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June 27, 2014

Virginia trying to put brakes on ride-sharing services

Say you leave a bar in Clarendon, Virginia, on a Saturday night. You don't want to walk home, the Metro is closed, and you can't find a cab. There are smartphone apps that will call you a car at the touch of a button.

It's fast and convenient. But it's also illegal in Virginia, and police have started handing out citations to drivers in the weeks since the state's Department of Motor Vehicles issued a "cease and desist" order to the companies Uber and Lyft, saying they don't have the proper permits to operate in the state. Drivers can take passengers to Virginia from the District, but they can't pick up anyone in the commonwealth.

Since the letters were issued June 5, five citations have been issued to drivers who said they were in Virginia to pick up customers, Dustin Sternbeck, spokesman for the Arlington police, said. But he emphasized that all of those cars were initially stopped for breaking traffic laws. "We haven't done any type of sting operations," he said.

Tickets for operating illegally can range from $100 to $500. Sternbeck said most were at the lower end.

Alexandria has not written any tickets since the DMV decision, according to police spokeswoman Crystal Nosal. "We will comply with the DMV's request," she said. "But . . . it's hard to enforce."

Patrons are standing up for the companies, saying they offer a much-needed service, especially in areas where it's not easy to hail a cab.

"It's easier, it's more reliable, the payment options are better," said Joseph Santoro, a 32-year-old Washington resident who doesn't have a car. He sometimes goes to Virginia and would like to know he can take Uber home. Because the service's drivers are rated, he said, "it's in their best interest as drivers to see that the car is cleaner, that they're safer."

In the District, Virginia and beyond, governments are struggling with the tension between existing regulations and established cab companies and newfangled amateur car services such as Uber and Lyft.

Washington taxi drivers held a protest Wednesday morning against UberX, Lyft, and other non-professional car services, asking the District to issue a cease and desist order similar to Virginia's. In their view, it's unfair and unsafe that Uber and its ilk can bypass the regulations that govern licensed cabbies and raise their costs.

Most contentious is not the sleek livery car service that first introduced Uber as a luxury good but UberX, a fleet of part-time cabbies who use their own cars. While drivers undergo background checks, they are not professionally licensed. UberX is one of a host of new smartphone-based amateur car services, including Lyft and SideCar.

In spite of Virginia's cease and desist order, Uber and Lyft have vowed to keep operating in the state, arguing that their businesses are not like cab companies and should be treated differently.

A spokesman for Uber said the company "will pay any unjust citations."

So will Lyft, where a spokeswoman added that the company also will cover legal assistance. "We are committed to supporting the Lyft community, especially as we work through challenges at the city and state levels," she said.

Before the order, both companies had already been fined for operating in the commonwealth without proper licensing. Uber was hit with a $26,000 penalty, Lyft $9,000.

In a meeting with the local Chamber of Commerce on Tuesday night, Arlington County Board Chairman Jay Fisette, D, said he believed that the companies could operate if they were registered as businesses in Virginia.

"Our police are not going to look for a problem, but if they run into it, they will ticket," he said. The County Board isn't taking a side, he said, but officers "have to enforce law."

The friction between existing taxi systems and the new operators has popped up around the country - indeed, even overseas. Protests choked London, Paris and Madrid earlier this month.

New Mexico has denied Uber a temporary permit while working on regulations, and state regulators have battled with Lyft.

Even places that have embraced the new services are running into trouble. Chicago cabdrivers are suing city to impose stricter regulations on their new competition. Last fall, California, where many of the new companies are based, became the first state to issue regulations legalizing the non-professional car service industry. But this month, the president of the state Public Utilities Commission sent an angry letter threatening to revoke permits after personnel complained that drivers were illegally operating at major airports.

"California is the first state that creates rules for this industry to promote consumer choice," he wrote. "We will not, however, accept consumer choice at the expense of consumer safety."

Uber is being sued in San Francisco over the death of a 6-year-old girl who was hit by an UberX driver, and companies are protesting a subsequent legislative push to require more insurance.

There's a political element to these fights as well.

In Chicago, a libertarian law firm is defending the non-professional car service drivers in Chicago. In Virginia, Republicans have blamed Gov. Terry McAuliffe, D, for the regulatory blocks.

"The Virginia DMV is screwing over young people and screwing over young entrepreneurs," said Evan Feinberg, president of Generation Opportunity, a conservative-libertarian nonprofit group that also opposes the Affordable Care Act and backs tax and spending cuts. "It's directly applicable to the dangers of government intervention into health care, into their education, into the job market."

Capitalizing on the tension are other companies, like Hailo, which work with existing professionally licensed cabdrivers so they can be summoned through a smartphone system. The company recently began operating in the District.

Public safety is a real concern with unlicensed drivers, Hailo's Don Gilmour argued: "It's a matter of time before these things happen."

Hailo just expanded to Arlington and Alexandria - without the legal issues. In fact, Alexandria's mayor said the city was "thrilled" to have the company operating there.

 

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