New Jersey lawmakers are currently debating legislation that will determine how to regulate ride-sharing companies like Uber and Lyft. Of particular interest to municipalities, a provision of the proposed bill removes the industry from local oversight.
As we have previously discussed on the Scarinci Hollenbeck Business Law News Blog, so-called transportation network companies (TNCs) use a cell phone application to connect drivers using their personal vehicles with passengers who need a ride. While the service has proven to be wildly popular with the public, it has drawn the ire of the both the taxi cab industry and regulators.
In New Jersey, lawmakers are considering a comprehensive bill that would create a regulatory framework for TNCs, which are defined as “an individual or entity that uses a digital network or software application to connect a passenger to a transportation network company driver for the purpose of providing transportation to the passenger.” As has been the case in many other states, the debate has focused on how to balance innovation with public safety.
Both the Senate and Assembly bills create state-level registration, insurance, and safety requirements for TNCs. While ride-for-hire businesses have traditionally been licensed at the municipal level, the proposed legislation expressly exempts TNCs from any local oversight. Pursuant to Senate Bill No. 2179:
A county or municipality shall not require a transportation network company or transportation network company driver to obtain a license or permit to provide a prearranged ride in that county or municipality, or require a driver to obtain a license or permit for the driver’s personal vehicle in order to provide a prearranged ride in that county or municipality.
A county or municipality shall not impose a tax or fee that only applies to a transportation network company or transportation network company driver; except provided that a transportation network company or driver shall be subject to a tax or fee that applies generally to all businesses or residents of the county or municipality.
Based on the preemption provision, the New Jersey League of Municipalities (NJLM) opposes the TNC bills. “The manner in which the service is dispatched and provided does not materially alter the responsibilities that local governments will bear. Nor will the manner of dispatch obviate the concerns of local elected officials in ensuring the public’s legitimate interests in public safety,” the NJLM stated. “Further, enactment of this bill could motivate traditional taxi and limousine businesses to, similarly, avoid local over-sight by a change to their business models.”
For more information about the TNC legislation or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.