Mayor May Veto L.A. City Appeal of Rideshare App Regulation

The Los Angeles City Council today again delayed a decision on whether to appeal state regulations allowing phone-app-enabled rideshare companies, such as Lyft and Uber, to operate in California.

The city has until Wednesday to join taxi companies in appealing the state Public Utilities Commission's regulations, but a deputy city attorney says it may be too late for the council to act.

Mayor Eric Garcetti has indicated he would veto a city appeal of the regulations, according to Michael Nagle, a city attorney who advises the Transportation Department. The attorney said if the council votes tomorrow to pursue the appeal, it would not have time to override a mayoral veto in time to meet the state deadline.

But Councilman Paul Koretz, who is pushing for the city to appeal the PUC's rules, begged to differ.

"You are assuming an action by the mayor which he has not taken yet, and you are also assuming he has to sign or veto this, which is also a legal fine point that we should be discussing in closed session," Koretz said.

Mayoral spokesman Yusef Robb would not confirm if Garcetti plans veto an appeal, saying the office would comment "if council acts."

Nagle said the City Council will still have a chance to weigh in during a "phase two" of the PUC's regulation-drafting process.

The PUC will still hear objections from the taxi companies, and the state will also be considering "phase two" regulations that may address "enforcement issues, whether they need to revise the current rules and regulations in phase one," Nagle said.

One of the issues to be discussed in the second phase could be the inclusion of fingerprinting in the process for checking drivers' backgrounds, he said.

Opponents of the regulations have until Wednesday to submit their request to have the PUC reconsider the new rules, which were approved in September. The step is necessary to pursue future legal appeals in court, city officials said.

Representatives of Lyft did not respond to questions about the city's possible appeal of the PUC regulations. A representative of UberX declined to respond prior to any decision by the City Council.

Even though the PUC does not categorize ridesharing services as taxi companies, Koretz has said the services are taxis in disguise.

"Essentially what they are doing is legalizing bandit cabs," Koretz said of the PUC's new rules.

State law reserves a city's right to regulate the taxicab industry, according to Koretz's motion.

By approving the new rules, the PUC "created a new class of for-hire transportation service" that cannot be regulated by the city and would be "unfairly competing with existing locally regulated taxi services," the motion states.

Koretz said the PUC does not have enough investigators to enforce its own rules.

"They're not going to do anything to actually make (the requirements) happen, as a practical matter," he said, adding that "it makes a lot more sense to have local control."

He also questioned whether background checks of drivers will be thorough enough to protect the public's safety.

"When you have the first serial murder or rapist ... they're going to look back and say the PUC screwed this up and the city screwed this up," he said.

Officials with Yellow Cab said the company is appealing the rules.

"Your entire (taxi) franchise system is under attack," Dominick Rubalcava, an attorney and lobbyist for Yellow Cab, told the city's Taxicab Commission last week.

The commission, formed in 1998, oversees a franchise system that allows nine taxi companies to do business in Los Angeles. Regulation was previously handled by transportation commissioners.

The state Public Utilities Commission's action last month signed off on regulations that classifies phone-app-enabled rideshare services as "transportation network companies." Such companies allow people in need of rides to use a downloadable smartphone app to make arrangements with those willing to drive them to their destinations, often for a fee.

Under the new PUC rules, the rideshare companies must get a license from the PUC, require criminal background checks of drivers, create a driver training program, adopt a "zero-tolerance" policy on drug and alcohol use, buy commercial liability insurance policy with a minimum $1 million coverage and do a 19-point car inspection.

Tom Drischler, administrator for the city's taxicab franchise system, told the taxicab commission last week that the state's laws are unclear on whether drivers for rideshare companies will be required to get commercial insurance, which costs between $5,000 and $7,000. Drivers for those companies might actually be free to purchase personal insurance instead, he said.

There are also no requirements on the age of vehicles, and the only enforcement measure in place for the "zero-tolerance" policy on drug and alcohol use is an online complaint board, he said.

The rideshare app companies are required to do criminal background checks but do not need to take fingerprints of drivers, a step that is required under city rules, Drischler said