81.84.010(1) prohibits operating a commercial ferry for the
public use over a regular route unless the Washington
Utilities and Transportation Commission (WUTC) issues a
certificate declaring that public convenience and necessity
(PCN) requires such operation. James Courtney and Clifford
Courtney sought a declaratory order from the WUTC to
determine whether any of their five proposed commercial ferry
services on Lake Chelan would require a PCN certificate. They
contended that none of their proposed services were "for
the public use, " as contemplated by RCW 81.84.010(1).
The WUTC disagreed and concluded that all five of the
Courtneys' proposed ferry services were for the public
use and would require a PCN certificate.
appeal, the Courtneys contend that the WUTC erred in too
broadly construing "for the public use." They also
contend that the WUTC acted arbitrarily or capriciously
because it treats surface transportation carriers differently
from commercial ferries and because the WUTC refused to apply
the charter service exemption for commercial ferries to one
of its proposed ferry services.
review the legislative intent behind RCW 81.84.010(1),
conclude that the phrase "for the public use"
should be construed broadly to protect regulated commercial
ferries, and affirm the WUTC.
Chelan Boat Company has operated a year-round commercial
ferry service on Lake Chelan since 1918. The WUTC's
predecessor issued a PCN certificate to Lake Chelan Boat
Company in 1929 and, since that time, Lake Chelan Boat
Company has successfully protected its exclusivity.
Courtneys are residents of Stehekin, Washington, a small,
unincorporated town at the northwest end of Lake Chelan. The
Courtneys and their families own several businesses in
Stehekin, Washington, including two floating plane companies,
Stehekin Valley Ranch, Stehekin Outfitters, Stehekin Log
Cabins, and Stehekin Pastry Company. They have attempted to
operate their own commercial ferry on Lake Chelan for the
past two decades. Stehekin, a popular tourist destination, is
accessible only by boat, plane, or foot.
2009, Cliff Courtney sent a letter to his state legislators
and the governor urging them to eliminate or relax the
commercial ferry PCN requirement. The legislature passed, and
the governor signed, a bill directing the WUTC to study and
report on the appropriateness of the regulations governing
ferry service on Lake Chelan.
WUTC published its report in early 2010. The report reviewed
the history of ferry service regulation on Lake Chelan from
1911 to 2009 and the legal framework for regulation and its
rationale. The report discussed the then-current ferry
service on Lake Chelan and the views of stakeholders as to
whether existing laws should be relaxed to allow unregulated
commercial ferries to compete with regulated commercial
ferries. The report concludes with a discussion and
recommendation to the legislature:
[T]he ferry services provided by the Lake Chelan Boat Company
provide a lifeline to the communities of Stehekin and Holden
Village. Faced with the question posed in 1921-would these
communities be adequately served by unregulated passenger
ferry operators?-the present Commission could not say with
confidence that they would.
In the short term, it is conceivable, and perhaps likely,
that during the busy summer months customer would enjoy the
benefits of competition among boat operators, who would lower
fares and improve service to make their offerings more
attractive to potential customers. During these periods,
tourism may even increase as prices fall.
But we agree with our predecessors that. . . ferry operators
would cease all unprofitable activities. With no legal
obligation to serve, they would reduce or eliminate services
during the winter months, or during times when fuel prices
are high, or during times when more attractive business
opportunities arise for the use of their boats or docking
facilities. Even if revenues during the summer months would
allow the operators revenue to serve year-round, they would
not be expected to so if such activities were unprofitable
and they were under no obligation to provide them. In any
event, it is not clear that summer operations would subsidize
winter service if the operators were to lose market share
during those months to seasonal competitors.
Moreover, the issue of safety must be considered. Because the
purchase, maintenance and operation of ferry service is a
costly venture ... we doubt that the opportunity to provide
ferry service on Lake Chelan will attract more than a few
operators that the Commission would deem "fit, willing
and able" to provide service under current standards. .
For these reasons, the Commission does not recommend at this
time any changes to the state laws dealing with commercial
ferry regulation as it pertains to Lake Chelan. . . .
Clerk's Papers (CP) at 287.
2011, the Courtneys commenced a federal constitutional
challenge to the PCN requirement. The federal district court
dismissed the Courtneys' claims, but the Ninth Circuit
reversed in part. On remand, the federal district court
issued an order "retain[ing] jurisdiction over [the
Courtneys'] second constitutional claim pending an
authoritative construction of the phrase 'for the public
use for hire' by the WUTC or the Washington state
courts." CP at 252.
furtherance of that order, the Courtneys filed a petition
with the WUTC for it to determine the meaning of "for
the public use for hire." The WUTC declined to enter an
order on the basis that the petition lacked sufficient
information and operational details. The Courtneys then filed
a second petition setting forth five proposed ferry services
so that the WUTC could make its determination as to each
services share several features in common. The proposed
vessel is a 50- to 64-foot climate-controlled boat, and would
operate between Memorial Day and early October of each year.
Each service would charge a flat rate of $37 per adult
passenger for a one-way ticket, or $74 for a round trip.
service would be a scheduled run between Stehekin and the
federally-owned dock in either Fields Point Landing or Manson
Bay Marina. The boat would leave Stehekin at 10:00 a.m.,
arrive at either destination at noon, depart at 12:30 p.m.,
and arrive back at Stehekin at 2:30 p.m. The primary
difference among the proposed services are the scope of
passengers the boat would carry:
Proposal 1 (Lodging Customers of Stehekin Valley
Ranch)-Passengers would be limited to persons with confirmed
reservations to stay overnight at Stehekin Valley Ranch,
owned by Clifford Courtney and his wife. The boat
transportation service would be owned by Clifford Courtney,
and make no intermediate stops.
Proposal 2 (Lodging Customers and Customers of Other
Activities Offered at Stehekin Valley Ranch)-In addition to
persons with reservations to stay at the ranch, passengers
would include anyone with reservations to participate in any
of the activities the ranch offers, including activities
provided by Stehekin Outfitters, run in part by Clifford
Courtney's son. Again, the boat transportation service
would be owned by Clifford Courtney and would make no
Proposal 3 (Customers of Courtney Family-owned
Businesses)-Passengers would be limited to anyone with
reservations at any business owned by Clifford or James
Courtney or their extended family, including but not limited
to the Stehekin Valley Ranch. The boat would make
intermediate stops at, or stand-alone trips to, other points
on Lake Chelan as necessary to access the businesses. The
boat transportation service would be owned by James and
Proposal 4 (Customers of Stehekin-Based
Businesses)-Passengers could be anyone with reservations at
any Stehekin-based businesses that want to use the service,
including but not limited to Courtney family-owned
businesses. The boat would make intermediate stops at, or
stand-alone trips to, other points on Lake Chelan as
necessary to access the businesses. The boat transportation
service would be owned by James and Clifford Courtney.
Proposal 5 (Charter by Stehekin-based Travel
Company)-Passengers would be restricted to persons who have
purchased a travel package from a Stehekin-based travel
agency that is not affiliated with the Courtneys but would
charter the boat from the Courtneys. The boat would make
intermediate stops at, or stand-alone trips to, other points
on Lake Chelan as necessary to access the travel locations.
The boat transportation service would be owned by James and
CP at 429-30. In all of the proposed services, the commercial
ferry service would be owned independently from the other
WUTC issued notice for all interested persons or entities to
submit comments. Lake Chelan Boat Company expressed its
opposition to another ferry service on Lake Chelan, claiming
its financial viability and ability to operate year-round
services for the public would be under threat. Arrow Launch
Service, Inc.-a PCN ferry operator not servicing Lake
Chelan-also expressed its opinion that the Courtneys'
proposed services would create a template for setting up
ferries that are public in all but name, which would threaten
the viability of all true regulated public ferries in
WUTC heard oral argument and issued its declaratory order a
few weeks later. The WUTC noted that the only legal issue was
whether the proposed services would operate "for the
public use" within the meaning of RCW 81.84.010(1). The
order noted that the legislature did not define the phrase
and that neither the WUTC nor any Washington court had
interpreted the phrase.
WUTC then looked to the plain language of the statute to
derive the legislature's intent. Relying on a dictionary
definition, the WUTC construed "for the public use"
as meaning "'accessible to or shared by all members
of the community.'" CP at 432-33. Relying on a
dictionary definition once again, the WUTC construed
"community" as meaning "' a body of
individuals organized into a unit'" or "'
linked by common interests.'" CP at 433. Combining
the dictionary definitions for both terms, the WUTC concluded
that a commercial ferry operator must obtain a PCN
certificate when the ferry "is accessible to all persons
that are part of a group with common interests."
Courtneys argued to the WUTC that their proposed services
were not for the public use because ferry services would be
limited to customers of one or more particular Stehekin
businesses. The WUTC noted that the United States Supreme
Court had rejected a similar argument in Terminal Taxicab
Co. v. Kutz, 241 U.S. 252, 36 S.Ct. 583, 60 L.Ed. 984
(1916). The WUTC, in rejecting this argument, concluded that
limiting services to persons who are demonstrated customers
of specific businesses would not remove the services'
essential public character.
Courtneys also argued that exemptions applicable to
commercial ferries should be as broad as exemptions
applicable to surface transportation companies. The WUTC,
noting that there are important differences between the
commercial ferry statutes and surface transportation
statutes, rejected that argument.
Courtneys further argued that Proposal 5 was exempt under the
ferry charter service exemption. The WUTC disagreed and
explained that Proposal 5 was not a true charter service
because it would not transport cohesive groups for a single
agreed-upon purpose; rather, it would simply be customers of
Stehekin businesses aggregated through a ...