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Did $98.5 billion high-speed rail project just hit a wall in California?

An independent review panel says the plan for a high-speed rail corridor linking northern and southern California poses 'an immense financial risk' to the state and should not move forward.

By Daniel B. WoodStaff writer / January 4, 2012

This image provided by the California High Speed Rail Authority shows an artist's rendering of a high-speed train speeding along the California coast.

California High Speed Rail Authority/AP


Los Angeles

Drawing a battle line over a high-speed rail project in California – and adding a yellow caution light nationally – a trusted and independent review panel has recommended that California not move forward on its proposed $98.5 billion bullet train, saying it poses “an immense financial risk.”

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The watchdog body, created by state law to guard the public interest (known as the California High-Speed Rail Peer Review Group), released its findings Tuesday and is recommending to the Legislature – which opened its 2012 session Wednesday – that it not approve bond proceeds for the project.

California voters approved a $10 billion bond in 2008 in support of plans to build a high-speed rail corridor to link northern and southern California, with trains reaching 220 m.p.h. The system would link to other rail lines that fanned out across the state.

Will Kempton, the former director of the California Department of Transportation, or Caltrans, and current head of the Orange County Transportation Authority, chaired the independent review panel.

“We cannot overemphasize the fact that moving ahead on the (high-speed rail) without credible sources of adequate funding, without a definitive business model, without a strategy to maximize the independent utility and value to the state, and without the appropriate management resources, represents an immense financial risk on the part of the state of California,” Mr. Kempton wrote.

Officials at the California High-Speed Rail Authority have been swift with a curt response to the panel’s review, calling it a “narrow, inaccurate and superficial assessment” in a letter to lawmakers.

“What is most unfortunate about this report is not its analytical deficiency, but that it would create a cloud over the program that threatens not only federal support but also the confidence of the private sector necessary for them to invest their dollars,” said Thomas Umberg, chairman of the rail authority board.

The dispute in California could be instructive for other rail projects nationwide. In February, Vice President Joe Biden announced a plan to put $53 billion in federal funds into a national, high-speed rail network, which could be built in regional sections. California was to be the first state to receive matching funds. 

The negative recommendation is bad news for Gov. Jerry Brown, who has stated he will ask legislators in coming months to issue the initial cluster of $9 billion in voter-approved bonds. He also must confront supporters of the project who say it will create jobs, aid the environment, and jumpstart the state’s ailing economy.

In a year-end group interview with reporters, Governor Brown said last week that he favors moving ahead.

“I believe California is a leader. It's a leader in energy. It's a leader in medical research. It's a leader in venture capital, and I'd also like to see it be the leader in high-speed rail,” Brown said, according to the San Francisco Chronicle. “Spain, China, Japan, France, Germany – all these countries can afford it,” he continued. “California, I believe, can.”


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