For those who dont know me, i am corrine long, and i teach antitrust and intellectual property law. Ill pause for a minute. We saw people joining us online and thats what youre hearing. To everyone in the room, welcome and thank you for coming. Its a privilege for mow to be here today in my capacity as cochair along with josh wright of the antitrust and Consumer Protection working group of the Federalist Societys regulatory transparency project. This was launched in 2016 to foster a National Conversation around the issue of regulatory excess and harms it causes. The project consists of 12 working groups each composed of experts in specific fields of regulatory law and policy ranging from environmental and energy to race and sex. In june of this year, each of the working groups start today release various issue papers, podcasts and short videos, which, among other things, can be found on our website, which is regproject. Org and i invite you all to go to the website. And today is the first conversations of the antitrust and consumer working Protection Group and occupational licensing and other restraints on competitions. Im now going to turn it over to my comoderator as our host for today, lisa kimmel. Thank you very much for joining us today. My name is lisa kimmel and im senior counsel here in the antitrust group at crowell and mooring. Like everyone else that youre going it hear from today, before joining the law firm i spent time at the federal trade commission where i was an antitrust and policy advisor to former chairwoman Edith Ramirez and in my work there, i focused on antitrust and competition matters, particularly in the Technology Sector and with the intersection of intellectual property and we want to welcome everybody, and thank you, Federalist Society giving us the opportunity to host this program. With that im going to introduce our Prestigious Group of panelists and first of all, we have the honorable maureen kay oles housen. She was sworn in on the federal trade Commission April 4th, 2012 and designated by the Current Administration to serve as acting chairman in january of 2017. Before joining the commission maureen was a partner at Wilkinson Barker where she focused on ftc issues, competition law, privacy and technology policy. And i want to say that the acting chairman has a very long history of ftc service and before rejoining the commission in 2012, maureen had previously served as both the Deputy Director and director of the ftc policy of planning and i think its responsible for the liberty agenda now. And maureen began her ftc career in the general counsels office. Before joining ftc for the first stint, excuse me, maureen has spent five years at u. S. Court of appeals for the d. C. Circuit serving as a law firm and staff attorney, maureen graduated from distinction from the Antonin Scalia law school from virginia and thank you for joining us and welcome to the prom. To my immediate right. Professor james cooper, an associate professor of law at Antonin Scalia law school at george mason university. James brings over a decade of public and private sector experience to his research and teaching work. And he spent time at federal trade commission served as the director of of policy planning, an attorney advisor to federal trade commissioner. And i want to note that james also spent time here with the antitrust group, a very fine group of crowell and moring and were happy to welcome james back. Focuses on competition and Consumer Protection issues, including privacy, Data Security and restraint on competition, behavioral economics, very interesting, antitrust treatment of vertical practices and price discrimination. James has a ba from university of South Carolina and a ph. D. In economics from emory university. James also holds a law degree magna cum laude at Antonin Scalia school. Allison is assistant attorney general and antitrust unit in the Virginia Attorney generals office. She currently cochairs the National Association of attorneys generals state Action Working Group so the right person to be on this panel. Ms. Allen successfully argued the Summary Judgment motion and 4th circuit appeal on virginia board of medicine and six individual Board Members against an antitrust claim by a chiropractor sanctioned by the board for practicing outside of the statutory scope of practice. Recently ms. Allen represented the commonwealth of virginia in federal and multistate to mergers and worked to challenge and settle other mergers. Before coming to the Virginia Attorney generals office, sara has spent time, eight years at the federal trade commission. So, thank you very much. And with that, i will turn it back over. Great. So, the format of todays program is were going to try to do interactive discussion led by the moderators asking question and reserve 10, 15 minutes at the end for questions from you, the audience. Occupational licenses and state restraints on trade, competition have received significant bipartisan attention in recent years. For example, in 2015, the Obama Administration released a report outlining the growth of such restraint, costs and benefits and impacts on workers and work arrangements. Earlier this year, acting chairman olehousen through the ftc launched the Economic Liberty Task force which im sure shell tell us some about. So, chairman, if you could start us off to give us a little overview what the main concerns are and the issues with such restraints. Great. And thanks corrine and everything and for Crowell Moring for hosting this today. Its something near and deer to my heart and i spent time focusing on this. Its no accident that its something that the ftc has focused quite a witness on. And weve done Consumer Protection and antitrust and occupational licensing and thats kind of at the intersection of those two issues, very often these kind of restraints on entry into a profession are put forth as necessary for Consumer Protection reasons. I think were particularly well placed as an agency to think about that and to say, does that make sense to us . So the issue with occupational licensing, i think this has come to the forefront, because occupational licensing has exploded so going back to 1950s Study Suggests fewer than 5 of occupations required a license. And today, that number is approaching 30 . So whats changed in that time period . And the number of occupations and the types of occupations that licensing has extended to has gotten, i think, you know, beyond where we can say, well, you know, of course you want your job to be licensed and someone who is doing a health and safety related thing to do licensed, but we have cases now where florists are licensed, where interior designers are licensed. Where hair braiders are licensed and so, that say, well, what is the rational for that, why is this happening . Thats sort of where the antitrust side of the analysis comes into play and one way ive kind of characterized this, we, as any enforcers, we need to be alert to private anticompetitive conduct, but the actions of the government can also be anticompetitive, and in a way that is a lot less likely to be eroded by market dynamics. So, i often call, what i call the brother may i problem. And its where you need your competitors permission to enter the market. So thats one of the issues weve seen where we have a board of active Market Participants saying, you know, well, you need this license or, you know, the practice for our North Carolina dental case we won in the Supreme Court, he said the practice of dentistry now includes tooth whitening in the state of North Carolina. What are some of the problems here . The problems are manifold. One of them is anticompetitive problem where you say, well, consumers may be paying more for a service or have fewer choices or there may be less innovation happening because of these onerous licensing requirements, but theres also an impact on workers, where workers have lost the ability to enter a field more freely. I see clark neily back there, he paid wonderful attention to this issue and institute for justice has done wonderful work in this area, but i think thats one of the issues here, what about the individual worker and their ability, even if they have a skill that we all agree requires a license, if theyre moving from state to state, they have to undergo that licensing all over again. Now, certainly that isnt necessarily an ftc antitrust issue. We have focused on a Market Participant saying you cant compete with me. On our advocacy role at ftc, thats where weve tried to talk to states and really, other parts of the federal government about some of these issues. Because theyre hitting certain populations quite a bit more onerously than others, so, one, believe it or not, military spouses, members of the military move a lot. They get deployed around different places around the country and a lot of times the trailing spouse has a license, a job that requires a license, and they have to get relicensed, recertified, undergo tons of training even if theyve been active in the field already. And its led to, i think its one of the contributors to the fact that youve got an Unemployment Rate of almost 20 in this population. And so thats why ive launched my Economic Liberty Task force at the ftc. I see it as an attempt to shine a spotlight on this issue, and certainly, we can continue to bring enforcement action where appropriate, but its mainly an advocacy role and then i talk often about it being a coalition of the willing because i think a lot of groups, consumer organizations, we mentioned the bipartisan appeal that has extended to a lot of, you know, the interest in this topic to a lot of different areas and ive worked with states, Governor Scott walker and i did a joint oped on this issue so i think were at a particularly good time to make progress on this issue, but the problem is, you know, the lack of competition, the higher prices, lower innovation, but also the effects on the workers. Okay. Thank you. Sara, were really interested to hear from the states perspective on occupational licensing issues that the acting chairman. Okay, thank you to the federal society and Crowell Moring to be invited on the panel to be the spoiler on the panel. Id like to start with a disclaimer that the opinions i express today are only mine, they dont reflect necessarily the opinions of general mark hairing or the virginia ags office for National Association of attorneys general and its a little odd for me because at 95 of the time i and my antitrust counterparts in the other state ag offices are the antitrust enforcers, and agencies we work with quite often, ft c d oj. In this, we flip and were the antitrust experts in the state, and so being the state apologist on this panel is a little backwards to me, but so is the position of otherwise staunch states right adds vo cats like senator mike lee and ted cruz and well talk about their bill in a minute. My personal perspective from the state side, i see a lot of value to this wider philosophical discussion about whether too many occupations require licenses and i also basically agree with the Supreme Courts decision, but at the end of the day it should be left up to the states to decide how to structure their economies, how to structure their governments and how to provide for the health, safety and welfare of their citizens. I applaud the ftcs effort to educate state legislators and others about dangers to the National Economy of too much licensing, and i support their enforcement efforts, however, i do not support the federal governments attempts to decide them for themselves or dangle state action as a carrot in order to provide active supervision in the manner it sees fit or into adopting its philosophy about the appropriate profession to license. Under current case law, principles of federalism allow states to decide which occupations they would license as opposed to professions that only require certification, registration or have no restrictions at all. And once the state legislature has authorized a licensing scheme with the board of active Market Participants as Board Members, the only questions that remains in order tore the board and members to receive state action immunity are whether they meet the two prongs, which is one was the board following a clearly articulated and affirmatively expressed policy for state competition and two, whether the board was actively supervised by a disinterested state official to assure the board was with that policy. There was a decision whether they had to say whether the board was with the states policy or whether it was undually burdensome. But theres no requirement that the active supervisor require they receive the least restrictive alternative. Theres no ability for the active supervisor or the state courts to disregard the states intent to in a lansing scheme. States could easily decide to get rid of their state boards and switch to the oversight of licensed occupations from the board to traditional, sorry, state agencies, with fulltime salaried state employees. That gets rid of the need for active supervision, but has many disadvantages, the most would be to apply millions to all of those people. State boards currently serve with no pay in most cases. It would not necessarily change the states philosophy which occupations to license and harder to maintain an antitrust challenge against the state. While it would take care of problems of Board Members acting in individual self interest, it would not capture, sympathies with those they regulate. And Board Members who practice in the profession regulated are usually the best people to evaluate standard of care cases. Many cases involve ethics violations or behavioral standards of licensees, such as medical licensees who operate while intoxicated or take sexual improprieties with their patients or lawyers to dip into escrow funds. While a licensing regime itself may restrict competition, most individual licensing decisions are adminsteral either of the applicant checks the boxes for criteria to receive a license or she doesnt. In that case it seems massively unfair to subject the board or even worse, to subject the individual Board Members to potential image liability for a decision that the state legislature made and that the Board Members were statutorily required to follow. Thank you. I, in particular, really appreciate the diverse views and hope we will have a dialog. Any thoughts from other speakers. Id like to weigh in on your points and i think we agree on many, many things. I also, you know, im sensitive to the fact that we operate in a federal system, and that the states are sovereign, and they can they can take these actions. I think that theres a twofold question here though, is should they be taking these actions . I care a lot about liberty and i want to advocate that before any policy maker, whether its at the federal level or the state level and i think thats a lot of what were trying to do here is to say, is this really, you know, best for your citizens . Is it a true application of public choice here where weve got concentrated benefits to the providers and theyre going to lib lobby and say, here are the good things that the licensing regime is going to do and the consumers who will pay the price dont know whats happening or their interests are diffuse so theyre not going to be there. So, were trying to step into the shoes of the consumers and workers and say, hey, consider these things, these things, too. So on the second issue, for the state action doctrine, i think thats what its really trying to do. Its trying to say, is this truly an action of the state, rather than the state and one of my favorite phrases, costing a cloak on the state authority on what is essentially private economic conduct. So i think thats the other factor. Is this truly the states own action rather than sort of deinvolving that to private actors who will often act in their own private interests. Well, i know you wanted to weigh in and i would quickly respond that Board Members, you know, if you talk to them, they are really trying to do their best in the most instances, maybe they are acting in their self interest sometimes and sometimes its blatant like the North Carolina dentist case, but i think a lot of the cases are on the margins where they really think theyre doing the right thing, and so its it seems a little paternal for the federal government to say, should you be making these decisions . We dont think you should and were going to make it so you dont get state action immunity unless you do it the way we think you should do that. So that was my point on that. Well, i think that theyve covered most of the ground here, but the only thing i want to add is, well, i just want to make sure when were talking about occupational licensing regimes, i think that sara alluded to this, that theyre talking more broadly, not just limiting in fact, setting up credentials and if you didnt score this, and you cant be a hair braider if you dont have x number of hours. Thats one level, but a lot of work i did when i started at ftc in the office of policy planning, theres a whole host of states occupations and put them limits on attorney advertising. Weve had several Supreme Court cases on the First Amendment issue surrounding that, but theres still to this day state bars that try to limit the ability of attorneys to advise, does that fit into occupational licensing . Maybe you could put it in that, but its a different animal. Minimal Service Requirements. There was an issue with that when the internet was burgeoning and their online real estate providers. The traditional real estate providers didnt like that so what did they do . They tried to in various states set up minimum Service Requirements that said, well, if youre going to be a Real Estate Agent, youve got to do house showing and do all of these things. Well, why do they do that . To prevent disintermediatation. Is that really occupational licensing, whether you can be a Real Estate Agent or not. It was the regulations that are promulgated by these boards. North carolina dental wasnt in fact who could be a dentist and who couldnt be, it was somewhat scope of practice. The only thing i wanted to emphasize in the discussion, i think we touched on it. On my view most of the mischief that the boards do, i think that all the points that chairman ohl hausen brought out, is really, really important and has to do with the regime itself that says you have to have this qualification to be in this profession. Those are bad and they have their own anticompetitive effects, but to me the core mischief here is the regulation of these selfinterested boards often promulgate. Not the restrictions in and of the professions itself. Thats what i would say on that. And i dont want to forget that. But professor cooper as a lawyer, whats the empirical efforts on these restraints, what are central costs and are there benefits for quality and other things . Thanks. So most of these regulations and im kind of painting in a broad brush stroke, but most of the regulations are justified, typically, some kind of form of the following story that provide consumers cant discern the quality of what provider x does. Provider x may be a dentist, an ophthalmologist, an interior designer. You cant figure out beforehand the quality of the service, and so this leads to what economists refer to going back to georges famous article out there all the time as a lemons market. The basic idea if you cant figure out quality ahead of time, consumers know that, they go into the marketplace and they discount they dont know if theyre going to get a good provider or a bad provider so only willing to pay a certain price that provides that ability. And in certain qualification, the good providers completely exit the market because the equilibrium price is not high enough to atact good providers into the market so you end up with this unravelling and thats often the horror story told to justify these regulations that the market would unravel into a lemons market if we didnt have this. I want to say in fairness that i think, you know, these arguments and i think that the chairman alluded to this earlier, these arguments may have some purchase when we talk about severe information asymmetries, doctors, im a lawyer, so of course i want to protect our guild, right . No, there can be asymmetries, what economisting sometimes call credence scope. If you go to the doctor and they recommend a treatment and you get better, you have no idea what they told you to do was right or not. You got better. Even if you can evaluate, say you go to a doctor or maybe an attorney doctor or attorney for complex activity and stakes are high, your life in a capital murder case, you may find out after the fact, oh, my lawyer or my doctor was no good because you die or you. [laughter] or you get the death penalty, right . The costs are high in figuring out, maybe we think that, i can figure out that this wasnt that this was a bad service and reputation and marketplace can take effect, but when the costs of figuring that are really high maybe thats where we want to step in and say were going to set some kind of level. We can talk later should the states at that level or should we have private certification and those are certainly areas of fair debate. Although they may have target for severe and asymmetric problem, in the arc archetypical case, you get a hair cut and you figure out quickly. Costs are relatively low, maybe leaving aside for job interviews. But for the most part the asymmetric information, theoretically, the idea of a lemons market of hair braider, designer, and going into the kwer. The imperrics, the ftc did cutting edge works in the 80s, and mostly in optometry, they were commercial practice restrictions when eye doctors were able to partner up with lens crafter, trivia, and if you go to Lens Crafters in Pentagon City mall you walk in the side door because dr. Smith cant be legally associated with Lens Crafters, just theres still some states that have the twodoor requirements, but theres been some theres good evidence in the 80s that these restrictions and restrictions in advertising, that are promulgated by the boards dont do much. And there is also more modern i would encourage people to look at president obamas last year, they do a great job of looking at old stuff and new stuff and almost 100 unanimous theres no impact on quality from these licensing, you know, no matter how you no matter how you measure it. So, and that these laws do tend to increase price. I think the price effect is a little they certainly went at mobility, they limit entry. The price effect is maybe not as robust as the lack of quality effect, but its therement one thing i would want to add is just because you see a licensing regime increases the level of quality, that doesnt necessarily mean its good for consumers either because everyone doesnt need to buy a mercedes, right . You could make a regulation that every car must have x, y all of these features and means were all paying 50,000 for a car and its a really nice car. And the same could be true. If you force everyone to go to an ophthalmologist who is board seared. And now when you stick your head in something and the receptionist does it for you and they get their prescription really, really close and the eye doctor tweaks it a little. Maybe its Higher Quality if you go to the ophthalmologist, but should we all be forced in . Ill leave is at that. I think that the impeerics say it tends to limit competition and dont really provide benefits for consumers. I want to follow up on the price effects. I know in the obama report, i think it said Something Like the cost to consumers was around 100, 100 billion. So can you talk a little more . About the price effect . Theyre a host i would commend anybody look at that. They do a great literature review. I think its hard to tease out problems in this. I think thats the main problem. Im not exactly sure where they got that number, i think theres no doubt that these are costs to consumers. As an economist and reviewing the literature, i wouldnt think that the price effect literature is not as robust, but its there. I just want to be a little careful what im saying. Not so much on the price effects, but on youre asking i am imperrics, what do we know . One of the most interesting factors or facts that ive seen only about 60 occupations are licensed in every state, but there are over 1100 occupations that are licensed in at least one state. So, to the extent that we are saying, well, other states, like, for example, other states than North Carolina, you could go to a regular, you know, mall, kiosk, tooth whitener, were we seeing bad effects on Consumers Health . No, we werent. I think if you start to put your finger on this great disparate, so we have 60 where, you know, everyone kind of agrees these need to be licensed. As you get further and further out from the core area where you see a lot of states agreeing. Can you you put your finger on, its probably not a very good health or safety or quality argument for having that, having that license. I just would and just real quick add in to kind of echo that, like i said before, if we have to think about the mischief, where the mischief in these words boards come from, do we agree that a dentist should be licensed . There are arguments on the other side. Even if we say that dentists have to be licensed, if you cant get your teeth whitening anywhere else except my office for a lot of money. I would say that the dental case is an excellent case to show why active sup supervision for these, activity supervising the board and we wouldnt have all of this kerfuffle. I dont have a lot of substantive things to add, but like to credit my colleague, and current chair of the antitrust task force and works in the tennessee ags offers and he says whenever you wonder whether this occupational regulation should exist, just substitute lawyer for whatever occupation they are talking about and then youll probably be fine with it. [laughter] and one other thing that i was going to mention, its not necessarily a binary choice of licensing or not licensing, theres how strict of a license do you need . And thats something that theyve paid attention to, allowing people like Nurse Practitioner he is, dental hygienists to perform to the height of their license. There was a case that preceded the North Carolina dental case, South Carolina dental case and we settled in the dental board there. The state weve got a problem with getting dental care to poor children. Very Poor Dental Health in the state, and these kids just werent getting, you know, basic, you know, cleaning and screening kind of stuff. So theyve rescinded the requirement that a dental hygienist had to act under the immediate supervision of a dentist when providing that care, so that the hygienist to go out to the poor schools and give the kid some basic dental care and the dentists went and reinstituted that requirement as an emergency regulation in their could it be clear, the state wanted Something Different . So, its the degree of it. Its not there shouldnt be licensing, its allowing them to practice. Weve done a lot of that. One of the projects i worked on when i headed up the policy planning was allowing Nurse Practitioners to practice in Big Box Stores like the cvs. Target, things like that. Where you really are expaning access to people who couldnt take time off from work, may not have health insurance, they, you know, on saturday morning, the kids got i am a mother of four, ive seen this, its Christmas Eve and youve got oh, you know, an eye infection, the doctors closed. You dont want to go to the emergency room, you want this kind of care. The other thing is expanding access to services and to care. Most acute in the health space. And were going to be moving into a world of telemedicine and enormous benefit, but well have to have licensing to allow the Nurse Practitioner, when the doctor is remotely. Its not a binary thing. Lets come back to the federalism issue. Dr. Cooper, id like to hear from you, what role is there, if any, for antitrust law and what about federalism . Thats a good question since this is sponsored by the federal society. Right . So, anyway, yeah, and i think that, again, weve already started at least to touch on this, but the state action doctors, and i imagine people are interested in this, in our panel, you all many of you already speak to this so i apologize if this is a review. The state action doctor is a compromise, Supreme Court compromised the favor of free Market Competition as evidenced in the federal antitrust laws and federalism, which is part of our system, part of our constitution, so, one of the state action doctrine, how do you apply it, sarah alluded to this when talking about the South Carolina dental. There are two prongs. There is articulation, the action that, you know, if you start with, say, a private with private actors or a board, is what theyre doing. Is it pursuant to a clearly articulated payroll, or a planned competition where some of the litigation issues come in here and the ftc. There have been some as what is how specific does the policy have to be . Do you have to does it r to be, do you have to be acting to, you know does the state have to spell it out precisely, if you go beyond that, youre in trouble . I think its generally an idea reasonably forseeable, but theres some the Supreme Court had you cant say well, the state said i could regulate and therefore, i can do anything. There has to be a state policy saying were going to displace competition and then theres the active supervision prompt. Its something that the Supreme Court hasnt elucidated what that means in detail. Theyve said what clear articulation means, but not what active supervision means. The landmark case said a selfinterested boards would be subject to this. So going back before North Carolina dental, it was clear to municipalities were subject only to this clear articulation. So if a town decides to lend a competition garbage, who can pick up garbage. We dont need to have someone monitoring the municipality, but the municipality is not sovereign, but theyre acting pursuant to a state policy. Thats okay. Its enough until North Carolina dental rolled around, it was unclear whether the selfinterested boards would be more like a town and acting if youre acting pursuant to a state policy thats enough or go out and license and regulate the way you want to, or would they be considered more like private actor in what was the landmark and something again that the federal trade commission has been on the forefront trying to push this and find cases to test this proposition. What was revolutionary about North Carolina dental, they said, yes, if there is a board that is composed of selfinterested actors who a decisive majority who contr control who are active Market Participants, then were going to treat them like a private cartel, like a trade association and therefore they will be subject to active to active supervision. So, thats kind of where we are now, i mean, thats how we the Supreme Court has made that balance and now we have North Carolina dental and in many ways why were having to panel. Ive been on several panels on this, its opened up a pandoras box. How are states going to implement this . When are they allowed to regulate professions, its front and center and written by justice alito. And why cant obviously im paraphrasing. This is a state issue, states have regulated forever, and if they want to say that teeth whitening is part of dentistry, why not let them do that and theyve compromised a board to let them do that. And thats one issue, what does it mean to be actively supervised and does that mean they will have to dismantle some licensing regimes . Another issue, something ive been writing about, a shameless plug, is what is an antitrust inquiry going to look like because we havent had that yet when a board is stripped of immunity . Lets say that youve looked at this and under rule of reason and we know from National Society professional engineers and other cases that what you dont let noncompetition concerns into an inquiry. If i said i want today wanted to regulate teeth whitening because i was concerned the consumers would be harmed, too much oxidation or, might burn their gums. That might not be because engineers cant say were worried the bridges are going to fall down. The dentists cant say were worried that the consumers will burn their gums. Once its stripped and what are the defenses left for the board . Id argue it could be defacto per se, in which says, antitrust preemptions, but its another, another issue, but ill kind of leave it there. I mean, not only with i mean, boards are required to follow state law, so, where is where does that fit into their defense under a fullblown rule of region and analysis. The board says i was following the law that i am required to follow and youre not letting me put on this here and i have a problem with National Society of professional engineers saying that i mean, if the legislature has made the decision to restrict competition for health and safety reasons, its not it wasnt the boards decision, it was the state legislatures decision so why are you making the board defend the legislatures decision when they had no discretion whether or not to follow that rule. So its a very, very complicated issue and its really unfair to state boards and state Board Members hoo have to defend that, and you know, since dental, there has been pushback from Board Members no longer willing to serve on state boards because theyre individually liable for trebil damages if they were sued like the case i was involved in, and some states constitutions dont allow them to indemnify Board Members so theyre not getting paid to do this. Theyre doing this as a Public Service and then theyre going to be hauled into court and made to defend a fullblown rule and reason with one hand tied behind their back. Its not a workable situation at all. I didnt know whether you wanted to get into the bill. Yeah, i mean, so, one im sorry, i just want to we were talking about federal and one thing i think fits in well with what i completely sympathetic with what sarah is saying. If we go back to the doctrine, a lot was motivated by a desire to so lockner said you cant use this process and someone said lets use the antitrust laws to go after states. So in some ways, in the state not in some ways, in actually real ways, that was another way to have an attack on state sovereignty in that respect. Now with North Carolina, what youre saying is, we think about what a real of reason looks like and we would be back to you can say whether its good or bad and there are arguments, and whether, you know, that lockner was, theres nothing wrong with lockner. So, but what we would have, we would have a rule of reason inquiry with the federal court reweighing a states a state legislatures decision to say that we think that the scope of dentistry should be x and we think health and safety should i think it does race a host of federalism issues and how we would actually deal with underlying. State action is one thing, but once we get past that we have an antitrust case and how do we deal with that and respect federalism i think is a really good question. Just to go back to the fundamental state action doctrine, if the state clearly articulated that tooth whitening is the practice of dentistry, right, and the board just prom mull promulgates that. And one way i think of how this works is going back to what the Supreme Court has said over time, which is this is supposed to assign political responsibility not obscure it. Right . So, if the state itself is saying, well, we think that this common practice that in every other state is you can go to the drug store and get it and do it yourself, were going to say its the practice of dentistry in our state and people dont like it, they can say to the legislature what are you doing, we doesnt like that, rather than this murky thing some board member decided on his own, if the state thats what clear articulation is. No, i think thats right. Youd still have the act of supervision. If you have the if you have the selfinterested board, but your point is welltaken maybe theres nothing to so if the facts of North Carolina dental were different and didnt give the Board Discretion to expand or to contract the soap of what the practice of dentistry was, we perhaps would not have had North Carolina dental because states say i didnt take an action. As you said, they said the scope of dentistry included teeth whitening in mall kiosks. The legislature did it and not the board. Thats a fire point. Your point is absolutely right. You mentioned a bill, recent proposal which is intended to take these various concerns into account. Im interested to hear your thoughts from the panelists on this bill. So how much time do we have left . I have a lot of concern. About ten minutes left. So the bill summary states there is concern that the decision a limited state sovereignty. But this bill gives no deference to principles of federalism or to state sovereignty. Instead it criticizes states like maryland, tennessee, montana and mississippi that managed to get the state legislatures to pass an active supervision statute this year by stating theyve only established a layer of bureaucratic oversight that merely monitors board actions for consistency with the state licensing laws. What is the purpose of active supervision . It is to ensure a board actions are consistent with the state licensing laws, exactly what youre supposed to do. It is to ensure members of the board or private individuals participate in a state program are following clearly articulated and affirmatively expressed state statutes authorizing that activity. It is not to substitute the active supervisor or a judge his opinion of of what the licensing regime should be or the state legislatures decision. As a matter fact this bill would subject state boards to a much higher standard to be steve state action immunity than other private citizens acting pursuant to state policy would have to meet under the current case law. Not only does the bill summary criticize the states that a vast state action statute but the bill will invalidate those statutes. The bills requirements go significantly beyond incidental requirement of maintaining only board actions complying with the policy set out in section 5b will receive immunity or in other words, board actions that use the least restrictive alternatives will be immunized. As i said thats not a requirement of nc dental. There seems to be significant constitutional problems with the bills requirements that state courts cannot give any deference to the state legislature or present the legislature determined that the restriction was necessary to prevent harm to the Public Health, safety or welfare. This again allows a state court judge to substitute its judgment for the decision of the state legislature and is contrary to antitrust president that the legislature is presumed to havee considered anticompetitive effects of the statute and pass them anyway. In addition there appears to be extra requirement that the state act in good faith to implement licensing reforms in order to receive immunity for any poor decision. The board also changes the standard of review to clear and convincing evidence and puts the burden on the board to show its action suddenly were to protect and identify important government interest but the restriction was substantially related to that identified government interest. And that it used restrictive alternatives and acted in good faith. So theres a lot of standards. The plaintiff only has to make out a prima facie case the restriction substantially burdened his ability to engage in that profession to switch the burden to the board to justify its behavior. The term substantially burden is not defined. It seems like it would cover a potentially in the restriction that a board imposes. The board must defend its actions without the court being allowed to defer to the legislature or presumed that the legislaturthelegislature intendt the public from harm that the restriction wa substantially related to the presumed heart. Like i said before kind of like being asked to fight with one arm tied behind your back. As i can tell you from doing this, getting one case against a board for Summary Judgment and cost several hundred thousand dollars. Efforts like this bill that will increase litigation against board will significantly add to state budget. I dont want to be too snarky about it but i think this bill highlights a common problem when the federal government tries to mandate state behavior. It doesnt have any idea how difficult and timeconsuming 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 because this would conflict with wide swaths of the virginia code, i can tell you that. Not just the administrative process act but all the enabling acts for the state boards themselves. At a minimum this bill creates an unfunded federal mandate for states to create an office of supervision of occupational boards or restructure judicial review procedures, and like i said it will cost extensive revisions to state codes. At the end of davis bill is unworkable for states to implement which leads the states without any antitrust immunity for state boards decisions if the bill passes. Drive any thoughts . Do i have any thoughts . I completely understand and im not superfamily with the bill. Ive looked at it and i thought a little about it. The thing that i certainly think the part of this bill that i do like is that this idea of changing the challenges to intermediate scrutiny. With the rational basis which is how you challenge a state law in a rational basis, its basically the state wins. The deck is stacked against. I like that notion of intermediate scrutiny Type Analysis with the state actually cant just say womens march, we win. Exaggeration collude bit but its not too much of an exaggeration. Actually happened t may be justified these. Thats just me as kind of an economist thinking that some of these laws are bad but i understand the federalism, certainly understand the federalism point. The only thing i would say is kind of beyond just the substance of this is it is amazing to think, i think when i left this place you went over to the ftc us are working in the office of policy planning and work a lot on state restricting competition to thank you we fastforward many years, but here wev we got a democratic ad administration, influential report thats fairly critical period last year. Not this year. I know that theres not a democratic administration. I see a few hands. Last year theres a democratic and administration releasing a fairly influential report on occupational licensing that somewhat critical at least pointing out theres a lot of improvement, and then we have three influential republican senators introducing a bill that takes serious aim at the problem. I think the fact its on a National Stage now and i think theres bipartisan consensus that things have gone awry of the statement with occupational licensing, something that used be done, not exact which are, im an antitrust lawyer so i like antitrust a as a tool but theres a lot of things to like in this bill. Stay tuned, i guess thats where i am with it. Certainly the bill, the goals of the bill are very consistent with what the ftc has been doing both on the policy front and an enforcement front. One of the things that im glad to see it does preserve the ftc section five authority, which we dont get treble damages are cases dont seek money in these situations because you want antitrust oversight but some sensitivity to some of the difficulties it creates for the state. James, you have put your finger on it. I think that its a signal of the fact a lot of people are saying this is a problem, a a problem for consumers, a problem for workers, a problem for the economy. So we need to figure out how we fix this. Ill add that part of the bill that the senators just introduced are from a model bill, and im blanking on the name, by an organization with the certification, the least restrictive alternative, the list to most restrictive being licensing, and several states actually did introduce a bill that was based on that model bill this past session. As far as i know not a single one past. State legislatures are looking at these issues. They are just not there yet. And included in the bill was also mandatory sunset review for a certain number of boards every year and things like that. You cant get states to move very fast. Its how many years now since the incidental decision . In c dental . We want to make sure we save time for your questions. We have yes, i see one in the back and women like that is going to go around. Perhaps you could introduce yourself and where you are from. Thanks for the shout out early. Hart, now with cato. I want to start by saying to sarah, having worked in this area for 20 years i want to assure you you have no more fear of this bill getting enacted that he heard of unicorns stripping the virginia countryside. Dont worry about that. But in all seriousness i think there is a real tension is a failure of the state to get their own houses in order. Virtually everybody now agrees that occupational overregulation is a huge problem. Right down to the micro level we can talk about just abuse after abuse. You have to have a College Degree to do interval design in florida. I could go on and on. I do want to pick on virginia but i will. Virginia is one of the last two or three states the requires a a Funeral Directors licensed to sell caskets. As the failure of the states to get their own houses in order, and if you to advance any interest in getting the houses in order on this front continues. I think its a practical matter, it is just going to invite federal attention that you may not want. The question is what has the state of virginia done that is been sort of the most significant step in getting its house in order when it comes to occupational overregulation . First of all, its the commonwealth of virginia. [laughing] and im not 100 sure that we done anything thats noteworthy in that regard. I think that weve had an active supervision bill thats been introduced. The last two years in the legislature. One went pretty far this year but still didnt pass. Like i said we had one of those model bills that requires sunset review. I wont say i think, licensing is huge from in this country come sometime seems to me a bit of an overstatement because i dont think, 60 occupations are licensed in every state for i think we can all agree may be the 60 occupations should be licensed in every state. Lets pick the outliers, like funeral, not directors because hai hair braiders and floral design and work on that. Stop making the people that are in the professions that should be licensed feel threatened, that they are going to face some big antitrust cases. When you say, i was curious they should be licensed, what is that based on . Personally i do want to go up in an airplane thats not flown by a licensed pilot. I dont want to be operated on by someone who is not a licensed doctor. I dont want to necessarily have a veneer put on by person who is not a licensed dentist. So i think there is occupations we can all agree that there needs to be some form of licensing. The tort system is not adequate to protect against unlicensed con artist who are practicing in their field. I think those are legitimate Public Health and safety issues that should be recognized. What do we do with those who say these types of licensing dont affect quality, even for professions like dentist or lawyers . I think those professions to have extensive selfregulation. Their standard of care cases all the time at the board of medicine. Theres people that lose their license to practice law all the time. Are the perfect . No, but i think that doctors are the best people to determine whether the standard of care of other doctors is adequate. I dont think that bureaucrats are necessary the right people to determine that. What about consumers . Shouldnt there be some choice for consumers . Some me may want a higher standd of care . James is saying there was a cost tradeoff. Some consumers in certain years may be willing to accept a noncertified, is the risk is relatively low and shouldnt have the ability to make those choices . Thats a fairly affluent consumer who can determine those things. What about the consumer doesnt have enough money and is forced to choose the lowerpriced person, a lower quality person because they can afford anybody else . Shouldnt there be some minimum standard . But i think when we frame it that way, you kind of cut out the consumer who cant afford the cadillac care and just isnt getting any care. We need to be sensitive to that. I also think we need to keep in mind, i think theres good evidence about the fact that competition leads to better quality. When we see regimes that a cutting off real competition, then we should be concerned. I think that was the professional engineers case saying competition is going to lead to worse quality because they will compete to have lower prices and so the bridges will fall down. We have pretty strong evidence at this point that competition as good, leads to better quality. In fact, james comey you mention the putney case. Where the ftc one of victory in the Supreme Court because it stopped the merger and monopoly from happening. The state was think we will oversee it. Dont worry, it will be okay. So i was like thats a proposition. I had our economists take a look and we had some evidence suggesting quality has gone down in that. Thats the other thing that competition will kind of give the array to consumers of choice, quality, all those things. We all agree on that. I also think were looking at the license or not licensed but also expand what is the profession. Thats a problem. One of the things, the way i got involved in this early on was the issue of what you need to be an attorney to do real estate closings. Most states you do not. You do not need to be an attorney. Virginia is a state where its not required. Weve got as you start to look at the statute this and what is the practice of law, some are hilarious. My favorite was it is what attorneys typically do. [laughing] maybe you could say golf is the practice of law. [laughing] like when you mail the letter for a real estate closing, you put in the mail to send the documents. That had to be a lawyer who did that. How is that sensible kind of thing . I would just say, the idea that maybe we want because of information a symmetries, maybe we want some sort of, some way for consumers to figure out whether you met the minimum qualifications, thats fine and that makes sense but i think one of the issues is its unclear why the state needs to be that entity that does it. There could be private certification, and maybe not for doctors, i dont know, but its unclear whether you couldnt just say get rid of the virginia board of medicine and replace it with a private certification regime thats made up with doctors, very high professionals, and say a doctor can hang out a shingle and say i have been, ive been certified by the private board of kind of like the Good Housekeeping seal of approval which i said jokingly, but as an attempt before the fda that was a large wave how drugs were, there were private certification regimes. So one thing i think we need to think about is whether we may need some way to get out of the asymmetric information problem but its unclear even if we say we need something that it has to be government rather than private. I think its something we need to think about as we go down this path. I think you are switching one so protectionist regime for the other. Whenever you going to doctors decide what the qualifications are for doctors and deciding who cant be a doctor, youre going to have situations where you are probably doing i do what its come out and say at a competitive, and so, and why is a private Certification Company better than a State Government to determine the . I think everyone is going to be a different barrier. Theres a case where it had to do with the ophthalmologist come out and say this sort of care, tree, the laser surgery, that this is, this method is no good so somebody sued and said thats a barrier to entry. The seventh circuit said no, no, this is basically free speech. And maybe one organization has a bigger machine that just because consumers can choose. So yes, yes, i still do want o undergo this procedure even if the academy of ophthalmologist headset its not ready for prime time. I guess the idea is consumers can sort in. It would be illegal to practice if you dont have certification is a private syndication would exist. I think one thing is were starting with the hardest case first and the so many other things where you can say yes, for makeup artists and hairstylists and florists. Social media reviews or Better Business bureau can provide that function. We dont need the state say that is an ugly throw pillow. You kind of think like restaurants. We have the Health Department they comes in to make sure its clean in the back where the consumer isnt going in, checking. But we dont have them saying does the food taste good, right . People rely on wordofmouth and reviews and things like that. I think theres a whole host of those things that can address, like lets start with low hanging fruit first. Also, the great thing about state is the laboratory of the states and you can see the quality stuff where, in some states where you have a Nurse Practitioners are able to practice. You can say, what the effect on quality, whats the effect there versus saying lets visualize like the perfect licensing regime to begin with. We can kind of look at whats already working and then go after, i mean, the health once i think our very appealing because there is such a need that is being unmet. But im not sure im ready to say that doctors who perform should be license. That is not the focus of the Economic Liberty Task force certainly, but should you be able to go to the Nurse Practitioner to get the kids a flu shot . I think the answer is pretty clearly guess that would probably be very good. We have about five minutes left and i want to make sure we have time for other questions. Any other questions in the room . We have one over here. The mic is coming to you. Thank you. My name is todd wiggins and my question has to do with Small Businesses, because the industry seems to be blowing up the Small Business coworking space industry such as we work in those kinds of shared spaces where so many new businesses are coming in that are unregulated, unlicensed properly. No one, im sure its a good place to solicit for services if youre a lawyer, if youre starting off, but secondly, what about those organizations, should the be any regulations for who they accept to work to be in those coworking spaces . Should they be talking to attorneys about what they would consider acceptable businesses for their space . I would say i certainly wouldnt want to say that there should be regulation put on the coworking space where they need to have some sort of government oversight saying well, you can accept these kinds of business. Reputation is going to be part of it. If you create a reputation for being a place where youve got an ethical businesses or problematic businesses, i think your reputation will suffer and other people will not want to go there. I think theres a market mechanism that i would imagine, i havent studied this, im just the, would operate, much like who rents in an office park or other commercial buildings, i i imagine that would have a similar dynamic. I would just throw out there before in any kind of economic regulation you want to have an identifiable market failure as necessary but not sufficient cause and then you still need to do a costbenefit analysis here is this regulation going to solve the problem and not be worse . Any other questions . We have a few minutes left. Yes. Im melissa odonnell. My question is related to how the bill fits into the kind of larger framework of the state action doctrine as interpreted by courts. First of all is a completely clear that this bill would displace the twopronged test that the Supreme Court has announced in the north, dental and other cases . And number two, what would happen when a florida self interested board is promulgating a rule related to something that is not licensure as professor cooper whizzing earlier . The rule is promulgated is not related to licensure per se but something else, how would this law the in . Are you talking about the bill introduced in congress . Yes. I think the fundamental holding of nc dental stands were state board would need to meet both prongs to get state action immunity, so they would still need to be following a clearly articulated state policy to displace competition. They would also need to active supervision but the way active supervision is gained would be changed through this bill and you have two do all the things the bill says shut to do in order to active supervision rather than away commissioner nd out active supervision. I think all the things you to do to get active supervision and other problematic part of the bill. As far as the rule, the board is hampered what it can do by the clear articulation arm. In 2004 the sec sued the funeral board in virginia fcc having a regulation that was not enabled by any corresponding state legislation, and the funeral board, it was actually my old section that cb right after i had left. They just wanted to see more of you. I actually agreed with the sec on that one and we quickly withdrew the regulation and settled and it was all very neat and tidy and done. I hope that answers your question. I would add, just my reading of the bill is that first, i dont think, i think it only covers the licensure decision. It seems theres a section that says come suggest its about not the other type of regulation. There are also two paths one path to immunity under this bill, however limited it may be just a licensure decisions, one path is an active supervision path. The other path is setting up private actions that allows consumers to challenge, not consumers, sort of aggrieved workers or people who have been i cant practice my profession because of this law, to challenge under intermediate scrutiny which would have, with essentially completely displace the analysis for intermediate scrutiny type of analysis. Thats my reading of it. I dont claim to be an expert there but that is at least my take. We are out of time, so please join me in thanking our excellent panelists. [applause] [inaudible conversations] a live look at the senate floor for brief pro forma. No legislative visit is scheduled throughout the month of august the city meets every three days as required by the rd constitution communication to the senate. The clerk washington,d. C. , august 18, 2017 to the senate. Under the provisions of rule 1 paragraph 3 of the standing rules of the senate i hereby appoint the honorable james lankford, a senator from the state of oklahoma to perform the duties of the chair. Signed orrin g. Hatch, president pro tempore. The presiding officer under the previous order the Senate Stands adjourned until 7 00 a. M. On adjourned until 7 00 a. M. On the Senate Meeting every three days while on break to prevent recess appointment. Let sit of work resumes when senators will consider a judicial nomination. Live coverage when the Senate Returns on cspan2. Today President Trump will leave new jersey and had to camp david to meet with the White House National Security Team to discuss north korea. Vice president mike pence will also be at the meeting. It cut short his trip to latin america in order to attend. He was scheduled to return home this afternoon. This meeting comes after President Trumps chief strategist steve bannon said there is a military solution to the threat posed by north korea. Yesterday both secretary of state Rex Tillerson and defense secretary jim mattis rebuffed the claim. Rex tillerson said we are prepared, prepared militarily, prepared with our allies to respond if that is necessary. Tonight on cspan2s booktv in prime time looks at president ial history starting with form advisor to president clinton sidney blumenthal. Talking about the second volume of his biography of Abraham Lincoln this years festival is so exciting, and it must tell you its going to be one of my favorites because i am a big nonfiction fan. And the types of author offers t were going to have from David Mccullough to j. D. Vance this book is on every reading list that you can imagine and in every book club, its an exciting time. Im thrilled. Join motive for the National Book festival live from washington, d. C. , saturday september 2 on cspan2. The Heritage Foundation helped an indepth discussion on u. S. Taiwan relations. A panel of experts talked about the challenges and possibilities in expanding the economic relationship between the two nations. This Panel Discussion is one hour. We are going to start the panel pretty soon, and before we start the panel i would like to introduce our cosponsor, to say a few words before this event. [applause]
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