PUC Gives Uber a Chance

On Thursday, July 24, the Pennsylvania Public Utility Commission decided on a way forward that will allow App-based transportation networking services Uber and Lyft to continue operating in Pittsburgh while the Commission decides whether and how to grant them permanent authority to operate. The Commission granted Emergency Temporary Authority (“ETA”) for the entities to operate experimental transportation networks in Allegheny County and simultaneously granted Commission prosecutorial staff petitions ordering the entities to cease and desist operations.  The net effect is that the Commission has determined on a preliminary basis that Uber and Lyft have been operating illegally (i.e., before their applications to provide transportation service were granted), but has also allowed them to continue operating (in compliance with strict ETA requirements) while their pending applications are being considered by PUC ALJs. Moreover, during their operation under ETA, the Commission directed that the entities maintain insurance higher than the minimum required by the relevant regulations and imposed eligibility restrictions on vehicles that offer transportation service.

In statements that accompanied today’s votes, individual Commissioners expressed disappointment that Uber and Lyft disregarded the Commission’s compliance suggestions while applications were pending. Certain Commissioners also noted that further investigation is warranted to determine whether Uber and Lyft operated for a period in violation of the Public Utility Code. If violations are found, civil penalties and customer refunds may be imposed. The Commission demonstrated acute awareness of public interest in continued availability of App-based transportation services by acknowledging the substantial amount of consumer comments submitted. Some Commissioners noted statements by legislators that suggested the Commission’s enforcement activities are standing in the way of innovation and obstructing technological development at the consumers’ expense.  Various Commissioners also pointed out that notwithstanding consumer interest in alternatives to existing taxi and limo services, the Commission has an obligation to adhere to its statutory mandate to regulate transportation service in order to safeguard public safety through insurance and vehicle safety requirements. In his statement Commissioner Cawley also based his support for a grant of ETA, in part, on Senator Wayne Fontana’s (D-Allegheny) pending legislation that would expressly require PUC safety regulation over App-based transportation networking services. Commissioner Cawley commended Senator Fontana for incorporating into the proposed legislation safety standards absent from the entities’ current service. Notably, the proposed legislation would require stringent driving and criminal history checks for drivers, impose substantial insurance obligations on companies, and also establish eligibility requirements for authorized vehicles.[1]

In addition to pending legislation and the specific cases being litigated before the PUC, the Uber phenomenon has spurred the Commission to embark on a general re-examination of its regulation of passenger transportation in Pennsylvania.  The Commission will hold an en banc hearing on August 28, 2014, to study issues in the state’s transportation industry including adequacy of driver integrity regulations, vehicle safety regulations and current insurance requirements.