Car Sharing Companies And Municipal Regulations.

Governor Rauner recently issued an amendatory veto of SB 2641 with the intent to create the Illinois Peer-to-Peer Car Sharing Act. Although this bill was passed as a bi-partisan measure through both the Illinois House and Senate, the Governor’s veto has limited the General Assembly’s goal of allowing municipalities to tax and regulate car sharing transactions. In his amendatory veto message, the Governor premised his exercise of veto authority upon his concerns that municipal taxation would, “unintentionally smother growth before it has a chance to get off the ground.” Without giving too much credence to the Governor’s statement, the amendment does reluctantly allow municipalities to impose taxes on Peer-to-Peer car sharing transactions when a vehicle has been shared more than 1,825 days during a calendar year. At first glance, this threshold seems impossible for an individual owning one car in circulation on the network; however, the amendatory language includes an aggregate calculation allowing an accumulation of days if that same individual or entity owns and shares multiple cars.
 
The purpose behind the bill is to allow municipalities an opportunity to regulate the growing industry of Peer-to-Peer car sharing in a similar fashion to that of car rental companies. However, if the Governor’s changes are approved, any taxing authority will remain largely with the State. Pursuant to the Illinois Constitution, the Governor has full authority to make an amendatory veto and include the language limiting municipal taxation. Nevertheless, such authority has been limited by the Illinois Supreme Court if the amendatory veto essentially creates a new bill. Following the issuance of this veto, SB 2641 will be sent back to the General Assembly, where they will decide whether to (1) let the bill die, (2) approve the amendatory bill by simple majority, or (3) override the veto by a supermajority.
 
The Governor’s actions shine a spotlight on the growing popularity of services like Turo and Getaround, which allow individual car owners to share their vehicles onto a Peer-to-Peer network for rent by others. In response to the demand for car sharing services, major automakers such as GM, BMW, and Diamler have all embraced the car sharing archetype and created their own networks. Although the influx of Peer-to-Peer car sharing is not as expansive in the Chicagoland area as cities like San Francisco, Los Angeles, Boston, and Atlanta, its future growth here appears imminent.
 
The Governor’s proposed amendments will have an adverse impact on municipal revenue streams by preempting their taxing and regulatory authority. As such, the veto could likely end up shackling municipalities’ ability to control the proliferation of car sharing within their communities, while at the same time forcing them to incur the liability and cost of ridership on their local streets. Although the Governor’s intentions are to encourage the growth of this industry, municipalities may end up shouldering the burden without any additional financial support.  
 
It should be noted that all is not lost. The Governor’s proverbial silver lining in this veto is outlined in his proposed insurance and indemnification framework. The Governor’s veto requires (1) both vehicle owners and drivers to maintain insurance and a valid driver’s license, (2) ensures that vehicles in use on the network are not subject to any safety recalls, (3) requires the Peer-to-Peer companies to assume liability of a shared vehicle for bodily or personal injury, and (4) provides that traffic tickets or citations issued while the vehicle is on the network may be dismissed against the owner and/or issued against the driver. Although mere speculation, these safety regulations appear to be a consolation prize following the removal regulatory authority from municipalities. 

In conclusion, juxtapose to the limitations on local regulatory authority, the Governor’s safety measures seem to balance those restrictions while simultaneously safeguarding the community by outlining certain safety and liability requirements for car sharing companies and users. While this bill makes its way back through the General Assembly, municipalities should review their own municipal codes to determine if they have any regulations that may be impacted by this legislation. Looking forward, with the car sharing services on the horizon, it is imperative that municipalities prepare for its arrival.

The full text of the veto can be viewed here.