The decision by the Kansas Legislature earlier this week to override Gov. Sam Brownback’s veto of onerous ridesharing legislation already is yielding its inevitable consequence. Transportation network company Uber has announced it plans to pull out of the state before the new rules take effect early next month.

While a number of states continue to consider and implement reasonable ridesharing regulations, the path has been bumpier than expected, given that the historic compromise reached in March between leaders of the TNC and auto insurance industries on safety and coverage issues offers a great model for states to emulate. Nonetheless, some states continue to make the task harder than it need be. In Kansas, that took the form of an inexplicable requirement that any driver with a lien on his or her vehicle must carry additional coverages.

The Garden State might present the next hot spot. Whereas ridesharing has made significant strides in many regions of the country, particularly in the West, the Northeast remains notably behind in recognizing the need for an appropriately modern and flexible regulatory regime to handle this emerging business model. Just in the past few weeks have proposals for real reform taken even the first steps toward public debate in states like New York and Massachusetts.

In New Jersey, we see a classic example of government bowing to incumbent special interests – particularly in the taxi cartel – with proposed regulations that would drive out the competition and innovation ridesharing has introduced. As The Associated Press reports:

Uber’s spokesman Matt Wing said the current bill New Jersey lawmakers are considering would be a death sentence for the company, WCBS 880’s Jim Smith reported.

The legislation calls for a number of new requirements, including requiring ride-hailing firms to display a Motor Vehicle Commission marker when drivers are searching for fares, background checks for drivers as well as safety inspections for vehicles.

“If this bill passes we will be forced out of New Jersey,” Wing said.

The bill breaks from the compromise worked out between TNCs like Uber and Lyft and major insurers like State Farm, Farmers and USAA in that it would require the companies’ commercial policies to cover drivers any time they are logged in to the TNC app. Not only does this represent a more stringent requirement than that emboidied in laws passed in places like California, Illinois, Colorado and Washington, D.C., but it threatens to crowd out newer policies and endorsements that insurers have rolled out in recent months, which offer coverage purchased by the driver.

Even more troublingly, the legislation essentially requires TNCs to get government approval at every stage of the process, from licensing to clearing new drivers to what signage and decals drivers would be required to display.

The legislation would require ridesharing drivers to receive special driver’s license endorsement as “commercial drivers” from the state’s Motor Vehicle Commission, despite the fact that most TNCs drivers are only part-time. The state also would issue a unique vehicle identifier for ridesharing drivers, which could be a license plate, sticker or some other signage. What need exists for either of these requirements has not been made clear in the public debates, to date.

It also would mandate fingerprinting for criminal background checks conducted through the state police, who would use the FBI Livescan program, rather than the third-party services TNCs use in most states. For its part, Uber asserts the background checks it performs already are more thorough than Livescan. Among other items, Uber says its screening includes records from county courthouses, federal courts, multistate criminal databases, the National Sex Offender Registry, Social Security traces and motor vehicle records that Livescan does not.

The bill’s future currently remains unclear. Both Uber and the cab industry have been embarked on a statewide tour of rallies, demonstrations and counterdemonstrations, looking to sway any lawmakers still undecided. Encouragingly, the Legislature appears have eased up on the throttle on a bill that had been speeding ahead toward passage. Perhaps there is still time to correct course and emulate the best practices that already are working well elsewhere, before the Garden State lets this bad idea steer it straight into a ditch.

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