Uber, Lyft Get Green Light To Operate In Pennsylvania

Oct 27, 2016

A Philadelphia UBER driver consults her phone during her shift.
Credit Jessica Kourkounis / Keystone Crossroads)

 After more than two years of contentious legal battles, Uber and Lyft may operate legally in Pennsylvania. On Monday, the Senate voted 47-1 to allow ride-hailing services to operate in the state — and to begin regulating them as their own transportation entity. Governor Tom Wolf plans to sign the legislation. 

In a statement, Wolf said, "I am pleased the legislature worked with me to finally pass a long-term solution for ride sharing companies like Uber and Lyft to operate everywhere in Pennsylvania. The commonwealth has proven itself to be a place where these companies can invest and grow, and we must continue to find ways to fuel the development of these and other high-tech companies." 

Uber and Lyft let drivers use their personal vehicles to offer what's essentially a taxi service to people looking for rides. Though both companies, and similar ride-hailing businesses, operate in nearly every state, the road to regulation hasn't always been easy. 

Uber illegal to get a Lyft

When Uber and Lyft first came to Pennsylvania in 2014, both companies gave thousands of rides without applying for the proper licenses. Uber argued it was a technology company, not a transportation service, and Lyft said it didn't charge for rides, but rather took suggested donations.

Those arguments were unpersuasive. Lyft paid the state Public Utility Commission a fine of $250,000 for that illegal action. Uber, which refused  t/T^o settle the case, was issued an $11.4 million fine. That's the largest fine in PUC history, six times over. Uber still hasn't paid the fine.  

Despite this rough start, the PUC granted both companies two-year, "experimental" licenses in November 2014. That will expire next month, which motivated the legislature to consider this issue before the session ended.

Those temporary licenses did not apply to Philadelphia, where taxi services are regulated by the Philadelphia Parking Authority. 

Philadelphia declined to make Uber and Lyft legal in the city until this summer, when SEPTA had to decommission 120 subway cars right before the Democratic National Convention. The PPA offered Uber and Lyft a three-month temporary license, to much criticism from the taxi companies.

 But that expired at the end of September, making Uber and Lyft illegal again.

It also ended a financial incentive for the city, a 1 percent fee on gross receipts that was split between the the School District of Philadelphia and the PPA. PlanPhilly projected that one year of this fee would have Uber and Lyft sending, combined, just under $1.7 million to the public schools. The district's total budget is $2.8 billion. 

Legal limbo no more

For Pa. Sen. Camera Bartolotta (R-46), the sponsor of this bill, it was clear that ride-hailing was here to stay, whether or not the state was prepared to regulate it. 

"And it's providing a much needed service," said Bartolotta. "There are so many rural areas in Pennsylvania where you can't get a cab, where you don't have public transportation and that limits people economically. It's prohibitive to not have a service like this." 

The bill gives permanent licenses to Uber, Lyft and Pittsburgh-based zTrip for the entire state. It also institutes regulations on these "transportation network companies."

The bill also requires a $50,000 application fee for TNCs that want to start operating in Pennsylvania. Drivers working for the TNC will also have further requirements, including insurance, license and background checks.  

"This is first and foremost a consumer protection bill," said Bartolotta. "We focused on assuring safety for the consumers. The background check goes further back than even the cab drivers background checks do."

Not everything is quite so stringent. The inspection requirements are less than those for taxi cabs, for example. 

And Philadelphia will get its fees restored. TNCs operating in first-class cities (so, Philadelphia) will be required to pay 1.4% of gross receipts from rides starting in Philadelphia, with 2/3 going to the School District of Philadelphia and 1/3 going to the PPA.

TNCs also won't be allowed to queue up with taxi cabs at certain locations in Philadelphia, like the airport and train stations. 

There's still the little matter of that $11 million fine Uber owes the PUC. An amendment to the bill would limit fines on ridesharing companies to $250,000, but the language doesn't make it clear whether that change would be retroactive. The lone nay vote from Senate Minority Leader Jay Costa was due to concerns over this fee change. 

The Pittsburgh Post-Gazette quotes Costa, "What we're talking about here is a very dangerous precedent. We're overriding an independent agency [PUC] ... we're cutting their legs out from under them."

Bartolotta says that the language may be "vague," but it's not intended to change the Uber fine. 

"It's not the intention to go back and change anything currently under litigation," said Bartolotta. "We needed to get this through and passed, and I have made my promise, the moment we get back and start session again, my number one priority is addressing that language to clarify it."

Wolf has spoken out in favor of lowering the fine, though, so this argument is unlikely to slow the signature on this bill. 

Find this report and others at the site of our partner, Keystone Crossroads