See also: Ride-Sharing Apps Fight Back

Ride-share apps have been told to take a flying leap in L.A. The city has sent cease-and-desist letters to Uber, Lyft and Sidecar, arguing that they're operating outside of the local rules in a town that has lots of hoops and regulations for legit cabs.

Well, yesterday afternoon, a key state official said the apps should be allowed to stay calm and ride on as part of a new class of paid transport in California:

California Public Utilities Commissioner Michael R. Peevey proposed that the full dommission go forward with a new category of ride services called TNCs for Transportation Network Company.

According to a summary:

A TNC is defined as a company or organization, operating in California, that provides transportation services using an online-enabled platform to connect passengers with drivers using their personal, noncommercial, vehicles. Among other requirements established in this decision, we require each TNC (not the individual drivers) to be licensed by the California Public Utilities Commission (Commission), require criminal background checks for each driver, establish a driver training program, implement a zero-tolerance policy on drugs and alcohol, and require an insurance policy that is more stringent than our current requirement for limousines.

The full commission will consider the proposal at its Sept. 5 meeting.

Peevey's deal would allow the ride-share app companies to exist alongside Towncar-and-limo Transportation Charter Party (TCP) rides as state-permitted services.

The Los Angeles Times last night opined that the proposal was “a not-so-subtle message to the Los Angeles City Council” to keep its hands off the techno-rides.

The new designation could leapfrog the city's rules.

Credit: Lyft

Credit: Lyft

Peevey says the ride-share services operate mostly like limo TCPs but deserve some special consideration given that rides are arranged via apps (and thus necessary “waybills,” info on riders, should be kept electronically) and drivers sometimes use their own cars.

In fact, his proposal says ride apps should be able to have their drivers get TCP or TNC permits. In the case of Uber, the company operates as a TCP, with dedicated towncar-like vehicles, although its UberX service involves personal cars.

The proposal says drivers should each have a minimum of $1 million per incident in liability insurance; should undergo background checks that would weed out violent felons, sex offenders and DUI convicts; should be at least 21; should undergo driver training; should use cars clearly marked as TNC vehicles; should avoid airports; should deal only in prearranged pickups (no street “hails”); and should have their cars undergo inspections, among other things.

All the major ride apps welcomed the proposal:

Lyft stated the new category would set “a new standard for safety in transportation.” Uber said the new category “does not impact Uber's core model.” Sidecar called it “a critical milestone for ride-share and transportation innovation.”

The ball is still in the full Public Utility Commission's court. And it's not year clear how the city's Department of Transportation, which appears to have been carrying water for the powerful taxi companies, will react.

But it looks like the apps are here to stay.

[Added at 3:32 p.m.]: L.A. Mayor Eric Garcetti today issued this statement about the decision:

This is an exciting moment for Los Angeles as we work to embrace technology to improve our transportation options and save people money. This decision allows new, cost-effective solutions while protecting public safety through common-sense regulations. I also look forward to working closely with L.A.'s taxi companies to revisit our existing franchise agreements to adopt similar innovations.

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