Connecticut acted belatedly Thursday to impose standards on Uber and Lyft, the market-disrupting, ride-sharing companies that arrived here three years ago, ignoring a regulatory structure devised for taxicabs — not an app-driven matchmaking service for drivers willing to pick up passengers in their personal cars.
After false starts, intense lobbying and, ultimately, a compromise, the House of Representatives voted 103 to 39 to approve and send to the Senate a bill that defines Uber and Lyft in state law as “transportation network companies” and sets standards for driver background checks, motor vehicle safety and insurance coverage.
If passed by the Senate, Connecticut will be one of the last states to figure out this piece of the new economy.
Rep. Sean Scanlon, D-Guilford, the co-chair of the Insurance and Real Estate Committee, had a simple introduction to a complex bill: To anyone who feels the new standards are insufficient, they are the first attempt to keep up with a technology and business model not addressed in any current regulatory framework.
Uber was first to establish a beachhead in Connecticut, following the same swashbuckling business model employed globally as it invented a new ride-sharing market in more than 60 nations, convincing some analysts it was worth $70 billion — all in a lifespan of just seven years,
“They show up in a municipality or state and they start to operate, and they are completely unregulated,” Scanlon said.
If the Senate concurs, that will end later this year. Uber and Lyft will pay annual registration fees of $50,000, provide up to $1 million of insurance coverage for passengers and accept or reject drivers based on driving records and criminal history.
Unlike taxi and limo drivers, who must be fingerprinted and pass law-enforcement criminal background checks that take eight weeks or longer, Uber and Lyft can use commercial background services that look back seven years and can quickly clear a prospective driver for work.
“I believe we can safely look our constituents in the eye and tell them that they are getting the most full, proper background check,” said Scanlon said.
Uber’s “dynamic pricing,” the use of algorithms that can sharply raise rates based on supply and demand — say inclement weather or the competition for rides when bars empty at closing time — will be regulated in times of emergency, limited to an increase of 2.5 times over regular prices.
Opposition to the bill was led by Rep. Rob Sampson, R-Wolcott, who acknowledged he’s never used Uber or Lyft, but said he could not understand why drivers of personal vehicles dispatched by a transportation network company should not meet the same standards as taxi companies.
He also noted that taxi rates are set by the state, calling that “a noteworthy difference.”
Uber and Lyft drivers cannot have convictions for drunken driving, fraud, and other certain crimes in the past seven years, nor can they be listed on a sex-offender registry. Drivers with three moving violations in three years also are banned.
Sampson noted that the bill does not prohibit immigrants in the country illegally from driving for a transportation network company
Thirty-four of the 39 no votes came from Republicans.
Scanlon said the terms of the bill were set in negotiations with Uber, Lyft and the taxi companies.
Uber and Lyft quickly issued statements of praise after passage.
“We thank the Connecticut House of Representatives for today passing ridesharing legislation that is the product of years of negotiations between the legislature and a diverse array of stakeholders,” said Matthew Powers, the general manager of Uber. “It will ensure that Connecticut riders retain access to safe, affordable and reliable transportation and drivers continue to be afforded flexible economic opportunities.”
“Today, Connecticut took an important step towards ensuring statewide access to safe, reliable, and affordable ridesharing services like Lyft,” said Scott Coriell, a spokesperson for Lyft. “We look forward to working with the Senate and helping to make Connecticut the 43rd state to enact comprehensive ridesharing legislation.”
The taxi industry nearly drove Uber off Connecticut’s roads soon after it arrived in 2014, prevailing on a legislator to insert language that would have imposed a two-year moratorium. Uber hired a lobbyist who convinced the legislator to withdraw the language.
The House voted 133-9 in 2015 to pass a bill creating standards for transportation network companies. It died from inaction in the Senate.
Scanlon said he is confident the Senate will take up the bill this year.