ESDI Michigan Green Enterprise Zone Initiative - Wayne Law Student Involvement
As a call to action to address the critical economic decline in Michigan and viewing it as a unique opportunity to develop bold solutions to rebuild the State’s economy, the Directors of the Engineering Society of Detroit Institute (“ESDI”) launched the Michigan Green Enterprise Zone Initiative. The Initiative proposes the creation of a sovereign investment zone within Michigan that would utilize the large number of engineers and university educated citizens to attract new capital and investment and retain and build the state’s manufacturing base. The Initiative further envisions that the Zone would contain “Five Innovations” for investment: (1) Legal Risk Mitigation; (2) Technology and Invention; (3) Labor/Management Relations; (4) Quality of Life; and (5) Governmental Sovereignty and Collaboration.3 On March 19 and 20, 2009, the ESDI held an initial symposium on Innovations (1), (3) and (5) in an attempt to begin ground-breaking thinking on pioneering economic solutions.
The Symposium began with three fundamental questions:
(1) If you were creating a dispute resolution system from scratch, what would it look like and how would you accomplish it?
(2) If you were creating a labor/management relationship from scratch, what would it look like and how would you accomplish it?
(3) If you were creating a sovereign investment center from scratch, what would it look like and how would you accomplish it?
A diverse group of individuals, including hundreds contacted prior to the Symposium, exchanged ideas on various issues raised by these questions. The participants separated themselves into four working groups: Labor/Management Workgroup, Legal Innovation Workgroup, Sovereign Zone Workgroup, and Near Term Workgroup. Each workgroup analyzed various questions, the answers to which constituted a preliminary framework for future work.
By the end of the Symposium, the participants proposed that a Zone Prospectus be developed that would provide a roadmap for the implementation of the Zone and describe how it would operate and be governed. The participants agreed to develop the Zone Prospectus at a future Symposium at which they would consider the following questions:
(1) Should the Zone be a geographical or virtual “state within a state” allowing organizations and individuals to opt into its benefits and responsibilities?
(2) For formation purposes, should legislative enactment be on a state or federal level?
(3) How would the Zone be governed?
(4) What will be the actual bottom line financial advantages of the various innovations to be enjoyed by those doing business in the Zone?
(5) How can the organizational structure of the Zone ensure transparency and social/financial accountability?
(6) What would be the fiscal and service relationship between the Zone and existing governmental entities?10
The numerous ideas shared during the Symposium represented cutting edge thinking. These questions raised legal issues that required careful examination. Christopher Webb, Co-Director of the ESDI, requested that the Wayne State University Law School assist in this examination by addressing the following thirteen issues related to the development of the Zone Prospectus:
(1) What is the most competitive investment zone for manufacturing in the world (including port authorities if applicable)?
(2) What are its governing charter, bylaws enabling legislation and any other formation documents?
(3) What are its governing, taxing, financing, immunity and legal dispute resolution structure, if any?
(4) What are its intergovernmental revenue and service sharing compacts or agreements, if any?
(5) Is there any example of an investment zone that limits or restricts legal liability such as class action exposure and exemplary or punitive damages?
(6) Is there any example of an investment zone that employs alternative dispute resolution methods for disputes prior to or in lieu of litigation?
(7) Is there any example of an investment zone that can relieve or impose any kinds of tax obligations through its own internal decision making process?
(8) Is there any example of an investment zone that contains a collective bargaining or operating agreement that permits both union and non-union labor?
(9) Is there any example of an investment zone that has the power to create and enact its own regulatory framework (for example, environmental and construction regulations) through its own internal decision-making process?
(10) Is there any example of an investment zone that enjoys preferred pricing and supply for its requirements relating to energy and other resources such as water, sewer, transportation and other infrastructure?
(11) Is there any example of an investment zone in which those who reside and/or work in the zone enjoy a proprietary or entrepreneurial benefit as a result of the success of the zone and its enterprises?
(12) Is there any example of an investment zone in which those who reside and/or work in the zone enjoy affordable housing, transportation and other quality of life issues such as health care and educational benefits?
(13) Should enabling legislation be on the state or federal level to achieve the most competitive investment zone for Michigan?
In June 2009, four law students joined the Wayne Law Research Group – Kevin Kelly, Erika Monfette, Samantha J. Orvis, and Julianna Marie Rivera – directed by Professor John E. Mogk. The Group conducted research with respect to studies and reports within various fields relating to business investment zones worldwide, as well as on the sovereign rights and business activities of American Indian tribes. Members had extensive communications with federal and state agencies, tribal governments, and private organizations and individuals related to the questions raised. The below Report and the separately compiled Appendix represents the culmination of the Group’s research.