State Senate explores Uber, Lyft regulations

By Jack Turman, Daily Staff Reporter
Published March 25, 2015

Controversy in Michigan over ride services such as Uber and Lyft continued Wednesday afternoon as the Michigan Senate’s Regulatory Reform Committee discussed two bills proposing to regulate similar companies in the state.

The two proposed bills seek to regulate the companies by requiring them to follow taxicab regulations. One bill would require the companies to complete the same safety inspections and carry the same insurance as taxicab companies. The second would mandate background tracks and require drivers to hold chauffer licenses.

Neither bill was brought to a vote Wednesday, meaning both remain in committee and will not be voted on by the full Senate at this time.

In an interview Tuesday, State Sen. Rick Jones (R–Grand Ledge), one of the sponsors for the bills, said the delay is not uncommon. He added that he expected a vote at a future committee meeting.

When Uber came to the Detroit area in December 2013, the Michigan Department of Transportation notified the companies of transportation laws in the state. However, Uber has stated that it doesn’t think their model is bound by those laws, causing complaints from both lawmakers and traditional taxi services.

Jones said his bill was designed to correct several discrepancies between taxicab services and ridesharing companies, namely those concerning insurance. According to Uber, drivers are currently covered by a commercial insurance policy capped at $1 million per accident. A minimum $1 million insurance policy is also required for traditional taxicabs, but under state licensing rules, cabs have to provide documentation of that to the state. Ridesharing companies currently do not.

Jones said it’s problematic that Uber is not mandated to provide proof of appropriate insurance coverage.

“What I’m looking for is a solution to a problem,” Jones said. “Also, what I’m seeking to do is to get Uber to carry proper insurance.”

Taxicabs are also required to have their vehicle inspected, to register vehicles for $50 and to pay a one-time fee of $300, along with a renewal fee of $50, to receive a Certificate of Authority.

Uber has not supported passage of these bills, but in an interview Wednesday, Uber Michigan Manager Michael White said Uber is open to having a regulatory structure that more closely follows their business model, citing commercial insurance policies in particular.

“We want to make sure every trip is covered by commercial level insurance by order of regulation that codifies that at the city or state level,” he said.

Jones said he wants to ensure that passengers are legally insured by Michigan auto insurance policy. He noted that he does not want Uber to stop business, just to follow the laws that will allow for fair competition.

“We’re not trying to put Uber out of business,” he said. “We want them to prosper, but they just need to play by the rules and be responsible corporate citizens.”

A previous bill was introduced during last year’s lame duck session that was supported by Uber, but failed to reach a vote in the State House.

John Etter, president of Blue Cab Company, expressed similar views. He said these bills would foster public safety and bring order to Uber’s “chaotic” business model.

“I think it’s a good development and I hope it passes and then Uber can continue competing, but without the massive, pretty unfair advantages they currently enjoy, such as not paying insurance, which, of course, is one of my biggest expenses,” he said.

Merlyn Wade, owner of Ann Arbor Cab, said the taxicab companies are not concerned with the competition presented, but rather believe Uber should be subject to the same laws.

“It’s not about the competition,” he said. “They need to follow the same rules everyone else is following. What makes Uber better than you? Why should you have to follow the rules and Uber doesn’t?”

Wade cited incidents in San Francisco and Boston in which Uber drivers harmed their passengers. He said the incidents demonstrated that increased regulation would improve the safety of passengers and hold Uber to the same standards as other transportation companies.

Another common issue taxicab drivers highlighted in regards to ridesharing companies is surge pricing, a pricing model Uber uses to increase fares when there is high demand. State law doesn’t allow taxicab drivers to do this.
Jones said the bills don’t specifically address surge pricing, but added that surge pricing does need to be addressed eventually.

Uber’s website says surge pricing “encourages drivers to become available,” and notifies the customer of the price.

Overall, White said, Uber feels it is primarily a technology company because the app connects part-time drivers with passengers, instead of arranging rides directly, meaning it should not be subject to the same regulations as traditional taxicabs.

“The drivers are not our employees,” White said. “We’re partnering with them and they’re using our platform to connect with their passengers, who are the people who have signed up to use our platform to connect with these drivers.”

Jones disagreed. He said the services provided are similar enough to warrant regulation.

“We’re not trying to control your app, but you are providing rides through a system,” Jones said. “There needs to be some form of licensing, appropriated insurance. (There) needs to be appropriate background checks on drivers.”