U.S. GOVERNMENT PUBLISHING OFFICE

29–777 WASHINGTON : 2018

OCCUPATIONAL LICENSING: REGULATION AND 

COMPETITION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 12, 2017 

Serial No. 115–23 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DESANTIS, Florida 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

MARTHA ROBY, Alabama 

MATT GAETZ, Florida 

MIKE JOHNSON, Louisiana 

ANDY BIGGS, Arizona 

JOHN CONYERS, JR., Michigan, 

Ranking Member 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

THEODORE E. DEUTCH, Florida 

LUIS V. GUTIE ́ RREZ, Illinois 

KAREN BASS, California 

CEDRIC L. RICHMOND, Louisiana 

HAKEEM S. JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

ERIC SWALWELL, California 

TED LIEU, California 

JAMIE RASKIN, Maryland 

PRAMILA JAYAPAL, Washington 

BRAD SCHNEIDER, Illinois 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

TOM MARINO, Pennsylvania, Chairman 

BLAKE FARENTHOLD, Texas, Vice-Chairman 

DARRELL E. ISSA, California 

DOUG COLLINS, Georgia 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

MATT GAETZ, Florida 

DAVID N. CICILLINE, Rhode Island 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

ERIC SWALWELL, California 

PRAMILA JAYAPAL, Washington 

BRAD SCHNEIDER, Illinois 

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C O N T E N T S 

SEPTEMBER 12, 2017 

OPENING STATEMENTS 

Page 

The Honorable Bob Goodlatte, Virginia, Chairman, Committee on the Judiciary ......................................................................................................................... 3 

The Honorable David Cicilline, Rhode Island, Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law, Committee on the Judiciary ........................................................................................ 3 

WITNESSES 

Ms. Maureen K. Ohlhausen, Acting Chairman, Federal Trade Commission 

Oral Statement ..................................................................................................... 6 

Mr. Robert E. Johnson, Esq., Attorney, Institute for Justice Oral Statement ... 7 

Ms. Sarah O. Allen, Esq., Senior Assistant Attorney General, Office of the 

Attorney General of the Commonwealth of Virginia Oral Statement ............. 9 

Ms. Rebecca H. Allensworth, Esq., Professor of Law, Vanderbilt Law School 

Oral Statement ..................................................................................................... 10 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Responses to Questions for the Record from Robert E. Johnson, Esq., Attorney, Institute for Justice ..................................................................................... 30 

Responses to Questions for the Record from Ms. Sarah O. Allen, Esq., Senior 

Assistant Attorney General, Office of the Attorney General of the Commonwealth of Virginia ................................................................................................ 34 

Responses to Questions for the Record from Ms. Rebecca H. Allensworth, 

Esq., Professor of Law, Vanderbilt Law School ................................................. 48 

Statement submitted by the Honorable John Conyers, Jr., Michigan, Committee on the Judiciary. This material is available at the Committee and 

can be accessed on the Committee Repository at: 

http://docs.house.gov/meetings/JU/JU05/20170912/106382/HHRG115-JU05-MState-C000714-20170912.pdf 

Testimony submitted by the Honorable Tom Marino, Pennsylvania, Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law, 

Committee on the Judiciary. This material is available at the Committee 

and can be accessed on the Committee Repository at: 

http://docs.house.gov/meetings/JU/JU05/20170912/106382/HHRG115-JU05-20170912-SD004.pdf 

Testimony submitted by the Honorable David Cicilline, Rhode Island, Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law, Committee on the Judiciary. These materials are available at 

the Committee and can be accessed on the Committee Repository at: 

http://docs.house.gov/meetings/JU/JU05/20170912/106382/HHRG115-JU05-20170912-SD003.pdf 

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OCCUPATIONAL LICENSING: REGULATION 

AND COMPETITION 

TUESDAY, SEPTEMBER 12, 2017 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW

COMMITTEE ON THE JUDICIARY

Washington, DC 

The Subcommittee met, pursuant to call, at 3:07 p.m., in Room 

2141, Rayburn House Office Building, Hon. Darrell E. Issa presiding. 

Present: Representatives Goodlatte, Issa, Collins, Ratcliffe, 

Gaetz, Handel, Cicilline, Johnson, Swalwell, Jayapal, and Schneider. 

Staff Present: Ryan Dattilo, Counsel; Andrea Woodard, Clerk; 

and Slade Bond, Minority Counsel. 

Mr. ISSA. The Subcommittee on Regulatory Reform, Commercial 

and Antitrust Law will come to order. Without objection, the Chair 

is authorized to declare a recess of the Committee at any time. 

We welcome today today’s hearing on, ‘‘Occupational Licensing: 

Regulation and Competition.’’ And I now recognize myself for a 

short opening statement. 

Occupational licensing has exploded in this country over the last 

few decades without any apparent connection to the correlation— 

or correlation to public health or safety. In a 2015 report, the 

Obama White House pointed out that more than one-fourth of 

Americans are required to obtain some form of occupational licensing. While many States’ occupational licensing requirements would 

tend to promote consumer health and safety, others serve as barriers to competition and to entry and are constructed by incumbent 

industry interests, inevitably rising prices and reducing consumer 

choice in a marketplace. 

The research done on occupations newly subject to license reveals, that licensees often raise prices and reduce employment 

without any corresponding increase in productivity or service quality. A 2011 study estimated that some restrictions have resulted in 

2.85 million fewer jobs in regulated industries and have cost as 

much as $203 billion. 

Perhaps these figures would be less troubling if effects of occupational licensing were confined to occupations typically subject to the 

licensing process, such as public health or public safety. But these 

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net costs come from new licenses levied on occupations such as interior designers, shampooers, florists, home entertainment installers, funeral home attendants, and one of my favorite, casket manufacturers. Often, these quasi-government regulatory regimes have 

the effect of not only—of not promoting public safety but shifting 

innovation and reducing competition. 

One serious impact of occupational licensing is decrease in geographic mobility. And what I mean by that, as an example, in my 

district, there are 47,000 marines, almost half are married. Those 

marines travel and are redeployed every 18 to 36 months. Their 

spouses must move to another area, and most of them work. If they 

are schoolteachers, they may be subject to a multi-State compact. 

If they are hair braiders or other professions, some of which we will 

discuss today, it is unlikely that there is any reciprocal relationship 

between Virginia, North Carolina, and California. 

This patchwork of overly burdensome occupational licensing laws 

means that, when you arrive in a new location, even after formal 

education, a licensing process, and years on the job, you will likely 

have to begin that same process over again. This certainly causes 

people to be unable to be reemployed even when they would be, by 

any reasonable definition, fully qualified for the position. 

That is not to say that we do not want to support and continue 

a long tradition of licensing through medical boards and the like, 

doctors, lawyers, nurses, real estate professionals, and, of course, 

people in the construction industry required to be responsible, such 

as general contractors. 

Before the August recess, I introduced legislation that would 

serve as a means to crack down on boards engaged in anticompetitive behavior while creating—and I want to stress this—creating a 

specific safe haven for certain environmental—and certain the environment for boards that serve in the public interest. The Supreme 

Court decision in North Carolina Dental case left open to interpretation what steps a State must take to ensure that the board—the 

boards satisfy the sanctions, that the boards it has sanctioned are 

not found liable for violation of antitrust. 

Today, the term active supervised is not defined in law but defined in a single court case, a course case that in many ways comes 

more than half a century after States explicitly were allowed to create these boards and to rely on these boards as antitrust exceptions. The speed with which court cases can resolve problems are 

not fast enough and certainly create a burden for States that do 

not want to have to legislate every part of regulation. 

The Restoring Board Immunity Act would offer States a certainty 

in exchange for the adoption of an oversight mechanism to ensure 

boards are operating in the public interest and not stifling competition. 

We have an excellent panel today. We have a really excellent 

panel today, and I would like to thank you for being here. When 

somebody puts together a panel, you often hope to get the kinds of 

different views and different capability, and, of course, different enforcement requirements that we have today. 

So I am delighted now to recognize the Ranking Member for his 

opening statement and get to our board. 

Mr. Cicilline. 

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Mr. CICILLINE. Thank you, Mr. Chairman, for calling today’s important hearing. And welcome to the panel. I look forward to hearing your testimony. 

Creating economic opportunity for working Americans must be a 

national priority. It is essential that we invest in a stronger America that delivers good-paying jobs through apprenticeship programs, on-the-job training, and education, and a system of competition that helps workers and small businesses. That is why House 

and Senate Democrats have proposed A Better Deal, a bold economic agenda that will give workers new opportunities to get 

ahead. 

Right now, nearly a third of American jobs require a State license. This includes many jobs that have little impact on public 

health or consumer safety. And as the Obama administration reported last year, this threatens to, ‘‘raise the price of goods and 

services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines.’’ 

Excessive licensing keeps jobs out of reach for too many working 

families who cannot afford large, upfront costs just to qualify for 

employment. For example, to work as a security guard, a job that 

typically pays less than $30,000, a Michigan resident must have 3 

years of education and training. Other States require less than 2 

weeks of training for the same job. What is worse, because these 

standards differ by State, military families are disproportionately 

affected because they are 10 times more likely to relocate across 

State lines. 

In response to this growing problem, the Obama administration 

issued a series of best practices for States to reduce licensing barriers to employment and mobility, along with a call to action for 

Governors to streamline requirements for service members, veterans, and spouses. 

Today’s hearing is an important opportunity to consider whether 

we can do more. More than 70 years ago, the Supreme Court held, 

in Parker v. Brown, that the antitrust laws do not apply to a 

State’s sovereign action. But recently, the Court held in North 

Carolina Dental that this exemption does not apply to State boards 

controlled by private parties or active market participants. As the 

Court noted, these boards have a structural risk of confusing their 

own interests with the State’s policy goals. 

In these circumstances, States must actively supervise the anticompetitive conduct of these agencies to receive antitrust immunity. This requirement is essential to ensuring that State boards 

are serving the public interest. 

I look forward to hearing whether Congress should have a role 

in clarifying this standard. 

And, with that, I thank the Chairman for calling today’s hearing. 

And again, with our esteemed panel of witnesses, thank you for 

your participation today. And I yield back the balance of my time. 

Mr. ISSA. I thank the gentleman. 

We now recognize the Chairman of the full Committee, Mr. 

Goodlatte of Virginia, for his opening remarks. 

Chairman GOODLATTE. Thank you, Mr. Chairman. 

The United States has been and continues to be a champion of 

free and open markets. An open market place cultivates competiVerDate Sep 11 2014 06:50 Apr 25, 2018 Jkt 029777 PO 00000 Frm 00007 Fmt 6633 Sfmt 6602 E:\HR\OC\A777.XXX A777
4 

tion among service providers and is the very foundation of maintaining lower prices, higher quality products and services, and superior innovation. 

The antitrust laws established in this country serve a valuable 

role in promoting competition, and the Judiciary Committee routinely exercises oversight authority to ensure that these laws are 

applied in a manner that is transparent, fair, predictable, and reasonably stable over time. 

All occupational licensing restrains competition to a certain extent by restricting who can provide certain services. While occupational licensing can serve the important function of maintaining 

quality and safety in key vocations, poorly executed licensing 

schemes can be detrimental. In some instances, control of regulatory boards by incumbent interests can transform the boards into 

market gatekeepers, limiting entry into regulated industries and 

benefiting the established practitioners that control the boards. 

Often, boards’ licensing requirements are not proportional to the 

regulated occupation’s impact on public health, making it difficult 

for newcomers to enter well-paying industries, harming consumers 

through higher prices and generally disrupting otherwise competitive marketplaces. 

The Federal Trade Commission and Acting Chairman Ohlhausen 

have made significant strides to fight back the tide of anticompetitive occupational licensing. It was an FTC enforcement action that 

led to the Supreme Court’s recent decision in North Carolina Dental, which casts doubt on whether boards fall under the State action doctrine, a judicial rule granting antitrust immunity to Statelevel regulations restricting competition. The FTC has also issued 

guidance regarding when a State exerts sufficient active supervision over a regulatory board controlled by market participants 

such that it can invoke State action antitrust immunity. And the 

Commission recently launched an Economic Liberty Task Force to 

address regulatory hurdles to job growth, including occupational licensing. 

States around the country have also made inroads to limit the 

undesirable aspects of occupational licensing. Occupational licensing requirements are an often unnecessary burden on low-income 

Americans and military families struggling to earn a living. During 

the most recent legislative session in Arizona, State Representative 

Jeff Weninger sponsored a bill that allows individuals with household incomes below 200 percent of the Federal poverty line to obtain an occupational license without paying the accompanying fee. 

A similar bill passed in Florida this year. 

Finally, Congressman Issa recently introduced the Restoring 

Board Immunity Act to address two major problems related to occupational licensing boards. One, the cost associated with onerous 

and arbitrary occupational licensing and, two, the potential that 

the threat of monetary damages under Federal antitrust law may 

chill the willingness of worthy individuals to serve as board members and officers. 

Today’s hearing will help inform the committee regarding the recent proliferation in occupational licensing, the impact of the Supreme Court’s decision in North Carolina Dental, and potential legislation to address concerns in this important area. I look forward 

5 

to hearing the witnesses’ views on these issues and how the FTC, 

Congress, and the States can work together to address the anticompetitive impacts arising from significant growth in occupational 

licensing. 

Today’s testimony will help the Committee gain a better understanding of the seriousness of these issues and how they might be 

addressed. And I am pleased to welcome all of the witnesses here 

today, and especially Commissioner Ohlhausen, who has done 

great service on the FTC. I want to thank you all for your participation. I look forward to your testimony. 

Thank you, Mr. Chairman. 

Mr. ISSA. Thank you, Mr. Chairman. 

We now recognize the Ranking Member for unanimous consent. 

Mr. CICILLINE. Yes. I ask unanimous consent that the opening 

statement of the Ranking Member, Mr. Conyers, be introduced into 

the record. 

Mr. Issa. Without objection, so ordered. 

Statement submitted by the Honorable John Conyers, Jr., Michigan, Committee on the Judiciary. This material is available at the 

Committee and can be accessed on the Committee Repository at: 

http://docs.house.gov/meetings/JU/JU05/20170912/106382/ 

HHRG-115-JU05-MState-C000714-20170912.pdf 

Mr. ISSA. And without objection, other members’ opening statements will be made a part of the record. 

It is now my pleasure to introduce our panel of distinguished witnesses. And I would ask all the witnesses to please rise to take the 

oath. And raise your right hands. 

Do you solemnly swear or affirm that the testimony you are 

about to give will be the truth, the whole truth, and nothing but 

the truth? 

Please be seated. Let the record reflect that all witnesses answered in the affirmative. 

It is now my pleasure to introduce, as the Chairman just did, the 

distinguished Acting Chairwoman of the Federal Trade Commission, Ms. Maureen Ohlhausen, who has done great work for a long 

time. And this is not her first trip here, but we appreciate your return. Mr. Robert Johnson, attorney for the Institute for Justice. 

Ms. Sarah O. Allen, senior assistant attorney general, the Office of 

the Attorney General for the Commonwealth of Virginia. Welcome. 

Ms. Rebecca Allensworth, professor of law at Vanderbilt School. 

For those who have not been here before, you will notice the red, 

yellow, and green lights. We often muse that it is exactly like what 

you see when you are driving down the road. Green means go. Yellow means go like heck. And red, of course, means you are stuck, 

you are going to have to stop. So I won’t cut anyone off mid-sentence, but let’s make sure that we stick to that last thought being 

the last one, and then we will allow you to embellish during Q and 

A. 

6 

TESTIMONY OF MAUREEN K. OHLHAUSEN, ACTING CHAIRMAN, FEDERAL TRADE COMMISSION; ROBERT E. JOHNSON, 

ESQ., ATTORNEY, INSTITUTE FOR JUSTICE; SARAH O. ALLEN, 

ESQ., SENIOR ASSISTANT ATTORNEY GENERAL, OFFICE OF 

THE ATTORNEY GENERAL OF THE COMMONWEALTH OF VIRGINIA; AND REBECCA H. ALLENSWORTH, ESQ., PROFESSOR 

OF LAW, VANDERBILT LAW SCHOOL 

TESTIMONY OF MAUREEN K. OHLHAUSEN 

Ms. OHLHAUSEN. Chairman Issa, Ranking Member Cicilline, 

Chairman Goodlatte, and members of the Subcommittee, thank you 

for the opportunity to appear before you today. I am Maureen 

Ohlhausen, the Acting Chairman of the Federal Trade Commission, 

and I am pleased to join you to discuss competition perspectives on 

occupational licensing. This has long been a significant area of interest for the Commission. And as demonstrated by H.R. 3446, the 

Restoring Board Immunity (RBI) Act of 2017, it is of interest to 

Congress as well. 

Competition is the cornerstone of America’s economy. When sellers compete, consumers benefit from lower prices, higher quality 

products and services, and greater innovation. In furtherance of 

that national policy the FTC act grants the Commission broad enforcement authority regarding both competition and consumer protection matters in most sectors of the economy. 

The FTC has a long history with occupational licensing and State 

boards from both a policy and an enforcement perspective. The 

Commission and its staff have submitted hundreds of comments 

and amicus curiae briefs to State and self-regulatory entities on 

issues related to the intersection of antitrust and competition law 

and policy and occupational licensing. 

In these comments, we provide a helpful analytical framework 

for State legislatures when considering occupational licensing. In 

particular, we advise policy makers to consider five key factors. 

First, implement licensing only when legitimate health and safety 

issues or other public policy purposes justify doing so. Second, 

adopt licensing that will not have adverse effects on competition 

and consumers. Third, only consider licensing that will yield other 

countervailing consumer benefits, outweighing the costs of foregone 

competition. Fourth, narrowly tailor regulations to minimize the 

loss to competition. And, fifth, always ask if there are less restrictive alternatives. 

Elements of the proposed RBI Act are consistent with this framework and share similar procompetitive goals. By following this 

guidance, lawmakers can better avoid adopting rules that interfere 

unnecessarily with an otherwise competitive marketplace. 

Although the FTC typically relies on competition advocacy to discourage potentially anticompetitive occupational licensing and regulations, the Commission sometimes invokes its enforcement authority to challenge anticompetitive conduct by regulatory boards 

when it falls outside protected State action. For example, in 2010, 

the Commission challenged the North Carolina Board of Dental Examiners for issuing a series of cease and desist letters that successfully expelled low-cost nondental providers of teeth whitening services. And the case went to the Supreme Court, which explained 

7 

that States must ensure that any anticompetitive actions undertaken at its direction by private actors pursuant to State law are, 

in fact, approved by the State as part of its policy to displace competition. 

In light of the Commission’s longstanding interest in mitigating 

the anticompetitive effects of occupational licensing and our ongoing work in this area, the Commission supports the overall goals 

of the RBI legislation. At the same time, we note a substantial 

body of case law regarding the State action doctrine has already 

struck a careful balance between the antitrust laws and State sovereignty. Careful thought must be given to the details and potential unintended consequences of any initiatives that would alter 

this balance. 

Because occupational licensing and regulation affects an increasingly broad swath of our economy, I formed the FTC’s Economic 

Liberty Task Force. One purpose of the task force is to study the 

economic effects of occupational licensing on competition. Toward 

that end, the FTC’s Economic Liberty Task Force hosted a roundtable discussion in July and will host a second roundtable discussion on November 7. These programs involve leading economic and 

policy experts discussing the current state of economic learning, 

about the costs and benefits of licensing and its effects on workers, 

consumers, competition, and the overall economy. 

So thank you for your time today, and I look forward to your 

questions. 

Hon. Ohlhausen’s written statement is available at the Committee or on the Committee Repository at: http://docs.house.gov/ 

meetings/JU/JU05/20170912/106382/HHRG-115-JU05-WstateOlhausenM-20170912.pdf 

Mr. ISSA. Thank you. 

Mr. Johnson. 

TESTIMONY OF ROBERT E. JOHNSON, ESQ. 

Mr. JOHNSON. Good afternoon, Chairman Issa, Ranking Member 

Cicilline, and members of the Subcommittee. My name is Robert 

Johnson, and I am an attorney at the Institute for Justice, a national public interest law firm that for decades has been at the 

forefront of the fight against occupational licensing. We have represented scores of entrepreneurs subject to arbitrary and unnecessary licensing restrictions, from Louisiana florists to tour guides in 

Philadelphia and teeth whiteners in Connecticut. 

Occupational licensing is growing at an alarming pace. Whereas 

in the 1950s only one in 20 U.S. workers required an occupational 

license, today, that figure stands at almost one in four. Occupational licensing has spread because it helps economic incumbents. 

Licensing limits opportunities for workers, frustrates entrepreneurs 

seeking to introduce innovative new business models, and it also 

raises the prices paid by consumers. Licensing is particularly troublesome for workers at the first rungs of the economic ladder. 

Importantly, even when licensing protects against real dangers, 

it can still be abused. Take medical licensing. While some States 

allow nurse practitioners to meet rising demand for medical services, in other States, doctors have used licensing laws to strictly 

8 

limit the practice of nurse practitioners, resulting in more profits 

for doctors but higher medical costs for everybody else. 

Now, most licensing occurs at the State and local level. But there 

is still an appropriate role here for Congress, and that is because 

licensing restrictions are often imposed by boards made of up of industry insiders. And when industry insiders use licensing laws to 

exclude competition, they can be liable under the Federal antitrust 

laws. 

In a 2015 decision, FTC v. North Carolina Board of Dental Examiners, the Supreme Court addressed this antitrust question and 

held that boards can be liable when they violate the antitrust laws. 

At the same time, the Court made clear that States can insulate 

boards from liability so long as they impose what the Court termed 

active supervision. And that, in turn, raised the question of just 

what active supervision entails. And, right now, nobody really 

knows. 

But several States have responded to that decision by enacting 

what you might call rubber-stamp supervision. And these States 

charge licensing—or charge bureaucrats with supervising the actions of licensing boards, but they don’t charge those bureaucrats 

with any actual mandate to promote competition. And this kind of 

rubber-stamp supervision is bad for everybody. It is a bad bet for 

the States, because the Supreme Court, after recently deciding the 

North Carolina Dental decision, is unlikely to hold that a rubberstamp supervisor actually satisfies the antitrust laws. And it is certainly bad for those affected by occupational licensing as it will not 

result in real reform. Result is likely to be years of litigation as the 

courts hammer out a definition of active supervision. 

The Restoring Board Immunity Act seeks to clear up this uncertainty, while also promoting reform. The Act immunizes State licensing boards, but it only does so if States adopt a meaningful 

version of active supervision. So to secure immunity under the bill, 

States must do two things. First, they must adopt a policy of using 

licensing only when truly necessary. And, second, they must adopt 

a procedure to ensure that boards follow that policy. And, notably, 

the bill gives States a choice between two procedural enforcement 

mechanisms: one administrative and one judicial. And this approach is consistent with principles of federalism. Since the antitrust laws are a creature of Congress, it is appropriate for Congress 

to clarify how they apply. And, at the same time, the bill does not 

actually require that States do anything at all. Instead, the bill 

simply rewards States that adopt beneficial reforms. 

In short, the bill promotes licensing reform, benefiting consumers, workers, and entrepreneurs, while also respecting the role 

of the States. The Institute for Justice is pleased to support this 

bill. 

Thank you for the opportunity to testify. 

Mr. Johnson’s written statement is available at the Committee or 

on the Committee Repository at: http://docs.house.gov/meetings/ 

JU/JU05/20170912/106382/HHRG-115-JU05-Wstate-JohnsonR20170912.pdf 

Mr. ISSA. Thank you. 

Ms. Allen. 

9 

TESTIMONY OF SARAH O. ALLEN, ESQ. 

Ms. ALLEN. Chairman Goodlatte, Chairman Issa, Ranking Member Cicilline, and members of the Subcommittee, thank you again 

for inviting me to speak with you today about this very important 

topic to the States. 

Before I start, I must reiterate the disclaimer I made in my written testimony that my remarks today are my opinions alone and 

do not necessarily reflect those of the Virginia Attorney General’s 

Office, General Mark Herring, or any of the other antitrust colleagues I have that are affiliated with the National Association of 

Attorneys General. 

Even though these are my opinions alone, my remarks are informed by my 26 years as an antitrust enforcer, both on the Federal level as an alumnus of the FTC and on the State level at the 

Virginia Attorney General’s Office. I do believe in strong antitrust 

enforcement and open competition. But part of my job at the AG’s 

office is also to defend and advise State agencies and boards on 

antitrust issues. And in the last 3 years, most of that advice has 

been on issues concerning State action immunity. 

One of the things that struck me when reading through the testimony of my fellow panelists and others who are critical of State 

boards is how widespread and profound the misunderstanding is of 

what State boards actually do. They are not cartels. They are not 

State-authorized conspiracies to exclude new entrants and raise 

prices in the market. They are arms of State government that are 

formed by sovereign State legislatures to perform oversight over 

people that the legislatures have chosen to include in their licensing regimes, not the board. 

The legislatures have chosen to license certain occupations and 

restrict competition in those markets to protect something they 

value more than open competition, which is the health, safety, and 

welfare of their citizens. 

The large majority of decisions made by State boards have little 

to no competitive impact. Instead, they are mainly concerned with 

issues, such as the proper standards of care for their profession, 

holding licensees to minimum ethics standards, protecting consumers from deceptive advertising or fraudulent billing practices, 

or cases involving licensees’ mental or physical fitness to practice. 

Practitioners who are active and current in their professions are 

often the best people to judge these issues. It would be difficult for 

States to develop this kind of expertise in-house with bureaucrats. 

Even without active supervision, State boards must follow clearly 

articulated State policy. Private trade associations, to which State 

boards are often unfairly compared, are under no such restrictions. 

In addition, more boards in many States do not have jurisdiction 

over nonlicensees. So it is not possible for them to do what the dentistry board in North Carolina did, which is to overreach their statutory authority to try to shut down new forms of lower cost or more 

innovative competition. 

And many functions boards perform, such as determining if a 

particular applicant is qualified to receive a license, are ministerial 

and do not involve any discretion on the part of the board or the 

individual board members. Either the applicant meets the criteria 

for a license or she doesn’t. 

10 

The licensing regime itself may restrict competition, but that decision was made by the legislature, not by the board or the individual board members. And that highlights the biggest problem 

with the Restoring Board Immunity Act, in my opinion. It targets 

the wrong actor. The State legislature is the entity that is creating 

boards and requiring them to be overseen by active market participants. The boards and the individual board members are taking actions, for the most part, that they are statutorily obligated to take. 

If Congress wants State legislatures to engage in regulatory reforms to reduce the number of professions they license or to regulate them in less restrictive ways, then the boards are not the proper entities to defend the competitively restrictive decisions they did 

not make. And they certainly should not be on the hook for potential treble damage liability for these decisions. These cases should 

be for declaratory or injunctive relief only, and the board and its 

members should be immunized from damages liability. 

In the aftermath of the NC Dental decision requiring active supervision for antitrust immunity and the flurry of antitrust cases 

filed against boards and board members since the decision, it is 

getting difficult for States to find qualified people to serve on these 

boards. The potential for being sued for treble damages and the inability of many States to indemnify them for constitutional reasons 

has caused some board members to resign and many more practitioners to refuse to serve. 

And I am running out of time, but I wanted to wrap up by saying 

that the board would require huge revisions to States’ legal codes 

and create an unfunded Federal mandate to establish an umbrella 

State agency for active supervision. The Act would also cause an 

arguable separation of powers problem by having an active supervisor in the executive branch or a State judge in the judicial branch 

overseeing the legislative branch. 

So at the end of the day, I think the Act is really unworkable 

for States to implement, and so they will not be engaging in the 

regulatory reform that Congress would like to encourage them to 

do. And I thank you for inviting me to speak here today. 

Ms. Allen’s written statement is available at the Committee or 

on the Committee Repository at: http://docs.house.gov/meetings/ 

JU/JU05/20170912/106382/HHRG-115-JU05-Wstate-AllenS20170912.pdf 

Mr. ISSA. Thank you. 

Professor. 

TESTIMONY OF REBECCA H. ALLENSWORTH, ESQ. 

Ms. ALLENSWORTH. Thank you, Chairman Issa, Ranking Member 

Cicilline, Chairman Goodlatte, Ranking Member Conyers, and 

members of the Subcommittee, for the opportunity to testify today. 

The case against excessive occupational licensing has been made 

for decades by libertarians who see it as an infringement on individual liberty—we have someone here on the panel today that 

would fit that description—by progressives who see licensing as yet 

another way to privilege high-status groups while leaving immigrants, racial minorities, and ex-offenders out of the labor market. 

And, of course, by conservatives who see licensing as just more govVerDate Sep 11 2014 06:50 Apr 25, 2018 Jkt 029777 PO 00000 Frm 00014 Fmt 6633 Sfmt 6602 E:\HR\OC\A777.XXX A777
11 

ernmental red tape keeping markets from operating freely and fairly. 

Yet in the half century since licensing first came under fire, it 

has only proliferated. Nearly a third of Americans need a State license to work, and the licensed professions have swelled to include 

hair braiders, casket sellers, and floral designers. 

How can it be that excessive occupational licensing has survived, 

even thrived, in this environment of bipartisan support for reform? 

The answer is the regulatory institution targeted by this bill that 

we are discussing today, the State-level occupational licensing 

board. 

Almost a third of our workforce is regulated by a constellation of 

over 1,700 State boards, each so small and so politically irrelevant 

as to be invisible. My research has shown that nearly all of them, 

over 85 percent, are required by statute to be dominated by currently licensed working professionals. That is right, these boards 

are formed by law as cartels. 

So here you will see where my perspective differs sharply from 

Ms. Allen’s. And I will pause to say, what is a cartel? A cartel is 

a group of competitors who get together, set the terms of entry into 

their profession or the things that they sell, determine what the 

kinds of competition will be allowed, what other kinds of competition won’t be allowed. And that perfectly describes a State occupational licensing board. It is basically totally nongovernmental. 

In 2015, the Supreme Court finally recognized these boards for 

what they are: not arms of the States, but combinations of competitors. Until North Carolina Dental, it was widely believed that 

boards enjoyed a legal loophole that allowed them to operate without oversight from the States and without Federal accountability 

for their anticompetitive practices. But in 2015, the Supreme Court 

decided that boards must bow to either State control or Federal 

antitrust lawsuits. It is this legal development that provides new 

hope for meaningful reform. 

The introduction of this bill represents a promising effort in that 

direction. It offers States a carrot, a new way to immunize their licensing boards from the Sherman Act, if they adopt a policy of creating only efficient licensing laws and then either create an office 

of supervision of occupational boards or create a cause of action allowing individuals to sue to invalidate any licensing laws that do 

not conform to that policy of efficiency. Of course, States also have 

the option of doing nothing and rolling the dice with the court’s existing State action doctrine. 

The bill’s greatest strength is the first option: the active supervision option that encourages States to supervise their boards, restoring transparency and accountability to licensing regulation. In 

other words, this would make licensing regulation governmental 

again, taking the cartel—taking away the power of the boards to 

act as a cartel and putting it in the hands of State government. 

I advocated for a similar reform in an article I wrote last year, 

and I generally support this portion of the bill, except to the extent 

that it may give too little regulatory freedom to States by mandating that States use a least restrictive alternative test for all of 

their licensing regulation. The bill does well to require that licensing rules address only real threats to public health and safety, but 

12 

it goes too far by making States show that they had no other regulatory alternative. 

I am less enthusiastic about the second option in the bill, the one 

that gives States immunity if they create a substantive right to efficient occupational regulation and a cause of action to enforce it. 

This section also has the least restrictive alternative analysis problem, and it has the additional flaw of relying on courts to balance 

regulatory alternatives and to do so in a case-by-case manner. 

This issue is too important and too complex to be resolved by 

State courts on an ad hoc basis. And the result is likely to be one 

of two undesirable outcomes: either broad deference to the boards 

or wholesale deregulation of the professions. A better approach, in 

my opinion, would be to streamline the bill to its first option, to 

offer immunity to licensing boards that are supervised according to 

the bill’s terms. 

Thanks again for this opportunity to speak to you about this bill, 

and I look forward to your questions. 

Ms. Allensworth’s written statement is available at the Committee or on the Committee Repository at: http://docs.house.gov/ 

meetings/JU/JU05/20170912/106382/HHRG-115-JU05-WstateAllensworthR-20170912.pdf 

Mr. ISSA. I do too, I do find it interesting that a former clerk for 

Anthony Kennedy and a former, I guess, researcher for Elizabeth 

Warren when she was at Harvard are on each side of you, Ms. 

Allen. I know you are in good company and feel that your left and 

your right is properly covered. 

I am going to try and focus on Virginia for just a moment. Virginia is one of the States that had hair braiding regulated. And the 

legislature was lobbied in Virginia by the hair salon industry to 

make sure that if you want to be a hair braider, you had to be a 

hair salon. So although I hear what you say, the State of Virginia, 

for a period of time, based on a board/inside—and you called it— 

these were government entities—took the advice and elevated simple hair braiding to a cartel, essentially, of a much higher level. 

You had to have a facility, you had to have the right chair, you had 

to have the right water, and you had to have everything to braid 

hair. 

Now, during Governor McDonnell’s period of time, it was gotten 

rid of because it showed no public—I forget the exact language— 

evidence of public harm to get rid of it. 

I heard what you said, but I am going to ask you a simple question. By my standard, simple. You mentioned and somewhat derided trade associations. But trade associations are fully covered by 

the antitrust laws. They live in terror that two of their board members will say the wrong thing in a meeting. Having been the Chairman of a major trade association, trust me, I have seen it, that you 

are overly concerned. And yet you would purport that it is burdensome in Virginia, in return for this immunity, to have active supervision, and yet you called them an arm of government. 

Are they an arm of government, in your opinion, as you said in 

your opening statement? 

Ms. ALLEN. Yes. 

Mr. ISSA. If they are an arm of government, in Virginia, don’t you 

require that people not have an economic conflict of interest in 

13 

their everyday voting? In other words, aren’t you covered by not 

making decisions where you have an economic benefit of that decision? Isn’t that true? 

Ms. ALLEN. I am not sure about what it would—how it applies 

to me. But I think that the situation here is that the many, many 

decisions that the board makes—— 

Mr. ISSA. If you were in an antitrust case and you owned stock 

in the company, would you be allowed to prosecute that case or 

would you recuse yourself? 

Ms. ALLEN. I would recuse myself. 

Mr. ISSA. Okay. So we have established the conflicts of interest 

by government officials are critical. Additionally, your legislature, 

even though it is a part-time legislature, they find themselves 

recusing themselves if they have major interest in a specific entity 

that would be affected directly by a bill. True? 

Ms. ALLEN. I assume so, yes. 

Mr. ISSA. Okay. And yet these boards have no such objection. So 

the one point I want to make, using your testimony, is you want 

them to be public entities. But you don’t currently, nor do virtually 

any States, require that they essentially recuse themselves from 

self-dealing. So if you have got people who can self deal, such as 

hair salons that can rake in braiding, or even dentists who can 

bring in additional revenue from tooth whitening, and you don’t 

have them live up to the same ethical standards, isn’t that where 

we are stepping in and where this legislation, which Professor 

Allensworth is not thrilled with, she wants some changes, but that 

is why we have a requirement here, is there is an inherent conflict 

because they are acting as government entities, but they are not 

bound by the normal ethics that the FTC commissioner would be 

bound by in her government role. 

Ms. ALLEN. Well, to the contrary, Chairman Issa, I believe that 

the standards of ethics for many of these boards are very stringent. 

I know that the State bar has very stringent ethics rules and so 

does the Board of Medicine and so—— 

Mr. ISSA. Let’s go through that. 

Mr. Johnson, I will go to you. And I would like to get to all of 

you quickly. Do you see that they are allowed to rule in areas that 

specifically limit competition or raise potential revenues that come 

to their industries? 

Mr. JOHNSON. Absolutely. That is what they exist to do. 

Mr. ISSA. Okay. Professor Allensworth, do you agree? 

Ms. ALLENSWORTH. They are regulating entry—they regulate 

entry and they are regulating the terms of competition. So that is 

always going to be a conflict of interest for currently licensed working board members. 

Mr. ISSA. Okay. And Ms. Ohlhausen—Chairman, your past work 

of the FTC is specifically for that reason, isn’t it, that overreach by 

people who have an economic benefit and do so without a demonstrated need for what they are asking for? 

Ms. OHLHAUSEN. Yes, absolutely. 

Mr. ISSA. So when we look—and I know Ms. Allen said that these 

things don’t apply to the North Carolina Dental case, but hair salons in Virginia that wanted to make sure that braiding had to 

14 

come into their establishments, isn’t it really a first cousin, if not 

a direct sibling, of the North Carolina Dental case? 

Ms. OHLHAUSEN. Yes, I think it is. And the Supreme Court has 

recognized the risk of board members confusing their own interests 

with the State’s policy goals. 

Mr. ISSA. Okay. I want to be respectful of the clock, so I will now 

go to the Ranking Member, Mr. Cicilline. 

Mr. CICILLINE. Thank you, Mr. Chairman. Thank you again to 

our witnesses. 

I would like to begin with you, Acting Chairman Ohlhausen. In 

the same way that excessive licensing hurts workers, entrepreneurs, limit market mobility and innovation, so too do non-compete agreements. According to a report by The New York Times, 

these clauses have become pervasive, unreasonably broad in duration and scope, and cover one in five Americans, from hairdressers 

to engineers. Leading economist Alan Krueger has described the 

prevalence of non-competes as an act to prevent the forces of competition to rig the labor market against workers. And the Treasury 

Department, likewise, reported last year that non-competes diminish workers’ earnings, mobility, and economic opportunity. 

Through its competition enforcement, the Federal Trade Commission can be a leader against these structural impediments to open 

labor markets, just as it can be against occupational licensing. And 

so I would like to ask you what resources has the Commission dedicated to policing unreasonable non-compete clauses in employment 

contracts? And are you concerned that non-compete clauses are 

being unfairly used by businesses to unreasonably restrain trade in 

violation of the antitrust laws? 

Ms. OHLHAUSEN. So last year, the FTC and the Department of 

Justice put out guidelines for HR professionals. And one of the 

things that it cautioned against in there is HR professionals getting together and coming up collectively with terms that they are 

going to impose on employees and their businesses, that that could 

raise a competition concern, and be an antitrust violation. 

I think, also, as we look at all barriers to additional economic liberty, we can certainly look at the problem that may be raised by 

some, extensive or inappropriate noncompete agreements. 

Mr. CICILLINE. I am also very concerned that the consolidation 

is a threat to the economic opportunity to working Americans. 

Many leading economists agree that the concentration of labor 

markets gives corporations the ability to hoard profits at the expense of workers. And yesterday, you remarked that antitrust is 

not suited to address economic problems such as income or inequality. But isn’t enforcement and promoting competition critical to 

avoiding the harms of consolidation such as depressed wages, reduced opportunity, and workplace inequality? 

Ms. OHLHAUSEN. So I am very much in favor of enforcing the 

antitrust laws and merger guidelines against undue levels of concentration that could cause impacts on consumer welfare. And preserving a competitive market also can preserve some of these other 

values that you are talking about. 

Mr. CICILLINE. Thank you. 

15 

I would like now to turn to Professor Allensworth and ask you, 

what effect would this legislation have on the State action doctrine, 

in your judgment? 

Ms. ALLENSWORTH. So I think that there is a bit of an ambiguity 

in the way that the bill is currently drafted. I read it as attempting 

to create another option for immunity for boards, in addition to the 

State action doctrine that exists. But there is something especially 

in the preamble that seems to suggest that maybe this is an attempt to define active supervision once and for all. 

So the first reading, the one that I think is dominant and the one 

that I prefer, is the idea that occupational licensing is a special 

problem. And here we have a special solution for it. There is uncertainty in NC Dental following—there is uncertainty after NC Dental about what supervision is and about the State action doctrine. 

And so you can sort of bypass that by going to the options laid out 

in this bill for your occupational licensing boards. 

I think that that is a more natural reading of the bill the way 

it is written because State action doctrine applies to all kinds of 

State regulation: liquor commissions, municipalities, regulated utilities. And this bill really says nothing about how States need to supervise—those entities are subject to the same two-prong test 

under State action doctrine involving supervision. It says nothing 

about that. And so it would be odd to read this bill as defining supervision for all areas of State action doctrine. 

But I do think that it may be worth clarifying, if that is the intent of the drafters, that that is what this bill does. So, in other 

words, I think it would leave State action doctrine as it is. 

Mr. CICILLINE. And your recommendation is that those first—the 

first part of the legislation act provides those two prongs is sufficient, it is the second part that raises concerns? 

Ms. ALLENSWORTH. My hesitation about the judicial review option? 

Mr. CICILLINE. Yeah. 

Ms. ALLENSWORTH. Yeah. That is the one that I think, if States 

opt for that, I think we may not see the kind of reform that the 

bill is aimed at. 

Now, the other question is, is it better than the status quo? So 

the status quo is the antitrust liability for boards. That is case-bycase judicial resolution of these problems too. So what I am talking 

about is writing on a blank slate. I like the idea of giving this option that will really encourage supervision. I think that is the better way to go. 

As to whether or not this bill with its two options, including the 

one that I think is a little bit weaker, is better or worse than what 

we have, it is a closer call for me. 

Mr. CICILLINE. Thank you. 

Mr. ISSA. Would the gentleman yield for a second? 

Mr. CICILLINE. Of course. 

Mr. ISSA. I am intrigued by this. One follow-up question to Mr. 

CICILLINE’s. 

So, summarizing, it doesn’t go far enough because it leaves a little too much in the way of loopholes. You would like it to be tougher on what it takes to qualify for immunity. Is that a fair statement? 

16 

Ms. ALLENSWORTH. I think it is possible to characterize the lawsuit option as a loophole because I worry that courts would under 

enforce the kinds of objectives that are laid out in the bill. So, yes, 

I think a way to make it tougher is actually sort of addition by subtraction, is to get rid of that second lawsuit option. Because I think 

the real problem with licensing is who does it. Right now, it is 

boards that I see as cartels. Who do I want to do it? The State. I 

want the State to take governmental responsibility for the regulation they create. 

Mr. ISSA. Thank you. 

Mr. CICILLINE. So just reclaim my time. 

So that I understand your testimony, so your recommendation, 

your testimony, is if the bill had those two components that made 

it clear, that the State was going to engage in the supervision, that 

by itself is preferable to the bill with the second piece with respect 

to judicial review? 

Ms. ALLENSWORTH. That is right. 

Mr. CICILLINE. Thank you. I yield back. 

Mr. ISSA. Thank you. 

We now go to the Chairman of the full Committee, the gentleman from Virginia, Mr. GOODLATTE. Chairman GOODLATTE. Thank you, Mr. Chairman. 

Commissioner Ohlhausen, I would like to get your thoughts on 

that, but I will just make it a wider question. And that is, how 

would this bill impact your efforts with respect to occupational licensing both from advocacy and enforcement perspectives? And do 

you agree with Professor Allensworth’s suggestion that we remove 

that provision related to the options? 

Ms. OHLHAUSEN. I think the bill would give us additional opportunities for advocacy. As States decided whether to adopt these 

provisions and to go through this process that the bill provides, it 

would give the FTC an opportunity to weigh in on whether we 

thought where they were drawing the lines was good for consumers. 

Regarding our enforcement, I think it depends on whether the 

bill is an additional option for States or whether it defines the field 

of what is active supervision. With that being said, I think to have 

the States think more closely about what this occupational licensing is doing and whether it is good for consumers or is it more restrictive than necessary, I would hope would reduce the incidents 

of States adopting, or boards adopting, harmful legislation. 

As for the issue of parts on part two of the bill, I don’t actually 

have an opinion on that. I certainly, appreciate setting out a process for—a clear process for the States to follow. I do agree that having a case-by-case of different judges deciding may give a less clear 

and consistent answer. 

Chairman GOODLATTE. Very good. Thank you. 

Ms. Allen, you note in your testimony that the RBI Act—by the 

way, Mr. Chairman, I like the baseball analogy in your title of your 

thing, because baseball itself has an antitrust exemption. 

But the RBI Act places a significant burden on States to comply. 

How do the requirements under the Restoring Board Immunity Act 

differ from the inherent requirements under North Carolina Dental 

or the FTC guidance? 

17 

Ms. ALLEN. In several ways, actually. The active supervisor currently under North Carolina Dental case law merely has to be a 

disinterested State official who looks at what the board did in a 

substantive way, not just a procedural way, and determines whether or not the action that the board took is in keeping with the enabling statute that the board is operating under. There is no requirement of using the least restrictive alternative, there is no requirement that it has to be efficient, and there is no requirement 

for regulatory reform. 

If you go the judicial route, review route, the burden shifts quite 

substantially from the plaintiff to prove that there was an antitrust 

violation to the board to defend a decision that they didn’t make. 

The legislature is the one that restricted competition. The board 

was following what the legislature instructed them to do. So I 

think it quite substantially puts a burden on the States that is different and more than what they have to do now to comply with NC 

Dental. 

Chairman GOODLATTE. And, Mr. Johnson, would a Federal legislative solution be necessary or helpful to address this issue? 

Mr. JOHNSON. Yes, I think it would be. We are in a situation 

right now where there is a great deal of uncertainty as to what active supervision means. And I think that certainly Ms. Allen has 

suggested that the bar posed by active supervision requirement is 

quite low and that the States can meet it quite easily. On the other 

hand, that requirement may turn out to be much higher, and I 

think it probably will turn out to be much higher. But that uncertainty is going to create costs, it is going to give rise to litigation. 

And however it is decided ultimately by the courts may be a good 

result or a bad result. 

What we have here is an opportunity to eliminate the need for 

those costs, to eliminate the need for that litigation, and to assure 

off the bat that what is achieved is a good result and a result that 

actually advances the cause of occupational licensing reform. And 

that is what the bill tries to do. 

Chairman GOODLATTE. You like this bill. Do you think this bill 

should go further? Do you envision other bills that you would like 

better? What is your overall take on what needs to be done to address this creeping regulatory effect of State licensing which obviously has grown? And I, quite frankly, think the need for it hasn’t 

been justified by the amount of growth we have seen. 

Mr. JOHNSON. Well, this is obviously an area where there are 

sensitive federalism concerns. This is an area of regulation that 

historically has been one that is overseen by the States. This bill, 

I think, is sensitive to those concerns because it proceeds from the 

sort of foundation of the antitrust laws, which I think are sort of 

recognized roles for the Federal Government. 

Could Congress go further and explore other types of approaches 

to occupational licensing? I think it certainly could, and it would 

be an interesting conversation to have. But the federalism issues 

that would then start to arise would be interesting and substantial 

and would require a lot of attention. 

Chairman GOODLATTE. So you would be happy with this for now? 

Mr. JOHNSON. Absolutely as a first step. 

Chairman GOODLATTE. Thank you, Mr. Chairman. 

18 

Mr. ISSA. Thank you, Mr. Chairman. 

We now go to the gentleman from, more or less, Oakland, California, Mr. Swalwell. 

Mr. SWALWELL. Thank you, Mr. ISSA. 

And I just want to, before we begin, wish well my colleague, 

Hank Johnson, and others who were in Irma’s path, their constituents, as well as Mrs. Handel, that we are for them and will do anything in a united way in Congress to help them. 

So, with that, I wanted to ask Ms. Allen, with respect to indemnification, it is my understanding that in some States you are not 

allowed to indemnify board members for damage liability associated with antitrust actions in which board members are specifically 

named as the antitrust defendant. But my fear is that this would 

be a perversion of the antitrust laws if counsel for an individual 

seeking a license or an individual subject to a disciplinary proceeding could contact an individual board member in such States 

and then threaten them with treble damages liability under the 

North Carolina Dental case if they did not refrain from acting 

against that client’s interests. 

Should there be a more straight way to remove this threat of individual damage liability? And, I guess, I am speaking specifically 

to the RBI Act and what your thoughts are on that. And I guess, 

just thinking—I went to law school, passed the bar exam, appreciate the great work that the California Bar Association does. And 

these are volunteers, the board members, at least in the law, usually don’t get paid, and you just want to protect against them from 

being personally liable unless you can show that they are acting 

maliciously. So I would be interested in your thoughts on that. 

Ms. ALLEN. Absolutely. There has been a flurry of lawsuits that 

have been filed against boards since the North Carolina Dental decision. And the majority of those lawsuits have also sued the individual board members for treble damage liability under the antitrust laws. And many States—some States are able to indemnify 

board members. Many States are not. They are constitutionally 

prohibited from indemnifying them over a certain amount of 

money, and it is been a problem. 

In Florida, the Chairman and a couple of other members of the 

podiatry board have resigned because of this. Many other people in 

their professions are refusing to serve because of this problem. And 

boards can’t add active supervision to themselves. They have to 

wait till the legislature does it for them. So the problem does exist. 

And I think that one possible solution is to add an analog to the 

Local Government Antitrust Act that immunized municipalities 

from antitrust damage liability because of several big judgments 

that bankrupted some cities and towns. 

Mr. SWALWELL. Do you fear that if they were not indemnified 

from treble damages, that the costs would be passed along either 

to the practitioners or—I mean, because I don’t know who would 

serve without some sort of protection, and that would require an 

insurance policy. And someone would have to pay for it. 

Ms. ALLEN. Right. I mean, the Commonwealth of Virginia has a 

risk management plan that requires us to defend them, and it does 

immunize them to a certain amount. But antitrust treble damage 

19 

liability can quite easily go over the amount of the risk management plan. 

Mr. SWALWELL. Now, Chairman Ohlhausen. 

Darrell Issa and I are the founders and co-chairs of the Sharing 

Economy Caucus. And I was interested in your testimony about 

how smartphones have allowed the development of new ways for 

consumers to use transportation services. Particularly, Uber and 

Lyft are the most widespread platforms. You note that some jurisdictions have pursued regulatory approaches that would impede 

the development of new services, often without putting forth evidence of a legitimate consumer protection justification. 

Could you share some examples of the services targeted and the 

approaches that you have seen used? 

Ms. OHLHAUSEN. So the FTC has filed competition advocacy comments on some of these concerns. So we filed comments on the Colorado Public Utilities Commission, District of Columbia Taxicab 

Commission, the City Council of Anchorage, and the City Council 

of Chicago on allowing these kinds of new forms of sharing services 

to exist for consumers. With that being said, we certainly are also 

alert to whether there any consumer protection issues that regulation should address. But opening it up to competition, certainly, we 

are in favor of. 

Mr. SWALWELL. Sure. So are we. 

Mr. ISSA. If the gentleman would yield? 

Mr. SWALWELL. I would yield. 

Mr. ISSA. I liked your line of questioning. I would only share a 

question with you. If I heard correctly, according to Ms. Allen, 

many States have decided to protect their boards exactly as they 

do every employee, millions of employees that work for States. 

When they make a decision to have someone do something on behalf of the government and then decide not to treat them like employees for the purpose, wouldn’t you say that was a decision that 

each State makes? 

Mr. SWALWELL. Sure. And to reclaim my time. I certainly respect 

that. And I think what you are looking for is probably when people 

go outside the scope of employment, if that is the relationship that 

they have. If you go outside the scope of employment, then you are 

not covered as a State employee, and then you probably won’t be 

covered on one of these boards. But fair point. 

Mr. ISSA. I thank the gentleman. It is a good line of questioning. 

With that, I believe the next in line is the gentlelady from the 

air-and-water-torn State of Georgia, Mrs. Handel. 

Mrs. HANDEL. Thank you very much, Mr. Chairman. 

And thank you to my colleague from California for your good 

wishes for everything in Georgia. We still have quite a number of 

people without power, including our own Congressman Collins 

here, so—— 

Mr. COLLINS. I come with my own power. 

Mrs. HANDEL. He does come with his own power. Believe me, I 

know. 

Thank you very much to the witnesses for being here. 

I am a former secretary of state, and as such, in that role, I 

oversaw some 40 licensing boards. So this is, even though I am 

new, this is a very interesting piece of legislation for me. 

20 

So one thing I would like to get at is, for Chairman Ohlhausen, 

as you sent out the guidance on the active supervision, what was 

the response to that, and sort of, has there been any action taken? 

Specifically, what have you heard from secretaries of state that 

may have these licensing boards up under them? 

Ms. OHLHAUSEN. So we had a very productive dialogue with the 

State AGs and other officials about trying to give them the guidance that they were seeking post-North Carolina Dental. 

So the response has been positive on it. And as for what the 

States have done, we are actually conducting a survey right now 

to look at what every State who has taken an action, which States 

have taken an action, and what they have done in response to the 

North Carolina Dental case. 

Mrs. HANDEL. Do you know if secretaries of state have been 

rolled into that, or has it just been the attorneys general? 

Ms. OHLHAUSEN. So different States do it differently. Some AGs, 

some State legislators—— 

Mrs. HANDEL. Okay. Great. I know, for myself, I took a very active role in what was happening with the licensing boards, and I 

will say there are some boards that are really, really good. And 

they come at it with the right perspective for what they are trying 

to do. And it is true that the boards, they can only do what they 

are legislatively directed and instructed to do. 

With that said, some did very much—your point—wander into 

what I would call attempts to barrier to entry. And I always took 

that very, very seriously. 

So, Professor Allensworth, what more do you think needs to be 

done in this piece of legislation to make sure that we have as open 

and free market possible out there? 

Ms. ALLENSWORTH. Well, I think the first goal of the legislation 

is to increase clarity for States. I think that is really, really important. Once States know the lay of the land, as made clear by this 

statute, then they will be able to balance the competitive costs of 

regulations themselves. 

I do think that licensing has gone too far. I think that there are 

lots of occupations that we license that shouldn’t be licensed at all, 

and I also think that occupations we do license, like medicine, get 

regulated in a way that is inefficient. And I think that all goes 

back down to who is doing that regulation. 

I like this bill because it addresses what I think the real problem 

is, which is that regulatory infrastructure, if we fix that, and then 

we fix the ultimate problem. 

So what more does the bill need? I think I will go back to the 

comments that I said before. I think it would be stronger if it didn’t 

have the option of lawsuits because, to me, that is not restoring 

governmental regulation here in place of the cartel. It is putting 

the cartel—vulnerable to a different kind of lawsuit and different 

courts, State courts rather than Federal courts. To me, it is sort of 

a step sideways whereas the first option, what I would call the administrative option, the active supervision option, actually puts the 

regulation back in the hands of the State. And that will result in, 

somewhat—it is never going to be perfect. You are going to have 

capture. You are going to have regulatory inefficiencies, but it is 

going to make it better, in my opinion. 

21 

Mrs. HANDLE. Great. Thank you very much. 

To be sure, it is regulation run amuck with some of the licensing, 

but then there are those boards, to your point, that are very much 

needed to strike that right balance. 

So thank you very much. And I yield back, Mr. Chairman. 

Mr. ISSA. I thank the gentlelady. 

We now go to the gentlelady from Washington, Ms. Jayapal. 

Ms. JAYAPAL. Thank you, Mr. Chairman. 

And I really want to thank you and our Ranking Member 

Cicilline for what I think is a very important hearing. And I think 

it has been very reassuring to hear all of the views across the 

board, which is what I have heard from my constituents in reaching out about this bill, but also in my time in the State senate, 

where I served on the healthcare Committee. We dealt a lot with 

these licensing issues. And I think, from the labor and social services side, the importance of licensing, particularly in the health 

professional—health arena and around quality of care and standardization of professions, but also then, on the other side, the studies that clearly show that too much licensing actually presents 

enormous barriers. 

And certainly with the population that I have worked very closely with, immigrant refugee population, we have really had to balance a lot of these cultural competency issues. So I hope we continue to have those discussions and the right balance there, and I 

appreciate the various perspectives that you have brought. 

Now, Ms. Allensworth, I wanted to ask you about Ms. Allen’s testimony. Ms. Allen argues that our constitutional system vests plenary authority on States to protect their citizens from fraudulent 

or unsafe practices by unqualified practitioners of vital consumer 

services, such as medical, engineering, or legal services. 

Are you concerned at all that Federal reforms in this area might 

actually disrupt the role of the States in ensuring the safety of 

their citizens? 

Ms. ALLENSWORTH. To me, it is quite the opposite. It is putting 

it back in the hands of the States. 

The States have decided for various reasons to, in my opinion, 

abdicate their responsibility to regulate in this area. So, while it is 

true that States have the ability and the responsibility to regulate 

in the public interest, they also cannot, according to our antitrust 

laws, merely hand over regulation to self-interested regulators and 

walk away. 

So that is what this—that is what the North Carolina Dental 

case is about, and that is what this bill is about. 

So I don’t think it is an area where the Federal Government is 

being too heavy-handed. I think this is totally appropriate. 

So Chairman Goodlatte said something about how maybe this 

was more effort than it was really worth. And I just wanted to say 

I think Federal interest in this is really appropriate. So we are 

talking about almost a third of American workers. That is how 

many people were covered by unions in the maximum level of 

unionization going back decades. 

I don’t think that we would be debating about whether or not the 

Federal Government has a role in regulating how unions operate. 

22 

I think it is a totally appropriate thing, and it covers—I mean, 

today, unions cover many, many fewer than these boards cover. 

Ms. JAYAPAL. Well, I mean, that is interesting perspective, and 

it leads to the next question I was going to ask you, which is, in 

light of the North Carolina Dental case, I mean, does it in any way 

minimize the role for the Federal Government, because one could 

argue that you do have that case, you do have regulation that has 

been set forth, essentially deriving from that case? 

Do you feel that the Federal Government really—why do you feel 

that the Federal Government has such a strong role to play here? 

Ms. ALLENSWORTH. So the Federal Government back in 1890 created the Sherman Act. And so they are very involved in regulating 

competition, going back 120 years ago. In 1942–1943, I believe it 

was, they came up with this doctrine of immunity. And now, to me, 

this is another piece of legislation in that line that—1943 was not 

a piece of legislation. That was—— 

Ms. JAYAPAL. Yeah. 

Ms. ALLENSWORTH [continuing]. To be sure, an interpretation of 

the Sherman Act. But I don’t think it is displacing the Court’s 

opinion. I think it is rather taking an opportunity to come back and 

say: This is what we mean, at least as far as it concerns occupational licensing, this sort of specific problem that has cropped up. 

Ms. JAYAPAL. Thank you. That makes sense. 

Mr. Johnson, Ms. Allen argues in her written testimony that 

States are best suited to determine how to best structure their governments and economics in order to protect their citizens. How do 

you respond to that concern? 

Mr. JOHNSON. Well, I think the concern and the reason that the 

antitrust law has come into play here is that these decisions about 

what to regulate and how are not being made by the States. They 

are being made by boards that are charged by the States with regulating their own industries. And that brings up huge problems 

where the members of these industries are acting as gatekeepers 

to competition for their own industry. 

Certainly the State legislature lays out a licensing law where 

they say, for instance, that dentists have to be licensed. But then 

the question becomes, well, does the practice of dentistry include 

teeth whitening? And the people who get to decide that, under the 

current system, are dentists. 

And, of course, in State after State after State, they say: Well, 

teeth whitening is dentistry, i.e., there is no health or safety justification for excluding unlicensed teeth whiteners. And the only 

reason is to ensure that dentists can make greater profits. 

So, absolutely, yes, this is an area where there is a role for the 

States and for the Federal Government. But the problem right now 

is that this is an area where regulation has been given to—— 

Ms. JAYAPAL. Thank you. 

Mr. JOHNSON. Sorry. 

Ms. JAYAPAL. Thank you. I appreciate that. 

And, again, I am glad we are having this hearing. 

I yield back. 

Mrs. HANDEL [presiding]. Thank you very much. 

Let me next recognize the gentleman from Georgia. 

Mr. COLLINS. Thank you, Madam Chair. I appreciate it. 

23 

This is an interesting hearing. I think it is one that, as you first 

look at it, I think this Committee, this Subcommittee in particular, 

has a lot more issues of jurisdiction, especially, Ms. Ohlhausen, 

from what we have talked about before, in not just this arena. I 

think this is a good opening to talk about it, but there is a lot more 

from hearings that we could have on truly national issues that I 

think that I would like to see moving forward here. 

I just have some interesting comments. Because being on the 

State legislator level, having—the former secretary of state, this is 

interesting because you talked about active supervision. If we define it in this—and the bill I think takes a stab at that, but several 

things that have come out sort of this rubber-stamp authorization, 

if they do it, and also this fact of the sort of the antithesis here 

is the dental and the teeth whitening, hair braiding. 

In Georgia, you can be a hair braider if you have 2 hours of community—or CLE or business practices, industry trends. I mean, 

what does that mean? Reading a magazine? I mean, and what is 

the health—why would a State do that? And even my own State 

of Georgia does this. But it is interesting. 

Where I want to concentrate for a second is, the majority of these 

State boards are required by State statute to be comprised of a majority of currently licensed professionals active in the very profession they were regulated in. So most States are doing it this way. 

It brings to a question; it is opened up. This is free for all. To determine active supervision, we have a secretary of state in some instances, but in the State of Georgia, on the very website, it says: 

We do not have any input into the decisions made by these boards. 

They are appointed in Georgia by the Governor. Many of the 

States have a similar aspect, which puts them under the realm of 

executive branch. Attorneys general are the ones, as you well 

know, as I, are the ones that take the cases and have to defend. 

This is an interesting—I know, in Georgia, they would. 

But my question is this: If we roll this back to active supervision, 

and we sort of hit at this at many different levels, my question is: 

I don’t believe we need an office of anything in most government, 

State, local, Federal, in particular. We need a better understanding 

of what that means. Does that mean the secretary of state should, 

in these offices, if they are under them, actually give administrative support, that they are the active supervision, or should there 

be a change in State law? And then if that is true—and I am making a long question because I want to hear your answers—how can 

Congress or a State legislature be considered active supervision 

when most have no idea what goes on, or if they do, it is only from 

an outcry? 

So, Ms. Ohlhausen, if you will start, and just sort of everybody 

from there jump in. 

Ms. Allen, I know you have got a position on that but—— 

Ms. OHLHAUSEN. Thank you. You put your finger on some very 

important factors. And in the FTC’s guidance to the States about 

what constitutes active supervision, we say the supervisor has to 

obtain the information necessary for a proper evaluation. 

We brought a case a number of years ago where there was someone who just got a price list and shoved it in a drawer. They never 

looked at it. Have they looked at the substantive merits of the acVerDate Sep 11 2014 06:50 Apr 25, 2018 Jkt 029777 PO 00000 Frm 00027 Fmt 6633 Sfmt 6602 E:\HR\OC\A777.XXX A777
24 

tion? Did they have a written decision, and do they have the ability 

to overturn what the board has done? 

So, but it is up to the State to decide where that authority should 

lie, whether it is with the attorney general or whether it is a board, 

the only thing we say is the supervisor cannot be a market participant, him or herself. 

Mr. COLLINS. Just a quick yes/no. So, in your answer that is out 

there, I have heard basically you say a State legislature could not 

provide active supervision. 

Ms. OHLHAUSEN. I think it would be very difficult for a State legislature—— 

Mr. COLLINS. Okay. Although they could make rules and 

laws—— 

Ms. OHLHAUSEN. Right. 

Mr. COLLINS [continuing]. Could change any decision by a board. 

Ms. OHLHAUSEN. Right. 

Mr. COLLINS. Ms. Allen. 

That is interesting because that brings back—that is a whole different line of questioning, Ms. Allen. 

Ms. ALLEN. I agree with that answer. I don’t think the State legislature can be the active supervisor. 

But I think, in Virginia and many other States, all the health 

profession boards are under a department of health profession. All 

the other nonhealth boards are under a department of professional 

occupational regulation. 

The directors of those umbrella agencies are State employees, 

and they could very easily be the active supervisor for the boards 

that are under their umbrella agency. 

Mr. COLLINS. Would they have a veto opinion on those votes? 

Ms. ALLEN. Yes, absolutely. To be active supervision, you have 

to be able to approve, deny, or modify a board decision. And they 

would have to be—the legislature would have to pass a statute to 

enable them to do it, but they should be able to do those things. 

Mr. COLLINS. That could throw a kink in the cartel world. 

Mr. Johnson. 

Mr. JOHNSON. I think it is important to understand the act here 

gives flexibility to the States to decide where to put the office of 

supervision. And then the board—or the act refers to an office, and 

they give the impression that there is a particular structure for 

that in mind. But the bill really is functional. And it requires that 

some part of the State bureaucracy be charged with supervision, 

not that it be in anywhere in particular in the State. 

Mr. COLLINS. Ms. Allensworth, a very quick comment. 

Ms. ALLENSWORTH. So I see your question, Mr. Collins, as basically asking, are they going to do their job? Is this supervisor going 

to help at all? And I don’t have an answer to that, right? 

How well does this government work? You know better than I do, 

not perfectly all the time. 

Mr. COLLINS. Well, we could all look at that one. 

Well, but I think here is the point here, and I want to finish up 

with this, and I think—I appreciate—the comments have been good 

here. This actually goes back to a really—from the new sharing 

economy to things we don’t know about yet. 

25 

The concern is, is when it comes to the State legislatures or to 

Congress, each of these groups are a voting constituency. So, when 

it comes to that that is the active supervision part. 

And, look, I think there needs to be some licensing. I don’t think 

we need as many as we probably have, but there are definitely 

some that need to be there. 

This question—I appreciate Representative Issa bringing this up 

and talking about this from his bill perspective, but I think one of 

the things that we need to do here is, what are we doing to actively 

participate in the marketplace, not restrict the marketplace, and 

find ways that I would like to talk even further in bigger arenas 

on this antitrust issue as we go forward. But I think this goes back 

to say I am very—I see the need for this discussion of this legislation, but also it goes back to—Ms. Allen, your last comment—State 

legislators need to take an active role in what they are doing, instead of just giving carte blanche to a lot of these things, which is, 

unfortunately, happens, due to many multitude of reasons. 

With that, Mr. Chairman, I yield back. 

Mr. ISSA [presiding]. Thank you. 

I would like to hear from Mr. Cicilline. The gentleman is recognized. 

Mr. CICILLINE. I would just ask unanimous consent that a statement entitled ‘‘Occupational Licensing: Regulation and Competition,’’ from a variety of regulatory boards be made part of the 

record. 

Mr. ISSA. Without objection, so ordered. 

This material is available at the Committee or on the Committee 

Repository at: http://docs.house.gov/meetings/JU/JU05/ 

20170912/106382/HHRG-115-JU05-20170912-SD003.pdf 

Let me do a couple quick closing questions. 

Chairman Ohlhausen, you have seen a lot of government, and 

you worked with all kinds of agencies—EPA, OSHA, et cetera. Just 

for purposes of comparing the Federal Government with the State 

of Virginia, the Commonwealth of Virginia: Although the Federal 

Government has all kinds of boards and commissions, for the most 

part, aren’t they advisory, in other words, they lack the ability to 

create regulations? 

Ms. OHLHAUSEN. I think that that varies. So, but I agree that 

there are a lot of advisory boards that play a role—— 

Mr. ISSA. And so—— 

Ms. OHLHAUSEN [continuing]. In the U.S. Government. 

Mr. ISSA [continuing]. In the executive branch of the Federal 

Government—just for purposes of making the record clear, and I 

am using you as my fellow Federal officer here for a moment— 

when you go on a board or commission, even when it is advisory, 

there is a whole slew of ethics protections, recusals; you have to file 

almost every one of these positions; even unpaid has to file a full 

financial reporting so that the public has the ability to see if there 

is a conflict of interest, right? 

Ms. OHLHAUSEN. Yes. 

Mr. ISSA. And yet they do not—and we pay money to move them. 

Even if they are not being paid, we supervise them. And yet they 

don’t get to create regulations. For the most part, the regulations 

that are created, that Ms. Allen is saying are burdensome, are creVerDate Sep 11 2014 06:50 Apr 25, 2018 Jkt 029777 PO 00000 Frm 00029 Fmt 6633 Sfmt 6602 E:\HR\OC\A777.XXX A777
26 

ated by the Federal taxpayer through their employees? Isn’t that 

correct, from your experience? 

Ms. OHLHAUSEN. Yes. So the regulations are created through the 

appointed or elected official. 

Mr. ISSA. So, when States decide, instead of having an advisory 

board that ultimately the executive branch then, through an agency it creates or its legislature creates, creates rulemaking, what 

they are really doing is using, for the most part, a volunteer, unpaid group to lower their economic costs but not, quite frankly, not 

that they couldn’t have those boards and commissions, including 

the State bar. Those could all be advisory with a separate agency 

of government employees who would have no conflicts of interest, 

who would have all the normal requirements actually creating the 

regulations. There is nothing inherently outside of what States 

could do if they were willing to pay the tab. Is that right? 

Ms. OHLHAUSEN. That is right. I think it is up to the States to 

choose. 

Mr. ISSA. Okay. 

And so, Professor Allensworth, sort of going to that, because you 

have studied both the Federal and the State, is there something 

wrong in my thinking that, because Ms. Allen has very carefully 

articulated that, although these are government people—and I 

have made clear I think in our conversation—that they are not 

held by the same set of rules that government people are because 

they, obviously, have an economic interest in the decisions they 

make—isn’t it really a question of any time you use these outside 

groups you are lowering your burden as a State where the Federal 

Government, for the most part, does not lower its burden? It has 

an equivalent group of people, advisers from industries, but it 

doesn’t allow them to legislate. It uses federally tax paid employees—the FCC, the SEC and so on—to actually regulate and then 

holds them to a very different standard. Is that a fair representation? Because I want to set the stage for why we are thinking that 

this legislation may be appropriate, and the Court’s decision, looking at these conflicts in the North Carolina case, was appropriate. 

Ms. ALLENSWORTH. So I think that is absolutely right. And so a 

private association, industry association doesn’t enjoy immunity. 

They are subject to the Sherman Act. And they can have an opinion. They can involve themselves in a rulemaking. We know that 

they do. And sometimes they can be very influential on what the 

Federal Government does. 

But that doesn’t mean that they ought not to be answerable for 

the anticompetitive things that they do when they are not merely 

lobbying. And so, if we thought of these boards as lobbying and 

taking a position, that then the State listened to, considered, 

weighed, and, in their wisdom, accepted or rejected, that would be 

a very different circumstance from what we have now. 

Mr. ISSA. Let me ask you a follow-up question, Professor. 

This part of the bill that I participate in that you seem to have 

concerns about, let me ask you as a question in the alternative, if 

we struck that altogether and there were no private right of action 

and the States had to have active supervision and then we discovered that they didn’t have active supervision or somebody wanted 

to contest whether they have active supervision, you would preVerDate Sep 11 2014 06:50 Apr 25, 2018 Jkt 029777 PO 00000 Frm 00030 Fmt 6633 Sfmt 6602 E:\HR\OC\A777.XXX A777
27 

sume that either the Federal Trade Commission or some other entity would sue just as they did in the North Carolina Dental case, 

right? 

Ms. ALLENSWORTH. Right. So I think your question is saying I 

am not crazy about the legal option, but doesn’t it all boil down to 

legal option; doesn’t it all boil down to courts making individual decisions in these cases? And I think that that is a fair point. 

Any time you have an issue where somebody has failed to comply 

with the statute, that gets worked out, whether or not they have 

or haven’t typically gets worked out in a court of law. 

I just think that doing it in the first instance through the courts 

may be a less efficient way to get the kind of results this bill is 

looking for. 

Mr. ISSA. And I am going to include Ms. Allen, because I have 

been talking around you for a moment, but final question for you 

and then others: If I were to tell you that my wish is that no State 

would choose the second option, that every State would look and 

say, ‘‘We’ve given you a definition of active supervision, and we 

really wish you would choose it, but under the concept of federalism, if you do not do it, rather than automatically say, ‘Well, 

we will wait for a challenge from perhaps the FTC because you 

didn’t do active supervision,’ we are going to have this other option,’’ is there something inherently wrong with that, presuming 

that we really do want everyone to have active supervision, but we 

know that, out of 50 States, there just might be somebody who 

doesn’t get around to it? 

Ms. ALLENSWORTH. So I don’t think there is anything inherently 

wrong with it, and that has to do with what we have under the status quo. What we have under the status quo is ambiguous vulnerability of these boards to Federal antitrust lawsuits. 

And so I see the second option as being maybe as good as that. 

And that is something that I was happy to see happen in 2015. So 

I am not against that. I just think this other one is superior. 

So your hope that everyone takes the superior one I think is 

good. I also think they are more likely to take it. The States are 

not going to want to hand over control of their boards to their judiciary. They are probably going to want to keep it within the executive round. 

Mr. ISSA. Nobody is going to want to be on a board that is in that 

situation, particularly if they are in a State that doesn’t fully indemnify them. 

Ms. ALLENSWORTH. Well, that is also true. 

Mr. ISSA. Ms. Allen, your final comments. 

Ms. ALLEN. I think most States actually want active supervision 

following North Carolina Dental. 

I think the problem is that, even under the current case law, 

many States haven’t been able to get their legislatures to pass a 

bill. 

I think this bill respectfully creates even more hurdles for a 

State to meet than they do under current case law. And so I think 

States are just going to take the option of doing the cost-benefit 

analysis and chancing it in court. 

Mr. ISSA. Well, Mr. Johnson, that leaves it up to you. What do 

you think about first option, second option, and so on? 

28 

Mr. JOHNSON. Well, so I do want to speak briefly in favor of the 

second option. I think that there are merits to the first option. I 

also think there are merits to the second. And Professor 

Allensworth alluded very briefly to the concept of regulatory capture, which is just that, when you have bureaucrats whose job is 

to regulate a particular agency, it often happens that those bureaucrats end up being aligned with the industry that they regulate. 

And we see that constantly. 

So the plus to an option that puts the responsibility for supervision in the courts is that courts are far less subject to regulatory 

capture because judges are generalists. They regulate everybody. 

They don’t regulate a particular industry. 

So, as a litigator, my perspective is that you often get better results out of the courts than you do out of the legislative or—not the 

legislative, than you do the administrative process. 

I think that perhaps there are different views on that, but I 

think one of the—— 

Mr. ISSA. The conservative arguing for the plaintiffs’ bar. 

Mr. JOHNSON. Yeah, one of the benefits of the bill though is it 

ultimately leaves that choice up to the States. So perhaps some 

States choose the administrative option; some States choose the judicial option. Well, let’s see. Maybe some of them will have better 

results than the others, and then we will actually know which is 

the better way to do it. 

Mr. ISSA. Thank you. I might note that, in a book I wrote some 

time ago, I noted that the father and son team that came aboard 

the Deepwater Horizon one morning and gave it a clean bill of 

health had breakfast with some of their cousins and then left before that ill-fated rig blew up were probably part of a captive entity 

known as the Minerals Management Service. 

So it happens. There is no question at all. And you are right. At 

least for British Petroleum, it was the private right of action that 

caused them to take steps so that it will never happen again, hopefully. 

Chairman, you are the one government person. You filled out all 

those financial reporting things. You have lived up to all those onerous things, and you have done it on a limited salary, so you get 

to close. 

Ms. OHLHAUSEN. Thank you so much. And what I would say is 

that I think that, to the extent the bill is giving States an option 

that will improve their oversight of these boards, I think it is a 

very positive development. 

Mr. ISSA. Mr. Cicilline, any final remarks? 

The gentleman is recognized. 

Mr. CICILLINE. Thank you. I just want to follow up on Chairman 

Issa’s question. 

With respect to the second part of the bill, the judicial review 

part, I mean, if in fact the bill had the first requirement, the active 

supervision, and a procedure to be sure that it is being followed, 

States would either be required to do that or their board—I mean, 

that is in order to earn immunity. So, if they didn’t do it, they 

would expose their board members to litigation and treble damages, and presumably that would be enough of an incentive. If you 

29 

think that the regulatory role of this board is important, you want 

to actually be able to staff the board with individuals. 

So I do wonder whether the judicial component will invite more 

uncertainty. And to Professor Allensworth’s point, maybe it will be 

no worse than the current situation in terms of ambiguity. But 

having a clear requirement in the legislation that says, ‘‘You must 

provide supervision in this way and a system to ensure it is happening in order to get the immunity, and if you don’t, you don’t get 

the immunity,’’ it is sort of very clear. And isn’t that a better system than inviting a whole judicial review subject to all kinds of 

hopes, dreams, and advocacy? Both you, sir, and Professor 

Allensworth. 

Mr. JOHNSON. I think, from the perspective of the antitrust laws, 

either option provides clarity. From the perspective of the antitrust 

laws, if the State has satisfied the requirements of section 5 or the 

requirements of section 6, either way, the State is entitled to immunity under the antitrust laws, and that is kind of case closed. 

The sort of uncertainty is, well, if you go with the bureaucratic 

administrative option, will it work? If you go with the judicial option, will that work? And that is sort of the devil is in the details. 

It depends on how the States implement it. 

But my prediction would be that the States that go with the judicial option will actually see better results. Perhaps Professor 

Allensworth’s prediction is the opposite. 

I think that is an interesting experiment. I would rather see that 

experiment run than to not give the States the option to choose. 

Ms. ALLENSWORTH. I agree, especially with the last couple things 

that Mr. Johnson said. We do have different priors on this as to 

which works better, but I also think it is an interesting experiment 

and maybe would like to see it run. 

I would like to add one more comment about the judicial review 

option. And here is where my objection to that kind of dovetails 

with my objection to the least restrictive alternative analysis. 

So that itself is very uncertain. The least restrictive alternative 

sounds great. Can we do the same thing with less injury to competition? But it is almost never true that the alternative does the 

exact same thing as the first thing. And so this least restrictive alternative analysis is a bit unwieldy, and it is difficult for courts to 

do, especially on an ad hoc kind of basis. 

Mr. CICILLINE. Thank you. I yield back. 

Mr. ISSA. Thank you. To be continued. 

What I heard today was you would all like legislation; perhaps 

some less. But I think, even for Ms. Allen, I didn’t hear that the 

status quo is delightful in the current environment. 

So, recognizing that I have three who like the legislation, at least 

partially, and one who would like legislation but perhaps not this 

legislation, I look forward to getting Mr. Cicilline onto this bill with 

such modifications as may be necessary to get his buy-in. 

And, with that, we stand adjourned. 

[Whereupon, at 4:37 p.m., the Subcommittee was adjourned.] 

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