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>> now to a panel discussion on to state and licensing requirements or service industry jobs such as cosmetology. labor secretary says lawmakers should work to get rid of unnecessary state licenses. this panel discussion is on our -- is it one hour. >> unhappy to see some familiar faces in the audience and for those who don't know me my name is trying to-- koren wong-ervin. i also teach antitrust and intellectual property law. i will pause for a minute. we also have people joining us online. again, to everyone in the room, welcome and thank you for coming. it's a privilege to be here today in my capacity as cochair

along with josh writes of the antitrust and consumer protection working group of the fried the list society project. this project was launched in 2016 to foster a national conversation around the issue of revelatory access end of the harms it causes. of the project consists of 12 working groups, each composed of experts with specific fields of regulatory line policy ranging from environmental and energy to raise and sex. in june, this year each of the working groups started to release issue page verse, podcasts and short videos which among other things can be found on our website. i invite you all to visit the website. today's panel is the first of these conversations for the antitrust and consumer protection working group and its devoted to occupational licensing and other restraints

on competition. i will turn it over to mike hobart read her host for today, lisa kimmel. >> thank you. hello and thank you for joining us today. my name is lisa kimmel, senior counsel in and take trust a group. like everyone else you will hear from on the panel i also before joining the law firm spent time at the federal trade commission where i was in antitrust and competition policy advisor to former chairwoman edith ramirez focusing on antitrust and competition matters in that technology sector into two killer on behalf of all of us we went to welcome everyone and thank you for giving us the opportunity to host this program. with that i will introduce our prestigious group of panelists and first of all we have the honorable maureen ohlhausen. maureen was sworn in as as a

commissioner on the federal trade commission april 4, 2012, and was designated by the current administration to serve as acting chairman in january, 2017. before joining these commissions, marine was a partner at wilson barker where she focused on ftc issues including competition law and technology policy. i want to say that the acting chairman has a long history of ftc service and before rejoining the commission and 2012 marine previously served as both that the deputy director and of the office of policy planning which i believe is in charge of economic liberty. maureen was also a returning-- attorney advisor and began her career initially in the general counsel's office. lets me also add before joining the ftc for the first stance marine has-- maureen has spent five years at the us court of

appeals for the dc circuit serving as a law clerk and staff attorney and she graduated with distinction from antonin scalia law school and was honored from the university of virginia. thank you for joining us and welcome to the program. to my immediate right we have professor james cooper. he is on associate professor of law at antonin scalia law school at george mason university. james brings a decade of public and private sector experience through his research and teaching work and he also spent time at the federal trade commission where he served as the deputy and acting director of the office of policy planning and as attorney advisor to federal trade commission or bill come off sick and he also spent time here with antitrust group earlier in his career, so we are happy to welcome at james back. professor cooper's research at the law school focuses on competition and consumer

protection issues including privacy, data security, behavioral economic and antitrust treatment of vertical practices and price dissemination. james has a ba from the university of south carolina and phd in economics from emory university and also holds a law degree from antonin scalia law school at george mason university. last, but not least we have sarah oxenham allen. sir alan is eight senior assistant attorney general of the antitrust unit in that virginia attorney general's office and cochairs the national association of attorneys generals state action working group, so the right person to be on this panel. she successfully argued the summary judgment motion and for the circuit appeal on the half of the virginia board of medicine and six of its individual board members against an antitrust claim by a

chiropractor's sanctions-- sanctioned by the board. most recently ms. allen represented the commonwealth of virginia and the federal and multistate challenges and has worked with federal enforcers to challenge and settle other mergers. before coming to the virginia attorney general's office there has also spent time as a federal trade commission or, so thank you very much and with that i will turn it back over. >> great. we will try to do interactive discussion today led by the moderator who ask questions and then we will reserve time at the end for questions from the audience. by way of background, occupational licensing and state return street on trade has received significant bipartisan attention in recent years. in 2015, the obama administration released a report outlining the growth of the restraints, its cost and benefits and impact on workers

and work arrangements. earlier this year, acting chairman maureen ohlhausen launch the economic liberty task force. chairman, if you could start us off to give us a little overview of what the main concerns are in the issues with the restraint. >> thank you, koren. and thank you to everyone for hosting us today. this is one of my favorite topics. i spent a lot of my career focusing on this. it's no accident that it's something the ftc has focused a bit on because we are an agency with consumer protection and antitrust and occupational licensing is at the intersection of those two issues. often these restraints on entry to a profession are put forth as necessary for consumer protection reasons.

particularly well-placed for an agency to think about that and say does that make sense to us, so the issue is occupational licensing. it has really come to the forefront because occupational licensing has exploded. going back to 1950s a study suggest that fewer than 5% of occupations required a license and today the number is approaching 30%. what has changed in that time period? and the number of occupations and type of occupations that license has extended to has gotten i think beyond where we can say, of course you want your people to be licensed, someone doing a health and safety related thing to be licensed and , but now, we have cases where florists are licensed, where interior designers are licensed, where hair breeders are licensed and so you say what

is the rationale and why this happening. about is sort of where the antitrust side of the analysis comes into play and one way i have characterized this is at the antitrust enforcers we need to be alert to private anti- competitive conduct, but actions of the government can also be anti- competitive and in a way that is a lot less likely to be eroded by market dynamics, so i often what i call the brother may i problem and it's where you need your competitor's permission 20 the market, so that's one of the issues we have seen where we have a board of active market participants saying, well, you need this license or to practice for our north carolina dental case we want in the supreme court they said the practice of dentistry includes tooth whitening in the state of north carolina. so, what are some the problems here?

the problems are manifold and one certainly is anti- competitive problem where you say well, consumers may pay more for service or have fewer choices or there may be less innovation happening because of these onerous licensing requirements, but there is also an impact on workers where workers have lost the ability to enter a field more freely. ic clark neeley back their. clark has paid wonderful attention to this issue and institute for justice has done fantastic work in this area, but i think it is one of the issues here is what about the individual worker in their ability even if they have a skill that we all agree requires a license, if they are moving from state to state they have to undergo that licensing all over again. certainly, that isn't necessarily an ftc antitrust issue.

we focus more on where you have an active market participants saying you can't compete with me come about on our advocacy role at the ftc is where we have tried to talk to states and really even other parts of the federal government about some of these issues because they are hitting certain populations quite a bit more onerous league than others and one is believe it or not military spouses. members of the military move a lot and they get deployed different places around the country in a lot of times the trailing spouse has a job that requires a license and they have to get to rely send and recertify and undergo tons of training even if they had been active in the field already and it has led to i think one of the contributors that you have unemployment rate of almost 20% in the population. so, that is why i launch my economic liberty task force at the ftc.

i see it as a attempt to shine a spotlight on this issue. certainly, we can continue to bring action, but mainly an advocacy role and i talk often about it being a coalition of the willing because i think a lot of groups consumer organizations and we mentioned bipartisan appeal has extended to a lot of the interest in this topic with a lot of different areas and i have worked with states, governor scott walker and i did a joint op-ed on this issue, so i think we are at a good time to make progress on this issue, but problem is the lack of competition, the higher prices, organization, but also that affects on the workers. >> thank you. sarah, we are really interested to hear from the state's perspective on occupational licensing issues as acting

chairman. >> thank you to the federal society for inviting me to be honest panel today to be the spoiler on the panel. i would like to start with a disclaimer that the opinions i expressed today are only nine. they don't reflect necessarily the opinions of general markarian or the virginia ag's office or any other persistence in the national association of attorney general and it is a little odd for me because at 95% of the time i am anti- trust counterparts and then there are the enforcers that we work with quite often. in this one little area we flip and become it defense attorney for state board and state agencies accused of anti- competitive behavior because we are the antitrust experts in the state so be the state apologist on this panel it's a backwards to me. so is the position of otherwise

stanch state rights advocates like senator mike lee and senator ted cruz, but we will talk about their occupational licensing bill in a minute. so my personal perspective from the stateside is that i see a lot of value to this wider philosophical discussion about whether to any occupations require licenses. i also basically agree with the supreme court decision, but it is of the should be left up to the states to decide how to structure their economy, how to structure their governments and how to provide for the health, safety and welfare of their citizens. i applaud the ftc's efforts to educate state legislators and others about the dangers to the national economy of too much licensing and i support their enforcement efforts. however, i do not support the federal government's attempt to preempt the state's abilities to decide these issues were themselves or to dangle state action immunity as a carrot in order to course states in to

providing supervision and that manner it seems that or to adopt its philosophy about that appropriation of us licensing. under case law federalism allows state to decide which occupations they will license as opposed to professions that only require certification, registration or have no restrictions at all. was a state legislature has authorized a licensing theme with board members the only question that remains in order for the board and its members to receive state action immunity or whether they need the two-pronged count which is one with the board following clearly articulated state policy to displace competition and never to whether the board was actively supervised by a disinterested state official to ensure the board's actions were consistent with the policy. bears some ambiguity-- there's

some ambiguity in the opinion about whether that supervisor only has two determines the board actions were consistent with a policy or whether it goes behind that to see if it was unduly burdensome, but there is no requirement that the active supervisor inquire into whether the board used the least restrictive alternative to achieve the legislature's goal. there's certainly no ability for the active supervisor or the state courts to disregard the state legislature's intent to displace competition in favor of a licensing scheme. moreover, states could easily decide to get rid of all of their state boards and switch to the oversight of license occupation from the board to traditional state agencies with full-time salaried state employees. that gets rid of the need for active supervision, but has many disadvantages with the most obvious that it would add millions to a states budget to

employ those people because state board members currently serve with moat-- no caps-- no pay. it would also not necessarily change the state legislature's philosophy about which ones to license will make it harder to maintain a trust challenge against the say. while it would take care of the problem of board members acting in their individual self-interest, it would not address a different problem which is regulatory capture of the state employees who sympathize with the people in the industries they regulate. finally, i would add a very large majority of the work of occupational regulatory board does not restrict competition in any way. board members who practice in the profession are usually the best people to evaluate standard care cases. many cases involve ethics violations or behavioral standards of licensees. medical licensees cooperate while intoxicated or take sexual improprieties with her patients or lawyers who dip into the escrow funds and while a

licensing regime itself may restrict competition, most individual licensing decisions are ministerial and evolve no discretion on the part of the board members. either the applicant checks the boxes for the objective criteria to receive a license or she doesn't and in that case it's really massively unfair to subject the board or even worse to subject the individual board members to potential liability for a decision that the state legislature made in that the board members were statutorily required to follow. >> thank you. i really appreciate the diversity of the views and again we went to have a conversation, so i'm hoping we will have a dialogue. any thoughts from the other speakers? >> i would like to weigh in on your points and i think we agree on many many things. i also am sensitive to the fact

that we operate in a federal system and that the states are sovereign and they can take these actions. i think there is a twofold question here, though. should they be taking these actions? i care about liberty and went to advocate that before any policymaker whether it's the federal level or the state level and i think that's a lot of what we are trying to do here is to say is this really best for your citizens. it's a two application public choice where you have concentrated benefits to the provider and they will lobby and say here are all the good things that licensing will do in the consumer's who will pay the price don't even know it's happening or their interests are very diffuse, so they're not going to be there and so we are trying to step into the shoes of the consumers and workers and say consider these things also.

but, on the second issue for the state action doctrine i think that's what it's really try to do. is trying to say is this truly an action of the state rather than the state and what my favorite phases from that case is casting a gauzy cloak, a state authority on what is essentially private economic conduct, so i think that is the other factor. is this truly the state's own action rather than sort of the evolving not to private actors who will often act in their own private interests. >> i would quickly respond that board members if you talk to them, they are really trying to do their best and in most instances may be there acting in their self interest sometimes and sometimes it's pretty blatant like the north carolina dentist case, but a lot of these cases are on the margins where they really think they'd are doing the right thing and so it seems a little eternal for the

federal government to say should you be making these decisions, we don't think you should and we will make it so you don't get state action immunity unless she do with the way we think you should do it. that was my point on that. >> i think sarah has covered most of the ground here, but the only thing i want to add-- i went to make sure when we talk about occupation licensing regimes i think we are talking more broadly, not just limiting -- in fact, setting up credentials as a if you don't get score x on your bar exam you cannot be an attorney or that quintessential case you can be a hair breeder if you don't have x number of hours. that's one level with a lot of the work i did when i started at the ftc in the office of policy planning was to look at a host of state restraints and competition that maybe he can

put them in occupational licensing category, but limit on attorney advertising, several supreme court cases on the first amendment issues surrounding out -- that, but there are still to this date state bars that try to limit the ability of advertising. i mean, you can maybe put it in that, but it's a different animal, minimum service requirements. there was an issue with that when the internet was a burgeoning and their work online real estate providers. the traditional real estate provider did not like that, so they tried to in various states set up minimum service requirements that said if you are real estate agent you have to have a showing that do these sort of things. why did they do that? to prevent intermediation. again, occupational licensing was about being a real estate

agent or not. it was the regulations that were our promulgated by these boards. north carolina dental was not so much about who could be a dentist and who couldn't it was more about scope of practice, but-- the only thing i want to emphasize the discussion is in my view most of the mischief that the boards do i think all the points the chairman brought out as far as limiting mobility has to do with the regime is soft to say you have got to have this qualification to be in this profession i think to me the core mischief here is the regulation with the self interested board, not so much the restrictions in the profession. that's the only thing i would add to that. >> i went to come back to the federalism issue. i don't want to forget that, but

professor cooper, we can stay with you as an economist and a lawyer can you tell us what the empirical evidence on the effects of these restraints? what are the potential costs and are there benefits for quality and other things? >> so, most of these regulations and i'm kind of painting with a broad stroke, but most are justified typically some kind of form of the following, consumers can't discern the quality of what provider x does. provider x may be a dentist of ophthalmologist or. they may be a interior designer come as a you can't figure out beforehand the quality of the service and so this leads to what economists refer to going back to the famous article, and limits market the basic idea that if you can't figure out

quality ahead of time and consumers know that they go in the marketplace and discounts and they don't know if they get a good provider or bad provider so they are only willing to pay a certain price that discounts the probability and in the limit important qualifications and in the limits the good provider is completely exited from the market because the price the consumer is willing to pay is not high enough to attract of the good providers in the market so you end up with this unraveling and that is often the four stories told to justify regulations that the market would unravel into a lemons market if we didn't have this. i want to say and fairness that i think these arguments and again i think chairman ohlhausen alluded to this earlier. the arguments may have some purchase when we talk about severe information asymmetry, doctors-- i'm a lawyer so of course i went to protect our guilt. there could be severe

information asymmetry to what economists sometimes call it freedom scope and if you go to a doctor they recommend you get treatment and get better you have no idea what they told you to do was right or not. you know you got better. even if you can evaluate say you go to a doctor or maybe attorney and do some sort of complex transaction may be custody where stakes are high or your life in a capital murder case you may find out after the fact that my lawyer-- my doctor was no good because you die or you get the death penalty. if the costs are really high in figuring out maybe we think i can figure out that this wasn't -- this was a bad service and reputation marketplace can take effect, but when the cost of figuring that are really high maybe that's where we want to step in and say we will set some kind of level. we can talk later about should the states set the level or have

private syndication and those are certainly areas of fair debate, but although the argument may have purchased for severe as asymmetric information problems it's harder to make that in the case i alluded to that the hair breeder an interior designer where you code get haircut you get a bad haircut you know that pretty quickly. the cost is relatively long-- low, but for the most part these asymmetric information erratically the idea of the lemons market for the hair braider or barber doesn't hold much water. it pretty must suggest what you think in the ftc did cutting-edge work back in the 80s mostly in optometry to find that and these were quite a patient zero-- occupational licensing, but i doctors were

allowed to park-- partner up with lenscrafters. a bit of trivia, virginia he still. if you go to lenscrafters you walk on the side door because doctor smith can't legally be associated with lenscrafters. there are still states that have these two door requirements, but there has been-- there is good evidence in the 80s these restrictions and restrictions in advertising that are promulgated by these boards don't normally do much and there is also more modern literature and i would commend everyone to look at impreza obama's counsel from last year they do a great review of the literature, also than new stuff and it's almost 100% unanimous that there's no impact on quality from these licensing, no matter how you measure it.

these laws do tend to increase price. i think the price effect is a little-- they certainly limit mobility, entry in the price effect is maybe not as robust as lack of quality effect, but it is their. the one thing i would want to add is just because you see a licensing regime increases the level of quality a doesn't mean it's good for consumers because everyone doesn't need to buy a mercedes. you can make a regulation that every car must have all these features which means we all pay $50000 for a car and it's really nice car. same thing could be true. you could force everyone to go to an ophthalmologist who spent five years, board certified to get your eye exam. now all you do is stick your head in something with the receptionist and she does it for you and they get your prescription really really close in the eye doctor just tweaks it a, so maybe it's higher quality

if you go to the ophthalmologist , but should we be forced into higher quality? it should be the case, so i will just leave it at that, but that's kind of where we are. i think that interacts say strongly limits competition and don't really provide benefits for consumers. >> i want to follow up on the price affects. i know in the obama report you said something like the cost of consumers was around $100 billion, so can you talk more about the price. >> there are a host of-- i would commend anyone to look at that. i think it's just hard to teach out price affects. that's the main problem. i am not exactly sure where they got that number. i think-- there is no doubt these are costly to consumers. i would just say as an economists i wouldn't think the price effect literature is perhaps not as robust, but it is their.

i went to be careful with what i'm saying. >> not so much on the price effect, but asking them. , what are we know and i think one of the most interesting factors or fax that i have seen is that only about 60 occupations are licensed in every states, but there are over 1100 occupations licensed in at least one state, so to the extent we say well, other states like for example other states in north carolina you could go to a regular mall kiosk for tooth white are. will we see about effects on consumers health and the answer was no. i think as you start to put your finger on this great disparity so we have 60 where it seems like everyone agrees these need to be licensed and as you get further and further out from that core area where you have a

lot of states agreed i think that's where you can at least put your finger on like probably not a really good safety or quality argument for having that license. >> real quick to echo that and as i said before we have to think about the mischief, where the mischief comes from. maybe do we agree that a dentist should be licensed? may be having i think that's a reasonable position. there are arguments on their side, but even if we agreed dentist should be licensed and they have to have minimal quality should they be able to say kiosk and by the way you can't get your consumers, you can't get your teeth whiten anywhere else except in my office for a lot of money? >> i would say north carolina dental cases the excellent case to show white active supervision is a good idea for these boards because that would have never

happened if there was a dis- interested state official that was actively supervising a board and then we wouldn't have all this. i don't really have a lot of stuff to do add your chi would like credit my colleague and the current chair of the antitrust task force and works in the ag's office. whenever you start wondering whether this occupational regulation should exist just substitute lawyer for whatever occupation they are talking about and then you will probably be fine with it. [laughter] >> one other thing i went to mention, it's not necessarily a binary choice of licensing or no licensee. there's also the issue of how strictly license do you need and that's something that gets a lot of attention is allowing people like nurse practitioners or dental therapists, dental

hygienist to practice to the top of their license, so there is a case that preceded the north carolina dental case called south carolina dental and we settled with the dental board there, but the issue there was the state had said we have a problem with getting dental care to poor children, very poor dental health in the state and these kids just weren't getting basic cleaning and screening kind of stuff, so they rescinded the requirement that a dental hygienist had to operate under the immediate supervision of a dentist when providing that care so that the hygienist could go out into the schools and give these kids basic dental care in the dentist when 10 reinstituted that requirement as emergency regulation in-- it was like the state wanted something different, but the thing there was the degree of licensing. it wasn't saying there should be

any licensing. it was allowing them to practice and we have 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 the big-box stores where you really are expanding access to people who couldn't take time off from work, may not have health insurance. on saturday morning there-- a mother of four, i've seen all of this, christmas eve and the doctors close and you don't want to go to the emergency room. you want this kind of care and i think that is the other thing is expanding access to services. it's the most acute i think in help the space and we will be moving into a world of telemedicine with enormous benefits to be had, but we will have to get the licensing right to allow that to happen, to allow the nurse practitioner to

be with the patient when the doctor is diagnosing remotely, so it's not a binary thing either. >> let's come back to the federalism issue. professor cooper i would like to hear from you. what role is therefore antitrust law and what about federalism? >> that's a good question. sponsored by the federalist society; right? anyway, i think again we have already started to touch on this, but the state action doctrine and i imagine people are interested in this in our panel. many of you-- i apologize if this is just a review, but the state action doctrine is really kind of a compromise between the national policy in 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 what state action doctrine and how do you apply it. sera alluded to this already wichita .-dot north carolina dental is that they are two-pronged, there is clear articulation, the action-- so if you start with say a private actor or a board, is what they are doing, is it pursuant to articulated policy to plan competition where some the litigation issues coming in the ftc and there have been some-- how specific does the policy had to be? it do you have to-- does it have to be-- do you have to act-- does the state have to spell it out precisely and if you go

beyond that you are in trouble or i think it's generally reasonably foreseeable, but it has to be-- you can't just say the states that i can regulate so i can do anything. there has to be a state policy that says we will display competition and then there is the active supervision. again, something the supreme court hasn't said what that means in detail pic they said a lot about what active supervision-- on site clear articulation and not a lot about what clear supervision means so north carolina dental was a landmark case because it says self-interested boards would be subject to this, so going back before north carolina dental it was clear that municipalities are subject only to the clear articulation, so the town decides to let in competition garbage. who can pick up garbage. well, we don't need to have

someone supervising the witness of holidays, but they are not sovereign so they don't have the benefits, but if they are acting pursuant to state policy that's okay. that's enough and when barrett-- north carolina dental rolled around, are you acting pursuant to state policy then that's enough. you go out and license and regulate how you want to or would they be considered more like private actors and what was the landmark and something again that the federal trade commission has been at the forefront of trying to push this and find cases to test this proposition, what was revolutionary about north carolina dental is they said yes, there is a board composed of self-interested actors who decides the majority who control who are active market participants then we will just treat them like a private cartel

like a trade association and therefore they will be subject to active supervision. so, that's kind of where we are now, i mean, that's how the supreme court's has made that balance and now with north carolina dental and why many ways we are having this panel is that it has opened up a pandora's box of federalism issues. if we a lot of supervision, how with states implement this? when are they allowed to regulate professions? this was front and center in the dissent in north carolina dental about why-- obviously grossly paraphrasing, but this is a state issue. states have regulated forever and if they want to see teeth whitening is a practice of dentistry, than do that let them allow practicing dentists to do that.

some of the boundaries-- and that will be one issue. what is it mean to be actively supervised and how extensible that be for states? will they have to dismantle some of their-- some of these licensing regimes? another issue is what is antitrust inquiry going to look like because we have not had that yet when a board is stripped of immunity. let's say you mitigate in north carolina dental and you had to do it under a rule of reason. well, we know from national society professional engineers in other cases that you don't let noncompetition concerns enter into a rule of reason inquiry, so i say i want to regulate the use of teeth whitening because i was concerned that consumers were going to be harmed because they would have too much fluoride or two months-- two months oxidation or whatever. that may be true, but it will

typically not be a justification like the engineers can't say we are worried to bridges will fall down. dentists can say we are worried consumers will burn their gums. that's a very unanswered question as to what sort of defenses once you have been stripped and you have to litigate the substance, what is left for the board and i would argue it could be the-- it could lead to antitrust, but that's another issue. i will just kind of limit their. >> not only coming boards are required to follow state law, so where is-- where does that fit into their dissent under a full-blown reason of analysis? the board says i was following the law i'm required to follow and you are not letting-- i have a big problem with national society of professional engineers saying that, i mean, if the legislature if they had

made the decision to restrict the competition for health and safety reasons. it wasn't the board's decision. was state legislature's decision, so why are you making the board defend the legislature's decision when they had no discretion whether or not to follow that rule, so it's a very complicated issue and it's really unfair to state boards and stay board members to have to defend that and since and see dental there been a lot of pushback from board members who are no longer willing to serve on state boards because they are individually liable for damages if they are individually sued like they were in the case i was involved in and some states constitutions don't allow them to indemnify board members, so they are not getting paid to do this. they are doing this as a public service and then they will be

called into court and made to defend a full-blown rule of reason antitrust case with one hand tied behind their back. it's not a workable situation at all. i didn't know if you wanted to get into the bill? >> yeah-- >> i'm sorry, i think this fits in really well. unconsumed-- i'm sympathetic with what you are sane and if we go back to the history of the state acted doctrine a lot was motivated by-- so it said you can't use due process so then they say let's is antitrust laws to go after states and so in some ways-- not in some ways, in a very real ways it was another way to cast an attack on state sovereignty in their site, so now with north carolina what you are saying is when you think about what a rule of reason looks like we would be back and you can say whether it's good or

bad, i mean, there are arguments and some members of my faculty say that law clerk and there's nothing wrong with that, so-- but what we would have we would have a rule of reason inquiry with federal court leeway reef weighing a state legislator's decision saying think the scope of industry should be ask and so this is where he think it raises federalism issues and how we deal with the underlying because state action is one time, but once we get that we have an antitrust case and how do we do with-- do with that? >> to just go back to the state action doctrine. if a state has articulated that tooth whitening is the practice of dentistry and the board just promulgates that, that needs state action. they satisfied that because one

of the things i really the way i try to think about 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 destroy it. if of the state itself is saying we think that this common practice that in every other states you can go to the drugstore and just get it and do yourself, but we are going to say back to seem dentistry in our state and people don't like it. well, they can say to the legislature what are you doing we don't like that rather than this murky thing that some board member decided on his own, so, i mean, if-- that's what clear articulation is. >> i think that is right. he still had the active supervision. >> if you have-- >> if you have a self-interested board, but so if the facts of north carolina dental were different and they did not give

the board discretion to expand or contract the scope of the practice of dentistry we perhaps would not have had north carolina dental because they would say i didn't really take an action. they said the scope of industry included teeth whitening and if you could imagine a statute that said that there's no discussion. i think that's a fair point. this would apply once we-- when there is more discretion and that discretion matter-- violates antitrust laws and its unsupervised discretion and then they would try to defend as sarah has said how do we get into that either we can't bring in health and safety or if we do this kind of back to lochner in a way where you have federal judiciary sitting as saying we would balance health and safety competition in a different way than you did, but your point is absolutely correct. >> sarah, you mentioned the bill

in the recent proposal the board immunity act which is intended to take these various concerns into account. i'm interested to hear your thoughts from the panelists on this bill. >> so, how much time do we have left because i have a lot of concerns? >> about 10 minutes left. >> so, the bill summary states that there is concern that the nc dental decision eliminated a measure of state sovereignty, but this bill gives no difference to federalism or state sovereignty instead it criticizes states like a maryland, tennessee, montana and mississippi that manage to get their state legislators to pass an active supervision statute this year by stating they only established a layer of bureaucratic oversight that nearly monitors board action for consistency with state licensing what is the purpose of active supervision?

is to ensure a board's actions are consistent with the states licensing laws. is to ensure that members of a state regulatory board or private participants are following clearly articulated and affirmatively expressed state statues authorize connected to. it's not to substitute the active supervisor or judges opinion of what the licensing regime should be for the state legislature's decision. as a matter fact, this bill would subject state board to a much higher standard to receive state action immunity than private trade associations or 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 have passed state action statues, but the bill will invalidate the statutes. the bill requires scope to beyond requirements by mandating only board action come line with

the policy set out in section five of the will receive immunity or another words board actions that use the least restrictive alternatives will be in and that is what i said earlier that it's not a requirement. there also seems to be significant constitutional problems with the bills requirements that state courts cannot give deference to the state legislature or presume the legislature determined that the restriction was necessary to prevent harm to the public health, safety or welfare. this again allows the state court judge to substitute its judgment for the state legislature and contrary to any present tense that the legislature is presumed to have considered the anti- competitive effects of the statute and pass them anyway. in addition, there appears to be an extra requirement that the state act in good faith to implement licensing reform in order to receive immunity for any board decision. the board also changes the standard of review to clear and convincing evidence that puts

the burden on the board to show that its actions not only were to protect and identified for government interests, but that the restriction was substantially related to that identified government interest. and that it acted in good faith, so there is a lot of standards of their. the plaintiff on has to make out a case that 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 burdened is not defined and seems like it would cover a potentially restriction that a board opposes. the board must then defend its actions without the court allowed to defer to the legislature or presume that the legislature intended to protect the public from harm or that the restriction is substantially related to that present harm. like i said before it's kind of like being asked to fight with one arm tied behind your back.

as i can tell you from doing this, getting just one case against a board to summary judgment can cost several hundred thousand dollars, so efforts like this bill that will increase litigation against boards will significantly add to the state budgets. not to be-- i don't want to be too snarky, but i think this bill highlights a common problem in the federal government tries to mandate state behavior. it 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 stay codes would be required to do so because this would conflict with a wide swath of the virginia code, i can tell you that. all of debt enabling acts for the state board itself and at a minimum this bill creates an unfunded federal mandate for

states to create an office of supervision of occupational boards or restructured judicial review procedures and like i said it will cause extension provision to i-picketing at the day the bill is unworkable for states to implement which leaves the states without antitrust immunity for state board decisions if the bill passes. >> do i have a thoughts? yeah. sarah did a great summary and i completely understand and i'm not super familiar with the bill. i have looked at it. i thought a little about it. the things that i certainly think-- the part of this bill i do like is that this idea of changing the challenges to intermediate scrutiny because with rational basis, which is

you challenge a state law and a rational basis and it's basically the state wins. not always. i have been successful in some cases, but that deck is stacked against. i like that notion of intermediate scrutiny analysis with the state can't just say women's market and the legislature said lemons market so we when. exaggeration little bit, but not too much. actually happened to maybe justify these and not just me as kind of an economist thinking that some of these licensing laws are bad, but i understand the federalism and is certainly understand the federalism point. the only thing i would say is kind of beyond just the substance of this is that it is amazing to think and when i left

this place whenever to the ftc and started working a lot of state restrictive competition to think here we fast-forward many years, but here we have got a democratic administration with influential report that's fairly critical last year. i know there is not a democratic administration. i see a few hands. democratic administration last year. somewhat critical or at least pointing out that there are improvements. and then, we have three influential republican senators introduced a bill that takes serious aim at the problem. i think the fact that it's on a national stage now and i think there is kind of bipartisan consensus that this-- things have gone right the state level with occupational licensing and something needs to be done. i may antitrust lawyer, but i think there are things to like in this bill.

we will stay tuned. i guess that's where i am with it. >> certainly, the goals of the bill are very consistent with what the ftc has been doing both on a policy front and on enforcement front and one of the things that i'm glad to see is that the purser-- preserves that ftc authority which our cases don't seek money in these situations. some sensitivity to some of the difficulties it creates with the state, but i think you put your finger on it. i think it's a signal that the fact that a lot of people see this as a problem for consumers, it problem for workers and a problem for that economy, so we need to figure out how do we fix this. ..

that was based on that model built this past session. as far as i know not a single one past. so i mean state legislatures are looking at these issues. they are just not there yet. included in the bill was also mandatory sunset review for a number of boards every year, and things like that so i think you can't get states to move very fast. it's how many years now and most of the states don't have an active bill, including virginia, much to my chagrin. >> lisa and i have a couple of the question but what to make sure we save time for your

questions. we have this, you in the back and we have a mic will go around. around. if you just introduce yourself and where you are from. >> asked for the shout out earlier. i guess i want to start by saying to sarah, having worked in this area for 20 years i want you sure you get no more fear of this bill getting enacted than heard of unicorns stripping the virginia countryside bear, don't worry about that. but in all seriousness i think there's a real tension, a failure of the states to get their houses in order. virtually everybody now agrees that occupational overregulation is a huge problem. right down to the micro level he can talk about abuse after a district you really do have to do, have to have a college degree to sell floral arrangement. i do want to pick on virginia but i will. virginia is one of the last two or three states in the country that allows a funeral directors

license to sell caskets. i could go on but it won't. as the failure of the states to get their own house in order and the failure with any interest in getting to houses in order on this front continues. i think as a practical matter it is just going to invite federal attention that you may not want to. the question is what has of the state of virginia done that is been the most significant step in getting its house in order when it comes to occupation of the regression? >> first of all, it's the commonwealth of virginia. and i'm not 100% sure that we done anything that noteworthy in that regard. i think that we've had an active supervision bill that's been introduced the last two years, one of them went pretty far this year but still didn't pass. we had one of those model bills that required sunset review. i will say i think saying

licensing is a huge problem in this country sometime seems to me a bit of an overstatement because i don't think, 60 occupations are licensing and every sticker i think we can all agree maybe the 60 occupations should be licensed in every state. let's pick the outliers like funeral, not directors because they are license but hair braiders and work on that. and stop making the people that are in the professions that we should be licensed feel threatened, that they are going to face some big antitrust cases. >> when you say they should be licensed, what is that based on? >> i think that, i mean personally i do want to go up in an airplane that's not flown by a licensed pilot. i don't want to be operated on by someone who is not a licensed doctor. i don't want to necessarily have

a veneer put on by person who is not a licensed dentist. so i think that 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. >> so what do we do with the interior who say that these types of licensing don't affect quality, even for professions like dentist or lawyers? >> well, i think those professions do have extensive self regulation. their standard of care cases all the time at the board of medicine. there are 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 was adequate. i don't think that bureaucrats are necessarily the right people to determine that. >> what about consumers? should there be some choice for the consumers? some consumers may want a higher standard of care? there's a trade-off. some consumers in certain areas may be willing to accept a noncertified, if the risk is relatively low and should they have the ability to make those choices? >> that's a fairly affluent consumer who can determine those things. what about consumer doesn't have enough when he and his forced to choose the lower quality person because they can afford anybody else? shouldn't there be some minimum standard? >> i think when we frame it that way, you kind of cut out the consumer who can't afford the cadillac care and just isn't getting any care. we need to be sensitive to that.

i also think we need to keep in mind, i think there's good evidence about the fact that competition leads to better quality. and so when we see regimes that are cutting off real competition, then we should be concerned. i think that was the professional engineers case, saying competition will lead to worse quality because they will compete to have lower prices and so the bridge will fall down. i think we have pretty strong evidence at this point competition a has good, leads to better quality. in fact, james comey she mentioned the putney case where the ftc won a victory in the supreme court but couldn't stop the monopoly from happening. state was we will oversee it, don't worry, will be okay. so i was like that's a proposition. i had our economist take a look, and we had some evidence suggesting quality has gone down. down.

that's the other thing, competition will come to give the array to consumers of joys, quality, all those things. i think we all agree on that. i also think we're looking at the license or not licensed but also expand what is the profession. that's a problem. one of the things, the way i can got involved in this early on was the issue of whether 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 it's not required. as you start to look at the statutes of this of what is the practice law, some were hilarious. my favorite was it is what attorneys typically do. >> and maybe you could say golf is the practice of law. [laughing] try to extend like when you mail the letter from a real estate

closing you put in the mail to send it off. that must've been a lawyer. how is that sensible kind of thing? >> i would just say the idea that maybe we want because of information, maybe we want some sort of, some way for consumers to figure out whether you have met the minimum qualifications. that's fine and that makes sense, but i think one of the issues is it's unclear why the state needs to be that entity that does it. there could be private certification, you know, maybe not for doctors, i don't know but it's unclear whether you couldn't just say get rid of the virginia board of medicine and replace it with a private certification regime that made up with the doctors, very high professionals and say, a doctor

can hang out a shingle and say i have been, i've been certified by the way that board of, kind of like the good housekeeping seal of approval which isaac added jokingly but as i understand it before the fda that was in large ways how drugs were, you know, there were private certification regimes. one thing we need to think about is whether it needs, we may need some way to get out of the asymmetric information problem but it's unclear even if we say we need something, that it has to be government rather than private. i just think that something we need to think about as soon as we go down this path. i think you are just switching one self protection is reaching for the other. whenever you are going to have doctors decide what the qualifications are for doctors and deciding who can't be a doctor you are going to have situations where you were probably doing some, displacing

some competition. and so why is a private certification company better than i government, a state government to determine that? >> it would allow choice. >> i think everyone here -- >> it's just going to be a different barrier. >> i think there's a case where they had to do, the ophthalmologist come out and say this sort of, you know, the laser surgery, that they say this method is no good and so somebody sued and said that's aa barrier to entry and the seventh circuit said no, no. this is basically free speech. maybe one organization has a bigger -- but just because you say this but consumers can choose. so, yes, i would still do want to undergo this procedure if vicki academy of ophthalmology set said it's not ready for prime time, but i guess the idea

of consumers can sort. it would not be illegal to practice if you don't have certification. they would devastate power, that would be to be the biggest difference. >> one thing is wer starting wih the hardest case first went are so many other things where you can say yes, for makeup artist and hairstylists and florists, social media for reviews or better business bureau can provide that function could we don't need the state say that is an ugly throw pillow. [laughing] >> you kind of think about restaurant. we have the health department accounts and make sure it's clean in the back where the consumer isn't going in. but we don't tha and saying doee food taste good, right? people rely on word-of-mouth and reviews and things like that, at a think there's a whole host of those things that can address, like let's start with low hanging fruit first. and that 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 the nurse practitioners are able to practice. you can say what's the effect on quality, what's the effect on -- there versus saying let's visualize like the perfect licensing regime to begin with. we can kind of look at what's already working and then go, go after, i mean, the health once i think are very appealing because there is such a need that is being unmet. but i'm not sure i'm ready to say doctors who perform brain surgery should be licensed. that is not the focus of the economic liberty. should you be able to go to a nurse practitioner to get a flu shot? i think the answer is pretty

clearly yes, that would probably be a very good thing. >> we only have about five minutes left. i want to make sure with time for other questions. we have won over here. the mic is coming to you. >> thank you. todd wiggins, and my question has to do with small businesses, because the industry seems to be blowing up the small business co-working space industry such as we work and those kind of shared spaces where so many new businesses are coming in that are unregulated, unlicensed probably. number one, i'm sure that's a good place to solicit for services if you're a lawyer, if you're starting off. but secondly what about those organizations, should there be any regulations for who they accept to work to be in those

co-working spaces? should they be talking to attorneys about what they would consider acceptable businesses for their spaces? >> i would say -- but i certainly wouldn't want to say that there should be regulation put on the co-working space where they need to have some sort of government oversight saying, well, you can only accept these kinds of business. i think repetition is good part of it. if you create a reputation for being a place where you've got an ethical businesses or problems, meta-businesses, i think your your reputation will suffer and of people woul not wo go there. i think there's a market mechanism that i would imagine, not having studied this, i am

just arising, what operate, much like who rants in an office park or other commercial buildings i imagine that would have a similar dynamic. >> i would just offer i think before you of any kind of economic regulation you want to have identifiable market failure as a necessary but not sufficient cause, then you still to do a cost-benefit analysis, is a dysregulation going to actually solve the problem and not be worse. >> any other questions? we have a few minutes left. yes. >> i'm melissa o'donnell. my question is related to how the bill fits into the kind of larger framework of the doctrine. personal is completely clear this bill would displace the

two-pronged test that the supreme court has announced, nortel and dental and other cases? number two, what would happen when a florida self interested board is promulgating a rule related to something that is not licensed? professor cooper was saying earlier, if it's not come if the rule that is promulgating is not related to licensure per se but something else, how would this law fit in? >> are you talking about the bill i introduced in congress? [inaudible] >> well, i think the fundamental holding of incidental sandor state bar would need to meet the prongs to get state action in committee, so they would still need to be following i could articulate state policy, there would also need to as access supervision but the way access supervision is gained would be

changed through this bill and you would have to do all the things that the bill ceja to do in order to have active supervision rather than the way incidental laid out active supervision. and i think all the things you have to do to get active supervision is other polymeric parts of the bill. as far as the rule, the board is hampered what it can do by the clear articulation. in 2004 the fcc actually sued the funeral board in virginia for having a regulation that was not enabled by any corresponding state legislation. and the funeral board, and was i actually my old section at the fcc that cb right after i left. >> they just wanted to see more of you.

>> but i actually agreed with the fcc on that when and we quickly went through the regulation and settled and it was all very neat and tidy and done. i hope that answers your question. >> i would add my reading of the bill is that first, i don't think, i think it only covers the licensure decision. it seems there's a section for a i think suggest it's about the not the other type of regulations. there are also two paths. one path to community under this bill however limited it may be is to licensure decision. one path is the active supervision path 50 of the path is setting up private right of action that allows consumers to challenge, not consumers, aggrieved workers or people who have been i can't back to my profession because of this law to challenge under it immediate

scrutiny which would have, which would essentially completely displace the analysis for an immediate scrutiny type of analysis. that's my reading on it. i don't claim to be an expert, but that's at least my take. >> all right. well, we're out of time so please join in thinking our excellent panelists. [applause] [inaudible conversations] [inaudible conversations] >> every month booktv on c-span2 features an in-depth conversation with a nonfiction author about their writing career. join us on september 3 what i guess is eric my taxes.

his latest book is if you can keep it. his other books include amazing grace was his best-selling biography. october 1 opera "new york times" columnist maureen dowd will discuss her books bush world, and the year of voting dangerously. november 5 michael lewis will about his books. join us for in-depth the first sunday of the month at noon eastern. that's booktv on c-span2. >> next i discussion on the fight against ebola outbreaks. doctors and public health officials talk about ongoing research, treatment and response efforts to the disease. this panel discussion was hosted by the center for global development and is 90 minutes. [inaudible