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Sunday, November 02, 2008

Federal preemption of NYC’s Taxi Rules?!

Fans of federalism will read with dismay Judge Paul Crotty’s opinion in Metropolitan Taxicab Board v City of New York in which the court held that the NYC’s Taxi & Limo Commission may not set fuel efficiency standards for taxis holding a medallion from the city. Judge Crotty reasoned that the TLC’s rule requiring medallion-bearing taxis to achieve 30 miles to the gallon was an indirect way to regulate fuel efficiency for automobiles covered by federal law – a regulation that is barred by the Energy Policy & Conservation Act's (EPCA's) preemption clause, which prohibits the City from adopting “a law or regulation related to fuel economy standards … for automobiles covered by an average fuel economy standard under this chapter. 49 U.S.C. § 32919(a).

But I would suggest that NYC is not regulating automobiles at all. NYC is regulating access to its medallions. A medallion is a piece of city-created property worth well over a half-million dollars on the open market. Medallion owners get a piece of valuable city “property” in return for which they are supposed to perform special duties. The City ought to have the same power to place conditions on medallions that it has to place conditions on any other form of city property – say, the city's budget for police cars. No one would argue that the city could not demand that sellers of cars to the city's own police department meet higher standards of fuel efficiency than those specified by EPCA. Why can’t the city likewise demand that medallion seekers meet higher standards? The usual rationale for preemption – preserving a national market from a crazy quilt of locals standards – is wholly inapplicable, because no one expects taxi-licensing rules to be uniform throughout the nation: Medallion owners are expected to meet a myriad of rules specific to NYC, such as installing meters and (lately) credit-card machines and posting various consumer warnings in the cabs.

But preemption doctrine has been running amok lately. The Roberts Court declared in Brown v Chamber of Commerce last term that California could not place anti-union-busting conditions on California’s own state money. If environmental preemption becomes just as draconian as Machinist labor law preemption in Brown, then this nation’s policy-making will slowly ossify into a dirigiste sclerosis worthy of France.

Posted by Rick Hills on November 2, 2008 at 08:57 PM in Constitutional thoughts | Permalink


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Andrew asks: "What is the difference, then, between car licensing and taxi licensing?"

The critical difference is that medallions are scarce resources that deliberately are not made available to all comers on equal terms. The number is deliberately kept low to protect existing medallion owners' investment. The city, therefore, ought to be able to recoup the oligopoly rents that it bestows on medallion owners, by conditioning access to the medallions on compliance with extra-high standards of conduct.

Suppose that the city instead taxed all medallions to recover the rents that its regulation gives to medallion owners. Suppose, further, that the proceeds of the tax were deposited in a special "clean air" fund that was used to subsidize the purchase of hybrid taxis, making these vehicles cheaper than the normal variety. Would Judge Crotty preempt this tax-and-subsidy scheme for medallions? Such a result would seem bizarre to me: Surely the city is entitled to reward extra-good behavior, and surely it is also entitled to recover oligopolistic rents that it itself creates! But I would suggest that such preemption of a tax-and-subsidize scheme is no different than the actual preemption conclusion that Judge Crotty reached.

Posted by: Rick Hills | Nov 3, 2008 12:42:43 PM

I agree with you that this is ridiculous, the absurd result of preemption run amok. Having said that, isn't access to licenses exactly how every state would regulate its fuel economy standards? California requires smog checks in order to register a vehicle. If they were so inclined, couldn't they do the same with fuel economy? Different states already require different stickers to be affixed to one's car as a condition of licensing, just like taxis. And installing a meter is still different from requiring that a car feature a completely different species of engine. What is the difference, then, between car licensing and taxi licensing?

You seem to be relying on a rights-privileges distinction, and saying that privileges are property of the state, not subject to preemption. I think that with the police cars, the City is pretty clearly buying cars for its "own use" (an express statutory exception). In licensing cabs, as the decision notes, NYC is acting purely as a state regulator, unless literally everything that the state permits to be done is for its "own use." And unlike meters and posted notices, New York City's aim is not the protection of the consumer, but at reducing greenhouse gas emissions and pollution--the very goals that federal policy is so studiously ignoring.

Posted by: Andrew | Nov 2, 2008 9:35:19 PM

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