PRESENTATION TO REGIONAL TAXICAB REGULATORS TASK FORCE: D.C. TAXICAB COMMISSION REPORT ON RIDESHARING March 26, 2014 Jacques P. Lerner General Counsel (202)

Service entered D.C. without approval (Spring 2013) Unlicensed public vehicles-for-hire operated by unlicensed drivers. D.C. Code: vehicles impounded and drivers arrested by MPD DCTC creates the Panel on Industry to study current issues in the industry and make non-binding recommendations (August) Emergency legislation allows ridesharing while the Panel concludes its work (September-December) Panel studies ridesharing businesses, meets with industry stakeholders, and drafts the report Report issued (January 2014) Rulemaking process expected to begin (April)

Marketing impels passengers to believe the only relevant difference between a trip by black car and a trip by a ridesharing vehicle is a higher payment for a more luxurious ride. But that is not true. [So-called] [r]idesharing vehicles are personal cars with non- commercial tags driven by untrained, amateur drivers; black cars and taxicabs are commercial vehicles operated by trained professionals. Report at page 3.

The word ridesharing is not fair and accurate and legally has no place describing a service that falls within the authority of the Commission. The Commission could not license or regulate this activity if its self-styled name were accurate. The term ridesharing confuses the consumer and lends legitimacy to an otherwise unlawful activity. Other jurisdictions have not focused on this issue.

Define ridesharing as an activity in which passengers are grouped for a non-commercial purpose, such as defraying costs, reducing road congestion, decreasing fuel use, protecting the environment, and increasing ridership, in which no person has a for-profit interest. Definition is for the Commissions regulations only. Define the new service as a public vehicle-for-hire service that uses digital dispatch to connect passengers with non-professional drivers operating their own personal vehicles. Report at page11. The proposed rules will use the term private sedan.

The No. 1 issue for regulation. Adequate liability coverage must be available to cover claims by passengers and members of the public injured when vehicles are involved in accidents. Claims do not fall within the coverage of ordinary personal motor vehicle policies (consider pizza delivery). Existing excess liability policies provided by the businesses may not be adequate to ensure coverage. These policies pay at $1 if personal policy refuses to pay. No coverage for driver or vehicle. Terms of service are misleading and may be incompatible with insurance requirements.

Driver/owner must maintain personal insurance. Business must provide umbrella policy. Covered activities under the umbrella (increasing scope): Whenever a driver has a passenger in the vehicle Whenever a driver is signed into the app (not the same as a shift) Whenever a driver is providing service (e.g. cruising for street hails) Whenever a driver is signed up (i.e. 24/7 until the relationship ends) Terms and conditions must not disclaim liability.

Equipment – Private Vehicles: Enforcement issues Vehicles not commercially tagged (trade dress) Driver/owners – Little or no training: Safety issues Criminal background and driving records Zero tolerance policies but no screening Policies against taking street hails but the apps allow it (cruising) No shift limits Licensing: Who decides which drivers and vehicles are on the road?

Licensing process (both the business and the Commission): Business pre-qualifies driver and vehicle, sends application to DCTC. DCTC completes the process, issues light license and vehicle decal. Pre-qualification by business: Third party screens driver for criminal background Third party screens driver for drug use Driver signs owners agreement to obey regulations, maintain insurance, etc. (excludes leasing) Vehicle receives safety inspection. DCTC checks driving record at DMV Approved drivers receive basic training from the business.

Business model is similar to black cars Existing rules: No street hails (may require changes to the app) 100% digital dispatch 100% digital payment Additional requirements: DCTC decal on vehicle (trade dress optional) Light license limits driver to part-time DCTC commercial license allows full-time

How business is organized: uberX vs. Lyft & SideCar. The business is not unlike a taxicab company paired with a single digital dispatch service. The business is the only meaningful source of insurance coverage. Unprecedented role in licensing and operation.

Business must establish its compliance with all requirements for drivers and vehicles. Most important issue is adequacy of insurance policy. The digital dispatch service (which may be a separate company) must be registered for approval of its app, to provide quarterly trip data, and submit the passenger surcharge.

The business would play a unique and untested role, requiring a high level of cooperation with the Commission. The business must: Maintain insurance coverage (if lost, operations must be immediately suspended). Maintain zero tolerance policy for drug and alcohol use. Maintain requirements for drivers (drug screening, training, etc.). Maintain an inventory with DCTC for enforcement purposes. The digital dispatch service must: Modify its app to prevent street dispatches and hold light drivers to part-time. Collect passenger surcharge and make quarterly payments to the District. Provide quarterly trip data to assess patterns of service and reconcile surcharge.

Private sedan service creates new challenges for preserving and enhancing fair competition. Taxicabs find it difficult to compete fairly, in part because many private sedans cruise and take street hails. Taxicabs are the main source for wheelchair-accessible public vehicle-for-hire transportation. A reduction in taxicabs means fewer options for wheelchair passengers.

Level the playing field between taxicabs and private sedans: Allow drivers with DCTC commercial licenses to operate private sedans full-time. Allow dispatched taxicabs to go off-meter, with rates set only by the dispatch service, like black cars and private sedans. Study measures to prevent private sedans from hindering current efforts to increase the availability of wheelchair-accessible vehicles.

Jacques P. Lerner General Counsel Main: (202) Direct Dial: (202)