A lobbying war between Connecticut’s taxi industry and Uber Technologies, whose ride-sharing service is the epitome of a “disruptive technology” and the evolving “sharing economy,” is about to emerge from the shadows in Hartford.
One of the State Capitol’s untold lobbying stories is how the taxi industry nearly drove Uber off Connecticut’s roads last year, only to see Uber rebound politically on the session’s last day after hiring Brown Rudnick, a lobbying firm run by a former House speaker, Thomas D. Ritter of Hartford.
Rep. Antonio Guerrera, D-Rocky Hill, the co-chairman of the Transportation Committee, now plans to hold an informational forum for Uber, a remarkable turnaround for a politician who viewed the startup as a menace deserving of being banned last year.
“I was misinformed,” Guerrera said.
Even in a state where $40 million is spent annually lobbying the executive and legislative branches, Uber’s last-minute deal with Brown Rudnick last year seemed extravagant: $20,000 for representation on the annual session’s final day. Uber, with plenty of money and few friends in Hartford, had little choice.
It would prove to be money well spent.
The company had learned Guerrera was ready to insert language imposing a two-year moratorium on certain ride-sharing services into an unrelated transportation bill, a technical measure known as an implementer. Loading provisions into late-session implementer bills is a time-honored manner of passing legislation at the State Capitol without review or debate.
House Majority Leader Joe Aresimowicz, D-Berlin, conceded last week that imposing a two-year moratorium on an emerging industry without a public hearing would have been less than ideal. One draft that circulated in April would have imposed a ban.
“Ideally, it should be completely transparent,” Aresimowicz said of legislation involving new issues. “It should always have a public hearing. Everybody should always have an opportunity to weigh in on it.”
With no lobbyist representing Uber, Guerrera’s view of the company largely came from lobbyists for three taxi companies, including the state’s largest lobbying firm: Gaffney, Bennett and Associates, whose revenues are triple its nearest competitor.
Jay F. Malcynsky, the firm’s co-founder and managing partner, said the taxi industry had been warily watching Uber’s exponential growth from a San Francisco startup with a clever smart-phone app to a national phenomenon that threatened the highly regulated taxi business.
Uber and similar services, such as Lyft, employ no drivers and own no vehicles. Its business model is to match private drivers with passengers through a free smart-phone app that allows customers to track their approaching ride and make payment.
No state passed a law regulating Uber until June 5, 2014, when Colorado Gov. John Hickenlooper signed a bill defining enterprises like Uber as “transportation network companies.” It required a permit, insurance coverage of $1 million per occurrence for incidents involving a driver, annual vehicle inspections, and criminal background checks for drivers.
The Connecticut taxi industry, with its investment in cars and employees, says it was horrified at Uber’s ability to set its own rules in the absence of regulation.
The industry operated under laws and regulations that dictate driver qualifications and insurance coverage, as well as how many cars it can operate, what rates it may charge and what territories it can serve.
Knowing Uber’s arrival in Connecticut was a matter of time, Malcynsky said, the taxi industry pushed for legislation delaying its entry into the market until the state could determine how to create a level regulatory environment.
“This was not something that came up in the last week of the session. It was an ongoing discussion from the beginning of the session, with the industry asking for some help,” Malcynsky said. “It wasn’t a midnight special.”
Guerrera said he decided to press for a two-year moratorium sought by the taxi industry, unaware that Uber had begun service in New Haven and Fairfield counties on April 24.
Brown Rudnick registered as a lobbyist for Uber at 11:29 a.m. on May 7, just 12 hours and 31 minutes before midnight adjournment. The director of its Hartford lobbying unit, Tracy J. Persico, a lawyer and former legislative staffer, immediately reached out to Guerrera.
“Well, lo and behold, I find out they’re already in the state,” Guerrera said of Uber. “All of a sudden, I start looking into it, they’re not as bad as I thought they were. I didn’t get the concept, basically. I am a pretty pro-business individual.”
The moratorium was dead.
“I felt it was wrong to put a moratorium on somebody who is already here,” Guerrera said. “I mean, that just sends a bad signal to someone if you want to come into Connecticut to do business.”
In its place was language directing the Department of Transportation, in consultation with the departments of Consumer Protection and Motor Vehicles, to study the business and recommend a regulatory structure. The report is due by Feb. 1.
“We’re totally fine with it,” Malcynsky said of the legislation that required a study, not a moratorium.
Persico and Ritter declined to speak on the record about the episode, deferring requests for comment to Uber. A company spokesman declined to speak in detail about its political or lobbying challenges.
Uber has extended its relationship with Brown Rudnick.
According to a filing with the Office of State Ethics, it has retained the firm for $6,000 a month and expects to pay $144,000 over the 2015 and 2016 sessions.
The Taxicabs and Livery Council of Connecticut, a trade group, hired a new lobbying firm for 2015: International Government Relations, which was founded by one of Ritter’s successors, former House Speaker James Amann, D-Milford. For the 2015 session, it is paying $40,000.
Lyft hired Sullivan & LeShane at the end of the 2014 session, but there is no record of its retaining a lobbying firm for 2015.
Gaffney, Bennett is still in the mix. Its client is the state’s largest taxi company, the West Haven-based Metro Taxi, which has a fleet of 161 cabs. It paid the firm $121,000 for the 2013 and 2014 sessions.
The industry is hedging its bets. As soon as the session ended in 2014 without placing limits on Uber, a number of companies — Metro Taxi and its parent, Transportation General, not among them — sued Uber and Lyft in U.S. District Court.
They are asking the court to find that Uber is operating illegally.
In a letter to the Hartford Courant after the suit was filed, Kevin Moore of the Taxicabs and Livery Council called Uber a high-tech gypsy cab operation, serving only where it chooses, charging whatever the market will bear on a given day.
“If you are in an urban area and need to call a cab in the middle of the night, a cab will serve you,” said David Evans, a lobbyist who represents Yellow Cab of Bloomfield. “If you are an Uber driver, you can refuse.”
In an email to the Office of Legislative Research, Uber called the lawsuit “another example of taxi company owners trying to shield themselves from perceived competition and limit consumer choice and driver opportunity.”