After months of hearings, a Seattle city council committee has released a draft blueprint for regulating on-demand, app-based “ridesharing” companies like Uber, Lyft, and Sidecar that would dramatically curtail their growth in the city, if not kill their current business model.
Until now they’ve been picking up customers illegally and with virtually no oversight from the city. This has been unfair to taxi and for-hire vehicle drivers, the bulk of whom are immigrants and who have to follow a thicket of regulations dictating everything from the insurance they must buy to what they wear to the form of payments they can accept.
Clearly, the city had to level the playing field somehow. But instead of loosening restrictions on taxi drivers and allowing them to compete more freely in the marketplace, the city’s solution appears to revolve around imposing more byzantine regulation on yet a new category of competition.
The city’s draft regulations would put Uber, Sidecar, Lyft and similar companies into a new category of “Transportation Network Companies (TNC)” and create a two-year pilot program. If the rules remain as written, they would limit those companies—whose smartphone-based dispatched systems and savvy marketing have been steadily wooing over customers—to a fleet of 100 vehicles. That’s a huge problem for companies that have sought to build a pool of many part-time drivers who typically use their own vehicles to give people rides.
And many of their users are going to be as bewildered as Sandy Cioffi, a Seattle filmmaker and college professor, who values the freedom to pick and choose among a growing number of options that allow her to leave her car at home. She might take the bus in the middle of the day to her teaching job. She might take Lyft home if she’s pressed for time, choose an UberX hybrid to meet friends for dinner, or call a taxi if she’s not up for chatting with drivers on a mission to build community. And she can’t fathom why the city of Seattle would want to limit those options.
I am frankly gobsmacked. I think that rideshare as we know it—the way that Lyft and UberX and others currently operate—would not be able to exist in Seattle right now.
We need to incubate these ideas. Let’s decide that we want bikes and transit and cars and rideshares and Car2Go. We want all of it. All of the above. I don’t understand why we’re not looking at the role of government in the shared economy and getting on the front end of it. The challenge of governing in a massively shifting economy is actually pretty exciting, and the city should be looking at innovating rather than protecting vested interests.
The city has drafted a good summary of the proposed regulations here, and is holding its first discussion and public hearing on Friday. Based on the initial objections from nearly everyone involved, it is undoubtedly not a final product.
For TNCs, the draft legislation would also:
- require each driver go to through streamlined training and testing to obtain a “TNC Driver’s Permit”
- limit drivers with only a TNC permit to driving 16 hours a week
- allow TNC drivers willing to go through more extensive training process to obtain a for-hire vehicle driver’s license to work more than 16 hours
- require a third-party to conduct a 19-point safety inspection for all vehicles, but limit those vehicles to 16 hours/week unless they undergo a city for-hire vehicle inspection
- require the TNC companies to carry a $1 million-per-incident insurance policy that covers drivers whenever they are “active” on the system
require each TNC company to pay $50,000 per year (or 0.35% of revenue, whichever is higher) to offset the costs of hiring 2-3 people to oversee the program
You might think that taxi drivers might be thrilled by the proposed regulations for TNCs. But you’d mostly be wrong. Because they don’t remove most of the barriers that make it difficult for taxi drivers and owners to compete, said Dawn Gearhart, a business representative for Teamsters Local Union No. 117 who works with the Western Washington Taxicab Operators Association, a coalition of taxi drivers and owner-drivers.
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For instance, the proposal would increase caps on taxi licenses by a scant 50, which is less than that group had lobbied for. It would also make few changes to existing rules for for-hire vehicles (another weird category of vehicles which look much like taxis but cannot pick up street hails).
One thing that taxi drivers desperately want is the ability to dispatch and accept fares through smartphone apps. That’s a service customers now expect and that taxi drivers need to survive, she said. Seattle city regulations currently make it impossible for them to meter and collect fares through a smartphone-based system, and the draft regulations still don’t give them that flexbility, Gearhart said.
The draft legislation doesn’t address other key concerns, like the need for better enforcement against vehicles that illegally pick up street hails and a long list of questionable requirements that would still only apply to taxi or for-hire drivers (medical physicals, restrictive paperwork rules, uniforms.) And more substantive inequities, including requirements that cab owners carry very specific commercial insurance in addition to umbrella policies that taxicab companies must have, would persist under the draft regulations, Gearhart said.
We had some high hopes. We didn’t really see what we were looking for. Our main things were enforcement of the law and a level playing field so the people who are doing the same work and competing for the same business are doing it fairly.
From his perspective, Lyft president John Zimmer thinks the regulations read like they were written directly by existing taxi interests. Compared to recent regulations passed by the state of California, Seattle’s proposal goes far beyond protecting public safety and consumer transparency, he said. It appears that the city is either trying to kill off the ridesharing companies to protect existing interests or fundamentally doesn’t understand how they operate, he said.
Zimmer said the proposed rule that Lyft’s insurance cover drivers anytime they are logged into the system means that a driver could theoretically turn the app on anytime—even if they were just going to the grocery store instead of looking to pick up customers—and be covered. No insurance company would be willing to underwrite that, he said.
Of all the cities and states that are currently wrestling with how to oversee ridesharing companies, Zimmer said, Seattle’s proposal represents “the most drastic overstepping, overreaching protection of existing industries.” Given the green city that Seattle purports to be and the technological innovation that flourishes here, the proposed rules are bizarre, he said:
It’s extremely counter to what I know about Seattle, but it’s really just a couple of council members that are saying something. It’s not like the whole city is saying something. I think they’ll quickly hear from the city that this is not what the city stands for.