Concerns with the OPHA Special Act and Port of Fernandina issues

Submitted by Frank Santry

July 21, 2015 9:35 a.m.

An application at the Port of Fernandina for an air quality permit to handle waterborne coal and the publication of a proposed Revised Master Plan with references to the expansion of port traffic regarding potentially hazardous cargo set off months of activities to address citizen concerns. The activities take three forms. The first is consideration by the Port board of amendments to the Revised Master Plan. The second is consideration by the City of Fernandina Beach of amendments to the land use codes addressing potentially hazardous activities. The third is the consideration by state legislative representatives of changes to the Ports authorizing Special Legislative Act.

The public policy discussions have been vigorous and useful. Review is moving forward on the first two fronts. I believe, however, that a complete solution must include the third step, revisions to the Special Legislative Act for the Port.

According to OPHA website (www.portoffernandina.org), a port authority for Fernandina was originally created by a special act of the legislature in 1941. Its name was changed in 1961 to Ocean, Port and Highway Authority of Nassau County. As the Port’s governing body, the OPHA board has policy-making, budgeting and general oversight responsibilities for all port activities.

While some changes have been made to Special Act since 1941, they have not kept pace with the changes in the demographic and economic realities of the City of Fernandina Beach and Nassau County.

The Port of Fernandina occupies a small land tract with the only rail and truck access passing through downtown Fernandina Beach. OPHA board members acknowledge that the Port has no room to expand its terminal facilities. Its truck capacity is somewhat less 80 round-trips per day.

The business of the Port is in decline. Waterborne tonnage was 647 thousand for fiscal year 2010-11. The 2013-14 tonnage was down 65% to only 228 thousand [http://static.flaports.org/Seaport-Mission-Plan-Final-small2.pdf (see both 2013 and 2014 report.)]. This is the second lowest tonnage reported by any of the 10 reporting Florida ports. It represents only 0.2% of the total for all state ports of 98.7 million. Business at the Port of Fernandina has been shrinking while the economy has been expanding.

In the meanwhile, the City of Fernandina Beach continues to develop as a tourist destination which relies on riverfront and beach safety and aesthetics; historic preservation; and, car and pedestrian access to thrive. Hazardous material handling, environmental damage, truck and rail traffic and other Port consequences pose profound risks to tourism interests. The possible negative consequences now far outweigh the potential benefits of expanded port activities.

A rebalancing of Port versus tourism economic values is needed. It is against this need that issues regarding the Port Special Act should be examined. There are three areas of specific concern:

1]         ANTIQUATED AND INAPPROPRIATE AUTHORITY IN THE CURRENT SPECIAL ACT;

2]         SEPARATING OPHA ACTIVITIES IN THE CITY FROM ITS ACTIVITIES IN RURAL NASSAU COUNTY; and

3]         ERRONEOUS LEGAL ASSUMPTIONS REGARDING THE PORT AUTHORITY.

ANTIQUATED AND INAPPROPRIATE AUTHORITY IN THE CURRENT SPECIAL ACT

Currently, Ch. 2005-293 Laws of Florida [http://laws.flrules.org/2005/293], the Florida legislative act governing OPHA, contains, among other things:

The right to build:

• Residential and mercantile projects,
• Industrial and manufacturing plants,
• Motels,
• Hotels,
• Radio stations,
• Recreation facilities,
• Beach casinos,
• Public beaches,
• Entertainment and eating places,
• Swimming pools,
• Stadiums,
• Concert halls,
• Auditoriums,
• Golf courses, and
• Public electric, gas, water and sewer facilities.

The Act also authorizes the port authority to:

• Acquire lands, buildings and real or personal property in Georgia,
• Acquire or construct a paper mill and lease it to another for 40 years,
• Acquire or construct an Oil Refinery and lease it to another for 40 years, and
• Construct a toll road from City of Fernandina to Brunswick GA.

No other Florida port special act authorizes such an expansive list of activities. Yet most other ports, without this breadth of authority, have vastly more impact on their local and regional economies than does the Port of Fernandina. Some comparisons of port activity from the most recent report of the Florida Ports Council [http://static.flaports.org/Seaport-Mission-Plan-Final-small2.pdf (2014 report.)] provide perspective.

PORT TAMPA BAY

• Annual Traffic:                       36.2 million tons cargo
• 888 thousand passengers

PORT EVERGLADES

• Annual Traffic:                       24 million tons cargo,
• 4 million passengers

JAXPORT

• Annual Traffic:                       16.9 million tons cargo
• 364 thousand passengers

CANAVERAL PORT AUTHORITY

• Annual Traffic:                       3.4 million tons cargo
• 4.2 million passengers

PANAMA CITY PORT AUTHORITY

• Annual Traffic:                       1.6 million tons cargo
• No passengers

OCEAN HIGHWAY AND PORT AUTHORITY OF NASSAU COUNTY

• Annual Traffic:                       228 thousand tons cargo
• No passengers

OPHA, with this modest economic impact, has authority about which big Florida ports can only dream. And, it can advance any of this authority by its unrestricted power to condemn and take any private property.

Concerns about unrestricted power are magnified by OPHA’s oft repeated assertion--most recently in the “Port Planning OPHA Legal Parameters Outline” circulated at the July 6, 2015 OPHA publically noticed workshop--that in regard to the exercise of its powers it is exempted from the regulations or consent of city, county and other state or local government. This claim will be examined in part three.

Many of the activities authorized in the OPHA Special Act are of dubious legality under the Florida Constitution. Art. 7, Sec 10 of the Florida Constitution provides:

Neither the state nor any county, school district, municipality, special district, or agency of any of them, shall become a joint owner with, or stockholder of, or give, lend or use its taxing power or credit to aid any corporation, association, partnership or person;….

This provision advances the public policy that government credit and tax favored advantage should not be used to help private business. Using public funds to construct a paper mill or oil refinery to lease to a private, for-profit business for 40 years, would violate this constitutional provision. [See, e.g. State of Florida v. Jacksonville Port Authority, 204 So.2d 881 (Fla. 1967).] Even if there was no constitutional issue, authorizing OPHA to use public bond indebtedness to build tax exempt motels, hotels, radio stations, beach casinos, entertainment and eating places, stadiums, concert halls and golf courses in competition with private enterprises providing the same facilities is an absurd use of public money.

Lastly, Section 12 of the Special Act contains an ambiguously worded waiver. This provision of the Special Act comes from Ch. 315.04, Fla. Stat.; the section of statutes which has been misinterpreted by the Port Authority to exempt it from development and building permit compliance with City of Fernandina Beach zoning and land use regulation. Because it has advanced this mistaken interpretation, and because it is clearly no more than a recital of the language in the statute, it too should be removed from the Special Act. There is no comparable provision in the special acts of any other operating Florida Special District Port.

SEPARATING OPHA ACTIVITIES IN THE CITY FROM ITS ACTIVITIES IN RURAL NASSAU COUNTY

The OPHA Special Act should acknowledge and effectuate logical differences between the urban seaport activities of OPHA within the City of Fernandina Beach and its business development activities in the less populated areas of its Nassau County jurisdiction. Activities generating intensive truck and rail traffic in less populated County areas with better road access and less utilized rail crossings make sense in that setting. Considerations of the handling of more risk intensive cargo like fossil fuels and toxic chemicals in areas where a reasonable population buffer can be established may also make sense.This should not be taken to suggest that traffic and environmental concerns are less important in rural Nassau County. Rather it suggests that risk/benefit analysis might assess these concerns differently. However, expansion goals for the Port of Fernandina which would significantly worsen existing problems with truck and rail traffic in downtown Fernandina Beach or expose the adjacent urban density population to more risky cargo, do not make sense. Further, they do not take into account the long-term damage which could result to tourism and eco-tourism which has become the engine of the eastern Nassau County economy.

In June 2008, the Hass Center for Business Research and Economic Development completed a report on the economic impact of Amelia Island tourism on Nassau County. Tourism on Amelia Island generates “~$346 million in total sales (retail plus business-to-business) locally. It creates about 4,781 jobs that are directly or indirectly related to tourism and it creates local income and wages of ~ $94 million.” The accommodation, food service and retail industries (visitors and hospitality sectors) employ the largest share of Fernandina Beach’s workforce, making up over 35% of its economic base. Contrast that to the manufacturing sector, including Rayonier and WestRock which makes up only 14% of the City’s economic base. The comparative contribution of the Port of Fernandina to the economic base is negligible.

This perspective does not change if you view the economic impact of tourism on all of Nassau County. Nassau County’s economy is twice as dependent on tourism as the average Florida County, according to Florida Legislative Research. The continued economic vitality of the tourism sector of Fernandina Beach is critical to the City and to Nassau County.

The OPHA Special Act, and indeed the land use regulations of the City of Fernandina Beach, including OPHA land, must place thoughtful, logical restrictions on the uses to which the Port of Fernandina, or any other urban landowner, may develop its property and services. These location specific restrictions should at least consider the impact of expanded rail and truck traffic and eliminate the risk of exposure to flammable, toxic and hazardous cargo, including petroleum products and coal. Where appropriate, these limitations need not apply to OPHA activities in rural Nassau County, but they should be applied to operations in the City of Fernandina Beach.

ERRONEOUS LEGAL ASSUMPTIONS REGARDING THE PORT AUTHORITY

Much of the public discourse surrounding OPHA issues has included legal discussions and conclusions of dubious accuracy. I will review them one at a time. 

The claim that the Port of Fernandina is not governed by the laws and ordinances of the City of Fernandina Beach

This position has been raised repeatedly by port representatives in public meetings and press offerings. It appears to come from an interpretation of the language in Ch. 315.04, Fla. Stat.

This statutory provision does not exempt a port authority from municipal building and land use regulation. In fact just the opposite is true. In AGO 82-24 [http://www.myfloridalegal.com/ago.nsf/Opinions/6A32E82A2A67E8538525658600566295], the Port of Tampa, sought and received an advisory opinion from the Florida Attorney General on the obligation of a port to comply with municipal building permit and land use regulations.

The Florida Attorney General concluded that a port authority was obliged to comply with municipal land regulations. The opinion cited Florida Supreme Court decisions [Hillsborough Association for Retarded Citizens v. City of Temple Terrace, 332 So2d 610 (Fla. 1976) and City of Treasure Island v Decker, 174 So.2d 756 (Fla 2^nd DCA 1965).], which stressed that the zoning powers of municipalities were derived, not from statutes, but from Art. III, s. 2(b) of the Florida constitution. It also noted the “recently developed general rule in Florida that unless the legislature determines otherwise, one governmental unit in the use of its property located within the jurisdictional boundaries of another governmental unit, is bound by the zoning regulations of the latter”.

The exact legislative exemption in Ch. 315.04 referred to by OPHA was considered by the Florida Attorney General and rejected. He determined that it simply did not furnish the specific exemption or immunity from local building codes which is necessary under the above authorities.

Thus, the Florida Attorney General, based on specific decisions of the Florida Supreme Court, has determined that any port authority, including OPHA is bound by the building and zoning regulations of the city where its property is located.

The claim that the Port of Fernandina cannot decline to load or unload any lawful cargo

This claim is based on vague assertions that a government port is a common carrier [a term applied in U.S. common law from English law] and that a common carrier who offers its services to everyone cannot decline that service to anyone. The legal doctrine does exist, but

I have not been able to find any legal authority for the premise that a Florida seaport is a common carrier. Nor can I find any indication that Florida public ports hold themselves out as handlers of all lawful cargo. I do not contend that my research is exhaustive, but no proponent of this legal opinion has ever provided the public [or to my knowledge the OPHA board] with legal research and analysis, with appropriate citations to legal authority, to support the claim.

Public Florida seaports certainly do not hold themselves out as handling all lawful cargo. For example, Terminal Tariff 2014-A [http://www.jaxport.com/sites/default/files/Tariff2014-A.pdf]  of Jaxport provides: “Articles of highly inflammable, explosive, hazardous or objectionable nature will not be received by JAXPORT except by explicit approval from the Terminal Director in advance….

Even OPHA’s tariff No. 2, 34-B [http://media.wix.com/ugd/e33a28_11c98ca0032244c8a5d69f38ee9da351.pdf] for the Port of Fernandina says, “Notwithstanding any other provisions of this Tariff, the Commercial Director may refuse entry of any vessel to the Port of Fernandina, when, in his discretion, such refusal shall be in the best interest of the Port of Fernandina.”

So, it appears that ports, including the Port of Fernandina, provided public notice that they can and will decline lawful cargo. Once again, if actions are to be taken by or regarding OPHA, they should be based on publically vetted legal analysis and citation, not unsubstantiated conjecture.

Lastly, there are many cargos, particularly dangerous ones, which require a port to have special licenses and equipment to handle. The recent uproar regarding OPHA arose when a member of the public discovered that the port contractor--in its own name and not OPHA’s--applied to the Florida Department of Environmental Protection for a final air construction permit (Air Permit No. 0890440-001-AC) which the Port did not already have. (There is, in my view, a serious issue about whether OPHA, the owner of the Port, was the only entity which could make this application.) It has been contended that the permit was requested by the contract port operator without the board’s knowledge of consent. The application was in the name of Nassau Terminals KM, not OPHA’s. The permit would authorize the re-purposing of the port facility to allow for the handling, storage and transporting of coal from barges. Without this permit, it was unlawful for the port to handle coal. So, if OPHA has chosen not to handle coal or any other cargo, it simply could decide never to obtain the necessary legal permits and/or to purchase or re-purpose the equipment necessary to handle that or any unwanted cargo.

The claim that OPHA’s board cannot prevent Nassau Terminals/Kinder Morgan from handling any cargo it wants at the Port of Fernandina

 At the July 6, 2015 workshop of the OPHA board regarding changes to the proposed Revised Master Plan, Port legal counsel advised Port board members that under its contract with Nassau Terminals/KM, they could not restrict NT/KM from handling any cargo at the port unless the contractor consented to the restriction. Counsel never referred to a specific contract provision or language saying this.

I assume the contract referenced is the “Operating Contract” between Nassau Terminals, Inc. and the Ocean Highway and Port Authority of Nassau County, dated Dec. 1, 1990 and the “First Amendment to Operating Agreement” dated Nov. 28, 1994. I have reviewed the contract and have not found any language requiring NT/KM consent for the Port governing board to restrict port cargo or activities.

Once again, if actions are to be taken by or regarding OPHA, they should be based on publically vetted legal analysis and citations, not unsubstantiated opinion.

CONCLUSIONS

The Special Act governing the operation of the Port of Fernandina must be revised. The revisions should include the removal of the overreaching, inappropriate and, in some cases, unconstitutional grants of authority. The Section 12 waiver language, which has resulted in so much misunderstanding, should be repealed. Special limits and provisions should be put in place in the Special Act to protect the urban population of Fernandina Beach and the tourism base of the city and county from damaging truck and train traffic, historic preservation degradation and environmental hazard. These limits and protections should recognize the different risk/benefit and economic calculations which apply between urban and rural Nassau County. Lastly, the public and government stakeholders must insist on thorough, documented and publically vetted legal advice so that they can made decisions in the public interest.

Frank Santry is a retired attorney. His nearly 40 year law practice centered on government and regulatory law. He regards himself as a Fernandina Beach “replant” rather than a transplant. While he has lived in Orlando and Tallahassee, five generations of his family have lived in Fernandina from the 1850’s to the present.