Arlington, Va.—Today, the U.S. District Court for the Eastern District of Washington dismissed a case brought by brothers Jim and Cliff Courtney seeking to sink a government-enforced ferry monopoly that operates on Washington state’s Lake Chelan. The Institute for Justice, which represents the Courtneys, said they will appeal.
“Today’s decision leaves in place a nearly century-old, government-created ferry monopoly—a monopoly that hurts both entrepreneurs and consumers alike,” said Michael Bindas, a senior attorney with the Institute for Justice, which represents the Courtney brothers. “We are confident the decision will be reversed on appeal and that Jim and Cliff’s right to operate on the lake will be vindicated.”
For 15 years, the Courtneys have tried to launch a competing ferry on the Lake Chelan, only to have their efforts thwarted by Washington’s “public convenience and necessity” requirement. To provide ferry service on the lake, you must obtain a “certificate of public convenience and necessity” from the state. The state will only issue a certificate if the lake’s existing ferry company consents or the applicant can prove to the government, in a costly legal proceeding, that the “public convenience and necessity” require another ferry. The existing ferry company gets to participate in that proceeding and effectively veto your entry into the market.
Jim Courtney applied for a certificate but was denied after the lake’s existing ferry company protested. He and Cliff then tried to launch services short of a full-service ferry—for example, a shuttle for patrons of Courtney-family and other Stehekin-based businesses—but the state required a certificate even for these services.
Since the certificate requirement was imposed in 1927, Washington has issued only one certificate for service on Lake Chelan.
Thwarted by the state and the existing ferry provider, Jim and Cliff filed a federal constitutional challenge to the certificate requirement in October 2011. The requirement violates their “right to use the navigable waters of the United States”—a right the U.S. Supreme Court has held is protected by the Privileges or Immunities Clause of the 14th Amendment. That clause was adopted in the wake of the Civil War to protect the newly freed slaves, whose economic rights were still being routinely violated by Southern states.
Despite the clause’s clear concern with economic freedom, however, the court, in dismissing the Courtneys’ case, concluded that it was not designed “to protect quintessentially economic rights.”
Bindas said, “The framers of the Privileges or Immunities Clause sought to ensure that all citizens were free to participate fully in the economic life of the nation. Today’s decision fails to honor that purpose.”
“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.”
For more information about the Courtney brothers’ case, visit: www.ij.org/LakeChelan.