A Blind Eye : How the Rational Basis Test Incentivizes Regulatory Capture in Occupational Licensing

Regulatory capture occurs when a political entity or regulatory body is acquired by the regulated industry and acts for its benefit. It frequently appears in occupational licensing restrictions, as established actors seek to use licensing to prevent new entrants to the market from competing with them. Plaintiffs often have extreme difficulty when attempting to vindicate their right to pursue their desired occupation without unnecessary government interference because the rational basis test, the standard of review used to review the constitutionality of economic regulations, is extremely deferential to the government. Licensing restrictions are often upheld even when they are clearly motivated by regulatory capture, rather than a genuine health and safety rationale. In order for courts to effectively combat regulatory capture, a more rigorous standard of review should be applied to licensing restrictions. Strict scrutiny would be the preferable standard of review for reviewing the constitutionality of licensing restrictions because it would be better at preventing regulatory capture and because it is generally the standard used to review restrictions on fundamental rights. Fundamental rights are rights that have roots in the history and tradition of the United States and are implicit in a system of ordered liberty, such as occupational liberty, so strict scrutiny should be used in the name of both function and intellectual consistency. Intermediate scrutiny could also deter regulatory capture more effectively than rational basis review. Although it is not as rigorous as strict scrutiny and is not used when fundamental rights are at stake, intermediate scrutiny nevertheless would be preferable to the overly deferential rational test. Additionally, legislatures can take steps to combat regulatory capture in licensing, such as through the use of legislative committees to review restrictions on the front end