LLR Mum on Auctioneering Board About-Face

October 7, 2011

Investigative Reports

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The NerveGoing once, going twice … a rare chance to shrink South Carolina state government … going three times … gone!

In a state with more 300 boards and commissions, some feel that South Carolina could get by with a little less regulatory oversight.

So, when the S.C. Department of Labor, Licensing and Regulation – the agency that oversees 42 licensing boards, according to its website – recommended that the S.C. Auctioneers’ Commission be discontinued and the profession deregulated, an opinion shared by the then-governor, it seemed like a no-brainer.

That’s what happened in 2007, when LLR issued a white paper urging the “deregulation of the auctioneering profession and ‘sunsetting’ of the Auctioneers’ Commission.” LLR added that the public interest could be protected by increasing criminal and civil penalties for misconduct.

LLR, a cabinet agency, oversees the Auctioneering Commission, which licenses and regulates approximately 1,000 auctioneers in South Carolina.

But somewhere along the line something changed. LLR is no longer recommending that the Auctioneering Commission be discontinued and the profession deregulated, according to agency spokeswoman Lesia Kudelka.

However, that was news to anyone perusing the LLR website as recently as last week. The white paper in question was still available for all to view until it was brought to the agency’s attention by The Nerve. It was then removed.

“That was an issue then-LLR director Adrienne Youmans supported,” Kudelka said in an email to The Nerve. “I do not know if or at what time that changed while she was at LLR. That is not an issue being pursued by LLR and its current director.”

When asked how current LLR director Catherine Templeton, appointed by Gov. Nikki Haley earlier this year, stood on the issue, Kudelka said the decision didn’t rest with her agency. However, Kudelka alluded that were such a change to come about, it would have to be at the behest of Legislators.

“Our job is to defer to the will of the General Assembly and this is their decision, not ours,” she said in a follow-up email response.

However, Jimmy Blocker, chairman of the state Auctioneering Commission, said he believes the change in direction came about because public officials realized the profession’s contributions to the state.

“We regulate the auctioneers, and auctioneers didn’t always have the best reputation in the past,” said Blocker, an auctioneer since 1967. “We’ve cleaned it up, and I think that’s part of why they’ve backed off, along with the fact that we contribute to the state treasury, which I’m sure was a factor given the state of the economy.”

Licensed auctioneers pay $150 annually to the state. In addition, there is a $150 initial application fee.

With just over 1,000 auctioneers licensed in South Carolina, that means a minimum of $150,000 flows into state coffers from auctioneers annually.

Blocker, who was first appointed to the board in 2004, said that “overall” those within the profession have no problem with Auctioneering Commission oversight.

“Everyone in the industry, except for a few crooks, thinks the regulation is good,” he said.

The recommendation to do away with the commission was made under former Gov. Mark Sanford’s administration, said Scott English, who served as Sanford’s chief of staff the last three years of Sanford’s second term.

“Our philosophy was that boards and commissions should be limited to those that had to do with the health, safety and welfare of South Carolinians,” said English, now chief operating officer for the S.C. Department of Education. “We didn’t see that need with this commission.”

What it Does

The Auctioneers’ Commission is responsible for the administration and enforcement of the state auctioneers’ law, which establishes specific standards of conduct for practitioners to protect the public.

Activities the Auctioneers’ Commission attempt to protect the public from include: auctioneers knowingly using false bidders, who can be used to artificially drive up auction prices; the use of misleading or untruthful advertising; and engaging in dishonest behavior in connection with a sales transaction, according to the S.C. Code of Laws.

Established in 1977, the S.C. Auctioneers’ Commission issues three types of licenses:

  • To auctioneers – Individuals who conduct or offer to conduct auctions;
  • To apprentice auctioneers – Individuals who conduct or offer to conduct auctions under the supervision of a licensed auctioneer; and
  • To auction firms – Business entities that conduct or offer to conduct auctions.

In order to become a licensed auctioneer, applicants must complete one year as an apprentice auctioneer or 80 hours of instruction in auctioneering at an approved institution. They must also pass a written examination.

An applicant must also have a satisfactory credit report, pass a background check and pay the required license and recovery fund fees. The recovery fund pays claims to individuals “injured” by licensed auctioneers. To renew a license, a licensee must complete four hours of continuing education credits annually and submit the renewal forms and fees.

English said the Sanford administration’s aim was to go after the “guilding of professions,” referring to the practice of excluding competition through artificial means.

“It’s not clear, for example, that a certain number of hours spent in a classroom, as many boards require in order to receive a license, necessarily makes you competent in that profession,” English said.

“Ultimately, the problem with many of these organizations is that it’s not about proficiency; it’s about reducing competition,” he added.

Labor, Licensing and Regulation stated in its 2007 white paper that there were other means to keep unscrupulous auctioneers in check.

“The auctioneering community supports a variety of professional associations such as the South Carolina Auctioneers Association and the National Auctioneers Association,” LLR wrote. “These groups and their members provide another avenue to educate the public about the value of professional auctioneering services. Membership in these groups provides a credential that auctioneers may use to differentiate themselves from less qualified persons …”

The push to do away with the Auctioneers’ Commission earned a thumb’s up from some outside of state government, as well.

“Generally, the creation of these commissions is sought by those already in the business,” according to an Oct. 10, 2007, editorial in the Charleston Post and Courier. “Licensing and regulating specific groups effectively provide the state’s seal of approval and can create barriers to competition.”

With about half the states not regulating auctioneers, it’s hard to imagine why auctioneering can’t be controlled by regular business practices, including contractual agreements, the Post and Courier wrote.

Indeed, LLR’s white paper stated that the “public interest can be protected by an increase in criminal and civil penalties for misconduct in the conduct of auctions.”

The Post and Courier also pointed out that the cost of regulation doubtless is passed on to the customer, while raising the issue of whether the commission actually serves a broad public purpose.

Among those who disagreed with the idea of deregulating the auctioneering industry was Ed Roumillat, who made his feelings known in a letter to the paper a week after the editorial appeared.

“To deregulate auctioneers will set the public protection back to the late 1970s, when there was no protection for buyers or sellers at auctions,” wrote Roumillat, an auctioneer since the 1970s. “Before the auctioneers’ commission was enacted, South Carolina was infested with unscrupulous operators and out-of-state, fly-by-night auctioneers. These operators have since been eradicated and now set up their shops in a state that have no or weak licensing law(s).”

Reach Dietrich at (803) 779-5022, ext. 110, or kevin@thenerve.org.