South Bronx rail development back on track.

A state-of-the-art rail freight and environmentally friendly paper recycling mill project is again moving forward in the South Bronx. An appeals court has reversed a lower court ruling that halted the $300 million re-development of the former Harlem River Rail Yards as a multi-use intermodal rail transportation facility and industrial park. The unique public/private project will provide more than 800 new industrial sector jobs in New York City and will provide the only New York Area terminal east of the Hudson River where containerized freight can be loaded and unloaded from freight trains. Transferring freight from trucks to rail in the Bronx will ease area traffic congestion and exhaust emissions.

The project is the culmination of years of effort by the New York State Department of Transportation (DOT) to develop the old rail yard as an intermodal rail transportation facility and distribution center. The 96-acre parcel in the South Bronx, under long-term lease to Harlem River Yards Ventures (HRYV), part of the Galesi Group, is to include a rail intermodal facility, warehousing and a mill to transform New York City waste paper into pulp for recycled paper. The development has strong support from community and business groups, Governor George Pataki, Mayor Rudolph Giuliani and Bronx Borough President Fernando Ferrer.

In March of last year, a Bronx judge stopped the project when he ruled in favor of a coalition of citizens and local advocacy groups that objected to the use of the former rail yards for any industrial or commercial development other than for handling truck trailer-on-flat-car intermodal freight (TOFC).

In reversing on the expedited appeal, the Appellate Division Court indicated that while DOT had originally contemplated developing the rail yard as an all TOFC facility, changed market conditions, including competing TOFC facilities in New Jersey, had made that infeasible. Instead, based on the recommendations of its consultants, DOT sought to develop the site as a multi-use intermodal park which would combine TOFC with warehousing and other distribution activities.

In 1991 DOT leased the yard to HRYV to implement their winning development proposal. A land use plan was prepared and an environmental impact statement under the State Environmental Quality Review Act evaluated the environmental impacts of the project. DOT approved the project's land use plan in May 1994.

In its decision, the Appellate Court said that the "court (below) should not have substituted its analysis for the expertise of the lead agency (DOT) simply because the agency rejected what it considered to be a less feasible use." "DOT had every right to reject petitioners' alternative proposal, which had fully aired in public debate." The Court also ruled that the judge erred in accepting economic analysis claims, which the Court stated is an inappropriate basis for review of an environmental clearance." The Appellate Court ruled that the project opponents should have commenced their challenge back in 1991 when the lease became effective instead of waiting until August 1994.

David Paget, a leading real estate development and environmental attorney at Sive, Paget & Riesel, P.C. and counsel to HRYV, hailed the decision for eliminating this obstacle to a development that will provide much needed economic development as well as diverting existing freight transport from truck to rail.

"SEQRA mandates that agencies take the hard look at environmental impacts of their actions and evaluate reasonable and feasible alternative," he said. "However, once that is done, courts are not to substitute their judgment for that of the expert agencies charged with responsibility for making public determinations."

Paget said that the Appellate Court's decision send a clear message to project opponents that economic-based challenges will not succeed in environmental impact review cases. "Increasingly, opponents to development projects advance economic claims under the guise of an environmental challenge." The Court's decision also affirms that opponents cannot sit back and wait until construction is about to commence and then start litigation seeking to undo governmental action taken years before and justifiably relied on by the private sector.

HRYV Project Director Anthony M. Riccio, Jr. said "For developers, this case underscores the potential perils of legal challenges, even when projects such as this one enjoy wide government support and the importance of having experienced environmental counsel as part of the project team. Its too late to fill gaps in the administrative record after a legal challenge is brought."