Does the Constitution Allow State Governments to Grant "Special Benefits" to Favored Industries? Louisiana Says Yes


Last week the Louisiana State Board of Embalmers and Funeral Directors asked the U.S. Supreme Court to uphold the state's requirement that only licensed funeral directors be permitted to sell caskets within the state, thereby preventing the unlicensed monks of Saint Joseph Abbey from selling traditional handmade wooden caskets at an affordable price to willing buyers.

Although Louisiana does not regulate caskets in any other fashion—there are no design or construction requirements and it's perfectly legal to either build your own casket or be buried without one—the State Board has nonetheless attempted to pass the law off as a public health measure. That flimsy rationale did not stand up to scrutiny at the U.S. Court of Appeals for the 5th Circuit, however, which ruled in favor of the monks earlier this year and denounced the State Board for its "nonsensical explanations for naked transfers of wealth."

This time around, the State Board has largely dropped its pretense of acting in the public interest and is now openly advocating in favor of special interest legislation. "Economic protectionism," the State Board tells the Supreme Court in its petition, "occurs in so much legislation, both intentionally and unintentionally, so much so that it may be practically
impossible to avoid it." In fact, the brief continues, "the idea that courts — Federal or State — could change this perhaps regrettable truth is just unworkable."

As an authority for this argument, Louisiana cites a 2004 decision from the 10th Circuit called Powers v. Harris. Just like the Saint Joseph Abbey case, Harris centered on a state licensing law designed to protect the funeral industry from outside competition. But unlike the 5th Circuit's recent ruling, the 10th Circuit upheld the casket licensing law, even while admitting that the regulation was an act of economic protectionism. "While baseball may be the national pastime of the citizenry, dishing out special economic benefits to certain in-state industries remains the favored pastime of state and local governments," that court wrote. And unfortunately for the state's taxpayers and entrepreneurs, "protecting or favoring one particular intrastate industry…is a legitimate state interest."

So the Supreme Court not only faces the question of whether Louisiana imposed an illegitimate and unnecessary licensing scheme, it also faces the larger issue of whether state and local governments possess the lawful authority to pass regulations whose sole purpose is the protection of favored industries. The fact that the 5th and 10th Circuits are split on that fundamental question only adds to the urgency.

We'll know in a few months if the Supreme Court decides to take the case.