In following Uber's arrival in Anchorage, I have noticed the incumbent Anchorage Taxicab Permit Owners Association (ATPOA) bringing forth an argument very familiar to me. That is that the Municipality of Anchorage would have to reimburse existing taxi permit holders.
As legal counsel, I represented Anchorage Citizens for Taxi Reform in its bid to open Anchorage's relatively closed taxi permitting system. For those of you who are unfamiliar, my clients wanted to open Anchorage's taxi permitting system via ballot initiative. They submitted their petition in 2002, but were denied placement on that year's ballot on the grounds that their initiative was a de facto taking of existing permit-holders' property rights. Litigation ensued, but I'm happy to say that the Alaska Supreme Court ultimately found ATPOA's argument unpersuasive and placed the issue on the ballot in 2008.
ATPOA's premise is this: The municipality deliberately set up a system of transferable taxi permits to the extent that a given current permit trades hands for up to $140,000 -- simply for the government's permission to operate a vehicle for hire. And, in so doing, created a reasonable expectation that monopoly profits derived from this system would exist in perpetuity. Therefore, any government action that catastrophically devalues the market price of their transferable permits would put the municipality in the position of having to reimburse permit-holders for lost sales.
This is not so for several reasons.
The first and foremost being there is no contract, and much less any agreement whatsoever between the municipality and ATPOA, that no significant change in permit issuance may occur. Current code allows for new permits to be issued without limit so presumably they are aware their monopoly position is no guarantee.
The second reason is the nature of the permits. A permit is just that; a license from the government to do something as opposed to a physical piece of property. In this case, it's a permit to ply public roads for private gain, yet with a bevy of laws and regulations overseen by a government inspector and commission riding herd. This contrasts with a physical piece of property such as a house or car where the property right is manifest, but even here we see instances where such property can be seized by the government (e.g. cars being seized for DUI violations).
The third reason is the nature of the proposed government action. In the Uber case, proposed government action simply allows Uber's car-sharing partners to operate legally. It doesn't impede existing taxi permits in any way. This turns a usual argument of a government taking on its head.
Almost always a complaint of a government taking is that the government has imposed some new and unexpected onerous burden on a physical piece of property, thereby damaging the usability and subsequent resale value of the property. But here we see perversion of this idea. We see the aggrieved party (ATPOA) arguing that the loss of government action constraining competition constitutes a taking. Also, taxis are operating under this obvious cartel and serving an international airport. This raises the question of whether the municipality is violating federal anti-trust law, which outlaws cartels. Call me old-fashioned, but just because someone opens a better lemonade stand next to mine doesn't mean I think I can sue the municipality for damages.
Proposals of legalizing ride-sharing services like Uber place no new legal restrictions on existing taxicabs, they simply introduce new competition. Which, from ATPOA's perspective, is exactly the problem.
Last, the origins of the permits; The existing transferable permits were issued for nominal fees. In the last instance they were issued in 1984 for under $900 per permit on a population-based formula. This is relevant in showing the municipality's intentions. Presumably the municipality did not have some sort of grand scheme to inflate permit prices to their current absurd levels. It is far more likely that ATPOA has successfully manipulated the political landscape over the years to create some sort of expectation in their members' minds that this situation will last forever.
My sense is that the public interest should not be constrained by a cartel's unreasonable expectations. And however unfortunate their inconvenience, the municipality really has no obligation to ensure ATPOA's monopoly profits.
Caveat emptor, ATPOA.
Ken Jacobus is an attorney in private practice in Anchorage.
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