Sen. Lowenthal Defends Himself

by Rafael

In a spirited op-ed piece in the Modesto Bee, Sen. Alan Lowenthal (D-Long Beach, pictured left) defends himself against earlier accusations ("Quit playing high-speed politics") that he was engaged in a "power grab" to prevent the use of prop 1A(2008) funds to construct a central maintenance facility for the HSR network somewhere in the Central Valley.

Lowenthal's claims his beef is not with the location of the maintenance site but something more profound: CHSRA's 2008 Business Plan, which he considers unsound. He notes that prop 1A(2008) only provides $9 billion of the $34 billion price tag he estimates for the entire starter line and that CHSRA has not yet actually secured the balance from non-state sources, i.e. Congress, local counties and cities and private investors. It also does not spell out contingency plans for coping with the possibility that the required funding will never materialize in full.

While claiming to be an ardent supporter of the HSR project, the State Senator has in fact taken a fiscally conservative stance: the state contribution should not be used for component projects such as a dedicated high-speed test track and maintenance facility that will only prove useful if and when HSR actually enters service in California - an outcome that is obviously contingent on securing all necessary funds for constructing the starter line. The whole public-private partnership concept allows CHSRA to remain rather more independent of financial oversight by the state legislature than is typical for a major public works project. Encouraging noises from Congress and the Administration are not enough to get this railroad built and as for private investors, those will come to the party late if at all. In other words, Lowenthal is a risk-averse pessimist who sees the glass as currently 3/4 empty.

Perhaps not as coincidentally as he would have us believe, spending the state funds conservatively implies priority for component projects at either end of the starter line. Orange County politicians, including Anaheim mayor Curt Pringle, insisted on tacking the LA Union Station to Anaheim ARTIC section onto the starter line to ensure at least a section of the BNSF Transcon line along highway 91 gets fully grade separated sooner rather than later. The ports of LA and Long Beach provide roughly one in seven jobs in the LA basin, so freight rail is a big deal both locally and at the state and federal levels. Note that the state-sponsored ACE project to eliminate or improve UPRR's grade crossings in the San Gabriel Valley is already underway.

Note that the Fullerton-Anaheim section is too narrow for quad tracking, so no more than 2-3 HSR trains per hour (each way, PDF p14) will actually serve Anaheim station.

By contrast, CHSRA has thus far taken an approach long favored by planners: build broad political support for the concept, accumulate funding contributions and proceed on the assumption that the balance will be forthcoming. Eventually, the sum already invested becomes so large that it makes more sense to finish the project than to scale back its ambitions or cancel it altogether. Once that tipping point is firmly on the horizon, negotiations with private investors will get down to brass tacks. In other words, the CHSRA board is a group of optimists who see the glass as already 1/4 full, with prospects for more brighter than ever.

This also explains why CHSRA want to prioritize not just the contentious SF peninsula but also the Central Valley test track and associated central maintenance facility: it anticipates these will be needed to secure the all-important "rule of special applicability" required before its engineering staff can pre-qualify vendors of proven, specialized HSR equipment and draw up a shortlist. If the history of HSR projects elsewhere in the world (e.g. Taiwan) is any guide, there will be significant political wrangling over manufacturing jobs etc. that CHSRA may want to stay out of.

On a related note, Susan A. Fleming, Director of Infrastructure Issues at the non-partisan Government Accountability Office released a statement to Congress yesterday underlining that FRA has a vision for HSR but not yet have a well-defined strategic plan or organization for developing it nationwide, beyond the disbursement of already-approved ARRA funds. In particular, she pointed out that $8 billion ($9.5 billion if you include the earlier PRIIA act) represents just a fraction of the federal funds needed to build the California network's starter line, never mind anything else. Implicitly, she questioned the wisdom of using short-term stimulus funds on HSR before Congress has decided to reorganize USDOT and allocate tens of billions in additional funds. To create lasting value for federal taxpayers, HSR must be elevated to a strategic shift in policy. Currently, the numbers suggest merely a make-work effort in the short term.

Fortunately, the next surface transportation bill outlined earlier this week would address the concerns GAO has raised. The snag is that this bill is still quite far from the President's desk.

FRA Guidelines On Federal Funds For HSR

by Rafael

Earlier today, the Federal Railroad Administration (FRA) published a press release to notify the general public of guidelines for applicants seeking a slice of the $8 billion allocated in the American Recovery and Reinvestment Act (ARRA) a.k.a. the stimulus bill passed in the spring.

The same guidelines will be used to evaluate applications for the $1.5 billion reserved for HSR in the Passenger Rail Investment and Improvement Act (PRIIA) that was signed into law last October. The principal difference is that PRIIA funds are limited to 80% of total project cost. The proposed 2010 budget also includes a provision for an additional $1 billion in federal funding to be made available in each of the next 5 years and will presumably be allocated according to the same or similar guidelines as PRIIA.

USDOT Secretary Ray LaHood expects the first HSR grants to be awarded by mid-September. To allow for timely processing, the guidance calls for pre-applications to be filed no later than July 10 (preferably sooner). These are essentially expressions of interest with rough outlines that FRA will use to establish the volume of applications it will need to process and, to aid applicants in drafting their formal documentation. Final applications for Tracks 1, 3 and 4 (Projects, Planning and FY 2009 appropriations, respectively) due no later than August 24. Those for Track 3 (Service Development Programs, e.g. the California HSR network) are due October 2. These dates may be pushed back by at least 30 days if FRA decides to make changes to its guidelines in response to formal comments received no later than July 10.

Each application will be evaluated using 7 criteria in three categories. From 1 to 5 points will be awarded for each to reflect how well it conforms to the objectives of the federal government and Congress. The results are summed up, with different weights used for the various Tracks.

The first category addresses the return on public investment. This includes a rigorous analysis of financial costs and benefits of service operations. Further, it includes quantification of indirect benefits such as population mobility and safety, economic recovery benefits, energy efficiency, CO2 reduction etc.

The second category covers criteria related to project success, specifically project management and the sustainability of claimed benefits.

The third category examines the timeliness of estimated project completion and the risk of delays, which typically entail cost overruns as well.

These evaluation criteria will apparently be used to arrive at shortlists of candidates in each of the Tracks described above. The final selection among those will be based on what the guidelines refer to as "balance and diversity". This refers to the geographic extent of the projects, the level of technical innovation required etc. USDOT will explicitly favor those shortlisted projects that have already attracted non-federal investment. Tracks 3 and 4 explicitly require 50% matching funds.

Even so, these selection criteria remain quite fuzzy, so political clout on Capitol Hill and with the Obama administration will almost certainly play a significant role. Keep in mind that only projects in the eleven official high speed rail corridors are eligible at all. However, the Secretary of Transportation has limited powers to modify their definition. Brand-new corridors could only be created by and act of Congress, which would also have to amend the PRIIA and/or ARRA to make them eligible.

The Associated Press interprets the guidelines as favoring California and the Midwest over other regions. My own take is that Florida's HSR effort is still stalled and lacks funding commitments, though it is otherwise well placed thanks to the advanced state of its environmental impact review. In addition, Rep. Oberstar (D-MN) and Mice (R-FL) intended the NEC to be the primary beneficiary of HSR funds in PRIIA, to cut the Amtrak Acela Express' line haul times for New York to Washington, DC from roughly three to under two hours.