Texas court ruling revives $30 billion bullet train project

BY SourceMedia | MUNICIPAL | 06/27/22 12:54 PM EDT By Caitlin Devitt

The Texas Supreme Court breathed life into a controversial and costly project that aims to be the nation?s first bullet train Friday when it ruled the company has the power of eminent domain.

The 5-3 ruling comes amid financial uncertainty for Texas Central, the private entity developing the $30 billion project, whose CEO and top managers exited earlier this month.

The court ruled that Texas Central is a railroad company and therefore has the power to seize private property if needed to establish the 240-mile passenger rail corridor between Dallas and Houston.

?The case involves the interpretation of statutes relating to eminent domain; it does not ask us to opine about whether high-speed rail between Houston and Dallas is a good idea or whether the benefits of the proposed rail service outweigh its detriments,? Justice Debra Lehrmann wrote in the decision.

An adverse ruling would likely have killed the decade-long effort to build the high-speed passenger line using Japanese Shinkansen technology. It?s one of only a handful of high-speed rail projects under development in the U.S.

When first unveiled in 2012, the Texas Central price tag came in at $10 billion, and was to be entirely privately funded. But the cost has since climbed to $30 billion. The former CEO said the project would need a $12 billion federal Railroad Rehabilitation and Improvement Financing program loan, which would mark the largest RRIF loan by more than five times.

The company owes at least $622,975 in delinquent property taxes to several counties on the railway?s path, according to a brief filed in March.

The trial court had ruled that the entity does not qualify as either railroad companies or interurban electric railway companies and therefore lacks eminent-domain authority, which is reserved for the state and its political subdivisions. An appeals court reversed the decision, and the Texas Supreme Court's ruling affirms the reversal.

In the dissent, three justices argued that the ruling abandons long-standing protections afforded to property owners and added that ?it blinks reality to conclude, as the court does, that the same trolley-car statute confers eminent domain power on private entities aspiring to build ? in 2022 ? a massive $30 billion infrastructure project capable of supporting an elevated, 672-foot-long high-speed train as it traverses hundreds of miles and thousands of privately owned parcels between Houston and Dallas."

Texas officials had lined up on opposite sides of the question, with the State Attorney General filing an amicus in favor of the landowner that argued the company lacks eminent-domain authority ?because they cannot show a likelihood that they will procure financing to complete the project.?

Local officials for Dallas and Houston support the project. ?I hope the decision will revive interest in the project and incentivize investors to move forward in financing and building the Houston to Dallas bullet train,? Houston Mayor Sylvester Turner said in a statement.

A spokesperson for ReRoute the Route, which opposes the current rail corridor, said the ruling "strips away the rights of private property owners in Texas. Since the beginning, the proposed Texas high-speed rail project has been a failure, being promoted to the public as a private venture, yet seeking a $30 billion taxpayer-funded federal bailout to salvage its insolvent proposal." The group said they will continue to fight the project.

A Texas Central spokesperson said work would go on.

?We are appreciative to the Texas Supreme Court for their time and consideration of this important issue as we continue work on this high-speed passenger train rail.?

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