This does not appear to be a good time for high-speed rail (HSR) projects in the United States. USDOT Secretary Sean Duffy has called for an investigation into the California HSR project, as I reported and commented on March 14. Now it’s the proposed high-speed route in Texas that has been thrust into the spotlight.
The route is slated to run between Dallas and the intersection of two highways in the Houston area, several miles from the city’s urban core. Duffy and the Federal Railroad Administration (FRA) say that Amtrak is now out of the picture, but there might be a new private sector investor ready (see APRIL 17 UPDATE below) to keep the project going. While HSR rights-of-way require gentle grades and curves, the Texas project is looking more like a roller coaster, given the developments we report now.
Duffy Dumps Amtrak Grant
The FRA had previously announced a $63.9 million grant for Amtrak under its Corridor Identification and Development (CID) Program. As recently as April 8 at a conference sponsored by Texas Rail Advocates (TRA), Amtrak Vice President for Network Development Nicole Bucich mentioned it in a list of the grants slated for Amtrak under the program. However, the FRA now says the proposed deal is off. The FRA statement criticized the project and claimed that withdrawing the grant would save taxpayer dollars.
“U.S. Department of Transportation Secretary Sean P. Duffy today announced an agreement between the FRA and Amtrak to terminate the $63.9 million grant awarded to Amtrak under the Corridor Identification and Development (CID) Program for the Amtrak Texas High-Speed Rail Corridor previously known as the Texas Central Railway Project,” USDOT’s said. “This project was originally announced as a purely private venture, but as the cost estimates dramatically ballooned, the Texas Central Railway proposal became dependent on Amtrak and federal dollars for development work. The project capital cost is now believed to be more than $40 billion—making construction unrealistic and a risky venture for the taxpayer.”
Duffy was quoted as saying: “I am pleased to announce that the FRA and Amtrak are in agreement that underwriting this project is a waste of taxpayer funds and a distraction from Amtrak’s core mission of improving its existing subpar services. If the private sector believes this project is feasible, they should carry the pre-construction work forward, rather than relying on Amtrak and the American taxpayer to bail them out. My department will continue to look for every opportunity to save federal dollars and prioritize efficiencies.” Duffy was also quoted as criticizing Amtrak for “significant operating deficits” and “delays on its own Northeast Corridor and the loss of its Horizon coach fleet to corrosion,” events that have nothing to do with the grant program or the Texas HSR project.
In response to my inquiry, an FRA spokesperson added: “We are currently in the process of administratively closing out the grant, and once that’s complete, there will be a formal document reflecting the closeout and termination. That said, we do not share contract or grant award/closeout documents publicly. Regarding any additional comment from FRA, everything has been shared in the press release. As noted there, this project was originally proposed as a purely private venture, and there’s a strong interest within the Administration in not using taxpayer dollars for a private project. FRA’s current priority is to focus on fixing Amtrak’s existing service to improve reliability for today’s riders.”
New Investor Materializes
As Amtrak leaves the scene, a private sector “angel” (to use the theatrical term) appears prepared to step in and continue the project. “Within a matter of hours, two breaking issues on the effort to bring high-speed rail to Texas,” TRA reported. The first was that there would be no grant from the feds to Amtrak for the project. Then: “The next several days may tell us who is in charge of the Texas bullet train project and where it is going.” The sudden change concerned a hastily convened legislative hearing to be held on Thursday morning, April 17. TRA reported that “all bills to be heard in the Thursday morning, April 17, session were removed to make way for testimony from Texas Central, the originator of the bullet train effort. This highly unusual move may have been to put legislators under pressure to deal with this issue as soon as possible. At the April 3 [Texas] House Transportation hearing, committee members were not pleased with responses from a Texas Central spokesperson and issued a subpoena for the private firm to appear with company documents at a future date. That date is now Thursday morning at 8:00.”
As I reported on July 19, 2022, the proposed project’s survival seemed like a long shot before Amtrak started promoting it. There were questions about the actual level of activity on the part of its proponents, questions that continue to be asked. Even though the Texas legislature has voted to preclude the State from funding the project, there is also a bill to subpoena project managers to produce records of activity on the part of what is left of Texas Central, the original proposer.
The TRA report quoted President and Chair Peter LeCody as saying: “I think we are going to have to wait until Thursday morning to see where both of these developments take us … Texas Central spokesperson Andy Jent, who spoke before the Transportation hearing earlier this month, said that a Fort Worth investor now holds the financial reins of the high-speed rail project.” LeCody told Railway Age that he has made several trips between his home in Dallas and the capital at Austin on behalf of the TRA’s legislative effort recently. The TRA quoted LeCody as asking: “Is this going to be a seismic shift from first being driven by private efforts, then shifting to Amtrak in the public sector when the project stumbled during the pandemic, and now back to private hands to make this a reality?” and commenting “I hope that Mr. Jent can give us some clarity on this important mega-project that would be a game changer in Texas.”
According to TRA, “The main investor now is John Kleinheinz, a backer of the Texas Central project for quite a while. At the April 3 hearing, Jent announced that Kleinheinz had bought out Japanese financial interests in the project but would still use their technology in running high-speed trains.”
The “Japanese financial interests” wanted the project to serve as a demonstration in this country of high-speed rail equipment and operating practices in that country. The TRA report continued: “Kleinheinz is President and CEO of Kleinheinz Capital Partners, a company he founded in 1996,” and recited some of his credentials as an investment advisor and financial manager.
What a Difference a Day Makes
TRA had more to report on April 15 in a story that bore the headline Fort Worth investment firm says Texas high-speed rail project is shovel ready as Amtrak involvement winds down. The report noted that Kleinheist Capital Partners “said that they are shovel-ready to proceed” and included this statement from the company: “We are proud to have stepped in as the private sector sponsor of the Texas high-speed rail, and today’s announcement is good news for the overall project. The [POTUS 45] Administration gave this project the green light, but after [he] left office the project got hung up in the politics of the Biden Administration’s efforts to jam Amtrak and politics into the equation. We agree with Secretary Duffy that this project should be led by the private sector, and we will be proud to take it forward. This project is shovel-ready and will create significant new jobs and economic growth for Texas as part of [POTUS 47’s] efforts to boost the U.S. economy.”
Regarding the legislative situation, the report said: “The committee issued a subpoena for Texas Central records at its April 3 hearing after committee members grilled Jent for detailed financial information from the private company. Jent indicated that since Kleinheinz is in process of putting together financing for the project, much of the information is at a very sensitive stage and could be misinterpreted or misused by opponents.” Opposition by landowners and elected officials along the proposed route has been strong, as I have reported over the past several years, going as far as the Texas Supreme Court, which held that Texas Central could exercise eminent domain authority to acquire land for the proposed line, but as an “electric interurban railway company” and not as a “railroad,” a ruling that LeCody characterized at the time as “a miracle.” The opposition continues.
Continuing Efforts Post-Amtrak
The effort to promote the project continues, too. According to TRA, “Amtrak started working with the high-speed railroad in 2023 and took over the planning phase in 2024 … Amtrak consultants had been working on the second step of a three step Corridor ID plan and, as Texas Rail Advocates understands, the draft version has just been completed. Sources indicate it will show that there is a significant increase in projections for ridership and viability of the high-speed rail project. The work effort will be turned over to Texas Central as the plans for building the 240-mile-long line move forward.”
What About Train Daddy?
TRA reported: “Andy Byford, noted transportation executive hired by Amtrak to lead the Texas high-speed rail program, said that he is personally and professionally disappointed by the USDOT announcement, but still believes that the Dallas to Houston bullet train line is a superior project that should be built. Byford was responsible for bringing the multi-billion-dollar London Crossrail (Elizabeth Line) project online and has been involved with major rail transportation projects worldwide.”
Byford has established a global reputation, especially in the field of rail transit, for his work in such places as London, Sydney, Toronto and New York. In the latter city, his success in improving the subway system earned him the nickname of “Train Daddy” among riders and other observers of the local transit scene. Amtrak had hired him as Executive Vice President for High-Speed Rail, a job that included an appearance and press conference at the TRA’s Southwest Rail Conference last year to promote the line. At the time, Byford said that the Texas project was his sole responsibility, but Amtrak told Railway Age on April 14 that Byford’s job was “unchanged” following the loss of the FRA grant.
APRIL 17 UPDATE
Texas Rail Advocates, which have been pushing for the project since its inception, reported being pleased with the outcome of the April 17 legislative session: “The effort to finally have high-speed train service in Texas got a shot in the arm today at the Capitol in Austin. Testimony from the organization reworking the finances of the bullet train project said that if everything falls into place, Dallas-Houston service could be running seven years from now, potentially in 2032.”
The witness was Kleinheinz Capital Partners investment advisor Andy Jent, who appeared to answer questions about the state of the project. As we reported, Kleinheinz Capital Partners is proposing to take up where Amtrak and the former Texas Central managers left off, to get the high-speed rail line built and running.
According to TRA, when asked if there is a master plan for the project, Jent said, “If we said go, and we’re not prepared to say go, we think it would take six months to complete the finalization of the planning effort. That would involve relooking at roads, utilities, all the disruption that would take place over the 240-mile segment.”
Jent also said that during the six-month period, the Kleinheinz organization would be working on the financing and the application for the Surface Transportation Board final permit, and that construction would take between 80 and 86 months, roughly seven years.
The TRA report also said that Jent told the legislators: “The investment house is in process of restructuring the initial debt incurred, working on transfer of ownership and completing a Fresh Start Accounting Perspective by the end of June. That would allow the company to re-state its assets and liabilities at fair value as of the emergence date, creating a fresh start for the newly reorganized entity.”
TRA President Peter LeCody was upbeat. He told Railway Age: “It looks like this project is springing back to life. We’ve morphed from a private organization to a public entity, and now we’re back to the private sector. It looks like this investment house is very intent on bringing the project forward.”
Meanwhile, Newsweek reported this statement by the Kleinheinz firm: “We are proud to have stepped in as the private-sector sponsor of the Texas high-speed rail, and today’s announcement is good news for the overall project.”
Dallas-area leaders also continue to push for the project, according to a report aired April 16 on KERA, the local NPR station.
So now the project is back in the private sector, with a new investor who believes his company can succeed where others have failed to meet the challenges of getting the proposed service going. The project has been there before, a situation that baseball great Yogi Berra might have described using his expression “It’s déjà vu all over again.” Nevertheless, circumstances can change. I expect more events to follow in the continuing saga of high-speed rail in Texas, and I am prepared to report them to you.
