Council Proposes New Restrictions on Ridesharing Companies
The city's taxi committee proposes new regulations on companies like Uber and Lyft—restrictions that could, the companies say, put them out of business.
After a year or so of discussions about how to regulate "transport network companies" (TNCs, colloquially known as ridesharing services), like UberX and Lyft, the city council's special taxi committee is preparing to adopt regulations limiting the number of people who can drive for those services and the number of hours those drivers can be on the road—changes that advocates for ridesharing services say will make it impossible for them to operate.
The proposal, by council member Mike O'Brien, would limit the number of licenses for ridesharing drivers to 300, and would limit the number of hours each driver could work to 16 per week, among other requirements, including a minimum million-dollar insurance policy. Anyone who wanted to drive more than 16 hours a week would have to go through a two-day course and pay a fee of several hundred dollars to get a for-hire driver's license.
Currently, if you want to hire a driver in Seattle, you have three legal choices: Call a limo, hail a taxi, or call a for-hire car service. (You're only supposed to be able to hail taxis, although many for-hire drivers will stop if you flag them down). In the last year, companies like Lyft and Uber have disrupted that market, by allowing customers to summon (and pay) drivers via smartphone.
Users say the services are more reliable and convenient than taxis, supporters say they're an example of the free market generating innovation, and drivers say they provide an extra source of income. Detractors say they're currently illegal, unregulated, and create unfair competition for the heavily regulated taxi, for-hire, and limo industries.
The city council's special committee on taxi regulation is trying to address those issues by creating a regulatory framework for ridesharing drivers and services—specifically, by creating a special ridesharing license for drivers (and limiting the number of ridesharing licenses to 300 users), restricting the hours a driver can work to 16 per week, and requiring all ridesharing drivers to obtain a minimum of $1 million in commercial car insurance.
Allowing 300 new licenses for ridesharing drivers, O'Brien says, "would give a total of about 1,200 to 1,300 people out there" the ability to make money driving, when you add up all of the city's taxi licenses (about 700 cars), for-hire licenses (about 200 cars) and the TNC drivers (300 individuals—as opposed to vehicles.) After some debate over whether the city should limit the number of cars that can be operated as TNCs, the number of TNCs can operate in the city, or the number of drivers that can operate TNCs, O'Brien (and, it seems, much of the council) settled on limiting the number of drivers.
"Instead of putting a cap on either the number of TNCs (companies) or the number of vehicles that each TNC could have, I would [suggest] a scenario where we would issue a fixed number of TNC driver permits," O'Brien said at yesterday's packed public hearing. "By issuing the license explicitly to people [as opposed to vehicles], this gives [drivers] some more power in this conversation and some security about their ability to have a livelihood."
Contacted for more detail about how he came up with the 300-driver number, O'Brien told PubliCola he chose the cap based on the assumption that each of the companies currently operating in Seattle—UberX, Lyft, and Sidecar—have around 100 drivers. He says he hasn't been able to get data from any of the companies on their exact number of operators.
"Their argument is, 'We don't need any data—let the free market figure it out. I understand that argument, but the problem is that we are using taxis currently to address a whole host of transportation needs," including the grandmother who needs to go to the hospital and the carless person who only has cash, O'Brien says. Taxis are required to pick up anyone who hails them, regardless of how far they're going or how they plan to pay. Lyft and UberX are not.
"They have a model that works for people like you and me who have a smartphone and a credit card, but that doesn't work for everyone."
Which is undoubtedly true. But even King County Metro, which serves many low-income and elderly people, is moving toward an entirely ORCA-card-based system and away from cash fares. Isn't that just ... the future?
"Yes, we may end up in a world where we say we're not going to be subsidizing my grandma's trip to the hospital," O'Brien says, "but I'm not ready to get rid of all limits everywhere. I'd like it to be an orderly transition. I get what Uber and Lyft are doing, . They have an innovative idea. But they know they've been breaking the law for a year, and we've been allowing it to happen."
So what's the justification for limiting the number of hours an Uber or Lyft driver can operate to 16 per week? Clark and O'Brien say their goal is to make sure that people who want to make a little money on the side are able to do so, while requring full-time drivers to jump through more hoops—like taxi drivers have to.
The city limits the number of for-hire vehicles to 200 (the number of for-hire driver's licenses, however, is unlimited—allowing multiple drivers to share each car, just as regular taxi drivers do).
"If they're really going to be part-timers like the companies say they are, let's help them out by giving them this lighter version of" the regulations, Clark says. "But if they want to drive an unlimited number of hours, they need to do the two-day course."
Advocates for the ridesharing industry say requiring drivers to go through cabbie training school (and operate their cars exclusively as for-hire vehicles, a huge departure from the more casual ridesharing model of companies like Uber and Lyft) will effectively put ridesharing companeis out of business. "It's severely limiting, and it's going to be exceptionally hard for any TNC to operate in this market," says Mike Mann, a consultant who works for Lyft in Seattle.
In addition to the new proposed restrictions on hours and the number of cars that can operate for a company, the city has proposed requiring $1 million in commercial insurance for every TNC operator whenever they're "live" on the system—meaning that any time a driver is actively logged in and available to pick up a rider, their commercial insurance (as opposed to their personal insurance on their car) kicks in.
In San Francisco, the family of a six-year-old girl killed in a crosswalk by a driver who was logged in to UberX's smartphone software is suing the company for unspecified damages, charging that although the driver wasn't actively transporting a customer, the company is liable because he was available to provide rides when he hit the girl.
The insurance requirement could also be problematic for savvy ridesharing drivers. If a driver is logged in to more than one ridesharing system (if they're actively seeking riders on both Uber and Lyft's apps, say), and they get into an accident, who's liable?
The council is hoping to adopt new regulations on TNCs by February 14, and staffers say the vote can't come soon enough. Tempers, already elevated, are only increasing; at yesterday's meeting, shouting broke out in council chambers over whether taxi industry representatives had unfairly showed up hours early in an effort to dominate public comment, prompting for-hire drivers to storm the microphones.
"They said, 'If you think we do illegal stuff now, well, watch this,'" Clark summarized. At future meetings, in an effort to allow everyone to comment, the council will likely have three separate sign-up sheets—one for the taxi drivers, one for the for-hire folks, and one for the ridesharing advocates.