To: To US Congress, State Legislators, US Mayors and City Council members from coast to coast
Re: Ridesharing regulations
From: Paul Steinberg, Vice President, Carma (previously Avego Corporation)
Carma operates Real-Time Ridesharing projects funded by the Federal Government in San Francisco, Santa Barbara, Austin and Washington DC. Carma is bound by, and compliant with all federal, state and local laws and regulations; Carma has never received a citation or cease and desist letter from any regulator.
Ridesharing occurs when you pickup someone, drive to your destination, and park your vehicle until you go home. If you get compensated more than it costs to operate your vehicle, then you crossed the line to become a for hire driver. – Captain Carpool
Many cities and states across the United States are evaluating regulations for what seems to be a new breed of transportation vendors (UberX, Lyft, Sidecar) whom categorize themselves as smartphone apps that enable “ridesharing” services. In contrast, these vendors are actually connecting “for hire” drivers with passengers by way of a smartphone. We want to encourage policy makers to consider several additional areas before defining any new regulations for vendors, or their independent “for hire” contract drivers:
- Federal, state and local laws and programs
- Congestion mitigation impacts
- Liability and insurance
- Economic impacts
- Public-private partnerships
- Alternative solutions
Any new regulations adopted should clearly state these vendors are not enabling “ridesharing”, and should not inadvertently, or adversely, affect government funded projects, funding for public transit agencies, or legal forms of carpooling, vanpooling, or ridesharing as defined in federal government laws and programs. Any consideration should look past the mechanics of how trips are dispatched, the independent nature of the drivers, or the equipment used to fulfill the request. The UberX, Lyft, and Sidecar applications connect riders with “for hire” drivers who provide a service extremely similar to that of a traditional taxi driver or delivery truck – what’s different is the lack of markings, fare meters or permits for the vehicles and drivers involved.
Federal, state and local laws and programs
Ridesharing has a long history in American culture, and since it’s inception its goal has been reducing emissions and improving the efficiency of our transportation network. What we have learned about ridesharing over the years:
- It doesn’t matter if you are friends, co-workers, or complete strangers that give each-other a fist-pump;
- It is when your intent is to drive in the same direction, but that is difficult to prove or enforce;
- It doesn’t matter if you do it everyday or a couple times each year;
- It doesn’t matter if you drive a hot rod, pickup truck, van, SUV, hybrid or all-electric vehicle;
It’s all about the amount of compensation you receive in exchange for sharing a ride. “Ride-share” – The Merriam Webster dictionary defines”Share“as; “a) a portion belonging to, due to, or contributed by an individual or group, b) one’s full or fair portion”. If you earn a profit; then the IRS requires a tax on the income, the state requires a special license, the local government enforces regulations, and the insurance provider requires a bigger policy.
Federal definitions for “Ridesharing” have been around for decades, and may be found in many federal, state and local subsidy programs and in laws set by the Federal Highway Administration, Federal Transit Administration and the Internal Revenue Service. Just a few examples include:
- “Carpooling”, “Vanpooling” and “Real-Time Ridesharing” are defined in US Public Law 112-114, and funding for qualified programs is subject to the condition that “the cost recovered does not exceed the cost of the trip provided.”
- The Federal Commuter Tax Benefit (TEA-21 Transportation Equity Act) provides millions of Americans with pre-tax payroll benefits that encourage alternative transportation options. The qualifications require “employees commute to work using mass transit, commuter highway vehicles, or carpools.”
- The Congestion Mitigation and Air Quality Improvement Program (CMAQ) provides over $2.2 billion annually to reduce emissions through programs if “the project or program shifts traffic demand to non-peak hours or other transportation modes, increases vehicle occupancy rates, or otherwise reduces demand for roads through such means as telecommuting, ridesharing, car sharing, alternative work hours, and pricing created to reduce emissions and improve air quality”.
- “Park and Ride” lots and highway signs encouraging carpooling are provided through funding programs that include the basic definitions mentioned above.
- Every major US city runs a “rideshare” matching service to help commuters find carpool and vanpool partners. Both carpooling and vanpool program are eligible for federal dollars, and commonly provide incentives (e.g. coupons, gift certificates) to encourage changes in commute behavior.
Organic forms of carpooling include slugging in Washington DC, Lawrence On-Board in Kansas, and casual carpooling in San Francisco and Houston. It’s common for riders to contribute $1- $2 toward tolls or gas in exchange for trips, but none are regulated or funded by any transportation authority.
The average US commuter drives 25+ miles to work each day, and the 2012 Urban Mobility Report from TTI shows peak hour commute times greater than 40 minutes in many US metros. This transportation problem will not addressed and adding 1,000 or 5,000 or 10,000 extra “for hire” vehicles into your over burdened transportation network, and they will have no impact on our critical congestion and emission problems.
The California Public Utilities Commission (CPUC) defined a new category for these vendors (UberX, Lyft, Sidecar); they are now labeled as “Transportation Network Companies” (TNCs). The simplest way to describe TNCs is peer-to-peer taxis using private vehicles. Both TNCs and traditional taxis provide effective solutions for addressing the first/last mile problem, and Carma partners with legal taxis for our guaranteed ride home service. However, these TNCs are based around the “for hire” driver model (meaning rider and driver do not have a shared destination), and has no significant impact on daily congestion. With base pricing above $1 per mile ,and significantly higher “surge pricing” during periods of peak demand, TNC drivers are obviously participating to earn a profit.
Liability and insurance
For hire vehicles spend much more time on the road than personal use cars and thus have higher insurance liabilities. The taxi profession is consistently ranked as “high-risk” based upon the increased number of accidents and crime. What additional liabilities will the city be adopting when private unmarked vehicles are loitering on city side streets, waiting for their smartphone to dispatch them to give strangers rides anywhere they ask? What prohibits them from waiting outside popular bars and events to give folks rides – what is the insurance coverage in that situation? Uber and Lyft will claim these are “friends” giving “friends” rides and these TNCs maintain that the drivers are not employees when they are waiting for a rider, so they have no legal obligations. Perhaps the burden falls upon the driver, but shouldn’t the TNC be responsible for clear communications and oversight of their network?
Take a look at another transportation equivalent – the tow truck industry. Any AAA member can download their smartphone app, request a tow, and the software dispatches the closest “independent” tow truck driver in their network. AAA considers these tow truck drivers “independent contractors” irrespective of whether they belong to a small tow business or are a sole-proprietor. The same state licensing and regulations bind each tow truck driver, again, whether they are an independent contractor or an employee of a tow truck company. AAA has a very large staff of employees in every state dedicated to ensuring every driver has all the necessary licensing and insurance to be allowed to receive dispatch requests via the AAA smartphone application.
Any new peer-to-peer vehicle will be driving around unfamiliar city streets for 3, 6 or even 9 hours each day, and it will cost your taxpayers >$0.05 per vehicle mile traveled in road maintenance costs alone. Who is going to pay the cost to repair roads if you add additional vehicles into your already over-crowded transportation network?
Any new operators will not improve competition, but rather move drivers from existing legitimate operators to these new TNCs as we have seen in San Francisco. Existing taxi providers are generally locally owned franchises or small business owners, and a flood of new providers playing by less stringent rules will shift revenues into the pockets of heavily venture-backed California firms.
The end result will be a net loss of jobs for hard working, lower income, high risk, and legal taxi drivers.
Since 2012 TNCs have continued to flout public policy, ignore regulations and laws, and repeatedly violate the trust of public officials around the country. They try to manipulate regulators through lobbyists, PR firms, expensive lawyers and public petitions that encourage citizens to SPAM any politician that opposes them. If that isn’t successful, they enter the market anyway. UberX in particular was granted opportunities in California by the CPUC; to this day it refuses to comply with any of those regulations and is suing the State of California.
In the past TNCs claimed they only take “donations”, therefore are not making a profit, and should consequently be classified as “legal ridesharing”. However, their pricing model is structured very similar to a traditional taxi model, plus they introduced fixed and “surge” pricing during real, or artificially manipulated, peak hours. They also claimed they only help you find a friend to rideshare, but recently Uber has expanded into a delivery service for anything – no friends in the car, just a delivery vehicle. Government agencies should work with private industry when they respect our laws, regulations, and legal processes for making regulatory changes.
In contrast, Carma Carpooling takes great pride in the fact we worked for years to gain approvals before entering any of our markets – time used to gain trust, and execute agreements at all levels including: the Federal Government, State Departments of Transportation, and dozens of local transportation agencies, city regulators, and policy makers.
We respectfully suggest you first engage your local and state Transportation Demand Management (TDM) professionals in your local areas. This TDM community has more local applied domain experience to answer the potential local transportation impacts than outside consultants, lobbyists, lawyers or the many activists for these private organizations.
Responsible regulators around the country are taking time to pilot or explore alternatives that may address specific transportation needs:
- A tool to reduce DUIs – the need for additional transportation services to address a growing DUI incident rate should be funded by the very institutions that are perpetuating the situation. Not every citizen goes to bars on Friday and Saturday night, so everyone should not be burdened with funding a solution. When a new commercial development is permitted, it is common for the property developer to be obligated to fund TDM solutions such as private shuttles or other alternatives for their employees. It has been suggested a tax on every drink sold to fund additional public transportation options, or to subsidize legal taxi trips home as AAA does with their “Tipsy Tow” service.
- A tool to address inadequate taxi supply during big events and conventions – the need for additional taxis during large events is not unique, but the solution could include adjustments to existing regulations that insure all operators have a fair and open market. Several items considered include; (1) flexible permits (medallions) that can be used by backup drivers for shift time during large city events, (2) reductions in minimum wait times, (3) adjustments to requests and payment options, (4) expansion of the total number of permits available, and; (5) variable meter rates in a similar model to congestion based toll pricing.
Any regulations should clearly state that these vendors are not enabling “ridesharing”, and should be cautious not to adversely affect government funded projects, funding for public transit agencies, or legal forms of carpooling, vanpooling, or ridesharing as defined and protected by the federal government. Any consideration should look past the mechanics of how trips are dispatched (there are many smartphone apps that dispatch legitimate licensed taxis), or the equipment used to fulfill the request (a vehicle with a pink mustache instead of a taxi with a permit and a light), and recognize that UberX, Lyft, and Sidecar provide “for hire” drivers who deliver the same type of service as a traditional taxi driver or delivery truck.
Specifically language we would ask you to consider as proposed by several cities:
- Ridesharing definition; means the two or more persons traveling by any mode of private passenger vehicle, including, but not limited to, carpooling, vanpooling, buspooling, to any location incidental to another purpose of the driver, for which compensation is not accepted, collected, encouraged, promoted, or requested.
- Compensation definition; means any money, thing of value, payment, consideration, reward, tip, donation, gratuity, or profit paid to, accepted, or received by the driver or owner of any vehicle providing transportation; whether paid upon solicitation, demand or contract, or voluntarily, or intended as a gratuity or donation. Reimbursement for the following is not compensation: (1) Vehicle operating costs in an amount that is equal to or less than the most current privately-owned vehicle mileage reimbursement rates established by the U.S. General Services Administration; (2) Tolls; and (3) Parking costs at the shared destination.
Communications to the media and public should clearly state that these new vendors are not enabling “ridesharing”, and any new regulations exempt legal forms of carpooling, vanpooling, and ridesharing as defined above, and protected by the federal government.
Vice President aka “Captain Carpool“