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entitled 'High Speed Passenger Rail: Developing Viable High Speed Rail 
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Before the Subcommittee on Railroads, Pipelines, and Hazardous 
Materials, Committee on Transportation and Infrastructure, House of 

United States Government Accountability Office: 

For Release on Delivery: 
Expected at 2:00 p.m. EDT:
Wednesday, October 14, 2009: 

High Speed Passenger Rail: 

Developing Viable High Speed Rail Projects under the Recovery Act and 

Statement of Susan A. Fleming, Director: 
Physical Infrastructure Issues: 


[End of section] 

Madam Chairwoman, Ranking Member Shuster, and Members of the 

I am pleased to be here today to discuss funding for high speed and 
other intercity passenger rail projects under the American Recovery and 
Reinvestment Act of 2009 (the Recovery Act). The $8 billion that the 
Recovery Act provided for these projects has attracted great attention 
from states and others who look to develop or improve intercity 
passenger rail service across the country. Proponents see these 
projects as serving an important transportation role, by moving people 
quickly and safely, reducing highway and airport congestion, and being 
environmentally friendly. While we have found that the potential 
benefits of high speed and intercity passenger rail projects are many, 
these projects--both here and abroad--are costly, take years to develop 
and build, and require substantial up-front public investment as well 
as potentially long-term operating subsidies.[Footnote 1] My statement 
today focuses on (1) some principles that could guide the effective use 
of these Recovery Act funds, (2) some challenges that states face in 
establishing high speed and other intercity passenger rail service, and 
(3) the nature of our ongoing work on Recovery Act high speed rail 
projects. My testimony is based on our recent report and testimony on 
high speed rail and our ongoing work.[Footnote 2] 


Several principles could guide the effective use of the Recovery Act 
funds and any future federal investments in high speed and other 
intercity passenger rail. These principles include establishing clear 
federal objectives and stakeholder roles, clearly identifying expected 
outcomes, basing decisions on reliable ridership and other forecasts, 
and reexamining how intercity passenger rail service fits in with other 
federal surface transportation programs. In addition, determining 
which, if any, high speed rail projects may eventually be economically 
viable will depend on an accurate determination of such factors as 
ridership potential, costs, and public benefits. These projects also 
face many challenges, such as securing the significant up-front 
investment for construction costs; sustaining public, political, and 
financial support; and resolving outstanding liability issues. Our 
ongoing work in this area will focus on determining how states that 
have recently initiated passenger rail service have met these 
challenges, how the rail industry can accommodate this increased 
investment, and how the Federal Railroad Administration (FRA) is 
planning to oversee the use of Recovery Act funds for intercity 
passenger rail service. 

Principles for the Effective Use of Recovery Act Funds for Intercity 
Passenger Rail Service: 

As policymakers decide how to allocate current Recovery Act funds and 
any possible future federal investments in high speed and other 
intercity passenger rail projects, several principles could guide the 
effective use of those funds. In our recent report and in 2005, 
[Footnote 3] we concluded that there is a need to: 

1. clearly establish federal objectives and clear roles for all 
stakeholders (federal, regional, state, and local governments and 
freight, commuter, and passenger railroads); 

2. clearly identify expected outcomes; 

3. base decisions on reliable ridership and other forecasts to 
determine the viability of high speed rail projects; and: 

4. include high speed rail in a reexamination of other federal surface 
transportation programs to clarify federal goals and roles, link 
funding to needs and performance, and reduce modal stovepipes that 
hinder the financing of transportation improvements with the greatest 
potential for improving mobility. 

While each of these principles is important, the third principle will 
soon come into play as FRA decides which projects will receive initial 
Recovery Act funding. FRA has received applications totaling $57 
billion for its $8 billion in available Recovery Act funds. The factors 
affecting the economic viability of high speed rail projects--meaning 
whether total social benefits offset or justify total social costs-- 
include the level of expected ridership, costs, and public benefits 
(i.e., the benefits to nonriders and the nation as a whole from such 
things as reduced congestion and pollution), which depend on a 
project's corridor and service characteristics. High speed rail is more 
likely to attract riders in densely and highly populated corridors, 
especially where existing transportation facilities, such as highways 
or airports, are congested. Characteristics of the proposed service are 
also a key consideration because high speed rail is more likely to 
attract riders where it compares favorably with travel alternatives in 
terms of trip times, frequency of service, reliability, safety, and 
price. Costs largely hinge on the availability of rail right-of-way and 
a corridor's terrain. To stay within financial or other constraints, 
project sponsors typically make trade-offs between cost and service 
characteristics. We are pleased to note that FRA's notice of funding 
availability for high speed and other intercity rail projects generally 
asks applicants to address these factors. 

Challenges Facing High Speed and Other Intercity Passenger Rail 

Once FRA chooses projects for funding, project sponsors face several 
challenges. These include securing the significant up-front investment 
for construction costs; sustaining public, political, and financial 
support; and resolving outstanding liability issues. We found that in 
other countries with high speed intercity passenger rail systems 
(France, Japan, and Spain), the central government generally funded the 
majority of the up-front costs of high speed rail lines.[Footnote 4] 
The $8 billion in Recovery Act funds for high speed rail (and other 
intercity passenger rail) lines represents a significant increase in 
federal funds available to develop new or enhanced intercity passenger 
rail service. This $8 billion, however, represents only a small 
fraction of the estimated costs for starting or enhancing service on 
the nation's 11 federally authorized high speed rail corridors. For 
example, a portion of one such corridor, from San Francisco to Los 
Angeles, which already has about $9 billion in state bonding authority, 
is estimated to cost about $33 billion.[Footnote 5] 

Federal funds for high speed rail in the past (like Recovery Act funds) 
have been derived from general revenues, not trust funds or other 
dedicated funding sources. This makes ongoing capital support for high 
speed rail projects challenging, because such projects compete for 
funding with other national priorities, such as health care, national 
defense, and support for ailing industries. States face similar 
challenges as they develop these systems over a decade or more, and as 
they look to provide operating support for the rail lines. The 
potential problem could be compounded when service extends across state 
boundaries and each state must provide operating support. Finally, 
several state and industry stakeholders have told us that outstanding 
questions about liability coverage for passenger rail providers 
operating on freight railroads' tracks is a major barrier to entry for 
service providers and for host railroads.[Footnote 6] 

GAO's Ongoing Recovery Act Work on Intercity Passenger Rail Projects: 

To further help Congress understand how Recovery Act funds for high 
speed and intercity passenger rail service can be used effectively, we 
are addressing the following three questions: 

1. How have states that have recently initiated intercity passenger 
rail service overcome the challenges to establishing service? 

2. How can the rail industry accommodate the increased investment in 
intercity passenger rail? 

3. How FRA is positioning itself to implement and oversee current and 
any future federal investments in intercity passenger rail? 

To carry out this work, we have identified states that have initiated 
new intercity passenger rail service and states that have expanded 
existing service since 1995, including "higher-speed" rail service. 
Intercity passenger rail service in those states has a mix of 
characteristics, including infrastructure and equipment ownership, 
capital investment levels, levels of state involvement, and multistate 
operating agreements. We are also meeting with FRA, freight railroads, 
Amtrak, possible domestic and foreign operators of intercity passenger 
rail service, passenger rail equipment manufacturers, and other 
possible rail industry stakeholders. We are in the beginning stages of 
our work and plan to report on these issues early next spring. We would 
be pleased to discuss our work with you as we progress. 

In conclusion, the infusion of up to $8 billion in Recovery Act funds 
is only a first step in developing potentially viable high speed or 
other intercity passenger rail projects. The principles we have 
identified can be applied to promote the effective investment of 
Recovery Act and any future federal funds for these projects. 
Surmounting these challenges will require federal, state, and other 
stakeholder leadership to champion, and commitment to carry out, the 
development of any new or improved intercity passenger rail service. It 
will also require (1) clear, specific policies and delineations of 
expected outcomes and (2) objective, realistic analyses of ridership, 
costs, and other factors to determine the viability of projects and to 
maximize their transportation impact and other public benefits. 

Madam Chairwoman, this concludes my prepared remarks. I would be 
pleased to answer any questions that you or other members of the 
subcommittee may have at this time. 

GAO Contact and Staff Acknowledgments: 

For additional information about this testimony, please contact Susan 
Fleming at (202) 512-2834 or Contact points for our 
Offices of Congressional Relations and Public Relations can be found on 
the last page of this statement. Heather Chartier, Greg Hanna, James 
Ratzenberger, and Caitlin Tobin made key contributions to this 

[End of section] 


[1] GAO, High Speed Passenger Rail: Future Development Will Depend on 
Addressing Financial and Other Challenges and Establishing a Clear 
Federal Role, [hyperlink,] 
(Washington, D.C.: Mar. 19, 2009). 

[2] [hyperlink,] and GAO, High 
Speed Passenger Rail: Effectively Using Recovery Act Funds for High 
Speed Rail Projects, [hyperlink,] (Washington, D.C.: June 23, 
2009). We conducted our work for these products in accordance with 
generally accepted government auditing standards. 

[3] [hyperlink,] and GAO, 21st 
Century Challenges: Reexamining the Base of the Federal Government, 
[hyperlink,] (Washington, 
D.C.: February 2005). 

[4] [hyperlink,]. 

[5] The corridor would extend from Sacramento and San Francisco through 
Los Angeles to San Diego. 

[6] Some freight railroads are concerned that an accident involving a 
passenger train on their tracks could involve potentially substantial 
liability claims, even if the freight railroad was not at fault. We 
reported that such liability is capped at $200 million per accident or 
incident for passenger claims; however, this cap has not been tested in 
court. See GAO, Commuter Rail: Many Factors Influence Liability and 
Indemnity Provisions, and Options Exist to Facilitate Negotiations, 
[hyperlink,] (Washington, D.C.: 
Feb. 24, 2009); and Commuter Rail: Information and Guidance Could Help 
Facilitate Commuter and Freight Rail Access Negotiations, [hyperlink,] (Washington, D.C.: Jan. 9, 

[End of section] 

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