A California Senate on Tuesday blocked legislation aimed at preventing ride-hailing services Uber and Lyft from adjusting their prices based on demand, a practice known as "surge pricing" that is at the heart of the companies' business models.
The bill would also have allowed stricter background checks for ride-sharing drivers and required the companies to report data to the state. It has drawn fierce opposition from the technology industry, which warns it would dismantle the popular ride-hailing companies.
The bill, SB1035, fell one vote short in the Transportation and Housing Committee.
Sen. Ben Hueso, a San Diego Democrat with longstanding family ties to the taxi industry, said his measure would add a minimal level of protection for customers and drivers. He criticized the dynamic pricing that Uber and Lyft deploy to match supply with demand and said the companies put customers at risk with inadequate background checks.
It's unfair, Hueso said, for someone to pay a low fare to get to a restaurant and a much higher one to get home. Likewise, drivers are punished when fares plummet, he said. His bill would direct the California Public Utilities Commission to take a more hands-on approach to regulating Uber and Lyft and allow police officers to impound vehicles if they discover violations.
"They're just inventing a reason to oppose this legislation," Hueso said of the ride-hailing companies. "Why? Because they are concerned that the PUC may take measures to hold them accountable."
Technology interest groups say Hueso's bill would stifle innovation, intrude on the privacy of drivers and customers and remove popular transportation options from the market.
Sen. Ben Allen, a Santa Monica Democrat who declined to provide the final vote needed for the bill, said strict regulations for Uber and Lyft would not resolve the regulatory disparities with taxis.
"If anything, we need to be loosening up rate regulation, not the other way around," Allen said. "Taxis absolutely are at an unfair disadvantage. We need to be working to help the taxis out, instead of doubling down on a broken policy."
Hueso's bill isn't the only front in his battle with Uber and Lyft. Two bills the companies support have stalled in the Senate committee that Hueso chairs for almost a year after clearing the state Assembly nearly unanimously.
Critics charge that Hueso's ties to the taxi industry have colored his judgment and blocked him from considering the legislation.
Hueso's father bought USA Cab in San Diego in 1982, he told the Los Angeles Times in March. He said he worked and drove for the company, but he never had a financial interest in it. It's now owned by his brothers, Alfredo and Jose Antonio Hueso.
Ben Hueso's financial disclosure forms, filed with the Fair Political Practices Commission since he was elected to the Legislature in 2010, show his brothers have given him between $10,000 and $100,000 a year to repay a loan related to a 2008 sale of property. Hueso could not be reached for comment late Tuesday.