Bill should add taxis to rideshare state regulation

The Louisiana Legislature met me halfway. But I argue in the case of point-to-point passenger transportation it should go all the way.

Last year, this space recommended, as a number of local jurisdictions began to regulate transportation network companies (that is, rideshare arrangements), that the state move in to assume the regulatory role. At least one attempt now has appeared, HB 527 by state Rep. Kenny Havard, which would have the state Department of Transportation and Development create standards and conduct permitting, kicking back 0.95 percent of gross receipts of the rides to the points of origins’ local governments (having taken out .05 percent for administrative expenses).

Complaints from local jurisdictions have come in two kinds. One, the language within the statute some consider not restrictive enough, in areas such as insurance, background checks, drug testing, surge pricing in case of emergencies, and determination of discrimination in provision. Local ordinances reflect some or all of these; for example, in New Orleans a detailed receipt must be generated at the end of a trip and the data reported to the city that could use it to assess whether some form of discrimination is occurring, while the proposed law allows for sending a receipt electronically with less information and no mandatory forwarding of the data to the state.

Of course, an opinion on severity of standards is just that, an opinion. The law’s specifications obviously meet requirements of state law and includes extensive background checks. If lawmakers don’t think these adequate, they can strengthen these during the legislative process and/or grant rulemaking authority to DOTD for the possibility of this.

The other criticism gets to the heart of the issue – money. Local governments realized that in regulating TNCs they could milk these as cash cows. The law wipes out that possibility, with the exception of airport charges. Jurisdictions may figure that the 0.95 percent of gross receipts will not surpass what they could squeeze from TNCs on their own. Further, to add TNC regulation would cost them little, since they already have overseen taxi and limousine services for decades.

Which points to the direction in which this legislation should proceed. Taxi services also provide a lucrative source of income for local jurisdictions, as the individuals and firms involved quite willingly pay whatever local governments want as they can use government to create barriers to entry and monopolistic conditions to keep pricing artificially high – which TNCs threaten. Local elected officials have less opportunity to keep the symbiotic relationship (fed as well by taxi companies’ donations to their campaigns) going if they can’t control the threat to it.

So, local governments will oppose this bill simply because it gives them reduced leverage over something that can eat into their cash flow. And the easiest way to address that opposition would be to pull up all the roots by passing on taxi regulation to the state as well. Several states have headed in that direction in the past few years as a consequence of the rise of ridesharing, correctly determining that two closely-related businesses ought to not to have oversight decided between levels of government.

Most other states have adopted statewide rideshare regulation in order to avoid a patchwork coverage where standards differ within metropolitan areas and across the state, and leave particularly rural areas with no regulation at all, creating confusion. Yet the same problem exists regarding taxi service that has become exacerbated by the entry of TNCs overseen statewide into the market – to the point that in some places taxi companies had asked for statewide regulation to remain competitive.

Thus, HB 527 would do best, as previously argued in concept here, by including statewide regulation of taxis and, as in the case of TNCs, usurp local control of these. It should become law using this comprehensive approach.