Petition for Waivers and Variances Memorandum

Standard

Mailed to Transportation Director Avelino Gutierrez and Sen. Cisco McSorley

Re:      Restoring Adequate Taxi Service
Petition for Waivers and Variances

Introduction

Uber’s virtually unregulated business model is unconstitutional under the Equal Protection and  Supremacy Clauses, as well as violating a couple of Antitrust statutes. It also exploits its drivers who have been forced to operate at a loss since 2015.

However, Uber cannot service cash and landline customers, so healthy taxi companies providing adequate service is still essential and in the public interest.

The timing is right to attempt changes

Both sponsors of the Transportation Network Services Act are under a cloud of criminal indictment. Sen. Phil Griego was convicted of corruption in 2017, and Rep. Monica Youngblood is fighting (ironically) aggravated DUI charges.

Since 2016 Call-A-Cab has been dormant, forwarding calls to taxi companies. Taxis are no longer being tracked. However, several improvements to the GPS Map are waiting for activation once the system is adopted by Albuquerque taxi and limo companies.

There is no reason taxi and limo luxury sedans cannot operate together on one system in order to offer more variety. SUV’s are the future of transportation and they should be available as well. Regulations currently separate taxi and limo business models, but that should be waived in order to compete with Uber’s Select services.

Both TNC and Taxi Services are Inadequate

Both the TNC’s and taxi companies fail to provide ‘adequate’ service.

The TNC’s cannot accept cash or non-smartphone ride requests. Because of 2013 legislation, taxi company fleets are now so numerous that none of them are large enough to service Albuquerque-Rio Rancho. Santa Fe lost its only taxi company because it chose the wrong Internet logistics, as did Yellow Cab choosing iCabbi over Call-A-Cab. Only Call-A-Cab offered Uber-style ‘proximity’ and ‘peer-to-peer’ logistics.

Over several years, Google Analytics tracked month-to-month decreases in Google Search for ‘taxi’ of over 10% a month, every month, indicating a drastic loss of market share (50% to 90%) to Lyft and Uber.

To make matters worse, the number of taxi companies increased from two large fleets to six small fleets. Four taxi companies have less than four taxis. Google lists over two dozen taxi companies, but more is not better; in fact, it makes service worse. Customers report service times of ’45 minutes to Never.’ Many Internet listings are duplicates, customers trying another ‘company’ end up talking to the same person.

Consider the fact that Uber’s server went down twice one month, once for over 45 minutes. It still suffers periods of loss of service . . . that and the gross inequity in market share and regulatory structure is cause for alarm. When Uber goes down, we need taxi companies to fill in the loss of service.

Taxi companies can compete with TNC’s if the following can be done:

  • All taxis from all companies be required to be tracked on one GPS
  • Independent contractors in SUV’s and Luxury Sedans commercially insured be allowed to operate under existing taxi and limo company certificates.
  • In time, the TNC’s be required to credit the $2.95 insurance fee to all drivers with their own commercial insurance so they can choose to subscribe to non-TNC networks.

If all taxis are tracked by GPS on one map, five small companies (plus Rio Rancho Cab) will have the logistic efficiency of one large company. Only Green and Yellow cab companies have 24/7 telephone dispatch, but as customers learn to use the GPS map linked to all taxi websites, all cab companies will benefit equally.

At this time, the Transportation Network Services Act prohibits commercial vehicles with certified motor carrier PRC numbers from subscribing to the TNC apps. As TNC drivers operating more than 20 hours a week pay more for insurance than taxis, sometimes triple taxi insurance rates, this is a violation of Antitrust law as well as unjust enrichment. While taxi companies struggle to afford insurance for fleets, TNC’s are making a profit off the insurance fees collected from ‘booking fees.’

If this issue is addressed and Uber/Lyft drivers permitted to take calls from non-TNC GPS logistics systems, taxi companies can reduce their fleet insurance and maintenance costs and have vastly improved service including SUV’s and Luxury Sedans.

Call-A-Cab is a Hybrid System, Using Both Traditional and Uber-Style Logistics

Call-A-Cab® started in Albuquerque, New Mexico in 2012, based on paralegal research to improve taxi company logistics. Call-A-Cab’s owner had both static and streaming GPS maps in his Motorola Q (a Blackberry-style phone) before there were Smartphones.

Call-A-Cab determined that GPS proximity logistics used by both taxi dispatchers and direct contact of drivers by customers off an Internet Interactive GPS Map would improve service. This permits standard taxi dispatch, but also direct customer-to-driver communication off of an Interactive GPS Map that can be linked to any website.

In addition, taxi companies subscribing driver-owned vehicles would permit smaller full-time fleets (lower fixed insurance costs) with the advantage Uber has of rapid response to brief periods of high-demand.

2014, Director of Transportation Ryan Jerman approved an interpretation of the ‘lease of certificate’ provision in the Motor Carrier Act that would allow driver-owned cars used as passenger carriers [See Exhibit A], however, the insurance companies would not sell directly to individual contract operators. They do now, as long as the commercial insurance is filed with the Superintendent of Insurance and the driver associated with a certificate holder.

[Note: Uber operated unlawfully without any insurance, commercial or otherwise, from May, 2014 to June, 2016. Call-A-Cab has alleged that their insurance scheme results in unjust profits to the TNC’s and violations of Antitrust laws. Uber drivers operating 20 hours/week pay $700 for commercial insurance. Full-time drivers are paying $1200 to $1600 a month, a profit for Lyft and Uber.]

Restoring Adequate Taxi Service Still Possible

Call-A-Cab’s www.taxiabq.com URL is the second oldest and one of the highest-rated listings, but after the 2015 Predatory Price Drop by Uber Call-A-Cab lost almost thirty tracked drivers. When the Transportation Network Services Act was signed into law, May of 2016, Call-A-Cab shut down all tracking. (All incoming calls have been forwarded to the two largest cab companies.)

Meanwhile, taxi driver income has dropped over 50% and the job has become more dangerous (two drivers murdered since 2016).

Uber’s Predatory Pricing has resulted in Uber and Lyft drivers operating at below minimum wage, actually showing a loss on their 1040C tax returns. The 2015 Price Drop to 63 cents/mile paid to Uber X drivers nets about 32 cents to the driver for total miles driven on the app, which with the 53.5 cent/mile federal standard commercial mileage deduction is a loss of 30 cents/mile.

Waivers and Variances

18.3.1.10 WAIVER OF OR VARIANCE FROM RULE REQUIREMENTS: A. The commission may, in its discretion, waive or vary any requirement of these rules whenever the commission finds that such waiver or variance would be in the public interest.

If the PRC works with taxi companies and Call-A-Cab to initiate Waivers and Variances, taxi companies (and limo companies) can reduce their insurance liabilities by reducing fleet sizes and contracting drivers who use their personal vehicles as commercial passenger carriers. Limo luxury sedans can also be on the GPS map to compete with Uber Select.

As mentioned above, Uber can’t take calls from landlines or from cash customers; that business is left to taxis. Taxi Companies can’t fight Uber and changing the law is burdensome in time and money.

Ironically, Uber’s biggest advocates are the citizens who are addicted to paying drivers less than minimum wage; technically a ‘tipping wage,’ but aren’t compelled or willing to tip. So, the only alternative is how to help taxis reach the same level of service as Uber.

Because the TNC Act, codified in NM Stat § 65-7-7 (2016) specifically denies the NMPRC jurisdiction, Uber and Lyft are operating under bare-bones regulation and rules. Except for insurance and a $10,000 annual fee, TNC’s are essentially unregulated. On the other hand, taxi companies are highly regulated. Waivers and Variances are within PRC powers if for the benefit of the public.

This disparity in regulations begs the question of constitutional ‘equal protection’ violations voiding the TNC Act (See Exhibit C), Supremacy Clause pre-emption[1], and Uber (its app permitting crossing of state lines) blatantly ignoring Federal Motor Carrier Safety Rules.

I cannot predict the result of a 14th Amendment ‘equal protection’ challenge to the TNC Act, but a safer solution is selective deregulation of taxi rules and regulations ‘in the public interest’ through waivers and variances.

Uber’s TNC Act and the Motor Carrier Act are both codified under Chapter 65 (NMSA). However, it is unconstitutional for two similar services (transportation of persons) to be regulated by grossly different laws. That is a violation of the NM Constitution, §18 equal protection clause.

Does the state legislature have a legitimate interest and over-riding constitutional policy that permits such disparities between Articles 3 and 7? No.

The 2016 Transportation Network Services Act created a deregulated taxi and limo service in direct conflict with existing Motor Carrier Act rules; the rationality for permitting unvetted drivers and uninspected vehicles to operate as commercial carriers of passengers being a popular ‘ridesharing’ app. That app was so popular, and the rides so cheap in comparison to taxis, that the state ‘tabled’ enforcement of Motor Carrier safety regulations and let Uber drivers operate uninsured for two years.

Yes. Uber provided superior service, but at the cost of safety regulations and below minimum wage incomes to their drivers, and at the expense of their vehicles through mileage depreciation and wear & tear.

Innovation is good, but taxi companies operated with the understanding they could not change the Motor Carrier Act. This memorandum suggests otherwise.

The technology exists; an Interactive GPS Map that can be linked through any taxi website and dispatch office was available ever since GPS was installed in Smartphones. That technology improves service five ways:

  • Proximity Dispatch Logistics assigns the taxi closest to the customer, increasing efficiency.
  • Customers who visit or are directed to the website(s) can use the Interactive Map to call the closest cab driver directly, without going through a dispatch office where they might be put on hold during high demand.
  • All taxi companies tracked on one map will turn five small companies into an efficient system, maximizing logistics to that of one large company.
  • Customers who call the closest driver will get a ‘verbal contract’ for service, and not be tempted to call multiple companies.
  • Use of direct contact of the closest driver is a continuous process. As customers find or are redirected to the website by advertising, telephone hold messages, and by the drivers themselves, traditional telephone dispatch offices will become more efficient and provide better service. More simply put, if a customer doesn’t want to be put on hold, or wants to talk to the driver, they have the option to use the Interactive GPS

Conclusion:

If taxi companies can operate with the same logistics as Uber, they can compete while providing service to landlines, business operators, and cash customers; customers Uber and Lyft are unable to service.

Uber is too powerful and too popular to control through litigation or legislation. So, I suggest using Waivers and Variances until proven ready for legislated revisions to the Motor Carrier Act.

In time, a Class E License can force the TNC’s into safety rules compliance, and restore PRC jurisdiction over fair tariffs so both TNC and taxi drivers can have a sustainable income.

The gross inequity in high fixed taxi insurance costs and Uber using the $2.95 ‘booking fee,’ (applied to insurance) as a profit center and non-compete ‘clause’ has to be addressed as well.

_______________________________

Leonard A. Daneman, Paralegal
Call-A-Cab
(505) 252-6175

cc:       Senator Cisco McSorley
Director Avelino Gutierrez

EXHIBIT A

Mr. Daneman,

If I understand you correctly, you propose to operate a taxi service with contract drivers, but the drivers will be responsible for providing their own insurance and vehicles.  I don’t see that this would be a problem, provided that the certificate holder is the one ultimately responsible for compliance with the Motor Carrier Act and Commission rules.

Ryan Jerman

From: Jimenez, Ryan, PRC
Sent: Friday, June 06, 2014 12:16 PM
To: Jerman, Ryan, PRC
Subject: Fw: ‘Lease of Certificate’ Opinion Necessary to Prove Lyft Illegal

EXHIBIT B

 taxisearch

EXHIBIT C

Taxi companies are ‘persons,’ legal entities with constitutional rights. Jones v. Temmer, 829 F.Supp. 1226 (1993), “In determining whether an equal protection violation has occurred, the court must (1) identify the questioned classification of groups, and (2) determine whether the classification is valid applying the appropriate standard of review. See Allright Colorado v. City and County of Denver, 937 F.2d 1502, 1511 (10th Cir.1991)”

[1] A legal memorandum on the Class E License and Supremacy Clause viz-a’-viz Lyft and Uber is posted on Scribd at https://www.scribd.com/document/373643069/A-Class-E-License-Will-Promote-Fair-Competition-Between-Uber-and-Taxis

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