Advocates of deregulation often concentrate on horror stories out of Washington. But state regulations can be as ill-conceived, harsh and unforgiving as any scheme hatched along Pennsylvania Avenue, according to observers.

Take the burdens limousine operators face in Nevada.

• In 1997, the state legislature created something called the Transportation Service Authority, which has the power to impound limos that lack a certificate of "public convenience and necessity."

• This requires would-be limo entrepreneurs to demonstrate a need for their services and to prove that they won't "adversely affect other carriers" -- their competitors -- who have a right to challenge anyone who wants to enter the field.

• Only six companies are currently licensed to provide limousine service in the state.

• Those who elect to run a limo service without a license face penalties if caught of up to $10,000 in impoundment fees, $10,000 in civil fines and $2,000 in criminal fines -- and the authorities are constantly running sting operations to catch them.

One TSA bureaucrat contends limousine service "is one area where the free market doesn't work."

One would-be operator estimates he was required to file more than 500 pieces of paper to back up his application and that the whole process cost him more than $20,000. After a year of paperwork, three TSA commissioners tossed out his application -- one explaining that the application had simply become "too complicated."

The applicant and two other victims of TSA's bureaucracy are suing the agency in state court, with the assistance of the Washington, D.C.-based Institute for Justice. They claim that state rules go far beyond the reasonable standard of ensuring public safety and therefore violate their constitutional right to earn a living.

Source: Michael W. Lynch (Reason magazine), "A Free-Enterprise Flat Tire in Vegas," Investor's Business Daily, December 3, 1998.