Texas High-Speed Rail Authority

The pursuit of a high speed rail project in Texas began in earnest in 1987. In June of that year the 70th Legislature directed the Texas Turnpike Authority (TTA) to study the feasibility of high speed rail service in the Texas Triangle - Dallas-Houston, Dallas-San Antonio, and San Antonio-Houston. The study began in February 1988. The study reviewed other high speed rail systems, current and projected transportation needs in Texas, and other related subjects. The TTA reported to the Texas Legislature in January 1989 that, under certain assumptions, high speed rail (over 150 miles per hour) would be feasible in Texas. The 71st Legislature passed legislation to implement the findings of the report.

The Texas High-Speed Rail Authority (THSRA or the Authority) was created in 1989 by the 71st Legislature (Senate Bill 1190, Regular Session). The governing board of the Authority was composed of 11 members. The governor, with the advice and consent of the senate, appointed three public members to overlapping six-year terms. The governor also appointed a current or past member of a board of an authorized metropolitan transit authority from a city with a population of 1.5 million or more; a current or past member of a regional transportation authority that contained a city of 800,000 or more; and a current or past member of the executive committee, a subregional board of directors, or the board of directors of a regional transportation authority with a subregion containing a city with a population of less than 800,000. The chairs of the State Board of Transportation and the Texas Turnpike Authority, and the three commissioners of the Railroad Commission served as exofficio members of the governing board of the Authority.

The Authority was charged with determining whether high-speed rail (HSR) was in the public interest, and if so, to award a franchise to operate a high-speed rail service to the most qualified applicant. The Board solicited letters of intent from potential applicants. Non-solicited parties were also welcome to submit letters. On July 19, 1990, two letters of intent were received - from Texas High-Speed Rail Joint Venture (later renamed Texas FasTrac) and the Texas TGV Consortium. A Request for Proposal (RFP) was published in September 1990. Two groups responded to the RFP - Texas TGV and Texas FasTrac, submitting franchise applications and the required franchise fees by the deadline of January 16, 1991.

Franchise applications were subject to review by independent advisors hired by the Authority. Six firms were chosen to review the franchise applications and report on specific topical areas in each application. Following the review process, each advisor submitted a report to the Authority on the topic(s) reviewed in the franchise applications. The reports were submitted to the Board and to all parties involved - each applicant and Southwest Airlines. Southwest Airlines was granted intervenor status for the franchise application hearing process. The reports provided THSRA with independent, objective analyses of the franchise applications. Additionally, each advisor team was represented during the franchise application hearing and was subject to cross-examination by all parties.

Franchise application hearings opened on March 25, 1991. Seventy-eight witnesses and fourteen advisors to the THSRA testified at the hearings. Over 160 evidentiary and demonstrative exhibits were presented. A proposal for decision was entered on May 10, 1991. This proposal recommended that the Authority find that high-speed rail in Texas was in the public interest and that the Texas TGV consortium was the best qualified applicant. Two parties filed exceptions to the proposal and all parties filed briefs. At the May 28, 1991 meeting of the Board, it heard final arguments from all parties and voted 8-0 to award the franchise to Texas TGV. Texas TGV accepted the terms of the franchise order. On June 18, 1991 Southwest Airlines and Texas FasTrac filed motions for rehearing in the proceeding and Texas TGV filed replies to the motions on June 28, 1991. Because the Board took no actions on the motions by July 15, 1991 the motions were overruled by operation of law.

Texas TGV was awarded the franchise to build, operate, and maintain a high-speed rail system in Texas. The franchise agreement was signed on January 31, 1992 and included certain milestones by which its progress could be measured. Within two weeks of the signing, Texas TGV complied with three provisions of the agreement. It provided the remaining operating funds for the Authority's fiscal year 92 operating budget, it provided certification that it had met the necessary capitalization requirements of the agreement ($10 million capitalization, $3 million net worth), and it submitted a $2.5 million abandonment bond, to be used by the Authority in the event Texas TGV abandoned its franchise. The Equity Financing Commitment (EFC) became the most important milestone. Texas TGV failed to meet its deadline to evidence $170 million in equity financing agreements by December 31, 1992. The deadline was extended for one year.

The high-speed rail franchise agreement required that an independent ridership study be conducted so that the public would have a more complete examination of the revenue potential of the proposed high-speed rail project. The study had to be initiated within 60 days of the execution date of the franchise agreement. It was funded by the franchisee, Texas TGV, now also known as the Texas High-Speed Rail Corporation. The consultant chosen to conduct the study was Charles River Associates, which presented its findings to the Board at its September 2, 1993 meeting. The final printed report was released in October 1993. The study examined ridership with different alignments and different air connect relationships. It was intended to be used by Texas TGV to refine ridership estimates using different assumptions, different line haul times, and different market response strategies. The Authority considered this report to be one of the most complete and exhaustive examinations of the high speed ground transportation demand and revenues ever completed for any corridor in the United States.

The franchise agreement also called for the preparation of an environmental impact statement (EIS) on the proposed project, as required by the National Environmental Policy Act. The board selected Woodward-Clyde Consultants, Inc. to prepare the EIS. A contract was signed on April 16, 1992.

Part of the EIS process included conducting public scoping meetings in communities affected by the project. At each scoping meeting, representatives of the Authority, Woodward-Clyde Consultants, and Texas TGV were present to answer questions and take input. Federal Railroad Administration (FRA) representatives were present at some of the meetings. Oral and written statements were given by local officials, local citizens, and others. Thirty-nine meetings were held between May 12 and June 25, 1992. Over 4000 people attended the meetings, with attendance in rural counties exceeding those in urban counties. The public comment period was held open until July 13 and over 15,000 separate comments were recorded. The Final Scoping Report was issued in late 1993. Concerns expressed centered on noise, economics, impacts on agricultural operations, socioeconomic impacts, financing, location of the route and stations, road closures, access issues, and impact on the quality of life, especially in rural areas. The vast majority of commentors in the rural areas were opposed to the high speed rail project, with comments from the urban areas mixed.

In December 1992, work on the EIS project was halted due to concerns over EIS consultant expenditures. Work was delayed until March 1993 for contract negotiations. In May 1993, the work summary and cost plan were reformed and contract issues were resolved. By December 1993 sufficient detail on the Alternative Analyses component of the project was done so work could proceed with baseline studies on different issues required by the EIS. Texas TGV and the EIS consultant developed work plans for the baseline studies and reviewed teams of consultants Texas TGV had chosen to conduct the studies. In January 1994 Texas TGV halted work on the baseline studies and dismissed its contractors due to financial deadlines in the franchise agreement. By March 1994, a draft alternative chapter of the EIS was completed and circulated for comments, but never released. By October 1994, due to cessation of environmental activity by Texas TGV, the THSRA board terminated its contract with the EIS consultant.

Another milestone required by the franchise agreement was the Baseline Implementation Plan. It was submitted on March 25, 1993. This plan detailed financing, engineering, designing, program management, construction, and operation elements of the high speed rail project.

After the ridership study was completed and the EIS process was well underway, Texas TGV prepared its EFC offering to investors. The offering was $200 million in convertible equity notes and was issued on November 29, 1993. The notes were to be priced and sold on December 11, 1993. The corporation offering a counter guarantee, Morrison Knudsen, withdrew its counter guarantee offer on December 10, 1993 and the notes offering was withdrawn. At the Boards December 17, 1993 meeting, Texas TGV reported it was unlikely to make the December 31, 1993 EFC deadline. The Authority refused to extend additional accommodations to Texas TGV and in early 1994 began termination proceedings against Texas TGV. A settlement was negotiated that rescinded the franchise agreement, repaid all outstanding general revenue funds to the state, and made available to the state all non-proprietary information that Texas TGV developed during the project. The information included a considerable amount of work prepared for an environmental impact statement, a required component of this project.

The settlement agreement did not allow the Authority to collect the $2.5 million abandonment bond. The Attorney General's Office publicly disagreed with this, and encouraged the Authority to collect the bond. The Authority felt the time and effort to collect the abandonment bond would diminish its net value to the Authority and prolong the time rural land owners would be affected by the presence of the franchise, so that issue was not pursued. Lack of federal support and lobbying against the HSR plan by Southwest Airlines were among the reasons that no other franchise applications were awarded and a high-speed rail system was not built. At one point the Authority was scheduled to become part of the Railroad Commission at the beginning of the 1996 fiscal year. Instead, the 74th Legislation abolished the Texas High-Speed Rail Authority and repealed its legislative authorization (House Bill 2390, Regular Session). Its functions were not absorbed by any agency.

Much of the agency history was taken from internal reports of the Authority and from the final report of the Authority, High-speed rail in the rear-view mirror : a final report of the Texas High-Speed Rail Authority, by Marc H. Burns.

From the guide to the Records, 1970-1995, (bulk 1990-1994), (Repository Unknown)