Regulations

Operators Seek Fairness On Rules For Mobile App Services

Posted on August 21, 2013

How should California state regulators enforce rules on charter party carriers versus new online-enabled transportation services?
How should California state regulators enforce rules on charter party carriers versus new online-enabled transportation services?

[UPDATED 8/21/13; 3:40 p.m. PDT]

LOS ANGELES -- The Greater California Livery Association underscored its position Tuesday night that state regulators need to step up to the plate and figure out how to fairly regulate limousine companies and the new app-based transportation businesses that so far operate under looser rules and enforcement.

Comments from industry leaders at a Greater California Livery Association meeting in Los Angeles followed an assertive response issued Monday to a California Public Utilties Commission proposal that would create a new category for such ground transportation upstarts, referred to by the state as NOETS: New Online-Enabled Transportation Services, also known as Transportation Network Companies (TNCs). The proposal, officialy called an Order Instituting Rulemaking (OIR), will be discussed and possibly approved at a CPUC meeting on Sept. 5. The CPUC must regulate Uber, Sidecar, Lyft and other app-based transportation businesses in the same way it regulates limousine companies and other charter party carriers, said GCLA President Mark Stewart in comments Tuesday night. Those were echoed by GCLA 1st Vice President Rich Azzolino, a San Francisco operator who also represents California and the Western Region on the National Limousine Association's Board of Directors.

FULL TEXT OF CPUC OIR PROPOSAL HERE

FULL TEXT OF GCLA RESPONSE HERE.

Stewart and Azzolino were joined Tuesday night in their critique of the CPUC proposal by Bill Rouse, the president of the Taxi Limousine Paratransit Association and the general manager of Yellow Cab Company in Los Angeles. Rouse pointed out that while the limousine and taxi industries each have their own sets of rules, interests and protocols, both sectors share enough common concern and goals related to how NOETs end up being regulated at the state, local and/airport levels.

Rouse, mentioning that the GCLA is a member of the TLPA, urged minor differences to be cast aside so both organizations can join in getting a fair regulatory playing field. Some of the core issues that still need to be addressed with clarity are how state regulators ultimately will define a cab hail and a pre-arranged ride. Regardless, NOETs need to be regulated consistently, whether it is with taxicabs at the city/local level or with charter-party carriers at the state level, the leaders said Tuesday night.

"We need to work together on taking positions wherever there is consensus," Rouse told a room full of operators, many of whom stayed later than usual as the discussion picked up steam.

Among the most troubling disparities is the fact that drivers for the app-based services need only prove $1 million in personal car insurance, Rouse said. Personal insurance policies are cheaper than commercial ones, and often don't cover a personal car if it is being improperly used for commercial purposes, he said. Nevertheless, the CPUC so far is only requiring verification of the $1 million personal policies among NOETs. In cases where vehicles serving an app-based transportation provider have been involved in accidents generating claims, those claims have been denied, Rouse said. [Limousine operators in California are required to carry under threat of penalty the more expensive commercial vehicle insurance, with a typical policy covering up to $5 million per incident per vehicle].

Rouse also warned that the CPUC meeting on Sept. 5 that will decide the fate of the OIR proposal is not a public meeting. That fact only adds urgency to the need for operators to support the GCLA financially in coming weeks as it seeks the best legal, lobbying and consulting strategies in trying to get the proposal modified or at least plan for a possible alternative course of action should it not turn out favorable to the limousine and taxicab industries.

The prolonged discussion on Uber and mobile-app services Tuesday night provoked some spirited and testy discussion and exhanges from GCLA members and operators during a question-and-answer period. The comments and suggestions reflect a growing industry divide among operators on how to handle the inroads from Uber and similar providers: Some operators are quietly doing business with Uber, while others are avoiding it completely. Either way, the transportation mobile-app technology is not going away, which will force the industry to come to terms with it. The consensus emerging among many industry leaders is that limo operators must find ways to adapt to the new technology while competing with newcomers, while maintaining quality service, while ensuring a fair regulatory environment. Therein lies one of the biggest challenges the chauffeured transportation industry has faced in California and beyond.

"I am being indundated by people in this room about what we are going to do," said Stewart, adding that operators are noticing NOETs making airport runs with apparent impunity.

Among the conclusions that the GCLA reached in its official response:

  • If the CPUC plans to have authority over NOETS, then those entities must abide by ALL the rules on liability insurance, workers comp, vehicle standards, registration, licensing, fees and chauffeur training verification that apply to charter party carriers, the GCLA response concludes. If the CPUC can't maintain such equal regulatory status, then it must change the way it regulates charter party carriers, including chauffeured transportation companies, the response states.
  • The GCLA questions how a bureaucratic agency such as the CPUC can afford the time, money and staff to adequately regulate NOETS and the 7,000 charter party carriers under its jurisdiction. It urges the CPUC to address and remedy the lack of administration and oversight of its Passenger Carrier Division, especially since the agency has a $5 million surplus in its accounts earmarked for enforcement activities.

GCLA PHOTO GALLERY OF SPEAKERS AND ATTENDEES HERE

-- Martin Romjue, LCT editor

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