October 22, 2014

Tears Of The Crocodile

John D. McKinnon | 6/1/1995
Armed with the latest government reform manifesto, Gov. Chiles set out this spring to do battle against business people's number-one bugaboo: bureaucratic rules and regulations.

Instead, Chiles found himself tangling with a different foe, one you'd least expect: the state's major business lobbies, and especially Associated Industries of Florida (AIF).

It turns out that some business lawyer-lobbyists have become fans of Florida's elaborate rule-making machinery. In fact, they helped encourage the recent glut of administrative regulations, by successfully pushing for a 1991 law that required more agency rule making.

Why would business lobbyists do something so intuitively counterproductive? In essence, some business lawyers figured they could beat state government at its own bureaucratic game. They came to believe that if they forced agencies to adopt more formal rules in controversial programs like growth management, they and their business clients could restrict the reach of those programs by litigating the new rules. Even if they didn't succeed in stopping the programs they didn't like, they figured they could slow them down.

To a considerable extent, the strategy has worked, as evidenced by the furious growth of both rule making and rule challenges since 1991. Needless to say, the strategy has been particularly beneficial for Tallahassee's well-paid administrative lawyers, whose bright new brick-and-glass office buildings have popped up around the Capitol in recent years like toadstools after a spring rain.

But this year, amid a growing cry for red-tape relief among rank-and-file business people, Chiles decided to make rule-making reform one of his top priorities. Suddenly, business lawyer-lobbyists found their loyalties being tested to the limit.

On one hand, small-business leaders felt they had no choice but to line up behind the governor. After all, Chiles was seeking not only repeal of the 1991 rule-making law, but also repeal of half the state's existing rules. "That's the kind of opportunity that comes once in a political lifetime," explains Bill Herrle, Florida director for the National Federation of Independent Business, which serves small businesses. "There's not a small business owner in the state who wouldn't take it."

But AIF, which had been an ardent supporter of red-tape reform, proved to be downright unenthusiastic about the governor's proposal for repeal of the 1991 law. And even the Florida Chamber of Commerce, which had whipped its members into a near-frenzy over red tape in recent months, found itself conflicted over the 1991 law. While Chamber lobbyists led the charge for many rule-making reforms in 1995, they resisted outright repeal of the 1991 law and instead talked up alternatives such as pilot programs in selected agencies.

It turned out that "a lot of people were real wedded" to the core of the state's rule-making machinery, explains one insider in the governor's office.

In fact, in the late 1980s and early 1990s, expansion of the rule-making machinery became a sort of Holy Grail for some landowners, their lawyers and sympathetic lawmakers. Back then, they complained that state government was using unpublished, informal policies to decide whether to approve or reject local growth-management plans. "Phantom government," they griped.

Big developers and their lawyers finally got what they wanted in 1991, when the Legislature passed a law requiring many informal agency policies to be adopted as formal rules. Developer lawyers figured they would gain a couple of advantages. One was obvious: They would know more precisely what state agencies expected from them. More important, they'd gain the ability to challenge the new rules before a nearly endless series of hearing officers and judges. Even if businesses didn't win, they figured they could win leverage for settlements. And what difference did it make if the number of rules swelled to 25,000 or more in the meantime?

Explains Jodi Chase of AIF: "That number means nothing. That means that state agencies had all that stuff as [informal] rules before, and they never told you. The number of rules is good. Who cares if there's 25 billion, as long as they tell you?"

As with most actions, however, there were unintended consequences, at least as far as some small businesses were concerned: Agencies began adopting formal rules like crazy, faster than almost anyone had predicted. In 1991, the year before the new rule-making standard went into effect, state agencies had generated 4,310 rules - almost exactly the yearly average for the decade of the 1980s, 4,292. But the next year, under the influence of the new rule-making standard, the number of new rules shot up to 7,160. It has never come close to the old, lower levels again. In 1994, some 6,416 new rules were proposed or adopted.

Governor Chiles promised to cut the red tape, but big business had other ideas.

Inevitably, the number of rule challenges also increased, from about 185 a year during the 1980s to an average of 274 in the years since 1991. Not surprisingly, one of the biggest challenges has involved growth management rules that the 1991 law forced the Department of Community Affairs to adopt. In their efforts to weaken growth management controls, developers have challenged the rules as a way to get to the program itself.

Little wonder that administrative law specialists - including superstar land-use lawyer Wade Hopping, who is also the Chamber's point person this year on red-tape reform - found themselves advocating a go-slow approach to reform of the 1991 law.

"That's one of the ironies in this," complained Lt. Gov. Buddy MacKay at one point during the debate over the state's swollen administrative code. "The damn thing is so complicated now that not even ordinary lawyers understand it. Only a cadre of micro specialists understand it, and they get all the referrals. So naturally there's a great deal of reluctance to move away from what we've got now."

Big business lawyer-lobbyists weren't just fighting to maintain their advantage under the 1991 law, however. As originally filed this year, some of their proposals for reining in the agencies actually could have increased the amount of rule making, as well as litigation over rules, according to Chiles aides. According to administration officials, bills that had the backing of business groups appeared to hold the potential to force agencies to generate even more rules, then force them into long, costly and ultimately unsuccessful court battles to defend those rules.

"I've been telling people we may develop a new cottage industry," MacKay says. "Litigation [over rules] might double or triple or quintuple, like it did with workers compensation."

Business lobbyists don't apologize for their approach. They argue that when it comes to battling bureaucratic regulation, they have to fight fire with fire - or more specifically, lawyers with lawyers. To their credit, their approach includes some promising ideas for forcing agencies to examine the cost of new rules more closely and to stick closer to the Legislature's intent.

In addition, they argue that the governor's proposals hold far greater drawbacks for business. In addition to switching off the rule-making machinery in the future, Chiles also proposed giving executive agencies vastly greater flexibility in interpreting existing rules. Chiles derived his ideas in part from a hot-selling new government reform book entitled "The Death of Common Sense: How Law is Suffocating America," by New York lawyer Philip K. Howard.

"His [the governor's] proposals were based on the premise that if you left them alone, the employees of state government would be able to exercise their common sense and good judgment, and the legislators don't believe that a wealth of that has been demonstrated," explains Hopping. "The fundamental complaint they're getting is that these people have no common sense."

In the end, neither side gained all that much in the 1995 session. Through negotiations, Chiles and MacKay managed to kill most of the provisions that would have increased rule making and litigation. In return, they had to give up most of their ideas for "common sense" flexibility.

Instead, the 1995 session was significant for the fundamental flaw it revealed in the red-tape reform movement itself: As long as it's being led by lawyers - even business lawyers - real relief might be slow in coming.

Tallahassee Talk

As if anyone in Tallahassee needed reminding, a new study has concluded that several major states, including Florida, have begun raiding their higher education budgets to pay for prison expansion. The study, "The Fiscal Crisis of the States" by Steven Gold of the Albany-based Center for the Study of the States, points out that the choice will inevitably result in less well-trained work forces. The other states in the study included California, Connecticut, Massachusetts, Michigan and Minnesota. The book is published by Georgetown University Press.

Tags: Florida Small Business, Politics & Law, Business Florida

Florida Business News

Florida Trend Video Pick -

Gasoline Prices: Why Are They Going Down Now?
Gasoline Prices: Why Are They Going Down Now?

Gasoline prices in the U.S. are the lowest they've been in four years. Why?

Earlier Videos | Viewpoints@FloridaTrend

Ballot Box

Jeb Bush has said he'd accept tax increases as long as they are paired with federal spending cuts. This stance runs counter to conservatives who oppose tax hikes. Is Bush right?

  • Yes - raising taxes should be considered
  • No - there's enough money, need to manage it better

See Results

Ballot Box
Subscribe