At the voting meeting on April 21, the California Public Utilities Commission approved new regulations impacting the operations of Transportation Network Companies (TNCs), such as Lyft and Uber, within California. The “Phase II” regulations come more than 2.5 years after the Commission first created rules specific to TNCs, defining them as companies using an “online-enabled app or platform to connect passengers with drivers using their personal vehicles.” CPUC Decision 13-09-045. Those rules ordered “a second phase to this proceeding to review the Commission’s existing regulations . . . in order to ensure that these rules have kept pace with the needs of today’s transportation market, and that the public safety rules are up to date.” CPUC Decision 13-09-045, Ordering Paragraph 9.

The “Phase II” regulations impose substantial new requirements on TNCs, including ordering that TNC drivers obtain inspections at a California Bureau of Automotive Repair-licensed facility at onboarding and every 12 months or 50,000 miles thereafter, whichever occurs first. Left unanswered by the new inspection regulations are what variety of BAR license is required to qualify (BAR issues various certifications, none of which are aimed at vehicle inspections). Also left unanswered is how TNCs are expected to enforce an inspection requirement based on mileage, given that these are personal vehicles in the possession of TNC drivers, rather than TNCs.

The regulations also order that trade dress must be displayed in the front and rear of TNC vehicles, and impose additional data-reporting and training requirements. Finally, more stringent background checks will be required of drivers for TNCs primarily involved in the transportation of unaccompanied minors (e.g., Hop Skip Drive, Shuddle (RIP), etc.).

Beyond that, the outcome of the Phase II proceedings are largely a victory for TNCs. Among other things, the Commission approved fair-splitting for TNC carpool services, such as Lyft Line and UberPool, so long as the fare is based on time and distance. And two heavily contested issues – efforts by taxi interests to impose fingerprinting requirements for TNC drivers and whether short-term rentals are “personal vehicles” under the TNC regulations – were put off for further deliberation. The Commission’s proposed definition of “personal vehicle” would have prohibited TNC drivers from providing rides under short-term rental agreements by requiring at least a 4-month lease, conflicting with provisions of the Public Utilities Code applicable to TNCs and definitions provided in the Vehicle Code. This was of particular concern to TNCs and their supporters because it would have prohibited initiatives such as Lyft’s partnership with General Motors, called Express Drive, enabling drivers to enter short-term lease agreements to transport passengers in GM-owned vehicles at little or no cost. Programs such as Express Drive are expected to benefit economically disadvantaged individuals who want to become a TNC driver but who cannot afford to purchase a vehicle.

The Commission’s Decision can be found here