Aug. 19 when plaintiffs agreed that limited survey work in the disputed area could proceed.
While Flynn said he could not "predict the outcome" of the panel's ruling, he was pleased that the corridor agency "got to a hearing within approximately three months of a notice of appeal being filed" with the Ninth Circuit Court. The expedited hearing "was very important to us." he said.
Mark Weinberger, a partner with San Francisco-based Shute, Mihaly & Weinberger, which represents environmental groups fighting the toll road, said the fact that the hearing was quickly scheduled does not necessarily bode well for the corridor agency.
"In any case where a multimilliondollar project is at stake, and an mjunction is in effect, the court did what it would routinely do -- which is require expedited briefing and hearing of the action," Weinberger said. "That is what we would have expected."
Weinberger said that an appeal is possible if the Ninth Circuit ruling goes against the plaintiffs.
"The Ninth Circuit decision, when it comes out, may be definitive -- and it may not be," Weinberger said. "It may find partially for petitioners, and partially for the agency."
"Depending on the nature of the issues that come out of [the ruling], the U.S. Supreme Court is another forum for this case," he said. Meanwhile, Weinberger said, there is a pending lawsuit in federal District Court in Los Angeles "relating to [issues concernmg] endangered species that has not moved forward." That case seeks a "further injunction against construction in the area in question," he said.
The corridor agency is one of two joint powers authorities formed by local governments in 1986 to construct three tollways in Orange County. The other authority, the Foothill/Eastern Corridor Agency, last year opened a segment of the Foothill Corridor which is said to be California's first modern toll road.