Economy
E. Tammy Kim / Al Jazeera America
AUSTIN, Texas — On Thursday, just one week after Houston police arrested an Uber driver for allegedly raping his passenger, the app-based private taxi company was at the state Capitol pushing for a bill that would authorize it to do business across Texas and reach 27 million potential customers.
House Bill 2440 would establish statewide standards for transportation network companies (TNCs) like Uber and its lesser-known competitor Lyft, which allow nonprofessionals to drive their own cars as vehicles for hire. (The companion Senate bill has not yet been heard in committee.) Ten states already pre-empt local rules when it comes to TNCs, including California, Virginia and Illinois, and similar legislation is pending in 27 more, Uber says. In Texas, Uber, a $40 billion company, has a presence in nearly a dozen cities and airports, though the number of drivers remains a closely guarded secret. More than 100,000 Uber customers have signed a petition to support HB 2440.
Texas’ current “patchwork of regulations,” Uber’s head of state affairs, Sally Kay, explained Thursday morning to the House Transportation Committee, is bad for everyone. A TNC driver permitted to work in Austin but not Houston, for example, cannot pick up a customer in one and drop him off in the other. But several city governments, black car companies and taxi drivers oppose the bill. They argue that municipalities should govern vehicles for hire, that Uber’s background check and insurance requirements are too lax and that TNCs simply aren’t playing fair: Why demand strict licensure and inspections, city by city, from taxis and limos but not Uber?
The TNC bill is sponsored by Republican Rep. Chris Paddie, a conservative from a rural town in East Texas not likely to see much Uber activity. (His office did not respond to requests for comment.) To him and other boosters of the bill, such as the Texas Association of Business, however, TNCs represent the best of free enterprise — innovation, disruption and the wise, untethered hand of the market.
Perhaps this is why, at the committee hearing on HB 2440 — crowded with lobbyists, cab drivers, black-car executives and people in wheelchairs who depend on taxis for transit — nearly an hour passed before the alleged sexual assault in Houston was even mentioned. The details are not good for TNCs: According to The Houston Chronicle, Uber driver Duncan Burton passed the company’s background check but not the city’s when he allegedly raped a drunk passenger in late January. Had Uber required Burton to obtain a city license in compliance with existing law before connecting him to the app, Houston’s background check, which includes fingerprinting, would have revealed that the man served 14 years in federal prison on a drug conviction and likely disqualified him from commercial driving.
Kay would not address Burton’s case directly but said, “We stand by the background check system we’ve developed and believe it’s more rigorous [than most cities’].”
Houston’s deputy assistant director of administration and regulatory affairs, Lara Cottingham, disagreed, saying Uber’s background check “is based on a Social Security number, and ours is based on fingerprints. They cannot access the same data that [the FBI] can.” Houston requires vehicle-for-hire license applicants to take a drug test and goes back 10 years into their criminal history; Uber does not test for drug use and goes back seven years.
The debate over public safety extends to TNC insurance as well. Yellow cabs, livery cars and limousines in Texas are classified as commercial vehicles and insured as such in case of injury or other damage. But HB 2440 would require TNCs to maintain a more limited form of commercial insurance that takes effect only when they’re working an app-based fare, as opposed to driving for personal reasons. This makes TNC work unpalatable to Hannah Riddering, an Austin taxi driver who started out in the industry in 1973. “I want to have commercial insurance and protection. [Uber] has no accountability,” she said. On Wednesday, at a mobility committee hearing of the Austin City Council, she also pointed out the unfairness of requiring cabbies but not TNCs to pay commercial property taxes on their vehicles.
Other taxi drivers see flaws in the Uber interface. “You cannot have any regular customers with the app, and you can only have credit card customers,” said Antonio Rojas, a driver with the Austin Cab Co. who relies on a repeat passenger base. And David Passmore, the president of the union-affiliated Taxi Drivers Association of Austin, says Uber’s business model relies on unfair competition. “It’s not the sharing economy. It’s sharing the scraps of the economy,” he said. “These guys come into a regulated industry and do whatever they want.”
As Uber takes its quest for market dominance from the city to the states, it challenges not only traditional cab drivers and franchises but also the basic notion of government regulation. The Houston case underscores Uber’s history of allowing what it calls driver partners to work in contravention of local laws — and paying off tickets and legal fees as necessary. In the meantime, it builds public support. Last year app users were outraged when the Austin police department warned SXSW festivalgoers not to ride in unlicensed Uber cars; this year, after Austin adopted an interim TNC ordinance, nearly all the festival work went to Uber, say several Austin cabbies.
Even in Texas, a state famously wary of Big Government, Uber’s disregard for regulators has been striking. The corporation refuses to release even the most basic information to legislators or the public, citing trade secrets, and often criticizes rules it helped develop. Officials in neither Austin nor Houston can say how many Uber drivers are working in their jurisdictions, with or without a commercial permit. And when San Antonio increased its regulatory standards for TNCs, Uber vowed to pull out.
Austin and Houston, which sent representatives to testify on HB 2440, are struggling with Uber’s seeming petulance. Cottingham says Uber was intimately involved in crafting the local TNC ordinance but now, less than a year later, is pushing to invalidate municipal regulation. “Cities are the most capable entity to regulate vehicles for hire,” she said. “We know our city. We know the needs of our community.”
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