Uber, Lyft secure future in Maryland with passage of ride-share law

An UBER application is shown as cars drive.

Gov. Larry Hogan signaled Tuesday that he would sign legislation, passed in the waning hours of the legislative session Monday, that would secure the future in Maryland for popular ride-share outfits Uber and Lyft.

The bill clears the way for the companies to operate legally in the state under a far less burdensome regulatory structure than applies to traditional taxi companies.


Erin Montgomery, a Hogan spokeswoman, said the governor was "giving the bill one last look" before making a final decision on whether to sign it, but "believes it's a forward-thinking framework for bringing transportation network services and more jobs to our state."

Hogan's signature would end a battle to regulate ride-share companies in Maryland that has raged since Uber first launched in Baltimore in 2013. It also would mark yet another territorial coup for tech companies that allow users to summon rides by tapping their phones from their couch instead of raising their arms on the street.


Representatives of traditional taxi companies, including market leader Yellow Cab, also welcomed the legislation Tuesday, claiming it lessened regulatory burdens on them.

Still, industry observers said the legislation clearly favors the ride-share companies.

"This is a win for Uber," said Brent Goldfarb, academic director at the Dingman Center for Entrepreneurship at the University of Maryland, College Park. "Putting in front of them an extra regulatory hoop or two to jump through isn't going to restrain them much. The basic model is approved."

The bill places ride-share companies under the oversight of the Maryland Public Service Commission, which already regulates taxi companies in much of the state. But it does so under a new regulatory framework for so-called "transportation network services" that the companies find less onerous than the structure applied to taxis.

Taylor Bennett, an Uber spokesman, called the legislation's passage "a huge win for riders and drivers across the state who now have permanent access to safe, reliable rides and the jobs they create."

The bill establishes minimum insurance requirements for ride-sharing companies. It allows local jurisdictions to levy fees on ride-sharing trips, as they do on taxi fares, but blocks them from independently regulating ride-share operations, as some do now.

"It was a major compromise bill that addresses every important issue around ride-sharing in what I think is a pretty effective way," said Sen. Bill Ferguson, the bill's lead sponsor.

The PSC recently developed its own proposed regulations for the ride-sharing industry, though the new bill — if signed into law by Hogan — makes those efforts moot. The PSC rules would have applied to Uber's popular UberX service. The PSC already struck a deal with Uber for its more expensive SUV and black car services.


Lyft, which had not struck any deals with the state, said the bill secured its future in the state.

"We look forward to working with the PSC and Governor Hogan to develop a streamlined process for implementation and are excited to see ridesharing continue to grow and thrive across the state," the company said.

Ferguson, who led a late charge to pass the bill, said it was needed to clear up confusion about the services' operations in Maryland.

Uber officials previously said the company could not operate in the state under the PSC's full regulatory requirements for traditional cabs. Traditional taxi companies like Yellow Cab said they couldn't compete with Uber if requirement gaps weren't closed.

Uber and Lyft have upended traditional taxi markets across the globe in recent years, allowing users to hail drivers with the tap of a smartphone. Efforts to regulate the companies have popped up across the country in response. Virginia and the District of Columbia already passed laws governing the companies, though Maryland's rules are substantively different.

Ferguson said many other states with new policies have relied mostly on self-regulation by ride-share companies, while his bill mixes self-regulation with oversight by the PSC.


Kevin Hughes, chairman of the Public Service Commission, said in a statement Tuesday that the commission "appreciates the hard work" of the legislature and looks forward "to working with all stakeholders to develop regulations to implement the new law."

If signed by Hogan, the law will take effect on July 1.

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Dwight Kines, vice president of both Yellow Cab and Checker Cab, which dominate the traditional taxi market in Baltimore, said he appreciated the state's willingness to "establish adequate regulation for this business model and, at the same time, update the existing statutes in order to allow taxi and sedan companies to compete fairly going forward with protection for the public."

One such update, he said, would allow taxi companies to put new drivers to work immediately without having to wait on fingerprint background checks, he said.

"Now we can get our drivers processed as quickly as they can," Kines said.

Goldfarb, meanwhile, said whatever small regulatory relief the taxi companies received in the legislation will mean little compared to the broad entry to Maryland markets granted to their largest competitors.


"They've got to claim some victory, but this is a flat-out loss for them," he said. "For a win they would have had to put real restrictions on Uber's ability to operate, because they can't compete on product. They have an inferior product."