Assembly panel may decide fate of car-service apps

Rhode Island is back at war with car-service apps Uber and Lyft.
On Thanksgiving week, state regulators reinstated a controversial $40 minimum charge for all rides for hire in Rhode Island that don’t take place in licensed taxicabs.
The $40 minimum, which was first proposed more than a year ago, was suspended for almost all of 2014 as a result of appeals from a number of car-service businesses and eventually San Francisco-based Uber, which said it would force the service out of the Ocean State.
Since the R.I. Division of Public Utilities and Carriers began enforcing the $40 rule on Dec. 8 (allowing a two-week grace period for news of the decision to spread), neither Uber nor rival app Lyft has gone dark here.
However, their legal footing remains tenuous, with Public Utilities Division Administrator Thomas F. Ahern calling them illegal in his order reinstating the $40 minimum and vowing to enlist state police, the attorney general, local police departments, state licensing authorities and tax collectors – in addition to his own investigators – to crack down on them.
What appears to have already changed is the composition of drivers using Uber, which originally included both licensed, professional car-service and limousine drivers, as well as part-timers using their personal vehicles.
Now, as a result of the $40 rule, many of those professional car-service drivers appear to be backing away from the app, even if Uber has made no official change in its policy toward them.
“For public motor-vehicle carriers, once they put that $40 minimum into effect, [Uber] doesn’t work, because we could be fined or have our certificate pulled,” said Rachel Carvalho, owner of Rachel’s Big City Transportation, which specializes in airport shuttle trips. “It is too bad because it is a nice service.”
Carvalho used Uber off and on since it launched in Providence in the summer of 2013. She said she was one of the drivers the company guaranteed minimum fares to in its first three months.
Since the service lowered its rates this year in competition with Lyft, Carvalho said she hadn’t used it very often, although it did provide a boost during a slow patch in October.
Unlike trips to the airport or limo rides, rides booked on Uber and Lyft tend to be short and inexpensive, putting them in conflict with the taxi market, taxi regulators and the $40 minimum. If Uber Providence’s other certificated car-service drivers give up the app because of the $40 minimum, it could become more similar to its rival Lyft, which cultivates an amateur ethos and promotes the concept of ride sharing.
“Uber partners with a number of drivers with [Public Motor Vehicle] certificates on our uberX platform,” wrote Uber spokeswoman Kaitlin Durkosh in an email. “This minimum fare would unfairly take business away from these partners by making their rides too expensive for the average consumer.”
In response, Uber has filed a Motion to Reconsider with the Public Utilities Division asking it to scrap the $40 minimum until a General Assembly study commission authorized over the summer to review the issue makes recommendations.
Lyft, for its part, has stayed out of the price-floor debate entirely, arguing that since its drivers are using their personal automobiles to give rides, not professional car-service companies, the price floor would not apply to them.
Governments across the country have been wrestling with how to regulate car-service apps and Rhode Island is one of the few places where the issue is handled on the state rather than local level.
Next door in Massachusetts, Gov. Deval L. Patrick this month proposed state regulations for car-service apps in an effort to head off more aggressive, local rules.
In his decision to restore the $40 minimum, Division Administrator Thomas F. Ahern said, “I have determined that following Uber’s recommendation that I willfully ignore the statutory requirement that I establish a price floor must be rejected.”
Ahern also rejected the argument that amateur drivers without public-motor-vehicle certificates or “blue card” licenses are exempt from state regulation or the $40 price floor.
John Chung, a professor at Roger Williams University Law School, doesn’t see an obvious legal avenue for Uber to challenge the state’s car-service regulations, whether for certified PMVs or personal vehicles.
“Uber can’t argue that no law applies to them,” Chung said. “They have to establish that they are some sort of exception.”
That makes the General Assembly likely the best hope for preserving car-service apps in Rhode Island.
Larry Berman, spokesman for House Speaker Nicholas Mattiello, said appointments to the study commission should be made before the end of the year so the panel can begin work in January. •

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