Why New Orleans officials, ride-hailing services Uber, Lyft still at odds over some proposed regulations

Posted on: April 2 2015

By: Jeff Adelson, The Advocate

Disagreements over proposed regulations for ride-hailing services in New Orleans continue to divide city officials and the companies lobbying to be allowed to operate in the city, with two of the largest companies in the fledgling industry saying their business models do not fit within the rules proposed by City Council members.

Both Uber and Lyft, a major player in the market that previously had remained largely out of the public debates in New Orleans, told members of the council’s Transportation Committee on Wednesday that a new version of the proposed rules was still too strict.

“The amendment before us today is a step in the right direction,” Uber official Trevor Theunissen said. “It’s not to the point where we would need it to be to operate in New Orleans.”

City officials have been negotiating with the ride-hailing companies for months, and several of the issues brought up at a previous public hearing appeared to have been resolved in the revised regulations rolled out at Wednesday’s meeting.

Councilman Jared Brossett, who authored the new regulations along with Councilwoman Susan Guidry, said more tweaks are possible over the next week. The ordinance is expected to go to the full council for a vote on April 9, Brossett said.

Ride-hailing services like Uber and Lyft allow people to use a smartphone app to get in touch with drivers who use their own vehicles to carry passengers to their destination for a fee. The services have fought against many of the proposed regulations for the drivers and their vehicles, arguing that their business models call for a system that makes it easy for people to sign up as drivers, without having to meet rigorous requirements.

Taxi companies and independent drivers have fought against the entrance of ride-hailing companies into the local market, particularly if they would not have to live up to the same stringent regulations that govern the established operations.

The proposed rules would require drivers to meet many of the same standards as those now imposed on the taxi industry, such as driving only relatively new vehicles and undergoing background checks.

The ride-hailing companies have opposed a requirement that their drivers be drug-tested, as taxi drivers must be.

Company officials have argued that requiring drug tests could shrink the pool of potential applicants and slow down the process of recruiting new drivers. Both of those outcomes would be problematic for companies that rely on having a large number of drivers available when needed.

How the ride-hailing services would handle insurance, particularly during periods when a driver is available to pick up passengers but does not have anyone in the vehicle, was a particular sticking point in earlier rounds of negotiation. That issue has largely been settled, thanks to a deal Uber struck last week with several large insurance companies that would provide much of the coverage sought by city officials.

However, Guidry and other city officials have continued to call for regulations that would ensure the drivers have coverage from their company to protect them in case they are hit by an uninsured motorist. While Uber and Lyft representatives have said that coverage is unnecessary, Guidry and others have argued it is needed because personal car insurance might not cover such accidents if the vehicle is being used for commercial purposes.

Disagreements also remain over how much the companies would charge passengers and how much they would have to pay the city to operate their fleets.

The proposed regulations would require that each trip cost at least as much as the minimum cab fare, now set at $3.50, to keep the playing field level between the ride-hailing services and traditional taxis. Lyft officials have said that would interfere with their business model.

The city also proposes to charge each ride-hailing service $15,000 per year for a license that will allow it to have an unlimited number of drivers, plus a per-trip fee of 50 cents. That money would go toward covering the costs of enforcing the regulations, which are expected to run between $230,000 and $250,000 a year.

The companies have said the per-trip fee is too high.

The companies also have pushed back against requirements that they provide the city with lists of their drivers and detailed information about each trip, including the addresses of the starting point and destination. That information is required of cab companies, but Uber and Lyft representatives said it would raise privacy concerns and, because documents collected by the city could become public records, give rivals an easy way to check on the competition.