CPUC Proposes Legalizing 'Ride-sharing' Companies in California

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Update: The California Public Utilities Commission unanimously approved new regulations around ride-sharing services in September.

The California Public Utilities Commission on Tuesday released long-awaited proposed regulations for smartphone-enabled "ride-share" services such as Lyft, Uber and Sidecar. These companies allow passengers to hire private drivers through online applications, bypassing local cabs.

The advent of these services has disrupted the taxi industry and prompted bitter reactions from licensed companies and drivers. Last August, the CPUC sent ride-sharing firms cease-and-desist letters, which they did not comply with. This January, the agency came to an agreement with the companies, allowing them to keep operating while it drafted new regulations.

Lyft car
Adorned with a pink mustache, a Lyft car drives in San Francisco (Steve Rhodes/Flickr)

The new proposal, which the CPUC will vote on Sept. 5, requires the ride-sharing companies to be licensed by the agency. They also would have to run background checks on drivers, institute driver-training programs and meet expanded insurance requirements, as well as maintain a zero-tolerance policy on drugs and alcohol.

The companies hailed the decision. In a blog post, Sunil Paul, CEO of Sidecar, wrote, "We couldn’t be more pleased with this outcome and applaud the CPUC for moving in favor of transportation innovation and consumer choice." John Zimmer and Logan Green, the co-founders of Lyft, wrote on that company's blog, "...the CPUC has set a new standard for safety in transportation while supporting innovation that makes cities safer, more affordable and better connected." Uber said in a statement that the proposal "reaffirms that Uber’s core business model of working with professionally licensed and regulated transportation providers can continue without change, while paving the way for a long-term regulatory framework for peer-to-peer ride-sharing services."

Yesterday, before the ruling, hundreds of taxi drivers rallied outside San Francisco City Hall, calling for Mayor Ed Lee to intervene and ban the companies from the city. At the rally, DeSoto Cab Co. President Hansu Kim said city officials are at fault for shortcomings in the city's taxi service, which many have said creates the demand for ride-sharing.


"They have regulated us poorly," Kim told the crowd. "They have not met the capacity. They have not created the standards the industry and the public deserves, and their answer is, 'We’ll deregulate the industry.'"

Some of the rhetoric espoused was an indication of just how volatile the issue has become within the taxi community.

“Is it going to take a rapist -- a pink mustache rapist, a Sidecar serial killer," Kim said, "to let the city realize it is not in the interest of the public or this industry to allow unlicensed, unfettered, unregulated commercial practices by anyone who wants to pick up the public?”

Mayor Lee, by the way, has been publicly supportive of ride-sharing, which you can hear in the following clip from this May appearance on KQED Forum ...

Cabbies see drop in income

Brad Newsham, a cab driver for 28 years until May, told us he sold his medallion because of a precipitous drop in income, which he attributes to a recent flood of ride-sharing vehicles. Newsham said in his best years driving a taxi he made $30,000-35,000 working 20-30 hours per week, but that recently his income had dropped to $5 per hour. He said other drivers he's spoken with have seen a large drop in income as well.

Newsham, who has been politically active on taxi issues, acknowledged that the new services have made it easier for San Franciscans to hire a ride. But he said that licensed cab drivers have been asking the SFMTA to create a centralized system for decades, so that after a certain amount of time the closest cab would be dispatched regardless of which company it works for.

Newsham, who calls ride-sharing vehicles "bandit cabs," acknowledged that the CPUC's proposed regulations could level the playing field between licensed taxis and the  ride-sharing cars to a degree.

KQED's David Weir, who has been covering this story for some time, said some aspects of the CPUC's proposed rules may actually not be that easy for companies to comply with: They will have to prove that they can adequately serve riders with disabilities and they will have to prove they can handle requests from poor neighborhoods. And, he said, "what many considered to be a clever marketing ploy by Lyft (pink mustaches) is about to become a requirement." From the proposed regulations:

TNC (Transportation Network Company) vehicles shall display consistent trade dress (i.e., distinctive signage or display on the vehicle) when providing TNC services. The trade dress shall be sufficient to allow a passenger, government official, or member of the public to associate a vehicle with a particular TNC (or licensed transportation provider). Acceptable forms of trade dress include, but are not limited to, symbols or signs on vehicle doors, roofs, or grills. Magnetic or removable trade dress is acceptable. TNC shall file a photograph of their trade dress with the Safety and Enforcement Division.

Here is the full CPUC Ride-sharing Proposal...