Despite objections from a few Republicans and taxi drivers, the state Senate on Thursday approved the state’s first-ever regulations governing ride-hailing apps such as Uber and Lyft.
The bill – which passed 41-5 and now heads to the House – would require ride-hailing companies to purchase insurance that covers its drivers and passengers, including for times when a driver doesn’t have a passenger but has made the vehicle available through the app.
They’d also have to conduct local and national criminal background checks on all drivers, pay a $5,000 annual fee to the state, and disclose fares to customers before they request a ride.
Current law has no such requirements for the services, which launched in North Carolina about a year ago. The apps connect users looking for a ride with nearby drivers who are willing to offer one in their private cars – often at fares below what traditional taxis charge.
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Without regulations, drivers and their passengers could find themselves uninsured. Most personal vehicle insurance policies don’t apply if an accident occurs while the car is being used for a commercial activity.
“You did not indicate on your policy that you would be transporting people for a fee,” said Oyango Snell, a lobbyist for Property Casualty Insurers Association of America. “The more you’re on the road, the more the risk increases of you having an accident.”
Snell said North Carolina’s legislation is the result of negotiations between the insurance industry and companies like Uber. “We came to this national compromise,” he said, noting that similar regulations are already in place in about two dozen states.
Sen. Floyd McKissick, a Durham Democrat and sponsor of the bill, said the regulations are needed because the legislature voted several years ago to exempt Uber and its peers from all city and county taxi rules and requirements.
“Local governments have no authority, no control over Uber,” he said. “To fill that void, only the state of North Carolina can do so.”
Representatives from Uber attended many of the meetings to draft the bill, McKissick said. Company spokesman Taylor Bennett said Uber is happy with the result and already meets the insurance and background check requirements.
“This bill really does codify what Uber has already done,” he said. “It really does protect consumer safety and at the same time allows for the economic opportunity that our partners enjoy.”
But some traditional taxi drivers say they weren’t included in the discussion, and they say the proposed rules would still give Uber an unfair advantage.
Lee Churchill of Raleigh’s Express Taxi said she had only two minutes to speak at a committee hearing on the bill. She said Uber drivers should go through the government-run background check and fingerprinting process that cab drivers face.
Cities, counties and airport authorities handle taxi permits under current rules.
The Senate bill would allow ride-hailing companies to run background checks themselves or through private companies. “It’s Uber policing itself,” Churchill said. “I think it’s very dangerous.”
Uber and its competitors often have sharply lower fares than traditional taxis, which operate in Raleigh under a maximum fare of $2.50 per mile. That’s caused a big drop in business for taxi drivers, Churchill said.
“I’m working 18 hours a day,” she said. “I’m just living hand to hand, mouth to mouth. I’ve seen a major cut in my income due to Uber.”
Several of the five Republican senators who voted against the bill Thursday cited complaints from cab drivers in their districts.
“I talked to a few last night,” said Sen. Jerry Tillman, an Archdale Republican. “They were not at the table. ... Uber’s got it made. If you like one person being in charge and having a monopoly, you’ll love this bill.”
Opponents in the Senate also voiced concerns about the $5,000 annual fee, saying that would effectively create a barrier for start-up companies seeking to compete with Uber.
McKissick said he doubts the fee would be a hurdle. “If you don’t have $5,000, you probably want to reconsider getting into this business,” he said, adding that the revenue is needed to fund oversight of the industry, and “$5,000 is probably a very nominal sum for the costs of monitoring their compliance.”
McKissick’s bill also resolves a dispute between ride-hailing companies and airports. The Raleigh-Durham Airport Authority has refused to let Uber drivers access the airport unless they register with the state as “for-hire passenger vehicles” – effectively a ban on Uber serving the airport.
The bill allows airports to charge drivers “a reasonable fee” and require them to have a decal to access the property – a provision that airports including RDU support.
The legislature’s discussion on ride-hailing apps began last fall with a committee meeting that also featured talk of regulating services like Airbnb, which allow users to rent space in their homes online.
While the current bill doesn’t involve Airbnb, McKissick said that’s “something that seriously needs to be addressed.”
“We need to get our laws updated to take into account the way people do business,” he said.