Lyft, UberX Receive 3-Year Licenses to Operate in California

In further signs that ride services like Lyft and UberX are probably here to stay, the California Public Utilities Commission last week issued both companies three-year permits to operate in the state.

Lyft said in a blog post last week that it was "thrilled" to announce the issuance of the permit.

"This is exciting progress," the post said. "The CPUC’s framework serves as a sound example for other jurisdictions who are considering regulations for this new, peer-to-peer model. By supporting innovation and technology, these city and state leaders have the opportunity of paving the way for providing safe, affordable and sustainable transportation and we’re thrilled to be working with them to improve our cities of tomorrow."

An Uber post announcing its permit said, "The unprecedented growth in this industry and the leadership shown by California’s regulatory leaders sends a clear message. The innovation economy is thriving in California and the roadmap is simple: public safety and consumer choice go hand in hand."

Lyft and UberX had been operating conditionally as the CPUC reviewed their applications. Just last month, the commission sent letters to both companies informing them they needed to correct "deficiencies" in their applications within 60 days or have them denied. The CPUC specifically singled out questions about the companies' vehicle inspection programs. As reported by the San Francisco Chronicle:

The letter asked them to clarify

• Who is conducting the vehicle inspection?
• What qualifications do they possess to conduct the inspection?
• Any copies of contracts with outside vendors that may provide these services.

The CPUC also said that UberX must make its driver safety program mandatory, the Chronicle reported.

UberX's permit (issued to its subsidiary, Rasier), is especially interesting because, as we found in a report earlier this year, the company was conducting inspections strictly by reviewing photos of applicants' vehicles. The CPUC decision requires TNCs to either conduct a 19-point inspection “prior to allowing the driver to operate the vehicle” or to have the vehicle inspected at a facility licensed by the California Bureau of Automotive Repair. None of the drivers we spoke to reported anyone from UberX ever looking at their cars.

“You have to submit photos of every angle of your car, and interior photos,” said Tyler Granlund, an UberX driver in Los Angeles. “Those had to be approved before you could drive.”

The CPUC inspection mandate includes things like brakes, steering, headlights, seat belts, muffler and exhaust -- difficult items to assess, seemingly, from photos.

Lyft, for its part, assigns what it calls "mentors" to inspect the vehicles of prospective drivers, providing checklists as guidance.

In addition to the inspection requirements, the CPUC mandated the establishment of driver-training programs by TNCS to "ensure that all drivers are safely operating the vehicle prior to the driver being able to offer service." The commission said TNCs had to report annually the number of drivers completing the course, and it gave each company 45 days to file its training program. UberX's filing was notable for its brevity: one page (including double spacing and double paragraph breaks). Filing as Rasier, its ride-service subsidiary, Uber submitted under a heading of  “Driver Training Program” exactly four paragraphs, with the actual steps the company plans to enhance driver training expressed in two sentences:

Rasier will also recommend that partners with less than five years of driving history take a driver training course at a school listed in the California DMV’s Occupational License Status Information System database. For each California city where Rasier partners operate, Rasier will provide, during the application or onboarding process, a list of three such local driving schools.

At the time, Uber told us it was "in the process of preparing additional information for the CPUC."

We have asked the CPUC what changes Uber has made to its inspection and driver training programs in order for it to receive the permit, and are waiting to hear back. We also have a call out to Uber.

Before the latest round of permits were issued, the CPUC had approved licenses for Wingz and Summon, two smaller TNCs.