New Orleans opened the door to ride-hailing services on Thursday, but two of the largest companies in the industry said they’ll take a pass rather than operate under the rules passed by the City Council.
The regulations that emerged after weeks of negotiations involving council members, representatives of Uber and Lyft, and Mayor Mitch Landrieu’s administration continued to provoke complaints from both the companies and the traditional cab drivers who have been their harshest critics.
The council’s vote for the new regulations was 4-2, with members James Gray and Nadine Ramsey voting against the measure and arguing the rules should provide a more level playing field for all drivers, whether they’re sent out by a dispatcher or a smartphone app. Council President Stacy Head was absent.
That neither of the two sides of the for-hire vehicle industry could claim victory is a sign that the negotiations “struck the right balance,” said Councilman Jared Brossett, who shepherded the measure along with Councilwoman Susan Guidry.
“We should not always be the last to come forward,” Brossett said. “The ordinance before us will bring ride-sharing the right way.”
By the end of the day, however, the prospects that the ride-hailing companies will actually start operating in New Orleans seemed in doubt.
Representatives of both Uber and Lyft, which packed the council chambers with their supporters, said they had serious problems with some provisions in the regulations. While many of the companies’ previous concerns had been addressed with tweaks to requirements such as for drug testing of drivers, fights over insurance requirements — a previous sticking point that had appeared to be surmounted — and the rights of customers and drivers to take the companies to court may still prevent them from opening shop in the city.
Neither company had decided on its next steps by Thursday evening, but both were guarded about the prospect of entering the New Orleans market.
Uber spokesman Bill Gibbons said the company was “disappointed that after a year of constructive dialogue and considerable compromise with the City Council and the Mayor’s Office, some problematic, atypical regulatory language was inserted and passed in the final stretch.”
The company is evaluating the regulations and has not decided whether to enter the market, he said.
The ride-hailing regulations have been a fraught issue for the council since last year, when the city first opened the door to Uber by revising its limousine regulations to allow the company’s premium service, Uber Black, to operate company-owned luxury vehicles in New Orleans.
Unlike that service, Lyft and Uber X use amateur drivers who pick up passengers in their personal vehicles after being hailed by a smartphone app.
Cab drivers, who were forced by the city to make major and expensive upgrades to their vehicles just a few years ago, have fought to ensure that the regulations on the new services are similar to those faced by taxi companies. While the final provisions impose some of the same requirements on the ride-hailing companies, such as restrictions on the age of cars that can be used, cabbies said they still fall short of matching other regulations imposed on cabs, such as the cameras they are required by law to install.
At the same time, Uber and Lyft have fought against proposals put forward by the council, calling on the city to adapt its rules to their business models.
For the most part, those issues had seemed to be ironed out by the time the council started its meeting Thursday. Insurance issues that dominated the debate earlier appeared to have been settled with a global deal between the companies and the insurance industry. And one of the last major hurdles — a provision that required all drivers for the services to be drug-tested before starting — was overcome with a rule that calls for random testing of up to 25 employees per company per quarter instead.
But another rule dealing with the details of dispute resolution and the arcane language of Uber’s terms of service could be enough to scuttle the company’s entry into the market.
The ordinance adopted by the council bars ride-hailing services from forcing customers or drivers who become involved in disputes with a company to accept arbitration rather than seeking relief in the courts. Such provisions are not uncommon in contracts, but they have been criticized as a tool companies use to gain the upper hand by steering cases to friendly arbitrators.
Uber official Trevor Theunissen said those provisions apply only to the company’s app, and he pointed to other companies, such as the Saints, that have similar language in the agreements written on their tickets.
However, council members said the restrictions are necessary to protect consumers.
“You do realize there’s a difference between sitting in a seat watching a game and sitting in a car that someone else is in control of?” Councilman Jason Williams asked.
Other concerns were raised by Lyft official Michael Masserman, who called on the council to delay some provisions until insurance firms have time to come up with products that fit the terms of an agreement they struck with the ride-hailing services several weeks ago. But that, too, proved to be a non-negotiable issue for the council.
“We’ve done what we think is a very stringent law actually, possibly the harshest insurance requirements of anywhere in the country,” said Guidry, as she defended the measure to traditional cab drivers.
Brossett said the council would continue to talk with the ride-hailing companies.
Even if Uber and Lyft choose to stay out of New Orleans, the ordinance does provide an opportunity for local firms to start their own ride-hailing services or for existing taxi companies to switch to that model.
Beyond the specific issues in dispute, some council members said they had a problem with the way the companies approached the city.
Uber and Lyft have been lobbying for a looser set of restrictions for months and have chastised the council as it has taken up various proposals they said would interfere with their business model. That attitude elicited the ire of Councilwoman Nadine Ramsey.
“Quite frankly, I don’t like the attitude of ‘Give it all to me or I’m going to walk,’ ” Ramsey said. “Life is about compromise, and we can’t always get what we want. If there’s one or two provisions in there that would keep you from operating, then don’t.”
Follow Jeff Adelson on Twitter, @jadelson.