Government bureaucrats are at it once again in their quest to stomp out innovation in the market. Virginia’s Commissioner for the Department of Motor Vehicles sent cease and desist letters to both Lyft and Uber on June 5, warning the companies to stop their innovative and affordable private driver services or face thousands of dollars in fines.
From the letter to Uber:
Virginia law requires passenger carriers to have proper operating authority. Although certain types of passenger carrier arrangements are excluded from this requirement, none of those exclusions applies to Uber’s operations. For example, Va. Code 46.2-2000.] contains an exclusion For ride-sharing arrangements; however, a separate statute sets out the requirements for ride-sharing arrangements. This statute defines ride-sharing arrangements as those which do not involve transporting passengers for profit. See Va. Code 46.2-1400, et seq. Uber’s operations are not ridesharing arrangements as defined in Virginia law because Uber receives compensation for its services.
The Virginian-Pilot reports:
The DMV had already issued civil penalties against the companies in April — $26,000 for Uber and $9,000 for Lyft — for trips that their drivers provided in Virginia despite warnings by the state agency that Virginia law does not allow their business model. The companies are on the leading edge of a trend in which mobile apps are used to connect passengers with part-time drivers who use their personal vehicles outside of the regulations of a traditional taxi service.
The DMV is studying Virginia’s motor carrier laws with an eye toward legislative changes next year that could allow Lyft and Uber to legally operate in the state. Secretary of Transportation Aubrey Layne said last week that he liked the companies’ business models, but until the law is changed, they are violating it.
Despite the fines and the DMV’s entreaties to the ride services to work on the study and legislative changes, Lyft and Uber have continued to provide services in Virginia.
Commissioner Richard Holcomb cited protecting families as the reason to use only government-approved private transportation services. Of course, Uber and Lyft have been targeted by government regulators and taxi cab unions in other states in an effort to raise the barrier to entry and shut out innovative competition.
Lyft responded to the “cease and desist” letter:
Virginia residents have enthusiastically embraced Lyft as an affordable and reliable transportation alternative that increases safety by going above and beyond what is required by existing transportation services.
As many of the current regulations surrounding taxis and limos were created before anything like Lyft’s peer-to-peer model was ever imagined, we’re committed to continuing to work with state officials to craft new rules for this new industry. We truly believe that if we approach situations like this positively and collaboratively, we can work together with local leaders to greatly improve transportation access, safety and affordability.
Uber also responded:
Uber has been providing Virginians with safe, affordable and reliable transportation options, so the DMV’s actions today are shocking and unexpected. We have been working in good faith with the DMV to create a regulatory framework that allows for modern business models like ridesharing. This decision is not in the best interest of Uber partners, who have been using the technology to make a living, create new jobs and contribute to the economy – or residents who rely on Uber for access to affordable, reliable transportation alternatives. We look forward to continuing to work with the Virginia DMV to find a permanent home for ridesharing in the Commonwealth.
The Virginia Department of Motor Vehicles is soliciting public comment on this issue. If you appreciate innovative services like Lyft and Uber, feel free to let the VA DMV know by contacting Commissioner Richard D. Holcomb at [email protected] or by phone at (804) 367-6606.