Bloomberg News

Nissan Allowed to Proceed With $1 Billion NYC Taxi Plan

June 11, 2014

Nissan Motor Co. (7201) can proceed with a $1 billion plan to build a new vehicle for New York City’s taxi fleet in an appeals court defeat for cab operators who opposed being forced to buy a specific model.

The Taxi of Tomorrow program fulfills the Taxi and Limousine Commission’s obligation “to produce a 21st-century taxicab consistent with the broad interests and perspectives that the agency is charged with protecting,” the appeals court in Manhattan said yesterday. The court overturned an earlier decision blocking the proposal from moving forward.

Nissan won a contract in 2011 valued at $1 billion over 10 years to supply more than 15,000 minivans with sliding doors, more luggage space and back-seat airbags for the city’s taxi fleet, the largest in the U.S.

The commission in September 2012 designated the Nissan NV200 as the official “Taxi of Tomorrow” and required owners of medallions, which confer the right to operate yellow cabs in New York, to buy the $29,700 vehicles.

Taxi fleet operators sued the city in December 2012 seeking to block the requirement, and a judge halted the program five months later, saying it violated the administrative code because it didn’t allow medallion owners to buy hybrid vehicles. The city then revised the rules to let medallion owners buy hybrids until Nissan develops a hybrid version of the NV200.

Exceeded Authority

The operators sued again in July, and a judge blocked the plan from going forward, saying the commission exceeded its authority under the city charter by requiring the purchase of a specific vehicle.

Justice David B. Saxe wrote in yesterday’s ruling that the taxi commission “carried out its assigned mission with an exacting process lasting from 2007 to 2011, obtaining input from all conceivable interests and concerns, to ensure a final decision that would best satisfy taxi passengers, owners, and drivers, as well as the general public.”

Justice Rolando D. Acosta, in a dissenting opinion, said the commission exceeded its authority “regardless of whether the Taxi of Tomorrow project is rational and consistent” with its objectives, because it mandated the exclusive use of a specific make, model and manufacturer.

“TLC’s authority under the Charter to make rules with respect to vehicle design is limited to rules regulating ’standards’ of design, and this does not include the power to issue rules mandating the exclusive use of one purpose-built vehicle manufactured by a single company,” Acosta said.

Nissan said in a statement that it’s pleased with the decision, which gives the company exclusivity with respect to New York City’s nonhybrid-taxi market. The company said it’s been been distributing the NV200s through dealers since October 2013.

“Given the specific NYC taxi research and development that Nissan conducted -- including crash testing with the installed partition -- we are confident that the Nissan NV200 taxi will provide a solution that is optimal in safety, comfort and convenience for passengers and drivers alike,” the Yokohama, Japan-based automaker said in a statement.

City Review

Taxi and Limousine Commissioner Meera Joshi said in a statement that the city is reviewing the ruling in light of the potential for further appeal.

“Certainly, we are gratified by this latest decision upholding the TLC’s regulatory authority,” Joshi said.

Mayor Bill De Blasio, who received more than $200,000 in taxi-industry donations during his campaign, said before taking office that he opposed the plan because not all cabs would be wheelchair-accessible. The proposal calls for about 2,000 of the taxis to be fitted for disabled riders.

De Blasio said in a letter to the taxi commission in 2012, while he was the city’s public advocate, that it had selected “a bid that did not contain a plan to create jobs in New York City despite the large contract awarded to the company.” A spokesman for De Blasio said in October that he was evaluating the ruling blocking the proposal from going forward.

Taxi Plan

De Blasio in March named Joshi, who helped lead the “Taxi of Tomorrow” plan for the prior administration of Michael Bloomberg, to head the taxi commission. Joshi is a former TLC general counsel. Bloomberg is the majority owner of Bloomberg LP, parent of Bloomberg News.

Officials wanted to give one carmaker an exclusive contract so the manufacturer would have an incentive to include passenger amenities and durability features while keeping the price low, former TLC commissioner David Yassky said in 2012. Taxis are now built by nine manufacturers, and the fleet was dominated by Ford Motor Co. (F:US)’s Crown Victoria, which the company stopped making.

The plan is also facing litigation in federal court in Manhattan. Disabled people and advocates for the handicapped sued in January 2011 seeking to force the city to make its entire taxi fleet wheelchair accessible.

U.S. District Judge George B. Daniels ruled in December 2011 that the commission subjects disabled people who use wheelchairs and scooters to discrimination in violation of the Americans with Disabilities Act.

The U.S. Court of Appeals in New York overturned Daniels’s ruling in June 2012 and found that the act doesn’t obligate the commission to require taxi owners to provide access for disabled people.

Noncompliant Fleet

Ethan Gerber, executive director of the Greater New York Taxicab Association, said yesterday’s ruling means the city will have a fleet of taxis that don’t comply with the Americans with Disabilities Act, which requires all for-hire vans to be wheelchair-accessible.

“Fleet owners are now in the uncomfortable position of having to violate either local or federal law,” Gerber said in a statement.

The case is Greater New York Taxi Association v. New York City Taxi and Limousine Commission, 101083/2013, New York State Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Peter Blumberg


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