Does the Federal Government Have a Role to Play in Combatting Bad State Licensing Laws?

It’s still illegal to sell flowers in Louisiana without being a licensed florist. You’re still not allowed to sell caskets in Virginia without being a licensed funeral director.

Those are outliers inasmuch as most states don’t require licenses for those activities. But they’re typical in that, like many licensing laws, they don’t protect the health and safety of the general public. All they really do is restrict economic freedom by unfairly limiting competition in certain professions.

They are also exactly the types of laws that the Restoring Board Immunity Act, introduced last week by Sen. Mike Lee (R-Utah), wants to convince states to repeal, or at least reform. Lee’s bill would create a limited, conditional exemption shielding licensing boards from federal antitrust lawsuits, but only for states that change how their licensing boards operate and how courts handle disputes between those boards and individuals subjected to their rules.

That sounds complicated, but it’s not. The bill gives states a two options for reform; states that choose one of the two will be protected against future lawsuits challenging their licensing boards for behaving like private cartels. It allows states to retain licensing boards that serve legitimate public health and safety interests, but nudges them to change laws that serve no such purpose. If they want, of course, states can choose to do nothing.

Lee has positioned his bill as a federal solution to a state problem, but that opens up a legitimate criticism. Should the federal government play any role in telling states what to do? That rarely works well for states, warns Sarah Allen, a senior deputy attorney general in the state of Virginia. Allen predicted Wednesday that Lee’s bill would be “unworkable” at the state level.

“I think this bill highlights a common problem when the federal government tries to mandate state behavior,” Allen said at a discussion of licensing issues hosted by the Federalist Society. “It really doesn’t have any idea how difficult and time consuming and expensive it is to implement these big ideas into 51 existing and different state governments, and how many revisions to state codes would be required to do so.”

Read more of this Reason article by Eric Boehm by clicking here.

Sign up now to receive early access to RTP content and exclusive materials available ONLY to our subscribers.