Detroit Int'l Bridge Co. v. Gov't of Can.

Decision Date21 June 2016
Docket NumberCivil Action No. 10-476 (RMC)
Citation192 F.Supp.3d 54
Parties DETROIT INTERNATIONAL BRIDGE COMPANY, et al., Plaintiffs, v. GOVERNMENT OF CANADA, et al., Defendants.
CourtU.S. District Court — District of Columbia

Amy Lynn Neuhardt, Hamish P.M. Hume, Boies, Schiller & Flexner LLP, Robert Allen Sedler, Wayne State University Law School, Detroit, MI, Patrick A. Moran, Detroit International Bridge Company, Warren, MI, for Plaintiffs.

Douglas A. Dozeman, Eugene E. Smary, Scott M. Watson, Warner Norcross & Judd LLP, Grand Rapids, MI, Brian Matthew Collins, Davene Dashawn Walker, U.S. Department of Justice, Peter Christopher Whitfield, Hogan Lovells, Washington, DC, for Defendants.

OPINION

ROSEMARY M. COLLYER, United States District Judge

During the past six and a half years, Detroit International Bridge Company and its wholly-owned subsidiary, the Canadian Transit Company (collectively DIBC), have litigated this case to prevent the proposed construction of a new publicly-owned bridge between Detroit Michigan and Windsor Ontario. The new bridge, known as the New International Transit Crossing/Detroit River International Crossing (NITC/DRIC), could take away a substantial percentage of the traffic between the United States and Canada from DIBC's Ambassador Bridge.1 It could also threaten the financial viability of DIBC's plans to build an adjacent Twin Span to provide a modern bridge crossing while DIBC repairs and modernizes the Ambassador Bridge.

This Court has previously dismissed all but one of the claims in the Third Amended Complaint (TAC), Dkt. 105. See May 26, 2016 Mem. Op. and Order [Dkts. 269 & 270] (amending some of the Court's previous reasoning and findings, but denying DIBC's motion to reconsider the dismissal of Counts 2, 3, 6, and 9); April 7, 2016 Order [Dkt. 255] (dismissing Count 4 pursuant to the D.C. Circuit's April 4, 2016 Mandate); September 30, 2015 Mem. Op. and Order [Dkt. 222 & 223] (dismissing Counts 1, 2, 3, 5, 6, 8, and 9).

Only Count 7 remains. It alleges that the U.S. Department of State (USDS) violated the Administrative Procedure Act (APA), 5 U.S.C. § 706(2), when it approved the NITC/DRIC Crossing Agreement. The parties have cross-moved for summary judgment and the merits of Count 7 are now before the Court.2 For the reasons that follow, the Court will grant the Federal Defendants' Motion for Summary Judgment on Count 7 and deny DIBC's Cross Motion for Summary Judgment.

I. BACKGROUND3

At the very heart of Count 7 is the Crossing Agreement between Michigan and Canada to "design, construct, finance, operate, and maintain" the NITC/DRIC, which is to be located two miles from the Ambassador Bridge over the Detroit River. See Admin. Record [Dkt. 226] at STATEDEPT-AR0000110. The International Bridge Act of 1972 (IBA), 33 U.S.C. § 535 et seq ., provides in relevant part that:

The consent of Congress is hereby granted for a State or a subdivision or instrumentality thereof to enter into agreements—
(1) with the Government of Canada, a Canadian Province, or a subdivision or instrumentality of either, in the case of a bridge connecting the United States and Canada, or
(2) with the Government of Mexico, a Mexican State, or a subdivision or instrumentality of either, in the case of a bridge connecting the United States and Mexico,
for the construction, operation, and maintenance of such bridge in accordance with the applicable provisions of this subchapter. The effectiveness of such agreement shall be conditioned on its approval by the Secretary of State.

33 U.S.C. § 535(a) (emphasis added). Pursuant to this section of the IBA, the Government of Canada, the Governor of Michigan, the Michigan Department of Transportation (MDOT), and the Michigan Strategic Fund (MSF) executed the Crossing Agreement. In June 2012, the Governor of Michigan submitted an application to USDS for a Presidential Permit to build the NITC/DRIC, as required by the IBA. See Admin. Record [Dkt. 226] at STATEDEPT-AR0000001 and AR0000109-162.4 The Governor also sought approval of the Crossing Agreement by USDS. See id.

On July 11, 2012, USDS published a notice in the Federal Register soliciting comments on the permit application, which included the Crossing Agreement. See Notice of Receipt of Application for Presidential Permit for the Construction of a New International Trade Crossing, 77 Fed. Reg. No. 40937 (July 11, 2012). The public comment period ran until September 10, 2012 and USDS received over 14,000 comments. See STATEDEPT-AR0000363 and AR0000225. DIBC "submitted a Comment on August 9, 2012 and a Supplemental Comment on September 10, 2012 ... both of which explained to the State Department that it should promptly reject the NITC/DRIC Application for a number of reasons, including that ... [it] sought approval of an agreement illegally executed by the Governor, MDOT, and MSF." TAC ¶ 261; see also STATEDEPT-AR0012008-32; AR0025102-05. Other commenters, including some Michigan legislators, also questioned the validity of the Crossing Agreement on the basis that MDOT, MSF, and the Governor lacked the necessary authority under state law to execute the Agreement. See, e.g. , STATEDEPT-AR0028367; AR0028564; AR0028443; AR0028637; AR0028625; AR0028539; AR 0028504; AR0000461-77; AR0000492-94; AR0015045-47.5

In light of these comments, USDS requested the "views of the Michigan State Attorney General" regarding whether "the Governor, MDOT or MSF require authorization or approval of the Michigan State legislature to execute the Crossing Agreement, to bring it into effect, or to implement it." STATEDEPT-AR0000363. USDS also asked whether there were "any additional legislative authorizations or approvals required for the planning, construction, or operation of the NITC." Id. USDS received responses that stated, among other things, that "the Attorney General ha[d] concluded that no further legislative action [was] required to execute the Crossing Agreement, bring it into effect or implement it" and "no further legislative approvals [were] necessary for the planning, construction, or operation of the NITC." STATEDEPT-AR0000365; see also STATEDEPT-AR0000380-383 (letters from Carol Isaacs and George Elworth of the Michigan Attorney General's Office providing additional information). DIBC characterizes the letters as "conclusory, self-serving, and completely without analysis." Pls. Mot. at 13. DIBC disagrees with the interpretation of Michigan law provided by the Offices of the Governor and the Attorney General concerning the validity of the Crossing Agreement.6

On March 25, 2013, USDS signed a Record of Decision supporting its approval of the Crossing Agreement and, on April 12, 2013, notified the Governor of Michigan that the Agreement had been approved. See STATEDEPT-AR0000222; AR 0000385. On April 18, 2013, USDS published a notice in the Federal Register that it had issued a Presidential Permit to build the NITC/DRIC. See Issuance of a Presidential Permit to the State of Michigan, 78 Fed. Reg. 23253 (April 18, 2013).

On September 30, 2015, this Court rejected Federal Defendants' arguments that DIBC lacked standing to challenge approval of the Crossing Agreement by USDS and that the approval was unreviewable agency action under the APA. See September 30, 2015 Mem. Op. [Dkt. 222]. As a result, the Court denied Federal Defendants' Motion to Dismiss Count 7. See September 30, 2015 Order [Dkt. 223].

On summary judgment, the sole question is whether approval of the Crossing Agreement by USDS violated the APA. See TAC Count 7 at 106 (titled, "APA Claims Based on Approval of Crossing Agreement—State Department Defendants"). Count 7 alleges that USDS violated the APA because "it approved an agreement that was entered into in violation of Michigan law." TAC ¶ 357.7 Specifically, Count 7 alleges that, since the Crossing Agreement was illegal under Michigan Law, its approval by USDS was "contrary to law" because approving unlawful agreements violates the U.S. Constitution and the IBA. Id. Count 7 also alleges in passing that, the "approval of the [illegal] Crossing Agreement [was] also arbitrary and capricious and in violation of the other standards set forth in 5 U.S.C. § 706(2)." Id. The parties disagree as to the applicable standard of review, as well as the nature of the APA claim.

II. LEGAL STANDARD
A. APA Claims in Count 7

The APA provides in relevant part that:

To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall—
...
(2) hold unlawful and set aside agency action, findings, and conclusions found to be—
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(B) contrary to constitutional right, power, privilege, or immunity;
(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
(D) without observance of procedure required by law;
(E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or
(F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.
In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.

5 U.S.C. § 706(2).

Count 7 alleges that the approval of the Crossing Agreement was arbitrary and capricious and contrary to the U.S. Constitution and the IBA. See TAC ¶ 357. In its Motion for Summary Judgment, Federal Defendants rely on the APA's "highly deferential standard," under which a court "may set aside [the agency's] action ‘only if it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’ " Zevallos v. Obama , 793 F.3d 106, 112 (D...

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