BART‘s train operators and station agents have ratified a new contract, allowing the transit system to save millions of dollars on labor costs.

Amalgamated Transit Union Local 1555 approved a four year contract Tuesday that freezes pay, cuts overtime and charges workers more for health benefits.

The union, which represents about 900 people, rejected a similar contract offer about two weeks ago and threatened to strike. That would have shut down a system that carries more than 300,000 people daily.

Both sides struck a tentative agreement Aug. 15.

With this concession from Local 1555 — and two other BART unions — the transit system has reduced its projected four-year deficit to about $210 million. But that figure could rise if ridership does not improve.

BART’s average daily ridership last month fell 11.4 percent to 332,368 people, compared with the same time a year ago. That caps six months of accelerating declines after ridership increased each month in 2008.

If the 11.4 percent decline continued for a year, BART would lose about $33 million or 5 percent of its $673 million operating budget.

BART ridership tends to follow Bay Area employment. With local unemployment rising past 9 percent and expected to go higher, fewer and fewer people are using the system to get to jobs in San Francisco and the East Bay.

Other factors could lead to BART’s widening deficit, including a loss of state funding because of California‘s budget crisis and lower local sales tax revenue because consumers are buying less.

Gov. Arnold Schwarzenegger submitted 42 applications for $1.1 billion in federal stimulus funds Monday to help pay for intercity rail projects, including funds for a future high-speed rail station and Caltrain beneath San Francisco’s Transbay Terminal.

Applications seeking federal stimulus funds specifically for the state’s proposed 800-mile high-speed rail network connecting Southern California to the Bay Area and Sacramento will be filed Oct. 2.

Rod Diridon Sr., executive director of the San Jose State University’s Mineta Transportation Institute and member of the California High-Speed Rail Authority’s board of directors, said the October high-speed rail application should include requests totaling “several billion dollars.” He has said in the past that could be between $4 billion and $6 billion.

Diridon said that application, being handled by the High-Speed Rail Authority, would focus on funding the stretches with the most advanced planning — San Jose to San Francisco, Anaheim to Los Angeles and portions of the Central Valley.

He said about $400 million of the application sent Monday would go toward a “box” to be built 100 feet below the redeveloped Transbay Terminal that would contain a future station for high-speed rail and Caltrain service connecting San Jose and San Francisco. Proposals for spending the remaining $700 million are scattered around the state for various intercity rail projects, Diridon said.

President Obama, who has expressed strong support of high-speed rail, set aside a total of $8 billion in stimulus funds for high-speed and intercity rail projects nationwide. Besides California, which has been credited by federal transportation officials as having the most advanced high-speed rail proposal, other high-speed systems are proposed for the Northeast, Florida, Midwest, Pacific Northwest and other areas.

California’s high-speed rail system received approval for nearly $10 billion in funding from California voters in November 2008

“By approving a nearly $10 billion bond in November, voters spoke loud and clear that rail, including intercity, commuter and high-speed, must play a greater role in addressing the transportation and environmental challenges we face in the 21st century,” Schwarzenegger said in a statement. “On top of stimulating the California economy, federal investment in California’s rail systems will help lay a sustainable foundation for economic growth, help us meet our environmental goals and improve quality of life here in California.”

A Sacramento County Superior Court judge said Wednesday that portions of an environmental review of high-speed rail service will have to be rewritten, which might lead to delays in the project and loss of billions of dollars in state and federal funds.

Judge Michael P. Kenny ruled that the California High-Speed Rail Authority had failed to address concerns by Union Pacific Railroad about sharing its right-of-way in a stretch of the system further south, between San Jose and Gilroy, in its environmental review.

The ruling grew out of a lawsuit filed by the cities of Menlo Park and Atherton that challenged the adequacy of an environmental impact report conducted by the rail authority. Officials are meeting regularly with Union Pacific representatives to iron out any concerns they have about right-of-way issues between San Jose and Gilroy.

Rod Diridon, an authority board member and executive director of San Jose State University’s Mineta Transportation Institute, minimized the impact of Kenny’s 21-page ruling, saying it upheld most of the environmental study.

He added that rail authority members are waiting until a more detailed interpretation of the ruling is made available Thursday by the office of state Attorney General Jerry Brown.

However, he warned that delays caused by lawsuits could derail immediate plans for portions of the $45 billion, 800-mile high-speed rail network that would connect Southern California with the Bay Area and Sacramento.

“Losing even one month in our schedule in this region could cause us to lose federal stimulus funds, Proposition 1A state funds and up to $3 billion worth of badly needed jobs in our state,” Diridon said .

State officials seeking a portion of the $8 billion in stimulus funds must file by Oct. 2 of this year to be in the running.

High-speed rail opponents say Judge Kenny’s ruling means the rail authority will have to reconsider connecting the Bay Area to the system through Pacheco Pass.

Rail authority officials chose Pacheco Pass for the rail line instead of an alternative location, Altamont Pass between Livermore and Tracy.

“We are confident that a fair and complete analysis will demonstrate to the Authority that the Pacheco Pass route, with its lower ridership, lower revenue and its major impacts along the San Francisco Peninsula, is not the best choice,” David Schonbrunn, spokesman for the High-Speed Rail Litigation Coalition, said in a statement.