Michigan Bill Could Give Ride-Sharing an Uber Lift

Bill prohibits local governments from further regulation

State Rep. Tim Kelly, R-Saginaw, introduced legislation that would create state-based regulations for ride-sharing services such as Uber and Lyft. At first glance, the regulations appear reasonable and have the support of these so-called transportation network companies themselves, as reported by MIRS News (subscription required).

Uber and Lyft have faced challenges trying to break into new markets around the country, as each city has its own unique regulations for taxi services. City governments don’t quite know how to regulate these new ride-sharing services though, because they don’t fit neatly into pre-existing taxi laws. Naturally, taxi companies are lobbying local governments to ban or severely limit these services, as they (justifiably) view them as an existential threat to their business.

Statewide regulations of these services make some sense. After all, do residents of Lansing face significantly different risks from ride-sharing than residents in Grand Rapids? Or, put another way, if some ride-sharing regulations are good for Detroit, they should be just as good for Traverse City or Jackson. Further, reasonable statewide regulations are an improvement over the current hodgepodge of rules created by local city ordinances.

The proposed regulations require transportation network companies to hold a certain amount of insurance, get annual vehicle inspections and only use licensed drivers with good driving records, among other things. Uber and Lyft do almost all this on their own already.

In light of these regulations, it’s important to note that ride-sharing services provide a remarkable level of self-regulation — much more than most other services that the state does not regulate at all. For instance, Uber drivers are rated directly by their riders, and these ratings are available for all other riders to see. The best type of regulation comes not from bureaucrats in Lansing, but from the information generated by the users of these services themselves. Previously, this type of information was too costly to share easily with all potential users, but today, it’s readily available in your pocket.

The most important aspect to Rep. Kelly’s bill is that it prohibits local governments from further regulating transportation network companies. This will provide regulatory stability for Uber and Lyft in Michigan, and will make it likely that they could expand rapidly in this state. This should be welcomed, as these services provide new job opportunities to thousands of people and reduce the transportation costs of thousands more.