Wednesday, September 17, 2008

The US Senate Ready to Step Up on HSR

NOTE: We've moved! Visit us at the California High Speed Rail Blog.

Although this blog is primarily focused on Proposition 1A through November 4, we do need to pay attention to the federal government when necessary. We've had strong indications of support from leading national politicians on high speed rail over the course of the year. Once Prop 1A passes our focus will shift toward ensuring those strong indications become firm realities. In that light it's worth spending a moment to consider a John Kerry/Johnny Isakson funding concept that the two Senators are kicking around. Kerry is of course a Massachusetts Democrat, Isakson a Georgia Republican, but together they are sounding like strong HSR supporters, as demonstrated in an Atlanta Journal-Constitution interview of Isakson on HSR:

Kerry’s office wouldn’t answer questions about the measure, dubbed the High Speed Rail for America Act, but a letter he sent to colleagues talks big: “$200 million per year in grants, $8 billion in tax-exempt bonds, $10 billion in tax-credit bonds for high-speed intercity rail facilities, and $5.4 billion in tax-credit bonds for rail infrastructure.”

Kerry and Isakson are focusing on Birmingham, Alabama to Washington, DC but this concept can apply to our own HSR project, which after November will be the closest by far to reality. Senator Isakson shows a very astute understanding of the need not just for HSR but for government involvement in getting it off the ground:

Q: Why should government be involved in this at all? If it’s really worth doing, won’t market forces lead private enterprise to make it happen?

A: Sometimes you have to make the investment in the hub if you will, like aviation, or in the spine, like in the line from Boston to New York, to then make the rest of the system viable. And, again, I don’t think general taxpayer subsidies make sense in transportation … it’s a user investment in the system they are using in turn to make an income.

This formulation may be key in bringing Senate Republicans on board - government needs to "prime the pump" and build basic infrastructure to spur private enterprise. Isakson is talking in systemic terms here, understanding the value that an HSR spine - like SF to LA - provides for the entire passenger rail system.

Now I strongly disagree with his claim that taxpayer subsidies don't make sense in transportation - they most certainly do, for without them we wouldn't have a transportation system at all. Airports and freeways require continuous subsidies to maintain operations. But let's game this out for a moment. If Isakson is willing to support federal government funding for tracks...that's pretty much all we need them for anyway. HSR generates an operating surplus "above the rail" - meaning that subsidies are either not going to be necessary for ongoing operations or they'll be costs California can handle. If Isakson doesn't want the federal government to pay for ongoing CA HSR operations, but is willing to help pay for construction costs - which is how I read his statement - then that's a deal I might be willing to take.

Isakson also understands the economic value of HSR - especially during hard economic times like these:

Q: The U.S. economy hasn’t been in such bad shape for years. Is it a little strange to be talking such an ambitious project that would cost so much at this moment?

A: The economy’s struggling now in part because of the high cost of fuel, because of the high cost of commodities, and that rolls right back into the whole transportation issue. I mean if you can reduce your dependence on oil, then the demand goes down so the price goes down.

From your lips to other Republicans' ears, Johnny. He clearly understands the connection between HSR and economic recovery. Namely, the first leads to the second.

Logan Nash at Trains for America is reserving his judgment for now:

A high-speed rail initiative in this county would be great if executed well, but we don’t want any nascent project to siphon funds and support away from our already functioning Amtrak system....The way Isakson talks seems to point to a European-style system where a public entity owns the infrastructure, which private-ish operators then rent.

In other words, the role of private enterprise in HSR is going to be a key battleground for us after November 4. I'm on record as favoring a limited role for private enterprise and am strongly opposed to giving them a place in system operations. But if Isakson is willing to agree to federal assistance for track construction and then letting the states determine the role of private enterprise, well, that would be workable.

And of course all this demonstrates that federal support for HSR is quite strong - despite what the HSR deniers would have you believe.


Anonymous said...


How can you possibly believe that with the tremendous pressures being put on the country's finances, that there is going to be any hope for any appreciable funding for High Speed Rail in the near future. It just isn't going to happen.

Then of course, Lehman was supposed to be leading the charge on the private front, and they are now bankrupt.

Surely you must be reading the financial press. Kerry is grandstanding. Just like Reid of Nevada was. Did you know that the $55 millions he announced for Maglev from Anaheim to Las Vegas never got funded? Lots of talk; no action.

Anonymous said...

Harry g.,

You forget that there are other companies out there in the world that would like to invest in a HSR system. This is because they know it is an investment which turns a profit within a couple of years after opening. French SNCF is one of those companies and with the Euro currently being stronger than the dollar right now, it is a good opportunity for european investments.

Anonymous said...

A due diligence summary report authored on the High Speed Rail project by Wendell Cox and Joseph Vranich has just been released. It is a much shortened version of the full report which is over 190 pages long.

The report hammers most of the performance claims of the CHSRA including, costs of construction, ridership projections, overblown CO2 reduction estimates, unrealistic trip times, exaggerated highway and airport costs.

Formal release of the report is due tomorrow (9/18/2008) at a press conference in Sacramento. Too bad some endorsers of this project, like the Sierra Club did not see this before they acted.

Brandon in California said...

It's always good to hear good signs coming from the Feds concerning their optimism for HSR and willingness to help pay for it. We have seen this time and time again cominging from Washington... it's absolutely fantastic!!!

And why shouldn't it? HSR supports many national objectives.... reduces dependance on foreign oil, supports the economy in multiple and tangible ways, and helps mitigate homeland security concerns.

As for Wendall Cox... he's really a person seeking relevance in this worl. Whenever someone forwards stuff from him, I'll scan it, but it never resonates with me. His conclusions are baseless and his bias against transit bleeds from his nose, eyes and ears. Only a fool would not see that... and also let his points be allowed to resonate.

Robert Cruickshank said...

I saw that report earlier today. There are so many lies and half-truths in it that to properly refute them all would take about as many words as are in their actual document.

I gotta hand it to the rabidly anti-rail Reason Foundation and Howard Jarvis Association, though, for digging up two people with supposedly good rail credentials to put their name to this report.

Just for starters - they talk about rising costs of the project since 1999, but nowhere is global inflation of construction materials or the declining value of the dollar mentioned. A gallon of gas costs 200% more in 2008 than it did in 2000, but somehow I doubt that Reason and the Howard Jarvis people would suggest we abandon cars and freeways as a result.

Their $80 billion cost estimate is pulled out of thin air - and if we use their same logic, a gallon of gas will cost between $8 and $10 by 2018 ensuring that HSR is a financial bargain.

It's nonsense, as are all the HSR deniers' claims.

Spokker said...

trains own

Rafael said...

@ robert cruickshank -

Sen. Isakson said he doesn't think "general taxpayer subsidies" should be used to subsidize transportation.

IMHO, there are three ways to read that:

a) he doesn't think the operations of any transportation system should be subsidized by taxpayers or,

b) he wants create a reliable dedicated tax to subsidize train operations, much like airport fees and gas taxes support civil aviation and highways or,

c) he wants fare box returns to fully cover the cost of operations.

My reading of the tea leaves is interpretation (c). In other countries true high speed rail - unlike slower forms of intercity passenger rail - is delivering net positive farebox returns, albeit only after a ramp-up period. Usually, the excess is used to cross-subsidize slower regional/local and/or freight trains operated by the same company.

CAHSR has always said that the operations of its system will be put out to tender. Indeed, rolling stock and operations are the aspects of HSR most likely to attract private investment. Without that, the network cannot be built and get through the ramp-up period. Perhaps there will be a state-owned dispatcher and multiple privately owned train operators competing with one another. They would buy "slots" in the timetable at infrequent auctions and, actively market their services to generate ridership. This would be analogous to the civil aviation and cell phone industries.

Consumers might prefer the option of hopping onto any train at any time, something that would require a monopolistic operator. However, monopolies have a tendency of delivering poor quality at inflated prices, so there is something to be said for competition.

If the California system proves as popular as those elsewhere in the world, it may well generate enough revenue to de facto fund ongoing Amtrak California operations. If anything is left over after that, it will almost certainly not be handed to county-level passenger railroad operators. Instead, it will either be used to fund a fraction of the prop 1A bonds or, be applied to unrelated programs.

For me, the Kerry/Isakson bill is significant for two reasons:

1) it is yet another bipartison effort focused on public investment in passenger rail infrastructure (i.e. tracks, grade separations, signaling and rolling stock) and,

2) it comes at a time in the political cycle when it has little if any chance of actually passing.

Nevertheless, I think it's unfair to label it mere posturing. The bill allows politicians from both sides of the aisle another opportunity to take a position on HSR as a concept, testing the waters with their constituents as it were. Clearly, there are a number of Republicans in Washington who are positively disposed toward high speed rail, especially along the East Coast.

If California voters approve prop 1A in November, the state's senators will have a strong case for directing all that goodwill toward the West Coast: there will be an (almost) complete EIR/EIS plus $9.95 billion allocated. No other HSR project, including Birmingham to DC, has reached a similar level of maturity.

Brandon in California said...

I did not read anything special about Senator Ikason's comment and think that nothing atypical or different than the past would/could occur; the Feds help fund the upfront capital cost while local jurisdictions provide any necessary operating subsidy.

Of late, Amtrak may be different. However, Amtrak is not really public transit and is largely, for better or worse, a priority for some midwest states seeking connectivity to the rest of the country with local senators taking up that cause.

The comment could be to front any political ideas that the Feds would do something different with HSR.

@ Robert... I agree about your comment speaking to refuting the Cox bird cage liner; it takes more time and energy than it's worth. I also would think energy devoted to it would incorrectly elevate his points and give it/him more credit than deserved.

crzwdjk said...

Hopping on any train at any time doesn't require any sort of monopoly. Look at Britain for example, where there are a dozen or two private rail operators, often with three or four sharing a corridor, and all of them sharing a single, unified ticketing scheme. One can buy a ticket, say, from Manchester Oxford Road to Edinburgh Waverley, and then take Northern Rail or Transpennine Express to Bolton, followed by Virgin Trains or Cross Country to Edinburgh. All on a single ticket that doesn't even say which operator's trains you can or can't take. Now, sometimes some operators do sell tickets valid only on their own trains, with a discount, and some trains require reservations, so it isn't quite entirely any ticket on any train. But overall, this just goes to show that proper through-ticketing doesn't require a monopoly operator (though admittedly, the whole system is a legacy of the BR operation).

Rob Dawg said...

Airports and freeways require continuous subsidies to maintain operations.

Repetition is not proof. Both modes are grievously taxed far beyond government expenditures in those areas. Giving back a fraction of the revenues collected is not a subsidy.

I look forward to your factual rebuttal of the Cox report.

Anonymous said...


IN ten minutes on KQED-FM there is going to be a program with Diridon and Wendell Cox.

That's 9:00 AM 9/18/08 ===

They archive these programs on the net -- so if you miss it live you can listen later.

The program is called Forum.

Anonymous said...

rob dawg - We've already established that roads (and airplanes) are heavily subsidized by general revenue. On another thread, for example, I provided a link to the California budget demonstrating that California's gas tax provides barely enough to fund just DMV + CHP alone, before any money is even spent on building or maintaining a single mile of roadway! Why do you persist in spreading inaccuracies?

Anonymous said...

Morris - The Cox and Vranich report implies that even these anti-rail guys (Cox, for example, has been opposing any sort of non-freight rail for decades) believe that CA HSR's cost figures are much, much closer to the truth than the 5x over-inflated numbers that Derail cites.

Rob Dawg said...

mike said...
rob dawg - We've already established that roads (and airplanes) are heavily subsidized by general revenue. ... Why do you persist in spreading inaccuracies?

Because the facts are on my side.

> In 1999 (a proportionally typical year), $101 billion was collected in
> the U.S. in road user taxes and fees (all levels of government), and
> $110 billion was expended for road construction, maintenance and
> administration (all levels of government). That is 92% coverage of
> expenditures by revenues.
> Source: FHWA OHIM Table HF-10, FHWA "Highway Statistics" Series.

That's total costs. Operating costs are a fraction of that. Robert is absolutely with no question wrong to claim that airport or road operations are subsidized.

Anonymous said...

rob dawg,

Please explain to me why if roads are bringing in revenue and not subsidized, that financial institutions around the world are not willing to invest in them but rather in High Speed Rail?

Rafael said...

@ rob dawg -

the numbers you refer to cover only the construction of new roads, road bridges, road tunnels etc. that are eligible for federal funds, such as interstates. Individual states only have to pick up 20% of the up-front tab but 100% of maintenance. Ask Minnesotans for details.

In 2006, California voters approved a $20 billion bond measure to beef up the state-owned highway infrastructure. These bonds will be repaid out of the General Fund.

Similarly, LA county voters are being asked to approve measure R this year, rougly half of which is dedicated to road repairs and new construction. The funds would be generated by a sales tax hike.

Note that California only collects $0.18 per gallon in gasoline excise taxes.

Ergo, while federal funds for new road construction are indeed almost fully covered by federal gasoline excise tax receipts, at the state level this is not the case.

Anonymous said...

@ rafael

According to this site the taxes here in California are a total gasoline tax of 63.9 cpg. That's including sales tax etc.

From that site, California taxes auto gas total taxes are higher than any other state. Sales taxes go into the general fund, so isn't it fair to include those from gasoline as being towards highways etc.

Anonymous said...


I'm not sure why you are linking to a table that completely contradicts your assertions. Let's check out the latest version of that table, 2006:

FHWA Table HF10 2006

To summarize:

Total Highway "User" Revenues: $116 billion
Total Highway Expenditures: $160 billion
Net subsidies to highways each year: $44 billion

So, overall, that's already equal to more than one entire California High Speed Rail System every single year. But it gets much, much worse.

First, this is really just the operating subsidy that highways require - we're not building new roads in any meaningful amount. For example, since 2000 we've added new road mileage at the rate of 0.3% per year. In fact, we're probably consuming from our capital stock of roads, rather than adding to it, when you take into account the declining quality/deferred maintenance of our highways. So an apples-to-apples comparison would compare the HSR operating subsidy (0) to the highway operating subsidy ($44 billion nationwide - CA's share would be around $6 billion).

Second, the FHWA's definition of highway "user" fees is very, very generous. The gas tax is plausibly a user fee since it is roughly proportional to miles driven. Many vehicle license fees, such as the California VLF, are not - they have little to no relationship with miles driven. Instead, they are simply a tax on wealth (the value of your car, in this case). To quote a UC Berkeley study of the California VLF: "The VLF and its equivalents elsewhere pose interesting questions because they are distinct from other transportation-related taxes. Unlike many other taxes, the VLF bears no relationship to costs or benefits from use of the transportation system. Some transportation-related taxes seek to recapture some external benefits by taxing actual system use...or by taxing the wealth derived from the system. Other taxes are assessed in some rough proportion to the impacts that a user places on the system, simply by participating...or by imposing specific externalities...The VLF does not fit any of these categories; instead, it is loosely related to individuals’ ability-to-pay." VLFs make up about half of California's "user" revenues. But they are not actually user fees because they have very little correlation with use, unless you want to argue that most of Prop 1A bond funds are "user fees" because the majority of the households paying for them will use some aspect of the HSR system at some point during the next two decades.

Finally, by far the biggest subsidy for roads isn't the $44+ billion listed above, huge as it is. Rather, it's all the land that roads (not to mention their associated parking spaces) are granted, free of rent and property taxes. If you were to grant 5% of the land that roads get in California to CA HSRA (which would be their fair share based on reasonable HSR ridership figures), I guarantee you that we could build HSR without any subsidy. And since this isn't a subsidy, then it's free, right? So why don't we just build HSR "for free" just as we build roads "for free"?

Rob Dawg said...

No, no, no.

Read the FHWA HF series documents before speaking. I even went to the trouble of quoting the key point: "road construction, maintenance and administration (all levels of government)"

Is there something difficult about all spend and all revenue at all levels that I needed to explain?

Rob Dawg said...

Mike, did you read what went into the $160 billion? Like the $18b in transit and non-transportation uses? And the rest of the "subsidy" was bond expenditures which get repaid by the HTF.

Anonymous said...


The trust fund is broke anyway. There will need to be a big infusion from the general fund just to keep making payments.


Anonymous said...


Please read more carefully before you accuse others of not reading. My belief is that adding insults that turn out to be unfounded does not strengthen your case.

The $160 billion figure includes spending on: state- and local- administered highways/roads, highway administration/research, highway law enforcement/safety, interest on highway debt, and repayment of outstanding highway bonds. That is all highway spending - nowhere in there is there mass transit spending (even though highway users are the main beneficiaries of mass transit spending, but let's not get into that).

You may be getting confused because there is a "less amount for non-highway expenses/mass-transit" at the top of the table. The $116 billion figure for "user" fees that I quote is BEFORE taking out non-highway/mass-transit expenses from the highway "user" fees.

Though now that you mention it, I see that I understated subsidies because I did not subtract out tax/toll collection expenses from user fees (this is equivalent to a business failing to account for its cashiers as an expense). I apologize for my mistake: the correct number is $47 billion of subsidy per year, not $44 billion of subsidy per year.

Anonymous said...

It's nonsense, as are all the HSR deniers' claims.

Ok, I am an HSR backer too, but that statement does seem a little overzealous to me.

Anonymous said...

At least the highways carry millions of trips to everywhere and offer flexibility that no rail can ever match. They generate taxes from the fuel burned and from license taxes.

The rail system will be a permanent drag, carrying relatively few riders. Nobody seems at all concerned about all the CO2 and pollution that is going to be generated by this project during construction, which after all is just a train.

We have a great highway system in California. What is needed is congestion relief in the urban areas, not a train trying to compete with the airlines for a route that is very well already served.

The project is a loser, a monstrous loser at that. I sure hope it will be soundly defeated at the polls in November

Reading the economics of the project, they obviously don't have nearly enough funds to build the project. This is going to result in one of two options.

1. They will spend all the money, have an incomplete and useless system.

2. They will come back, and ask for more, much more.

If there indeed is a need for HSR in California, this is not the project that should be built.

Anonymous said...

On a lighter can now order your Yes on prop 1a Tee shirts ..bumper strickers and yard signs..

Anonymous said...

Gordon its going to win!!! people are sick of the car oil world you are so fond of. move into the 21 century!! BTW its polling 62 on the yes side!!!!

Anonymous said...


Maybe you can shed some light on this. The Wendell Cox report just issued says the passenger cars being used for HSR in Europe and elsewhere do not meet our FRA standards, and will have to be re-designed and in doing such will get much heavier.

This was news to me, although the conclusion that predicted trip times projected by the CHSRA were not realistic, I had read elsewhere.

You have any input on this?

Brandon in California said...

^^^ Where?

Spokker said...

From the implementation plan on the California High Speed Rail web site:

"In the late 1990s, the FRA considered waiving
U.S. equipment strength requirements to allow
operation of a Florida high-speed line because
it was to be operated on rights-of-way dedicated
to high-speed train operation and separate from
other railroad lines. However, suspension of the
Florida project meant that FRA rule-making
was never completed. Under any circumstance,
California will have to start a similar federal
regulatory process that will lead to an FRA “Rule
of Particular Applicability” governing operations
up to 220 mph on the high-speed-train-only

Anonymous said...

Caltrain is taking the lead on FRA rule-making. They are meeting with great success, so it looks like the CHSRA will be buying off-the-shelf HSR trainsets, not building another hunk of crap, like the Acela.

Mr. Cox is obviously up to date on the plans for HSR in California- NOT!

Spokker said...

More. It's on page 21 by the way.

"However, one issue will require the Authority to
work closely with the FRA on potential changes
to or waivers from FRA regulations in order to
operate the safest, most reliable high-speed train
service possible. Extremely successful European
and Asian technology differs significantly in one
major respect from the current U.S. regulatory
requirements governing passenger and freight
trains. The FRA currently requires all existing
U.S. passenger trains to be at least twice as
strong in certain aspects than the lightweight
equipment used in European and Asian highspeed
trains. In order to meet this strength
requirement, manufacturers would have to structurally
redesign their trains, at significant additional
development cost and time, resulting in
higher costs to the Authority, but with uncertain
effect on the ultimate safety of the operation.

Such a redesign would make high-speed rolling
stock heavier, jeopardizing the low axle loadings
that have efficiently enabled the high speeds,
low operating and maintenance costs, and positive
cash flows like those enjoyed by high-speed
train operations in Europe and Asia. In addition
to being more costly to purchase and operate,
heavier equipment may cause changes in other
system components such as track or bridges
and result in higher maintenance costs."

"While the majority of the high-speed train system
is being planned with dedicated separate tracks,
there are two sections of the system that are
proposed to be shared with existing commuter
and intercity trains at reduced speeds. Under
current regulations, either the selected European
or Asian equipment would have to be modified structurally to meet the FRA requirements or the
proposed system would have to be modified in
other ways to avoid compatibility conflicts with
freight trains and conventional passenger trains.

The Authority will engage the FRA and a group
of pre-qualified high-speed train manufacturers
to investigate safety approaches that have been
applied successfully in other countries and to
consider how existing high-speed train vehicles
and systems might need to be modified for use
in California. Manufacturers would be pre-qualified
for future California contracts based upon their
existing ability to produce very high-speed trains
and their willingness to work with the state and
federal governments. Pre-qualification of manufacturers
and safety studies will also improve
price competition and quality of bids on the trains
and systems as well as improve the Authority’s
ability to evaluate those bids.
Pre-qualification is intended to help streamline
FRA rule-making for California’s unique circumstances.
Once the FRA/high-speed train systems
compatibility studies are completed and financing
is secured, the Authority will proceed to a competitive
procurement of the high-speed train and
related systems from among the pre-qualified
high-speed train manufacturers. A decision on
which high-speed train system to use will then
allow the Authority to formally apply to the FRA
for the Rule of Particular Applicability.

The California high-speed train has been developed
with criteria and standards that allow use
of any of the existing European and Asian technologies.
Prior to selecting a train technology,
progress can be made on numerous planning,
environmental approval and preliminary design
tasks that will take several years. However,
detailed design will be made more efficient by
the selection of a specific train type and system,
and in some cases will require coordinated,
technology-specific parameters such as electric
power supply and signal systems. Optimally,
the train technology selection will be made and
rule-making will be substantially completed within
two to three years of obtaining significant funding
for the project and before the planning and
environmental work is completed."

Anonymous said...

@ Harry

"How can you possibly believe that with the tremendous pressures being put on the country's finances, that there is going to be any hope for any appreciable funding for High Speed Rail in the near future. It just isn't going to happen."

Yields on 3-month T-bills s basically zero right now, showing that investors are definitely interested in investing, but in safe investments. HSR is proven to be a stable steady revenue stream all over the world.

Similar arguments were made regarding the New Deal. In fact, the democrats were the party of the balanced budget before then. If we had stuck to that credo, the Great Depression would have lasted much longer than it did. Recessions are the best time to embark on large infrastructure projects. (Just look at the hoover dam).

Rafael said...

@ morris brown -

FRA requires that all trains that share track with freight trains in the US conform to its crash safety rules. Its philosophy centers on making crashes survivable rather than on doing everything possible to avoid them. This minimizes safet-related costs for the freight rail operators but maximizes them for passenger trains.

If a railroad can guarantee that its trains will never share track with freight trains or FRA-compliant passenger trains, FRA can grant a waiver to permit the operation of non-compliant rolling stock. BART obtained such a waiver and, CAHSR will seek one as well. This is the primary reason why the HSR project calls for brand-new, decicated track along the entire network.

CAHSR absolutely wants to avoid a repetition of the Acela Express situation, where FRA forces Amtrak to add an enormous amount of weight and cost to perfectly good off-the-shelf tilting trainsets.

Btw, "never" in this context includes situations in which the operator can guarantee ample time separation between compliant and non-compliant trains. This is the basis on which Caltrain will be filing its own waiver application for the European EMU rolloing stock it wants to use after electrification. UPRR runs very few freight trains up the peninsula but the terms of sale for the ROW give it the right to do so.

If both Caltrain and CAHSR obtain waivers, it will be much easier for them to share the tunnel that will connect 4th & King to the Transbay Terminal in downtown SF.

Anonymous said...

Thanks Rafael:

I was under the impression that HSR would not share tracks with freight, which you confirm, and therefore the need the need for heavier cars. This sounds like the Cox report may have that issue incorrect.

I gather then the tunnel proposed in SF is going to be only double tracked. So HSR and Caltrain will share those tracks, but freight will be diverted before the tunnel.