Some good news: it appears that a temporary solution has emerged to prevent Metro from losing $3.6 billion in federal funds due to an ongoing dispute over pension reform between the state of California and the U.S. Department of Labor.

The solution involves a state bill exempting transit agencies from pension reform while allowing for the Labor Department’s ruling to be challenged in court.

Some quick background:

U.S. Labor Secretary Thomas Perez said earlier this year that pension reform signed into law in California last year (known as PEPRA) violates the collective bargaining rights of transit workers represented by the Amalgated Transit Union.

That, in turn, would violate the Federal Transit Act, meaning that Metro and other large transit agencies in California are ineligible to receive most federal funding.

That could cost Metro $3.6 billion in funds that would be used for everything from day-to-day operations to key grants and loans absolutely vital to build such projects as the Purple Line Extension and Regional Connector.

Here is the news release from California Gov. Jerry Brown; please note that the $1.6 billion in the first paragraph does not include the full array of funds that transit agencies could lose.

And here is the legislative update from Metro CEO Art Leahy:

PEPRA/13C UpdateGovernor Brown Proposes Legislation to Keep Federal Transit Money Flowing; Will Defend Pension Reforms in CourtAs outlined in our recent communications on this issue, Sacramento Regional Transit today was notified by the United States Department of Labor that they are now decertified from receiving federal funds.

Governor Brown has also now proposed legislation which would exempt other transit agencies from the pension reform law so that federal funds would continue to flow while the litigation proceeds.

The legislation AB 1222 will be carried by Assembly Member Bloom.

I would like to thank our Board Chair Diane DuBois and Director Zev Yaroslavsky for meeting with the office of Governor Brown, Assembly Speaker Perez, Senate President Pro Tem Steinberg and Assembly Member Bloom during their recent trip to Sacramento as well as Director Pam O’Connor who also worked with Assembly Member Bloom on this issue.

I would also like to thank Mayor Eric Garcetti for his outreach to the Administrations of President Obama and Governor Brown. We will continue our advocacy efforts with Assembly Member Bloom and legislative leaders in both houses to move this bill through the legislative process.

Concurrently, we will continue to work with the U.S. Department of Transportation and U.S. Department of Labor to ensure the free flow of federal transportation dollars. The favorable resolution of this issue will safeguard over $3 billion in federal grants, new starts fund agreements, and loans that we anticipate receiving in the next twelve months.