California DMV Rescinds Action Amid Uber, Lyft Furor
In this Jan. 4, 2013 photo, Lyft driver Nancy Tcheou waits in her car after dropping off a passenger as a taxi cab passes her in San Francisco. Jeff Chiu / AP Photo
The ride-booking services protested that an agency action on commercial vehicle registration would stifle their business operations in the Golden State.
In another flashpoint in the ongoing regulatory battles over ride-booking services like Uber and Lyft, the California Department of Motor Vehicles announced late Friday evening that it was backtracking from a Jan. 5 agency advisory on commercial vehicle registration that the companies argued would hamper their business models.
“Any passenger vehicle used or maintained for the transportation of persons for hire, compensation or profit is a commercial vehicle,” the advisory stated. “Even occasional use of a vehicle in this manner requires the vehicle to be registered commercially.”
That advisory made waves in California, where the companies, which have disrupted traditional taxi models there and in cities across the United States and around the world, are based.
According to the San Francisco Chronicle:
That determination — based on a 1935 state law — ignited a firestorm of criticism from the San Francisco startups and their supporters as stifling innovation. Commercial licenses are cumbersome to obtain, meaning they could impede the companies’ growth, which relies on getting new drivers, many of whom work just part time, into service quickly. And commercial registration probably would have necessitated that drivers get commercial insurance, which is significantly more expensive than personal auto insurance.
The DMV’s action attracted complaints from the companies, which stated that other state entities, like the legislature and the California Public Utilities Commission, “already recognized their so-called ‘transportation network company’ model as distinct from other commercial transportation businesses,” according to The Sacramento Bee.
Amid the backlash, the Department of Motor Vehicles released a statement late on Friday announcing that the agency was stepping back from its earlier advisory.
“We jumped the gun, and we shouldn’t have,” the DMV’s statement said, according to the Los Angeles Times. “The matter requires further review and analysis which the department is undertaking immediately.”