Another Bump-in-the-Road for High-Speed Rail?
High-speed rail has had more bumps and grinds than a North Beach pole dancer.
Mar 04, 2013
High-speed rail has had more bumps and grinds than a North Beach pole dancer. Never mind that rider estimates are too high, cost estimates too low, that it does nothing to solve traffic problems where they need to be solved...within the greater L.A. and S.F. areas, not the space between them, that there isn't any money, that it isn't what we voted for, that it would not pass if voted on again, that it isn't high-speed, that it has none of the $13 billion in projected private investment, or as the New York Times wrote it's 'like building a state-of -the-art driveway while your house collapses.'
On top of all that, now we find that the California High-Speed Rail Authority apparently never bothered to request permission from the federal Surface Transportation Board to build a high-speed rail system, nor did they file for an exemption from STB's regulatory authority.
We suspect that the California High-Speed Rail Authority will find a way to get around this problem in a way that the common private businessman could not. There doesn't seem to be any obstacle too great for CHSR. Jerry Brown likened it to the Little Engine that Could, a little train engine that pulls a heavy load over a large mountain, despite the difficulty. "We're going to get over that mountain," Brown said. Who can argue with that?
But, back to the STB problem. This is just the latest SNAFU in a long string of SNAFU's. The failure of the California High-Speed Rail Authority to get STB permission could conceivably lead to cease-and-desist injunctions from a federal court, if opponents of the project (or the STB itself) ask for such injunctions. We will hazzard to guess, however, that the CHSRA will railroad us once again and roll right over the latest speed bump.
Troubled California High Speed Rail
Project May Face New Regulatory Delays
The troubled California high speed rail program, which is
scheduled to break ground on initial construction this
summer, may be facing a new round of lawsuits and
construction delays due to a failure by the state rail agency to
ask federal regulatory permission to build a new railroad.
According to letters sent last Friday by House Railroads
Subcommittee chairman Jeff Denham (R-CA), the California
High Speed Rail Authority (CHSRA) apparently never
bothered to request permission from the federal Surface
Transportation Board to build a high-speed rail system, nor
did they file for an exemption from STB’s regulatory
Denham wrote to the chairs of the STB and CHSRA and to the Administrator of the
Federal Railroad Administration requesting clarification on the California project’s
compliance with the Interstate Commerce Act. (The STB is the successor to the
Interstate Commerce Commission.)All three of Denham’s letters contain these common sentences: “As I understand it, the
Authority has not sought such a determination by the Board regarding its proposed
project…While I pass no judgment on whether the Board has jurisdiction over the
construction of the project – indeed, that is a determination properly left to the Board –
I believe it is imperative that the authorities set forth in the Interstate Commerce Act
be followed. If the Board does have jurisdiction, it is my understanding that the
Authority may construct a rail line only if the Board authorizes that activity.”
In the short term, the failure of CHSRA to get STB permission (or a determination from
the STB that no permission is needed) could conceivably lead to cease-and-desist
injunctions from a federal court, if opponents of the project (or the STB itself) ask for
such injunctions, until such time as the jurisdictional question is resolved.
Beyond that, the question becomes: does California need STB permission in order to
build their rail system? The Board decides these questions on a case-by-case basis, but
a STB decision two months ago sheds some light on the question. Last year, a company
called All Aboard Florida, which is proposing to build a new 230-mile rail line between
Miami and Orlando, petitioned the STB for a ruling on whether or not they needed STB
permission (since the railroad itself would not cross any state lines).
On December 21, 2012, in a 2 to 1 ruling, the STB determined that it lacked jurisdiction
over the Florida project, because the project would not be “part of the interstate rail
network.” In particular, the Board noted that the Florida project would not use “the
locomotive power, and train and engine crews” of Amtrak and that the Florida project
would not provide through ticketing with Amtrak or any other rail service provider.
By contrast, the latest business plan of the California High Speed Rail Authority says
that once the very first construction segment (the one that hopes to break ground this
summer) is completed, “the first IOS construction segment will be used by Amtrak San
Joaquin service and potentially other operators. Similarly, when the gap between
Bakersfield and Palmdale is closed, it will be available for immediate use by others.”
The San Joaquin line connects to the rest of Amtrak’s interstate route network. The
business plan also envisions combined ticket sales and marketing between the CHSR
network and Amtrak routes.
(The dissenting STB member in the Florida decision, Frank Mulvey, seems even more
likely to vote that the California project needs STB approval, based on his dissent, in
which he wrote that “if a proposed rail line uses facilities that are in the general system
of rail transportation and is related to the movement of passengers in interstate
commerce, Congress has determined that the Board should regulate its proposed
The STB could decline jurisdiction over the California project, though doing so would
seem to violate its recent case law. But what would be the consequences if the STB
determines that it does have jurisdiction over the California project?
In a word: delays.
Federal law (49 U.S.C. 10901) says that no one can “construct an additional railroad
line” or “provide transportation over, or by means of, an extended or additional railroad
line” unless “the Board issues a certificate authorizing such activity.” The STB has two
ways of granting such permission: exemption and full review. According to the STB’s
website, “Most carriers file, as an initial pleading, a Petition for Exemption under 49
U.S.C. 10502 from the formal application procedures of 49 U.S.C. 10901. The STB
reviews the Petition to make a determination of whether, from a transportation
perspective, detailed scrutiny of the proposed increased service is necessary. If the STB
finds that such scrutiny is not necessary, it will typically issue a conditional grant of
authority, subject to the STB's further consideration of the anticipated environmental
impacts of the proposal.”
Whether the STB gives the project the low-scrutiny exemption or the full-scrutiny
treatment, the project then rises or falls on its specifics. The STB website says that
“Historically, the agency has evaluated whether there is a public demand or need for
the proposed service; whether the applicant is financially able to undertake the
construction and provide rail service; and whether the proposal is in the public interest
and will not unduly harm existing services.”
In particular, the law and STB rules require the STB to conduct a rail transportation
analysis of the proposed project and to consider the Environmental Impact Statement
for the project – analyzed pursuant to the STB’s rules in 49 CFR 1105. The EIS process
is already ongoing, but the STB would have to review the EIS’s thousands and
thousands of pages before voting on the application.And it is important to remember that the STB is a quasi-judicial agency. Applications
have to have public comment periods, then public hearings, with waiting periods
between each, before the Board can vote whether or not to grant an application.
Interested parties can file motions against the application. And the process is supposed
to be insulated from politics to some degree.
For an example of how this works in the fastest-case scenario (assuming that the
project is indeed under STB jurisdiction), let’s look at the proposed Las Vegas high
speed rail line to terminate in Victorville, California (DesertXpress). The issue of STB
jurisdiction was a no-brainer because the project crosses state lines. DesertXpress filed
a petition for exemption from the STB on July 28, 2011 and the Board granted the
exemption on October 20, 2011 to become effective on November 25, 2011.
That was a time frame of four months, and the reason that it was done so quickly was
that, according to the STB ruling, “No replies to the petition were received.” But this
followed a three-year period of legal wrangling at the STB from 2006-2009 over whether
or not STB jurisdiction preempted state and local environmental review laws for
DesertXpress. And one can be certain that opponents of the California project would
file motions and comments with the STB, including motions for reconsideration of
potential adverse decisions, that would extend the process for longer than four months.
If a sign-off from the STB is required for the California project to move forward, then
the start of construction could be delayed from anywhere between several months to
more than a year, depending on how fast the STB wants to move the process. (This is
in addition to any delays in the project that might come from the other lawsuits now
pending against it.)
Any delays in the project threaten to jeopardize the $2.4 billion in federal funding from
the 2009 ARRA stimulus law that has been allocated to the California project by the
U.S. Department of Transportation. Under the law, any remaining high-speed rail
stimulus funding vanishes in a puff of smoke at midnight on September 30, 2017, even
if the work associated with that money has already been done and a contractor or
CHSRA is simply waiting for reimbursement.This brings up another bit of news relating to the California project. The Federal
Railroad Administration and CHSRA quietly amended their project agreement on
December 5, 2012 to allow CHSRA to spend about $400 million of federal money before
the state authority has to put up a dime of its matching funds. According to the revised
grant agreement, although the final project cost is supposed to be split 50-50 between
CHSRA and FRA, in the first two fiscal years (California fiscal years, so for the period
from July 1, 2012 through June 30, 2014), the federal government would pay 84 percent
of the cost. The state would then put in significantly more money in 2015 to get the
balance back to approximately 50-50.
The nonpartisan California Legislative Analyst’s Office actually sounded the alarm on
this in a recent review of Governor Brown’s budget request: “The Governor’s budget also
proposes for 2012–13 and 2013–14 to spend a greater share of federal funds at the
beginning of project construction, followed by a proportionally greater share of
Proposition 1A bond funds as the project nears completion. According to the HSRA, this
will reduce the risk of not spending the ARRA funds before the required deadline of
September 2017. The federal government and the HSRA amended their cooperative
funding agreement in December 2012 to allow for this arrangement.”
However, by having Uncle Sam spend $925 million in the first two fiscal years versus
California’s $180 million, the federal government’s “sunken costs” are that much higher,
so if the project then gets canceled (like the New Jersey ARC tunnel in 2011), the
federal government loses much more than would the state.
The front-loading of the federal money appears to be a reversal from USDOT’s position
of two years ago, when Undersecretary of Transportation Roy Kienitz wrote to CHSRA
to reject their suggestion that stimulus funding be used in advance of California
matching funds. The usual practice is to demand that the non-federal match be applied
on a dollar-for-dollar basis every time federal money is spent.
If CHSRA and FRA are already so concerned about meeting the September 2017
deadline for spending all the ARRA money, then the prospect of extra months of delay
(possibly a year or more) to go through an STB approval process must make the lapse of
at least some of the ARRA funding a distinct possibility.
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