Government-paid undercover cab customers started hailing taxi drivers yesterday to see how many of them discriminate on the basis of race or the destination of the fare.

The move follows years of complaints that black customers and those who want a ride to far Southeast Washington are regularly passed up by many of the city's 8,555 licensed cabdrivers.

Drivers found guilty of discrimination could face fines of up to $500 and their employers could face suspension of their building occupancy permits.

The Fair Taxicab Service Project, operated by the District's Taxicab Commission along with the city's Human Rights and Minority Business Opportunity Commission, is expected to last six weeks and cost $25,000.

Under the program, 20 monitors are working in racially mixed teams of two, half the teams dress in casual clothes and the other in professional clothes. They will hail cabs in 13 areas.

When monitors are passed by or refused a ride, they will file a complaint with the two departments conducting the project. Hearings will be held to determine the accuracy of the charges.

"We have taken off our gloves and rolled up our sleeves to work on this issue. We mean business," said Loretta S. Caldwell, director of the human rights agency.

Carrolena Key, chairwoman of the Taxicab Commission, said last year that her office received more than 700 complaints alleging refusal to transport.

"Discrimination against anyone for any reason and failure to transport any person who has the cost of the fare to travel is reprehensible and will not be tolerated in the City of Washington," she said.

Drivers and company owners interviewed yesterday said they were aware some cabbies are selective about their customers, but they maintained it is done for economic and safety reasons and is not related to the race of the customer. They did not support the new enforcement system because, they said, the fines are too steep.

Because the District has a zone system instead of the more common meter rates, drivers maintain, there is a built-in disincentive to drive long distances, particularly over the Anacostia River to far Southeast Washington, a predominantly black area. They say they can make the same amount of money in much less time by working the downtown area and picking up many shorter rides or several group rides.

"I just got a customer who wanted to go from 15th and M streets all the way out to Riverdale," said a cabdriver waiting outside the Madison Hotel who refused to give his name.

"I took him, and I got $11.60 and no tip for a one-hour ride {round trip}. That just isn't fair."

Some cabdrivers indicated they do not pick up everyone who hails them.

Bill Miser, a driver for 17 years, said, "I won't pick someone up if I feel my life is in danger."

Asked how he could tell when a customer posed a threat, he said: "I have pretty good instincts. The law is one thing, but I have to look out for myself."

Neither economic nor safety concerns permit a cabdriver to discriminate, according to city regulations that state a driver must transport any orderly customer with money to pay the fare. The arguments about who gets taken where have gone on for some time, according to Frank Andruzzi, claims manager for Diamond Cab, who attended a briefing by city officials for company owners yesterday morning.

"All of this business goes back at least 20 years, at least as long as I've been out here," he said.

"No one wants to talk about the root of the problems. The basic root problem is the rate structure and the general management of the industry."

Andruzzi said the new program was similar to other efforts in the past that targeted violations such as double-parking and the blocking of intersections.

"I call them rhetorical enforcement programs," he said.

"They talk about it and they publicize it. They will probably scare some people."

Picking Up Passengers

Drivers of on-duty taxicabs not already engaged shall furnish service to any orderly person.

No driver of a taxicab shall refuse to transport a passenger while holding his or her taxicab for hire.

Any taxicab occupying a taxicab stand shall be considered held for hire.

Any taxicab being operated on the streets shall be considered for hire: (a) when not occupied by a paying passenger; or (b) when not displaying on "On Call," "Off Duty" or "Out of Service" sign.