Can a state aviation authority give one taxicab company the exclusive right to pick up passengers at the airport?

Plain-English summary

In 1988, the head of Maryland's State Aviation Administration asked the Attorney General whether the Administration could bar taxicabs from picking up passengers at Baltimore/Washington International Airport unless they held a concession contract with the Administration, and whether it could give that contract to a single taxicab company on an exclusive basis. The opinion concluded the Administration could do both. It read a transportation statute that let licensed taxicabs from any Maryland political subdivision serve BWI without a separate local license as directed only at conflicts between competing local governments, not as a limit on the State's own concession authority over its airport. Separately, the opinion concluded that an exclusive taxicab contract would not run afoul of federal antitrust law, because the Administration's statutory authority to set the terms of airport concessions amounted to a clearly articulated state policy substituting regulation for competition, which under the Supreme Court's "state action" doctrine shields such an arrangement from Sherman Act liability.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Could BWI Airport's Aviation Administration require taxicabs to sign a contract before picking up passengers?
Yes, according to this 1988 opinion. It concluded a state statute letting licensed taxicabs travel between their home political subdivision and BWI without a separate local permit did not limit the Administration's own statutory authority to license concessionaires and regulate operations at the airport it controlled.

Would giving one taxicab company an exclusive contract at BWI have violated antitrust law?
No, the opinion concluded. It found that the Administration's exclusive-contract authority under the Transportation Article was a clearly articulated State policy substituting regulation for market competition, which under the Supreme Court's state action doctrine gave an exclusive airport taxicab arrangement immunity from Sherman Act liability.

Did courts elsewhere allow airports to award exclusive taxicab contracts?
Yes, the opinion noted that two federal cases involving similar municipal-airport statutes, Independent Taxicab v. Greater Houston Transportation Co. and Woolen v. Surtran Taxicabs, Inc., had already found state action antitrust immunity for cities that granted exclusive taxicab franchises at their airports.

Background and statutory framework

The dispute arose because BWI Airport straddled a boundary: it had been owned by Baltimore City until the State purchased it in 1972, and Anne Arundel County (where the airport sits) had its own taxicab rules that could burden out-of-county cabs serving the airport. To prevent this kind of local protectionism, the General Assembly enacted what became Transportation Article §5-413(b), letting a taxicab licensed in one political subdivision transport passengers to and from BWI without obtaining an additional local permit elsewhere.

The opinion found this provision addressed disputes among political subdivisions, not the authority of the State itself. Citing Maryland-National Capital Park and Planning Commission v. Montgomery County, the opinion noted the State and its agencies are not "political subdivisions," so §5-413(b)'s bar on requiring "an additional permit or license from any other political subdivision" left untouched the Aviation Administration's separate statutory concession authority under Transportation Article §5-408(a), which lets the Administration contract with any person to supply services, including taxicab service, at an airport it operates. The opinion also pointed to the Administration's broader regulatory and traffic-control powers under §§5-204(b), 5-412, and 5-426(a), and a 1988 amendment adding a new §5-408(c) requiring Administration authorization for commercial activity at BWI, as reinforcing that authority.

On antitrust, the opinion applied the state action immunity doctrine from California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc. and City of Lafayette v. Louisiana Power & Light Co., concluding that Transportation Article §5-408, by letting the Administration "establish any terms and conditions and fix any charges, rentals, or fees" for airport concessions, was a clearly articulated State policy to replace competition with regulation for commercial activity, including taxicab service, at BWI. The opinion found this conclusion reinforced by two federal appellate decisions, Independent Taxicab v. Greater Houston Transp. Co. and Woolen v. Surtran Taxicabs, Inc., which had upheld exclusive taxicab franchise arrangements at municipal airports under similar state statutory schemes.

Citations and references

Statutes:

• Transportation Article §5-413(b)
• Transportation Article §1-101(g)
• Transportation Article §5-408(a)
• Transportation Article §5-408(b)(1)
• Transportation Article §5-408(b)(2)
• Transportation Article §§5-204(b) and 5-412
• Transportation Article §5-426(a)
• Chapter 383, Laws of Maryland 1963
• Chapter 558 (Senate Bill 155), Laws of Maryland 1988
• Section 1 of the Sherman Antitrust Act

Cases:

• Maryland-National Capital Park and Planning Commission v. Montgomery County, 267 Md. 82, 296 A.2d 692 (1972)
• United States v. Yellow Cab Co., 332 U.S. 218 (1947)
• Southern Motor Carriers Rate Conf. v. United States, 471 U.S. 48, 63 (1985)
• California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980)
• City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 410 (1978)
• Town of Hallie v. City of Eau Claire, 471 U.S. 34, 46 n.10 (1985)
• Independent Taxicab v. Greater Houston Transp. Co., 760 F.2d 607 (5th Cir. 1985)
• Woolen v. Surtran Taxicabs, Inc., 615 F. Supp. 344 (N.D. Tex. 1985)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1988/Volume73_1988.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

AVIATION ADMINISTRATION

Taxicab Regulation—BWI Airport—Administration May Enter Exclusive Contract With Taxicab Company To Pick Up Passengers At BWI Airport.

July 5, 1988

Mr. Theodore E. Mathison
Administrator
Maryland State Aviation Administration

You have requested our opinion on whether the State Aviation Administration may (i) prohibit a taxicab from picking up passengers at Baltimore/Washington International Airport unless the taxicab is operated under a concession contract with the Administration and (ii) enter a concession contract with a single taxicab company.

For the reasons stated below, we conclude that the Administration may (i) prohibit taxicabs not under contract from picking up passengers at BWI Airport; and (ii) enter an exclusive contract with a taxicab company to provide this service, if the Administration concludes that an exclusive contract would most effectively serve airport operations.

I
Restrictions on Dual Regulation of Taxicabs

BWI Airport is situated in Anne Arundel County. Until its purchase by the State in 1972, the airport was owned and operated by Baltimore City under the name of Friendship International Airport. This geographic circumstance presented a risk of biased regulation of taxicabs: Each jurisdiction might have been pressured to regulate taxicabs serving the airport in a manner that would protect its locally based taxicabs but impose a burden on the airport's patrons.1 To avert this risk, the General Assembly enacted Chapter 383 of the Laws of Maryland 1963, then codified as Article 1A, §16A and now codified as §5-413(b) of the Transportation Article ("TR" Article). TR §5-413(b) provides:

Notwithstanding any public local or other law, the operator of a taxicab authorized and licensed to operate in a political subdivision of this State may, without being required to obtain an additional permit or license from any other political subdivision:

(1) Transport passengers to Baltimore-Washington International Airport from the political subdivision in which the taxicab is authorized and licensed to operate; and

(2) After transporting passengers to the airport from that political subdivision, pick up passengers at the airport and transport them to the political subdivision on its return trip.

(Emphasis added.)2

The term "political subdivision" is defined as follows: "'Political subdivision' includes: (1) Any county or municipal corporation; and (2) Unless the context requires otherwise, any special taxing district." TR §1-101(g).

The State or one of its agencies, such as the Administration, is not included in the term "political subdivision," either under this definition or in general. See Maryland-National Capital Park and Planning Commission v. Montgomery County, 267 Md. 82, 296 A.2d 692 (1972). TR §5-413(b) does not prohibit the Administration, a State agency, from requiring a taxicab operator to obtain a license under contract as a condition to picking up passengers at BWI. Indeed, because the prohibition is phrased in terms of "an additional permit or license from any other political subdivision," it impliedly recognizes that an operator might well be subject to licensure by the State, apart from that of a political subdivision.

Indeed, the Administration has express statutory authority to license concessionaires. TR §5-408(a) provides, in pertinent part, as follows:

In its operation of an airport, airport facility, or air navigation facility owned or controlled by this State, the Administration, with the approval of the Secretary, may contract, lease, or otherwise arrange with any person to:

(2) Grant to the person the privilege of:

(ii) Supplying services, facilities, goods, commodities, or other things at the airport or facility.

A taxicab company supplies "services ... at the airport ...." We do not believe that TR §5-413(b) could properly be construed to delimit the Administration's authority under TR §5-408.3

In addition, the Administration has broad power to regulate operations at BWI Airport. See TR §§5-204(b) and 5-412. The Administration also has specific power to regulate traffic at BWI Airport. TR §5-426(a). Preventing a potentially chaotic free-for-all among taxicabs is plainly related to legitimate concerns about safety and efficiency.

In sum, the Administration may exercise its contracting and regulatory authority so as to place limits on the taxicab operators who may pick up passengers at BWI Airport. In so doing, the Administration does not contravene TR §5-413(b).4

II
Antitrust Considerations

An agreement between the Administration and a taxicab operator under which the latter would receive the exclusive right to pick up passengers at BWI Airport raises questions under the antitrust laws. Section 1 of the Sherman Antitrust Act declares illegal "[e]very contract ... in restraint of trade ...." A contract that awards an exclusive right to serve patrons at a transportation terminal might, under some circumstances, violate the Sherman Act. See United States v. Yellow Cab Co., 332 U.S. 218 (1947).

However, immunity from antitrust liability is available to a State agency, under the state action doctrine, if its anticompetitive action "is undertaken pursuant to a clearly articulated policy of the State itself, such as a policy approved by a state legislature ..." Southern Motor Carriers Rate Conf. v. United States, 471 U.S. 48, 63 (1985).5 In our view, state action immunity would apply to an exclusive contract between the Administration and a taxicab operator.

By enacting TR §5-408, the concession authority set out in Part I above, the General Assembly unequivocally established that it was going to rely on regulation rather than commercial competition to set the standards for commercial activity—including taxicab operations—at BWI Airport. In terms of state action antitrust immunity, TR §5-408(b)(1) establishes a clear State policy to substitute regulation for competition: "For the privileges granted, the Administration may establish any terms and conditions and fix any charges, rentals, or fees ... "6

TR §5-408 thus establishes antitrust immunity for the Administration's limitation of taxicab operations at BWI. In two recent cases, a statute very similar to TR §5-408 was found to confer state action immunity on municipalities when they were sued for granting exclusive contracts to taxicab companies at municipal airports. Independent Taxicab v. Greater Houston Transp. Co., 760 F.2d 607 (5th Cir. 1985); Woolen v. Surtran Taxicabs, Inc., 615 F. Supp. 344 (N.D. Tex. 1985), aff'd 801 F.2d 159 (5th Cir. 1986). As the federal district court put it in Woolen: "The decision to grant an exclusive airport taxicab franchise—to utilize the 'single-operator concept,' in the parlance of these actions—is a logical and reasonable consequence of the State's broad allocation of authority to cities to ... operate municipal airports." 615 F. Supp. at 348.

III
Conclusion

In summary, it is our opinion that the Administration may (i) prohibit taxicabs not under contract from picking up passengers at BWI Airport; and (ii) enter an exclusive contract with a taxicab company to provide this service, if the Administration concludes that an exclusive contract would most effectively serve airport operations.

J. Joseph Curran, Jr., Attorney General
Peter W. Taliaferro, Assistant Attorney General

Jack Schwartz
Chief Counsel
Opinions & Advice

1 Under §33-46 of the Anne Arundel County Code (1957), taxicabs "operated in Baltimore City or in other communities outside of the county" were permitted to bring passengers into Anne Arundel County "but shall not receive any passengers within the county...."

2 As phrased in the original enactment, a licensed taxicab was authorized to serve the airport in the specified ways "without being required to obtain an additional permit or license from any other County or political subdivision." Chapter 383, Laws of Maryland 1963.

3 The General Assembly recently amended TR §5-408 by providing, in a new subsection (c), that "commercial activity"—defined to mean "the sale, merchandising, marketing, or promotion of any goods or services"—is permitted at BWI Airport "only when expressly authorized by and in a manner prescribed by the Administration." Chapter 558 (Senate Bill 155), Laws of Maryland 1988 (effective July 1, 1988). To the extent that taxicab operators solicit business at BWI Airport, this new subsection reinforces the Administration's authority to regulate taxicab service there.

4 Consistently with TR §5-413(b), Anne Arundel County may regulate some aspects of taxicab service at BWI (for instance, cabs from Baltimore City that bring passengers to the airport, which is allowed under TR §5-413(b)(1), but then pick up passengers bound for a location in Anne Arundel County, which is beyond the scope of TR §5-413(b)(2)). Whether the county could restrict practices expressly authorized by the Administration is a question that we need not address at present.

5 The private beneficiary of the State's anticompetitive policy would enjoy antitrust immunity if that policy is not only "clearly articulated" but also "actively supervised" by the State itself." California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980) (quoting City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 410 (1978)). Cf. Town of Hallie v. City of Eau Claire, 471 U.S. 34, 46 n.10 (1985). See note 6 below.

6 Moreover, TR §5-408(b)(2) establishes a mechanism for active State oversight of the private conduct that has supplanted competition.