The decision will provide startups, their users, and regulators with a clear uniform set of policies as well as set the stage for future regulation in other U.S. markets.
California today became the first U.S. state to regulate ride-sharing services when the state’s Public Utilties Commission voted Thursday to establish a new category of businesses called “Transportation Network Companies.” The vote passed 5 – 0.
The proposed regulations define ride-sharing startups, now considered Transportation Network Companies, as an “organization, whether a corporation, partnership, sole proprietor, other form, operating in California that provides prearranged transportation services for compensation using an online-enabled application (app) or platform to connect passengers with drivers using their personal vehicles.”
The new category will includes existing services from Sidecar, Lyft, and Uber. Sidecar and Lyft announced the news on their Twitter accounts:
By a unanimous vote, the historic regulations proposed for ridesharing have been adopted by the CPUC! pic.twitter.com/FL7MOeiUSz
— Lyft (@lyft) September 19, 2013
It’s official! Rideshare is a new, official transportation category in CA! Thank you all for your support, we couldn’t have done it w/o you!
— Sidecar (@Sidecar) September 19, 2013
As part of the 28 regulations passed by CPUC, TNCs will be required to:
- 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.
The full proposal that the CPUC voted on is embedded below: