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FTC forcefully rejects LouisianaÕ request to pause regulatory action over appraisals

Claims state’s recent actions to repeal appraisal law do nothing to change past

Last week, the state of Louisiana asked the Federal Trade Commission to pause its legal action over the state’s appraisal laws after the state’s governor and the Louisiana Real Estate Appraisers Board issued complementary orders that addressed the FTC’s charges that the board was stifling price competition by requiring that appraisal management companies follow the state’s established polices for how AMCs pay appraisers.

Well, the FTC received that request, considered it, and promptly swatted it out to half court.

The LREAB previously asked the FTC to stay the proceedings after Louisiana Gov. John Bel Edwards issued an executive order and the LREAB issued a resolution that that will lead to the law that dictated how AMCs pay appraisers being repealed.

But in its response to the LREAB’s request, the FTC said that any changes to Louisiana law in the future do not have any impact or sway on the FTC’s belief that the LREAB-stipulated policies are tantamount to price-fixing.

After Edwards and the LREAB announced the looming changes to the appraisal fee laws, the board asked the FTC for a 120-day stay to allow the state to implement the new laws.

“These State acts substantially change the factual and legal basis of this proceeding, by confirming state action immunity with respect to any current and prospective actions of the Board, and addressing the retroactive and prospective relief sought in the Complaint,” the LREAB said in its request to the FTC.

Beyond allowing the state time to implement its new laws, the FTC claims that the LREAB made the stay request to allow the board time to prepare a motion to declare the FTC’s case moot based on the new laws.

But the FTC is not buying any of those arguments, in the slightest.

“(The LREAB) claims that the Executive Order and Resolution ‘fundamentally change the legal and factual issues pertinent to this proceeding’ and ‘moot’ the Complaint because of the purported applicability of the state action doctrine to everything Respondent has done or will do,” the FTC states in its filing. “These actions do no such thing.”

In the FTC’s view, the case will not be moot even at the end of the proposed stay.

Beyond that, the FTC states that putting new rules in place doesn’t change or excuse the impact of the board’s previous actions.

“(The LREAB’s) claim that its implementation of the Executive Order and Resolution will exempt all of its future actions from the antitrust laws is incorrect,” the FTC states.

“And nothing (the board) can do in the future will exempt its past conduct from antitrust scrutiny,” the FTC continues. “Because a stay will only impede the efficient resolution of the issues raised in the Complaint, (the board’s) motion should be denied.”

One of the main issues brought up by the FTC in its initial complaint (beyond the price-fixing allegations) was that the LREAB was not properly supervised by the state government, but Edwards’ stipulated that the state’s Division of Administrative Law will have increased supervision over the LREAB related to its issuance of regulations and its enforcement of those regulations.

But the FTC claims that the supposed increased oversight and repeal of the state’s appraisal fee laws “have not eliminated” the need for FTC intervention.

“(The board) assumes that, at the end of the stay, Louisiana will have in place a legal regime for state supervision of all Board activities relating to regulation of appraisal fees,” the FTC states. “However, neither the Executive Order nor the steps contemplated by (the board) will yield an effective supervision regime. These actions also will not undo past competitive harm as alleged in the Complaint.”

The FTC also claims that none of the state’s actions will truly prevent repeats of the state’s previous offenses.

“Other gaps also allow (the board) undue leeway in regulating appraisal fees without supervision. For example, the Executive Order does not require (the board) to submit a judgment against an AMC for review, potentially allowing (the board) to impose draconian penalties or take other actions against offending AMCs,” the FTC states. “And the Executive Order provides for review only of actions designated by (the board) as pursuant to one provision of the Louisiana Code, potentially allowing (the board) to sanction AMCs for price-related conduct pursuant to other provisions.”

For all those reasons and more, the FTC said that the stay should be denied.

3d rendering of a row of luxury townhouses along a street

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