President Obama’s signature infrastructure project suffered a huge defeat Friday, when a Sacramento Country Superior Court judge ruled that the California High Speed Rail Authority has failed to comply with essential financial and environmental statutory requirements.

The voter initiative that created California’s high-speed rail project, Proposition 1A (the “Safe, Reliable, High-Speed Passenger Train Bond Act for the 21st Century”), required the CHSRA to identify “sources of all funds to be invested in the corridor” and complete “all necessary project level environmental clearances” before construction can begin. The CHSA has done neither.

In a 16-page decision, Superior Court Judge Michael Kenny concluded that the CHSA “abused its discretion by approving a funding plan that did not comply with the requirements of the law.”

Kenny, however, declined to invalidate a separate California State Legislature appropriation for the project, finding that Proposition 1A did not forbid the legislature from funding the CHSRA. But Kenny did leave open the possibility of other remedies, including forbidding the CHRSA from spending any future bond proceeds. The final remedy will be determined after a future hearing.

The CHSRA had argued that Proposition 1A only required them to identify the funding and receive environmental approval for each “construction segment,” since the CHSRA has identified funding and received environmental approval for the initial construction segment linking Madera and Fresno.

But Kenny rejected this argument, finding that the clear language of the statute required full funding and environmental planning for larger “initial operating sections” of the track, and that the term “construction segment” did not appear anywhere in Proposition and was a legal invention of the CHSRA.

As of July 23, the CHRSA still had not even closed on a single parcel of land for the initial construction segment between Fresno and Madera. Funding had not been identified for any other segment of the track, and while a draft environmental repot has been issued for the Fresno to Bakersfield segment, no other segment has even been analyzed yet.

After the ruling, Hanford, Calif., landowner and co-plaintiff Aaron Fukuda told The Sacramento Bee after the decision “To read the judge’s statement that the authority ‘abused its discretion’ – ‘abused’ is an understatement.”