Tuesday, June 26, 2012

Miami federal judge blocks new Florida anti-Cuba law from taking effect

Posted on Monday, 06.25.12

Florida politics

Miami federal judge blocks new Florida anti-Cuba law from taking effect

A federal judge ruled against a law banning governments from awarding
contracts to companies whose affiliates work in Cuba. Gov. Rick Scott
had caused an uproar when he signed the law in Miami but warned it was
likely unenforceable.

A Miami federal judge on Monday blocked Florida from enforcing a new
state law that prohibits governments from hiring companies with business
ties to Cuba.

A temporary injunction, ordered by U.S. District Judge K. Michael Moore,
prevents the law from taking effect on Sunday as scheduled. And it deals
a blow to the politicians who backed the legislation, which was
sponsored by Miami-Dade lawmakers, approved by a near-unanimous majority
of the Legislature and signed by Gov. Rick Scott.

After an hour-long hearing late Monday, Moore ruled from the bench in
favor of Odebrecht Construction, the Coral Gables-based subsidiary of a
Brazilian engineering and construction giant.

"It's not as if there isn't some precedent there and there hasn't been a
run at this effort in the past," the judge said, referring to previous
failed legislative efforts to make it difficult to conduct business with

Odebrecht USA sued the Florida Department of Transportation earlier this
month over the new law, which would ban state and local government
agencies from awarding future contracts worth at least $1 million to
U.S. firms whose foreign-owned parent companies or affiliates conduct
business in Cuba or Syria. A subsidiary of Odebrecht USA's parent
company is expanding the Cuban Port of Mariel.

Odebrecht said the state law would prevent it from bidding on $3.4
billion in FDOT contracts this year, and that the company had already
suffered "irreparable harm" because the law spooked potential business
partners and employees.

Though the judge's order was directed at FDOT, it is highly unlikely
that any other state or local government agency would try to enforce the
law while the injunction is in place.

The judge agreed with Odebrecht's contention that the law conflicts with
the federal government's power to set foreign policy. The state, Moore
said, would "inject itself into foreign affairs matters, which are
traditionally under the prerogative of the executive branch."

Moore's ruling, while temporary, foreshadows that he is likely to issue
a permanent decision that the law is unenforceable. The judge wrote in
his order that Odebrecht "has demonstrated a substantial likelihood of
success with respect to its claims." He did not set a new hearing date,
and told the parties to work out a resolution.

In a statement, Odebrecht USA, which has been involved in some of South
Florida's most visible projects, including the Adrienne Arsht Center for
the Performing Arts and AmericanAirlines Arena, said it was "very
gratified" by Moore's ruling.

"We are extremely proud of our 21-year track record of performance and
community involvement in Miami-Dade County and throughout Florida," the
company said.

"We will continue to defend our right to serve the state of Florida and
its local governments, and remain fully committed to complying with all
local, state and federal law, and dedicated to working with our partners
to provide outstanding service to each of our clients."

FDOT's attorney, Paul J. Martin, had argued that the state is allowed to
set parameters for how to spend public money. He also made a complicated
argument that the state law does not run afoul of federal law because
the Florida statute does not allow anything that U.S. law prohibits.

But Moore turned that argument on its head and noted that the state law
prohibits something the federal law allows: American companies to bid on
public contracts even if they are affiliated with companies doing work
in Cuba.

Monday's ruling allows Odebrecht to continue operating as it has been,
including negotiating with the Miami-Dade Aviation Department to develop
Airport City, a project that would bring hotels, office and retail to
Miami International Airport. The project has stalled because county
commissioners, objecting to Odebrecht's Cuba connection, were wary of
giving the firm another contract.

It is unclear how many other companies would be affected by the law in
addition to Odebrecht, the law's chief target.

The legislation, sponsored by two Republicans, state Rep. Michael Bileca
of Miami and Sen. Rene Garcia of Hialeah, drew little attention during
the annual lawmaking session earlier this year in Tallahassee. But after
it was approved, the Miami-Dade county attorney opined the law was
unenforceable. And business interests, including the Florida Chamber of
Commerce and the governments of Brazil and Canada, Florida's top two
trading partners, raised concerns that the law could slow foreign
investment in the state.

When Scott, the Republican, pro-business governor, traveled to Miami's
Freedom Tower to sign the law, he stirred controversy among
Cuban-American lawmakers by issuing a statement shortly afterward
suggesting the law was unconstitutional and could not be enforced
without federal action. He later backed away from that stance and said
his administration would defend the law against a likely legal challenge.

Still, one of Odebrecht's attorneys, James E. Moye, cited the governor's
signing statement as proof that the state knew the law is
unconstitutional. While the federal government allows states to withhold
public contracts from certain "scrutinized" companies that work in Iran
and Sudan, it does not authorize them to do the same with the two other
countries considered sponsors of terrorism, Cuba and Syria.

From the beginning of the hearing, Judge Moore hinted at how he would
rule in the case. He asked FDOT's attorney to speak first — even though
Odebrecht had filed the motion for the preliminary injunction — and
peppered him with questions.

Martin cited a 2006 Florida law prohibiting state colleges and
universities from using public funds to pay for travel to Cuba or other
states sponsors of terrorism. That law was upheld by a federal appellate
court, and the U.S. Supreme Court declined to take up the case on Monday.

But Moore said that case, which originated at Florida International
University, applied only narrowly to academic travel and other
educational purposes. He sided instead with Odebrecht's Moye, who cited
three other federal cases as precedent.

In 2000, the U.S. Supreme Court struck down a Massachusetts law
restricting businesses in the state from working with companies tied to
Myanmar. The same year, a federal judge overturned Miami-Dade County's
requirement that companies certify that they did not work in Cuba. And
in 2009, another federal judge ruled against a 2008 Florida law setting
increased fees and bonds for travel agencies specializing in trips to Cuba.

Garcia, the legislation's Senate sponsor, learned of the judge's ruling
from a Miami Herald reporter and said he was "very disappointed" —
particularly because the U.S. Supreme Court allowed the law in the FIU
case to stand.

"When we talk about education, that's about [restricting] public
dollars," he said. "I don't see any difference between that and what the
Cuba and Syria bill is doing."


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