SB 125 could face bumpy ride in House

The Colorado Statesman

A measure that would place ride-sharing services like Lyft and UberX under light regulation could face a bumpy ride when it lands in the House this upcoming week.

The bipartisan Senate Bill 125, sponsored in the House by Reps. Dan Pabon, D-Denver, and Libby Szabo, R-Arvada, has been scheduled for Wednesday in the House Transportation and Energy Committee in the Old Supreme Court Chambers.

The measure would empower the Public Utilities Commission to regulate so-called “Transportation Networking Companies” by:

• Requiring an insurance policy that applies to the rider and driver;

• Mandating criminal background checks on drivers and prohibiting employment of drivers who have been convicted of certain crimes;

• Prohibiting drivers from operating more than eight hours in any 24-hour period;

• Screening driving history of employees; and

• Requiring a thorough vehicle safety inspection.

Sponsors hope to clear up uncertainty surrounding the burgeoning industry, which uses mobile applications to connect passengers with drivers of vehicles for hire and ridesharing services.

Unlike traditional taxi companies, TNCs allow drivers to simply sign up and use their own vehicles to transport passengers, which complicates regulating the industry. The PUC is confused as to whether companies like Lyft and UberX are complying with state transportation rules.

While the companies are offering similar services to that of taxis, they operate without the same regulatory requirements. The PUC has threatened to shut the companies down if a regulatory framework is not developed.

“If legislation is not passed, we will have no choice but to kick them out of Colorado,” Doug Dean, director of the PUC, testified when the bill was in a Senate committee in February that lasted more than five hours.

Ride-sharing stakeholders point out that they are not a motor carrier but instead a TNC, utilizing an online platform that doesn’t fall under the state’s existing regulations.

Lawmakers have grown concerned about safety and liability, pointing to recent serious accidents in other states, including one in California in which an UberX driver killed a 6-year-old.

“We have to make sure that the consumers’ risk is protected by making sure that they have insurance, that they have their background checks, that they have all the things that a regular business has to do,” explained Sen. Cheri Jahn, D-Wheat Ridge, who co-sponsors the bill in the Senate.

Beyond the regulatory issue, lawmakers are hoping to encourage use of the new ride-sharing services by offering certainty. They believe the new services can be an economic boon for the state by creating jobs and offering consumer choice.

“We need to welcome this type of innovation and entrepreneurship,” said Szabo. “We are creating jobs and we are giving consumers more transportation options.”

Pabon acknowledged the fears around moving away from a traditional cab service to TNCs, but he said the state must embrace the evolution.

“Change is never easy, but putting transportation network companies… in place with stronger regulations makes economic sense, it makes environmental sense and it makes for a stronger, more competitive marketplace,” added Pabon.

For the drivers themselves, the services allow them to receive a paycheck while setting their own hours.

Ali Vazir, who previously worked for traditional cab companies in Denver, said he joined UberX last year and hasn’t looked back.

“The way I see it, I equate it to Lincoln’s emancipation executive order when the slaves in the South were freed,” opined Vazir. “I think UberX has that kind of ramification for freeing and allowing taxi drivers… to have a better living standard, to have more money for themselves and to drive more safely because they are not stressed out to work longer hours to pay for the cab lease… a lease of at least between $2,400 to $3,000 per month.”

Disabled riders have also encouraged passage of the bill, including Richard Faubion, regional director of the Foundation Fighting Blindness. Faubion, who is blind, said he has had trouble with traditional public transportation, including not being able to bring his guide dog in yellow cabs.

“I’ll tell them to honk when they get there and they do, that way I know they’re there and then I go out and get in the car…” Faubion explained of TNCs. “A lot of taxicabs have really been reticent about having a guide dog come into their car… But this makes it just so much easier.”

Will McCollum, general manager for Uber Denver, said TNCs are about “opportunity, market choice, safety, reliability, convenience and progress.”

“Why would you not support this kind of a measure?” asked McCollum. “It’s completely consistent with both parties platforms for job creation, for economic activity, for reducing greenhouse gas emissions, for reducing pollution. It’s about reducing road congestion… When you start to really look at this bill, it’s firing on all cylinders.”

He added that the industry is encouraging the regulations to provide certainty.

“It’s a regulatory framework to approach this innovation,” said McCollum. “This is new territory here. We’ve got a transportation infrastructure… that’s been around for 50, 60 years. This is brand new stuff. It was just created last year… What we’re doing is making sure that regulators have the toolkit… to allow TNCs to continue to operate…”

The measure passed through the Senate on March 10 by a vote of 29-6, despite concerns by some lawmakers on both sides of the aisle about the regulations.

Sen. Owen Hill, R-Colorado Springs, believes the bill would place an onerous burden on drivers, despite the companies that they work for encouraging the legislation.

“When does the PUC have constitutional authority to say who can and can’t pick someone up and take them somewhere else as part of a private contract?” asked Hill.

Sen. Ted Harvey, R-Highlands Ranch, who co-sponsors the bill in the Senate and is a vocal advocate for limited government, suggested that the bill could actually lead to less government oversight if traditional cab companies transition to the new model.

“This is a deregulation bill in that way,” he said.

But the insurance industry sees it a bit differently. They believe the measure does not go far enough to regulate the industry when it comes to liabilities. Those concerns are likely to come up when SB 125 makes it to the House.

The Property Casualty Insurers Association of America is asking that the legislation be amended to state that commercial driving begins when the driver logs into the application.

“We think all Colorado drivers will end up paying more in higher auto insurance premiums,” explained Nicole Mahrt Ganley, regional director for PCI.

She points out that banks are also concerned because they hold the notes on cars that are financed. Without proper insurance, cars could be totaled and left to the bank.

“That driver has to drive to be there at the right time. They’re going to get there as fast as they can. That’s riskier driving in more congested conditions at higher peak travel times,” added Ganley.

The PUC appears to agree that the bill does not go far enough. Officials are asking that the liability coverage be raised.

“There are some gaps,” said Dean. “Particularly on insurance and background checks.”

Traditional cab companies like Yellow Cab and Metro Taxi say that the bill would offer an advantage to TNCs by limiting regulation. A TNC would not be classified as a common or contract carrier, which exempts them from much of the PUC’s authority.

“Letting the new companies operate would unlevel the playing field,” Kyle Brown, general manager of Metro Taxi, said during the February hearing. “It could result in unintended consequences.”

Peter@coloradostatesman.com