WORKSHOP COMMENTS TO ORDER INSTITUTING RULEMAKING FILED BY BARRY KORENGOLD ON BEHALF OF THE SAN FRANCISCO CAB DRIVERS ASSOCIATON

Note - There have been some excellent arguments made on behalf of taxi drivers and the taxi industry at the CPUC hearings on "Rulemaking on Regulations Relating to Passenger Carriers, Ridesharing and New Online Transportation Services (NOETS)." In honor of these efforts I'm discarding my usual egotism and will be running some of them in my blog. This one is from Barry Korengold of the SFCDA. 

Opening Comments:

The San Francisco Cab Drivers Association (SFCDA) would like to register our strong objection to the biased and predetermined manner in which this proceeding is being conducted.  The stated goal of this proceeding was “to ensure that the law and the Commission’s safety oversight reflect the current state of the industry and these regulations are just and fair for all passenger carriers.”  Yet before the first round of comments to this proceeding were submitted or reviewed, the commission suspended its $20,000 citations and cease and desist orders to Uber and Lyft, giving both companies the go ahead to continue operating and advertising full steam ahead, regardless of existing law.  This action has allowed these companies to continue building their customer base at an rapidly expanded level, unfairly competing with law abiding taxicabs and charter party passenger carriers.  (Appendix A and B)

In taking this action, the Commission has ignored or neglected to consider the comments submitted by the Personal Insurance Federation of California which state clearly that vehicles operating for companies such as Lyft or Sidecar would not be covered by personal insurance policies, as they clearly operate on a “for profit” basis and are not “rideshare” services as defined in California Public Utilities Code Section 5353(h).  (Appendix C)

This action also ignores what the SFCDA pointed out in our initial comments, including the fact that although no “time based determination” may be cited in California Public Utilities Code Section 5360.5, it clearly states that charter party carriers of passengers shall operate on a prearranged basis, and that “prearranged basis” means transportation must be arranged by written contract or by telephone.  (Appendix D) At the time this was written, this was enough to ensure the intention of this law, which is the requirement of prearrangement.  Uber is now conflating the meaning of “by telephone” in this context, as being the same as “by smartphone”, which is actually a computer, with more processing power than was used by NASA to land a man on the moon.  

The use of a smartphone, which uses GPS and other technology that didn’t exist when this law was written, allows one to virtually see a vehicle around the corner or down the street and “hail” it for “on demand service”.  As we’ve already pointed out, Uber’s website even states their service is now “exclusively on demand”.  (Appendix E)  Given this context and the advancement of modern technology, we believe that in order to preserve the concept of prearrangement in the smartphone era, additional terminology specifying a minimum prearrangement time window is necessary.  We recommend a 30 to 60 minute advanced order requirement.

Thus far, the Commission has rewarded these rogue operations for defying the law.  It has become clear to those forced by necessity to participate in this proceeding that the outcome has been predetermined from the onset.

Should NOETS be regulated as taxicabs?

Absolutely.  As NOETS have been and continue operating as de facto taxicabs, they need to be regulated as such.  It is untenable to have different taxicabs, providing the same service, regulated by different entities and playing by different rules, simply because they label themselves something different.

The claim that NOETS such as Lyft and Sidecar are “rideshares” is completely false.  Whether the payment for rides are called “donations” or not, they are clearly “for profit” enterprises which provide taxi service. (Appendix F)  They are not merely providing transportation between home and work locations, nor to a destination incidental to another purpose of the driver, as specified in CPU Code 5353(h).

Lyft and Sidecar drivers spend hours on the road for no other reason than to pick up passengers and take them wherever they want for monetary compensation.  This behavior is encouraged and promoted actively by Lyft and Sidecar, despite contradictory claims to this commission.  These NOETS are not just “software companies” facilitating communication between individual drivers and people needing rides.  

Not only do they provide the means for payment and scheduling to these drivers, Lyft frequently hosts “Lyft Driver Hangouts” organized via a private Facebook page.  We have witnessed some of these “Hangouts” at SOMA Street Food and Mel’s Diner.  They even provide incentives to drivers who work during traditionally high taxi demand hours.  Unfortunately, since these are private pages, only registered drivers of these services are granted access to these pages.  

We have been able to obtain screenshots of some internal Lyft driver pages however, which mention these “Hangouts”. They also demonstrate these incentives and that drivers are working up to ten hour shifts. (Appendix G)

Other posts from Lyft drivers clearly indicate they see themselves as taxis and working “slow shifts”.  (Appendix H)

I personally had a passenger inform me that a Lyft driver told her she was able to quit her previous job now that she was driving for Lyft.  There are also these comments from Lyfts internal Facebook page: (Appendix I)

The suggested donation is not truly a donation, as there is a “suggested” amount, which does not just cover the cost of gas, bridge tolls and minor wear and tear of the vehicle.  Their suggested “donation” rates are clearly comparable to city regulated taxi fares, as demonstrated by this twitter from a Lyft administrator. (Appendix J)  The mere suggestions of these rates create substantial “peer” pressure to “donate”.  In fact, Lyft drivers are able to selectively avoid passengers who do not wish to “donate” enough. (Appendix K)

If a passenger neglects to actively input any payment amount to Sidecar, their credit card is automatically charged the “suggested donation”. (Appendix L)

Sidecar has also gone as far as providing a “heat map” of where potential taxi passengers are. (Appendix M)  

These drivers are unfairly competing with highly regulated and city permitted taxi drivers by not having to follow the same regulations and standards.  They are not required to carry the same insurance coverage, undergo the same level of background checks or partake in any required training.  Their vehicles are not required the same inspections or quality standards, they do not charge city standardized metered rates, nor do they follow any of the city’s Transportation Codes.

Public Safety:

As with most occupations, those who have not driven a cab for a length of time do not understand or appreciate the skills required to do it well.  Although most people can drive, a career driver who is on the road eight to ten hours a day, year after year, is a much safer driver than one who is not.  A professional driver is more skilled at hazard avoidance, knowledge of traffic laws and dealing with distractions, such as unruly and/or intoxicated passengers.  It is in the interest of public safety for cab driving to be a profession that retains skilled, knowledgeable career drivers, rather than one with low standards that attracts temporary workers with little to no experience spending their whole day on the road in city traffic.

If there are too many drivers vying for a limited number of passengers, this becomes a public safety hazard, as drivers get frustrated and race around looking for fares, jeopardizing pedestrians, bicyclists and other users of public rights of way.

Good drivers eventually quit and the quality of driver goes down.  If this happens, safety and service deteriorates even further for those who need it most (e.g., senior citizens and the disabled).

Should NOETS be regulated as passenger charter-party carriers?

No.  The CPUC does not have enough enforcement officers to ensure compliance and charter-party passenger carriers should only operate on a pre-arranged basis or they are essentially taxicabs.  Uber black car livery service should be regulated as a charter-party passenger carrier provided they are not operating on an “on demand” basis.

Public safety is better served when transportation for hire is regulated by local jurisdictions, as they have more resources for enforcement and a better ability to judge how those services should be regulated in the context of the local community.

Should NOETS represent a new transportation model requiring a Third Way regulatory approach?

No.  Taxicabs have been using smartphone apps for booking (and payments) before Uber, Sidecar, Lyft or Tickengo.  There is nothing new about using a smartphone app to hail a ride.  The NOETS are simply trying to avoid regulations required of legal taxicabs and charter-party passenger carriers.

If any new regulations were to be applied to NOETS operating as rideshares, the driver should have to post their intended destination with a departure time.  No more than the Internal Revenue Service business mileage standard plus any bridge tolls, divided by the number of passengers and driver, should be collected to cover the cost of the rideshare.  The 2013 IRS standard rate is 56.5 cents per mile. (Appendix N)

 A true rideshare should share the cost of each individual ride, not pay for the entire cost of vehicle ownership.  After all, these are personal vehicles, not primarily used for this purpose, as is a vanpool vehicle, defined in Section 5353(h).

Mitigating the costs of car ownership has been readily solved with services such as Zipcar.com and Citycarshare.org.  Lyft and Sidecar’s claims that they reduce congestion are in fact false, in that the riders that would normally take a different mode of transportation such as a taxi or mass transit are now in additional vehicles.  This causes the exact opposite effect and directly negates the positive impact of services such as Zipcar and Citycarshare.  Taxis that would normally be occupied are now driving around empty and cars that would normally be parked in a space or a driveway, are now constantly occupying transit only lanes and double-parked, either waiting for passengers or dropping them off.

Are NOETS either not subject to the CPUC’s jurisdiction, or is forbearance appropriate?

NOETS are absolutely subject to CPUC’s jurisdiction and forbearance is not appropriate, as Section 710(d) clearly does not exempt IP or VoIP’s from state or federal criminal or civil law, or any local ordinances:  

   (d) This section does not affect the enforcement of any state or federal criminal or civil law or any local ordinances of general applicability, including, but not limited to, consumer protection and unfair or deceptive trade practice laws or ordinances, that apply to the conduct of business, the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code), local utility user taxes, and state and local authority governing the use and management of the public rights-of-way.

The CPUC should determine that the NOETS must either conform to existing state regulations regarding charter party carrier or be subject to local regulations regarding taxis.  If they are to fall under ride-sharing as defined by CPUC code they must be limited to having a destination entered into the app prior to accepting passengers with a similar destination.

By extension, it would not be legal to sell drugs or run a prostitution ring because you use a smartphone app.  Those who transport passengers for hire over the public highways must still comply with governing laws, smartphone app or not.

For Appendices click on Read more.

APPENDIX A

http://blog.uber.com/2013/01/31/california-clears-uber-to-continue-and-expand-operations/

California Clears Uber to Continue and Expand Operations

by Ilya on Jan 31, 2013

Uber Community,

Over the past several months, Uber has worked closely with the California Public Utilities Commission (CPUC) — the people who regulate sedan service in our home state — to educate them about our technology platform and what it is doing for riders, drivers, and California cities.

Today, we reached an agreement with the CPUC confirming that Uber is legal in California and suspending the prior complaints and fines levied against the company. More than that, the agreement states that ride-sharing — or rides provided by drivers not specifically licensed to drive a limousine or taxi — is legal too. This paves the way for Uber to begin offering ride-sharing services in California in the near future.

This settlement agreement is part of a steady drumbeat of progress in which pro-consumer, pro-innovation jurisdictions like Washington D.C., New York City, and Massachusetts are recognizing that everyone wins when new technology that fosters efficiency, affordability, and choice in transportation is allowed to flourish.

California has always been on the cutting edge. The CPUC agreement further demonstrates how the Golden State welcomes and supports not only technological advancement, but a better future for drivers, riders, and our cities.

APPENDIX B

LYFT

The official blog

Progress: Lyft Reaches Interim Agreement with CPUC

January 30th, 2013  /  1 note 

Today marks an early sign of progress, and we’re happy to share that we have come to an interim agreement with the CPUC. This agreement supports the continued legal operation of Lyft and sets a precedent for the upcoming rulemaking process. This agreement would not have been possible without the outpouring of support from the community. Thank you for your thousands of emails and phone calls — they had an impact.

Over the last five years, Zimride has focused on improving the safety and convenience of peer-to-peer transportation. We’re strong believers in the idea that community can solve the largest problems of our time, but we also knew our vision would be met with adversity along the way. In August of 2012, the California Public Utilities Commission (CPUC) sent Lyft a cease & desist letter followed by a $20,000 fine. As participants in a new category, we believed that our goals of safety and innovation were not too different from those of the CPUC, and we worked diligently with them to develop a responsible plan forward.

Most importantly, Lyft continues to set the gold standard for safety with measures that go beyond the requirements of other transportation alternatives:

• $1 million per-occurrence excess liability insurance
• Criminal background and DMV record checks on all community drivers
• In-person screening & vehicle inspection
• Zero-tolerance drug and alcohol policy
• 5-star rating system for community drivers and passengers

This is only the beginning. As we expand in 2013, we’ll continue to work with cities and regulators to build a more social, affordable and sustainable transportation solution. You are our community’s pioneers who make this vision possible, and we thank you for supporting the movement.

Onward,

Logan Green & John Zimmer
Co-Founders, Lyft & Zimride

APPENDIX C

The Commission regulates passenger carriers pursuant to Article XII of the California Constitution and the Passenger Charter-party Carriers’ Act, PU Code § 5351 et seq. (the Act). Section 5360 states in part: 

Subject to the exclusions of Section 5353, “charter-party carrier of passengers” means every person engaged in the transportation of persons by motor vehicle for compensation, whether in common or contract carriage, over any public highway in this state.

California Public Utilities Code Section 5353

This chapter does not apply to any of the following:

(h) Transportation of persons between home and work locations or of persons having a common work-related trip purpose in a vehicle having a seating capacity of 15 passengers or less, including the driver, which are used for the purpose of ridesharing, as defined in Section 522 of the Vehicle Code, when the ridesharing is incidental to another purpose of the driver. This exemption also applies to a vehicle having a seating capacity of more than 15 passengers if the driver files with the commission evidence of liability insurance protection in the same amount and in the same manner as required for a passenger stage corporation, and the vehicle undergoes and passes an annual safety inspection by the Department of the California Highway Patrol. The insurance filing shall be accompanied by a one-time filing fee of seventy-five dollars ($75). This exemption does not apply if the primary purpose for the transportation of those persons is to make a profit. "Profit," as used in this subdivision, does not include the recovery of the actual costs incurred in owning and operating a vanpool vehicle, as defined in Section 668 of the Vehicle Code.

                        APPENDIX D

California Public Utilities Code Section 5360.5

5360.5.  (a) Charter-party carriers of passengers shall operate on a prearranged basis within this state.    (b) For purposes of this section, "prearranged basis" means that the transportation of the prospective passenger was arranged with the carrier by the passenger, or a representative of the passenger, either by written contract or telephone.  

APPENDIX E

     (From Uber website)

https://www.uber.com/cities/san-francisco#

Frequently Asked Questions 

May I reserve your service in advance?
Right now, we're still exclusively on-demand. You'll want to request your pickup close to the time you need it. Our average pickup time is 5 - 8 minutes in San Francisco and 10 - 12 minutes on the Peninsula. 

Uber is your on-demand private driver.

Request a ride at any time using our iPhone and Android apps or from m.uber.com.

                      APPENDIX F

"You are your own boss. Some of our SideCar drivers

are earning $30+ per hour."

                APPENDIX G

                APPENDIX H

                 APPENDIX I

                APPENDIX J

1. ft @lyft 

Emily Sklar @emilysklar 

@tAcTweets Lyft donations are 80-90% the cost of a cab. However, Lyft drivers don't do pickups at SFO. All rides originate in the city.
Hey @lyft do you do airport rides?

19 Dec lyft @lyft 

@emilysklar Yes ma'am! We can take you from SF to any area airport.

APPENDIX K

(From internal Lyft drivers page)

PASSENGER FILTERS

Control the minimum average donation riders must have to ride with you. A higher setting may      lower the number of requests you receive.

Minimum average donation:           90%

APPENDIX L

New Feature: Auto-Donate is Here!

We’re very excited to announce a new feature that both drivers and riders alike have been requesting for quite a while:  auto-donate.

It works like this:

• Grab a ride, just like normal
• Once your ride has started, you’ll have the option to make a donation to your driver.  You can still donate any amount.
• If you don’t make a specific donation (including $0) within 24 hours of your ride, SideCar will automatically process a donation in the amount of the community average for your ride.
• Your ride just got even more hassle-free, and your driver just got happier.  Win-win.

Thanks for your continuing feedback on this and other features!  It’s the community’s input that keeps making SideCar better and better.

APPENDIX M

Hey all,

It’s Jahan, for everyone here on the Product team.  I just wanted to make an announcement here about our newest feature, an intelligent demand heat-map for iPhone in San Francisco (Android coming soon).  We know our driver community has been asking for a way to understand where passengers are likely to be hanging out and needing rides.  We believe that our latest attempt goes a long way to allowing all of you to figure this out.  Here’s how it works:

Our servers are constantly collecting information about when and where people open the app, and when and where people historically order rides.  Additionally, we also know where all other available cars are, as well as where drivers that are on rides are headed (ahh destination 

We take all of that data, put it through our top secret set of learning algorithms and filters (courtesy of Rob, our resident mathematical genius), and generate a personalized recommendation for where you should head to be closest to passengers that need rides.  So when you’re out using the map, just remember that everyone sees something different depending on where they are.

Please everyone, give it a try this weekend, and give us feedback, we’re excited to see how it works for all of you.

Ride On,
Jahan
Co-Founder, CTO @sidecar

                        APPENDIX N

IRS

Standard Mileage Rates for 2013

R-2012-95, Nov. 21, 2012

WASHINGTON — The Internal Revenue Service today issued the 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 56.5 cents per mile for business miles driven.
• 24 cents per mile driven for medical or moving purposes.
• 14 cents per mile driven in service of charitable organizations.