State legislatures are getting on board with ride-sharing.
A new report by legislative and regulatory analytics company Fiscal Note details a slew of legislation legitimizing services known as “transportation network companies,” or TNCs — a term applied to companies like Uber and Lyft that engage in app-based transportation services.
According to the report, 30 bills regulating ride-sharing have been passed in state legislatures this year around the country, while an additional 64 have been introduced and are under consideration. Overall, by the end of the 2015 legislative session, it is expected that 45 states will deliberate on ride-sharing bills.
In June and July, Pennsylvania, Louisiana, South Carolina and Maine enacted bills to define the ambiguous terminology around ride-sharing and establish a framework for regulation. The legislation maintains the status quo for ride-sharing companies operating in those states, according to the report.
“States can keep their head in the sand as long as they choose,” said Tennessee state Sen. Bo Watson, a Republican, “but the rule of the free market is going to prevail and people are going to demand this type of technology.”
Despite wide support for ride-sharing companies, many local legislators have moved to require tougher insurance rules as well as commercial licensing for drivers, issues that have caused Uber — which claims its drivers are contractors, not employees — to stop service in several cities. This was the case in San Antonio, Texas, where local government began requiring permitting fees for ride-sharing operators, and in Kansas City, Missouri, where drivers are forced to acquire business and chauffeur licenses. Uber exited both cities in April.
State governing bodies have moved to block this sort of local legislation — often without success. The Missouri Senate drafted a bill that would prohibit local licensing requirements, but the legislation did not advance before the chamber adjourned this year. This trend has frustrated some officials, like Republican Gov. Sam Brownback of Kansas, where similar legislation prompted Uber to immediately withdraw service statewide.
“To overregulate or improperly regulate an emerging industry before the marketplace actors make proper arrangements is to invite more problems, not less. An open and free marketplace often results in higher quality products at a more affordable price,” Brownback wrote when he vetoed the bill. The Legislature eventually overrode the governor’s veto.
According to the report, only 10 bills nationwide specifically address licensing issues.
The report also found states often require that ride-share drivers have at least $1 million in liability coverage while a passenger is in the vehicle — protection companies like Uber already provide. Some critics suggest that current ride-sharing policies leave gaps in coverage — for example, when a driver is using the app but does not actually have a passenger in the vehicle. Instances like this blur the lines of insurance policy, but many companies — like Allstate, Farmers and Geico — have begun crafting specialized ride-sharing policies that they say will address this gap.
Uber’s controversial CEO Travis Kalanick described how the company, recently valued at $50 billion, plans to blaze a trail through any other obstacles that may arise.
“Stand by your principles and be comfortable with confrontation,” he said in a Wall Street Journal interview January. “So few people are, so when the people with the red tape come, it becomes a negotiation.”