High Speed Passenger Rail
Future Development Will Depend on Addressing Financial and Other Challenges and Establishing a Clear Federal Role Gao ID: GAO-09-560T April 1, 2009This testimony discusses the potential viability of high speed rail in the United States. Federal and other decision makers have had a renewed interest in how high speed rail might fit into the national transportation system and address increasing mobility constraints on highways and at airports due to congestion. This testimony is based on our report issued March 19, 2009, entitled High Speed Passenger Rail: Future Development Will Depend on Addressing Financial and Other Challenges and Establishing a Clear Federal Role. In preparing the report, we reviewed federal legislation; interviewed federal, state, local, and private sector officials, as well as U.S. project sponsors; and reviewed high speed rail development in France, Japan, and Spain. More detailed information on our scope and methodology appears in the March 19, 2009, report. We conducted our work in accordance with generally accepted government auditing standards. This statement focuses on (1) the factors affecting the economic viability of high speed rail projects, including difficulties in determining the economic viability of proposed projects; (2) the challenges in developing and financing high speed rail systems; and (3) the federal role in the potential development of U.S. high speed rail systems.
In summary, high speed rail does not offer a quick or simple solution to relieving congestion on our nation's highways and airways. High speed rail projects are costly, risky, take years to develop and build, and require substantial up-front public investment as well as potentially long-term operating subsidies. Yet the potential benefits of high speed rail--both to riders and nonriders--are many. Whether any of the nearly 50 current domestic high speed rail proposals (or any future domestic high speed rail proposal), may eventually be built will hinge on addressing the funding, public support, and other challenges facing these projects. Determining which, if any, proposed high speed rail projects should be built will require decision makers to be better able to determine a project's economic viability--meaning whether total social benefits offset or justify total social costs.
GAO-09-560T, High Speed Passenger Rail: Future Development Will Depend on Addressing Financial and Other Challenges and Establishing a Clear Federal Role
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Testimony:
Before the Subcommittee on Transportation, Housing and Urban
Development, and Related Agencies, Committee on Appropriations, House
of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 2:00 p.m. EDT:
Wednesday, April 1, 2009:
High Speed Passenger Rail:
Future Development Will Depend on Addressing Financial and Other
Challenges and Establishing a Clear Federal Role:
Statement of Susan A. Fleming:
Director, Physical Infrastructure Issues:
GAO-09-560T:
Mr. Chairman, Ranking Member Latham, and Members of the Subcommittee:
I am pleased to be here today as you examine the potential viability of
high speed rail in the United States. Federal and other decision makers
have had a renewed interest in how high speed rail might fit into the
national transportation system and address increasing mobility
constraints on highways and at airports due to congestion. My statement
today is based on our report issued March 19, 2009, entitled High Speed
Passenger Rail: Future Development Will Depend on Addressing Financial
and Other Challenges and Establishing a Clear Federal Role.[Footnote 1]
In preparing the report, we reviewed federal legislation; interviewed
federal, state, local, and private sector officials, as well as U.S.
project sponsors; and reviewed high speed rail development in France,
Japan, and Spain. More detailed information on our scope and
methodology appears in the March 19, 2009, report. We conducted our
work in accordance with generally accepted government auditing
standards.
In summary, high speed rail does not offer a quick or simple solution
to relieving congestion on our nation's highways and airways. High
speed rail projects are costly, risky, take years to develop and build,
and require substantial up-front public investment as well as
potentially long-term operating subsidies. Yet the potential benefits
of high speed rail--both to riders and nonriders--are many. Whether any
of the nearly 50 current domestic high speed rail proposals (or any
future domestic high speed rail proposal), may eventually be built will
hinge on addressing the funding, public support, and other challenges
facing these projects. Determining which, if any, proposed high speed
rail projects should be built will require decision makers to be better
able to determine a project's economic viability--meaning whether total
social benefits offset or justify total social costs.
Like the report, this statement focuses on (1) the factors affecting
the economic viability of high speed rail projects, including
difficulties in determining the economic viability of proposed
projects; (2) the challenges in developing and financing high speed
rail systems; and (3) the federal role in the potential development of
U.S. high speed rail systems.
The factors affecting the economic viability of high speed rail lines
include the level of expected riders, costs, and public benefits (i.e.,
benefits to non-riders and the nation as a whole from such things as
reduced congestion), which are influenced by a line's corridor and
service characteristics. High speed rail tends to attract riders in
dense, highly populated corridors, especially where there is congestion
on existing transportation modes. Characteristics of the proposed
service are also key considerations, as high speed rail attracts riders
where it compares favorably to travel alternatives with regard to door-
to-door trip times, prices, frequency of service, reliability, and
safety. Costs largely hinge on the availability of rail right-of-way
and on a corridor's terrain. To stay within financial or other
constraints, project sponsors typically make trade-offs between cost
and service characteristics.
Once projects are deemed economically viable, project sponsors face the
challenging tasks of securing the up-front investment for construction
costs and sustaining public and political support and stakeholder
consensus. In the three countries we visited, the central government
generally funded the majority of the up-front costs of high speed rail
lines. By contrast, federal funding for high speed rail has been
derived from general revenues, not from trust funds or other dedicated
funding sources. Consequently, high speed rail projects must compete
with other nontransportation demands on federal funds (e.g., national
defense or health care) as opposed to being compared with other
alternative transportation investments in a corridor. Available federal
loan programs can support only a fraction of potential high speed rail
project costs. Without substantial public sector commitment, private
sector participation is difficult to secure. The challenge of
sustaining public support and stakeholder consensus is compounded by
long project lead times, by numerous stakeholders, and by the absence
of an established institutional framework.
In addition, the recently enacted Passenger Rail Investment and
Improvement Act of 2008 will likely increase the federal role in the
development of high speed rail, as will the newly enacted American
Recovery and Reinvestment Act of 2009.[Footnote 2] In the United
States, federal involvement with high speed rail to date has been
limited. The national rail plan required by the Passenger Rail
Investment and Improvement Act of 2008 is an opportunity to identify
the vision and goals for U.S. high speed rail and how it fits into the
national transportation system, an exercise that has largely remained
incomplete. Accountability can be enhanced by tying the specific,
measurable goals required by the act to performance and accountability
measures. In developing analytical tools to apply to the act's project
selection criteria, it will be important to address optimistic rider
and cost forecasts and varied public benefits analyses.
In our report, we recommended that the Secretary of Transportation, in
consultation with Congress and other stakeholders, develop a written
strategic vision for high speed rail, particularly in relation to the
role that high speed rail can play in the national transportation
system, clearly identifying potential objectives and goals for high
speed rail systems and the roles that federal and other stakeholders
should play in achieving each objective and goal. We also recommended
that the Secretary develop specific policies and procedures for
reviewing and evaluating grant applications under the Passenger Rail
Investment and Improvement Act of 2008 that clearly identify the
outcomes expected to be achieved through the award of grant funds and
that include performance and accountability measures. Finally, we
recommended that the Secretary develop guidance and methods for
ensuring the reliability of ridership and other forecasts used to
determine the viability of high speed rail projects and to support the
need for federal grant assistance. The Department of Transportation
(DOT) said it generally agreed with the information presented but did
not take a position on our recommendations. DOT said the strategic plan
required by the American Recovery and Reinvestment Act of 2009 may
include a vision for high speed rail. DOT also said that this act will
accelerate its involvement with high speed rail.
Mr. Chairman, this concludes my prepared remarks. I would be happy to
answer any questions you or other members of the subcommittee may have.
For future contacts regarding this statement, please contact Susan
Fleming at (202) 512-2834 or flemings@gao.gov. Contact points for our
Offices of Congressional Relations and Public Relations can be found on
the last page of this statement. Andrew Von Ah, Assistant Director;
Catherine Kim; Richard Jorgenson; and Gretchen Snoey also made key
contributions to this statement.
[End of section]
Footnotes:
[1] GAO-09-317 (Washington, D.C.: March 19, 2009).
[2] Pub. L. No. 110-432, Div. B (2008)(PRIIA) and Pub. L. No. 111-5
(2009)(ARRA).
[End of section]
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