Goldwater Urges N.C. Supreme Court to Let Entrepreneurs Defend Themselves

The Goldwater Institute filed a brief in the North Carolina Supreme Court today in support of a group of business owners who are challenging that state’s anti-competitive “certificate of need” or “CON” law.

CON laws are rules that prohibit people from starting a new business, or expanding an existing business, without first getting permission from the already-established businesses in the area. In other words, these laws exist for the express purpose of prohibiting economic competition. And absurd and unjust as they are, they apply to everything from moving companies to medical clinics. The results—especially in the medical or psychological realm—are horrendous: they deprive people of the care they need for no legitimate reason.

The North Carolina lawsuit, which is litigated by our friends at the Institute for Justice, has been going on for several years now, thanks to various legal delays. It involves a doctor named Dr. Jay Singleton who wants to provide low-cost eye surgeries at a surgical center in Raleigh. Nobody doubts that he’s got the skills, and nobody thinks he’s a danger to the public—but he’s not allowed to provide surgeries in his own clinic because the state doesn’t want him to compete against another clinic in the area.

That’s not just absurd, it’s also unconstitutional. The Constitution only allows the government to block people from entering a profession for reasons that (in the U.S. Supreme Court’s words) “have a rational connection with the applicant’s fitness or capacity to practice” that profession. Blocking competition just to prevent competition is irrational and unjust—in other words, it deprives people like Dr. Singleton of their liberty without due process of law. That was what we argued in a brief that we filed in the case more than four years ago.

Unfortunately, the trial court threw the case out without even letting Dr. Singleton introduce evidence to show that the CON law is unjustified and harmful. Why? The answer lies in the infamous “rational basis test”—the test courts use when deciding whether an economic regulation is unconstitutional. That test is so heavily tilted against business and property owners that they’re forced to prove that the law they’re challenging has no legitimate basis—in other words, they’re forced to prove a negative. Many judges then conclude that this is impossible, and therefore that people should simply not be allowed to even put their evidence in front of a judge in the first place.

That’s wrong, of course—and in the brief we filed today, with the assistance of American Freedom Networkmember Elliot Engstrom, we explain why: however much the “rational basis test” may lean toward the government, it still lets people try to prove that economic regulations are irrational. Dr. Singleton should at least get his day in court.

CON laws are among the worst ideas in the history of regulation. Even the Federal Trade Commission has declared them a bad idea. They raise prices, reduce the services available to patients who need medical care, and empower politicians and bureaucrats at the expense of the sick and needy. It’s time for courts to take these questions seriously, and to vindicate the constitutional right to economic freedom.

Read our brief here, and you can learn more about CON laws here.