A prohibited conflict of interest would be created under Section 112.313(7)(a), Florida Statutes, were a chairman of a shipping company to be appointed to a port authority. Assuming arguendo that business between the port and the company could be “grandfathered,” a prohibited conflict would exist via regulation by the port; and a continuing or frequently recurring conflict of interest or an impediment to the full and faithful discharge of public duty would exist because of the chairman/authority member’s simultaneous private/public interests regarding his company’s shipping operations at the port, including carriage of a very large percentage of refined petroleum products into the port. CEO’s 84-63, 96-31, and 02-14 are referenced.^[1]

QUESTION:

Would a prohibited conflict of interest be created were you, chairman of a shipping company operating at a port, to become a member of the port authority?

This question is answered in the affirmative.

By your letter of inquiry, materials accompanying your letter, and a letter and accompanying materials from an attorney in your behalf, we are advised that you are chairman of a shipping company (headquartered in Tampa) whose subsidiaries own and/or operate petroleum tankers, tank barges, and tug boats in the United States coastwise trade^[2] and that you intend to submit your name to the Governor for appointment to a vacant position on the Tampa Port Authority. In addition, you advise that your company leases land from the Authority (as a successor in interest under a lease between a tenant and the Authority executed in 1980), that the lease expires on December 31, 2004, that the lease provides options for renewal for ten-year periods, and that rates for renewals must be renegotiated. Further, we note that relevant language of the lease (found in Addendum II) reads:

Option period rental to be negotiated beginning one year prior to expiration of previous period to allow at least ninety (90) days notice of decision to exercise. Negotiated rental to be a reasonable rate for the bare land as described in Attachment ‘A’ and any disagreement as to the amount of the rent which cannot be settled between the Tenant and the Authority shall be decided under the provisions of the Florida Arbitration Code.

In addition, we are advised that your company is a holding company, that it neither owns nor operates vessels, that it is the owner of another holding company which owns two other companies, that the other two companies own a number of corporations whose sole asset is a tanker, barge, or tug boat, and that the vessels are all bareboat chartered^[3] to yet another company.^[4] Further, you advise that vessels owned and operated by your company’s subsidiaries carry petroleum products throughout the United States and that you enter into private charters with oil company customers to carry their product to various ports where the product is discharged at private company facilities. You also advise that your companies carry approximately forty percent of all refined petroleum products that are imported into the Port and approximately twenty-five percent of all petroleum products brought into Florida, but that your companies have no contracts with the Port relating to marine transportation.  Further, you advise that the Authority sets rates for various port services involving public facilities owned by the Port, including fees for dockage and water, and that your company has routine maintenance and upgrading of its vessels and barges performed at shipyards leasing their facilities from the Authority, but that the Authority does not operate the shipyards.

Section 112.313(7)(a), Florida Statutes, the portion of the Code of Ethics for Public Officers and Employees that contains the prohibitions relevant to your inquiry,^[5] provides:

CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.—No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he or she is an officer or employee . . .; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his or her private interests and the performance of his or her public duties or that would impede the full and faithful discharge of his or her public duties.

The first part of Section 112.313(7)(a) ostensibly would prohibit your serving on the authority due to your company’s lease with the Authority, inasmuch as you would hold a contractual relationship (via your chairmanship) with a business entity (your company) which is doing business with your public agency (the Authority) via the lease. However, in situations such as yours (situations where the contract or other business between a public agency and a public officer’s company was entered into before the public officer took public office) we have applied Section 112.316, Florida Statutes, as a “grandfather clause” to negate the literal effect of the first part of the statute. See, for example, CEO 02-14 (school board member employee of investment banking firm marketing school district bonds). Thus, in your situation, we also would apply Section 112.316 in your favor regarding the existent lease. Similarly, if the lease is renewed prior to your becoming a member of the Authority, we also would apply Section 112.316. However, if the lease is renewed after you become an Authority member, we find that it would be grandfathered only if the renewal is for a time certain provided for in the original lease and only if the terms (provisions) of the renewal remain the same as those of the original contract. See CEO 02-14, Question 2.^[6]

In addition, while the Coast Guard and other governmental agencies are charged with regulation of your company’s corporate operations in and around the Port, we find that the Authority also regulates your company’s corporate interests, thus creating a prohibited conflict of interest under Section 112.313(7)(a) independent of any business relationship which could be grandfathered. Regarding “regulation” by the Port, we note that your company’s counsel has represented that “the Port Authority does get involved in some vessel movement issues in the Port, which are primarily associated with the use of the Port Authority’s facilities,” that “[your company’s] vessels do occasionally use public docking facilities, and therefore may be affected by some Port Authority requirements affecting the use of those facilities,” and that “the Port Authority has recently adopted amendments to its tariff which granted it the authority to take the actions regarding vessel movements within the Port.”^[7] Also, regarding the issue of regulation, we note that Chapter 95-488, Laws of Florida, the special act of the Legislature concerning the Port, provides, inter alia, in various subsections of Section 7 (POWERS), that the Authority has the following powers:

(n) To exercise such police powers as it deems necessary for the effective control and regulation of all facilities, areas, and districts under its jurisdiction.

(o) To have and to exercise all of the powers, rights, and authority now vested by the Florida Statutes for the operation of ports and harbors, except the examination, appointment, and licensing of pilots and the fixing of rates of pilotage.

(s) To adopt rules and regulations governing the speed, operation, docking, movement, and stationing of all watercraft plying waterways in the port district under the jurisdiction of the port authority, subject to the provisions of section 19 of this act.

Further, and perhaps most importantly, we find that your serving as a member of the Authority while serving as chair of a company that, among other things, carries approximately forty percent of all refined petroleum products that are moved into the Port would create a continuing or frequently recurring conflict between your private interests and the performance of your public duties or would impede the full and faithful discharge of your public duties.Zerweck v. State Commission on Ethics, 409 So. 2d 57 (Fla. 4^th DCA 1982).The terms “conflict” and “conflict of interest” are defined, at Section 112.312(8), Florida Statutes, to mean “a situation in which regard for a private interest tends to lead to disregard of a public duty or interest.”

In making our findings, we have considered your position that a person of your maritime industry expertise would serve the Port and Authority well.  However, the Legislature has not yet seen fit to “waive” the conflicts identified by us herein via applying to the Port of Tampa language similar to that employed in the special act regarding a sister port (Port Everglades).  See CEO 84-63, in which we found that no prohibited conflict of interest would be created under Section 112.313(7)(a) were a vice president of a shipping company doing business with Port Everglades to be appointed to the Port Everglades Authority, reasoning that Section 112.313(7)(b), Florida Statutes,^[8] negated the conflict because the Port Everglades special act provided that “. . . the other person so appointed shall be a representative of business entities doing business with or at the port.”

Accordingly, we find that a prohibited conflict of interest would be created were you to be appointed to the Tampa Port Authority.

ORDERED by the State of Florida Commission on Ethics meeting in public session on December 4, 2003 and RENDERED this 9th day of December, 2003.

__________________________

Richard L. Spears

Chairman

^[1]Prior opinions of the Commission on Ethics are viewable on its website: www.ethics.state.fl.us

^[2]Your inquiry specifies your extensive shipping industry experience, including :chairman of an association of major U.S. flag vessel operators, chairman of a London-based international insurer of vessels, and chairman of an international association of tanker operators.

[c]harter where ship owner only provides ship, with charterer providing personnel, insurance and other necessary materials and expenses.

^[4] Your inquiry materials include a chart of your company’s corporate structure.

^[5]We find that the prohibitions of Section 112.313(3), Florida Statutes, are not at issue regarding your inquiry inasmuch as your scenario does not indicate that your company is renting, leasing, or selling anything to the Port. The statute provides:

DOING BUSINESS WITH ONE’S AGENCY.—No employee of an agency acting in his or her official capacity as a purchasing agent, or public officer acting in his or her official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his or her own agency from any business entity of which the officer or employee or the officer’s or employee’s spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or the officer’s or employee’s spouse or child, or any combination of them, has a material interest. Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to the officer’s or employee’s own agency, if he or she is a state officer or employee, or to any political subdivision or any agency thereof, if he or she is serving as an officer or employee of that political subdivision. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator’s place of business or when such offices are on property wholly or partially owned by the legislator. This subsection shall not affect or be construed to prohibit contracts entered into prior to:

(a)            October 1, 1975.

(b)         Qualification for elective office.

(c)         Appointment to public office.

(d)         Beginning public employment.

^[6] We recognize that it might be difficult for the terms of a renewal to remain the same in your situation due to the original lease’s providing for a renegotiation of rental rates regarding a renewal. However, since the issuance of CEO 96-31 (our opinion cited in your inquiry that apparently recognizes a grandfathering when the terms of a renewal remain “substantially the same” or “substantially identical”), we have clearly and recently stated our view that the terms of a renewal must remain the same. CEO 02-14, Question 2.

^[7] We note that your company’s legal counsel, in a letter to our staff, cited United States v. Locke, 529 U.S. 89, 120 S.Ct. 1135 (2000), regarding state regulation of ports and waterways.However, we do not view the case as holding that all non-Federal regulation is preempted by Federal law such that Port regulation of your company’s operations cannot exist.  Rather, it appears that the case held that Federal law allows a state to regulate its ports and waterways, so long as the regulation is based on the peculiarities of local waters that call for special precautionary measures.

^[8]Section 112.313(7)(b) provides:

This subsection shall not prohibit a public officer or employee from practicing in a particular profession or occupation when such practice by persons holding such public office or employment is required or permitted by law or ordinance.