Transportation companies sue over regulation on non-taxi car services

An online petition to repeal a minimum charge rule has collected over 2,100 signatures

Staff Writer
Thursday, November 7, 2013

Four transportation companies filed a civil action suit in Superior Court Tuesday against the Rhode Island Public Utilities Commission, which drafted and passed legislation last year to allow the commission to set a price floor on public motor vehicle transactions. RIPUC set a minimum charge of $40 for all trips taken in public motor vehicles — car services outside of the taxi industry. The rule will go into effect Nov. 11.

The law was originally drafted “to address a problem that Rhode Island companies were having with rogue companies that were operating illegally,” wrote Greg Pare, director of communications for the Rhode Island Senate president, in an email to The Herald. The bill distinguishes between PMVs, like sedan services, and taxi companies. The law was sponsored by Rep. Teresa Tanzi, D-Narragansett, and Sen. Bill Walaska, D-Warwick, and was signed into law by Gov. Lincoln Chafee ’75 P’14 P’17 last year.

Lawmakers claim that the state taxi industry has been suffering as a result of increasing pressure from PMV companies. Terrence Mercer, RIPUC’s associate administrator for motor carriers, said the taxicab industry is more heavily regulated than the PMV industry is in his testimony for a hearing on the rule in August. Taxis have territory restrictions, their fares must be approved by RIPUC and they face vehicle age and mileage restrictions, whereas PMVs do not face similar regulations.

The price floor was set to “eliminate the rogue, gray area sedan services that are really acting like taxicabs and, truth be told, stealing the work of taxicabs,” Mercer said.

Tanzi, one of the bill’s sponsors, said that when RIPUC came to her with the drafted bill there was very little opposition in the House. Following passage in the General Assembly, RIPUC held a standard hearing to address details and concerns over the new minimum charge. There was also a second “unprecedented” hearing to further discuss the change, but “very few people” attended, Tanzi said.

But since its passage, the price floor has been met with increasing opposition from local PMV companies. Uber, a mobile app that works to connect PMV companies with consumers, started a petition last week on to repeal the law, said Meghan Joyce, general manager of Uber Providence. As of yesterday, the petition had garnered over 2,100 signatures.

“It’s not true that (the PMV industry) is an unregulated space,” Joyce said, adding that all of the drivers Uber works with are fully certified and licensed with RIPUC.

While Uber is not actually a PMV company, it depends on PMV business because the app allows consumers to find available cars nearby. Uber is attempting to capitalize on the growing trend of PMVs offering high volume, low price rides. In fact, Uber offers several different services to match different cost levels — the company’s website claims that uberX, the lowest-cost option, is “better, faster and cheaper than a taxi.”

Tanzi said she used Uber when she was in Charlotte, N.C., for the Democratic National Convention, and though she enjoyed the service, she found that pricing fluctuated frequently. “There’s no price protection for the consumer,” she said.

In an October report published by RIPUC, PMV companies argued their case by explaining that “it is common knowledge that many taxi cab companies refuse to provide short-distance services due to the minimal financial reward.”

“Rhode Island has plenty of room for a healthy taxi system and a healthy PMV system,” Joyce said. “It’s just a matter of providing consumers with choice.”

The four companies filing the joint suit are L.C. Transportation, Rainbow Sedans Inc., Corporate Limousine Services L.L.C. and Dewey’s Transportation Inc. The suit specifically cites the minimum charge rule and not the entire legislation. The plaintiffs argue that the $40 minimum is an “arbitrary and capricious amount” and that RIPUC set the amount “without any sound factual basis, figures or evidence in support thereof,” according to the summons.

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  1. The taxis in Providence are expensive and low-quality. Allowing competition from Uber will lower prices and improve service quality. The $40 minimum law is crony capitalism.

  2. Dave Sutton says:

    Uber is unsafe because it is definitely NOT regulated. Simply by downloading the Uber app, passengers agree to hold the company harmless for anything that happens on the ride. Outrageous—no regulated transportation company would dare attempt this.

    Worse, knowledgeable California regulators now question whether an Uber driver’s commercial insurance will provide coverage while he’s driving for Uber.

    Uber claims to possess its own significant insurance policy. Fans parrot this claim as fact. But Uber has never allowed anyone—of any official standing—to review the terms of this insurance policy. This, too, is outrageous behavior for a transportation company operating in the public domain.

    So, if an Uber driver causes a crash, his commercial insurance could refuse to cover the accident and Uber could refuse to cover it as well.

    Not regulated. Not safe.

    • Rudy Samples says:

      The insurance issue is indeed a murky one.

      From the driver’s perspective, I want to see the insurance details related to UberX (as opposed to Uber Black Car). The California PUC ruled in September that UberX and similar companies are designated as Transportation Network Companies, a new designation to put along side the regulation of Taxies and Limos. The CPUC also ruled that UberX must provide $1M liability coverage for each driver. I attempted to get access to the details of the insurance policy at the headquarter in SF but was turned away.

      In research to get insurance to drive-for-hire, I’ve talked to several insurance companies and they have said that they really don’t know how to insure drivers for UberX. I guess since it’s a new structure, insurance companies are afraid and shy away.

      Frustrating the issue, the CPUC publishes nothing online explaining the requirements for drivers and the issues for riders. Two calls to the CPUC have been met with “drivers do not require any special license”, but not seeing that in writing is disconcerting to say the least.

      I’m not sure what you mean by “Worse, knowledgeable California regulators now question whether an Uber driver’s commercial insurance will provide coverage while he’s driving for Uber.” I’ve not heard this, and I follow things pretty closely here in California.

  3. Joshua Jachimczyk says:

    Use Promo code: ridebos135 to receive your first Uber ride for free.

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