Moving industry closed to competition

Reno entrepreneur Maurice Underwood last week filed a federal civil rights lawsuit challenging the constitutionality of a Nevada statute that pretty much outlaws competition in the moving-van business. Mr. Underwood, represented by attorneys with the nonprofit, free-market, public-interest Pacific Legal Foundation, charges that the state operates a cartel to protect existing moving companies, violating his right to earn a living.

"Nevada has the worst law in the nation when it comes to moving companies," says Pacific Legal's principal attorney, Timothy Sandefur. "It specifically bars any new moving company that might compete with an existing company. This unconstitutional restriction on the right to earn a living doesn't protect consumers - it isn't meant to. It only protects existing businesses from having to compete fairly."

State law requires would-be moving companies to apply for and acquire a Certificate of Public Convenience and Necessity from the Nevada Transportation Authority. To obtain that certificate, a person must prove at a government hearing that he "will not unreasonably and adversely affect other" moving companies. The law even declares it to be state policy "to discourage any practices which would tend to increase or create competition."

"This law ... is a blatant abuse of government power to protect politically influential companies against entrepreneurs seeking to start new, wealth-creating businesses," says Mr. Sandefur, who's based in Sacramento.

Mr. Underwood launched his business, Man With A Van Moving, in 2004. He was cited in 2005 for operating a moving company without a license. He paid the fine and obtained a partial license. Today he employs seven people. Without a Certificate of Public Convenience and Necessity, he and his workers can load and unload trucks but can't drive them.

Last year, Mr. Underwood applied for a full moving license, but he dropped the effort in July. His lawyers say he was rejected, while Andrew MacKay, chairman of the Nevada Transportation Authority, says authority records show no decision was ever reached.

Applicants for the certificate have to meet absurd requirements. They must describe the types of household goods they intend to transport. They have to provide a map, drawn to scale, of all places they intend to serve, along with photographs of all equipment the new company will use. They also have to provide a year's worth of financial statements and "facts showing that the proposed operation is or will be beneficial to the traveling public," a vague term not defined in the law. "The law creates a process so burdensome and time-consuming that it creates a roadblock on its own," Mr. Sandefur notes.

If the real goal is to protect consumers against fly-by-night operations, the state could encourage such firms to acquire bonding and insurance with mandated coverage limits, or provide a state website where consumers could verify which firms carry such coverage. The existing law, requiring prospective entrepreneurs to prove their operations won't affect existing firms, doesn't accomplish that goal. Instead, it's a protection racket - like barring Burger King and Wendy's from locating in a town that already has a McDonald's.

Pacific Legal already has successfully challenged similar laws in Oregon and Missouri, and it recently filed a lawsuit in Kentucky to challenge that state's mover licensing laws. Regardless of the outcome of Mr. Underwood's legal challenge, the 2013 Legislature should repeal this protectionist law, opening the moving business to all comers. Then they should take a similar look at the taxi cartel.