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The next four weeks are shaping up to be critical for ride-hailing companies like Uber and Lyft as state and city lawmakers grapple with how to regulate the growing industry in which customers order up rides with a smart phone app.
At the Honolulu City Council, Chairman Ernie Martin and Budget Committee Chairwoman Ann Kobayashi co-sponsored Bill 85, which would require the companies to abide by the same regulations as taxi companies.
At the Legislature, Senate Consumer Protection Committee Chairwoman Rosalyn Baker has revived a proposal to require Uber and Lyft drivers to obtain certain types of vehicle insurance policies.
That proposal appeared to be dead, but Baker brought it back this week by erasing the contents of a House bill that solely involved insurance for self-storage facilities and inserting language that requires insurance for so-called transportation network companies like Uber.
Uber spokeswoman Taylor Patterson said either bill would force the company to leave Hawaii. A hearing in Baker’s committee for House Bill 260 is scheduled for 10 a.m. Friday. Meanwhile, the City Council Budget Committee deferred Bill 85 until April 27 after a heated two-hour hearing Wednesday.
“I just don’t understand why a $62 billion company can’t conform to the rules and regulations that thousand-dollar companies and individual drivers can conform to.” —David Jung, EcoCab
Bill 85 would place several new restrictions on companies like Uber, one of the biggest being a requirement that their drivers use taximeters instead of GPS technology to calculate distances for fares.
The legislation also proposes limiting surcharge rates to the hours of 10 p.m. to 5 a.m., special events and holidays — and they could never be more than twice the regular fare. Uber regularly charges extra during busy times — sometimes triple the normal rate — but customers are made aware of this in advance.
The bill would also require Uber and similar companies to have their drivers identify their vehicles with a sign or dome light on the roof. Potential fines for breaking the rules would be up to $2,000.
Taxi companies see Uber cutting into their market without abiding by the same regulations. Both sides are spending tens of thousands of dollars on lobbyists.
The ride-hailing companies say they are fine with regulations, but should not be lumped in with taxis since their business model is different. Uber users book rides in private cars through an app on their smart phone, unlike taxis that people flag down on the street or order by phone or through the company’s website. Uber calculates fares by using GPS distances logged through the app as opposed to standard taximeters.
“(Bill 85) would force Uber out of the market,” Patterson said in a telephone interview. “There’s no way around that.”
David Jung, president of local taxi company EcoCab, said he’s skeptical about whether that’s true.
“I just don’t understand why a $62 billion company can’t conform to the rules and regulations that thousand-dollar companies and individual drivers can conform to,” Jung said.
Uber General Manager Brian Hughes said ride-hailing companies should be regulated differently than taxi cabs because they have a different business model that relies on part-time drivers who can work whenever they want.
“(Bill 85) would force Uber out of the market. There’s no way around that.” — Taylor Patterson, Uber
Bill 85 would require that Uber drivers get certified by passing an exam that tests their knowledge of traffic rules and how to get around Honolulu. Drivers would also have to meet certain medical standards and affix a sign that identifies the company they’re driving for on the roof of their cars.
Kobayashi said she’s been in negotiations with lobbyists on both sides of the issue and hopes they can come to an agreement.
“We’re a small city but still I think there’s room for everyone,” she said. “We’re not trying to make Uber become a taxi company. We’re just trying, as I say, to protect the consumer.”
It’s also important that local taxi drivers aren’t pushed out of the market, she said.
“We have to make sure that (Uber) drivers are at the same level playing field as the taxi drivers so that our local taxi drivers are not at a disadvantage,” she said.
Kobayashi knows at least one member of the taxi industry very well — Dale Evans, who owns Charley’s Taxi, a local company founded in 1938. Evans is a staunch supporter of Bill 85.
The councilwoman from Manoa says her parents and Evans’ parents were family friends. Evans also donated $2,500 to Kobayashi on Dec. 14, 2015, less than two weeks after she and Martin introduced the measure.
There was no discussion at the meeting of whether Kobayashi should recuse herself from the deliberations.
While Kobayashi says donations don’t influence her decisions, the contribution underscores how both the taxi and ride-hailing industries are vying for influence.
Taxi companies have hired lobbyists George “Red” Morris, John Radcliffe, Bruce Coppa, Celeste Nip and Ross Yamasaki of Capital Consultants, one of the top lobbying firms in the state.
Charley’s Taxi formed a political action committee March 21, and the company reported that it spent $2,094 in January and February on lobbyists at the state level.
But Uber outspent Charley’s Taxi nearly six-to-one during that time period, reporting $12,444 on lobbying.
The lobbyists will have their work cut out for them over the next few weeks as the bill heard Wednesday at the City Council is far from finalized. Sheri Kajiwara, director of the city Department of Customer Services, gave Council members a long list of proposed amendments.
Jung from EcoCab said he’d be open to several changes, including allowing Uber to use GPS technology to calculate fares as long as their meters are approved by the city. He’s also not a fan of the bill’s provision regarding surcharges, and agrees that Uber cars don’t need dome lights on top.
But Uber’s Hughes said it’s hard for the company to get past the fact that the bill would essentially equate it with taxi companies instead of regulating it separately as some jurisdictions on the mainland have done.
That’s exactly what many taxi drivers — who have seen their passenger lists shrink and revenue drop — don’t want.
Darwin Abenoia, a vice president at The Cab where he’s worked for 16 years, said it’s a matter of fairness.
“They do exactly the same thing: Pick you up from A to B for a fare. It’s not share ride. It’s taxi service,” he said, referring to how Uber and Lyft are commonly called ride-sharing companies. “Drivers doing exactly the same type of service better be under the same rules.”
Proponents of Bill 85 also say the regulations would help consumers by better vetting drivers, with Abenoia noting it’s an issue of “public safety.”
But supporters of Uber argue that consumers are actually better protected when they use the app.
Kalihi resident Shellford Cantan was one of several blind people who attended Wednesday’s hearing at Uber’s invitation to oppose the bill. Cantan said taxi drivers have overcharged him before but that with Uber, he knows he can trust that he’s paying the correct fare without having to see the taximeter.
House lawmakers killed a bill last week that would have imposed new insurance requirements on employees of ride-hailing companies like Uber and Lyft.
But Baker brought it back to life this week through a process that good-government advocates have derided as “gut and replace.”
Baker approved a similar bill earlier this month that would have required each driver to carry primary liability coverage while traveling to pick up customers and transporting them of at least $100,000 per person, with an aggregate limit of $200,000 per accident, and coverage of no less than $50,000 for property damage. She wrote in her committee report last month that the proposal’s goal was to address gaps in motor vehicle insurance coverage, provide guidelines for the activity and insurance specific to the activity.
She felt insurance requirements tailored to Hawaii’s market were more appropriate since Hawaii wasn’t a party in developing the national model legislation.
But that bill — Senate Bill 2684 — died in the House Judiciary and Consumer Protection committees, chaired by Reps. Karl Rhoads and Angus McKelvey, respectively.
Rhoads said it seemed unnecessary — “like a solution in search of a problem.”
But in rewriting HB 260, Baker hasn’t given up. That’s worrisome to Uber’s Patterson, who said the company has suggested an alternative type of insurance coverage that is used in 30 other jurisdictions.
“The bill in its current form would force us to cease operations in Hawaii,” Patterson said. “The way the terms would ultimately end up means that our business would not be able to thrive or survive in the market.”