ATLANTA -- Although Florida's cabinet this week gave its final approval to unprecedented rules that limit the political activity of market participants seeking state bond business, a key legislative committee could soon present a roadblock to the actual implementation of the rules, an official said yesterday.

Carroll Webb, executive director of the state Legislature's Joint Administrative Procedures Committee, said staff lawyers for the committee have questioned the rules on the grounds that the cabinet does not have the statutory authority to impose guidelines imposing a standard of conduct of people who are not state employees. The cabinet, which is composed of the governor and the state's six top elective and appointed officials, sets administrative policy in Florida.

The rules, approved by a unanimous cabinet vote on Tuesday, direct the state's division of bond finance to exclude underwriters or lawyers who have contributed to state election campaigns in Florida from participating in state-level negotiated bond issues. The guidelines also bar municipal market participants from holding informal discussion with the division about whether they should be given state bond business.

"One possible problem with the rules is that they may seek control over areas that are outside of the cabinet's purview and must receive legislative authorization," Mr. Webb said.

In a letter sent yesterday to the division of bond finance, Jesslyn A. Krouskroup, an attorney for the committee, said the state laws the division claims provide statutory authorization for the rules do not, in fact, grant such authority.

"Sections 215.64(5) and 215.68(5), F.S., cited as laws implemented by each of the proposed rules do not appear to provide authority for the standards of conduct established for governing board members and employees in rule 13K-6.003 [the rule barring informal business solicitation] and rule 13K-6.004 [the rule limiting bond participants' election campaign activity],} Ms. Krouskroup wrote.

Referring to section 215.64(5) of the state's statutes, which autorizes the division to hire private firms to plan and underwrite bond sales, she wrote: "This provision does not, either expressly or by implication, include provisions against enganging in business communication...or campaign contributions to or participation in management of fund raising for governor or a cabinet position by service providers or underwriters."

Ms. Krouskroup also affirmed that "section 215.68(5), which provides in relevant parts, that the division 'may negotiate for sale of bonds to any underwriter designated by the division'" does not extend to the activities the rules seek to prohibit.

The legislative official said that the six-member procedures committee, composed of three members from the House of Representatives and three from the Senate, would not likely formally review the rules until a meeting to be held during the week of Dec. 9.

At that time, he said the committee could decide to recommend that the division of bond finance withdraw the rules. If this happens, Mr. Webb continued, the chairman of the comittee, Sen. Sherry D. Walker, D-Tallahassee, would be in favor of drafting legislation that would seek to make cabinet-approved bond rules state law. Sen. Walker and other members of the committee could not be reached for comment yesterday.

After the committee makes its recommendation, Mr. Webb said, the division of bond finance would then have the option of complying with or rejecting that recommendation. If it is rejected, the committee could file suit against the division, he said.

Raymond K. Petty, senior attorney with the division of bond finance, said that although he was aware that the committee is reviewing the rules and could recommend against their implementation, the division still plans to file the rules with the Florida's Secretary of State on Nov. 16. Under Florida state law, the rules will then become effective 20 days thereafter.

Daniel Fuchs, Gov. Lawton Chiles's assistant director of cabinet affairs, downplayed the possible dispute between the cabinet and the Legislature over the rules.

"These rules are very high on the governor's list of priorities, and one way or another they will become implemented," he said. "We would be glad to work with the Legislature to see that this is done. My only question is why the committee has not made its concerns known before now."

The cabinet's approval of the bond rules on Tuesday comes more than six months after Gov. Chiles began his bond reform crusade by directing the state's Housing Finance Agency to sever the link between politics and the awarding of bond contracts in Florida. About a a month later, Gov. Chiles directed William Sweeney, who oversees the Division of Bond Finance, to propose similar guidelines for all state bond issuance.

In addition to limiting political activity and business solicitation, the rules approved Monday also tighten guidelines that specify when negotiated sales are appropriate and how fees should be determined on such issues. These part of the rules expand on administrative procedures for negotiated sales adopted late last year.

This year of the rules also tighten previous guidelines by requiring that the expense component of the gross underwriter's spread be reported. Under the new rules, agreement on these expenses must be reached with the division at least three days before pricing, and unless the cabinet votes otherwise, compensation for underwriters counsel cannot exceed that paid to bond counsel

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