While it may go down as a classic case of “bad facts making bad law,” last week’s ruling rejecting the government’s NEPA analysis for the controversial Illiana Expressway is the just the latest in a disturbing trend for large infrastructure development and Public-Private Partnership (P3) financing.
Ironically, just a couple of weeks before Judge Jorge Alonso issued his decision, Illinois Governor Bruce Rauner publicly announced that the project would not move forward “at this time” in light of state budgetary constraints. The Governor’s statement said that “[i]t is the determination of IDOT that the project costs exceed currently available resources.” This announcement was the culmination of what many political experts viewed as a long-running death spiral, although there may be some wiggle-room for the project’s future.
In light of Illinois’ definitive-sounding decision to kill the project, the adverse ruling appears to be a classic case of kicking a project when it’s down, or driving the final nail in the project coffin, or whatever imagery you prefer.
The court’s opinion focused on the growth and population forecasts used by project proponents to justify the Purpose and Need statement. Using “market-driven forecasts” prepared by consultants, the agencies represented that the project study area would experience a 176% population growth and employment growth of 225%. The Environmental Impact Statement (EIS) used that data in lieu of projections created by the local Metropolitan Planning Organizations (MPO) because they concluded that the MPO forecasts concerning in-fill growth and densification development in certain areas were too “aggressive.” Save that thought.
The agencies developed project alternatives using the assumption that the proposed facility would be tolled as part of the project’s P3 financing. The Plaintiffs strenuously objected to the EIS alternatives, with those arguments supported by the Chicago MPO. These parties asserted that the stated project need was inconsistent with other projections for study area population and employment growth. In short, they believed the agencies hadn’t demonstrated that the $4 billion project cost was justified, even if supported in part by private financing. While project opponents also raised typical environmental objections, the litigation and controversy surrounding the Illiana Expressway was always about whether it was the right project for the region at the right price.
The court’s recitation of portions of the lengthy administrative record reveal the ongoing disagreement between the agencies and the MPO over which growth projections should be used and whether those projections supported the project need. Plaintiffs and the MPO believed that the project was simply in the wrong place and would encourage development where it should not occur and ignore growth and development where it was actually happening. Make no mistake: this was as much a political dispute as it was a legal one.
First, the court rejected Plaintiffs’ argument that choosing to ignore the MPO projections was, in and of itself, arbitrary. Previewing his ultimate ruling, however, Judge Alonso stated deciding to ignore the analysis of the body with the “legal mandate” to develop long-range plans “would seem unwise.” Even if the court was not persuaded that the agencies’ market-based approach was reasonable, it deferred to the decision of the agency experts. The court clearly believed that the agencies had not justified the need for the project, but it had to find some procedural basis to overturn the EIS.
That opportunity presented itself in the form of the EIS analysis of the “no-build” alternative. Digging deeply into modeling concerning the baseline scenario, the court found a statement in an appendix to a growth forecast report that the local County would benefit from a number of anticipated multi-model transportation projects including “potential construction of the Illiana Expressway” to connect many of the identified projects. This one statement doomed the agencies. The court found that the no-build option was flawed because it in theory included the project in its baseline assumptions.
Using that conclusion as support, the court then found that the agencies’ analysis did not “substantiate the purpose and need” because that assumption was derived from the “faulty no build analysis.” Returning to the MPO’s critical comments mentioned earlier, even though the court previously upheld the agencies’ decision not to use the MPO’s assumptions, he ruled that the agencies’ impacts analysis was arbitrary because they did not reconcile the inconsistencies between the MPO’s long-range plans and assumptions used to support the project.
This is truly a troubling precedent. Building off a similar finding concerning the Monroe Connector project in North Carolina, it seems courts are delving into the substantive decisions over transportation priorities, readily using a procedural subterfuge to second-guess agencies. Creating growth projections for large metropolitan areas is more art than science. P3 financing relying on those models is similarly subjective. When a court delves so closely into those assumptions that a single statement from a vast record calls into question the basic decision about whether a community actually needs a project, the judge is not far from becoming the master of that community’s long-range transportation plan.
Citizens and political leaders in Illinois and Indiana may have and may still disagree about the usefulness of the Illiana Expressway. But now, one person – a judge – has said that he wasn’t convinced the project was necessary. DOTs and private equity firms, take note.