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|
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 in Washington state. 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 to the government, in a trial-like hearing, 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, which interpreted the clause to protect only a handful of seemingly limited rights. One of those rights, however, was 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, in December 2013, the 9th U.S. Circuit Court of Appeals concluded that the Privileges or Immunities Clause does not protect the right to operate a public ferry on Lake Chelan—a conclusion that further narrowed Slaughter-House’s already narrow interpretation of the clause. Worse, the U.S. Supreme Court declined to review that decision in June 2014.
Fortunately, however, the courts left open the possibility that the Privileges or Immunities Clause could protect the right to operate a more limited “private” ferry—for example, a boat service for patrons of specific businesses. Accordingly, the Courtneys are pressing on with their lawsuit, committed to beginning the process of restoring the Privileges or Immunities Clause to its proper role in protecting the right of all Americans to participate in the economic life of the nation.