New Tennessee ride-sharing law hailed as model for nation

New Tennessee ride-sharing law hailed as model for nation

June 16th, 2015 by Andy Sher in Local Regional News

In this Tuesday, Dec. 16, 2014, photo, a woman leaves the headquarters of Uber in San Francisco.

Photo by Associated Press /Times Free Press.

A reference to Kansas has been deleted because the state ultimately passed a bill that met with Uber's approval.

NASHVILLE -- A top official at the ride-sharing service Lyft and Sen. Bo Watson, R-Hixson, say Tennessee's new law that allows the car-booking company, as well as other firms like Uber, to operate statewide can serve as a model to other states.

"We think this bill actually represents the model legislation for state legislatures regarding the ride-sharing or transportation networks across the nation," said Joseph Okpaku, director of public policy for Lyft.

State Sen. Bo Watson is interviewed by editors during a meeting at the Times Free Press.

State Sen. Bo Watson is interviewed by editors...

Photo by Doug Strickland /Times Free Press.

The bill, which Gov. Bill Haslam signed into law on May 20, incorporated a compromise that the majority of the insurance industry and the ride-sharing industry were able to strike back in March, Okpaku said. "And it was one of the first bills to encapsulate that compromise.

"But beyond that, we also think it provides an appropriate regulatory framework for this new and innovative sector," Okpaku added.

Watson, the primary Senate sponsor of the bill, was in Denver last week where he spoke to lawmakers from other states about the Tennessee law at the National Conference of State Legislatures.

"I hope it helps drive a new economy in terms of transportation," said Watson, who noted he often uses Uber and Lyft himself. The companies use smartphone apps to connect riders with independent contractor drivers. He calls it a "disrupting" technology.

"This is really one that's kind of market driven, which I think is amazing," Watson said of the law, which supersedes ordinances on ride-sharing in cities like Chattanooga and Nashville and leaves the companies largely self-regulating.

Watson believes "it is representative of the new economy that we're all experiencing where business is done over a smart phone, business is done over a computer and government's trying to adapt to that. As is business, the taxi cab industry, the limousine industry. I mean they've all kind of had to adapt to a changing landscape."

They sure have, said Tim Duckett, owner of Millennial Taxi and transport in Chattanooga. Duckett said it's unfair that he and other traditional taxi companies remain bound by far-stricter local ordinances when billion-dollar companies with an increasingly global reach and the powers of a monopoly are not.

"They want to say this is free and fair competition," Duckett said. "It's not. If an entity is allowed to undercut the market and do this on an unlimited basis, now how do you compete against that?

"We've had a significant setback," Duckett said. "Government has never gotten behind the taxi service to do this."

The new law appears to block traditional cab services from incorporating app-based hailing of cabs into their business models.

It also sets up insurance requirements for the ride-sharing companies and resolves national disputes between the firms and even more powerful insurers and lenders over whose insurance coverage kicks in when.

The law also seeks to resolve criminal background check issues, requiring them to be done (which the companies say they already did). But it allows them to continue to use private contractors to conduct the background checks instead of state or local police agencies.

Ride-sharing companies, which had been fighting their battles to operate on a city-by-city basis across the country soon figured out the quickest route was going to state legislatures or regulators.

Part-time Lyft driver Brittany Cameron sits on the hood of her own vehicle, which she uses to give rides, and which is adorned with Lyft's trademark pink mustache in downtown Denver. Lyft is a transportation network company whose mobile-phone application facilitates peer-to-peer ridesharing by enabling passengers who need a ride to request one from drivers who have a car. A dramatic change in the way people hail rides is shaking up decades of regulation now that getting a lift is as easy as making a few taps on a phone.

Part-time Lyft driver Brittany Cameron sits on the...

Photo by Associated Press /Times Free Press.

Douglas Shinkle, a transportation analyst with the National Conference of State Legislatures, says the best he can figure is 22 states have addressed ride-sharing in various ways.

Georgia is among states that beat Tennessee to the punch. Georgia allowed the contract drivers to be responsible for their own background checks instead of requiring fingerprints.

Chattanooga's Duckett said his own drivers still undergo government background checks.

Duckett said the situation is made even more difficult with the ride-sharing services' ability to change pricing at a moment's notice, which he can't. All that plus the billion-dollar companies' ability to shift financial resources to undercut traditional cab companies' fares makes real competition tough, he said. They are in effect monopolities, he said.

Mark McAllister, general manager for East Ridge Cab Co., said the playing field has been tilted in favor of the ride-sharing companies. For example, he said, the city of Chattanooga also mandates cab drivers have a letter from a physician saying they're physically capable of driving.

That's not in the new Tennessee law.

"They can say they're not taxi companies but when it comes down to it they're doing the same thing," McAllister said.

Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550.