Los Angeles Mayor Eric Garcetti has endorsed a move by state regulators to consider permitting new app-driven ride-sharing services, and also will work with city taxi companies to modernize their operations.
Garcetti said he supported an action Tuesday by state officials that could allow customers to summon a ride using a smartphone, if the businesses comply with safety rules.
“This decision allows new, cost-effective solutions while protecting public safety through common-sense regulations,” Garcetti said in a statement. “I also look forward to working closely with L.A.'s taxi companies to revisit our existing franchise agreements to adopt similar innovations.”
The proposal follows an outcry from L.A.'s 2,300 traditional taxis. The city’s taxi companies claim the growing, app-based ride services have had an unfair business advantage because they operate outside the city’s inspection and regulatory process.
Use of the apps, often marketed as a cheaper, more casual alternative to taxis, is expanding rapidly in Los Angeles, even as city regulators say the services are illegal.
Under this week’s California Public Utilities Commission proposal, a new category of businesses would be created, called “transportation network companies.” The agency, which regulates cars for hire, would issue licenses to the services. The policy could be approved as early as Sept. 5.
Los Angeles’ taxicab administrator, Thomas Drischler, sent ride-share companies cease-and-desist letters in June. The letters, sent to San Francisco-based companies Lyft, Sidecar and Uber, warned the companies that if they did not stop operating as “high-tech bandit cabs,” drivers could be arrested on misdemeanor offenses and cars could be impounded.
The app companies said at the time that they did not plan to stop operating in Los Angeles. All three said they conducted background checks on their drivers and bought insurance policies.
The clash between city regulators and the ride-share firms is part of a larger debate over how to classify start-ups whose business models don’t fit neatly under existing laws. Other major cities, including New York, Boston and Washington, have taken similar actions against one or all of the companies.