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Fight over fate of Uber in Maryland heating up

A battle is brewing over the fate of Uber in Maryland, with two competing ideas proposed for how the ride-hailing Goliath could operate legally within the state's shifting transportation marketplace.

Either approach would have broad implications not only for customers who tap their mobile phones to hail rides through Uber, Lyft and similar companies, but for those who hail traditional cabs in the street.

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One model, proposed by regulators at the Maryland Public Service Commission, would create a new regulatory category for "transportation networks," but would largely hold Uber and its independent drivers to the state's existing licensing, insurance and permitting requirements for traditional taxi operators.

The second model, proposed by state Sen. Bill Ferguson, would slice away much of the red tape now inhibiting Uber and similar services and allow the companies to handle most of their required driver oversight themselves.

The Baltimore Democrat introduced a similar bill last year, but it lost steam as lawmakers decided to give the Public Service Commission more time to develop its proposal.

The commission would require drivers for Uber and similar companies to submit FBI background checks and to carry commercial insurance, as taxi drivers do. It would bar drivers from accepting hails at BWI Thurgood Marshall Airport.

Commission members are set to discuss the proposal at a rulemaking session this month. Uber already has expressed opposition.

"It fails to recognize ridesharing as a new business model and simply tries to force it into a taxi framework," said Taylor Bennett, an Uber spokesman. "It's recategorizing us and calling us one thing, and then applying the same old rules."

If passed, Bennett said, the commission proposal would make driving for Uber prohibitively expensive for many — particularly the 50 percent who drive part time.

"These aren't full-time licensed commercial drivers," Bennett said. "The platform is very different, the model is very different, so therefore the rules that apply should be very different as well."

Bennett prefers Ferguson's proposal. That legislation would allow Uber to purchase $1 million in insurance coverage for its drivers, a system the company already has in place, and would leave background checks to the companies.

Both the commission and Ferguson would allow rideshare companies to charge "surge pricing" during periods of increased demand, but the commission would require them to submit minimum and maximum rates for approval in advance.

Ferguson would allow companies to charge surge prices as long as they alert users before they book a ride. Ferguson would allow rideshare drivers to pick up passengers at BWI.

Ferguson said he introduced his legislation in part because he doesn't think the commission proposal would work.

"There's still a lot of uncertainty about what these draft regulations even mean if they're passed," he said.

One question Ferguson says the commission leaves unanswered: What happens in jurisdictions such as Annapolis and Ocean City, which are allowed to add local restrictions on taxi drivers on top of commission requirements?

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"It has to be clarified that there is one standard for ridesharing across the state so there isn't significant confusion and we don't have to keep fighting this fight every time a new ride-sharing entity comes to the state," Ferguson said.

Annapolis has tried to require Uber drivers to operate under the same rules as the city's medallioned taxi drivers. Mike Leahy, an attorney for the city, said the city would follow state laws, but would be concerned that Ferguson's legislation would force taxi drivers out of the market.

"I suspect they would all move to [the Uber] model very quickly," he said. "We would still have laws applying to taxi drivers but we wouldn't have taxis."

Uber doesn't operate in Ocean City, but city Solicitor Guy Ayres said officials have been considering how they would regulate the company there.

He said a law that let Uber drivers operate "without going through the same regulations and inspections and licensing fees and medallion costs" would put the city's taxi drivers at a disadvantage.

"The concern is that they be on a level playing field with the other similar-type vehicles that operate here and are regulated by the town," Ayres said.

Officials at traditional taxi companies say the commission's recommendations are not perfect, but Ferguson's proposal would be deeply unfair.

Dwight Kines, a spokesman for Veolia who has negotiated on behalf of Yellow Cab, said taxi companies would demand similarly lax rules — or else restructure their operations to fall under the new rules for Uber.

Kines said that would mean fewer legal protections for customers in areas such as rates and the amount of insurance cab drivers would be required to hold.

"You're basically talking about the wild, Wild West," he said.

Uber says it has a proven record of providing quality service, promoted in part by the features that have made the business popular, such as the ability for customers to rate drivers and to see the fastest route to a destination, and the vehicle's progress on that route, laid out on a digital map.

Brent Goldfarb, academic director at the Dingman Center for Entrepreneurship at the University of Maryland, College Park, said those innovations are fundamental to the current debate, and leave the taxi industry with few options.

"Whenever you have this sort of business model disruption, if you will, the incumbents tend to do two things," he said.

"One is they innovate and try to get better to be a more effective competitor. The other thing is work through the regulatory regime to slow everything down — which they've done, but not with huge success, frankly."

With Uber's features providing quality control, Goldfarb said, the company might not need the same level of government oversight as traditional taxi companies.

Taxi companies are "fighting back the good old American way, which is through the government, which is what every business with influence will do," he said. "But they're losing because of the constituents."

Del. Jeffrey D. Waldstreicher said he plans to introduce a bill similar to Ferguson's in the House. The Montgomery County Democrat said it would include incentives to help taxi cabs compete with Uber drivers.

He suggested a low-interest state loan program that would help taxi drivers invest in technologies that would allow riders to summon them with an app.

"We want to make sure that Maryland is open for business for Uber, Lyft and rideshares, but you never want to hurt another industry," Waldstreicher said.

Uber rolled out its service in Maryland in 2013 by launching in Baltimore. The company has been sued by Yellow Cab, challenged by Annapolis and targeted by the Public Service Commission. But it has seen animosity toward its business model thaw substantially.

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As the fight in Maryland has heated up, the company has taken several steps to flex its muscle. It offered several days of free rides in Annapolis last week, and on Friday launched a program to partner with 50,000 new drivers in the next year from urban communities up and down the East Coast.

About 5,000 of those jobs would come in Maryland, with about 500 in Baltimore.

Ferguson said he wants to support such growth. His goal is to establish an "appropriate regulatory framework that protects consumers and improves the market."

Commission members have said their goal is the same. The commission also announced Thursday it had reached a deal for Uber's sedan and SUV services to continue operating in the state, but that didn't involve the company's most popular UberX service.

Senate Finance Committee Chairman Thomas M. Middleton said his staff has begun "developing a matrix of comparison charts" on the commission proposal and laws in Virginia and the District of Columbia.

The Charles County Democrat said they would soon add Ferguson's bill to that mix.

Middleton said he believes the issue falls naturally within the purview of the Public Service Commission, but that there is "nothing that prevents the legislature from putting this whole thing into statute."

He has told commission members to be open-minded.

"The last thing that I told the PSC on behalf of the committee," he said, "is that we don't want to see a service out there, that there is a consumer demand for, being subjected to antiquated laws."

Baltimore Sun reporter Erin Cox contributed to this article.

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