News: CJ Exclusives

Occupational Licensing Commission Could Expand Bureaucracy

Legislature's response to teeth-whitening decision may set back would-be entrepreneurs

RALEIGH — A U.S. Supreme Court decision that many opponents of restrictive occupational licensing rules saw as a victory for small-scale entrepreneurs may wind up being a setback, as the General Assembly’s Program Evaluation Division wants to create an Occupational Licensing Commission to supervise licensing agencies and consolidate some of those boards.

Chuck Hefren of the Program Evaluation Division on Monday urged creation of the new commission — staffed by state employees and housed in the Department of Commerce — and gave other recommendations to members of the Joint Legislative Program Evaluation Oversight Committee.

The report stems from a 2012 legislative directive to study the issue, and its presentation comes on the heels of the February decision by the U.S. Supreme Court saying the North Carolina Board of Dental Examiners violated federal antitrust laws by ordering non-dentists to stop providing teeth whitening services.

At issue in the Supreme Court case is whether occupational licensing boards are state agencies that enjoy immunity from antitrust laws, and under what circumstances they lose that protection. Many free-market advocates hailed the ruling, but some advocates of separation of powers cautioned that the decision erodes federalism and extends federal government power.

A number of the state’s professional licensure boards sent representatives to Monday’s meeting to urge lawmakers not to overreact to the Supreme Court decision. They advised taking steps to avoid a recurrence of the situation that faced the Dental Board by having other licensing boards more closely follow existing procedures and statutes.

Others sent delegates to argue against consolidating boards. And some agencies urged committee members to create new licensure boards to regulate additional professions.

Hefren said state oversight does not report and monitor the agencies adequately, notify complainants of outcomes, and maintain records of information in complaints.

An umbrella Occupational Licensing Commission would provide more direct supervision of the agencies, which could address the Supreme Court’s concerns in the Dental Board case, he said. It also could facilitate disputes without involving the legislature, evaluate whether the agencies are effectively protecting the public’s safety, health, and welfare, and require and catalog records of complaints and their resolution.

Commission members’ salaries would be funded from receipts the licensing agencies collect from applications and renewals.

“We estimate the funding would be less than 1 percent of their receipts,” Hefren said, and there would be “more reduction in costs than the annual charge.”

Hefren cited a similar model in Texas, which he said more than made up for its costs through sharing IT, training, and other services.

Hefren’s report also recommended reviewing 12 occupational licensure agencies to see if they are still needed, and consolidating 10 agencies with other licensing entities in their field.

“It’s not feasible or efficient … to add another layer” of regulations onto licensure boards, said John Fountain, representing two contracting licensure boards. “We can do that without more bureaucracy.” He submitted language for draft legislation offering criteria to establish licensing agencies, spelling out enforcement powers, and suggesting payments to board members.

Karen Cochrane Brown, Legislative Research Division staff attorney, gave the committee an analysis of the Supreme Court decision in the Dental Board case. The court did not say that the Dental Board would be subject to antitrust violations in performing “its clear statutory duties of issuing licenses and disciplining licensees,” or that the Dental Board “is powerless to take any actions against non-dentists,” she said.

Bobby White, chief operations officer of the Dental Board, said the Supreme Court order does not prevent the board from investigating complaints about teeth whitening, but in the future the board will use the courts to pursue complaints, a more costly route than the cease-and-desist letters it previously used.

He noted that Dental Board members were “not alone in our belief” that the board was immune from antitrust laws. Attorneys general from 23 states, the National Governors Association, the National Conference of State Legislators, Council of State Governments, and 16 other groups signed onto the lawsuit.

The Federal Trade Commission told the Dental Board, “You’ve got to consent to the jurisdiction of the federal government in this matter,” White said. Believing the board was acting appropriately as a bona fide state agency in safeguarding the public’s health and meeting its charge as a licensure board, it refused, “and that’s when the fireworks started.”

Mark Merritt, vice president of the State Bar Association and an antitrust lawyer in Charlotte whose firm signed onto the Dental Board’s lawsuit, said, “Our viewpoint is the Supreme Court got it wrong,” and that teeth whitening by definition is the practice of dentistry over which the Dental Board has jurisdiction.

However, he said, “We have to deal with this new decision.”

As a result, he told lawmakers, the State Bar would like “legislative clarity” on Internet service providers of legal documentation such as LegalZoom.com.

The State Bar has not contended that providing online forms or scriveners services constitutes the practice of law. “But when you answer questions in a certain way online [that] constitutes giving legal advice” and the practice of law, Merritt said, and “we should have the ability to regulate.”

Susan DeLaney of Carrboro, representing the North Carolina Association of Naturopathic Physicians, said they have been trying for 14 years to get state approval for an occupational licensing board.

Alita Hill, a sign language practitioner with the North Carolina Interpreters and Transliterators Licensing Board, was the only agency representative who spoke in favor of the Occupational Licensing Commission.

Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.