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Maryland panel says Uber is subject to state regulations, must get permit to operate in state

(Photo by Evelyn Hockstein/For The Washington Post)
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Uber must get a permit to operate in Maryland and as a “common carrier” be subject to state regulations, a state panel ruled Wednesday.

The Maryland Public Service Commission said the ride-sharing company must abide by regulations imposed on passenger-for-hire services in the state and apply for a motor carrier permit for its UberBLACK or UberSUV services within 60 days.  The commission also ordered its staff to draft new regulations for the new ride-sharing industry.

The ruling affirms an April decision by the state’s chief public utility law judge that said the company needed to file an application to operate as a for-hire carrier.

“We recognize that many industry changes and technological advances have occurred since these regulations were adopted, including the everyday use of the Internet,” the Commission said.   That’s why, the panel said, it is directing its staff to work on new regulations  to cover the new industry and that address public safety concerns, including assurances of drivers’ insurance, vehicle safety, and the qualification of drivers.  The new regulations will be ready within 90 days and will be drafted with input from Uber, the commission said.

Maryland Gov. Martin O’Malley issued the following statement in response to the Public Service Commission’s ruling:

The U.S. Chamber of Commerce has ranked Maryland as the #1 state in the nation for innovation and entrepreneurship for three years in a row. As new innovations change the transportation services landscape, we must ensure that our laws and regulations evolve as well – we shouldn’t try to limit a 21st century marketplace with 20th century regulations. The Public Service Commission was right when it said that “many industry changes and technological advances have occurred since these regulations were adopted” and that regulatory revisions “may be appropriate to more effectively regulate” innovative transportation companies.  I urge the Commission—and the Maryland General Assembly—to ensure that our laws and regulations accommodate and foster new innovations to ensure that Marylanders have choices, while always ensuring that we protect the safety of all Marylanders.”

Uber spokesman Taylor Bennett said the company will appeal the decision and “continue to defend the rights of riders and drivers to have access to the safest, most reliable transportation alternatives on the road.”

Uber officials say Maryland is the first state to categorize Uber as a common carrier, “imposing antiquated regulations on our decidedly modern industry.” The company has argued it is a technology company, not a transportation company and therefore exempt from regulation.

“We do not own vehicles or manage/control drivers,” the company said in a June blog post. “Drivers have complete control over their business, including whether to join Uber, how many hours they work, where they work, and when they work.”

The decision to categorize Uber as a common carrier “not only restricts transportation options for Maryland riders, but will also limit economic opportunities for Maryland drivers.”

Although Uber had claimed that it is exempt from state oversight because its technology is covered by the Telecommunications Act of 1996, the Public Service Commission found in this case the technology used “does not merely provide information, but rather is used to contract with and operate a fleet of vehicles and set rates through Uber’s website and phone application.”

John A. Lally, an attorney who represents about 2,000 taxi drivers in the Washington area, most of them in Maryland, said the ruling is a good step to begin oversight of an industry that taxi drivers say has had unfair advantage because its drivers don’t face the same rules as licensed taxi drivers.

“All they have is a driver’s license, but you have to make sure that the person in that driver’s seat is responsible,” said Lally.  “Drivers should be licensed and background checked, their vehicles should be inspected, and they ought to have government guaranteed insurance.”

“The good news is that the (commission) is saying ‘look you got to play by the rules and here are the rules,'” Lally said.

In a related story, Virginia officials on Wednesday announced that they had reached an agreement with Uber and Lyft that allows the transportation services to continue operating in the state.

Under the agreement, the companies are required to run extensive background checks on drivers and disqualify those with convictions for any felony, fraud, sexual offenses, or violent crimes.  It also says there should be reviews of driving history, zero tolerance for drug use, and strict insurance requirements. Failure to comply with the conditions could result in the DMV revoking the operating permit, officials said.