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California Regulator Says Commercial Carpooling -- Like What Uber and Lyft Are Doing -- Isn't Legal

CPUC says UberPool (and probably Lyft Line) isn't legal.

The California Public Utilities Commission is apparently not a fan of the newest trend in mobile-enabled ride-sharing: Helping two or more people with similar origins and destinations share a car across town.

In a letter sent on Thursday to Uber, the CPUC asserted that state law prohibits what are known as “charter-party carriers” from charging fares to individuals, rather than charging a total amount to all passengers.

This conflicts with the way both UberPool and Lyft Line are run, which is to match together similar ride requests that come in at a similar time, and charge each party a reduced amount in return for sharing.

Both Uber and Lyft are currently offering such commercial carpooling features in San Francisco.

It’s possible Lyft and Uber will protest that the law doesn’t apply to them, as the CPUC officially legitimized ride-sharing last year by creating a new category of transportation network companies that include personal cars that are driven for profit. Obviously, the CPUC doesn’t agree.

The letter to Uber, which was obtained by Re/code, said that the company had not applied for any special designation for its new product. Needless to say, it is in keeping with these startups’ philosophy: Act first, figure out the regulatory situation later.

Quoting the law, the CPUC said: “The section strictly prohibits a charter party carrier from charging passengers on an ‘individual-fare basis.’ In accordance with §5401, the Commission has consistently found that charter party carriers cannot charge an individual fare when carrying multiple persons in a vehicle, and, therefore, a person chartering a charter party carrier vehicle must have exclusive use of the vehicle.”

Uber and Lyft have promoted the new services as alternatives to car ownership and public transportation — which they can now offer, given that they have substantial supply and demand for rides in key cities.

(However, my personal early experience so far with both UberPool and Lyft Line in San Francisco has been that nobody else requests the same route as I do, and I just receive the promotional discount — usually 50 percent off — while they are working to build demand.)

Update: Lyft confirmed it received a similar letter from the CPUC. Here’s the company’s comment:

“San Francisco residents have embraced Lyft Line as an affordable, efficient way to get around their city. By connecting shared rides along shared routes, Lyft Line is helping to improve daily commutes and reduce traffic – ultimately contributing to carbon reduction and improved air quality in the process. We welcome the opportunity to discuss this new form of shared transit with President Peevey and the CPUC to ensure that residents continue to have access to this innovative and sustainable transportation option.”

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