Taxi services in Montana would no longer be regulated by the Public Service Commission if a Missoula lawmaker gets her way, but nothing is certain yet.
Rep. Ellie Hill, a Democrat, has introduced a House Bill 267 to revise motor carrier laws and deregulate the state taxi industry. The bill is co-sponsored by Speaker of the House Austin Knudsen, a Republican from Culbertson.
The proposal would allow mobile app-based transportation networks like Uber and Lyft to operate in the state without opposition.
Those companies allow anyone with their own car and a clean driving record to work as “independent contractors” to provide people with rides, and customers book trips online or through mobile apps.
The bill was tabled by the transportation committee on Feb. 13 because some members weren't present. Hill said she is confident the bill will move forward in the next few weeks, or she will have a state senator introduce similar legislation.
"I am well aware on any given weekend night in downtown Missoula, you can't get a cab, and everyone kind of knows that," Hill explained. "We have super-antiquated laws. You can't start a motor carrier company in Montana if a competitor vetoes you. That's why Austin and I – who are from two very different perspectives and two different areas of the state – teamed up. This is good for Montana, good for economic development and good for public safety because there will be less DUIs."
When a new taxi or shuttle service applies for a business license in Montana, current law allows any existing taxi companies in the same market to protest the new competition and force a hearing before the Public Service Commission.
Last month, Traci Pabst, the owner of Big Sky Shuttle, filed a lawsuit in U.S. District Court in Helena asking that the law be declared unconstitutional.
She argues that the law reduces competition and allows existing companies to charge higher prices. That case is still working its way through the court.
In 2012, Green Taxi in Missoula applied to the PSC to expand its service. Specifically, Green Taxi wanted to be able to transport customers to medical appointments and to out-of-county destinations, two things it was initially barred from doing because other companies already provided those services.
Green Taxi’s application was protested by Yellow Taxi, Valet Limousine and Medicab, each saying that their businesses would be hurt if Green Taxi was allowed to perform similar services.
New transportation companies must prove four things: That a need exists in the market they wish to serve, that existing companies can't or won't meet the customer's demands, that economic harm won't come, and that they are a "fit operator," meaning they aren't felons and have insurance.
In the end, Green Taxi was denied its application to provide services to other counties but granted permission to transport medical patients. Hill’s bill would strip the PSC of its power in such cases.
Currently, Uber is the world’s second most valuable startup, with a total valuation of $41.2 billion, behind only Chinese electronics company Xiaomi. The company operates in 54 countries and nearly 100 U.S. cities, but it doesn’t have any operations in Montana.
“For months, residents and visitors across Montana have been opening the Uber app and asking us to come to town,” Uber spokesman Michael Amodeo said in an email to the Missoulian. “Uber is focused on bringing better, safer and more reliable transportation options to communities across the country. We’re excited about the Montana market and look forward to exploring opportunities in the future.”
Hill said that Uber has hired a lobbyist who has been making appearances at the state Legislature.
Hill’s bill would eliminate the requirement that certain motor carriers demonstrate public convenience and necessity to acquire a certificate from the Public Service Commission.
"The current situation is great for current taxi cab owners, because they have a monopoly," Hill said. "The major taxi cab companies, and there is only one in each major city, because, again, they have a monopoly, have come in super hard against us."
The proposed bill would create a new class of motor carrier compliance: Class E. The new class would be for carriers that “offer transportation network carrier services,” such as Uber and Lyft, and would provide operating requirements for those carriers.
The bill would also prohibit local governments from regulating or imposing any taxes and fees on transportation network carrier services.
A local government would also not be allowed to require a license or impose any other operational requirements.
Both Uber and Lyft have gotten around paying payroll taxes and workers' compensation insurance by claiming that their drivers are “independent contractors” and not employees. They argue that they are software platforms, not employers.
Two separate lawsuits filed in U.S. District Court in San Francisco recently are challenging that contention.
Travis Kavulla, the PSC commissioner for Region 1, said Monday that he is in favor of Hill's legislation.
"We regulate these passenger companies like they are electric transmission lines," he said. "That type of regulation makes no sense in the modern world. Besides being anti-competitive, I believe people choose not to use taxi services in the state of Montana because of a perception that they are unreliable.
"I've got an obligation to enforce the law as it exists, and I have turned down requests before. But if you have a regulation and the only people who seem to like it are the people being regulated, then it's probably a terrible regulation."
Kavulla said the legislation has failed in the past because of a vocal minority.
"You've got two competing parties," he said. "You have the public at large who would benefit, and then you have the protected regulated interests who have a captive customer base. The interests of one side are concentrated more in the case of the latter camp.
"When 500,000 citizens of Montana stand to benefit a little bit, but you have a small group that stands to lose a lot, you have the latter camp often winning in the legislative process."
Kavulla said that the owners of existing taxi companies have shown up to testify before lawmakers, while average citizens have not.
"I don't think it's reasonable to expect someone who has had a hard time picking up a cab late at night in Missoula to go to the extreme hassle of testifying before a legislative committee," he said. "But as we've seen, it's quite likely that people having a business interest will make the trip to Helena."