California High-Speed Rail Spending Probed by U.S. House

A U.S. House of Representatives committee said it will investigate reports of conflicts of interest at California’s high-speed rail authority when it received federal money to start construction.

The Oversight and Government Reform Committee contacted all current and former executive leaders at the California High- Speed Rail Authority seeking information on how federal money has been spent on the planned San Francisco-to-Los Angeles connection, said Jeffrey Solsby, a spokesman for the panel. The letter also went to all current and former board members, Solsby said.

“California high-speed rail was sold to voters as a grand vision for tomorrow but in practice appears to be no different than countless other pork-barrel projects -- driven more by political interests and consultant spending than valid cost- benefit analysis,” Representative Darrell Issa, a California Republican who chairs the committee, said in a statement today.

Congress must understand “the appropriate role of financiers, consultants, board members and other state officials in crafting and implementing an infrastructure plan of this scope,” he said in the letter to authority officials dated yesterday.

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The probe will focus on the uses of U.S. funds, allegations of conflicts of interest and mismanagement, and how these factors may affect taxpayers, according to the statement.

Source: California High-Speed Rail Authority

An artist rendering of a California High-Speed Rail train at the ARTIC station in Anaheim, California. Close

An artist rendering of a California High-Speed Rail train at the ARTIC station in Anaheim, California.

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Source: California High-Speed Rail Authority

An artist rendering of a California High-Speed Rail train at the ARTIC station in Anaheim, California.

“Any project of this size should be subject to overview,” Dan Richard, the authority chairman, said today in a statement. “We, of course, will cooperate with the committee, but do not believe any conflict of interest has occurred.”

Gil Duran, a spokesman for California’s Democratic Governor Jerry Brown, declined to comment, referring inquiries to the authority.

California last month reduced its cost estimate for the project to $68.4 billion from $98.5 billion. It’s the only U.S. state near construction on tracks to allow speeds as fast as 220 miles (354 kilometers) per hour.

Issa’s letter asks the authority to preserve documents and e-mails relating to U.S. Transportation Department funding. Issa also said the authority should notify former employees, contractors and consultants to safeguard their records.

It’s too soon to say whether the committee will have hearings, Solsby said.

State Auditor Elaine Howle criticized the rail project in January as lacking specifics about it would be paid for.

California has received commitments for $3.5 billion in federal funds. State officials have said they will rely on government and private investment to complete the line, including as much as $9.95 billion in bonds voters approved in 2008.

To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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