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Hypocritical Bureaucrats Stifle Entrepreneurship in Colorado

Harris Kenny
March 24, 2011, 9:07pm

Seven months ago the Colorado Public Utilities Commission (PUC) denied start-up firm Mile High Cab Company the right to compete in metro Denver’s taxicab market. According to David Migoya of The Denver Post:

Mile High (Cab Company) was started in 2008 by a number of immigrants from western and Southern Africa disgruntled with the city’s largest cab companies claiming they could make more money if they had their own firm. As the process wore on, Mile High Grew from 40 co-owners to 150.

A PUC administrative law judge issued an 85-page ruling (that was later sustained by the commission at-large), which denied Mile High’s request to operate 150 cabs in the metro Denver area, as reported by Vincent Carroll of The Denver Post. The judge ruled that if Mile High opened and added an additional 150 cabs to the taxicab market, the consequence “could very well result in impaired services, higher rates, and ultimately the type of destructive competition this commission is charged with protecting against.” Mile High has appealed the ruling, and a hearing is set with a Denver District Court for June.

Last week the same PUC judge approved requests by incumbent firms to operate 300 additional cabs in metro Denver. PUC’s hypocritical decision demonstrates what critics have long argued: the PUC is a state-created bureaucracy that limits consumer choice, criminalizes competition and in the end only serves to protect the interests of incumbent firms. In fact, marketing professional Edward Harvey testified in a PUC hearing that Denver has .46 cabs per 1,000 population, which is dramatically lower than comparable cities such as Boston, Philadelphia and Detroit that have as many as 3.75 per 1,000 population.

Over the years, Colorado has taken enforcing taxicab regulation to unbelievable lengths. (Special thanks to the Aspen Daily News for tracking this story.) 75-year-old Aspen-resident Phil Sullivan operates a free taxicab service, and while he does not collect fares he does accept tips. In 2008, undercover state employees conducted a sting operation where they successfully lured Sullivan into accepting a tip from them. Investigators from Colorado’s PUC pursued legal action shortly thereafter, levying a $12,100 fine against him that he refused to pay. Sullivan was unfazed by the state’s legal action and continued to offer free rides to Aspen residents. Earlier this month (nearly three years later) Sullivan was tried and convicted to a 15-day jail sentence for violating the state’s taxicab regulation. After being sentenced and led out of the courthouse, Sullivan told the Aspen Daily News that he plans on resuming his service after his release from prison.

Colorado's PUC is a bureaucracy that has gone off the deep end enforcing taxicab regulations that need to be reformed by the legislature. (The Colorado legislature has attempted—and failed—to act on this for years, for more see my recent Reason.org commentary here). The legislature’s most recent attempt, SB 11-065, passed out of the Senate Business, Labor and Technology Committee, but failed in the Senate Appropriations Committee. (For more on SB 65, see here and here.)

Its high time Colorado policymakers legalize competition in the taxicab market, because the ambiguous status quo harms both entrepreneurs and residents alike. For more on anti-entrepreneur taxicab regulation, see my colleague Sam Staley’s recent work here, here and here.


Harris Kenny is Policy Analyst


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