Occupational Licensing Abuse Comes Under Legal Fire in Kentucky

State law allows existing businesses to veto new competitors.


Should an entrepreneur be required to get permission from his competitors before opening up a new business? Yes, you read that sentence correctly, and no, it's not a trick question. Earlier today, the Pacific Legal Foundation, a public interest law firm based out of Sacramento, California, filed suit in the United States District Court for the Eastern District of Kentucky challenging a Kentucky law that effectively grants existing moving companies the power to veto the licensing application of any would-be competitors.

At issue is a Kentucky statute requiring moving companies to obtain a Certificate of Public Conveyance and Necessity, which, under the law, may only be issued if "existing transportation service is inadequate." How do state officials decide whether the state's current crop of moving companies are "inadequate" to the task and in need of some fresh competition? By asking them, of course. As the complaint filed by the Pacific Legal Foundation explains,

Section 281.625(1) of the Kentucky Statutes and 601 Ky. Admin. Regs. 1:030, Section 2, provide that whenever a person applies for a Certificate, the Division of Motor Carriers must notify every existing moving company of the application and give them the opportunity to file "protests" against the new
application.  Section 281.625(2) provides that if an existing moving company files a "protest" against the applicant, the Division must hold an administrative hearing to determine whether to grant or deny the Certificate to the applicant.

It's one thing to justify an occupational licensing requirement on the grounds that it will protect the health, welfare, or safety of the citizenry, but this is something else entirely. The Kentucky licensing law isn't about protecting the public, it's about restricting competition for the benefit of special interests.