In a victory for the ride-for-hire tech industry, a California bill to regulate ride pricing and mandate broader background checks failed in committee on Tuesday and could be done for the year.
The latest legislative attempt to tighten rules on businesses like Uber and Lyft, which have reaped huge profits at the expense of the taxi industry, Senate Bill 1035 drew intense industry opposition for a provision that would have pushed regulators to fix rates. A flexible pricing system that allows rates to fluctuate, spiking during “surge pricing” times of heavy use, is key to the ride-hailing business model.
It also earned extra scrutiny because of its author. Sen. Ben Hueso, D-San Diego, has family ties to the taxi industry. Hueso called his bill an attempt to protect customers and to ensure different types of ride businesses can coexist.
The taxis are absolutely in an unfair position right now, and the answer to that is to work on helping the taxis out, as opposed to doubling down on an increasingly broken policy.
Sen. Ben Allen, D-Santa Monica
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“People are being hurt and there are incidents that are happening that could have been avoided,” Hueso said, noting complaints of sexual assault from riders, adding that the businesses “are allowed to operate under a monopolistic business scheme. Now, it’s not our job to create an economic climate in our state that’s going to contribute to creating a monopoly.”
But opponents in the tech industry, joined by the California Chamber of Commerce and bolstered by an expanded Sacramento lobbying presence, called the bill a needless burden that would stifle innovation.
Legislators sitting on the Senate Transportation and Housing Committee sided with that perspective on Tuesday. The bill fell two votes short of passage, with three Republicans voting no and a number of Democrats withholding votes.
“We’re going in the wrong direction,” said Sen. Ben Allen, D-Santa Monica. “I think we’ve realized in the context of all the market changes that have happened that if anything we need to be loosening up rate regulation rather than the other way around. The taxis are absolutely in an unfair position right now, and the answer to that is to work on helping the taxis out, as opposed to doubling down on an increasingly broken policy.”
Hueso said the committee’s failure to act would endanger citizens. “By turning our backs on them we are contributing to their victimization, and the blood is going to be on our hands.”