Ride Hailing Apps

It is a time for new rules. On top of the EPA's proposed regulations for coal power plants, there are reports out of California that the ridesharing industry will need to sit down and digest a new 76-page rule document. The California Public Utilities Commission (CPUC) has approved ridesharing regulations that will codify the emerging peer-to-peer transportation networks in the state, Techcrunch reports.

"Today was a milestone that paved the way for our generation's peer economy"

Last year, things looked a lot different, with the CPUC sending Lyft a cease-and-desist letter. Following the new regulations, Lyft co-founders John Zimmer and Logan Green wrote on their company blog to thank their supporters and to say that, "We'll now be able to look back in 10 years knowing that today was a milestone that paved the way for our generation's peer economy."

The new rules, which affect not only Lyft but also other ridesharing companies like SideCar, InstantCab and Uber, are focused on safety. The CPUC used to refer to these companies as "New Online-Enabled Transportation Services" (NOETS) but has now changed the acronym to TNC, for "Transportation Network Company." California TNC's now need to get a license from the CPUC and conduct a criminal background check on each driver. TNC's also need to establish a driver training program and have a big 'ole commercial liability insurance policy. Oh, and drunk stoners need not apply to be drivers. The CPUC's press release and 76-page decision document is embedded below.

The time is right to put some order in the (potential) chaos. While major automakers and independent start-ups are offering a lot of carsharing options – from BMW with DriveNow to Daimler with Car2go to Zipcar - the rideshare universe has been a lot less organized. But it does have more pink mustaches.
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CPUC ESTABLISHES RULES FOR TRANSPORTATION NETWORK COMPANIES

SAN FRANCISCO, Sept. 19, 2013 -- The California Public Utilities Commission (CPUC) today took action to ensure that public safety is not compromised by the operation of transportation services that use an online-enabled platform to connect passengers with drivers who use their personal, non-commercial vehicles.

The CPUC determined that companies such as Lyft, SideCar, and UberX are charter party passenger carriers subject to CPUC jurisdiction. The CPUC created the category of Transportation Network Company (TNC) to apply to companies that provide prearranged transportation services for compensation using an online-enabled application (app) or platform to connect passengers with drivers using their personal vehicles.

The CPUC established 28 rules and regulations for TNCs. The rules include the requirements that TNCs must:
  • Obtain a license from the CPUC to operate in California;
  • Require each driver to undergo a criminal background check;
  • Establish a driver training program;
  • Implement a zero-tolerance policy on drugs and alcohol;
  • Hold a commercial liability insurance policy that is more stringent than the CPUC's current requirement for limousines, requiring a minimum of $1 million per-incident coverage for incidents involving TNC vehicles and drivers in transit to or during a TNC trip, regardless of whether personal insurance allows for coverage; and,
  • Conduct a 19-point car inspection.
A second phase of this proceeding will review the CPUC's existing regulations over limousines and other charter party carriers to ensure that public safety rules are up to date and responsive to the needs of today's transportation market.

"The CPUC is at the forefront of leadership in crafting new safety based regulations for a rapidly emerging industry," said CPUC President Michael R. Peevey, the lead Commissioner for this proceeding. "The rules we created today allow Transportation Network Companies to compete with more traditional forms of transportation and for both drivers and consumers to have greater choice within the transportation industry."

"Our decision emphasizes safety as a primary objective, while fostering the development of this nascent industry," said Commissioner Mark J. Ferron. "We have specified our expectations for the attributes of insurance. Now the insurance market will determine the best approach to ensure that there is coverage for passengers, drivers, and third-parties at all times while these vehicles are operating on a commercial basis."

The proposal voted on is available at http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M077/K112/77112285.PDF

For more information on the CPUC, please visit www.cpuc.ca.gov.

CPUC Ridesharing