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Letting Businesses Sue Cities Is Florida’s New Preemption Idea

April 22, 2022, 9:45 AM

Florida’s track record of blocking local ordinances—ranging broadly from minimum wages to bans on plastic bags—makes it a preemption bellwether in the eyes of some public policy advocates.

Now, Sunshine State lawmakers are close to outsourcing the preemption job by letting businesses sue local governments seeking payment over regulations that cost them money. That sweeping measure needs only the signature of Gov. Ron DeSantis (R) to become law.

Workplace law is one of a handful of wide-reaching policy areas that states frequently set as off-limits for city and county regulation. Often, it’s Republican-majority state legislatures enacting laws to preempt the more Democratic-leaning local governments from passing ordinances that might cost businesses, such as paid sick leave or employee scheduling measures, but Democratic-majority legislatures are no strangers to passing preemptive measures either.

Half of all states preempt local minimum wages, although Colorado made the rare move of rolling back a preemption in 2019 to let Denver pass its own $15-plus minimum wage.

Still, the Florida legislation, the GOP-sponsored SB 620, is likely the first of its kind, according to opponents and the bill sponsor alike. Rather than telling local governments what they can’t do, it would empower businesses to sue for damages if a newly passed or amended local ordinance causes or is expected to cause a decrease in their profits by 15% or more—letting the business potentially win up to seven years of future profits paid out of local tax dollars.

“It’s something we’ve never seen before,” said Ida V. Eskamani, a lobbyist with Florida Rising. “It’s a pretty extreme idea and one that would tie the hands of local governments and cost local taxpayers to defend laws that they support.”

The bill also would deter local governments from passing any regulation that might cost businesses money, she said, including light-pollution ordinances aimed at protecting sea turtles, prevailing wage laws, limits on hydraulic fracturing by oil and gas companies, and bans on “puppy mills"—operations that breed dogs to sell and have a reputation for sometimes inhumane conditions.

“Not even puppies are safe from this,” Eskamani said.

Sen. Travis Hutson (R), who sponsored the bill, said opponents’ warnings of excessive litigation against cities and counties are overblown, since the legislation gives local governments a chance to revise an ordinance, exempt a particular business, or negotiate a settlement before any claim would go to court.

The burden of proof is on the business if a claim does go to court, the lawmaker said during a January committee hearing. “The business has to prove that this ordinance has affected them by that 15% profit,” Hutson told senators at the time as the bill was moving through the legislature.

Business Support, Local Opposition

The bill is waiting to be officially transmitted to DeSantis, whose spokeswoman, Christina Pushaw, said he will decide whether to sign it after reviewing the final language.

While he’s typically an ally of the GOP-majority legislature, DeSantis did veto a bill in 2019 that would have preempted local governments from banning plastic drinking straws, and he’s hearing requests to do the same with this measure.

But the latest preemption bill also has broad support from the state’s business community, including the Florida Chamber of Commerce.

“Florida’s continued economic growth depends on the ability of businesses to operate with certainty, free from burdensome regulation that impacts their competitiveness, so they may continue to invest in their local communities,” said Frank Walker, the Florida Chamber’s executive vice president of government and political relations, in an emailed statement.

The bill gives the Florida legislature a means of ending the tradition of considering multiple policy-specific preemption bills every year, Hutson said. The scope of the measure and its impact on local governments are limited in several ways, such as barring business damages claims over certain categories of local regulation including zoning, building, and fire safety codes, he added.

Among those urging DeSantis to veto the measure are environmental and labor groups, such as the Florida AFL-CIO, city and county mayors and commissioners and the associations that represent them.

Even if the actual lawsuits would be rare and hard to win, SB 620 likely would deter a lot of local governments from enacting or amending policies that their citizens want or need, such as noise ordinances, said Rebecca O’Hara, deputy general counsel for the Florida League of Cities.

“It doesn’t matter whether there’s a legitimate purpose to be served by the ordinance or it’s protecting the public from harm or it’s protecting the environment,” she said. “The only analysis is: Does it meet the threshold of causing a 15% impact on the business’s profits?”

Punitive Preemption

It’s rare but not unprecedented for states to impose penalties as a way of limiting local laws. Arizona, for example, imposed a penalty through its state budget process last year, requiring the city of Flagstaff to forfeit $1.1 million in state funding to offset what the state said were its costs for complying with the city’s $15 minimum wage. That budget penalty remains tied up in litigation.

Florida and Texas passed laws last year threatening a state override of local budget decisions or financial penalties for cities that cut police department funding, in a GOP response to the “defund the police” movement. A handful of states also have laws that subject local officials to possible fines or removal from office by the governor if they enact gun-control laws.

It’s possible the latest Florida idea could spread as well.

“Florida is like the pilot state,” said Francesca Weaks, state campaign consultant for the Local Solutions Support Center, which advocates for preserving cities’ and counties’ local legislative powers.

“If something can pass in Florida, then other conservative states might do the same thing,” she added, pointing to Texas as a likely state to emulate Florida’s bill to let businesses sue local governments for damages.

To contact the reporter on this story: Chris Marr in Atlanta at cmarr@bloomberglaw.com

To contact the editor responsible for this story: Andrew Harris at aharris@bloomberglaw.com

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