Uber stops operations in Kansas over new legislation

The state legislature overruled a veto on the legislation by the governor

Uber Technologies has ceased operations in Kansas after state legislators overruled a veto by the governor on a bill that aims to tighten insurance requirements and background checks for drivers operating in app-based transportation networks.

The ride-hailing company said it had stopped operations throughout Kansas immediately after the vote on Tuesday. "Drivers who opened the app to make a living, and riders who opened it to get a ride, were both denied the freedom to do so," Uber said. It launched in Kansas about a year ago.

The Kansas Transportation Network Company Services Act was vetoed last month by the state's Governor Sam Brownback who warned against overregulating or improperly regulating an emerging industry. He pointed out in a statement the ride-hailing industry's concern that the "background requirement as currently written, weakens rather than strengthens, the level of scrutiny placed on its potential drivers."

The legislation requires that drivers obtain a local and national criminal background check, conducted by the Kansas Bureau of Investigation, before they are allowed to operate as drivers by the transport network company (TNC). The attorney general is required to release fingerprints to the KBI for the purpose of conducting criminal history records checks, utilizing the files and records of the KBI and the Federal Bureau of Investigation.

The bill also requires that if a driver's vehicle is subject to a lien in the case of a loan, the driver will have to demonstrate to the ride-hailing company and to the lien-holder that he has comprehensive and collision insurance coverage on the vehicle, both for periods logged into the TNC network and when engaged in a prearranged ride.

It also requires that while a driver is engaged in a prearranged ride, the vehicle must be covered under primary automobile insurance that provides at least US$1 million for death, bodily injury, and property damage, besides meeting other conditions.

While a TNC driver is logged on to the digital network and available to receive transportation requests, but not engaged in a prearranged ride, the bill requires primary automobile insurance of at least $50,000 for death and bodily injury per person and $100,000 per incident, and $25,000 for property damage. The insurance can be maintained by the driver, vehicle owner or the TNC.

On Tuesday, the governor's veto of the bill was overruled in a 96-25 vote by the house and in a 34-5 vote in the senate. "Over-regulation of businesses discourages investment and harms the open and free marketplace," Brownback said in a statement soon after the vote. "Uber, and other innovative businesses, should be encouraged to operate, grow and create jobs here in Kansas."

Uber said Kansas was the first and only state in the U.S. that forced it out with "unbalanced, backward regulations," destroying jobs and earning opportunities in the bargain.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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