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Seattle council votes to limit rideshare firms UberX, Lyft, Sidecar

Ed Murray addresses the crowd after being sworn in as Mayor of Seattle at City Hall in Seattle, Washington January 6, 2014. REUTERS/David Ry
Ed Murray addresses the crowd after being sworn in as Mayor of Seattle at City Hall in Seattle, Washington January 6, 2014. REUTERS/David Ry

By Jonathan Kaminsky

OLYMPIA, Washington (Reuters) - Seattle lawmakers on Monday voted to cap the number of rideshare company drivers in a hotly contested move to limit a nascent industry that has emerged in dozens of cities to compete with traditional taxis.

The rules, approved unanimously by the Seattle City Council, will limit each of the three ridesharing companies - UberX, Lyft, and Sidecar - operating in the Pacific Northwest city of about 630,000 people to 150 drivers on the road at any time.

Seattle Mayor Ed Murray said he would sign the measure into law, despite concerns the limits were too strict.

The companies, which allow members of the public to hail rides at the touch of a smartphone app from drivers using their own cars, have said the rules will make it difficult, if not impossible, for them to continue operating in Seattle.

The companies together have at least 2,000 drivers citywide, according to the Seattle Times newspaper.

In addition to capping the number of drivers, the council also moved to require that drivers and cars meet state insurance rules already in place for taxis.

"In cities across the United States and other parts of the globe, companies have chosen to launch first, ask questions later," said Seattle City Council President Sally Clark in a statement.

The limits and changes are to last a year, when they could be revisited.

Getting legislators and regulators on board with ridesharing is a key part of the ridesharing companies' business plans, with many local officials specifically citing insurance coverage among other concerns.

UberX on Friday expanded the insurance coverage it offers to ridesharing drivers, a new policy designed to make drivers more comfortable, along with regulators and lawmakers working through industry rules, the company said.

Lyft allows customers to book rides from a network of screened drivers and Sidecar offers a similar peer-based service.

Regulatory and other hurdles have hurt ridesharing companies' expansion in U.S. cities, such as Miami, while other places are considering legislation.

In California state regulators last year gave the green light to ridesharing enterprises, along with some conditions, which had taxi companies saying the alternatives lacked the safeguards they provide and makes for unfair competition.

The move is a victory for Seattle's traditional taxi and car-for-hire drivers and companies, which have said the app-based ride service operate at an unfair advantage because they don't have to abide by rules such as having to accommodate elderly or infirm customers.

Uber Seattle General Manager Brooke Steger, whose company lobbied aggressively to defeat the proposed rules, said their passage means Uber will not have enough drivers to keep up when demand is highest.

"It's astounding that the City Council has chosen to ignore the voices of nearly 30,000 constituents and move to put hundreds of drivers out of work," Steger said in a statement.

Uber has faced criticism in recent months for its practice of surge pricing, in which it increases the cost of a car ride - sometimes several times over - at times when demand is highest, such as during a snowstorm. Uber Chief Executive Travis Kalanick has defended the practice as an example of market-driven efficiency.

(Reporting by Jonathan Kaminsky in Olympia, Washington; Editing by Eric M. Johnson and Eric Walsh)

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