Uber, Lyft get the green light: New Orleans City Council votes to allow ride-hailing companies to operate

Posted on: April 9 2015

By Jeff Adelson, The Advocate

A framework of regulations for ride-hailing services passed the New Orleans City Council on Thursday, but the companies that would be authorized by the measure continued to say the rules would keep them out of the market.

While the new rules, which were approved 4-2 by the council on Thursday, are broadly similar to regulations that had been rejected by Uber and Lyftjust a week ago, city officials had expected a more positive reaction from the companies after making tweaks aimed at addressing some of the services’ concerns. But the services said there are still provision related to insurance and lawsuits that could keep them out of the market.

Parts of the ordinance rely on model insurance policies negotiated between the ride-hailing services and insurance firms earlier this year. But, because those provisions won’t go into effect until January, representatives for Lyft said they could not operate unless those requirements were waived.

Uber representatives, for their part, complained about a provision in the ordinance that would invalidate a part of its terms of service requiring those with disputes with the company to go through arbitration, rather than take their issue to the courts.

The ride-hailing regulations have been a fraught issue for the council since last year, when the city first opened the door to Uber by tweaking its limousine regulations to allow the company’s premium service, Uber Black, to operate in New Orleans.

Cab drivers, who were forced to make major and expensive upgrades to their vehicles just a few years ago for the Super Bowl, have fought to ensure that the regulations on the new services are at least similar to those faced by traditional companies.

At the same time, Uber and Lyft have fought against the proposals put forward by the council, calling on the city to adapt to their business models.

Those models call for amateur drivers to use their own vehicles to pick up passengers, who use smartphone apps to hail a ride.

The final version of the ordinance holds the companies to some rules already in place for cab drivers, such as requirements that vehicles be less than seven years old and drivers complete background checks before signing on.

The only major change to the regulations since council members discussed the issue last week was the elimination of a requirement that drivers be drug tested before they start working for a ride-sharing service. Instead, the council agreed to allow the services to conduct random drug tests of 25 drivers every three months and require drug tests after crashes.

The ride-hailing services had opposed up-front drug testing, which would have both slowed their ability to recruit new drivers since they would have had to wait on the results of the tests and could have reduced the pool of potential applicants.

The random tests will cover the public safety concerns the council had in mind when they called for up-front testing, city officials said. Taxis could be moved to a similar system with tweaks to their regulations later this year.

Taxi drivers pushed back hard on those regulations, arguing they represented one of several elements that gave the ride-hailing services and their drivers preferential treatment.

As with previous versions of the measure, ride-hailing companies would have to pay $15,000 a year plus $0.50 per trip to the city in order to cover the costs of enforcing the new ordinance, which are expected to run between $230,000 and $250,000 a year. Both Uber and Lyft had argued those charges were too high and city officials said they would revisit the issue after six months, with an eye toward lowering those amounts if enough money was coming in.

The regulations also make use of an agreement between the ride-hailing companies and insurance firms several weeks ago that spells out how coverage will be handled for the drivers. The city’s rules build on that plan but also requires additional coverage for crashes involving uninsured motorists, something the ride-hailing companies had argued was unnecessary.