Indian River Cnty. v. U.S. Dep't of Transp.
Decision Date | 20 December 2019 |
Docket Number | No. 19-5012,19-5012 |
Parties | INDIAN RIVER COUNTY, FLORIDA and Indian River County Emergency Services District, Appellants v. UNITED STATES DEPARTMENT OF TRANSPORTATION, et al., Appellees |
Court | U.S. Court of Appeals — District of Columbia Circuit |
Philip E. Karmel, New York, NY, argued the cause and filed the briefs for appellants.
Steven L. Brannock and Tracy S. Carlin, Tampa, FL, were on the brief for amicus curiae Indian River Neighborhood Association in support of appellants.
Joan M. Pepin, Attorney, U.S. Department of Justice, argued the cause for federal appellees. With her on the brief were Jeffrey Bossert Clark, Assistant Attorney General, Eric Grant, Deputy Assistant Attorney General, Kevin W. McArdle, Attorney, Steven G. Bradbury, General Counsel, U.S. Department of Transportation, Paul M. Geier, Assistant General Counsel for Litigation and Enforcement, and Charles E. Enloe, Trial Attorney.
Eugene E. Stearns, Miami, FL, argued the cause for intervenor-appellee. With him on the brief were David H. Coburn, Cynthia L. Taub, Washington, DC, and Matthew Buttrick, Miami, FL.
Before: Garland, Chief Judge, Srinivasan, Circuit Judge, and EDWARDS, Senior Circuit Judge.
In 2011, Intervenor AAF Holdings LLC ("AAF") announced plans to construct and operate express passenger railway service connecting Orlando and Miami, Florida. Phase I of the All Aboard Florida Intercity Passenger Rail Project (also "AAF Project" or "Project"), connecting Miami to West Palm Beach, has been completed. Phase II, which will extend service to Orlando, is presently under construction. In 2014, AAF applied for an allocation of tax-exempt qualified Private Activity Bond ("PAB") authority to partially finance Phase II of the Project. In December 2017, the Department of Transportation ("DOT") allocated $1.15 billion in tax-exempt PABs to be issued by the Florida Development Finance Corporation to finance Phase II of the Project. AAF, the sponsor of the Project, received the proceeds of the bond sales to fund the Project and is responsible for repaying them.
In February 2018, Indian River County, the Indian River County Emergency Services District (together "County" or "Appellant"), and other parties filed a complaint in the District Court claiming that DOT exceeded its authority under 26 U.S.C. § 142(m)(1)(A) when it allocated $1.15 billion in PABs to fund Phase II of the AAF Project. The complaint further alleged that the allocation violated 26 U.S.C. § 147(f), which requires certain state or local governmental approvals before tax-exempt PABs may be issued. Finally, the complaint challenged the adequacy of the Environmental Impact Statement ("EIS") prepared by the Federal Railway Administration ("FRA") pursuant to the requirements of the National Environmental Policy Act ("NEPA"). See 42 U.S.C. § 4332. With respect to all of its claims, Indian River County raised causes of action under the Administrative Procedure Act ("APA"). See 5 U.S.C. § 706(2)(A) ( ); id. § 706(2)(C) ( ). On December 24, 2018, the District Court rejected Appellant’s claims and granted summary judgment to the federal defendants. Indian River Cty. v. Dep’t of Transp. , 348 F. Supp. 3d 17 (D.D.C. 2018).
The District Court ruled that because the complaint arguably fell within the zone-of-interests protected or regulated by § 142, Indian River County was among the class of parties authorized by Congress to pursue a cause of action under the APA. However, the District Court found no merit in Indian River County’s claims. The court ruled that the disputed Project constituted a "surface transportation project" under § 142(m)(1)(A), as required for DOT’s allocation of PABs qualifying for tax-exempt status. The District Court also ruled that the use of the disputed PABs did not violate 26 U.S.C. § 147(f). And, finally, the District Court ruled that the FRA’s preparation of the EIS as required by NEPA was neither arbitrary, nor capricious, nor an abuse of discretion, nor otherwise in violation of the law. On appeal, Indian River County challenges only the District Court’s rulings with respect to § 142 and NEPA. DOT and Intervenor AAF, in turn, contend that Appellant’s claims should be dismissed because its interests are not within the zone-of-interests protected by 26 U.S.C. § 142(m). In the alternative, they seek affirmance of the District Court’s judgments on the merits.
For the reasons explained below, we affirm the judgments of the District Court. We agree that Indian River County’s interests are within the zone-of-interests protected by 26 U.S.C. § 142 and, therefore, the complaint raises claims that are cognizable under the APA. However, we hold that DOT permissibly and reasonably determined that the Project qualifies for tax-exempt PAB financing under 26 U.S.C. § 142(m). We also hold that the EIS for the Project adheres to the commands of NEPA.
Under 26 U.S.C. § 103(a) of the Internal Revenue Code ("Code"), interest on state or local bonds is generally not subject to federal taxation. 26 U.S.C. § 103(a). However, a PAB issued by state or local governments to finance private activities is not tax-exempt unless it is a "qualified bond." Id. § 103(b)(1). As the District Court explained:
Indian River Cty., 348 F. Supp. 3d at 28 (alterations in original)
As noted, an "exempt facility bond" includes a bond whose proceeds from its issue are used to finance "qualified highway or surface freight transfer facilities." 26 U.S.C. § 142(a)(15). Section 142(m)(1)(A) defines "qualified highway or surface freight transfer facilities" as "any surface transportation project which receives Federal assistance under title 23, United States Code." Title 23, in turn, authorizes federal funding for, inter alia , "the elimination of hazards of railway-highway crossings." 23 U.S.C. § 130(a).
875 F.3d at 15-16 (alterations in original) (citations and quotation marks omitted).
In sum, because NEPA’s requirements are "essentially...
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