Wednesday, April 27, 2011

Trying to Fund the Unfundable: High-Speed Rail in America

Las Vegas: What ever happens in Vegas, stays in Vegas.  Or, perhaps it should, but somehow, it doesn't.  The Las Vegas Sun has a special interest in high-speed rail since they have been talking about a rail or maglev system from Vegas to Anaheim for a long, long time.  Millions have already been spent on studies.  The most recent plan is from Las Vegas to Victorville, well outside of Los Angeles or Anaheim. Oh, well. Never mind.

Not Las Vegas: The important thing about this article is not Las Vegas, it's the overview, including some erroneous conceptions.  But, well worth discussing. The problems are very large and there are very many of them.  Most problems have been ignored or glossed over in the eagerness of HSR promoters to get their projects on the books to be eligible to start the cash flow.  

No Planning: It's not only that the very nature of high-speed rail should come under scrutiny, but the way this program has been implemented is so questionable and unseemly, that it is reasonable to say that the whole thing should be closed down because there have been no reasonable grownups involved in the planning; and there hasn't been very much planning. It's mostly been a political promotion exercise.

Conflict of Interest: We have said before that the Federal Railroad Administration was established in the '70s to support the freight carriers and regulate them as well.  Remember, it was during that time that the freight operators were glad to relinquish their non-profitable passenger service to Congress and Amtrak.  And, by the way, it has always been a major failing of the federal government that creates agencies that both support an industry while at the same time seeking to regulate it.  The FAA is a similar conflicted organization.

That conflict problem was recently exacerbated when Ray LaHood was given the task of administering $8 billion of Obama's Stimulus funds (ARRA) and he delegated the administration of that program to the totally unprepared FRA.  Since the entire exercise has been a political one, any hints of meritocratic selection processes in the grants and award administration should be regarded as window dressing.

Freight vs. Passengers: Since the FRA also has consisted of rail guys with mostly freight experience, they have favored the more profitable freight world over government dependent passenger rail.  That conflict between passenger and freight looms large yet again.  This time, it's the promotion of high-speed rail and its deployment within freight owned and maintained rail corridors.  

Although sharing rails, or at least corridors, freight and passenger have divergent motives, processes and goals.  Amtrak has been tolerated and inconvenienced by the freight carriers on shared tracks, with resulting awkward scheduling.  But, now, the problem is greatly enlarged since HSR cannot share tracks simultaneously with the far slower freights.  Furthermore, the liability factor increases one hundredfold. To reduce that liability issue, Union Pacific has expressly denied HSR access to their wholly-owned rail corridors. Other Class 1 carriers have been only sightly more accommodating, but are unhappy, nonetheless.

Politics as Usual: As you read the article and see Robert Puentes' name come up (he works at Brookings), please note that he's an enthusiastic HSR supporter. He comments on the politicalization of the DOT regarding high-speed rail.  That "con-fusion" is at the heart of what's wrong with the high-speed rail program at the federal level, having been mounted as a political rather than transportation program from the start. 

No Cost-Benefit Analysis: On the other hand, Prof. Geddes from Cornell does point out the federal government's failing in the management of the HSR program, and we have specified those failings in other blog entries. We recently reviewed an article that made the point of the total lack of cost-benefit analysis by any government agency pertaining to HSR.  

Oink, Oink: That failing can only be construed as an attempt to ignore or cover-up the obvious, self-evident inadequacies of this program on a cost/benefit basis.   It tells a cynic like me that the real purpose was (and is) not to actually create a national high-speed rail program that is effective and beneficial, but to use it as window-dressing for political, earmarked pork, the facts be damned.

Highways Aren't Rails: Again we read about the appropriateness of the Eisenhower National Interstate Highway Program as the prototype for high-speed rail in America.  That is, must I say it again, total nonsense.  The two intentions and "technologies" are as different as day and night.  

The interstate highways, regardless of early objections, were always intended to be the connectors to all the roads and streets of America.  And, indeed, they did connect every driveway in the US to every other one, every worker to every job, every parking garage to every other one, every shopping mall to every other one, and so on.  It created an automobile culture, including all our suburbs, due to its absolute comprehensiveness. It became the body-politic's vascular network, complete in every way.  

Who We Are: Furthermore, it became the physical embodiment of how Americans saw themselves; as independent, individualistic, self-motivated and self-directed people.  We bought our cars for ourselves and our families to immerse ourselves in close or distant locales, and we were able to go where and when we pleased.  The government created the network upon which to do just that.

High-speed rail, I don't have to tell you, is almost the total opposite of that.  It will serve a very select portion of the population. One that can afford not only the train tickets, but the cab fare or car rental costs at "the other end."  It is, therefore self-sorting and self-selecting.  Built and paid for by the many for the benefit of the few.  Unlike the Interstates, it's military values and it's movement of goods values are non-existent. It's government sponsored luxury for the favored few.

Seeking to make the analogy between highways and rails, Western HSR Alliance head Tom Skancke says, “The interstate system is the backbone of what has made America the No. 1 economy in the world,” “The only proven formula of job creation funding in this country is transportation and infrastructure investment."

Investment, Good and Bad: Of course he would say that; he's in that line of work. Yes, the Interstate system is the transit/transportation backbone of the US economy, but at least equally so is freight rail. But both are now in place. High-speed rail is not.  It would have to be fully invented, or imported, the latter most likely. 

High speed rail is not a substitute for either transportation (it's an add-on, or embellishment) or the infrastructure goals we need to address, contrary to what Skancke and other want us to believe. It's a bad investment both in financial and in cultural terms.

 But, typically, when Skancke goes on to generalize about the "only formula of job creation" being "transportation and infrastructure investment," he opens himself up to charges of over-selling and to ridicule. Only formula?  Really?  Did he forget that our greatest job creation power was our manufacturing capacity, such as steel in Pittsburgh or automobiles in Detroit?  Does he ignore the incredible impact of information technologies which diminish the need for transportation, and the infrastructure of which is electrons?

Let's agree that this is a provocative article which we need to think carefully about in order to draw appropriate conclusions about high-speed rail and its costs, costs we cannot afford.

Is America ready to manage high-speed rail?
By Karoun Demirjian (contact)
Wednesday, April 27, 2011 | 2:05 a.m.

WASHINGTON — The future of a national high-speed rail system hangs in the balance of the budget. As a down payment on a renaissance of American rail, President Barack Obama wants $53 billion over the next six years — a figure some criticize as too much, and others as too little by about an order of magnitude.

But even if lawmakers can steer their way through the dollars, there’s another potential tripping point in the track around the bend: Is Washington ready to regulate this sort of rollout?

It’s an issue that will affect Southern Nevada’s high-speed rail proposals.

The central federal authority for all rail-related matters is a tiny wing of the Transportation Department: Federal Railroad Administration. The administration is just slightly older than Amtrak, a name most Americans associate with passenger rail, and for good reason: Amtrak has been in charge of all passenger rail, by congressional order, for the past four decades.

The Railroad Administration has remained involved largely as a regulatory agency that focuses more on freight than passenger service.

But that division of authority started to change in the past few years, since administration officials began setting aside stimulus funds for high-speed rail — and entrusting the Railroad Administration to parse out the money, which, if the Obama administration gets its figure, will grow from an $8 billion initiative to a $53 billion portfolio, putting pressure on the 1,000-person shop to expand.

“This is uncharted territory for sure,” said Robert Puentes, a transportation expert with the Brookings Institution. “There are bound to be hiccups along the way.”

Although the Railroad Administration is taking on a new role, it’s not acting alone, Puentes notes: “There seems to be a more collaborative approach” in the Transportation Department,” he said, one that involves the president and the secretary lending the weight of their offices to high-speed rail promotion.

But Washington’s involvement so far has been limited to drumming up excitement and handing out funding to states to amp up their local rail; even the administration admits it’s just scratched the surface of what’s to be a 25-year national plan.

Officials envision a system built from the ground up, in terms of tracks, contracts, engineering and connecting a variety of public, private and foreign-funded rail projects.

That gives Las Vegas an important stake in the federal government’s actions: Although local flagship rail venture DesertXpress hasn’t sought a single federal dollar to date, it is dependent on high-speed rail taking off in other places — such as California — if people are going to have a reason to ride the rails.

Backers of high-speed rail give the Railroad Administration’s work thus far their seal of approval.

“I think that the Federal Rail Administration, and particularly the staff that they have, have done a really great job of trying to get this money sent out,” said Tom Skancke, director of the Western High Speed Rail Alliance. “This is a new era for (the Railroad Administration), a new opportunity for them to get into the passenger rail business, and I happen to think that this is a great place for it to start.”

But some critics say the government is proceeding in too haphazard a manner to inspire confidence.

“It seems as though the executive branch really lacks the structure to execute this type of a huge infrastructure project well,” said transportation expert Richard Geddes, a professor at Cornell University, who pointed out that the Railroad Administration recently admitted it doesn’t do cost-benefit analyses of the programs it agrees to fund before awarding contracts.

“That’s a shocking revelation. The administration has not sat down and said ‘OK, let’s assess, as objectively as we can,’” he said. “They’re spending public taxpayer money and they should be very careful about ensuring that those moneys are spent not because it’s politically expedient to spend them in certain places, but because social cost/social benefits indicate they should be spent.”

At this juncture, the administration isn’t investing in high-speed rail exclusively. In fact, California was one of only two projects nationwide to receive initial federal grant funding under the stimulus for a high-speed rail project. Most of the rail money actually went to pay for incremental advances in train speed not quite enough to be called “high-speed.”

“They’re making a lot of incremental improvements that have to be made,” said Steve Kulm, a spokesman for Amtrak. “The route between Chicago and St. Louis, we can increase from 90 mph to 110 mph — increasing speeds is going to provide a benefit. And how do you improve rail traffic? Fix congestion in Chicago.”

All of that is far less glamorous than the dream of bullet trains flying across the tracks clocking speeds closer to 220 mph. But both Amtrak officials and Republicans in Congress seem to be downplaying at least the near-term expectations on that front; both will argue that the Boston-New York-Washington corridor is the only place where such a model truly has the potential to be cost-effective. And maybe California.

That’s not to say they’re both approaching that conclusion from the same angle. For Amtrak, it’s a question of how much money it has to work with; and although Amtrak has posted record revenue and ridership this year, it’s still dependent on the federal government, especially for capital projects: 90 percent of revenue for nonoperating initiatives come from tax dollars that Congress has to authorize.

On that front, Republicans just aren’t willing to spend what transportation-minded Democrats were in years past, when they controlled the House. The days of half-trillion-dollar surface transportation proposals are all in the past under current House Transportation Chairman John Mica of Florida — a state that rescinded its request for federal high-speed rail funding, sending it back to the Transportation Department this year.

Mica is writing a surface transportation reauthorization bill that he plans to move before the fiscal year is out. It will include a section on high-speed rail investment, but not likely of the sort Obama wants to see.

That’s potentially a blow to the high-speed rail revolution, which backers have tried to stress needs investment on the sort of magnitude as Dwight Eisenhower’s Interstate investment program.

“The interstate system is the backbone of what has made America the No. 1 economy in the world,” Skancke said. “The only proven formula of job creation funding in this country is transportation and infrastructure investment.

“And I happen to think that there needs to be a strong federal role in transportation, as it relates to regulation, safety, right-of-way management, and a certain amount of oversight,” Skancke said.

He pointed out that having an interstate oversight agency is what keeps states — which own the interstate routes in their boundaries — cooperating to keep the system working across borders.

“You can’t allow 70 different systems in this country and none of them connect; you’ve got to have a regulation for some type of interoperability,” he said.

But there’s a difference between interstate investment and high-speed rail — not the least of which is that the interstate was, and is, largely paid for by gas taxes. Lawmakers have shot down proposals to divert some of those taxes toward rail, or to direct a carbon tax toward a new rollout of rail.

Still, some advocates say reducing funding — or dealing with a slightly unwieldy Railroad Administration — may not be nails in the coffin of high-speed rail, arguing it was never supposed to be a fully federal initiative.

“There is a balancing act going on, moving up and down the federalist scale, of where the federal government should engage, and where they should get out of the way,” Puentes said, highlighting Intermountain West cities such as Las Vegas, Phoenix, Denver and Salt Lake City, which are raising revenue to bankroll surface transportation projects, both in traditional and innovative areas.

“It’s a self-help approach that they want recognition for from the federal government,” he said. “We’re starting to see a flipping of the financing pyramid, because those days of federal government funding everything are largely over, partly because of the economic crisis we’re facing.”

If more private companies do jump in the ring — and, experts point out, there been some interest from European and Asian countries more advanced in the development of high-speed rail — that would almost by definition create a more jumbled network of crossed rail signals for the federal government to regulate, because it would create competition for Amtrak’s long-standing monopoly on passenger rail.

But that’s not nearly as confusing, or as unprecedented, experts say, as it may seem — if you just look at what’s been running on a parallel track.

“A lot of people don’t realize that the vast majority of train tracks in this country are owned by private rail companies,” Geddes said. “Amtrak pays those freight rails for use of those lines; that was the deal back in 1970. But you could have a competing private company also pay for the use of those tracks, and that’s good for consumers.”

It’s not yet entirely clear where high-speed rail cars would use existing freight tracks — a sharing arrangement that brings up a whole host of right-of-way problems — and that’s certainly not what’s being envisioned for Las Vegas, where the projected $5 billion DesertXpress project is dependent on a new system of rails.

But that’s a private initiative until completion, and depending on how things progress in California, the federal government may not have to weigh in.

“They have to cooperate across state lines. That could be the federal government, but it doesn’t have to be,” Geddes said. “If you needed to coordinate between California and Nevada, the two governors could just talk to each other and hash this out. It’s not clear that you need some sort of entity in Washington.”

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