BOND BUYER story: Judgment Sought in Florida Train's Bond Allocation

Posted on October 27, 2016

By Shelly Sigo

BRADENTON, Fla. –Two Florida counties say they have proven in federal lawsuits that the $1.75 billion private activity bond allocation for an in-state passenger train project should be vacated, according to court filings.

Indian River and Martin counties filed separate motions for summary judgment Oct. 20, setting their 2015 suits involving All Aboard Florida's planned Brightline service on course for a final decision.

"We're hoping the case will be submitted to the judge in early December, and then the judge will dispose of the case as he sees fit," said Stephen Ryan, a partner with McDermott Will & Emery LLP, which represents Martin County.

Both counties said in filings that the judge should rule in favor of their claim that the U.S. Department of Transportation violated the National Environmental Policy Act at the time it approved All Aboard Florida's request for tax-exempt bond financing.

The planned passenger train service would pass through the two counties, where there are no stops, on a route between Miami and Orlando.

In its response to the suit, the USDOT said it didn't violate the law, and the counties are not entitled to relief, which would be a reversal of the agency's approval of the bonds.

USDOT also said that it is not required to conduct a review under NEPA, the National Historic Preservation Act, or the Department of Transportation Act.

All Aboard Florida, which became a party to the suits as an intervenor, denied most allegations made by the counties, although the company said that when the suits were filed no Final Environmental Impact Statement or Record of Decision – documents associated with the NEPA process - had been issued for the project.

The final Environmental Impact Statement has since been released, but the Record of Decision – a document that concludes the NEPA review process – has never been issued.

The USDOT has given All Aboard Florida until Jan. 1 to issue the bonds.

Proceeds will be used to fund a portion of its $3.5 billion train project from Miami to Orlando.

Construction is well under way on stations in Miami, Fort Lauderdale and West Palm Beach where service is expected to start next year.

U.S. District Judge Christopher R. Cooper, in an August ruling allowing the lawsuits to move forward, said that the counties proved that the USDOT bond allocation should have been considered in a federal environmental review process.

Cooper said that the counties had legal standing to proceed with their challenges because they demonstrated that the project likely would not be built without tax-exempt financing – a reversal from a decision in June 2015.

Information produced during discovery, the judge said, raised "legitimate questions" about All Aboard Florida's commitment to completing the second phase of its project, from West Palm Beach to Orlando, without the use of private activity bonds.

Cooper said the issue "casts some doubt as to whether AAF is truly serious about moving forward with phase 2 of the project regardless of the outcome of this lawsuit."

USDOT and All Aboard Florida must file responses to the motions for summary judgment by Nov. 4. Reply briefs from the counties are due Nov. 14.

The suits are pending in the United States District Court for the District of Columbia.

Indian River's case number is 1:15-cv-00460 and Martin County's case is 1:15-cv-00632.

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