United States: Your Driver Is Arriving Now

Last Updated: January 27 2017
Article by Karen O. Moury and Daniel Clearfield

On November 4, 2016, Governor Wolf signed a statewide law – Act 164 of 2016 – establishing a regulatory framework that allows transportation network companies ("TNCs") like Uber Technologies, Inc. ("Uber") and Lyft, Inc. ("Lyft") to continue providing TNC services throughout Pennsylvania. The legislation was introduced by Senator Bartolotta as Senate Bill 984 and referred to the Consumer Protection and Professional Licensure Committee on September 8, 2015. With sine die quickly approaching, little time was left in the 2015-2016 session to pass this law.

Under the new law, the Philadelphia Parking Authority has exclusive regulatory jurisdiction over all TNC services originating within the City of Philadelphia ("City" or "Philadelphia"). The Pennsylvania Public Utility Commission ("PUC") oversees TNC services throughout the remainder of Pennsylvania, including trips that originate outside of the City and terminate in the City. However, special rules apply to trips originating or terminating at Philadelphia train stations and airports. This article focuses on the provisions of the law governing the PUC's regulation of TNC services.

What are TNC services?

TNCs use a mobile application ("App") to connect riders with drivers using their personal vehicles. Through the App, riders receive details about the make, model and license number of the vehicle, the name and photo of the driver, estimated time of arrival and applicable prices. At the end of the trip, riders pay and provide feedback via the App, which can also be used to confirm that the correct fare was charged or to help retrieve an item left behind in the vehicle.

Why was legislation needed?

For nearly two years, Uber and Lyft have been providing TNC services under "experimental" authority granted by the PUC. Over 375,000 Pennsylvanians have used Uber's services, according to a Petition recently filed with the PUC. With the experimental authority set to expire in early 2017, the General Assembly and the Governor have acted to ensure that these popular and innovative services spurred by advancements in technology have a permanent home in Pennsylvania.

What are the key consumer protections assured by the new law?

The new law contains numerous consumer protection requirements that are designed to ensure driver integrity, vehicle safety and adequate liability insurance. These standards substantially mirror the requirements previously imposed on TNCs by the PUC. With a focus on safety, the law requires extensive criminal background checks, driver history reports, the disqualification of certain individuals from operating on the platform, driver training and a zero tolerance policy for the use of alcohol or drugs by drivers. Vehicles must be inspected and have a placard visible in the windshield.

Although TNCs' liability insurance obligations are extensive under the new law, the total coverage that must be provided while the driver is engaged in a ride is reduced to $500,000 from the PUC's previous requirement of $1,000,000. Also, while the PUC required TNCs to obtain the insurance coverage for drivers operating on the platform, the law permits drivers to personally secure this liability insurance.

What other consumer safeguards are imposed by the new law?

In addition to consumer protections designed to promote safety and adequate insurance coverage, the new law also imposes several customer service standards on TNCs. These standards address: (a) the unlawful refusal to provide service to certain classes of passengers or certain localities; (b) a nondiscrimination policy regarding service to individuals with disabilities; (c) the transportation of service animals; (d) wheelchair accessible service; and (e) the availability of the App to consumers who are blind, visually impaired, deaf and hard of hearing. The law also contains protections against the disclosure of customer information to third parties, expressly prohibiting a TNC from requiring a consumer to consent to the disclosure of personally identifiable or financial information to a third party in order to download the App.

What are the requirements applicable to TNC pricing?

The pricing provisions in the law echo the PUC's requirements. Specifically, TNCs may use dynamic pricing, which allows them to continuously adjust their prices to reflect supply and demand. Although the fares need not be included in tariffs posted on the PUC's website, they must be disclosed to the rider prior to the trip. Riders are also entitled to receive an estimate, upon request, of the trip's cost. During a state of emergency declared by the Governor, TNCs must comply with Pennsylvania's Price Gouging Act.

Do TNCs need to get license from the PUC?

Under the requirements of the new law, TNCs must secure licenses from the PUC prior to operating. In addition to requiring TNC applicants to comply with a host of criteria prior to obtaining a license, the PUC is authorized to impose additional conditions that are reasonably related to a licensee's obligations. If a license is later revoked and suspended or a driver is disqualified due to repeated traffic violations or because the driver was convicted of specified criminal offenses, the law authorizes the PUC to confiscate, impound and sell vehicles that are thereafter used to provide TNC services.

What is the PUC's authority to impose civil and nonmonetary penalties?

The law authorizes the PUC to impose civil penalties and nonmonetary penalties, including license suspension and revocation, on TNCs that violate the law. The PUC is required by the law to adopt a schedule of penalties to be imposed for specific violations, including multiple violations. The schedule must delineate offenses that are deemed to be serious and the corresponding penalties.

Additionally, the law provides that an entity that operated as a TNC "prior to the effective date of this section without proper authority from the Commission shall be subject to a penalty not to exceed $1,000 per day or a maximum penalty not to exceed $250,000 notwithstanding the number of violations that occurred during the period in which the person or entity operated without authority." A civil penalty in the amount of $11.4 million imposed on Uber by the PUC for oeprating as a TNC without authority in 2014 is currently on appeal at the Commonwealth Court at Docket No. 1617 CD 2016.

Is there a particularly unique provision of the law that may generate legal questions that are not directly related to furnishing TNC services?

As with any law, many of the provisions will likely require interpretation, especially in the early phases of implementation. A particularly compelling provision that may implicate issues going beyond the regulation of TNC services is one that provides protections for confidential documents and data that are shared with the PUC. Specifically, proprietary information that is disclosed to the PUC as part of the inspection and investigation of a TNC's books, records and facilities is exempt from public release even pursuant to a request submitted under Pennsylvania's Right to Know Law. Questions may arise in the future as to the legal implications of preempting Right to Know Law requests for TNC information, particularly due to recent case law favoring the disclosure of all information relied upon by the Commission during investigations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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