*Correction appended

The state Legislature could put up major road blocks next year for a private firm's plans to build a high-speed rail project connecting Houston and Dallas now that a federal transportation board has decided the project falls under state jurisdiction.

The Surface Transportation Board decided last week that Texas Central, the private firm looking to build the bullet train, does not need Board approval for the project because it would be "constructed and operated entirely within the State of Texas." Texas Central Partners is developing a 240-mile bullet train line intended to transport passengers between Houston and Dallas in 90 minutes with a stop near Bryan. The company has partnered with Japanese train operator JR Central to bring its bullet train technology to Texas.

"It is undisputed that the Line would provide only intrastate passenger service between Dallas and Houston," the decision reads. "What Texas Central characterizes as its proposed 'connections' to Amtrak are not sufficient to make the proposed Line part of the interstate rail network."

In April, Texas Central submitted two petitions to the board, including one requesting a ruling that the company's plans to assess the value of properties along a possible train route should not be considered part of the construction process, a move that might have blocked landowners from challenging the company's authority to employ eminent domain. The Board dismissed both petitions because the project was outside its jurisdiction. 

"We were glad the STB ruled as quickly as they did because that allows us to set the path forward and if they had any uncertainty it could have impacted the project's timeline," said Holly Reed, Texas Central's managing director of external affairs. The company expects construction to start in 2017 and rides to start as soon as 2021.

With the Surface Transportation Board's decision, the extent of the role of the federal government in the Texas project is unclear. The Federal Railroad Administration is still in the midst of an environmental impact study of the project. 

"STB oversight has things that are positive and negative for the project based on either direction that it would decide, so getting a timely decision was important," Reed said.

Even though Reed did not express displeasure with the Transportation Board's decision, opponents of the project are celebrating it as a victory. 

"I have good news for you," reads a Texans Against High Speed Rail newsletter sent last week. "With the federal government's ruling that it will not oversee this ill-advised project, Texas Central will now have to come back to Texas to get approval to build its high-speed rail ... From our point of view, the best place for the citizens of Texas to be heard is the State Capitol." 

Texans Against High Speed Rail was one of many entities that submitted comments to the Board opposing Texas Central's petition. However, the National Association of Railroad Passengers and the Transportation Advocacy Group in the Houston Region submitted supportive comments.

Several U.S. Representatives from Texas also submitted comments to the Board, with Democrats Eddie Bernice Johnson of Dallas and Gene Green of Houston joining Republican Blake Farenthold of Corpus Christi in support of Texas Central's petition, and Republicans Joe Barton of Ennis, Kevin Brady of The Woodlands and Bill Flores of Bryan against the firm's claims. 

The project has strong support from local officials and residents in both Houston and Dallas, but residents of the rural counties along the planned route remain staunchly opposed. State lawmakers who represent those communities tried last session to pass measures blocking the project, but they were unsuccessful. 

Many lawmakers who opposed the project last session are pointing to the Transportation Board's ruling as a reason to feel emboldened about stopping the project dead in its tracks in 2017, even as Texas Central gears up to begin construction.

"The STB clearly made the correct decision on this matter, plainly reinforcing that a project contained wholly within Texas should be under the purview of state legislators and the citizens we represent," said state Sen. Brian Birdwell, a Republican who represents counties south of Dallas, in a statement. "I consider this issue far from resolved and I reiterate my steadfast opposition to the project — both for individual landowners who will be harmed by it in the short term and for the Texas taxpayers who will likely be asked to subsidize it in the long term."

State Rep. Will Metcalf, R-Conroe, said he is looking forward to "a robust debate going forward at the state level on the future of Texas Central Railway."

"Fortunately for landowners and all who value property rights, the Surface Transportation Board made the right decision and declined oversight," Metcalf said in a statement.

State Sen. Robert Nichols, a Jacksonville Republican who chairs the Senate Transportation Committee, said when the decision was released, "there was joy and celebration in the heartland of Texas," where he said people don't want the train. The ruling appears to put the project in limbo, he said.

"I think they are going to have to use eminent domain if they're going to build it, and I think they know that the status of whether or not they do or don't have it under current Texas law is a pretty shaky area, it's not real clear," said Nichols. "But had the Surface Transportation Board ruled and taken [the project] on, then they clearly under federal law would have the authority to do it." 

Nichols said he expects Texas Central to promote legislation next session that "makes it very clear that they do have the right of eminent domain." 

In 2015, efforts to kill the project were focused primarily on stripping Texas Central of eminent domain authority, preventing the firm from using private lands for the project. Another measure, proposed by Metcalf, would have required elected officials in every city and county along the proposed route to approve it. 

Lawmakers also attempted to stop the project through a last-minute budget rider that would have prevented the Texas Department of Transportation from spending any state funds to assist in the construction of the project. A Senate budget conference committee opted to remove the provision.

Nichols said it's possible a similar effort could happen next session.

"Maybe," Nichols said, laughing. "Maybe's always possible. What I've learned in the Legislature, in my years working down there, you can do anything if you can get the vote."

Peter LeCody, the president of Texas Rail Advocates, said he expects to see efforts to pass more wide-reaching legislation when the Legislature reconvenes in January. 

"I think it's going to be very contentious going into the legislative session," LeCody said. "This is definitely probably one of the strongest rural-versus-urban fights we're going to be seeing for a long time."

Disclosure: Texas Central Railway has been a financial supporter of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.

Correction: An earlier version of this story included the incorrect political party for U.S. Rep. Blake Farenthold.

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