Opinion
No. 04 Civ. 2957 (TPG).
September 27, 2004
OPINION
after-the-fact testimony is simply not admissible.
THE COURT: Well, I'm not so sure I very strongly disagree with the idea that there might be some individual rights here.
MR. BEHA: Your Honor said you weren't going to reach it, and that's why I'm saying we probably don't need to submit this.
THE COURT: Let me just, before the morning is over, let me dictate a ruling.
I want to thank all counsel for their papers and for their arguments. You've been very measured and thorough and helpful, and I appreciate it.
We have an action brought by two members of the United States House of Representatives, Congressman Jerrold Nadler and Congresswoman Carol Maloney. Another plaintiff is New York State Assemblyman Michael Gianaris, two members of the New York City Council, plaintiffs, Alan J. Gerson and Peter F. Vallone, Jr. In addition, we have two organizational plaintiffs, the Duane/Thomas Neighborhood Committee and Jean B. Grillo, the president of that committee, and another organizational plaintiff, From the Ground Up, Incorporated.
The record is sufficient to show that the Duane/Thomas Neighborhood Committee and From the Ground Up have as members persons with businesses in the lower Manhattan area, businesses in the part of that area which was affected by the World Trade Center disaster.
The defendants are the New York Liberty Development Corporation, Charles Gargano, chairman of the board of directors of that organization, and various individuals who were members of the board of directors of that organization, which is sometimes referred to as LDC.
Also sued as a defendant is Astoria Energy, LLC.
My statement now is not going to contain a great deal of detail. The basic facts are described very clearly in the papers before me, and I will hope to make only a short summary. But it is necessary to start with the statute that is primarily in question, and that is a statute entitled the Job Creation and Worker Assistance Act of 2002. It is sometimes referred to by the acronym JCWAA, and it is found at 26 U.S.C. 1400L.
Under the JCWAA, bonds could be issued to assist in the recovery of lower Manhattan from the World Trade Center disaster. A total of $8 billion in such bonds could be issued. They would be tax-exempt. They're referred to as New York Liberty Bonds or simply Liberty Bonds. $4 billion worth of such bonds could be issued by the State of New York and $4 billion of such bonds could be issued by the City of New York.
Approval of the bonds issued by the state would be given by the governor. Approval of the bonds issued by the city would be made by the mayor. The proceeds from the Liberty Bonds would be loaned to qualified borrowers to finance residential and commercial projects primarily in what is referred to as the Liberty Zone in lower Manhattan, although, under certain circumstances, the borrowers could be involved in projects outside of the Liberty Zone.
Although what I have stated is the formal structure, it is agreed that, in practice, a proposed borrower must arrange for the underwriting of an issue of bonds involving the amount sought to be borrowed. Neither the state nor the city would actually be involved in employing underwriters and managing such underwritings. This type of financing is familiar in many tax-exempt bond offerings involving college dormitories, etc., etc.
It appears that as of the present time, about $1.6 billion in bonds has been approved for residential development, leaving about $6.4 billion for commercial. Again, as of the present time, about $3.1 billion has been approved or is likely to be approved for commercial development. This leaves something like $3.3 billion available for future applications. One of the applications now pending relates to a power plant which is actually being constructed in Astoria, Queens, by defendant Astoria Energy LLC.
Astoria Energy is seeking approval for a bond issue of $400 million to carry out the construction of the power plant in Astoria. The power plant would sell the electricity generated there to Con Ed to be used as part of the New York City electrical supply. It would appear that although final approval has not been granted, the approval process is well along the way. And for the purposes of the proceedings before me, the Court will assume that barring some unexpected adverse development, the approval of the governor will be granted.
I do not say that for the purpose of making some finding about issues which remain to be decided; I simply say for the purpose of any argument about the action being premature, that the Court does not believe the action is premature.
This leaves two issues which are hotly contested and which are of great importance in this litigation. The first is whether there is any private right of action at all which would allow a private lawsuit by anyone to complain about the improper implementation of the JCWAA. The second issue is whether there is standing on the part of these plaintiffs to make the claims asserted in this action even if there might be a right of action on behalf of certain parties.
This brings me to the issue of what plaintiffs are actually asserting as their claims in this action. They assert that the approval of the Astoria electrical plant or the approval of bonds to carry out the construction of that plant would be in violation of the criteria set forth in the JCWAA governing the proper application of that statute. Plaintiffs make various arguments as to why the Astoria plant is not the kind of facility provided for in the statute. I will not go into the details of those arguments because my ruling will not involve the issues of whether those arguments are meritorious or not.
What I am dealing with are threshold issues which I just mentioned as to whether there is any private right of action at all under the statute and whether, even if there is, these plaintiffs have standing.
Before I go farther, I should note an essential point on the law. Plaintiffs are suing under both the JCWAA, that is 26 U.S.C. Section 1400L, and also 42 U.S.C. Section 1983. They assert that the improper approval of bond financing and the consequent improper application of the JCWAA would involve state action which would be a deprivation of rights under the laws of the United States. They have cited cases which in appropriate circumstances join together claims under, for instance, some federal financing statute and the civil rights statute Section 1983.
Now, on the issue of whether there is any private right of action, I am not prepared to hold that there is none. I am not prepared to say that if a plaintiff came to court and claimed that he had been refused bond financing and that this refusal had amounted to a clear violation of the statute and a clear wrongful exercise of discretion, I'm not prepared to say that that person would not have a cause of action.
The critical issue in the present case, in my view, is the one of standing. In this connection, there is no doubt about the seriousness of the objections to this project in the minds of the plaintiffs. There is no doubt that they, in all sincerity, believe that these bonds for this Astoria power project are a misapplication of the statute.
As I've said, we have as plaintiffs two members of the United States House of Representatives, a New York assemblyman and two members of the New York City Council. We also have two organizations, and, undoubtedly, their views are sincere and deeply felt.
However, on the issue of standing, the law is clear. For standing, they are relying on 42 U.S.C. Section 1983. By itself, the JCWAA would not confer any right of action on them, as they themselves concede. Thus, they rely on Section 1983. This statute provides that every person who, under color of state law, subjects any citizen of the United States to the deprivation of any rights, privileges, or immunities, secured by the Constitution and laws, shall be liable to the party injured, in an action at law. This statute and its language are very familiar to the legal community. The crucial language is deprivation of any rights.
Now, if, as I've posed hypothetically a moment ago, a person came to court, a party came to court and said that the governor had abused his discretion in denying him approval of bond financing, it is surely conceivable that he would have a cause of action for the deprivation of his rights; that is, the right to have his application dealt with in accordance with the federal law. But none of the plaintiffs here are in that position.
The public officials are suing for other reasons. They are suing as deeply interested officials seeking to have a correct application of the statute. But these officials are not claiming any deprivation of their own rights. Of course, they are not claiming the right to have any application for financing approved. The theory of their approach to the Court is completely different. But it is not within the ambit of Section 1983.
The organizational plaintiffs are made up to some extent of businesses who might conceivably apply for approval of bond financing. A witness today who is from the organization called From the Ground Up testified that she knows of two small businesses in her group who might wish to have bond financing. The cross-examination brought out that the need for funds in those cases might be so small as to make a bond issue impractical. But the Court is certainly not in a position to say that nobody in these organizations might come up with a workable application for bond financing. But the fact is that no such application has been made; no such application is pending, and surely no such application has been denied.
So, as to the organizational plaintiffs and their members, there is no indication of any deprivation of rights within the meaning of Section 1983.
I should add that over the years there have been various attempts by taxpayers and others to sue with the purpose of vindicating the public interest in the proper application of the laws. And really that is what is being done here, at least as far as the public officials are concerned. But the Supreme Court has held that as a general matter, such actions are not within the jurisdiction of the federal courts. There are numerous cases, including Lujan v. Defenders of Wildlife, 504 U.S. 555, case decided in 1992, and Blessing v. Freestone, 520 U.S. 329, case decided in 1997.
For the reasons I've given, the motion for preliminary injunction is denied, and the motion to dismiss this action is granted. The parties will settle an appropriate order and judgment. Thank you.
MR. ZARIN: Thank you, your Honor.
SO ORDERED.