Court Refuels Challenge to State Ferry Limits

     (CN) - The 9th Circuit has revived a lawsuit where resort owners say that Washington law improperly keeps them from operating a public ferry on Lake Chelan.
     James and Clifford Courtney are brothers who operate a lodge and outdoor guide service in Lake Chelan National Recreation Area. The lake is 55 miles long, and the Courtneys' property is inaccessible by car. Only one public ferry, the Lake Chelan Boat Co., is allowed to operate on the lake.
     The brothers have tried several times since 1997 to start a public ferry service or private boat charter, but were blocked in part by Lake Chelan Boat Co.'s objections to a new certificate of "public convenience and necessity."
     Washington requires potential operators to obtain these so-called PCN certificates, but, if the proposed route is already served by a commercial ferry company, the applicant must prove the current operator failed to provide adequate service or does not object to the new operators.
     The Legislature directed the Washington Utilities and Transportation Commission to study the regulation of commercial ferry service on Lake Chelan in 2009.
     After finding that Lake Chelan Boat Co. was providing adequate service, the commission recommended no changes in the permit requirements but said that some competition might be permitted by exempting certain services from the certificate requirements, provided the services would not "significantly threaten" the existing certificate holder's business.
     The Courtneys sued the commission in 2011, claiming the permit requirements were unconstitutional and violated the privileges or immunities Clause of the 14th Amendment.
     U.S. District Judge Thomas Rice dismissed the first constitutionality claim, finding no right "to operate a ferry service open to the public," and held that the brothers lacked standing in the second claim that challenged the constitutionality of the permit requirement as applied to boat-transportation services on the lake solely for patrons of specific businesses.
     A three-judge panel of the 9th Circuit affirmed dismissal of the first claim Monday but remanded the second claim, finding the Courtneys do have standing and the court should have retained jurisdiction.
     "We agree with the district court that even if the Privileges or Immunities Clause recognizes a federal right 'to use the navigable waters of the United States,' the right does not extend to protect the Courtneys' use of Lake Chelan to operate a commercial public ferry," Judge Jacqueline Nguyen wrote for the court.
     The panel found that the Courtneys want "to do more than simply navigate the waters" and claim a right to use them for professional ventures.
     "At the end of the day, the state legislation the Courtneys challenge is narrow in scope, merely restricting the operation of commercial public ferries to those who obtain a PCN certificate," Nguyen wrote. "The PCN requirement does not constrain the Courtneys from traversing Lake Chelan in a private boat for private purposes."
     The lower court had abstained from considering the second claim to avoid hearing a claim that should be adjudicated in state court, but the appellate panel found that it should have retained jurisdiction pending "resolution of the state law issues, rather than dismissing the case without prejudice."