OHPA accuses Nassau Terminals, LLC, with breaching operating agreement

Submitted  by Suanne Z. Thamm
Reporter – News Analyst
November 8, 2021


On November 5, 2021, Ocean Highway and Port Authority (OHPA) attorney Patrick Krechowski formally notified Nassau Terminals (NT) via an 8-page letter to NT’s attorney Charles B. Jimerson that Nassau Terminals is in default and/or breach of the October 19, 2018 Operation Agreement regarding the operation of the Port of Fernandina in 14 specific areas.

In the letter, Krechowski wrote, “Given that the business interactions between OHPA and NT are ongoing and given the fact that OHPA receives almost daily correspondence from NT providing information and making certain demands, notices, and requests, this letter should not be considered as OHPA’s final position on any matter discussed herein. OHPA desires to resolve the issues addressed herein (and others that may not be specifically mentioned herein) so that a more cooperative, efficient and professional working relationship with NT may be established.

“As detailed below, NT has failed to perform or otherwise comply with many of its obligations under the Agreement. OHPA demands immediate remediation as follows:

[Note that the information below was copied directly from the correspondence with Nassau Terminals.]

Section 2.1:
Under Section 2.1 of the Agreement, NT is obligated to provide “the necessary labor, machinery and equipment to accomplish cargo handling and warehousing functions in the Port,” except certain machinery and equipment identified in Exhibit 1 to the Agreement, which OHPA shall provide. Furthermore, to the extent that OHPA cannot fully fund the machinery and equipment identified in Exhibit 1, NT is obligated to “make all reasonable efforts” to fund any deficiencies, with repayment to be determined on a project-by-project basis.

Section 2.2:
Pursuant to Section 2.2 of the Agreement, NT must provide skilled personnel (at its own expense) to maintain and operate the machinery and equipment provided by OHPA.

Section 2.3:
Section 2.3 of the Agreement provides that NT is responsible for all ordinary, day-to-day repairs and maintenance of Port facilities and equipment owned by OHPA, and that NT must pay for the replacement or repair of any OHPA property that is destroyed or damaged by any accident or neglect.

In addition, Section 2.3 provides that NT must create and preserve current maintenance logs and repair reports and, on July 1 of each year, provide OHPA with a written maintenance report and account on each piece of equipment owned by OHPA and utilized by NT, as well as each building, shed, shack, scale, and warehouse owned by OHPA and utilized by NT, as well as the projected expenses for the maintenance, replacement or repair of all such items for the next fiscal year.

Section 2.5:
Section 2.5 of the Agreement obligates NT to advertise and solicit shipping business.

Section 3.1:
Pursuant to Section 3.1 of the Agreement, NT must charge wharfage, dockage, and other fees at competitive rates, not to exceed those charged at neighboring ports North and South of the Port of Fernandina Beach.

Section 4:
Under Section 4 of the Agreement, NT must maintain various insurance policies, including workers compensation coverage, comprehensive general liability insurance, and property and hazard insurance. Furthermore, NT must indemnify OHPA from any losses, including attorneys’ fees, arising out of any damages to any property due to the negligence, willful act, or omission of NT in connection with the NT’s performance under the Agreement.

Section 6.2:
Under Section 6.2 of the Agreement, NT must pay $50,000.00 in 2019 and 2020 for Development of Regional Impacts payments.

Section 6.4:
Under Section 6.4 of the Agreement, NT must allocate $5,000.00 per month to the Capital Improvements and Maintenance Reserve Fund.

Section 7.3:
Section 7.3 of the Agreement obligates NT to “undertake[] to devote to the performance of this Operating Contract the efforts and experience of one reasonably skilled in the field of port operations.”

Section 7.4:
Under Section 7.4 of the Agreement, NT must notify OHPA at each monthly meeting of:
o Initiation of process that is otherwise needed to invoke a proceeding for civil administrative or criminal liability, including but not limited to a trespass, negligence, Longshore and Harbor Workers’ Compensation Act violation, or workers’ compensation.
o Breach of security at the Port otherwise needed for reporting to another governmental authority or insurer.
o Arrival or expected arrival of any Certain Dangerous Cargo as defined in U.S. Code of Federal Regulations Title 33, Chapter I, subchapter P, Part 160, Subpart C, Section 160.202 (appended) to the extent known by the Operator.
o Inspections of the port facility or off-loaded cargo conducted by any state or federal government entity residing in the United States, and local public safety/fire inspection, and the written results thereof.

Section 8.1:
Pursuant to Section 8.1 of the Agreement, NT shall maintain its accounts and all records pertaining to the Dockage and Wharfage Fees and Operator Revenues and compensation in accordance with general accepted accounting principles and practices and shall retain such accounts and records including all documents received from OHPA and/or any third party in connection with said fees and compensation.
In addition, NT must permit duly authorized representatives of OHPA for the duration of the Operating Agreement and for ten years thereafter to have access to all accounts, books, documents, papers, and records of the Operator relating to the Dockage and Wharfage Fees and Operating Revenues for the purpose of audit examination and inspection and agrees to make available adequate facilities for such purposes and to permit duplication of any records that are subject to such inspection.

Section 8.3(a):
Section 8.3(a) of the Agreement obligates NT to comply with Florida public records laws, and specifically requires it to:
o Keep and maintain public records required by OHPA as the public agency to perform the services for OHPA.
o ProvideOHPAwithcopiesoftherequestedrecords(uponrequestbytheOHPA’srecordscustodian) or allow the records to be inspected or copied within a reasonable time at a cost that does not exceed the cost provided in Chapter 119 Florida Statutes or otherwise provided by law.
o Ensure that the public records that are exempt or confidential are not disclosed except as authorized by law.
o Upon completion of the contract, either transfer all public records in its possession to OHPA at its own cost or keep and maintain the public records as required by law. If NT elects to transfer the records, it must destroy all duplicates that are exempt from public records disclosure requirements. Also, when transferring electronic documents, NT must transfer the records in a form that is compatible with OHPA’s IT systems.

Section 9.4:
Under Section 9.4 of the Agreement, whenever any dredging or deepening of access channels is required, NT must cooperate with OHPA to obtain any and all requisite federal, state, and local permits and approvals.

Section 10.2:
Pursuant to Section 10.2 of the Agreement, if NT determines that any equipment or facilities have become obsolete due to wear and tear or changing needs, it must obtain approval from OHPA before arranging for the sale, trade or disposal of such equipment or facilities.

Krechowski concluded his letter with the following:

“Please provide written confirmation that NT will comply with the above terms. This correspondence shall not alter or amend any of NT’s obligations under the Agreement, and OHPA expressly reserves all rights and claims available to it at law and in equity. Should you wish to discuss the foregoing, please do not hesitate to contact me.”

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