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A Devastating Verdict

Posted by Ken Orski on Monday, January 9th, 2012

Innovation NewsBriefs
Vol. 23, No. 2

Like many other observers,  we have found  the California High-Speed Rail Peer Review Group to have made a convincing case for a fresh look at the feasibility of the California high-speed rail project. The Group’s report was issued as eleven House Democrats — eight from California– joined an earlier request from twelve Republican House members for an independent GAO investigation of the embattled project.

That is why we find Governor Brown’s reaction— that the Peer Reviewers’ report  “does not appear to add any arguments that are new or compelling enough to suggest a change of course” —incomprehensible. Either the Governor issued the statement without the benefit of having read the report,  or else he is so ideologically committed to the project that he refuses to look the facts in the face.

Precisely which conclusions of the report  are not compelling enough, the Governor’ s spokesman has not made clear.  Is it the statement that “the Funding Plan fails to identify any long term funding commitments” and therefore “the project as it is currently planned is not financially feasible”?

Is it the Reviewers’  assertion that “the [travel] forecasts have not been subject to external and public review” and, absent such an open examination,”they are simply unverifiable from our point of view”?

Could it be their statement that “the ICS [Initial Construction Section] has no independent utility other than as a possible temporary re-routing of the Amtrak-operated San Joaquin service…before an IOS [Initial Operating Segment] is opened”?

Or, is it  the Panel’s conclusion that “…moving ahead on the HSR project without credible sources of funding, without a definitive business model, without a strategy to maximize the independent utility and value to the State, and without the appropriate management resources, represents an immense financial risk on the part of the State of California?”

To us, the findings seem at least deserving of  a respectful consideration.

But  the California High-Speed Rail Authority (CHSRA) is not ready to concede anything. Here is the opening paragraph of its response: “While some of the recommendations in the Peer Review Group report merit consideration, by and large this report is deeply flawed, in some areas misleading and its conclusions are unfounded. …Although some high-speed rail experience exists among Peer Review Panel members, this report suffers from a lack of appreciation of how high-speed rail systems have been constructed throughout the world, makes unrealistic and unsubstantiated assumptions about private sector involvement in such systems and ignores or misconstrues the legal requirements that govern construction of the high speed rail program in California.”

It is not our intention to delve in detail into the Authority’s response and judge the soundness of its arguments. No doubt, the CHSRA response will come under a detailed examination by the Authority’s critics in the days ahead. Suffice it to say that, having carefully and with an open mind examined the Authority’s rambling nine-page response, we find that it did not satisfactorily rebut the Peer Group’s central point: that it is not prudent, nor “financially feasible,” to proceed with the $6 billion dollar rail project in the Central Valley (including $2.7 billion in Proposition 1A bonds) in the absence of any identifiable source of funding with which to complete even the Initial Operating Segment. To do so, would be to expose the State to the risk of being stuck, perhaps for many years,  with a rail segment unconnected to major urban areas and unable to generate sufficient ridership to operate without a significant state subsidy.

The Authority’s lashing out at  the Peer Reviewers and the dismissive tone of its response suggest that it  has already made up its mind to stay the course and circle the wagons. That  is not a wise posture to assume in the face of an already skeptical state legislature and a disenchanted public opinion.

C. Kenneth Orski is a public policy consultant and former principal of the Urban Mobility Corporation. He has worked professionally in the field of transportation for over 30 years, in both the public and private sector. He is editor and publisher of Innovation NewsBriefs, now in its 22nd year of publication.

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