The California high-speed catastrophe is now estimated to cost $100 billion. With zero experience in train operations, high-speed rail promoters in Texas intend to ask Washington to grant or lend up to $30 billion in public money for a financially insolvent project marked by the abuse of feigned eminent domain authority, a dearth of private investment and violations of federal regulatory requirements that endanger the general public.
In 2015, Texas Central Railway (TCR) announced a scheme to build a private high-speed rail system connecting Houston and Dallas. They said they would privately raise the entire $10 billion cost and complete the system by 2021. They raised $110 million in the U.S., another $40 million from sovereign Japanese entities promoting 1960s-era rail technology for U.S. use, and burned through it all within three years.
Unable to secure significant new private investor interest, they welcomed a $300 million interest-bearing loan from Tokyo deposited in an offshore Cayman Islands “special purpose vehicle” account, which is depleted.
For years, the Texas promoters have wrongfully threatened to invoke state eminent domain authority to forcibly acquire hundreds of properties, 30% of the total along the proposed 240-mile route. Many of these have been owned by families since the 1800s. When Texas state lawmakers repeatedly threatened legislation to deny eminent domain power to this private company, the promoters sought federal jurisdiction even though the planned project was intrastate, wholly within east Texas.
The TCR requested the Surface Transportation Board grant federal jurisdiction based on a spurious non-physical connection to a Houston Amtrak station, to render the Texas project part of the federal rail network. Amtrak recently warned that its rarely-used Texas lines are on the COVID-19 chopping block. If the STB approves this pending petition, it will set a precedent enabling every urban light-rail system near an Amtrak station anywhere in America to access federal transportation funds and eminent domain powers.
The Federal Railroad Administration (FRA) recently issued its final Environmental Impact Statement to satisfy NEPA requirements. FRA had announced that a public comment period for a draft Rule of Particular Applicability regarding minimum safety-oversight standards would end May 26, 2020. In the final EIS, the FRA openly admitted it cut off public comments on May 15, deceiving the public and denying Texans sufficient time to understand and comment on this complex and highly-technical regulation.
The FRA ignored or dismissed almost all the safety comments Texans offered, especially over a multiple mini-curved track design that increases the likelihood of derailment by heat buckling during the intense Texas summer.
Union Pacific has also repeatedly warned that the proposed system’s proximity to existing freight lines would interfere with rail signaling, impair the visibility of oncoming rail traffic, and imperil vehicles and pedestrians at multiple track crossings. The FRA also admitted that inter-agency coordination is severely delayed, and many permit approvals will not be completed until after it issues its Record of Decision.
This lack of effective corporate operations or essential safety ethos is unsurprising. A Texas district court held that the TCR is “not a railroad or interurban electric company” as it has never laid track or run a train. Rather, the TCR is a technology promotion scheme seeking Washington’s muscle to condemn private properties.
In April, the TCR revealed its construction budget had tripled to $30 billion and laid off dozens of executives. TCR executive Drayton McLane explained in a private letter that the project could survive only with federal funds from a hoped-for “President’s Trump’s infrastructure stimulus.”
President Trump twice issued “Buy American” executive orders tightening standards for federal procurement departments and companies that hire foreign workers. His orders encouraged the purchase of U.S. resources for public infrastructure projects, especially those funded by the federal government. The TCR’s promoters seeking public money have hired technology providers from Japan, engineers from Italy and rail operators from Spain.
In October 2019, National Economic Council Director Larry Kudlow stated that the project’s developers were free to raise money privately but should not expect any federal financial assistance. Mr. Kudlow elaborated: “I’d like to say if we had [money], we’d give it to you. We don’t have it. But I wouldn’t give it to you any way.”
Reps. Kevin Brady, Ron Wright and Michael McCaul oppose this project. Defiantly, The TCR intends to request billions in federal taxpayer-backed grants or loans for a project that is nowhere near shovel-ready, has failed to excite private investors and will likely never be built.
If the Trump administration, through the Department of Transportation, approves and finances this newest worthless and wasteful project, American taxpayers could be on the hook for tens of billions of dollars for yet another failed high-speed rail project — first California and now Texas.
• John Sitilides, a federal government affairs and risk management specialist, advises landowners affected by the proposed route.
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