Senate committee on appropriations



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SENATE COMMITTEE ON APPROPRIATIONS


Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 1195 (Hill) - Professions and vocations: board actions: competitive impact




Version: April 6, 2016

Policy Vote: B., P. & E.D. 6 - 0

Urgency: No

Mandate: Yes

Hearing Date: May 16, 2016

Consultant: Brendan McCarthy

This bill meets the criteria for referral to the Suspense File.

Bill Summary:


SB 1195 would grant authority to the Director of the Department of Consumer Affairs to review decisions and other actions by boards within the Department to determine if the action restrains trade. The bill would require the Office of Administrative Law to perform additional reviews of regulations proposed by boards within the Department. The bill would extend the statutory sunset of the Veterinary Medical Board.

Fiscal Impact:




  • One-time costs of $600,000 and ongoing costs of $570,000 per year for the Department of Consumer Affairs to establish an Anti-Trust Unit to review board actions for their impacts on trade (various special funds). The costs would be paid from Department of Consumer Affairs boards and bureaus, which are supported by license fees.




  • Ongoing costs of about $4.8 million per year for the continued operation of the Veterinary Medical Board (Veterinary Medical Board Contingent Fund). All costs to operate the Board are funded with licensing fees.




  • Minor costs are anticipated by the Veterinary Medical Board for the changes in the bill to its statutory requirements and procedures.




  • Ongoing costs of about $160,000 per year for the Board of Pharmacy to coordinate inspection and enforcement activities with respect to the regulation of drug compounding on veterinary premises (Pharmacy Board Contingent Fund).




  • Ongoing costs of about $320,000 per year for the Office of Administrative Law to conduct additional analyses on regulations proposed by Department of Consumer Affairs Boards to ensure that they do not have anticompetitive impacts (General Fund).

Background:


Under current law, various boards and bureaus within the Department of Consumer Affairs license and regulate professions and vocations. The Department is headed by a Director who is appointed by the Governor. The licensing boards within the Department have differing board compositions. Based on current appointments and vacancies, more than half of the licensing boards have a majority of the board from the profession regulated by the board.

In February 2015, the U.S. Supreme Court ruled that because the North Carolina State Board of Dental Examiners had a majority of dentists on its board, it was not acting as a state agent in its regulation of the practice of dentistry. This opened the North Carolina Board of Dental Examiners to legal action for engaging in unfair restraint of trade. In the ruling, the Supreme Court ruled that a licensing board can only invoke state anti-trust immunity if it is subject to active supervision by a state.


Proposed Law:


SB 1195 would grant authority to the Director of the Department of Consumer Affairs to review decisions and other actions by boards within the Department to determine if the action restrains trade. The bill would require the Office of Administrative Law to perform additional reviews of regulations proposed by boards within the Department. The bill would extend the statutory sunset of the Veterinary Medical Board.

Specific provisions of the bill would:



  • Authorize the Director of the Department of Consumer Affairs to review a decision or action by a board within the Department to determine if it unnecessarily restrains trade, and to approve, disapprove, or modify the action;

  • Require the Director to undertake such a review upon request of a consumer or licensee;

  • Require the Director to review and approve any regulation promulgated by a board within the Department, and authorize the Director to modify or disapprove a regulation if it would have an impermissible anticompetitive effect;

  • Extend the statutory sunset on the Veterinary Medical Board to January 1, 2021;

  • Authorize a veterinarian or registered veterinary technician under supervision to compound drugs for anesthesia and authorize the Veterinary Medical Board and the Board of Pharmacy to enforce those requirements;

  • Require veterinarians employed by university veterinary schools to be licensed by the Veterinary Medical Board;

  • Extend the existing indemnity for Department of Consumer Affairs board members to judgements or settlements relating to anticompetitive behavior;

  • Require the Office of Administrative Law to consider the anticompetitive impacts of a regulation proposed by a licensing board within the Department of Consumer Affairs.

Staff Comments:


This bill is one of a number of bills authored by the chairs of the Senate and Assembly Business and Professions Committees to extend the sunsets of licensing boards and bureaus within the Department of Consumer Affairs.

In addition to extending the sunset of the Veterinary Medical Board, the bill makes changes to current law intended to address issues raised in the Supreme Court Case relating to the North Carolina Board of Dental Examiners. The purpose of the proposed changes is to ensure that Department of Consumer Affairs licensing boards are subject to active state supervision and are therefore exempt from anti-trust claims relating to professional licensing.



The only costs that may be incurred by a local agency relate to crimes and infractions. Under the California Constitution, such costs are not reimbursable by the state.

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