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IN FOCUS |
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by Matthew W. Daus, Esq. |
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Phillip Hom, Esq. |
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The New Year brings the potential of major changes in New York State and City legislation governing the operation of Transportation Network Companies (TNCs) such as Uber and Lyft. While Uber and Lyft have operated in New York City (NYC) as licensed car services since 2011, they have operated in a gray area outside of NYC where they prefer to be governed by less regulation.
Last year, two upstate legislators, State Senator James Seward (R-Oneonta) and Assembly Member Kevin Cahill (D-Albany) introduced bills that would regulate TNCs. The legislature did not enact any of these bills mostly attributable to leadership changes in the Assembly and Senate. Meanwhile, on a local level, in NYC, there are concerns that any State legislation passed in the coming session may have an impact on local legislative and regulatory proposals to level the playing field.
While NYC has stood alone on the national regulatory front with more strict licensing laws and regulations, and one of the few cities where TNC regulations have not passed, this could all change in a heartbeat. Quietly, maneuvers are being made by TNCs in Albany, and the calm before the storm could end quickly with the imminence of two colliding political weather fronts.
In NYC, there is a southern cold front in a holding pattern with the NYC Council poised to move pending and new legislation while the NYC Mayor and the NYC TLC are about to release a major study and proposals to level the playing field between TNCs and taxicabs/FHVs.
n Albany, there is a developing nor'easter that may be moving quickly south towards NYC, with the Governor about to unveil a statewide plan for TNCs in his State of the State speech. May regulatory weather forecasters beware and be on the lookout for a major political tempest brewing.
It is unclear how much hot air will be blowing, from which direction and from which persons or entities. It is also not known whether there will be some scattered thunderstorms or a regulatory tornado. Either way, while weather forecasters sometimes have difficulty in accurately predicting conditions, we will attempt to nevertheless predict the regulatory outcome.
Bill S4108/A8195 (also known as the TNC Insurance bill), would create new insurance requirements for TNCs and create group TNC polices. The Bill had the most legislative progress last year. It was amended three times, but not brought to a vote.
The bill would require a TNC driver, while logged into a TNC's digital network and available to receive requests without a passenger, to carry primary automobile liability insurance of at least $50,000 for death and bodily injury per person, $100,000 for death and bodily injury per incident, and $25,000 for property damage.
While the driver is on the digital network and has a prearranged rider, he or she would be required to have primary automobile liability insurance of at least one million dollars for death, bodily injury and property damage, and other coverage as required by the insurance law. The coverage requirements can be satisfied by insurance maintained by the driver, a group policy maintained by the TNC, or a combination of both.
The original version of this bill was troublesome because it did not have exemption language for New York City. New York City has strict requirements that For-Hire Vehicles (FHVs) maintain more expensive and comprehensive commercial insurance at all times. This was a highly suspicious development as the language exempting jurisdictions with a population of over 1 million people is standard protocol when a bill is not intended to apply to NYC.
Without the exemption language, there was a fear that New York City taxicab and FHV drivers would turn in their more comprehensive 24/7 coverage commercial policies for these less expensive insurance policies. This would enable Uber to grow exponentially with drivers migrating away from other fleets or bases. This would place competitors at an unfair disadvantage should they not be able to procure the unique supplemental or umbrella insurance policies maintained by Uber and Lyft.
Now, the last amended version of this bill does prohibit these policies from being issued in New York City, however, the potential latent intent of the original bill must remain on the minds of policy makers and lobbyists in the next session.
S4280/A6090, known here as the Omnibus TNC bill, is more comprehensive than the TNC Insurance bill and did not move much legislatively having only been amended once last year. In addition to the insurance provisions provided in S4108-C/A8195 (TNC Insurance bill), this bill would amend the State's Vehicle and Traffic Laws to explicitly create TNCs.
The bill creates registration and operational requirements for TNCs including:
This bill explicitly exempts New York City. The TNC Omnibus Insurance bill, which appears to be a version similar to the self regulatory and deregulatory structures passed by many states around the nation raises a number of concerns and unanswered questions:
First is the issue of "reciprocity", where FHVs subject to existing license recognition state laws operating by and between NYC, Nassau and Westchester counties, do not require multiple permits to pick up passengers in one of those jurisdictions for transport to another.3
The Omnibus TNC bill may upset the "mirror image" requirement of regulations possibly undoing the reciprocity arrangement. It may then require vehicle licensing by all three jurisdictions for each vehicle to operate between those jurisdictions. Also, the new law may allow for a TNC loophole to usurp the Nassau and Westchester licensing systems completely.
There is also a question of whether the final version of the Omnibus TNC bill will allow for divergent standards between taxicabs and TNCs, and permit TNCs to roam free in NYC as well.
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