Arizona Breaks Up Bottleneckers

Gov. Ducey Issues Executive Order and Signs Law to Limit Occupational Licensing

At the end of March, Arizona Gov. Doug Ducey took two important steps to limit licensing in Arizona. First, on March 29, the governor issued an executive order to state licensing boards requiring them to review and provide a report on all the requirements to obtain a license, and provide justification for requirements deemed to be excessive. A day later, the governor signed SB 1437, the Right to Earn a Living Act, which restricts regulatory boards from issuing regulations that limit entry into a profession or trade unless the regulations are proven necessary for health and safety.

Gov. Ducey’s executive order will require state licensing boards and commissions to review all requirements for each type of license they issue. Then, if the requirements in Arizona are higher than the national average the board must provide justification for the higher requirements “with specific reference to potential harm to individuals in the State of Arizona.” The order also mandates that the boards provide justification for a license for a specific profession if 24 or fewer states require that license.

In addition to the review mandated by the executive order, SB 1437 will allow individuals to petition an agency to remove or modify occupational regulations that are not demonstrably “necessary to specifically fulfill a public health, safety or welfare concern. Individuals can also challenge occupational regulations in court. While it is the case that people can challenge the constitutionality of such regulations today, the courts are ordinary very deferential to the government and the heavy burden of proof falls on the individual. But under SB 1437, the burden of proof falls on the regulatory board to prove that a regulation is demonstrably necessary to protect the health and safety of Arizonans.

These are not the first changes made to Arizona’s licensing regulations under Gov. Ducey. In May 2016, he signed HB 2613 into law, which eliminated licensing requirements for citrus fruit packers, cremationists, assayers and yoga instructor training programs.

Before the HB 2613 passed a vote, many license holders lined up to testify against the bill. These license holders acted as “bottleneckers” to maintain the licensing regulations. The recently published book, Bottleneckers: Gaming the Government for Power and Private Profit, defined a bottlenecker as a person who advocates for the creation or perpetuation of government regulation—particularly through occupational licensing—to restrict entry into his or her occupation, thereby accruing an economic advantage without providing a benefit to consumers.

Some licensing boards in Arizona have used aggressive enforcement against unlicensed individuals. In February, the Arizona State Board of Cosmetology received scathing letters from the governor and the Institute for Justice (IJ) after it launched an investigation into an unlicensed student giving free haircuts to homeless people in Tuscon, Arizona. The board ended the investigation soon after receiving the governor’s letter. IJ also successfully challenged licensing requirements for animal massage practitioners in Arizona following several years of litigation and international media coverage.

Since his first State of the State Address, Gov. Ducey had made it clear that he wants to eliminate unnecessary and burdensome licenses in Arizona. There is still a lot of work ahead for him. Arizona was ranked as the “most broadly and onerously licensed state” according to the IJ report, License to Work. The report found that Arizona required a license for 64 occupations, second only to Louisiana which required licenses for 71 occupations. On average, these licenses require $455 in fees, 599 days in education and experience, and two exams.

As Gov. Ducey said, “There is great value and purpose in work. Government should never stand in the way of someone’s efforts to start a new life or profession.” On the bright side, Arizona is not alone in reforming occupational licensing. Eighteen states legislatures had licensing reform bills filed during the current legislative sessions, and the Federal Trade Commission recently created an Economic Liberty Task Force with a focus on occupational licensing reform.

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