the Louisiana Public Service Commission (“LPSC” or “Commission”) and the Louisiana Legislature recently changed the standard in which waste hauling applications are granted. Act 278 of the 2017 Regular Session removed the requirement for applicants to prove “public convenience and necessity” (“PC&N”).1 The Commission adopted rules identical to Act No. 278 at its Business and Executive Session on December 20, 2017.2 These law and rule changes have been over twenty years in the making.
BACKGROUND
In 1994, Congress preempted state regulation of the prices, routes, and services of motor carriers of property.3 This action greatly reduced the overall number of motor carriers regulated by the LPSC, but it did not apply to waste carriers since waste was not included in the Act’s definition of “property.”4 After 1994, the legislature maintained the PC&N requirement for waste hauling applicants but eventually eliminated it for tow trucks, passenger carriers, household goods carriers, and saltwater haulers.5
PC&N is a type of licensing requirement that originated in the 1800s. Essentially, PC&N blocks a new company from operating unless it can prove to the license-granting governmental agency that new competition is in the “public interest.”6 PC&N was originally devised for the railroad industry under the theory that under certain circumstances, economic competition7 is “inefficient” or “destructive,” so government should restrict excess entry into certain markets.8 If an existing license holder objects to the application, it is extremely difficult – if not impossible, time-consuming, and very expensive to prove PC&N.
PC&N rules “are tools by which an incumbent firm bars competition for self-interested reasons. These laws enrich existing businesses by restricting the supply of services, raising prices for consumers, and – worst of all – depriving would-be entrepreneurs of their constitutional right to earn a living without unreasonable government interference.”9
Previously in Louisiana, an applicant seeking a common carrier certificate or contract carrier permit to transport non-hazardous oilfield waste, non-hazardous solid industrial waste or hazardous waste intrastate for disposal would apply to the LPSC. The application would be advertized in the LPSC bulletin, and almost assuredly draw opposition from certain existing waste haulers. These “intervenors” would object on the basis of protecting their operating rights in order to minimize competition. In order to remove the intervenors’ objections, applicants typically entered into “restrictive amendments” with the intervenors to limit their scope of authority by geographical restrictions, limitations on the types of waste the applicant could carry, and restrictions on the number and type of trucks the applicant could utilize in waste hauling.
The LPSC considered eliminating the PC&N requirement from its rules in 2008, but the Staff recommendation failed at the November 12, 2008 Business and Executive (“B&E”) Meeting. Commissioner Jimmy Field stated that: “…I just don’t think we can overrule or (sic) express statute of the Legislature.” Commissioner Jay Blossman concurred by stating: “. . . the statute says what the rules are and what the laws are, and I just don’t think we have the authority to do away with it…. But, until the Legislature changes the statute, I don’t think the Commission needs to step in and start changing things…”10
On May 23, 2012, the Commission did change its rules, “. . . whereby all waste carriers are [sic] exempted from proving Public Convenience and Necessity prior to obtaining operating authority, but requiring all waste carriers to register with the Commission and prove fitness to operate at a public hearing.”11 However, upon reconsideration the next month, it re-instituted PC&N, but established a lessened burden of proof and provided for proof of fitness. This 2012 rule change made it possible for an applicant to prove PC&N, but it remained a costly and time-consuming process. From 2012 to the beginning of this year, only a few applicants received certificates free of restrictions. The vast majority of applicants continued to enter into “restrictive amendments” with the intervenors.
POWERS OF THE PUBLIC SERVICE COMMISSION VERSUS THE LEGISLATURE
According to Article III, Section 1(A) of the Louisiana Constitution, the “legislative power of the state is vested in the legislature…” The Public Service Commission is created by Article IV, Section 21 of the Louisiana Constitution. Subsection B sets forth the powers and duties of the LPSC by stating that, “[t]he commission shall regulate all common carriers and public utilities and have such other regulatory authority as provided by law. It shall adopt and enforce reasonable rules, regulations, and procedures necessary for the discharge of its duties, and shall have other powers and perform other duties as provided by law.”
Prior to the adoption of the Louisiana Constitution of 1974, the LPSC was not vested with constitutional authority and did not question the law making authority of the legislature. Since the LPSC powers are now enumerated in the Constitution, there have been times when the two bodies have disagreed over where the legislature’s law making powers end and the Commission’s regulatory powers begin.
PC&N has been just such an area of disagreement. Since the early 2000s, the legislature removed the PC&N requirement for tow trucks, passenger carriers, household goods carriers, and saltwater haulers. The Commission did not challenge these laws and changed their rules accordingly. But in the area of waste hauling, applicants were caught in a Catch 22 of sorts.
RECENT ATTEMPTS AT CHANGE
Senator Dan W. “Blade” Morrish attempted to remove the PC&N requirement on several occasions. Other legislators filed similar bills, but Morish was the most persistent. His bills were usually defeated based on the argument that the legislature would be infringing on the Commission’s constitutional authority to regulate common carriers if it eliminated the PC&N requirement via statute. As noted earlier, efforts to eliminate PC&N through the Commission’s rule-making authority were similarly defeated by the argument that the LPSC could not ignore an existing statute that required applicants to prove PC&N in order to be awarded a certificate or permit.12 In 2016, Senator Morrish’s bill (SB 399) attempted to treat waste applications the same as saltwater applications. SB 399 was involuntarily deferred in the House Commerce Committee. During the same time, then Commissioner Clyde Holloway opened LPSC Docket No. R-34054 seeking to remove the requirement for motor carriers of waste to prove public convenience and necessity, while maintaining the requirement to prove fitness to operate.”
After receiving comments from interested parties, in August of 2016, the LPSC Transportation Staff issued a proposed recommendation that would have changed the definition of PC&N by stating that an applicant applying for a common carrier certificate, contract carrier permit, or expansion of authority granted in an existing certificate or permit authorizing the transportation of nonhazardous oilfield waste, hazardous waste or non-hazardous industrial solid waste shall prove public convenience and necessity in a hearing before an administrative law judge or hearing officer by proving…” five fitness requirements.13
The staff adopted an argument made by the author of this article that since the Louisiana Supreme Court considered PC&N to be “a dynamic and flexible concept, which is not susceptible to a rigid or precise definition and, therefore must be determined on a case-by-case basis”14 the Commission could change the definition of PC&N by making it subject to a fitness test. This staff recommendation was not considered by the Commission. Commissioner Holloway’s term was nearing its end and he was in failing health.
In early 2017, the docket was reopened with a request for specific comments and a technical conference was scheduled. A technical conference is a meeting of the interested parties and LPSC staff to discuss a proposed rule. The technical conference was held shortly thereafter, but the previous recommendation was not the central point of discussion. A new proposed rule was circulated, that in this author’s opinion, gave minor relief to applicants by reducing the power of intervenors, but was still too time-consuming and complicated.
ACT 278 AND LPSC GENERAL ORDER DATED 1/23/2018
Before the Commission acted on this rule-making docket, Senator Morrish passed and Governor John Bel Edwards signed Senate Bill 50 of the 2017 Regular Session that became Act 278. Act 278 amended R.S. 45:164 to eliminate the PC&N requirement. In its place, Act 278 instituted the fitness test set forth in the LPSC Staff’s proposed recommendation dated August 3, 2016, described above. [See article quick fact 1 below] In reaction to the new law, the Commission brought suit against the legislature seeking a declaratory judgment that Act 278 be declared unconstitutional.15 While the suit was pending, the Commission, by a 3-2 vote, adopted a new rule in conflict with Act 278. Judge Mike Caldwell then dismissed the LPSC’s suit on procedural grounds.
At the December 2017 meeting of the Commission, Commissioner Foster Campbell, a longtime supporter of removing the PC&N requirement, brought a motion to repeal the recently passed rule conflicting with Act 278. Commissioner Campbell’s motion also sought to adopt rules in conformity with Act 278. After much discussion between the commissioners and testimony by this author, the Commission adopted Commissioner Campbell’s motion that became LPSC General Order dated 1/23/2018. Commissioners Lambert Boissiere and Craig Greene were instrumental in the motion’s passage.
APPLICATION OF THE NEW LAW AND RULE
Under the new rule, intervenors can still protest an application, but only as it applies to the applicant’s fitness. In March and April of this year, this author represented Apex Trucking, LLC16 and Summit Trucking, LLC17 in contested hearings. After the Administrative Law Judge issued his proposed recommendation that Apex’s application be granted, the intervenors have withdrawn from all subsequent applications. To this author’s knowledge, all subsequent applications have been approved without restriction — unless the applicant requested to limit its own scope of authority.
Under the 1/23/2018 General Order, trucking companies can apply for expanded or new waste-hauling authority with the LPSC. [See article quick fact 2 below]
Once all the documentation is provided to the LPSC transportation staff, the application will be published in the LPSC Bulletin with a 15-day intervention period. The application will be assigned to an administrative law judge. The Staff may send the applicant data requests before the hearing date. After the staff finishes its investigation, it will make a recommendation regarding the applicant’s fitness. The application then goes to a hearing in which the applicant’s attorney introduces documents and questions witnesses in order to prove fitness.
After the order granting authority is issued, the applicant’s insurer must submit proof of insurance, the applicant must submit a tariff, and annually register the power units utilized in intra-state waste hauling.
Certificate holders are subject to continuing LPSC jurisdiction by filing annual reports, submiting quarterly inspection and supervision reports, and paying the applicable fees.
State Senator, Dan “Blade” Morrish
LPSC Commissioner, Foster Campbell
ARTICLE QUICK FACT 1
Act 278 Fitness Test: Applicants must prove the following:
✓ Holds an insurance policy
✓ Has financial ability to safely and efficiently dispose waste
✓ Authorizated by required regulatory authorities for waste transportation
✓ Possesses the equipment and man power to provide transportation services safely and efficiently
✓ Has an established a safety program for the transportation of waste
ARTICLE QUICK FACT 2
Trucking companies can NOW apply with the LPSC, pay a $200 application fee and providing the following documents:
1. Secretary of State Certificate and Articles of Incorporation or Formation from the State.
2. Louisiana Secretary of State Certificate of Good Standing.
3. The company’s operating structure, names of regulatory contacts, bookkeepers, CPA, dispatchers, or other employees anticipated to be involved with the transportation and disposal of waste.
4. Financial statements and balance sheets for the company for the last two complete years.
* For a newly formed company, a detailed statement from the owner(s) outlining the financial ability to operate all transportation functions authorized by the applied for authority.
5. List of equipment anticipated to be used
6. Letter from an insurance company (or agent) authorized to do business in Louisiana, who will write the required insurance coverage
7. Copy of the company’s safety manual either by printed hard copy, flash drive or CD.
8. Permits required by any and all other state and federal agencies for the transportation and disposal of waste, or a list including a detailed compliance history under any jurisdiction for each regulatory agency’s jurisdiction.
References
1. Act 278 originated as Senate Bill No. 50 by Senator Dan “Blade” Morrish, and was signed by Governor John Bel Edwards on June 15, 2017.
2. See LPSC General Order dated 1/23/2018.
3. See 49 U.S.C. §14501(C).
4. See LPSC Docket No. R-34054, Proposed Staff Recommendation dated August 3, 2016, page 4
5. See LPSC Docket No. R-34054, Proposed Staff Recommendation dated August 3, 2016, page 5.
6. See Thomas Sandefur, State “Competitior’s Veto” Laws and the Right to Earn a Living: Some Paths to Federal Reform, 38 Harvard Journal of Law & Public Policy 1009 at 1010.
7. Id. 8. Id. 9. Id.
10. See pages 21-29 from the LPSC B&E Meeting Transcript, dated November 12, 2008.
11. See LPSC General Order (R-30297) dated May 30, 2012.
12. See La. R.S. 45:164 prior to the enactment of Act 278 of the 2017 Regular Session.
13. See LPSC Docket No. R-34054, Proposed Staff Recommendation dated August 3, 2016, page 9.
14. See Vacuum Truck Carriers of Louisiana, Inc. v. Louisiana Public Service Commission, 2008-CA-2340, p. 4 (La. 5/5/09)
15. See LPSC v. Louisiana State Legislature, 19th JDC, Suit No. 659999, Section 24.
16. See LPSC Docket No. T-34587.
17. See LPSC Docket No. T-34440.
18. See LPSC forms T-79, T-79 (Amend), and T-73 for common carrier certificates.
