Occupational Licensing

How Licensing Laws Cripple Competition

Certificate of Necessity requirements trample on the right to earn a living.


In 2004, Maurice Underwood was just a man with a van.

When he made the decision to start his own moving company, Underwood was running an established small business in Reno, Nevada, providing home cleaning services.  A moving business was a natural next step, he thought, after he noticed several of his clients inquiring about moving services.

A year later, the government came calling.

One of Underwood's trucks was cited in 2005 for operating without a license ? in the state, anyone can load or unload a truck, but special permission from the state government is required to drive a loaded truck from point A to point B.  He paid the fine and began the process of bringing his company, Man With A Van Moving, in compliance with the state law.

He soon learned that the only way to get a license in Nevada was to comply with a law requiring proof that his business would not "unreasonably and adversely" affect other companies by creating additional competition.

Another part of the same law indicates the "legislative intent" of the licensing rule ? to discourage competition that may be detrimental to the existing carriers in the state.

Timothy Sandefur is a lawyer with the Pacific Legal Foundation, a nonprofit law firm that challenges laws impeding economic and civil liberties. He is the lead attorney on a federal case challenging the legitimacy of the Nevada licensing law, which he calls "the most blatant anti-competition law" in the nation.

Licensing requirements like those in Nevada are part of that broader problem. Known generally as Certificate of Necessity laws, the requirements apply to trucking companies, movers, limousine and taxi drivers, and even hospitals. They allow private companies to use the strength of the state government to keep competitors from entering the market, or to require large up-front investments of time and money that discourage potential competitors.  

It adds up to a system that benefits the established, entrenched interests at the cost of entrepreneurs ? and, ultimately, consumers, Sandefur said.

"Wal-Mart could make a lot more money if they could use the government to make Target illegal," he said.

In a federal court filing, the Pacific Legal Foundation argues the Nevada government is "irrationally and arbitrarily discriminating against" Underwood in a violation of the U.S. Constitution's equal protection clause.

Andrew MacKay, chairman of the Nevada Transportation Agency, which oversees just about anything that moves objects or people around the Silver State, takes a different view of his state's licensing requirements.

In his six years as chairman of the agency, MacKay says he has never seen an applicant denied a license, provided they go through the entire application process. And he disagreed with the view that the licenses are a mean to keep out competition.

"In short, the Legislature enacted those laws to ensure that the trucking and shipping industries are adequately protecting the public safety," MacKay said.  

Though he declined to discuss the specifics of the Underwood case because of the ongoing litigation, MacKay said he is a former businessman who understands the importance of competition.

"I believe in the free market," he said. "But if you're going to hire a mover or a limousine company, there is an expectation that you are getting someone who can do the job safely and economically, without price gouging."

The battle rages elsewhere as well.

In 2009, Raleigh Bruner started a new moving company and learned that he had to obtain an "Intrastate Household Goods Certificate" from Kentucky's perfectly bureaucratic-sounding Transportation Cabinet Division of Motor Carriers.

And the only way to do it was to win approval from the existing license-holders in the state.

Once one of those other companies protested, state law requires the new applicant to hire a lawyer ? owners are not allowed to represent themselves at the state board ? and begin a lengthy process of hearings that costs a new company valuable start-up cash.

In practice, the only way a new business can get a license is to prove there are not already enough movers in the market to meet demand, said Tom Underwood (no relation to Maurice), state director of the Kentucky chapter of the National Federation of Independent Businesses.

"This is a state-controlled monopoly, that's all there is to it," Tom Underwood said.

But the days might be numbered for the moving cartels in Kentucky. Brunner filed a lawsuit in federal court last year to get the Kentucky law overturned. Though the case is still pending, there is now legislation in the state Senate that would deregulate Kentucky's moving industry.

Existing license holders oppose the change, saying it would decrease the value of their licenses, but Underwood points out that the licenses have only become such expensive commodities as a result of the state's restricted market.

Despite the opposition, Underwood said there is enough support for the bill to be passed into law before the state Legislature's annual session ends in mid-March.

These state licensing laws are hardly a new phenomenon ? and neither is the fight against them.

The first such laws were created in the late 19th century and designed to protect semi-monopolies like railroads, but they gradually evolved into government-enforced bans on competition in a variety of sectors.

In 1932, the U.S. Supreme Court struck what should have been a decisive blow. In New State Ice Company v. Leibmann, the court struck down an Oklahoma law that banned the delivery of ice unless a new delivery company could prove to a state board there was a public need for more deliveries.

The board that made the decision, perhaps unsurprisingly, was staffed by the owners of existing ice companies.

In the 7-2 ruling, Justice George Sutherland wrote "it is beyond the power of the state, under the guise of protecting the public, arbitrarily to interfere with private business or prohibit lawful occupations."

But that ruling did little to stop the march of restrictive licensing laws. In recent year, though, the tide has started to turn.

In 2007, Minnesota lawmakers eliminated a state law requiring new moving companies to give notice to existing companies.

A year later, the Ninth Circuit Court of Appeals overturned a California state law for licensing pest control workers.

In 2009, the Pacific Legal Foundation challenged a similar law in Oregon on behalf of college student Adam Sweet and his start-up moving company, 2Brothers Moving. A federal judge declined to overturn the law, but the Oregon Legislature removed moving companies from the licensing requirement, though it remains in place for other types of carriers and taxi companies.

In 2012, Missouri lawmakers brought an end to a similar law that gave existing moving companies veto power over new applicants.

Missouri State Rep. Eric Burlison (R-Springfield), who sponsored the legislation that changed that law, said the old arrangement created some nonsensical loopholes for companies to operate.

New moving companies could obtain federal licenses, but faced a harder time obtaining state licenses, which could be blocked by existing companies.  

As a result, some start-up companies could legally move a customer from inside Missouri to Kansas or Kentucky or elsewhere across state lines, but would be operating outside the law if they tried to move the same customer to a neighboring town in Missouri.

"It absolutely insane that we would forever enshrine certain businesses and make sure they would never get any competition," Burlison said. "That's not the role of government and it should never have been the role of government."

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  1. Wonder what cosmos have to say to this?


    1. Is he wearing some sort of pharemone, or is this some kind of “fortune favors the bold” thing?

      1. No, that’s just how females are in Obama’s America.

      2. Maybe editing favors the bold?

        1. He probably failed with a few. Still, that’s twenty women. A whole lot better than what beta males can do trying to be nice to women.

          1. Yeah, because he was so VERY rude to them.

    2. Well, New Rise, I’m off to watch 10 black men stuff their balls through a little hoop. I’m talking about college basketball; not what you are paying those guys to do to your wife tonight. Get your mind out of the gutter you albino perv.

    3. …cosmos…Obama’s America…

      Oh shit, I think SIV’s fracture psyche has gotten its own Reason account. It’s gonna post random shit and bleat on about cosmos and shit.

      “Look at this cosmo SHIT!! You need this to KNOW WHEN TO GO TO YOUR FUCKING COCKTAIL PARTIES!” *head explodes*

  2. the Legislature enacted those laws to ensure that the trucking and shipping industries are adequately protecting the public safety

    The eternal weasel words of the protectionist.

  3. Sheesh, that New State Ice Company decision should have been used to strike down every “Certificate of Need” law. Why hasn’t it? Why don’t Republicans make a big stink about this? It’s a perfect issue for being pro-competition but anti-entrenched interest.

    1. It’s a perfect issue for being pro-competition but anti-entrenched interest.

      I think you answered your own question.

      1. Sadly, you may be correct….

  4. Hey New Rise, I bet competition would be increased if instead of red tape, they used white tape. Amiright?

    And blsck tape is inferior quality tape that won’t stick. Right?

    1. The red tape is ineffective because it tends to gambol around whatever you’re trying to repair.

    2. The DMV people really suck. Recently I had to get my license renewed and fuck it took like three hours. But even worse than that are all those affirmative action incopotoids.

      1. Lamest sockpuppet ever.

        1. I’m a sockpuppet of the majority of white Americans who oppose immigration, imperialism, socialism, and the notion that race and gender are “social constructs.”

          1. That’s a lot of hands to fit up your ass. You wouldn’t happen to be a German sockpuppet, would you?

            1. I suppose a facist ultra-nationalist sockpuppet is an interesting change from the sockpuppets we usually get.

            2. Them people? They wouldn’t dare speak out against the Muslim invasion lest be labeled “nazis.” Just like white liberal Americans, except that they deserve it, to a point. Hitler’s revenge….

  5. New State Ice Company
    DUM ba DUM ba-da DUM DUM
    New State Ice Company
    DUM ba DUM ba-da DUM DUM

    All right, stop suppressing competition
    Freedom of commerce is our vision
    Regulations grabbing hold of me tightly
    Tieing me up daily and nightly
    Will it ever stop? Yo, I don’t now
    The New State opinion has basically been overruled, which blows

    New State Ice Company
    DUM ba DUM ba-da DUM DUM
    They overruled New State Ice Company
    DUM ba DUM ba-da DUM DUM
    That really blows

    Word to the Justices

  6. OT: I’ve been in the middle of an argument with a prog friend about AGW and asked in the comments for support.

    Yesterday H&R posters connected me to survey that shows there is no consensus on AGW, which my lefty writer friend immediately discounted as “that poll was only of oil industry employees.” He instead linked me to this site, which boldly states “In the field of climate science, the consensus is unequivocal: human activities are causing climate change.” They based this on a study which said that 97% of American climate scientists agreed about AGW.

    Because his site seemed like advocacy, and I since I publish and review in peer-reviewed journals myself, I decided to find the article that has caused this oft-repeated claim, and see if it has merit. Here it is. And it is full of holes big enough to drive a truck through.

    Let’s go through the enormous flaws: (cont)

    1. 1. The question is not “are greenhouse gases coming from their constituents threatening catastrophic harm?”, as the first site claims. Instead, the question asked of the reported 97% of “climate scientists”: “Do you think human activity is a significant contributing factor in changing mean global temperatures?” That is a much milder statement and much easier to agree with.

      2. But there is not even enough numbers to justify agreement! The survey was sent to 10,257 people from a database. 3,146 responded. Of these, they reported that a whopping 79 total individuals (0.0077 of those sent the survey) were those who self-reported that ‘climate science was their area of expertise and over 50% of their published articles in the past five years were on climate change.’ It is out of these 79 people that 75 of 77 answered yes to the question in my point one.

      3. So out of 10,257 scientists sent a survey, only 79 respond that they are climate scientists, and 97.4% of those answered “yes” to a mild question that human activity contributes to changing mean global temperatures. And there is no proof that those who even answered that they are published climate scientists indeed are what they say they are, it was all by self-report. (cont)

      1. Tell you what. With the right funding, I can send out a survey to 10,000 people. I’ll contact 100 people I know on that list who are also big believers in my position on a disputed issue, and make absolutely certain they answer questions in a certain way, and list themselves as a certain type of expert. I’ll bet I can get 75 of those 100 people to actually fill out the survey as I have asked. Voila! I can now go claim that 97.5% of experts agree with anything I believe in. Even “UFO aliens control Congress.”

        Now I know why I hear so much from AGW skeptics about junk science. If there is good science out there and your positions are accurate, you don’t have to make up biased stuff like this.

        1. Epi is right. It has been pointed out on these boards before that you cant use sound data, reason and logic in an argument with someone whose position is not based on sound data, reason and logic.

          What you pointed out I have been screaming from the rooftops since the initial panic over the hole in the ozone. If they have to lie, make emotional appeals, or use scare tactics it is because they dont have a case.

          They know they dont have a case, that is why they knowingly engage in those tactics. If they already know they dont have a case, you aint gonna convince them to admit it.

          Tell them to go fuck themselves and stop trying to steal from you.

          1. oops…..or logic.

            Clearly I need more vodka.

            1. You’re drinking already?!? What the hell time is it there?

              1. *scratches head in puzzlement*

                It has to be a certain time in order to drink?

                1. Dude, I’m processing stockholder agreements of mine, I still have to work out, and I have to go to the store too. I wish I could be drinking gin right now. Jerk.

                  1. Gin is bad for your teeth.

                    1. Wait what? How is gin bad for your teeth?

                    2. The citrus in gin is very acidic.

                    3. Did not know that. Guess my teeth are fucked then.

                      *slices another lime, and opens the tonic.

          2. Liberalism is just a bunch of substitutions for things that normal people have but liberals do not.

            Government is a moral substitute for people who don’t have a conscience.

            Identity studies are a career substitute for people who have no skills.

            Belief in global warming is a science substitute for people who don’t like or understand science.

            1. I should say AGW, since that really makes it less about evidence and more about making Gaia cry.

      2. You are going about this all wrong. Your only response should be “Consensus is not science, proof is science. If all you have is consensus, and not proof, you have nothing. Fuck off and die.”

        Why waste your time with a religious idiot?

        1. Episiarch, you are the common sense I wish I always had.

          1. To me, it’s very probable that human activity is contributing something to climate change. The big questions are: How much are we contributing? How extreme will the changes be? How much is it worth to stop or lessen those changes? What are the best ways of doing so?

            Too many Greens think we are causing all of it, that it will be a catastrophe, that no technological solutions (e.g. modifying clouds, pulling CO2 from the air) are possible or desirable, and so no cost is too high when it comes to stopping CO2 emissions. I believe all of those beliefs are incorrect, and are based on a near-religious belief in the awfulness of modern technology and free enterprise, and a naive belief in simplistic and flawed computer models of climate change.

            1. The big questions are: How much are we contributing? How extreme will the changes be? How much is it worth to stop or lessen those changes? What are the best ways of doing so?

              You forgot the biggest one of all. Are the effects of “climate change” going to be a net positive or a net negative. If 5% of the Earth that is currently in permafrost were to thaw out, wouldn’t that be a net gain over a few low lying islands (of which very few would actually be lost)? Wouldn’t the warmer temperatures decrease human death from cold and the human consumption of energy for heat? Wouldn’t the opening of the Northwest Passage etc, etc.

              The human race has a lot more to fear from a cyclical ice age than they do “global warming”. A gazillion tons of carbon in the atmosphere might save tens or hundreds of millions of lives.

              1. Mg, couldn’t agree more. They cannot predict the weather for tomorrow with any accuracy, yet they can predict the outcome of a few degrees increase in temperature?

                Not fucking likely.

                IF, and I mean IF, we are causing the warming, I suggest trusting to adaptation rather than trying to stop the inevitable.

          2. C.A

            His head is big enough. Don’t encourage him.

  7. Newly-Released Memo by Donald Rumsfeld Proves Iraq War Started On False Pretenses

    1. Whatever. The Iraq War was (or at least should have been) started on the simple basis that Iraq had never even come close to meeting the terms of surrender from the ‘end’ of Desert Storm. That made Iraq old business that needed to be gotten out of the way if the world was going to take new business seriously.

      Why wasn’t this the reasons given? Because the media would have had a cow, breach presentation, at the idea .

      Diplomacy is credit. Making war is cash. 9/11 was an announcement that our credit was no longer being accepted.

      I very much hope that we are not at war to ‘end terrorism’, but to establish the idea that if you attack the U.S. bad things are likely to happen to you. THAT has some chance of working.

      1. I think our response should have been similar to that scene in Last Crusade where Indy throws the Nazi out of the zeppelin. Find the smallest group of people responsible for 80% of the attack against us, kill them ruthlessly, and say the diplomatic equivalent of “No ticket” to the rest of the world.

  8. UGH:
    Raising children is everyone’s job

    1. The Tragedy of the Commons, applied to children.


    2. I want those sweeties!

      Raising Children, my best advice, don’t have children.

      1. My Spanish teacher just showed that commercial at the end of class yesterday.

        1. This is exactly what Murika teaches da childins that they are supposed to be. Then they render the parents helpless to do anything about it. Then when the children grow up and act badly, they become the wards of the prison industrial complex. Needs MOAR prisoners.

          1. This is exactly what Murika teaches da childins that they are supposed to be.

            What a fucking load of bullshit.


            1. Did you go to public school? Do you have kids in public school?

              1. I did in the ’80s, then to private schools.

                I have no children.

                It would really love to see the lesson plan that teaches children to pitch fits and scream and destroy things when they aren’t given what they want. Which is why I demanded a cite.

                Regardless, the public schools are not “‘Murika.”

                1. This is also about calling Hyperion on his “‘Murika sucks” bullshit.

    3. The dilemma is this: raising children is everyone’s responsibility – parents, non-parents, community members and political leaders.

      Don’t you just love it when a person begins an article with a bare assertion fallacy?

      “Society used to have a role in raising children.

      It used to be you could beat your kids when they fucked up. Hell, in some communities, other people could beat your kids if you weren’t present to do the beating.

      “You should not tell a child that they are an idiot. But neither should you let the child get away with bad behaviour,” he said.

      Children are idiots. They’re not necessarily stupid, but they are idiots. Idiocy can be fixed with experience and learning. Stupidity looms eternal.

      1. The heart of a child is filled with foolishness but the rod of discipline will drive it from him.

    4. The motto of the zeitgeist: It’s never YOUR fault.

    5. “Kids need old-fashioned discipline”

      “Society needs to take collaborative approach to raising children”

      “Research proves parenting styles not important”

      When all of your summarizing bullet points contradict each other maybe it’s time to retire.

  9. Game of Thrones Season 3 Trailer

    I hear there’s going to be a wedding!

    1. I wonder what its theme color will be?

    2. My hope/prediction:

      Hodor ?ber alles.

    3. Wedding in Westeros are more dangerous than battles.

      Stannis For King!

  10. OT and creepy as hell – I posted a nasty comment about pedophiles in the article yesterday about the guy that got 3 bazillion years for looking at some pictures.

    Someone claiming to be a pedophile responded to me, but I was away from the computer so they emailed me demanding an explanation for my nastiness. We are on our third email exchange. Creepy.

    I hope this is not one of you guys trolling me.

    1. What? This sounds hilarious. What’s he saying to you?

    2. Pics or it didn’t happen.

      Oh, wait…

    3. In principle, accused pedophiles are entitled the same rights of due process, vigorous defense, so on and so forth.

      Personal opinion, I think drawing and quartering is an appropriate penalty for being a child molestor.

    4. I went to the website linked in his name, it was some next level weird.

      1. Following a link posted by a pedophile sounds like a very, very bad idea…

    5. Oh, and on a side note, I just looked at the thread and I’m really, really sorry to hear what happened to your adopted daughter. I hope she is doing OK.

      1. Yeah, I saw that too and it’s royally fucked up. Really sorry to hear about that.

    6. If you go on Torchan (the Tor 4chan), they are all over those boards. I’m not sure if they are real, LEO, or trolls.

      1. y would you go there on purpose?

        1. The same reason I go to any comment board.

          They have an excellent board on internet security and cryptography.

  11. But without licensing, we would all die from BOTULISM

    It’s for the children, you know.

  12. OT:

    3 personal disneylands being planned by total lunatics in Cracked magazine. Of course lunatic here means not a left wing retard.

    In the comments there are a lot of people saying that the seasteading will sink within weeks because there are no building codes and a bunch of billionaires would die; because a bunch of billionaires would live on a floating platform without having someone take a look at it. These people are literally unable to imagine someone doing something well without the government not telling them to.

    They also say that pirates will take it over because of all the rich people’s cash, like money isn’t all in computers now.

    1. Because the billionaires won’t bring along any private security?

    2. Everyone who compares this to Rapture miss the key aspects that doomed Rapture:

      1) Nothing comes in from the outside world.

      Not really an issue here.


      Also not an issue here. I guess people don’t actually pay ANY attention to the media they consume.

      And those saying it will sink because there are no government building codes, must really think people are complete idiots. Yes, I’m sure since the government isn’t there to tell them to have standards they’ll have no concern for their safety whatsoever. Morons.

      1. Or how about some saying that they won’t have any people to do the dirty work ’cause it’ll be too expensive/poor people don’t want to be slaves.

        I would totally work a shitty job on a seastead. I think a lot of people would be willing to work on a seastead when they find out that there is no taxes and they won’t be thrown into a cage for smoking some weed.

        1. Yeah I mean sometimes they talk about poor people being swindled by unscrupulous contractors and that’s why we have building inspectors. Which I can counter easily, but at least it’s a semi-decent argument.

          But what idiot thinks someone who probably has hundreds of engineers working for him is going to go live somewhere he’s not absolutely sure is safe?

          1. I can’t imagine the amount of hatred for humanity one must have to believe that the only reason that builders don’t skimp on supplies, or cooks use rotten meat is that there is a government bureaucracy out there protecting them. It couldn’t be that killing your customers is usually bad for business, no, it must be those occasional, arbitrary inspections.

            There has to be a fair amount of projection there.

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