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California becomes first in nation to regulate ride-sharing

Spiros Vathis

California regulators gave the go-ahead to ride-share apps last week, making it the first state in the nation to legalize peer-to-peer services connecting riders to drivers who use their own cars.

That's an about-face from a year ago, when the California Public Utilities Commission (CPUC) was handing out cease-and-desist letters to companies like Lyft, Sidecar, and Uber.

The commission voted unanimously to oversee companies that run these apps, creating a new category called Transportation Network Companies, or TNCs, to regulate them. Now, the CPUC can mandate driver training and a $1 million per-incident insurance policy for all drivers.

This makes it legal for companies like Lyft and Sidecarto operate in California -- if they comply with a set of 28 rules.

“The CPUC is at the forefront of leadership in crafting new safety based regulations for a rapidly emerging industry,” CPUC President Michael R. Peevey said in a press release. “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.”

Rideshare companies welcomed the CPUC’s decision, which has legitimized the industry in California. In a post on Lyft’s website, company co-founders John Zimmer and Logan Green gave credit to their customer base.

“When we first received a cease-and-desist letter from the CPUC last year, you came together and spoke out. Your stories, enthusiasm and support fueled us forward, and today you’ve been heard,” they wrote.

“And thanks to your involvement, 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.”

Sidecar’s CEO, Sunil Paul, cheerfully addressed the apps’ users.

“Today we have a new transportation category — the first in 16 years! — and a new set of rules that will allow rideshare to flourish in California. This new roadmap will pave the way for transportation innovation nationwide,” he said.

Paul also took the opportunity to announce that Sidecar will be launching statewide next year.

Kepa Askenasy is a regular Lyft and UberX user. She was laid up with a back injury for a while, and she relied on ridesharing to get around. Askenasy said the drivers would often help her get groceries in and out of the car.

“It felt more like riding with a friend than an employee of something,” she said.

As an Airbnb host, Askenasy is well-versed in the sharing economy. She said she feels the CPUC’s decision has legitimized her line of work.

“(This decision) will now open up the next round of adopters to be more confident,” she said, adding that people will feel safer knowing the drivers are approved and drug tested.

The CPUC will continue to review state transportation codes. Next up: tackling existing limo and charter service regulations.