Texas lawmakers look to overhaul ridesharing regulations

Published 9:53 am Wednesday, January 18, 2017

By Taylor Millard


A pair of  state senators are pushing measures that would take the regulation of ridesharing companies out of the hands of Texas cities. One would hand the authority over to the state government. The other would effectively get the government out of the regulatory business.

Transportation network companies (TNCs) vacated Austin in May 2016 after the failure of a ballot measure that would have banned the fingerprinting of drivers. The company also left San Antonio in 2015 over a similar dispute with city leaders, but eventually reached a compromise to return. In 2013 Dallas came close to outlawing Uber completely, but held back after the Dallas Morning News revealed the ordinance was essentially written at the behest of the taxi cab industry.

Such fights could become a thing of the past if either senator gets his way.

measure by Jacksonville Republican Sen. Robert Nichols would shift the regulatory power over TNCs from cities and counties to the state.

The bill would require companies to implement and publish an intoxicating-substance policy, and have a process for passengers to complain if their driver is drunk, otherwise under the influence, or dangerous. Uber and Lyft already have complaint procedures on their websites.

The bill also would require all TNC drivers to be at least 19 years old, and for companies to make sure they have a driver’s license, registration and insurance. These are all standard requirements already in place for major ridesharing players such as Uber and Lyft. Significantly, the mandates do not include fingerprinting, the stumbling block that drove TNCs out of Austin. A non-profit called Ride Austin says it also does fingerprint checks to adhere to the city’s regulations, but have not commented on the legislative proposals.

Nichols’ measure would require a multi-state criminal background check and bar drivers on the federal sex offender registry.

Uber says it uses Checkr to conduct its background investigations, which include use of the Justice Department’s sex offender website, the PACER court records database, and several databases used to flag suspected terrorists. Lyft did not reveal who it uses for background checks, but their website says it’s “by a third party and includes national and county-level databases, and when necessary, local courthouse record checks.”

His bill also would prohibit TNCs from hiring anyone who has been convicted of more than three moving violations in Texas, which includes offenses ranging from  failure to use a turn signal to speeding to DWI.

Bryan Matthew, a policy analyst at the Texas Public Policy Foundation Center for Local Governance told Watchdog the bill is a step in the right direction, but “preserves the opportunity for cronyism to creep back in over time” because larger companies are able to game the regulatory regime in their favor.

That’s why Matthew prefers another ridesharing bill.

‘Get the government out of the way’

Dallas Sen. Don Huffines’ bill takes the prospect of deregulation a step further. It would erase local rules not just for Uber and Lyft, but also for taxi cabs and limo services, while preserving only insurance requirements and the barring of registered sex offenders from being drivers.

It might sound like a radical notion, but it’s one the sophomore senator stresses is important for the broader economy.

“This is the free market,” Huffines told Watchdog, emphasizing the need to crack down on cronyism. “The days of coming down to the state Legislature and legislating away your competition are over. That’s my goal … have a real free market and a complete level field.”

Austin Transportation Director Robert Spillar made a similar suggestion to the city in 2016 right after Uber and Lyft skipped town.

“A transition from the current system of managed competition to an open-entry system would provide a truly competitive marketplace,” Spillar wrote in a memo to the City Council. “This would require the City of Austin to abandon the taxi franchise model for an operating authority system … a deregulation of the taxi and limousine industries in Austin and would allow these mobility providers to compete in the open market, with the transportation network companies and with each other.”

Austin Mayor Steve Adler told Watchdog he looks forward to discussing the proposals with state lawmakers and “sharing what we’ve learned from our experience in Austin.”  He declined to comment on the individual proposals, but has previously defended the city’s regulations on fingerprinting drivers.

Huffines says consumers, not politicians, should be driving the process.

“Government is the threat to all new ideas and innovation. We need to get the government out of the way,” Huffines said. “Let the consumer decide.”

Spokesmen for Uber and Lyft expressed generic support for both measures, but wouldn’t offer an opinion about which they preferred to see enacted.

“No matter where people live in the Lone Star State, they deserve the same economic opportunity and access to reliable transportation options that Uber provides,” Uber Texas lead spokesperson Trevor Theunissen told Watchdog.

Lyft spokesperson Chelsea Harrison said it was nice to see “state leaders recognize the importance of consistent ridesharing regulations.”

Austin Cab General Manager Ron Means said he wants to see the state enact regulations on both ridesharing and taxis.

“If they have rules, we should have rules,” said Means, who blasted Spillar’s Austin deregulation proposal as an example of “people who are over the industry that don’t know anything about the industry.”

The major players in Texas’ taxi industry, Yellow Cab, are staying quiet on the issue. Neither the Dallas nor San Antonio offices replied when asked by Watchdog about the proposed bills. But that doesn’t mean Yellow Cab is going to let the changes slip through the legislature without a fight. The Eppstein Group is listed with the Texas Ethics Commission as Yellow Cab’s lobbyists, while Texas Taxi Inc. has hired the Garcia Group as its lobbyist. Principle Joe Garcia spent most of the 1990s at the Capitol as chief of staff for state Sen. Eddie Lucio, while co-lobbyist Katy Johnson worked in state Rep. Ryan Guillen’s office until 2014.

Process could play a key role in the outcome, including which Senate committee will review the bills.

The Transportation Committee seems the most logical, but Huffines has floated the idea of putting both ridesharing bills into the Business and Commerce Committee. Senate rules put the decision in the hands of Lt. Gov. Dan Patrick. He appears to have a good relationship with both men — Huffines endorsed Patrick for lieutenant governor in 2014, while Nichols and Patrick worked together on transportation issues in 2015 — but TNC regulation is not on Patrick’s list of priorities.

No companion measure for either bill has been introduced in the Texas House, but Transportation Committee chair Joe Pickett, an El Paso Democrat, told Watchdog he expects to see at least one ridesharing bill filed. Pickett said he would prefer some “basic protection for the public,” including background checks and insurance requirements.