California Legally Approves Peer-to-Peer Ridesharing

By Kurt Wagner2013-09-19 23:35:18 UTC

The California Public Utilities Commission voted unanimously on Thursday to legally approve peer-to-peer ridesharing as provided by companies like Lyft, Sidecar, and UberX.

The decision has been long-awaited by many in the state of California as the CPUC dealt with how best to regulate these new transportation services. The ridesharing companies will be allowed to operate legally under CPUC jurisdiction, and will now fall under a newly created category called Transportation Network Company.

Ridesharing apps like Lyft, Sidecar and UberX allow users to request a ride from a driver who then picks them up in his or her own vehicle. The main points of concern from the State of California were safety and insurance-related. The CPUC came down with 28 rules that TNC drivers will need to adhere to in order to operate legally in the state.

Among other things, the new rules stipulate that each driver must obtain a license from the CPUC and pass a criminal background check.

"New innovations in transportation have always played a large role in our country’s economic development," wrote Lyft co-founders John Zimmer and Logan Green on the company's blog. "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."

Thanks to your incredible support, today the CPUC adopted historic regulations for ridesharing by a unanimous vote. pic.twitter.com/q7qYpGoZvm

— lyft (@lyft) September 19, 2013

All three companies had received cease and desist letters in the last three months from the Los Angeles Department of Transportation. They also all received cease and desist orders from the CPUC to go along with $20,000 fines. Lyft and Sidecar received their CPUC letters last fall, and Uber received its letter in 2010. The companies were able to remain operational through agreements with the state that granted them temporary legality while the rules were written.

"We knew this idea of bringing people together to solve a problem like transportation would be met with resistance," wrote Sidecar CEO Sunil Paul on the company's blog. "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."

Do you have a go-to ridesharing app? Tell us in the comments below.

Image: Alfredo Mendez/Flickr

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