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During this year's regular legislative session, Texas lawmakers voted to override several local ordinances with new statewide measures — including relaxing regulations for ride-hailing services like Uber and Lyft.
Lawmakers sought to establish a statewide framework for regulating ride-hailing companies. The primary issue was whether such companies should have to perform fingerprint-based background checks, much like many cities require of taxi drivers.
Here’s a look at the state-vs.-local fight over ride-hailing regulations, what the new state law means for drivers and customers, and how some Texans feel about the changes.
This is the first in an occasional series exploring how Texans are affected by the fight between state and local officials over regulatory power — and where people like you stand on those issues. What state-vs.-local issue should we tackle next? Vote at the bottom of the page!
What did the 85th Legislature do about ride-hailing services this year?
The bill that Gov. Greg Abbott signed into law — House Bill 100 — undoes local rules that Uber and Lyft had argued were overly burdensome for their business models, like fingerprinting their drivers. Ride-hailing companies are still required to have a permit from the Texas Department of Licensing and Regulation, pay an annual operations fee of $5,000 and perform criminal background checks on drivers.
When did the controversy surrounding ride-hailing regulations start?
Lyft left Houston in November 2014 after a mandate there went into effect requiring ride-hailing companies to perform fingerprint background checks on drivers. Uber opted to continue service in the city despite its opposition to Houston's fingerprint requirement.
Both companies left Austin in May 2016 after the Austin City Council passed an ordinance requiring ride-hailing companies to perform fingerprint background checks on drivers, a stipulation that already applies to Austin taxi companies. After Austin implemented the fingerprinting rule, Uber and Lyft spent millions in a campaign last year to overturn it — an effort that ultimately failed when voters rejected a ballot proposition on the issue. The companies suspended services in the city just days after the vote.
How do regulations for Uber and Lyft differ from regulations for Texas taxis?
For the most part, regulations for taxis vary in each city. However, traditional Yellow Cab-style companies in Austin and most other Texas cities are limited in how many vehicles they can have on the road and are strictly regulated in terms of the fares they can charge. Many cities also require those firms to have some wheelchair-accessible vehicles in their fleets. Uber and Lyft constantly adjust their fares based on demand and do not face requirements in most cities to provide wheelchair-accessible service.
What happened when Uber and Lyft left several Texas cities?
The resulting ride-hailing vacuum attracted several start-up ride-hailing apps that agreed to comply with the city's rules. One of those companies includes the nonprofit RideAustin, which several Austinites said they supported because — unlike Uber and Lyft — the service agreed to have drivers do the fingerprint background checks that Austin voters asked for.
What were the main arguments for and against the state regulating ride-hailing companies?
When Abbott signed the ride-hailing measure into law in late May, he called it "disappointing" that Austin "rejected and jettisoned that very freedom from the customers who wanted to have a choice in what transportation provider they could choose."
"What today really is is a celebration of freedom and free enterprise," Abbott said during the signing ceremony. "This is freedom for every Texan — especially those who live in the Austin area — to be able to choose the provider of their choice as it concerns transportation."
Both Uber and Lyft have previously said they advocated for statewide regulations to make it easier for drivers to transport customers between neighboring jurisdictions without violating differing regulations.
But some Texans said ride-hailing should be regulated at the local level because cities can better represent the interests of people within their boundaries than lawmakers from other parts of the state.
How does HB 100 affect competing apps, drivers and riders?
The bill Abbott signed into law eliminates the requirement for fingerprint background checks for all ride-hailing services, though drivers for some services still have these regulations in place. Several drivers said they were happy with the signing of HB 100 because local regulations had limited where they could operate. Uber and Lyft have also capitalized on the change by promising Austin drivers bonuses.
Meanwhile, some smaller ride-hailing companies have already seen a drop in customers since Abbott signed HB 100. RideAustin reported 22,000 rides in the week beginning June 4 — less than half of the 59,000 rides it says it operated the week before Uber and Lyft returned to the Texas Capitol on Memorial Day. And on June 5, the Phoenix-based ride-hailing app Fare announced it was leaving Austin because it was “unable to endure the recent loss of business.”
To adjust to the ongoing price war between the now-competing ride-hailing companies, RideAustin announced in mid-June that it would be reducing fares to 99 cents a mile and 20 cents a minute (both Uber and Lyft charge $1 a mile and 20 cents a minute).
As for riders, they now have varying options when it comes to what ride-hailing company they want to use. Upon Uber and Lyft’s return to Austin, several of these companies invested big bucks into luring customers back with discounts.
How many other states have measures similar to HB 100 in place?
Currently, 41 other states have adopted comprehensive ride-hailing laws similar to Texas' new law. The Florida Legislature also passed a statewide measure in mid-April.
Disclosure: Uber, Lyft and RideAustin have been financial supporters of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.