Senate sends bill creating statewide ride-hailing regulations to governor

^{Editor's note: This story was updated to reflect that House Bill 100 passed the Senate on a 21-9 vote.}

After a debate among lawmakers over the best way to regulate services like Uber and Lyft, the Texas Senate on Wednesday backed a proposal that would override local regulations concerning ride-hailing companies.

House Bill 100 would establish a statewide framework to regulate ride-hailing companies and undo local rules that the two companies have argued are overly burdensome for their business models.

“Regulating them at the city level will always be challenging,” the bill's Senate author, state Sen. Charles Schwertner, R-Georgetown, said. “Transportation, by nature, is a regional concern.”

His bill passed in the upper chamber in a 20-10 vote on its third and final reading. The measure now heads to the governor’s desk.

Though the vote on the bill was originally announced as 20-10, senate records later showed it actually passed 21-9, meaning more than two-thirds of the Senate supported the measure. That distinction matters because of a provision in the bill that allows it to go into effect immediately after the governor signs it instead of on Sept. 1 if it receives support of two-thirds of the members in both chambers. As the measure passed the House in a 100-35 vote, it means ride-hailing companies like Uber and Lyft could potentially return to cities like Austin as early as this summer.

At times, the debate over the bill appeared to veer into whether its passage would create a barrier for future ride-hailing services attempting to compete in the marketplace. Though he still voted for the measure, state Sen. Don Huffines, R-Dallas, expressed concerns that the bill would stifle the free market.

“While HB 100 is an improvement on the status quo, it remains a missed opportunity to foster innovation,” Huffines said in a written statement. “Government regulations are a poor substitute for market forces and personal responsibility.”

Schwertner, however, pushed back on these claims and insisted that his bill would help pre-empt “overly protectionist municipalities.”

State Rep. José Menéndez, D-San Antonio, also questioned a controversial amendment tacked on by the House that defines "sex" as "the physical condition of being male or female.” Schwertner had introduced a committee substitute that stripped the “sex” amendment, but he later withdrew the substitute without discussion when the bill was being heard in the Senate State Affairs Committee.

“My concern is that ... it might not be extremely obvious or evident what the actual sex of [a passenger] is and I’m not sure why, in a transportation bill, we have a definition of what that condition would be,” Menéndez said. “That line has the potential for discrimination, and I’m somewhat put off by that.”

The “sex” amendment proposed by state Reps. Tony Tinderholt, R-Arlington, and Briscoe Cain, R-Deer Park, comes amid a legislative session in which some GOP lawmakers have pushed for measures that would keep transgender Texans from using public bathrooms that match their gender identities.

The amendment passed in the House last month on a 90-52 vote without objection from Paddie, who said he viewed it as simply “further defining something that’s already defined.”

Tinderholt, pushing back against claims that his amendment could lead to discrimination against the LGBT community, previously said “there’s no huge reason behind [the amendment]. I just wanted to clarify.” Uber and Lyft, the companies that have pushed for the legislation, objected to the amendment, but neither withdrew their support from the bill. Several House Democrats took their names off the bill after the amendment passed.

During Wednesday’s floor debate, Schwertner signaled his support for the controversial amendment. He also disputed claims that the amendment would open the door for discrimination against transgender Texans.

“It’s really just kind of self obvious, but the House decided to add it,” Schwertner said.

The primary issue addressed by the legislation is whether companies such as Uber and Lyft should perform fingerprint-based background checks, much like many cities require of taxi drivers.

HB 100 would require ride-hailing companies to have a permit from the Texas Department of Licensing and Regulation and pay an annual fee to operate throughout the state. It also calls for companies to perform local, state and national criminal background checks on drivers annually — but doesn't require drivers to be fingerprinted.

After Austin implemented a fingerprinting rule, Uber and Lyft spent millions in a campaign last year to overturn it — an effort that ultimately failed when voters rejected a ballot proposition on the issue. After the vote, both companies immediately suspended services in the city, and the resulting ride-hailing vacuum attracted several start-up ride-hailing apps to Austin that have said they comply with the city's rules.

“A statewide framework for ridesharing will help bring greater economic opportunity and expanded access to safe, reliable transportation options to more Texans,” said Sarfraz Maredia, general manager for Uber Texas. “We look forward to making Uber available in more cities across Texas and continuing to serve drivers, riders, and the communities in which they live.”

Lyft spokesperson Chelsea Harrison said: “Ridesharing in Texas took a tremendous step forward today. Thank you to Senator Schwertner and Representative Paddie for defending consumer choice and all the stakeholders who have helped create safer roads and expand reliable, affordable rides for Texans.”

Currently, 41 other states have adopted comprehensive ride-hailing laws similar to Paddie’s proposal. The Florida Legislature also passed a statewide measure in mid-April.

Read related Tribune coverage:

• A bill meant to regulate ride-hailing companies has now made its way to the Senate — and senators have revived controversial language that would define "sex" as "the physical condition of being male or female.”
• Representatives for Uber and Lyft said an amendment to a statewide ride-hailing bill that defines "sex" as "the physical condition of being male or female" is disappointing and unnecessary.
• A group of House members removed their names as co-authors of a bill that would regulate ride-hailing companies because of an amendment that defines “sex” as the “physical condition of being male or female.”
• A Senate committee heard testimony on three bills that would override local regulations concerning ride-hailing companies.

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