Dismissing Train Suits 'Inequitable,' Florida Counties Argue

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BRADENTON, Fla. – With a privately owned passenger train service just months away from starting up in south Florida, its opponents told a federal judge it would be inequitable to dismiss their lawsuits because of a "backroom" deal over public financing for the project.

Indian River and Martin counties urged U.S. District Judge Christopher R. Cooper on Monday not to dismiss their lawsuits challenging the private activity bonds approved for the $3.5 billion project because of a recently employed financing strategy that leaves a portion of the project affecting their counties without tax-exempt financing.

All Aboard Florida's Brightline-branded trains will pass through both counties without stopping, and critics there believe some public safety issues and costs still have not been addressed.

On Tuesday, four state lawmakers – taking aim at All Aboard Florida - announced they'd filed legislation in the Senate and the House that would establish minimum safety standards on high-speed passenger rail service in the state.

Sen. Debbie Mayfield, R-Melbourne, said the AAF project in her district "threatens to put at risk thousands of school children, pedestrians, first responders, and residents who would be forced to cross railroad tracks between 110 mile-per-hour trains multiple times per day.

"I find it quite astounding that Florida does not have any measures in place to address high-speed rail when there is a statewide project underway that will crisscross through my community, many others between Miami and Orlando, and potentially up Florida's entire east coast," she said in a statement.

Mayfield's bill, SB386, would also reduce the financial burdens for local governments by requiring train builders to absorb the cost of safety upgrades, she said.

In the House, Republican Reps. MaryLynn Magar, Gayle Harrell and Erin Grall have co-sponsored a companion measure, HB 269. Their districts include portions of Palm Beach, Indian River, Martin, and St. Lucie counties.

The Legislature will consider the bills during the regular session that begins March 7. Pre-session hearings are underway now.

Citizens Against Rail Expansion in Florida, a group with members in north West Palm Beach and counties to the north known as the Treasure Coast, expressed support Tuesday for the bills saying they address an "unacceptable" lack of safety standards on passenger rail projects.

"This important legislation will ensure that AAF is solely responsible for the cost of upgrading and installing the appropriate safety measures desperately needed at high-speed rail crossings, protecting not only the safety and well-being of Treasure Coast residents, but our pocketbooks as well," said CARE Steering Committee Chairman Brent Hanlon.

Mayfield's district includes Indian River County, which filed the federal lawsuit challenging the U.S. Department of Transportation's decision to give AAF $1.75 billion in private activity bonds in December 2014 to finance the 235-mile, Miami-to-Orlando project.

Martin County filed a separate lawsuit.

Both counties contend that the USDOT should have considered the bond allocation in a rigorous review process under the National Environmental Policy Act before awarding the bonds.

U.S. District Judge Christopher R. Cooper agreed with the counties in a potentially precedent-setting ruling Aug. 16 that allowed the lawsuits to proceed.

USDOT then withdrew AAF's $1.75 billion application at the company's request and awarded a smaller tranche of $600 million in PABs to finance phase one of its project, the 67 miles between Miami and West Palm Beach where service is expected to begin this summer.

AAF has said it will request $1.15 billion of bonds at a later date to finance the second, 168-mile phase of the project from West Palm Beach to Orlando.

Both USDOT and AAF filed motions to dismiss the lawsuits, saying they are moot because no bond financing authority currently exists for the portion of the route that goes through Indian River and Martin counties.

The counties contended in a joint filing Monday that their suits remain viable based on previous court rulings involving similar circumstances and the fact that USDOT "still adheres to its position that its approval of an application for PABs is exempt" from federal environmental review despite Cooper's Aug. 16 ruling.

The motions to dismiss should be denied, they said, because they have spent significant resources prosecuting the lawsuits.

The counties also said it would be inequitable to prevent their suits from going forward "because of a back-room deal by the defendants" that would require them to return to square one and again challenge the same conduct at issue in the lawsuits if USDOT approves $1.15 billion of PABs at a later date.

"This court has patiently and thoroughly considered these issues through extensive briefing and arguments, and substantial – albeit only partial – discovery," they said. "To require this all to be repeated would be a true injustice."

USDOT and AAF are due to respond to the counties' filing by Jan. 30.

All Aboard Florida is planning to operate the nation's first privately owned intercity passenger train service in at more than three decades, operating 32 daily trains on tracks shared with sister freight company Florida East Coast Railway on the east coast portion of the route.

Owned by Fortress Investment Group LLC, AAF was scheduled to start testing its Brightline-branded trains this week on a 10-mile portion of track south of West Palm Beach.

The first of five trains, which arrived in Florida last month, is being readied to begin service this summer between Miami and West Palm Beach. Ticket prices have not been released.

AAF began working on the first segment of the system many years ago, and received federal environmental clearance through a "record of decision" in January 2013, according to the Federal Railroad Administration, the lead agency conducting rigorous studies for the project.

The FRA released a final environmental impact statement for the West Palm Beach-to-Orlando segment in August 2015, but has not issued a record of decision.

The environmental review process was begun because AAF sought a low-interest $1.6 billion loan through the FRA's Railroad Rehabilitation and Improvement Financing Program. If granted, the loan would have been the largest ever approved by the FRA.

AAF put its application for the railroad financing program loan on hold and opted to request $1.75 billion of tax-exempt financing from the USDOT's private activity bond program, a step that halted completion of the second environmental review process.

Without a record of decision for West Palm Beach-to-Orlando, opponents of the passenger train project have expressed frustration due to the fact that they cannot appeal environmental studies that they have said failed to properly consider public safety, historical, and environmental issues.

At a media event unveiling the new train last week, AAF President Mike Reininger told the Palm Beach Post that the company has listened to concerns people have about the project, and responded to them.

"There is no such thing as a major infrastructure project in the history of the United States that doesn't have some manner of people with a divergent point of view," Reininger said told the paper. "We recognize that. We have been very attentive to the things that people have said that are of concern of them."

Reininger also told the newspaper that the company continues to "look for the exact right moment in the marketplace" to issue the $600 million of PABs awarded by the USDOT recently.

The bonds will be issued by the Florida Development Finance Corp., a state-created conduit issuer.

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