Entrepreneurs Challenge Government-Enforced Ferry Monopoly on Washington’s Lake Chelan

John Kramer
John Kramer · October 18, 2011

Arlington, Va.— A federal lawsuit filed today in Spokane, Wash., provides yet another example of why so many Americans are frustrated with the size and power of government.

The suit, filed by two brothers, seeks to sink a government-enforced ferry monopoly that operates on Washington state’s Lake Chelan—a monopoly that hurts both entrepreneurs and consumers alike.

For 15 years, Jim and Cliff Courtney have tried to launch a ferry service to compete with the lone government-authorized ferry provider on the lake, only to have their efforts blocked by a nearly century-old state law designed to protect existing transportation companies from competition.

“Government ought to welcome entrepreneurship, especially during a recession,” said Jim Courtney. “Instead, Washington state is prohibiting new businesses from forming—all for the sake of protecting an inefficient, government-enforced monopoly.”

Lake Chelan is a narrow, 55-mile long lake tucked away in Washington’s Northern Cascade mountains. The community of Stehekin, which Jim and Cliff’s great-grandparents helped settle, is located on the lake’s northwest tip and is a popular summer destination full of outdoor opportunities. In fact, Cliff owns a rustic ranch in Stehekin, as well as an outfitter that offers white water river outings and horseback riding.

But Stehekin is accessible only by boat or float plane, and, since 1927, the state of Washington has allowed only one ferry operator on the lake. During peak summer months, it runs two boats between the city of Chelan, on the lake’s southeast end, and Stehekin. But each boat makes only one trip per day and, bizarrely, the boats depart at the same time, in the same direction. That means visitors from Spokane or Seattle have to build in an entire extra day of travel to explore the lake’s scenic north shore. The schedule is even less convenient the rest of the year.

Jim and Cliff want to operate another ferry that will make transportation more convenient for Stehekin visitors and residents. Their boat would be insured, inspected, and certified, and their captain would be licensed with extensive safety training.

The state law that stands in their way requires a “certificate of public convenience and necessity.” To obtain a certificate, Jim and Cliff have to either get the consent of the current ferry provider or prove to the Washington Utilities and Transportation Commission (WUTC), in a trial-like proceeding, that the current provider is not rendering “reasonable and adequate service,” and that the “public convenience and necessity” require additional service. The current provider gets to participate in the proceeding and argue why Jim and Cliff should be kept out. Not surprisingly, since the certificate requirement was imposed in 1927, the state has approved only one certificate for ferry service on Lake Chelan.

“For nearly a century, Washington has protected a monopoly ferry provider by giving it a veto over new competition,” said Michael Bindas, a senior attorney with the Washington Chapter of the Institute for Justice, which represents the Courtney brothers. “That is not how government power is supposed to be used in America. Consumers and entrepreneurs—not bureaucrats and existing businesses—should decide whether a new business is ‘necessary.’”

Jim and Cliff’s lawsuit was filed in the U.S. District Court for the Eastern District of Washington against the WUTC commissioners and executive director. It argues that the certificate of public convenience and necessity requirement violates the 14th Amendment to the U.S. Constitution—specifically, its Privileges or Immunities Clause, a post-Civil War provision designed to protect the economic liberty of the newly freed slaves and all other American citizens. Unfortunately, in the notorious Slaughter-House Cases, the U.S. Supreme Court largely eviscerated the clause by interpreting it to protect only a very few limited rights.

One right that survived the Slaughter-House Cases, however, was the “right to use the navigable waters of the United States,” and Lake Chelan has been designated such a body of water by the U.S. Corps of Engineers. Jim and Cliff argue that by prohibiting their operation of a ferry on the lake, Washington is abridging that right—and their right to earn an honest living free from unreasonable government interference.

According to IJ Staff Attorney Jeanette Petersen, “All someone should need to operate a ferry for hire in Washington is an insured and inspected boat, a trained and capable captain and crew, and the desire to work. The government should not block entry merely to protect other ferry operators from competition.”

For more information about the Courtney brothers’ case, visit: www.ij.org/LakeChelan.