Nevada residents, beware. The regulators are after your Uber rides.
A bill filed in Las Vegas on March 27th would impose new burdens on platform drivers. It would require drivers to obtain a valid state business registration and to submit that information to the ride-sharing company. The company would be required to submit a list of drivers operating on its platform to the regulatory authority which would then post it online.
The bill would also remove the requirement that the regulatory authority determine that violations were willful and endangered public safety before levying a fine up to $100,000 on ride-sharing companies.
This would significantly increase the amount of discretion that the regulatory authority can wield. Ride-sharing companies could be hit with hefty fines for minor or unintentional infractions, which would limit their ability to operate in Nevada.
The cited argument for most of the provisions in this legislation, aside from protecting members of the taxi unions from competition, is that these regulations are necessary to protect the safety of riders. Ride-sharing has proven to be as safe as using traditional taxis in the current permissive regulatory scheme. In many ways, riders of these new platforms are at less of an informational disadvantage than they would be in traditional taxis because of the data the platform provides to them about the driver, route, and price.
Nevada had considered even more onerous legislation introduced the same day, reflecting a wish list from the taxi drivers’ union to lawmakers, but decided not to proceed.
New proposed regulations in this bill reflect a shift towards provisions that primarily focus on restricting competition or helping taxi companies rather than increased consumer safety. This bill would have required a 15-minute wait for ride-sharing pickups, which has little to no connection to protecting riders. One of the first examples of this was the bill signed in Massachusetts last year that imposed a 20-cent surcharge on ride-hailing trips, with 5 cents being funneled directly to the taxi industry.
Policymakers putting forward legislation such as this bill in Nevada are subsuming the needs of their constituents who could benefit from using the ride-sharing services to the interests of the taxi industry and the related unions. Even if they do not get implemented, proposals like this one could shift the window of measures perceived as acceptable so other, less egregious regulatory bills get passed without controversy.
Opponents of ride-sharing are now calling for regulations that would fundamentally alter the business model of companies such as Uber or Lyft.
In addition to the required 15 minute wait-time, which would severely curtail the usefulness of “on demand” ride-sharing, opponents are asking Uber and Lyft to file a full fare schedule with the regulatory agency. Opponents are asking for a maximum fare that would cap surge pricing, the mechanism some companies used to incentivize more drivers to operate in times of high demand by allowing prices to fluctuate.
Ride-sharing companies would no longer be viable with these provisions in place, and the scope of new regulations being called for is only expanding, as seen with the required wait time.
These kinds of provisions erect new barriers to potential drivers. Most drivers use these platforms as a way to supplement their income or help them weather an unexpected crisis like the loss of a traditional job or emergency expense. Removing that option would make them worse off.
Uber threatened to pull out of Nevada if more onerous provisions were not withdrawn, removing competition for taxi drivers who gave almost $500,000 to legislators over the 2016 election cycle.
It is unclear how ride-sharing companies will respond to the recent bill under consideration. If they perceive those regulations as injecting too much risk into their model, they could still choose to withdraw if it is implemented.
Nevada shows that proposed regulations are getting more creative and expansive. Opponents of ride-sharing such as the taxi industry are moving beyond safety and using more direct measures to hinder competition. States and local jurisdictions should resist the rush to further regulate because passengers and drivers alike would be worse off.
Charles Hughes is a policy analyst at the Manhattan Institute. Follow him on twitter @CharlesHHughes.
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