The District's corporation counsel yesterday blocked a 40-cent surcharge on taxi fares scheduled to take effect today after finding that the D.C. Taxicab Commission's rate panel failed to give weight to evidence supporting a higher fare increase proposed by taxi industry groups.

In the opinion issued yesterday, Frederick D. Cooke Jr. said the taxi commission's panel on rates and rules violated its own rules when it substituted the 40-cent surcharge for the industry proposal and neglected to consider a subsequent protest filed by industry groups.

A segment of taxi company owners and cabdrivers, represented by The Joint Industry Group and the Communications Workers of America Local 2336, had protested the flat surcharge after pressing for a percentage rate increase based on the city's taxi zone system.

It was unclear last night how the panel would respond to the ruling. One panel member, Vice Chairman Lucille Johnson, said she interpreted the legal opinion as confirming the panel's power to change its own rules in a way that would allow the surcharge to stand.

An industry spokesman, however, said the opinion could require the panel, which is scheduled to meet today, to begin anew its consideration of the industry's proposal for an interim, percentage fare increase -- a process that has been under way since last July.

In the legal opinion sent to Taxicab Commission Chairman Arrington Dixon, Cooke said the five-member rate panel "should reassess the record" of industry testimony and commission staff recommendations before deciding whether the 40-cent surcharge is justified.

The panel, which has the power to set rates and is dominated by a three-member majority that has kept Dixon virtually locked out of the process, has been the subject of growing controversy over its tactics and the sometimes bitter infighting between its members during the last eight months.

Dixon said he considered Cooke's opinion an important turning point for the commission, saying it sends a message that the rate panel will be held to a strict standard of conduct.

"I think {the opinion} highlights concerns that, over the last several months, have been expressed over and over again," Dixon said. "I just hope that the panel will be receptive now to reconsideration and that they will allow the position of the public and the process to be fully honored."

Dixon was among those who complained that the panel's decision in November to implement its own proposal for a 40-cent surcharge ignored testimony from taxi industry representatives, as well as recommendations from the commission's staff and a paid consultant favoring a 23 percent increase for taxi zones.

"There was no comment at all, absolutely none, supporting 40 cents," Dixon said.

Dan Smith, owner of several D.C. cab companies and an organizer of The Joint Industry Group, said yesterday he hoped the rate issue could be resolved but expressed dismay over the rate panel's actions.

"This has been going on since last July and we have accomplished nothing with this rates and rules panel. They have done nothing constructive or positive and it's very frustrating," Smith said. He said the 40-cent fare increase had been approved "in the most arbitrary and capricious manner I have ever seen by a commission of citizens."

Johnson disagreed, saying, "The proposals were studied and there was no ignoring any of those . . . . I'm not familiar with what you're saying when you say there must be testimony and evidence."

Indications of growing public concern over the panel's conduct surfaced last week, when D.C. Council member Nadine P. Winter (D-Ward 6) at a hearing on the commission's budget warned that she might seek to replace the three members of the rate panel who approved the 40-cent surcharge.

Winter's comments followed a vote by the panel majority favoring the 40-cent surcharge -- Joseph Becker, John Jessamy and Johnson -- to hold future meetings of the rate-making body in private.