Texas Central’s system is modeled after the Central Japan Railway company’s Shinkansen N700. In 2018, Japan Bank for International Cooperation formed a special finance vehicle, Japan Texas High-Speed Railway Cayman LP, which lent $300 million to Texas Central Railroad Holdings, LLC for building the railway project.
In his letter dated October 2, Abbott expressed his desire that “final negotiations with Japan” be completed soon and that the Japanese contact the Texas Economic Development Corporation (TXEDC) for available assistance. TXEDC is chaired by Drayton McLane, Jr, who is also the chairman of Texas Central Railroad.
McLane has given over $1.66 million in political contributions to Abbott since 2010, according to the Texas Ethics Commission.
TXEDC is a public-private partnership that works closely with the governor’s office to promote Texas as a business location while helping businesses understand and take advantage of the tax incentives, grants, and financing options available to them.
McLane issued a letter in April to state Senator Robert Nichols (R-Jacksonville) which acknowledged that the railroad was having financial difficulties and was relying on funding from the Japanese government.
It appears from filings in several Texas counties along the planned route that Texas Central began transferring property interests, known as deeds of trust, to the Japanese holding company in the Cayman Islands this summer.
A deed of trust conveys a property interest to a lienholder as security for debt.
Abbott asserts in his letter that the railway has received all necessary permits to begin construction, but this is contrary to the Federal Railroad Administration (FRA) recently issued final rule regulating the safety of Texas Central Railroad.
“FRA does not grant any kind of construction approval or permit. Neither does this final rule, by itself, grant any permission or authority for [Texas Central Railroad] to operate,” the official rule states.
State Rep. Ben Leman (R-Brenham) pointed out the inaccuracy in the governor’s statement. “The truth is Texas Central has not received all of the necessary permits to begin construction or operation,” he said.
Leman represents portions of the Brazos Valley through which the railroad is planned on its route from Dallas to Houston.
Rep. Kevin Brady (R-TX-08) also clarified that Texas Central is not ready for construction when responding to the governor’s letter.
“Many serious and lengthy financial, environmental, and regulatory hurdles must be cleared before federal approval is given or the first shovel of dirt is moved – so the prospect of this long-delayed project remains highly uncertain,” Brady said.
“The Governor has been given highly inaccurate information about the status of project approvals. Additionally, this letter further solidifies that the Japanese government, not Texas investors, is the true support behind a high-speed rail project which will lead to the evisceration of private property rights of all Texans,” stated Kyle Workman, chair and president of Texans Against High-Speed Rail.
Before the railroad can begin construction, it must submit an application to the Surface Transportation Board, an independent federal agency charged with the economic regulation of railroads, according to federal law. The application will also look into the financial feasibility of the project.
“It is hard to imagine a project is financially feasible in which the cost has ballooned out of control from a $10 billion project financed by private investors, to a $30 billion project in which Texas Central is seeking a $16 billion taxpayer-funded bailout in Nancy Pelosi’s Green New Deal Stimulus Bill,” Leman pointed out.
While Abbott’s letter claimed that “public support and momentum are on our side,” Brady disagreed.
“I deeply respect Governor Abbott, but this letter is a gut punch to our rural Texas landowners who strongly oppose giving Texas Central Rail (TCR) the power to seize their family lands without their consent,” he said.
“The growing momentum has been clearly demonstrated and documented in opposition to this project, not in support,” Leman remarked.
Texas Central responded to a request for comment after publication, stating, “Our comment to the letter is that Texas Central is pleased to have Governor Abbott’s support as we move forward in bringing new, quality jobs to further enhance Texas’ leadership in our national economic recovery after Covid-19.”
John Wittman, spokesman for the governor’s office, told The Texan, “From the beginning of this project, the Governor made clear that he could support this project if, and only if, the private property rights of Texans are fully respected and no state funding is used. The Governor’s team has learned that the information it was provided was incomplete. As a result, the Governor’s Office will re-evaluate this matter after gathering additional information from all affected parties.”
Editor’s Note: This article has been updated to include the statement from the governor’s office.
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Kim Roberts is a regional reporter for the Texan in the DFW metroplex area where she has lived for over twenty years. She has a Juris Doctor from Baylor University Law School and a Bachelor's in government from Angelo State University. In her free time, Kim home schools her daughter and coaches high school extemporaneous speaking and apologetics. She has been happily married to her husband for 23 years, has three wonderful children, and two dogs.