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Updates to Michigan’s Legislative Battle to Permit Ride-sharing Statewide

The Michigan House of Representatives failed to pass on Wednesday HB 5951 which would have permitted ride-sharing companies like Uber and Lyft to operate in Michigan and preempted any more-restrictive local regulations.  The House may take up the bill again today.

The Michigan House of Representatives failed to pass on Wednesday HB 5951 which would have permitted ride-sharing companies like Uber and Lyft to operate in Michigan and preempted any more-restrictive local regulations. The House may take up the bill again today.

We recently overviewed Michigan’s proposed legislation, HB 5951 that would effectively allow ride-sharing services like Uber and Lyft to operate statewide by preempting local regulations. Here is a quick update to the status of this proposed legislation.

Michigan’s House of Representatives Fails to Pass HB 5951 on Wednesday

As reported by MLive, Michigan’s House of Representatives did not pass HB 5951 yesterday.  A House committee approved the bill last week and sent it to the House floor for a vote.  The bill would permit ride-sharing services to operate in Michigan provided they met certain requirements (outlined here) that are largely consistent with Uber’s current practices.

Yesterday, the House failed to pass the bill.  The bill is still alive, however.  Here is what happened, as outlined in the Journal of the House of Representatives for yesterday’s session.

  • The House made certain changes to the bill, including exempting from Michigan’s Freedom of Information Act any list of ride-sharing drivers provided to the state as required by the bill.
  • An amendment was proposed, but failed to pass, that would allow local municipalities to still pass their own ride-sharing regulations, even those more restrictive than state law.  This would effectively strip HB 5951 from having its primary impact (of having uniform state-wide requirements for ride-sharing services).  In particular, the amendment stated:

    Sec. 11. (1) This act does not prohibit a municipality or a group of municipalities that form an authority to regulate transportation network companies under the municipal partnership act, 2011 PA 258, MCL 124.111 to 124.123, or the public transportation authority act, 1986 PA 196, MCL 124.451 to 124.479, from adopting a rule, ordinance, or resolution that is more restrictive than this act.

  • When at least 50 representatives voted against the bill’s passage, the House passed on the agenda item.
  • The House will reconvene at 10am today, December 11, and may take up the bill again.  You can watch a live webcast of today’s House session here.

Opposition from Insurance Industry

Michigan's insurance industry continues to oppose HB 5951.

Michigan’s insurance industry continues to oppose HB 5951.

The insurance industry continues to vigorously oppose the bill in its current form, as laid out in its December 9 letter to the House.  One of their primary complaints is the gap in coverage for a ride-sharing driver who is on duty, but not currently carrying a passenger.

According to the executive director of the Insurance Institute of Michigan, HB 5951 leaves a gap in coverage that “may leave drivers and passengers of ride sharing companies at financial risk.”

In the meantime, all eyes will be on the House floor today to see if an agreement can be reached to allow HB 5951 to pass a House vote.

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Uber’s Regulatory Drama Continues: Portland Sues Uber

The City of Portland sued Uber on December 8 seeking to enjoin Uber from operating in the city limits.

The City of Portland sued Uber on December 8 seeking to enjoin Uber from operating in the city limits.

Yesterday’s post discussed Michigan’s proposed bill HB 5951 which would implement state regulations permitting ride-sharing services such as Uber and Lyft to operate in the state of Michigan provided they met certain regulations that are largely consistent with Uber’s existing practices.  That bill would preempt various city regulations (such as Ann Arbor’s), some of which conflicted with Uber and Lyft’s existing practices.  Just a few days after Michigan’s house committee approved HB 5951 and recommended the house pass the bill, a strikingly different approach has been taken in Portland, Oregon.

City of Portland v. Uber

On Monday, December 8, the City of Portland sued Uber seeking to enjoin Uber from operating in the city of Portland.  This lawsuit comes just days after Uber began operating in Portland on Friday, December 5.  The conflict involves Portland City Code Chapter 16.40, which requires as follows:

  • “for-hire transportation” drivers must obtain a “for-hire transportation” permit
  • for-hire vehicles must have certain decals and plates
  • taxicabs must adhere to certain fare and meter rates
  • taxicabs must adhere to certain regulations related to wheelchair accessibility
  • for-hire vehicles must maintain certain levels of insurance
  • taxicabs must maintain a dispatch system in operation 24 hours/day
  • taxicabs must service city-wide 24 hours/day, 7 days a week and accept any request received within the city
  • taxicab companies must have at least 15 cabs in their fleet and have at least 2/3 of their fleet in service at all times
  • for-hire vehicles must pass regular inspections
  • for-hire vehicles must be equipped with digital security cameras

According to the City of Portland’s complaint, which can be read here, Uber violates Portland City Code because it:

  • does not hold a valid company permit
  • all prospective Über customers must first download the Uber app and enter into an online agreement under terms dictated by Uber, including a waiver of any and all liability to Uber
  • the customer must provide credit card information to Uber, which is charged, rather than having drivers collect a fare from the customer
  • customers hail an Uber vehicle through the Uber app instead of a human dispatcher
  • the Uber app calculates fares based on time and distance rather than through a certified taxi meter
  • Uber’s drivers and vehicles are personally insured, and Uber does not require its drivers to purchase commercial at insurance
  • Uber does not require its drivers to be certified by the City of Portland
  • Uber’s drivers are not required to be dispatched to all ride requests in the city, but rather only to passengers who can pay via credit card and have access to the Uber app or website to request a vehicle

Portland’s Cease and Desist Letter to Uber

On December 8, the City of Portland sent a cease and desist letter to Uber demanding that Uber cease operations in the city limits.  The cease and desist letter is attached to the complaint as Exhibit A. While there have been varying reports of the city’s enforcement against individual Uber drivers, it does appear the

Support for Uber and Success in Other Markets

As of publication, close to 10,000 individuals have signed a petition to support Uber’s operations in Portland.   Uber remains wildly popular and it generally overcomes the legal obstacles it has faced in other markets.  As previously reported, Uber faced initial obstacles in Ann Arbor and Detroit.  While Ann Arbor sent Uber cease and desist letters, it generally did not crack down on Uber’s operations, and now a Michigan bill is likely to preempt any local regulations.  In Detroit, Uber worked with the city to enter into an operating agreement stipulating how the company could operate in Detroit.

Ride-sharing In and Around Portland

While regulatory issues are nothing new to Uber, the situation in Portland is slightly unique.  Uber is already operating in several cities in close proximity to Portland, for instance, Vancouver Washington.  Additionally, various tweets, such as the one below, were bring broadly disseminated citing the limited availability of traditional taxi services in and around Portland:


 Going Forward

Going forward, the legal questions related to whether Uber is complying with Portland’s City Code appear to be relatively clear:  Uber is not.  As in other cities, this is likely not a legal battle, but rather one of politics and policy.  If Portland desires to have Uber available in its city, it will ultimately amend its city code to provide for transportation network companies such as Uber, to obtain permits to operate in the city.  Alternatively, as happened in Michigan, the state of Oregon could pass statewide regulations that preempt the regulations of any particular municipality, thus permitting Uber to operate statewide as long as it abides by the state-level regulations.

So far, Uber’s tactics of commencing operations and then working out any regulatory hurdles have worked out with staggering success.  Indeed, Uber recently raised another $1.2B at an amazing $40B valuation.  So far, Uber has proven that massive customer acquisition can cure all evils – even legal and regulatory ones.

 

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Transportation Network Company Bill Supported by Uber Moves to House Vote in Michigan

The Michigan House of Representatives will vote on HB 5951 which would implement state regulations largely consistent with Uber and Lyft's existing practices.

The Michigan House of Representatives will vote on HB 5951 which would implement state regulations largely consistent with Uber and Lyft’s existing practices.

On December 4, Michigan’s House Energy and Technology Committee approved HB 5951.  The bill provides for state regulation of transportation network companies such as Lyft and Uber.  Uber supports the bill because it is consistent with its existing practices.  The bill would supersede any local regulations, such as the city regulations underlying Ann Arbor’s cease and desist letters to Uber and Lyft earlier this year.

Overview of HB 5951

HB 5951 directs the state to issue permits to any transportation network company that meets certain requirements, including:

  • the company carries insurance meeting certain minimum coverage thresholds;
  • drivers are at least 21 years old;
  • each driver maintains a Michigan chauffeur’s license;
  • the company performs background checks on and collects driver history reports from each drive;
  • that each driver vehicle undergoes a yearly safety inspection.

As reported here by Mlive, Michael White, manager of Uber’s Michigan operations, says Uber supports the bill and that Uber’s current practices are largely consistent with the bill’s requirements.

Existing Local Regulations

Currently, various municipalities provide their own regulations purported to cover ride-sharing services such as Uber or Lyft.  For example, as widely reported by outlets such as Business Week and MLive, on May 14 the city of Ann Arbor issued cease and desist letters to Uber and Lyft.  Other cities in Michigan, permitted Uber and Lyft to operate.  For example, Detroit entered into an operating agreement with these companies to permit their operation.  Section 11 of HB 5951 provides: “A local unit of government shall not enact or enforce an ordinance regulating a transportation network company.”  Accordingly, HB 5951 effectively trumps any local ordinances such as those of Ann Arbor seeking to restrict Lyft or Uber from operating.

Uber Urges Support for HB 5951

Beyond Michael White’s strong testimony in favor of HB 5951 at the committee level, today Uber also launched a marketing campaign urging its users to email their state representatives in support of HB 5951.  Michigan Uber users were emailed information about 5951, and a one-click mechanism for emailing the appropriate state representative.

On December 8th, Uber Michigan users received emails from Uber asking for their support of HB 5951.

On December 8th, Uber Michigan users received emails from Uber asking for their support of HB 5951.

HB 5951 Opposition
Not everyone supports HB 5951, however.  As noted here, the taxi industry and  Michigan Municipal league oppose the bill.  Objections include:
  • the bill does not require companies like Uber and Lyft to have large enough insurance policies;
  • the bill is unfair to taxi and limousine services that remain subject to harsher regulations; and
  • the bill may undo some beneficial regulations on limousine services (see the comments here).

In the end, Michigan’s legislature will have the final say.  The bill appears to have momentum and some have noted they expect it to become law before the end of the year.