It seems very common for quota systems and grandfathering and such to lead to really bad dynamics... In addition to deliberate abuses, manipulations, and loopholes, sometimes the incentive structure of a poorly designed system can penalize or sidetrack well-intentioned participants.
Some random examples:
California water politics is complicated, since it's a major farming state with a very limited water supply. This leads to many, many very stupid things. For example, if farmers don't use their full water quota for a given year, it can be reduced the next year. And they can get paid for trying and failing to grow crops. So there is an incentive to fail to grow water-intensive crops like rice in order to use up their water quota so they won't lose it, instead of doing something sensible, under some conditions.
Also, the farmers use most of the water, but huge amounts of water are still used by cities, and so there are often efforts (both reasonable and insane, both grassroots and coordinated by water companies and state governments) to have city-dwellers conserve water. In the 80s, there was a statewide drought, and all the green-aware hippies in San Fransisco were doing things like not flushing their toilets often, taking two minute showers, and not watering their lawns or washing cars, while in Los Angeles, people continued with ostentatious lawns in the desert and fountains and such. I found them both rather silly, since the well-intentioned asceticism of the San Fransisco folks was a drop in the bucket compared to the stupid rice farmers, yet the Angelenos were showing the arrogance of "hey, I pay my water bill, so I don't have to care if there's a drought."
Of course, not all Los Angeles dwellers are arrogant jerks; some actually noticed that water was a concern. In fact, the water department sent homeowners a request to voluntarily conserve water as much as they could. The L.A. folks who were not too self-centered, apathetic, or ignorant then tried to reduce their water footprints as much as they could, to their credit. The powers that be decided that this wasn't making it, though, and they needed to provide some economic teeth, and made the announcement that anyone who didn't cut their water bill by some amount (20%) would be forced to pay a large penalty. It apparently didn't occur to them that the arrogant jerks who ignored the voluntary request could easily reduce their lawn-watering or something and avoid the penalty, but the poor saps who had cut their water usage down to the bare minimum in response to the request a few months earlier had nothing left to cut. Take that, you tree-hugging hippies! ( *ironic* for the irony-impaired)
I see these sorts of broken incentives come up all the time in everything from carbon-trading schemes to computer games... quotas and regulations often seem like a good idea, but it's not too unusual for bad implementations to actually make things worse, and a lot of people don't seem to understand that the devil is in the details.