DOT'S $1.75 BILLION RAIL BOND APPROVAL SKIRTS NEPA

Publish Date: 
Wednesday, March 16, 2016 - 1:30pm

By Michael Macagnone  www.law360.com

Martin County, Florida, pushed back against the U.S. Department of Transportation's attempt to slough off its suit over the All Aboard Florida rail project, arguing in a D.C. federal court on Monday it has sufficiently pled that the approval process for a $1.75 billion bond offering violated the National Environmental Policy Act.

Martin County said that it has sufficiently pled that the DOT’s approval process for the All Aboard Florida Intercity Rail Project’s private-activity bonds violated the National Environmental Policy Act, as well as the Administrative Procedures Act, the county said in its brief. The county claims the Department of Transportation's "provisional" letter that authorized the $1.75 billion in bonds does not follow the APA and went without an environmental impact statement required under NEPA.

The county further contends that the DOT misinterpreted the relevant law when deciding that the rail project would be able to use those bonds in the first place, saying that the project did not have the characteristics to make it eligible. The county also said the department can’t use the “provisional” nature of the approval letter to the project’s backer, AAF Holdings Inc., to escape court review of its actions.

“Nowhere in the letter did DOT indicate that it would issue a ‘final’ approval of AAF’s [private-activity bond] application; the letter demonstrated that the agency had completed its decision-making process and allowed AAF to go forward with the financing of the project,” the pleading said.

The county also rebutted an argument from the government and AAF Holdings that an injunction on the bond issuance wouldn’t actually stop the project. Martin County said it has discovered evidence that AAF and its parent company, Florida East Coast Industries, wouldn’t be able to finance the project without the bonds, despite their testimony to the contrary.

“Reduced to their essence, the declarations of AAF’s witnesses merely provide the court with the declarants’ unsubstantiated and self-serving opinions AAF could and would proceed without the [private-activity bonds]. These conclusory assertions without any facts should be ignored altogether as inadmissible testimony,” the pleading said.

The passenger railway would connect Miami and Orlando, with stops in Fort Lauderdale and West Palm Beach, crossing through Martin County. The county claims it would increase noise, traffic pollution and safety hazards in the area.

Martin County has claimed that the bonds shouldn't be tax-exempt because trains running on the line would not reach the 150 mph speed required to be considered a high-speed intercity rail facility under Section 142 of the Internal Revenue Code.

Counsel for AAF declined comment Tuesday.

Officials from the DOT could not be immediately reached for comment Tuesday. Counsel for Martin County did not immediately respond to requests for comment Tuesday.

Martin County is represented by Stephen M. Ryan, Amandeep S. Sidhu and Jacob Hollinger of McDermott Will & Emery LLP and County Attorney Michael Durham.

The DOT is represented by Luther L. Hajek and Alison D. Garner of the U.S. Department of Justice.

Intervenor defendant AAF Holdings LLC is represented by David H. Coburn and Cynthia L. Taub of Steptoe & Johnson LLP, Eugene E. Stearns and Ryan T. Thornton of Stearns Weaver Miller Weissler Alhadeff & Sitterson PA and Thomas J. Perrelli, Matthew E. Price and Joshua M. Segal of Jenner & Block LLP.

The case is Martin County, Florida, et al. v. Department of Transportation et al., case number 1:15-cv-00632, in the U.S. District Court for the District of Columbia.

--Editing by Bruce Goldman.