DALLAS — An environmental lawsuit by the Sierra Club could impede bond issuance for one section of a 170-mile toll loop around the Houston area known as the Grand Parkway.

The lawsuit, which names the U.S. Army Corps of Engineers, the Federal Highway Administration, and the Texas Transportation Commission as defendants, was filed Aug. 22 in the U.S. District Court for the Southern District of Texas, Houston Division.

Because bond issues require certification that there is no pending or active litigation, the lawsuit will have to be resolved before the TTC can issue debt for the project.

The lawsuit comes on the heels of the Sierra Club's previous unsuccessful litigation to halt the parkway in 2009. The original complaint accused the agencies of failure to follow the National Environmental Policy Act in preparing the environmental impact statement for the four-lane tollway and access roads.

In the latest filing, the environmental advocacy group claims that a 15-mile section of the tollway known as Section E in northwest Houston would create a risk of flooding in the city's core by compromising two dams.

According to the suit, the Corps of Engineers violated federal law by not disclosing a July 2010 internal memo that found the Addicks Dam and Barker Dam "currently face significant risks of 'catastrophic failure.'"

The Sierra Club says it discovered the memo last March after filing a Freedom of Information Act request for the Corps' evaluation of Segment E.

"According to the Corps, these dangers are 'Urgent and Compelling,'" the suit claims. "These two dams protect key areas of Harris County from the risks of catastrophic flooding from Buffalo Bayou, including Houston's Central Business District, the Memorial Drive area, the Memorial Villages, Tanglewood, River Oaks, and portions of the Interstate 10 energy corridor."

The $6 billion Grand Parkway, also known as State Highway 99, has been under consideration for more than three decades and is considered controversial because some critics see it as promoting growth in an area that is now sparsely settled. But advocates see it as a solution to future congestion and a corridor for cargo from the Port of Houston.

"Development of the Grand Parkway is a priority for the Houston area and for the state of Texas," Ned Holmes, a member of the Texas Transportation Commission board, said in a discussion of the project this year. "Development of the Grand Parkway will alleviate congestion on multiple roadway segments on the state's list of the 100 most congested, including six segments ranked in the 20 most congested."

The tollway is also unusual in that the Texas Department of Transportation will be supervising the project rather than the Harris County Toll Road Authority. Harris County Commissioners, which oversee HCTRA, decided to pass on the project in January because key segments are outside the county. The new loop is not expected to produce sufficient revenue to service bond debt from the outset.

The first section that won the green light from TxDOT was expected to connect Interstate 10 to U.S. 290 northwest of Houston. The TTC's unanimous decision to advance the project allows TxDOT staff to manage planning and to supervise contracts once funding sources are identified.

Initial funding of $350 million will come from the Texas Mobility Fund in the form of cash. The Texas Mobility Fund is made up of fees for driver licenses, driver records, certificates of title, and vehicle inspections. Construction costs for segment E are an estimated $355 million, with an additional estimated $64 million for engineering and right of way.

The low cost is due in part to the fact that the area where the four-lane highway will travel is relatively undeveloped, lowering right-of-way costs, according to a TxDOT spokeswoman.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.