Local Law 147 of 2018 (Local Law 147) directed the TLC not to issue new FHV licenses for 12 months after the law’s effective date of August 14, 2018. Local Law 147 also requires TLC to study various aspects of the for-hire vehicle (FHV) industry, including driver income, traffic congestion, vehicle utilization rates, and access to service in the different geographical areas, and to regularly report whether it would issue new FHV licenses following the original 12-month licensing pause. Local Law 147 expressly authorized the TLC to issue new FHV licenses based on the results of its assessment without engaging in the usual rulemaking process.

In furtherance of Local Law 147, in August 2019, the TLC adopted rules amending subdivision 35 R.C.N.Y Section 59A-06(a) to allow for exceptions for wheelchair-accessible vehicles (WAVs) and electric vehicles (EVs). In June 2021, TLC amended 35 RCNY § 59A-06(a) to eliminate the regulatory exception for EVs and instead incorporate the issuance of EVs into TLC’s annual review of all FHV licenses. At no time did TLC pause the issuance of licenses for WAVs.

The August 2020, February 2021, August 2021, and February 2022 reports concluded that additional FHV licenses were not needed at the time. The September 2022 report determined that TLC would issue up to 1,000 new FHV licenses, all restricted to use with EVs. On October 18, 2023, TLC adopted rules to effectuate its Green Rides Initiative, which requires high-volume for-hire vehicle (HVFHV) services to dispatch exclusively to either zero-emission vehicles (ZEVs), of which EVs are the most common type, or wheelchair accessible vehicles by 2030.

The February 2023 FHV License Review Report noted that despite the issuance of 1,000 new FHV licenses limited to use with EVs following the September 2022 report, there remains significant unmet demand for FHV EVs. The TLC believes that issuing new EV-only licenses, especially in the next two years, is essential to begin the large-scale conversion of the FHV sector to EVs and spur demand for charging infrastructure. Accordingly, the February 2023 Report concludes by announcing that TLC is permitting applicants to apply for new EV-only FHV licenses through the agency’s standard FHV license application process. The TLC believes that issuing new EV-only FHV licenses will not lead to oversaturation of vehicles because of other regulatory measures and market realities.

The TLC began accepting applications for FHV licenses restricted to an EV on or about October 19, 2023. The TLC said that as of November 6, 2023, over 90% of the applications received were made by individuals with a TLC driver’s license. Obtaining their own FHV license may allow these individuals to avoid renting a licensed FHV from a company that could subject them to onerous leasing terms.

On November 2, 2023, the New York Taxi Workers Alliance (NYTWA) filed a lawsuit seeking to stop the TLC from issuing new EV FHV licenses. The NYTWA argued that the TLC did not have the legal authority to change the license plate cap rules unilaterally, and that a slew of new vehicles with TLC plates would saturate the market, hurting existing FHV drivers. The NYTWA sought relief from the court through a Temporary Restraining Order (TRO). The TLC and the City of New York, via the NYC Corporation Counsel’s Office, opposed the issuance of the TRO. A TRO is essentially an order of the court restraining an entity from doing something (here, issuing new FHV licenses) pending a full and final determination of the lawsuit by the Court.

On November 7, 2023, New York County Supreme Court Justice Machelle Sweeting issued a TRO enjoining the TLC from issuing new licenses after 9:00am November 13, 2023. Essentially, the Court gave the TLC a five-day grace period to continue to issue new licenses. By that time, approximately 9,500 applications had been filed with the TLC. A further hearing is set to be held before Justice Sweeting on April 10, 2024.

On March 1, 2024, the TLC issued its February 2024 For-Hire Vehicle License Review Report and Determination. In it, the TLC concluded that additional FHV licenses are not needed at this time. The report noted that the rush for licenses brought about by the lawsuit resulted in a much more rapid expansion of EVs in the FHV fleet than TLC had anticipated when conducting its license review.

All of the above begs the question: Why did the TLC suddenly change course and decide not to issue further licenses pending a decision from the Court? Was it because of the lawsuit? Was it because the market was already saturated? Was it because the City’s fleet of FHVs is already on or ahead of schedule according to the City’s Green Rides Initiative?

To get an honest answer, one must look only at the recent letter filed by the NYC Corporation Counsel’s office with the Court. On March 11, 2024, the NYC Corporation Counsel’s office sent a letter to Justice Sweeting opposing the request of NYTWA to respond to the TLC’s February 2024 For Hire Vehicle License Report. The Corporation Counsel’s office said the “TLC found no proof of oversaturation of the FHV market…” and that the “TLC has not had the opportunity to fully assess the impact of new licenses on the FHV market.”

My take on all this is that the TLC does not want the Court to issue an adverse decision prohibiting them from issuing new licenses in the future. As a matter of litigation strategy, the NYC Corporation Counsel’s office argued that since the TLC is not issuing new licenses right now, the issue in Court has become moot. In other words, the City seems to be arguing that since no new licenses are being issued at the moment, the Court should simply dismiss the case as there is no legal issue in controversy.

There is some merit to this argument. However, I believe it would have been better for the Court to issue a decision so the TLC and industry stakeholders know if, in the future, the TLC can issue new licenses without going through the notice-and-comment rulemaking process. If the Court dismisses the case on this basis, the issue of whether the TLC violated the law (and whether the NYTWA lawsuit has merit) will simply be punted to another day.

What bothers me the most is that the March 11, 2024, letter from the NYC Corporation Counsel’s office specifically said the “TLC found no proof of oversaturation of the FHV market…” and the “TLC has not had the opportunity to fully assess the impact of new licenses on the FHV market.” While the law requires the TLC to consider other factors when deciding whether to issue new FHV licenses, what could be more critical than no proof of oversaturation of the FHV market?  Other important factors are driver income, how FHVs contributed to traffic congestion, traffic safety, vehicle utilization rates, access to for-hire service in different city areas, and driver availability. But again, with no saturation of the market, I believe this translates into new FHV licenses should be issued. After all, if the market were saturated, driver incomes would be down, and there would surely be greater access to FHV service in the outer boroughs.

I do not believe that the rush on EV licenses generated by the opening and subsequent pause on applications led to rapid growth in the number of EVs across the TLC fleet. The addition of 9,500 newly licensed FHV EVs is just a tiny blip compared to the size of the market and the size of the existing supply of FHV vehicles. Then again, my mantra is that the market should dictate the number of licenses and not the TLC. The laws of supply and demand have been a fundamental concept of economic theory since 1776. The market itself has a way of naturally working itself out. On the other hand, the TLC often seems to have a way of trying to fix what is not broken.

Now, all we have to do is wait until New York County Supreme Court Justice Sweeting holds a further hearing on April 10, 2024. As always, I am available to provide any assistance you may need with your company and industry needs.

Article by Steven J. Shanker, Esq.

Steven J. Shanker, Esq. is General Counsel to the Livery Roundtable, Inc. and the New York Independent Livery Driver Benefit Fund.

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