The latest battle in California’s ongoing legislative and regulatory war over ridesharing services has shifted to new ground, as livery supporters rallied to pass a new bill concentrating decision-making in state hands. Although car companies based in San Francisco would be spared thanks to a wrinkle in pre-existing municipal rules, a small consolation to startups in the space, the new scheme has attracted broader opposition.

Racing against regulation

Assembly Bill 650, introduced by Assemblyman Evan Low, D-Campbell, “would centralize control of the taxi industry by transferring regulatory jurisdiction from every city in California (except San Francisco, which operates on a medallion system) to Sacramento, the state capital,” The Verge recently reported. “So instead of L.A.’s taxi commission overseeing that city’s taxi business, California’s Public Utilities Commission, which oversees the electric grid and hot air balloons, among other commercial carriers, would now have that authority. Supporters say this will help the traditional taxi industry better compete with upstarts like Uber and Lyft.”

Automotive companies innovating around autonomous vehicle technology, however, have cried foul, with Uber, Ford and others pulling together a nationwide lobbying group dedicated to ensuring that bills like AB650 don’t sprout up around the country. “[S]witching the regulatory authority for taxis from localities to the state government could spell trouble once self-driving cars and taxis hit the road, since they rely heavily on local infrastructure information, such as detailed maps that include lanes and traffic levels, as well as real-time information on road construction and closures,” Business Insider noted. “Further, the state government may be less responsive than some local governments, and it’s not equipped to respond to technological developments in the market.”

Going driverless

San Francisco-based Uber, for its part, has forged ahead — scrambled, according to critics — with its plans to get autonomous vehicles on the roads as quickly as possible. With some jurisdictions already prohibiting the driverless autos out of safety concerns, the company could face a race against local and state lawmakers. But its hopes to outpace them were put on display as Uber revealed plans to deploy test cars in Pittsburgh, a city whose lack of regulation around the activity made for an appealing target.

“Current law, in its silence, is permitting it by not prohibiting it,” Pennsylvania transportation department policy director Roger Cohen told the Modesto Bee. “Pittsburgh might be the exact environment that innovators love to leap into — a legal void that can be defined by technologists, not bureaucrats,” the Bee noted. “The question is how fast, and under what conditions, should the testing of a life-changing technology occur. While many companies, including Google and General Motors, are conducting trials of automatic vehicles on public roads, Uber is the first to bring everyday commuters along for the ride.”

Although the automated cars have shown trouble handling physical features like bridges and more conceptual ones like the gestures made by human drivers, Uber has ensured that its Pittsburgh vehicles will be equipped with two individuals who can take the wheel if necessary. 

A shaky balance

In an ironic demonstration of how sharply the two sides in the California conflict differ, the taxi industry itself has complained that AB650 doesn’t do enough to protect them from ridesharing companies, also known by the term “transportation network companies,” or TNCs, as the California Public Utilities Commission officially dubbed them in 2013. In a Los Angeles Daily News op-ed, William Rouse, president of the Taxicab Paratransit Association of California, objected that AB650 “is a much more limited bill” now that it’s heading to Gov. Jerry Brown’s desk for a signature.

But much of what changed was driven by direct political pressure that threatened to effectively sink the bill. After the city of Los Angeles “voted to oppose the measure unless it was also exempted,” Low “changed the legislation to accommodate some of the largest objections,” as the Los Angeles Times reported. 

Today, the Assembly Utilities and Commerce Committee is scheduled to consider legislation by Asm. Adrin Nazarian, D-Sherman Oaks, that, some say, is intended to put ride-sharing companies out of business and force Californians back under the thumb of the taxi cab cartel.

Assembly Bill 24 would force transportation network companies, more commonly known as ride-sharing companies, to register with the Public Utilities Commission, display an identifying decal on all ride-share vehicles, and go through extensive bureaucratic red-tape for all their drivers.

“Nazarian’s bill is a blatantly anti-competitive example of regulatory capture at its very worst that will only serve to pile on bureaucratic redundancy and red tape while choking innovation,” argues CALinnovates, a tech group that lobbies in Sacramento and Washington, D.C.

Nazarian seeks end to “high-tech hitchhiking”

Nazarian makes no secret of his intention to run the ride-sharing industry out of California. His latest bill was introduced on December 1 – one month before last year’s compromise measure became law.

“Ridesharing is simply high-tech hitchhiking,” Nazarian said in a March press release announcing his latest proposal for new ride-sharing regulations. “Consumers are being blindly picked-up by complete strangers and entrusting them with their safety.”

Of course, Nazarian’s statements about naive consumers are hyperbole. Last year, he voted for Assembly Bill 2293, which forced ride-sharing companies to abide by new statewide regulations. That law requires companies to carry at least $1 million in commercial-grade insurance and set new minimum levels of additional insurance to be carried by drivers.

The bill also ordered the state’s Public Utilities Commission and Department of Insurance to produce a study on transportation network companies before December 31, 2017 – to see how well the new law is working.

But, before there’s any data on the new law, Nazarian is seeking to add more requirements to the books.

AB24 violates 2014 ride-sharing compromise

Nazarian’s latest proposal would make your next ride home more expensive by forcing ride-sharing companies to put all their drivers through a Department of Motor Vehicle Employer Pull Notice, a Department of Justice Fingerprint Background Check, and random drug and alcohol testing.

Critics of this year’s proposal say that Nazarian is resurrecting bad bills that were previously sponsored by their competitors, the taxi cab industry.

“If the vast majority of AB24 looks familiar; that’s because it is,” Alex M. Leupp, the West Coast public policy lead for Uber, wrote in his opposition letter. “Last year, the state Legislature twice rejected nearly identical bills, AB612 (Nazarian), and AB2068 (Nazarian).”

Both of those bills were sponsored by the Taxicab Paratransit Association of California, a trade group that represents the taxi cab industry. Rather than embrace government-controlled monopolies, business groups believe the state should support innovative technologies.

“The California Legislature should embrace companies like Uber, Lyft, and Sidecar, who are not only changing the future of transportation, but are driving economic growth and job creation in cities all around the State,” said Robert Callahan, the state executive director for the Internet Association. “A primary reason for the wide-scale adoption of ridesharing by consumers is the enhanced safety experience.”

Serious safety concerns with taxis

Consumer safety, Nazarian says, is exactly why more government mandates are needed.

“As a public servant, I want to ensure your driver gets you home safely through the enactment of common sense safety measures,” he said. “Who would be against making sure your driver is not a convicted felon or a reckless driver?”

Yet, if safety is his top concern, Nazarian may want to turn his attention to taxi cabs. Los Angeles taxi drivers have been cited more than 10,000 times in the past five years, according to a review of citation data from the city of Los Angeles. In some cases, taxi drivers were caught drinking on the job, aiding in prostitution and driving without a license.

Unlike popular ride-sharing companies that allow passengers to rate their drivers, the information supplied by the city of Los Angeles redacted all driver information from the citation database.

Meanwhile, Uber is ready to respond at a moment’s notice to complaints against more than 70,000 drivers in California.

“Uber has resources available 24/7 to respond to any allegations from riders or drivers, and can within minutes suspend access to the TNC platform in real time while it performs a thorough investigation with the rider, driver, trip data and third party resources,” Leupp, a representative of Uber, wrote to lawmakers.

On the safety front, Uber and Lyft have also received high-profile support from advocacy groups that see ride-sharing as a way to reduce the number of drunk drivers. As CalWatchdog.com reported last year, Mothers Against Drunk Driving opposed efforts to regulate ride-sharing.

“MADD supports new ridesharing platforms like Uber, Lyft and Sidecar as well as traditional taxi services that are enabling more options to provide safe rides in communities across the country,” J.T. Griffin, MADD’s chief government affairs officer, wrote in an open letter to state lawmakers.

The Assembly Utilities and Commerce Committee is scheduled to debate the bill at 3 p.m. You can listen live here.

During a Wednesday appearance on one of Southern California’s top-rated radio shows, Koretz admitted he’s taken money from cab companies.

“I’m mad that you’re doing the bidding of the taxi companies because that’s what this is really about,” John Phillips, the quick-witted co-host of KABC AM 790’s Mid-Day LA show, said during a heated exchange over controversial new regulations on ridesharing services. “The taxis are now having competition from someone who is eating their lunch.”

Then, he bluntly asked Koretz, “Do you take any money from the taxi cab companies? Have you gotten any contributions?”

“Yeah, sure,” the councilman replied. “A few bucks here, a few buck there.”

Koretz takes money from taxi companies, insurance industry

A CalWatchDog.com analysis of campaign finance records shows that Koretz has taken more than “a few bucks” from the taxi industry.

Since his first city council campaign in 2007, Koretz’ campaign committees have cashed checks from Bell Cab Management, City Cab, Yellow Cab, Taxi Systems Inc., Pacific Yellow Cab, L.A. Checker Cab Cooperative, Independent Taxi Owners Association, L.A. Taxi Cooperative, United Independent Taxi Drivers and the L.A. Transportation PAC, which is sponsored by the L.A. Taxi Cooperative.  In total, Koretz has accepted nearly $11,000 from the taxi industry. (See detailed list below.)

In addition to the taxi industry, Koretz has cashed checks from another beneficiary of rideshare regulations, the insurance industry. According to Maplight.org, which tracks special interest money in politics, the insurance industry is the fourth highest contributor to Koretz’ city council campaigns, having given $32,700 in recent years.

The campaign contributions from the taxi industry have flowed as Koretz ramped up his rhetoric against ridesharing. In June, Koretz and fellow Los Angeles City Councilman Gil Cedillo joined a demonstration at City Hall to support new government regulations of ridesharing companies.

Safety: L.A. taxis rack up more than 10,000 violations

Koretz and other rideshare regulators repeatedly cite safety concerns as the justification for new regulations.

“I would ask my daughter not to ride in an Uber car because, in my opinion, they are unsafe,” Koretz said, according to CBS Los Angeles. “We’ve seen incidents where Uber riders right here in Los Angeles, as well as all around the nation, have been endangered.”

But according to records from the Los Angeles Taxi Commission, regulations haven’t made taxis safe.

Los Angeles taxi drivers have been cited more than 10,000 times in the past five years, according to data obtained by CalNewsroom.com in response to a public records request filed with the City of Los Angeles Department of Transportation. In some cases, taxi drivers have been caught drinking on the job, aiding in prostitution and driving without a license.

As regulators have raised safety concerns about ridesharing, they’ve grown less vigilant in policing the taxi industry. The number of taxi cabs in Los Angeles has remained relatively fixed at roughly 2,300 in the past five years. The same regulations have been on the books. Yet there has been a staggering drop in citations, hearing notices, suspension days and fines against drivers.

From 2009-2013, the number of violations has declined 50 percent, while driver suspension days have plummeted from a high of 355 in 2009 to just 108 in 2013. In the first quarter of 2014, taxi drivers took just 22 suspension days for violations.

Koretz in 2010: Enforce laws already on the books

Koretz hasn’t always been in favor of new regulations to solve transportation-related problems. In 2010, when Angelenos complained about the growing number of food trucks in residential neighborhoods, Koretz said that current laws were adequate.

“The main reason we have problems is that our people are not enforcing the law,” said Koretz, according to LAist.com. “If we were just enforcing the laws strictly, our problems would be solved.”

Now, it appears, Koretz has lost those libertarian impulses.

“If John is a grown adult man making the decision that he wants to take Uber… isn’t that John’s right?” Mid-Day LA co-host Jillian Barberie asked Koretz.

“That’s a little more libertarian than I would go,” he said. “I think you have a responsibility to protect the public if you’re a government entity.”

Listen to the entire interview.

Koretz Campaign Contributions from Taxi Companies: $10,950

Now, rarely enough, we’re seeing a second unified front among some dissimilar editorial boards at large state newspapers. The issue: lightly disguised attempts to manipulate the regulatory process to kill or severely damage Uber, Lyft and other innovative companies that use smart phones and individual drivers to create transportation networks that often are cheaper and easier to use than taxis, limos or other alternatives.

Here are excerpts from three editorials in the last week.

L.A. Times: Driving away innovation

Just as Silicon Valley is a hotbed for innovation, Sacramento is a hotbed for regulation. Those two impulses are clashing now over a new generation of tech companies that uses smartphone apps to connect ride-seekers with drivers. If lawmakers aren’t careful, the regulations they’re poised to impose could snuff innovation across the sharing economy.

At issue is whether the Legislature will impose a second layer of rules on companies such as Uber, Lyft and Sidecar in addition to the ones the state Public Utilities Commission has been setting over the past year. To its credit, the commission recognized that these “transportation network companies” are fundamentally different from taxi companies, despite similarities in the services offered. The commission’s rules for driver and vehicle safety recognized the risks to passengers, but also that the drivers were freelancers using their own vehicles on a part-time basis, not full-time employees using cars dedicated to carrying passengers.

Nevertheless, some lawmakers allied with the taxi industry are now arguing that what’s sauce for the goose should be sauce for the gander. With little or no evidence to show that the ride-sharing services are as risky as traditional taxis, they nevertheless are pushing to make the former comply with several of the regulations that apply to the latter — or even more stringent ones.

The current version of one bill, AB 2293, proposes that ride-sharing companies carry more coverage when their drivers have no passengers than cab companies in L.A. are required to carry when their taxis are full.

Read the online version here.

The O.C. Register: Saddling rideshare services with uber-insurance

Cheering the bill is a coalition of special interests. Taxi drivers and companies, who are rapidly losing business to ridesharing companies, welcome the chance to impose higher costs on their competitors. The industry complains about regulatory disparities, yet it seeks to raise protectionist regulations on others, rather than lower its own regulations, which would open taxis up to more competition. …

There was a time when Microsoft and other tech companies were loath to stoop to lobbying the government. They were naïve enough to think that they should invest their hard-earned revenue in developing new technologies and finding better ways to serve their customers and stay ahead of their competition, rather than courting politicians. Then reality hit when the government cracked down with costly regulations and bogus antitrust charges. Now the ridesharing companies are learning this lesson.

Read the online version here.

U-T San Diego: Ridesharing bill: The stench in Sacramento

Under the bill, ridesharing companies wouldn’t just have to meet the state edict that they have $1 million commercial insurance coverage while a passenger is in their cars; they would have to have such coverage “from the moment a driver logs on to the application” linking them with a ridesharing network.

This mandate has no nexus with passenger or driver safety. Hitting a button on a smartphone and glancing at a screen while driving is an extremely common thing for drivers to do. If it were truly dangerous, our morgues would be overflowing.

That’s why it’s not the American Automobile Association or public-health lobbyists pushing AB 2293. It’s taxi and limousine companies that don’t want competition — with a huge assist from insurance companies, which love the idea of costlier coverage mandates, and trial lawyers, who expect to win bigger settlements from those required to have more expansive coverage.

I wrote the U-T editorial. Read the full thing, with the show-offy “Jungle” reference, here.

However that turns out, Uber almost certainly is the future for a simple reason: Digital technology ends up taking over every industry it advances into. Examples: books, newspapers, music, design, engineering, retail. Soon: K-12 education, universities.

A sign of Uber’s future is its hiring this week of top Apple engineer Chris Blumenberg:

“Blumenberg is a 14-year veteran of Apple, initially working on Safari for OS X and later iOS. He famously built a version of Maps for iOS in just a few weeks in late 2006 so that Steve Jobs could demo it at the iPhone introduction in January 2007. For the last six years, Blumenberg has managed the Maps Apps & Frameworks group, overseeing a team of at least 40 employees handling Apple’s Maps apps on iOS and OS X. From his LinkedIn profile:

“My team is primarily responsible for the Apple Maps app and the MapKit framework. Since 2006, we’ve worked on a number of Google and Apple service-backed features such as local search, directions, street view, next destination and CarPlay. I proudly drove and guided the implementation of vector maps, Flyover and navigation during the shift from Google’s services to Apple’s services in 2012.”

Taxi companies should have adopted Uber-type technology long ago. But they didn’t. Instead, they depended on their political connections to keep out new competition so prices could be kept high. Examples: I recently took a 2-mile cab ride in Huntington Beach and it cost me $16. A 10-mile ride to John Wayne Airport cost $40.

The taxi companies couldn’t adapt to the digital age any more than could Borders Books, Tower Records or the Rocky Mountain News. My own industry, newspapers, especially has been devastated.

It’s called progress. And as computing power continues to double every 12 to 18 months, the digits are going to be invading ever more industries — and government itself. When computers can teach your kids as well as humans, government schools will become obsolete.

And when driverless google cars become a reality, you’ll be able to punch up a ride on your smart phone and be whisked to your destination for a fraction of the current cost of a cab.

“The new wave of online-enabled ride- and car-sharing services that threaten to disrupt the taxi and limousine industries should be regulated, but in a way that doesn’t stifle innovation, the state Public Utilities Commission said Tuesday.

“The commission proposed rules that would force companies like Lyft, Uber and SideCar to obtain state permits to operate legally. And they would have to carry insurance coverage that exceeds what’s now required of limousines, establish driver training and criminal background checks, and have zero-tolerance drug and alcohol policies.

“Sunil Paul, SideCar’s chief executive officer, said he is happy with the decision, saying the commission “has come down on the side of safety and innovation.”

“Lyft CEO John Zimmer was still reading through the 59-page document when reached for comment, but said he is pleased that the commission focused on safety regulations. “The list is exhaustive, which I think is good,” he said.

“The proposed rules, which could become final Sept. 5, come after months of public hearings and community debate.”

I’ll believe it when I see it. It’s the government which makes car rentals and taxis so expensive it the first place. And the government transportation monopolies won’t like this any more than do the private taxi oligopolies.

I recently rented a car at SFO and the taxes, fees and whatnot cost more than the car rental. The city of San Francisco also mandates that only “green” cars be used as taxis, which raises the price.

And I recently took a cab in Orange County that cost me $16 to go 2 miles.

If ride-sharing systems can cut that cost, that’s a great advance. But I always expect government to crash a good thing. It’s called experience.