The PM/Governerd Non-Agreement DRIC Agreement

This article will give you two choices dear reader:

1) You can read all of it to determine that the so-called Canada/Michigan Agreement is nothing more than a 54 page nonbinding Letter of Intent without a legal obligation to do anything on Canada’s part and with no remedy to allow Michigan to force compliance on Canada, and

1a) You can read the sneaky, Machiavellian way that Michigan will pay out money for DRIC


2) You can discover how disadvantaged Michigan is under the Letter of Intent by reading this excerpt only from a news story that shows how detailed Canada’s control over the border file is and that the Governerd admits that he is powerless to do anything about it:

“He did not say who would get to decide the name – Canada is essentially paying the entire freight after Michigan legislators balked at committing state money.

Who knows? We may even have a naming contest,” Snyder said. “That’s up to the Canadians working with us. But that’d be kind of fun if you think about it.” (David Eggert June 16, 2012)

Yes, and a Canadian would win that contest too. Why, because only Canadians would know that the name has to be one that is practical in both English and French, the Official languages of Canada!

Ok, so you want to read on, eh (huh for my American readers).

I can feel the intense pressure. It is up to the Blogmeister to go through the Agreement between Michigan and Canada and explain it to my readers in a meaningful fashion without putting them to sleep.

I hope that I am up to the task.

But, if you think I have it tough, think of the lawyers for the Governerd and Prime Minister who had to sit there and come up with this Agreement, pretending that it is something of value when in effect it is meaningless. It was nothing more than a theatrical prop for the big show that was put on last week in Windsor and Detroit.

Hey, perhaps it is the first international theatrical drama carried on in two countries on the same day. A world’s record!

Just think of it, the Government of Canada prepared a two-page Letter of Intent for Jenny. Now, since the Prime Minister came down and since he is much more important than a mere Canadian Minister of Transport, that two pages had to be expanded to 54. What an awesome job that must have been. What a feeling of accomplishment when it was finished! If outside lawyers were retained, I can just imagine what the fees were.

In the past, when I have gone through the legislation with respect to DRIC/P3, I have given a clause by clause analysis. I don’t intend to do that type of review this time around primarily because it would be a huge waste of time. This Agreement is nothing more than a public relations tool that the Governerd and Prime Minister can wave in the air pretending that they have achieved something significant.

Rather, I will pick out the lowlights and deal with them.

However before I do that, dear reader, understand that our attention is being diverted away from the real way that Michigan will have to pay and pay and pay. It has nothing to do with this Non-Agreement. Rather, Michiganders will have to pay in a manner similar to what was done by the Governerd on the introduction of Bills 410/411. While everyone focused on Bill 410, the real way that money would be paid out was under Bill 411:

“Of course, the reality is that Bill 410 and the discussion around it is the diversion! Bill 411 should be what everyone considers equally. But it has to be kept quiet, ignored almost, or else the Governerd’s goose is cooked!”

It will be no different now. We will get some minor Bill down the road similar to Bill 411. I will just refer you to what I wrote before on the subject: “Governerd’s Bill 411: How Michigan Taxpayers Really Pay For DRIC.” Pretty sneaky.

Back to the Non-Agreement:

1) Right off the bat, we are told that this is a “framework for a Crossing Authority.” I would have preferred that it say that this was an actual binding agreement to accomplish something.

Don’t forget that the Crossing Authority is an entity “established by Canada pursuant and subject to the laws of Canada.” The State has no say in it whatsoever. Right now, MDOT has more control over the Bridge Company then it will over a new DRIC bridge once the entity is set up!

Don’t forget that the Golden Rule applies in this matter. Since Canada provides the gold, it makes the rules. (See control over name above)

2) Here are the key words right on the first page for the media to swallow and spew forth to their readers, listeners and viewers: “with funding approved by Canada, but with no funding by the Michigan parties. The Michigan Parties are not obligated to pay any costs of the new International Crossing.”

We have a problem, Houston. Funding has to be “approved” by Canada. In other words, there is nothing yet allocated. One might wonder why not at this stage of the game if there is a so-called agreement between the parties. I could speculate and say that it is way because the Prime Minister really wants to buy the Ambassador Bridge and put a new bridge beside it as was done with the Blue Water Bridge and as was proposed with the Peace Bridge.

Of course, Michigan is not “obligated to pay” but there is no prohibition on doing so. In other words, The appropriate circumstances, Michigan may pay! Moreover, the Majority Leader better bring out that constitutional amendment of his because down the road the Michigan Legislature can always agree to do so. Wasn’t that a No-no that the Legislators wanted to prevent!

The State may not be obligated to pay costs of the Crossing but, until we know what that really means, it is not definitive. For example, could the State guarantee certain indebtedness of the Project and be required to pay on the guarantee? That is not paying for the “costs of the Crossing.”

3) Of course, I don’t understand how the Governerd can sign this Agreement. Under what authority does he do so? As far as MDOT and MSF are concerned, I’m not sure how they can be signatories either considering the Budget language. Perhaps the argument is that there is no “commitment” on behalf of the Departments. In addition, I’m not sure that the Michigan Constitution nor any other Michigan law is applicable to permit the State to be a signatory.

All of this on page 1. Can you imagine what else I will find!

4) As my colleague has written, it is the US Constitution that seems to be a major roadblock to anything being done. If everything is subject to the Constitution, then what was the purpose of the exercise?

In Phil Power’s words in the Holland Sentinel on June 19, 2012,

“Rick Snyder describes himself as a “nerd,” a tough one. But nobody ever figured him as a Machiavellian strategist and brilliant schemer…

“So what did our governor do? He immediately started working on a way to bypass the Legislature to get it done…”

Is this what the US Ambassador meant when he said that the US Federal Government would not do anything until the People of Michigan have spoken? It seems to me that the Governerd deliberately wants to keep out the voice of the People:

“The bridge deal signed Friday between Michigan and Canada includes language intended to nullify a petition drive to require a public vote on the New International Trade Crossing.

Gov. Rick Snyder believes that even without special wording, a constitutional amendment passed by voters in November could not undo a contract signed in June, his spokeswoman Sara Wurfel said Monday.

“Like any other contract or agreement, it’s intended to be binding and not impaired by other actions,” Wurfel said.” (Paul Egan Detroit Free Press June 19, 2012).

It should be clear now how little the Government of Canada thinks about the State of Michigan. It only took a two-page Letter of Intent to fool Jenny and the Governerd and to try to sucker the Michigan Legislature but it will take a 54 page one for the US President and Congress.

5) The Michigan Constitution has some interesting language at the beginning of Section 5 of Article 3: “Subject to provisions of general law.” The way I look at it is that there is other general law that already exists that would prevent the Agreement being entered into. There are also other constitutional arguments that can be raised.

If other Michigan law refers to the Urban Cooperation Act, then I do not see any saving graces in that statute either. As an example, section 4 of the Statute does not talk about an agreement with Canada.

6) Here’s a showstopper for me. When discussing Canadian contributions, look at this loophole language: “which monies or monies for such property or services, have been appropriated by the Parliament of Canada and have been paid by Canada or provided by Canada to the Crossing Authority…”

Seriously, if this is the most important infrastructure project in Canada and absolutely essential to the economies of Canada and the United States, then why doesn’t the Government of Canada just say that it is going to pay for everything. Period. Why does it need this weasel language?

As we learned in Lansing, no money was appropriated for the $550 million by Canada and I have not found anything in the Canadian Budget that deals with DRIC expenditures. Even if money has been appropriated, that does not mean that it will be paid out. Remember what the former Minister of Transport said in Parliament: “Zero Taxpayer Dollars, Not A Single Dollar For DRIC.”

7) Find anything in the Agreement that refers to a commitment of Canada to pay out $550 million for that big pot of gold of $2.2 billion in federal matching grants. I could not do so. The only reference to $550 million was this one:

“Notwithstanding any other provision in this Agreement, all obligations under this Section 5 shall be deemed to have been met for all purposes if US $550 million expended on Federal Aid Highway Project Activities prior to the International Crossing Opening Date are eligible as the non-federal share for federal aid matching purposes under the FHWA’s Federal Aid Highway Program.”

8) I wonder what “Revenue arising from any Public-Private agreement” means. You don’t think that some foreign P3 operator might pay out billions of dollars for the concession to run the border crossing for a very long period of time. Can you imagine if Canada gets all of it and shares none of it with Michigan. That would be a real slap in the face to the State wouldn’t it.

After all, look at the kind of money being thrown around in the past by foreign P3 operators for long-term leases of up to 99 years in Chicago and Indiana. If traffic will triple and there will be enough money for all the crossings in the region to remain profitable, then why are we giving a freebie to a P3 operator to make even more money?

Since we Canadians are so much more experienced than you in Michigan, it would not surprise me if Canada is trying to make a profit on the deal and you just don’t know about it.

9) I wonder if the iron and steel requirements violate any trading rules or treaties.

10) I wonder if the “International Crossing Costs” are similar to the cost of producing a movie in Hollywood. The joke is that no movie has ever made a profit because of the costs allocated to a project by the Studio. I wonder if that will be the case in the DRIC project. Who knows what the P3 payments to a Concessionaire may be since the State has no control over that either.

11) I am glad to see the reference to the “Presidential Permit” since it seems to me that the Secretary of State would have to reverse what it said before with respect to the DRIC crossing. Why would the State Department do that when nothing has changed? Again, this may be fatal to the entire DRIC project.

12) “Public-private agreement.” It is an agreement between the Crossing Authority and a Concessionaire. The State has no control over it, the Legislators have no right to see it and who knows what the terms will be that could harm Michigan in the future.

What happens for example if there is a Default term that allows the Concessionaire to take action when the tolls are insufficient, as we know now that they will be, and Canada chooses not to pay. Could the Concessionaire take action that could be harmful to Michigan, its businesses and its international trade? Of course they can and then what will Michigan do!

13) Here is another giant loophole for Canada: “Responsible for…in the case of Canada, subject to all procedures and approvals required by Canada for the payment of funds, including appropriation by the Parliament of Canada, to pay for such costs and expenses: in the case of the Crossing Authority, subject to the availability of Crossing Authority Revenue or Canadian Contributions to pay for such costs and expenses… and in the case of the Michigan Parties, subject to availability of the Canadian Contributions to pay for such costs and expenses.”

One can drive a fleet of 18 wheelers through it!

Again, why is there all of this weasel wording if not to give Canada a way out and to make the entire agreement non-legally binding.

14) Here is another one dealing with funding: “subject to all procedures and approvals required by Canada…”

15) And that little wrinkle that is supposed to stop the Bridge Company Referendum dead in the water: “shall be deemed to be reference to such Law or section or definition in effect as at the date the Michigan Party became a Party.”

Gee, how does that stop anything when the Law at the date allows for a Referendum. Moreover is anyone serious in saying that a mere agreement can trump a Statute.

16) The only obligation of the Crossing Authority is to “consult.” If one wants to find out how limited consulting means to Canada, then take a look at the Canadian Senate transcripts dealing with the City of Windsor and Bill C-3.

17) The big deal is supposed to be the International Authority with three members from each of Canada and Michigan. Of course, it is subject to the US Constitution butting in again that could nullify everything. So much was written about an Authority that does nothing. Of course, it is designed to fool Michiganders by focusing on this group rather than on the Crossing Authority which controls everything and is controlled by Canada.

Of course, the first Chairperson for the first five years when key decisions will be made will be a representative Canada. In certain cases, the Chair has a second vote in the case of a tie so that means that Canada gets its way.

The role of the International Authority is extremely limited. In fact, the way I read the Agreement, it only has to call a meeting once each calendar year.

If a member of the International Authority dares to disagree with the Crossing Authority, you ought to see the rigmarole that the party has to go through before the disagreement is shown to have merit. The Alternative Language may never ever be acceptable given the tests that it has to meet.

In fact, their powers are further circumscribed by a Fairness Monitor who is also appointed.

The Crossing Authority need only report to the International Authority once per year. All that the Crossing Authority need do is “consider any advice given by the International Authority.”

Some real protection for Michigan and giving Michiganders a voice in how the border crossing is run. Sarcasm intended.

18) The Crossing Authority determines the toll rates.

19) Get worried Michiganders: “The Michigan Parties shall not be required to fund any International Crossing Costs, Michigan Interchange Costs etc.”
There is no prohibition though on Michigan agreeing to do so or a subsequent Legislature deciding to pay some of the costs. The Senate Majority Leader better get out his constitutional amendment because that was a huge worry to the Legislature before!

20) I like that Canada has the responsibility to appoint the Auditor for the Crossing Authority. Michigan may not like it though.

21) There is no waiver of sovereign immunity by Canada in this Agreement. I assume that means that Canada can walk away from its obligations any time it wants and there is no remedy. Perhaps the Michigan Solicitor Genderal could provide a legal opinion on that although I suspect that I know already what his answer will be.

22) The minimum term of this agreement is 100 years! It can last even longer, as long as Canada does not recover all of its money that it put into the project. That could mean forever based on some calculations that I did with respect to the cost of the P3 extravaganza! In other words, if revenues never exceed costs, then Canada controls the border for eternity.

23) Canada in its sole discretion may terminate the Agreement at any time prior to the commencement of construction of the bridge component of the international crossing. We know that the construction of the bridge will probably be at least a decade away by the time all of the legal disputes are cleared up and condemnation actions are completed. That gives Canada control until that time at no cost.

So much for a real agreement if Canada can terminate it so easily.

Michigan’s termination rights are very limited eg the Crossing Authority not entering into a P3 Agreement within 10 years. That should tell you the real story about how long the Governerd thinks it will take for a DRIC bridge to be started, if it ever is.

No reciprocity here in rights of termination.

24) Once the agreement terminates, “the Michigan Parties shall assume all liabilities and obligations of the Crossing Authority in respect of the Michigan Crossing.” So much for Michigan not being at risk for a single dime.

25) The way I read the agreement, the Legislatures not entitled to any “confidential information” at all.

26) Financial viability of DRIC: “the Parties do not anticipate that the first Canadian Contributions Recoupment Date will occur until at least fifty (50)years after the Effective Date. In other words, cost will exceed revenues for at least 50 years.

If you think that Michigan will not be asked to pay out money, just remember the Mackinac Bridge history and Bill 411.

27) No toll revenue for Michigan until Canada gets all of its money back

28) It seems to me that Schedule A requires that if the State wants to receive toll revenues, then it has to pick up 50% of the costs. There is no freebie to the State.

29) The RFP requirements and the P3 requirements are laughable. All that is needed for example is a “proposed plan of the proponent to hire legal residents and citizens of Canada and legal residents and citizens of the USA for work.” Check them out for yourself. It tells the Legislators nothing about what will be in these documents that could impact Michigan.

30) Hooray, huge protection for Michigan: “A Public-Private agreement must state that Michigan is not liable, either directly or indirectly under the Public-Private agreement.” As stated above that does not mean that Michigan cannot assume liability.

31) The P3 document shall be forwarded to the Parties excluding any confidential information of course.

32) And just in case someone flipped to the last page of the Agreement, that person would read that there shall not be included in the P3 Agreement “Any provision that Michigan, any of its political subdivisions, MDOT, MSF or any agency or authority of Michigan, are obligated to use Michigan state funds to make any payment to the Concessionaire or any third party.” See as above with respect to agreeing to do so. Better call the Senate Majority Leader for his constitutional amendment.

Well, that’s it. Not everything but enough to give you a flavour of the big circus last week. As I said, a 54 page Letter of Intent that sets out a framework but not an obligation for Canada to do anything. It is all part of the pressure tactic on the Moroun Family to sell out cheaply.

Oh wait, I forgot, Rashida Tlaib will have to start figuring out where she is going to lie down on the Detroit streets. The Community Benefits Agreement merely needs to show how the members of the community are to be involved, how community input is to be factored in, how the bidder will work with the local community and how job training and local job development will be encouraged.

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About the Author

Ian Shalapata

Ian Shalapata is the owner and publisher of Square Media Group. He covers politics, the police beat, community events, the arts, sports, and everything in between.

His imagery and freelance contributions have appeared in select publications and for organizations in Canada and the United States.

Contact Ian with story ideas.

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