Mobile ride-hailing first appeared nearly 10 years ago, when what was then known as UberCab launched and quickly became a hit among San Francisco tech workers needing a lift. Without raising a hand or saying a word, they could summon a ride by just tapping their phones. Also known as transportation network companies, providers such as Uber and Lyft have gone through rapid growth over the intervening decade and changed the way that people move around cities.
Despite providing essentially the same service as a cab, from the beginning TNCs have ardently fought being categorized as such. In addition to their legitimate advantages— lower fares, increased reach and ease of booking among them — one of the ways that TNCs have grown so big so quickly is by skirting the regulatory requirements under which traditional taxi companies have to operate.
The Power of Preemption
In most states, taxi companies are regulated by the individual cities in which they operate, so a company in Los Angeles may have different requirements for driver minimum wage, licensing and insurance than a company in Sacramento. When UberCab launched in San Francisco, the San Francisco Metro Transit Authority accused the company of running an unlicensed taxi operation and issued a cease and desist letter. UberCab dropped the “cab,” and fought back, arguing that they were simply a service to connect riders with drivers and shouldn’t be bound by taxi regulations. The SFMTA’s feud with Uber wasn’t resolved until the California Public Utilities Commission issued rules in 2013 that coined the term TNC and put the fledging companies under the state’s authority.
Uber and Lyft have had battles with local governments all over the country over issues like driver pay and working conditions, passenger safety, traffic congestions and accessibility. In response, TNCs have worked to get favorable state legislation passed that preempts local governments from being able to impose more stringent regulations.
TNCs argue that statewide regulation is necessary to avoid a patchwork of regulations for each city and town they operate in, and they’ve devoted massive resources to crafting and backing preemption laws across the country. “Uber has secured a high level of access in multiple state and city legislative processes, enabling it to draft its own bills, heavily influence the vetting, and even effectively staff elected officials on the issue,” writes the National Employment Law Project in a report on what they call “State Interference” by TNCs. The report cites a study from the National Institute for Money in State Politics that found “in 2016 Uber alone had 370 active lobbyists in 44 states across the country, dwarfing some of the largest businesses and technology companies. Together, Uber and Lyft lobbyists outnumbered Amazon, Microsoft, and Walmart combined.”
The case of Austin, Texas, serves as an example of the power of preemption. In 2016, the city of Austin passed regulations that would have required TNCs to conduct finger-print background checks on their drivers. Uber and Lyft refused, and suspended operations in Austin. To fill the transportation hole left by their departure, the city jumpstarted a nonprofit ride-hailing service called Ride Austin and welcomed smaller operators that were willing to comply with the city’s regulations. Then, the Texas legislature passed preemption legislation, effectively canceling Austin’s regulations. Uber and Lyft moved back into the city, and with price cuts and promotions, put many of the smaller operators out of business.
A Case for Regulation
Regulators in Portland, Oregon, have been engaged in a similar back and forth with TNCs. In 2015, Uber barged into the city even though local regulations prohibited them from doing so. The city sued Uber, and eventually negotiated with the company to create a 120-day trial program to study the effects of TNC operation. Using data from the trial period, the city created a task force to write new TNC regulations, which included a number of unique programs, including a 50-cent surcharge on rides to support the development of on-demand WAV service for wheelchair accessible vehicles. Despite the bumpy start, city officials were happy with the new framework.
Allowed to operate legally, Uber and Lyft quickly grew into the go-to transportation option for many Portlanders. “Our regulations, as robust as they’ve been, have been no barrier to TNCs carving out a huge slice of business in the city,” says Dave Benson, the parking services manager for the Portland Bureau of Transportation, which also handles TNC regulation.
But while Uber and Lyft have been operating, they’ve also been working at the Oregon statehouse to undermine Portland’s ability to regulate them. A recent bill, championed by the TNCs, would have set a base of statewide regulations and eliminated local government’s ability to impose anything stricter. PBOT and other local regulators, along with environmental, social justice and disability advocates, mobilized to defeat the bill, no small feat considering the lobbying resources the TNCs leveraged in support of the legislation.
“We’ve been [locally] regulating private, for-hire vehicles in Oregon for over 100 years, and there’s a reason for that: The public right of way, the streets, the sidewalks, they belong to the residents and citizens here, and they don’t belong to private companies to extract value from,” says Noah Siegel, the interim assistant director for PBOT. “They are welcome to operate at a profit, but we need to maintain the levers to decide if it’s benefiting people.”
A Continuing Battle
Oregon is the only state in the country that doesn’t have some sort of preemption legislation. Some, like Texas, set a base of standards for things like insurance and safety regulations and don’t allow local governments to go beyond that. Others, like New York, provide exemptions for certain cities to pass their own regulations. This exemption, along with NYC’s vast market, have forced the TNCs to work through the legal process with the city to come to a resolution on wheelchair accessible vehicle service — ultimately settling for a rule that TNCs provide at least 80 percent of requests for WAV service in under 10 minutes and 90 percent in under 15 minutes.
In response to a variety of lawsuits and public pressure, Uber has set up its own WAV service, but it’s currently available in only five cities across the country, and reports of its utility are mixed, at best.
It’s possible that TNCs may wake up on their own and realize the business and social value of providing equitable service to everyone, but far more likely is that state and local governments are going to have to legislate these programs into existence. While preemption laws move the battle from the local to the state level, there is hope. California passed its own TNC preemption law years ago. In December 2018, the governor signed into law the TNC Access for All Act. The bill mandates that the California Public Utilities Commission fund and develop a program to expand on-demand WAV service throughout the state.
No one is arguing that the New York City or Portland models are perfect or anywhere near comparable to the utility that nondisabled riders experience using Uber and Lyft, and there’s no guarantee that California’s new program will be successful either. But they’re a lot better than what most wheelchair users across the country are left with: vague, non-binding language prohibiting discrimination, and no on-demand WAV service. TNCs have revolutionized transportation; it’s now up to regulators to make sure that revolution includes everyone.