The decade-plus battle to bring high-speed rail to Texas could soon be over. On Tuesday, Transportation Secretary Sean Duffy delivered a blow to the project, known as Texas Central Railway, by rescinding a $63.9 million federal grant. Duffy called the project "a waste of taxpayer funds."
The Texas Central Railway was unveiled in 2013 as a fully privately funded high-speed rail project connecting Dallas and Houston. Originally estimated to cost $10 billion, the project would be able to shuttle passengers between the state's two largest cities in 90 minutes (versus nearly four hours in a car).
Like other high-speed rail projects before it, Texas Central has run into project delays and cost overruns. By 2019, the project's investors updated their original cost estimates to $20 billion. In 2020, project estimates were updated again to $30 billion. A 2023 analysis by Baruch Feigenbaum, senior managing director of transportation policy at Reason Foundation (the nonprofit that publishes Reason), estimates that the project's operating and construction costs will be at least $41.6 billion.
In September 2024, the Biden administration awarded Amtrak a $64 million grant to move the project forward. Despite this federal support, Japanese investors backed out of the project after claiming to have lost $272 million.
Kleinheinz Capital Partners, an investment firm headed by Fort Worth businessman John Kleinheinz, "bought its Japanese investors out of the project in January," reports The Texas Tribune, to become the rail line's controlling interest. Andy Jent, a representative of Texas Central, told the Tribune that the project had acquired 25 percent of the land it needed to build the route.
Despite Tuesday's announcement from the Transportation Department, which also directed Amtrak to rescind project leadership, the project appears ready to forge ahead. "We agree with Secretary Duffy that this project should be led by the private sector, and we will be proud to take it forward," Kleinheinz Capital said in a statement.
"Our interpretation of what the Department of Transportation released a couple of days ago is that number one, they don't want Amtrak leading this project," Jent told the Texas House of Representatives' Transportation Committee on Thursday. "We also don't believe that that's in the best interest of the state of Texas or in the best interest of this project."
Despite the optimism, the project faces a long route to completion.
The rail line has yet to lay a single foot of track or acquire the necessary permits to begin construction. In 2020, the Federal Railroad Administration issued a final environmental impact statement under the National Environmental Policy Act, which did "not grant any kind of construction approval or permit. Neither does this final rule, by itself, grant any permission or authority" for the company to operate. "The publication of this final rule is the beginning for [Texas Central Railroad], not the end, of its continuous obligation to demonstrate compliance with the regulation."
As of January 2024, the project had not received the necessary permits from the federal Surface Transportation Board to begin construction. The city of Houston has not approved a terminal site for the train, but Dallas has spent $1.5 million on an economic feasibility study for the project, Dallas City Council member Omar Narvaez told KERA News.
The project has also faced opposition from the state government. In 2017, Texas lawmakers passed a law prohibiting the Texas legislature from appropriating funds "related to the planning, facility construction or maintenance, security, or operation of a high-speed rail project operated by a private entity."
In June 2022, the Texas Supreme Court ruled that Texas Central could use eminent domain for the rail line, which has been met with staunch opposition from Texas landowners. This legislative session, state Rep. Brian Harrison (R–Waxahachie) introduced a bill that would prevent a private entity that operates high-speed rail from using eminent domain. Lawmakers are also considering a bill sponsored by Rep. Cody Harris (R–Palestine), which would make it impossible for state funds to be used to pay for the alteration of roadway because of high-speed rail construction.
Jent told lawmakers on Thursday that he still considers the project alive, but Kleinheinz is not, at this time, "proposing construction of the project." Once the developers give the green light, Jent expects that it will take six months to finalize project planning. During that time, Texas Central would secure more financing and submit a final permit to the Surface Transportation Board. Jent expects it would then take 80–86 months to complete construction of the project.
This estimation is a bit ambitious, Feigenbaum tells Reason. With the project's cost ballooning from $10 billion to over $40 billion, "I don't see how they're going to come up with" the funding that's needed for the rail line, he says. In his testimony to lawmakers, Jent said that he expects the Japan Bank for International Cooperation to "provide some form of financing" in the future (although the bank is not funding the project right now).
Feigenbaum says the project, which was essentially dormant before, will likely become dormant again.
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