States step in on ride share issues

Popularity of apps prompts regulators to reexamine laws



Companies that let people use their smartphones to find rides have racked up several recent victories with state regulators, despite intense opposition from taxi and limousine companies.

Outfits such as Uber, Lyft and Sidecar all have sprung up in the past four years, and now operate in cities as far-flung as Honolulu and Berlin. Using these mobile applications, customers can pick what kind of car they want, ensure that drivers will take them to their destination and pay drivers (including tip) with their phones, instead of using a physical credit card or cash.

The services’ rapid growth and growing popularity have state officials reviewing — and sometimes rewriting — existing rules that apply to traditional taxis and limousine services.

California, where all three companies are based, has gone the furthest of any state, approving regulations last month specifically tailored to those companies.

The new rules from the state’s Public Utilities Commission are widely seen as a victory for the upstart companies. The rules represent a remarkable turnaround from an agency that issued cease-and-desist letters to the companies just last year.

Under the new California rules, the companies must insure their drivers, train and perform criminal background checks on drivers, enforce a zero-tolerance policy for intoxicated drivers, monitor drivers’ traffic offenses and ensure that drivers have their vehicles inspected every year.

The statewide rules also prevent individual California cities from blocking the services from operating.


• Colorado’s Democratic governor in August urged regulators there to shelve rules that would have run Uber out of the state. “Rules designed to protect customers should not burden businesses with unnecessary red tape or stifle competition by creating barriers to entry,” wrote Jack Finlaw, Gov. John Hickenlooper’s chief lawyer. Last month, Colorado’s utilities commission let Uber stay.

• Massachusetts’ Division of Standards initially sought to shut down Uber in the state in August 2012, because it could not guarantee the company’s smartphone meters measured distance correctly. But the agency quickly reversed course, after Democratic Gov. Deval Patrick’s office publicly backed Uber.

• Maryland’s Public Utilities Commission announced in May it would decide whether Uber must obey the state’s laws for taxi companies. The same commission rejected an earlier request from Yellow Cab to subject Uber to those rules.

Despite its victories in some states, the app-based ride-hailing companies still face stiff resistance in many cities, including New York, Philadelphia and Austin, Texas.

Taxi and limousine companies argue it is unfair for Uber and its competitors to sidestep local rules that ensure passengers travel in safe vehicles, are ferried by qualified drivers and are covered by insurance in case of an accident.

Alfred LaGasse, who heads the Taxicab, Limousine and Paratransit Association, questioned whether California’s new regulations will keep passengers safe and protect them against discrimination. Companies such as Uber and Lyft target affluent customers with smartphones and credit cards, LaGasse said. He noted that while taxi services must serve poor, elderly and disabled passengers, Uber and Lyft generally do not use vehicles equipped for disabled passengers.

One of the key questions for regulators is whether Uber, Lyft, Sidecar and similar outfits provide technology or transportation services. If they are transportation companies, they must obey more stringent rules for cabs or limousines. Even in their California victory, car-hailing businesses suffered setbacks on that key legal question.