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.
06/25/2012 5:00 AM
06/26/2012 10:55 AM
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 Cuba.
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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