pecg - appellants' petition for calif. supreme court review filed 9-15-11

8/4/2019 PECG - Appellants' Petition for Calif. Supreme Court Review filed 9-15-11

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CASE NO. _____________

IN THE SUPREME COURT OF THESTATE OF CALIFORNIA

PROFESSIONAL ENGINEERS IN CALIFORNIA GOVERNMENT andDENNIS ALEXANDER,

Plaintiffs/Petitioners and Appellants,v.

CALIFORNIA DEPARTMENT OF TRANSPORTATION, et al.Defendants and Respondents.

PETITION FOR REVIEW

First District Court of Appeal Case No. A131449Certified for Publication

Upholding a Judgment and Order by the Superior Court of theState of California for the County of Alameda (Case No. RG10544672)

Honorable Wynne S. Carvill

SOMACH SIMMONS & DUNNA Professional CorporationKanwarjit S. Dua, Esq.(SBN: 214591)Adam D. Link, Esq.

(SBN: 271370)500 Capitol Mall, Suite 1000Sacramento, CA 95814

Telephone: (916) 446-7979Facsimile: (916) 446-8199

PROFESSIONAL ENGINEERS INCALIFORNIA GOVERNMENTGerald A. James, Esq.(SBN: 179258)455 Capitol Mall, Suite 501

Sacramento, CA 95814

Telephone: (916) 446-0400

Facsimile: (916) 446-0489

Attorneys for Plaintiffs/Petitioners/Appellants, Professional Engineers inCalifornia Government and Dennis Alexander.


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TABLE OF CONTENTS

I. PETITION FOR REVIEW ................................................................... 1

II. ISSUES PRESENTED FOR REVIEW ................................................ 1

III. WHY REVIEW SHOULD BE GRANTED ........................................ 2

IV. FACTUAL AND PROCEDURAL BACKGROUND ......................... 7

V. LEGAL DISCUSSION ...................................................................... 12

A. The Appellate Court Erroneously Found That Caltrans CanSatisfy Section 143(f)(1) by Merely Overseeing or ApprovingWork and Does Not Actually Have to Perform the Engineering

Work Assigned to It on P3 Projects. ........................................ 13

B. The Appellate Court Incorrectly Interpreted Section 143(a)(6)and Ignored the Legislatures Intent in Enacting the Statute ... 19

C. The Appellate Court Erred In Concluding the Presidio ParkwayProject and Future P3s Need Not Be Funded Through Tolls andUser Fees .................................................................................. 24

1. Section 143 Both Requires and Presupposes the

Existence of a Toll or User Fee Agreement, andContemplates No Other Financing Mechanism ............. 24

2. The Appellate Courts Reliance on Subdivision (a)(6)

Ignores the Reality That No P3 Project Consists Purely ofPlanning or Design Activities, and Thus All P3 ProjectsAre Capable of Being Assessed Tolls or User Fees ...... 27

3. Section 143(s) and Section 143(j)(1) Can BeHarmonized, and Section 143(s) Does Not Excuse

Caltrans Obligation to Comply With Section 143(j)(1) 28

VI. CONCLUSION .................................................................................. 30


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TABLE OF AUTHORITIES

CASES

Arias v. Superior Court

(2009) 46 Cal.4th 969 ............................................................................... 18Briggs v. Eden Council For Hope & Opportunity(1999) 19 Cal.4th 1106 ............................................................................. 19

Common Cause v. Board of Supervisors

(1989) 49 Cal.3d 432 ................................................................................ 25Cortez v. Abich

(2011) 51 Cal.4th 285 ............................................................................... 18Dix v. Superior Court

(1991) 53 Cal.3d 442 ................................................................................ 17People v. King

(1993) 5 Cal.4th 59 ................................................................................... 29People v. Woodhead

(1987) 43 Cal.3d 1002 .............................................................................. 18Professional Engineers in California Government v. Department of

Transportation (2011) 198 Cal.App.4th 17 .................................. 25, 27, 28Sonic-Calabasas A, Inc. v. Moreno

(2011) 51 Cal.4th 659 ............................................................................... 18

STATUTES

Cal. Const., art. XXII .................................................................................... 13Cal. Rules of Court, Rule 8.500, subd. (b) ................................................... 12Pub. Contract Code, 6801(c) ....................................................................... 4Streets & Highways Code:

143 ................................................................................................... passim 143(a)(6) .......................................................................................... passim 143(d) ............................................................................................... 22, 25 143(d)(1) .......................................................................................... 15, 16 143(f) ...................................................................................................... 16 143(f)(1) .......................................................................................... passim

143(f)(1)(A) ........................................................................................... 13 143(f)(1)(B) ...................................................................................... 13, 14

143(f)(2) ..................................................................................... 15, 17, 18 143(i) ...................................................................................................... 25 143(j)(1) ............................................................................... 24, 25, 29, 30 143(s) ......................................................................................... 28, 29, 30


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OTHER AUTHORITIES

Blacks Law Dict. (9th ed. 2009) ................................................................. 25


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I. PETITION FOR REVIEWTo the Honorable Chief Justice of the California Supreme Court

and the Honorable Associate Justices of the Supreme Court of

California:

Professional Engineers in California Government, Plaintiff and

Appellant, respectfully petitions the Court for review following the

decision of the Court of Appeal, First Appellate District, Division

One, filed on August 8, 2011. A copy of this decision is attached

hereto and marked as Attachment A.

II. ISSUES PRESENTED FOR REVIEWThis case presents the following issues for review:

1. Whether in passing Senate Bill 2X 4 in 2009, the

Legislature required that certain architectural and engineering services

on public-private-partnership (P3) state highway projects (Streets and

Highways Code section 143(f)(1)) be performed by employees or

consultants of the state Department of Transportation?

2. In order to qualify as a P3 project under Streets and

Highways Code section 143, must projects continue to result in new

facilities supplemental to the existing state highway system by

offering additional capacity or a new state highway option, or can

existing state owned highway facilities now be replaced or

rehabilitated as P3s, resulting in a lease to the private sector?


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3. Are availability payments from the state highway account

now a legally viable way to finance P3 projects on the state highway

system under Streets and Highways Code section 143, or must P3

projects continue to be funded by tolls or user fees?

III. WHY REVIEW SHOULD BE GRANTEDThe outcome of this case will determine the future of how state

highway projects costing billions of dollars will be developed,

constructed, and inspected. It will also determine the types of projects

that qualify as public-private-partnerships (P3s) going forward and

how those P3 projects will be funded. Will a public agency, through

engineers employed by or under direct contract with Caltrans, perform

certain critical engineering functions designed to protect the public

interest and public safety, including inspection of the construction

work done by the design-build entity building the facility as required

by the Legislature? Or instead, will a design-build entity be able to

inspect its own work, with Caltrans providing mere oversight and

quality assurance approval of construction work performed on the

state highway system? Will P3s be authorized for projects replacing

existing state highway facilities that result in leases of public facilities

to the private sector, with payments to the private sector coming from

existing state gas taxes and other highway funds over periods of 30

years or more? Or instead, will P3 projects continue, as they

historically have, to be for new transportation facilities, which provide

new lanes and options for motorists that will be funded by tolls or user

fees?


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These significant public policy issues, which are addressed in

the Court of Appeal decision, turn entirely on the words used by the

Legislature and what the Legislature intended when passing statutory

changes in 2009 allowing, for the first time, unlimited P3s on the state

highway system. This case is the first proceeding interpreting the P3

statutory provisions, which took effect January 1, 2010. Review of

the Court of Appeal decision is necessary to provide guidance to

lower courts and to all entities involved in transportation projects on

the state highway system as to which projects may proceed as P3s, the

manner in which the work on those P3 projects must be performed,

and how those projects are to be funded.

Projects on the state highway system have historically been

procured through a design-bid-build method where a project is fully

designed and plans are completed to 100 percent final design. For

projects on the state highway system, this design work is typically

performed by Caltrans employees or consultants directly retained by

Caltrans. Following completion of this design work, the construction

portion of a project is then put out to bid with the construction

contract awarded to the lowest responsible bidder. Independent

inspection of that construction contractors work for state highway

projects is then typically performed by Caltrans engineers or

consultants retained by Caltrans. (AA Vol. 13, 003493-003494.) In

2009, for the first time, the Legislature authorized the widespread use

of P3s which may utilize a design-build process, replacing the

traditional design-bid-build process. These changes were added by

Senate Bill No. 4 (2009-2010 2d Ex. Sess. (SB 2X 4)).


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Design-build means a procurement process in which both the

final design and construction of a project are procured from a single

design-build entity. (Pub. Contract Code, 6801(c).) As it has on

every design-build project authorization on the state highway system,

both before and after the passage of SB 2X 4, the Legislature in SB

2X 4 specifically identified engineering services to be performed by

Caltrans. For these design-build projects, the Legislature called for

Caltrans to perform preliminary engineering work. The design-build

entity then completes the final design and constructs the Project, and

Caltrans is assigned to perform construction inspection. In assigning

tasks to Caltrans, the Legislature stated Caltrans could either perform

those services with state employed engineers, or with consultant

engineers retained by Caltrans directly.

The Court of Appeal found that under Section 143(f)(1)

CalTrans is only required to be responsible for the performance of

the work on the Project. CalTrans is not required to actually perform

the work. (Emphasis in original, Slip Op. at p. 6.) The court reached

this conclusion despite legislative history that showed the Legislature

was knowingly assigning these tasks to be performed by Caltrans staff

or its consultants. The Chaptered version of SB 2X 4 passed by the

Legislature in the Legislative Counsels Digest provides:

The bill would provide that the Department ofTransportation is the responsible agency for theperformance of certain tasks and the preparation ofcertain documents, relative to projects on the statehighway system, where a regional transportation agencyis otherwise the sponsor of the project. The bill wouldstate that the department may perform those functionswith department employees or with consultantscontracted by the department.


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While this leaves no doubt that the Legislature assigned this work to

Caltrans and intended for Caltrans to actually perform those

functions with its employees or with Caltrans retained consultants,

the Court of Appeal ruled otherwise. While SB 2X 4 made changes to

Section 143 (f)(1) requiring that Caltrans perform certain functions,

other sections of Section 143, the only statutory authority for P3s on

the state highway system, were left intact. The Court of Appeal

decision erroneously ignores the original legislative intent of the

language in Section 143 requiring tolls on projects and requiring that

projects result in new facilities supplemental to the existing state

highway system.

Assembly Bill 680 added the original Section 143 to the law in

1989. There is no dispute that the original purpose was to allow

private industry to propose, build and operate toll roads. The toll

roads were required to be supplemental, or additional to state owned

facilities, and were to be paid for with private money rather than

public funds. Contrary to the Court of Appeal decision, SB 2X 4 did

not repeal Section 143s existing requirements that P3 projects be

funded by tolls or user fees, and did not amend the provision that

projects be for new facilities supplemental to existing state owned

transportation facilities. The Court of Appeal decision simply ignores

this clear legislative language and history.

The Presidio Parkway project to replace Doyle Drive is the first

P3 project on the state highway system to be attempted under SB

2X 4. The Presidio Parkway project did not originate as a P3. Rather

it proceeded under a traditional design-bid-build procurement method


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with a plan to utilize the traditional pay as you go construction-

financing model. The preliminary engineering work on this project

was not done by Caltrans, as required by the statute. The Project does

not result in a new facility, but rather is a replacement project and is

not supplemental to the existing state highway system. Finally, the

cost to complete the Project is not funded by tolls or user fees at all,

but rather will be repaid through payments out of the State Highway

Account over the next 30 years.

As the Presidio Parkway project was being considered for

conversion from a design-bid-build project to a P3, separate and

distinct legal opinions of counsel to the California Transportation

Commission, the Legislative Counsel and a finding of the Legislative

Analysts Office each concluded the Project would not be eligible for

conversion to a P3 as follows:

In a detailed 16-page analysis tracking the statutory language

and legislative history, counsel for the Respondent California

Transportation Commission concluded that Section 143 contained the

same financing provisions of the original AB 680, and therefore

allowed private investment to be repaid only from tolls or user fees.

That analysis also concluded that section 143 prohibited the

availability payments, which are the financing mechanism for this

project. Finally, the opinion found that the original language of

Section 143, as added by AB 680, requiring projects to be

supplemental to existing facilities still controlled. (AA Vol. 2,

000274-289.)


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The California Legislative Counsel also expressly found that

availability payments from the state highway account do not

comply with Section 143. (AA Vol. 2, 00247.) The Legislative

Counsel opinion also concluded that the legislative requirement that a

P3 transportation project must be supplemental to the existing

system and requires that an additional lane be added or that the

Project provide an alternative route to an existing route. (AA Vol. 2,

000259.)

Finally, the Legislative Analysts Office found that because

tolls were not part of the Project, this project does not appear to be

allowed under the P3 authorizing legislation. (AA Vol. 14, 003780.)

Despite these clear opinions that the Project could not legally

proceed as a P3, the Respondents converted the Project anyway,

committing nearly $1.4 billion to this project as a P3 over 30 years.

The trial court and the Court of Appeal, setting aside all statutory

language and legislative intent and history to the contrary, allowed

this project to proceed, despite the requirements of Section 143.

IV. FACTUAL AND PROCEDURAL BACKGROUNDIn 1989, the Legislature adopted Assembly Bill 680, thereby

creating the public-private partnership program for transportation

projects. AB 680 added Section 143 to the Streets and Highways

Code. (AA Vol. 6, 001509.) According to the bills author, and as

confirmed by its legislative history, this arrangement was proposed to

permit private industry to propose, finance, design, construct and

operate SUPPLEMENTAL transportation systems which would


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eventually be turned over to Caltrans. (Id. at 00152) Financing for

the design, construction, maintenance and operations of these new

facilities would come from tolls, rents, and royalties derived from

their private use. (Id. at 000152-153.) While this law has been

amended multiple times since its initial enactment, these fundamental

precepts that the projects be privately funded and provide facilities

that are additional to the existing state-owned facilities have never

been changed.

In 2009, the Legislature passed and Governor Schwarzenegger

signed into law Senate Bill 4 (SB 2X 4, Cogdill, 2nd Extraordinary

Session), which amended Section 143 and authorized unlimited P3s

for state highway transportation projects.

SB 2X 4 added a new Section 143(f)(1):

(A) Notwithstanding any other provision of this chapter,for projects on the state highway system, the departmentis the responsible agency for the performance of projectdevelopment services, including performancespecifications, preliminary engineering, prebid services,the preparation of project reports and environmentaldocuments, and construction inspection services. Thedepartment is also the responsible agency for the

preparation of documents that may include, but need notbe limited to, the size, type, and desired design characterof the project, performance specifications covering thequality of materials, equipment, and workmanship,

preliminary plans, and any other information deemednecessary to describe adequately the needs of thedepartment or regional transportation agency.

(B) The department may use department employees orconsultants to perform the services described insubparagraph (A), consistent with Article XXII of theCalifornia Constitution. Department resources, including

personnel requirements, necessary for the performance ofthose services shall be included in the departmentscapital outlay support program for workload purposes inthe annual Budget Act.


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In June 2009, the San Francisco County Transportation

Authority (SFCTA) ceased the development of the detailed Plans,

Specifications and Estimates for Phase II Contracts 5 to 8 and instead

utilized the contract with Arup/Parsons Brinkerhoff to analyze the

options of pursuing a P3 method of procurement. (AA Vol. 4, 00989.)

Despite having a fully funded plan, SFCTA and Caltrans

requested the California Transportation Commission (CTC) approve

this project as P3 at a cost of $1.378 billion from the State Highway

Account. On May 15, 2010, CTC staff recommended that the CTC

not grant the request as the proposal would take up to $1 billion from

State Highway Account capital programs. The recommendation

against approval noted that there were legal questions concerning

whether the statutes require that financing of a P3 project include tolls

or user fees and whether a P3 project must be supplemental to the

existing transportation system. CTC staff attached three legal separate

opinions to its recommendation, two of which opined the Project did

not meet the requirements of the law. (AA Vol. 2, 00199.)

Contrary to the staff recommendation and legal opinions, on

May 20, 2010, the CTC approved the Presidio Parkway Project to

proceed as a P3 under Section 143. The P3 agreement was then

submitted to the Legislature and the Public Infrastructure Advisory

Commission. The P3 agreement would make the private contractor

the lessee of the Project for the term of the agreement.


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PECGs November 2, 2010 complaint for declaratory relief and

petition for writ of mandate challenged the conversion of the Presidio

Parkway Project (Project) to a P3 on the grounds that the Project did

not meet the requirements of Section 143. The complaint alleged that

to proceed as a P3, the Project must comply with the requirements the

Legislature has mandated in Section 143: (1) Caltrans must serve as

the responsible agency for performance of the Project development

engineering services, (2) the Project must be for facilities that are

supplemental to existing facilities, and (3) the lease agreement must

authorize the private developer to collect tolls or user fees to defray

the funding cost.

As the Court of Appeal noted, the essential facts are not in

dispute. The Project involves the replacement of the existing

southern approach to the Golden Gate Bridge, known as Doyle Drive.

The existing Doyle Drive facilities are part of State Route 101. The

current Doyle Drive does not meet current highway standards.

The Project began in 1998 with a feasibility study conducted by

the SFCTA pursuant to a Memorandum of Understanding with

Caltrans. The MOU provided funding and called for Caltrans to

provide oversight, reviews, and approvals. SFCTA and Caltrans

then entered into a series of cooperative agreements. SFCTA was the

lead agency for preliminary project and development design and

environmental studies, and the resulting documents had to be

submitted to Caltrans for its review and concurrence and its

ongoing review. Through this series of cooperative agreements,

Caltrans provided quality assurance. (Slip. Op. at p. 2.)


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Preliminary design, engineering and environmental documents

were completed in 2008 while the Project was still proceeding under a

SFCTA design-bid-build method. The Project reports and

environmental documents were prepared by a private contractor,

Parsons Brinkerhoff, through a contract with SFCTA (Contract

Number 99/00-7). Caltrans did not perform the preliminary

engineering, pre-bid services, the preparation of project reports and

environmental documents, or the documents setting forth the scope

and estimated price of the Project. (AA Vol. 1, 00005, 00036.) Phase

I of the Project includes part of the permanent facility and a detour to

accommodate traffic during Phase II. Phase I construction was

underway at the time of the trial under a set of traditional design-bid-

build contracts.

Following briefs on the merits and oral argument, the trial court

on February 23, 2011 denied the Petition for Writ of Mandate and

dismissed the Complaint for Injunctive and Declaratory Relief.

Judgment was entered for Caltrans, SFCTA and the California

Transportation Commission. (AA Vol. 19, 004867-4872.)

Following briefing and oral argument, on August 8, 2011, the

First District Court of Appeal, Division One, affirmed the trial courts

decision in a written decision certified for publication. No Petition for

Rehearing was filed with the Court of Appeal.

The Court of Appeal decision noted the facts were not in

dispute and that all of the challenges involved questions of statutory

interpretation. The Court conducted a de novo review of the three


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claims raised by PECG, each involving the interpretation of Section

143s statutory language. First, the Court ruled that Caltrans could

satisfy the language of Section 143 by being the responsible agency

and providing oversight and approval and did not need to actually

perform the work on a P3 project. Second, relying in part on a

dictionary definition, the Court ruled that under any standard

definition of the term supplement, the Project is supplemental to

existing facilities and adds capacity thus satisfying Section 143.

Third, the Court ruled that projects under Section 143 must authorize

tolls and use fees, but not necessarily require them for every project.

V. LEGAL DISCUSSIONReview is appropriate by this Court when necessary to secure

uniformity of decision or settle an important question of law. (Cal.

Rules of Court, Rule 8.500, subd. (b).) This is the first case

interpreting the new amendments to the P3 statute. While it therefore

does not directly conflict with any other rulings regarding this statute,

the conclusions reached by the Court of Appeal regarding the

legislative intent behind Section 143 deviate from the proper rules

regarding statutory interpretation by ignoring the express words of the

statutes and the clear legislative history.

The ruling unquestionably impacts an important question of

law. The Presidio Parkway Project at issue in this case is a $1.3

billion dollar project. With unlimited P3 authorization on the state

highway system, this ruling will likely impact billions of dollars worth

of state highway projects.


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A. The Appellate Court Erroneously Found ThatCaltrans Can Satisfy Section 143(f)(1) by MerelyOverseeing or Approving Work and Does NotActually Have to Perform the Engineering WorkAssigned to It on P3 Projects.

The Legislature specifically assigned Caltrans responsibility forthe performance of project development services for P3 projects on

the state highway system and specifically assigned Caltrans

responsibility for the preparation of certain project documents. In

order to comply with Article XXII of the California Constitution

(which gives Caltrans the choice and authority to perform engineering

work assigned to it on any given project utilizing either state

employees or to retain consultants to perform the work on any given

project), the Legislature took care to specify that Caltrans may use

either department employees or consultants to perform those services,

though it unambiguously left Caltrans ultimately responsible for

performance of those services.

Section 143(f)(1)(B) explicitly directs Caltrans to perform the

services described in subparagraph (A), using either its own

employees or its own consultants. Section 143(f)(1)(A), in turn,

specifies that Caltrans is responsible for the performance of the listed

engineering functions and for the preparation of the listed documents.

(A) Notwithstanding any other provision of this chapter,for projects on the state highway system, the departmentis the responsible agency for the performance of project

development services, including performancespecifications, preliminary engineering, prebid services,the preparation of project reports and environmentaldocuments, and construction inspection services. Thedepartment is also the responsible agency for the

preparation of documents that may include, but need notbe limited to, the size, type, and desired design characterof the project, performance specifications covering thequality of materials, equipment, and workmanship,

preliminary plans, and any other information deemed


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necessary to describe adequately the needs of thedepartment or regional transportation agency.

(B) The department may use department employees orconsultants to perform the services described insubparagraph (A), consistent with Article XXII of the

California Constitution. Department resources, includingpersonnel requirements, necessary for the performance ofthose services shall be included in the departmentscapital outlay support program for workload purposes inthe annual Budget Act.

The Court of Appeal decision ignores the words to perform in

Section 143(f)(1)(B) and allows Caltrans to instead fulfill its

responsible agency role by merely supervising work that was

previously done by consultants retained by a local transportation

agency.

The legislative history confirms that the Legislature knowingly

assigned Caltrans the responsibility to perform this work with its staff

engineers or its own directly retained consultants. The Court of

Appeal decision fails to acknowledge that SB 2X 4 itself includes

language expressly acknowledging that Caltrans would actually

perform the work:

The bill would provide that the Department ofTransportation is the responsible agency for the

performance of certain tasks and the preparation ofcertain documents, relative to projects on the statehighway system, where a regional transportation agencyis otherwise the sponsor of the project. The bill wouldstate that the department may perform those functionswith department employees or with consultants

contracted by the department.


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Further confirming the intent of the Legislature, a Senate Floor

Analysis of SB 2X 4 states:

Caltrans is the responsible agency for the performance of

project development services and Caltrans can use eitherdepartment personnel or consultants to perform thoseservices. (AA Vol. 13, 03373.)

As originally enacted in 1989, Section 143 provided that

Caltrans may provide services for which they are reimbursed with

respect to planning, environmental certification, and preliminary

design of the demonstration projects. (AA Vol. 7, 001740.) Thus,

the legislative history of Section 143 confirms that the Legislature

knowingly assigned Caltrans the responsibility to perform this work

with its staff engineers or its own directly retained consultants and

that, when the preliminary work was performed by a local

transportation agency, the project is not eligible to proceed as a P3.

As discussed above, Section 143, originally enacted in 1989,

provided that Caltrans "may provide services for which they are

reimbursed with respect to preliminary planning, environmental

certification, and preliminary design of the demonstration projects."

(AA Vol. 7, 001740.) Current Section 143(f)(2) was previously found

at former Section 143(d)(1), which defined Caltrans role as follows:

(d)(1) The department or a regional transportation agencymay exercise any power possessed by it with respect to

transportation projects to facilitate the transportationprojects pursuant to this section. The department,regional transportation agency, and other state or localagencies may provide services to the contracting entityfor which the public entity is reimbursed, including, butnot limited to, planning, environmental planning,environmental certification, environmental review,

preliminary design, design, right-of-way acquisition,construction, maintenance, and policing of thesetransportation projects. The department or regional


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transportation agency, as applicable, shall regularlyinspect the facility and require the lessee to maintain andoperate the facility according to adopted standards. Thelessee shall be responsible for all costs due todevelopment, maintenance, repair, rehabilitation, andreconstruction, and operating costs.

(AA Vol. 13, AA003321.) At the same time, former Section

143(f) required that each transportation project "comply with the

departments standards for state transportation projects" and mandated

that projects for facilities on the state highway system "meet all

requirements for noise mitigation, landscaping, pollution control, and

safety that otherwise would apply if the department were designing,

building, and operating the facility." (AA Vol. 13, 003325-3326.)

Thus, at the time SB 2X 4 was passed, the former Section

143(d)(1) expressly stated that preliminary engineering services could

be performed by: (1) Caltrans, (2) a regional transportation agency, or

(3) other state or local agencies; former Section 143(f) provided

quality assurance for work performed by others by requiring all

parties to meet Caltrans standards, including specified requirements

for projects on the state highway system. SB 2X 4 amended Section

143 to delete the authorization for the engineering services to be

performed by a regional transportation agency or other state or local

agencies. The trial court and the appellate decision nonetheless

permits a regional transportation agency or other state or local

agencies to perform these engineering services, as long as the

performance is subject to Caltrans oversight. (Slip Op. at p. 7.) This

interpretation is in error as it engrafts back onto the statute the very

language that the Legislature deleted.


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SB 2X 4s amendment to Section 143 directs Caltrans "to

perform" the specified tasks, via its staff or its consultants; deletes

reference to other entities previously authorized to perform them; and

requires that the resources necessary to accomplish this work be

included in the Caltrans Capital Outlay Support portion of the state

budget. This amendment necessarily evinces a legislative intent to

alter the prior framework and assign specific responsibility for

performing this work to Caltrans. (Dix v. Superior Court(1991) 53

Cal.3d 442, 461 (in construing statutes, courts presume the Legislature

intends to change the meaning of a law when it alters the statutory

language).) The statutory role of Caltrans in the planning,

development, and construction inspection of these state highway

projects reflects a considered judgment by the Legislature on the

appropriate method of performing these responsibilities. The

appellate courts holding overturns the Legislatures decision and

interprets the statute so that it has the same meaning as it did prior to

its amendment designating Caltrans as the agency responsible for

performing this work. This construction of the statute is entirely

unsustainable.

Emphasizing the phrase "any power," the Court of Appeal relies

upon Section 143(f)(2) noting that it authorizes cooperative

agreements that do not have Caltrans perform the services set forth in

Section 143(f)(1). (Slip. Op. at p. 7.) This finding is in error as it

ignores the effect of the Legislatures deliberate amendment to

Section 143, as set forth immediately above. Furthermore, this

finding disregards the plain text of Section 143(f)(1), which includes a


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qualifier stating that the subdivision applies "[n]otwithstanding any

other provision of this chapter." This phrase commands that

Section 143(f)(1)s limitations be given effect, even if they conflict

with other provisions within Section 143 or its chapter of the Streets

and Highways Code. (Arias v. Superior Court(2009) 46 Cal.4th 969,

983 ("Notwithstanding any other provision . . . " is a "term of art" that

"declares the legislative intent to override all contrary law.").) The

Legislature expressly stated, in the plain text of the statute that Section

143(f)(1) was to apply "notwithstanding any other provision of this

chapter." Such an interpretation cannot withstand scrutiny.

Indeed, this overbroad construction of subdivision (f)(2) has the

effect of impliedly repealing the specific limiting language the

Legislature carefully included in subdivision (f)(1). As this Court has

recently reaffirmed, "all presumptions are against implied repeal."

(Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659, 675.) In

determining legislative intent, courts look first to the words of the

statute, "giving to the language its usual, ordinary import and

according significance, if possible, to every word, phrase and sentence

in pursuance of the legislative purpose." (Cortez v. Abich (2011) 51

Cal.4th 285, 292.) The appellate courts interpretation, which has

rendered the limiting language of subdivision (f)(1) null and of no

force, must be rejected. (Cf., People v. Woodhead(1987) 43 Cal.3d

1002, 1010 (interpretation which has the effect of making words in a

statute surplusage should be avoided).)


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B. The Appellate Court Incorrectly Interpreted Section143(a)(6) and Ignored the Legislatures Intent inEnacting the Statute

To qualify as an eligible project under Section 143, a

transportation project must be supplemental to existing facilitiescurrently owned and operated by the department or regional

transportation agencies. Specifically, Section 143(a)(6) provides, in

pertinent part:

Transportation project means one or more of thefollowing: planning, design, development, finance,construction, reconstruction, rehabilitation, improvement,acquisition, lease, operation, or maintenance of highway,

public street, rail, or related facilitiessupplemental to

existing facilities currently owned and operated by thedepartment or regional transportation agencies that isconsistent with the requirements of subdivision (c).

(Id., emphasis added.)

Both the trial court and the appellate court properly applied the

last antecedent rule, which directs that qualifying words and

phrases and clauses are to be applied to the words or phrases

immediately preceding and are not to be construed as extending to or

including others more remote. (Briggs v. Eden Council For Hope &

Opportunity (1999) 19 Cal.4th 1106, 1114.) In doing so, the lower

courts each held that the modifying phrase supplemental to existing

facilities modifies the term facilities. (AA Vol. 19, 004829.)

While the appellate court correctly applied the last antecedent

rule to determine that facilities is the antecedent for the modifying

phrase, like the trial court, it violated the rule by truncating the

modifying phrase and separating supplemental to existing facilities

from the remainder of the qualifier, currently owned and operated by


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the department or regional transportation agencies. Rather than

completing its analysis of the full language of Section 143(a)(6), the

appellate court instead diverted its attention towards the definition of

supplement to find that the Project is supplemental to existing

facilities and therefore satisfies Section 143(a)(6).

The result of the appellate courts failure to fully analyze the

language of Section 143(a)(6) is fatal to its true meaning and results

not only in its misinterpretation, but also in an aberration of the

Legislatures intent in enacting the statute. By analyzing the full

language Section 143(a)(6) using its plain meaning, and read in

accordance with standard rules of English grammar, the proper

interpretation is easily reached. The phrase currently owned or

operated by the department or a regional transportation agency

modifies the antecedent facilities, which is also qualified by the

adjective existing. Applying the last antecedent rule yields the

result that the facilities created through Section 143 transportation

projects must be: (1) supplemental to (2) existing facilities (3) that are

owned or operated (4) by the department or a regional transportation

agency. Thus, this sentence unambiguously bars application of P3 to

existing Caltrans- and regional transportation agency -owned

facilities. The reason for this limitation is obvious: the purpose of

Section 143 was to use private money to create additional

transportation facilities for Caltrans and regional transportation

agencies, not to cannibalize and privatize their existing, limited

facilities.


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The appellate court thus erred when it held that the Project

satisfies Section 143(a)(6) because it includes a series of

supplemental new improvements to existing facilities. (Slip Op. at p.

9.) None of the features cited by the appellate court result in new

facilities. Rather, these are merely new features of an existing state-

owned facility. It is undisputed that Doyle Drive is already a part of

the state highway system and has been since 1945. (AA Vol. 1,

000028, 000037.) Because it is a state facility, and because the

Project will not supplement this existing facility, the Project does not

qualify as a P3.

Leaving the appellate courts decision undisturbed would result

in the absurd conclusion that Section 143 authorizes P3s for any

project undertaken on facilities within the state highway system:

under the appellate courts (and trial courts) interpretation of Section

143, as long as the Project resulted in new features for existing

facilities, it is irrelevant that it does not result in new facilities. This

reading does violence to the statutory language because it renders the

qualifying language of Section 143(a)(6) supplemental to existing

facilities currently owned and operated by the department or regional

transportation agencies completely out of existence.

Interpreting Section 143(a)(6) in this manner would effectively

allow private parties to lease existing state highway facilities, thereby

removing them from public control and responsibility for the period of

the lease. This is not what the Legislature intended or authorized

when it passed Section 143. The trial court recognized this and noted

in its January 3, 2011 Order, that Section 143(a)(6) does allow for


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reconstruction or rehabilitation of existing facilities, but only as long

as those facilities are not already owned and operated by the

department or regional transportation agencies. (AA Vol. 6, 001464-

1465.) Under Section 143(a)(6) and (d), an older, existing facility

may be rehabilitated or reconstructed as part of a P3 project as long

as: (1) it is not currently owned or operated by Caltrans or a regional

transportation agency, and (2) ownership and operation of the facility

will be transferred to Caltrans or a regional transportation agency at

the conclusion of the P3 lease.

The legislative history of Section 143 also confirms that P3

Projects such as the Presidio Parkway must be supplemental to

existing facilities owned or operated by Caltrans or a regional

transportation agency. (AA Vol. 8, 001876.) For example, the

Caltrans Director sent a memo on July 6, 1989, discussing AB 680

specifically noting, [t]hese projects are to be supplemental to existing

state owned facilities. (Id. at AA001886.) Caltrans also issued a

Privatization Newsletter in October 1989, which stated that Projects

must supplement the existing free system, and they must offer a

reasonable choice (free or toll) to potential users and the public. (Id.

at AA001905.) Similarly, the Legislatures analysis of AB 680 said:

While new highways or other transportation facilitiescould be built under the bill, additions to existing state

facilities could also be built, including expanded tollbridge capacity in the San Francisco Bay area.

(AA Vol. 9, 002169.)


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The Legislature recognized and intended that [t]his new

private capital would be applied to the development of new facilities

not currently programmed with examples ranging from major new bay

crossings, rail corridor development, and double decking of

freeways. (AA Vol. 8, 001754, 1836, 1847, 1861, 2218.) While the

amendments to Section 143 expanded the definition of transportation

facilities, none of these amendments eliminated or narrowed the

application of the supplemental phrase to something less than all

transportation facilities produced as part of P3 projects. (AA Vol. 6,

001528-1529.)

The appellate court also unconvincingly found that by the time

Phase II of the Project begins, Phase I will be completed and

constitute an existing facility. (Slip Op. at p. 9.) This result is

absurd, because it would mean that any transportation project that

included a temporary detour, such as will occur with Phase I of the

Project, could qualify as a P3. Phase I of the Project is a temporary

realignment of the street to allow tearing out the existing state

highway facilities.

Once the Project is complete, the detour will be removed and

the street will return to its original location. Neither the Phase I

temporary realignment and/or the Projects completion in Phase II

result in facilities that will be incorporated into the state highway

system at the conclusion of the long-term lease, as required by Section

143(d). (AA Vol. 19, 004832 ([T]he agreement shall provide for

complete reversion of the leased facility, together with the right to

collect tolls and user fees, to the department or regional transportation


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agency, at the expiration of the lease at no charge to the department or

regional transportation agency.) The appellate courts interpretation

of Section 143(a)(6) is flawed, contrary to the Legislatures intent and

should accordingly be reversed.

C. The Appellate Court Erred In Concluding thePresidio Parkway Project and Future P3s Need NotBe Funded Through Tolls and User Fees

Both the trial court and appellate court erred in concluding that

Section 143 does not require tolls and user fees to be included as part

of the Presidio Parkway Project P3 agreement. Section 143

presupposes the existence tolls and user fees for all P3 projects, and

the legislative intent of the P3 statutes confirm that the imposition of

tolls and user fees on P3 projects is mandatory. Conclusions of the

trial and appellate courts to the contrary were based on erroneous

interpretations of the statute and should be reversed. The Supreme

Courts determination of this issue is significant because the trial and

appellate court decisions represent a judicial authorization for the use

of public financing in P3 projects, in the form of availability

payments, without any Legislative authorization and in spite of a clear

legislative intent that compels an opposite conclusion.

1. Section 143 Both Requires and Presupposes theExistence of a Toll or User Fee Agreement, andContemplates No Other Financing Mechanism

The unambiguous language of Section 143 requires that a P3

agreement be funded using tolls or user fees. Section 143(j)(1) states

that:


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Agreements entered into pursuant to this section shallauthorize the contracting entity or lessee to impose tollsand user fees for use of a facility constructed by it, andshall require that over the term of the lease the tollrevenues and user fees be applied to payment of[specified costs].

The use of the term shall clearly indicates that the inclusion

of this provision is mandatory. (See Blacks Law Dict. (9th ed. 2009)

p. 1499, col. 2d; Common Cause v. Board of Supervisors (1989) 49

Cal.3d 432, 443.) The trial court concluded that the provisions of

Section 143 fall short of requiring the use of tolls and user fees as a

necessary funding element or the sole funding source of every P3.

(Slip Op. at p. 10.) The appellate court, without further analysis,

agreed with the trial court on this issue, concluding that agreements

must authorize tolls and user fees, but not necessarily require them for

every project. (Professional Engineers in California Government v.

Department of Transportation (2011) 198 Cal.App.4th 17, 27.) Both

opinions miss the mark.

Every P3 project undertaken pursuant to Section 143 has been

based on the imposition of tolls and user fees. Aside from the

inclusion of subdivision (s), there have been no legislative

amendments or any indications by the Legislature that this mandatory

tolling, inherently part of the P3 statute, should change. In fact, there

are no fewer than ten specific references to tolls and user fees

contained in Section 143. (See Section 143 subdivisions (j)(1), (d),

(i).) All of these subsections of the statute presume the existence of

toll or user fees as an integral part of any P3 agreement and project,

and no other financing alternatives are discussed in Section 143. The

trial court acknowledged as much, noting that all of these statutory


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2. The Appellate Courts Reliance on Subdivision(a)(6) Ignores the Reality That No P3 ProjectConsists Purely of Planning or Design Activities,and Thus All P3 Projects Are Capable of BeingAssessed Tolls or User Fees

An additional basis of the appellate courts conclusion that

Section 143 does not require tolling was that such a requirement

would, at first glance, seem to conflict with other provision of the

statute, and specifically subdivision (a)(6) defining eligible

transportation projects for purposes of a P3. Specifically, the

appellate court found that transportation projects are broadly

defined in section 143, subdivision (a)(6) to include activities such as

planning and design, for which, of course, tolls and fees could not be

charged and thus it would be unreasonable to infer a legislative intent

to require tolls that cannot be collected. (Professional Engineers in

California Government v. Department of Transportation, supra, 198

Cal.App.4th at p. 27.) Such a conclusion is fundamentally flawed

because it is premised on the false assumption that the mere planning

or design of a facility, standing alone, could constitute a discrete P3

project.

Non-physical elements such as planning or design are not

undertaken in a vacuum and cannot be separated from the physical

transportation facilities to which they are related. P3 agreements are

entered into for the planning and design of highway, public street,

rail, or of highway, public street, rail, or related facilities supplemental

to existing facilities. ( 143(a)(6).) All projects, whether they

involve planning, design, construction, rehabilitation, or otherwise,

must be attached to an actual, physical (and supplemental)


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transportation facility. There is no evidence of any P3 agreement that

contemplates only planning facilities in a vacuum, without

constructing anything, and indeed such a project would not meet the

requirements of Section 143. Thus, simply because one cannot toll a

single component of a larger P3 project does not mean it is

unreasonable to infer that the finished project must be tolled.

Obviously, tolls or user fees can be assessed on the transportation

facilities for which the planning and design activities were

undertaken. Both the trial and appellate courts reliance on

subdivision (a)(6) as evidence of some legislative intent not to require

the imposition of such tolls or fees on the actual finished P3 project is

a clearly erroneous interpretation of the statutory language.

3. Section 143(s) and Section 143(j)(1) Can BeHarmonized, and Section 143(s) Does Not ExcuseCaltrans Obligation to Comply With Section143(j)(1)

Finally, the appellate courts third basis for concluding that

Section 143 authorizes availability payments and does not require

tolls or user fees was that subdivision (s) specifically provides that no

P3 agreement can be entered into that affects, alters, or supersedes the

Memorandum of Understanding (MOU) relating to the financing of

the Presidio Parkway project. (Professional Engineers in California

Government v. Department of Transportation, supra, 198 Cal.App.4th

at pp. 27-28.) The appellate court reasoned that because the MOU

identified in subdivision (s) specifically allows for tolls only when

certain limited conditions are met, an interpretation of section 143 that

requires mandatory tolling would therefore violate the MOU

incorporated into section 143 by subdivision (s). (Id. at pp. 27-28.)


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However, the trial and appellate courts fail to acknowledge that the

provisions of Section 143(s) and Section 143(j)(1) can and should be

harmonized, and do not need to be read as contradictory or conflicting

requirements. Provisions relating to the same subject matter must be

harmonized to the extent possible. (People v. King(1993) 5 Cal.4th

59, 69.)

Both the trial and the appellate court overread Section 143(s),

and concluded that because it may be difficult (though not impossible)

to comply with both subdivision (s) and subdivision (j)(1), therefore

the Legislature must have intended to eviscerate the toll and user fee

mandate in the rest of Section 143. However, subdivision (s) does not

state that the 2008 MOUpreempts any contrary provision of Section

143. Rather, Section 143(s) merely provides that any P3 lease

agreement developed for the Presidio Parkway Project must not

affect, alter or supersede the 2008 MOU in other words, that any

P3 agreement for the Presidio Parkway Project must comply with the

2008 MOU. The 2008 MOU itself does not eliminate the lessees

ability to collect tolls or user fees, but rather expressly allows tolls to

be collected for the Doyle Drive facilities under a Regional Cordon

Tolling Program. (AA Vol. 4, 000858.)

Thus, it is possible to comply with the statutory requirement of

procuring funding via tolls or user fees without affecting, altering, or

superseding the 2008 MOU. It is undisputed that the P3 agreement

for the Presidio Parkway Project did not include a provision for the

imposition of tolls or fees. Instead, the parties agreed not to impose

the required tolls or user fees at all. However, the terms of the lease


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to provide guidance to the entities involved in state highway projects

as to how to proceed with P3 projects. For all of these reasons,

Appellants respectfully request that the Court grant Appellants'

Petition for Review.

SOMACH SIMMONS & DUNNA Professional Corporation

DATED: September 16, 2011 By:Kanwarjit S. DuaAdam D. Link

Attorneys forPlaintiffs/Petitioners/AppellantsPROFESSIONAL ENGINEERS INCALIFORNIA GOVERNMENTand DENNIS ALEXANDER.

PROFESSIONAL ENGINEERS INCALIFORNIA GOVERNMENT

DATED: September 16, 2011 By:Gerald A. JamesAttorney for

Plaintiffs/Petitioners/AppellantsPROFESSIONAL ENGINEERS INCALIFORNIA GOVERNMENTand DENNIS ALEXANDER


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CASE TITLE: PROFESSIONAL ENGINEERS IN CALIFORNIAGOVERNMENT, ET AL v. CALIFORNIADEPARTMENT OF TRANSPORTATION, ET AL.

COURT/CASE NO: California Supreme Court Case No. ________Court of Appeal, First Appellate DistrictCase No. A131449

PROOF OF SERVICE

I am employed in the County of Sacramento; my business address is500 Capitol Mall, Suite 1000, Sacramento, California; I am over the age of18 years and not a party to the foregoing action.

On September 16, 2011, I served the following document(s):

APPELLANTS PETITION FOR REVIEW

__ (by mail) on all parties in said action, in accordance with Code ofCivil Procedure 1013a(3), by placing a true copy thereof enclosed in a

sealed envelope, with postage fully paid thereon, in the designated area foroutgoing mail, addressed as set forth below.

(by personal delivery) by personally delivering a true copy thereof tothe person and at the address set forth below:

_X (by overnight delivery) on all parties in said action, by placing a truecopy thereof enclosed in a sealed envelope in a designated area for outgoing,same-day pickup by Federal Express at the offices of Somach Simmons &Dunn for overnight delivery, billed to Somach Simmons & Dunn, andaddressed as set forth below.

Gerald A. James, Esq.

Professional Engineers in CaliforniaGovernment455 Capitol Mall, Suite 501Sacramento, CA 95814Telephone: (916) 441-2222Facsimile: (916) 442-4182

Co-Counsel for

Appellants/Petitioners ProfessionalEngineers in California Governmentand Dennis Alexander


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Jeffrey Rich, Esq.Attorney Generals Office1300 I StreetSacramento, CA 95814


Attorneys forRespondents/Defendants CaliforniaTransportation Commission andJames Earp

Erin Holbrook, Esq.1120 N Street (MS 57)Sacramento, CA 95812Telephone: (916) 654-2630Facsimile: (916) 654-6128

Attorneys forRespondents/Defendants CaliforniaDepartment of Transportation andCindy McKim

Stephen N. Roberts, Esq.

Nossaman LLP50 California Street, 34th FloorSan Francisco, CA 94111


Attorneys for

Respondents/Defendants SanFrancisco County TransportationAuthority and Ross Mirkarimi

Barbara A. Brenner, Esq.Stoel Rives LLP500 Capitol Mall, Suite 1600

Sacramento, CA 95814

Attorneys for Amicus CuriaeAmerican Council of EngineeringCompanies of California

California Court of Appeal350 McAllister StreetSan Francisco, CA 94102

Alameda County Superior CourtAttn: Dept. 21, Hon. Wynne Carvill1225 Fallon StreetOakland, CA 94612

I declare under penalty of perjury that the foregoing is true andcorrect. Executed on September 16, 2011, at Sacramento, California.

ASTRID B. WATTERSON, CCLS

pecg - appellants' petition for calif. supreme court review filed 9-15-11

Documents