Lake Chelan Ferries
Courtney v. Danner
Challenging Lake Chelan’s Government-Imposed Ferry Monopoly Under the Fourteenth Amendment’s Privileges or Immunities Clause
IJ Clients Cliff and Jim Courtney
|Watch: Sinking the Government-Enforced Ferry Monopoly on Lake Chelan|
If you want to understand the public’s growing frustration with government, visit Lake Chelan in Washington state. But if you go, you better plan to add an extra day to your travels.
Jim and Cliff Courtney have a plan to bring economic prosperity to their small community of Stehekin, located at the northern end of Lake Chelan. Because Stehekin is accessible only by boat or plane, the Courtney brothers want to provide convenient ferry service across Lake Chelan so more people can enjoy the natural beauty and outdoor activities in the community their family has called home for four generations.
Unfortunately, the state of Washington has sunk their plan. A nearly century-old state law requires Jim and Cliff to obtain a certificate of “public convenience and necessity” from the state in order to pick up and drop off passengers along Lake Chelan. This requirement, which was implemented to protect existing ferry providers from competition, has resulted in a government-imposed monopoly on Lake Chelan ferry service since the 1920s.
The public convenience and necessity requirement is an anticompetitive condition that turns the ordinary rules of business on their head. It forces entrepreneurs like Jim and Cliff to either obtain the existing ferry company’s permission to compete (akin to Burger King having to get McDonald’s permission before opening a restaurant) or prove in a trial-like hearing to the government that the existing company is not providing “reasonable and adequate service” and that a new service is necessary. In practice, this standard is so arbitrary and hostile to honest entrepreneurship that enterprising citizens are routinely prevented from pursuing their dreams. Such an approach is fundamentally inconsistent with the American tradition of allowing consumers and entrepreneurs—not bureaucrats and existing businesses—to decide whether a new business is necessary.
Not only does the public convenience and necessity requirement cost jobs and deny consumer choice by reducing competition, it also violates the Constitution—specifically, the Privileges or Immunities Clause of the 14th Amendment. That Clause, which was intended to protect the right of all Americans to earn an honest living, was substantially narrowed by the Supreme Court’s decision in the notorious Slaughter-House Cases. But although Slaughter-House interpreted the clause to protect only a handful of rights of national citizenship, it still recognized that those rights receive meaningful protection under the clause and that the states, therefore, cannot abridge them. One of those rights is the “right to use the navigable waters of the United States”—the very right that Jim and Cliff wish to exercise.
That is why, on October 19, 2011, the Institute for Justice (IJ) joined with Jim and Cliff in filing a federal civil rights lawsuit to challenge the public convenience and necessity requirement on Lake Chelan and vindicate their right to use the navigable waters of the United States free from the kind of arbitrary and protectionist interference effected by Washington's public convenience and necessity requirement.
Unfortunately, the district court dismissed their lawsuit in April 2012, and the 9th U.S. Circuit Court of Appeals affirmed that decision in December 2013. According to the 9th Circuit’s misguided opinion, the rights that the Privileges or Immunities Clause protects are, with one limited exception, necessarily non-economic in nature and, therefore, the right to use the navigable waters of the United States is merely a right to navigate such waters—not to use them in economic activity. The 9th Circuit’s decision thus exceedingly narrows Slaughter-House’s already narrow interpretation of the clause to the point of near meaninglessness.
The 9th Circuit’s decision cannot be squared with the history of the Privileges or Immunities Clause, which was designed to ensure that all Americans could participate fully in the economic life of the nation. Accordingly, Jim, Cliff and IJ are asking the U.S. Supreme Court to review the decision and begin the process of restoring the clause to its proper, robust role in protecting constitutional rights.