Texas Bullet Train Still Moving Forward But Big Obstacles Linger

The private firm hoping to build a high-speed rail line between Dallas and Houston has been celebrating a summer of successes: completing a successful round of fundraising, seeing a key federal study move forward, surviving the legislative session unscathed. 

But three years after Texas Central Partners first revealed its ambitious venture, a series of financial, logistical and political challenges remain. To Kyle Workman, president of Texans Against High-Speed Rail, those challenges are enough to make him question whether construction on the project will ever begin.

“Frankly, they’re on a salvage mission,” Workman said of Texas Central executives. “They’re trying to generate news that says, ‘We think we’re close.’ The reality is, they’re not that close.”

Yet Tim Keith, who has served as Texas Central's CEO for just more than a month, said the project is moving forward as planned and is more or less on schedule.

“I think my biggest challenge is conveying an abstract idea to Texans," Keith said. “We are firmly committed to doing everything in our control and power to be selling tickets beginning in 2021.”

Texas Central announced in 2012 a partnership with Japanese train operator JR Central to debut that company's bullet train technology in Texas. Unlike most other train lines in the country, Texas Central predicts its train will operate at a profit and has pledged to not take public subsidies to cover operational costs. JR Central plans to sell its famed Shinkansen trains to Texas Central and play an advisory role on the system’s operations. 

Texas Central officials have described the 240-mile stretch between Dallas and Houston as the country’s most financially viable prospect for a profitable high-speed rail line, pointing to the large swaths of rural, flat land and the cities’ robust population growth projections as key selling points.

The ambitious proposal immediately drew a healthy mix of excitement and skepticism, with some outright antagonism developing over the last year as rural communities near the train’s expected path learned more about it.

Texas Central has said it plans to run 62 trips between Houston and Dallas daily. Yet most Texans in communities along the route won’t be able to ride them. Though the route remains a work in progress, the company has plans for only three stations, in Houston, Dallas and Grimes County near the Bryan/College Station area.

While many Houston- and Dallas-area officials have backed the project, officials in communities in between have mostly come out against it. Statewide officials have largely avoided taking a position.

“I want to see transportation needs satisfied,” Texas Gov. Greg Abbott said when asked about the bullet train at a June press conference in Dallas.

Though he didn’t make clear whether he supports the bullet train, Abbott touched on the two issues that drew concerns from the Legislature this year. He said he aimed to ensure that the project neither spent any public tax dollars nor infringed on private property rights.

“As this process moves along, I will diligently work to ensure that both of those criteria are satisfied,” Abbott said.

The Federal Railroad Administration launched an environmental review of the project in 2014. Last month, the railroad administration narrowed its focus for the train route to a “utility corridor,” which is reserved for high-voltage electric transmission lines. Any route within that corridor would likely involve the train crossing some private land.

Keith, who joined Texas Central as CEO in July, said he is hopeful the railroad administration will offer tentative approval for a route within the corridor this fall and that the company would be able to quickly follow with discussions with affected landowners. A railroad administration spokesman declined to comment.

Major infrastructure projects hit a turning point when people can study specific routes, said Robert Puentes, director of the Metropolitan Infrastructure Initiative at the Brookings Institution in Washington, D.C.

“It’s easy to oppose or support something in the abstract,” Puentes said. “When you start really thinking about the details of where the construction happens and how it interacts with the existing land and the existing users, it becomes much more real.”

Company officials have said they plan to employ eminent domain only as a last resort. Workman, who lives in Jewett, halfway between Dallas and Houston, said that will be the company’s only option in many cases.

“We label that ‘the prime ranch land corridor’ because at the end of the day, that’s what it is,” Workman said. “They say, ‘We’re not planning on doing eminent domain,’ but all of us that live in this area know they’ll have to do that because none of us are willing to sell.”

During this year’s legislative session, a handful of lawmakers attempted multiple times to hobble the project through, for example, a proposal to strip high-speed rail companies of their eminent domain authority. Critics of the rail project vowed to continue the fight into the next session in 2017.

“This project is being sold to the people of Texas that it will never need state backing or subsidization or bailing out, and unfortunately, I think that’s a complete fallacy,” state Sen. Charles Schwertner, R-Georgetown, said in May.

Whether Texas Central will be able to raise the $12 billion or more it needs for the project has been a constant source of skepticism among critics. In July, the company announced raising $75 million from investors including Fort Worth investor John Kleinheinz, Dallas developer Jack Matthews and former Houston Astros CEO Drayton McLane, Jr. of Temple. That all of the investors were from Texas was not an accident.

“The company approached various individuals and explained the project and was able to attract these original investors,” Keith said. “A project like this, I think it’s imperative to have home-state investors, so it was a great market response for us.”

While $75 million is a far cry from $12 billion, Texas Central officials believe it’s what they need at this point. The company expects to ultimately get about half of its funding via a loan from the Japanese Bank of International Cooperation, a state-owned entity in that country that, like the Export-Import Bank in the United States, helps provide financing for projects that encourage exports. Another significant source of funds may be a federal loan designed to provide low-interest financing for large infrastructure projects.

While questions about the route and financing draw the most attention, the company is also preparing to tackle another tricky issue: federal safety regulations at odds with a Japanese-designed bullet train traveling 205 mph, faster than any other train in the country.

Company officials are expected to formally request next year that the railroad administration agree to waive or tweak various federal regulations. Keith acknowledged the train’s speed is part of the need for regulatory waivers but said so too is the system’s advanced technology, including its signaling and automatic train control system, both of which would be new to the United States. The Shinkansen’s famed record of zero casualties in over 50 years of operation in Japan is likely to play a central role in the company’s argument to federal regulators.

“The approach that this system takes is crash avoidance and that is different from some of the existing regulations for trains currently operating in the U.S.,” Keith said.

Transportation advocates around the country are closely watching Texas Central to see if it can overcome challenges with financing, regulations and local opposition.

"If those risks and rewards can be balanced out appropriately, there’s no reason Texas can’t see a successful project,” Puentes said.

Jim Malewitz contributed to this report.