It's one of the most contentious topics the Seattle City Council has faced this year: how to regulate new "rideshare" companies like Lyft, Sidecar, and uberX. On March 17, the council finally passed compromise legislation that fails to make anyone truly happy and gives everyone something to complain about. Success!

According to the legislation, which passed unanimously, app-based rideshare companies will each be subject to a cap of 150 drivers who can be active at any one time. The law also creates insurance and safety standards and opens up 200 more taxi licenses over two years.

Taxi drivers, who have long claimed the rideshares are crushing their business, are frustrated to be facing 450 new competitors. And the rideshare companies are furious that they'll be subject to these limits at all. Uber says that "by restricting uberX to 150 cars, this law will deal a devastating blow to uberX by forcing a vast majority of the almost 1,000 active drivers off of the system. Once enforced, uberX will be instantly unusable for tens of thousands of riders."

The weekend before the vote, Uber sent out e-mails to their customers, telling them the city council was about to "dismantle" uberX and giving out contact information for various city council members. Maybe that's what led Council Member Sally Clark, who's headed up the council's taxi committee for a full year, to scold the app-based companies from the dais for what she said was a lack of collaboration and communication with the city. "Sidecar reported a new harvest of $10 million in investment capital a few weeks ago," she said. "Uber raised $237 million last year. Lyft has raised $83 million in the last year... You're doing so many things right. You have a lot to teach regulators about how to strip back overweight and redundant regulatory constraints. If only you would communicate and collaborate. How can you raise this much money, have what I imagine are battalions of lawyers, and not have a better plan for how to engage with policymakers? It's amazing how many simultaneous city- and state-level wars you're waging."

Clark also said the new regulations were helpful because the app-based rideshares "will now become a legal choice," implying that they weren't operating legally before.

But Brooke Steger, Uber Seattle's general manager, says that Uber tried to work extensively with the city as far back as 2012 to create and regulate its rideshare service, uberX. "We definitely engaged the city long before we launched uberX," says Steger, "in an attempt to figure out how we can make this work and what the best way to move forward would be." After receiving requests for a "greener and lower-cost option" than their black car and SUV services, Uber "started looking into the regulatory options."

But the kind of service they wanted to create didn't seem to work under existing regulations—and yet customers were asking for it. So, says Steger, the company began talking to city and state officials, initially not getting "much, if any, response" to their queries. "And then Sidecar launched in November of 2012."

Immediately, says Steger, they reached out to the city and state again. "Hey, this is pretty similar to the service we have been trying to launch here for some time," Steger says they told the city, asking, "What are your plans around this?" Months later, a response finally came. "It was very clear that they were taking a path of non-enforcement."

When that became clear, she says Uber asked what the best course of action would be if they wanted to offer a similar option. "Their response was to make it as safe as possible."

So Uber mirrored existing regulations, like vehicle inspections and background checks, according to Steger. "While the ridesharing services do, I think, fall outside any existing regulatory framework, the city made a clear stance of non-enforcement... Because there was no regulatory scheme for this, we went the road of 'What is safe? What is necessary?' We put together best practices."

And while they support the insurance and safety requirements in the new law, they're very opposed to a limit on the number of active drivers. "It doesn't allow for a dynamic supply to be on the road. It doesn't allow for people to drive part-time if they want... [and] it limits availability for customers," Steger argues.

Too bad, says the city council. Though that lid could be lifted in the future, the new rules are set to go into effect a month after Mayor Ed Murray signs the bill—though even he doesn't support the cap. "I remain concerned about the issue of caps on rideshare vehicles," said Murray in a statement after the unanimous vote, which is veto-proof. He called caps "unreasonably restrictive and unworkable in practice" and said he'll direct staffers to work further on the issue and eventually submit mayoral recommendations to address rideshare regulations.

Meanwhile, Uber has a clear message: "We will fight this," says Steger. Uber plans to announce its next steps before the law goes into effect. recommended