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Sunday, 21 June 2015 21:00

Rival bills spark debate over the regulation of ride-sharing services in Michigan

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Rival bills spark debate over the regulation  of ride-sharing services in Michigan COURTESY PHOTO

Two bills before the state Legislature highlight a contentious debate over how and in what capacity governmental bodies should regulate the so-called sharing economy.

The proposed legislation has lawmakers, lobbyists, municipalities and ride-sharing companies at odds over which level of government — the state or individual municipalities — is best-suited to regulate the services provided by transportation networking companies, or TNCs.

Uber Technologies Inc., which offers rides in cities across the state, and rival Lyft Inc., which currently provides services in Detroit and Ann Arbor, operate mobile-based apps that match up in real-time the people searching for transportation with drivers who use their personal vehicles to give rides. To date, however, the fledgling industry has not been regulated to the same extent as traditional taxis or other cab services.

About two years after launching in Michigan, Uber has dealt with what legislators and other stakeholders described as at best a patchwork of state and local laws. In supporting state House-sponsored legislation to regulate TNCs, Uber hopes to gain some certainty in the Michigan market.

“I think eliminating the uncertainty of how this business will be regulated provides also the ability to expand and cover more communities across the state,” Mike White, Uber’s general manager for Michigan, told MiBiz.

The two bills being considered in Lansing — House Bill 4637 sponsored by Rep. Tim Kelly, R-Saginaw, and Senate Bill 184 sponsored by Sen. Rick Jones, R-Eaton Rapids — are similar in that each attempts to get some baseline regulation in place for driver and passenger safety, insurance and licensing.

The bills diverge on which level of government has oversight over the ride-sharing regulations. The House bill puts the bulk of the responsibility at the state level, while the Senate legislation allows for municipalities to have some regulatory discretion.

Uber overwhelmingly supports the House bill because having a single, statewide standard removes much of the uncertainty in which the company operates, White said.

“When you have uncertainty about how different cities are going to react or regulate, then it creates more uncertainty about where you can operate and how you’ll be regulated there,” White said.

AN ISSUE OF LOCAL CONTROL

Uber’s push for a uniform statewide regulatory framework faces opposition from advocates of local control including groups such as airport authorities and municipal organizations. They say that a bill that puts all regulatory responsibility at the state level ignores the needs of Michigan’s individual communities.

“Grand Rapids, Detroit and Lansing are all similar, but each has unique circumstances,” said John LaMacchia, legislative associate at the Ann Arbor- and Lansing-based Michigan Municipal League. “It would preempt local control. … We just feel that the government that is closest to the people is best served to do that.”

Under the House bill, a company such as Uber would pay an annual fee of $5,000 to obtain an operating permit from the Michigan Department of Transportation. The permit would cover all of a company’s drivers. For example, Uber works with a network of independent contractors who use their own vehicles and work at their own flexible schedule.

On the other hand, the Senate legislation does not prohibit a local governmental agency from creating an authority that could monitor and regulate the ride-sharing companies, a practice that has precedent in the state.

In 2014, the cities of Lansing and East Lansing created the Greater Lansing Taxi Authority (GLTA) that seeks to “engage in a regional regulatory scheme for taxi companies and drivers that will provide consistency and will ensure that a safe and professional fleet serves the Greater Lansing area,” according to its website.

In House testimony in early June, East Lansing City Clerk Marie Wick, who also oversees the GLTA, said the Capital area is an attractive market for transportation companies such as Uber, largely because of Michigan State University’s presence. However, the two cities want to ensure the same set of standards govern the service in each city.

TARGETING BUSINESS TRAVEL

Because of their ease of use and cost, ride-sharing services are becoming increasingly popular with business travelers.

According to Portland, Maine-based Certify, an online travel and expense management service, 46 percent of all expensed car rides were through Uber in the first quarter of 2015, up from 15 percent a year ago. Taxi rides dropped to 53 percent of paid car receipts in the quarter from 85 percent in the same period in 2014.

The cost of an average Uber ride is also nearly 12 percent cheaper than an average taxi fare, according to Certify.

The business travel niche is clearly one part of Uber’s growth plans, White said, noting the company wants to find ways to better serve riders at airports.

However, airports also want to have a say in how the services are regulated.

Representatives from the Kent County Department of Aeronautics, Lansing Capital Region International Airport and the Wayne County Airport Authority recently testified at a House Commerce and Trade Committee hearing in opposition to the bill that Uber supports.

While acknowledging the new TNCs provide more options for customers, Joel Burgess, properties administrator at the Gerald R. Ford International Airport, said in an interview following his testimony that the House bill could take away an airport authority’s ability to deal with congestion in designated pickup and dropoff areas.

“What the legislation does is prohibit the airport from regulating how (TNCs) use the airport,” Burgess said. “We have limited resources out here and limited real estate, quite honestly.”

GROWING PAINS

Nationally, the emerging ride-sharing companies have had to contend with a patchwork of regulations since their inceptions. That’s led to some challenges for the fledgling services, even in typically progressive cities.

Uber backed out of Portland, Ore. last year after the city passed regulations banning drivers from using personal cars as taxis, according to reports. But since neighboring cities allowed the service, one-third of the trips in the area still ended at a destination in Portland, The Oregonian reported in February.

In April, the city struck a deal with the ride-sharing services to allow them to resume business as part of a 120-day pilot project in exchange for meeting a number of requirements, including providing anonymized trip data to city officials, as Uber is doing in Seattle and Boston.

Uber’s White thinks it’s only a matter of time until the regulations catch up with the technology.

“Frankly, change is hard sometimes,” White said. “So industries that are now protected by regulatory structures for many years that haven’t adapted, they are likely going to resist new answers that are going to provide higher levels of safety and reliability.”

Read 3118 times Last modified on Sunday, 28 June 2015 18:01

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