By a vote of 6-1, the city council of Austin, Texas approved a new ordinance that legalizes Uber, Lyft and other rideshare services as “transportation network companies”. To operate legally, and to cover bodily injury and property damage, TNCs must have commercial automobile liability insurance coverage of at least $1 million. Moreover, drivers have to pass extensive criminal background checks going back seven years. Anyone who’s been convicted of fraud, reckless driving, or had any drug, sex or gun offenses cannot drive for a TNC.
Additionally, an amendment failed to pass that would have capped dynamic or “surge” pricing. As consumers demand more rides (like during peak hours or during storms), Uber and Lyft raise their prices accordingly to better accommodate demand. In a statement, Uber called the vote “a win for the people of Austin who have been asking for transportation freedom for months.”
Despite only being in town for a few months, ridesharing has been immensely popular. During one Austin music festival, Uber drivers provided more than 100,000 rides in two weeks, even though the service wasn’t technically legal at the time.
The ordinance could also help the city clamp down on drunk driving, by making it easier to get a ride home. Last year alone, police in Austin arrested over 6,000 people for driving while intoxicated. As a result, the ordinance to legalize Uber and Lyft won support from the local chapter of Mothers Against Drunk Driving. City Councilor Chris Riley, who sponsored the bill, even argued ridesharing could reduce the number of drunk drivers by 10 percent.
As Austin frees its transportation market, other cities face court battles. Back in August, in response to a lawsuit filed by the Institute for Justice, the Milwaukee City Council decided to scrap its arbitrary and unconstitutional cap on the number of taxicabs and to legalize ridesharing. Ever determined to stave off competition, five taxi companies, which own a collective 162 cab permits, initially sued Milwaukee to block both of these reforms, but are now demanding “compensation,” since their permits aren’t as valuable in a freer market. IJ has intervened to preserve this new law. The Institute for Justice is also defending rideshare drivers from a lawsuit by the Chicago cab cartel.
Meanwhile, across the country, transportation entrepreneurs will continue to come up with innovative ways to earn an honest living by giving someone a ride. The Institute for Justice will be there to break down the regulatory and protectionist speed bumps thrown in their way.
— Nick Sibilla
Nick Sibilla is a writer at the Institute for Justice