2016 New York Legislative Preview:  The Calm Before The Regulatory Storm

2016 New York Legislative Preview: The Calm Before The Regulatory Storm

The New Year brings the potential of major changes in New York State and City legislation governing the operation of Transportation Network Companies (TNCs) such as Uber and Lyft. While Uber and Lyft have operated in New York City (NYC) as licensed car services, since 2011, they have operated in a gray area outside of NYC, where they prefer to be governed by less regulation. Last year, two upstate legislators, State Senator James Seward (R-Oneonta) and Assembly Member Kevin Cahill (D-Albany) introduced bills that would regulate TNCs. The legislature did not enact any of these bills, mostly attributable to leadership changes in the Assembly and Senate. Meanwhile, on a local level, in NYC, there are concerns that any State legislation passed in the coming session may have an impact on local legislative and regulatory proposals to level the playing field. While NYC has stood alone on the national regulatory front with more strict licensing laws and regulations, and one of the few states where TNC regulations have not passed, this could all change in a heartbeat. Quietly, maneuvers are being made by TNCs in Albany, and the calm before the storm could end quickly with the imminence of two colliding political weather fronts. In NYC, there is a southern cold front in a holding pattern with the NYC Council poised to move pending and new legislation, while the NYC Mayor and the NYC TLC are about to release a major study and proposals to level the playing field between TNCs and taxicabs/FHVs. In Albany, there is a developing nor’easter that may be moving quickly south towards NYC, with the Governor about to unveil a statewide plan for TNCs in his State of the State speech. May regulatory weather forecasters beware and be on the lookout for a major political tempest brewing. It is unclear how much hot air will be blowing, from which direction and from which persons or entities. It is also not known whether there will be some scattered thunderstorms or a regulatory tornado. Either way, while weather forecasters sometimes have difficulty in accurately predicting conditions, we will attempt to nevertheless predict the regulatory outcome.

New York State Legislative Developments

  1. The TNC Insurance Bill[1]

Bill S4108/A8195 (also known as the TNC Insurance bill), would create new insurance requirements for TNCs and create group TNC polices, and had the most progress last year; this bill being amended three times, but not brought to a vote. The bill would require a TNC driver — while logged into a TNC’s digital network, available to receive requests, but who does have a passenger — to carry primary automobile liability insurance of at least $50,000 for death and bodily injury per person, $100,000 for death and bodily injury per incident, and $25,000 for property damage While the driver is on the digital network and has a prearranged rider, he or she would be required to have primary automobile liability insurance of at least one million dollars for death, bodily injury and property damage, and other coverage as required by the insurance law. The coverage requirements can be satisfied by insurance maintained by the driver, a group policy maintained by the TNC, or a combination of both.

The original version of this bill was troublesome because it did not have exemption language for New York City. New York City has strict requirements that For-Hire Vehicles (FHVs) maintain more expensive and comprehensive commercial insurance at all times. This was a highly suspicious development as the language exempting jurisdictions with a population of over 1 million people is standard protocol when a bill is not intended to apply to NYC. Without the exemption language, there was a fear that New York City taxicab and FHV drivers would turn in their more comprehensive (24/7 coverage) commercial policies for these less expensive insurance policies. This would enable Uber to grow exponentially with drivers migrating away from other fleets or bases, placing competitors at an unfair disadvantage should they not be able to procure the unique supplemental or umbrella insurance policies maintained by Uber and Lyft. Now, the last amended version of this bill does prohibit these policies from being issued in New York City; however, the potential latent intent of the original bill must remain on the minds of policymakers and lobbyists in the next session.

  1. The Omnibus TNC Bill[2]

S4280/A6090, known here as the Omnibus TNC bill, is more comprehensive than the TNC Insurance bill and did not move much (having only been amended once last year). In addition to the insurance provisions provided in S4108-C/A8195 (TNC Insurance bill), this bill would amend the State’s Vehicle and Traffic Laws to explicitly create TNCs. The bill creates registration and operational requirements for TNCs including: prohibiting additional charges for people with disabilities and accommodations for service animals and mobility devices; TNC background checks through the NYS Department of Criminal Justices services or an equivalent history from 3rd party background check providers (like many other TNC bills, fingerprinting is not required); identification of a TNC on the vehicle; drivers being prohibited from driving for more than 12 hours; and prohibiting TNC street hails. This bill explicitly exempts New York City. The TNC Omnibus Insurance bill, which appears to be a version similar to the self-regulatory and de-regulatory structures passed by many states around the nation raises, a number of concerns and unanswered questions. First is the issue of “reciprocity”, where FHVs subject to existing license recognition state laws operating by and between NYC, Nassau and Westchester counties, do not require multiple permits to pick-up passengers in one of those jurisdictions for transport to another.[3] The Omnibus TNC bill may upset the “mirror image” requirement of regulations, possibly undoing the reciprocity arrangement and which may then require vehicle licensing by all three jurisdictions for each vehicle to operate between those jurisdictions. Also, the new law may allow for a TNC loophole to usurp the Nassau and Westchester licensing systems completely. There is also a question of whether the final version of the Omnibus TNC bill will allow for divergent standards between taxicabs and TNCs, and permit TNCs to roam free in NYC as well.

  1. Other State Bills – MTA Tax and Wheelchair Accessibility

Other legislation of interest at the State level includes Senator Tony Avella’s & Assembly Member Victor Pichardo’s Accessibility bill,[4] which would impose accessibility requirements on the largest FHV bases in New York City. Also, Assembly Member Robert Rodriguez’ MTA Tax Bill (A5810)[5] which would require TNCs to collect and pay the MTA surcharge that is now imposed on taxicabs and street hail liveries, may enter the debate and discussion as the Cahill and Seward bills progress. Neither bill advanced last year, but their policy ideas could become highly relevant.

NYC Legislative and Regulatory Developments

Earlier in 2015, the Council held a hearing on a bill that would limit surge pricing to no more than double the normal rates (known as the Greenfield surge pricing bill).[6] Uber testified against the bill, but, although the bill seemed to enjoy support from the public and for-hire vehicle stakeholders, the New York City Taxi and Limousine Commission (TLC) testified that there were many technical issues with the bill, such as punishing the wrong party (the driver would be penalized under the bill even though it is the base that sets rates and determines what a normal rate is). The Greenfield bill may be resurrected this year. After the failure of an unrelated bill capping the growth of vehicles, the Speaker of the City Council, Melissa Mark Viverito said the Greenfield bill may be appropriate.[7] Just recently, after extensive surge pricing on New Year’s Eve, Council Member David Greenfield, once again said surge pricing is a type of price gouging and called for capping it.[8] Another recent Council bill worth mentioning is Council Member Benjamin Kallos’ proposal to require the creation of a universal app for taxicabs and street hail liveries.[9]

The Legislative and Political Weather Forecast

After TNC-related State bills were not enacted before the end of session this past summer, Senator Seward and Assembly Member Cahill announced that they would hold roundtable discussions around the State with stakeholders to obtain comments about the bills. There was at least one roundtable held in New York City and two in Albany. Before one of the roundtables in Albany, Governor Cuomo announced support for statewide regulations of TNCs stating that “[y]ou can’t do Uber city by city,” and stating the statewide framework would be a “statewide franchise.”[10] Some saw the Governor’s announcement as a rebuke to New York City Mayor Bill de Blasio, who supported two bills that would create a traffic study about possible congestion caused by the growth of TNC companies, and another bill that would cap the growth of for-hire vehicles. [11] After a $3 million lobbying campaign from Uber, the Mayor and Council agreed to scrap the plans for a cap, but enacted the bill requiring a traffic study. The City hired McKinsey & Company to conduct a reported $2 million study, which was scheduled for release at the end of 2015, but which has been delayed. However, even before the study is released, the Council has announced that it is working on legislation to regulate Uber that will impose accessibility requirements, create more parity with other FHV sectors, and possibly cap surge pricing.[12] The Council is expected to introduce this “leveling the playing field” bill at its January 20th meeting.

Suffice it to say that we will get some serious weather in early 2016, with some stakeholders getting a little wet, some getting hot, some freezing, and some may actually be struck by some regulatory lightening. The Cuomo/de Blasio rivalry may be an undercurrent or major factor in the outcome, with the NYC Council and the NY State Senate acting as de facto mediators that may help corral the parties to an equitable resolution. We predict that there will be some limitations to surge pricing and experimentation with taxicab surge pricing, enhanced accessibility requirements for FHVs, possible MTA fees and surcharges being imposed on the FHV industry, and a slightly more level playing field between Uber and its downstate competitors. We do not believe that it is likely that the upstate laws will preempt or usurp the NYC licensing process, but it is highly likely that the TNC Insurance bill will pass in some form that will provide new insurance products for everyone, including taxicabs and FHVs statewide. Let’s get out our snow shoes, our umbrellas, stay away from metal objects, and get ready for some 2016 street hail!

[1] S4108-C/A8195 – An act to amend the insurance law, in relation to transportation network companies, found at https://www.nysenate.gov/legislation/bills/2015/s4108.

[2] S4280-A/A6090-A – An act to amend the insurance law, the vehicle and traffic law, the general municipality law and the transportation law, in relation to transportation network companies found at https://www.nysenate.gov/legislation/bills/2015/s4280.

[3] Vehicle & Traffic Law § 498.

[4] S4482 Avella/A7203 Pichardo — An act to amend the administrative code of the city of New York, in relation to for-hire vehicles; and providing for the repeal of such provisions upon expiration thereof, found at http://www.nysenate.gov/legislation/bills/2015/s4482.

[5] http://www.nysenate.gov/legislation/bills/2015/a5810 .

[6] http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=2073899&GUID=0C1C4C28-9D46-4021-BAA6-EAC0D95D5F09&Options=ID%7cText%7c&Search=556.

[7] http://observer.com/2015/08/council-may-cap-uber-after-all-or-at-least-its-surge-pricing/.

[8] http://www.nydailynews.com/news/national/uber-angers-new-year-eve-revelers-surge-pricing-article-1.2483159.

[9] http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=2080729&GUID=0B43305D-62D0-4D1A-8524-4638757E8FA7&Options=ID|Text|&Search=universal.

[10] http://www.bloomberg.com/news/articles/2015-10-21/cuomo-seeks-statewide-uber-policy-undercutting-new-york-city.

[11] http://legistar.council.nyc.gov/MeetingDetail.aspx?ID=412649&GUID=F5F0CF40-1EF6-411C-B4D9-548961633DA9&Search= .

[12] http://www.wsj.com/articles/new-york-city-council-bypasses-mayor-bill-de-blasio-on-uber-policy-1452217772.

 

Professor Matthew W. Daus, Esq.

President, International Association of Transportation Regulators
Distinguished Lecturer, University Transportation Research Center, Region 2

Partner and Chairman, Windels Marx Transportation Practice Group

Contact: mdaus@windelsmarx.com

156 West 56th Street | New York, NY 10019

T. 212.237.1106 | F. 212.262.1215

and

Phillip Hom, Esq.

Special Counsel, Windels Marx Lane & Mittendorf, LLP

Contact: phom@windelsmarx.com

156 West 56th Street | New York, NY 10019

  1. 212.237.1049 | F. 212.262.1215

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