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Canadian officials say they have reached an “agreement in principle’’ with New York State to resolve a bitter dispute with New York State over the future of Peace Bridge improvements.

A Canadian official, speaking on condition of anonymity Tuesday night, said the looming deal should be announced soon that will be “good for both sides of the border and one that favors hard hats over lawyers’ bills as we’ve argued for all along.’’

Canadian government officials have not ruled out legal action against New York State if the Cuomo administration seeks to dissolve the bi-national authority that runs the span’s operations, but officials in Canada on Tuesday night appeared the most optimistic that they have in weeks that the cross-border dispute is coming to an end.

The official told The Buffalo News that the deal, which officials hope to announce this week if talks proceed as planned, aims to ensure the free flow of trade over the important border crossing. Final details were still being negotiated Tuesday evening, but all sides were intent on quickly resolving the dispute that has involved top officials from Washington to Albany to Ottawa.

The high level talks could lead to progress on Canadian priorities as well as a new traffic study on the U.S. plaza.

The traffic study, which eventually could lead to expansion of the Buffalo plaza, is now viewed as the key to New York State objectives and could offer a way out for all parties embroiled in a months-long international dispute over the pace of development on the U.S. side, according to Rep. Brian Higgins and several informed sources on both sides who asked not to be identified.

Following weekend meetings in Manhattan involving Gov. Andrew M. Cuomo and Ambassadors Gary Doer of Canada and David Jacobson of the U.S., the sources say all parties continue to build on progress and seek an agreement before Friday’s next scheduled meeting of the fractured Peace Bridge Authority.

Higgins, D-Buffalo, who has assumed a key role in brokering peace, said Tuesday that the personal involvement of the governor and two ambassadors has “kicked up” the level of discussions in a way that provides optimism for an agreement.

“There are still some issues that need to be resolved,” he said. “But the right people are in the room.”

But even if that goal is not attained, sources say Cuomo wants a new effort to begin planning for eventual plaza expansion in Buffalo while approximately $50 million in projects already unanimously approved by the authority proceed.

Assemblyman Sean M. Ryan, D-Buffalo, who has also assumed a visible legislative role in the ongoing dispute, said the traffic study now figures as an important part of the negotiations. He also said attaining an agreement before the Friday meeting remains desirable but does not present any kind of deadline.

“The goal is a comprehensive plan,” he said. “We have to do a traffic study.”

The word “simultaneous” has emerged as key to the talks, since New York officials fear that exclusive concentration on other projects could further delay plaza expansion.

“The rhetoric has changed,” the source said. “People are talking.”

Higgins defended Cuomo’s hard-charging approach to attaining progress on a Buffalo plaza long perceived as a symbol of inaction, noting that several of his predecessors have come nowhere near gaining at least some results. And key to the effort, he said, is an environmental review process that would allow U.S. planners to prepare for several alternative approaches while other projects proceed.

“The governor wants to look at a plan for the existing American footprint that may include reorganization of American facilities,” he said, with an eye toward improving traffic flow and easing congestion.

“It’s not important how you get attention, it’s what you do with the attention,” he added.

Higgins noted that a “comprehensive” settlement that includes governance of the international span still needs approval by both sides. Ryan also has addressed that issue, questioning whether the authority needs to build massive reserves for its construction projects.

While Ryan noted an agreement before Friday is not essential, others said Cuomo would like to announce an end to the dispute in Buffalo soon in the same manner as his recent truce with the Seneca Nation of Indians over its gambling compact.

The Friday meeting also assumes significance because the Peace Bridge Authority agenda includes awarding a $13 million contract to widen the span’s Buffalo approach. Canadian officials of the authority, meanwhile, continue to insist that with Ryan’s bill to dissolve the authority passed last week by the State Legislature and awaiting Cuomo’s signature, uncertainty clouds the future and most likely will cause the panel to delay a vote on the contract and the widening project – unless an agreement is reached.

Still, Higgins reiterated that the elevation of the talks to top levels has helped the situation.

“The Peace Bridge Authority is not hesitant in its responsibility to finance further American improvements,” he said. “The question is what is the right procedure.”

email: tprecious@buffnews.com and rmccarthy@buffnews.com