Antitrust Law Daily FTC proceedings over Louisiana appraisal board fee rule stayed
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Friday, October 27, 2017

FTC proceedings over Louisiana appraisal board fee rule stayed

By Jeffrey May, J.D.

An administrative trial against the Louisiana Real Estate Appraisers Board for allegedly restraining price competition for real estate appraisal services has been pushed back from its January 2018 start date. Yesterday, the Commission continued a stay in the matter and set the evidentiary hearing to commence on May 30, 2018. The board had sought the stay in light of actions taken by the Louisiana governor, which the board contended would eliminate the need for the agency proceeding. An administrative law judge’s stay in the case had been set to expire on October 30. The matter is now stayed until November 26 (In the Matter of Louisiana Real Estate Appraisers Board, FTC Dkt. 9374).

The administrative complaint was issued in May. The agency alleged that the board, which is a state agency controlled by licensed real estate appraisers, unreasonably restrained price competition for real estate appraisal services provided to appraisal management companies (AMCs) in Louisiana. The case takes up a Louisiana appraisal board regulation implementing a requirement under federal and Louisiana law that AMCs pay appraisers a "customary and reasonable" fee for real estate appraisal services. The regulation specifies how AMCs must comply with the customary and reasonable fee requirement. Under the regulation, AMCs must compensate appraisers at a rate determined by one of three methods: (1) an AMC may use a survey of fees recently paid by lenders in the relevant geographic area; (2) an AMC may use a fee schedule established by the board; or (3) an AMC may identify recently paid fees and adjust this base rate using six specified factors. By requiring one of these three methods, the board prevents AMCs and appraisers from arriving at appraisal fees through bona fide negotiation and through the operation of the free market, according to the agency.

In its answer, the board contended that it was immune under the state action doctrine. In July, the state governor issued an Executive Order requiring the board and state agencies to take actions intended to address state active supervision over the board in connection with regulating the customary and reasonable fee requirement. In response, the board issued a resolution to implement this Executive Order and to address past and pending investigations under the appraisal fee regulation at issue.

The board sought a stay of the administrative proceeding, arguing that these actions changed the factual and legal basis for the proceeding. The board anticipates that changes to the challenged state regulatory regime will be completed by November 20. FTC lawyers argued that these efforts did not and would not exempt all of the board’s past or future actions from the antitrust laws.

The Commission decided to extend the stay so that discovery would not close before prior to the changes to the regulatory regime being completed.

Attorneys: Geoffrey M. Green, FTC. W. Stephen Cannon (Constantine Cannon LLP) for Louisiana Real Estate Appraisers Board.

Companies: Louisiana Real Estate Appraisers Board.

MainStory: TopStory Antitrust FederalTradeCommissionNews

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