(AP) Superior Court Judge Michael Kenny said the California High-Speed Rail Authority "abused its discretion by approving a funding plan that did not comply with the requirements of the law."
Yet he declined to immediately halt funding for the project and said he will hold another hearing to determine what happens next.
The California High-Speed Rail Authority and the office of Gov. Jerry Brown, who has championed the project, did not respond immediately to requests for comment.
Central Valley landowners and the Kings County Board of Supervisors argued in their 2011 lawsuit that the $68 billion high-speed rail plan did not meet the promises made to voters in 2008, when they approved selling $10 billion in bonds for it.
Proposition 1A required the agency to identify funding for the entire first segment of the project and clear all environmental hurdles before starting construction.