Lawmaker Wants Federal Investigation of Austin Ride-Hailing Rules

_{Editor's note: This story has been updated with a response from the city of Austin.}

State Rep. Jason Isaac has asked the Federal Trade Commission to investigate Austin's rules for ride-hailing companies, raising concerns that the city's "burdensome regulations" are anti-competitive.

In the letter dated June 7, Isaac said he thought the city "erected a pernicious barrier to competition" through its rules, which have become a point of contention in the statewide discussion about which layer of government should ultimately regulate the industry.

"I think this turned into an immature battle that left some people really scared and things were done out of a vindictive nature," Isaac, R-Dripping Springs, said in an interview Thursday. "I personally believe that this is anti-competitive in nature, but I want to ask the FTC if they think it's anti-competitive."

The FTC did not immediately respond to a request for comment.

Austin's City Council drafted new regulations for ride-hailing companies in December that ordered drivers to pass a fingerprint-based background check, a requirement that also applies to drivers for taxi companies in the city. At the time the ordinance passed, many of its elements were still incomplete, specifically the penalties for drivers and companies that did not follow the rules. 

Isaac questioned why the city opted to move forward with the ordinance despite the absence of enforcement provisions.

"And then to learn that they're not going to enforce the regulations they have passed ... why are they there in the first place?" he asked.

Austin Mayor Steve Adler told the Tribune earlier this month that the city planned to address penalties and other holes in the ordinance shortly after approving it, but Uber and Lyft supporters filed a petition to overrule the ordinance before the city could take action. 

Uber and Lyft have vehemently opposed requirements for such background checks, ceasing operations in cities that don't share their view. After Austin's city council adopted the fingerprinting rules, Uber and Lyft supporters collected more than 25,000 certified signatures on a petition in favor of an ordinance with weaker regulations. 

The City Council asked voters to decide which ordinance ride-hailing companies in the city should adhere to. When voters opted for the city-mandated fingerprinting, Uber and Lyft followed through on their threat to leave — as they had done in Galveston, Corpus Christi and Midland. Midland has since changed its rules, and Uber and Lyft have returned.

• Read More Lawmakers Seek Roadmap For Ride-Hailing Regulation

Since their departure, numerous ride-hailing startups have flooded the city, hoping to capitalize on Uber and Lyft's departures. Austin's election has also spurred some lawmakers to push for statewide regulations to avoid a "patchwork" of rules that vary from city to city.

In his letter, Isaac suggested the Austin City Council knew adopting the fingerprinting ordinance would spur Uber and Lyft to leave the city and, in turn, would "return the marketplace" to taxi companies. 

"Despite knowing the ramifications of their vote, the Council added burdensome regulations and put the city at risk," Isaac wrote. 

Jason Stanford, a spokesman for Adler, said the city wants to have ride-hailing services.

"Nothing we've done would prevent Uber and Lyft from operating now in Austin just as before, and they are welcome to come back at any time," he said in a statement. "All such companies operating here would be entitled to receive the same kinds of support and encouragement."

Disclosure: Uber and Lyft have been financial supporters of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.