D.C.’s new ridesharing law will give business a lift
Sometime this month, Mayor Vincent Gray is expected to sign legislation to formally legalize and regulate ridesharing in the District of Columbia.
Dubbed the Vehicle-for-Hire Innovation Act, the law is largely unremarkable, laying down some basic and uncontroversial rules for driver background checks, the display of trade dress, vehicle age, and inspection and insurance requirements.
Yet this proposal and others like it have been met with pearl-clutching from some of our free-market allies, who express shock that companies such as Uber would sell out their inner anarchist and embrace regulation.
Reason magazine’s Stephanie Slade argues the D.C. law is overly burdensome and hostile to transportation network companies (TNCs) including Uber and Lyft, writing that the ridesharing industry should be “up in arms” over provisions such as the law’s insurance requirement.
Over at the Competitive Enterprise Institute, Marc Scribner argues that we should focus on “abolishing the local taxicab commission” and “limiting or eliminating the state’s regulatory authority.”
The thought of dysfunctional city bureaucrats getting pink-slipped is an appealing one. But there is no chance that will ever happen in D.C. or any other major American city. Moreover, without an affirmative legal framework for the TNCs, they face serious crackdowns pushed by more entrenched special interests such as the taxicab industry.
The D.C. framework certainly isn’t perfect. The requirement for $1 million of liability coverage, purchased either by the TNC or their drivers, is drastically higher than the mandate for taxis or limos. But it isn’t a terribly unusual requirement. I co-authored a recent R Street study which found that TNC legal frameworks in California, Colorado, Minneapolis, Chicago, and Columbus, Ohio, all have identical $1 million mandates.
While it’s costly, and probably higher than it needs to be, the insurance mandate isn’t unreasonably burdensome for TNCs. In fact, both Uber and Lyft already offer that level of coverage to their drivers. Maybe that’s why you don’t see them “up in arms” about it.
The D.C. bill also includes a restriction on drivers under the age of 21, a zero tolerance policy for incidents of alcohol and drug abuse, a 1 percent tax on gross receipts of digital dispatch services that would be placed in a consumer service fund, and a restriction on surge pricing during states of emergency.
It’s not the laissez-faire approach one might hope for in a perfect world. But neither is there much regulatory heavy-handedness. It doesn’t muck up background checks, as Houston did. It doesn’t impose high minimum fares, as New Orleans did. It doesn’t have Chicago’s weird pricing structure limitations. As these things go, it’s a sensible bill with relatively low associated costs.
What’s more, the D.C. bill shows that it’s possible to legalize TNCs while simultaneously deregulating existing for-hire transportation markets. The law loosens residency requirements for taxi drivers, lowers the number of inspections they need and allows them to experiment with new pricing models for app-based hails. It also creates a single operating license for taxis, sedans and limos and establishes that any new regulations must address legitimate issues of consumer safety.
Indeed, the effort to advance TNC regulation across the country is a grand opportunity to re-evaluate many of the archaic restrictions imposed on taxis. Rather than subject TNCs to the same overregulation as taxis or limos, we should allow all three industries thrive under a more streamlined and less prescriptive regulatory approach.
We’ll be discussing these issues next Wednesday in a panel co-hosted by the Examiner. Details can be found here.
