In 2004, Maurice Underwood was just a man with a van.
When he made the decision to start his own moving company, Underwood was running an established small business in Reno, Nevada, providing home cleaning services. A moving business was a natural next step, he thought, after he noticed several of his clients inquiring about moving services.
A year later, the government came calling.
One of Underwood’s trucks was cited in 2005 for operating without a license ― in the state, anyone can load or unload a truck, but special permission from the state government is required to drive a loaded truck from point A to point B. He paid the fine and began the process of bringing his company, Man With A Van Moving, in compliance with the state law.
He soon learned that the only way to get a license in Nevada was to comply with a law requiring proof that his business would not “unreasonably and adversely” affect other companies by creating additional competition.
Another part of the same law indicates the “legislative intent” of the licensing rule ― to discourage competition that may be detrimental to the existing carriers in the state.
Timothy Sandefur is a lawyer with the Pacific Legal Foundation, a nonprofit law firm that challenges laws impeding economic and civil liberties. He is the lead attorney on a federal case challenging the legitimacy of the Nevada licensing law, which he calls “the most blatant anti-competition law” in the nation.
Licensing requirements like those in Nevada are part of that broader problem. Known generally as Certificate of Necessity laws, the requirements apply to trucking companies, movers, limousine and taxi drivers, and even hospitals. They allow private companies to use the strength of the state government to keep competitors from entering the market, or to require large up-front investments of time and money that discourage potential competitors.
It adds up to a system that benefits the established, entrenched interests at the cost of entrepreneurs ― and, ultimately, consumers, Sandefur said.
“Wal-Mart could make a lot more money if they could use the government to make Target illegal,” he said.
In a federal court filing, the Pacific Legal Foundation argues the Nevada government is “irrationally and arbitrarily discriminating against” Underwood in a violation of the U.S. Constitution’s equal protection clause.
Andrew MacKay, chairman of the Nevada Transportation Agency, which oversees just about anything that moves objects or people around the Silver State, takes a different view of his state’s licensing requirements.
In his six years as chairman of the agency, MacKay says he has never seen an applicant denied a license, provided they go through the entire application process. And he disagreed with the view that the licenses are a mean to keep out competition.
“In short, the Legislature enacted those laws to ensure that the trucking and shipping industries are adequately protecting the public safety,” MacKay said.
Though he declined to discuss the specifics of the Underwood case because of the ongoing litigation, MacKay said he is a former businessman who understands the importance of competition.