Martin County, Florida v. Department of Transportation

UNI'I`EI) STATES DISTR}CT COURT

FOR THE DISTRIC'I` OF C()LUMBIA

er)lAN RlvER COUNTY, §_;__@_L,

Plaintiffs,

V.

PETER M. ROGOFF, et_al.,

Defendants.

MARTIN COUNTY, FLORIDA, et al.,

Plaintit`fs,

v.

DEPARTM ENT OF TRANSPORTATION,

et al.,

Defendants.

Case No. l : l 5~cv-00460 {CRC)

Case No. l:l§-cv-00632 (CRC)

MEMORANI)UM OPINION

Two Florida counties have challenged a 2014 decision by the United States Department

of Transportation (“DOT”) to allocate up to 31.75 billion in non-taxable private activity bonds, _

or “PABS,” to help finance a railroad project along the state’s eastern coastline DOT, the

counties allege, failed to comply with the requirements of the National Environmental Policy Act

(“NEPA”) and other environmental statutes before allocating the PABs. After this Court held

that the counties had standing and had Stated claims under these statutes, the project’s sponsor-

AAF Holdings, lnc. (“AAF”)-applied for a new allocation ot`PABs to finance a portion ot`the

project that does not attect the coanties, and requested that DOT withdraw the previously

challenged allocation DOT did so. Defendants now move to dismiss these cases as moot For

the reasons that follow, the Court will grant the motions

I. Background

The history of` this railroad project and the litigation it sparked are discussed extensively

in prior opinions by the Couit. See lndian kiver Ctv. v. Rogoff`, 20l F. Supp. 3d 1, 4 (D.D_C.

2016) (granting in part and denying in part .Defendants’ initial motions to dismiss); lndian River

Cty. v. Rogof`f`, 110 F`. Supp. 3d 59, 63~66 (D.D.C. 2015) (denying the counties’ motions for a

preliminary injunction), Wliat follows is a brief` overview of the most relevant facts that bear on

Def`endants’ present motions to dismiss

AAF seeks to construct and operate an express railway between l\/liami and Orlando. The

project is divided into two phases fn Phase l, which received private funding and is nearing

completion, AAF intends to provide rail service between Miami and West Palm Beach. The

F ederal Railroad Administration (“FRA”), an arm of`DOT, led a study of` the potential

environmental harms of Phase I, which resulted in a Finding of No Signil'icant Irnpact. l`n Phase

11, AAF aims to extend the rail line north from West Palm Beach to Cocoa, and then inland to

Orlando. Phase 11 of the project runs through lndian River and Martin Counties, which are

located along the east coast of Florida just north of`Palm Beach County.

'I`o fund Phase l`l, AAF applied for a $1.6 billion loan through the Railroad Rehabilitation

and lmprovernent Financing program (“RRIF”). RRIF is administered by the FRA, and the loans

it provides are expressly subject to NEPA requirements §ee 49 C_F.R. § 260.5, Under NEPA, a

federal agency is required to prepare an Environmental Impact Statement (“EIS”) and a Record

of`Decision before taking “rnajor Federal action[ ] significantly affecting the quality of the

human environment ” 42 U.S.C. § 4332(2)(€). FRA issued a final ElS in August 2015 but has

not issued a Record of`Decision or a decision on AAF’s loan application

While its application for a RRlF loan was pending, AAF also requested that DOT exempt

from federal taxes $l.75 billion in PABs to finance the remainder of the proj ect, spread over both

phases PABs are bonds issued by state or local government agencies to finance projects of

public utility By statute, DOT may designate up to $l 5 billion in PABS as tax-exempt

nationwide in order to encourage private development of transportation projects _S__ee 42 U.S.C.

§ l42(m). DOT provisionally authorized the requested $1.75 billion PAB allocation in

December 2014. lndian River Cg., 201 F. Supp. 3d at 6 (citing Reininger llecl. Ex. F, Letter

from `Peter M. Rogof`f, Under Secretary of`Transportation, to AAF President Michael Reininger).

lndian River County and l\/lartin County filed separate suits against DOT, alleging it

improperly authorized the PAB allocation prior to the completion of FRA’S then-ongoing NEPA

review for Phase II. g Amend. Conipl., lndian River Cty. v. Rogol"l", lS~cv~460 (D.D.C. l\/Iay

4, 2015); Compl., Martin Ctv. v. l)ep’t of Transr)._ l§-cv-632 (D_D.C. Apr. 27, 201 5). 'I`he

counties also allege that DOT violated Section 106 of the National Historic Preservation Act

(“NHPA”) and Section 4(f`) of the Department of Transportation Act (“DOTA”), both of which

set forth additional requirements for projects that are subject to federal control or approval §

Compl., lndian River C‘gg_, 15-cv-460, ll 6. The counties seek declaratory relief finding the 2014

allocation to be unlawful, as well as injunctive relief vacating the 20l4 allocation and blocking

DOT from issuing any additional PABS to fund Phase ll Without first complying with the

relevant environmental statutes lg_. at 44~45. While the cases have not been joined, the parties

noticed them as related and they have proceeded on parallel tracks AAF subsequently

intervened as a defendant in both cases The Court denied .Plaintiffs’ motions for a preliminary

injunction in May 2015_

1n August 2016, the Couit denied Def`endants’ motions to dismiss Plaintiffs’ NEPA,

NHPA, and DOTA claims In doing so, it held that DOT’s PAB allocation for the AAF project

qualified as major federal action, thus triggering the requirements of NEPA, NHPA, and DO'I`A.

g lndian River Cty., 201 F. Supp. 3d at 20, Several months later, the counties moved for

summary judgment The Court stayed summary judgment briefing, however, after Defendants

informed the Court that AAF had asked DOT to withdraw the 2014 PAB allocation and replace it

with a new, smaller allocation that would only be used to fund Phase 1. g DOT’s Mem. Supp.

Mot. to Dismiss (“DOT’s MTD”). On November 22, 2016, DOT withdrew the 2014 allocation

and granted AAF a new PAB allocation of $600 million A week later, Defendants moved to

dismiss, arguing that both cases are now moot

II. Legal Standard

A. l\/lotions to Dismiss under Rule 12( b)( l)

A party may move under Federal Rule of Civil Procedure 12(b)(1) to dismiss an action

for lack of subject-matter jurisdiction Fed_ R_ Civ. P. l?.(b)(l). Like a motion to dismiss for

failure to state a claim under Federal Rulc of`Civil Procedure 12(b)(6), the Court must “treat the

complaint’s factual allegations as true and afford the plaintiff the benefit of all inferences that

can be derived from the facts alleged.” leong Seon Han v. Lvnch. 2016 WL 7209628, *4

(D.D.C. Dec. 12, 20l6) (internal quotation marks omitted). But because the Court has an

“affirmative obligation to ensure that it is acting within the scope of its jurisdictional authority,”

Grand Lodge ofFraternal Order of Policv v. Ashcrof`t, 185 F. Supp. 2d 9, 13 (D.D.C. 2001), the

“[p]laintiff`[s’} factual allegations in the complaint . . . will bear closer scrutiny in resolving a

12(b)(l) motion than in resolving a 12(b)(6) motion,” Delta Air Lines. lnc. v_ ExDort-Import

Banl< of United States, 85 F. Supp. 3d 250, 259 (D.D.C. 2015) (quoting SA Charles A. Wright &

Arthur R_ Miller, Federal Practice and Procedure § 1350 (2d ed. 1987)). Moreover, “unlike with

a motion to dismiss under Rule 12(b)(6), the Court ‘may consider materials outside the pleadings

in deciding whether to grant a motion to dismiss for lack ofjurisdiction. Delta Air Lines, 85 F.

Suppi 3d at 259 (quoting Jerorne Stevens Pharms.~ Inc. v. FDA, 402 F.3d 1249, 1253-1254 (D.C.

Cir_ 2005)).

B. Mootness

A motion to dismiss for mootness is properly brought under Rule l2(l))(l) because

mootness itself deprives the court of jurisdiction _S_e§ DL v. Distn`ct ofColumbia, 187 F. Supp.

3d l, 5 (D_D_C_ 2016) (internal citations omitted). Federal courts lack jurisdiction to decide

moot cases “because their constitutional authority extends only to actual cases or controversies_”

Conservation Force1 lnc. v. Jewell, 733 F.3d 1200, 1204 (D.C_ Cir_ 2013) (quoting Iron Arrow

H`onor Soc’y v. Hecl<ler, 464 U.S. 67, 70 (1983)}; see also Worth v. Jacl<son1 451 F.3d 854, 855

(D.C. Cir. 2006) (“Three inter-related judicial doctrines--standing, mootness, and ripenessz

ensure that federal courts assert jurisdiction only over ‘Cases’ and ‘Controversies”’) (citing U.S.

Const, art 111, § 2).

A case becomes moot “when the issues presented are no longer live or the parties lack a

legally cognizable interest in the outcome.” Larsen v. U,S. Navy, 525 F.3d l, 3W4 (D.C. Cir.

2008) (quoting Ctv. of’Los Angeles v. Davis, 440 U_S_ 625, 631 (19'79)). A party may lack a

legally cognizable interest in the outcome °‘when, among other things, the court can provide no

effective remedy because a party has already obtained all the relief it has sought,” Je_w_e_ll, 733

.F.3d at 1204 (internal quotation marks omitted), or “when intervening events make it impossible

to grant the prevailing party effective relief,” Lemon v. Green, 514 F.3d 1312, 1315 (D.C. Cir.

2008); see also Spencer v. Kenma, 523 U.S. 1, 18 (1998) (noting that a case is moot when “there

is nothing for [the court] to remedy, even if [it] were disposed to do so”); Columbian Rope Co_ v_

M, 142 F.3d 1313, 1316 (D.C. Cir. 1998) (holding that a case is moot “if events have so

transpired that the decision will neither presently affect the parties’ rights nor have a more than-

speculative chance of affecting them in the futui'e”j (internal quotation marks omitted).

A defendant cannot, however, “automatically moot a case simply by ending its unlawful

conduct once sued.” Alreadv. LLC v. Nike` lnc., 133 S. Ct. 721, 727 (2013) (citing Q_jtyp_f

Mesquite v. Aladdin’s Castle_ 1nc_, 455 U.S_ 283, 289 (1982)). Otherwise, “a defendant could

engage in unlawful conduct, stop when sued to have the case declared moot, then pick up where

he left off, repeating this cycle until he achieves his unlawful ends.” I_d.; M Campbell-

Ewald Co. v. Gomez, 136 S. Ct. 663, 683 (2016) (Alito, J`., dissenting) (“Our ‘voluntaiy

cessation’ cases . . . hold that, when a plaintiff seeks to enjoin a defendant’s conduct, a

defendant’s ‘voluntary cessation of challenged conduct does not ordinarily render a case moot

because a dismissal for mootness would permit a resumption of the challenged conduct as soon

as the case is dismissed.”’) (quoting Knox v. SEIU, 132 S. Ct. 2277, 2287 (2012))_ 'l`hus, under

the voluntary cessation standard, the case is moot only if(l) “there is no reasonable expectation

that the [alleged] violation will recur” and (2) “interim relief or events have completely and

irrevocably eradicated the effects of the alleged violation.” Larsen v. U.S. Navy, 525 F.3d 1, 4

(D.C. Cir. 2008) (citing Los Angeles Ctv. v. Davis. 440 U.S. 625, 631 (l979)).

III. Discussion

Couits must apply the voluntary cessation standard “where the ‘intervening event

arguably ending any live controversy between [the parties]’ is the government’s own decision to

end the challenged conduct.”’ Cierco v. Lew, 190 F. Supp. 3d 16, 23 (D.D,C. 2016) (quoting

Nat’l Black Police Ass’n v. District of Colurnbia_ 108 F.3d 346, 349 (D.C. Cir. 1997))_ Here,

Def`endants contend that DOT’s withdrawal of the 2014 PAB allocation has mooted these suits

The Court will thus consider each prong of the voluntary cessation standard

A_ N`o Reasonable Expectation of Recurrence

The counties argue that the allegedly wrongful behavior will recur because the

withdrawal of the 2014 PAB allocation is nothing more than “a scheme to navigate around this

Court’s ruling [that Plaintiffs stated a claim under NEPA] by providing the same [$1.75 billion}

financing allocation in a two-step process.” Pls.’ Mem_ Opp’n Defs’ Mots. to Dismiss (“Pls.’

Opp’n”) 5. in Plaintif`fs’ view, “I)OT approve[d] the [new] allocation of 3600,000,000 . . , to

finance Phase 1 . . . with the understanding that AAF would follow up with a second application

for the $1,150,000,000 balance.” I_cL Plaintiffs cite to a September 30, 2016 letter from AAF to

DOT discussing the PAB withdrawal request:

Enclosed herewith is a new application which seeks the issuance of an allocation

of up to $600 million in PABs authority for Phase 1. This application is a substitute

for, and will effectively supplant, the Application originally filed in August of2014.

Within the next several weeks, we will separately discuss a new request for an

allocation of up to $l. 15 billion in PABs authority for Phase 11 (West Palrn Beach

to Orlando).

Letter from AAF President Michael Reininger to DOT (ECF No. 97- l) 4.

To be sure, the above-quoted passage indicates that AAF may well apply for a new

allocation ofPABs to fund Phase 11. But the task for the Court in considering the Defendants’

motions is to determine the likely recurrence of the alleged nn!au_)fi.rl behavior that prompted the

lawsuit That behavior is not AAF’s decision to apply for PABs to fund Phase 11. Rather, it is

DO'I"s decision to grant any future application without complying with NEPA and the other

relevant environmental statutes And as explained in detail in the Court’s opinion denying the

Defendants’ motions to dismiss, whether a particular PAB allocation constitutes “major Federal

action” requiring compliance with NEPA depends on a host of factors relating to the amount and

nature of the federal assistance provided and the degree of control that federal agencies exercise

over the project Mlndian River Ctv., 201 F. Supp. 3d at 14-21 (D_D.C_ 2016). Each case will

be different Accordingly, even if the counties are correct in assuming that DOT will issue a new

PAB allocation for Phase ll without conducting a NEPA review, such an allocation would not

necessarily be unlawful lts lawfulness would depend on how large the allocation was, what

economic assumptions were applied to assess its impact, and what federal strings were attached

Nor is it at all clear that DOT would authorize a new allocation for Phase ll without

complying with NEPA. Plaintiffs argue that, absent an injunction, DOT will continue its

“longstanding practice and policy of ignoring the Environmental Laws in its administration of

the PABs program,” citing statements made by the government in its earlier pleadings in this

litigationl §ee,_gg, Pls.’ Opp’n 4 (citing DOT’s Opp’n to Pls.’ Mot. Preliminary Injunction 4

(“DOT has never treated its allocations as federal actions implicating NEPA, the NHPA, or

[DOTA].”); DOT’s Mem. Supp. Mot. to Dismiss 27 (“N`EPA does not apply in the context ofa

PAB allocation.”).1 Yet these statements offer little support to Ir‘laintiffs1 position because most

were made prior to this Court’s ruling that they had stated a claim under the relevant statutes

§eg lndian River Cty., 201 F. Supp. 3d at 4.2 The Governrnent also appears to have walked back

these positions w DOT’s Reply MTD 9 (noting that the Court’s motion to dismiss ruling

would affect any future decision to allocate PAB’s for Phase Il). For these reasons, the Court’s

1 These pleadings stem from the counties’ motions for a preliminary injunction and

Defendants’ motions to dismiss for failure to state a claim Y lndian River CU., 15-cv-460,

ECF Nos_ 15, 53.

2 Admittedly, DOT stated in its Answer, which was filed after the Couit’s motion-to-

dismiss ruling, that “Federal Def`endants deny that NEPA, the NHPA, or [DOTA] imposed any

requirements on DOT with respect to the PAB Allocation and deny any violation of the law.”

DOT’s Answerjl 8. The Court construes this statement more as a reservation of legal rights than

as an indication of DOT’s future intent to disregard this Court’s ruling

8

earlier ruling casts considerable doubt on whether DOT would adhere to any previous

suggestions that PAB allocations are categorically excluded from NEPA’s coverage And even

if DOT were to do so, Plaintiffs could readily call it to the carpet by renewing their lawsuits in

this Court.

The Court’s conclusion -that the challenged behavior is not reasonably likely to recur is

only bolstered by the recent change in presidential administrations The decision to allocate tax

exemptions for 81.75 billion in PABs (a significant portion of the 815 billion in non-taxable

PABs that DOT is permitted, by law, to authorize nationwide, _ng 42 U,S.C. § l42(m)) was made

by the previous administration, as was the decision to issue a new allocation of $600 million in

late 2016. These actions were consistent with the former administration’s express support for

federal subsidies for high-speed rail projects3 Any decision on a future application by AAF will

be made by entirely different officials in the new administrationl While the new administration

has not publicly opined on the AAF project (as far as the Court is aware) its early actions with

respect to publicly-funded rail transportation in general suggest that it might take a different

track4 Thus, while AAF may well apply for another allocation of PABS to fund Phase 11,

3 See: e.g., Obama White l-Iouse Archives, President Obama Delivers on American High-

Speed Rail (]an. 28, 2010), available ai https;//obamawhitehouse.archives.gov/blog/2010/

01/28/president-obama-delivers-american-high-speed-rail (highlighting $8 billion in federal

grants that “inake rail a viable transportation alternative in many regions” and constitute “an

absolute game-changer for American transportation”); Obama White House Archives, High-

Speed Intercity Passenger Rail Program for Tampa-Orlando-Miami, available al

https://obamawhitehouse.archivesgov/sites/default/ files/rail_florida.pdf (noting that “[g}rants

from the [2009] American Recovery and Reinvestment Act (ARRA) will go toward the creation

of a new high-speed rail corridor that connects Tampa Bay, Orlando, Miami and other

communities in central and south Florida”).

4 See= e.g., White House Office ofl\/lanagement and Budget, America First; A Budget

Blueprint to Make America Great Again 35~36 (2017), available ar https://www.whitehouse_

gov/sites/whitehouse.gov/files/omb/ budget/fy2018/2018Wb1ueprint.pdf (noting that the new

administration’s budget reduces funding for DOT overall by 13 percent, “reduces Federal

subsidies to Amtrak,” “[l}imits funding for the F ederal Transit Administration’s Capital

9

predictions concerning the reception that such an application would receive at DOT would be

speculative at best

The Court finds, accordingly, that there is no reasonable expectation that the allegedly

unlawful behavior in this case will recur.

B. Effects of Violation Eradicated by lntervening Events

The Court now tums to the second prong of the voluntary cessation analysis whether

“interim relief or events have completely and irrevocably eradicated the effects of the alleged

violation.” L_als_e_g, 525 F.3d at 4 (quoting Ctv. ofLos Angeles v_ Davis, 440 U.S. 625, 631

(1979)). “The determination whether sufficient effects [of the alleged violation} remain . _ _ will

turn on the availability of meaningful relief” Cierco, 190 F. Supp. 3d at 24 (alteration in

original) (quoting 13C Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper, Fed Prac.

M, § 3533_3_1, at 104-05 (3d ed. 2008)).

The Counties’ suits challenge a particular agency action: DOT’s 2014 decision to

allocate $1.'75 billion in tax-exempt PAB authority to AAF prior to the FRA’s completion of its

ongoing NEPA review of Phase 11 of the project The relief they seek in turn focuses on

invalidating the challenged allocation w Amend. Compl. 44-45, lndian River Ctv. v. Rogoffq

15-cv-460 (D,D.C. l\/lay 4, 2015) (seeking a declaration that DOT violated NEPA by approving

AAF’s PAB application and an injunction against the issuance of any PABs prior to completion

of the required environmental reviews); Compl. 34, Martin Ctv. v. Deo’t of Transr).. l5-cv-632

(D,D.C. Apr. 27. 2015) (same). But now that DOT has rescinded the allocation ordering the

requested relief would no longer be meaningful and, as a result, would amount to an

lnvestment Program,” and notes that “[f`]uture investments in new transit projects would be

funded by the localities that use and benefit from these localized projects”).

10

inappropriate advisory opinion Iudge Boasberg’s ruling in West v. Horner--a challenge to the

Federal Highway Administration’s approval of a state-funded Interstate highway construction

project in Virginia without full NEPA review-provides a useful analog 810 F. Supp. 2d 228

(D.D.C. 201 1). About a year after the plaintiff in that case filed suit, Virginia abandoned the

challenged project and announced it was planning a new project that it insisted would comply

with NEPA. lying at 23 0“3 l. The court found that interim events had eliminated the effect of any

NEPA violation because the “sole subject” of the Complaint had been abandoned, and that “any

injunction or order declaring [the abandoned project] illegal would accomplishing nothing-

amounting to exactly the type of advisory opinion that Article 111 prohibits.” id at 234-35

(quoting Larsen, 525 F.3d at l, 4). The same is true here

The Counties seek to avoid a mootness determination by reiterating their characterization

of the challenged conduct as “DOT’s policy of violating the Environmental Laws in approving

PABs for transportation policies,” Pls.’ Opp’n 17 (emphasis added), and arguing that DOT will

be free to continue that purported policy absent the requested reliefl But the Cornplaint, fairly

read, does not challenge a general policy; it contests a specific PAB allocation As explained

above, whether any new PAB allocation might require compliance with NEPA would depend on

an individualized assessment of the actual allocation No overarching policy controls whether -

PAB allocations are subject to prior NEPA review. And, again, to the extent that positions taken

in the government’s briefs may have revealed a misunderstanding on the part of the DOT on this

point, those litigating stances were taken prior the Court’s motion-to-dismiss ruling Because

there is no longer any meaningful relief that the Court can provide Plaintif`fs, the Court finds that

“interim reliefor events have completely and irrevocably eradicated the effects of the alleged

violation.” Larsen, 525 F.3d at 4.

ll

IV. Conclusion

For the foregoing reasons, the Court finds that these suits are moot and will dismiss both

actions A separate order accompanies this Memorandum Opinion.

%r)¢/»\L¢_ /Z. H/W_»~

CHRISTOPHER R. COOPER

United States District Judge

Date: May 10, 2017

]2