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86–279 PDF 2014

A REVIEW OF THE CHALLENGES FACING 

CALIFORNIA HIGH-SPEED RAIL 

(113–49) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

RAILROADS, PIPELINES, AND 

HAZARDOUS MATERIALS 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JANUARY 15, 2014 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

Available online at: http://www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=transportation 

(II) 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

BILL SHUSTER, Pennsylvania, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee, 

Vice Chair 

JOHN L. MICA, Florida 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

SAM GRAVES, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

LOU BARLETTA, Pennsylvania 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

DANIEL WEBSTER, Florida 

STEVE SOUTHERLAND, II, Florida 

JEFF DENHAM, California 

REID J. RIBBLE, Wisconsin 

THOMAS MASSIE, Kentucky 

STEVE DAINES, Montana 

TOM RICE, South Carolina 

MARKWAYNE MULLIN, Oklahoma 

ROGER WILLIAMS, Texas 

TREY RADEL, Florida 

MARK MEADOWS, North Carolina 

SCOTT PERRY, Pennsylvania 

RODNEY DAVIS, Illinois 

MARK SANFORD, South Carolina 

NICK J. RAHALL, II, West Virginia 

PETER A. DEFAZIO, Oregon 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

TIMOTHY J. WALZ, Minnesota 

STEVE COHEN, Tennessee 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

JOHN GARAMENDI, California 

ANDRE ́ CARSON, Indiana 

JANICE HAHN, California 

RICHARD M. NOLAN, Minnesota 

ANN KIRKPATRICK, Arizona 

DINA TITUS, Nevada 

SEAN PATRICK MALONEY, New York 

ELIZABETH H. ESTY, Connecticut 

LOIS FRANKEL, Florida 

CHERI BUSTOS, Illinois 

SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS

JEFF DENHAM, California, Chairman 

JOHN J. DUNCAN, JR., Tennessee 

JOHN L. MICA, Florida 

GARY G. MILLER, California 

SAM GRAVES, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

CANDICE S. MILLER, Michigan 

LOU BARLETTA, Pennsylvania 

LARRY BUCSHON, Indiana 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York, Vice Chair 

DANIEL WEBSTER, Florida 

THOMAS MASSIE, Kentucky 

ROGER WILLIAMS, Texas 

TREY RADEL, Florida 

SCOTT PERRY, Pennsylvania 

BILL SHUSTER, Pennsylvania (Ex Officio) 

CORRINE BROWN, Florida 

DANIEL LIPINSKI, Illinois 

JERROLD NADLER, New York 

ELIJAH E. CUMMINGS, Maryland 

MICHAEL H. MICHAUD, Maine 

GRACE F. NAPOLITANO, California 

TIMOTHY J. WALZ, Minnesota 

ALBIO SIRES, New Jersey 

JANICE HAHN, California 

ANN KIRKPATRICK, Arizona 

ELIZABETH H. ESTY, Connecticut 

PETER A. DEFAZIO, Oregon 

MICHAEL E. CAPUANO, Massachusetts 

NICK J. RAHALL, II, West Virginia 

(Ex Officio) 

(III) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... v 

TESTIMONY 

PANEL 1 

Hon. Zoe Lofgren, a Representative in Congress from the State of California .. 4 

Hon. Kevin McCarthy, a Representative in Congress from the State of California ..................................................................................................................... 4 

Hon. Loretta Sanchez, a Representative in Congress from the State of California ..................................................................................................................... 4 

Hon. Jim Costa, a Representative in Congress from the State of California ..... 4 

Hon. Doug LaMalfa, a Representative in Congress from the State of California ..................................................................................................................... 4 

Hon. David G. Valadao, a Representative in Congress from the State of 

California .............................................................................................................. 4 

PANEL 2 

Karen Hedlund, Deputy Administrator, Federal Railroad Administration ........ 24 

Dan Richard, Chairman of the Board, California High-Speed Rail Authority ... 24 

Alissa M. Dolan, Legislative Attorney, American Law Division, Congressional 

Research Service .................................................................................................. 24 

PREPARED STATEMENTS AND ANSWERS TO QUESTIONS FOR THE 

RECORD SUBMITTED BY WITNESSES 

Hon. Zoe Lofgren, prepared statement .................................................................. 59 

Hon. Kevin McCarthy, prepared statement .......................................................... 63 

Hon. Loretta Sanchez, prepared statement ........................................................... 69 

Hon. Jim Costa, prepared statement ..................................................................... 74 

Hon. Doug LaMalfa 1

Hon. David G. Valadao, prepared statement ........................................................ 76 

Karen Hedlund: 

Prepared statement .......................................................................................... 78 

Answers to questions for the record from the following Representatives: 

Hon. Jeff Denham, of California .............................................................. 86 

Hon. David G. Valadao, of California ...................................................... 90 

Hon. Corrine Brown, of Florida ................................................................ 94 

Dan Richard: 

Prepared statement .......................................................................................... 97 

Answers to questions for the record from the following Representatives: 

Hon. Jeff Denham, of California .............................................................. 109 

Hon. Roger Williams, of Texas ................................................................. 110 

Hon. Corrine Brown, of Florida ................................................................ 133 

Alissa M. Dolan: 

Prepared statement .......................................................................................... 135 

Answers to questions for the record from Hon. Corrine Brown, a Representative in Congress from the State of Florida ..................................... 150 

1 Hon. Doug LaMalfa did not submit a prepared statement for the record. 

Page

IV 

SUBMISSION FOR THE RECORD 

Karen Hedlund, Deputy Administrator, Federal Railroad Administration, response to request from Hon. Corrine Brown, a Representative in Congress 

from the State of Florida, for the letter from the Office of the Governor 

of the State of California, confirming that pending changes in the structure 

of California State government will have no effect on the existing legal 

obligations of the California High-Speed Rail Authority or the State to 

the Federal Railroad Administration, November 29, 2012 ............................... 48 

ADDITIONS TO THE RECORD 

Shelli Andranigian, on behalf of the Andranigian family, written testimony 

for the record ........................................................................................................ 154 

Alain C. Enthoven, William C. Grindley, William H. Warren, Michael G. 

Brownrigg & Alan H. Bushell, Reports and Litigation on Aspects of the 

California High-Speed Rail’s Finances 2

2William C. Grindley submitted for the record the reports by the team listed 

above which document their review and analysis of the financial risks 

of the planned California high-speed rail project. The reports are available 

online at http://www.sites.google.com/site/hsrcaliffr. 

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(1) 

A REVIEW OF THE CHALLENGES FACING 

CALIFORNIA HIGH-SPEED RAIL 

WEDNESDAY, JANUARY 15, 2014 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, Washington, DC. 

The subcommittee met, pursuant to notice, at 10:08 a.m. in Room 

2167, Rayburn House Office Building, Hon. Jeff Denham (Chairman of the subcommittee) presiding. 

Mr. DENHAM. Ladies and gentlemen, the subcommittee will come 

to order. First, let me welcome our distinguished witnesses and 

thank them for testifying today. This is the second hearing this 

session of Congress that I have held on a hearing on California 

high-speed rail since I became chairman of the subcommittee. In 2008, the voters of California approved a $9.95 billion ballot 

measure, Prop 1A. I was serving in the State senate at the time, 

and voted in favor of this proposition because of the guarantee to 

taxpayers it would be fiscally responsible, and not need an ongoing 

subsidy. What was sold to voters was a $33 billion project that 

would receive equal parts of financing from the State, Federal Government, and private investors. Since that vote, as costs have skyrocketed and the outcomes of the project have remained in flux, I 

have consistently called for the California High-Speed Rail Authority to develop a viable plan that accepts economic and budgetary 

realities. 

Sadly, after 5 years, we are nowhere closer to that viable plan, 

nor have any construction jobs been created, even though the 

premise for the Recovery Act was to create jobs immediately. In 

fact, in November the project received two new setbacks in the 

California State court system. 

First, the courts found that the California high-speed rail funding plan did not comply with Prop 1A. Those requirements were 

identified as $26 billion needed to build the entire 300 miles of rail 

between Merced and San Fernando, and that all environmental 

clearances be completed for the entire initial operating segment. 

Second, the courts found that California High-Speed Rail Author- ity did not provide sufficient justification for the issuance of $8.6 

billion in Prop 1A bond funds. Those bond funds were to be the 

source of the State match for the $2.55 billion the Federal Government has provided to this project through the Recovery Act. 

Therefore, as of now, California does not have the funding in 

hand to begin supplying the State match for the Recovery Act 

2 

grant, and the Federal Railroad Administration’s grant agreement 

with California requires the first State match, that payment, due 

on April 1. 

In this hearing I want to hear from the Authority about how they are going to resolve these deficiencies, where the total $26 billion 

will come from, and how they complete the environmental reviews 

for the entire 300 initial operating segments. 

I will note that the 2014 omnibus appropriations bill released 

yesterday includes no funding for high-speed rail, the fourth 

straight year no monies have been provided. It is clear that the 

Federal Government will not be the source of more funding. 

I also want to understand how the Authority believes that Governor Brown’s proposal to use revenue from California’s cap and 

trade program to support the project is constitutional, since independent observers have stated that the high-speed rail program is 

not an eligible use for those revenues. 

I do want to thank Mr. Richard, who is here this morning, for 

being open and transparent with this subcommittee on the 

Authority’s activities. While we may agree or disagree about the viability of the project, he has displayed professionalism in all of our 

discussions. However, I have many concerns about how the FRA is 

reacting to these recent setbacks, and what it is going to do to protect billions of taxpayer dollars. 

After the rulings, I sent a letter to the FRA on December 12th 

with a number of commonsense, simple questions. The Administration sent back this letter that basically states, ‘‘Everything is fine. 

Nothing has changed.’’ They didn’t answer a question, and staff has 

basically refused to provide the data that we feel is necessary to 

conduct proper oversight. 

I note, however, that I originally wanted to have this hearing in 

December. Ms. Brown and I had discussed that. There were some 

logistics challenges with Mr. Szabo at the time. We also had a rail 

catastrophe that I know took some extra attention. So I agreed to 

delay this hearing for 3 weeks, give plenty of time for schedules, 

give plenty of time to have the promise of this information brought 

to this committee. But, as you can see here today, Mr. Szabo was 

unable to make it. While I understand Deputy Administrator 

Hedlund is quite knowledgeable, I am disappointed but not overly 

surprised that the Administrator could not attend. 

So, here we are now. And I will ask the same questions I asked 

a month ago. Hopefully the Administration has had time to prepare 

and actually give us straightforward answers to straightforward 

questions. Further, despite the loss of matching funds, FRA has 

continued to reimburse California for spending on the project. We 

need to understand what FRA has reimbursed California to date, 

including since the adverse rulings, and how much matching funds 

California is required to contribute to the project. 

Under FRA’s grant agreement, the Administration has the ability today, right now, to suspend reimbursements until the California High-Speed Rail Authority presents a viable plan to identify 

a new source of the required State match. Given so much uncertainty around this project, why wouldn’t FRA take the prudent step 

to hold off spending more taxpayer dollars until they are satisfied 

that California has remedied these legal setbacks? 

3 

If the Administration continues to march down this same path, 

operating as though it is business as usual, then I am prepared to 

take my own action through legislation to force FRA to act in a 

more prudent fashion. Frankly, after 5 years filled with cost overruns, lawsuits, lost promises of immediate job creation in the valley, and reduced expectations, unless they can come up with a viable plan that meets the requirements of Prop 1A, I believe it is 

time to end this project. 

I look forward to discussing these important issues with the witnesses. 

I would now like to recognize Ranking Member Corrine Brown 

from Florida for 5 minutes to make any opening statement she may 

have. Ms. Brown? 

Ms. BROWN. Thank you. I know that California’s high-speed rail 

program is important to the chairman, and this subcommittee certainly has a responsibility to provide oversight of federally funded 

rail projects. But this is the third hearing that we have held since 

December 2012 on California high-speed rail, yet we have not had 

one hearing this Congress on rail safety. 

At the same time, we failed to reauthorize the National Rail 

Safety Program, which expired at the end of fiscal year 2013. Several Members of Congress have written letters to the committee requesting a hearing on rail safety, particularly given the recent 

tragedies. Protecting our community and citizens from harm should 

always be the top priority for Congress. To that end, I am handdelivering this letter to you today, Mr. Chairman, from all of the 

Democratic members of this subcommittee, requesting a hearing on 

rail safety as soon as possible. We urge you to promptly consider 

this request. 

As for the hearing today, like many States, including my home 

State of Florida, California is struggling to meet the transportation 

needs of its citizens. According to the U.S. Census Bureau projection, the population of California will be close to 60 million by the 

year 2050. This explosion in population will result in the crippling 

of California’s already aging public transportation infrastructure. 

California’s 170,000 miles of roadway is the busiest in the Nation. As a result, the statewide costs at this time in fuel waste and 

transportation congestion is estimated at $18.7 billion annually. 

Travelers on California’s interstate system is increasing at a rate 

five times faster than capacity. This is a formula for disaster, and 

everyone that has driven in California’s major cities knows this all 

too well. 

Looking at air travel, the busiest short-haul air market in the 

country is between Los Angeles and San Francisco, with 100 daily 

flights and more than 5 million passengers, annually. This is larger 

than the New York and Washington, DC, markets. In fact, the 

L.A.-San Francisco air route is one of the most delay prone in the 

Nation, with approximately one out of every four flights delayed by 

about an hour. 

What is the solution to the congestion? According to the California High-Speed Rail Authority, to achieve the same capacity as 

the San Francisco-Los Angeles high-speed rail system, California 

will need to construct 2,300 new lane miles of highway, 115 additional gates at California airports, and four new airport runways. 

4 

The estimated costs for these improvements is $1.14 billion over 

the next 20 years, which is equivalent to $170 billion with inflation. This is four times what it would cost to develop a planned 

high-speed rail system. 

We are going to hear some complaints and reasons why highspeed rail should not be developed in California. Unfortunately, we 

are not going to hear about any solutions for addressing the congestion disaster that is facing California in the very near future. 

This high-speed rail project will help the environment, reduce congestion, and create jobs. 

Now, I hope that during today’s hearing the Members who opposed the development of high-speed rail in California will help us 

with details as to how they intend to finance this $170 billion in 

improvement for the State. 

With that, I want to welcome today’s panelists, and I am looking 

forward to hearing their testimony. I yield back the balance of my 

time. 

Mr. DENHAM. Thank you. And I would just respectfully remind 

Ms. Brown that this committee has already agreed to hold a rail 

safety hearing. We would actually be holding that hearing right 

now, today, but the ranking member had asked me to hold off on 

the high-speed rail hearing that we were supposed to have 3 weeks 

ago. So, we look forward to scheduling that together, and I hope 

staff recognizes that, as well. 

I would like to again thank our witnesses here today. We have 

two panels today. Our first panel is with Majority Whip Kevin 

McCarthy, Representatives Zoe Lofgren, Loretta Sanchez, Jim 

Costa, Doug LaMalfa, and David Valadao. After receiving testimony from our first panel, we will proceed to our second panel of 

testimony. 

I ask that unanimous consent that our witnesses’ full statements 

be included in the record. 

[No response.] 

Mr. DENHAM. Without objection, so ordered. Since your written 

testimony has been made part of the record today, the subcommittee would request that you limit your oral testimony to 5 

minutes. 

Ms. Lofgren, welcome to the committee. Thank you for joining us. 

TESTIMONY OF HON. ZOE LOFGREN, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF CALIFORNIA; HON. KEVIN 

MCCARTHY, A REPRESENTATIVE IN CONGRESS FROM THE 

STATE OF CALIFORNIA; HON. LORETTA SANCHEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA; HON. JIM COSTA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA; HON. DOUG 

LAMALFA, A REPRESENTATIVE IN CONGRESS FROM THE 

STATE OF CALIFORNIA; AND HON. DAVID G. VALADAO, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. LOFGREN. Thank you, Mr. Chairman and Ranking Member 

Brown, for allowing my colleagues to appear before you today. As 

chair of the California Democratic Congressional Delegation, which 

is the largest, most diverse delegation in the Congress, comprised 

5 

of 38 Members, I am here to reaffirm our strong support for the 

California high-speed rail project. And that is because our economy 

improves, and our population—as our population grows, our transportation infrastructure is falling further behind. 

As many of us know, the transportation infrastructure is already 

in very serious need of upgrade in California. And California’s skies 

are blue, our air corridors between San Francisco and L.A., as mentioned by the ranking member, is the busiest in the country. Our 

congestion is high. And we know that the lost time and fuel wasted 

in California traffic costs Californians an estimated $18.7 billion 

each year. 

As we watch our population grow—and the estimate is, as Ms. 

Brown has said, we will have 51 million people by the year 2050— 

we know that we need to have the capacity to move people north, 

south. And without the high-speed rail project, it has been estimated that we would need to build over 4,000 new highway lanes, 

115 airport gates, and 4 new runways, just to keep up with the demand. And we know that is just not possible. 

So, the California high-speed rail project is the largest and most 

ambitious infrastructure project of our time. When completed, it is 

going to be able to provide the transportation solutions that our 

State needs. 

Now, Californians, including folks in my home district in San 

Jose, are going to see immediate benefits from this project. It invests $1.5 billion in the Caltrain modernization program, which 

will replace Caltrans diesel trains with electric trains on the Peninsula Corridor. And, according to a recent economic impact report by 

the Bay Area Council, a premium business group in the bay area, 

the project will create over 9,500 jobs, with over 90 percent being 

in the bay area. The Bay Area Council also says that the highspeed rail will increase our State’s bottom line. The State and local 

revenues will see an increase of $71 million during the construction 

phase. And we also know, from this business group, that neighborhoods near Caltrain will see an increase in property value by as 

much as $1 billion. 

As good stewards of the environment, Californians, by and large, 

also agree that we must make critical infrastructure investments 

that connect our communities and reduce carbon emissions, while 

keeping our economy strong. Electrifying Caltrain will make its operation quieter, reduce air pollution by 90 percent, and lower energy consumption by 64 percent, because its electric trains are less 

noisy and more cost-effective to run. 

Now, despite the overwhelming arguments for the need and benefits of high-speed rail, the project, as we know, has detractors. 

And its first days, the project had a rocky start, before the current 

management team was put in place. And that led some to say the 

project was too large, or others disputed the high-speed rail 

project’s business plans, and the like. And that is why I joined 

Chairman Denham in asking the GAO, the independent, nonpartisan auditors, to conduct a thorough review of the high-speed 

rail project and its cost estimates, the project’s funding plan, and 

passenger ridership and revenue forecasts. 

And, last spring, the GAO came back with its report and gave 

the California High-Speed Rail Authority high marks for its cost 

6 

estimates, ridership estimates, and funding plan. The GAO also 

made some noteworthy observations, saying that the greatest challenge before California’s high-speed rail project is not whether it 

can be done, but whether it will be funded, particularly on the Federal level, in order to attract much-needed private investment. 

That certainly continues to haunt the project, because investors 

question whether the Federal support will be there in the future. 

It is also one of the reasons why the California High-Speed Rail 

Authority’s very realistic and responsible business plan is building 

the project in phases. However, based on experiences in other countries, and positive ridership estimates by the GAO, it seems likely 

that the private sector will invest in the project if it is allowed to 

move forward. 

It will take both public and private support at all levels to make 

high-speed rail in California a reality. The people of California, as 

been noted, have already voted in support of it, and taxpayers’ dollars have already been invested in it, including $3.3 billion in Federal grants. And just this week, Governor Jerry Brown announced 

his State budget, pledging $250 million in cap and trade revenues 

for high-speed rail, while laying out continued funding for the 

project in the following years. 

Now, given the environmental benefits, both short term and long 

term, using cap and trade funds for this project is very appropriate. 

And our delegation would like to commend Governor Brown for his 

leadership on high-speed rail. 

We know high-speed rail can work in America if it is given a 

chance to succeed. As the GAO noted in its report, several private 

consortiums were preparing bids for a high-speed rail project in 

Florida before that State’s Governor pulled the plug. And, as recently as January 9th, the Washington Post reported that Japan is 

seriously interested in developing a high-speed rail line between 

Washington and Baltimore, Maryland, even offering to foot half of 

the projected $8 billion it would cost to build. 

You know, our global competitors aren’t holding back on their 

high-speed rail infrastructure. And that is because, around the 

world, high-speed rail has been shown to be an effective, popular, 

and profitable mode of transportation. When it comes to transportation, I believe the United States should be second to none. It was 

solid investments in infrastructure that helped make the 20th century the American century. And California’s high-speed rail project 

can help continue that kind of success for our country in the century to come. I thank the chairman and the ranking member for 

the opportunity to testify today. And I yield back my time. 

Mr. DENHAM. Mr. McCarthy, welcome to our committee. 

Mr. MCCARTHY. Thank you. 

Mr. DENHAM. You may proceed. 

Mr. MCCARTHY. Well, thank you, Mr. Chairman, for holding another important hearing on California high-speed rail, and for allowing me to testify today. 

I have expressed my opposition to the California High-Speed Rail 

Authority’s deeply flawed business plan, which is not what California voters approved in Proposition 1A back in 2008, and I do so 

again today. I continue to have serious concerns with the 

7 

Authority’s finances, and how they plan to come up with the tens 

of billions of additional funds needed to complete the project. 

To date, the Authority has never provided a satisfactory answer, 

and continues to move forward with this project. My colleagues and 

I even commissioned the Government Accountability Office to audit 

the Authority’s plan. And GAO also expressed concerns about the 

Authority’s funding sources, public and private. Not one additional 

cent has been identified for this project. In fact, the Authority recently lost its largest source of funds when a Sacramento County 

Superior Court judge prohibited the Authority from spending State 

funds on this project, because they are violating the requirements 

set by Prop 1A. That leaves the Authority with just little over $3 billion in Federal tax dollars to waste while they come up with new schemes to 

get State funds like cap and trade, not to mention one of the original requirements for spending these Federal funds was that the 

State matches every Federal dollar it spends, a requirement the 

State now looks unable to ever meet. 

The Authority’s business plan and funding sources for high-speed 

rail project were questionable from day one. The real concern here 

is the prudent use of billions of taxpayers’ dollars, which the Authority has proven time and again that they are unable to be good 

stewards of. 

In addition, I know many on our side of the aisle were disappointed by the Surface Transportation Board’s decision last year 

to approve the first segment of this project. I disagree with this decision, and believe the STB should have reviewed the project in its 

entirety, rather than an unprecedented segment-by-segment piecemeal fashion. At least the STB refused to approve the second segment of this project until environmental documentation is complete. This is just another example of how the California HighSpeed Rail Authority continues to bend the rules and seek exemptions to ram through high-speed rail because they believe they 

know what is best for Californians. 

Mr. Chairman, the Authority has yet to break ground for the 

high-speed rail project, but they have already dug themselves in a 

hole, and are wasting the public’s money. Since approving Prop 1A, 

California voters have turned on this project, because they now see 

it for the boondoggle it is. The Authority has not dealt with the 

Central Valley communities in a meaningful manner, has failed to 

properly plan this project, and has failed to secure any additional 

funding. If the Authority cannot prove to us and this committee 

that California high-speed rail is viable, what makes them think 

they can build it, much less operate and maintain it? 

I call again for an end to the Authority’s current plan for California high-speed rail, and that is not one more Federal dollar is 

spent on this boondoggle. Thank you for your time today. I yield 

back. 

Mr. DENHAM. Ms. Sanchez, you may proceed. 

Ms. SANCHEZ. Thank you, Chairman Denham, thank you Ranking Member Brown, and to the Members who are here today. I appreciate this opportunity because this, I believe, is instrumental to 

the economic recovery for California. This is bold, it is big, and, in 

other words, this is Californian. 

8 

When the Spanish settled California, they built 21 missions, each 

a day’s ride apart by horseback, to connect our State. They did that 

because they knew commerce was important for the future of California. And we are the economic engine of the United States. When 

we built the aqueduct, it too cost money. But it moves water up 

and down California. 

When Governor Pat Brown built the UC system, it gave accessibility of education, higher education, to Californians. 

These are bold, they are big. And this project is just as important 

to California. It is probably our best project to get us out of this 

real recession we have felt for so long. 

There are a couple of realities in California. Our unemployment 

rate is still stuck at over 8 percent. And we have some of the worst 

traffic congestion in the Nation. High-speed rail moves both of 

those points. In the first 5 years of construction alone, this will 

support 100,000 new construction jobs, in particular in the areas 

where we need our people to work. And it is estimated that there 

will be over 1 million indirect and direct jobs related to that in my 

area, in the Los Angeles metropolitan area. Or, as I say, where we 

dream and build big in Anaheim, California. 

The project will move forward because there are funds. Let’s talk 

a little bit of Proposition 1A and just what happened. The court has 

not issued an injunction against this project, nor have the recent 

rulings prohibited the State from selling bonds. In any major 

project—and remember the background that I come to this Congress with, transportation and infrastructure financing. And, believe me, you can ask people in California. As a financier, there 

were many times I stopped big projects and told them they had to 

wait their time until the financing was correct. So I am not afraid 

to do that. But this is the time for this project. I believe that the 

Authority has worked very hard to put together a finance plan that 

will work for Californians. 

I want to also say that we have to think about how we move 

right now from southern California to northern California. You either have to drive—and when I was young—and I admit I used to 

speed a little bit more than often—it would take me about 51⁄2

hours to get up to San Francisco from Anaheim. That was a—well, 

that was about midnight, when there was nothing on the highway, 

on that ‘‘5,’’ not dillydallying along our beautiful coast. I just went 

up to Ventura, what used to take maybe 2 or 21⁄2 hours to go, and 

today it takes about 3 or 4 hours to get there. So to San Francisco, 

I imagine it is much more than the 6 hours I typically think. 

As a private pilot in my former life, I know what it felt like to 

be at Orange County John Wayne Airport, and have all the major 

commercial airlines get in front of me and wait and wait with the 

propeller turning, spending fuel and time as I rented that plane. 

So, this whole idea that somehow our air is going to continue to 

get us out of this congestion problem is just not true, let alone— 

excuse me, for those who are in San Francisco—the weather you 

have there means that many times those of us who are trying to 

fly into your beautiful city just don’t get there. 

This is an important project. It is important for jobs. It is important for our economy. And I urge you we all need to work together 

to make this a reality. Thank you, Mr. Chairman, for your time. 

9 

Mr. DENHAM. Thank you, Ms. Sanchez. 

Mr. Costa, you may proceed. Good morning. 

Mr. COSTA. Thank you. Good morning, Mr. Chairman and Ranking Member Brown, and the members of the subcommittee. Thank 

you for taking the time and allowing me to testify before you today. 

As we all know, building major infrastructure projects are never, 

ever easy. And the oversight of these projects are necessary and appropriate. And, therefore, this committee’s work is appropriate. But 

that is also why I joined Chairman Denham, along with many of 

our colleagues, Republicans and Democrats alike, in asking the 

Government Accountability Office, the Government’s independent 

watchdog, to audit this project. 

After more than a year of review, the GAO reported that the Authority followed best practices in each of the areas they studied. 

Ridership, revenue, cost estimates, and the analysis of the economic impact of the people, and this project have all been examined by the GAO. And they are—their information is there for all 

of us to read. 

In fact, the GAO’s report shows that the California High-Speed 

Rail Authority, over the last 2 years, has taken stock on a number 

of the comments that were made, and some of the criticisms that, 

Mr. Chairman, you and others and myself have made. They have 

listened and they have responded. And that is why they have come 

out with a new business plan that has created this blended approach. 

Therefore, I think things are beginning to move on the right 

track. But there are still challenges that remain, clearly. But this 

is not unique to this project or any other major project. We know 

that building infrastructure in this country is challenging. It is so 

difficult to get anything done, whether we are talking about water, 

whether we are talking transportation or education. 

But yet today, in California, we are living off the success that our 

parents and that our grandparents made. In the 1950s and the 

1960s they were multitaskers. They not only invested in what is 

one of the world’s great education systems, but they invested in one 

of the world’s greatest water systems, and they invested in the 

transportation system, because they thought we could do those critical things that were necessary. When President John Kennedy 

came to Los Banos in 1962, 51 years ago, he said, ‘‘We are investing in these water projects because we believe in the future of 

America.’’ And it doesn’t matter what part of the country we are 

talking about, we ought to be investing for all Americans. 

When California sought to build the State water project, guess 

what? It faced lawsuits. Guess what? It faced funding challenges. 

Guess what? It had opposition. Does that mean that the folks in 

those days, in the 1950s, said, ‘‘Well, gee, we got lawsuits, we got 

opposition, we got funding challenges, maybe we shouldn’t pursue 

this great water project’’? 

Our forefathers knew that maybe the water wasn’t quite necessary then, but they knew future generations of Californians 

would need water in the next century. Today we find ourselves 

water short. So what did they do? They buckled down, they worked 

together, and they built the largest, most complex water system 

10 

that the world has ever seen. We ought to be doing the same thing, 

working together. 

I am hopeful today that we can focus on those legitimate challenges facing California high-speed rail, and that we can work together to deal with the challenges in this project and make it work. 

I also hope we can stick to the facts, you know. I mean the facts 

are the facts. We can all have our version of the politics; we get 

that. But the facts are that California has 38 million people today 

living there. And by the year 2030 we will have over 50 million 

people. And we are behind on the investment in our transportation 

infrastructure, we are behind on the investment in our water infrastructure and our education system. 

So, to accommodate the future growth of California, we should be 

investing in all of the above. High-speed rail is a part of that response. In 2008, Californian voters approved of this construction of 

this system, a system that would address our intermodal transportation system, including our airports and our highways. From the 

time the first shovel hits the ground later this year, the project will 

be a true economic game-changer. We have too many unemployed 

workers, not only in the San Joaquin Valley, but throughout California. Many of them are being trained for the thousands of jobs 

this project will create. 

During this subcommittee’s last field hearing in California, in 

Madera, we saw many hard-hats in that room, people in the audience looking for good-paying jobs. We ought to be working together 

for these Americans sooner, rather than later. 

Now, the impacts to agriculture have been well stated, and I am 

very, very, very focused on that. The major investment in our 

State’s transportation network cannot and will not come, in my 

view, at the expense of San Joaquin Valley’s agricultural sector. 

Yes, there will be impacts. But, like any transportation system, 

there are impacts. We have just expanded Highway 99 between 

Congressman Denham’s district and mine, from Merced to 

Chowchilla. Guess what? It has taken 1,200 acres of land. It has 

impacted prime agriculture. But we accommodate it, and we paid 

for that, and we mitigated for that, just as we must for high-speed 

rail. 

As a third-generation farmer who continues to farm today, I fight 

every day on behalf of farmers and growers to preserve their businesses and our valley’s way of life. I reject the idea that investing 

in our State’s transportation network means that we cannot invest 

in our State’s water infrastructure. We can do it today, just like 

they did it in the 1950s and the 1960s. 

California can afford to invest in our water and our transportation because the success of our State in the next 30 years depends upon both. That is what our parents and that is what our 

grandparents did. 

Mr. Chairman, and for others who are naysayers on this project, 

I wonder, I just wonder out loud what you might have said to that 

great American President, that great Republican American President, Abraham Lincoln, in the middle of the Civil War in 1862, 

when he decided boldly to build a rail system across the Nation. 

‘‘Well, gee, Abe, maybe we ought to wait until the Civil War is 

over. Maybe we can’t figure out how to fund this.’’ You know, 

11 

maybe that is what we ought to do. But President Lincoln was bold 

and he was visionary. And he understood that the Nation needed 

to not only—to end this conflict, the Civil War, but he also needed 

to invest in America. 

The California high-speed rail project does face challenges, but it 

is no reason to kill the project. For those who oppose this project, 

give us your plan. Tell me, tell everybody else how you are going 

to build more freeways in California, how you are going to build 

more airports in California, and how you are going to mitigate for 

the impacts of those communities with those airports and those additional freeways. And how are you going to provide the subsidies 

to pay for the expansion of those airports and the expansion of 

those freeways? Because subsidies are directly related to that infrastructure. 

With thousands of jobs for California and the valley on the line, 

let’s use today’s hearing as an opportunity to exchange ideas on 

how we can best invest in California’s infrastructure as an example 

on how we need to invest in America’s infrastructure, because that 

is what this subcommittee ought to be about, and that is what we 

ought to be about in Congress, working together to invest in America’s future. I thank you for your time. 

Mr. DENHAM. Thank you, Mr. Costa. 

Mr. LaMalfa? 

Mr. LAMALFA. Thank you, Mr. Chairman, committee members, 

for the opportunity to weigh in on this issue, one we have worked 

on a lot in California. 

You know, you would have to pose the question, what is the utility of this project? It is being compared to a lot of other important 

infrastructure projects in the history of California, or in the history 

of the Nation. I think nobody would dispute the interstate system 

or California water project, the Federal water project. Other comparable issues have been very useful to many Californians and 

many Americans. This here is a much more select group. 

Indeed, in order to afford to ride high-speed rail, it would have 

to be subsidized per ticket in the true cost of operating it, or someone is going to have to pay probably $300 per ticket to ride it from 

L.A. to San Francisco, or vice versa, in order to sustain itself. It 

is not going to meet the mark of matching airline ticket prices. 

There is no possible way. 

We have heard some pretty grand claims on what it would provide for California. The Authority at one time was trying to claim 

a million jobs for Californians. We had a hearing in the State legislature on it, finally pinned them down, said they meant a million 

job years, which might translate to approximately 20,000 jobs during the time it is to be built. 

We heard claims on what it would cost. The voters of California 

in 2008 were told that this would be a $33 billion project, up to $45 

billion if you add a spur to Sacramento and one to San Diego. 

Those two have been long since abandoned in this project. And the 

price ballooned at that hearing we had in November of 2011 in the 

State senate to just under $100 billion. So what did the audit folks 

think about that, what the voters were sold when they were originally told $33 billion? 

12 

So, the Governor revised the plan down to $68 billion, utilizing 

transport in the bay area and Los Angeles. Now, I can understand 

why those folks would want to have their areas enhanced with electrifying Caltrain, I am sure that is a good thing. It is not the domain of high-speed rail to be doing so. This revised plan is not even 

legal under Proposition 1A, because it doesn’t deliver a true highspeed rail all the way from San Francisco to all the way to downtown Los Angeles. So, in time, this will be exposed. 

So, we have to ask ourselves here today, as a Federal body, are 

we being good stewards of Federal tax dollars with the $3-plus billion of stimulus money that is still captured for this plan, as well 

as telling State voters that your investment of $9-plus billion in 

State bonds, which have to be paid back two-to-one ratio—is this 

a good investment for you, for a plan that no private investors 

want to come in on? 

We can see that a forward-thinking project like the Maglev, perhaps, running from DC to Baltimore, has already attracted Japanese investors as a possibility. High-speed rail is using 18th-century technology. It is steel wheels running on a rail. It might go 

faster if it is not stopping in every burg up and down the valley 

in order to gain the votes of those legislators to put high-speed rail 

on the ballots. Indeed, how many true high-speed rail end-to-end 

trains are going to be run, or will be able to run, at 220 miles per 

hour on this project? 

It is not going to meet the goals. It is not going to meet the cost 

goals. We heard some creative ridership numbers posed in the past 

by the Authority. There might be 32 million riders, and it is going 

to replace the airplane riders from S.F., to L.A., vice versa. There 

is only 8 million people that use airlines between those two towns. 

And so we are going to replace that with 32 million riders? There 

is only 31 million riders that use Amtrak nationwide, in the 48 

States, per year. High-speed rail in California is going to surpass 

that? 

We have got some pretty phony numbers operating on this thing. 

And we are still seeing that taxpayers are going to be footing the 

bill federally and at the State level, paying back those bonds. 

So, we can only identify $13 billion of real funding so far to go 

into this project. By Governor Brown’s estimate, it would be $68 

billion. Where is the other $55 billion going to come from to build 

this thing? And what are the benefits going to be to global warming, or climate change, or whatever that is? 

Now, the Governor’s proposal was to divert $250 million from 

California’s new cap and trade into this project. That is not fulfilling the goal of whatever cap and trade is, because high-speed 

rail won’t be operable for at least 30 years to replace and start on 

the positive side on reducing CO2. In the meantime, they are going 

to be constructing it, using heavy equipment to build the project. 

We saw the folks that got stuck in Antarctica the other day, trying to explore the ice sheet down there. They felt bad because they 

had to get rescued because there is too much ice, and so they had 

to—decided they had to offset their carbon footprint of getting rescued by the helicopters, and so they are going to go plant trees 

somewhere in Australia or New Zealand to offset that. 

13 

Or I saw an article last night. In California, because of all the 

CO2 emissions that are going to be happening during the 30 years 

of construction, they proposed they are also going to plant thousands of trees to offset the CO2 output from its construction. So we 

are not going to realize benefits any time soon to the CO2 equation 

of this project. Indeed, when I saw that—you know, there is a term 

in Hollywood, ‘‘jump the shark.’’ I think this project really jumped 

the shark when we started saying we are going to plant trees to 

offset carbon when it is supposed to be all about offsetting carbon 

some time in the future. 

We are at a point that we will need to assess what our priorities 

are, as a Nation, for our budget, for our spending. At a time—we 

had a budget deal the other day that is cutting dollars to retired 

veterans. We are going to go tell the people of this country or people of California that this is a project that is worthy of their goals? 

All the other things we are having to deal with? Food stamp program, whatever. We are looking at this still at this point, when we are $55 billion 

short of the funding to do what is now an illegal plan, we need to 

really take a strong look at putting the brakes on it here in Washington, DC. And, as I hope, Californians will see the opportunity 

to re-vote on this project by a ballot initiative that is underway 

right now. 

So, Mr. Chairman, I do appreciate the time, and I hope this committee will keep delving into this issue and the falsehoods that 

have been used to sell this to what was at the time a very optimistic votership back in 2008. 

So I thank you for your time, and I yield back. 

Mr. DENHAM. Thank you, Mr. LaMalfa. 

Adam, can you close the door? 

Mr. Valadao, you may proceed. 

Mr. VALADAO. Chairman Denham, Ranking Member Brown, and 

members of this subcommittee, thank you for the opportunity to 

testify before you today. As a lifelong resident and taxpayer in 

California’s Central Valley, I have watched the proposed California 

high-speed rail project transform over the years. I have watched as 

the estimated costs of this project have ballooned tens of billions 

of dollars more than was promised to the voters in 2008. I have 

watched as the California High-Speed Rail Authority has invented 

a plan that takes thousands of acres of farmland out of production 

and destroys hundreds of homes and businesses throughout our 

communities. 

Every single day I hear from constituents of California’s 21st 

Congressional District who are opposed to, and worried about, California’s misguided high-speed rail project. They say the project 

spends too much money, delivers too little on its promises, and 

threatens their very livelihoods. Constituents located in the path of 

the project complain about the lack of information provided to the 

landowners, and the sheer fear they are sacrificing their dreams 

and hard work for a project that is not feasible. 

The current path, which is constantly changing, calls for the 

tracks to cut across the entire length of the San Joaquin Valley 

through some of our Nation’s most productive farmland. Fields will 

be cut in half, fertile ground will be taken out of farming, and proVerDate Aug 31 2005 13:16 Aug 05, 2014 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\RR\1-15-1~1\86279.TXT JEAN
14 

duction will suffer. For many, this farmland is their home, and the 

proposed high-speed rail project will impact countless families. All 

of this with very little benefit to my constituents in the Central 

Valley. 

While estimates of the project’s price tag continue to escalate, I 

find it increasingly difficult to reconcile the tremendous cost of the 

project with the limited benefits it provides to my constituents and 

to all taxpayers in California, as a whole. When California voters 

approved the project in 2008, they were told the project would cost 

$33 billion, and burden would be shared equally between State and 

Federal Governments and private investors. Since then, cost estimates skyrocketed to over $90 billion for a fully operational highspeed rail line, and nearly $70 billion for a new blended line that 

is only high speed some of the time. 

California’s taxpayers simply cannot support a multibillion-dollar 

boondoggle. To date, the State has been unable to uphold its promise and provide matching funds for the Federal dollars. As this 

committee continues to weigh the pros and cons of California’s 

high-speed rail project, it is important to consider the trade-offs for 

this project. Every one of our constituents makes trade-offs when 

they manage their family budget, and our Government should operate no differently. 

When the State of California chooses to spend the taxpayers’ 

money on high-speed trains, they are forced to set aside other priorities. This year, California faces a drought that leaves the availability of clean, high-quality water in jeopardy for families and 

farmers. At the same time, California’s aging water infrastructure 

is struggling to keep up with demand from a growing population. 

When the State of California chooses to spend taxpayer money on 

high-speed rail, they are choosing to neglect addressing our valley’s 

water crisis, and they are choosing to jeopardize water availability 

for over 30 million Californians. 

There was a time when California led the world in technological 

advancement and innovation. Unfortunately, the California highspeed train project is anything but innovative. California’s highspeed rail proposal relies on old technology that is on its way to 

being phased out. Meanwhile, across the globe, America’s competitors are already well on their way to developing the next generation of high-speed rail technology. 

Today, innovation is increasingly being performed overseas by 

foreign workers and inventors. At the same time, the United States 

continues to lag behind in many measures of worldwide educational 

achievement. We will continue to lose our advantage to foreign nations if we do not educate our young people. When the State of 

California chooses to spend taxpayer money on high-speed rail, 

they are choosing not to invest in education, our children, and our 

future. 

Last October, the State of California was ordered by a Federal 

judge to free over 9,600 inmates by the end of 2013. The reason? 

California has been unable to provide the funding necessary to stop 

overcrowding in prisons and keep dangerous criminals behind bars. 

I think many of our constituents would agree that public safety is 

among the most basic of Government functions. Simply put, if California cannot afford to keep convicted criminals behind bars, it cerVerDate Aug 31 2005 13:16 Aug 05, 2014 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\RR\1-15-1~1\86279.TXT JEAN
15 

tainly cannot afford to build a needless billion-dollar train project. 

When the State of California chooses to spend taxpayer money on 

high-speed rail, they are also choosing to put the safety of my constituents’ families and communities in jeopardy. 

The California High-Speed Rail Authority continues to pursue 

this project with only 4 percent—$3 billion out of $68 billion—of 

the funding necessary to achieve the largest infrastructure project 

in the country. To continue to pursue high-speed rail in California 

is to spend billions of dollars we don’t have on a project we don’t 

need. California high-speed rail comes at a tremendous cost to taxpayers while providing no benefit to my constituents. The project 

will destroy homes and businesses throughout my district and divert precious tax dollars away from far more pressing issues, like 

expanding our water infrastructure, protecting our communities, 

and ensuring access to quality education for our Nation’s young 

people. 

The greater cost is to the entire Nation, as the public will continue to watch the Authority squander billions in pursuit of a 

dream they cannot achieve. Now, more than ever, the Central Valley must come together to make their voices heard, and oppose this 

wasteful project. 

I will continue to uphold my promise to my constituents and oppose the California high-speed rail project. I look forward to working with you, Chairman Denham, and members of the subcommittee, to make sure this wasteful project is held accountable 

to the taxpayers. 

Mr. DENHAM. Thank you, Mr. Valadao. Out of respect for each 

of our witnesses, I know you all have busy schedules. If you do 

need to go, we fully understand. But, at Ms. Brown’s request—she 

has requested that we do one round of questioning. So, again, if 

you do need to leave, that is understandable. But if you do have 

time to stay and answer a question from panel members, we would 

appreciate that, as well. 

Let me start by—it frequently comes up: Do you like having a 

new train in California or not? That has never been the issue here. 

The issue has been from a Federal perspective of can you afford a 

project that continues to grow out of control, and what is the business plan. And, from a California perspective, what are your priorities? Sixty-eight billion dollars, if that is the true number, if it 

doesn’t grow any further, could rebuild our entire water infrastructure. Now, those of us that represent California’s Central Valley, 

we know how important water is. 

Rebuilding our entire water infrastructure? The Federal obligation for every water project that is being proposed today, and every 

highway project in California, expanding all of that, and still having money left over for aviation infrastructure. I think we would 

actually even have money left over for education and public safety 

in the process. We are talking about a minimum of $68 billion. It 

is about priorities. 

We have some real needs in California. Our schools are falling 

behind, our public safety is a big issue, with people leaving prison 

early, and certainly our infrastructure is falling apart. This is 

about our priorities. 

16 

Lots always talk about relieving traffic. This is not a commuter 

rail. This is going from L.A. to San Francisco. There is a reason 

that the comparison to this is the price of an airline ticket. This 

would be nice to have. But I think the question that every member 

of this committee needs to see and understand is the $55 billion 

that is still needed is more than we spend on infrastructure across 

the entire Nation. So is every member of this committee, every 

Member of this Congress willing to give up the money for their 

State for California to expand a rail system that goes from L.A. to 

San Francisco, may not relieve our traffic congestion? It would be 

nice, but maybe out of control. 

I just have one question for one Member. Mr. LaMalfa was in the 

State legislature, as I was, when this was being put together, while 

we were debating it, we were voting on it, and certainly saw the 

guarantees and the promises that were made within this. And it 

is my understanding that you did, while you were in the assembly, 

present a bill on—going back before the voters. This had changed 

many times. 

I would just ask you to explain what your reasoning for wanting 

to bring this back to the voters was, and what was in your legislation. 

Mr. LAMALFA. Yes, thank you, Mr. Chairman. In the State senate I offered two bills that had to do with high-speed rail. The first 

one was called Senate Bill 22 to merely put a pause on high-speed 

rail spending, planning, eminent domain, what have you, until a 

true plan could be brought forward. Because there wasn’t a plan 

that really articulated true costs. We saw all the pie-in-the-sky 

numbers. The year after the 2008 vote, where it was claimed $33 

billion, 1 year later the price was adjusted up to $42 billion in 

2009. The voters at that point had already been sold a bill of goods. 

So, my proposal was to say just put a pause on any spending until 

a true plan, stem to stern, could be developed. 

Then my later bill was Senate Bill 985, which, at the time, at 

the—after the November hearing in 2011, the price of the highspeed rail had been adjusted upwards of $98.5 billion during that 

mark I mentioned. So that bill was to place it simply back on the 

ballot in front of the voters, asking the people of California, ‘‘Would 

you like to still go through with this plan, in light of all the other 

challenges we face, with public safety, with law enforcement, with 

fire, with our school system, prisons,’’ whatever, you name it. 

And so, I thought those were worthy efforts to ask again the voters of California that. And an assemblyman out there is proposing 

that bill again, Assemblyman Gorell down in Santa Barbara. 

So, I hope that the legislature would deem to place it on the ballot or go the initiative process. But I thought it was a very important question, to re-ask at that time, since the numbers had gone 

up so dramatically for the project. After that November 2011 hearing, indeed, there was a scramble to try and re-adjust the numbers. 

That is why the project was re-adjusted to now incorporate 

Caltrain and local infrastructure in the bay area and in southern 

California, so that it is now a San Jose to North L.A. County highspeed rail, and utilizing with other ones, which is illegal under 

Prop 1A. 

17 

So, those were the efforts that we tried at, but California Legislature being what it is, they are still hell-bent on doing this project 

as-is. 

Mr. DENHAM. Thank you, Mr. LaMalfa. Ms. Brown? 

Ms. BROWN. Thank you. And thank you, Mr. Chairman, first of 

all, for agreeing to schedule the safety hearing workshop, or hearing, which is important to all of the Members, both Democrats and 

Republicans. 

Let me just say that we in the Congress have dedicated $8 billion, period, for high-speed rail. There is not another Member in 

Congress that has given more to the California project than I—$1 

billion. So you have my money. My Governor sent it to you. You 

all competed for it and won. So I have already given $1 billion. 

Thank you. 

Now, as I travel around the world, everybody is moving ahead 

of the United States and investing in rail. We started the rail system, and now we are the caboose. And they don’t use cabooses any 

more. Seventeen billion dollars, Saudi Arabia. China, $300 billion. 

And we are fighting. 

I mean, California is the most progressive and—I visit you all 

constantly. And let me just tell you. Talking about driving, I don’t 

even want you, Ms. Sanchez, to even carry me around in the traffic. It is so scary. We have got to find a way to compete and be a 

leader in transporting people, goods, and services. Can you respond 

to that? Because I haven’t heard any way, any discussion as to how 

we are going to be competitive with the rest of the world. 

And someone mentioned other countries. Let me tell you—they 

want to participate. I mean you—the French, the Chinese, the 

Italian. They are constantly calling. They want to partner. Yes, 

ma’am? 

Ms. SANCHEZ. Well, I hope you were thinking that you didn’t 

want me driving you around in my car because of the traffic, not 

because of my driving skills. 

Ms. BROWN. Both. 

[Laughter.] 

Ms. SANCHEZ. So, several things. The first is while this is not a 

commuter line, per se, the fact of the matter is, for example, plenty 

of people go from Anaheim into downtown L.A. today on train. I 

imagine if we could get faster speed, there would be even more who 

would do that. 

The biggest problem for us, coming from the south of L.A., is getting through L.A. to get to the other side. This is where we hit traffic, not 3 hours of the day, but all day, every day, everywhere, any 

way, et cetera. So that would be a big deal, when someone is talking about how many stops you have. We don’t need a lot of stops, 

but we certainly would love to have a faster way to get across L.A. 

Even if we could do that by air, by the time you go up in the 

air, and you go that short distance, and you come down in the air, 

I mean, you are spending 3 hours or 4 hours, at least, doing that. 

In particular, having to be at the airport, TSA, et cetera. 

So—and remember that since we had that crash of a big liner 

and a little liner over Cerritos in our area, as a pilot, I would tell 

you that we have very limited air space going on. It is a very trafVerDate Aug 31 2005 13:16 Aug 05, 2014 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\RR\1-15-1~1\86279.TXT JEAN
18 

ficked air space. And, again, fog in Sacramento, the situation in 

San Francisco, we need to move our people. 

And let me end with this. I told you we were the economic engine. Given any day, any year, we are anywhere between the fifth 

and the eighth largest economy in the world. I am astounded, because I had not heard Mr. Costa’s number of we have 38 million 

people today. I know that. But if we are going to have 50 million 

people by 2030, this is a major problem. And we cannot build wider 

roads through our places. 

In the El Toro ‘‘Y’’ intersection, which is, I think, the widest freeway at least in California, you can—I am told you can see it from 

the moon. When you are up in a spaceship, you can actually see 

my highway down there. So we need to get this going. It needs to 

happen. We need to move our people. And there are plenty of people who are afraid to fly, who are—don’t have the time to drive, 

who I know we could get on that train to go up to San Francisco, 

and 21⁄2 hours later be there, eating some great seafood. 

Mr. COSTA. With the time remaining, let me quickly just indicate 

that the comments you made about the busiest, highly used air 

traffic corridor in the country, San Diego—I mean Los Angeles-bay 

area is true. But the comments that the chairman made about taking the $68 million—billion dollars, excuse me—and applying that 

to the other systems, I mean, the seven airports that we talk about 

are all built on postage stamps. You are not going to expand them. 

And the cost of the eminent domain and that—the freeway, it is 

the same thing. The corridor is the cost of those freeways. 

You are talking about impacts to communities in the valley, 

which are real, and we need to mitigate for, but they are magnified 

tenfold when you talk about expanding those same freeways in the 

urban areas. And all the lawsuits and all the opposition that we 

see that has been concentrated in the last several years toward 

high-speed rail, I can guarantee you will be similarly used for some 

of the same reasons, trying to expand those airports for noise and 

for traffic, as well as for those freeway systems. And that is why 

you need an integrated, multimodal approach that uses our road 

systems, our air systems, and our rail system. 

And we are going to have to invest in all these areas, like our 

parents did, in water and education. We share those goals. 

Mr. DENHAM. Thank you, Mr. Costa. Mr. Webster. 

Mr. WEBSTER. Well, thank you, Mr. Chairman. I don’t usually 

get engaged in somebody else’s food fight. 

[Laughter.] 

Mr. WEBSTER. But I do have a question. Is there a neutral party 

that could tell me about the two lawsuits, and what the implication 

of those judgments were? 

Mr. DENHAM. Mr. Webster, that is going to be the next panel. 

Mr. WEBSTER. Oh, that will be the next panel. All right, so, 

great. Well, thank you all for coming today, and it has been very 

interesting. 

Mr. DENHAM. Mr. DeFazio? 

Mr. DEFAZIO. Thank you, Mr. Chairman. I was pleased to hear 

you announce at the beginning of the hearing that you had agreed 

to schedule hearings on rail safety. And we haven’t had a real 

hearing on rail safety for 3 years now. The last one that was held 

19 

in the last Congress by the Republican majority was one against 

regulations and rules that might bring about more safety. 

So, I am pleased to hear that. I specifically asked for hearings 

on the DOT 111 tank car, which has been identified since 1992 as 

inadequate to withstand a rollover, crash, or derailment. It was 

news to everybody on this side, it would be news to the ranking 

member, the ranking member of this committee, to the—our chief 

of staff on our side, and to me, that the hearing had been agreed 

to and scheduled. But I am really pleased to hear that. Maybe 

someone knew that we were all going to bring up this issue, or a 

number of us at this hearing, and it got scheduled just before the 

meeting. 

As to the subject at hand, the chair made a point about how 

much this would, you know, compare to the rest of our investments 

in transportation in America. And, you know, I would agree that 

it is a challenging number. If there is going to be substantially 

more Federal investment, given the dearth of Federal investment— 

in fact, Federal investment in transportation in this country is 

going to drop by over 90 percent, absent a new funding source and 

reauthorization by October 1st. So it would be even more of a contrast. 

But I think the point that was made—and I will ask a couple 

Members from there—but, I mean, if you are moving 8 million passengers by plane—I have spent 27 years on the Aviation Subcommittee—I am not aware of any way to enhance the capabilities 

or capacity, absent the building of a new airport somewhere between L.A. and the San Francisco area. I am just wondering, with 

the expected increase in the California population, I expect that 

number will go up substantially. How are you going to accommodate that? 

Somehow, third-world, developing countries, you know, are able 

to build high-speed rail systems, but we just can’t. We are the 

United States of America. We can’t maintain our bridges, we can’t 

build high-speed rail, we can’t compete in the world economy, we 

can’t move our people efficiently. What the heck? What happened 

to America and our vision? 

Mr. Costa, would you address—can you address that? How else 

are we going to deal with moving these people back and forth? 

Mr. COSTA. Well, I think there is only really one way that we did 

it, and that is creating the integrated, multimodal system that has 

worked in other parts of the country, both developed countries, in 

Europe and Japan, as well as in developing countries, as you mentioned, places in Asia and elsewhere. 

So, the fact is transportation experts have studied these challenges with densities for a long time, and they know that there is 

not one silver bullet. You have got to use all of the technologies. 

And for those who—I have spent a lot of time on this stuff. Making 

reference toward high-speed steel on rail as an old technology, let 

me tell you. They are fifth generation of steel on rail. These trains 

have gone on regular corridors in France and Germany as fast as 

Maglev, 350 miles an hour they have been clocked. The Germans 

and the Japanese, I think, are very smart people. They have developed both technologies, Maglev and steel on rail, and they have 

20 

chosen for themselves to be the most cost effective steel on rail for 

their needs and for the foreseeable generation or two. 

And the fact is that, if we want to be smart about investments, 

at the end of the day—and you hit the nail on the head, Congressman DeFazio—we have got to, on a bipartisan basis—and this subcommittee is, I think, where it starts—figure out a strategy on how 

we are going to fund America’s infrastructure for transportation. 

We can’t do it with fairy dust. We have got to do it with some practical, commonsense means on how we are going to invest in every 

region of America. And it costs money; guess what? 

That is what our parents did. That is what our grandparents did. 

They invested. They knew it cost money, and they were willing to 

make those kinds of investments. I mean, otherwise, we are just 

playing to the public. Well, we have to have this, we have to have 

that. But, no, we don’t—I don’t want to—it is unpopular, politically, 

to talk about how you pay for these things. 

Mr. DENHAM. Thank you. Thank you, Mr. Costa. And I would 

just remind Mr. DeFazio that Florida is not a third-world country. 

Texas is not a third-world country. They are just doing high-speed 

rail much cheaper, and with private investors. 

Mr. Duncan? 

Mr. DUNCAN. Well, thank you, Mr. Chairman. I have been in another hearing, so I was going to reserve my questions to the panel. 

But since you all are still here, I will just very quickly mention 

that a few weeks ago there was an article in the Washington Times 

saying that estimated cost has gone from $33 billion to $68.5 billion. Does anybody know how much this is going to cost us? Are 

these cost estimates going to keep going up? 

Ms. SANCHEZ. Mr. Duncan, I think, again, that the second panel, 

as quickly as you can get to it, will be the technical people who will 

go through the plans, et cetera. 

Mr. DUNCAN. That—— 

Ms. SANCHEZ. From both the Federal and the Authority. 

Mr. DUNCAN. That same article said 52 percent of the Californians were against this, and with some undecided, so that there 

was a minority in favor. What do you say about that? 

Ms. SANCHEZ. Mr. Duncan, I would just say that I am from Anaheim, California. There were many cities that were approached before we built Disneyland. Nobody wanted it, because they thought 

it was pie in the sky. We built it in Anaheim. It is the number one 

icon in the world. 

I will tell you that Anaheim is currently building—it is in construction, it is probably 75 percent done—the regional transportation hub which will house the end of the high-speed rail. We will 

have that finished in this year. So when people say, ‘‘People don’t 

want it,’’ I am going to tell you we not only want it in Anaheim, 

but we have put our money—we have built the cart ahead of the 

horse, if you will, because we truly believe that we need this 

project in California. 

Mr. DUNCAN. Do you all want to say anything? 

Mr. LAMALFA. Mr. Duncan, thank you. I have lived this thing in 

the State legislature since 2010. And, as a farmer, I would also 

speak that my colleagues that live down in the valley—Mr. Valadao 

could attest to—their lives are going to change a lot, their cities, 

21 

their way of life, because they are going to have this thing running 

through there that is 70 feet wide, changing their access to normally rural roads that are now going to have to have overcrossings 

every half a mile or 2 miles, or whatever they deem they are going 

to spend on them. 

So, a farmer with a tractor no longer just crosses a road. He has 

got to go several miles with a low-speed tractor to move his equipment back and forth to his fields that are now being sliced into 

small—maybe 12-acre—parcels and ribbons that way. 

But to get back to your question on cost, indeed, it was sold to the voters as a $33 billion project for the San Francisco-to-L.A. 

line. A year later, it was revised to $42 billion, after the voters had 

already left. When we had the hearing in September—excuse me, 

November 2011, they finally admitted it was a $98.5 billion project 

to do the legal project, true high speed from San Francisco all the 

way to Los Angeles, or vice versa. 

So, the modified project, to get the cost down and not scare ev- erybody so much, did reduce to $68 billion. But that means it is 

not a true high speed from San Francisco all the way to L.A. They 

are going to use Caltrain, they are going to pay to help electrify 

that track in the North and do other infrastructure in the South. 

So, the real number, for a legal Proposition 1A project, is some- where around $100 billion as an old estimate. With inflation, who 

knows where it is: 120, 130, 150? We see how these things go. Just 

ask the Bay Bridge what that cost. 

And so, if you want the real numbers of a legal Prop 1A project, you are somewhere north of $100 billion. And so we are not just 

55 short, we are 80, 90 short, or more. 

Mr. DUNCAN. Almost all of these major projects, and especially 

true of Federal medical programs, they always lowball the cost on 

the front end, and then the costs just explode after a time. 

Yes, Mr. Valadao? 

Mr. VALADAO. The one comment that has been made quite often 

is that they don’t know or they don’t expect more money to come 

to California. No one disagrees that L.A.-San Francisco has horrible traffic. From a Central Valley perspective, it doesn’t make any 

sense why you would start the project in the Central Valley, if 

L.A.’s traffic is so bad. I have no problem with helping fix the traffic in L.A. Do something there, spend the money there. 

Getting from where I live in Hanford down into L.A., if I wanted 

to get on Amtrak today, or if they built the high-speed rail, it 

would stop in Bakersfield. I would get off the proposed rail project, 

get on a Greyhound Bus, go over the Grapevine, then go into L.A. 

There is no connection there, there is no rail there. 

You would think we would start by filling in some holes in our 

current system with newer technology, versus building a train literally right next to an existing train that we already have and we 

already lose money on. It just doesn’t make any sense. If you are 

hell bent on spending money and building rail, start somewhere 

where we actually need rail. And that is what my biggest beef with 

this project is right now. 

Mr. DUNCAN. All right—— 

Mr. VALADAO. Thank you. 

Mr. DUNCAN [continuing]. Thank you very much. 

22 

Mr. DENHAM. Mrs. Napolitano? 

Mrs. NAPOLITANO. Thank you, Mr. Chairman. And I have been 

listening to all the debate and the concerns that they have. I must 

point out that most of the voters that vote for these things are in 

southern California. I would say two-thirds of the voters are there. 

Most of the impact that is against it is in northern California. So 

southern California really has a great deal of interest in what is 

going to happen to be able to move people. You have got L.A. County with 12 million people. That is almost a third of the voters in 

the whole State. 

But we do need faster transportation in the North. I was in the 

Sacramento Assembly. And, Loretta, I hate to tell you, but I made 

it in 41⁄2 hours to Sacramento from L.A. 

Ms. SANCHEZ. Oh, yes—San Francisco. 

Mrs. NAPOLITANO. Right. Well, and it is—it was one of those 

things when you travel, and there is nobody else on the road, or 

one or two cars, your foot gets a little heavy. 

But there are concerns. There have been concerns with the Councils of Government in the areas where I am, in my former district 

and my new district, in regard to being able to work with them. 

And they have been addressing—the Authority has been addressing the concerns directly with the CoGs. So—and we are moving 

forward on those, because there are issues that they have. And it 

isn’t the funding. It is if it is going to take away from the funds 

for local transportation projects, that is one of the main concerns 

that my Councils of Government have. 

Now, that put into perspective, as Loretta was saying, we need 

to be futuristic in California. We are a donor State to the rest of 

the Nation in many areas. And so, if we are not going to be able 

to help move people or move goods, then we are not helping our 

State move into and keep the position we have. As Loretta said, 

when I was in the State legislature, it was the fifth world’s largest 

economy. I think we have dropped a few. 

But most of the concerns that we have are not going to be addressed by us speculating, until we know whether or not—and we 

will hear from the other panel, the upcoming panel, is whether or 

not they are already making inroads to be able to get outside investors to come in and help do, as in other areas. 

Now, I understand—and I agree, Mr. Denham—there are great 

projects in other countries. But, guess what? The Government owns 

the land. Here, it is either privately owned or railroad-owned. And 

so, you have a lot of contentious litigation, whatever. But we must 

move forward. 

And I would like to give Loretta a chance to be able to expound 

more, because I could represent L.A. County sort of, kind of, but 

you, in Orange County, you have a lot more. 

Ms. SANCHEZ. Well, remember that we have an airport, John 

Wayne, which is at capacity. Some people would like to see—that 

is the airport, if you have ever been to it, where, when you take 

off, you take off like this, because our residents don’t want to hear 

the noise. 

So, we have a lot of limitations. We also have a lot of growth: 

80 percent of the new trips that are going to be generated out of 

LAX are actually coming from South Orange County. I know this 

23 

because we had to fight for a second commercial airport that never 

happened, for example. I have been through these wars. 

People are working. They are building companies in Orange 

County. They have got to go up to the Silicon Valley, they have got 

to go and get financing, et cetera. 

Currently, however, the Authority is working with local agencies. 

For example, in Anaheim, where we will use the same rails that 

we currently have, we have this problem called grade separations, 

or lack of, where you stop the traffic because the train is going by. 

Well, you know, they are investing in making sure that we are 

making grade separations. Cars will either go under or will go over 

where the track is. So we are already going to see some help, with 

respect to the way people move. And this is one of the costs that 

is being borne by the Authority. 

Mrs. NAPOLITANO. Well, one of the other concerns is that the cost 

to the ridership. And I have always been of the opinion it should 

be available to all residents that need to use it. Now, how we work 

it out, I think it is important for us to be able to understand that 

this is—one of the points that has to be taken up and discussed 

and addressed is the cost of a ticket. Because if it is going to be 

more than airfare, then it is something that we need to be able to— 

allow others to be able to have access to that form of transportation. The choice should be for everybody. 

Ms. SANCHEZ. Congresswoman, certainly the cost is a concern to 

all of us. 

I will say that when I go into L.A., if I can, I do take the 

Metrolink that we have, which, if you are a commuter, you can buy 

a set of tickets that makes it lower, et cetera. And you would—it 

is amazing, because, first of all, the people who take the Metrolink 

are surprised that the congresswoman is taking the Metrolink. It 

is a great way to travel up to L.A. 

But secondly, I am surprised that it is not people with suit—with 

briefcases, et cetera, necessarily, that other people who 2 or 3 days 

a week commute into L.A., who I would say are not professionals 

as people typically think these commuter rails handle, are taking 

the trip. So we have made it manageable for many of them. 

Mrs. NAPOLITANO. Thank you, ma’am. Thank you, Mr. Chairman. 

Mr. DENHAM. Thank you. Mr. Williams? 

Mr. WILLIAMS. [No response.] 

Mr. DENHAM. Thank you. Ms. Hahn? 

Ms. HAHN. Thanks. I think—and I will take a pass on a question, 

just because I think we need to get to the second panel. But, Mr. 

LaMalfa, where did ‘‘jump the shark’’ come from? 

Mr. LAMALFA. Jump the shark is a saying that is a—— 

Ms. HAHN. Where did it come from? 

Mr. LAMALFA. Grew out of ‘‘Happy Days.’’ 

Ms. HAHN. Very good. 

Mr. LAMALFA. During the end of the—— 

Ms. HAHN. Which episode? 

[Laughter.] 

Ms. SANCHEZ. Number 31, second season. 

Mr. LAMALFA. Fonzie, wearing a leather jacket while water skiing, jumping a shark. 

24 

Ms. HAHN. OK, fifth season, that is right. But, by the way, it was 

a phrase that meant to show a decline in a series, which was not 

the case for ‘‘Happy Days.’’ So, really, that phrase was not used 

properly, which I also don’t think we ought to use about the highspeed rail project. And I hope to hear from that on the next panel. 

Thank you. 

Mr. DENHAM. Well, thank you, Ms. Hahn. I am sure that will end 

up in Politico today. 

[Laughter.] 

Mr. DENHAM. And certainly thank each of the Members for 

spending a little extra time with us this morning. Obviously, this 

is a very important issue, not only for California, but for the Nation. And so, we appreciate your time this morning. 

I would now like to welcome our second panel of witnesses: 

Karen Hedlund, Deputy Administrator of the Federal Rail Administration; Dan Richard, chairman of the board of the California 

High-Speed Rail Authority; and Alissa Dolan, legislative attorney, 

Congressional Research Service. 

I ask unanimous consent that our witnesses’ full statements be 

included in the record. 

[No response.] 

Mr. DENHAM. Without objection, so ordered. 

Since your written testimony has been made part of the record, 

the subcommittee would request that you limit your oral testimony 

to 5 minutes. 

Welcome. And, Ms. Hedlund, you may proceed. 

TESTIMONY OF KAREN HEDLUND, DEPUTY ADMINISTRATOR, 

FEDERAL RAILROAD ADMINISTRATION; DAN RICHARD, 

CHAIRMAN OF THE BOARD, CALIFORNIA HIGH-SPEED RAIL 

AUTHORITY; AND ALISSA M. DOLAN, LEGISLATIVE ATTORNEY, AMERICAN LAW DIVISION, CONGRESSIONAL RESEARCH SERVICE 

Ms. HEDLUND. Chairman Denham, Ranking Member Brown, and 

members of the committee, thank you for this opportunity to speak 

with you today. 

The high-speed and intercity passenger rail program is the largest grant program for passenger rail in our Nation’s history. And 

it supports more than 150 projects in over 32 States. We are focused on executing high-quality projects that deliver tangible value 

for the taxpayers. 

And California’s high-speed rail project, like all of our projects, 

has received a very high level of scrutiny and oversight that reflects our good stewardship of Federal funding. The project has 

made significant progress, and continues today to move forward. 

The design-build contract for construction package one was awarded in August. Right-of-way is currently being acquired. Final design is progressing. And we anticipate utility relocation and building demolition to begin this winter, with significant construction 

activities to begin this spring. 

As we address the project’s short-term challenges, it is important 

for us to also recognize the fundamental reality that the 

Authority’s phased approach is consistent with how major infrastructure projects have been designed and constructed, both here in 

25 

the United States and around the world. Each interim stage is projected to be self-sustainable on an operating basis. Each interim 

stage is projected to generate enormous public benefits. And by 

doing it this way, the Authority, the State, and stakeholders are in 

a position to be highly adaptable to challenges and changing conditions. 

Furthermore, the data driving our decisionmaking progress reveals a clear need for California to move forward. Our data justifies 

the project’s need. It identifies rail in California as the mode of opportunity. 

And lastly, it foretells pretty ominous consequences, should the 

State fail to act. Choosing to do nothing is choosing to allow the 

producer of more than 10 percent of America’s GDP to be paralyzed 

by clogged roads, by overwhelmed airports, and by rapidly diminishing air quality, all as, by 2050, the Central Valley population 

doubles and the State’s overall population, as has been mentioned, 

swells to 60 million people. 

On the other hand, to build transportation capacity, California 

needs an alternative to high-speed rail. As has been previously 

mentioned this morning, this would require building 4,300 miles of 

new lanes of highway, 115 additional airport gates, and 4 new airport runways. It is not only considerably more expensive; in many 

cases, geographic constraints would make it impossible. 

High-speed rail is a necessary part of California’s response to its 

mobility and transportation challenges. It will deliver tremendous 

transportation capacity and, at the same time, reduce greenhouse 

gas emissions. It will spur economic development and create thousands of jobs and, at the same time, relieve pressure and reduce 

wear and tear on our Nation’s most congested highways and airports. 

The challenges this project faces, including some of the opposition, are nothing new. Critics of the Golden Gate Bridge called it 

an upside-down rat trap. Some engineers believed the towers would 

never stand. They dismissed the whole thing as impossible to build. 

Meanwhile, as the project got close to breaking ground, opponents 

filed more than 2,300 lawsuits to stop it. And that was before the 

Environmental Protection Act. 

Some question the revenue sources. Some even grasped at the 

issue of how the bonds would be used. In fact, later, historians 

would write that building the bridge was the easy part. The hard 

part was breaking ground. But, ultimately, the project did break 

ground, and during the Great Depression, at that. Can you imagine 

anyone today saying it would have been wiser not to build it? Can 

you imaging anyone today—can you imagine, today, if tens of thousands of drivers each day lacked a direct crossing into one of America’s signature cities? 

We have an opportunity to not only absorb these great lessons 

from the past, but to reclaim them as an essential feature of the 

American identity, and to accept our responsibility to do for future 

generations what previous generations have done for us. We will 

continue to work with the Authority as it updates its business plan, 

conducts environmental analysis, and develops a project we believe 

is critical to both California’s future and to America’s future. 

26 

And I look forward to discussing with you today how we can 

agree to work together to move this project forward. Thank you. 

Mr. DENHAM. Thank you, Ms. Hedlund. 

Mr. Richard? 

Mr. RICHARD. Thank you, Mr. Chairman. Chairman Denham, 

Ranking Member Brown, members of this committee, I am pleased 

to be here today to discuss the status of the California high-speed 

rail program, our progress to date, and our prospects for the future. 

Mr. Chairman, the subject of this hearing is a review of the challenges facing California high-speed rail program. I think what you 

have heard this morning from your colleagues and from Ms. 

Hedlund is that the kind of challenges we face are not new. We certainly do have challenges. We have engineering challenges, we 

have the challenge of protecting our environment, farmland, riparian zones, species, communities. And we have, as all major infrastructure projects have, funding challenges and some legal challenges, as well. 

And, of course, this is not the first massive infrastructure project 

to face tests like these. As has been said, the generations before us 

built this country in the face of even greater uncertainties. And I 

would note, Mr. Chairman, that a project that you know better 

than anyone is of vital importance to our State, the California 

water project, which has provided sustenance to our farms and agricultural sector in the Central Valley, was highly controversial. It 

passed the legislature in California by a single vote. The Bay Area 

Rapid Transit System, where I once served as a director, similarly 

barely came into existence, again by a one-vote margin. But today 

it provides essential transportation service, and its replacement 

value was recently estimated at $30 billion. 

My point is that these monumental infrastructure projects are 

difficult, contentious, belittled, fought, and questioned. And, yet, in 

retrospect, in virtually every case, we have determined that they 

are undoubtedly worth the struggle. We feel that way about the 

California high-speed rail project. This project is much more than 

a train. In addition to meeting rapidly growing transportation 

needs, high-speed rail will bring untold economic and environmental benefits to communities throughout our State. 

In approving the program, the California Legislature unleashed 

$13 billion of statewide transportation modernization improvements that are all tied to the high-speed rail program, but reach 

into every portion of our State. In places like Fresno, Palmdale, 

and other cities, we see already local leaders envisioning revitalized downtown areas, anchored by the high-speed rail transit hubs. 

In fact, we anticipate creating as many as 20,000 construction jobs 

during each of the first 5 years of the project. And once operational, 

the initial operating segment will directly employ at least 1,300 

workers. 

Mr. Chairman, we have made tremendous progress towards delivering these benefits to Californians. Our design-build contractor 

is firmly ensconced in the downtown historic Fresno area, bringing 

65 full-time jobs to that region, already. They are currently focused 

on acquiring properties and equipment, finishing design work, 

doing utility relocation, archeological work, permit finalization, and 

geotechnical surveying. 

27 

And, since the last time I appeared before this subcommittee, we 

have strengthened our agreements with the Merced and Madera 

County Farm Bureaus for the protection of agricultural lands, with 

the San Joaquin Regional Rail Commission for improving the ACE 

Train service, which is vital to central California and with the California Department of Veteran Affairs for employment of veterans 

and the utilization of veteran-owned businesses. We want the benefits of this program to reach every Californian. 

I know this hearing will address some recent developments, including a November California State court opinion, and we will be 

prepared to discuss those. But I can say to you that in concert with 

our Federal funding partners, we will address these matters expeditiously, maintain the momentum of the program, and we will continue to meet our matching fund obligations. 

At the same time, the committee should note that, to date, approximately $100 million of State funds have already been spent, 

and that we anticipate fully participating in this project with the 

Federal Government for the entire amount that was appropriated. 

Mr. Chairman, you also know that last week Governor Jerry 

Brown released his new budget for the coming year. And, in so 

doing, he included a proposal to allocate revenues from the State’s 

new cap and trade greenhouse gas emission program to the California high-speed rail program. We believe this $250 million in the 

coming fiscal year, if approved, will portend a long-term, sustained 

effort, which combined with the bond funds and the Federal funds, 

can help us build all the way to the gates of Los Angeles within 

a decade, and that will change things dramatically. 

Finally, I would like to thank you again for the opportunity to 

provide the committee with an update. 

And I would like to close with these words from Governor Brown, 

as he described his commitment to the California high-speed rail 

project. And he said—and I quote—‘‘No big project, whether it was 

the Golden Gate Bridge, Transcontinental Railroad, or the Panama 

Canal, was free of very strong criticisms, skepticism, and attack. 

That goes with the territory. This is a big project. It was started 

by my predecessor,’’ the Governor said, ‘‘something that I proposed 

and talked about when I was Governor the last time. There is no 

doubt that California will have millions more people coming to live 

in this State. Many of them will live in central California. We cannot add more freeway miles, particularly when we already saw 

331.8 billion vehicle miles traveled last year. We need alternatives. 

And transit and high-speed rail are part of that mix. And the program that I have set forth,’’ said the Governor, ‘‘strengthens the 

local rail, the commuter rail between San Francisco and San Jose, 

and in the southern California area. It reduces greenhouse gases. 

It ties California together. The high-speed rail serves all these 

functions, and that is why I think it is in the public interest.’’ 

Mr. Chairman, we look forward to continuing to work with the 

subcommittee and all stakeholders to ensure that the Nation’s first 

true high-speed rail system is built correctly, cost effectively, and 

in the best interest of the Nation’s and California’s taxpayers. 

Thank you, sir, and we look forward to answering questions from 

the committee members. Thank you. 

28 

Mr. DENHAM. Thank you, Mr. Richard. And I would also say I 

appreciate when we had talked back in December, you asked me 

to delay this hearing, as well. I asked you to make sure that you 

could be here today. You did, and I appreciate that. 

And would just also remind you, Mr. Brown’s—I believe in his comments, because next year’s budget he is anticipating $20 billion 

coming from the Federal Government to fill that funding gap. That 

is in his—we would have that up on the screen, but our screen, I 

guess, is broken. So we will hand that out to others. Thank you. 

Ms. Dolan, you may proceed. 

Ms. DOLAN. Thank you. Chairman Denham, Ranking Member 

Brown, and members of the subcommittee, my name is Alissa 

Dolan, and I am a legislative attorney in the American Law Division of the Congressional Research Service. I thank you for inviting 

CRS to testify today regarding the legal issues associated with 

challenges facing California high-speed rail. I will be discussing 

two recent California Superior Court cases and specific provisions 

of the cooperative grant agreement that exists between FRA and 

the California High-Speed Rail Authority. 

The first case I will discuss is Tos v. California High-Speed Rail 

Authority, which is a suit that was brought by Kings County, California, and two taxpayers who reside therein. The plaintiffs alleged 

that the Authority’s funding plan did not comply with the statutory 

requirements contained in Proposition 1A. Specifically, the statute 

requires that the funding plan, one, identify the sources of funds 

for the corridor, or usable segment thereof, defined in the plan as 

the initial operating section, or IOS; and, two, certify that all 

project-level environmental clearances needed to proceed to construction have been completed. 

The court ruled in favor of the plaintiffs on these claims. It held 

that the funding plan did not comply with Prop 1A because it only 

identified funding sources for a portion of the IOS, and did not certify that all environmental reviews for the IOS had been completed. 

The court issued a writ of mandate, ordering the Authority to rescind its approval of the plan. It appears as though the Authority 

will have to approve a new funding plan that identifies sources of 

funds for the entire IOS, and certifies the completion of all environmental clearances before the Authority can proceed towards spending bond proceeds. 

The court also noted that this case had no direct bearing on the 

Authority’s ability to expend Federal funds, which are not governed 

by Prop 1A. 

The second case is a validation claim that was brought by the 

Authority and the High-Speed Passenger Train Finance Committee, a body that was created in Prop 1A to approve the issuance 

of bonds. In this claim, the Authority and the committee sought to 

validate the committee’s March 2013 approval of the issuance of 

Prop 1A bonds. A successful validation claim would prevent future 

suits that challenged the legitimacy of the bonds. 

In this case, the court refused to issue a validation judgment, because the Finance Committee did not provide substantial evidence 

that it complied with the statute requiring it to decide that bond 

issuance was necessary or desirable. The court found no evidence 

in the record to support the Finance Committee’s decision. The 

29 

record contained no explanation of how or on what basis the committee decided that bonds were necessary and desirable in March 

2013, and no summary of the factors that were considered. 

Therefore, the court denied the Authority and the Finance Committee’s request for validation. By statute, they have 30 days to file 

an appeal. However, representatives of the State have signaled 

that they will seek to restart the validation process, in order to obtain a validation judgment before issuing Prop 1A bonds. 

Finally, I will discuss the cooperative agreement that governs 

Federal grant funds awarded by the FRA to the Authority under 

the American Recovery and Reinvestment Act, or ARRA. Under the 

ARRA agreement, the Authority must provide matching funds that 

cover approximately 50 percent of the project costs. The agreement 

does not require these funds to come from a specific source, but recognizes that the Authority plans to use Prop 1A bond funds. 

Currently, the agreement allows the Authority to spend Federal 

money without concurrently providing the required matching 

funds. This advanced payment method expires on April 1, 2014, or 

at the time of a Prop 1A bond sale, whichever is earlier. After that 

date, Federal funds will only be available via reimbursement for 

expenses already incurred. Since the current agreement requires 

the Authority to begin spending matching funds in April 2014, it 

does not appear that the Authority’s failure to obtain bond proceeds 

or secure other matching funds has led to a violation of the cooperative agreement at this time. 

The agreement also establishes FRA’s rights if a violation or anticipated violation of the agreement occurs. The FRA may choose 

to suspend or terminate all or part of the grant funding provided 

under the agreement under several circumstances, including if the 

Authority violates the agreement, or if the FRA determines that 

the Authority may be unable to meet the contributory match percentage, and complete the project according to schedule. 

Additionally, under these circumstances, the FRA may also require the Authority to repay all or part of the funds it has received. 

This concludes my prepared statement. Thank you for the opportunity to appear before the subcommittee, and I will be happy to 

answer any questions you may have. 

Mr. DENHAM. Thank you. Ms. Hedlund, back in December I had 

a discussion with Mr. Szabo, I had a discussion with Mr. Richard 

about holding this hearing. We obviously wanted to hold this hearing in December, after the court ruling on November 25th. I understand that this hearing held in December, with the catastrophe 

with Metro North, would have been untimely. 

So, out of professional courtesy, after the request from Ms. 

Brown, we delayed this hearing to accommodate everybody’s schedules, and give plenty of time to answer questions and provide staff 

information that we detailed out in several letters. Now, that has 

put this committee behind. We obviously wanted to have a rail 

safety hearing already. We wanted to have it today. We will still 

plan on having a rail safety hearing. I want to make sure all of our 

Members know that. 

But we asked you for specific information. I sent a letter December 12th asking for information that Mr. Szabo and I discussed on 

the phone call that he would provide, not only answers to my quesVerDate Aug 31 2005 13:16 Aug 05, 2014 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\RR\1-15-1~1\86279.TXT JEAN
30 

tions, but he would provide invoices. Four weeks later, we didn’t 

have any of the questions answered, we didn’t have any of the invoices. And now he can’t be here today. 

So, we sent another letter, again, asking for those invoices. We 

have had staff make multiple phone calls on these invoices. Now, 

this is an administration that the President said, ‘‘We are the most 

transparent and ethical administration in U.S. history.’’ It doesn’t 

say we are the most transparent, except for FRA. And yet we can’t 

get invoices? 

Do you have these invoices? 

Ms. HEDLUND. Yes, sir, we do. But let me first state, on behalf 

of Administrator Szabo, he very much regrets not being able to be 

here today. Frankly, he understood the safety hearing was going to 

be yesterday, and would have been available yesterday for that 

hearing. Today he has both business and personal issues that he 

needed to deal with. 

Mr. DENHAM. And your testimony is more than fine today. I 

know that you are very knowledgeable, you are very capable. We 

respect your expertise. But whether it is Szabo or you, we expect 

answers. This committee expects the cooperation to have those invoices presented to it. 

Ms. HEDLUND. Mr. Chairman, we wanted to have further conversations with your staff about the least burdensome way we 

could respond to—— 

Mr. DENHAM. You have had 4 weeks to work on that. We could 

have had those conversations. And certainly, if it is boxes of invoices, we would have been able to accommodate that over the holiday break. I think there was some staff that had plenty of extra 

time, with such a long break. 

Ms. HEDLUND. It was over the holiday. But be that as it may, 

we have provided your staff with significant information with respect to all the invoices that were paid since the decision came 

down. We have provided a breakdown of all invoices that have been 

paid from the inception of this project—— 

Mr. DENHAM. The $275 million that has been spent so far, we 

have received invoices on? 

Ms. HEDLUND. No, you have received a breakdown, by task order, 

of the amounts that have been spent, both by the Authority and 

by FRA—— 

Mr. DENHAM. Is there a reason that we can’t see specific invoices? 

Ms. HEDLUND. Sir, we are more than happy to meet your demands, and—but we would like to—— 

Mr. DENHAM. You haven’t met them to date. We have had 4 

weeks to work on this. And if there is specific information that you 

need from our committee, we have had 4 weeks to work on it. We 

have had phone calls. Mr. Szabo and I have exchanged several 

phone calls, and we provided several letters. If there is any question on what we are asking for, whether it is you and I or whether 

it is staff, I would assume that those questions can be answered, 

so that we can get these invoices in a timely manner. 

Ms. HEDLUND. I think we should work with you on how we provide you the information that we have that you have asked from 

us. We are committed to being completely transparent. There is 

31 

nothing that we have to hide, or that the Authority has to hide. We 

are trying to get—— 

Mr. DENHAM. That is the real question. What are you hiding? 

This is—the administration—the President has said several times, 

‘‘This is the most transparent administration in the history of our 

country,’’ yet it has been 4 weeks, several phone calls, and a couple 

of letters, and we have still not received any invoices. 

In fact, what we have received, over the $275 million to date that 

has been—that has come in, we got that information from our 

Democrat counterparts. Now, I appreciate—this is a bipartisan 

committee, and we are working together. But what are you hiding 

that we have to get information—do you only share transparency— 

let me see one of these other quotes. ‘‘My administration is committed to creating an unprecedented level of openness in Government.’’ Only with Democrats. No, it doesn’t say that. It says, ‘‘My 

administration is committed to creating an open—unprecedented 

level of openness in Government.’’ 

The most transparent administration in history, not just to 

Democrats, but to both, to—a bipartisan committee of Congress, yet 

we can’t get these invoices. When will we have these invoices? That 

is the question. 

Ms. HEDLUND. We will discuss that with your staff, and talk 

about—— 

Mr. DENHAM. What do we need to discuss? Is there a reason that 

we can’t send somebody over to pick up invoices today? 

Ms. HEDLUND. I do not know, sir. I can’t answer that question. 

We are talking about a process of turning over information. We 

need to have further discussions—— 

Mr. DENHAM. You have had 4 weeks. How much more time do 

you need before we can send somebody over to pick up information? 

Ms. HEDLUND. We will talk to your staff about how we can turn 

over the information you are looking for. 

Mr. DENHAM. A week? 

Ms. HEDLUND. I can’t tell you. 

Mr. DENHAM. A month? 

Ms. HEDLUND. I—— 

Mr. DENHAM. This is the most transparent Government in our 

U.S. history. 

Ms. HEDLUND. We agree—— 

Mr. DENHAM. Do you need 2 months? How much time do you 

need to have our staff go over and pick up invoices? 

Ms. HEDLUND. There are thousands of documents, sir. 

Mr. DENHAM. How about every invoice over $100,000? How many 

documents is that? 

Ms. HEDLUND. I have no idea. 

Mr. DENHAM. I assume that is a smaller amount. Is there any 

reason why the FRA can’t put together every invoice over 

$100,000? 

Ms. HEDLUND. I—you know, the invoices that we get from the 

Authority are a combination of invoices that they get from their 

contractors. 

Mr. DENHAM. Look, I am not concerned with the combination—— 

Ms. HEDLUND. That is why—— 

32 

Mr. DENHAM. I am not concerned where they are, or what is in 

them. What I am concerned about is an agency that is hiding information from Congress. We are a congressional committee that is 

overseeing this project, and you cannot provide us information. 

Ms. HEDLUND. Sir, we are committed to give you all the information that you—— 

Mr. DENHAM. So when can we get this information? 

Ms. HEDLUND. I can’t say that today, exactly what it will take 

for us to provide the information that you are seeking. But we will 

certainly be as cooperative as possible. 

Mr. DENHAM. Well, you have not been cooperative. You have not 

given us the information over the last 4 weeks. That is what this 

committee will be demanding, is—at least in the short term—every 

invoice that is over $100,000. 

My time is expired. I now—Ms. Brown? 

Ms. BROWN. Thank you. Mr. Richard, I am interested, since you 

have a billion of my dollars from Florida, to tell us what we can 

do to expedite the process in getting the project done. For example, 

we have had lots of discussions about one stop permitting. What 

can we do to help you and assist you? 

I mean, obviously, the Congress, you know, even this committee, 

we are on various tangents. My goal is to make sure that we have 

true—we have high speed. And there is a discussion about what is 

high speed. But when I go to Europe, I can go 200 miles from 

downtown Paris to other European capitals in 1 hour and 15 minutes. And that is the goal, to move people, goods, and services. 

You know, the Congress is on a different kind of tangent, obviously. So can you tell us what we can do, as a Congress, to help 

you all? 

Mr. RICHARD. Congresswoman Brown, first of all, thank you very 

much, both for your support and for that question. 

And you are right. In Europe and those places where you’ve traveled, they are true high-speed trains. I know there has been some 

commentary on whether that is what we are building, but that is 

what we are building: a high-speed train that will go more than 

200 miles an hour and be fully electrified and clean, and so forth, 

exactly what the people of California and the people of the United 

States want to see. 

To answer your question directly, I know that this is a controversial project. But if we can find ways to come together and talk seriously about this project and what its objectives are, to the extent 

that the private sector sees that there is an ongoing commitment, 

both from the State of California and the Federal Government, that 

will accelerate private-sector money into this project. 

I know the chairman has been very concerned, as has been the 

concern of all Members, to see if we can find a way to leverage public dollars with private-sector dollars. Madam Ranking Member, we 

estimate that $20 billion of private-sector dollars would be coming 

into our project, based on the revenues that would be generated. 

That is a lot of money. What they are waiting to see is the first 

piece of this built and a commitment going forward. 

In fact, just yesterday, at our monthly meeting of the California 

High-Speed Rail Authority, a representative of one of the largest 

infrastructure builders in the world, from Spain, stood up and said, 

33 

‘‘We see what Governor Brown is doing with his commitment of 

money from cap and trade. This type of long-term commitment is 

creating excitement and generating more and immediate interest 

on the part of the private sector.’’ 

So, Madam Ranking Member, I really believe that if we can come 

together around this project, we can achieve these objectives of 

leveraging public dollars with a lot of private-sector money. 

Ms. BROWN. Thank you. Would you like to respond and explain 

the Federal role in making sure that we are spending taxpayers’ 

dollars properly? Do you want to expound on that? I mean—— 

Ms. HEDLUND. We engage in all of our projects in extensive oversight and monitoring of the expenses. We do detailed reviews, desk 

reviews, on-site reviews. And every single payment, reimbursement, that we make to a grantee is subject to audit. So, even if, 

after the fact, some question is raised about the propriety of a specific expenditure, we can recapture that. 

Ms. BROWN. CRS, do you want to respond, as far as taxpayers’ 

dollars are concerned? 

Ms. DOLAN. I will decline to answer any questions that deal with 

policy. So I think, as—from the legal standpoint, you know, the 

FRA’s relationship to the Authority is set out in the cooperative 

agreement, and they have certain rights under that agreement. 

And as far as the way that that agreement is written, the FRA has 

the responsibility at this point to make decisions on how to proceed. 

Ms. BROWN. OK. I wasn’t aware that I was asking you a policy 

question. But let me just make a statement: I think that—and I 

have said it before—I think certain Members in this body need to 

run for Governor of California, need to run for the State legislature 

in California or the State senate in California. We have a bigger 

role here. We are interested in California, but we are interested in 

the entire country. Yes, interested in how we can move our country 

forward. 

We are stuck on stupid. We are not investing any money. Eight 

billion dollars, not a dime—and proud of it—not a dime for highspeed rail. But when I go to other places, they are moving forward. 

They are moving forward. And we are left behind. I am talking 

about third-world countries moving ahead and leaving us. Thirdworld countries have intermodal airports. I mean, I don’t understand why we don’t understand the importance of moving people, 

goods, and services. We are becoming a third-world country, while 

we sit here and argue about nickels and dimes. 

Mr. DENHAM. Mr. Webster? 

Mr. WEBSTER. Thank you, Mr. Chairman. Mr. Richard, which 

segment—OK, I don’t know much about California, except just 

somewhat where the cities are. Which is the segment that you are 

building first? 

Mr. RICHARD. Congressman, first of all, we would welcome you 

to come visit and see what we are doing. The segment that we are 

actually building first is in the Central Valley of California, but simultaneously we are making investments in our urban areas in 

San Francisco and Los Angeles. We are building the spine of the 

system in the Central Valley. This is an intercity rail system, and 

so it is going to connect the great regions of our State. 

34 

Mr. WEBSTER. So how long is that segment? 

Mr. RICHARD. The segment that we are building will be 130 miles 

through the Central Valley, and that will go from north of Fresno, 

which is right in the center of that region, to Bakersfield, which is 

in Congressmember McCarthy’s district. 

Mr. WEBSTER. What is the projected passenger travel per day, 

or—— 

Mr. RICHARD. So, Congressman, this gets into the issue of how 

we are building in a stair-step fashion. 

Mr. WEBSTER. Well, just in this segment. I am just—if we are 

talking about the—— 

Mr. RICHARD. Right. That segment is what we have the funds to 

build today. And that is not going to be a segment where we are 

going to be able to start full high-speed rail service. 

So, what we are going to do in the interim is to upgrade the existing Amtrak service on that segment while we clear the environmental process and put the funding package together to get to the 

next segment, which is over the mountains to a community of 

Palmdale, right at the edge of the Los Angeles basin. That is where 

I think we will be able to start to operate. 

I will tell you that it surprises a lot of people, but, today, three 

of the top five Amtrak ridership corridors are in California. And 

the Central Valley segment where we are building right now is the 

fifth most used Amtrak corridor, with more than 1 million trips per 

year. So there is substantial ridership in those communities. And 

as we move to transition up to high-speed rail level service, we expect to see, ultimately, between that area and Los Angeles, about 

2.2 million trips, just in the first year, to start, as we get into the 

Los Angeles basin. So it is significant. 

Mr. WEBSTER. So, what I—I just heard a lot of numbers flying 

around here, 8 million passengers, you know. What kind of—I just 

want to see what kind of impact it was going to have on the traffic, 

air traffic, even the bridge that was mentioned. That has—— 

Mr. RICHARD. So—— 

Mr. WEBSTER [continuing]. 60,000 cars a day on it. You know, is 

that going to—that is certainly a different kind of project than this. 

This would be far less than that, as far as people moving. I am just 

trying to get an idea. 

So—but that is not going to be high speed. It eventually will. Is 

that what you are saying? 

Mr. RICHARD. Yes, sir. Absolutely. As the GAO noted, when it 

was asked by several Members to review our project, a project of 

this size can only be built in phases, and that is what we are doing. 

Our approach is to make sure that each phase is usable, as we 

build it. Then, as additional phases are added, the whole system 

gets better and better and better. 

But our Central Valley in California right now suffers from tremendous traffic and serious environmental issues. The air basin is 

very bad there; 21 percent of the kids have asthma. It is actually 

one of the poorest areas of our State, in addition to having some 

of the great wealth from our agribusiness communities. And this is 

an area that has been left behind in investment in California for 

years. 

35 

So, our first $6 billion—half from Federal funds, half from the 

State—targeted to that area, is going to have immediate benefits 

in terms of employment, air quality, transportation, and mobility. 

And it is the spine of the system that we are building that is ultimately going to connect the entire State. 

Mr. WEBSTER. What does the ridership produce, as far as operating cost, in just that segment? 

Mr. RICHARD. Under our bond act, Congressman, we are not allowed to operate high-speed rail with a subsidy in California. And 

that is the crux of the issue. 

Because everywhere in the world, once high-speed rail is built, 

it generates enough money to operate without needing a public 

subsidy. And our projections are that we will be able to do that, 

too. Not on that first segment, which is why we will probably use 

it for upgraded Amtrak service. But as we get over the mountains 

to Palmdale, and to connect to L.A., we believe we will be able to 

start operating without a public subsidy. In other words, our highspeed rail will cover its costs, and that will trigger further privatesector investment that will help build out other portions of the system. So that is the approach we are taking. 

Mr. WEBSTER. Thank you very much. 

Mr. RICHARD. Thank you, sir. 

Mr. DENHAM. Thank you, Mr. Webster. Mrs. Napolitano? 

Mrs. NAPOLITANO. Thank you, Mr. Chairman. It is really interesting to hear some of the information. But I—Mr. Richard, what— 

because I know there is going to be some grade separation improvements. And, as I have mentioned before in this subcommittee, that 

in my area there were 54 grade crossings, and only 20 are going 

to be separated. So some of the investment is going to be in helping 

the communities be able to deal with the impact it would have on 

its traffic. And, of course, you are talking about improving the infrastructure of the rail lines, which, of course, have been sadly in 

need. We talk about not funding infrastructure repair, that we are 

so back—and bridges and dams and railroads, and all of that. 

So, all of that said, I think we need to have more information 

from the Authority to the general public about the benefits it 

brings, besides being able to do the connection and the choices of 

travel for folks and eventually into the L.A. area. 

We talk about Palmdale, going into Palmdale. How—what is the 

connection between there and Los Angeles? 

Mr. RICHARD. Congresswoman Napolitano, in the first phase, 

part of the appropriation from the California Legislature is to upgrade the Metrolink line from Los Angeles to Palmdale. So there 

will be near-term improvements in that service. That service right 

now has about 1.2 million riders per year. As you know, it is very 

well-traveled. We will be improving the travel time, straightening 

part of the track, and doing grade separations there. Those things 

will provide immediate benefits for the Metrolink service between 

Los Angeles and Palmdale. 

Mrs. NAPOLITANO. Well, I am not opposed to the high-speed rail, 

at all. I just want to be sure that the communities that I represent, 

and the rest of the county, is aware of the plans that the Authority 

has for the area, and how the impact is going to be on those comVerDate Aug 31 2005 13:16 Aug 05, 2014 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\RR\1-15-1~1\86279.TXT JEAN
36 

munities, themselves. And I think I shared that with you, and I 

hope to be able to continue working on that. 

Ms.—I would yield to Ms. Brown. 

Ms. BROWN. First of all, I would like to make some breaking 

news. I would like to clarify that the Democrats on this committee, 

members or staff, are not getting any information that the Republicans have not been getting. I want to be clear: We have not gotten 

any information. 

Secondly, for the Deputy Secretary, in light of the two recent 

court decisions that we have heard about this morning, is the Authority currently meeting its obligations to FRA, or are there any 

violations of the agreement? 

And my second question, have either one of these lawsuits 

stopped the projects? 

Ms. HEDLUND. Thank you, Ms. Brown, for giving me an opportunity to clarify that issue. As our learned counsel from the CRS 

has pointed out, the Authority is not in violation of the cooperative 

agreement as a result of its inability to access bond funds at this 

time. The Authority is in the process of developing a plan to address concerns raised by the court in pursuing supplemental funding sources, and you have heard the chairman of the Authority 

today, that they are committed to meeting their matching fund obligations under this agreement. 

With our Federal investment secured by strong protections in our 

grant agreement, we are working with California on a path forward 

that best serves the interests of the American people. And with 

these strong protections in place, any premature adverse action on 

the part of the Federal Government would not serve the taxpayers’ 

interest, because it could delay project delivery and cause the Authority to incur substantial contract damages and other costs that 

could needlessly increase the ultimate cost of the project to the taxpayers by millions of dollars. 

Ms. BROWN. You want to add to that, Mr. Richard? 

Mr. RICHARD. Yes, Congresswoman. I want to reaffirm what I 

said before. We are meeting our obligations. We will continue to 

meet our obligations. 

When we negotiated this last grant agreement amendment with 

the Federal Government, it allowed us to access Federal funds 

ahead of State funds. And I would like to emphasize that was just 

good business. The Congress, in its wisdom, set a deadline on the 

use of the stimulus money of September 2017. We were facing a 

situation where, in order to use the Federal funds in time, we were 

going to pay about $180 million of acceleration fees to our contractor to get them to go faster. We have saved that money now, 

because of the cooperation and the work that we have done with 

our Federal funding partners. It was good business. 

But, at the same time, Ms. Hedlund and her colleagues negotiated a very strong agreement that went through all kinds of 

‘‘what-if’’ questions. They anticipated that there might be a problem like this. The agreement, by its terms, says the State intends 

to pay back the difference with bond money. But if they can’t, there 

will be other monies, and other monies, and ultimately, Federal 

protections, as was described by Ms. Dolan. 

37 

So, we feel that the Federal taxpayers are fully protected. The 

State of California recognizes its obligation to match the Federal 

commitment. We are doing so, and we will continue to do so. 

Ms. BROWN. Thank you, sir. 

Mr. DENHAM. Thank you, Mr. Richard. Mr. Williams? 

Mr. WILLIAMS. Thank you, Mr. Chairman. And I want to thank 

all of you for being here this morning. Appreciate it. 

I am from Texas. I am a business guy for 42 years, and I am a 

big believer in the private sector. I think the private sector is the 

biggest, the best partner anybody can have. And they get it done 

right, much better, in most cases, than the Federal Government. 

But just last week Secretary Foxx was in my State, in San Antonio, announcing an agreement between the Federal Railroad Administration, TxDOT, and the Central Texas Railway, to prepare 

two environmental studies that will lay the groundwork for highspeed rail between Dallas/Fort Worth and Houston. And I must tell 

you, I personally look forward to seeing the results of that Department’s work, and—with our State, on the project. 

Now, in preparing for this hearing, I was struck by the stark difference between the work that has been done in Texas and that 

that you describe that is being done in California. Most glaring to 

me is the private-sector involvement. In Texas, I understand there 

is a lot of private-sector interest and backing, but I don’t see any 

of that, that you are talking about. You have touched a little bit 

on it, but we don’t see any of that in California. 

So, Mr. Richard, I would direct this, my first question, to you. 

How much private-sector money do you have in hand for all this 

project? Now, I heard you talk a little bit about that. But what do 

you have on hand now that shows you are aggressively going after 

the private sector? 

Mr. RICHARD. Congressman, thank you for that question about 

the private sector. Let me just say, sir, that this is actually a parttime job for me, being the chair of the California High-Speed Rail 

Authority. It is sort of a full-time part-time job. In fact, I have 

spent much of my career in the private sector, including infrastructure finance. And so I share your view that the private sector 

brings innovation and efficiency. 

And, indeed, our business model for high-speed rail in California 

anticipates that it would be operated by the private sector. This is 

not going to be a public-sector railroad. Our business model is to 

have initial investment, and then to auction the rights to the private sector to come in and build and operate on that system. They 

would be the operators. That is a model that has been used successfully around the world. I am sure that that is what they are 

looking at in Texas. So we are going to follow that model. 

Sir, we have had extensive conversations, not only with privatesector entities in this country, but with sovereign funds and private-sector builders and operators from around the world. There is 

no question there is going to be extensive private-sector involvement in California high-speed rail. The only question, Congressman, is when. Our view is, as we talk with them—and we would 

be happy to share this with you and your colleagues—that they 

want to see certain things first. 

38 

It is a question of how they price the risk. If we bring them in 

too early, it could be very costly for us. If we can effectively use 

public dollars first and show a ridership base, then we have got 

something much better to sell to them, and we can generate a lot 

more private-sector dollars. 

So, we think that we are working very well with the private sector. I would like to point out that when Governor Brown appointed 

me, he also appointed a fellow named Mike Rossi, who was the 

former vice chairman of Bank of America. Mr. Rossi sits on the 

board of Cerberus and other financial companies. He has extensive 

finance experience. Together, we have laid out an entire financial 

approach to this project that we think will maximize private-sector 

involvement. 

We don’t have those dollars in hand today, but that is because 

we believe that it is proper to use the Federal stimulus dollars 

first, and then lever up the private-sector dollars afterwards. 

Mr. WILLIAMS. Well, with that in mind, as—what I understand, 

as I have listened to this, even before the stimulus money came 

out, you all turned down an offer from the private sector to help 

build this project. Can you explain that offer? And can you speak 

on why it was turned down? 

Mr. RICHARD. Congressman, I am aware of the situation you are 

referring to. It predated my time on the California High-Speed Rail 

Authority. But what I understand was that a company that has operated the French railroad, SNCF, made a proposal at one point to 

the California High-Speed Rail Authority to simply take over the 

project. It is also my understanding that that offer did not come 

with any dollars attached to it. They just said, ‘‘You know, we can 

come in and take this over.’’ 

To me, that would basically be the same as saying, ‘‘Well, why 

don’t we let Airbus come in and run our airports?’’ I’m not quite 

sure that the jetways would fit the Boeing airliners at that point. 

So we wanted to have an open-source project. We didn’t want to 

turn it over to just one company, particularly when there was no 

financial commitment associated with that proposal. If they had 

brought dollars to the table, it might have been a different conversation. 

But that is my understanding of the history, sir. And, if you are 

interested, I am happy to provide more information. 

Mr. WILLIAMS. I think you should provide that information, let 

us see that. 

Mr. RICHARD. I would be happy to do that, sir. 

Mr. WILLIAMS. And also, talking about the model in Texas, I note 

that the Texas Central has been speaking with STB throughout 

their process, to ensure that they check all the boxes they need to, 

and they don’t get hung up anywhere. 

You all, however, didn’t apply for the necessary STB authority 

until after Chairman Denham asked you to look into it. Is that correct? 

Mr. RICHARD. That is absolutely correct. We had thought that we 

did not need to go to the STB until we started operations. Upon 

assuming the chairmanship of this subcommittee, Chairman 

Denham told us that he did not agree with that view. We told him 

that we respected that position, and we immediately went to the 

39 

Surface Transportation Board to put the question to them. They 

determined that we were under their jurisdiction, and we have proceeded apace since then. But you are absolutely correct, Congressman. 

Mr. WILLIAMS. Well, you think if you discussed it with them before, and supposedly applied on time, that you would not have had 

to ask for approval to be—to have the process affected? 

Mr. RICHARD. Congressman, my understanding is that once we 

applied, the application went through the normal process at the 

STB. 

A few months ago, for the next leg, we asked the Surface Transportation Board if they wanted to bifurcate our application and 

deal with the transportation issues first and the environmental 

issues second, in order to meet time schedules. They told us they 

didn’t feel the need to do that, that they felt that their process 

would work just fine, and we accepted that judgment. 

Mr. DENHAM. Thank you, Mr. Williams. Ms. Hahn? 

Mr. WILLIAMS. Yield back. 

Ms. HAHN. My turn already? It is only 2 hours. So it is 2 hours 

into this hearing. Pretty much everything has been said. But everything hasn’t been said by everybody, so I am going to say it. And, 

as co-chair of the California High-Speed Rail Caucus, I am a strong 

supporter of bringing high-speed rail to California. 

We are behind the rest of the world. China has built more than 

6,000 miles of high-speed rail track since 2008, and is investing 

more than $100 billion in high-speed rail. Japan and France have 

also made substantial investments. In California, our transportation system is at its limit. Our highways are jammed. L.A. to San 

Francisco is the second busiest air route in the country, and faces 

constant delays because of their weather. We need another option, 

and I think that is what high-speed rail is for California. 

It is true that the Authority has had a lot of challenges. It needs 

to quickly and effectively and—address, so that we can ensure that 

this project moves forward. I hope that, at some point, we can 

begin to talk about the serious impact that this project is going to 

have on some of the communities, and how we might mitigate that. 

But let’s not pretend that these challenges are insurmountable, and 

that we haven’t faced similar challenges before. Everybody has 

been talking about it. 

The great California water project, which, by the way, when it 

was introduced, only passed the legislature by one vote. And today, 

it provides drinking water for more than 23 million Californians 

annually. Nobody is going to question that. 

The New York Times talked about when the Golden Gate Bridge 

was in development, it had 2,300 lawsuits before it was built. So, 

again, nobody is discussing whether or not that project was worthwhile. 

I believe this is worthwhile. When we talked about 15 million 

residents residing in California, you know, I hope that these are 

the kinds of projects we are dreaming about and thinking about 

and planning for. 

I was disappointed one of my fellow California Members, Mr. 

Valadao, was more interested in dealing with the population by 

building more prisons. You know, I don’t think that is the future 

40 

of California. I think we need to be innovative and big thinkers. 

And you know, with the jump the shark comment, you know, we 

both had knowledge of ‘‘Happy Days.’’ The problem is that episode 

was in the fifth season. It went on for 11 more seasons. So, even 

the way people use that comment to describe a project that is declining, or that is relying on gimmicks to keep attention on it, was 

used improperly. I think we are in season 1 of the high-speed rail, 

and I think we have got at least 11 seasons that are going to be 

strong and problematic. 

And I hope we, as Californians, can come together and talk about 

the problems, and talk about the solutions. And I hope, Mr. 

Denham, your line of questioning is more about tough love than, 

you know, about shaming and punishing a project that I think will 

mean a lot to California. And I think we ought to be fighting together to bring Federal resources to California, not trying to oppose 

Federal resources. 

So, Mr. Richard, a couple things have been talked about. You 

have been accused in this hearing of having phony numbers with 

your ridership and your business plan and your financing. Can you 

address some of that? 

And also, one of the things I am interested in is the Governor’s 

proposal to offer the $250 million in cap and trade. Is that legal? 

What does our legislative analyst say, whether or not we can use 

that? Is $250 million even close to what we are going to need to 

fill the gap? And how do we plan to fill the gap in this project, 

which I think is one of the greatest projects that we have seen in 

this country in a really long time? 

Mr. RICHARD. Well, Congresswoman Hahn, thank you for those 

comments and questions. Let me just quickly address the issue on 

the use of the cap and trade money. 

The Governor did propose in his recent budget to use cap and 

trade money for high-speed rail. But this has been talked about for 

several years. In fact, going back to the commencement of the 

greenhouse gas reduction program by the California Legislature, 

early on, the California Air Resources Board put out a scoping 

plan, talking about the types of strategies they would have for 

meeting the target reductions. California high-speed rail was included in that early scoping plan. So, from the very beginning, the 

Air Resources Board saw this project as having major benefits for 

helping us meet our goals of reducing greenhouse gas emissions to 

1990 levels. 

Now, it is true that the legislative analyst of the California Legislature came out this week and said that they thought that this 

was not necessarily consistent with the law, I think the term they 

used was a ‘‘legally risky strategy.’’ But the problem with that conclusion is that it was based on two assumptions, both of which are 

not correct. 

The first assumption was that the legislative analyst assumed 

that there wouldn’t be benefits before the year 2020, as contemplated by the law. But, in fact, there will be tremendous benefits. Because of our cooperative agreements, we are going to be 

electrifying the Caltrain commuter rail system. That, itself—and 

that is going to be in place by 2018 or 2019 and reduce 18,000 tons 

41 

per year of carbon emissions immediately, just for that train system there. 

The second assumption was that we would generate greenhouse 

gas emissions during construction. As far as construction in the 

Central Valley goes, we are committed—and we are required, 

under the environmental processes—to a zero impact construction. 

The equipment that is being procured right now is called Tier 4 

equipment, which has the lowest possible emissions. We have required the contractor to recycle all steel, all concrete, to take care 

of all those materials, so that they don’t go into landfills. And landfills themselves generate greenhouse gas emissions. 

My point is there are immediate and durable benefits that are 

being provided through this program. 

Mr. DENHAM. And we will be having a couple more rounds. 

Ms. Hedlund, I appreciate that in all efforts for it to be transparent, you will be providing those invoices. Our staff looks forward to having those conversations and getting those in a timely 

manner. But let me ask you a little more about the lawsuit and 

what is happening right now with California, as it pertains to our 

Federal tax dollars. 

So, is it accurate that FRA has not changed any policy or procedures related to the grant since the court ruling? 

Ms. HEDLUND. We have not—I think that is accurate. We have 

not made any change to the grant agreement since the court ruling. 

Mr. DENHAM. So even though a court has made the decision that 

there is no State match at this time, FRA is not taking any separate precaution on Federal tax dollars? 

Ms. HEDLUND. I would not agree with your characterization, sir, 

of the court’s decision. The court decision—and I am a little reluctant to discuss a litigation to which we are not a party, but you 

have been advised by counsel to the CRS—the court decision did 

not say that the funds would never be available. It said that the 

Authority has to—— 

Mr. DENHAM. It said ‘‘currently,’’ which—— 

Ms. HEDLUND. They—— 

Mr. DENHAM [continuing]. Is your responsibility, watching over 

the taxpayer dollars. You have a fiduciary responsibility to make 

sure that, under the Antideficiency Act, that you are going to receive your 50 percent match coming back. So, currently—— 

Ms. HEDLUND. I don’t—— 

Mr. DENHAM [continuing]. The court decision has said—so the 

question is, have you made any changes? And who has actually 

made this decision? Did it go up to DOT? Is the White House 

aware that the FRA is not making any changes in its current procedures? 

Ms. HEDLUND. We are in discussions with the Authority about 

their plans to continue to meet their obligations under this agreement. They have not failed to meet their obligations. As far as we 

can determine to date, they have said they will continue to meet 

their obligations. And so, we are going to continue to talk to them 

about this. 

Mr. DENHAM. Ms. Hedlund—— 

Ms. HEDLUND. But we have not made a decision. 

42 

Mr. DENHAM. A court has made a ruling. Today, currently, there 

is no State match. Now, the courts have said Prop 1A cannot be 

used, the $9.95 billion cannot be used under the current system. 

And April 1, $180 million is going to be owed back, by your numbers, by your request, on that State match. 

So, I understand the Governor has been very creative, $250 million for the cap and trade dollars. But as I served in the State legislature, that vote has to be done by the legislature at the end of 

the fiscal year. Most of the time they are late, meaning July or August. How do they meet the April 1st deadline, if it is even constitutional to do cap and trade, and if both liberals and conservatives in the legislature agree that cap and trade dollars should be 

used for this process? We are still talking August versus April. 

Ms. HEDLUND. I would suggest you address that question to Mr. 

Richard. We do recognize that acts of the legislature, that they are 

subject to appropriation, as is my next paycheck. 

Mr. DENHAM. My concern is this does not seem to be raising any 

red flags. 

Ms. HEDLUND. We are very concerned about it, sir, and that is 

why we have been engaged in discussions with the Authority about 

their plans. 

Mr. DENHAM. So who made the final decision to continue to 

spend the dollars? Is that something that Mr. Szabo makes on his 

own? Is that something he takes to Secretary Foxx? Is it something 

Secretary Foxx takes to the administration? 

Ms. HEDLUND. We have not made a determination that they are 

in violation of their agreement. And so, we have continued to make 

those payments in the ordinary course. 

Mr. DENHAM. Ms. Dolan, do you think that they are in violation? 

Ms. DOLAN. I think, under the terms of the cooperative agreement as it stands at the moment, two things happen on April 1st. 

They may no longer take advantage of an advanced payment method, and can only be granted Federal funds under a reimbursement 

method. And, according to the funding contribution plan, as it exists in the cooperative agreement, funds starting in April of 2014 

until, it appears from the chart, April of 2015 will be spent solely 

from the matching funds the State provides, instead of the ARRA 

funds, as an effort to ‘‘catch up’’ on the contributory match percentage that they are required to have. 

So, at this point, considering that those contributory match funds 

are due in April of 2014, it doesn’t appear that they have violated 

the agreement right now, as it stands. 

Mr. DENHAM. So, given the November ruling, does the FRA have 

the right, under the grant agreement, to suspend payment? Do 

they have the right to be able to suspend payment to the California 

High-Speed Rail Authority if they so choose? 

Ms. DOLAN. So, under Section 23 of the grant agreement, the 

FRA has several options for suspension and termination of the cooperative agreement if any number of circumstances exist. One of 

those possible circumstances is if the FRA makes a determination 

that the grantee will not be able to meet the contributory match 

percentage that is required under the agreement. 

43 

So, if the FRA determined that the Authority would not be able 

to meet the contributory match percentage, then under the agreement they would have the option to suspend or terminate funding. 

Mr. DENHAM. Thank you. I do have a followup question on that, 

but my time has expired. 

Ms. Brown? 

Ms. BROWN. Thank you. You know, I have been here for 22 

years, and I guess this is the first time I have ever seen anybody 

go after money for their State. I mean this is really breaking. 

But my question has to be that if California is temporarily prevented from selling bonds because of the recent lawsuit, are there 

other ways California can meet its obligations? Mr. Richard, you mentioned that we—you saved us $188 million. 

Can you expound upon that? 

Mr. RICHARD. Well, thank you, Congresswoman. I think it is important to note that Governor Brown came into this project when 

it was already underway. It had been started by his predecessor 

and had been supported by many Governors over the years. In fact, 

even when he was President, President Reagan spoke to the Japanese and said, ‘‘We are going to be building high-speed rail in California, just like you folks have here, in Japan.’’ So this has been 

something that California has been looking at for many, many 

years. 

When Governor Brown came in, this program did have a number 

of challenges and a number of problems, which we’ve tried to address. My background is in local transit. My colleague’s background 

is in finance. We tried to bring a businesslike approach to this 

project. What that meant was that we wanted to look at this in a 

way that business leaders would look at the challenges and opportunities of a similar venture. 

You know, Ms. Hedlund, before she had this position, was a commercial attorney working on infrastructure projects. She knows 

how to negotiate an agreement that has security provisions in it. 

And I can tell you that when we sat down to negotiate for months 

and months with the Federal Railroad Administration, they went 

through, in chapter and verse, how they were going to make sure 

that they protected themselves. 

What the agreement says is that if we can, we will pay back the 

money from our bonds. If we don’t have the money from the bonds, 

we will pay it back from other sources of State funds. If all of that 

fails, they have the right, under Federal law, to actually offset 

monies that would come to California. So they have an agreement 

that you, as a Member of Congress, should be happy about, because 

it protects the taxpayers of Florida and every other State in the 

Nation, Federal taxpayers, when it comes to California. 

Now, our administration is committed to meeting its obligations. 

Our hope is that, possibly by April, we will have access to the bond 

money. But if we do not, the Brown administration is committed 

to working with our Federal funding partners to make sure that, 

under the grant agreement, we continue to work in harmony to 

achieve the objectives. That is what we are going to do. 

Ms. BROWN. Well, I surely hope so, because I am sure we will 

be back here April 1 with another hearing. You know, we are going 

to micromanage this project. You need to know that. 

44 

Deputy, are you comfortable that we are safeguarding the taxpayers’ dollars, particularly the billion dollars I gave? 

[Laughter.] 

Ms. HEDLUND. We are absolutely comfortable that we are safeguarding the taxpayers’ dollars. 

Ms. BROWN. And do you need any authority from us? 

Ms. HEDLUND. We do not need any additional authority from you 

to safeguard the taxpayers’ dollars in this project. 

Ms. BROWN. I am, overall, interested in how to expedite projects. 

I heard the person talking from Texas, which—I have been out 

there five times. The flights between Houston and Dallas, I mean, 

it is—I have sat on the runway for an hour. And if they had a highspeed train, I could have been there. And we just sit on the runway. And all of the local communities are supportive of the project. 

But the problem was you didn’t have the support in the capital. 

And that is part of the project. Where you have the local government’s support, then you don’t have the people—the capital. 

So, this is a project that has local and State support, but you are 

having problems up here, with the Federal Government. Not the 

Federal Government, but Members of Congress. 

Mr. RICHARD. Well, Madam Ranking Member—— 

Ms. BROWN. Republican Members of Congress, OK. 

Mr. RICHARD. There are certainly people in California who have 

concerns about the project. So I don’t want to pretend otherwise—— 

Ms. BROWN. I was there. I mean I was there when the Governor 

announced the—I was there for another meeting, so I was there 

when the $100 million, $100 billion, or something—I was there. So 

I have been there, over and over again, in the congestion, in the 

traffic. I had a convention out there, it was the worst one I ever 

had, because it takes all day to get from one place to another. So 

there has got to be a better way to get around. 

Mr. RICHARD. Well, and on that point—and also, in response to 

something that Congressman DeFazio said before—one of the biggest supporters of the California high-speed rail project is the head 

of the San Francisco International Airport. That is because, right 

now, between San Francisco and Los Angeles, which is the busiest 

short-haul air corridor in the country, 25 percent of those flights 

are delayed. They don’t have any room to expand the airport. And 

their view is they want to use their runways and their gates for 

long-haul—— 

Ms. BROWN. Long-haul. 

Mr. RICHARD [continuing]. International flights. That is the most 

effective use of that resource. So they have been very strong supporters, and we have enjoyed the support of the mayors of all of 

our biggest cities, the heads of the business communities in all the 

major cities. We have a lot of support. We do have detractors, but 

we have a lot of support. 

Ms. BROWN. Yes, sir. 

Mr. DENHAM. Thank you, Mr. Richard. Mr. Mica? 

Mr. MICA. Thank you. A couple of questions. Since we have got 

pretty substantial Federal expenditure already in the project, and 

this will be one of the biggest expenditures of Federal funds for any 

infrastructure project, there is some—there is now some uncerVerDate Aug 31 2005 13:16 Aug 05, 2014 Jkt 000000 PO 00000 Frm 00056 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\RR\1-15-1~1\86279.TXT JEAN
45 

tainty. I guess your superior court had said that there are not 

funds available. Has the Governor made a commitment? And that 

may be a temporary situation. If, in fact, those funds are not available for California to come up with its share, has he made a commitment to find the resources to continue the project? Do you have 

a written—I mean or some solid commitment? 

Again, there—a quarter of a billion Federal funds has already 

been spent. State has certain commitments. This is not just the 

Federal project, but California’s project. 

Mr. RICHARD. Yes, Congressman Mica, and I am glad you made 

that last point. The Federal Government has spent several hundreds of millions of dollars on this project, already. But so also has 

California. We have spent $400 million of our State bond funds on 

this project to date. Of that, about $97 million qualifies as matching funds under our agreement with the Federal Government. But 

the other $300 million is money that we spent, preparatory to that, 

to do environmental—— 

Mr. MICA. No, but both sides have spent money. My question 

deals with—— 

Mr. RICHARD. Going forward. 

Mr. MICA. Yes. 

Mr. RICHARD. Going forward, Congressman, Governor Brown just 

went to the California Legislature with his budget to put, at least 

for the upcoming fiscal year, $250 million from our new greenhouse 

gas emission program into high-speed rail. He also indicated in his 

budget that he will be asking the California Legislature to create 

a more permanent structure around that, so that we have—— 

Mr. MICA. But right now the answer would have to be no, you 

do not have a commitment, because he doesn’t have the approval 

of the legislature. He does have a proposal before the legislature 

for both short term or interim, and then long term. Is that the answer? 

Mr. RICHARD. That would be my answer, sir. 

Mr. MICA. OK. Well, you know, I am the strongest advocate of 

high-speed rail in the Congress. Have been. I didn’t think they 

should start in California, with a stretch that—nowhere. It can 

lead to somewhere. It has to lead to the bay area or it has to lead 

to L.A. 

Mr. RICHARD. Right. 

Mr. MICA. Those are very expensive links, too. And in the future 

we are going to end up with a high-speed train, unfortunately, that 

does not serve substantial population areas, nor does it connect in 

to fixed systems. And again, my druthers would be to do the Northeast Corridor, where we have the only right of way we own, Amtrak-substantial, that could be eligible for that. So I see more and 

more money going into this project. California has had incredible 

financial problems. I think it is starting to come out of it. And we 

have no commitment for the future. 

The other question I have is I consider Amtrak our Soviet-style 

train system. They are just—I mean their record, and we keep 

pouring more money into losing propositions. But now I understand 

Amtrak has a potential operational—or some participation in the 

project. Can you describe that to me, without me getting a prescription for depressant medication? 

46 

Mr. RICHARD. I can’t guarantee that, Congressman. First, I want 

to say that even though I understand that you have had concerns 

about the California project, we recognize and respect your leadership on high-speed rail. 

We also believe that the Northeast Corridor is an essential corridor for high-speed rail. So we don’t see competition with that program. In fact, we would love to work together with that project. 

On the question of Amtrak, as I was explaining before, to one of 

your colleagues, we are starting in the Central Valley, sir, and I 

would be very happy to talk about reasons why. 

Mr. MICA. Do you have a relationship now, or an agreement with 

Amtrak—— 

Mr. RICHARD. Yes. 

Mr. MICA [continuing]. For service, or what? 

Mr. RICHARD. Well, we—the most interesting agreement we have 

with Amtrak is actually for the joint procurement of locomotives for 

the—— 

Mr. MICA. Oh, that—oh, please. I am going to have to go get a 

double dose of depressants. Their last locomotives were the Acela 

engines. You know the history of that. They misdesigned them, 

they were supposed to be tilt, so you could get the speed, then— 

they spent so much money in the suit of the acquisition almost as 

they did for the equipment. Then the tilt trains were misdesigned 

so they were hitting—they could hit the other trains. They had to 

put metal wedges in, so we have never had them utilized to their 

full capability. Now they are replacing them. That is another nightmare that I am concerned about. 

I would look at—to anybody except for Amtrak to—if you are 

going to get into a locomotive operational or any kind of a deal. 

Mr. RICHARD. Well, I am happy I stumbled into that one, sir. 

But the thing I was going to say is that of the five busiest Amtrak routes in the United States, three are in California. The fifth 

busiest Amtrak route is in the Central Valley of California. There 

are a million trips per year on that segment. As we build to full 

high-speed rail, which will accomplish what you said you wanted 

to see, connecting our cities with high-speed, intercity service, we 

can, as an interim step, upgrade that Amtrak service substantially. 

Mr. DENHAM. Thank you, Mr. Mica. Mrs. Napolitano? 

Mrs. NAPOLITANO. Thank you. Thank you, Mr. Chair. And one of 

the other things that I think we have heard—not heard as much 

about is the system of payment, the fare system, and how it can 

be made affordable for the nonprofessional people. 

Then the next issue that I would like for you to maybe even 

touch upon would be the safety issue, whether there will be the 

positive train control type system to protect the general public, the 

safety of the workers, the rail workers, the conductors, et cetera. 

Would you address that, please? 

Mr. RICHARD. I would be happy to. First of all, we are very committed to make sure that this high-speed rail program benefits all 

Californians. I had the opportunity recently to travel to China with 

Governor Brown on his trade mission. We rode the high-speed rail 

system in China. As you know, they have built 7,000 miles of highspeed rail in China. 

47 

It was very interesting because there were levels of service. In 

some of the cars, there were basically the workers, who were moving back and forth between the cities. And I understand in Japan 

this is true, as well. So this system has to accommodate all of the 

community’s needs for travel and transportation, and we believe 

that it will. 

Regarding our pricing structure, I took the Amtrak from Sacramento to Fresno many times in the course of this effort. The fare 

is $43. If we were operating high-speed rail today, the fare to go 

all the way from Los Angeles to San Francisco would be $81. So 

we think we are pretty comparable to the Amtrak fare structure 

right now, and that is a very popular system, especially with working-class folks in the Central Valley. 

On your question about safety, the California high-speed rail system will be 520 miles in the first phase of fully positive train-controlled track. It will be entirely subject to positive train control. 

And, Congresswoman, our program is also providing $180 million 

to upgrade the existing Amtrak service in California, including the 

addition of positive train control. So we are getting a jump on positive train control through funding from the California high-speed 

rail program. 

And on your final question about worker safety, I am happy to 

say that we work very closely with the Teamsters, Brotherhood of 

Locomotive Engineers. We are working to make sure that what we 

are doing is going to meet those safety standards. It is very important. 

Mrs. NAPOLITANO. Thank you, sir, for the answer. And I would 

yield to Ms. Brown. 

Ms. BROWN. Thank you. I just want to mention and clarify that 

Governor Brown sent a letter to DOT committing that the State is 

to meet its obligations in the grant agreement. I don’t know, do you 

have that, Deputy? 

Mr. RICHARD. Ms. Brown, I don’t have that letter with me. I am 

aware of that letter. That letter was part and parcel of our negotiations with the Department of Transportation and what I was saying before about their insistence that they have security against 

our advance payments. 

Ms. BROWN. Deputy, are you all—— 

Ms. HEDLUND. Yes, we have that letter, and we are very gratified 

by that letter. Thank you. 

Ms. BROWN. And that letter—it meets your qualifications? 

Ms. HEDLUND. Yes. 

Ms. BROWN. OK. 

Ms. HEDLUND. Additional security. 

Ms. BROWN. Can you please submit that letter to the record? 

Ms. HEDLUND. Yes, we will do that. 

[The information follows:] 

48 


Insert offset folio 8 here 86279.008
49 

Ms. BROWN. Thank you. Thank you very much. I yield back the 

balance of my time. 

[Laughter.] 

Ms. BROWN. I yield back. And do you want your time back? I 

yield it to Ms. Hahn, so we can finish. 

You wanted a minute? 

Ms. HAHN. Thank you. It is so surreal to be in this hearing, literally. The voices behind me, if I didn’t know better, that voice 

sounds like a congressmember representing any State but California. And the voice right behind me sounds like, if I didn’t know 

better, secretly lived in California, not to mention gave up $1 billion from the State that she represents to go towards this highspeed project. So it is just really amazing to me that our California 

delegation is not united together in trying to bring Federal resources to the beautiful State of California, instead of trying to 

fight it. 

So, my last couple questions are, you know, again, just reiterate, 

Mr. Richard, how confident you are that the State legislature will 

approve this $250 million and the cap and trade dollars. 

Also, I haven’t talked a lot about jobs. You were accused by one 

of our Members of being fuzzy on the jobs number. Once construction begins, like to know how many jobs are we talking about? And, 

of course, for those of us down in the southern California area, 

even though the project is starting somewhere else, can we count 

on some of those construction jobs to come from Los Angeles, some 

of the communities that I represent? 

And maybe talk about how Palmdale seems to be this tipping 

point. And what does that mean for this project in the future? 

Mr. RICHARD. Very quickly, Congresswoman, first of all, yes, we 

hope that you will be seeing jobs in southern California, as well, 

with a lot of the grade separations that Mrs. Napolitano had talked 

about, and other things that we are doing in southern California. 

We estimate that, during the initial construction segment, there 

will be 20,000 jobs per year for 5 years. 

And Mr. LaMalfa was correct. Some people jumped on us because 

we used the term ‘‘100,000 jobs.’’ That was basically the same way 

that people have described these job estimates historically. But we 

went and broke it down and said 100,000 jobs means 20,000 jobs 

a year for 5 years, which is a lot of jobs in an area that has twice 

the unemployment rate of the State, as a whole. The million jobs 

relates to the entire build-out, which is 100,000 jobs per year for 

10 years. So, there is a lot of employment associated with this 

project. 

I will be respectful of our California Legislature, so I won’t make 

a prediction as to how they would vote on cap and trade. It would 

be inappropriate for me to do so. But I will say that we are having 

conversations with environmental leaders and others, and I think 

they are more comfortable, as they have seen the Governor’s entire 

program for use of the cap and trade money, of which only 29 percent is not just for high-speed rail, but also for rail modernization— 

$250 million for us, $50 million for rail modernization, $200 million 

more for clean vehicles, more money for transit land use, more 

money for urban forestry. So, as they are seeing the totality of the 

50 

Governor’s approach to using the cap and trade funds, I think we 

are seeing a lot of support. 

Palmdale is emerging as a major hub. The mayor of Palmdale, 

Jim Ledford, is a real visionary, and sees the benefit of high-speed 

rail. And Palmdale could be the place where the Desert Express 

connects from Las Vegas, if that project is built, where high-speed 

rail connects into the Central Valley, and the third leg reaches 

down into L.A., Anaheim. The mayor and the civic leaders there already see what that could mean, in terms of the revitalization of 

downtown and development in Palmdale. 

Mr. DENHAM. Thank you. There has certainly been a lot of questions to this Member, who is from California, on ‘‘Why wouldn’t you 

just spend the money?’’ Just give all the money to California, $68 

billion. Let’s take some more money, 55—no, let’s take the entire 

transportation budget for the rest of the United States, and just 

give it to California. You are from California, why wouldn’t you 

take it? Here is why. Here is my concern. 

Ms. Dolan, Mr. Richard testified a minute ago that FRA, the Administration, the U.S. Government, if the Antideficiency Act was 

not followed, if they cannot come up with their 50 percent match, 

then we could hold up other funds. So, the Governor has already 

committed $250 million that was supposed to go to environmental. 

That would help out my Central Valley. That would help out our 

air quality. We are already going to see—if some of the environmentalists in California don’t get outraged that $250 million be 

used for something else. 

But what other money could be held up? Could Federal education 

dollars be held up? 

Ms. DOLAN. So, under the terms of the cooperative agreement, 

their—FRA reserves their right to require repayment of either all 

or a part of the funds that have been given to the grantee. That 

repayment can be done through what is called an administrative 

offset. And I believe that that would reach, in this order, FRA 

funds and then DOT funds and then, in the event that those funds 

cumulatively are not enough money, funds from the rest of money 

that is owed to California from the Federal budget. 

Mr. DENHAM. So the Federal Government, if the State does not 

repay its 50 percent match, which—the State is already in the 

hole—if the State cannot come up with its match, the Federal Government could first withhold all rail funding, then withhold all 

highway funds and aviation funds, and then go into deeper pockets 

of education, when our school systems are already failing our kids 

in California. Is that correct? 

Ms. DOLAN. The FRA reserves that right in the cooperative 

agreement. As it is written at the moment, it is in their discretion 

to—— 

Mr. DENHAM. Also—— 

Ms. DOLAN [continuing]. Decide how to exercise that—— 

Mr. DENHAM. Also, infrastructure dollars to water storage, 

which—water is being shut off in my Central Valley right now, and 

we are having huge droughts, tens of thousands of jobs that will 

be lost, due to water. That is another issue that could be held up. 

This is why this is such a big issue for California. It is about priorities. This is not just an endless pot of money, this is not just free 

51 

money. This is not just, ‘‘Let’s take it from Florida and every other 

State and give it all to California.’’ We have priorities. We are dealing with budgets. We have to be good stewards of the Federal taxpayers’ dollar. 

And so, when I am asking these questions, it is not because I 

hate high-speed rail. I think there are some great high-speed rail 

projects going in across the Nation. I think, you know, seeing 

Maglev, a newer technology than high-speed rail, may have an opportunity in the DC area. There are great infrastructure projects 

that are moving forward, as we move forward, as a country. The 

question is, what are our priorities? Sixty-eight billion dollars that 

could balloon to $100 billion is something I am going to continue 

to have a lot of questions about. 

Ms. Hedlund, Ms. Dolan said that she believes the—I don’t want 

to misquote you—that, ‘‘They can make the determination on 

whether or not to stop funding.’’ Do you believe that you have that 

ability to stop funding at this point? Is your discretion—is it up to 

the discretion of the Administration? 

Ms. HEDLUND. Since we have not made a determination that the 

Authority is currently in default, I think our legal obligation, at 

this point in time, is to honor the commitments made by the State 

of California, and continue funding. I think we have a legal obligation to continue funding. 

Mr. DENHAM. But if they do not—at a certain point, if the Administration decides that you have—that the Authority has hit 

some type of trigger, then you feel that you have the ability to 

make that determination, that they are not fulfilling their obligation? 

Ms. HEDLUND. It would depend on the facts and the circumstances at the time; they do not exist today. 

Mr. DENHAM. So, April 1st, they owe $180 million. If they cannot 

find that money, would that be one? 

Ms. HEDLUND. It would depend on the facts at the time. 

Mr. DENHAM. If the legislature does not approve the $250 million 

in August or July or June, would that be something that would 

trigger it? 

Ms. HEDLUND. The Authority has the ability to cure the deficiencies that were set out by the court. That is another alternative. 

Mr. DENHAM. In the grant agreement it reads, ‘‘Any failure to 

make reasonable progress on the project, and FRA determination 

that the grantee may be unable to meet the contributory match 

percentage required and complete the project according to the 

project schedules, shall provide sufficient grounds for FRA to terminate this agreement.’’ You still agree with that, correct? 

Ms. HEDLUND. That is what the agreement says. 

Mr. DENHAM. My time is expired. Ms. Brown? 

Ms. BROWN. Just in closing, I would like to have some questions 

submitted for the record. 

In addition to that, I want to just clarify for you, Mr. Richard, 

Maglev is 1 billion per mile. There are many types of high-speed 

rail, Maglev just being one of them. There are many countries and 

many organizations that want to partner with you. Are you looking 

at who is providing the best possible resources and partnerships, 

and who is going to build a plant in the area? I mean, there are 

52 

many factors that you consider when you decide who is going to 

partner. I know there are options because I have talked to the 

Italians, the Japanese. Everybody wants to partner with us. 

Mr. RICHARD. You are exactly right, Congresswoman. And the 

other issue you touched on is that the Congress, in appropriating 

these dollars, made it very clear that the Buy America provisions 

will apply. What that means is, for those who would come in and 

provide locomotives or any other things for high-speed rail, they 

are probably needing to look at building factories here and hiring 

American workers, because that is what American taxpayers expected. Our friends at the FRA have been very, very clear that they 

will enforce the Congress’ policies on that provision, and we have 

made that clear to the people that we are talking with. 

But you are right. There is international interest. They want to 

come here. They want to build high-speed rail in America. I would 

really like to see American companies developing the technology 

that some of the European and companies in Japan and China 

have developed. 

Ms. BROWN. Spain. I mean, I love it. I love it. 

Mr. RICHARD. They are very successful. But they want to work 

with us, they are looking forward to it. Congresswoman, we are 

going to be building high-speed rail in California. 

Ms. BROWN. Thank you, thank you. And, like I said, if you can 

come up with some ways that we can help expedite it, the permitting process, or anything that we could do on the positive end, I 

would certainly be interested in, you know, working with you to 

that regard. I am constantly out in L.A., which I think is a nightmare, as far as transportation is concerned. 

And, Deputy Secretary, I just want you to know that I know that 

Congress is not interested in bullying the Administration. And so, 

think kinder of us in our tone. We are learning, we are working, 

and we are, hopefully, moving forward and going to be a kinder, 

gentler Congress. I yield back. 

Ms. HEDLUND. Ranking Member Brown, we always appreciate 

the opportunity to have a lively discussion with you. 

Ms. BROWN. Lively, yes. Thank you. I yield back the balance of 

my time. 

Mr. DENHAM. Thank you, Ms. Brown. 

Mr. Richard, again, I appreciate your willingness, your openness. 

You know, we have had a great relationship, and continue to have 

ongoing conversations. And I understand that we may have some 

disagreements on some of the funding challenges, but you have certainly been a good partner to work with in this process. 

I do have a question on the operating segment itself, on identifying available funding. The court ruling, that was one of the 

things that they had ruled on, was that the initial operating segment, the entire segment going from Merced all the way down to 

Palmdale, there is a $20 billion deficiency in putting that together. 

So, basically, in a nutshell, the court is deciding that, until you have that $20 billion funding gap, no Prop 1A funds can be utilized. How do you fill that $20 billion gap? 

Mr. RICHARD. Mr. Chairman, first of all, thank you for your kind 

words. I also want to thank you for the courtesies that you have 

shown to me. I know that you have policy differences with us, but 

53 

I have appreciated the opportunity to work with you on this 

project, and we will continue to work with you and the committee. 

This is going to get to be a little bit technical, but I think that 

in Ms. Dolan’s excellent testimony that she provided to this committee, there is really the key to understanding how we look at this 

situation. The problem is that the bond act, the law, does not say 

that we have to build an initial operating segment. In fact, those 

words do not appear in the bond act. What the bond act says is 

that we have—— 

Mr. DENHAM. So, just to clarify, you disagree with the court’s ruling. 

Mr. RICHARD. No, sir. I can explain the court’s ruling. What the 

court dealt with was the initial funding plan that the California 

High-Speed Rail Authority provided in November of 2011—and, 

Mr. Chairman, it was released just after I was appointed by the 

Governor; it was really in the can ready to go before that. That 

plan described the first ‘‘usable segment’’—and the ‘‘usable segment’’ is the key term, here, that the bond act says is what we 

have to build. The authors of the bond act knew that nobody was 

going to be able to unwrap a 520-mile high-speed rail system like 

a train set under a Christmas tree in 1 day. They knew it was 

going to be built in segments. They said that those must be usable 

segments. And I believe Ms. Dolan quoted that in her memo. 

What happened was that the California High-Speed Rail Authority defined its usable segment as the initial operating segment. 

And, accordingly, the judge said, ‘‘If that is your first usable segment, you have to show me all the money, and you have to show 

me the environmental permits,’’ and we did not have those. 

But what was not in front of the judge was the revised business 

plan that we put forward before the California Legislature, 4 

months later, in April 2012. And, responding to a lot of public comment, what we did was we said the valley segment is, in fact, a 

usable segment. 

Mr. DENHAM. The valley segment, meaning the initial construction? 

Mr. RICHARD. Correct. And it is a usable segment, precisely because, in response to public commentary, we are tying in to Amtrak, we are tying into ACE train, and we are doing these other 

things that would give it usability. And I would point out, Mr. 

Chairman, that in its approval of the first leg of that, the Surface 

Transportation Board used the term ‘‘usable segment’’ as they—as 

a justification for why they were providing that approval. 

Our view is—and, obviously, the opponents of the project will 

come back and try to test it—our view is that, if that valley segment is a usable segment, and we believe it is—that we will comply 

with the judge’s ruling by showing that we have all of the funding 

for that, which we do, and all of the environmental permits, which 

we will. 

I will just end on this point, Mr. Chairman, which, as a former 

member of the California Legislature, I think you will appreciate. 

When our revised plan was put before the California Legislature in 

the spring of 2012, some of your former colleagues asked legislative 

counsel, ‘‘Does the High-Speed Rail Authority revised business plan 

comply with Proposition 1A?’’ The answer that came back from legVerDate Aug 31 2005 13:16 Aug 05, 2014 Jkt 000000 PO 00000 Frm 00065 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\RR\1-15-1~1\86279.TXT JEAN
54 

islative counsel, in a very detailed written opinion, was, ‘‘yes, it 

does.’’ 

That question has never been before Judge Kenny. He was dealing with the prior plan. So that is one of the reasons why, despite 

all of the press around this, we do not agree that in order to comply, in order to have access to the bonds, that we need to assemble 

$25 billion. We believe we have the funds in hand, and what we 

need to do to comply is to show that funding plan and to finish the 

environmental process so that we have the environmental documents in hand. That is eminently doable. 

Mr. DENHAM. I guess the piece that I don’t understand about 

this—I guess you would have two choices, either ignore the court 

ruling all together and hope that the attorney general can go ahead 

and float the bonds—— 

Mr. RICHARD. No, sir. 

Mr. DENHAM [continuing]. Or, because you have a disagreement 

with the court, the court is looking at the initial operating segment, 

and you are redefining the usable segment as the initial construction segment, the—you would have to actually go back to another 

court, to another judge, or to this very same judge, and fight that 

case. Would you not? 

Mr. RICHARD. I would almost agree with that. First of all, there 

is no prospect that the attorney general will give a clean bond opinion to try to sell the bonds until—— 

Mr. DENHAM. I didn’t think there was, but—— 

Mr. RICHARD. Right. So I don’t want to pretend that there is. 

What the judge said to us was, ‘‘Go back and redo your funding 

plan to show that it complies.’’ My view is that we can go back and 

we do exactly what the judge said. We are not, by any stretch of 

the imagination, Mr. Chairman, intending to ignore what the court 

said. What the court said was, ‘‘Before you can go forward, I need 

you to go back and redo this funding plan.’’ In my view, that means 

updating the funding plan to be exactly what was presented to the 

California Legislature that they determined was likely to comply 

with the bond act. 

There has been a lot of commentary about this, and I think most 

of what has appeared in the press and the discussion has been 

wrong. But it means that we can comply with the judge’s ruling, 

not ignore it, sir. We would not do that. 

Mr. DENHAM. I do want to finish this. I have got a couple more 

brief questions before we close. But do you want to go first, or—— 

Ms. BROWN. No, I am finished. 

Mr. DENHAM. Mrs. Napolitano? 

Mrs. NAPOLITANO. Thank you, Mr. Chair. And this is an interesting extension, and I enjoy it. 

I have been privileged to be on CODELs with Ms. Brown in Europe, and have ridden on some of those really fast trains, and spoken to the boards, some of the board members, in regard to how 

they put the plan together. We did that, what, 3 years ago, something like that. 

The impressive thing about that was that their safety record, 

their ridership, was exceedingly high, their cost was affordable. 

And if they can do it, why couldn’t we, other than the fact that 

55 

most of those countries own the land on which the transportation 

lines were geared to? 

So, to me, we need to concentrate on the bigger picture, and that 

is the ability for us to be able to not necessarily compete, but be 

able to maintain the necessity of options for our ridership. And you 

are right. In California, I can tell you, when I was into the first 

phases of the building of the Freeway 105, which leads into where 

I live, it used to take me 20 minutes to the airport. It now takes 

me almost an hour. Same amount of distance. 

So, we are congested, and there is more to come. How do we address the issues and begin to convince the general public and the 

Government, especially my colleagues in northern California, that 

this is going to be an effective way of being able to deal with part— 

it is not the whole answer, it is part of the answer, and we must 

be astute enough to understand that we need to invest it, and we 

need to convince our voters that this is where we need to go for 

the future of our generations. 

And as far as taking funds and putting them into other areas, 

I am concerned about my project funding. I have covered that with 

you. But you can’t commingle funds, like water funds or transportation funds. Let’s be real about that. So, while we can talk big 

about how we need to be able to fund these other entities, we need 

to understand that we are not able, legally, to commingle funds, or 

to be able to transfer funds. 

But, you know, there is an old—the movie—I can’t remember the 

name of it, but it said, ‘‘Build it, and they will come.’’ I have great 

expectations that it will be successful. And how we go about it is 

just having the faith that we can and that we will be able to not 

only find the funds, but find the partners to be able to do that. 

So, with that, Ms. Corrine Brown, you want any further comments? 

Ms. BROWN. No. 

Mrs. NAPOLITANO. Thank you. I yield back. Thank you, Mr. 

Chair. 

Mr. DENHAM. Thank you, Mrs. Napolitano. 

I just wanted to follow up on the last discussion we had. So, if 

you disagree with the court’s decision, or you have a difference of 

opinion on what the usable segment is—the court has defined that 

usable segment as the initial operating segment. If you are going 

to take your day in court, what is that timeline? When do you go 

back to court to clarify that? 

Mr. RICHARD. First of all, Mr. Chairman, if I might clarify, I 

don’t think it is a matter of us disagreeing with the court. What 

the court said was, ‘‘What I have in front of me, the preliminary 

plan from the high-speed rail, you guys defined usable segment as 

the initial operating segment. If that is your definition, then you 

have to meet these other tests.’’ 

Mr. DENHAM. Well, Prop 1A defines it, as well. 

Mr. RICHARD. The words ‘‘initial operating segment’’ do not appear in Proposition 1A. It only talks about a usable segment. 

Mr. DENHAM. Correct. 

Mr. RICHARD. So, my predecessors on the California High-Speed 

Rail Authority board, as they were looking at their business plan 

and finance plan, which I inherited in November of 2011, they 

56 

equated initial operating segment with a usable segment. And the 

judge said, ‘‘OK, I am going to take you guys at your word. And, 

if that is the case, you needed to check these boxes.’’ 

It is not a matter that we are saying the judge was wrong. What 

we are saying is that, after that plan that he had in front of him, 

we presented an updated plan to the legislature that did not 

equate usable segment with the initial operating segment. It equated usable segment with the first valley construction, as enhanced 

by connections to existing rail. We think, then, that meets the 

same standard that the judge was talking about, and that is what 

the legislature voted on, and that is what the legislature’s lawyers 

looked at and said met the provisions of Prop 1A. 

Mr. DENHAM. Either case, it—either you have to comply with the 

court decision, it is a $20 billion hole to have an electrified track 

that goes around Palmdale and to San Fernando Valley—that is 

electrified, that will be high speed, hopefully it is not running a 

subsidy, because that is what Prop 1A says—— 

Mr. RICHARD. Won’t be allowed to. 

Mr. DENHAM. So, either you have to come up with that $20 billion and comply with the court, or you have to comply with Prop 

1A, which says, if you are redefining that usable segment, that usable segment still says it cannot operate with a subsidy, and it cannot operate outside of high speed. 

So, you are saying that this construction segment will not be 

high speed, it will not be electrified, it will just be a second Amtrak, which I know Mr. McCarthy, if he were still here, has huge 

issues with having two Amtraks that stop in his district and you 

get on a bus on both of them to go over Tehachapis. So, if it is not 

high speed, because it is not electrified, and it is running a subsidy, 

how does that initial construction segment comply with Prop 1A? 

Mr. RICHARD. Mr. Chairman, I think maybe one of the most useful things I could do is to provide the committee with the opinion 

of California legislative counsel. In a 21-page, single-spaced opinion, they went through and looked at our revised business plan. 

They were asked by two of your former colleagues in the California 

Legislature, ‘‘Does this comply?’’ They concluded it did. That informed the vote of the California Legislature to appropriate the 

bond monies to move forward. And they went through an extensive 

legal analysis about why it did. 

I could try to go through that here, but I fear, sir, that we would 

really get down into the weeds. But what I would say to you is I 

think, for this committee’s purposes today, what you are interested 

in doing is making sure that the Federal taxpayers are protected, 

and that we have the ability to pay them back. 

I can’t tell you, Chairman Denham, when we might have access 

to the bond funds. People who oppose the project will continue to 

bring litigation. But I can tell you that we believe that our revised 

business plan is in harmony with Proposition 1A. We believe that 

that can be established. And we think that we have other backstop 

mechanisms. So, from the standpoint of Federal taxpayers, we 

don’t think that there is a question. 

As a Member of the delegation from the Central Valley, I think 

you are also concerned about other aspects of this. Is this just 

going to be stuck in the Central Valley? Are your citizens going to 

57 

actually be able to get to Los Angeles and San Francisco? And 

there, Mr. Chairman, I think we are hoping to come back to you 

very soon and say if we look at the bond money, and we look at 

the cap and trade dollars, we really believe—I want to be able to 

confirm this—but our vision is that we can get all the way to 

Palmdale, connect to the Metrolink, and that that triggers privatesector investment. 

And, Mr. Chairman, I would look forward to working with you 

to work through that challenge. Because, if that is the case, that 

we can get to Palmdale, I think that is going to address many of 

the questions that you have had about this project. And that is 

what we are aiming to do right now. 

Mr. DENHAM. And I don’t know that you and I have ever had this 

conversation, but I think you are absolutely correct. That is my 

concern. My concern is that we build another Amtrak that stops in 

Bakersfield, and the rest of the Nation looks at California and says, 

‘‘You just spent $6 billion,’’ and it is decades, if ever, that this thing 

ever gets accomplished. 

Now, I know you and I are both—you are moving forward, and 

that is your job. My job is looking over the Federal tax dollars, that 

we are actually spending money properly, and that we are not putting my voters, my State, at risk of losing highway dollars, aviation 

dollars, or education dollars. And so—— 

Mr. RICHARD. Absolutely. 

Mr. DENHAM [continuing]. I look forward to this continued dialogue. I look forward to you getting me that information that 

proves that this operating segment either complies with the court 

decision, or that this construction segment complies with Prop 1A. 

But I certainly think that FRA—I know that FRA has the ability. 

The question is whether they have the will to make a determination at a certain point. Whether that is April 1, when there is $180 

million due, or whether that is later in this budget year, if the $250 

million of cap and trade money becomes unconstitutional, or the 

legislature just votes it down, at a certain point FRA may be forced 

to make a determination that they withhold funds. 

I have a better solution, and I am prepared to introduce a bill 

that will require FRA to suspend all payments until California 

High-Speed Rail Authority has the matching funds available, and 

is not hindered in coming forward with that, and spending that 

money. 

So, I will be introducing this bill before we leave on our district 

work period next week, and I am happy to share the language 

with—to you after this hearing. 

Ms. Brown, do you have any closing remarks? 

Ms. BROWN. Just that I won’t be signing on to your bill. 

[Laughter.] 

Mr. DENHAM. I am sure California would be happy to take more 

money from Florida, then. 

Again, I would like to thank each of you for your testimony 

today. Ms. Hedlund, obviously, you can see my frustration has to 

do with FRA and its transparency. I look forward to getting those 

invoices from you. 

If there are no further questions, I would ask unanimous consent 

that the record of today’s hearing remain open until such time as 

58 

our witnesses have provided answers to those questions, and have 

submitted them in writing, and unanimous consent that the record 

remain open for 15 days for additional comments and information 

submitted by Members or witnesses to be included in today’s record 

of today’s hearing. 

[No response.] 

Mr. DENHAM. Without objection, so ordered. Again, I would like 

to thank our witnesses again for their testimony. 

If no other Members have anything to add, the subcommittee 

stands adjourned. 

[Whereupon, at 1:11 p.m., the subcommittee was adjourned.] 

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