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.

Comments

[SugarFree]

I can't enough fathom how this passed the laugh test when it was proposed. Good job, guys.

[fried wylie]

Special Interests aren't part of "The Public" with a need for protection? DISCRIMINATION!!11one

[Fluffy]

I'm sure it was justified the same way that taxi medallions were/are justified.

"It's a low-margin business where the drivers and workers don't make a lot of money as it is!"

"We don't want the roads all cluttered up with dozens of moving companies chasing down business!"

"We don't want people trusting their goods to fly-by-night operations!"

"Race to the bottom!"

And so forth.

[SugarFree]

Yeah. I just don't see where the moving companies got this sort of juice. They aren't union and they aren't a particularly big sector of the economy.

I'm sure it was someone's demi-cousin on their half-aunt's side or some other nepotistic nonsense.

[Episiarch]

Well, it is Kentucky, right? What does Raylan Givens think about it?

[Aresen]

You are overestimating the cost of buying a few state legislators.

[Aresen]

The part about competitors having to say there aren't enough people in the business is a little unusual.

Normally, the justifications you cite are the ones used plus "if we don't regulate them, there will be dangerous trucks on the road as the companies cut corners to compete".

[Auric Demonocles]

I remember a quote from an article that was 2-3 weeks ago. It said something about "You don't want the limos coming in and taking all the good fares from the taxis." Apparently this guy knows what I want more than I do. And it is to wait around for a tiny smelly car.

[o3]

moving this much stupid would require moar moving cos

[Aresen]

BUT,,,BUT,,,BUT,,,

Government regulation is there to protect the consumer!

/Tony mode.

[cavalier973]

Pretty sure this is the rule for building a new hospital anywhere in the U.S., thanks to Nixon.

[Christina]

THIS. Hospitals are required to obtain a Certificate of Need proving that they won't cut into the business of any other hospitals.