Saturday, December 17, 2011

KenOrski's Newsletter: The Washington hearings on the California High-Speed Rail Project

As you already know, Ken Orski's newsletters are highly appreciated on this blog. His understanding of the Washington political machine and how it works is the best way to grasp the high-speed rail situation since, as we keep saying, it's a political program first and foremost.

Ken Orski's InnovationNewsBriefs covered the hearings of the House Committee on Transportation and Infrastructure.  Mica's committee singled out the California HSR project. While not a fighting match, neither side was willing to hear the other.  The battle lines were drawn well before this Congressional confict and they haven't changed.  What has changed is that we all know a great deal more now than we did in 2008, when this project was brought to our attention and to the voters of California.

There is now a great deal of irrefutable truth about this project previously very hard to come by.  The Due Diligence Report, usually dismissed by the rail supporters for undue motives, was one of the early comprehensive documents calling the CHSRA's bluff.  We didn't listen.

But, we're hearing loud and clear now.  Time to terminate this distaster before it can do more harm.  See also:

And beneath Ken's newsbrief, as another good article about the hearing with some compelling comments from Reps. Mica and Nunes.

Here are Ken's insights:
Vol. 22, No. 34

December 16, 2011

The Troubled Future of the California High-Speed Rail Project

A congressional oversight hearing, focused on the concerns surrounding the troubled California high-speed rail project, cast new doubts on the likelihood of the project’s political survival.

The December 15 hearing was the second of two hearings called by the House Transportation and Infrastructure Committee to examine the Administration’s "missteps" in handling the high-speed rail program. Before a largely skeptical groups of committee members — Reps Mica (R-FL), Shuster (R-PA), Denham (R-CA), Miller (R-CA), Napolitano (D-CA), and Harris (R-MD)— two panels of witnesses offered a mixture of support and criticism concerning the project’s impact, financial feasibility and prospects for the future. The first panel comprised six California congressmen — three testifying against the project (Reps. Nunes (R), McCarthy (R) and Rohrabacher (R)), three in support of it (Reps. Cardoza (D), Costa (D) and Sanchez (D).) The second panel consisted of FRA Administrator Joseph Szabo, California Rail Authority CEO, Roelof Van Ark, local elected officials and representatives of citizen groups.

A Brief Project Overview
The proposed high-speed line, from Sacramento and San Francisco to Los Angeles and San Diego, was originally estimated to cost $43 billion in 2008 when the state’s voters approved a $9.95 billion bond measure (Proposition 1A) to help finance the project.  Since then, the total cost estimate for the project has more than doubled to $98.5 billion and the completion date has been pushed back by 13 years to 2033.

The "initial construction section" of 140 miles is proposed to be built in the sparsely populated Central Valley from south of Merced to north of Bakersfield. The $6 billion project is to be financed with a $3.3 billion federal contribution and $2.7 billion worth of state Proposition 1A bonds. Construction is to begin in 2012. However, to qualify as an "Initial Operating Segment" as required by the authorizing bond measure and capable of running high-speed trains, the line has to be extended by another 290 miles to San Jose (or 300 miles to the San Fernando Valley), at an additional cost of $24.7 billion.

To finance the latter construction, the California Rail Authority’s business plan calls for $4.9 billion in Proposition 1A bonds and assumes a $19.8 billion federal contribution – $7.4 billion in federal grants and $12.4 billion in the yet to be created Qualified Tax Credit Bonds (QTCB). The latter assumption came in for sharp committee criticism as wishful thinking. The bill authorizing QTCB (or TRIP) bonds, proposed by Sen. Wyden (D-OR), is not given much chance of passing in the House. Even if passed, it would only offer $1 billion for the California HSR project rather than $12.4 billion as claimed in the Authority’s business plan. 

Further federal high-speed rail grants are equally uncertain given the bipartisan congressional refusal to appropriate funds for high-speed rail two years in a row. In other words, the funding for the Initial Operating Segment hinges on highly questionable assumptions as to continuing federal aid.

Even more conjectural are the Authority’s funding assumptions for the subsequent phases of the project— a line extension from San Jose to the San Fernando Valley and a southern connection, to Los Angeles and Anaheim. That phase of construction according to the Authority’s business plan, would require a further federal contribution of $42.5 billion between 2021 and 2033 (plus $11 billion in private investment).

Left unstated in the Authority’s business plan, one informed observer speculated, is the secretly entertained hope that by 2015 (when the additional federal funding will be needed), the economic circumstances — and perhaps political circumstances as well — will have changed, to allow a resumption of generous federal support.

A "Boondoggle" or a "Compelling Opportunity for Our State"?

Witnesses testifying before the committee aligned along predictable fault lines. Critics of the rail project (mostly, but not all, Republicans) tended to focus on the specific weaknesses of the project: its unrealistic assumptions concerning future funding; the quixotic choice of location for the initial line section ("in a cow patch," as several lawmakers remarked) ; a lack of evidence of any private investor interest in the project; the eroding public support for the project (nearly two-thirds of Californians would now oppose the project if given the chance, according to a recent poll); the "devastating" impact of the proposed line on local communities and farmers; and the unrealistic and out-of-date ridership forecasts (with more passengers in 2030 predicted to board trains in Merced, a small farming community in Central Valley, than in New York’s Penn Station). Other witnesses asserted that the current project is vastly different from the one Californian voters approved in 2008; and that it is lacking proper management oversight (it is a project "of the consultants, by the consultants and for the consultants" one witness remarked).

Defenders of the project (mostly, but not all, Democrats) resorted largely to abstract arguments about the merits of building a high-speed rail system in California. They saw the project as a compelling long-term vision, as a travel alternative to congested highways and air lanes, as a way to reduce greenhouse gas emissions, and as a means of creating thousands of jobs. They argued about the difficulty and prohibitive costs of the alternative of building more highways and airports to accommodate future population growth.

Federal officials are fond of reminding us that construction of the interstate highway system also began "in a cow patch " — in that particular case, a wheat field in the middle of Kansas. But they ignore a fundamental difference between the two decisions: the interstate highway system was backed from the very start by a dedicated source of funds, thus ensuring that construction of the system would continue beyond the initial highway segment "in the middle of nowhere." 
The California project has no such financial assurance. Should money for the rest of the system never materialize— as is likely to happen— the state will be stuck with a rail segment unconnected to major urban areas and unable to generate sufficient ridership to operate without a significant state subsidy. The Central Valley rail line could literally become a "Train to Nowhere" — a white elephant and a monument to wasteful government spending.


Note: the NewsBriefs can also be accessed at
A listing of all recent NewsBriefs can be found at
Please feel free to forward or reprint this item with appropriate citation. All correspondence, including requests to subscribe and unsubscribe, should be addressed to: C. Kenneth Orski, Editor/Publisher;  email:; tel: 301.299.1996; fax: 301.299.4425. Please make sure that your email account is set up to accept incoming mail from 

California's High-Speed Project Railed at Congressional Committee Hearing
by Ed Fuentes
on December 16, 2011 1:23 PM

Photo Courtesy of California High-Speed Rail Authority
A U.S. House committee hearing about a high-speed train system between Los Angeles and San Francisco had opponents talking in circles for four hours on Thursday. The hearing, called "California's High Speed Rail Plan: Skyrocketing Costs & Project Concerns," 

included a heated and highly critical discussion led by House Transportation and Infrastructure Committee chairman Rep. John Mica (R-Fla), who has lately stepped away from his support of the transit mode. 

Mica has made it clear that he is skeptical of the Obama administration's pet program. "The California project appears to be a disaster," he said in his opening statement. "The project seems to be imploding."

He then called the location of the first proposed leg in Central Valley farmland a route that is about "more cows and vegetables, than riders." He questioned what travelers would be served in the farmlands of California for a sticker price of $5.8 billion.

Public opinion will change, said supporters, once the train is running. Roelof Van Ark, CEO of the California High-Speed Rail Authority, emphasized jobs and the viable cost of travel versus flying.

These are the range of bullet points recanted from the last few years, but now a sense of urgency is felt as both sides see a shovel date for next year.

Even with congressional opposition apparent, Democratic representatives introduced vital projects in their region as recipients of potential funding.

"Any further money for high-speed rail needs to solely come to the Northeast Corridor," said Mica last month, according to Transportation Nation. The congressman stated he would commit to redirect rejected funding to the Amtrack project.

At the hearing, Rep. Devin Nunes, (R - Tulare County) supported Mica by countering projections that round-trip fare from Los Angeles to San Francisco will be $162. "It costs $350 to ride the fastest Amtrak train from New York to Washington," said Nunes, as he questioned the authority's credibilty.

"It is clear that high-speed rail is not about jobs," said Nunes at the hearing. "It is about corruption, public deception and bureaucratic experimentation."

Even the cost of revolving PR firms representing rail project came under fire. "If high-speed rail were widely supported, a multimillion dollar PR campaign would not be necessary," called out Nunes.

On Tuesday, the California High-Speed Rail Authority board decided to end a five month search to find another replacement firm, reported the Sacramento Business Journal.

The Obama Adminstration says the project will continue, despite its critics. $3.3 billion is committed for construction to start next year, said Joseph Szabo, Administrator of the Federal Railroad Administration.

No comments: