‘Illegal taxis may endanger passengers’

Taxicab services on Saipan operating without government approval are skirting safety and insurance regulations and could pose a serious risk to passengers looking for a cheap ride, according to CNMI Department of Commerce officials.

Commerce issued notices earlier this year to six taxi services on Saipan operating without the department’s approval, prompting five of them later to close, acting Commerce Secretary Michael Ada said in an interview Wednesday. At least one of those companies, known as Tropical Island, has challenged Commerce’s enforcement effort and remains open, continuing to pick up passengers.

“These companies are a danger to the community,” Ada said. “They’re a danger to consumers and there’s no way for us to monitor how much they are earning, so the government might be losing out on potential tax revenues from companies that are not reporting or underreporting their income.”

Meanwhile, taxi drivers say scores of other unregulated taxis are roaming the island without Commerce’s knowledge and taking business away from cabs that follow local rules.

Most taxi services on Saipan get approval from Commerce, department officials said, which requires them to submit to safety inspections, obtain health certifications, carry onboard fire extinguishers and show proof of taxi insurance—which covers passengers in the event of an accident. Yet unregulated cabs have avoided abiding by these standards.

“For passengers, if they get into one of these cabs, they are taking a risk,” said David Palacios, Commerce’s enforcement chief. “If they get injured, insurance does not cover them like it would in a regular taxi.”

In the case of Tropical Island, Palacios said the company has obtained a business license to operate as a transportation company rather than a taxi service; a designation that its owners contend gives them the ability to stay in business without the need for approval from taxi regulators. For now, that distinction is working in the company’s favor.

“It’s a loophole and technically it shouldn’t be one,” said Ada, adding that changing rules to close it could prove tricky because the department wants to avoid penalizing hotels that provide transportation to tourists.

Local regulations, however, define the type of vehicle Tropical Island uses—four door sedans that seat less than eight passengers—as a taxi, meaning the company should be subject Commerce’s authority, he added.

Tropical Island has asked for a hearing on the issue with Commerce officials, according to Palacios, yet the department currently lacks the hearing officers it needs to conduct one, giving the company an indefinite stay on any enforcement action.

“They’re challenging the codes and they have to be heard,” Palacios said.

For those cabbies that follow the rules, black market cab companies represent a major concern and a drain on the number of paying customers available on Saipan because they can afford to offer cheaper rates than regulated taxi services.

“They are significantly affecting our business,” said Rabby Syed, president of the Saipan Taxi Association. “They take customers, like tourists and people off the U.S. Navy ships, away from us.”

Tropical Island did not immediately respond to requests for comment.