CONTACT: Matthew Daus [mdaus@windelsmarx.com] 212-237-1106
From Coast to Coast in the U.S., Regulators Outlaw and Rein In Rogue Apps
Such as Uber, Lyft and SideCar
Transportation regulators are joining a growing movement across the United States to curb the unsafe, unregulated expansion of rogue car service apps. Such as Uber, Lyft and SideCar
The International Association of Transportation Regulators (IATR) is pleased to announce that efforts informing regulators of problems associated with rogue ridesharing apps is gaining significant traction.
In the last few weeks, regulators in Los Angeles ordered apps Uber, Lyft and SideCar to cease operations immediately. In Philadelphia, SideCar suspended operations after receiving pushback from regulators. Local authorities in Austin, meanwhile, have proposed changes that would adopt IATR model regulations allowing technology to flourish while also holding apps accountable to the public and to regulators. Pending IATR opposition, SideCar closed its operations and was shut down by the NYC Taxi and Limousine Commission.
��The war against rogue apps is not yet over, but the tide has turned, and the IATR is winning!� said Professor Matthew W. Daus, President of the IATR. �Regulators around the country have adopted the IATR�s model regulations and are either shutting down rogue apps or forcing them to comply with new and innovative pro-technology laws,� said Daus. �The vast majority of regulators will continue to protect the public from transportation companies masquerading as technology providers who may be using uninsured vehicles driven by unlicensed drivers - who have not been drug tested and who may be dangerous criminals,� Daus continued.
A summary of recent legal developments that have hindered and in some cases caused rogue app companies to cease operations may be found here http://iatr.org/IATRAppCommittee.html
About IATR: The IATR is a peer group of taxi, limousine and for-hire transportation regulators. It is dedicated to improving the practice of licensing, enforcement and administration of for-hire transportation through the sharing of information and resources.
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Summary of State-by-State Rogue App Developments
Austin, Texas
The Austin Transportation Department (�ATD�), along with the City Council, has been addressing rogue ridesharing apps by proposing amendments to its regulations, including revised definitions of �chauffeur� and �compensation� as well as proposed amendments that would outlaw the operations of rogue �ridesharing� app companies. The IATR submitted to the Austin City Council and the ATD, Windels Marx�s legal and policy primer regarding ground transportation regulation as it relates to �ridesharing� apps and transportation technology companies, entitled �Ridesharing Applications: Illegal Hitchhiking or Sustainable Group Riding?� (the �Rideshare Report�). 1
Rideshare apps have received several citations over the past year for operating in Austin without a permit. In a memorandum from the ATD to the Mayor and City Council dated May 31, 2013 (�Memo to the Mayor�), the ATD recounts at least three instances where drivers and vehicles affiliated with rogue apps that were cited by authorities were also found to be uninsured. Further, in one instance, a citation was issued against a rogue app-affiliated driver for unlicensed for-hire operation, and the vehicle was also impounded because the app-affiliated driver was on parole and the vehicle was equipped with an alcohol detection device as a part of the ignition system � the type of equipment usually assigned to persons found guilty of driving under the influence. These scenarios cast a stark light on the public safety issue. Accordingly, the ATD concludes in its Memo to the Mayor that �ridesharing� for compensation is illegal and should remain illegal as it negatively impacts the public.
Although, the City Council is not expected to issue a final decision on the proposed amendments until August 8, 2013, Council members publically expressed concern over SideCar, and it appears a vote to block rogue ridesharing operations is imminent.2 Indeed, Austin City Council member Chris Riley has stated publicly that �[m]any of these services are actually hiring people to actually work as drivers that are essentially being dispatched to give rides for compensation,� Riley said. �That, to me, is not ridesharing. Just because you are using your smartphone does not necessarily 2 make it ridesharing.�
As a result of the efforts of the ATD, the IATR, and the public representations made by the City Council, SideCar has announced that it has suspended operations in Austin 4 and it has been reported that SideCar has also let go of its entire Austin staff.
Dallas and Houston, Texas
The City of Dallas has issued two cease and desist letters against Uber for illegal operations and is ticketing the company daily. In addition, Houston has issued a cease and desist letter against Tickengo, a ridesharing app company based in San Francisco, for illegal operations in the city, including reports that drivers were arriving for scheduled pick-ups in different vehicles than those indicated when the trip reservation was made, as well as some drivers arriving for pick-ups who were not registered by Tickengo as affiliated drivers.
Philadelphia, Pennsylvania
Approximately two weeks after launching operations in Philadelphia (its first east coast jurisdiction), SideCar was shut down by the Philadelphia Parking Authority (�PPA�), vehicles providing SideCar services were impounded and SideCar was charged thousands of dollars in fines due to the drivers� lack of proper licensure and failure to submit to the PPA background checks which are required of all for-hire vehicle drivers.5 Further, SideCar announced on or about June 19, 2013, that it has suspended operations in Philadelphia 6
New York, New York
After announcing in March 2013 that it had launched its ridesharing service operations in New York City, and as a result of information provided by the IATR, SideCar became the subject of a �sting operation� by the New York City Taxi & Limousine Commission (�TLC�) which resulted in SideCar announcing that it would suspend its New York City operations.7
Colorado
The Colorado Public Utilities Commission (the �Colorado PUC�) held two public hearings to address proposed amendments to the state�s transportation rules which, as a result of testimony provided by Mr. Daus on behalf of the IATR, will either drive Uber out of the state or, which will require that Uber obtain licensure as a common or contract carrier by the Colorado PUC. 8
Maryland
Similar forceful action against Uber is taking place in Maryland before the Public Service Commission (the �PSC�) where, as a result of testimony provided by Mr. Daus on behalf of the IATR, PSC Staff released a Public Report which finds Uber to be a �common carrier� providing transportation services for-hire and which directs Uber to file for authorization from the PSC. 9
Washington, DC
The Washington, DC Taxicab Commission (the �DCTC�) has recently passed regulations that further require that apps, or �digital dispatchers� as they are referred to by the DCTC, be accountable to regulators. The DCTC has mandated the acceptance of credit and debit card payments in all DCTC licensed taxicabs, and accordingly, digital dispatchers must be integrated with the �payment service providers� that process such payments, precluding what was formerly a purely app-based transaction. 10
California
The California Public Utilities Commission�s (the �Commission� or the �CPUC�) �quasi-legislative proceeding� to institute rulemaking (the �OIR�) on regulations relating to passenger carriers, ridesharing, and new online-enabled transportation services (�NOETS�) began in December 2012 and is still ongoing.11 The Commission has taken nearly seven months to evaluate the operations of ridesharing app companies and still has yet to reach a final decision, despite the fact that numerous parties representing stakeholders� interest, including the IATR, have submitted public comments that echo that of the Austin City Council, and the numerous other jurisdictions taking a stand against rogue apps.
For instance, the Personal Insurance Federation of CA (�PIFC�), which represents six (6) of the largest insurance companies in the U.S 12, and which collectively, insure the majority of personal automobiles in California, submitted comments to the CA OIR which explained the position of its members on the subject:
It appears that the industry standard for personal auto insurance ... is to exempt from insurance coverage claims involving vehicles used for transporting passengers for a charge. Thus, in situations where a vehicle is insured as a private vehicle and is used to transport passengers for a fee, no insurance coverage would exist . . . . The issue before the CPUC is not ridesharing, but instead using a private passenger vehicle in a livery service. This is clearly not covered under a standard policy; if an accident occurs, coverage would not exist.
(Emphasis added).13
The Taxicab, Limousine & Paratransit Association (�TLPA�)14 has also submitted comments warning of the threat to public safety posed by deregulation of the for-hire vehicle industry:
In very simple terms, allowing companies like Lyft, SideCar and Uber to operate without any oversight or regulation is not only untenable, it is reckless. The Commission�s mandate is �to promote carrier and public safety through its safety enforcement regulations.� Allowing Lyft, SideCar, Uber, and other similarly unlicensed transportation companies to exist without regulation is in total disregard15 of the established purpose of the Commission. 16
What�s more, the Los Angeles Department of Transportation recently issued letters to Uber, SideCar and Lyft, respectively, ordering each company and all drivers and vehicles dispatched through the mobile app systems to cease and desist from picking up passengers within the city until they are properly licensed. 17 The companies are advised that failure to comply with the notice is a misdemeanor offense and subject to criminal prosecution and the impoundment of vehicles.
The aforementioned events in Texas, Colorado, New York City, Philadelphia, Maryland and DC all suggest that although rogue app companies are attempting to expand at a rapid pace throughout the country, there seems to be a general consensus among regulators that these apps are dangerous. Regulators around the country have unanimously condemned deregulation via rogue ridesharing and rogue apps. Feeling the weight of transportation regulatory agencies across the country, Lyft co-founder John Zimmer indicated that the company is trying to work with other ridesharing companies, such as SideCar and Uber�s ridesharing services to fight regulators.18
The CPUC is behind the times. It should step-up and join the national regulatory movement to prohibit unsafe, illegal rogue for-hire transportation. Indeed, the CPUC should take heed of the enforcement actions recently demonstrated by the numerous other jurisdictions in which rogue ridesharing apps have attempted to launch, and require licensure as well as increased enforcement against their rogue operations. In light of the overwhelming body of evidence, the Commission has grounds to reach an immediate conclusion to outlaw rogue rideshare apps
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