Peace Bridge bill may be DOA

Reporting, analysis and commentary
by Jim Heaney, editor of Investigative Post

I suspect a number of newspaper readers and television viewers surmise that the Peace Bridge Authority is about to go bye-bye as a result of Wednesday’s approval by the state Legislature of a bill that would dissolve the authority that operates the Peace Bridge next year unless its governing board acts in accordance with state wishes.

That would be a false assumption, and the story I did Thursday evening on WGRZ was my attempt to set the record straight. I want to expand on that story here.

The bridge authority has a legal opinion from Phillips Lytle, Buffalo’s biggest law firm, that concludes the changes being sought by New York require the approval of the U.S. secretary of state and the Canadian Parliament. Let me quote from the May 1 opinion issued by Craig Bucki:

A review of applicable U.S. law indicates that the New York Legislature lacks the power to enact the Proposed Changes without the consent of the Government of Canada. Pursuant to the U.S. Constitution, the Proposed Changes would also require approval by the U.S. Secretary of State. 

Elsewhere in his legal opinion, Bucki noted a dispute in 1955 that was similar, although not identical, to the current controversy.

The state wanted to hand control of the bridge plaza on the U.S. side over the the Niagara Frontier Transportation Authority. The Legislature passed a bill to that effect that the governor signed. Congress then granted its approval. The Canadian Parliament did not, however, and the matter died there. Canadian officials went so far as to ask the New York attorney general, Jacob Javits, the future United States senator, for a legal opinion. Javits ruled in favor of the Canadians.

So, if Bucki’s legal opinion is to be believed, the bill passed Wednesday amounts to a non-binding resolution. Good political theater, to be sure, but toothless.

I spoke Thursday with Assemblyman Sean Ryan, chief sponsor of the bill, who insists the state has the legal authority to unilaterally change the terms of the compact that governs the authority, even though it’s a three-party agreement between the state, U.S. and Canadian government.

I asked him if he or other bill supporters had done any legal research to back up their position or perhaps obtained a legal opinion. He said they had not. Hmmmm.

Keep in mind that Ryan is a lawyer. So is Mark Grisanti, who sponsored the bill in the Senate.

Also keep in mind that the Assembly and Senate employ scores of lawyers. I did a story for The Buffalo News in 2008 that determined the Legislature employed no fewer than 113 lawyers. But yet no legal due diligence was performed on the legalities of the bill.

Hmmmm, indeed.

So where does this leave us?

The authority’s five state appointed board members have indicated they will not vote to authorize any measures that enables the authority to finance bond sales unless Canadian board members acquiesce to Cuomo’s demands that they develop the U.S. plaza as he wants.

Under Ryan’s legal theory, the bill passed earlier this week would then trigger a dissolution of the authority in July 2014, as it would have no outstanding debt that would justify its continued legal existence. Jerry Zremski of The Buffalo News explains Cuomo’s thinking in this story.

Canadian members of the authority board see things through a different lens.

They want to go to the bond market to refinance about $35 million in debt, plus borrow another $50 million for three projects that have been approved on the U.S. side of the bridge. The board has approved other borrowing, some $90 million to $100 million re-deck the bridge, and up to $30 million to build a facility to accommodate a new program to inspect U.S.-bound trucks on the Canadian side of the bridge that is intended to reduce backups and pollution on the American plaza.

If the authority can’t sell bonds to pay for that work, Ron Rienas, the authority’s general manager, said the $35 million in current debt will have to be paid off next year out of the authority’s reserves. The remaining balance would be set aside for the re-decking. That work would have to be paid in cash. That leaves no money for any other work.

 “The very progress everyone wants to see comes to a grinding halt and pre-inspection falls off the table,” Rienas said.

If the state acted to dissolve the authority and take control of the bridge plaza in Buffalo, the Canadians have said they’ll “defend their interests,” which probably means taking the matter to court. Which means costly, time consuming lawsuits that would likely preclude work on the U.S. plaza for years.

Accordingly, a growing number of U.S. officials, including Sen. Chuck Schumer and Congressman Brian Higgins, are opposed to the Cuomo-backed bill.

It’s hard for me to see how this scenario works out for Cuomo’s supposed objectives of speeding work on the U.S. side of the bridge and helping the Western New York economy.

The governor is inviting years of legal wrangling before work could begin on any plaza improvements. He’s also risking economic retaliation by Canada, something I’m told is already under consideration in Ottawa. Western New York as a lot to lose in this regard, as a lot of Canadians cross the border to shop at our stores, attend our sporting events and fly out of our airport.

The governor is engaged in a high stakes game of chicken. My question is whether he or his people have fully considered the risks and rewards.