What do teeth-whitening and solar PV installation have in common? Both can be subject to the murky authority of state professional boards made up of members with potential conflicts of interest. A case argued before the Supreme Court on October 14th, North Carolina State Board of Dental Examiners v. Federal Trade Commission, colorfully presents the potential conflicts that arise when professionals on such boards attempt to regulate at the margins of their profession. It also suggests that federal antitrust laws may restrain the authority of such boards in extreme cases.
The North Carolina State Board of Dental Examiners has eight members, six of whom are practicing dentists elected by the state’s dentists. The Board licenses dentists in North Carolina, but its statutory authority does not extend to disciplining unlicensed individuals. Around 2003, the Board began receiving complaints from dentists about teeth-whitening services offered by non-dentists. At the time, several Board members provided teeth-whitening services at their dental practices. The Board opened an investigation, informed dentists that it was attempting to shut down non-dentist teeth-whitening providers, and sent dozens of cease-and-desist letters, on official letterhead, to non-dentists offering teeth-whitening services. The Board also contacted mall operators to stop the leasing of kiosk space to non-dentist teeth-whitening providers and the Board of Cosmetic Art Examiners to ask that board to instruct its licensees to refrain from providing teeth-whitening services.
Based on these activities, the Federal Trade Commission charged the Board with unlawful use of unfair methods of competition under the Federal Trade Commission Act, 15 U.S.C. § 45. After an administrative trial, the FTC found that the Board’s actions violated the Act and ordered the Board to stop the offending behavior. The Board appealed to the United States Court of Appeals for the Fourth Circuit, which upheld the FTC.
The issue before the Supreme Court is whether the Board should have been given immunity from antitrust laws as a state actor. Because the Board was made up of potentially self-interested market participants, both the FTC and the Fourth Circuit applied a more stringent standard for obtaining immunity than might apply to other state entities, requiring that the Board be actively supervised by the state—a showing that neither tribunal found the Board could make. At oral argument, the Justices seemed uncomfortable with shielding the Board’s actions from antitrust review in this case, but they also seemed concerned about setting a precedent that would impede states’ ability to use professional boards.
A similar issue, without the FTC enforcement, has arisen in a number of states with respect to the installation of solar panels. States commonly use professional boards to regulate electricians. In several states, such boards—generally comprised largely of electricians—have asserted authority to prevent non-electricians from engaging in any aspect of installing solar PV equipment, including tasks like marketing, performing structural analyses, piercing and waterproofing roofs, installing structural supports, and physically transporting PV panels. Previously, in many states, non-electricians performed many of the non-wiring tasks associated with solar installations. Just as in North Carolina State Board of Dental Examiners, such situations raise questions about whether the board members’ actions are influenced by their professional interests.
This is a difficult issue. There are benefits to delegating the regulation of professions infused with public safety concerns to those most knowledgeable about the profession: the professionals themselves. As Justice Breyer noted, we want brain surgeons, not bureaucrats, to decide who can practice brain surgery. But when professional boards interpret the scope of the market to which their professionals have exclusive access, the potential for self-interested decisions can be troubling. How the Supreme Court handles this tension in North Carolina State Board of Dental Examiners will have implications beyond the availability of teeth-whitening services in North Carolina malls.
“In several states, such boards—generally comprised largely of electricians—have asserted authority to prevent non-electricians from engaging in any aspect of installing solar PV equipment”…
States and muni gov’t offices are enacting reg’s to keep the tax dollars flowing.
Fortunately, policy always lags behind technology.