SACRAMENTO -- California regulators have approved the nation's and state's first rules for fast-growing ride-sharing companies that connect passengers to drivers via smartphones.
The Public Utilities Commission voted 5 to 0 to let the services -- such as Lyft Inc., Sidecar and Uber Technologies Inc. -- continue to operate, if they comply with basic safety and insurance requirements.
The three companies provide transportation for a fee or donation, connecting paying passengers with drivers who use their own vehicles.
The proposed decision gives a greenlight for ride-sharing in California and should set an example for cities and states across the country to provide consumers with a new way to get around, supporters said.
Under the proposal, the PUC would have jurisdiction over ride-sharing under a new category of businesses called transportation network companies. The agency would also issue licenses to the services.
The decision is expected to preempt efforts by California cities to oversee or even ban ride-sharing under their authority to license taxi cab firms.
Regulators would require drivers to undergo criminal background checks, receive driver training, follow a zero-tolerance policy on drugs and alcohol and carry insurance policies with a minimum of $1 million in liability coverage.
Controversy over ride-sharing comes as local governments seek to encourage new business models. Meanwhile, the highly regulated taxi industry is howling at the prospect of losing fares to new and typically cheaper competitors.
"This is an existential threat," said Mark Gruberg of the United Taxi Cab Workers of San Francisco. "It's hard to see how the taxi industry with its rules and regulations and responsibilities can compete with a service that has none of those requirements."