The Rail Debate Intensifies

Posted by Ken Orski on Monday, June 28th, 2010

Innovation NewsBriefs
Vol. 21, No. 13

A series of events during the month of June have kept the spotlight on the Administration’s high-speed rail (HSR) initiative. Noteworthy events included a June 11 U.S. DOT announcement of the first round of funding for HSR projects; a new Government Accountability Office (GAO) report assessing the prospects for the federal HSR Program (GAO-10-625, June 17, 2010); a U.S. Conference of Mayors report predicting significant economic benefits from the HSR program; and a policy statement by the HSR Development Council of the American Road & Transportation Builders Association (ARTBA) setting forth a set of recommended policy principles for the federal HSR initiative.

Also keeping HSR in the public eye have been various advocacy groups, such as the OneRail Coalition, a group of rail industry stakeholders; the Passenger Rail Coalition, representing state DOTs’ rail interests; various regional HSR associations; and two freshly minted lobbying organizations, the American High Speed Rail Alliance and the U.S. High Speed Rail Association. The latter held a High Speed Rail 2010 Conference in Los Angeles on June 17-18.

Adding an element of controversy to the HSR initiative has been the recent Federal Railroad Administration directive setting the terms of the “Stakeholder Agreements” to be negotiated between state DOTs and the Class I railroads participating in the HSR program. The rail industry was reported to be “stunned” by the peremptory tone and burdensome terms of the FRA directive that was reportedly drafted without the parties’ advance knowledge or participation. Despite reassuring statements from U.S. DOT, the threat of some of the Class I railroads walking away from the HSR program and effectively derailing portions of the Administration’s initiative was still considered a real possibility as this is being written. (See our NewsBrief of June 16, “Is the High-Speed Rail Program At Risk?”).

Is There a Need for High Speed Rail In America?

The FRA controversy has momentarily diverted media attention, but of greater significance is the more fundamental ongoing debate about the role and future of HSR in America. Some critics are contesting the very need for high speed passenger rail service in the belief that even very fast trains cannot hope to compete with automobile or air transportation. At a June 25 seminar at the Heritage Foundation, the well-known and outspoken rail skeptic Wendell Cox, used the California high-speed rail project as a case in point. Calling it “untimely extravagance,” Cox argued that the Los Angeles-to-San Francisco high speed rail line is based on unrealistic financial assumptions, highly optimistic ridership projections, understated cost forecasts, exaggerated benefits from greenhouse gas reductions and unachievable travel times. Also issuing a skeptical verdict on HSR have been several reports and articles, notably a Reason Foundation report, “The California HSR Proposal: A Due Diligence Report” by Wendell Cox and Joseph Vranich; a March 19 Heritage Foundation  paper, “America’s Coming High-Speed Rail Financial Disaster” by Senior Research Fellow, Ronald Utt; an article titled “The Trouble With High Speed Rail,” by the Hoover Institution’s Liam Julian (Policy Review No. 160, June 2010); and a commentary by the Progressive Policy Institute’s Mark Reutter (“The Right Track: Improving Obama’s High Speed Rail Program,” February 17, 2010). The blogosphere has likewise weighed in with a mix of critical opinions (see, especially the National Journal Transportation Blog of March 23, 2009, “Is High-Speed Rail Worth It?” for a somewhat dated but still relevant collection of both positive and critical views.)

A larger body of critical opinion has centered on the extent to which the Administration’s $8 billion “high speed rail” initiative will, in fact, advance the goal of high-speed rail service in America. According to Administration officials, the program is but a “down payment” toward a true high-speed passenger rail system of the kind that has been deployed in Europe and the Far East. But the Administration’s actions belie its rhetoric, for the federal efforts have been heavily focused on upgrading existing Class I freight rail infrastructure rather than on laying foundations for a true high-speed rail system.

A Policy of Incrementalism

From the very outset, the Administration has evidenced a laudable desire to introduce a more multi-modal approach to national transportation policy, restore more modal balance to the transportation system and elevate the importance of enhancing the nation’s freight delivery system. This policy had its first concrete manifestation in the choice of projects under the TIGER program. Of the total $1.5 billion, 62 percent of the dollars went to improvements in freight rail infrastructure. This included $105 million for the Crescent Corridor Intermodal Freight Rail project (an upgrade of Norfolk Southern’s freight rail lines between the Gulf Coast and the Northeast); $100 million for the CREATE Program to relieve congestion in Chicago’s notoriously clogged rail hub; $98 million to finance doubling CSX’s freight capacity in the National Gateway Freight Rail corridor between northwest Ohio and Pennsylvania; and $83 million toward construction of a new Penn Station (Moynihan Station) in New York City. By comparison, money for highway and transit projects was parceled out in smaller amounts. The great majority of the 51 TIGER grants were under $30 million.

The allocation of the $8 billion in HSR funds followed a similar pattern: a continued emphasis on incremental improvements in existing rail infrastructure. 76 of the 78 grants the Administration awarded under the Recovery Act — representing 56 percent of the total dollar amount of the HSR awards ($3.5 billion) went for relatively minor enhancements in existing Class I RR facilities, such as overhauling track and signal systems, improving grade crossings, refurbishing existing stations and implementing positive train control technology. As critics like to point out, while these improvements might allow passenger trains to operate somewhat faster in the HSR-designated corridors, they will not move the country any closer to achieving a true national high-speed rail vision as promised in White House press releases and speeches of federal transportation officials.

That is not to say that the $8 billion HSR program is “a total waste of the taxpayers’ money” as alleged by some critics. A plausible case can be made that upgrading the Class I rail facilities is a cost-effective means of enhancing the nation’s freight carrying infrastructure. Increasing freight system capacity has been acknowledged by the entire transportation community as a matter of the highest national priority. As rail industry spokesmen like to point out, freight railroads move 40 percent of the nation’s freight as measured in ton-miles, and allowing freight railroads to carry more of the weight, will help to reduce future maintenance costs of the nations’ highways and help relieve road congestion. It follows that expanding freight rail capacity should be the goal of any enlightened national transportation plan.

Some observers, however, attribute a more cynical motive to the Administration’s tilt toward incrementalism. Any investments whose purpose is to lay foundations for true high-speed rail technology, they say — as the Florida and California high-speed projects purport to do— will take years to complete, long after the present generation of political leaders has left office. Most of the “upgrades,” on the other hand, could become operational in a relatively short time and become part of the Administration’s record of accomplishment, which the White House could proudly point to during the 2012 presidential election campaign. Indeed, the Administration has pointedly spread its HSR grants far and wide among 27 recipients, scoring political points in all regions of the country (ironically, the Northeast region, with its key Boston-New York-Washington rail corridor and extreme air traffic congestion, has benefitted the least from the Administration’s largesse— much to the consternation of Rep. John Mica (R-FL) ranking member of the House Committee on Transportation and Infrastructure and former chairman of the House Aviation Subcommitte. See his comments, “We must develop high-speed rails for NE Corridor” in The Hill, June 22, 2011.)

Having listened to all sides in this debate, we believe in striking a middle course. We think a strong case can be made that true high-speed rail will eventually be necessary in the U.S. between major city-pairs separated by less than 300-400 miles, in order to relieve unacceptable levels of airport and air traffic congestion. In Europe, air service between Paris-Brussels [162 miles], Paris-Lyon (246 miles) and Cologne- Frankfurt [94 miles] has already been totally replaced by high-speed rail service. In the United States, there are seven heavily traveled corridors under 400 miles in length that could be logical candidates for high speed service (Source: Congressional Research Service, “High Speed Rail (HSR) in the United States,” December 8, 2009.) But building even such a limited number of dedicated high-speed rail lines would require decades of a sustained national commitment spanning many administrations and requiring its own dedicated source of revenue outside the Highway Trust Fund.

Nor is there any assurance that future presidents and future Congresses will share President Obama’s enthusiasm for high-speed rail and will not be distracted by other infrastructure priorities. Hence, only time will tell if the $8 billion is indeed a “first down payment” on a multi-generational commitment to create a network of high-speed lines, or whether it is simply a commendable one-time initiative that will enhance the nation’s freight carrying capacity (and will primarily benefit the Class I railroads) but only marginally improve passenger service in a few rail corridors. Our conversations with colleagues in the transportation community and the railroad industry suggest that the weight of expert opinion is leaning in favor of the latter scenario.

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 21st year of publication.

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One Response to “The Rail Debate Intensifies”

  1. F.K. Plous says:

    A “dedicated revenue stream” seems to have become the holy grail of high-speed rail advocates. They see it as the only way HSR can be financed as well as the only serious warrant of Congress’s and the administration’s will to support a passenger-rail buildup.

    Yet both the U.S. highway civil aviation infrastructures got a solid launch without a dedicated revenue stream. The first Federal Aid Highway Act, in 1916, was financed out of general revenues, and so were its successors in 1921 and 1925. The first federal gasoline tax–1 cent, and not all of dedicated to highway construction it –was not imposed until 1932, by which time the U.S. had nearly 200,000 miles of paved highways. The first Federal Airport Aid Program, in 1946, set aside $525 million from the General Fund for airport construction over a 6-year period. It was renewed in 1951, but the Federal Airline Ticket Tax and the Airport and Airways Trust Fund were not set up until 1971. If Congress genuinely wants to build a high-speed rail system it will find a way to raise the money, but a revenue stream supported by user fees will not generate adequate payments until enough users are first attracted. As with highways and airports, we will have to prime the pump before the system will be big enough or fast enough to attract that many passengers.

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