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April 17, 1995

Town of Secaucus, and Anthony E. Just, Sr., Plaintiffs,
United States Department of Transportation, Federal Transit Administration; Gordon J. Linton in his capacity as Administrator of the Federal Transit Administration; Hackensack Meadowlands Development Commission; New Jersey Transit Corporation; and Allied Junction Corporation, Defendants.

The opinion of the court was delivered by: DICKINSON R. DEBEVOISE

 DEBEVOISE, Senior District Judge.

 Plaintiffs, the Town of Secaucus and its Mayor, seek to enjoin preliminarily and permanently the expenditure of federal funds for the construction of a $ 448 million transportation hub in the Town of Secaucus. Defendants, who are two federal and two state parties and a private property, oppose the preliminary injunction, and have filed cross-motions to dismiss the complaint. Plaintiffs have moved for leave to file an amended complaint. For reasons which follow, the defendants' motions will be granted, the plaintiffs' motions will be denied, and the complaint will be dismissed in its entirety.


 Pleadings and Procedural Background

 A. The Complaint:

 Plaintiffs are the Town of Secaucus and Anthony E. Just, Sr., a resident, taxpayer and the Mayor of Secaucus.

 Defendants are (i) United States Department of Transportation, Federal Transit Administration ("FTA"), the agency charged with the administration of federal funds under the Inter-Model Surface Transportation Efficiency Act ("ISTEA" or the "Act"), 49 U.S.C. § 5301, et seq.); (ii) Gordon J. Linton, administrator of the FTA; (iii) Hackensack Meadowlands Development Commission ("HMDC"); (iv) New Jersey Transit Corporation ("NJ Transit"); and (v) Allied Junction Corporation, a New Jersey corporation ("Allied").

 The complaint alleges certain facts, which do not appear to be in dispute, namely:

 In the early 1980's Allied purchased land in Secaucus which is now the site where the Northeast Corridor, Main and Bergen County railroad lines converge. In March 1990, Allied submitted a revised General Plan application to the HMDC seeking approval of a mixed use 4.7 million square foot development, including a 272,000 square foot train station known as the Secaucus Transfer Station to be constructed and operated by NJ Transit, as well as extensive office and retail space, hotel rooms and requisite parking structure.

 HMDC is a political subdivision of New Jersey organized under N.J.S.A. 13:17-5. Within its designated statutory boundaries, N.J.S.A. 13:17-5 has zoning authority over 14 municipalities. Approximately 88% of the land area of Secaucus is subject to HMDC's zoning authority. In September 1992 HMDC approved Allied's revised plan and in December 1993, HMDC overrode the Hackensack Meadowlands Municipal Committee veto of its approval of the Allied revised General Plan.

 In April 1993 Allied and NJ Transit entered into an agreement (the "Agreement") enabling Allied to implement its development plan. NJ Transit undertook to use $ 15,700,000 of the federal funds it was to receive for the Secaucus Transfer Station for the construction of foundations structurally sufficient to support the 4.7 million square foot commercial development. Were the foundation built sufficient only to support the Transfer Station, it would have been unnecessary to expend this $ 15,700,000.

 Under the Agreement with NJ Transit, Allied is required to reimburse NJ Transit for the $ 15,700,000 in federal funds, and if Allied elects to construct the commercial development, it is required to reimburse NJ Transit for all construction costs relating to the Transfer Station and improvements up to a maximum of $ 59,335,000.

 Allied has no assets other than the land on which the Transfer Station is to be built. The only security for its obligation to NJ Transit is a mortgage on that land. The land was purchased in 1982 for $ 130,000. In a January 1995 interview, Allied's president stated that the land was worth no more than $ 5 million.

 Hearings on Allied's implementation of its project proceeded before the HMDC in 1994. There was strong local opposition to the plan, but HMDC's staff issued a report dated October 28, 1994, in support of the Transfer Station. On November 9, 1994, HMDC unanimously approved construction of the Transfer Station.

 In December 1994 FTA forwarded to NJ Transit a full funding agreement for the Secaucus Transfer Station. The funding included $ 15.75 million for construction of foundations of sufficient strength to support Allied's 4.7 million square foot commercial development.

 Plaintiff's principal ground for attack on the Allied project is a simple one: the use of ISTEA funds to pay for the foundations required to support Allied's proposed structure violates a statutory prohibition.

 It is undisputed that if the proposed Allied structure were not built over the Transfer Station, the expenditure of the $ 15.7 million would be unnecessary. Plaintiffs assert that this expenditure for the benefit of Allied flies in the face of 49 U.S.C. § 5309(f)(2)(B) which provides:

(f) Required payments and eligible costs of projects that enhance urban economic development or incorporate private investment.
(1) Each grant or loan under subsection (a)(5) of this section shall require that a person making an agreement to occupy space in a facility pay a reasonable share of the costs of the facility through rental payments and other means.
(2) Eligible costs for a project under subsection (a)(5) of this section --
(A) include property acquisition, demolition of existing structures, site preparation, utilities, building foundations, walkways, open space, and a capital project for, and improving, equipment or a facility for an intermodal transfer facility or transportation mall; but
(B) do not include construction of a commercial revenue-producing facility or a part of a public facility not related to mass transportation.

 It is plaintiffs' contention that the Allied project is "not related to mass transportation" and, thus, the $ 15.7 million expenditure of federal funds is unlawful.

 Count One of the complaint seeks a judgment finding that the Allied-NJ Transit Agreement violates federal law and is unenforceable.

 Count Two seeks a judgment finding that the Agreement violates federal law and public policy because it provides for the use of federal funds without adequate security.

 Count Three seeks a writ of mandamus against the FTA and Linton requiring them to refuse to permit ISTEA funds to be used to subsidize Allied's development, including use of $ 15.7 million for construction of the strengthened foundation.

 Count Four seeks a judgment enjoining the FTA and Linton from distributing and Allied and NJ Transit from receiving and using $ 15.7 million ISTEA funds for construction of foundations structurally sufficient to support Allied's private commercial development.

 Count Five challenges the actions of HMDC approving the Secaucus Transfer Station and seeks a judgment directing HMDC to rescind its resolutions permitting use of the $ 15.7 million ISTEA funds.

 Count Six challenges HMDC's actions as arbitrary and capricious in light of ecological and typical zoning, land use and municipal planning considerations. Count Six seeks a judgment enjoining the construction of the Secaucus Transfer Station as violative of federal law and public policy, as a wasteful and unnecessary use of public funds, and as detrimental to the public interest.

 B. Subsequent Proceedings:

 Plaintiffs sought a temporary restraining order, which I denied, because it did not appear that expenditure of funds pursuant to the Agreement was imminent. I scheduled a hearing on plaintiffs' application for a preliminary injunction.

 The federal defendants (FTA and Linton), the state defendants (HMDC and NJ Transit) and Allied filed affidavits and exhibits in opposition to the application for a preliminary injunction. In addition, the defendants moved to dismiss the complaint.

 C. Defendants' Factual Contentions:

 The affidavits provide factual data which, while not contradicting the facts set forth in the complaint, spell out the context in which the Allied-NJ Transit Agreement arose.

 The Secaucus Transfer Station is a facility that NJ Transit has planned which will link service on various passenger rail lines in New Jersey that were originally built and operated by private and sometimes competing railroad companies but are now run by NJ Transit. The need to transform these separate rail lines into an integrated state-wide rail system, to enable improved distribution service for NJ Transit railroad passengers, has been recognized since before World War II. Studies exploring methods of achieving such an integrated state-wide system were done as early as the mid-1960's, when the federal government began funding mass transit.

 Secaucus is the exclusive site for the connecting facility because it is the only location where three of New Jersey's primary passenger rail lines converge: the Northeast ...

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