Sandoval misses mark by vetoing motor carriers bill

Fast-food restaurant Chick-fil-A, one of the fastest-growing chains in the country, plans to enter the Las Vegas market in the coming months. But what if KFC or El Pollo Loco had the power to quash Chick-fil-A’s Nevada plans on the premise that the new competition might be bad for the bottom line?

The scenario may sound absurd, yet it’s hardly outrageous when it comes to Nevada’s transportation industry, much of which operates under an antiquated regulatory framework that suppresses innovation and restricts competition to protect the profits of established interests. Unfortunately, a bipartisan legislative effort to reform this hidebound setup for the benefit of both entrepreneurs and consumers died last week at the hands of Gov. Brian Sandoval.

Under current state law, those seeking to start a taxi or limousine business, tow-truck firm, moving company or other motor carrier enterprise must first obtain a “certificate of public convenience and necessity” from the Nevada Transportation Authority. (Clark County has its own regulatory board to oversee the taxi industry.) In order to grant such a certificate, however, the authority must conclude that a new business will “not unreasonably and adversely affect other carriers” already operating in the same territory.

The law goes so far as to allow existing companies — citing potentially undesirable economic consequences — to “intervene” in the licensing hearing of a prospective competitor or a current rival seeking to expand its operation.

This protectionist approach represents an attack on consumer choice and entrepreneurialism while inadvisably empowering the bureaucracy to make decisions that are better left to the marketplace. Would Las Vegas burger lovers have Five Guys or In-N-Out to enjoy if a similar anti-competitive regulatory apparatus governed Nevada fast-food outlets?

Senate Bill 183, a bipartisan measure that passed the state Senate unanimously and the Assembly by a comfortable 26-16 margin, would have created a more equitable system for overseeing motor carriers. Among other things, the bill would have dropped existing language from the statute that directs the Nevada Transportation Authority to deny any applications that “would tend to increase or create competition that may be detrimental.”

But on June 9, Gov. Sandoval vetoed SB183. The authority’s “ability to consider the economic viability of a motor carrier operator,” he explained in his veto message, “is an important factor in evaluating whether that operator has the necessary resources to transport members of the public safely and can maintain industry safety standards.”

While the governor’s concern for the well-being of the traveling public is admirable, it is misplaced in this context. Nothing in SB183 limited the authority’s role in promoting consumer welfare. The bill did not alter the fact that the state, counties and municipalities retain the power to enact and enforce safety regulations governing motor carriers. In fact, the legislation expressly allowed existing interests to “intervene” during hearings if they had concerns regarding an applicant’s ability to operate safely.

More likely, SB183 became a victim of political backscratching in an effort to placate the state’s limo and cab operators, who vigorously opposed legislation signed by Gov. Sandoval that paves the way for ride-sharing outfits such as Uber to operate in Nevada.

While legislative reform will now have to wait until at least the next session in 2017, the issue remains pertinent.

In February, a small Reno limo company and a California-based moving company teamed with the Pacific Legal Foundation to file suit in federal court challenging the state’s method of awarding transportation operating certificates. Danell Wilson-Perlman, owner of Reno-Tahoe Limousine, maintains that the process stymies her efforts to keep up with consumer demand by forcing her to receive permission from her competitors before she is allowed to add vehicles to her fleet.

A Pacific Legal Foundation attorney leading the challenge to the law on due process grounds noted that the issue has “absolutely nothing to do with safety and everything to do with a competitor’s veto.”

Amen. Nevada consumers and entrepreneurs deserve better. If Gov. Sandoval won’t recognize that, perhaps the judicial system will.

Las Vegas resident John Kerr, former editorial page editor of the Review-Journal, is a communications fellow with the Institute for Justice, a public-interest law firm based in Arlington, Va. IJ testified in favor of Senate Bill 183 during the 2015 Legislature.