Creating Unique Regulations for Transportation Network Companies (Uber)

Companion bills H.3413 and S.409 are an attempt to allow ridesharing companies (Uber and other similar services) to operate legally without having to obtain class c certificates from the public service commission as is required for traditional taxicab companies. Transportation network companies (TNCs) are defined by the bill as “every person, entity, or corporation that uses a digital platform, network, or software application service to connect TNC passengers to TNC services provided by TNC drivers.” TNC services are in turn defined as “the transportation of a TNC passenger between points chosen by the TNC passenger and prearranged with a TNC driver through the use of a TNC company digital platform, network”, not to include any services offered by taxicabs or other services for which a class c license is required.

Under the proposed law TNCs would be exempted from existing state law regulating motor vehicle carriers as well as any local ordinances attempting to do the same. Instead, TNCs would be required to obtain a new permit from the Office of Regulatory Staff (ORS) designed specifically for TNCs. To receive the permit a TNC would have to pay a $5,000 fee and maintain an agent for service of process (an individual designated to receive legal correspondence for the company) in South Carolina. Outside of the permit requirement, H.3413 imposes a number of additional regulations on TNCs which include:

  • When not carrying passengers TNC drivers must have insurance which meets the bodily injury and property damage limit requirements in state law
  • When carrying passengers a TNC driver must have automobile liability insurance that covers at least $1,000,000 in potential damages
  • TNCs shall implement a zero tolerance policy for drugs and alcohol use by any drivers any time they’re logged into the TNC network
  • TNCs must conduct background checks for drivers and may not employ drivers who have committed a variety of offenses such as moving violations, sex offenses, DUI, or who do not possess a valid driver’s license or are under 19 years old
  • TNCs can’t accept street hails or cash payments
  • TNCs must have non-discrimination policies and must not impose additional charges for providing service to persons with disabilities (if they are capable of providing these services)
  • TNCs must maintain trip records, and must maintain records for drivers they employed for up to a year after they stop driving for the TNC
  • TNCs shall not disclose passenger’s personally identifiable info to 3rd parties with limited exceptions (such as legal obligations, or if the passenger consents)
  • TNCs shall disclose their fare calculation methods on their websites or digital platform, and shall further provide passengers with the applicable rates being charged and shall give passengers the option to receive an estimated fare before entering a TNC vehicle

Compared to current motor vehicle carrier laws these are simple regulations designed to keep consumers informed and safe. Under this proposed law, TNC drivers would be free to operate openly and legally to the benefit of both consumers and TNCs. Such a circumstance would no doubt be an improvement over the current legal structure which is hindering the legal operation of TNCs. However, just because this bill would be an improvement when compared to current law does not mean it represents optimal reform. Under the new legal regime created by this bill, TNC’s would face a much lighter level of regulation than their direct competitors, taxicab companies. Taxicab companies would still have to comply with the far more onerous motor vehicle carrier regulation which includes paying regular fees to the Public Service Commission (PSC), and having to prove their proposed area of operation isn’t already “adequately served” in order to receive a license. Taxicab companies would also remain subject to local government regulations.

There is no compelling reason why taxicabs should face a higher level of regulation than TNC’s. The enterprises may differ slightly in some respects, as in the methods used to hail a vehicle, but this does not justify a grossly lopsided level of regulation. Current law favors taxicab companies at the expense of TNC’s. Rather than attempting to level the playing field, this bill would simply shift government favor from the taxicab industry to TNC’s.

Again, this bill would be an improvement on existing law which is denying consumers a desired service. A superior alternative however as laid out by SCPC, would be to either repeal existing motor vehicle carrier regulations (such as certification requirements) which don’t affect consumer safety, or to write new law establishing the same exemptions from existing law for taxicab companies and TNC’s. Using the latter approach would establish a level playing field, and would allow consumers to fully express their preferences between two unhindered industries.

(Related: H.3525 is another regulatory carve out for TNC. Like the bills discussed above it would create a new TNC certificate issued by the ORS distinct from class C certificates for taxis. H.3525 also contains some additional regulations for TNC’s not in the companion bills discussed above such as mandatory mechanic inspections of TNC vehicles, and the issuance of annual assement fees to all TNC’s by the ORS.)

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