Testimony 

Before the Subcommittee on Surface 

Transportation and Merchant Marine Infrastructure, 

Safety, and Security, Committee on Commerce, 

Science and Transportation, U.S. Senate 

United States Government Accountability Office

GAO 

For Release on Delivery 

Expected at 2:30 p.m. EDT 

Tuesday, June 23, 2009 HIGH SPEED PASSENGER

RAIL 

Effectively Using Recovery 

Act Funds for High Speed 

Rail Projects 

Statement of Susan A. Fleming, Director 

Physical Infrastructure Issues 

GAO-09-786T 
Page 1 GAO-09-786T 

Mr. Chairman, Ranking Member Thune, and Members of the 

Subcommittee: 

I am pleased to be here today to discuss the implementation of high speed 

intercity passenger rail projects in the American Recovery and 

Reinvestment Act of 2009 (the Recovery Act). The $8 billion provided by 

the Recovery Act for high speed and other intercity passenger rail projects 

has focused more attention on and generated a great deal of anticipation 

about the possibility of developing high speed rail systems in the United 

States. These projects are seen by some as serving an important 

transportation role, by moving people quickly and safely, reducing 

highway and airport congestion, and being environmentally friendly. My 

statement today focuses on (1) the factors that we have identified that 

affect the economic viability of high speed rail projects and (2) how the 

Federal Railroad Administration’s (FRA) recent strategic plan 

incorporates those factors.1

 My testimony is based on our recent report on 

high speed rail, our review of FRA’s strategic plan, and discussions with 

FRA and selected transportation experts.2

In summary, we found that while the potential benefits of high speed rail 

projects are many, these projects—both here and abroad—are costly, take 

years to develop and build, and require substantial up-front public 

investment, as well as potentially long-term operating subsidies. 

Determining which, if any, high speed rail projects may eventually be 

economically viable will rest on factors such as ridership potential, costs, 

and public benefits. FRA largely agrees with our March report. FRA’s 

strategic plan for high speed rail outlines, in very general terms, how the 

federal government may invest the $8 billion in Recovery Act funds for 

high speed rail development. However, this plan does not establish clear 

goals for the federal government in high speed rail—other than 

establishing a “longer term goal of developing a national high speed 

 

1

By economically viable, we mean that a project’s total social benefits offset or justify the 

project’s total social costs. 

2

See GAO, High Speed Passenger Rail: Future Development Will Depend on Addressing 

Financial and Other Challenges and Establishing a Clear Federal Role, GAO-09-317

(Washington D.C.: Mar. 19, 2009); and Federal Railroad Administration, Vision for HighSpeed Rail in America (Washington D.C.: April 2009). We conducted this performance 

audit from May 2009 to June 2009 in accordance with generally accepted government 

auditing standards. These standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence obtained provides 

a reasonable basis for our findings and conclusions based on our audit objectives. 
intercity passenger rail network of corridors”—and does not define a clear 

federal role for involvement in high speed rail projects other than 

providing Recovery Act funds. As such, in our view, it is more a vision than 

a strategic plan. As part of a discussion to prepare for this hearing, FRA 

told us that it sees its strategic plan as a first step and that it intends to 

seek structured input from stakeholders and the public to help develop 

strategies to implement its vision. 

The factors affecting the economic viability of high speed rail projects 

include the level of expected ridership, costs, and public benefits (i.e., the 

benefits to non-riders and the nation as a whole from such things as reduced 

congestion), which depend on a project’s corridor and service 

characteristics. High speed rail is more likely to attract riders in densely and 

highly populated corridors, especially where there is congestion on existing 

transportation modes (such as highways or airports). Characteristics of the 

proposed service are also a key consideration because high speed rail is 

more likely to attract riders where it compares favorably to travel 

alternatives in terms of trip times, frequency of service, reliability, and 

safety. Costs largely hinge on the availability of rail right-of-way, and a 

corridor’s terrain. To stay within financial or other constraints, project 

sponsors typically make trade-offs between cost and service characteristics. 

Factors That Affect 

the Economic 

Viability of High 

Speed Rail Projects 

Once projects are deemed economically viable, project sponsors face the 

challenging tasks of securing the significant up-front investment for 

construction costs and of sustaining public and political support and 

stakeholder consensus. We found that in other countries (France, Japan, 

and Spain) with high speed intercity passenger rail systems, the central 

government generally funded the majority of the up-front costs of high 

speed rail lines.3

 The $8 billion in Recovery Act funds for high speed rail 

(and other intercity passenger rail) lines represents a significant increase 

in federal funds available to develop new or enhanced intercity passenger 

rail service. This amount, however, represents only a small fraction of the 

estimated costs for starting or enhancing service on the 11 federally 

authorized high speed rail corridors. For example, the San Francisco-Los 

Angeles portion of the California high speed rail corridor alone, which 

already has about $9 billion in state bonding authority, is estimated to cost 

 

3

GAO-09-317. 

Page 2 GAO-09-786T 
about $33 billion dollars.4

 Furthermore, federal funds for high speed rail in 

the past (as with the Recovery Act) have been derived from general 

revenues, not trust funds or other dedicated funding sources. This makes 

ongoing capital support for high speed rail projects challenging, as they 

compete for funding with other national priorities such as health care, 

national defense, and support for ailing industries. In addition, the 

challenge of sustaining public-sector support and stakeholder consensus is 

compounded by long project lead times, the diverse interests of numerous 

stakeholders, and the absence of an established institutional framework 

for coordination and decision making. 

FRA’s strategic plan attempts to address the absence of an institutional 

framework for investments in high speed intercity passenger rail service. 

In our recent report and in 2005,5

 we discussed the need for: 

FRA’s Strategic Plan Is 

a First Step 

1. Clear federal objectives and clear roles for all stakeholders (federal, 

regional, state, and local governments and freight, commuter, and 

passenger railroads). 

2. Clear identification of outcomes expected. 

3. Ensuring the reliability of ridership and other forecasts to determine 

the viability of high speed rail projects. 

4. Including high speed rail with a reexamination of other federal surface 

transportation programs to clarify federal goals and roles, link funding 

to needs and performance, and reduce modal stovepipes that hinder 

financing transportation improvements that will lead to the greatest 

improvements in mobility. 

FRA’s plan, which the Recovery Act required the FRA to issue 60 days 

after the act was signed, outlines in very general terms how the FRA will 

allocate the Recovery Act high speed rail funds. It does not define goals 

for investing in high speed rail, how these investments will achieve them, 

how the federal government will determine which corridors it could invest 

in, or how high speed rail investments could be evaluated against possible 

alternative modes in those corridors. In our opinion—and as FRA 

 

4

The corridor would extend from Sacramento and San Francisco through Los Angeles to 

San Diego. 

5

GAO-09-317 and GAO, 21st Century Challenges: Reexamining the Base of the Federal 

Government, GAO-05-325SP (Washington D.C.: February 2005). 

Page 3 GAO-09-786T 
recognizes—this strategic plan is a first step in planning federal 

involvement. FRA has emphasized that its approach is to involve the 

ultimate “owners” of high speed rail—the states and communities in which 

they will reside—to help flesh out the approach to developing high-speed 

rail that are under its control. FRA officials also told us that it plans to 

spend Recovery Act funds in ways that show success to help keep longterm political support for these projects at the local level. 

Overall, FRA generally agrees with the issues that we raised in our March 

report, with the report’s recommendations, and with the observations that 

we are making today. Last week, FRA took its next step by issuing interim 

guidance for applying for Recovery Act funds.6

 The guidance lays out the 

evaluation criteria for grant funding, the weights to be applied to the 

criteria, and the selection criteria. 

In conclusion, the infusion of up to $8 billion in Recovery Act funds is only 

a first step in developing potentially viable high speed passenger rail 

projects. The host of seemingly intractable issues that have hampered 

development of these projects remain as challenges, and these issues will 

need to be resolved to effectively spend Recovery Act funds. Surmounting 

these challenges will require federal, state, and other stakeholder 

leadership to champion the development of economically viable high 

speed corridors and the political will to carry them out. It will also require 

clear, specific policies and delineations of expected outcomes, and 

objective, realistic analysis of ridership, costs, and other factors to 

determine the viability of projects and their transportation impact. 

Mr. Chairman, this concludes my prepared remarks. I would be pleased to 

answer any questions you or other Members of the Subcommittee may have. 

Please contact Susan Fleming at (202) 512-2834 or Flemings@gao.gov

about this statement. Contact points for our Offices of Congressional 

Relations and Public Relations can be found on the last page of this 

statement. Greg Hanna and James Ratzenberger made key contributions to 

this statement. 

 

6

A link to the guidance can be found in 74 Fed. Reg. 28770 (2009). 

(542156) Page 4 GAO-09-786T 
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