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Before the Subcommittee on Surface Transportation and Merchant Marine 
Infrastructure, Safety, and Security, Committee on Commerce, Science 
and Transportation, U.S. Senate:

United States Government Accountability Office: 

For Release on Delivery: 
Expected at 2:30 p.m. EDT:
Tuesday, June 23, 2009:

High Speed Passenger Rail:

Effectively Using Recovery Act Funds for High Speed Rail Projects:

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


[End of section]

Mr. Chairman, Ranking Member Thune, and Members of the Subcommittee:

I am pleased to be here today to discuss the implementation of high 
speed intercity passenger rail projects in the American Recovery and 
Reinvestment Act of 2009 (the Recovery Act). The $8 billion provided by 
the Recovery Act for high speed and other intercity passenger rail 
projects has focused more attention on and generated a great deal of 
anticipation about the possibility of developing high speed rail 
systems in the United States. These projects are seen by some as 
serving an important transportation role, by moving people quickly and 
safely, reducing highway and airport congestion, and being 
environmentally friendly. My statement today focuses on (1) the factors 
that we have identified that affect the economic viability of high 
speed rail projects and (2) how the Federal Railroad Administration's 
(FRA) recent strategic plan incorporates those factors.[Footnote 1] My 
testimony is based on our recent report on high speed rail, our review 
of FRA's strategic plan, and discussions with FRA and selected 
transportation experts.[Footnote 2]

In summary, we found that while the potential benefits of high speed 
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. Determining which, if any, high speed rail projects may 
eventually be economically viable will rest on factors such as 
ridership potential, costs, and public benefits. FRA largely agrees 
with our March report. FRA's strategic plan for high speed rail 
outlines, in very general terms, how the federal government may invest 
the $8 billion in Recovery Act funds for high speed rail development. 
However, this plan does not establish clear goals for the federal 
government in high speed rail--other than establishing a "longer term 
goal of developing a national high speed intercity passenger rail 
network of corridors"--and does not define a clear federal role for 
involvement in high speed rail projects other than providing Recovery 
Act funds. As such, in our view, it is more a vision than a strategic 
plan. As part of a discussion to prepare for this hearing, FRA told us 
that it sees its strategic plan as a first step and that it intends to 
seek structured input from stakeholders and the public to help develop 
strategies to implement its vision.

Factors That Affect the Economic Viability of High Speed Rail Projects:

The factors affecting the economic viability of high speed rail 
projects include the level of expected ridership, costs, and public 
benefits (i.e., the benefits to non-riders and the nation as a whole 
from such things as reduced congestion), 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 there is congestion on existing transportation modes (such as 
highways or airports). Characteristics of the proposed service are also 
a key consideration because high speed rail is more likely to attract 
riders where it compares favorably to travel alternatives in terms of 
trip times, frequency of service, reliability, and safety. 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 

Once projects are deemed economically viable, project sponsors face the 
challenging tasks of securing the significant up-front investment for 
construction costs and of sustaining public and political support and 
stakeholder consensus. We found that in other countries (France, Japan, 
and Spain) with high speed intercity passenger rail systems, the 
central government generally funded the majority of the up-front costs 
of high speed rail lines.[Footnote 3] 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 amount, however, 
represents only a small fraction of the estimated costs for starting or 
enhancing service on the 11 federally authorized high speed rail 
corridors. For example, the San Francisco-Los Angeles portion of the 
California high speed rail corridor alone, which already has about $9 
billion in state bonding authority, is estimated to cost about $33 
billion dollars.[Footnote 4] Furthermore, federal funds for high speed 
rail in the past (as with the Recovery Act) 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, as they compete for funding with other national priorities 
such as health care, national defense, and support for ailing 
industries. In addition, the challenge of sustaining public-sector 
support and stakeholder consensus is compounded by long project lead 
times, the diverse interests of numerous stakeholders, and the absence 
of an established institutional framework for coordination and decision 

FRA's Strategic Plan Is a First Step:

FRA's strategic plan attempts to address the absence of an 
institutional framework for investments in high speed intercity 
passenger rail service. In our recent report and in 2005,[Footnote 5] 
we discussed the need for:

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

2. Clear identification of outcomes expected.

3. Ensuring the reliability of ridership and other forecasts to 
determine the viability of high speed rail projects.

4. Including high speed rail with 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 financing transportation improvements that will lead to the 
greatest improvements in mobility.

FRA's plan, which the Recovery Act required the FRA to issue 60 days 
after the act was signed, outlines in very general terms how the FRA 
will allocate the Recovery Act high speed rail funds. It does not 
define goals for investing in high speed rail, how these investments 
will achieve them, how the federal government will determine which 
corridors it could invest in, or how high speed rail investments could 
be evaluated against possible alternative modes in those corridors. In 
our opinion--and as FRA recognizes--this strategic plan is a first step 
in planning federal involvement. FRA has emphasized that its approach 
is to involve the ultimate "owners" of high speed rail--the states and 
communities in which they will reside--to help flesh out the approach 
to developing high-speed rail that are under its control. FRA officials 
also told us that it plans to spend Recovery Act funds in ways that 
show success to help keep long-term political support for these 
projects at the local level.

Overall, FRA generally agrees with the issues that we raised in our 
March report, with the report's recommendations, and with the 
observations that we are making today. Last week, FRA took its next 
step by issuing interim guidance for applying for Recovery Act funds. 
[Footnote 6] The guidance lays out the evaluation criteria for grant 
funding, the weights to be applied to the criteria, and the selection 

In conclusion, the infusion of up to $8 billion in Recovery Act funds 
is only a first step in developing potentially viable high speed 
passenger rail projects. The host of seemingly intractable issues that 
have hampered development of these projects remain as challenges, and 
these issues will need to be resolved to effectively spend Recovery Act 
funds. Surmounting these challenges will require federal, state, and 
other stakeholder leadership to champion the development of 
economically viable high speed corridors and the political will to 
carry them out. It will also require clear, specific policies and 
delineations of expected outcomes, and objective, realistic analysis of 
ridership, costs, and other factors to determine the viability of 
projects and their transportation impact.

Mr. Chairman, this concludes my prepared remarks. I would be pleased to 
answer any questions you or other Members of the Subcommittee may have.

Please contact Susan Fleming at (202) 512-2834 or 
about this statement. Contact points for our Offices of Congressional 
Relations and Public Relations can be found on the last page of this 
statement. Greg Hanna and James Ratzenberger made key contributions to 
this statement.

[End of section] 


[1] By economically viable, we mean that a project's total social 
benefits offset or justify the project's total social costs. 

[2] See GAO, High Speed Passenger Rail: Future Development Will Depend 
on Addressing Financial and Other Challenges and Establishing a Clear 
Federal Role, GAO-09-317 (Washington D.C.: Mar. 19, 2009); and Federal 
Railroad Administration, Vision for High-Speed Rail in America 
(Washington D.C.: April 2009). We conducted this performance audit from 
May 2009 to June 2009 in accordance with generally accepted government 
auditing standards. These standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 

[3] GAO-09-317. 

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

[5] GAO-09-317 and GAO, 21st Century Challenges: Reexamining the Base 
of the Federal Government, GAO-05-325SP (Washington D.C.: February 

[6] A link to the guidance can be found in 74 Fed. Reg. 28770 (2009).

[End of section] 

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