The Texas Supreme Court Tuesday will consider a case that may decide the fate of what would be the nation’s first bullet train.
The high-speed train connecting Dallas and Houston is one of only a handful of high-speed rail projects under development in the U.S.
The court case is the latest in a series of legal, political and financial hurdles that Texas Central, the private company developing the project, has faced over the last decade as it tries to build the 240-mile route.
JR Central
At the heart of the state Supreme Court dispute is whether Texas Central is technically a railroad company with eminent domain authority, which is necessary for the company to build the route.
Last month, for the first time in the nearly seven-year-old case, the State of Texas weighed in, logging its opposition to Texas Central’s designation as a railroad company and questioning the project’s finances.
High-speed rail has faced a long, slow slog in the U.S.
California’s high-speed train plan, launched with a $10 billion state bond measure in 2008, has struggled with missteps and cost overruns that have pushed budget projections to nearly $100 billion. The project has now won a final Environmental Impact Report/Environmental Impact Statement for a $18.2 billion, 80-mile chunk of the project.
Brightline, which operates a Florida train that runs slower than a high-speed train, has struggled to ramp up amid COVID-19 shutdowns, though its officials say they are on track to finish construction between West Palm Beach and Orlando by the end of this year.
It’s also trying to develop a line between Las Vegas and Southern California.
Amtrak’s Acela, averaging less than 80 mph between New York and Washington, is far from any definition of high-speed rail.
Despite years of pledges from various administrations, the U.S. lacks any high-speed trains, which are considered, by some definitions, trains that move at least 180 miles per hour. Lobbyists last year pushed for high-speed support in the bipartisan infrastructure bill, and an early House version included $25 billion, but the money was dropped from the final Infrastructure Investment and Jobs Act.
When first unveiled, in 2012, the Texas Central price tag came in at $10 billion, but has since climbed to $30 billion. The company has secured roughly 60% of the parcels along the planned route, according to local reports, but many landowners, like the plaintiff in the state Supreme Court case, don’t want to sell.
Texas Central did not respond to requests for comment.
In a milestone for the project, the Federal Railroad Administration in 2020 released the Final Environmental Impact Statement and issued its Record of Decision that established federal safety standards under which Texas Central would operate the train and giving environmental clearance for the selected alignment from Dallas to Houston.
In 2021, the company signed a $16 billion final agreement with Webuild Group to oversee much of the engineering and construction. It plans to use off-the-shelf Shinkansen high-speed train technology from Japan.
On the finance side, the company said it has letters of intent from banks in Japan and Europe for a piece of the funding, and last year announced plans to seek a federal Railroad Rehabilitation and Improvement Financing program loan of up to $12 billion. That would mark the largest RRIF loan by more than five times, according to the Reason Foundation, which is tracking the project.
“I don’t know how realistic this is,” said Baruch Feigenbaum, senior managing director of transportation policy at Reason Foundation. “There’s some chance they wouldn’t be able to repay, and then the taxpayers would be responsible,” he said. The company wants to develop the land along the route for revenue, Feigenbaum added. “They really need the court decision to go the way they want.”
After Texas Central announced it would pursue a RRIF loan, Reps. Kevin Brady and Jake Ellzey warned federal officials that the project faced major uncertainties. “Important questions about the financial feasibility of this project remain unanswered,” the Texas Republican congressmen said in an Oct. 14, 2021, letter to U.S. DOT Secretary Pete Buttigieg.
“We are concerned with Texas Central’s ability to skirt Buy America requirements, inflate ridership projections and obtain federal loans without authority to construct, which will leave the American taxpayer on the hook,” the letter said.
In 2017, responding to political opposition to the project, the Legislature passed a bill prohibiting the state or any state agency from appropriating money for high-speed rail operated by a private entity.
The case heard this week stretches back more than six years.
Leon County rancher James Miles sued Texas Central in 2016 to block the company from surveying his 600-acre property as a first step toward possible eminent domain. He won at a trial court but the 13th Court of Appeals in May 2020 ruled in favor of Texas Central, handing it a crucial victory with the designation of a railroad company and interurban electric railway under Texas law. Miles appealed to the Texas Supreme Court, which first declined to take up the case but later reversed its decision and agreed after a motion for a rehearing was filed.
“It’s been quite the case,” said Patrick McShan, an attorney at Beckham Group who, along with lead counsel Blake Beckham, represents Miles.
Even if Texas Central wins the case, the company “has a better chance landing on Mars than starting construction anytime soon” because of the $30 billion price tag, McShan said. “They’ve been trying to get money from private investors for going on a decade and they can’t get any because the project simply isn’t investment grade and the ridership projections are pure fantasy.”
In a rare move, the state Supreme Court asked the Texas Solicitor General to weigh in on the case. The state filed a brief on Dec. 17, siding with the landowners. The Texas Transportation Code gives eminent domain authority to a railroad company, but Texas Central is not actually a railroad company because it doesn’t own any trains and hasn’t yet constructed any tracks or stations, the state argues.
“The state takes no position on the wisdom or utility of building a high-speed train between Dallas and Houston,” the filing says. “Private actors who seek to seize private property using eminent-domain powers must strictly comply with statutory and constitutional conditions governing the use of such powers. Respondents [Texas Central] have not.”
The state also says Texas Central has “failed to establish a likelihood that they will ever succeed in raising the substantial capital required to complete their high-speed train, let alone that such a train will one day actually operate and serve the public interest.”
In the midst of the opposition, the bullet train proposal has earned the support of many cities, including Dallas, Houston, Fort Worth and the Harris County Metropolitan Transit Authority, which have all filed court briefs in support of the project, as has the American Council of Engineering Companies of Texas.
“The Dallas-to-Houston corridor is already home to more than 14 million
people and growing at a rate that is far outpacing the ability of governments to build new public infrastructure,” Dallas Mayor Eric Johnson wrote in a Sept. 30, 2021, court brief. “Texas Central Railroad has already invested millions of dollars toward bringing this new industry to our state,” Johnson said, saying the rail would help reduce greenhouse emissions and dovetail with the city’s transportation plan to increase mobility and quality of life.
The court will likely release its opinion on the case in late June or before the end of its session, at the end of August, according to a Supreme Court clerk.
The case is No. 20-0393, James Fredrick Miles v. Texas Central Railroad & Infrastructure Inc. and Integrated Texas Logistics, Inc.,