August 19, 2014

PLF opens the road for free enterprise in Kentucky!

By PLF opens the road for free enterprise in Kentucky!

Earlier this year, a federal court in Kentucky struck down that state’s “Competitor’s Veto,” a law which allowed the state’s existing moving companies to block any new moving company from starting up. We represented Raleigh Bruner, owner of Wildcat Moving, who was astonished to discover that his state—like about half of the states—required anyone who wants to start a moving company to get a “Certificate of Public Convenience And Necessity” first. Yet when you apply for a Certificate, existing moving companies were allowed to object to any new competition. And the state always denied applications if objections were filed, no matter how experienced or qualified the applicant. It wasn’t just moving companies. The same law applies to taxicabs, ambulances, limousines, and a wide variety of other businesses. Sadly, these laws are on the books in about half of the states.

The court ruled that allowing existing companies to bar competition this way violated Bruner’s constitutional right to earn a living. “This measure to privilege certain businessmen over others at the expense of consumers is not animated by a legitimate governmental purpose,” wrote the judge, but was “an act of simple economic protectionism” which “violate[d] the Fourteenth Amendment of the United States Constitution.”

This is just common sense. Everyone has the right to earn a living, and government may require people to get licenses only where necessary to prevent harm to the public—not to pick and choose winners in the marketplace. Sadly, many states still abuse their powers—and courts have often ignored those abuses. Astonishingly, the Bruner decision marked the first time since the 1930s that a federal court ever held a Certificate of Public Convenience and Necessity law unconstitutional. (We challenged similar laws in Oregon, Missouri, and Nevada in recent years; the first two states repealed their Certificate requirements before the courts could decide those cases, and the Nevada case is still pending in the Ninth Circuit.) Yet the court’s decision focused only on the moving industry, leaving unclear how it applied to taxicabs, limousines, ambulances, and so forth. And although the state soon repealed the Competitor’s Veto for moving companies, it took no action about these other industries.

But now there’s good news: the state’s Transportation Cabinet has acknowledged that the Bruner decision applies not just to moving companies, but to all transportation companies.

In two orders issued this month, state officials announced that the same unconstitutional law “appl[ies] equally to segments of the passenger motor carrier service industry,” but that “[t]he economic and legal justifications for these procedures as applied to the passenger industry [are] indistinguishable,” and that “they amount to a ‘competitor’s veto.’” Thus “the department shall not enforce them. The only issue for decision by the department in these matters is therefore whether the applicant [for a Certificate] is fit, willing, and able properly to perform the service proposed.” In other words, whether you’re qualified, safe, and abide by the law are the only considerations, not just for a mover license, but for any transportation license, whether for moving companies, or for taxicabs, limousines, etc.

That’s as it should be: the government should ensure that people are qualified and safe—and should not restrict competition simply to protect established companies against fair competition. Merit, not favoritism, is what matters. The Kentucky Transportation Cabinet has done the right thing, and the beneficiaries are consumers, who will find more plentiful services at lower prices, and entrepreneurs who will have increased economic opportunity and a greater chance to pursue the American Dream.

Note to Kentucky entrepreneurs: the Kentucky Transportation Cabinet has confirmed that it will adopt formal regulations on this matter shortly. For now, it has issued these orders in at least two cases. If you apply for a Certificate, and a protest is filed, you should receive an order similar to this. If you do not, or if you learn of the Cabinet continuing to apply the Competitor’s Veto, please contact us immediately.

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