What’s faster than a bullet train? Answer: California’s decision to abandon its lawsuit for an estimated $4 billion. After a lengthy court battle with the Federal Railroad Administration (FRA), the California High-Speed Rail Authority (CHSRA) has abandoned its lawsuit against the federal administration to reinstate grants canceled by the Trump administration. The FRA had based its decision to cancel the grants because of delays and cost increases and a lack of compliance with terms of funding. The state authorities have already acknowledged the fact that a “not a reliable, constructive, or trustworthy partner” in carrying out high-speed rail in California does not exist in Washington and would therefore continue with it in opposition to the federal administration’s funding.
The pivot comes against a background of project history that has been defined by the collision of engineering dreams and financial realities, a report from the Center of the American Experiment observes. Initially approved by voters in 2008 with a cost of $33 billion and a promise of travel from Los Angeles to San Francisco in under three hours, the cost of the scheme has grown as high as $128 billion. The latest scheme involves a 171-mile route known as the “Early Operating Segment” between Merced and Bakersfield at a cost of $38 billion. Yet this scaled-back scheme has a shortfall of ‘eight or nine billion dollars’ and a projected evaluation by the inspector general that there would not be passenger service until 2033.
The Federal regulatory requirements have been a double-edged sword for the proposed project. Although safety is the intended purpose of the requirements, the Federal Railway Administration (FRA) requirements mean that additional levels of complexity and expense are involved. As the CHSRA itself noted, “federal requirements have, at times, hindered project delivery by adding cost and delays without adding value.” For major rail development projects like the one under discussion here, the time involved for permitting, land acquisition, and environmental factors could add years to a project. This is reflected in the typical time for a project from conception to completion at 16 years on average across the European continent. Then it would be even longer if it involved tunnel works or difficult terrain. This would seem consistent with the California situation.
Engineering-wise, a high-speed system has to be accurate in every aspect. Infrastructural investments in land preparation, bridge, tunnels, and viaduct works may go up to 40-50% in case of challenging terrain. Investments in superstructure like guideway, electrisation, signaling, and safety measures may add another 5-10%. The average cost for building one km of a European network is approximately €17.5 million; but in California, this is higher due to land costs and seismic designs.
Operational viability will depend on the procurement of rolling stock, of which California has had some hard experiences. Additionally, the FRA wrote that trainset procurement competition that was to be held in December 2024 has been reopened and an outcome has not been agreed. If there are not enough train sets, then the physical infrastructure will remain idle. Where an existing system has been set up, such as in France’s TGV or Japan’s Shinkansen, then the procurement process fits perfectly into this timeline.
As federal money is no longer on the table, California is now seeking private investment. This came after the CHSRA published its request for qualifications on December 19 for a co-development partner who would be responsible for financing, construction, operation, and maintenance in return for revenue received from ticket sales and associated properties. Some potential scenarios posited by CEO Ian Choudri include higher levels of public investment, including up to $60 billion, making it easier to attract private investment. However, attracting private investment into high-speed rail is not common if there is no public guarantee, not even in Europe where most high-speed railways are propped up by subsidies due to high operating and maintenance costs.
The current commitment of California’s cap-and-trade market is only $1 billion over 20 years; while predictable and necessary funding is essential to offset total costs not yet met, this is far short of total funding needs. Furthermore, lack of linkages to Link LA/Union Station in Los Angeles or Link SF in San Francisco for the initial operating corridor lessens ridership potential either as a complement to fare recovery or otherwise. HSR is economically viable based upon origin-destination density; without this density, ridership decreases with insufficient revenue to cover operating costs alone.
Internationally, successful high-speed rail lines, like China’s massive 38,000km network, rest on huge public investment and connectivity with large economic centers. None of these is present in California’s reduced Central Valley route. The FRA’s withdrawal of funds simply drives home a point that even technical expertise will not rescue a venture that is otherwise unsound.
