In 1980 the Transport Union of Greater New York called an illegal strike against the New York City Transit Authority, shutting down subway and bus service for 11 days. In response, a new industry was born as outer-borough New Yorkers scrambled to find a way to get to work in Manhattan and scores of private vans began shuttling passengers to and from the city. The vans were convenient, usually cheaper than buses, and could do things no subway could do—such as deliver passengers directly to their doorsteps late at night.  Not surprisingly, when the strike ended, many customers kept riding the vans, even though they were operating outside the law. In 1993 the City Council bowed to reality and legalized private van services—sort of. It subjected them to a byzantine set of regulations.

No one quarrels, of course, with the requirement that van operators be licensed, inspected, and insured. Harder to justify is the anticompetitive provision that van services may not operate on routes already served by city-run or -subsidized bus lines—a restriction designed solely to preserve the monopoly of the Transit Authority and its union. A would-be van operator must next secure the approval not only of two city agencies (the Transportation Department and the Taxi and Limousine Com-mission), but also of the City Council itself—which gets extraordinary power in this scheme.

The Institute for Justice, a free-market legal foundation, has sued the city on behalf of four commuter-van operators and the trade association that represents nearly all the city's van operators, alleging a violatation of van operators' due-process rights. Meanwhile, the City Council seems to have concluded that it has gone too easy on van entrepreneurs. On September 4 the Transporta-tion Committee voted unanimously to impose a yearlong moratorium on van permits—including annual renewals of existing permits. Since all such permits must be renewed every September, and the moratorium is retroactive to August 25, it would have made all commuter vans illegal. Facing public pressure, the committee did modify its moratorium bill two weeks later to permit renewals. The full City Council approved the moratorium on September 30.

"We get to stay in business, but we're stagnant—we can't grow and meet the increasing demand," says Hector Ricketts, whose company, Queens Van Plan, runs 53 licensed vans.

Monopolistic regulation and ex post facto laws won't banish vans from the city, but since unlicensed vans won't be subject to the inspection that govern licensed ones, the City Council will succeed in endangering citizens. You might expect all this from a two-bit banana republic, but not America's greatest city.


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