Washington’s Newest Gravy Train: High-Speed Rail

Stimulus funds create lobbying frenzy, but will anything result?

The U.S. High Speed Rail Association’s October conference opened like any large Washington gathering. The congressmen were seated in the front row. A powerhouse Beltway law firm laid out prints of its lobbyists’ biographies on a display table. And as the upscale J.W. Marriott meeting room went dark, a short film offered romantic visions of bullet trains in America’s future.

As far back as 1965, planners, transportation experts, visionaries, and American train buffs — President Lyndon Johnson among them — have coveted the sort of sleek high-speed trains that crisscross much of Europe and Asia at speeds of more than 180 miles per hour. But after millions and millions of dollars spent studying, planning, and mostly falling short, the American incarnation of high-speed passenger rail is but a single line that travels from Washington to Boston at an average speed of under 80 miles per hour.

Now, though, the Obama administration is looking to change all that, starting with $8 billion in federal stimulus money to be awarded starting this winter. Equally captivated, Congress is considering adding as much as $4 billion more in next year’s budget. The House Transportation and Infrastructure Committee chairman, James Oberstar, a Minnesota Democrat, is talking $50 billion after that.

That helps explain the U.S. High Speed Rail Association, which didn’t even exist a year ago. Actually, the group was just formed in June, and the timing is no accident. High-speed rail is Washington’s latest potential bonanza, it seems, and that $8 billion dollars — just for starters — is attracting lots of attention. In fact, an examination by The Center for Public Integrity found that more than 50 public and private groups explicitly lobbied on high-speed rail policy last quarter — a three-fold increase from a year ago. Even that number fails to capture dozens of other actors likely lobbying on high-speed rail that keep their specific lobbying targets as vague as Washington does its spending plans.

A Long Time Coming

Advocates hope that high-speed rail’s future is brighter than its past. “We have set our rail systems up to fail,” says transportation consultant and lobbyist Tom Skancke. “It’s never been a priority.” Skancke served on a congressionally-chartered commission that in 2008 recommended spending $8 billion per year on intercity passenger rail as part of an overhauled federal transportation policy.

The $8 billion did indeed emerge from final negotiations over February’s American Recovery and Reinvestment Act — a total that shocked the acting federal railroad administrator, among others. And in the nine months since, leaders on both sides of the aisle have boarded the spending train. The Senate passed $1.2 billion more for high speed rail in the fiscal year 2010 budget, topping the $1 billion called for by the President. Meanwhile, the House blew past both numbers with a proposal for $4 billion. The final figure awaits budget negotiations between the two chambers, but the broad support has been cause for great excitement. Rail backers are also jockeying for advantage in the ongoing debate over a new six-year bill guiding U.S. transportation policy that may ultimately be worth hundreds of billions of dollars.

“Everybody stands to benefit,” the President argued at an April press conference after running through the list of reasons high-speed rail has gained traction. Large airports are operating at capacity. Highway congestion is costing tens of billions per year. Trains promote energy independence and run cleaner. And, of course, there’s the primary focus of legislators during a recession — the potential for long-term job creation and economic development.

“I submit,” former Transportation Secretary Rodney Slater said at the rail conference, “that this is our moment. This is our time.” The Clinton-era Cabinet member is now a partner at Washington’s most prolific lobbying firm, Patton Boggs. Already representing six of the nation’s 15 largest cities and more than 40 transport-interested clients in all, Patton Boggs listed lobbying on high-speed rail for six of them in the third quarter of 2009, including the cities of San Jose, California, and Mesa, Arizona.

Looking for a Blueprint

Now the fun begins. At least 34 states submitted proposals valued at $57 billion chasing that initial $8 billion, and rail fans and skeptics alike are anxious to see who gets the money and how — and why — the decisions are made. Washington has designated 10 logical high-speed rail corridors since 1991, in addition to Amtrak’s northeast corridor, based on projected ridership, public benefit, and anticipated partnerships, but it is unclear which of those areas might win funds.

With interest throughout the country, Representative John Mica of Florida, the top Republican on the House Transportation Committee, argued at a recent hearing that “We have to focus on areas where there is the greatest demand for high-speed rail, like the Northeast corridor.” Sounds responsible enough. The Acela, which travels from Washington to Boston at speeds up to 150 miles per hour on select segments, is already Amtrak’s most successful line, and could no doubt make progress with a new funding stream.

But there are lots of other ideas from lots of other proposed rail corridors that want money too, and many of them have powerful patrons. It will — technically — be up to the Federal Railroad Administration to decide who gets all the stimulus cash between this winter and October 2012. But there won’t be any shortage of pressure on an agency that already has to “overcome staffing shortfalls and insufficient expertise” according to a Department of Transportation inspector general’s report this past spring. Senate Majority Leader Harry Reid of Nevada, for instance, wants a high-speed rail link between Las Vegas and Southern California. The administration just designated that line in July as an extension of one of those 10 corridors. The chairwoman of the Senate’s transportation appropriations subcommittee, Democrat Patty Murray, endorsed the $1.3 billion in applications submitted by her state of Washington, and Senate Public Works chairwoman Barbara Boxer’s state of California is seeking $4.7 billion of its own. Even House Republican whip Eric Cantor of Virginia celebrated the program’s potential for funding a D.C. to Richmond line.

And therein lies a potential problem. Rail experts worry that the money might be spread around too thinly, a bit here and a bit there to please various power politicians and constituencies and keep the spigot flowing. Trouble is, $8 billion or even $12 billion is a drop in the bucket to fund the type of national network the President is calling for. Just the nation’s 11 currently designated high-speed corridors, including the Northeast, would cost at least around $100 billion to complete according to experts; the American Public Transportation Association’s rail chair, Rod Diridon, says in the end that is “undoubtedly a low estimate.” And additional funds would no doubt be susceptible to the congressional gauntlet of special interests and earmarking.

“That’s the subject that worries me the most,” says Martin Wachs, a transport policy expert with the RAND Corporation. Wachs explains the myriad criteria that should be considered in deciding on high-speed rail funding — like whether cities and states will provide matching money and whether stations would be placed in locations that maximize ridership and revenue potential. Most transportation professionals get this, he argues.

“But that wouldn’t stop [a legislator] from writing an earmark and bringing a project to a particular corridor in which he or she has friends or owns land or wants to get votes,” Wachs says. Especially if an army of new lobbyists are pushing this proposal or that.

It makes the railroad administration’s ongoing task of crafting a national rail plan – into which funded high speed rail lines logically fit — monumentally important. Without a rational long-term plan with a minimum of political interference, experts say the entire venture is doomed to fail. The agency declined to comment on its ongoing work, which was mandated by the 2008 Passenger Rail Investment and Improvement Act, but it did release a preliminary version of the plan last month. It hit many of the right notes, transportation experts say, but the report admits it “does not generally offer specific recommendations.” An actual plan will coordinate individual states’ rail plans sometime next year, after the stimulus money has already begun to flow.

“Handing out pieces doesn’t create a national system,” says transportation consultant Skancke.

There’s also tension over what the cash awards will actually be for — some want money to make incremental upgrades in existing rail lines while others argue that America needs to think big — with brand new dedicated lines that can deliver 200-plus mile per hour speeds.

A Troubling Past

The history of funding for high-speed rail provides plenty of cause for concern. Georgia received a $2 million earmark to study a southeast corridor in the last transportation bill, for instance; that bill authorized a total of $100 million for high-speed corridors through 2013. Most of that money was appropriated to eliminate rail grade crossings. Bigger numbers like the $800 million for a National High-Speed Ground Transportation program in the 1991 federal transport bill were authorized by Congress but never actually appropriated. States and private investors have spent their own dollars as well, with Florida and Texas projects coming the closest to fruition. Neither project proceeded past the study phase, however. Florida’s project secured a few hundred million dollars in state and private financing before the state, responding to concerns over budget and ridership forecasts, ultimately balked and eliminated funding in 1999. The Texas project met opposition from Southwest Airlines in the early 1990s and ultimately suffered cost overruns in the planning stage. The project stalled in 1994 and was abolished by the state government the following year.

“Whatever money was available wound up going into these feasibility studies or analyses of routes,” says Tim Gillespie, a rail consultant and former congressional aide who lobbies on behalf of French companies Alstom and Veolia.

One federal program awarded $104 million to a variety of sponsors to study magnetic levitation technology for high speed rail over the last decade. Pittsburgh and Atlanta received $28 million and $14 million respectively in September as part of that initiative to continue studying the levitation technology for regional projects. The Transportation Department had big plans for the Pittsburgh initiative a few years back, but Congress lost interest.

“Nothing ever gets off the ground,” laments transportation researcher Yonah Freemark of the program.

A sobering Government Accountability Office report this past spring has served as the conscience of the debate. It identified more than $1 billion already spent by governments at various levels on just 11 high speed rail proposals currently in the environmental review phase. Some of that money went to upgrade rail crossings or improve track along existing lines. But none of it resulted in any high-speed rail. Project sponsors must be prepared to sustain political and public support “over several electoral cycles,” the report cautioned. Advocates know they need to achieve something substantive – like a real, working high speed rail line – built before political will fades.

Skancke called Congress’ decision to commit billions more in next year’s budget “courageous,” but warns that even the planning can take decades. “So by 2030 we should see the first studies done,” he argues. “That’s not a vision.”

“We need to deliver, not study.”

The Lobby Bulks Up

But for K Street, it’s “all aboard.” General Electric turned heads this summer by hiring Linda Hall Daschle, previously the Federal Aviation Administration’s Deputy Administrator — and wife of former Senate Majority Leader Tom Daschle — to lobby on rail. Signing up such an influential Washington player — just last month the Daschles hosted a fundraiser for House Transportation chairman James Oberstar’s political action committee — suggested one of the world’s largest companies sees real opportunities. Last week the firm announced an agreement with China that would allow GE to pursue American projects using Chinese rail technology.

“There will be a lot of consultants all over this stuff,” says consultant Gillespie, who got his rail start while working for Republican Senator John Heinz of Pennsylvania and then Amtrak. “There already are.”

The 50-plus groups that filed last quarter as explicitly lobbying on high-speed rail include labor unions such as the AFL-CIO and big freight railroads such as BNSF Railway, as well as supply companies, transit agencies, 15 cities and counties, and even the Mayo Clinic in Rochester, Minnesota. Law and lobby firms Patton Boggs and Ball Janik represent many of the local governments, while others, such as Kelley, Drye & Warren lobby, for specific rail-interested niche groups such as the steel industry.

French conglomerate Alstom, which provided the design and some equipment for the Amtrak Acela project, hired a new in-house lobbyist this year to to augment Gillespie’s work. The company has already spent $1.6 million in lobbying fees this year. Before 2009 its expenses never topped $1 million. Other foreign firms such as Siemens and Canada’s Bombardier also maintain their own lobbying teams. Bombardier led the consortium that won the Acela project over Siemens, and along with Alstom, was a sponsor of the failed Florida and Texas attempts.

“Established foreign competitors with their huge marketing budgets are beginning to position themselves,” noted upstart US Railcar’s chief executive, Michael Pracht, at a recent hearing. US Railcar, which would like to manufacture rail cars in Ohio to compete with foreign outfits such as Spain’s Talgo, just inked its own lobbyist: former deputy FRA administrator and Senate Commerce staffer Donald Itzkoff of Nossaman LLP.

Similar examples abound on the design side. Los Angeles-based AECOM, a Fortune 500 engineering firm, already boasts former Transportation Secretary James Burnley on its lobbying payroll. In August the firm also signed up Greenberg Traurig’s Alan Slomowitz, a former staffer on the House Transportation committee. Earlier in the summer Georgia’s American Maglev Technology, which has a major branch in Florida, signed a former congressional aide to Corrine Brown, a Florida Democrat and chairwoman of the House railroad subcommittee.

A New Lobbying Power

Some of the established transportation interests are highly skeptical of the new organizations trying to bring disparate interests together — such as the U.S. High Speed Rail Association. Rod Diridon, the former head of the American Public Transportation Association who now leads the group’s high speed rail committee, refers to these new players as “vultures.”

“They’ve definitely stirred things up,” says one lobbyist of the new association, which just last week announced the hiring of its new president, Eric Peterson, a former deputy administrator at the Transportation Department’s Research and Innovative Technology Administration. Its chairman, Lewis Goetz, understands the sentiment. “They have a right to be skeptical,” says Goetz, who is personally bankrolling the new high-speed rail association and operating it out of his Georgetown-based design firm Group Goetz Architects. “I would be.”

Many of Goetz’s development clients would certainly be interested in the 17,000-mile national network the association mapped out for 2030 — a proposal that’s widely considered unrealistic in that timeframe. Nevertheless, Goetz is pressing ahead. The association hopes to enlist as members firms in the real estate development, finance, renewable energy, engineering, and of course train manufacturing sectors.

“I think they’re looking to cash in just as others are,” says association advisory board member Dr. Anthony Perl, a leading expert who heads a National Research Council panel on intercity passenger rail. “But my view is, if the groups that were there forever were committed to do this, why didn’t it happen?”