Lawmakers weigh regs for ride-sharing apps

A LONG RIDE? Cecilia Navarro drives for ride-sharing app Lyft in a 2014 photo. / PBN FILE PHOTO/MICHAEL SALERNO
A LONG RIDE? Cecilia Navarro drives for ride-sharing app Lyft in a 2014 photo. / PBN FILE PHOTO/MICHAEL SALERNO

Despite state regulators calling ride-hailing-app companies, such as Uber and Lyft, “wholly illegal,” it’s unlikely the popular taxi-like services will be shut down anytime soon in the Ocean State.

The advent of the ride-hailing apps, known in many circles as “transportation-network companies (TNCs),” has taken the country by storm and thrown a wrench into already-existing regulatory systems in Rhode Island. The companies argue they stand apart from current state laws regulating two separate, but similar, industries: taxicabs and public motor vehicles.

But state regulators disagree.

“In my opinion, and I don’t think it’s disputable, it’s 100 percent illegal,” said Terrence Mercer, associate administrator, motor carrier section of the R.I. Public Utilities and Carriers.

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“When it boils down to it, we already have a regulatory framework in Rhode Island,” he added. “There is no need, in my regulatory opinion, to create a third category. Especially if creating that third category makes us compromise every other aspect of the regulatory [system].”

The influx and market takeover of these ride-hailing apps, since Uber entered the state in September 2013, is a testament to their popularity among users, who find the process less onerous than traditional methods of hailing a cab, and for drivers who can create flexibility in their work schedule or make extra cash as a part-time job.

Indeed, Stanford University researchers polled 1,330 app-enabled employees nationwide in May and calculated 25 percent of respondents worked a separate full-time job.

The new services in Rhode Island have created such a political rift that the General Assembly last year created a special joint legislative commission “to study and analyze the impact of innovative technologies including online-enabled applications or smartphones to connect passengers with drivers,” according to the commission’s charge.

“It’s been a real eye-opener learning about the number of issues surrounding these car-hailing services,” said John “Jay” G. Edwards, D-Tiverton, who co-chairs the commission with Sen. Maryellen Goodwin, D-Providence.

Edwards is expected to produce the commission’s report for the General Assembly this session, along with potential changes to state law. He doesn’t entirely see eye-to-eye with Mercer, saying he doesn’t think the state needs to reinvent the wheel to accommodate this new type of service.

“They are fairly straight forward,” he said. “With that said, we don’t want to have some company coming in and running roughshod over Rhode Island regulations and doing as they see fit.”

Edwards wants to see the companies pay quarterly sales tax, “like every good Rhode Island business.” Uber earlier this year paid an undisclosed amount of sales tax to Rhode Island after withholding it for 18 months, attributing the holdup to ambiguity in state law.

Edwards says any legislative fix would “probably” include language requiring driver background checks, along with finding some “common ground” on the issue of insurance.

The ride-hailing apps nationwide have raised some red flags within the insurance industry, as insurers and TNCs disagree about how drivers are covered.

Frank O’Brien, vice president of state government relations with Chicago-based Property Casualty Insurers Association of America, is based in Boston and represents insurers locally, including Amica Mutual Insurance Co., GEICO and Progressive Corp. among others.

O’Brien says his members are unopposed to the TNC industry at-large, but hope the General Assembly requires companies to provide compulsory insurance during the period of time when drivers have turned on the app, until the time they accepted a client.

Currently, insurers consider this timeframe a gap in coverage between personal policy and app-hailing policy, according to O’Brien.

A compromise to include “compulsory coverage,” which varies state by state, would satisfy the concerns of insurers within his trade group and reflects legislation that has been enacted in about 10 other states, according to O’Brien.

A Lyft spokesman did not immediately return a call seeking comment.

Uber, Rhode Island’s first and biggest ride-hailing-app company, is supporting legislation submitted in February that creates a separate category for TNCs. The legislation requires TNCs to cover the so-called insurance gap if the driver’s “own automobile liability policy excludes coverage.” The legislation also requires TNC drivers to be permitted through the Division of Public Utilities and Carriers with required background checks, but says little about taxation.

Taylor Bennett, an Uber spokesman, in an email said the company is pleased the General Assembly has recognized the value of the “new transportation alternative.

“We look forward to making Rhode Island a permanent home,” he said. •

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