Pedicab Regulation

By Richard A. Epstein,

Around 7:30 a.m., on June 10, 2009, a pedicab driver crashed into a taxicab while getting off the Williamsburg Bridge, injuring himself and his passenger. The pedicab driver was at fault and presumably liable both for personal injuries and property damage.

That's the small story. The large story is that four days later, Mayor Michael Bloomberg and City Council Speaker Christine Quinn proudly announced New York City will finally impose regulation on the growing pedicab industry, with the blessing of its trade association, which only two years before had beaten back an earlier version of these regulations.

The new regulatory system will license pedicab drivers, mandate liability insurance and impose detailed safety rules on such issues as brake pads, headlights, taillights and vehicular size. Similar regulatory initiatives are afoot in both Chicago and London. This regulatory boomlet poses two challenges to regulation: why and how?

It's estimated that there are about 1,000 pedicabs cruising New York City. So why does a single accident suffice to ignite this regulatory cascade? I am not aware of any city that licenses bicycle riders or pedestrians, but both pose greater safety risks. Like bike riders, pedicab drivers know that they expose both life and limb. So too do their passengers. Self-help is imperfect, but it is also cheap. Can any system of regulation do so much better as to justify its costs?

It's a tough question. Yet, no one, and certainly no libertarian, can brand as illegitimate any safety regulation intended to protect others from physical harm. Not only does the state have general regulatory powers, but it also owns the public highways. Shouldn't that extra power allow it to adopt the same kind of restrictions that a private condominium association imposes on its members?

Well, not quite. Private owners can exclude outsiders for good reason, bad reason or no reason at all. The state, as a fiduciary for all people, can exclude people for good reason only. It could not decide, for example, to let only men, Protestants or Republicans pedal a cab in New York City.
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Safety rules, however, count as good reasons because they can reduce the social costs of accidents. Licensing can keep dangerous drivers off the road. Liability insurance provides compensation for accident victims. Vehicular safety devices prevent accidents. Yet, alas, all good ends can be perverted, for crafty safety regulations can be deployed for partisan ends--to drive the economic competitors to cabs, buses and livery services off the street. No explicit safety regulation should be free of public scrutiny.

Regrettably, many transportation regulations don't bother to hide behind the safety fig leaf. They just play the public ownership card. For example, the aborted 2007 New York regulation would have reduced the number of pedicabs from 1,000 to 300--great news for the pedicab survivors and the regular cabs, but bad news for everyone else.

Chicago's proposed pedicab regulation raises this anticompetitive theme to an art form. Buried in its insurance and safety standards is a prohibition against operating "a pedicab along any route unless such route is first approved by rules and regulations promulgated by the commissioner."

This is troublesome, because the rule can't be dismissed out of hand since it could make sense to prohibit, as the New York rules will do, the operation of pedicabs on bridges or, more critically, in tunnels. And it surely makes sense to keep these slowpokes off interstate highways. But the use of the word "route" signals the strong likelihood that the commissioner will, in good Chicago style, also keep pedicabs off safe routes that compete with ordinary cabs or city buses.

At this point, a constitutional challenge is in order. No system of limited government can rule out state ownership of roads. But none should tolerate using state monopoly power to upset the level playing field between competitive businesses. Both New York and Chicago have a long and disgraceful history of keeping jitneys off the roads because of the competition that they give the city-owned, and union-operated, buses. If private utilities used their power for similar partisan ends, they would be on the receiving end of civil and criminal sanctions. The government ownership of the roads does not cleanse these anticompetitive practices for pedicabs or anything else. Our libertarian moral is this: Public safety should never be a pretext for anticompetitive regulation, be it on public roads or private property.

Richard A. Epstein is the James Parker Hall distinguished service professor of law, the University of Chicago; the Peter and Kirsten Bedford senior fellow, the Hoover Institution, and a visiting professor at New York University Law School.