A new federal lawsuit could derail financing for the second phase of All Aboard Florida’s privately run, Brightline-branded passenger train service.

Martin County, Indian River County, Citizens Against Rail Expansion (CARE), and Indian River County Emergency Services filed a joint complaint late Tuesday in U.S. District Court for the District of Columbia.

A Brightline passenger train in testing in Miami
A Brightline passenger train travels through Miami during a test run for crew certification and training in August 2017. All Aboard Florida

The litigants, who are attempting to block the issuance of $1.15 billion of private activity bonds allocated to All Aboard Florida, claim the U.S. Department of Transportation and the Federal Railroad Administration worked with AAF to violate federal environmental laws.

The legal challenge comes as AAF faces a May 31 deadline imposed by USDOT to issue the $1.15 billion of PABs. AAF is not named in the suit but it could join as an intervenor as it did in prior litigation filed by the two counties.

The 94-page complaint contends that USDOT and FRA violated the National Environmental Policy Act by failing to “take a hard look at [AAF’s] environmental impacts, rigorously explore and objectively evaluate all reasonable alternatives, and identify all reasonable means to mitigate the harms from the project.”

“Martin County feels strongly that the federal government rubber-stamped a high-speed train route through historic and environmentally sensitive areas of Martin County, ignoring viable alternative routes just to maximize profits,” said a statement by Martin County Attorney Sarah Woods.

The suit alleges that the federal agencies charged with permitting the project acted as a cheerleader “deferring to AAF as to the scope of environmental analysis, the range of alternatives to be considered, and the mitigation measures to be evaluated in the final environmental impact statement and imposed in the record of decision.”

The record of decision, the final step in the environmental review process approving the project, was signed Dec. 15 by Paul Nissenbaum, associate administrator for the FRA’s Railroad Policy and Development, opening a window in which legal challenges could be filed.

The new suit could delay the completion of AAF’s intercity train service from West Palm Beach to Orlando, a 168-mile second phase of the project that would pass through Martin and Indian River counties at speeds over 100 mph without stopping. The counties lie in a region known as the Treasure Coast.

“This is the seventh lawsuit Treasure Coast counties have filed in order to stop a privately funded transportation project that is critical to Florida’s growth,” said a Brightline spokesperson. “The anti-progress vision of the Treasure Coast has already cost taxpayers $7 million. Apparently, there is no limit to how much more taxpayer money they will waste.”

The USDOT said it does not comment on pending litigation.

AAF, a privately held subsidiary of Florida East Coast Industries LLC, has already issued $600 million of PABs to finance portions of phase one, the 66.5 miles between Miami and West Palm Beach. The Florida Development Finance Corp. issued the bonds in December. They were rated BB-minus by Fitch Ratings.

AAF has also applied for a low interest FRA Railroad Rehabilitation and Improvement Financing loan to finance phase 2, but has declined to say whether it will use the loan program or PABs, or both.

USDOT granted the second phase allocation Dec. 20, giving the company less than six months to issue the debt. The approval letter signed by U.S. Department of Transportation Under Secretary for Transportation Policy Derek Kan did not say why the tight deadline was imposed.

“The Department of Transportation is focused on ensuring utilization of our remaining authority for private activity bonds,” the USDOT spokesperson said, when asked about the deadline. “In aggregate, All Aboard Florida has received one of the greatest allocations in the history of transportation PABs.”

Combined, USDOT has approved $1.75 billion of PABs for the nation’s first privately owned passenger train system in decades. Although fiercely private about costs, AAF said in a previous federal suit the entire 235-mile project was estimated to cost $3.5 billion.

The new lawsuit, an action filed under the Administrative Procedure Act, contends that the approval of $1.15 billion of PABs for phase 2 of AAF’s project must be set aside because it was “arbitrary, capricious, an abuse of discretion, in excess of statutory authority and otherwise contrary to law.”

The PAB allocation violates requirements of the Internal Revenue Service because it does not fall into one of 15 specified categories the IRS code allows for the issuance of tax-exempt private activity bonds, the suit argues. One of the 15 categories is high-speed intercity rail facility.

To qualify as a high-speed intercity rail facility, federal statutes say the passenger train must reach speeds in excess of 150 mph between stops. The suit claims the train will be capable of attaining a maximum speed of 125 miles per hour in some areas and 110 mph along the Florida East Coast Railway corridor, which the AAF will share with slower freight trains.

Because the project is not a high-speed intercity rail facility, the USDOT and FRA approved the bonds for the project based on the theory that it is a “qualified highway or surface freight transfer facility,” the complaint said. “But the project is a passenger railroad. It is neither a highway nor a freight transfer facility.”

If the project is considered a highway or freight transfer facility, it must have received funds under Title 23 of the Federal Highway Administration. “On information and belief, the AAF project has not received a single dollar of Title 23 funds,” and the bond approval must be vacated, said the suit.

The litigants also contend that the bonds are invalid because the IRS code for PAB issuance requires approval by each governmental unit within the project’s boundaries. Two of the five counties in phase 2 – Orange County and Brevard County – approved the PABs but Martin, Indian River, and St. Lucie counties have not, the suit said.

In a statement Tuesday, the litigants said their complaint demonstrates federal officials “ignored or failed to consider the environmental, public safety, maritime and environmental impacts” in their communities. They said USDOT and FRA “acted as the project’s supporter deferring to AAF’s needs and wishes in violation of law.”

“Throughout the NEPA process, Indian River County submitted comments to the FRA demanding that the agency take a hard look at the environmental impacts of the All Aboard Florida project,” said Indian River County Attorney Dylan Reingold. “Unfortunately, after improperly waiting 28 months, the FRA issued a flawed and legally inadequate record of decision.”

Citing public safety problems posed by the train, the suit said the project “will significantly increase the number and speed of trains passing through nearly 350 at-grade road crossings” along the east coast rail corridor, 28 of which are in Martin County and 31 of which are in Indian River County.

When completed AAF expects to operate 32 passenger trains daily from Miami to Orlando, sharing the rail corridor with freight trains.

“Those at-grade road crossings create what the FRA has euphemistically called ‘opportunities for conflict between trains and vehicles or people’ but what would be more accurately described as ‘opportunities for catastrophic and fatal collisions between trains and cars and trains and people,’” the complaint said.

During test runs between Miami and West Palm Beach late last year, two pedestrians were killed in separate incidents. Two more people have been killed since limited service began in January between West Palm Beach and Ft. Lauderdale. Most of the deaths occurred when drivers, bikers or pedestrians went around closed crossing gates. One death was ruled a suicide.

Citing USDOT and FRA data, the suit said that between 2011 and 2017, there were 103 deaths on Florida East Coast Railway tracks.

“Safety is our top priority,” Brightline said last week. “For more than a year, Brightline has been working with local communities to bring awareness about rail safety. We continue to expand our outreach efforts.”

The company said it stepped up safety campaigns adding variable message signs at 20 crossings, airing additional public service announcements, and sending teams to distribute safety information along the rail corridor.

County officials have said the high-speed train will cut through heavily populated areas where they believe more safety improvements are needed than those planned by All Aboard Florida to prevent people from accessing the tracks. State and federal lawmakers have also called for upgrades.

In January, Miami-Dade County Mayor Carlos Gimenez asked the Florida Department of Transportation to evaluate safety measures at AAF’s railway crossings.

In 2015, after AAF was originally granted $1.75 billion of PABS to finance work on the entire project, Indian River County, Martin County and individual CARE plaintiffs sued USDOT. In August 2016, the court ruled for the first time that PABs allocated by USDOT must be considered in the NEPA process.

The suits were dismissed as moot in May 2017 after AAF withdrew its request for $1.75 billion in bonds, leaving the portion of the project pertaining to Indian River and Martin counties unfunded.

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