Rules for ride networks could usurp local control
Published 12:30 pm Tuesday, March 31, 2015
BOSTON – Ride-booking companies Uber and Lyft have raced into Massachusetts over the protests of disgruntled cab drivers and skeptical officials who contend they are operating illegally.
Taxi drivers – many of whom pay hundreds of dollars a year for licenses, insurance and vehicle inspections – say the newcomers have an unfair competitive advantage because they are unregulated.
State officials are now weighing rules for the burgeoning ride-booking industry, including at least one plan that would bypass local control and allow the state to regulate drivers and collect hundreds of thousands of dollars in licensing fees.
Rep. William Pignatelli, D-Lenox, proposes giving the state Department of Public Utilities the authority to regulate “transportation network companies.” The state would charge a $5,000 annual permit fee to each driver and require each company to obtain at least $1 million in liability insurance and criminal background checks for drivers.
The proposal blocks local governments from imposing taxes, fees or requiring licenses.
Stephen Regan, a spokesman for the Massachusetts Regional Taxi Advocacy Group, said cab companies want “an equal playing field.” They want local governments to regulate the ride-booking companies.
“The state and local governments are essentially killing the taxi industry by allowing an illegal, unregulated market to prosper,” Regan said.
State law now allows communities to license taxis that pick up fares within their borders. That can include charging permit fees or mandating insurance and background checks for drivers.
Some local governments have also approved rules for ride-booking services, while others are waiting for the state.
Geoff Beckwith, executive director of the Massachusetts Municipal Association, said cities and towns will oppose any effort to strip them of their regulatory authority.
“These companies shouldn’t be running to the Legislature to prevent cities and towns from establishing rules for an operation that’s almost identical to taxi service,” he said. “There are public safety concerns in making sure that drivers are vetted and the vehicles are in good condition, and that’s why local regulations make sense.”
Chelsea Wilson, a spokeswoman for San Francisco-based Lyft, which operates in 30 U.S. cities, said the company prefers a “common-sense regulatory framework” by the state, not local governments.
“We’re not opposed to regulations, we just believe those regulations must recognize that our business model is different,” she said. “And having statewide regulations would provide more clarity for passengers and drivers.”
Wilson said the company already requires its drivers to get background checks and insurance.
A spokesperson for Uber, which is valued at more than $40 billion and operates in some 150 cities around the world, didn’t respond to a request for comment.
Ride-booking services leverage mobile apps, which customers use to hail a ride. Drivers in the area are notified of those requests. Riders pay through the app; no money changes hands.
Since entering the market over the past several years, Uber and Lyft have encountered angry taxi drivers, lawsuits and suspicious officials in dozens of states.
In Boston, where taxis are losing substantial business to an estimated fleet of 10,000 Uber drivers, cab companies are suing the city for not regulating the ride-booking services more aggressively.
One sign of the local taxi fleet’s woes came from Carriage News, a 45-year-old trade newspaper that serves cab drivers, which folded with the editor blaming declining advertising revenue on Uber and Lyft and the state’s “do-nothing politicians.”
But ride-booking companies are also making inroads in the suburbs, putting the squeeze on local taxi operations.
“They’re operating an illegal service. It’s not fair,” said Richard Hewlett, a driver with Seacoast Taxi, which operates in towns along the New Hampshire border including Haverhill, Amesbury, Salisbury and Newburyport.
Sean McKinnon, general manager of North Shore Taxi, said he and other drivers filed a complaint at Peabody City Hall alleging that Uber is skirting local regulations.
Mayor Ted Bettencourt responded with a proposed ordinance to regulate the services, modeled on a law approved by Melrose, but the City Council has yet to act.
“They’re not playing by the rules,” McKinnon said. “We have laws on the books, and they’re ignoring them.”
Former Gov. Deval Patrick proposed rules for the services but took no action before leaving office.
His successor, Gov. Charlie Baker, is working on regulations and is expected to file legislation in coming weeks. It’s not clear if Baker’s plan would give local governments authority over the ride-booking industry, but a spokesperson said the governor is talking with all of those involved.
“The administration continues to engage with municipalities, industry leaders and public safety advocates as it works to draft a statewide regulatory framework that embraces innovation and enhances the safety of riders and drivers,” said Baker spokesman Billy Pitman in a statement.
Meanwhile, both ride-booking companies and cab companies are lobbying lawmakers and regulators to win support.
Uber and Lyft reported spending nearly $140,000 on lobbying in 2014, according to disclosures filed with Secretary of State William Galvin’s. That included $78,000 in lobbying fees to Beacon Strategies Group LLC, a Boston firm that includes attorney Michael Morris, who served as Patrick’s director of government affairs.
Morris has contributed more than $52,000 to the campaign accounts of several Boston City Council members and state lawmakers in the past six months, according to the state Office of Campaign and Political Finance.
Uber has also leveraged customers to lobby state and local officials, using social media and email to urge riders to contact lawmakers and councilors ahead of votes on new rules.
The Taxi Advocacy Group, established several years ago in response to Uber and Lyft’s lobbying efforts, spent $60,000 lobbying Beacon Hill lawmakers and other officials last year, state records show.
Regan said taxi companies want state and local governments to crack down on the ride-booking services before state regulations are approved – a process that will likely take a back seat to debate on the 2016 state budget.
“It’s the Wild West, and nobody is doing anything about it,” he said. “There are laws that need to be enforced.”