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    Over the last several months, there have been discussions by various groups on removing Substantial Equivalency, as set forth under Section 23 of the Uniform Accountancy Act (UAA), as the criteria for determining mobility. These discussions have centered around replacing Substantial Equivalency with an “Automatic Mobility” provision as a way to ensure mobility continues in the event a jurisdiction has adopted a pathway to licensure that is not defined in the UAA. 

    It should be noted that such a provision could be considered as an unconstitutional delegation of legislative authority because it grants one state the unqualified right to determine the qualifications for practice for a state that is not the licensee’s principal place of business. This may especially be the case when the initial licensure requirements are not considered substantially equivalent between the relevant states. We bring this to your attention as there have been a number of courts, attorneys general, and state agencies that have heard dozens of challenges to such regulations, and they consistently support host states’ regulatory powers. For example:

    • Johnson v. Hall, Nos. 4:08-CV-2726-TLW-TER & 3:09-CV-0102-TLW-TER, 2011 U.S. Dist. LEXIS 116167 (D.S.C. Aug. 9, 2011), aff’d per curiam sub nom. Johnson v. Bryant, 474 Fed. Appx. 105 (4th Cir. 2012), cert. denied, ___ U.S. ___, 133 S. Ct. 940, 184 L. Ed. 2d 726 (2013): South Carolina has a legitimate constitutional interest in “assuring the public that only persons who have demonstrated their qualifications as CPAs and received a license can hold themselves out as public accountants.”
    • Att’y Gen. Kan. No. 98-7 (Feb. 9, 1998): “It is clear from the language [of UAA Section 23] that certificate and permit holders from other states who practice in Kansas will be subject to this state’s accountancy laws and regulation as administered by the Kansas [Board] regardless whether the Board issues a certificate or permit that represents that privilege.”
    • In the Matter of the Application for Certification as a Certified Public Accountant by Gary E. Lotzer, No. 12F-2012.096-ACY, 2012 Az. Admin. Hearings LEXIS 241 (Az. Office of Admin. Hearings May 31, 2012): A CPA was properly denied certification by reciprocity in Arizona based on a determination by the board that he did not meet its reciprocity requirements.

    Furthermore, only the host state has the power to determine whether an out-of-state licensee’s credentials are substantially equivalent to host state requirements. Courts, attorneys general, and state agencies consistently support licensure laws that uphold this principle  and reject those that do not. For example:

    • Att’y Gen. Oklahoma No. 2011-4, 2011: “Enactment of the Nurse Licensure Compact by the Oklahoma Legislature would constitute an unlawful delegation of Oklahoma’s police power as the Nurse Licensure Compact does not establish standards for the implementation of state policy, but authorizes the legislatures of other states to determine by absolute reciprocity the qualifications of persons admitted to practice nursing in Oklahoma.”
    • 2007 Tenn. AG LEXIS 107: “This [licensure] compact limits reciprocity to any person holding a license, certificate, or other permit issued by any state party to the compact evidencing the meeting of qualifications for professional, mechanical, or other skills. Therefore, so long as the health care professionals in question are licensed in other “party states,” then under this compact such professionals may provide medical assistance.”
    • Att’y Gen. Kan. No. 99-3 (Feb. 9, 1999), 1999 Kan: “Reciprocity in professional licensure is extremely common between states. In every case we could find, however, there was a requirement that there be substantial equivalency between qualifications of the respective states.” Thus, “enactment of the nurse licensure compact [without ensuring substantial equivalency] would be an unconstitutional delegation of legislative authority because it grants other states the unqualified right to determine the qualifications for the practice of nursing in this state by nonresidents.”

    We encourage Boards of Accountancy to use caution and seek board counsel, and/or your state attorney general’s input, before moving forward with any statute and/or rule change that would empower another state to determine the qualifications for practice in your state when the licensing requirements are not substantially equivalent.

    *This information does not constitute legal advice from NASBA. It is not intended to advocate for a legal position.