Taxi and phone for MOVEmag

August 2014




Uber has left its U-shaped impression in metropolitans across the world as it has flourished as a pioneer in the ridesharing app business. Competitors in the industry are thriving too, including Lyft and SideCar. While they all are bursting onto the scene in new markets, traditional taxi and limousine companies are servicing these same jurisdictions the way they always have and are facing a rise in competition. With these variant forms of passenger ride options taking to the same streets, states and jurisdictions are trying to figure out how to deal with these burgeoning transportation options through regulatory and legislative means.

Ridesharing apps have proliferated because these new companies have utilized smartphone technology, which has exploded in use over the past decade. Passengers can conveniently connect with a driver who has an open car instead of hailing a cab from the street and pay with a credit card on file. Each company has a different pricing scheme, and they also occasionally use special promotions to entice new and existing customers to utilize their service. With their popularity expanding, the issue of concern for policymakers surrounding these “transportation network companies” – as ridesharing companies are termed in the public policy domain – is mainly public safety, specifically insurance requirements, criminal background checks, driver training, and vehicle inspection standards.

State public utilities commissions have authority over taxi operations in various states and set the rates and service guidelines for them. Since Uber established itself in San Francisco as a forerunner in the ridesharing movement, California is naturally one of the first examples of a public utility commission seeking to regulate these new-fangled types of companies. According to the California Public Utilities Commission’s Carrier Investigations web page, California began sending cease-and-desist letters to Lyft and SideCar in August 2012, fining Lyft, SideCar, and Uber in November 2012 for its public safety violations, and, in September of last year, issuing regulations allowing “transportation network companies” to operate. Since motor vehicle agencies also have control of ridesharing companies in other states, some have approached these companies in the same regard. According to two June 5th cease-and-desist letters, the Virginia Division of Motor Vehicles ordered Lyft and Uber to halt operations in the state, citing they had been warned beginning six months prior that their presence was illegal in Virginia. Despite these attempts to halt operations, both Lyft and Uber received notification on August 6th that their applications for transportation broker's licenses and temporary operating authority had been granted effective immediately, a press release on the governor’s website announced.



Not only have state agencies in charge of passenger carriers sought to regulate emerging app services, statehouses have also pursued ways legislatively to bring these operations into compliance standards. Thirteen states and the District of Columbia have introduced legislation since 2013 investigating ridesharing companies or setting forth guidelines for their operation. The pieces of legislation creating protocols cover public safety concerns such as insurance requirements, criminal background checks, driver training, and vehicle inspections. They also require drivers to only receive passengers via the online application instead of hailing them off the street and to disclose how fares are calculated. On January 18, 2013, the District of Columbia’s mayor signed into law 2011 L.B. 19-892, becoming the first AAMVA jurisdiction in the nation to recognize "digital dispatch" car services like Uber. Colorado became the first state to authorize ridesharing services through legislation when 2014 S.B. 125 was adopted on June 5, 2014. The bill requires the companies to carry one million dollars of commercial liability insurance and primary insurance. In addition, drivers are prohibited against using drugs and alcohol, background checks are conducted, vehicle inspections are specified, and fare calculations must be transparent.

Other jurisdictions that have seen legislation since 2013 concerning ridesharing companies include Arizona, California, Florida, Georgia, Illinois, Maryland, New Jersey, Oklahoma, Pennsylvania, Rhode Island, Virginia, and Washington. While each state’s legislation has similar provisions to Colorado, many have their own unique provisions.

For instance, Arizona’s proposed 2014 H.B. 2262 would set guidelines similar to Colorado for the network transportation companies and drivers. Companies would need to maintain a commercial liability insurance policy which provides minimum coverage of one million dollars per incident, perform vehicle safety inspections, conduct a criminal background check on each driver, prohibit the use of drugs and alcohol, and set policies for fare calculation transparency. Pennsylvania’s proposed 2013 S.B. 1457 would also set insurance requirements, background check requirements, prohibitions against drugs and alcohol, inspection standards, guidelines for fare transparency but also contains disparate provisions from Colorado and Arizona. It would require ridesharing companies to maintain detailed records of each driver’s transactions and establishes driver training programs as well. 

state motor vehicle agencies play a role

As the use of ridesharing smartphone apps continues to boom, regulators and lawmakers will continue to seek ways to bring these ventures in line with existing passenger carriers. This is where state motor vehicle agencies may play a role if they regulate taxi and limousine companies in their jurisdictions. Law enforcement officers must also be aware of regulatory and statutory happenings in their jurisdictions if they are to enforce safety provisions or cease-and-desist letters to companies that are deemed illegal. Moreover, local governments can each set their own parameters for their taxi companies within their borders, but have the option to look aggregately to their state governments to set coverage for all jurisdictions, leaving a top-down approach to regulating new carriers. Without a doubt, innovation has always forced regulators to confront the realities of emerging technologies, so this will be no different. Agencies heads and lawmakers will have to balance the popularity of these smartphone apps as well as public safety aspects as Uber, Lyft, and SideCar come to a city near them.