Denham’s Oversight Hearing on High Speed Rail: “We Could Build 20 Dams for That Price!”

A federal transportation subcommittee—on Railroads, Pipelines, and Hazardous Materials—held a hearing on high-speed rail that wasn't as hostile as its chair seemed to promise

Phased implementation of California high-speed rail. Source: California High-Speed Rail Authority 2018 Business Plan
Phased implementation of California high-speed rail. Source: California High-Speed Rail Authority 2018 Business Plan
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Judging from the opening remarks by Congressman Jeff Denham (R-Turlock), the federal hearing on high-speed rail in California seemed like a set-up for grandstanding hostility. Denham complained of the project’s growing price tag, saying its “confusing” business plans “are clearly not grounded in reality.” The original bond measure, he claimed, promised California voters that a high-speed rail connection between Los Angeles and San Francisco would be completed by 2020 and cost only $33 billion. For the record, the bond did not claim it would cost only $33 billion).

“This is a poster child for mismanagement,” he railed. Denham had called for a federal audit of the California High Speed Rail Authority (CAHSRA), he said, because it has consistently missed deadlines and run into cost overruns, changed its plans, and reduced its promised scope of service. “There is no reason to believe that anything with regard to this project will go according to plan.”

“We’ve got other issues in California,” he said, and “a fraction of [the money invested in high-speed rail] could have solved our water crisis, with the same jobs–some would argue, with more jobs.”

Later in the hearing, Congressman Doug LaMalfa (R-Richvale) expanded on this notion. “We could build twenty dams for the price of what we’re spending on high-speed rail,” he said–as if money were the only thing holding California back from building dams everywhere.

But it was clear that other Congressional members on the panel take a slightly different view of state infrastructure investments.

Congressman John Garamendi (D-Davis), while wanting to better understand plans to finance the project, said he was excited about the economic impacts it has already had, including the jobs it has produced. The completion of the first segment in the Central Valley will bring important benefits to communities there, he said.

“California didn’t become the fifth largest economy by chance,” he said, pointing to other state investments in infrastructure, transportation, and education. “We’ve got things to do, places to go, and we need people to build it.”

Brian Kelly, current CEO of CAHSRA and former head of CalSTA, the agency that oversees CAHSRA, gently pointed out that CAHSRA has met all of its federal funding deadlines. And, although funding has not been procured for two of the trickiest (and most expensive) segments, there is enough money to complete several key parts of the ambitious project, with immediate local benefits.

Denham questioned Kelly sharply about the differences between Prop 1A, the voter-approved bond that got high-speed rail project going, and the current business plan. What is the reason for delays, Denham wanted to know, and where will future funding come from?

Kelly started to refer him to Chapter 4 of the CAHSRA business plan, but was interrupted before he could elaborate. “Is it labor?” asked Denham. “No,” said Kelly.

“Is CEQA the holdup? Are we done with environmental review?”

“No, we are not,” said Kelly. “We had some requirements to quickly spend federal dollars, and so got into [early] construction before we had all the right-of-way and third party agreements finished.”

“If the state [can] waive CEQA for stadiums . . . streamlining could be done if this were a real priority,” said Denham. “The rest of the nation would like to hear what you are doing about that.”

Kelly began to respond, but Denham cut him short and moved on. . . to Garamendi, who asked Kelly to finish his response.

Kelly said that the Authority has asked the federal government to assign responsibility for review under NEPA—the National Environmental Policy Act—to California. Because NEPA requires its own process to comply with federal funding rules, agencies are basically forced to go through the environmental review process twice–once for the federal government and once for the state. Giving the state authority to handle the NEPA process at the same time as CEQA could cut the amount of time for review considerably, said Kelly.

Combining NEPA and CEQA has been done, for example, to build highways.

“We have a request before the administration,” said Kelly, “and we’re waiting for approval.”

Denham was busy talking to someone else and didn’t seem to hear the response.

Under further questioning, Kelly said that financing was and “is the single most important challenge of this project, from day one.” Voters, through Prop 1A, provided $9 billion, which at the time was estimated to be about one-fifth of projected total costs, he said. The original idea was that the federal government would provide about a third of the money, the state about a third, and private investors would kick in the rest.

So far the federal government has contributed about $4 billion, under Obama’s stimulus package–nothing has come from the current administration, and Denham has actively opposed any federal money for the project. Private investors won’t be expected to come on board until the project has moved further along.

“We are approaching it in a building block way,” said Kelly. “We don’t have all the funding right now. Our plan is to use the money we do have to build as much as we can to create a usable service where we can.”

That means focusing on separate segments. The early investments are in the Central Valley, where bridges and viaducts for high-speed rail are already being built; and on “bookend investments” in the Bay Area, where Caltrain is being electrified, with plans to extend service to Gilroy, and in Southern California. There, CAHSRA is partnering with other agencies on upgrades to Union Station and several rail grade separation projects. All of these early investments will bring immediate improvements for local rail transit.

That leaves two remaining, unfunded pieces: a tunnel through the Pacheco pass between the Central Valley and Gilroy and another through the Tehachapis from Bakersfield going south.

Denham and La Malfa tried to drill down into this funding gap, seeing it as a fatal flaw in the project, but others testified that this is a common way to handle large projects. Garamendi pointed out that the President is poised to sign a reauthorization of the National Defense Act, which has no secure funding source for many of its provisions. “It’s an ongoing issue, year by year, going forward,” he said.

CAHSRA has estimated that eighty percent of the funding for phase 1—the build-out between L.A. and San Francisco—has already been secured, including federal funds, the Prop 1A bond, and estimated proceeds of about $750 million annually from cap-and-trade. “That’s a whole lot better than we’re doing for a plan to replace our Navy,” said Garamendi.

Denham wanted to know what kind of leverage the federal government has over the project—what could it do to ensure the state met its obligations, he asked Calvin Scovel, the Inspector General, who is conducting the audit.

The answer was fourfold: the FRA could suspend any as-yet-unspent funds; it could use administrative funds to apply against any missing state match; it could apply the Debt Collection Act of 1982; or it could suspend or debar CAHSRA from participation in any grant programs. “That would require a finding that the Authority was not a responsible agency,” said Scovel.

Mark DeSaulnier (D-Contra Costa) pivoted the question to ask Lou Thompson, Chair of the California High-Speed Rail Peer Review Group, to outline possible actions the state could take.

First, it could just stop now. “And . . . that’s not a good idea,” agreed DeSaulnier. “What’s the next option?”

“They could finish what they’re building now—that would protect against any federal claim. It would not provide much value to the state,” said Thompson.

A third option would be to finish work on the “bookend” projects in addition to the Central Valley work, which would bring more benefits, he said. And a fourth option would be “for the legislature and the governor to recommit to the project—to say that we really want to do this, even in the face of uncertainty.”

“That’s precisely what the U.S. Congress did on the reauthorization act for the Navy,” said Garamendi. “Even if the money’s not there yet, the commitment is.”

And without that commitment, it’s hard to manage any large project. “You have to restructure your commitments and take risks you shouldn’t have to take,” said Thompson. “If the state wants to do this, they should recommit to it.”

  • les_2

    The primary network makes money because lines have liberty to rent space near stations. Paris to Lyon is another example that doesn’t lose money. Even NEC uses excesses to subsidize its needy brethren routes.

  • A quick search finds this:
    “The sole reason why Shinkansen plying the Tokaido route make money is the sheer density—and affluence—of the customers they serve. All the other Shinkansen routes in Japan lose cart-loads of cash, as high-speed trains do elsewhere in the world. Only indirect subsidies, creative accounting, political patronage and national chest-thumping keep them rolling.”

    Of course California will never have that kind of population density.

    See also this: and this:

  • KJ

    Who is going to drive all of those buses? Also, a train can carry 20+ times as many people as a bus… they are more efficient and comfortable for travel that is longer than a few miles.

  • LazyReader

    I know this is a parody from the Onion, but the technology isn’t far fetched
    BIgger, wider tires, lower center of mass and non stop service with a dedicated lane, you can cover the 383 mile distance in less than 5 hours .

  • Mike

    Absolutely! High Speed Bullet Buses are a real option:

  • Blaine2008

    Too true, and how does that help the general population in the USA get about on a day to day basis.? Answer, not at all. They stay stuck in “freeway” jams, freeways also paid for by tax $.

  • Blaine2008

    Keep wasting money on weapons and really help the general public in the USA! Plus who pays for the “freeways” yes you guessed it the taxpayer!

  • Blaine2008

    You mean that a 250mph train does not exist in the USA. Lots of other lands have them though, even India does now! USA is so backwards!

  • les_2

    False. Japan doesn’t subsidize their lines. Even Denver’s union station is designed not to require subsidies for assoicated public transit. CAHSR just needs to license station real estate appropriately which would inturn avoid the need for public subsidies.

  • All those other countries built their HSR systems with public money and subsidize them after they are built with more public money. The problem supporters of the California project have: the 2008 Proposition 1A included the promise to voters that no public money would be used to subsidize the project if/when it’s built, that those using the system would pay for it.

    Governor Newsom will have to cancel that dumb project when the next recession hits.

  • Yes!

  • Edward

    Correct by 1 mph if you mean conventional trains, but not if you mean maglev. Note that these are regular speeds not tests or attempts at record breaking. The maglev record is 374mph. The conventional rail record is 357.2 mph.

  • J. Geoff Rove

    Compelled like the Pentagon started F-35 and F-22 assembly without completed designs or testing. Or the $100 billion spent on an orbiting space camp.

  • jltulock

    Which will get you there faster, a 250mph train or a 250mph bus?
    Answer is neither exist.

  • les_2

    “We Could Build 20 Dams for That Price”
    I wonder if we can float the subsequent river made from these damns?
    Maybe a raft can do 25 mph from SF to LA?

  • Blaine2008

    Totally dumb idea, sure a bus will go 250mph in the same comfort level as a high speed train.

  • Blaine2008

    Busway lanes, ya right a bus can go 250mph, not! That’s an idea from 1965, not 2018!!

  • Blaine2008

    That Denham is a negative dude to say the least, as other industrial lands build HSR the USA looks to all the negatives with transpiration improvements. I hope the door knocks him on the bum as he is the one who closes it on something other lands have, eg UK had 125mph train in 1974 good grief! Let the USA stay stuck in 1960 with passenger rail!!

    He looks like a typical person who has never actually seen HSR in operation, so is not justified to comment on it.

  • The commitment to build the Golden Gate Bridge was accompanied by a financial commitment of construction bonds that were paid off over the years using bridge tolls. The high-speed rail project has never had any comparable commitment, only the $9.95 billion in bonds accompanied by lies about future federal money and private investment.

    The annual interest payments on those bonds will be $647 million! Prediction: Governor Newsom will cancel the project when the next recession hits to avoid cutting vital services to the people of California.

    Supporters of this project—including the construction unions—relied on the anticipation that once this dumb project was started, the public would be compelled to keep throwing good money after bad so that the original investment won’t be wasted!
    See Megaprojects and Risk:

  • Eric

    For almost no money they could convert all center freeway lanes to bus only.

  • Ben Phelps

    oh jeez

  • LazyReader

    “You have to restructure your commitments and take risks you shouldn’t have to take”
    Sounds like moral excuse making for gambling with public funds… For the same amount of money to build HSR for California they could build over 4,000 lane miles of dedicated busway lanes…or half that much and enough buses to run everyone in that corridor for the next century