New Mexico Legalizes Uber and Lyft

New Mexico became the latest state to formally legalize ridesharing, under a new bill signed by Gov. Susana Martinez last week. Martinez even arrived at the signing ceremony by taking her first Uber ride. “After one ride I can see why Uber is so amazing. It makes the state accessible,” she said.

A statement from the governor’s office noted that the legislation “makes it crystal clear that ride-sharing companies, like Uber, are allowed to operate in the state.” The governor portrayed the new law as a way to crack down on drunk driving and to bolster economic development and tourism in the state.

Sponsored by state Rep. Monica Youngblood, HB 168, also known as the “Transportation Network Company Services Act,” creates a new regulatory framework for Uber and Lyft. The law categorizes these firms as “transportation network companies” (TNCs), explicitly exempting them from the state’s Motor Carrier Act. Instead, HB 168 rules that a personal vehicle used by a TNC driver is “not a taxicab or other vehicle for hire.”

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In other words, drivers do not have to register their cars as commercial vehicles or vehicles for hire. To better distinguish TNCs from traditional taxis, the former are banned from soliciting or accepting street hails and accepting payments in cash. A fiscal impact report by the New Mexico Legislature also notes that “TNC drivers are independent contractors and not employees”—a point of contention in other jurisdictions.

Although TNC drivers are exempt from New Mexico’s taxi regulations, they still have to comply with safety restrictions established by the new law. Drivers must pass a background check, follow a zero tolerance policy for alcohol and drug usage while driving and must be at least 21 to drive for a ridesharing firm.

HB 168 also sets up a two-tier insurance policy for drivers. When a driver is logged into the app, but not engaged in a pickup, the driver must have a car liability insurance policy that covers up to $100,000. But once a passenger enters the vehicle, the minimum liability insurance rises to $1 million. Either the driver or the company can provide the insurance policy. Previously, the state Public Regulation Commission demanded ridesharing firms have the latter policy for all drivers who are on the app, regardless if passengers were in the vehicle or not.

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New Mexico’s strict regulations previously had forced Lyft out of the state. Back in April 2014, Lyft launched in New Mexico, but less than one month later, the Public Regulation Commission ordered the firm to cease operations. As the Albuquerque Journal noted at the time, “The company could potentially be fined $10,000 for each individual violation, plus an additional $10,000 per violation for every day it continues to operate without authority.”

Lyft initially refused to comply and continued operating, but citing “onerous ride sharing requirements,” it left the state last May. Upon the bill’s passage, Lyft praised HB 168, “but did not say if it would return to New Mexico,” according to the Associated Press.

New Mexico’s legislation is just the latest win for the so-called “sharing economy.” In Chicago, the Institute for Justice is currently representing ridesharing drivers against the taxicab industry’s specious attempts to litigate ridesharing out of existence. Last September, a federal judge dismissed most of cab companies’ claims. Earlier this month, the Arizona Senate voted to ban local governments from banning Airbnb and short-term rentals.

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