Texas-sized debate expected over proposed statewide regulations for ride-hailing companies

Ride-hailing giants Lyft and Uber left San Antonio in their rearview mirror after the nation's seventh largest city restricted their operations, instead shifting their focus — and money — on convincing Texas lawmakers to allow them to operate statewide with fewer restrictions.

The companies are spending as much as $1 million on more than three dozen lobbyists at the Texas statehouse this session, according to Texas Ethics Commission records. The companies are pushing legislation that would supersede local rules, allowing them to operate the same way in San Antonio as they do in other Texas cities where they're thriving.

Lyft and Uber — which use smartphone apps to connect drivers with customers who need rides — have successfully led similar efforts elsewhere: California, Colorado, Illinois, the District of Columbia and Virginia have all passed laws that regulate companies' operations, and about 35 states are considering similar laws.

But the companies' efforts in Texas could be among the biggest and most contentious to date, because the companies have essentially been kicked out of one of the state's largest cities.

The squabble centers on whether such companies should be held to the same standards as taxi operators. Records show that Texas Taxi, a group representing 2,500 Texas taxi drivers, hired eight lobbyists this legislative session, compared to one in 2013, and the industry has spent about $500,000 to block a statewide law.

Taxi companies argue that Uber, Lyft and similar services would hurt the industry's level of service. Ed Kargbo, president of Yellow Cab Austin, said the legislation would allow the companies to skirt the Americans with Disabilities Act because they could pay a fine if they don't provide wheelchair-accessible vehicles.

"If this bill passes in its current capacity, it's the beginning of a really bad process of service delivery and would be detrimental to the benefit of the customer," Kargbo said.

The bill's sponsor, Republican Rep. Chris Paddie, said he wants to avoid a patchwork of regulations across the state. Already, Houston has a strict ordinance that requires drivers to get permits — which requires fingerprinting — that Uber says left it with a fraction of the divers it has in other cities. Similar rules were adopted in in San Antonio, prompting both Uber and Lyft to leave.

"My goal here is to make sure that as technology advances, that it's available to more people, and not that we're restricting this type of innovation," Paddie, who lives in Marshall in northeast Texas, said in a recent interview. He said he's been using Uber for two years in Austin.

The proposal would require such companies to register with the state and pay a $5,000 fee each year. Taxi companies are currently regulated by cities and aren't governed by a state law.

The bill — co-sponsored by San Antonio Republican Rep. Lyle Larson — also would require the companies to conduct driver background checks and to provide commercial insurance. The companies would have to service wheelchair-bound customers or pay a $10,000 annual fine.

The bill is scheduled for its first hearing Thursday, in the House Transportation Committee — meaning it a long way to go before it could become law. But the committee's chairman, Democratic Rep. Joe Pickett, said changes to the taxi industry are "probably inevitable."

Since its founding in 2009, Uber has ballooned into a $40 billion company that operates in about 150 U.S. cities — including New York City, where Uber cars now outnumber yellow cabs. Lyft, founded in 2012, operates in 59 U.S. cities and is valued at $2.5 billion.

Lyft spokeswoman Chelsea Wilson called the bill "a common-sense approach," saying Lyft and Uber already meet most of the bill's requirements. Uber spokeswoman Debbee Hancock noted that the company fought regulations in San Antonio after seeing the effects of Houston's rules. She said leaving the city wasn't an easy decision, noting that Uber drivers schlepped passengers on 50,000 trips in San Antonio in March alone.

San Antonio Mayor Ivy Taylor has defended the ordinance, saying the City Council's job was to ensure public safety, not the businesses' profitability.

Both companies cover drivers with passengers under a $1 million corporate policy, and have other insurance requirements, and conduct background checks involving multi-state and federal databases that go back seven years. But some drivers can slip through.

Despite Houston's ordinance, a driver with a federal conviction — who passed Uber's background checks — operated without a permit. Officials discovered the driver lacked a permit when he was arrested after a passenger alleged she'd been sexually assaulted by the driver. That case is pending.


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