LOS ANGELES — The California 3rd District Court of Appeal ruled Thursday that the state may resume selling $10 billion in bonds for its $68 billion high speed rail project.

The bonds were approved for the project by voters in a 2008 ballot measure.

The ruling reverses a decision last year by Sacramento County Superior Court Judge Michael Kenny, who found that the state failed to meet the legal requirements of the bond measure, because it failed to identify all the funds needed to complete a first usable segment and did not have all of the environmental clearances needed. The lower court judge ruled that bond proceeds could not be spent until the plan was redone, even though the legislature had already appropriated money for the project.

The decision also overturned a separate lower court decision invalidating a state bond sale. In that ruling, the judge said the project didn't meet promises for cost and speed outlined in the proposition.

The decision will enable high speed rail officials to move forward with plans to start construction on a 130-mile segment of track in the Central Valley and accelerate planning on a 40-mile section from Burbank to Palmdale.

Acknowledging that legal questions remain, the three-judge panel said in the ruling that questions still loom as to whether the project is consistent with what voters approved in 2008. The three-judge panel said their ruling is narrowly focused on whether the state followed the law for selling bonds. A number of other lawsuits challenging the project are still pending.

The appeals court judges also overturned Kenny's ruling that the state failed to establish that the bonds were "necessary or desirable."

While awaiting the decision on the bonds, the legislature appropriated $250 million in cap-and-trade revenues enabling the project to move forward despite the hold up on bond issuance. State legislators also allocated 25% of all future funds from the cap-and-trade program for rail construction.

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