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Will America Ever Have High-Speed Trains?


larry fisher writes about business for The New York Times and other publications.

Published July 29, 2019


When Gavin Newsom, California’s newly elected governor, used his first State of the State speech in February to announce that the state’s ambitious high-speed rail effort would be scaled back, the pundit world was quick to pronounce that if California could not do it, it could not be done. Never mind that Newsom soon walked back his remarks; never mind that almost as ambitious projects in other states continue to move forward. The initial statement fed a long-standing conviction — mostly, but not exclusively, from the right — that high-speed rail in the United States is a nonstarter. Look no further than the Trump administration’s May announcement that it would cancel the $929 million it had previously promised for the rail program.

But why should this be? Anyone who has experienced France’s TGV, Japan’s Shinkansen, China’s HSR or the high-speed trains in two dozen other countries has probably puzzled over why the United States lacks this safe, efficient mode of transportation. Could it be some particular American resistance to all things communitarian? Certainly, there has been vigorous opposition by ideologues opposing public works of all kinds. But Canada and Australia also lack high-speed rail, and both have universal health care.

In reality, the question has no simple answer, despite the best efforts of proponents and opponents alike to frame it that way. Proponents tout the economic development, congestion relief and pollution reduction linked to high-speed rail. But the skeptics remind us that many, if not most, networks can’t come close to covering their fully allocated costs. And that, while there are positive externalities to rail, the negative externalities in the form of disruption by million-pound juggernauts blasting though small towns and cattle pastures at 150 miles per hour on 100-foot-plus rights-of-way are far greater than is commonly understood.

Not surprisingly, high-speed rail faces NIMBY, or not-in-my-backyard opposition. Unlike the TGV, which runs on rights-of-way that largely predated this generation of trains, the California High-Speed Rail Authority counted on acquiring private land. While the owners of that land would be compensated, some of them objected to the terms offered, while others opposed the trains’ passage through their turf. The Authority’s former chief executive says he spent most of his time in court. Because California took federal funds, its proposed trains also ran into the requirement that the rolling stock must be built in the U.S. But there’s a catch: no one manufactures high-speed trains here.

What may surprise, then, is the fact that some private investors remain keen on high-speed rail. Or at least “higher-speed” rail, which would operate at about 100 mph – faster than most Amtrak trains, but well below the 220 mph proposed in California. Investors including Richard Branson of Virgin Group fame (along with a passel of private equity honchos) are not putting money into high-speed rail in Texas and Florida because they worship train travel. They expect a return.

Beginning from the Beginning

To understand this hoary controversy, a little historical context helps. Anthony Perl, the director of Urban Studies at Simon Frazier University in Vancouver, notes in New Departures: Rethinking Rail Passenger Policy in the Twenty-First Century that the passenger train occupies a peculiar place in North America. “It has gone from being absolutely central to the economic and social life of this continent to being of marginal utility and relevance to most people,” he writes.

This did not happen by accident, he argues. It was the result of government policy intended to rein in the monopolistic excesses of the railroads in their 19th-century heyday, and to boost the post-war fortunes of the automobile and oil industries. Passenger trains could again flourish, he suggests — but only if policy changed.

An Early Start

As Perl explained in an interview, policy in the United States has long failed to adapt to changing transportation needs.

“Should we continue a mid-20th century policy or get rid of the whole thing?” he asks rhetorically, calling the question a false dichotomy. “Once we get trapped in those debates, there’s no political room left. Then when we decide to build high-speed rail anyway, we don’t have the know-how. What it takes to run CalTrain [the San Francisco Bay Area commuter rail] or Amtrak is not what it takes to connect San Francisco and Los Angeles in two hours.”

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The reason Japan and France do have the know-how goes back a long way. Japan’s Shinkansen project was initiated in the 1950s, long before the country’s rail system was challenged by air and road competitors as the primary mode of intercity travel. Passenger traffic between Tokyo and Osaka was expected to double between 1957 and 1975 — more than a planned super highway could handle. The Shinkansen was created to be faster than cars, while running more frequently than airplanes and sparing travelers the hassle of transferring from airport to center city. Service began in 1964, when Japan’s economic miracle was in its infancy.

While Japan was proactive in its transportation choice, France was reactive, explains Perl. France began working on the TGV (a k a Train à Grande Vitesse) in 1966, motivated by the imperative of reversing industrial decline. One way that SNCF, the French train authority, brought public officials on board was by encouraging entrenched rail suppliers to form a cartel that would spread the opportunities in supplying the infrastructure among major manufacturers (implicitly ensuring lucrative margins). Politicians tend to value protecting jobs and profits in an existing sector more than developing a new one, says Perl.

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As a result of decisions made half a century or more ago, Japan and France know their stuff when it comes to building and managing high-speed rail. Other countries in Europe, Asia and Africa have tapped into that resource, but the Buy-American requirements on federally funded projects mean that U.S. rail authorities cannot do the same if they take federal subsidies.

Perl notes that politicians do not feel compelled to buy American when it comes to, say, personal computers or video screens. “We put ourselves in a corner and refuse to admit what we don’t know,” he says. “We went through this phase in the 1970s with urban rail systems. We slapped the usual buy-American restrictions on it and there was a half-century of disasters.”

With high-speed rail, Perl concludes, “we’re starting back at the bottom of the learning curve and are going to make the same mistakes that we did in urban rail. The difference is you add a zero to the cost, because high-speed rail is on a much bigger scale than a metro line.”

Building the California High-Speed Rail without Japanese or European input, Perl adds, “would be the equivalent to Bangladesh announcing it would go to the moon, using only indigenous technology.”

Tokyo, Paris, Fresno?

California gave the world Steve Jobs, but it also produced Howard Jarvis, the patron saint of anti-tax activists and author of the Proposition 13 cap on property taxes enshrined in the state constitution. So while the state may pride itself on innovation, risk-taking and forward-thinking, there is a large contingent of fired-up ideologues ever ready to stand athwart history.

These forces faced off in the creation and aftermath of California Assembly Bill 3034, the enabling legislation for a high-speed rail corridor, which was approved by the state legislature and signed by liberal Republican governor Arnold Schwarzenegger in August 2008. The bill was submitted to California voters as Proposition 1A in the November 2008 election — a presidential election year that brought out freer-spending Democratic voters in droves — and was approved.

Prop 1A included a $9 billion bond authorization to begin construction, which commenced in 2015 after a groundbreaking ceremony in Fresno. That the California High-Speed Rail Authority chose Fresno as its kickoff city speaks volumes about the politicization of the project. Fresno may be the most populous city in inland California, but it is nobody’s idea of a hub. The initial construction segment of high-speed tracks runs from Merced (pop. 83,000) to Bakersfield (pop. 380,000) in the Central Valley, a far cry from the Tokyo-Osaka and Paris-Lyon routes, which connect major commercial centers.

“There was no particular reason to go to Merced, except they needed to get one Republican vote [in the legislature],” laments Elizabeth Alexis, co-founder of Californians Advocating Responsible Rail Design. The group is pro-transit, she says, but wants to see things done right:

You can’t let any political consideration in. They insisted on some weird detour to Palmdale [pop. 157,000 and well to the east of the rational route], and that was never going to work. Almost nothing we have in California springs from some strategic plan to build out transportation capacity. In France it was very strategic; we just have schemes, and over 20 years the schemes change.

Political scheming resulted in a series of “worst practices” in California, as Jeff Davis at the Eno Center for Transportation, an independent think tank in Washington, explained in an interview with Slate. He counts the ways:

  • As noted above, a meandering route through the Central Valley was devised to win support in the legislature, locking planners into a design that took the route far from its goal of connecting the state’s biggest cities.
  • A mad rush to initiate construction without knowing the final route, or acquiring the right of way, or studying the geology, or securing full funding.
  • The Obama administration proved to be an irresponsible partner, pressing California to get going and encouraging the state to proceed with half-baked plans.
  • A balkanized planning process teeming with eager private consultants who were afraid to report how flawed the enterprise was, lest they be tossed from the gravy train (pun intended).
  • The determination not to engage experienced French and Chinese engineers who offered “to just build the damn thing for us,” as Davis put it.

Jeff Morales, who was chief executive of the California High-Speed Rail from May 2012 to June 2017, concurs that politics poisoned the project. Proposition 1A was, he says,

A study in contrasts. On one hand, it was visionary and provided the initial funding. But embedded in the measure itself were conditions and restrictions that ended up making it almost impossible to implement and became the primary focus of opponents’ litigation.

One of the most important was saying the trip time between L.A. and San Francisco had to be 2 hours and 40 minutes,” he says. “At the time, somebody thought that was a really appealing number that would get peoples’ attention. [But] none of the planning, none of the environmental clearances had been done. … So, sure enough, there were lawsuits filed by opponents claiming we could never achieve that.

Lost in the noise is the fact that high-speed rail in California originally had support across the spectrum. The concept dates to Jerry Brown’s first administration, in the late 1970s, and was backed by industry, environmentalists and labor alike. But things have changed.

“One interesting example,” says Morales: “Jeff Denham, a [Republican] Central Valley politician who supported high-speed rail when he was in the California Senate, got elected to the House of Representatives and then went out of his way to oppose the program. The only thing that had changed was Barack Obama had been elected and he supported high-speed rail. It is very odd. There are two dozen countries that either have, or are building, high-speed rail. It’s not a crazy, wacked-out idea.”

But Does it Pay?

High-speed rail may not be a wacked-out idea, but it is rarely if ever the win-win portrayed by boosters. The California project has been beset by cost overruns and delays, causing its estimated price to balloon to between $77.3 billion and $98.1 billion, from a projected cost of $40 million in 2008. That sort of overrun plagues high-speed rail in particular, but it dogs large transportation infrastructure investments in general. “You have a lot of pressure to build and a lot of interesting data thrown up to justify doing it,” says Kenneth Button, director of the Center for Transportation Policy, Operations and Logistics at George Mason University.

Button says the misleading data are the product of public servants generating numbers to support politicians’ agendas. “It’s human nature to be optimistic, and that’s a good thing in the long term, because otherwise we’d still be living in caves scared to go outside,” he says. “But people get carried away.”

Lost in the noise is the fact that high-speed rail in California originally had support from center-left to center-right and was backed by industry, environmentalists and labor alike.

“There is a misrepresentation of what goes on with high-speed rail” by enthusiasts who simply love trains, Button adds. “Firstly, it’s incredibly noisy. When was the last time you saw a film of high-speed rail with a soundtrack? Secondly, you hear about successful lines. In fact, as far as I know there are only two that have recovered their costs: Osaka-Tokyo, Paris-Lyon.”

Meanwhile, he says, “much of the Spanish system is very little used — a hub-and-spoke system based on Madrid. Every provincial capital in Spain has high-speed rail, and some of these places are cities of 40,000 people.”

Button says he believes the Spanish network, which is the world’s largest, was driven by politics, not economics, and that it may deliver adequate benefits if viewed from that perspective. A hub-and-spoke system makes no sense for trains traveling at 200 miles per hour, as opposed to airplanes going three times that speed, because transfer times add disproportionate delays to the former. But if the goal was to keep Madrid as Spain’s seat of power, then it may have made sense to send every train through the country’s capital.

This kind of thinking is not unique to Spain. “The Chinese are building them for political reasons, just as the U.S. subsidized the transcontinental railroad [after the Civil War],” Button says. “Also for military reasons: trains are very necessary for moving materiel and troops during wartime. People think I’m anti-high-speed rail. I’m not. But I am an economist, and you have to ask: is it worth the costs and subsidies?”

Transforming Texas

Are there places where high-speed rail could thrive without subsidies? An investor group is betting that one such place is the North Texas-Houston corridor. The location has much in common with the two successful lines in Japan and France. By connecting Dallas-Fort Worth and Houston with a transportation option that is convenient, safe and fast, Texas Central expects to turbocharge two economic centers that are already the country’s fourth and fifth largest, and still growing rapidly.

“The reason Texas Central will be successful is the market we’re serving is giant — and it has a problem,” says Tim Keith, Texas Central’s chief investment officer. “Already there are 16 million trips between North Texas and Houston per year, 15 million in cars. The passenger experience is unsafe, unkind and uncertain. It’s the second most deadly highway in America, with 55 deaths per hundred miles every two years on Interstate 45. Congestion in the metro areas is extreme, and if you have a wreck in between Houston and Dallas, there is no direct alternative route.”

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Keith says airlines that once served this route, notably Southwest, have shifted to more profitable long-haul flights. And in any case, getting from the airport to the business district in Dallas-Fort Worth or Houston is a horror show. Adding to the misery, travelers have to arrive two hours early to get through TSA. In contrast, Texas Central says it will cover the 240-mile trip in 90 minutes, and that it will do it profitably without public funds.

“Houston-Dallas-Fort Worth is a $1.2 trillion economy, the equivalent of Spain in two cities,” Keith notes. “We have the right distance and the right economic engines on either end, which give us the opportunity to respond to economic growth.” he says. In contrast, “most investment in high-speed rail around the world is by government to spur economic development.”

Keith claims Texas Central has raised $465 million, all of it from private investors, and could break ground in 2020 if its environmental review is completed by the end of 2019. Because it is not taking federal funding, it is unabashedly applying technology developed by the Central Japan Railway Company and will deploy equipment manufactured by Hitachi, Toshiba and NEC.

Acquiring the necessary land remains an issue, as Texas Central has signed contracts for just 30 percent of the parcels it will need and is already in litigation. “Where landowners refuse to engage in conversation with us, as a last resort the state has granted many private industries the power of eminent domain,” Keith warns.

Virgin Trains USA (formerly Brightline), a joint venture of Virgin Group and Fortress Capital, is taking an incremental approach. It began service between Miami and West Palm Beach in May 2018. These are hardly bullet trains — they average just 79 miles per hour. But a planned extension from West Palm Beach to Cocoa is projected to run at 110 mph, and a second extension, to Orlando, would operate at 125 mph. The diesel-electric trains run on existing track that has been upgraded to accommodate their speed. The company also plans to offer service from Los Angeles to Las Vegas.

For reference, the Acela Express, operated by Amtrak, is currently the fastest train in the Western Hemisphere, with a maximum speed of 150 mph on two sections of its route between Boston and New Haven (total distance: 35 miles). Its top speed between New York City and Washington is 135 mph.

Another caveat is that Virgin Trains USA has already experienced 11 fatalities. While most, arguably all, of the deaths were due to errors or misjudgments on the part of the victims, the record is hardly worth bragging about.

Amtrak, too, has experienced fatalities with higher-speed trains. Three passengers were killed and 62 passengers and crew members were injured in December 2017 when a train derailed near Seattle. It’s hard to blame this on advanced technology — the train doesn’t qualify as high speed. But, as with the Virgin accidents, it suggests there is less margin for error when trains travel at the sort of speeds needed to make them competitive with cars and planes.

Hope Springs Eternal

Since 1993, Bruce Agnew, policy director of the Seattle-based Discovery Institute’s Cascadia Center, has been lobbying for a strategic alliance on the corridor from Vancouver, B.C., to Eugene, Oregon, to promote high-speed passenger rail, Interstate-5 freight mobility, seamless border crossings, bi-national and bi-state tourism marketing and sustainable community development. There has been some progress with trains, he says, though not nearly as much as he would like: Seattle to Vancouver is a four hour and 20 minute ride, and Seattle to Portland, three and a half hours

“Washington [State] really stepped up to the plate and put close to $1 billion of tax money to allow the Amtrak trains on the BNSF Railway,” North America’s largest freight rail network, Agnew says. “I think in general the Amtrak Cascade is the best state-directed rail project in the country, despite that tragic accident. But it only can reach a certain point because it operates on the same tracks as freight.”

Agnew has, however, found an influential ally in Brad Smith, Microsoft’s president. Last year, Smith hauled the company’s entire board of directors to Vancouver for a conference on the Cascadia Innovation Corridor, a joint venture aimed at finding synergies among Pacific Northwest cities. Microsoft, which already has 750 employees in B.C., kicked in $50,000 to supplement the state of Washington’s $300,000 budget to study plans for a high-speed train between Vancouver and Seattle. The study is due by the end of 2019. Agnew says co-locating utilities with the system, like fiber-optic cable, could help it pay for itself.

“If it wasn’t for Microsoft this idea wouldn’t go anywhere,” Agnew says. “We got seaplane service started from Seattle to Vancouver that was all because of Microsoft. For years we couldn’t get the governor and the prime minister to talk about high-speed rail,” he says. “Now they are.”

main topic: Infrastructure