FTC Staff Comment to the Hon. Jim Horn Concerning Texas H.B. 1579 to Regulate Landscape Architects

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UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
DALLAS REGIONAL OFFICE
May 	8, 	1989
Office of the Regional Director
The Honorable Jim Horn
House 	of Representatives
state 	of 	Texas
P.O. 	Box 	2910
Austin, 	Texas 	78769-2910
Dear Mr. 	Horn:
COMMISSION AUTHORrlED
We 	are 	pleased 	to 	respond 	to 	your 	invitation 	to 	comment 	on
Texas 	House 	Bill 	1579, 	relating 	to 	the 	regulation 	of 	landscape
architects. 1 	The 	proposed 	legislation would 	amend 	an 	existing
statute 	that 	restricts 	the 	use 	of 	the 	title 	"landscape
architect" 	to 	individuals 	licensed 	in 	the 	profession by 	the
Texas 	Board 	of 	Architectural 	Examiners. 	House 	Bill 	1579 	would
further 	regulate 	the 	profession by 	limiting 	the 	practice 	of
landscape 	architecture 	primarily 	to 	persons 	licensed by 	the
Board.
If 	enacted, 	the 	bill 	is 	likely 	to 	inhibit 	entry 	into 	the
profession 	and 	restrict 	competition 	among 	providers 	of 	landscape
design 	services. 	It may, 	therefore, 	limit 	consumer 	choice 	and
cause 	the 	price 	of 	landscape design 	services 	to 	rise. 	The
Legislature may wish 	to 	consider these 	anticompetitive 	effects 	in
determining whether 	to 	enact 	this 	bill.
I. 	Interest and 	Experience 	of the 	Federal 	Trade 	Commission
The 	Federal 	Trade 	Commission 	is 	charged 	by 	statute with
preventing unfair methods 	of 	competition 	and 	unfair 	or 	deceptive
practices 	in 	or 	affecting commerce. 	15 U.S.C. 	§ 	45. 	Under 	this
statutory mandate, 	the 	Commission 	seeks 	to 	identify 	restrictions
that 	impede 	competition 	or 	increase 	costs 	without 	offering
countervailing benefits 	to 	consumers. 	The 	Commission has 	sought
to 	improve 	consumer access 	to 	professional 	services 	by 	initiating
1 	These 	comments 	represent 	the 	views 	of 	the 	staff 	of 	the
Dallas 	Regional 	Office 	and 	the 	Bureau 	of 	Competition 	of 	the
Federal 	Trade 	Commission 	and do 	not 	necessarily 	represent 	the
views 	of 	the 	Commission 	or 	any 	individual 	Commissioner.

antitrust 	enforcement proceedings 2 	and 	conducting 	studies
concerning various 	facets 	of 	the 	regulation 	of 	licensed
professions. 3 	In 	addition, 	the 	Commission's 	staff 	has 	submitted
comments 	to 	state 	legislatures 	and 	administrative 	agencies 	on
various 	issues 	involved 	in occupational 	licensing 	and
regulation. 4
II. 	The 	Proposed 	Legislation
Article 	249c 	of Vernon's Texas 	Civil 	statutes 	currently
restricts 	the 	use 	of 	the 	title 	"landscape 	architect" 	to 	persons
licensed 	in 	the 	profession by 	the Texas 	Board 	of Architectural
Examiners. 	The 	existing 	statute 	establishes 	qualifications 	for
licensure, 	including 	specified 	combinations 	of 	education 	and
2 	See,~, 	Massachusetts 	Board 	of 	Registration 	in
optometry, 	[FTC 	Complaints 	and 	Orders 	Transfer 	Binder] 	5 Trade
Reg. 	Rep. 	(CCH) 	22,555 	(June 	21, 	1988); 	Rhode 	Island 	Board 	of
Accountancy, 	107 	F.T.C. 	293 	(1986) 	(consent 	order); 	Louisiana
state 	Board 	of 	Dentistry, 	106 	F.T.C. 	65 	(1985) 	(consent 	order);
American Medical 	Ass'n, 	94 	F.T.C. 	701 	(1979), 	affirmed, 	638 	F.2d
443 	(2d 	Cir. 	1980), 	affirmed memo 	by 	an 	equally 	divided 	Court,
455 	U.S. 	676 	(1982); 	American 	Dental 	Ass'n, 	94 	F.T.C. 	403 	(1979),
modified, 	100 	F.T.C. 	448 	(1982), 	101 	F.T.C. 	34 	(1983) 	(consent
order).
3 	See,~, 	Jacobs 	et 	al., 	Cleveland 	Regional 	Office 	and
Bureau 	of Economics, 	Federal 	Trade 	commission, 	Improving 	Consumer
Access 	to 	Legal 	Services: 	The 	Case 	for 	Removing 	Restrictions 	on
Truthful 	Advertising 	(1984); 	Hailey, 	Bromberg, 	and 	MUlholland,
Bureaus 	of 	Consumer 	Protection and 	Economics, 	Federal 	Trade
commission, 	A Comparative Analysis 	of 	Cosmetic 	Lens 	Fitting by
Ophthalmologists, 	Optometrists, 	and 	Opticians 	(1983); 	Bond,
Kwoka, 	Phelan, 	and Whitten, 	Bureau 	of 	Economics, 	Federal 	Trade
Commission, 	Effects 	of Restrictions 	on Advertising 	and 	Commercial
Practice 	in 	the 	Professions: 	The 	Case 	of 	Optometry 	(1980).
4 	Within 	the 	past 	few 	years, 	Commission 	staff have
submitted comments 	on 	rules 	of 	professional 	conduct 	or
regulations 	governing 	architects, 	attorneys, 	chiropractors,
dentists, 	dry 	cleaners, 	electricians 	and 	electrical 	contractors,
funeral 	directors, 	interior designers, 	optometrists, 	pharmacists,
physical 	therapists, 	physicians, 	real 	estate 	brokers, 	and 	others.
During the 	current 	Texas 	legislative 	session, 	at 	the
invitation 	of Representative 	Glenn Repp, 	we 	have 	submitted 	a
comment 	on H.B. 	252, 	the 	proposed 	"Electrician 	and 	Electrical
Contractor Licensing Act." 	See 	Letter 	from 	Thomas 	B. 	Carter,
Director, 	Dallas 	Regional 	Office, 	Federal 	Trade 	Commission, 	to
the Honorable Glenn Repp, 	Texas 	State House 	of 	Representatives
(March 	13, 	1989).
2

experience, 	as 	well 	as 	satisfactory 	completion 	of 	an 	examination
prescribed by 	the 	Board. 	The 	Board 	is 	authorized 	to 	discipline
licensees 	and 	to 	adopt 	additional 	regulations 	necessary 	for
administration 	of 	the 	law.
Although 	unlicensed 	individuals may 	not 	represent 	themselves
as 	"landscape architects," 	the 	current 	law does 	not 	prohibit 	them
from 	rendering 	landscape 	planning 	and 	design 	services. 	In
addition, 	the 	law contains 	express 	exemptions 	for 	agronomists,
horticulturists, 	gardeners, 	caretakers, 	nurserymen, 	and 	others,
as 	well 	as 	persons making plans 	for 	their 	own 	property.5
If 	enacted, 	House 	Bill 	1579 	would 	extend the 	regulation 	of
the 	profession by 	restricting 	the 	practice 	of 	landscape
architecture 	to persons 	licensed by 	the 	state. 	The 	bill 	contains
a 	detailed definition 	of 	the 	"practice 	of 	landscape 	architecture"
and prohibits 	the 	performance 	of 	these 	activities 	by 	anyone 	other
than 	licensed 	landscape 	architects 	or persons 	exempt 	from 	the
provisions 	of 	the 	bill. 	It 	also 	reduces 	the 	categories 	of
exempted persons 	to 	sellers 	of 	horticultural 	products 	and
individuals 	planning 	landscape 	design 	for 	their 	own 	property.
Agronomists, 	horticulturalists, 	foresters, 	gardeners, 	and
caretakers would 	no 	longer 	be 	exempt. 6
III. 	The 	Costs 	and Benefits 	of occupational 	Licensing
The 	rationale 	for 	occupational 	licensing 	traditionally has
been 	to 	guarantee 	a 	minimum quality 	standard 	in 	the 	provision 	of
services. 	Proponents 	generally 	argue 	that 	occupational
licensing 	is 	necessary 	to 	correct 	an 	informational 	imbalance
between 	service providers 	and 	consumers. 	Because 	licensed
occupations 	often provide 	services 	that 	require 	highly
specialized, 	technical 	expertise, 	it 	is 	thought 	that 	consumers
may 	lack the 	information 	and 	resources 	to 	evaluate 	the 	quality 	of
services. 	For 	example, 	an 	unsuccessful 	litigant may 	be 	unable 	to
determine 	whether 	a 	lawsuit 	failed 	because 	the 	case 	lacked 	merit
or because 	the 	lawyer was 	incompetent. 	A patient whose
treatment 	fails 	to 	cure 	an 	illness 	similarly may 	be 	unable 	to
determine whether 	the 	treatment 	failed 	because 	of 	the 	limitations
of medical 	science 	or 	the 	failings 	of 	the 	doctor. 	If 	consumers
cannot 	evaluate 	quality, 	producers may provide 	lower 	quality
5 	The 	law also provides 	that 	it does 	not 	apply 	to
professional 	engineers, 	building 	designers, 	surveyors, 	or
architects; 	nor 	does 	it 	affect 	any 	laws 	relating 	to 	those
occupations.
6 	H.B. 	1579 	Sec. 	2(b) 	(Feb. 	28, 	1989).
3

services 	than 	consumers 	desire. 7 	Licensing thus 	may 	be
necessary to 	raise 	service 	quality 	above 	the 	level 	that 	would
prevail 	in 	an 	unregulated market.
This 	argument 	in 	support 	of mandatory 	licensing may 	not 	be
entirely 	convincing 	in 	all 	instances. 	Although 	consumers 	may
have 	less 	information 	on 	quality 	than producers, 	they 	often
receive 	adequate 	information 	from 	a 	variety 	of 	sources. 8
Consumers 	can 	assess 	quality 	on 	the 	basis 	of 	their 	own 	purchase
experience 	and 	the 	experience 	of 	friends, 	relatives, 	or
neighbors, 	information 	provided by 	sellers 	or by 	various
consumer-oriented pUblications, 	and 	inferences 	drawn 	from 	the
length 	of the 	seller's 	experience 	in business. 9 	Where 	voluntary
certification exists, 	the 	fact 	that 	a 	supplier 	is 	or 	is 	not
certified m~ convey 	to 	consumers 	information 	on 	service
quality. 10 	Similarly, 	in 	some 	industries, 	there 	are 	trade
associations 	with 	selective 	admission 	criteria 	designed 	to 	ensure
that 	all 	members 	meet 	certain competency 	standards. 	Membership
in 	such 	an 	organization may provide 	an 	assurance 	to 	consumers
that 	the 	services 	are 	rendered by 	a 	qualified 	professional.
Consequently, 	the marketplace 	for 	services may 	generate
7 	See 	Leland, 	Quacks, 	Lemons, 	and 	Licensing: 	A Theory 	of
Minimum standards, 	87 	J. 	Pol. 	Econ. 	1328 	(1979); 	Leland, 	Minimum-
Quality Standards 	and 	Licensing 	in Markets 	with 	Asymmetric
InfOrmation, 	in Occupational 	Licensure 	and 	RegUlation 	264 	(S.
Rottenberg, 	ed., 	1980).
8 	s. 	Young, 	The Rule 	of 	Experts: 	Occupational 	Licensing 	in
America 	17 	(1988).
9 	~. 	at 	17-18. 	Many products 	that 	consumers 	commonly
purchase, 	such 	as 	microwave 	ovens, 	personal 	computers, 	or
automobiles, 	are 	technologically complex. 	Although very 	few
consumers 	understand 	the mechanisms 	that 	make 	these 	products
operate, 	they 	nevertheless 	are 	able 	to make 	jUdgments 	concerning
some 	aspects 	of product 	quality, 	principally 	through 	the 	sources
described 	above.
10 	Under 	a 	voluntary 	certification program, 	only 	persons
who meet 	certification 	requirements 	may 	identify 	themselves 	as
being 	certified, 	but 	noncertified persons 	are 	not 	barred 	from
practicing the 	occupation. 	In 	contrast, 	under 	a 	mandatory
licensing 	system, 	only 	individuals who 	obtain a 	license 	from 	the
state may 	lawfully 	engage 	in 	the 	practice 	of 	the 	licensed
occupation. 	Even 	in 	industries where 	the 	market 	cannot 	furnish
sufficient 	information on 	service 	quality 	to 	consumers, 	a 	state-
supported 	certification program may 	provide 	them 	that
information without 	imposing on 	them 	the 	types 	of 	costs
associated with 	licensing. 	See M. 	Friedman, 	Capitalism and
Freedom 144-149 	(1962).
4

sufficient 	information 	to 	enable 	consumers 	to 	make 	informed
jUdgments 	about 	service 	quality without 	the 	imposition 	of
licensing.
A fundamental 	objection 	to 	licensing 	and 	related
governmental 	restrictions 	on professional 	practice 	is 	that 	they
often 	fail 	to 	achieve 	th~ir stated purpose 	of 	raising 	quality.
Empirical 	research, 	including 	studies 	by 	Commission 	staff,
indicates 	that 	licensing may 	not 	increase 	the 	quality 	of 	services
offered 	to 	consumers. l1 	Even when mandatory 	occupational
licensing does 	increase 	the 	quality of 	services 	offered by
licensed practitioners, 	it does 	so 	at 	a 	cost. 	By 	restricting 	the
supply 	of practitioners 	and 	raising 	the 	cost 	of 	entry 	into
licensed 	occupations, 	mandatory 	licensing tends 	to 	increase 	the
price 	of 	se~ices to 	consumers. 12 	In 	addition, 	by 	raising 	the
cost 	and 	limiting the 	availability 	of 	services, 	licensing 	tends
to 	induce 	some 	consumers 	to 	do without 	the 	services 	or 	to 	rely 	on
self-help. 	Consumers' 	tendency 	to 	use 	self-help measures 	when
the 	cost 	of 	services 	is 	raised 	or 	the 	supply 	is 	limited, 	in 	turn,
may 	result 	in 	a 	reduction 	of 	the 	overall 	quality 	of 	services
11 	For 	example, 	a 	study 	of 	the 	relationship 	between
licensing 	and 	fraud 	in 	the 	television 	repair 	industry 	in 	three
cities 	found 	that 	licensing 	failed 	to 	reduce 	the 	incidence 	of
fraud 	compared 	to 	an unregulated market. 	J. 	Phelan, 	Bureau 	of
Economics, 	Federal 	Trade 	Commission, 	Regulation 	of· the 	Television
Repair 	Industry 	in 	Louisiana 	and 	California: 	A Case 	study
(1974). 	The 	study 	also 	found 	that 	the 	cost 	of 	repairs 	was 	higher
in New Orleans, 	which 	imposed 	a 	licensing 	requirement, 	than 	in
San 	Francisco 	and Washington, 	D.C., 	which did 	not. 	In 	addition,
the 	study 	found 	that 	the 	incidence 	of 	fraud 	was 	60 	percent 	lower
in San 	Francisco, 	where 	repair personnel 	were 	not 	licensed 	but
where 	a 	state 	agency 	performed unannounced 	investigations 	of
repair 	facilities, 	than 	in New Orleans, 	where 	repair personnel
were 	licensed.
Another 	study by 	Commission 	staff 	found 	that 	the 	quality 	of
eye 	examinations 	by 	optometrists was 	similar 	in 	the 	various
jurisdictions 	studied, 	even though 	the 	stringency 	of 	their
regulations 	differed. 	The 	Case 	of 	optometry, 	supra 	note 	3; 	Bond,
Kwoka, 	Phelan 	& Taylor, 	Self Regulation 	in 	optometry: 	The 	Impact
on 	Price 	and 	Quality, 	7 	Law 	& Human 	Behav. 	219 	(1983).
12 	See, 	~.g., 	Shepard, 	Licensing Restrictions 	and 	the 	Cost
of 	pental 	Care, 	21 	J.L. 	& Econ. 	187 	(1978); 	Television Repair
Industry, 	supra 	note 	11.
5

actually 	consumed 	even when 	that 	portion 	of 	the 	services
delivered by 	the 	licensed 	occupation 	increases 	in 	quality.13
Another 	common 	argument 	in 	favor 	of 	licensing 	is 	that
purchasers 	of 	low-quality professional 	services 	may 	impose
significant 	costs 	on third 	parties. 	For 	example, 	a 	person
suffering 	from 	a 	contagious 	disease 	who 	is 	treated 	by 	an
incompetent 	physician may 	transmit 	the 	disease 	to 	others 	who 	did
not 	deal 	with 	the 	incompetent 	physician. 	While 	this 	argument 	has
theoretical 	appeal 	in 	some 	cases, 	its 	actual 	relevance 	to 	any
particular occupation 	should be 	examined 	closely. 	(See 	below 	for
a 	discussion 	of 	landscaping.) 	In 	addition, 	overly 	restrictive
licensing 	regulations may 	themselves 	give 	rise 	to 	the 	same 	type
of 	concerns.' 	This 	could 	occur where 	licensing 	so 	restricts 	the
supply of providers 	of 	a 	particular 	service 	that 	many 	consumers
engage 	in 	self-help 	as 	described 	above. 	As 	a 	result, 	incompetent
self-administered work by 	consumers 	could 	impose 	costs 	on 	third
parties.
IV. 	Analysis 	of House 	Bill 	1579
By 	supplanting the 	existing 	scheme 	that 	only 	limits 	the 	use
of 	the 	title 	"landscape 	architect" 	with 	a 	licensing 	system that
restricts 	the 	practice 	of 	landscape 	architecture, 	House 	Bill
1579 	may 	lead to higher prices 	and 	fewer 	consumer 	choices 	because
it would 	inhibit 	entry 	into 	the 	profession 	of 	landscape 	design
and 	restrict 	competition among 	providers 	of 	landscaping 	services.
It 	is 	likely 	that 	some 	individuals 	desiring 	to 	become 	landscape
architects would be 	deterred 	by 	the 	costs 	of 	fulfilling 	the
proposed prerequisites 	for 	licensure 	and would 	choose 	not 	to
engage 	in 	the 	occupation. 	Thus, 	the 	leqis1ation may 	have 	the
13 	Studies 	have 	shown that 	restrictive 	licensing 	of
electricians was 	associated with 	a 	higher 	rate 	of 	death 	by
electric 	shock, 	apparently because more 	consumers 	resorted 	to
self-help. 	Carroll 	& Gaston, 	Occupational 	Restrictions 	and 	the
Quality 	of 	Service Received: 	Some 	Evidence, 	47 	South. 	Econ. 	J.
959 	(1981); 	Carroll 	& Gaston, 	occupational 	Licensing: 	Final
Report 	(1977). 	See 	generally 	Carroll 	& Gaston, 	Occupational
Licensing 	and 	the 	Quality 	of 	service: 	An 	Overview, 	7 	Law 	& Hum.
Behav. 	139 	(1983); 	Hogan, 	The Recommendations, 	7 	Law 	& Hum.
Behav. 	117 	(1983).
Another study has 	shown 	that 	houses 	tended 	to 	remain 	unsold
for 	longer periods 	in 	areas with 	restrictive 	licensing 	of 	real
estate brokers. 	Occupational 	Licensing: 	Final 	Report, 	supra.
The 	increased duration 	of 	availability 	for 	sale 	is 	correlated
with a 	lower 	ratio 	of 	brokers 	per 	capita. 	See 	occupational
Restrictions, 	at 	970-973.
6

effect 	of 	removing 	from 	practice 	those 	individuals 	who 	have 	less
experience 	or 	skill 	and who 	are 	likely 	to 	charge 	lower 	fees.
There 	are 	differences 	among 	the 	skill 	levels 	required 	for
different 	landscaping projects. 	Planning 	a 	park 	for 	an 	urban
area 	or designing 	for 	an 	industrial 	client who 	needs 	holding
ponds 	for 	cooling water used 	in 	processing 	seems 	quite 	different
from 	planning 	a 	pleasing garden 	for 	an 	individual's 	residence.
Expertise 	essential 	to 	landscape 	design 	and 	supervision 	for 	a
large 	commercial 	or 	institutional 	client may 	be 	unnecessary 	for
designing 	and 	installing an 	environment 	for 	a 	private 	residence.
The 	current 	law already 	requires 	a 	total 	of 	seven years 	of
education 	and 	experience; 	the more 	stringent 	licensing
requirements may make 	this 	requirement 	more 	burdensome. 	The
Legislature may wish 	to 	consider whether 	these 	education 	and
experience 	requirements 	are 	necessary 	or 	desirable 	for 	all
landscape 	jobs.
Consumers 	benefit when 	they 	are 	permitted 	to 	find 	and 	employ
professionals with 	the 	skill 	levels 	appropriate 	to partiCUlar
tasks. 	Some 	consumers may wish 	to 	employ 	practitioners 	with 	less
education 	or 	experienoe who may 	accordingly 	charge 	lower 	fees.
Generally, 	competition 	in 	the 	marketplace, 	especially 	in 	light 	of
the 	existing 	regulatory 	scheme, 	will 	ensure 	the 	appropriate
levels 	of quality 	in 	the 	provision 	of 	landscape 	architecture.
Landscape 	designers 	who 	are 	unable 	to 	provide 	the 	quality 	of
services 	desired by 	consumers 	will 	be 	unable 	to 	survive.
Although the 	Legislature may 	conclude 	that 	certain
1andscapinq projects 	pose 	health, 	safety, 	or 	environmental
concerns,14 	it may be 	that 	the 	existing scheme 	is 	sufficient 	to
address 	any 	of these 	concerns 	and does 	not 	impose 	the 	partiCUlar
harmful 	effects 	on 	consumers 	that 	a 	more 	restrictive 	scheme may
impose. 	If 	the 	Legislature 	determines 	that 	the 	pUblic 	interest
would 	be 	served by 	some mandatory 	licensing 	scheme 	despite 	its
potential 	adverse 	effects, 	the 	Legislature may wish 	to 	consider
distinguishing among 	types 	of 	landscaping projects 	and 	requiring
that 	landscape 	architects 	be 	licensed 	only 	to 	perform 	the
selected 	tasks 	deemed 	to warrant 	strict 	regulation. 	other
projects 	could be 	regulated differently 	or 	exempted 	from
regulation altogether.
v. 	SUMMARY
Although 	occupational 	licensing may 	benefit 	consumers 	when
it 	responds 	to 	failures 	in the market, 	licensing 	also 	imposes
costs 	and may 	have 	anticompetitive 	effects, 	which 	injure
consumers. 	House 	Bill 	1579, 	if 	enacted, 	may 	limit 	competition
14 	This may be 	true 	in 	the 	case 	of 	drainage 	onto 	adjacent
properties 	or 	the 	installation 	of 	footbridges.
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and 	raise 	the 	cost 	of 	landscape 	design 	services. 	In 	determining
whether 	to 	impose 	additional 	regulatory 	constraints 	on 	the
practice 	of 	landscape 	architecture, 	the 	Legislature 	may 	wish 	to
consider 	these 	potential 	anticompetitive 	effects.
We 	are 	pleased 	to 	have 	the 	opportunity 	to 	present 	our views
on H.B. 	1579. 	Thank you 	for 	considering 	our 	comments.
Sincerely,
~
~ 	~:.-~c:----
~'??'-70~~
Thomas 	B. 	Carter
Director
Dallas 	Regional 	Office
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