City issues Uber a $3.5 million ticket
The city has fined Uber nearly $3.5 million and renewed its permit to operate in Portland for just six months instead of a year — essentially putting it on probation while the City Council ponders stiffer regulations, such as requiring Uber and Lyft to carry the same liability insurance as taxis.
The political tides have shifted dramatically for Uber in Portland, after revelations it used special Greyball software to evade city regulators when it began operating here illegally in 2014, and then took a year to notify the city and state that its driver and passenger records were hacked.
In addition, the pro-Uber majority on the City Council evaporated in last year's elections, when the company's two biggest champions, then-Mayor Charlie Hales and City Commissioner Steve Novick, were replaced by Mayor Ted Wheeler and Commissioner Chloe Eudaly.
"There has been a shift and it's partly been a result of frustrations about how the industry has operated with the city," said Commissioner Nick Fish, who, along with Commissioner Amanda Fritz, voted against a major rewrite of taxi regulations in late 2015 that paved the way for Uber to enter and dominate the market. "I just want Uber to play by the rules and be a good corporate citizen," Fish said.
Commissioner Dan Saltzman, the lone holdover who voted for that code, now oversees the Portland Bureau of Transportation, which regulates the industry, and he appears opposed to major changes.
However, Fish said all his peers on the City Council now want to revisit city regulations. That means the council won't defer to the commissioner who oversees the bureau in charge, as is customary.
The council will debate liability insurance, added safety requirements and the city's oversight body for Uber, Lyft and taxis, Fish said. Other issues also could come up, such as driver pay.
A tentative initial council hearing had been considered for early April, but that has been put off.
Saltzman did not respond to interview requests, but even he is getting tougher on Uber, despite his lame-duck status after deciding he won't seek re-election this year.
On Jan. 29, Saltzman issued a $3,475,000 fine against Uber for failing to meet city code that requires it to notify the city when there is a data security breach. He also extended Uber's operating permit on Feb. 1 for only six months, turning what had been a routine one-year renewal into a warning shot.
"Uber has had a difficult relationship with the city of Portland dating back to December 2014," Saltzman wrote in his letter issuing the fine. "In 2014, Uber used a tactic that has become widely known and reported as Greyballing to thwart regulators while Uber was attempting to illegally establish operations in Portland. The failure to report the data breach to those affected and the state and city, as required by state law and city code, shows a continuing disregard for Portland laws and regulatory structure ..."
Uber is aggressively contesting the fine and was scheduled for an appeal hearing on Tuesday, March 13, before the city hearings office.
In its appeal brief, Uber accused the city of "engaging in breathtaking overreach to fill its coffers," and said there was no deadline to notify the city of the data security breach, so taking one year should not be a violation. The city levied a separate $2,500 fine for all but two of the 1,389 Uber drivers whose Oregon driver's license numbers were hacked.
Uber's lawyers wrote that if there was a violation, there would have been only one, and added that only 328 of those drivers were operating in the city and under the city's jurisdiction.
"While we disagree with the city's basis to pursue a civil penalty, we do not minimize what occurred," Nathan Hambley, Uber spokesman for Oregon, said in a prepared statement. "Uber's new leadership has taken a series of steps to be accountable and respond responsibly. We will continue working with the city to try to engage in a constructive dialogue and resolve this matter fairly."
Uber's brief also questioned whether anyone whose name and driver's license number was hacked could be a victim of identity theft. The city disagrees.
"I believe that's why we fined them," said Dylan Rivera, spokesman for the Portland Bureau of Transportation, often dubbed PBOT.
The agency is clearly using the six-month permit renewal for leverage.
Renewing Uber's permit to Aug. 1 "allows the fine to play itself out," said Dave Benson, PBOT's parking services group manager. "The sentiment was we'll continue for six months and then make a decision."
Uber and Lyft lobbied PBOT heavily when the city deregulated its taxi market in late 2015, and some suspect Uber's handiwork in writing the new city code.
Taxi companies unsuccessfully argued they paid $1 million in liability insurance and questioned why Uber and Lyft provided only $100,000 for what's called Period 1, when Uber and Lyft drivers are cruising around waiting to be dispatched.
Novick now says that's his biggest regret when he led the deregulation effort that paved the way for Uber and Lyft to operate legally. Uber and Lyft threatened to "make an example of us and simply pull out" if the city insisted on requiring the $1 million insurance level for Period 1, Novick said, and Mayor Hales didn't want Portland to be one of the only cities in the U.S. not served by the companies.
Now Novick thinks the council should require the same insurance that taxis pay.
PBOT doesn't appear likely to recommend any changes to that requirement this time around.
"We talked to (Uber and Lyft) about what problem they're trying to solve," said Benson, who regulates the companies. Since the new code took effect in early 2016, there've been no insurance claims that reached more than half of that cap for Period 1, Benson said.
Steve Entler, general manager of Radio Cab, said the city should be more concerned. "Most of the accidents happen when you don't have a passenger in the car," Entler said. And he claimed that Uber drivers who get in accidents will often pull out their personal insurance cards when police arrive on scene, claiming they are driving on their own time, so Uber's insurance doesn't get charged.
"We haven't seen any evidence of that," Benson said.
But Entler said he's seen that happen when there are accidents involving Radio Cabs and Uber drivers.
"That's absolutely what happens," he said.
Saltzman and PBOT Director Leah Treat will look to the agency's Private For Hire Transportation Advisory Committee for guidance on what new regulations to present to the City Council, Benson said.
However, that committee hasn't been doing all that much since it was reconstituted, with reduced clout, under the new code.
"Mostly what we're doing is tuning up policy at the request of PBOT," said Mike Greenfield, the committee's chairman.
That means any suggested changes in the city's approach to Uber and Lyft likely will come from individual city commissioners, or from the public.