Nevada's high-speed rail plan deemed ineligible for stimulus funds

WASHINGTON -- Nevada lost out on another multimillion-dollar economic stimulus program when the government doled out $8 billion for high-speed rail projects Thursday because a route planned for a magnetic levitation train between Las Vegas and Southern California was declared ineligible for the funds.

The denial of $83 million in coveted federal funds that might have been used to create jobs and advance a futuristic mode of travel for casino-bound tourists immediately set off a round of political finger-pointing.

Republican Gov. Jim Gibbons blamed President Barack Obama and Democratic Sen. Harry Reid, saying it was an example of the state's senior senator not using his clout to help Nevada.

A Reid spokesman fired back, saying that Gibbons has no place to look but "in the mirror" and that it was his administration that bungled the opportunity.

Reid's office released a letter from the Department of Transportation that was dated Thursday. It said the maglev project was not far enough along to merit an award that the Obama administration intended for more immediate economic stimulus.

The department also said the Nevada-California partnership that applied for the funds did not meet a requirement for eligibility. Democrats sought to put that on Gibbons' shoulders.

The episode was the second time in a month that Nevada found itself at a loss when it comes to scoring federal cash to help itself through the recession. In mid-January, Las Vegas valley governments received nothing from a $2 billion cache handed out by the Department of Housing and Urban Development to keep homeowners from foreclosure.

The maglev train is one of two competing proposals to connect Southern Nevada and Southern California by rail.

The high-speed train would propel its passenger cars using magnetic forces at speeds that could reach 300 mph. A drive of more than four hours over the 269 miles from Las Vegas to Anaheim might take 86 minutes by magnetic rail.

Meanwhile, Desert XPress is moving forward on a $4 billion plan to run electricity-propelled high-speed trains between Las Vegas and Victorville, Calif., with planners envisioning an eventual extension to Palmdale, Calif.

The 10-car trains of Desert Xpress would operate at a top speed of 150 mph, the company has said, covering the 180 miles from Southern Nevada to Victorville in about 84 minutes. Company officials have said construction could start as soon as this year and open for customers by 2014.

Desert XPress investors have said they plan to seek no federal funding, and so it was no surprise when the project was absent from the list of 13 projects in 31 states, which shared the $8 billion from the Obama administration.

Among the big winners was California, which was given $2.3 billion in stimulus funds to advance high-speed passenger rail from Anaheim to San Francisco, with extensions planned to San Diego and Sacramento.

The maglev project involving Las Vegas, which has been in planning since 1988, encountered a setback last summer when Reid, who had been its chief patron in Congress, said he would wait no longer for progress and announced he was switching his support to Desert XPress.

Reid said at the time he would seek to redirect a $45 million earmark that he had placed in a 2005 transportation bill for maglev, on the grounds the project was not prepared to spend the funds.

Officials with the maglev project dispute that, saying they have come up with matching funds and met other criteria to gain access to the $45 million. But so far they have been unable to get it freed from the Federal Railroad Administration.

Given that history, Gibbons was quick Thursday to blame Reid for the latest setback for maglev.

"I am surprised Reid calls Nevada his home state when he uses his position to insult every citizen of Nevada," said Gibbons, who has ramped up his criticism of Reid at a time both of them are running for re-election. Reid spokesman Jon Summers said Reid did nothing to hamper the application.

Reid's staff posted a video on YouTube of Transportation Secretary Ray LaHood discussing the rail awards. In it, LaHood tells Reid that Nevada "did not submit any paperwork or any proposal for any high-speed money."

The video is at:

Reid said the advances in California high-speed rail will profit Nevada when a line from Las Vegas reaches Palmdale, built by Desert XPress. At that hub, it will extend Southern Nevada's reach to potential customers up and down the Golden State.

Gibbons was scheduled to speak on the phone with LaHood on Thursday, said Daniel Burns, the governor's spokesman. It was not clear Thursday night whether that call took place.

Robert Kulat, a Department of Transportation spokesman, said the Nevada-California partnership applied for funding, "but they were not qualified. The project was not eligible, and the sponsor was ineligible. There had to be a state agency sponsoring it."

The application for $83 million was filed by the California-Nevada Super Speed Commission, but according to the federal department, "only states, groups of states, interstate compacts, and public agencies established by one or more states" were eligible.

While the Super Speed Train Commission ostensibly is a bi-state body, there is a wrinkle, a senior Transportation Department official said. Nevada established its part as a state agency, but in California, it was formed as a "nonprofit public benefit corporation."

On Aug. 25, lawyers for the Federal Railroad Administration inquired about the makeup of the commission, said Neil Cummings, president of American Magline Group, the consortium putting together the Vegas-to-Anaheim project. Gibbons and Bruce Aguilera, the chairman of the California-Nevada commission, responded to the federal inquiry.

"We gave them everything and never heard back a word," Cummings said, adding he was baffled the project did not qualify based on its where its work stands.

The issue of whether the California-Nevada commission was a state agency is a "red herring," Cummings said. Clearly the two states had agreements in place to work together on any grant that would have been awarded, he said.

"It's very discouraging," Cummings said. "But we are still moving ahead with the plans we have in place.

"Maybe there is another round of funding we can apply for later," Cummings said. "This is great project, and it needs to go forward. The governors are committed to it along with everyone else along the corridor."

Aguilera described the missed opportunity as "a bitter pill for the business community and the working men and women of Nevada," particularly on the heels of Southern Nevada missing out on housing foreclosure funds.

Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault or 202-783-1760.