End the Competitor’s Veto

Occupational licensing laws in Nebraska often go too far, but are usually intended to protect public health and safety.

Nebraska’s transportation Certificate of Public Convenience and Necessity (CPCN) law is even worse than its job licensing laws. This law prevents honest and qualified Nebraskans from starting a transportation business with no public purpose, is not based on an applicant’s qualifications, and is explicitly designed to strangle competition.

Under the current law, applicants who want to start a new intrastate transportation or moving company can have their applications protested by existing businesses that hold a CPCN, prompting a trial-like hearing of the Nebraska Public Service Commission.

Established transportation businesses are allowed to cross-examine the applicant at the hearing and scrutinize the perceived “necessity” and soundness of their business plan.

The law, as currently written, requires protested applicants to prove to the Nebraska Public Service Commission that their new business is needed and that it will have no impact on protesting companies. Without this evidence, the Commission must deny their application.

What is truly needed is for the Nebraska Legislature to enact Legislative Bill 461 to end this blatantly anticompetitive practice.

Here’s a video showing how this law violates the economic freedom of Nebraskans.

The current CPCN hearing requirements discourage new entrants to the marketplace by imposing greater legal and start-up costs on entrepreneurs, and use the threat of a Competitor’s Veto to force applicants to either give up or agree to limit their services to areas where they will not compete with established companies.

Because the CPCN policy can allow qualified applicants to be denied, it can also permit state power to be used as an instrument of discrimination.

Under LB461, applicants for a permit to provide intrastate transportation services would still be subject to regulation, but could no longer be denied because of objections by existing transportation companies.

As the Legislature’s Transportation Committee considers potential amendments to LB461, senators should be cautious not to allow any part of the Competitor’s Veto to remain in statute for any industry group.

Courts have struck down CPCN/Competitor’s Veto laws, even as far back as 1932, when the United States Supreme Court invalidated an Oklahoma law requiring demonstration of “public need” for ice delivery trucks to enter the market.

In 2001, a District Court in Clark County, Nevada found the state’s CPCN law on limousine service to be unconstitutional, ruling that “[t]he right to earn a living in one’s chosen profession is a liberty interest protected by the due process clauses of both the U.S. and Nevada constitutions.”

In 2008 and 2011, courts in Oregon and Missouri, respectively, denied state motions to dismiss lawsuits against CPCN laws. The two state legislatures repealed the laws soon after.

In 2014, a federal civil rights lawsuit resulted in a judge in Kentucky ruling against the state’s CPCN law imposed on moving companies. The judge found that the law “acts as a Competitor’s Veto” that restricts an applicant’s economic opportunity without regard for their qualifications.

People from all walks of life and points of view can agree that the Competitor’s Veto goes against core Nebraska values. No business should have the right to appoint itself a regulator and dictate who may work in their industry.