State Legalizes SideCar -- For Now

SideCar.jpg
Oft considered a hooligan of rideshare start-ups, and the last hold-out in a grueling regulatory battle, SideCar is finally legal in San Francisco.

Well, sort of.

On Friday, the California Public Utilities Commission announced that the peer-to-peer service may operate on an interim basis while the state considers new rules on ridesharing. It has yet to decide whether SideCar and various other "New Online-Enabled Transportation Services" (NOETS) should abide by the same regulations that govern traditional transit.

SideCar's agreement with the CPUC somewhat resembles the ones signed by its competitors Uber and Lyft back in January, which helped the companies stave off $20,000 citations from November. It includes a few extra stipulations, such as a ban on transporting rideshare passengers to airports. But the basic contours are the same, says CPUC spokesman Christopher Chow.

Like Uber and Lyft, SideCar must provide documentation of a $1 million excess liability insurance, which is evidently the bar that California has placed on smartphone apps that contract with drivers, rather than hiring them as employees. It's become a major sore point between the agency and old-school taxis operators, all of whom are held to a different standard.

In an e-mail, Luxor Cab's general manager Charles Rathbone complained that cabs have far more rigorous requirements. Whereas the "excess" policies of ride-share start-ups only kick in after the driver's insurance maxes out, cab companies have per-incident liability coverage that doesn't require any other policy to be in effect. They also have to name the airport, the city and county, the paratransit broker, and San Francisco General Hospital as "additional insureds," he said.

SideCar exulted about the agreement yesterday afternoon, deeming it "a big victory for rideshare" in a blog posted around 3 p.m. The blog outlined a grudging, somewhat tense coexistence with the state agency, as though the two parties were frenemies who'd been plopped in the same reality show and forced to hang out.

"Even thought the CPUC and SideCar have shared goals for protecting safety and encouraging innovation, we felt it was important to wait to sign this agreement until it allowed us to work together while preserving the principles of rideshare," the blog said. It went on to assert that the commission doesn't -- or shouldn't -- have jurisdiction over ridesharing.

Like other NOETS, SideCare has long maintained that its domain is technology, not transportation, and that as such, it's not beholden to any of the old transit regulations. Rideshare start-ups often bolster that argument by claiming their only employees are marketers, developers, and engineers, while their drivers are all hired guns.

But it's unclear whether those lines will fly in CPUC's rideshare rule proceedings, which have been grinding along since January. A couple weeks ago the commission asked the rideshare start-ups to produce proof of workers compensation and other insurance documents, which suggests they may ultimately have to follow the same rules as everybody else.

It's also unclear whether this agreement will give SideCar an edge in the increasingly cutthroat rideshare market. At this point it still has to give free rides in New York and Philadelphia, since it can't get their regulatory bodies on board. Those markets are considered critical for any rideshare company hoping to achieve scale, and SideCar will have to win them too if it wants to be a serious player.


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