Florida lawmakers are creating a pathway for companies to challenge local regulations that affect profits.
Although many American political battles over the COVID-19 pandemic have taken place on the national stage, such as fighting on the scope of federal mandates in state affairs – the pandemic has also exposed tensions between state and local governments. Municipalities sometimes have provided more rules than state legislatures and governors, and local school boards have tried to retain masking requirements in opposition to state-level ordinances.
Now the Florida Legislature appears ready to redefine state-local power dynamics with a new regulatory preemption bill. New invoicetitled the Local Business Protection Act, would create a new cause of action allowing businesses to sue local governments over local ordinances that affect business profits.
The state legislatures pass topic-specific pre-emption bills each year, such as laws preventing local governments from setting a higher minimum wage or banning plastic bag bans.
Florida’s new bill would eliminate this process by allowing local companies to directly sue local governments if the company can show that an order reduces profits by 15%. To meet a challenge, companies must implement residency in the local jurisdiction for three years, and the disputing company must show evidence of a reduction in profits.
Not all local actions could be challenged under the new bill, as the final text passed by the Florida Senate provides for certain exceptions. For example, companies could not challenge a local government if the contested ordinance exists to implement state or federal law or if a local government passes an emergency ordinance under the State Emergency Management Act.
But the concerns abound community organizations that the Local Business Protection Act will reduce the willingness of local governments to create new regulations to address new issues. According to Rebecca O’HaraDeputy General Counsel of the Florida Towns Leaguelocal governments reduce their decision-making processes to a single question: “Does it meet the threshold of having a 15% impact on the company’s profits?”
The sponsoring legislator, the Florida senator Travis Hutson (R-District 7), a Speak clearly the purpose of the bill is to reduce repetitive state legislation that overrides local ordinances. Instead of the annual ‘tradition’ of the Florida Legislature who passed laws to reserve areas of regulation for themselves, municipalities and counties would face direct challenges from local businesses and have the ability to change or rescind an ordinance themselves. President-elect of the Florida Senate Kathleen Passidomo (R-District 28) OKstating during a debate that “local governments should handle this” and that the Local Business Protection Act “gives them the tools they need to manage their ordering process”.
Indeed, the Local Business Protection Act create a process for local governments to deal with a company’s challenge to their ordinances before facing the complaining company in court. To bring an action under the Act, a company need file a settlement offer with the local government within one year of passing the ordinance, but 180 days before filing the complaint.
The local government could then take action within 120 days: he can accept the settlement offer, reject the offer or make a counter-offer, which may include heal the allegedly offending order by a waiver for the company, the revocation of the order or a variation.
Even with this process – and with the burden of proving the negative effect on profits remaining with a difficult business – opponents of the bill worry on the negative effects on local government and taxpayers. Florida Senator Gary M. Farmer, Jr. (D-District 34), who voted against the bill with fellow Democratic senators, voiced concern about the “ability of local governments to do what they were elected to do, which is to govern”.
Critics testifying at committee hearings reportedly Express concern about the financial burden on taxpayers for damages to businesses, whether as a result of pre-litigation settlement or judgments against local governments. The bill too allow a court to award reasonable attorneys’ fees and costs to the winner, so local tax money could also end up in the hands of attorneys suing on behalf of business clients.
Beyond the potential effects of the Local Business Protection Act in Florida, opponents prevent that similar measures could become popular in other states. Florida functions as a “pilot state” to try new laws that limit local power, like when Florida and Texas threatened to punish municipalities trying to “defund the police” last year.
If the Local Business Protection Act becomes law, other conservative-leaning state legislatures could imitate its text and its objective, according to Francesca Weak of Local Solutions Support Centeran advocacy group that represents local governments trying to retain local power.
The Local Business Protection Act Now waits the signature of the Republican Governor of Florida Ron DeSantis before becoming law. DeSantis spokesperson, Christina Pushawwould have mentioned that the governor will review the final text of the bill before signing it.