California Stretch Limo Operators Suffer Big Loss

COMMENTARY: What if a state regulator or enforcement officer showed up at your business, eyeballed your fleet, and told you every one of your stretch limousines (120 in. or less) had to be retrofitted with push-out windows or roof hatches by Jan. 1, 2016? And if you don’t, then you have to buy new limousines that have fifth doors or the approved pop-out windows? No problem, right? It’s just another way to ensure public safety, right?

Well, California operators are facing this dilemma, which is one of the most absurd and unjust spectacles to hit the limousine industry in years. Legislation requiring such emergency exit retrofits, called SB 109, was approved in the state legislature in September. Gov. Jerry Brown signed it on Oct. 11, despite the fact that the group representing the interests of California operators, the Greater California Livery Association (GCLA), wrote a letter to Brown explaining why the facts supported a veto.

Bad Policy
By the stats, California has the most limousine operators of any state. From a pro-business standpoint, it’s also known for off-the-wall politics and zealous legislation. The passage of SB109 unfortunately serves as a poster child of such measures, with this one hurting the small businesses that comprise the bulk of the limo industry.

SB109 was sponsored by Sen. Ellen Corbett, a Democrat from the San Francisco Bay Area who serves as the Majority Leader. Corbett proposed her bill in response to the fatal stretch limousine fire of May 4 in which five women burned to death on the San Mateo Bridge while celebrating a bachelorette outing. But Corbett advanced the bill before all the facts were in.
 
The facts, based on a California Highway Patrol investigation, proved the limousine fire was a one-off catastrophe, not the result of a pattern. A unique set of circumstances, factors and miscues resulted in a horrific outcome. This scenario has not happened before. It’s not a case of exploding Ford Pinto gas tanks that requires safety improvements and new rules.

Clueless.gov
The GCLA did a valiant job trying to inform and negotiate in good faith on SB109. The GCLA and its lobbyists sought to engage Corbett, suggesting compromises and explaining the effects of the bill. The GCLA even agreed that a fifth-door requirement for new stretch limousines was reasonable, since they are easier for groups to get in and out of than four-door models. But retrofitting windows and roofs is structurally complicated or impossible, not to mention costly. It’s also never been done before on such a mass scale. With all the post-recession consolidations and bankruptcies in limousine manufacturing, there simply are not enough qualified builders in California able or willing to retrofit 3,000 plus stretches by the deadline.
That means small, mom-and-pop, Main Street limousine businesses will lose money, either by having to sell or retire their stretches early, buy more expensive new ones, or just forgo the stretch limo niche entirely. There’s also the added effect of spurring illegal activity, as is often the case when people are faced with difficult and stupid rules.

None of those facts, however, dissuaded Corbett from modifying or backing off of her emotional bill. She was not interested in any pragmatic, cost-benefit analysis. The real reason this bill ultimately got passed was not so much about public safety as it was about striking a political pose: Whenever something bad happens a politician somewhere has to be seen doing something supposedly helpful. This situation is especially acute in California, where one political party controls all levels of government, and it’s a party prone to anti-business biases.

The painful lessons for the limousine industry are common to small businesses everywhere. Government can be reasoned with up to a point. But at the end of the day it’s still government — a behemoth with its own interests, motives and appetites. You would think the GCLA’s savvy track record in working with regulators and legislators would earn it some reciprocity and a willingness from government officials to compromise in good faith and reward an industry trying to treat government as a partner. But we are in a political phase defined by “never letting a crisis go to waste” and a “we know better” attitude among elected officials. That adds up to greater government control over businesses and individuals.

Moving On
We should remember that for all of its blundering ineptitude, government is still of, by and for the people, maybe not always in practice but definitely in principle. The small business sector, including the limousine industry, has all the tools at its disposal to organize for political action. Despite all the regulatory and economic challenges of recent years, the sector is still the largest source of jobs in the U.S. That carries a lot of clout.

In the era of social media and the 24/7 media cycle, calling out bad political behavior goes a long way. California operators should start taking some clever pages from activist groups, who are never shy about leveraging free speech, freedom of assembly, and the wheels of the political process. There are thousands of stretch limousine operators nationwide who have every right and every tool to tell business partners, clients, suppliers, friends, colleagues and neighbors to turn up the heat on politicians like Corbett. Elected officials are not invincible and they don’t know more about business than you do. It’s time for the industry to do whatever it legally takes to gum up the gears on SB109. Advocates of the bill are due for a good dose of Constitutional blowback.

Related LCT article: GCLA Responds To Limo Safety Bills