October 30, 1998 (503) 795-7452 22948-0001 Carole J. Washburn Secretary Washington Utilities and Transportation Commission 1300 S. Evergreen Park Drive, SW P.O. Box 47250 Olympia, Washington 98504-7250 Re: Household Goods Rulemaking: Docket No. TV-971477 Dear Ms. Washburn: Public Storage Pickup & Delivery, L.P. (PSPUD) strongly supports the Washington Utilities and Transportation Commission’s (Commission’s) proposed definition of “household goods” in the final draft of the proposed rulemaking in this docket, filed with the Code Reviewer’s Office on September 16, 1998. In order to assist the Commission with its consideration of this important matter, PSPUD offers the following description of the service it provides and reasons why the proposal to continue to exclude such operations from Commission regulation is grounded in sound law and policy. A Unique Type of Self-storage Service PSPUD is owned, in part, by Public Storage, Inc. (PS). PS provides household goods storage services to customers in 38 states and Canada. PS is one of the pioneers of the self-service storage industry, having identified and served a market demand for convenient, affordable storage. Customers deposit their household goods in PS facilities seven days a week, at times convenient to them, and at a price that is low compared to the cost of full-service storage offered by the regulated moving and storage industry. No inventory of items stored is required, nor does PS assess the condition of a customer’s goods before they are stored. The infrequent claims that goods were lost or damaged while stored at a PS facility are resolved pursuant to the terms of the customer’s rental agreement and any relevant state law. Self-service storage businesses compete aggressively; rates are driven by market forces. Further, a significant capital investment is required to enter the business, because real estate must be acquired, developed and insured. The combination of a highly competitive market coupled with high start-up costs discourages poorly capitalized “fly-by-night” operators from entering the business. In 1996, PSPUD commenced operations to provide its “Pickup and Delivery” service attendant to self-storage. In essence, this service responds to customer demand for easing the customer’s transportation burden by bringing the storage unit (the container) to the customer’s home or business. As is the case with traditional self-service storage transactions, the customer loads his or her goods into the container and locks it. The sole difference in this service is that the packed, locked container is then transported by PSPUD back to the storage facility, for a predetermined fee. The benefits to the customer are obvious: the customer is spared (1) the expense of renting a vehicle to transport the goods to the self-service storage facility, and (2) the labor required to unload the goods from the vehicle and reload them in the storage unit. This service allows PS to improve service to existing customers, and to reach new customers who are reluctant to transport goods themselves. PSPUD’s household goods transportation services are an ancillary part of a storage transaction. Accordingly, PSPUD’s service is distinguishable from, and significantly more limited than, other moving and storage services currently operating in Washington. First, PSPUD transports household goods (in its own containers) only to and from its storage facility and its customers; goods are not transported from home to home. Second, goods are packed and loaded by the customer; in a typical moving transaction, movers or packers are paid hourly to pack and/or load goods. PSPUD does not inventory, inspect, or in any other way handle the customer’s household goods. Third, PSPUD charges only a predetermined, flat rate, eliminating the opportunity for “bait-and-switch” pricing tactics that are the focus of much of the Commission’s existing regulation. Finally, the price of the service is $49.00 each way (for a single container)—a small fraction of the typical moving expense. Customers using a container transportation service (rather than an expensive moving company) do so to save money, with the understanding that they will have to pack properly and load their own goods, as they do when they choose to rent a truck and haul goods to a traditional storage facility. PSPUD now offers this service in approximately 14 states. In all states, PSPUD offers its service for no more than the same basic rate and according to similar contract conditions. In Washington, PSPUD is aware that Shurgard Storage-to-Go, Inc. and Door to Door Storage, Inc., offer similar services. Accordingly, consumers also benefit from lively competition between providers of this low-cost container storage service. Proposed Rule To date, the Commission has not regulated the rates and service provided by PSPUD and its competitors in Washington. Based on a threshold opinion by the Commission’s Transportation Permit Interpretation Committee (set forth in a letter dated September 18, 1995 from the Commission Secretary to Mr. David W. Wiley), PSPUD began its service to customers in Washington State earlier this year without the need of a certificate of public convenience and necessity and a tariff. PSPUD became actively involved with this rulemaking when an early draft proposed rule appeared to create ambiguity about the continuing unregulated status of PSPUD’s operations. Along with its competitors, PSPUD participated in the stakeholder meetings that the Staff convened and facilitated over the past eight months. At the end of this process, Staff proposed the following definition of “household goods” for WAC 480-15-020: [W]hen the term is used in connection with transportation, means personal effects and property used or to be used in a residence when it is part of the equipment or supply of such residence, and is transported between residences or between a residence and a storage facility, with the intent of later transport to a residence. This term excludes transportation of customer packed and sealed self-storage type containers when no accessorial services are provided by a motor carrier in connection with the transportation of the container. (emphasis added) On August 12, 1998, the Commission approved this definition as part of a proposed rulemaking, which gives rise to these comments. PSPUD supports the proposed definition of “household goods” in the proposed rulemaking for the following reasons: 1. The proposed definition maintains the current unregulated status that the Commission’s Transportation Permit Interpretation Committee first propounded in 1995. At that time, the Committee found: “If the carrier merely provides transportation of storage containers and does not provide specialized handling nor use special equipment normally employed in moving household goods, the Commission would consider the transportation to be that of general commodities.” See Letter from the Commission Secretary to Mr. David W. Wiley, dated September 18, 1995. 2. The underlying facts supporting the Commission’s Transportation Permit Interpretation Committee’s basis for distinguishing self-storage container transportation from moving and storage transportation remains unchanged: PSPUD offers no packing, wrapping, special handling, or other “accessorial services,” and never handles the household goods in any way. 3. The proposed definition of “household goods” comports with federal law, including the ICC Termination Act and its implementing regulations. In response to a request by attorneys for Shurgard Storage-to-Go, Inc., an attorney for the Motor Carrier Law Division of U.S. Department of Transportation Federal Highway Administration (FHWA) opined: I also agree that regardless of whether [Shurgard] is considered to be a for-hire carrier, it is not providing transportation of household goods under Federal law. In determining whether a motor carrier was transporting household goods for the purpose of applying household goods-specific regulatory requirements, the Interstate Commerce Commission focused on the type of service provided rather than the identity of the commodities transported. Since [Shurgard] is not providing the specialized services which household goods carriers typically provide, it would not be considered subject to the FHWA’s regulations governing household goods transportation (49 C.F.R. part 375), the dispute resolution requirements of 49 U.S.C. § 14708, or the tariff requirements of 49 U.S.C. § 13702. Because [Shurgard] is not providing transportation of household goods within the definition of the ICC Termination Act, states cannot regulate its rates, routes and services under § 14501(2)(2) exception to Federal preemption. Letter from Michael J. Falk, Attorney for the FHWA to William A. Mullins, Esq., dated January 20, 1998 (case citations omitted). 4. Governor Locke’s Executive Order 97-02—the impetus for the Commission’s review of household goods rules—identified the following seven criteria for reviewing the Commission household goods regulations: need, effectiveness and efficiency, clarity, intent and statutory authority, coordination, cost, and fairness. None of these criteria are satisfied by increasing regulation over a currently unregulated business: transportation services incidental to the self-storage business. Rather, all of these criteria are satisfied by codifying the threshold opinion by the Commission’s Transportation Permit Interpretation Committee that such services are not subject to Commission regulation. 5. This Commission is charged with protection with the consumer interests of the public. Undoubtedly, the Commission spends a significant amount of time and resources dealing with consumer complaints about regulated moving and storage companies. Yet, in contrast, throughout this protracted informal rulemaking process, no evidence has been offered, shown, or even assumed that consumers have a significant number of complaints about incidental transportation services provided by PSPUD and its competitors in Washington or in any other state. 6. The Federal Aviation Authorization Act of 1994 and ICC Termination Act of 1995 propelled significant deregulation of the motor carrier industry (with the notable exception of state regulation of household goods transportation). Like Washington, several states have begun now to revisit the scope and method of regulation of household goods moving and storage companies. At this time, therefore, this Commission should not choose to increase regulation over a previously unregulated industry without compelling reasons. Notably, it appears that the Commission Staff has found no compelling reasons to regulate transportation of containerized household goods in Washington State. PSPUD thanks the Commission Staff for their hard work and commitment to an open rulemaking process. PSPUD appreciates this opportunity to comment and support the Commission’s proposed rulemaking insofar as the Commission has proposed to exclude PSPUD’s operations from Commission regulation. Very truly yours, HELLER EHRMAN WHITE & MCAULIFFE Todd G. Glass cc: Public Storage Pickup & Delivery, L.P.