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California becomes the first state to regulate ridesharing apps

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The California Public Utilities Commission (CPUC) has voted unanimously in favor of regulating ridesharing apps, a relatively new category of services that connect passengers with drivers-for-hire who are using their own cars. The ruling designates a new category of business, "Transportation Network Companies," that will be required to meet certain requirements and obtain a permit from the CPUC in order to operate. The category covers peer-to-peer networks like Lyft and Sidecar, basically apps that facilitate hitchhiking with an encouragement to tip, and UberX, Uber's low-cost hybrid vehicle option.

Such companies are now required to comply with 28 requirements, including criminal background checks on drivers, a driver training program, zero-tolerance policy on drugs and alcohol, and commercial liability insurance covering at least $1 million per incident.

Companies must now comply with 28 requirements

The ruling clarifies the law when it comes to ridesharing apps, which have been ruffling feathers in the highly-regulated taxi and livery industry and have been dinged by regulators in the past. California's ruling makes it the first state to regulate the nascent market. The ruling does not cover Uber's app-based taxi and limousine services. It covers UberX because even though drivers are licensed chauffeurs, Uber requires them to purchase their own non-commercial hybrid vehicles. (The CPUC also eschews the term "ridesharing," which it says is "not for profit.)

Companies can't get permits right away, however. The commission will take 45 days to publish an application, after which there will be a 60-day period for companies to apply. (They're also being required to write an essay about "how they plan to ensure that this new form of transportation service does not create a divide between the able and disabled communities" within 90 days.) There will be a second phase of the rulemaking period in which regulators will consider such questions as whether to require Uber to obtain an additional permit (and any truly incensed parties may appeal).

There will also be a workshop in one year to assess the impacts of the ruling. "Our decision emphasizes safety as a primary objective, while fostering the development of this nascent industry," commissioner Mark J. Ferron said in a statement.