DEREGULATION OF COMMERCIAL TRUCKING INDUSTRY

OFFICES AND OFFICERS ‑- STATE ‑- UTILITIES AND TRANSPORTATION COMMISSION ‑- COMMON CARRIERS ‑- DEREGULATION OF COMMERCIAL TRUCKING INDUSTRY

There is no constitutional impediment which would bar the state legislature from deregulating the commercial trucking industry without providing for the payment of compensation to existing permit holders; accordingly, such legislative action would be constitutionally permissible.

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                                                                 January 19, 1979

Honorable Ted Haley
State Representative, 28th Dist.
401 House Office Building
Olympia, Washington 98504                                                                                                                 Cite as:  AGLO 1979 No. 6

Dear Sir:

            By recent letter you advised us that you are currently interested in introducing a bill providing either for the partial or complete deregulation of the commercial trucking industry.  You then asked to be advised whether, in our opinion, such deregulation could be accomplished by the legislature without providing for the payment of compensation to existing permit holders.

            We answer your question in the affirmative for the reasons set forth in our analysis.

                                                                     ANALYSIS

            At the outset we note that no specific legislative bill, in draft form, accompanied your request.  Therefore, we do not purport in this opinion to pass upon the constitutionality of any specific proposed legislative enactment but, instead, will limit ourselves to consideration of the question posed in the abstract.

             [[Orig. Op. Page 2]]

            At the present time, RCW 81.80.070 provides that no motor freight carrier ". . . shall operate for the transportation of property for compensation in this state without first obtaining . . . a permit so to do . . . ."  This section then further provides that:

            ". . .

            "A permit or extension thereof shall be issued to any qualified applicant therefor, authorizing the whole or any part of the operations covered by the application, if it is found that the applicant is fit, willing, and able properly to perform the services proposed and conform to the provisions of this chapter and the requirements, rules and regulations of the commission thereunder, and that such operations will be consistent with the public interest, and, in the case of common carriers, that the same are or will be required by the present or future public convenience and necessity, otherwise such application shall be denied.

            ". . ."

            The primary constitutional basis for this legislation, like other laws regulating other classes of transportation companies in this state, is found in Article XII, § 13 of the state constitution which declares, in material part, that:

            "All railroad, canal and other transportation companies are declared to be common carriers and subject to legislative control. . . ."

            See,State ex rel. Dept. of Public Works v. Inland Forwarding Corp., 164 Wash. 412, 2 P.2d 888 (1931); and State ex rel. Spokane United Railways v. Dept. of Public Service, 191 Wash. 595, 71 P.2d 661 (1937).  It is clear, however, that Article XII, § 13, supra, is not self-executing but, instead, requires implementing legislation to subject the enumerated classes of common carriers to state regulation.  By its express terms the constitution makes those various enumerated categories of common carriers ". . . subject to legislative control . . ." but it does not require any particular formy of legislative action.  In fact, it is notable that the  [[Orig. Op. Page 3]] authority granted by Article XII, § 13, supra, has been utilized by the legislature from time to time to exempt several types of carriers which could otherwise have been subjected to statutory regulation.  See,e.g., RCW 81.80.040 which exempts certain described types of transportation activities from the regulatory provisions of chapter 81.80 RCW, and RCW 81.68.010 which exempts certain passenger carriers from the definition of the term "auto transportation company."

            Moreover, aside from Article XII, § 13, supra, regulation of the motor freight carrier industry also constitutes an exercise of the legislature's police power.  See, State ex rel. Scott v. Superior Court, 173 Wash. 547, 24 P.2d 87 (1933).  But again, the wisdom of the matter in which that power is exercised will not be questioned by the courts.  Robertson v. Dept. of Public Works, 180 Wash. 133, 39 P.2d 596 (1934); see also,Aetna Life Ins. Co. v. Washington Life and Disability Co., 83 Wn.2d 523, 520 P.2d 162 (1974).  The test of the valid exercise of the police power is whether there is a reasonable relationship between the end sought and the means adopted to accomplish that end.  Ketcham v. King County Medical Service Corp., 81 Wn.2d 565, 502 P.2d 1197 (1972).

            What this means, basically, is that the extent to which the legislature may choose to regulate entry into the motor freight carrier industry is strictly a policy question for the legislature itself to decide.  From this it clearly follows, in our opinion, that it would be constitutional for the legislature to amend or repeal those existing state statutes which regulate the motor freight carrier industry within the state of Washington‑-thereby either partially or totally deregulating that industry.  The only remaining issue arising from your inquiry is whether this may be done without compensating existing permit holders.  We answer in the affirmative.

            In general, the right to operate any lawful business is considered to be a property right.  Sandona v. Cle Elum, 37 Wn.2d 831, 226 P.2d 889 (1951).  However, there is no inherent right to operate for compensation as a motor carrier over the highways of this state.  Taylor-Edwards Warehouse & Transfer Co. v. Dept. of Public Service, 22 Wn.2d 565, 157 P.2d 309 (1945).  As stated inState ex rel. Scott v. Superior Court,supra, at page 550:

            ". . .

            "The highways of the state are public property, and their primary and preferred use is for private purposes.  The use for the purposes of gain  [[Orig. Op. Page 4]] is special and extraordinary, and the state, through its legislature, has a wide discretion in regulating the use of its highways, and especially their regulation for gain or profit.  [Citations omitted.]

            ". . ."

            On the other hand, once a motor carrier has met the legislature's requirements and has acquired the right to move freight over the highways for compensation, the right to operate such a business becomes a vested property right.  Lee & Eastes, Inc. v. The Public Service Commission, 52 Wn.2d 701, 328 P.2d 700 (1958).

            We need not, however, reach the question of whether denial of such a property right would constitutionally require compensation as it seems clear that mere deregulation of the motor freight carrier industry does not constitute such a denial.  Simply stated, deregulation would not deprive any motor carrier now holding a state permit of the right to conduct the business of transporting freight for hire over the public highways.  To the contrary, deregulation would theoretically permit anyone, including existing permit holders, to engage in that business.

            Obviously, of course, it follows from this latter point that deregulation could have the effect of subjecting existing permit holders to a greater degree of competition than is now the case.  Clearly, however, a motor carrier permit holder has no constitutional right to be free from competition.  In fact, in Article I, § 8 of our state constitution is a provision which states that the legislature may not irrevocably grant any privilege, franchise or immunity.  Thus, the state unquestionably has the right to qualify or revoke a permit, or to permit competition.  State ex rel. Dept. of Public Works v. Inland Forwarding Corp., supra.  Moreover, the Washington court has also specifically held that to construe the existing motor freight carrier act (chapter 81.80 RCW) as protecting regulated carriers from competition would be contrary to anti-monopoly provisions of Article XII, § 22 of the state constitution.  State ex rel. Adams Transport, Inc. v. Public Service Commission, 54 Wn.2d 382, 340 P.2d 784 (1959); see also, State ex rel. Dept. of Public Works v. Inland Forwarding Corp.,supra.

            Finally, we find no validity in the argument (reportably advanced by some) that legislative deregulation of the motor freight carrier industry, if unaccompanied by comparable deregulation of other classes of common carriers, would result in a  [[Orig. Op. Page 5]] denial of constitutionally guaranteed equal protection.  Neither the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution nor its counterpart, Article I, § 12 of the Washington Constitution, require uniformity in the manner or degree of regulation where reasonable distinctions may be made.  See,e.g.,State ex rel. Scott v. Superior Court, 173 Wash. 547, 24 P.2d 87 (1933), wherein the court considered the application of the Equal Protection Clause to the various categories of motor vehicle transportation then established by prior motor carrier laws and, in upholding the classifications made thereunder, said, at page 551:

            "A classification which rests upon any reasonable basis and is therefore not purely arbitrary will be sustained, and, if a state of facts reasonably can be conceived that would sustain it, the existence of that state of facts at the time the law was enacted must be assumed. . . ."

            A similar interpretation of the Fourteenth Amendment was given by the United States Supreme Court inSproles v. Binford, 286 U.S. 374, 52 S.Ct. 581, 76 L.Ed. 1167 (1932).  What was there involved was a challenge to the constitutionality of the Texas motor vehicle act of 1931 which established a comprehensive regulatory scheme for motor carriers.  The court upheld the act and, in rejecting an argument that the various classifications provided for thereunder denied equal protection, said, at page 396:

            ". . . There is no constitutional requirement that regulation must reach every class to which it might be applied,‑-that the legislature must regulate all or none. . . . The State is not bound to cover the whole field of possible abuses. . . . The question is whether the classification adopted lacks a rational basis. . . ."

            Other cases to the same effect include our own State ex rel. Dept. of Public Works v. Inland Forwarding Corp.,supra, along with the ruling of the United States Supreme Court inPuget Sound Power & Light Co. v. Seattle, 291 U.S. 619, 54 S.Ct. 542, 78 L.Ed 1025 (1934).  This latter case, notably,  [[Orig. Op. Page 6]] is significant on two counts here material.  At issue was the correctness of a decision of the Washington Supreme Court upholding an excise tax levied by the City of Seattle against an electric company which was in competition with an electric system owned by the city itself.  See,Puget Sound Power & Light Co. v. Seattle, 172 Wash. 668, 21 P.2d 727 (1933).  The company argued that the tax constituted a denial of equal protection inasmuch as the competing city-owned system did not have to pay such a tax.  The United States Supreme Court, however, rejected this argument, saying, first, at page 624:

            ". . . the equal protection clause does not forbid discrimination with respect to things that are different. . . ."

            Then, addressing itself to the question of competition, the court went on, at 625-626, to explain as follows:

            ". . . Legislation may protect from the consequences of competition, but the Constitution does not. . . .  The Fourteenth Amendment does not purport to protect property from every injurious or oppressive action by a state, . . . nor can it relieve property of congenital defects. . . .  It does not preclude competition, however drastic, between private enterprises or prevent unequal taxation of competitors who are different.  Those were risks which appellant took when it entered the field. . . ."

            In conclusion, while the state constitution specifically provides for the legislative control of the motor freight carrier industry, the degree to which the motor freight carrier industry should be controlled is a determination to be made by the legislature.  There is no constitutional impediment which would bar the legislature from permitting a greater degree of competition in the motor freight carrier industry through deregulation.  Deregulation of the motor freight carrier industry does not violate the constitutional rights of those carriers currently possessing permits.

             [[Orig. Op. Page 7]]

            We trust that the foregoing will be of assistance to you.

Very truly yours,

SLADE GORTON
Attorney General

JOHN W. HOUGH
Assistant Attorney General