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Ride-sharing regs pass key Senate committee

Thursday, May 15, 2014

* Sun-Times

Two bills advanced together out of committee Wednesday which would regulate ride-sharing companies like Uber and Lyft statewide, much to the dismay of the app-based entrepreneurs involved.

The legislative couple — House Bill 4075 and its trailer House Bill 5331 — passed 11-2 and 13-2, respectively, in the Senate Executive Committee.

“The bill creates regulations and requirements for commercial ride-sharing arrangements or transportation and personal-use vehicle prearranged through a dispatcher for a fee,” said Sen. Antonio “Tony” Munoz, D-Chicago, the bills’ chief Senate sponsor.

HB 4075 moves to the Senate floor while HB 5331, if it passes the full Senate, would go back to the House for final approval, a scenario that Munoz said he’s “100-percent” certain will happen.

In addition to mandating companies provide liability insurance, the combined effect of the bills would divide ride-sharing drivers into two tiers, based on the number of hours they work.

* From ride-sharing company Lyft…

Passing this legislation will place severe limits on Lyft and other ridesharing platforms, drastically decreasing the availability of safe and affordable rides. The bill prohibits ridesharing for cars that are more than four years old, even when stringently insured and background-checked, potentially eliminating 70 percent of Chicago’s Lyft drivers. This provision disproportionately affects lower-income drivers in the Lyft community who have come to rely on ridesharing as an important way to earn extra money to make ends meet.

* But Sen. Karen McConnaughay (R-Aurora) says some insurance regulations were very much needed

“I’m a huge fan of free markets and of Uber itself,” McConnaughay told Illinois Review Wednesday morning. “The core issue for me is how riders and drivers are insured while they’re taking UberX rides. I’m not entirely happy with the bill, but we’ve been working on this and there are problems the bill addresses.”

Uber says they carry a million dollar policy when passengers are in their vehicles, but UberX drivers provide their own private insurance that kicks in when they are not hauling passengers.

“That million dollar policy is to protect the company, not the driver nor the passenger,” McConnaughay said. “You sign a waiver when you sign up for the program. Right now, I wouldn’t want family or friends to get in a vehicle in which they are not insured. If there’s an accident, Uber is off the hook. This legislation addresses that problem.” […]

“There’s no question the taxi industry wanted to eliminate the rideshare programs,” McConnaughay said. “But we worked on the legislation to make changes, and while I’m not entirely happy with the bill, there is a need for insurance requirements to protect consumers.”


- Posted by Rich Miller        

  1. - VanillaMan - Thursday, May 15, 14 @ 9:06 am:

    Sorry, but this is Illinois.
    If you wanted for your business to succeed without governmental meddling and additional costs, you better find another location.

  2. - Rob Roy - Thursday, May 15, 14 @ 9:12 am:

    Free State…Free Country….right! We have budget issues galore and we are worrying about car pooling and pet stores. God save us from ourselves. This type idiocy is the reason businesses are walking away from IL

  3. - VanillaMan - Thursday, May 15, 14 @ 9:14 am:

    This is Illinois.
    No market innovations without political compensations permitted.

  4. - VanillaMan - Thursday, May 15, 14 @ 9:16 am:

    This is Illinois.
    We have entrenched friends threatened by your new business, so to be fair we have to fiscally knee-cap you so everyone limps the same.

  5. - VanillaMan - Thursday, May 15, 14 @ 9:18 am:

    “If there’s an accident, Uber is off the hook. This legislation addresses that problem.”

    This is Illinois.
    We mandate that all businesses be lawsuit targets.

  6. - anon - Thursday, May 15, 14 @ 9:18 am:

    Sorry, but this comment belongs in this thread, not the other.

    I realize that this is related to a different topic, but will the black caucus/taxi assn connection be investigated? I feel that african american members who voted yes should be interviewed and asked if the subject of a taxi assn contribution to the foundation was ever mentioned while being lobbied. We can’t just discuss this stuff in passing. If there is a possibility that this really happened, it must be investigated immediately and the truth must mined.

  7. - VanillaMan - Thursday, May 15, 14 @ 9:21 am:

    Come to Illinois and open your business!
    Just don’t forget to hire lobbyists, lawyers, tax accountants to fight off our state regulations, taxes and governments!

    But you get to keep any profits - that we think are fair and proper.

  8. - Jim'e' - Thursday, May 15, 14 @ 9:24 am:

    Gee, if it is true that Lyft cars cannot be more than 4 years older they had better apply the same standards to the taxi industry.

  9. - Arizona Bob - Thursday, May 15, 14 @ 9:27 am:

    The four year limitation stinks. Do cabs and limos operate under the same limitation?

    Insuring the passengers does seem to make sense, though. If someone is hurt due to negligence of a driver, it doesn’t seem fair that the only recourse for the passenger is to sue a likely judgment proof driver.

  10. - Grandson of Man - Thursday, May 15, 14 @ 9:31 am:

    My family’s most valuable asset is a taxi medallion. It’s something my father worked for and paid off not long before he passed away. It now belongs to my mother.

    The medallion appreciated in value since my father paid it off. I have no problem at all with other companies starting businesses to compete with the taxi industry. If the value of the medallion is lowered somewhat but everyone prospers, that’s okay. We need to grow our economy, and I welcome new industries.

    I have not looked over the bill, but I want that ride-share companies have to comply with regulations pretty much like cab drivers and medallion owners, such as drug tests, inspections, fees, etc.

    As far as the taxi industry being overregulated, my father was able to pay off his medallion and support himself and his family. He got into the business relatively late in life. Cab driving is very difficult and demands many hours of work to make money.

    People talk about unsafe cabs and drivers, and their concerns are correct. The concerns should also apply to any players in the transportation industry.

  11. - wordslinger - Thursday, May 15, 14 @ 9:32 am:

    Mandating liability insurance is hardly excessive regulation.

  12. - Walker - Thursday, May 15, 14 @ 9:36 am:

    VMan: clever. On an O’Willy-style rant today.

  13. - Adam Smith - Thursday, May 15, 14 @ 9:47 am:

    McConnaughay seems to be one of the few sane voices in this mess.

    Lyft and Uber are great innovators. I use them often. But requiring that a person and company providing a service be adequately insured is very reasonable in our sue-crazy world.

    The taxi goons wanted to use clout to outlaw ride-share. The ride-share innovators wanted to be free from government interference. (and made things worse by their over-heated rhetoric). Compromise is possible. Ride share will continue and taxis will survive.

    Can we get back to the state’s catastrophic financial condition please?

  14. - OneMan - Thursday, May 15, 14 @ 9:48 am:

    The age of the car thing surprises me and not sure that helps. The insurance thing makes sense,

  15. - VanillaMan - Thursday, May 15, 14 @ 9:55 am:

    At one time the auto market had a company which focused on auto safety. It was Volvo. If you wanted a safe car, you bought a Volvo.

    Then our helpful friendly government got involved and began mandating that every car sold in the US be as safe as a Volvo.

    It drove the prices of all cars higher and Volvo is now barely hanging onto existence in the market, owned by a nice Chinese organization.

    If we mandate the same safety standards to all ride shares, then there is no reason to ever call a taxi again. If the taxi companies believe mandating the same standards to other ride share companies will help drive those other companies out of business and help them compete - they need to realize that going through a government protection racket doesn’t help them in the long run.

    The problem taxi companies are having is not the competition. The reason for the other ride share companies taking their business is because folks don’t believe that taxis are giving them value for their costs. The market doesn’t like having to wait for a ride, doesn’t like being abused, doesn’t like the experience, doesn’t like the costs, and doesn’t like the drivers.

    Taxi companies can compete if they did a better job. Depending upon government regulations in order to shut down their competition will not force taxi companies to improve the poor service they currently provide.

    Liability with ride sharing operations is already covered. You ride with them, and you are on your own in case of an accident. That is the deal. If you don’t want that, then get a taxi where you end up paying more to cover that.

    Mandating the same safety standards to all ride shares will not save the taxi industry, will not improve ride shares for Chicagoans, and make us all pay more for less. It is wildly stupid and has been repeatedly proven so. The market is big enough for adults to decide for themselves with whom they wish to ride.

  16. - wordslinger - Thursday, May 15, 14 @ 9:57 am:

    –Ride share will continue and taxis will survive.–

    Correct. And this has never been about the taxi drivers, either, most of whom lease.

    There’s a handful of big money guys who own most of the medallions and they’re trying to protect the value of their assets.

    If they would have invested in the technology, they could have strangled the Uber’s in the crib.

  17. - wordslinger - Thursday, May 15, 14 @ 10:05 am:

    VMan, you make up the strangest things to make whatever point you think you’re making.

    The U.S. is still Volvos biggest market, although China is coming on strong. They’re struggling in Europe.

    The company banked $150 million in net profits last year.

  18. - VanillaMan - Thursday, May 15, 14 @ 10:38 am:

    Ford bought Volvo in 2000 for 6.45 billion
    Geely bought Volvo from Ford a decade later for 1.8 billion.

    Volvo lost almost 5 billion dollars in value after a decade’s worth of investment of billions.

    In 2010, Volvo sold 131,000 cars in North America, and last year, they’ve sold 65,000 cars in North America.

    They are struggling around the world.

  19. - Grandson of Man - Thursday, May 15, 14 @ 10:47 am:

    “There’s a handful of big money guys who own most of the medallions and they’re trying to protect the value of their assets.”

    I’m reaching back through the mists of time to try to remember, but if I’m not mistaken, there was a time when taxi medallions were owned solely by big companies. After that there was I believe some type of deregulation that allowed individuals to buy medallions. My dad was one of those individuals. There was a medallion lottery, but we entered in it and didn’t win.

    There were or still are a number of individuals who own their medallions, or who own more than one medallion. I’m not up on the current state of the cab industry, but I remember not too long ago that some folks had their own companies with the company name on the cabs. Others owned their medallions but paid association fees and had the big company name on their vehicles.

    If there were no regulations for cabs, can you imagine what kind of junky cabs would be out there, and what kind of drivers could be out there? Dented up cabs, poorly maintained cabs, etc. Regulations of course are not the answer to everything, but they help.

  20. - Dan Johnson - Thursday, May 15, 14 @ 11:01 am:

    One great point raised in committee debate by Leader Radogno: this legislation sets a reasonable floor for ride-sharing companies, including whatever smaller, fly-by-night companies might pop up in the future. Requiring a company that is in the business of providing transportation for people — whether as an app connecting a driver to a rider online or as a traditional company leasing licensed cars to drivers to pick people up off the street — to buy commercial liability insurance, get background checks and make sure the cars themselves are safe is common-sense.

    We trust transportation companies to protect the people they carry and we expect that when accidents happen they will make people whole. Since technology moves much faster than government, our laws haven’t (yet) caught up to the technology-based ride-sharing apps. This bill will do that. It might be more expensive for the new companies to comply with the same consumer protections that every other transportation company lives with, but that’s an inevitable consequence of making sure people are protected. It’s cheaper not to buy insurance to cover the damages caused by accidents, just not for the riders or drivers or pedestrians who are hurt.

  21. - RN - Thursday, May 15, 14 @ 11:09 am:

    I think it would be good form for folks who are registered lobbyists for an industry involved in the debate to note that fact when commenting.

  22. - A guy... - Thursday, May 15, 14 @ 11:37 am:

    Consumers lose. They almost always do in Illinois. There are some making the case that this legislation made consumers “safer”. Hah, take a ride in a few cabs and you’ll come to a new conclusion. FedEx, UPS air, and other services exist because the USPS didn’t offer what they did. Eventually, USPS started performing many of those services with similar efficiency and lower cost. The competition made them better and more innovative with their existing massive infrastructure. Uber and Lyft would absolutely make “commuting” less expensive for many, reduce the need for cars among many people who choose that over expensive cab rides. Ubers don’t scream and rant if you’re not going more than 5 miles or to the airport. They wouldn’t replace cabs, they’d do the business cabs already don’t want to do- but the medallion owners who lease those cabs could care less what they want to do. Consumers lost, courtesy of the Illinois Legislature. Another lousy chapter in the “Doing business in Illinois is futile” novel.

  23. - Mont - Thursday, May 15, 14 @ 12:27 pm:

    Speaking of insurance requirements for taxi companies, ever been in an accident where the taxi was at fault? Extremely difficult to file claims and recover damages. The taxi companies utilize questionable, uncooperative insurers who put up high barriers to getting a vehicle repaired or recovering money. Default is often to require an accident victim to go to the insurer’s contracted garage to get evaluations and repairs. No independent evaluations by other garages are often allowed. (For example, look up Unique Insurance and their ratings/reviews on various websites.)

    Perhaps, since the taxi companies are so concerned with the auto insurance requirements of ride-sharing services, legislators should reevaluate these requirements with a focus on creating more robust and delineated auto insurance company procedures. Don’t just look at dollar amounts, but also qualitative and process requirements.

  24. - Emily Booth - Thursday, May 15, 14 @ 12:29 pm:

    I’m not sure I would ever use Uber? But, it would make me feel way more comfortable, if I did, knowing the driver had insurance for using his car as a business and knowing the driver passed a drug test.

  25. - countyline - Thursday, May 15, 14 @ 12:42 pm:

    Insurance, I can see that, I have to have it. Drug tests, I can see that too, but the 4 year old car thing? I don’t think so. There no way that currently applies to the taxi industry.

    Pet stores, taxis, when are the clowns in suites I see walking around downtown Springfield during the noon hour going to take care of serious business like the budget, pensions, etc ?

  26. - sonny - Thursday, May 15, 14 @ 12:46 pm:

    Seeing this bill play out has been AMAZING for so many reasons

    1. Nobody is talking about the real reason this bill is being pushed… deregulate taxi rates across the state and let them impose “surge pricing”. Illinois is the FIRST state in the nation to take taxi pricing away from local municipalities and allow them to set their own rates.

    2. GOP leader Radogno and other Republicans are supporting this bill that regulates a new, innovative industry almost out of existence. I thought Republicans are for innovation and less government?

    3. The ridesharing companies have high-powered lobbyists but their messaging was pathetic. It doesn’t look like the companies were taking the advice of their lobbyists.

    4. The whole black caucus “donation” and the optics are typical old school Illinois politics.

    5. This bill preempts Chicago’s home rule authority and prevents the city from capping taxi “surge pricing” rates. The city keeps getting smacked down in the Capitol lately. This bill also guts many provisions in Mayor Rahm Emanuel’s proposed ridesharing ordinance. Does the city still have lobbyists in Chicago?

  27. - Nate - Thursday, May 15, 14 @ 1:04 pm:

    This state is a complete joke. Illinois entire government system is structured to make sure nobody gets ahead, and new and innovative ideas are crippled. I’ve lived in NYC, LA, and now Chicago. Business, workforce, politics, are complete garbage here. As much as I love Chicago as a city they need to cut the crap. It’s no wonder this city has corruption and segregation worse than any place I’ve lived. Your government has you under wraps here. This is no NY and no Cali. Get off your high horse Illinois.

  28. - OldSmoky2 - Thursday, May 15, 14 @ 1:12 pm:

    “…the 4 year old car thing? I don’t think so. There no way that currently applies to the taxi industry.”

    Actually, in Chicago it does apply. No models older than four years may be used as taxis.

  29. - GOOSE/gander - Thursday, May 15, 14 @ 1:17 pm:

    There are 60 pages of rules and regulations for Taxi Medallion Licence Holders in the City of Chicago.Plus there is 46 pages of rules and regulations for public chauffeurs holders.Comprehensive insurance coverage, newer green cars and mandatory city inspection just to name few. Drivers goes through police background check, driving record are verify, medical record must be submitted. You can not owe parking ticket or child support,just to name few. Those regulation protect the citizens and the industry for most part. Share ride tech is great i love it . But the problem is that they don’t want to be held to the same standard. No comprehensive insurance, you don’t even know who’s behinde the wheel. Oh we just want to wait until something crazy happen befor we hold them to standard ? give me a brake.

  30. - Demoralized - Thursday, May 15, 14 @ 1:37 pm:

    ==Consumers lose==

    Yeah, because those darn safety regulations are a drag.

  31. - wordslinger - Thursday, May 15, 14 @ 1:42 pm:

    –Business, workforce, politics, are complete garbage here. As much as I love Chicago…==

    LOL, that covers a lot of ground. What do you love, the weather?

  32. - Arthur - Thursday, May 15, 14 @ 2:43 pm:

    so does this mean Uberx and Lyft are done with in Chicago? When will be the last day we can take them in the city. I will miss it

  33. - Gator - Thursday, May 15, 14 @ 3:14 pm:

    The taxis just proved that if Blockbuster and Hollywood Video had lobbied up like they did, they probably would have forced Netflix to leave Illinois by requiring them to have brick and mortar stores, a certain number of DVDs in stock at all times, etc.

    Imposing 100 year old taxi rules on a new app-based business model makes sense. The city has an ordinance that covers regulation, insurance, etc.

  34. - Gator - Thursday, May 15, 14 @ 3:31 pm:

    [meant to say]……business model makes “no” sense.

  35. - OldSmoky2 - Thursday, May 15, 14 @ 4:34 pm:

    No one is imposing “100 year old taxi rules” on anything. This just says if you’re going to sell ride services to the public, you have to do it in insured, safe vehicles with responsible drivers. It’s like saying if you’re going to sell liquor to the public, you can’t just throw up a still in your back yard and sell glass jars full of who knows what. Then again, I get the feeling these days that some people think that ought to be legal, too.

  36. - Anonymous - Thursday, May 15, 14 @ 8:09 pm:

    Taxis have the same technology as sidecar, lyft and Uber x have. I regularly use Uber and hailo to pick up dispatch orders. The fact is that Uber x and the like are just trying to lowball me out of business with their fifty cents a mile cheaper fares.

    The only difference between taxis and Uber x and sidecar is that they have no insurance to cover anyone in case of an accident. That’s why their rates are cheaper. If anybody wants to roll the dice with their lives to save a couple dollars, why don’t you just walk on the side of the road and put your thumb out. It’s the same thing as lyft, Uber x and sidecar.

  37. - GOOSE/gander - Thursday, May 15, 14 @ 8:19 pm:

    How about share ride apps for the buses . CTAs always run behind schedule anyways. Let every tom dick and harry uses their mini van and buses to pick up people on the street. What is good for the goose should definitely be good for the gander . Think about it , there are many folks in south side and west side who are unemployed right now as we are speaking. Maybe
    we should let them use their minivans and buses to pick up, all in the name of new tech and innovation.

  38. - james - Thursday, May 15, 14 @ 8:57 pm:

    Congratulations to the legislatures that have passed this very important bill to keep all Illinois safe from unlicensed drivers, unlicensed vehicles and under insured vehicles running around acting as professionals with out a clue as to the geography of the city..

  39. - Larry - Thursday, May 15, 14 @ 9:09 pm:

    Finally the State of Illinois took the right choice and regulate this unlicensed, uninsured operators. What’s wrong with requirement of commercial insurance and licensed drivers? How about paying local taxes and fees ? Congratulation for standing up to the Google and its partners on this scam.

  40. - stewart - Friday, May 16, 14 @ 3:42 pm:

    cant wait for uber and lyft to sue in federal court and see the issue join with Houston and Kansas courts for an uplyfting uber smack down under the RICO act.

  41. - Internet Marketing - Tuesday, Jun 3, 14 @ 9:41 pm:

    Online video marketing is a great method to
    build brand awareness, share product information, and maintain long-lasting relationships with customers.
    Web Hosting (with business e-mail hosting with full anti-virus and anti-spam protection).
    Before the dawn of the net, it was merely local competition which was
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