Friday, April 29, 2011

China Political Memo: April 29, 2011

From Stratfor:
Created Apr 29 2011 - 07:56

STR/AFP/Getty Images

A Chinese high-speed train leaves Shanghai on Oct. 26, 2010, after the launch of the Shanghai-Hangzhou line

Over the past seven-odd years, China has tremendously expanded its railway network, particularly through the development of high-speed rail (or HSR, defined in China as any railway with speeds exceeding 200 kilometers per hour). Most of the growth occurred during the tenure of former Minister of Railways Lin Zhijuan and has been achieved by upgrading existing lines rather than building new ones.

During this period, China’s domestic HSR coverage has reached 8,358 kilometers, the longest high-speed network in the world. Meanwhile, China’s railway technology has become an increasingly important part of its foreign diplomacy, extending the country’s regional influence as well as addressing its growing energy demands.

On April 27, China and Myanmar signed a memorandum of understanding (MoU) for a joint railway construction project connecting the eastern Myanmar border town of Muse, the main gateway between Myanmar and China’s Yunnan province and the starting point of the Sino-Myanmar oil and gas pipeline, to the western port city of Kyaukphyu in Myanmar’s Rakhine state. The 61-kilometer Muse-to-Lashio line is the first scheduled phase of the project, all of which is slated for completion within three years. To be built parallel to the Sino-Myanmar pipeline, which began construction in June 2010, the railway will significantly enhance pipeline security and provide access to the sea from southwestern China.

While not strictly an HSR line, the Sino-Myanmar railway is an integral part of China’s vast international-railway expansion plan. Over the past year, overseas orders for equipment and technology from China’s major railway company, China South Locomotive & Rolling Stock Corp. (CSR), have more than doubled and now account for 10 percent of the company’s overall sales, or about $800 million. Though China’s railway expertise is based on technology introduced from other countries and the domestic industry has reached maturity only in the last three years, much of its technology is less expensive to produce and therefore strongly competitive.

The central government staunchly supports exports of China’s railway technology, often attaching attractive financing terms and other economic or political perquisites, particularly for less developed countries. Since 2010, Chinese railway technology has also seen a significant breakthrough into developed markets, including the United States and Europe.

But the Sino-Myanmar railway represents Beijing’s most ambitious railway project yet, designed to expand China’s links to the outside world. And similar projects are on the drawing board. According to a source within the China Railway Tunnel Group with knowledge of the plans, China is currently planning three more HSR networks, all heading in different directions – Southeast Asia, Central Asia and Russia. The source says negotiations are under way with a number of countries and progress is being made. Beijing hopes to complete the three new networks by 2025. Most of the HSR in the domestic portions of the networks will be designed for both passenger and freight transport.

Southeast Asian Network

China’s Southeast Asia railway network plan would largely realize the pan-Asian railway proposal introduced in 1995 by then-Malaysian Prime Minister Mahathir Mohamad in the fifth summit of the Association of Southeast Asian Nations (ASEAN). The original proposal, to connect Singapore to China through Malaysia, Thailand, Vietnam, Myanmar and Cambodia, was widely supported by ASEAN countries and China but was never implemented because of financial, technological and political constraints. In 2010, diplomatic efforts between Beijing and ASEAN countires to revive the plan accelerated. The network consists of different sections, which Chinese state-owned companies and governments are looking to take on, and it has been incorporated into China’s Mid- to Long-Term Railway Network Plan.

The Sino-Myanmar railway constitutes the western portion of the Southeast Asian network. Considerable progress also has been made regarding the middle section. The Chinese and Laotian governments have agreed to establish a joint venture to construct an HSR line connecting Kunming, the capital of China’s Yunnan province, to the Laotian capital Vientiane. Beijing and Vientiane signed an MoU in April 2010 and the Laotian parliament approved the 420-kilometer project in December. Construction was scheduled to begin April 25 and take four years to complete, though groundbreaking has been delayed, probably due to domestic issues on the Laotian side. Chinese companies would finance 70 percent of the $7 billion project.

According to the plan, this middle section will extend into Thailand. One line will connect Nong Khai to Bangkok and then continue eastward to Thailand’s eastern region. Another line will link Bangkok to the southern Thai-Malaysian border region near Padang Basar. Under a draft MoU, construction is slated to begin in 2011 and be completed in 2016. Meanwhile, Chinese companies are also bidding for an HSR project connecting the Malaysian capital Kuala Lumpur to Singapore. Once these missing links are in place, China’s existing railway network will extend south to Malaysia and Singapore.

The Southeast Asian railway network will significantly enhance the degree of interconnection among ASEAN countries and boost China’s regional influence through greater trade and economic cooperation under the ASEAN-China free trade agreement. The Singapore link will give China more direct access to the Southeast Asian trade hub and a greater export market, bypassing the South China Sea and the Strait of Taiwan, while the Myanmar link, by creating an alternate access route for China to the Indian Ocean, will enable it to avoid heavy reliance on the Strait of Malacca. Strategically, the railway network could alleviate any strategic pressure on China from the United States’ re-engagement with Asia and, coupled with Beijing’s “charm offensive,” help contain India’s influence in the region.

Central Asian Network

Beijing is also accelerating negotiations with a number of Central Asian countries to build an HSR network in this region. In February, during Kazakh President Nursultan Nazarbayev’s visit to Beijing, the two countries signed an agreement to construct a 1,050-kilometer, 350-kph line from Kazakhstan’s capital Astana to Almaty, the country’s largest city. The railway will terminate 300 kilometers from the Chinese border (further negotiations are expected to fill in this missing piece). Meanwhile, China is actively promoting a China-Kyrgyzstan-Uzbekistan HSR connection.

From the Chinese perspective, the Central Asian railway network will serve as a modern-day complement to ancient China’s Silk Road, intensifying transportation between China and Central Asian countries and facilitating trade. With China’s growing interest in the region, driven largely by its energy demand, the railway line will also reduce the cost of energy shipments and further diversify China’s energy routes and supply chains. These routes, combined with Beijing’s strategy to develop the country’s western buffer region, will also boost bilateral exchange. Beijing is talking with a number of other countries, including Russia, Nepal, Pakistan, Vietnam and India, about constructing railways for them. And it has even proposed a rail project for Latin America that it believes would rival the Panama Canal by linking Cartagena, Colombia, to the Pacific coast (This plan won’t reach maturity any time soon, given the technological difficulties that arise from negotiating the geography and consolidating existing rail tracks in Colombia using Chinese standards).

More important for China is the expanded regional influence exercised through this railway diplomacy. China is building HSR railways in neighboring countries to within a few miles of its border, then filling in the gaps at a later date. This is an effective strategic template for moving people, goods and potentially even materiel. The strategy is already realizing its potential to facilitate Beijing’s foreign-policy agenda.
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Thursday, April 28, 2011


Video: Obama says high-speed rail must be implemented or America becomes Third World.

Wednesday, April 13, 2011

Budget Deal Deeply Cuts High-Speed Rail Program


Published: April 12, 2011

President Obama’s fledgling high-speed rail program was dealt a serious setback by the budget deal that he struck with Republicans last week: new details released Tuesday showed that the agreement will not only eliminate financing for high-speed rail this year, but will also take back some of the money that Congress approved for it last year. (Article linked here.)

The cut is a major blow to one of Mr. Obama’s signature transportation goals, which he set just months ago in his State of the Union address when he called for giving 80 percent of Americans access to high-speed rail within 25 years. And it casts serious doubt on his proposal for spending $53 billion on a high-speed rail program over the next six years.

The cuts will not bring the rail program to a halt, as there is still unspent rail money that can be used on new projects. But they leave the future of high-speed rail in the United States unclear, to say the least. Roughly $10 billion has been approved for high-speed rail so far, but that money has been spread to dozens of projects around the country. If Congress does not approve more money, it is possible that the net result of all that spending will be better regular train service in many areas, and a small down payment on one bullet train, in California.

This year, newly elected Republican governors in Florida, Ohio and Wisconsin decided to reject billions of dollars in federal rail money that their predecessors had sought and won, arguing that the projects would be costly boondoggles. Florida spurned $2.4 billion that would have nearly paid for the nation’s first high-speed train, connecting Tampa and Orlando.

The depth of the cut in the budget deal came as something of a surprise. As late as Monday afternoon, an administration official had said that there would still be $1 billion available for high-speed rail this year — a cut from the $2.5 billion in last year’s budget, and the $8 billion in rail money in the stimulus bill that got the program started.

But when the budget bill was released overnight, that money was gone: “Notwithstanding Section 1101, the level for ‘Department of Transportation, Federal Railroad Administration, Capital Assistance for High Speed Rail Corridors and Intercity Passenger Rail Service’ shall be $0.” Another section of the new budget bill called for taking back $400 million of the $2.5 billion that was approved last year.

The trims — coupled with cuts to transit spending — were denounced by transportation advocates. “With gas prices in many parts of the country topping $4 a gallon, now is not the time to choke off funding for high-speed rail and transit, which saves oil and provides travelers with a more efficient and convenient alternative to sitting in traffic on America’s increasingly crowded roadways,” said Dan Smith, who follows federal transportation issues for the U.S. Public Interest Research Group.

But the cuts were cheered by many Republicans, who have questioned the program all along. Gov. Rick Scott of Florida, a Republican with Tea Party support who canceled the Tampa-to-Orlando line, issued a news release on Monday celebrating premature reports that the high-speed rail program would be cut by $1.5 billion (it was ultimately cut by $2.9 billion).

Under the headline “Governor Rick Scott Helps Avoid Government Shutdown and Save Federal Taxpayers $1.5 Billion,” it began, “This weekend as Washington, D.C., insiders struggled to find billions to prevent a government shutdown, they found $1.5 billion worth of taxpayer money exactly where Governor Rick Scott left it: in the boondoggle high-speed rail proposal.”

But if some states have rejected the money, others are still clamoring for it: 24 states, the District of Columbia and Amtrak have applied for the money that Florida turned down.

Thursday, April 7, 2011

California high-speed rail: It’s on track. Climb aboard!

The San Diego Union-Tribune



It’s not a question of whether we can afford high-speed rail in California, it’s a question of whether we can afford not to have it – especially in San Diego.

In the late 1980s, San Diego was looking for a new airport site. As a San Diego port commissioner then, I advocated that high speed rail could be the right alternative. Earlier this year, this newspaper acknowledged San Diego International Airport’s “seam-busting future.” Planners see little potential for San Diego County’s 12 public airports to help alleviate capacity problems, but great potential for high-speed rail to do so. The five top destinations for San Diego travelers are within California – and most of them are along the proposed high-speed rail route.

Planners project that a quarter of San Diego County residents and visitors would switch to high-speed rail for trips to Northern California. San Diego International Airport is expected to reach capacity between 2025 and 2030 – just as high-speed trains are expected to start operating this far south.

In short, we need this system. Some trends are not in dispute. We know that California is growing with estimates of 50 million people by 2030. Those 50 million people – and the goods they need – will have to move around our state.

Meantime, our transportation infrastructure is barely serving our current population.

Californians will not bear the costs of this $43 billion project alone. We did our part in 2008 with the passage of Proposition 1A, a $9.95 billion bond measure. Beyond that, California already has received more federal funding for high speed rail than any other state, $3.6 billion, and we stand an excellent chance to receive more within the next few months. Additionally, the Obama administration has announced a plan to dedicate $53 billion more to high-speed rail over the next six years.

These are significant steps and they are exactly the signals the private sector needs to become involved. For years, companies have been telling the California High-Speed Rail Authority directly that they want to be part of our project because they expect it to not only be viable, but also profitable.

A recent call by the authority for expressions of interest gave the private sector – from the self-employed entrepreneur to the multinational corporation – a chance to submit their intentions in writing. Responses were voluntary and not a required part of the bidding process. We received 1,100 responses in five weeks. Virgin Rail Group was one: “This is an opportunity to which VRG is prepared to commit substantial resources to. We believe that California is a market very well-suited to high-speed rail.” Skanska USA was another: “We are excited for the opportunity to participate on such a monumental project.”

The procurement process is expected to begin late this year and work on the initial segment – 120 miles through the Central Valley – late next year. That segment will form the backbone of a system running from Sacramento to San Diego.

The 1,100 responses suggest we need not fear a shortage of private investment because private investors do not fear a shortage of riders.

We are updating our business plan with estimates of ridership that will take into account variables, including fuel costs, airline reactions, train schedules and more. Now that the project is taking clearer shape, early estimates of ridership will shift – as expected. No credible expert has ever said California’s ridership numbers are wrong; our experts say they’re reasonable – but the public has a right to be confident in those figures. A few months ago a peer review panel of experts from California and around the world looked at our ridership estimates. They found not incorrect conclusions, but that the firm we used didn’t document the process as fully as it could have. That is being fixed now.

The key point is that ridership models are just that – models. We can ask people hypothetical questions about their willingness to ride, but common sense and the experience of other nations tell us that when it is built, people will use it.

Californians have demonstrated their support for this project repeatedly. We have the will and the support from corporate boardrooms to the White House to make it a reality.

Schenk, an attorney, has served on the California High-Speed Rail Authority board since 2003. She was the first woman elected to Congress to represent a San Diego district.

Wednesday, April 6, 2011

PRESS ENTERPRISE: Desert high-speed train draws detractors

(link to article)

11:20 AM PDT on Friday, April 1, 2011
The Press-Enterprise

With one month left before federal officials finalize plans for a high-speed train from Victorville to Las Vegas, opponents of the project worry it will take money from High Desert cities and potentially destroy pristine landscapes and sensitive wildlife.

The Federal Railroad Administration -- which must approve the $6 billion Desert Xpress project -- unveiled the final environmental report last week and will open public comment today on the 185-mile route. Supporters and opponents have one month to review the environmental report and respond.

Barstow and Baker, cities that rely heavily on travelers to stop for gas and food, are fretting that the train could divert a lot of their business. And skeptics worry that vital habitats for the desert tortoise, bighorn sheep and Gila monsters could be lost.


DESERT: BLM gets an earful about the Ivanpah Valley

Proponents have spent more than six years planning for the trains, which would carry riders from Victorville to Las Vegas. They have secured key federal backing from Senate Majority Leader Harry Reid , D-Nev., and a recent endorsement from U.S. Secretary of Transportation Ray LaHood.

But those years of planning and support from federal lawmakers have not resolved many of the concerns of High Desert businesses and environmentalists.

"I do think there is a need for high-speed rail," said David Lamfrom, California desert program manager for the National Parks Conservation Association. "But we have to carefully consider the cost and benefits. There is a benefit, but is it worth some of the costs?"

Once the environmental review is adopted by federal rail officials, the project can finish its final design. It would take four years to build, at a cost of around $6 billion, according to the latest estimates from the company. Backers say the line will be paid for with private funds, though a federal loan might be needed to start construction.

Desert Xpress officials did not respond to requests for comment Tuesday and Thursday.

Tracks could be laid from Las Vegas to Victorville, mostly parallel to I-15, and electrical lines strung along the route. The all-electric trains could make the trip between the High Desert and Las Vegas in 85 minutes, a drive that takes three hours or more, depending on traffic.

Federal officials, including LaHood, who has supported national high-speed rail development, tout the jobs the projects would create.

"Just think about the possibility," LaHood wrote on his blog following a Las Vegas stop to support the project. "Factory workers building electric-powered trains. Engineers laying new track. Conductors, operators and ticket-takers helping passengers speed to their destinations. Americans of every trade advancing down the track to a better future."


Desert Xpress also has faced stiff opposition from officials and businesses in cities like Barstow and Baker, which cater to the 45,000 vehicles that drive through the desert on I-15. If the train takes 20 percent of the travelers away from the freeway, the sales loss to the cities could be devastating, some business and city leaders said.

"How could that not impact," said Carol Randall, a Barstow real estate agent who is helping revive the city's Harvey House, a local tourist stop. "We are an I-15 town."

She said many gas stations and restaurants would close if they lost one-fifth their business, leading to lower sales tax revenues for the city and higher unemployment.

City officials in the past have predicted more than 2,000 jobs would be lost in the city, which has a total workforce of slightly more than 10,000.

But an analysis by Redlands economist John Husing, prepared as part of the environmental review process, concluded Barstow would lose 542 jobs.

"While these are negative impacts, they do not constitute the devastating impact and urban decay city officials worry will occur," Husing wrote.

The train will create 18,361 jobs annually over the four-year construction period, about 1,600 of those in the Barstow area, Husing found.

Temporary jobs aren't enough to keep Barstow supportive of the project, Randall said.

"If you are doing this for clean air, or to get a rail line, fine, but then kick back what we're losing," Randall said. "If this will take 25 percent of our business away, then give that back to us."

Losing more business would cripple High Desert cities, she added. The area already is seeing some shipping and moving companies leaving the area.

"You've got trucks looking to leave California and a high-speed train looking to expedite that gambling money from California to Harry Reid's house," Randall said. "We're going to plead and beg and borrow whatever we can do to fight for Barstow."


Environmentalists worry the trains would do more harm than good. Taking cars off the road reduces vehicle emissions, but construction of the route will leave an impact on some of the most sensitive areas of the Mojave, they say. Rare plants such as Joshua trees and centuries-old Mojave creosote would be displaced.

About two square miles of habitat for the desert tortoise -- fully protected by federal and state laws -- would be permanently affected.

The preferred route through the Ivanpah Valley on the California-Nevada border would swing the tracks away from I-15 through a section where tortoises are being relocated to allow for a solar power plant, said Ileene Anderson, a biologist with the Center for Biological Diversity.

A natural gas pipeline also is planned in the Ivanpah Valley, where one solar project is under construction and two more are planned.

"The Desert Xpress and the proposed gas line project make a mockery of 'avoidance' and mitigation for desert tortoise from the solar project," Anderson said in an email.

What might be less damaging for the tortoises is if the train traveled through a small section of the Mojave National Preserve south of I-15 through the Ivanpah Valley, said Larry Whalon, the preserve's interim superintendent. Whalon said National Park Service officials have told Desert Xpress backers the procedure for taking a portion of the preserve, which would require an act of Congress.

Lamfrom, for one, is opposed to that idea, but said he is hopeful many of the issues can be resolved.

"The take of any tortoise is a blow," he said. "We are investing millions of dollars into saving this species."

Many desert creatures could see their territories fragmented by the train, which could be difficult for them to cross. Animals can use washes to get beneath the freeway, he said.

"But the train, I don't see that as passable with a rail line and the electrical system," he said.

Similar environmental concerns were raised earlier in the process, Lamfrom said. Desert Xpress backers adjusted the plan following meetings in 2009, and according to the final environmental report have sufficiently mitigated the damages.

But some questions remain, Lamfrom said.

"In some cases we don't feel the explanations we have been given so far are sufficient," he said.

Staff Writer David Danelski contributed to this report.

Reach Dug Begley at 951-368-9475 or

Impact report

To read the environmental report on the proposed high-speed rail project, go to:

Victorville City Library, 15011 Circle Drive
Barstow Library, 304 E. Buena Vista


Source: Federal Railroad Administration

Saturday, April 2, 2011


Can Obama Get High-Speed on Track?

By Philip Bethge

President Barack Obama wants to upgrade America's transport system using high-speed trains, bringing a taste of what is a part of everyday life in Europe and Asia to the United States. But the car-obsessed nation is divided over the plans. Is the mammoth project doomed to failure?

US Vice-President Joseph Biden is America's most famous commuter. It has earned him the nickname "Amtrak Joe." Several times a week, Biden takes an Amtrak train from Wilmington, Delaware to the historic Union Station in Washington, DC. It has been claimed the Democrat now knows the first name of every ticket inspector on the line.

Biden must have been pleased when he unveiled the government's new high-speed rail plans at 30th Street Station in Philadelphia last month. The administration plans to spend $53 billion (€38 billion) on passenger trains and rail networks over the next six years. The lion's share of this has been earmarked for new high-speed connections. The aim is that 80 percent of Americans will have access to "bullet trains" by 2035.

Such gleaming high-tech marvels could race between San Francisco and Los Angeles at speeds of up to 350 kilometers per hour (220 miles per hour). The planners hope to cut the journey times between Washington and Boston to less than four hours. A T-shaped line in Texas would connect Dallas, Houston and San Antonio. The plan foresees raising hundreds of kilometers of this so-called "Texas T-Bone" off the ground so that longhorn cattle can pass underneath the rails.

"It's a smart investment in the quality of life for all Americans," says Rick Harnish of the Chicago-based Midwest High Speed Rail Association. Industry insiders like Ansgar Brockmeyer, of the passenger rail division of Germany's Siemens Mobility, are thrilled about this locomotive renaissance. "There's reason for optimism," he says.

America's Legendary Railroads

However, the country's conservative forces are determined to derail US President Barack Obama's technological vision. No fewer than three newly elected governors (from the states of Wisconsin, Florida, and Ohio) have completely rejected Washington's planned cash injection for the country's railways.

In fact it's difficult to say whether America's long-neglected trains can ever make a comeback. Large parts of the network are in a desperate state, and most Americans have long-since switched to traveling by car or plane instead.

And yet the railroad enabled their forefathers to open up the Wild West. Train services were profitable in the US right up until the 1950s. Many lines were legendary, such as the Santa Fe Super Chief, which brought its passengers from Chicago to Los Angeles in luxury. Film stars like Elizabeth Taylor, Lauren Bacall and Humphrey Bogart slumbered in the elegant sleeper cars, and dined in five-star style.

The California Zephyr is another classic service, with its route stretching for almost 4,000 kilometers (2,500 miles) from the Midwest to San Francisco. In better times, "Vista dome" cars gave passengers a 360-degree panoramic view of the Colorado River, Rocky Mountains and Sierra Nevada. An elite team of hostesses, dubbed the "Zephyrettes," served drinks and even offered to act as babysitters.

The Zephyr still runs to this day -- but the 51-hour journey makes this more of a treat for diehard railway fans. One such fan is James McCommons from Northern Michigan University. The academic spent a year crisscrossing the US by train before chronicling his experiences in a book. "It's embarrassing," he says. "We were the greatest railroad nation in the world, and now we don't even build a railroad car in this country ourselves."

American author James Kunstler complains that "Amtrak has become the laughing stock of the world." He jokes that the company was clearly "created on a Soviet-management model, with an extra overlay of Murphy's Law to ensure maximum entropy of service." Indeed, Amtrak trains currently take more than 11 hours to cover the 600 kilometers (375 miles) from San Francisco to Los Angeles. It hardly helps either that the train is called the "Coast Starlight."

A Wake-Up Call

The high-speed rail plans have therefore come as something of a wake-up call in these circumspect times. Many Americans are amazed to discover that President Obama appears to be serious about investing heavily in the railways. "I don't know what this fascination with trains is about," says Michael Sanera of the John Locke Foundation, a free-market think tank. He has only one explanation: "I think there is a lot of frustration primarily by men who maybe didn't get that train set when they were kids, and now they want to play around with trains."

Taking a closer look, it's easy to see how serious the situation has become. America is facing gridlock. According to a study by the National Surface Transportation Policy and Revenue Commission, the US will need nine new airports the size of the gigantic Denver International Airport and will have to double the number of miles of interstate highways if demand for transportation continues to grow at the current level in the coming decades. In 2009, commuters in the US spent 5 billion hours stuck in traffic jams. That's seven times as long as in 1982.

"Four decades from now, the United States will be home to 100 million additional people," warns US Transport Secretary Ray LaHood. "If we settle for roads, bridges and airports that already are overburdened and insufficient … our next generation will find America's arteries of commerce impassable." He considers high-speed trains essential.

Friday, April 1, 2011


U.S. Department of Transportation Announces $1 Million Grant for West Virginia to Develop State Rail Plan

U.S.Department of Transportation
Office of Public Affairs
Washington, D.C.


FRA 3-11
Thursday, March 31, 2011
Contact: Rob Kulat
Tel.: (202) 493-6024

U.S. Transportation Secretary Ray LaHood today announced $1 million for the State of West Virginia to develop a state rail plan that will serve as a blueprint for guiding the state’s rail investment strategies.

“This plan will help West Virginia identify rail lines that will best serve shippers and passengers well into the future,” said Secretary LaHood. “It is an important part of the President’s plan to win the future by targeting critical rail projects.”

The grant will be matched by $1 million from the State of West Virginia. The plan will inventory existing freight and passenger rail lines in the state and analyze the potential for new freight, high-speed, intercity and commuter corridors, including tourist railroads.

“Planning for freight and passenger rail has been ignored for too many years, and state rail plans will create a sound basis for future, targeted investment,” said Federal Railroad Administrator Joseph C. Szabo. “Such plans are all part of the President’s long term vision to best use our railroads and create new opportunities for rail.”

To date, more than $5.3 billion has been obligated to States under the Federal Railroad Administration’s High-Speed Intercity Passenger Rail Program.

The Passenger Rail Investment and Improvement Act of 2008 requires each state to develop a State Rail Plan. The plan is also required for any application for additional intercity passenger rail grants.