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Blake: The exuberant and exorbitant transportation wars

By the time the legislature gets through with the bill regulating the new “transportation network companies,” such as UberX and Lyft, they might wish they’d just remained under the radar as gypsy operations.

After six hours of testimony last week, lasting until 9:30 p.m., the House Transportation Committee took up the TNC bill again Wednesday afternoon for “action only.”

Tack on a couple of amendments, then vote the bill out in 30 minutes or so, right? Hardly. “Action only” meant a half hour just to sort out the amendments, an hour to pass eight amendments on which everyone agreed, and five hours to vote on numerous controversial changes. The committee didn’t adjourn until 9 p.m.

The bill survived but faces more of the same in two more committees before it even reaches the floor. Somewhere the late Freda Poundstone is smiling. She was a Republican lobbyist for the taxi industry who successfully kept competition out of the industry for years.

Senate Bill 125, which has bipartisan sponsorship in both chambers, would establish limited regulatory standards for a new type of ride-sharing: Companies that link would-be passengers with private vehicles driven by their owners via smartphone apps. The driver gets 80 percent of the fare, the company 20 percent. The fares are generally lower than that charged by taxis. There’s no cash, just credit cards. (Uber Black, the original operation, lets passengers e-hail limousines; they cost more than taxis but the taxis don’t like higher-priced competition either.)

Few lawmakers want to be on the wrong side of history but on the other hand they love their local cab companies and the status quo. Since the bill has passed the Senate, the opponents’ strategy has turned to loading down the bill with expensive and cumbersome amendments that would make the TNC business model unworkable.

For instance, the TNCs already provide expensive commercial insurance to cover the vehicle when there’s a passenger in it. But opponents would require commercial coverage even before the rider gets in. An amendment approved 9-4 would authorize the Public Utilities Commission and the state insurance division to set the rules on insurance.

That would probably be fatal to the industry since the PUC is very much in the pocket of the taxi industry it purportedly regulates. Sponsoring Rep. Dan Pabon, D-Denver, resisted the move, but he couldn’t sway enough of his fellow regulation-happy Democrats.

A second major amendment would authorize the PUC and Department of Labor and Employment to determine whether the drivers, who are independent contractors, would have to carry workers’ compensation insurance.

Pabon insisted it was clear workers’ comp wasn’t required, and the unnecessary study would drive up the cost of the bill, but he lost again, this time by the narrower margin of 7-6. Pabon is assistant majority leader, but on this issue he leads the Republicans more effectively than his Democratic colleagues.

At least the committee resisted even more crippling amendments. One would have let counties implement even stricter controls; a second would have permitted the PUC to regulate “surge pricing,” which the TNCs use to regulate supply and demand. Rep. Don Coram, R-Montrose, helped sway the committee by pointing out that even hotels use surge pricing, posting maximum rates on the door that are much higher than what they generally charge.

An amendment that Pabon called “the most protectionist measure so far” would have permitted the PUC to determine how many TNC vehicles could operate, and where. Fortunately it also went down 10-2.

Proponents of TNCs will try to remove the offending amendments in the House Finance Committee, the bill’s next stop, but foes will no doubt try the tack on the bad ones again.

An attentive listener, and occasional participant, was PUC director Doug Dean, a former Republican lawmaker. He told the committee last week he was “neutral” on the issue of TNCs. But he noted that the PUC earlier had warned it would issue a cease-and-desist order against them. It will refrain from enforcing it only until the fate of the bill is known.

If the bill fails, said Dean, trying not to sound too eager, ”We have no choice but to tell the companies they have to leave the state.”

Rep. Dominick Moreno, D-Commerce City, made an interesting suggestion while opponents were testifying last week. “Maybe instead of raising the standards for TNCs we should reduce the regulations on taxis,” he said.

The taxi companies complained loud and long about “fairness,” claiming that TNCs should be held to the same standards that they are.

What they didn’t point out that for the last seven decades they didn’t worry about the fairness of requiring would be competitors to prove in advance there was a need for their services in order to get licensed. That was a virtually impossible assignment, considering how lovingly the PUC treated incumbents. The cab companies worry about fairness only when a new technology makes a different form of competition possible.

Ali Vazir, a supporter of UberX, accused the cab companies of charging their drivers “exuberant” lease rates. It was a happy instance where the wrong word was better than the right one. The rates, which are not regulated by the PUC, certainly make the companies exuberant. Kyle Brown, general manager of Metro Taxi, said a Prius can cost a driver $850 a week. Owner-drivers pay $524 a week and the average lease is $672 a week.

It’s no wonder the cab companies are afraid of UberX and Lyft. Why wouldn’t their drivers leave for a company that charges no lease and lets you keep 80 percent of the gross?

The bill was amended to allow the cab companies to operate TNCs, if they want. Perhaps they’ll have to if a good bill passes. It’s one way to force the cab companies to give the drivers a better break.

It will be interesting to watch what UberX and Lyft do if the bill fails, or if it passes with overly onerous requirements. Would they continue to operate as they do now, and tempt the PUC to entrap every driver with an app? That might be a public relations disaster.

Longtime Rocky Mountain News political columnist Peter Blake now writes Thursdays for CompleteColorado.com. Contact him at pblake0705@comcast.net You may re-publish his work at no charge and without further permission; please give full credit to Peter Blake and www.CompleteColorado.com.

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