Lyft, Uber face regulatory hurdles as Nebraska launch approaches

Uber and Lyft, two ride sharing services, will face an uphill legal battle as they try to enter the Omaha market. The Public Service Commission, the state agency that regulates transportation services like taxis and limos, sent cease-and-desist orders to both San Francisco-based companies Monday…

Uber and Lyft, two ride sharing services, will face an uphill legal battle as they try to enter the Omaha market.

The Public Service Commission, the state agency that regulates transportation services like taxis and limos, sent cease-and-desist orders to both San Francisco-based companies Monday.

The Commission says the companies, which use apps to connect drivers in their own vehicles with people who need a ride, have not applied to serve in Nebraska and would be operating illegally if they don’t.

Drivers could be arrested and vehicles impounded for being a “public nuisance,” according to the Commission’s letter.

The state commission is concerned about the companies’ insurance liability, vehicle safety checks and driver background checks.

Uber and Lyft representatives say they do rigorous vehicle and background checks and carry sufficient insurance

The Public Service Commission met Tuesday morning and expressed concern about services, according to the Lincoln Journal Star.

Commissioner Anne Boyle said she was concerned the companies have shown a willingness to violate public laws and court orders, the Journal Star reported.

“It’s almost as if there’s an arrogance from the people who are operating saying they don’t have to operate within the bounds of the law,” she said.

Both companies, which have advertised jobs for drivers in Omaha and have representatives in town, seem to have plans to launch in coming weeks.

Some say it’s a problem of technology and innovation being ahead of regulations, but the PSC’s Mark Breiner said they still need to play by the rules. 

“These companies need to commission authority to operate,” he said. “If they don’t, it’s wrong and it’s illegal.”

Both companies have a history of entering into markets before getting regulatory approval. However, the companies’ general arguments is they are tech companies creating an open market for ride-sharing, not taxi companies, therefore they shouldn’t be held under PSC rules and authority. 

Uber was cited in Madison, Wisc., Monday.

Lyft launched services illegally in St. Louis last week and drivers were handed citations an hour and a half later. A judge has since ordered Lyft to take drivers off the street and disable its app in the city. 

Paige Thelen, a spokesperson for Lyft, told the St. Louis Dispatch the company’s app will stay operational for now since it did not receive a notice to appear in court before the injunction was issued. She called that a violation of Lyft’s due process rights.

“We will not let bullying and intimidation by the taxi commission keep the people of St. Louis from exploring this new model of community-powered, safe rides and economic opportunity,” she told the newspaper.

While officials from both Lyft and Uber haven’t revealed their plans, if they launch without approval in Omaha, the situation likely would end up in a legal battle similar to St. Louis.

It appears drivers could face up to a $500 fine, according to Commission rules, which states: “Unless a more specific criminal penalty is provided, any person who knowingly and willfully violates Chapter 75 or 86, any rule, regulation, or order of the commission, or any term or condition of any permit or certificate issued by the commission is guilty of a Class IV misdemeanor. Each day of such violation constitutes a separate offense.”

A Class IV misdemeanor’s penalty is a $100-$500 fine with no jail time. 

Applications process lengthy

If the companies do apply for service in Nebraska, the process would delay the rollout of the service and cause Lyft and Uber to miss out on big events in Omaha including Berkshire Hathaway in May and the College World Series in June, two events with lots of out-of-towners who would likely use the service.

The application process can be take months. Lyft and Uber would have to apply for certificates of authority to operate, then the application must be published in a newspaper legal notice for 30 days. Other taxi services then have the right to protest the applications. If other cab companies protest, the PSC then hears both sides of the argument, which the entering companies must prove a public need for more taxis and fulfill regulatory requirements like insurance and other checks.

That process takes four to six months, pushing back any legal launch date till at least August, Breiner said.

Breiner said the concern is that personal car insurance wouldn’t cover any commercial use of the vehicle.

Uber said its commitment to safety has always been its top priority.

“First, we make sure all ride sharing drivers undergo background checks that are among the most stringent in the industry,” according to its blog. “Second, all ride sharing transportation partners carry best-in-class commercial insurance coverage in the event of an accident.”

It also provides more than $1 million in commercial, third-party liability coverage.

Both Lyft and Uber have been in legal and regulatory trouble as they enter new cities. The argument rests on whether the services are tech company providing “ride sharing” or if they provide the same services as taxis. 

Taxi cab drivers in Chicago have also been upset with the ride sharing models.

There are also gray areas like the safety and liability discussion that arose after an Uber driver killed a six-year-old girl on New Year’s Eve. Some of those issues have been addressed, Uber says in a blog

This is a developing story. We’ve reached out to Uber and Lyft officials for comment. Stay with Silicon Prairie News for updates.

This story is part of the AIM Archive

This story is part of the AIM Institute Archive on Silicon Prairie News. AIM gifted SPN to the Nebraska Journalism Trust in January 2023. Learn more about SPN’s origin »

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One response to “Lyft, Uber face regulatory hurdles as Nebraska launch approaches”

  1. […] a competitor of Uber, has operated in Lincoln since April. But both ridesharing services are still under scrutiny from state officials who are concerned over safety, insurance and background […]