Martin County, Florida v. Department of Transportation , 254 F. Supp. 3d 15 ( 2017 )

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. Hecl464 U.S. 67, 70 (1983)}; see also Worth v. Jacl451 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