Two months after Virginia sent cease desist orders to car-sharing services Uber and Lyft, the two companies have agreed to meet a series of insurance and legal requirements in order to operate legally in the commonwealth.
WASHINGTON – On one day, neighboring states Maryland and Virginia took opposing stances in how they would treat car-sharing service Uber.
In Virginia, the state cut a deal with both Uber and Lyft that would allow the companies’ drivers to operate legally as long as the companies met a series of insurance and legal requirements and paid thousands of dollars in fines. The deal was announced Wednesday, two months after the state sent the companies cease and desist notices.
Across the Potomac, Maryland regulators said Wednesday that Uber is a for-hire carrier like a limo or party bus rental company and must meet the same legal requirements as other carriers to operate there.
In the middle, lies the District, which has yet to address the legality of car- sharing services despite taxi driver protests and police investigations into alleged criminal behavior by drivers.
Riders use a mobile app to schedule their ride with one of Uber and Lyft’s independent drivers who own their vehicles, not the company. Drivers share the fares they collect with the company.
Virginia clears Uber, Lyft to drive
The Virginia Department of Motor Vehicles granted the two companies temporary operating authority along with a transportation broker’s license – issued to any person or company that arranges passenger transportation like a taxi company.
“This is a good interim step toward finding a permanent solution that will encourage innovation in the transportation industry and ensure the safety of passengers,” Arlington County Board Chair Jay Fisette said in a statement. “This agreement serves to bring Uber and Lyft into compliance with state law.”
State officials say the agreement could serve as a template for future legislation. The DMV is currently studying how state laws could be updated to incorporate new transportation services like Uber and Lyft, which don’t meet existing requirements for taxis and limos.
The temporary authority is good for 180 days and sunsets in February – in the middle of the next legislative session. The DMV can extend the operating authority however.
Uber paid $26,000 for 26 individual violations of operating without a permit and Lyft paid $9,000 for nine separate violations. Both companies had initially appealed the fines, according to the DMV.
Additionally, Uber and Lyft agreed to perform background checks on its drivers and to disqualify drivers with a felony conviction or who are a registered sex offender. The companies also agreed to extend insurance coverage to drivers of up to $1 million. Drivers can only accept riders through an app and cannot accept street hails.
The special terms are similar to requirements that other transportation companies must follow to operate in Virginia but not an exact match, says DMV spokeswoman Katy Lloyd.
“These guidelines are based on the uniqueness of this type of operation,” Lloyd says.
Maryland warns Uber to comply or face fines
Meanwhile, the Maryland Public Service Commission announced Wednesday that Uber would be treated as a for-hire carrier, similar to limo, sedan or party bus companies in the state. Unlike Virginia, which has effectively created a new category for Uber and Lyft, the Maryland ruling would mean the company would have to comply with existing regulations that the company says would ruin their business model.
“While the people of Maryland and their elected leaders support innovation and choice, Maryland’s PSC is stuck in the days of the horse and buggy,” says Uber spokesman Taylor Bennett in a statement.
“The PSC’s attempt to take choice and competition away from Maryland residents will not stand. Uber will continue to defend the rights of riders and drivers to have access to the safest, most reliable transportation alternatives on the road,” it concludes.
The company is pushing Maryland regulators for a deal similar to the one struck in Virginia.
The PSC has ordered Uber to apply for a motor carrier permit within 60 days or face fines.
UberX, the company’s low-cost alternative, and Lyft were not covered by the commission’s ruling.
Correction: This story has been updated to reflect the correct category of carrier that Uber must comply with, which is a passenger-for-hire carrier.