High Speed Passenger Rail:
Future Development Will Depend on Addressing Financial and Other Challenges and Establishing a Clear Federal Role
GAO-09-317: Published: Mar 19, 2009. Publicly Released: Mar 19, 2009.
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. GAO was asked to review (1) the factors affecting the economic viability--meaning whether total social benefits offset or justify total social costs--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. GAO 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.
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. 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. While some U.S. corridors have characteristics that suggest economic viability, uncertainty associated with rider and cost estimates and the valuation of public benefits makes it difficult to make such determinations on individual proposals. Research on rider and cost forecasts has shown they are often optimistic, and the extent that U.S. sponsors quantify and value public benefits varies. 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 GAO 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. 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. 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.
Recommendations for Executive Action
Status: Closed - Implemented
Comments: In March 2009, GAO found that it was not likely that high speed rail projects would come to fruition without federal assistance. In particular, GAO found that given the complexity, high cost, and long development time for these projects it would be critical to first determine how high speed rail fits into the national transportation system and establish a strategic vision and goals for such systems. GAO recommended that to ensure the effective implementation of provisions in the Passenger Rail Investment and Improvement Act of 2008 related to high speed rail 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 high speed rail could play in the national transportation system. In April 2009, the Department of Transportation submitted a strategic plan for high speed rail to Congress. This plan outlined the initial approach for developing high speed rail systems and the role they could play in certain travel markets. It also identified a near-term strategy for investing in high speed rail systems. Subsequent to issuing this plan, the Federal Railroad Administration (FRA) began implementing the high speed intercity passenger rail program with $8 billion from the American Recovery and Reinvestment Act. This included issuing program and policy guidance and establishing criteria for project review and selection for high speed and intercity passenger rail projects. According to FRA, these actions further refined the initial plan. Finally, the Presidents fiscal year 2012 budget request also described approaches for developing the intercity passenger rail network, including the role of high speed rail projects. These actions materially assist in developing the vision of high speed rail systems and the role they can play in the national transportation system.
Recommendation: To ensure effective implementation of provisions of the PRIIA related to high speed rail and equitable consideration of high speed rail as a potential option to address demands on the nation's transportation system, the Secretary of Transportation should, in consultation with Congress and other stakeholders, develop a written strategic vision for high speed rail, particularly in relation to the role high speed rail systems can play in the national transportation system, clearly identifying potential objectives and goals for high speed rail systems and the roles federal and other stakeholders should play in achieving each objective and goal.
Agency Affected: Department of Transportation
Status: Closed - Implemented
Comments: In March 2009, GAO reported that to maximize returns on federal investment in high speed rail projects it would critical when reviewing grant applications under the Passenger Rail Investment and Improvement Act of 2008 (PRIIA) high speed rail provisions to clearly identify expected outcomes of such projects and to incorporate performance and accountability measures to ensure these outcomes are achieved. GAO recommended that to ensure the effective implementation of PRIIA high speed rail provisions the Secretary of Transportation develop specific policies and procedures for reviewing and evaluating grant applications that clearly identify expected outcomes and to include performance and accountability measures. In response to requirements in PRIIA and the American Recovery and Reinvestment Act, in June 2009, the Federal Railroad Administration (FRA) launched the High Speed Intercity Passenger Rail Program by issuing a funding announcement and interim program guidance which outlined the requirements and procedures for obtaining federal high speed rail funds. In March 2011, GAO reported that in reviewing and evaluating grant applications that were received under this program, FRA reviewers used guidebooks to evaluate applications against technical criteria that included, among other things, identification of transportation and other public benefits (e.g., environmental quality and energy efficiency) and the sustainability of these benefits. GAO also reported that FRA had substantially followed recommended practices in awarding grants and had applied its established criteria during the eligibility and technical reviews of project applications. Finally, FRA reported to GAO that it has implemented an interim monitoring plan to ensure funded projects adhere to the performance and accountability measures built into each individual grant agreement. Collectively these actions will materially assist FRA and the Department of Transportation to identify specific outcomes from federally funded high speed rail projects as well as ensure that these outcomes are achieved.
Recommendation: To ensure effective implementation of provisions of the PRIIA related to high speed rail and equitable consideration of high speed rail as a potential option to address demands on the nation's transportation system, the Secretary of Transportation should, in consultation with Congress and other stakeholders, develop specific policies and procedures for reviewing and evaluating grant applications under the high speed rail provisions of the PRIIA that clearly identify the outcomes expected to be achieved through the award of grant funds and include performance and accountability measures.
Agency Affected: Department of Transportation
Comments: Federal Railroad Administration (FRA) officials indicated this recommendation is in the process of being implemented. FRA said it, along with its stakeholders, partners, and researchers are implementing this recommendation through an iterative process of developing methods and guidance, using them, and then refining them. Simultaneously, FRA is implementing GAO's recommendation for a data needs assessment (GAO-11-290), which will support implementation of forecasting. Under the National Cooperative Rail Research Program, the Transportation Research Board, with a FRA Passenger Rail Investment and Improvement Act (PRIIA) grant is convening research panels for project areas the Advisory Board selected. One of these project areas is development of a "Handbook of Tools and Procedures for Planning and Developing Intercity Passenger Rail Service" (Project 3-01). The research panel will meet in November or December 2012 to develop a Request for Proposals for contract award in late spring 2013 to develop this handbook. The project is intended to provide decision makers with tools needed in areas such as route alignment, station location and spacing, and ridership forecasting. FRA said it recognizes that travel demand and ridership forecasting methods differ significantly depending on their purpose, context, and complexity. For example, a regional planning exercise has much different data needs than a grant application. A corridor program has different requirements than an individual project. Moreover, to assess forecasting reliability, grantees must complete and implement their projects. As a result, FRA expects implementation of this recommendation to occur over a five to ten year period.
Recommendation: To ensure effective implementation of provisions of the PRIIA related to high speed rail and equitable consideration of high speed rail as a potential option to address demands on the nation's transportation system, the Secretary of Transportation should, in consultation with Congress and other stakeholders, develop guidance and methods for ensuring reliability of ridership and other forecasts used to determine the viability of high speed rail projects and support the need for federal grant assistance. The methods could include such things as independent, third-party reviews of applicable ridership and other forecasts, identifying and implementing ways to structure incentives to improve the precision of ridership and cost estimates received from grant applicants, or other methods that can ensure a high degree of reliability of such forecasts.
Agency Affected: Department of Transportation