Calif. Regulators Look to Limit Rideshare Programs

Taxi

Taxi drivers in San Fransisco want rideshare apps regulated

The California Public Utilities Commission (CPUC) is set to vote this week on a proposal that would significantly change regulations for online services in the state that let you get a lift from drivers who use their personal vehicles as makeshift taxis.

The CPUC calls these services “transportation network companies” (TNC), with some of the biggest TNCs being Uber, Instant Cab, Sidecar and Zimride. Essentially, these companies use digital interfaces to dispatch private drivers to people looking for a ride.

Companies providing the services are currently unregulated by the CPUC, which oversees commercial transportation services in California. Other similar driver services, such as limousines and taxi-cabs, are regulated.

The new CPUC proposal would regulate the rideshare programs, which the CPUC defines as “an online-enabled platform to connect passengers with drivers using their personal vehicles.”

Currently, participating drivers only need to possess standard class C licenses and carry personal auto insurance policies.

The new regulations would include each rideshare service to:

  • Obtain a permit from the CPUC
  • Conduct criminal background checks for every driver
  • Establish a driver training program
  • Implement a zero-tolerance policy for drugs and alcohol

Drivers that use the rideshare apps would also be required to carry a form of commercial auto insurance similar to what limousine drivers currently carry. The price of the insurance would vary by driver, with a range of between $60-$125 per week for commercial coverage, according to the San Francisco Cab Drivers Association.

More regulation could also follow, as the CPUC proposal states that further guidance from the state Legislature may be needed to create “an overall legislative scheme for regulating this new industry.”

Taxi Drivers vs. Silicon Valley

Rideshare apps have been very popular in San Francisco, a geographically compact city with a tech-savvy populace. The leading rideshare company, Uber, launched in San Francisco to great success. The company has been able to offer a lower-cost alternative to taxi cabs and other passenger-carrier services, in large part because personal drivers have fewer overhead costs compared to their commercial counterparts.

Uber has since been heralded as a game-changing application that could ultimately replace many taxi services, much the same way Craigslist has displaced classified ads in local newspapers.

But while the concept of connecting the user to the service provider directly may be similar to other digital interfaces, the San Francisco Cab Divers Association (SFCDA) has argued that driving is inherently different than sharing music or posting services to Craigslist.

“It is nothing like Craigslist or other service interfaces,” said SFCDA director Trevor Johnson. “Public safety in transportation for hire is of the upmost importance. On-demand transportation-for-hire regulations were put into place to protect public safety.”

The city of San Francisco has regulated taxi and other passenger services since 1912, according to the SFCDA. City officials agreed with the taxi drivers and implemented new ordinances regulating rideshare programs, in part because of liability concerns.

“They should not be called rideshares because they are not,” Johnson added. “There are a number of appropriate terms, namely ‘gypsy-cab’ or ‘rogue-cab’ or ‘bandit cab.’ That would be the more applicable terms for what these guys are doing.”

The issue of liability is also being tested in the courts.

Earlier this year a driver registered with Uber was involved in an accident in San Francisco. While it appears the driver was not carrying a passenger at the time, Uber is being sued for damages. The case is complicated and could take years to sort out, but the taxi drivers have said new regulations would make future accident claims easier to process.

Request for comments from Uber and other rideshare companies went unanswered. However, through testimony provided to the CPUC and in statements provided to other media outlets, Uber has contended it is a disruptive company changing how transport business is conducted. The company has also repeatedly stated that it has followed all laws governing ridesharing services.

The proposed regulation puts California in the awkward position of limiting a popular new tech service. In the past, the state has worked with new tech start-ups to develop laws and regulations fostering innovation.

The CPUC acknowledged as much in their proposal.

“The Commission is aware that TNCs are a nascent industry,” the proposal stated “Innovation does not, however, alter the Commission’s obligation to protect public safety.”

Vote Could be Postponed

While the vote by the California Public Utilities Commission is scheduled for Sept. 19, it’s possible the decision can be delayed for further study.

The CPUC has described the proposal as a “vexing issue” that is complicated and difficult to balance. One of the key sticking points has been how to regulate the auto insurance for the rideshare drivers.

“There’s been a whole slug fest over insurance,” said CPUC spokesperson Christopher Chow. “They want to make sure the document is clean. They may want to make other revisions. Usually, revisions are refining the language in the bill.”

There has also been concern that the proposal, if passed, could spur other states to follow suit and closely mirror California’s regulations.

“That’s one of the reason we are so greatly concerned how the CPUC votes,” Johnson said.

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