192 F. Supp. 3d 54
D.D.C.2016Background
- Plaintiffs Detroit International Bridge Co. and Canadian Transit Co. (DIBC) challenged the U.S. State Department’s approval of a Crossing Agreement and Presidential Permit for a new publicly owned bridge (NITC/DRIC) between Detroit and Windsor that would compete with DIBC’s Ambassador Bridge.
- The Crossing Agreement was executed by the Government of Canada, Michigan’s Governor, MDOT, and the Michigan Strategic Fund; public comments questioned whether Michigan officials had authority under state law to enter the Agreement.
- The Governor sought a Presidential Permit and State Dept. approval; State Dept. solicited comments, requested views from Michigan’s Attorney General, and relied on Michigan executive and AG letters stating no further legislative approval was required.
- DIBC’s remaining claim (Count 7) alleged State Dept. approval violated the APA because the Agreement was invalid under Michigan law and thus the approval was ultra vires, contrary to the Compact Clause/IBA, arbitrary and capricious, and unconstitutional/delegation violations.
- The Court considered (a) whether Michigan is an indispensable party under Rule 19, and (b) whether State Dept. exceeded authority or acted arbitrarily in approving the Agreement. The Court granted summary judgment to Federal Defendants and denied DIBC’s cross-motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Rule 19 joinder: Is Michigan a necessary/indispensable party to adjudicate DIBC's ultra vires claim? | Michigan must be joined because the claim requires determining whether the Crossing Agreement was valid under Michigan law. | Absent party joinder unnecessary; other parties adequately represent interests. | Michigan is a necessary and indispensable party; dismissal of ultra vires claim required because Michigan is immune and cannot be joined. |
| 2. Ultra vires/Compact Clause: Did State Dept. exceed constitutional or statutory authority by approving an Agreement allegedly invalid under state law? | State Dept. may not approve an agreement that was not lawfully "entered into" by the State under state law; approval thus violates Compact Clause/IBA. | The Compact Clause/IBA and delegated consent role are separate from state-law validity; Secretary’s approval concerns foreign policy/national interest, not policing state-law formalities. | Approval did not exceed State Dept.’s authority; Congress/IBA did not require Secretary to adjudicate state-law execution or to refuse approval on that basis. |
| 3. IBA/Statutory duty: Did the IBA require State Dept. to independently determine whether the compact was valid under Michigan law before approval? | IBA conditions effectiveness on Secretary approval, which must include ensuring compact was validly executed under state law. | IBA’s purpose is to ensure federal/national interest and foreign policy alignment; Secretarial approval is distinct from state-law validity and Congress did not intend exhaustive state-law inquiries. | IBA does not obligate State Dept. to investigate or decide complex questions of state law; Secretary reasonably relied on state officials’ determinations. |
| 4. APA arbitrary & capricious review: Was State Dept.’s approval arbitrary for relying on concise Michigan executive/AG letters and for any alleged change in position? | State Dept. acted unreasonably by not independently interpreting Michigan law and by relying on conclusory letters and an unexplained reversal. | State Dept. properly deferred to Michigan authorities on state-law matters; reliance on their letters was reasonable and within agency discretion. | Approval was not arbitrary or capricious; deference to Michigan officials’ statements on state law was reasonable and the record supplied adequate rationale. |
Key Cases Cited
- Zevallos v. Obama, 793 F.3d 106 (D.C. Cir.) (describing APA’s deferential arbitrary-and-capricious standard)
- Lyng v. Payne, 476 U.S. 926 (U.S. 1986) (agencies have only the power delegated by Congress)
- Transohio Sav. Bank v. Dir., Office of Thrift Supervision, 967 F.2d 598 (D.C. Cir.) (agency actions beyond delegated authority are ultra vires)
- Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (U.S. 1984) (framework for judicial deference to reasonable agency statutory interpretations)
- Cellwave Telephone Servs. L.P. v. FCC, 30 F.3d 1533 (D.C. Cir.) (agency interpretation of state law reviewed de novo when agency itself undertakes the interpretation)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (U.S. 1983) (arbitrary-and-capricious standards for agency decisionmaking)
- Kickapoo Tribe of Indians in Kan. v. Babbitt, 43 F.3d 1491 (D.C. Cir.) (Rule 19 joinder and indispensability when absent sovereign is necessary to adjudicate compact validity)
- Hinderlider v. La Plata River & Cherry Creek Ditch Co., 304 U.S. 92 (U.S. 1938) (distinguishing validity and effect of interstate compacts)
- Cuyler v. Adams, 449 U.S. 433 (U.S. 1981) (Congressional consent to compacts and deference to Congress’s political judgment)