It gets little publicity , but it seems to be moving forward. The Texan TGV is an issue that attracs our attention because European companies are involved in it. It is also fundamentally different from the Californian dossier, which is getting bogged down. Why?
This project concerns a 390-kilometre high-speed line to be built and put into service around 2026 between two major cities, Dallas and Houston. It is being built in a country that has never really believed in long-distance passenger rail services and which lives with a binary plane/car policy. It is therefore with great interest that we must follow this Texan project, in the land of oil.
Contrary to a common idea, high-speed rail projects in the United States date back to the High Speed Ground Transportation Act de 1965. Various state and federal proposals emerged at that time, but have not yet been implemented. The Passenger Railroad Rebuilding Act de 1980 led to the funding of high-speed corridor studies as early as 1984, 20 years after Japan. Private sector consortia with high-speed line projects were created in Florida, Ohio, Texas, California and Nevada.
Texas is the second most populous state in the United States of America, with some 28 million people. The idea for a high-speed rail project in Texas began in 1987 and its realization took shape with the creation of the Texas High-Speed Rail Authority (THSRA) in 1989, with the 71st Texas Legislature. THSRA was responsible for determining :
- to gauge the potential of high-speed rail for public interest and his viability;
- and, where appropriate, to grant an operating franchise for a high-speed rail service to the most qualified operator.
The Texan legislator, and that was crucial for the future, already made it clear that « the authority could only consider privately funded proposals. It is not in the public interest for a high-speed rail facility to be built, financed or operated by the public sector, » said the bill creating the THSRA authority. This manner of doing differs fundamentally from Europe, because for all projects in France, Italy, Germany and Spain, as well as in Japan and China, the train’s operator and the manager of the infrastructure are de facto designated in advance and are all (except in Japan) state-owned. Only contractors are subject to competitive bidding, with construction and commissioning tests. The British HS2 project as well as the Saudi Arabian project, on the other hand, are close to the American model.
In the 1990s, the TGV/ICE technological battle – in fact the battle between Alstom and Siemens -, that was raging in Europe moved to Texas. Two companies – Texas TGV backed by France and Texas FasTrac backed by Germany – (we’re talking about countries here…)-, paid up to $500,000 each to hope to get a Texas high-speed rail franchise. These projects were a threat to Southwest Airlines, which had built much of its business model on an air shuttle service between Dallas and Houston. Southwest’s CEO at the time said « the Texas project was unlike any other high-speed rail project in the world, in that it was focusing more on taking customers from air travel rather than cars. (…) The American reality is that high-speed rail will be viable in Texas only by destroying the convenient and inexpensive transportation service the airlines now provide, and only by absorbing huge public subsidies. »
In 1991, the French project, which was the only favourite, signed an agreement requiring several funding deadlines. The first major one, at the end of 1992, required the company to show that it had secured $171 million in letters of credit. Southwest lobbied hard to thwart efforts to amend federal legislation allowing to Texas TGV company to borrow the billions of tax-exempt bonds on which its plan was based. The lobbying paid off, because after the first deadline, Texas TGV acknowledged it had not secured the money. THSRA revoked the franchise.
Since then, time has passed. In 2009, a change in federal policy initiated by Barack Obama brought hope for a revival of the project, as well as others in the United States. Attitudes also changed within the aviation industry after the 2008 crisis. Southwest Airlines « now the company’s business has diversified enough that it would probably view a Texas high-speed rail project as less of a threat, », explains an aviation consultant.
In 2012, the Texas Central High-Speed Railway went back on track and announced its intention to develop a high-speed rail line between Houston and Dallas entirely financed by the private sector. Company officials said the project, which could reduce travel time between the two cities to less than 90 minutes, would use Shinkansen high-speed train technology.
In 2013, the privately owned Texas Central Partners was founded. This company is registered as a railway operator and will operate the high-speed line. This status legally allows it to carry out expropriations and commission work under legal permits. In 2014, the federal US Department of Transportation joined the Texan’s counterpart, the Texas Department of Transportation, in a partnership with Texas Central to study the high-speed rail project between Houston and Dallas.
But why the Japanese train? Because during the 1990s, Japanese rail operators were among several foreign Japanese companies that were considering partnering with U.S. companies to bid for high-speed rail franchises. Taiwan’s high-speed train project, which was a dirty trick for the Europeans, is also a project which runs Japanese rolling stock, the first outside Japan. This type of train, chosen by Texas Central, would offer eight times less energy consumption and emit only 1/12th of the CO2 emitted by a Boeing 777-200. Currently, Shinkansen trains carry more than 424,000 passengers a day in Japan at speeds of more than 250km/hour. But the main thing to be seen here is the Japanese government’s strategy, through financial structures such as Japan Overseas Infrastructure Investment Corp. for Transport & Urban Development and the Japan Bank for International Cooperation. These institutions lobbied hard to keep Japanese technology that it be accepted in USA.
From 2015 everything will accelerate:
- on August 10, 2015 the U.S. Department of Transportation and Federal Railroad Administration issued a report that supported the so-called utility corridor along U.S. Highway 290;
- unexpectedly, in January 2017, the Trump administration placed the project on the national transport infrastructure agenda;
- in December 2017, the Federal Railroad Administration published a draft environmental impact statement for a specific route;
- In January 2018, plans for the Dallas and Houston stations and their locations were published.
In the meantime, France, by its armed wing SNCF America, tried to counter the Texas Central company with its strong Japanese connotation. But the Japanese were the first to pull the trigger by announcing a $300 million loan to finance the Dallas-Houston project, repeating the same strategy as in Taiwan. As explained above, in this type of American case, the key to obtaining permits and approvals is to prove that one has the required financing. This is what the Japanese are doing, under French protests accusing the project of state funding, even though SNCF itself is a fully subsidized company. Apart from a few technical arguments (Japanese trains that are too wide…), France wanted above all to put forward institutional arguments: « No high-speed line has been designed with private funding. In order to achieve its goals, SNCF must succeed in getting the message across that taxpayer involvement is essential to the construction of a railway infrastructure. Even if it’s not popular, the message is starting to get through because the facts prove us right, » says SNCF America. Texans replied to the French the disastrous example of the Californian high speed project, which is practically dead: « The fundamental difference with the Californian project is the economic approach. In California, it’s a state-led project. In Texas, it’s not a public project, but a project led by entrepreneurs, investors, the private sector, and that changes everything. » The ideological debate is over, now it’s time for action.
Texas Central was then becoming the chosen project, with:
- rolling stock supplied by the Japanese, who were making this their first export outside Asia;
- a contractor yet to be defined.
The last stage to find a contractor was recently completed. In October 2019, the engineering work was awarded to the Texan company Bechtel, while a $14 billion construction contract was signed with Fluor Enterprise Inc. and Lane Construction, American subsidiaries of the Italian industrial group Salini Impregilo. Salini-Lane will provide the civil engineering for the project, which includes the design and construction of the 131 sections of viaduct and 130 sections of embankment for the line, as well as the installation of tracks, signalling and the construction of all buildings that will house maintenance services and other equipment. Approximately 10,000 jobs will be created in the construction phase and 1,500 in the operation phase.
Finally, Renfe, the Spanish public company, has just signed a $6 billion (€5.5 billion) agreement with the Texas Central company to provide technical advice and to assist in the operation of the Dallas-Houston high-speed line. Texas Central recently received « three serious bids » for the construction of the Dallas, Houston and Brazos Valley stations. « We cannot divulge names, but they are all major players in this sector in the United States that will complement the others that we have already mandated. »
The design-build agreement now authorizes a set of initial works to be carried out to advance the project. Texas Central is now awaiting the final Environmental Impact Statement (2017 was only a project of the Environmental Impact Statement), while all approvals expected by the second quarter of 2020. « The idea is to have a financial close by June 2020, » said Carlos F. Aguilar, CEO of Texas Central. « We are expecting construction to follow shortly thereafter. » The train is in motion…
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