United States District Court, S.D. New York
September 27, 2004.
NEW YORK STATE ASSEMBLYMAN MICHAEL GIANARIS, CONGRESSWOMAN CAROLYN B. MALONEY, CONGRESSMAN JERROLD NADLER, NEW YORK CITY COUNCILMAN ALAN JAY GERSON, NEW YORK CITY COUNCILMAN PETER F. VALLONE, JR., JEAN B. GRILLO, the DUANE/THOMAS NEIGHBORHOOD COMMITTEE and FROM THE GROUND UP, INC., Plaintiffs,
NEW YORK LIBERTY DEVELOPMENT CORPORATION, CHARLES A. GARGANO, in his capacity as Chairman of the Board of Directors of the NEW YORK LIBERTY DEVELOPMENT CORPORATION, CHARLES E. DORKEY, JOSEPH H. HOLLAND, KEVIN S. CORBETT, FRANCES A. WALTON and DAVE CATALFANO, in their capacity as Members of the Board of Directors, and ASTORIA ENERGY, LLC., Defendants.
The opinion of the court was delivered by: THOMAS GRIESA, Senior District Judge
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
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.,
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
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
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
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
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.
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