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Cities Grapple with Regulatory Status of Ride-Sharing Companies

Uber, Lyft and Sidecar have given people more transportation options, but municipalities are struggling with whether smartphone-based ride-sharing should be regulated the same as taxicabs and limousines.

Having a wide array of transportation options is typically a positive attribute for most cities. But while ride-sharing companies provide residents with an easy way to get around town using their smartphones, regulating the activity has been a challenge.

Transportation network companies (TNCs) such as Uber and Lyft argue that they’re technology companies. Their rationale is that they don’t employ drivers or own any cars, and therefore they’re not taxi services and shouldn’t be subject to the taxicab regulatory model. On the other hand, the taxicab and limousine industry is adamant that the TNCs are delivering commercial transportation services, and should be following the same rules they must adhere to.

The difference of opinion has sparked controversy in a number of cities across the U.S. Some municipalities have made it clear they consider the ride-sharing and taxi service to be the same commercial practice, while other areas have been open to modifying existing ordinances to relax the rules and more easily accommodate the peer-to-peer model of arranging rides.

For example, Annapolis, Md., has taken a hardline stance, requiring Uber to register as a taxi company before continuing its ride-sharing services in the city. Mayor Mike Pantelides cited safety concerns as one of the reasons TNCs should be regulated as taxis in a statement issued earlier this month.

Lyft and Uber drivers and customers at Tennessee’s Memphis International Airport are being warned by airport police that ride-sharing services are illegal, according to The Commercial Appeal. Although the TNCs have been permitted to continue their activities at the airport, The Appeal noted that the Airport Authority board and attorney were looking into the situation.

But some communities are simply embracing the ride-sharing concept. In Minnesota, the Minneapolis City Council voted to make ride-sharing legal in the city during a meeting on July 18. The city now recognizes TNCs as distinct from taxicabs and carves out a process for them to be licensed. The taxicab industry is upset, however, as a two-tier fee structure now exists that will charge some taxi companies more than Lyft and Uber, reported the StarTribune.

In addition to Minneapolis, other municipalities that have passed legislation to specifically regulate TNCs include Baton Rouge, La.; Chicago; Columbus, Ohio; and Seattle.

In an email to Government Technology, Uber spokesman Lane Kasselman explained that the company works to educate leaders on its business model and the benefits it can bring a community.

“Policymakers should have an open mind about new transportation options and develop frameworks that are focused on protecting consumer choice and rider and driver safety, not limiting competition,” Kasselman said. “Ultimately, we strive to make cities more accessible, opening up more possibilities for riders and more business for drivers.”

The Taxicab, Limousine & Paratransit Association (TLPA) believes the situation is much more complex than the TNCs make it out to be. Dave Sutton, spokesperson of “Who’s Driving You?” – the TLPA’s public safety initiative involving ride-sharing, admitted that what the TNCs do involves technology, but crosses a line into providing transportation services on the streets.

As a result, Sutton said he feels there are a number of unseen dangers regarding safety and insurance coverage that should require TNCs to be treated as taxi companies.

But as cities take different regulatory approaches to ride-sharing and states grapple with insurance concerns, it begs the question – shouldn’t the federal government get involved and provide a set of ground rules and clarity to the situation? For Sutton, the answer is no. He called the taxicab industry “dramatically different” from city to city, and said he believes local control over the issue is paramount to delivering the right solution for each community.

“The taxicab environment is typically controlled by cities and should continue to be,” Sutton said. “Different cities have different taxicab needs. Federal legislation is something Uber and Lyft would want, because with the stroke of a pen, they could gain the ability to avoid local requirements."

Brian Heaton was a writer for Government Technology and Emergency Management magazines from 2011 to mid-2015.