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Friday, December 28, 2018

Judge tosses lawsuit blocking Brightline bonds in Orlando-West Palm Beach expansion

Posted By on Fri, Dec 28, 2018 at 12:07 PM

click to enlarge PHOTO VIA BRIGHTLINE
Florida’s fledgling private passenger-rail service has had some reason for holiday cheer.

Days after Brightline got an extra six months to issue $1.15 billion in tax-exempt bonds needed to expand the service from South Florida to Orlando, U.S. District Judge Christopher Cooper on Monday tossed a lawsuit by Indian River County that sought to block the “private activity” bonds.

Brightline spokeswoman Ali Soule called Cooper’s ruling “well-reasoned.”

“The court’s decision adds momentum to our efforts of connecting Orlando to South Florida. We remain focused on exploring locations for a Brightline station in the Treasure Coast and are encouraged by the tremendous amounts of support we have received in the region,” Soule said.

The rail service has now prevailed in 10 rulings in cases initiated by Treasure Coast counties as it looks to put down a second track along a 128.5-mile stretch of single-track from West Palm Beach to Cocoa and then add 40 miles of track between Cocoa and Orlando.

Indian River County, which continued to press forward in the legal fight against the rail service after Martin County reached a settlement with Brightline, may determine its next move at a Jan. 8 meeting. Indian River and Martin counties have been key opponents of the rail service, pointing to concerns about issues such as safety.

“We’re disappointed [with the ruling] but we’re discussing with outside counsel our options on how we move forward,” Kate Cotner, an assistant county attorney in Indian River County, told The Bond Buyer on Wednesday.

The county contended the U.S. Department of Transportation exceeded its authority because the railroad was ineligible for the bonds under federal tax code. Part of the argument involved the federal agency categorizing the rail project as a “qualified highway or surface freight transfer” facility.

Cooper wrote that federal Transportation Secretary Elaine Chao’s approval, in part, met “statutory requirements and was a reasonable exercise of her discretion.”

Chao’s latest extension approval —- the bonds were first approved in December 2017 with a May 31 deadline —- appears to come with a warning that there won’t be another.

Derek Kan, an undersecretary of transportation, advised Brightline that “any amount of unused bond allocation following an initial bond issuance will automatically return to U.S. DOT's remaining aggregate amount of private activity bonds, and thus be available for other eligible applicants.”

Indian River County also argued that the Federal Railway Administration violated the Administrative Procedure Act and the National Environmental Policy Act by conducting a flawed and incomplete review of the public health and safety consequences of the rail project.

Cooper wasn’t swayed by a number of the county’s arguments about issues such as the potential shift of freight traffic from day to night to accommodate the passenger-train schedule, increased noise and vibrations from faster freight trains and the threat to the structural stability of the older St. Lucie River Bridge from faster freight trains.

Cooper also noted that the Federal Railway Administration determined that the project would have an overall beneficial effect on safety because the company would be required to introduce a variety of safety features, such as improved grade crossings.

U.S. Rep. Mario Diaz-Balart, a Miami Republican who chairs the House Transportation Appropriations Subcommittee, said in a release provided by Brightline that he intends to continue working with Chao on moving the project forward.

The bond extension gives Brightline more time to complete a separate application for a Railroad Rehabilitation and Improvement Financing loan to further cover the cost of the Miami-to-Orlando service, which has been previously pegged around $3 billion.

Brightline, which is being rebranded as Virgin Trains USA, has meet resistance from Treasure Coast officials and divided members of Florida’s congressional delegation. It currently has stops in West Palm Beach, Fort Lauderdale and Miami and is planned to run north to Orlando. Brightline is also looking to extend the service between Orlando and Tampa.

Armed with an Oct. 31 report from the state Legislature's Office of Program Policy Analysis and Government Accountability that backed financial and safety concerns expressed by Brightline critics, Treasure Coast lawmakers are again expected to pursue more state oversight of passenger rail service during the 2019 legislative session.

The report noted the state Department of Transportation hasn’t used its authority to regulate rail service at Brightline’s expected speeds of between 81 mph and 125 mph.

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