How Maryland reached a deal to regulate Uber and Lyft

At a hearing on March 24, state senators peppered representatives from Uber and Lyft with myriad questions about everything from customer privacy to drivers carrying guns.

Taxicab industry representatives warned senators about the ridesharing companies’ safety records. Officials with the Maryland Public Service Commission described more than a year of back and forth over how to regulate the companies. To top it all off, insurance companies arrived at the end with a heap of changes they wanted to make.
All of the parties were gathered to consider a bill that would create a new set of regulations for companies like Uber and Lyft. But with less than three weeks left in the legislative session, getting everyone to march in the same direction seemed like a tall order.
For state Sen. Bill Ferguson, the Baltimore city Democrat who offered the legislation, seeing the session pass without a bill would have been a letdown for the second year in a row.
Yet, the day after the session ended on Tuesday, Uber praised the politician’s “continued leadership,” and urged users to send a thank you message to Ferguson on Twitter.
Lyft said they “look forward to working with the PSC and Governor [Larry] Hogan.”
The PSC’s chairman said he was glad to see a bill that will “allow Uber and Lyft to thrive in Maryland” and “looks forward to working with all stakeholders.”
Yellow and Checker Cab Vice President Dwight Kines said the taxi industry would be allowed to “compete fairly.”
Even the insurance companies were onboard.
So what changed?
After more than a dozen work sessions to pore over the language, the sides all reached an agreement that changed the bill dramatically, but ultimately allowed it to pass, according to multiple sources who spoke with Technical.ly Baltimore. The final vote of the full House to seal the deal was taken with about two hours left in the legislative session. Referencing the term lawmakers use for the final day of the session, Ferguson called it the “Sine Die Miracle.”
The passage capped off a flurry of activity in the final week of the session that revealed just as much about regulating innovation companies as it did about how things work in Annapolis.

Political will

According to Ferguson, the first step was getting the legislators on board. Despite the many question they had at the hearing, Ferguson said members were “very committed to holding numerous workgroups on the bill” to address the issue.
Still, the sessions required legislators to decide that a bill was necessary.
Throughout the legislative session, Ferguson spoke of the need for the legislature to make policy around how to regulate ridesharing companies, because the companies and PSC weren’t getting anywhere by trying to fit Uber and Lyft into taxicab regulations that weren’t written for them. Eventually, the committee’s chairman, Thomas “Mac” Middleton, came around to that view, and proved a key supporter in moving negotiations forward, Ferguson said.

Roadblocks

Along with legislators, the PSC also had to be convinced that a bill was necessary. This was the entity, after all, that already had two years of work into figuring out how to regulate these companies.
The PSC had maintained that the companies fall under “common carrier” rules, which are essentially similar to taxicab rules. Uber and Lyft backed Ferguson’s bill to undercut that ruling, and create a new category for ridesharing companies called Transportation Network Services.
According to Ferguson, the big breakthrough in negotiations came on the morning of Thursday, April 9, when the two sides were able to agree on a big issue that had divided them: fingerprinting.
Uber and Lyft have their own background checks, and maintained that those were strong. The PSC wanted their process, which required fingerprinting of new drivers.
In the end, the two sides struck a balance. Under the deal, ridesharing companies will have to register with the Public Service Commission, and they will essentially have nine months to prove to the PSC that their background checks work. After that, the PSC will see how it’s going.
Under the deal, Uber can get a waiver so drivers don’t have to get fingerprinted over the next nine month. There’s a provision for the drivers to get temporary licenses, which opened up an agreement with the taxicab industry. The same temporary licenses issued to the Uber drivers can also be issued to new cabbies. Since it allows cab companies to compete on the same plain as the ridesharing companies, that provision went a long way toward easing concerns of the taxi industry.

Seeking insurance

Before the bill could go forward, the insurance companies had to have their say.
Insurance lobbyists brought concerns that Uber and Lyft used insurance companies that were not authorized in Maryland. The PSC and insurers wanted to make sure that insurance used by the ridesharing companies used insurance that would be OK in Maryland. In this case, they were again able to reach an agreement that struck a balance.
As the bill’s House sponsor, Del. Jeff Waldstreicher, put it: “When the app is on, the drivers will use surplus lines. When the app is off, they will used authorized insurers.”

The locals

With some cities and counties in the state already seeing Uber and Lyft on their streets and others new to the ridesharing game, local governments also wanted a seat at the table.
The result was a deal that allowed them the right to enact a 25-cent per-rider fee on the ridesharing companies to fund transportation needs like mobility services for people with disabilities. Baltimore city is the only government that has such a fee for taxis and limos, but the bill gives that right to others.

Next steps

The bill isn’t law yet. Gov. Hogan still has to sign it. Then, the framework would go into effect on July 1.
Meanwhile, the PSC will still craft plenty of regulations. But now they have a new framework to start from, and the issues that were hanging over previous negotiations have been ironed out.
Uber and Lyft’s statements indicate that the bill removes previous warnings that they could withdraw from Maryland. It might also keep them out of court. And the deal even encourages the PSC to look into ways to modernize the taxicab industry, which has been experimenting with app and text-based ride hailing in its own right.
“Innovation changes the economy,” Ferguson said. “Many times regulatory bodies are sort of stuck with very rigid laws that are passed based on prior economies.”