State gives up fight to cut ties to companies with Cuba connection

Published Sep. 5, 2013

The state of Florida has conceded it will not enforce a law — ruled unconstitutional by federal courts — that tried to prohibit the state and local governments from hiring companies with business ties to Cuba.

The Florida Department of Transportation's decision not to contest the June ruling by a federal appeals court marks the end of the short-lived legislation. It also paves the way for Odebrecht USA, the Coral Gables-based firm that challenged the law, to proceed with significant projects in the works — unless politics get in the way.

FDOT and Odebrecht agreed late last month to allow the federal trial court that struck down the legislation last year to enter an injunction permanently blocking the law from taking effect. A preliminary injunction had been in place since U.S. District Judge K. Michael Moore found in June 2012 that the legislation interfered with the federal government's authority to set foreign policy.

"This means FDOT cannot enforce the law," FDOT Communications Director Dick Kane said in an email Thursday.

Though the injunction is aimed only at FDOT, it effectively applies to every state agency, said Jim Moye, an Odebrecht attorney.

"The federal government is going to continue to establish whatever it believes is the proper relationship with Cuba," said Moye, of the Orlando-based Moye O'Brien firm. "Our client will continue to comply with the laws in that regard. It's not for the state or local governments to attempt to set the parameters for the relationship with Cuba."

FDOT chose not to go to trial to try to show why the preliminary injunction should be lifted. Instead, it agreed with the permanent prohibition and will reimburse Odebrecht about $500,000 in attorneys' fees, Moye said.

The legislation would have forbidden government agencies from awarding contracts worth at least $1 million to U.S. firms whose foreign-owned parent companies or subsidiaries work in Cuba or Syria. Though Odebrecht USA has no business in either country, an affiliate of its giant Brazilian parent is performing a major expansion at the Cuban Port of Mariel.

Without any ties to Syria, Odebrecht did not challenge the law in regards to that country, and the 11th U.S. Circuit Court of Appeals limited its ruling to Cuba.

The law's demise is the latest in a string of legislation signed by Republican Gov. Rick Scott that has ended up in the courts. Federal judges have invalidated the scope of a state employee drug-testing program, a requirement making it more difficult for groups to register new voters and a ban on physicians asking patients about gun ownership.

The drug-testing program has been sent back to the trial court, and the state has appealed the ruling in favor of physicians.

While hardly the only Florida company with indirect ties to Cuba, Odebrecht became the target of Sen. René García and Rep. Michael Bileca, the Miami Republican lawmakers who sponsored the legislation. It received near-unanimous support in Tallahassee. The governor signed it into law, but drew harsh criticism for suggesting the legislation might be unconstitutional. His administration vowed to defend it.

State law already imposes restrictions on hiring firms that work in Iran and Sudan, which, along with Cuba and Syria, are considered state sponsors of terrorism. But the federal government expressly authorizes hiring limitations relating to Iran and Sudan, not the other two countries.

Florida's State Board of Administration found in a preliminary analysis last year that 238 companies the state invests in could have connections to Cuba, including airlines, banks and pharmaceuticals. Fourteen firms, mostly in the oil and energy industry, could have ties to Syria.

The U.S. Chamber of Commerce and the United States Telecom Association both filed briefs supporting Odebrecht in its case.

In Miami-Dade, where Cuba often seeps into local politics, elected officials have had a fraught relationship with hiring companies linked to the island. County attorneys advised commissioners in 2007 that contractors' Cuba ties could not be considered in awarding the PortMiami tunnel project, despite concerns that an affiliate of the French firm Bouygues Travaux Publics built 11 resorts in partnership with the Cuban military.

After hiring Odebrecht to rebuild seaport wharves in 2011, several commissioners said they did not want to award any more contracts to the firm. They put a nonbinding question on the ballot last November asking if the county should ban hiring companies that "actively" do business with countries considered state sponsors of terrorism. Sixty-two percent of voters agreed.

That could spell trouble for Odebrecht, despite the company's court victory. Its latest county project — the $512 million Airport City, in which Odebrecht would develop 33 acres surrounding Miami International Airport — has stalled for months, even after the county attorney opined Miami-Dade could proceed with the project during the federal litigation.

Airport City appeared ready for a vote earlier this year. But with the March retirement of one of its most prominent proponents, Aviation Director José Abreu, it slowed again.

New Director Emilio González is in talks with Odebrecht to try to get a more palatable deal than the one agreed to last year after two years of negotiations, which has already received Federal Aviation Administration approval.

"We are meeting and speaking with Odebrecht regularly to see how they can better their financial agreements with the county," González told the Miami Herald two weeks ago.

In 2011, all of Odebrecht's business came from public infrastructure and transportation contracts. It has had a hand in some of South Florida's biggest projects, including the Adrienne Arsht Center for the Performing Arts and, more recently, expanding the southern runway at Fort Lauderdale-Hollywood International Airport.