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California Regulator Passes First Ridesharing Rules, A Big Win For Lyft, SideCar, And Uber

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The California Public Utilities Commission has unanimously approved new regulations around ridesharing services such as Lyft, SideCar and UberX (as initially noted in a number of reports on Twitter).

The CPUC proposed the rules back in July, offering a legal framework for ridesharing services to operate throughout the state. As we reported then, most of the regulations revolved around public safety, as well as ensuring that drivers have had background checks and are covered by insurance in the case of an accident.

According to a press release from the CPUC, the new regulations establish a new category of business called a Transportation Network Company, and it requires those companies to obtain a license from CPUC, conduct criminal background checks, establish a driver training program, and hold a commercial insurance policy with a minimum of $1 million per-incident coverage.

Lyft co-founder and President John Zimmer told me that California is the first state to establish such rules. While the company already operates in San Francisco (where it’s headquartered), Los Angeles, and San Diego, Zimmer said the decision “provides clarity to our communities here in markets that already exist” while also setting the stage for launching in more cities. He also said that, when he talks to regulators in other cities and states, they’re usually looking to see how things shake out in California, and now the state has shown there’s “a way to do this that doesn’t compromise on safety, innovation, or choice for consumers.”

As for how the regulations that were passed today compare to what was initially proposed, Zimmer said some of the language has changed, but the substance is similar. A CPUC spokesperson said the main revision since July is strengthening some of the provisions around insurance.

“Our decision emphasizes safety as a primary objective, while fostering the development of this nascent industry,” said Commissioner Mark J. Ferron in the press release. “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 full decision is embedded below.

Update: A spokesperson from the San Francisco Cab Drivers Association sent me the following statement:

The San Francisco Cab Drivers Association finds it disturbing that the CPUC is seeking to create a new class of for-hire transportation service which would not have the oversight of local regulatory bodies while unfairly competing with existing locally regulated taxi services.

This measure essentially deregulates California’s taxi industry for numerous reasons. The CPUC has only five safety enforcement investigators for the third largest and most populous state in the U.S., clearly not enough to enforce the new rules they are proposing. In California, taxicabs are an on-call and on-demand service as defined by California government codes. Any additional class of transportation provider, which offers the same on-call/on-demand passenger transportation service without the same regulatory standards, renders existing regulations meaningless.

Without proper local regulatory oversight this can only lead to abuse by TNC drivers, companies and the opportunistic element leading to the decreased quality of passenger service for the disabled, elderly and disenfranchised who rely on taxis for transportation.

This decision does not consider the wider environmental, economic and road safety impacts for all Californians. The addition of thousands of for-hire vehicles to the city of San Francisco alone has already increased congestion and pollution, contrary to the claims of TNCs and their supporters.

We vow to continue fighting for the rights of all Californians regarding equal access to safe, clean, efficient and fairly priced on-demand transportation.

CPUC Ridesharing by TechCrunch