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Council still far from agreement on TNC ordinance

Wednesday, October 15, 2014 by Tyler Whitson

City Council members demonstrated Tuesday that there is still considerable disagreement about the finer points of an ordinance that would temporarily legalize transportation network companies in Austin, despite its approval on first and second readings, with a final reading on Thursday’s agenda.

The conversation at this week’s Council work session revolved almost exclusively around Council Member Kathie Tovo’s amendment requiring that TNCs such as Lyft and Uber be responsible for providing their drivers with primary commercial insurance from the moment the driver turns on the associated smartphone app.

Council Member Chris Riley, the ordinance’s sponsor, said that the amendment’s passage on a 4-3 vote during the last Council meeting prompted him to move to adopt the ordinance on second reading, rather than on the emergency basis he had initially moved for.

Riley raised concerns about the requirement’s feasibility. “What I’m hearing from the companies is that they don’t think they can do that,” he said. “We’re on the brink of passing something that simply would not be workable for them and … I assume they would probably go on operating illegally and we’d be right where we are now.”

Riley asserted that no other cities that have passed TNC ordinances have included a similar measure.

Tovo said that, while the requirement may be without precedent, the city should not necessarily “follow somebody else’s lead if it’s not the right path.” She added, “What’s relevant is how the insurance company is going to view it.”

Tovo said her major concern is that if a driver is in an accident while the app is on but the driver hasn’t agreed to pick up a customer, the driver’s personal insurance might not only deny the claim, but cancel the driver’s insurance. She said the insurance company could rule that the driver was using his or her personal vehicle for commercial activities.

Tovo said that staff from the Law Department and the Risk Management Division of Human Resources indicated at the last Council meeting that this was a risk. She went on to request that they provide Council with additional information on how they arrived at this conclusion during this Thursday’s meeting.

Riley also said he would like to know if there have been any instances where this scenario has played out.

He called the time that a driver has the app on but has not accepted a ride as a “gray area,” because the driver could be doing any number of activities not related to providing rides, such as running errands or sitting at home.

Riley said that, in other cities with TNC ordinances, there is an expectation that the driver’s personal insurance is responsible if the driver gets into an accident while engaged in personal activities. If the driver is engaging in activities related to providing rides and the driver’s primary insurer denies the claim, he said, the TNC will provide “contingent” coverage to the driver.

Council Member Bill Spelman said that the “primary attraction” of the amendment is the certainty it provides to the driver. “My primary concern is that anybody, when they have the app on, if they get into an accident, will be absolutely certain to have their costs covered by insurance somehow.”

Spelman asked Riley to provide, in the next couple of days, more information about how the insurance issue was integrated into California’s new statewide regulations for TNCs and other cities’ ordinances.

Council Member Mike Martinez seemed more critical of the idea of reconsidering the amendment. “It’s somewhat ironic that we’re talking about new technology, yet that technology can’t fix this scenario,” he said.

“It blows me away that we push this in the name of technology — that this is where we’re headed,” Martinez said. “I agree that this is where we’re headed, but yet, when we come up with what are logical and reasonable requests, then somehow the technology can’t handle it.”

Mayor Lee Leffingwell said that a driver simply turning on a TNC app should not warrant such stringent requirements. “It makes sense to me that there should be a transaction there — that (the driver) not only has the app on, but he has used that app to contract a ride with the company.”

Leffingwell also pointed out that another conflict that may arise is drivers using a smartphone while driving, which will be illegal as of next year per a distracted-driving ordinance that Council passed in August. “I don’t know how you’re going to deal with that one,” he said.

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