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Competitor’s Veto: A ROADBLOCK TO NEW BUSINESSES
2 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSES
Competitor’s Veto: A Roadblock to New Businesses
Executive Summary
In 2010, a young man star ted a business that mover quality in states with and without a com-
the government threatened to shutter—not be- petitor’s veto, indicating that traditional CON
cause it threatened public health or safety, but laws provide no benefit to the public. Rather,
because it threatened his competitors. Wel- CON laws make it easier for existing business-
come to the upside-down world of cer tificate es to prevent competitors from entering the
of need (CON) laws. market—directly blocking entrepreneurs from
star ting new businesses.
CON laws require entrepreneurs to get a permis-
sion slip, or “certificate,” from the government Although entrenched businesses vigorously re-
before starting up. Many traditional CON regimes sist reform, Pacific Legal Foundation has suc-
also allow existing businesses to protest new cessfully secured judicial rulings, legislation,
certificate applications and force applicants to and administrative reform to remove competi-
prove that a new business is “necessary.” Since tor’s veto provisions in the moving industry in
this is nothing short of a competitor’s veto, we five states.
use the term to describe traditional CON regimes
with these anti-competitive veto provisions. The remaining 17 states with competitor’s veto
provisions on the books can, and should, re-
This repor t analyzes results from a nation- move these unnecessary cer tificate of need re-
wide survey of moving industry competitor’s quirements. Individuals have the right to earn a
veto laws, which affect intrastate compa- living by competing for customers’ business. By
nies that load and haul household goods. It eliminating unnecessary and costly CON laws,
is the first study to examine how these laws policymakers can remove barriers to business—
affect entrepreneurs, consumers, and com- without compromising quality of service.
munities. Our analysis found no difference in
PAC I F I C L E G A L F O U N DAT I O N 3
Table of Contents
05 Entrepreneur: Raleigh Bruner Starts a Business
07 Roadblock: The Competitor’s Veto
• A Survey of Competitor’s Veto Laws
• Information Sources
• History of CON Laws and Policy Goals
• 21st-Century CON Laws and Policy Outcomes
• Competitor’s Veto
◌ Competitors Are Allowed to Protest
◌ Protested Applicants Are Denied Cer tificates
◌ Denials Are Unrelated to Qualifications
◌ Protests Are Costly to Fight
15 Detour: PLF Fights for Movers
19 Reroute: Three Paths
• Judicial Rulings
• Legislative Reform Laws
• Executive Action
23 Back on Track: A World Without CON Laws
• Movers Flourish
• Consumers Benefit
• Communities Thrive
• Cer tificate-of-Need Alternatives
29 Appendix A: Quality of Businesses
30 Appendix B: State Moving Company Laws and BBB Data
4 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSES
Entrepreneur:
RALEIGH BRUNER STARTS A BUSINESS
PAC I F I C L E G A L F O U N DAT I O N 5
RALEIGH STARTED WILDCAT MOVING WITH A CRAIGSLIST AD AND A WHITE FORD BRONCO.
IN 2010, a young, energetic Raleigh Wildcat’s customers spread glowing reviews,
Bruner graduated from the University of which is what allowed Raleigh to grow the oper-
Kentucky with an MBA. Uninspired by the idea ation so quickly. “We were the fan favorite imme-
of a nine-to-five job with a Fortune 500 com- diately,” Raleigh recalled. And no wonder: Wildcat
pany, he gave himself the summer to figure Moving operated seven days a week, compared
out what was next. To pay his bills, he posted to the competitors’ six days, and charged nearly
an ad on Craigslist offering moving services. half of the established companies’ fees.
With his white Ford Bronco, a motor- As Raleigh’s business grew, established compa-
cycle trailer, and a couple of friends, nies took notice. Rather than responding with
Raleigh spent 60 hours a week moving people business innovations of their own, they began
in the Lexington, Kentucky, area. As the tem- calling the police and complaining that Wildcat
peratures began to cool, Raleigh knew he was was operating illegally.
onto something.
The moving industry can provide a quick route What was illegal?
to entrepreneurship and employment. A person • Fraudulent practices
needs only grit, insurance, and a truck to get • Unregistered vehicles
started. Raleigh had all three. • Lack of business license
• Lack of liability insurance
To better serve his clients, Raleigh purchased a • Competitors weren’t provided
used box truck. Within a year and a half of start- an oppor tunity to veto
ing his moving business, Raleigh had established Raleigh’s entrance into the
a sizable operation with five trucks and 30 em- market
ployees. He named the business Wildcat Moving,
after the University of Kentucky mascot.
6 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSES
Roadblock:
THE COMPETITOR’S VETO
PAC I F I C L E G A L F O U N DAT I O N 7
R A L E I G H H A D N O I D E A he needed something business that’s already successful. And I can
called a cer tificate of need (CON) in order to see that it could be extremely successful.”
operate. 1 But believing the licensing process Raleigh was par ticularly motivated to see his
would be reasonable, Raleigh reached out to business succeed, because he was recently
his attorney to figure out how to get one. “I married with a baby on the way.
think it might be impossible,” said his attor-
ney. “I can’t help you.” A Survey of Competitor’s Veto Laws
To secure a certificate of need, Raleigh was This repor t analyzes information from a na-
required to first get permission from the tionwide survey of state competitor’s veto
very people who were calling the police— laws in the moving industry. For purposes of
Lexington’s established moving companies. this study, a state has a competitor’s veto if
it requires movers to prove that services are
Under traditional CON laws, the government “needed” in order to secure operating author-
gives existing businesses the power to pre- ity. Seventeen states have competitor’s veto
vent new competition. laws in place for the
Incumbent businesses moving industry (see
may formally protest A rollback of competitor’s map). 5 With the ex-
any new business that ception of Hawaii and
veto laws is underway.
applies for a certifi- Massachusetts, all
cate to operate. Worse, states also allow es-
the government’s certifying bodies often de- tablished moving companies to protest new
fer to the existing businesses’ statements applicants and to intervene in the hearing pro-
about whether they can fulfill consumers’ cess. This repor t does not address other mov-
new or existing demand and, therefore, about ing regulations such as requiring good-faith
whether a new business is “needed.” Because cost estimates, insurance disclosures, and ve-
the competitors’ self-serving assertions hicle safety requirements designed to protect
often determine whether the government the public.
grants the certificate, CON laws are compet-
itor’s veto laws. By probing the stories of individuals who
fought the laws, and consumer reviews, this
From 2007 to 2012, 39 intrastate moving repor t describes the effect that tradition-
companies applied to operate in Kentucky. 2
al CON laws have on entrepreneurs and the
Of those, 19 of the applicants were protested quality of services available to consumers.
with a total of 114 protests—all from moving Based on consumers’ complaints and mover
companies, none from the general public. 3
reviews on the Better Business Bureau’s web-
Because of the protests, 15 businesses gave site, we find no difference in mover quality in
up, one waited, and three pushed forward states with and without a competitor’s veto.
through the hearing process. The three that Though CON laws provide no measurable ben-
persisted were denied a cer tificate of need. 4
efit to consumers, they may increase costs
for those who cannot or do not move their
“It can’t be right that there’s no way for me to own household goods.
get a license,” Raleigh recalled. “I have this
8 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSES
An analysis of evidence obtained through geographic areas to open and the costs and
litigation shows that competitor’s veto laws time associated with fighting a protest by an
stop moving businesses from opening in var- existing business.
ious states discussed in this repor t. However,
data on the number of moving businesses in Our study demonstrates the need to end
each state did not capture any statistically competitor’s veto laws. In this report, we
significant difference in the average number of recommend avenues to free more would-be
businesses between states with and without entrepreneurs from unnecessary, burdensome
competitor’s veto laws. This finding may
6
regulations, while providing alternatives de-
suggest that CON laws do not significantly signed to better protect consumers’ interests.
affect the overall number of businesses, due A rollback of competitor’s veto laws is under-
perhaps to ar tificial market segmentation way. Although entrenched businesses vigor-
or substitution effects, but they do have an ously resist reform, lawsuits have led to the
effect on individual entrepreneurs—as judicial invalidation, legislative repeal, or ad-
demonstrated by every application denied to ministrative repeal of CON laws in five states.
ready, willing, and able applicants.
Information Sources
The case studies below illuminate the indi-
vidual costs and effects that are harder to We obtained CON law information from four
capture with aggregate data: such as busi- sources. 7
nesses being forced to operate in limited
Competitor’s Veto Laws by State
WA
MT VT ME
ND
OR MN
NH
ID SD NY
WI MA
WY MI
RI
PA CT
IA
NE NJ
NV OH
IN
UT IL DE
CA CO WV
VA MD
KS MO KY
NC
TN
AZ OK AR
NM
SC
MS AL GA
LA Competitor’s veto
TX
AL No veto
FL
HI
PAC I F I C L E G A L F O U N DAT I O N 9
1. We scraped data from the Better Railroad companies argued many angles: 10
Business Bureau website on all moving
businesses in the United States and all con- • The number of operators needed to be arti-
sumer reviews and complaints filed with ficially limited to prevent a proliferation of
the BBB on moving businesses during a unused railroads.
three-year period (August 2016-July 2019).
• If the government allowed competition, rail-
2. We interviewed entrepreneurs affected by roads would have to keep lowering prices un-
CON laws. 8
til many were forced out of business, leading
to a scarcity of providers.
3. We mined PLF information obtained while
litigating on behalf of entrepreneurs. • Competition would force operators to cut
costs in detrimental ways. That would result
4. We sent public records requests to every in railroads serving only the most lucrative
state-based agency that requires moving populations and leaving out poor, rural, or
businesses to register or become certified. otherwise vulnerable populations.
History of CON Laws and Policy Goals • If given a monopoly privilege, railroads would
agree to price regulations and other rules
State governments created CON laws in the that govern public utilities.
19th century to regulate the construction of rail-
roads and utilities, which were thought to have Contemporary commentators criticized many
characteristics of a “natural monopoly.” The of the sweethear t deals and incentives
19th-century economic theory of the natural mo- offered to railroads. But fixed railroad lines
nopoly was applied to public utilities like water were expensive, and Congress, local officials,
and sewer systems because of the expensive, and businesses wanted service. 11 So, an awk-
fixed technology or infrastructure like treatment ward patchwork of federal and state incen-
plants, electric generation systems, and distri- tives, protections, and regulations emerged—
bution systems. Natural monopoly theory pro- including the CON process.
posed that these investments would not be via-
ble or efficient unless a single local provider had Eventually, CON laws were applied to oth-
the opportunity to earn a return on its invest- er industries, including such modern forms
ment by maintaining a monopoly on the supply of transpor tation as taxicabs, public util-
of services. 9 ities, and even hospitals and other medi-
cal providers (see “Other Transpor tation
Using this theory, railroad companies and their Industries,” p. 12).
investors sought protections and incentives
similar to those given to public utility compa- 21st-Century CON Laws and Policy
nies. They argued that the cost of laying track Outcomes
could only be recouped through a monopoly on
ridership and shipping. Rapid technological innovation over the past
50 years has reduced fixed technology costs
and turned the idea of a natural monopoly on
10 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSESits head. 12 For example, despite public utility Political monopolies and oligopolies result-
protections, cable television lost its monop- ing from CON laws are anything but “natural.”
oly power with the creation of the personal They’ve emerged from the arbitrary, outdated
satellite dish. cer tificate of need scheme. And their only
advantage is how they got their cer tificates.
Today’s CON laws apply to transpor tation in- Some were grandfathered in when the CON
dustries that lack the characteristics of a nat- law was enacted; others were the first to op-
ural monopoly. And, because federal trucking erate in a geographic area; some purchased
laws and regulations override state laws on a cer tificate from an existing company. Sub-
interstate commerce, state CON laws apply sequent entrepreneurs seeking to enter a
only to intrastate transpor tation, including in- geographic market must apply and prove the
trastate moving companies. Such intrastate “necessity” of their services despite potential
movers don’t need expensive, fixed infra- protests from cer tificate holders.
structure—and therefore should be a low-cost
way to star t a business. Raleigh Bruner was In lawsuits challenging CON laws, governmen-
able to star t with a truck and trailer he already tal defendants have provided different justi-
owned and public roads that already connect fications, depending on the industry. In the
every home and apar tment. In fact, moving is moving industry, where infrastructure is not
a service that people can do without hiring a fixed (for example, trucks can easily change
company: There is no “natural monopoly” in locations), the government has argued that
the moving industry. CON laws protect consumers’ personal prop-
er ty. In medicine, regulators argue that CON
But when a government requires a cer- laws restrict “excess entry” into the market
tificate of need, the costs of star ting a and keep costs low.
business rise. And the regulatory barriers can
be insurmountable when existing movers file Modern economic and other social science
objections to new competitors. literature has established that, contrary to
these justifications, competition helps soci-
Companies that have cer tificates of need ety flourish. Competition, in which consum-
benefit from reduced competition, which may ers choose which products and services to
also generate higher profits and incentivize purchase, ensures that the best products
them to exer t political influence to maintain and services, rather than the most political-
an advantage. 13
Cer tificate holders have a ly powerful, thrive. Allowing businesses to
lot to lose compared to individual consum- star t without barriers forces companies to
ers who seldom move. The infrequent need compete for consumers, keeping prices low
for service, together with small additional and quality high.
CON-related costs to individual consumers,
discourage them from organizing to end CON Even though the concept of “natural mo-
laws. For their par t, entrepreneurs can pur- nopolies” is thought to be much more limit-
sue a different line of work rather than sink ed now, and even though CON laws regulate
their limited capital into a fight against es- industries that have no natural monopoly
tablished moving companies. characteristics, CON laws remain on the
books in several states.
PAC I F I C L E G A L F O U N DAT I O N 11Competitor’s Veto
1. C O M P E T ITO R S A R E A L LO W E D TO P R OT E S T
Whatever a state’s CON law justification, data Typically, only existing cer tificate holders
obtained from PLF lawsuits demonstrates file protests, and they do it to prevent new
that, in practice, all CON laws operate as com- competition. Although some states allow any
petitor vetoes that favor entrenched business member of the public to protest an applica-
interests. This bias favoring established busi- tion, our review of public records and litiga-
nesses manifests itself in four main ways. tion documents found no consumer protests.
Moreover, records obtained from PLF lawsuits
Other Transportation Industries
CON laws govern other transportation services, among them limousines, taxis, shuttles,
and even medical transportation by handicapped-accessible van or ambulance.
After building successful transportation companies in New Mexico and Texas, Tracie Pabst
dreamt of opening one in her hometown of Big Sky, Montana. Given the sometimes dan-
gerous terrain and lack of transportation companies in the area, Tracie hoped to provide
customers a safe means of getting around. Her companies had provided transportation
services to over 170,000 passengers without a single accident or moving violation, and
she thought she could save lives by providing reliable transportation around Montana’s
precarious Gallatin Canyon. But before she could operate a shuttle business in Big Sky,
she had to obtain permission from her competitors. PLF challenged Montana’s CON law on
Tracie’s behalf, and shortly thereafter the Montana legislature repealed the law. 1
Ron Perlman bought his first limousine for the simple reason that he was a car enthusiast.
In 1987, after friends and clients asked to rent the limo for special occasions, Ron decid-
ed to buy a second limo and to open a business. By 2015, Ron and his wife, Danell, had
grown their company to 25 vehicles spanning Nevada and California. In 2017, after years
of seeking a certificate to expand their fleet in Nevada (including litigation and legislative
efforts), 2 the Nevada Transportation Authority granted the Perlmans limited authority to
operate additional limousines.
Most startups could never sustain the effort or expense that Tracie Pabst and the
Perlmans invested in fighting the government to secure their rights to open or to expand
a business.
1
Pabst v. Fox, No. 6:15-CV-00006-CCL (D. Mont. filed January 29, 2015).
2
Wilson-Perlman v. Mackay, No. 2:15-CV-285-JCM, 2016 WL 1170990 (D. Nev. Mar. 23, 2016).
12 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSESrevealed that self-interested industry protest- The last time an applicant secured a new
ers were quite active in blocking new compe- certificate to operate as a mover was over a
tition. For example: decade earlier, when a mover applied for limit-
ed authority to operate within a certain county.
M I S S O U R I: In the seven years preceding No out-of-state mover had been able to secure
PLF’s lawsuit in Missouri, every application a new certificate in the preceding 20 years. Out-
for a cer tificate to operate a moving compa- of-state companies seeking to expand to West
ny statewide, or in a large area of the state, Virginia obtained certificates only if they pur-
received an objection. 15
Not one of these pro- chased them from an established company. 18
tests was filed by a member of the public;
instead, every protest was filed by an exist- 3. D E N I A L S A R E U N R E L AT E D T O
ing moving company that did not want new Q U A L I F I C AT I O N S
competition. Applicants that revised their Application denials frequently state that
geographic market areas to avoid competi- the new business is fully qualified to op-
tion with protesters received erate but is rejected solely be-
cer tificates, after protesters The government cause it would threaten existing
withdrew their objections.
either frequently businesses’ financial interests.
16
For example:
KENTUCKY: The same was true or always denied
of the 19 protested applications protested N E VA D A: In Nevada, government
in the five years before Raleigh’s officials denied Ron and Danell
competitors threatened his applications. Perlman’s application to expand
business in Kentucky. Every their limousine business even
one of the protests were filed by competitors. 17
though they had a stellar safety record and
already owned seven vehicles that they used
2. P R OT E S T E D A P P L I C A N T S A R E D E N I E D for trips in California. The State did not as-
C E RT I F I C AT E S ser t that the Perlmans were unfit or un-
As in Missouri, Kentucky, and several other qualified. Instead, it denied the Perlmans a
states, the government either frequently or cer tificate solely because it found their ex-
always denied protested applications, barring pansion “unnecessary”—that is, a threat to
exceptional circumstances. For example: their competitors (see “Other Transpor tation
Industries,” p. 12). 19
WEST VIRGINIA: When PLF filed a law-
suit in West Virginia in 2017, the legal team CON laws can result in entrenched car tels
discovered that the State had not granted a sin- and few providers. When PLF challenged
gle application to operate as a mover of house- Nevada’s CON law for movers, only 43 li-
hold goods in the previous 10 years. From Jan- censed moving businesses operated in the
uary 1, 2007, to January 1, 2017, certificate entire state, and only two worked in Reno, the
holders protested all 15 applications. Ten busi- state’s second-largest metropolitan area. 20
nesses abandoned their applications in the face
of opposition. The State denied the rest on the Five years later, Nevada still has only 43
basis that the existing moving companies were state-cer tified movers. 21 Nevada’s neighbor
“adequate” to meet current and future demand. Utah, with a comparable population, does not
PAC I F I C L E G A L F O U N DAT I O N 13have a CON law and has three to four times In cases where CON laws apply to medical
as many moving companies. 22 businesses (see “KY Ambulance,” p. 17), the
process can be just as warped, and the con-
4. P R OT E S T S A R E C O S T LY T O F I G H T sequences more dramatic. In a 2019 lawsuit
Even in states where applicants with pro- challenging Kentucky’s CON law for ambu-
tests are sometimes granted a cer tificate, lance businesses, PLF discovered that, with
the CON law imposes a heavy cost of entry only two exceptions, every protested applica-
and discourages many ap- tion filed in the past decade
plicants from applying or Nevada’s neighbor Utah, had been denied.
completing the process. At
a minimum, fighting a pro-
with a comparable pop- In one case, the protesting
test usually requires an ap- ulation, does not have a business allowed an em-
plicant to hire attorneys to ployee suspected of elder
CON law and has three
prepare for and respond to abuse to return to work be-
objections in a hearing. The to four times as many fore the investigation had
required forms and loss of concluded. Based on those
moving companies.
time impose fur ther costs. facts, the government dis-
counted the protest and
Hearings in which new entrants are required granted the applicant a cer tificate. In the
to prove the necessity of their businesses other case, the applicant presented evidence
often devolve into explicit or implicit bar- that long wait times had likely contributed
gaining. Applicants are pressured to agree to a Kentucky resident’s death. Those were
to restrict their territory—as if existing cer- the only instances in which an applicant over-
tificate holders “own” the potential custom- came a competitor’s protest.
ers in a given area. Discussions with govern-
ment officials who administer the process, Thus, regardless of how the government tries
and with others familiar with it, indicate that to justify the cer tificate-of-need application
many would-be applicants do not bother to process, it is, in practice, a tool for incum-
file for a cer tificate on the advice of their bent businesses to block new companies.
attorneys or the government officials
who inform them that the odds of success
are low.
14 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSESDetour:
PLF FIGHTS FOR MOVERS
PAC I F I C L E G A L F O U N DAT I O N 15D E S P I T E T H E P R O B A B I L I T Y that his compet- businesses. Those businesses had done the
itors would thwar t his business through the same over the preceding seven years, filing
cer tificate-of-need process, Raleigh Bruner’s more than 100 objections to applications for
mantra—“It’s always going to work out; there’s cer tificates. The protesting companies didn’t
always a solution”—pushed him forward. even pretend to object based on health or safe-
ty concerns; instead, they blatantly objected to
Raleigh was consumer focused. He had liability new competition. 26
insurance, provided good-faith cost estimates,
and followed every law and regulation except After discovering these stories and reach-
for getting his competitors’ permission to ing out to Pacific Legal Foundation, Raleigh
operate. He decided he was not doing any- learned that the Constitution was on his side.
thing wrong and refused to be bullied. “I’m The Constitution protects the right of en-
going to keep doing it until you put me in trepreneurs to earn a living free of arbitrary
jail,” he said. He was not alone in his fight. In restrictions like CON laws. The Four teenth
searching the Internet for a solution, Raleigh Amendment guarantees that people will not
found movers in other states who fought sim- be deprived of liber ty without “due process of
ilar laws. law.” This means that
The Four teenth Amendment any time the govern-
PLF has represent- guarantees that people will ment passes a law, it
ed other movers who, must be pursuing a le-
like Raleigh, were not be deprived of liber ty gitimate public health
blocked by CON laws without “due process of law.” or safety goal. CON
from competing in laws have no relation-
their industry. In 2008, PLF brought its first ship to protecting consumers’ health or safe-
cer tificate-of-need lawsuit. Attorneys filed ty; they only protect the economic interests
on behalf of college student and entrepre- of existing businesses.
neur Adam Sweet. 24 A student at Por tland
State University in Oregon, Sweet was fined Courts, including the Supreme Court of the
$2,100 and had his truck towed in a full- United States, have struck down CON laws
fledged police sting after he helped peo- based on this reasoning. As early as 1932,
ple move without applying for a cer tificate the Supreme Court ruled in New State Ice
of need. Co. v. Liebmann that a CON law requiring ice
sellers to obtain a certificate of need was akin
In 2010, PLF brought a lawsuit on behalf of to an “attempt of the dairyman under state au-
Michael Munie in Missouri federal cour t. 25
thority to prevent another from keeping cows
Despite running one of the most popu- and selling milk on the ground that there are
lar moving companies in St. Louis for 20 enough dairymen in the business,” or a law that
years, he was prevented from expanding. “prevent[s] a shoemaker from making or selling
Michael applied for a cer tificate, but exist- shoes because shoemakers already in that occu-
ing businesses filed “interventions” on the pation can make and sell all the shoes that are
basis that his new routes would “permit sub- needed.” Any such law “create[s] and foster[s]
stantial diversion of traffic” from their own monopoly in the hands of existing
16 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSESKY Ambulance
CON laws are also common in the healthcare industry, governing hospitals and ambulatory surgical cen-
ters, which are required to obtain a certificate before purchasing new medical equipment like imaging
technology, or even before adding new hospital beds.
In southern Ohio in 2017, a local power plant was set to close and Phillip Truesdell and his adult children
were about to lose their jobs. Phillip’s solution was to start a nonemergency ambulance company to trans-
port individuals requiring extra support going to and from medical appointments and between facilities. He
wanted to help individuals who, for example, use supplemental oxygen, are on dialysis, or are bedridden.
Fearing that his children would have to move to find new jobs, Phillip purchased an ambulance and built a
family-run company. Within two years, he had grown his fleet to seven vehicles and averaged 1,500 trips
a year. The Truesdells sought to expand their business by one mile: from Aberdeen, Ohio, into Kentucky.
Phillip applied for a certificate to operate in Kentucky, but thousands of dollars in attorney fees later, the
government denied his application, saying he had not proven a “need” for his service in the state. Phillip and
his daughter were unprepared for the tribunal they faced. They expected questions about their qualifications.
Instead, they were assailed with questions about how they would “harm” existing businesses. In late 2019,
PLF filed a lawsuit in the Eastern District of Kentucky, challenging its CON law.1
Kentucky’s CON law has led to cartel-like behavior throughout the state’s healthcare sector. Hospitals,
birthing centers, and emergency ambulance businesses must obtain certificates before opening. The
Mercatus Center estimates that Kentucky has 42% fewer hospitals as a result of its certificate program.2
The COVID-19 pandemic clarified the consequences: CON laws restrict medical providers’ ability to respond quick-
ly to changing circumstances. During the pandemic, at least 24 states suspended their CON laws for medical
services.3 In doing so, these states likely saved hundreds of lives that states with these laws still operating lost.4
1
Truesdell v. Meier, No. 3:19-CV-00066 (E.D. Ky. filed on Sept. 24, 2019), https://pacificlegal.org/wp-content/uploads/2019/09/Legacy-Medical-
Transport-LLC-and-Phillip-Truesdell-v.-Adam-Meier-et-al.-Complaint.pdf.
2
Thomas Stratman, Christopher Koopman, Matthew D. Michell, Matthew C. Baker, and Anne Philpot, “Certificate-of-Need Laws: Kentucky,”
(Arlington, VA: Mercatus Center, 2017).
PAC I F I C L E G A L F O U N DAT I O N 17CONTINUED FROM KY AMBULANCE
3
Angela Erickson, “States Are Suspending Certificate of Need Laws in the Wake of COVID-19 but the Damage Might Already be Done,” Pacific Legal
Foundation, August 20, 2020, https://pacificlegal.org/certificate-of-need-laws-covid-19/.
4
Sriparna Ghosh, Roy Choudhury, and Alicia Plemmons, “Certificate-of-Need Laws and Healthcare Utilization During COVID-19 Pandemic,” July 29,
2020, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3663547.
establishments, against, rather than in aid of, protectionism, while the Second and Tenth
the interest of the consuming public.” Various Circuits have ruled that burdening one group’s
courts of appeals have also struck down CON right to earn a living to protect the econom-
laws governing motorcycle dealerships, pharma- ic interests of another is mere “politics,” and
cies, and even transporters of infectious waste. is constitutional.
Though CON laws violate the Constitution, PLF challenges CON laws to reaffirm that
Raleigh had no guarantee of a successful laws cannot be arbitrary, nor can they be
suit. Some cour ts have wrongly upheld CON handouts to favored interest groups. In-
laws, either turning a blind eye to how they stead, laws must be intended to protect the
operate in practice, or ruling that the govern- public generally, and the government must
ment may pass laws based on favoritism. be able to show, through objective evidence,
that the measures achieve their goals. Any
The federal circuit cour ts are split on law that restricts one person’s liber ty mere-
the latter issue. The U.S. Fifth, Sixth, ly as a favor to another, or that lacks a
and Ninth Circuits have ruled that demonstrable relationship to achieving legit-
the Constitution prohibits economic imate ends, is arbitrary and unconstitutional.
Circuit Split on Economic Protectionism
WA
MT VT ME
ND
1
OR MN 2 NH
ID SD NY
WI MA
WY MI
RI
8 3
PA CT
IA
NE NJ
NV
7 IN OH
UT IL DE
CA 9 CO 6 WV
MD
KS MO VA
KY
10 4
NC
TN
AZ OK AR
NM
SC
MS AL GA
LA Constitution
TX
11 Prohibits Economic
AL 5 Protectionism
FL Constitution
Allows Economic
Protectionism
9
HI
18 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSESReroute:
THREE PATHS
PAC I F I C L E G A L F O U N DAT I O N 19P L F H A S H E L P E D change unconstitutional Judicial Rulings
CON laws via three different avenues—ju-
dicial, legislative, and executive. In the five With the help of PLF, Raleigh opted to fight
states that removed CON laws for movers, one Kentucky’s CON laws in the cour ts. In 2013,
(Kentucky) did so through a judicial rul- he sued the Commonwealth of Kentucky
ing, three (Missouri, Oregon, and West for his right to compete. In litigation, the
Virginia) through a legislative fix, and one State justified the cer tificate-of-need pro-
(Pennsylvania) through executive agency cess by claiming it protected consumers’
action. personal proper ty and provided informa-
tion about movers to the public. Yet, even
Arty Vogt
Ar ty Vogt began working for Lloyd’s Moving & Storage in Berryville, West Virginia, straight out
of college. He star ted as a driver and worked his way up, until he and his wife, Stephanie, were
able to purchase the business. Lloyd’s was a family-run business that had operated for nearly
a century, but when Ar ty bought it, he didn’t realize that the company’s cer tificate to operate in
West Virginia did not transfer to him with the sale.
When Ar ty realized he needed a new cer tificate of need to operate legally, he applied
for one, but the government deemed his business “unnecessary.” Ar ty’s wife, Stephanie,
who had led the fight to get a cer tificate, passed away from cancer soon after the denial.
Ar ty renewed Stephanie’s effor ts in a federal district cour t in 2016. Represented by PLF,
he argued that the law acted as an unconstitutional competitor’s veto. Evidence obtained
during litigation showed that every cer tificate application that competitors had protested in
the past 10 years had been denied, and 2005 was the last time a moving company had been
able to obtain a cer tificate to operate. In 2017, while Ar ty’s lawsuit was pending and gaining
adverse publicity, the West Virginia Legislature repealed its CON law. Ar ty fondly calls the re-
peal bill “Stephanie’s Law.”
20 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSESRaleigh felt like he was on a pendulum. “You
go from operating a successful company
that you’re doing well—you can suppor t your
family—to having nothing if the judge rules in
the opposite direction,” he said. “You have to
stop operating that day. And then what? ... It
would have been a disaster to have to go and
do something else.”
Thankfully for Raleigh, his family, his 170
employees, and his thousands of happy
customers, Kentucky’s CON law was declared
unconstitutional. “[A] judge did something no
federal judge has done since 1932,” stated
George Will about the ruling. “By striking down
JULIET HOPE BRUNER, DAUGHTER OF PLF a ‘certificate of necessity’ (CON) regulation”
CLIENT RALEIGH BRUNER, HOLDS THE under the Fourteenth Amendment, “he struck a
INJUNCTION THAT ALLOWED HER blow for liberty and against crony capitalism.” 27
FATHER’S BUSINESS TO STAY OPEN.
The federal judge struck down Kentucky’s
without a certificate of need, Raleigh’s busi- CON law for movers because it denied
ness grew because consumers shared their Raleigh and others due process and equal
experiences on Google Reviews, Yelp, and the protection of the law. While the State claimed
Better Business Bureau website. These on- that its CON law prevented “excess” entry into
line reputation sites provide information about the industry, the cour t found that preventing
movers to the public without the conflict of inter- excess entry was synonymous with preventing
est inherent in the certificate-of-need process. competition that the existing businesses did
not like. The only way the State determined
During the two years of litigation, Raleigh whether a new business would be “excessive”
told us he was “still dedicating 10 to 12 hours was by deferring to its competitors’ wishes.
a day to building the business, knowing that In addition, the judge found that the com-
[he] could be building it on sand.” He doubled petitor’s veto process increased costs and
the company from five trucks to 10 while gave no new information to consumers. 28
waiting for a resolution.
Raleigh “was calm throughout it,” noted Andy “You go from operating a
Montgomery, the company’s general manager successful company that you’re
at the time. Still, on the day Raleigh received
an injunction allowing him to keep the busi- doing well—you can suppor t
ness running during the lawsuit, Andy saw your family—to having nothing
Raleigh’s relief.
if the judge rules in the opposite
direction.”
PAC I F I C L E G A L F O U N DAT I O N 21Upon receiving the announcement of his court
victory, Raleigh recalls, “It was a weight that I
had been carrying for years, just lifted. We won!
We beat the State.”
Legislative Reform Laws
Litigation is one pathway to beating CON
laws; legislation is another. After Adam
Sweet was targeted in a police sting and PLF
sued on his behalf, the Oregon legislature re-
pealed Oregon’s CON law in 2009. 29
Missouri amended its law so that movers only
need to show they are fit, willing, and able to
provide service in order to receive a certif-
COSMO AND MARY ANNE LOSCO OWN AND
icate to operate, allowing Michael Munie to OPERATE COLLEGE HUNKS IN TELFORD, PA.
operate outside of St. Louis. And in 2017, Arty
Vogt secured a victory when the West Virginia
legislature repealed its CON law for movers. Pennsylvania, wanted to work for themselves
The act was a direct response to Arty’s 2016 by opening a franchise, College HUNKS Haul-
lawsuit (see “Arty Vogt,” p. 20). 30 ing Junk and Moving. “I was looking for an op-
por tunity to be my own boss and hire and men-
Yet Legislative efforts don’t always succeed. tor young people,” Cosmo said. The Loscos
Raleigh had also tried the legislative route: were drawn to the company’s commitment to
building leaders and maintaining high stan-
I was very naïve about how that works. dards—HUNKS stands for Honest, Uniformed,
I thought okay, these elected officials Nice, Knowledgeable, Service. However,
will see how crazy this law is and the Loscos’ franchise hit a roadblock with
they will jump at the chance to make Pennsylvania’s competitor’s veto law.
it right. And what we were met with
were a lot of lobbyists from the large In 2015, Pacific Legal Foundation brought
moving companies and of course the a lawsuit on behalf of the Loscos. Follow-
limousine companies and taxicab ing PLF’s lawsuit, the state’s Public Utilities
companies fighting really hard to keep Commission rescinded the anti-competition
those laws on the books. The legisla- criteria within its CON law. In this case an agen-
tors blocked it from getting changed. cy reformed their rules. Similarly, a governor
could require an agency’s rules be changed.
Executive Action
Executive action is a third option for reining
in unconstitutional CON laws. Cosmo and
Mary Anne Losco, entrepreneurs in Telford,
22 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSESBack on Track:
A WORLD WITHOUT CON LAWS
PAC I F I C L E G A L F O U N DAT I O N 23W I T H H I S R I G H T to earn an honest liv- law states than in non-CON law states. 32 Re-
ing free from the competitor’s veto burden, search on occupational licensing laws also
Raleigh Bruner transformed his moving provides evidence regarding CON law effects.
company into Kentucky’s largest. Litiga- Like CON laws, occupational licensing requires
tion “ended up being the only possible way service providers to obtain a license based on
to get this problem solved,” Raleigh said. fixed criteria, but unlike CON laws, there is no
In the years since Raleigh’s victory he has oppor tunity for existing providers to protest
grown his business, served thousands of (CON law without the veto). Occupational li-
customers, and given back to his community. censing research shows that a licensed oc-
cupation has fewer workers in states that
Movers Flourish license the occupation relative to those
that do not. 33
In a world without CON laws, Raleigh’s mov-
ing business flourished. Since 2014, when Consumers Benefit
Raleigh received his cer tificate to operate,
an additional 27 moving companies have CON laws provide no measurable benefit for
opened in Kentucky including two companies consumers and may, in fact, cost them more. For
Raleigh co-owns. 31 example, when Raleigh
started, his competitors
Since packing and CON laws provide no measurable charged twice his rates.
moving its first There is no difference in
benefit for consumers and may,
customer in 2010, moving-service quality in
Wildcat Moving has in fact, cost them more. states with and without
grown to 22 trucks CON laws, as seen in two
and completed 4,500 moves in 2019. Raleigh measures of consumer happiness—reviews
is also par t owner of Cardinal Moving in and complaints.
Louisville, a company with 18 trucks and 3,500
moves in 2019. In April 2019, he helped open
Big Blue Moving outside Cincinnati. By year’s
end, the fledgling company had nine trucks
and 625 moves under its belt. It’s hard for
competitors to argue that there wasn’t a need
for more moving businesses like Raleigh’s
when he and his par tners have added nearly
50 moving trucks to the market and complet- Consumers visiting the Better Business Bureau
ed over 8,000 moves in 2019. (BBB) website can rate a business from one to
five stars. Moving businesses typically received
Though public records do not illuminate the mixed reviews—75% of reviewers give movers
precise circumstances in states PLF has not five stars and 19% leave one star. The average
litigated, social science research in other ar- review in competitor’s veto states is 3.60, com-
eas may provide fur ther insight. In the health- pared to 3.51 in states with no veto, a statisti-
care industry, for example, there are fewer cally insignificant difference.
service providers and services offered in CON
24 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSESThe results are similar when looking at com- These findings are unsurprising. Though an
plaints. The average number of complaints analysis of prices is beyond the scope of this
per moving business on the Better Business report, 34 academic research on CON laws in
Bureau website does not significantly vary the healthcare industry has found that certifi-
based on a state’s competitor veto status. In cates of need lead to higher costs and worse
competitor’s veto states, the average num- health outcomes. 35 Research finds that li-
ber of complaints is 2.5, compared to 2.1 in censing laws do little if anything to improve
non-veto states. These findings indicate quality. 36 But licensing does impose a cost
that moving businesses in non-veto states on consumers by restricting the supply of
provide the same quality of service as busi- businesses that provide services. 37 With fewer
nesses in competitor veto states, meaning choices, consumers see higher prices, 38 like
that the competitor’s veto regime does not Lexington residents seeking moving support
affect quality. at the time Raleigh entered the market.
Fewer moving companies in a geograph-
Average Number of BBB Complaints ic area does not indicate that fewer people
Competitor’s veto are moving, or that people are moving less
frequently. Instead, it is likely that they fore-
No veto go moving services that the customers either
cannot find or cannot afford. Alternatives
to professionally licensed moving services
RALEIGH ELEVATES MOVERS TO MANAGERS AND MANAGERS TO BUSINESS OWNERS.
PAC I F I C L E G A L F O U N DAT I O N 25include moving your own property; packing Wildcat doesn’t just move people. Raleigh cre-
a vehicle that someone else ated the Wildcat Group Company,
drives; hiring people to pack “We can take which includes companies that
a vehicle that the consum- perform a range of moving-re-
ers drive; or hiring full-ser-
those guys and lated services: packing and
vice movers operating without elevate them.” unpacking, cleaning, pressure
a certificate. 39
The presence washing, carpet cleaning, home
of fewer moving companies may put con- inspection, storage, and pet kenneling. In
sumers and their property at risk. For Lexington alone, these businesses employ
example, people who aren’t used to lifting around 170 people.
heavy objects may injure themselves if mov-
ing their own goods. 40 Raleigh has helped other entrepreneurs start 18
businesses in 11 states. “Just find really good
Communities Thrive people. If you employ a hundred 20-something-
year-old guys every season, by the end of that sea-
Raleigh’s business has brought immense value son, it’s [been] a trial by fire,” he said. “We know
to his community. Allowing entrepreneurs to who the guys are that are respectful, responsible,
earn an honest living by competing allows them hardworking guys. And we can take those guys
to help people. And the more entrepreneurs are and elevate them.” He turns successful movers
able to support their communities, the more into managers, and many of his managers have
communities thrive. become moving company owners in other locations.
WILDCAT MOVING DELIVERED 3,000 BACKPACKS AND SCHOOL SUPPLIES TO THE YMCA’S
BACK-TO-SCHOOL BACKPACK DRIVE.
26 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSESWILDCAT MOVING WAS A PREMIER SPONSOR FOR THE CHILD CARE COUNCIL OF KENTUCKY’S
ANNUAL GOLF TOURNAMENT FUNDRAISER.
Raleigh is proud that he’s been Raleigh is proud that he’s been able to give
back. His Wildcat Group helps the communi-
able to give back. ty—donating time, trucks, and hands to help
make fundraisers and other events possi-
ble by moving equipment around town and
Raleigh has paved a path for others to suc- setting it up.
ceed and to find communities they can call
home and raise their children. And he has Certificate-of-Need Alternatives
given his employees the values to succeed:
Stand your ground. Maintain boundaries. Give A world without cer tificate-of-need laws
back. Be involved. These are the values one doesn’t mean a world with no regulation. But,
manager, now co-owner, said he took with because the protest procedure and “need”
him to Oklahoma. requirement embedded in most CON laws
does not fur ther public health or safety goals,
PAC I F I C L E G A L F O U N DAT I O N 27policymakers should consider alternative If evidence indicates that existing regula-
forms of regulation. tions provide insufficient consumer protec-
tion, policymakers can turn to deceptive
Policymakers should start by evaluating the trade practice acts, inspections, and oth-
less-restrictive regulations in place that al- er less-restrictive forms of regulation than
ready protect consumers. These might include CON laws.
USDOT regulation, private certification, bond-
ing or insurance, requiring good-faith cost
estimates, and even noncoercive means of
regulating quality, like review websites.
RALEIGH’S COMMUNITY MOTTO IS “DON’T BUILD A HIGHER FENCE. BUILD A LONGER TABLE.”
28 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSESAppendix A: Quality of
Businesses
We hypothesized that the existence of a CON
law does not improve the quality of busi-
nesses in a state. Research on occupational
licensing finds that the existence of a licens-
ing requirement may have no effect, or even a
negative effect, on quality. 41
To test this hypothesis, we collected informa-
tion from two sources: The Better Business
Bureau website and public records requests. was a difference in the averages between
From the BBB, we collected data on all mov- CON law (veto) and non-CON law (other)
ing businesses and all complaints and rat- states, we ran t-tests (a method that deter-
ings received over the previous three years mines statistical significance between two
(data collection took place during July and means), which showed no difference in qual-
August 2019). We collected data on 4,400 ity between regimes. Table A provides the re-
moving businesses with over 19,000 re- sults including the t-statistics, probabilities,
views and over 12,000 complaints submitted means, and standard deviations. We also ran
between August 2016 and August 2019. t-tests with state population weights and
observed no change in results. 42
We used Better Business Bureau data be-
cause it is the best online source for scrap- In addition, for every state that registers mov-
ing reviews and complaints about mover ing complaints, we requested all complaints
businesses. Yelp’s user agreement explicitly against movers from 2012 to present. Pub-
forbids data scraping practices. Although the lic records were received in summer and fall
subset of the full population that uses BBB 2019. We received complaint records from 15
will produce different data, there is no reason states. For 13 of these we had complete data
to expect that bias to vary by state. for the analysis. 43 We ran t-tests and regres-
sion analyses on these data, and the results
We calculated the average consumer review were the same—there was no statistically sig-
and average number of complaints per busi- nificant difference in the average number of
ness. We averaged those numbers for each complaints per mover in CON law and non-
state by business to get the average review CON law states. We will supply these data
and average number of complaints per busi- upon request.
ness in each state.
These raw numbers are useful but do not
tell us if there is a significant difference be-
tween the numbers. To determine if there
PAC I F I C L E G A L F O U N DAT I O N 29Appendix B: State Moving Company Laws and BBB Data
Competitor’s Mean Mean review
State Statute Businesses complaints stars
veto
Alabama Ala. Code § 37-3-11(c) No 53 2.26 3.90
Alaska None No 22 2.05 2.12
Arizona None No 184 1.71 3.71
Ark. Code Ann.
Arkansas Yes 12 1.08 3.71
§ 23-13-220
California Cal. Pub. Util. Code No 533 2.27 3.39
§ 5133
Colorado Colo. Rev. Stat. Ann. No 136 2.60 3.08
§ 40-10.1-502
Conn. Gen. Stat. Ann.
Connecticut §§ 13b-389–13b-392 Yes 56 1.77 4.07
Delaware None No 21 2.10 4.04
Fla. Stat. Ann. § No 474 1.92 3.58
Florida
507.03
Ga. Comp. R. & Regs.
Georgia Yes 220 2.43 2.83
515-16-5-.12
Haw. Rev. Stat. Ann.
Hawaii Yes 13 1.92 4.25
§ 271-12
Idaho None No 64 1.39 3.64
625 Ill. Comp. Stat.
Illinois Yes 108 3.26 3.05
Ann. 5/18c-4202
Indiana Ind. Code Ann. Yes 86 4.80 2.64
§ 8-2.1-22-12.5
Iowa Code Ann.
Iowa §§ 325A.1(10), No 9 1.56 3.92
325.A.1(13)
Kan. Stat. Ann. Yes 30 2.37 3.33
Kansas
§ 66-1,114
Ky. Rev. Stat. Ann.
§§ 281.624, 281.655;
Kentucky 601 Ky. Admin. Regs. No 19 1.32 3.82
1:080
Louisiana La. Stat. Ann. § 45:164 No 16 1.31 5.00
30 COMPETITOR’S VETO: ROADBLOCK TO NEW BUSINESSESCompetitor’s Mean Mean review
State Statute Businesses complaints stars
veto
Maine None No 9 1.11 3.83
Mass. Gen. Laws Ann.
Massaschusetts Yes 113 2.42 4.07
ch. 159B, § 3
Mich. Comp. Laws Ann.
Michigan No 57 1.74 3.76
§ 477.1
Minn. Stat. Ann.
Minnesota No 52 1.94 2.59
§ 221.0251-1(a)
Miss. Code Ann.
Mississippi Yes 13 2.31 4.47
§ 77-7-41
Mo. Ann. Stat.
Missouri No 77 2.32 3.79
§ 390.051
Mon. Stat. Ann.
Montana Yes 20 2.15 3.67
§ 69-12-321
Neb. Rev. Stat. Ann.
Nebraska §§ 75-304.02(1); No 27 2.30 3.88
75-310; LB 461 (2020)
Nev. Rev. Stat. Ann. Yes 14 6.21 3.44
Nevada
§ 706.391
New Hampshire N.H. Rev. Stat. Ann. Yes 24 1.79 3.23
§§ 375-A:1, 375-A:2
New Jersey None No 90 5.08 3.09
N.M. Stat. Ann.
New Mexico Yes 15 1.13 3.97
§ 65-2A-9
New York N.Y. Trans. Law § 193 Yes 146 3.66 3.58
N.C. Gen. Stat. Ann.
North Carolina Yes* 155 2.56 3.32
§ 62-262
N.D. Cent. Code Ann. No 10 1.00 1.00
North Dakota
§ 39-31-03
Ohio Rev. Code Ann.
Ohio No 212 1.96 3.26
§ 4921.03
Okla. Stat. Ann. tit. 47,
Oklahoma No 28 5.32 4.47
§ 166
Or. Rev. Stat. Ann.
Oregon No 133 1.43 3.25
§ 825.110
52 Pa. Code § 3.381;
Pennsylvania 66 Pa. Stat. and Cons. No 97 2.19 2.77
Stat. Ann. § 1103
PAC I F I C L E G A L F O U N DAT I O N 31Competitor’s Mean Mean review
State Statute Businesses complaints stars
veto
39 R.I. Gen. Laws Ann.
Rhode Island No 6 1.00 4.00
§ 39-12-6
S.C. Code Ann.
South Carolina § 58-23-250; S.C. Code Yes 54 1.44 3.64
Ann. Regs. 103-102
South Dakota None No 13 1.08 3.67
Tenn. Code Ann.
Tennessee No 125 1.98 3.71
§ 65-15-109
Tex. Transp. Code Ann. No 349 2.73 3.39
Texas
§ 643.051(b)
Utah None No 17 3.18 3.59
Vermont None No 6 1.33 3.00
Va. Code Ann.
Virginia No 108 2.56 3.51
§ 46.2-2150
Wash. Rev. Code
Washington § 81.80.075; WAC Yes 206 1.52 3.64
480-15-340
West Virginia None No 3 1.67 3.67
Wisconsin Wis. Stat. § 194.01 No 58 2.26 3.34
Wyoming None No 7 1.00 4.65
*North Carolina has a competitor’s veto provision on its books, but in recent years it has allowed movers to apply for a
“certificate of exemption” under a more lenient standard. The level of regulation varies across the states, with most
states having some regulation for intrastate household goods movers.
32 COMPETITOR’S VETO: A ROADBLOCK TO NEW BUSINESSESSources 15
Data was collected for the seven years prior to the case.
16
Sandefur, “State Competitor’s Veto Laws.”
1
In Kentucky, a certificate of need is called a certificate of necessity. The same
permission slip goes by different names in other states (see Appendix B). 17
Data was collected for the five years prior to the case.
2
In states with CON laws, a moving company is only required to obtain a 18
During document discovery phase of litigation, PLF attorneys
certificate if it operates intrastate and both loads and hauls household goods.
obtained documents revealing this information. Documents are available
CON laws do not apply to those companies that (1) only load and unload goods
upon request.
but do not drive vehicles, or (2) only drive a vehicle that the property owner
loads and unloads. 19
See In re Application of Ronald M. Perlman d/b/a/ Reno Tahoe Limousine
for expansion of authority, Nevada Transportation Authority, Docket 12-
3
Competitors are notified about the applications and their ability to protest.
09001 (2014).
Consumers are not notified.
20
PLF brought two cases in Nevada. In 2013 before Maurice Underwood
4
Timothy Sandefur, “State Competitor’s Veto Laws and the Right to Earn a
could argue the merits of his case, a district court judge dismissed his case
Living: Some Paths to Federal Reform,” Harvard Journal of Law and Public
on the grounds that he had not yet been formally denied a certificate, and
Policy 38 (2015): 1009. The applicant that waited was relieved from the hearing
that his case was thus not “ripe” for adjudication. Underwood v. Mackay,
process after the competitor’s veto law was struck down in court.
614 Fed. Appx. 871, 872 (9th Cir. 2015). Despite this ruling, federal courts
in other parts of the country have allowed plaintiffs to bring suit without
5
Included in these 17 states are five states that do not use the nomenclature
submitting to a process they contend is unconstitutional. See, e.g., Babbitt v.
CON law, but do have a “need” requirement, as a traditional CON law does.
United Farm Workers Nat. Union, 442 U.S. 289, 298 (1979). In 2016, Nevada
mover Steve Saxon’s case was also dismissed, and a legislative effort failed.
6
The USDOT Motor Carrier Management Information System (MCMIS)
Wilson-Perlman v. Mackay, No. 2:15-CV-285-JCM, 2016 WL 1170990, at *4 (D.
census file, state registration data, and BBB data were all used to test the
Nev. Mar. 23, 2016).
hypothesis that CON laws reduce the average number of businesses in those
states. Controlling for population and number of intrastate moves, we found 21
Nevada Transportation Authority, “Tariffs & Certificates,” accessed May 1,
no statistically significant difference in the number of businesses using both
2020, http://nta.nv.gov/Carriers/Tariffs-Certificates/.
t-tests and regression analysis.
22
USDOT, MCMIS, census file, https://ask.fmcsa.dot.gov/app/
7
We also explored the USDOT’s MCMIS census file. This file contains a
mcmiscatalog/d_census_mcmis_doc, obtained December 26, 2019. State
classification for every vehicle registered with the USDOT. Not every state
numbers do not align with the MCMIS data. Nevada has 29 registered
requires intrastate movers to register with the USDOT, which might distort
moving companies and Utah 127.
some cross-state comparisons.
23
See Complaint at 8 n.5, Truesdell v. Friedlander, No. 3:19-cv-00066-
8
The authors thank the following individuals for providing interviews: Raleigh
GFVT (E.D. Ky. Sept. 24, 2019), https://pacificlegal.org/wp-content/
Bruner, Wildcat Moving owner, in-person interview, November 21, 2019;
uploads/2019/09/Legacy-Medical-Transport-LLC-and-Phillip-Truesdell-v.-
Meredith Turk, Wildcat Marketing Director, phone interview, December 16, 2019;
Adam-Meier-et-al.Complaint.pdf.
Kye Keefe, Thunder Moving Owner, phone interview, December 16, 2019; Nathan
Thompson, Big Blue Moving Owner, phone interview, December 16, 2019; Andy 24
Sweet v. Kroger, No. 08-CV-00671-MO (D. Or. Filed on June 8, 2008).
Montgomery, Cardinal Moving Owner, phone interview, December 17, 2019.
25
Munie v. Koster, No. 4:10-CV-01096-AGF, 2011 WL 839608 (E.D. Mo. Mar.
9
Richard A. Posner, "Natural Monopoly and Its Regulation,"
7, 2011).
Stanford Law Review 21 (1968): 548.
26
Id. At *1 (“MODOT found that [Munie’s company] was fit, willing, and able,
10
William K. Jones, “Origins of the Certificate of Public Convenience and
but four household-goods moving companies already operating in Missouri
Necessity: Developments in the States, 1870–1920,” Columbia Law Review 79,
each filed a motion to intervene objecting to [Munie’s] application on the
no. 3 (Apr. 1979): 426–516.
ground that granting the application would divert traffic from them.”).
11
Heywood Fleisig, “The Central Pacific Railroad and the Railroad Land Grant 27
George F. Will, “A Strike Against Rent-Seeking,” Washington Post,
Controversy,” The Journal of Economic History 35, no. 3 (1975): 552–66; Herbert
December 31, 2014, https://www.washingtonpost.com/opinions/george-
Hovenkamp, “Regulatory Conflict in the Gilded Age: Federalism and the Railroad
will-a-strike-against-rent-seeking/2014/12/31/ba5a1686-9109-11e4-ba53-
Problem,” The Yale Law Journal 97, no. 6 (1988): 1017–72.
a477d66580ed_story.html.
12
Posner, “Natural Monopoly.” 28
Bruner v. Zawacki, 997 F.Supp.2d 691, 699–700 (E.D. Ky. 2014).
13
Gary S. Becker, “A Theory of Competition Among Pressure Groups for Political 29
H.B. 2817, 75th Leg. Assemb., Reg. Sess. (Or. 2009).
Influence,” Quarterly Journal of Economics 98, no. 3 (1983): 371–400; Gordon
Tullock, “Public Choice in Practice,” Collective Decision Making: Applications 30
Vogt v. Ferrell, No. 2:16-CV-04492, (S.D. W. Va. Filed on May 19, 2016),
from Public Choice Theory (1979): 27–45.
https://pacificlegal.org/plf-challenges-law-that-allows-businesses-to-veto-
new-competition/.
14
George J. Stigler, “The Theory of Economic Regulation,” Bell Journal of
Economic and Management Science 2, no. 1 (1971): 3–21; Hal R. Varian, 31
Public records obtained from the Kentucky Transportation Cabinet.
Intermediate Microeconomics: A Modern Approach: Ninth International Student
Edition (New York: W.W. Norton), 2014.
PAC I F I C L E G A L F O U N DAT I O N 33You can also read
