Illinois Moves to Rein In Ride-Sharing
Friday, May 16, 2014 - 12:51 PM
(by Odette Yousef) Illinois senators have passed rules for the new, growing industry of “ride sharing” services, and they appear to be the strictest statewide regulations in the country so far. The package of regulations are contained in a House bill and a trailer amendment bill, the latter of which will have to go back to the House before both arrive on Gov. Pat Quinn’s desk for signing. The rules were largely championed by a coalition of Chicago cab companies, who claim their business has suffered as a result of the proliferation of ride sharing activity.
“We’re not trying to stop technology, and everyone that uses it,” said Sen. Tony Munoz (D-Chicago), sponsor of HB4075 and its amendment trailer bill HB5331. “The only thing we want to do is make it safer, regulate it fairly for everyone in the industry.”
The rules would apply most immediately to services UberX, Lyft and Sidecar, which facilitate ride sharing primarily in the City of Chicago. The three California-based companies provide smartphone app technologies that allow people to use their personal vehicles for hire, much like taxis. So far, they have operated illegally, but a groundswell of consumer support and a fear of alienating technology companies has prompted local and state governments to consider ways to bring them into a regulatory framework.
Under the bills, commercial ride sharing companies would be required to carry primary commercial liability insurance equal to taxis, with a combined single limit per accident of $350,000. More critically, it eliminates concerns raised by several insurance associations in the state over when that insurance policy would apply. Under the rules, the policies would be effective from the moment a ride share driver logs into the app to accept rides, until logging off. Previously, companies disputed whether their insurance policies should apply, or should apply at such a high level, during times that a driver may be logged onto their app, but not yet en route to or conducting a fare.
All ride share drivers would also have to carry distinctive registration plates and stickers on their vehicles.
More frequent drivers would be subject to additional rules, similar to taxi drivers. Those who offer ride sharing services more than 36 hours every two weeks, on average, would have to get public chauffeurs licenses, subjecting them to the same criminal background checks and drug testing as taxi drivers. The rules would allow a four-week grace period, during which these drivers may still offer ride shares while an application for a public chauffeur’s license is pending.
Chicago drivers who average at least 36 hours every two weeks would also have to comply with the city’s rules for taxis regarding the age of their vehicles. Currently, this means their cars could be no more than four years old, in most cases. These cars would also be subject to government safety inspections.
Despite fierce rivalry among ride share companies, they were united in their opposition to the Senate legislation.
“The bill will prohibit insured and background-checked Lyft drivers with cars more than four years old, immediately eliminating 70% of Chicago's Lyft drivers,” read an e-mail from Lyft. “This will disproportionately affect low income drivers in the Lyft community who have come to rely on ridesharing as an important way to earn extra money to make ends meet.”
“Today’s vote in the senate will hurt consumers and limit transportation options across the state,” wrote Uber Midwest Regional Director Andrew MacDonald, in an e-mailed statement. Uber is the company behind UberX, the ride sharing platform. “We will continue to work with state and city officials to ensure uberX has a permanent home in Illinois for consumers to benefit from competition and much needed transportation options,” he continued.
“I think it regulates too far, and I think it sends a message that innovation will be kneecapped in Illinois if you compete against a powerful monopoly,” said Sen. Matt Murphy (R-Palatine), during the debate preceding the floor vote. “That’s not the kind of message we want to send right now.”
The Senate rules still allow local municipalities authority to regulate fare structures for ride sharing services. In Chicago, aldermen are considering an ordinance that gives the city authority to cap so-called “surge pricing” among some of the ride sharing services. The concept allows them to charge passengers more than the usual amount during times of peak demand.