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California Regulators Say Carpool Services Of Rideshare Firms Lyft, Sidecar, Uber Are Illegal

SAN FRANCISCO (CBS SF) -- California regulators appear to have put the brakes on new carpooling services offered by rideshare firms such as Lyft, Uber and Sidecar.

The companies' newly-rolled out carpooling features allow customers to share a ride and split the cost with other persons taking a similar route.

However, the state's Public Utilities Commission has notified the companies that state law prohibits so-called 'charter-party carriers' from charging passengers on an 'individual-fare basis.'

Charter-party carriers can only charge by time or distance to rent out a vehicle, according to Section 5401 of the state's Public Utilities Code. Limousines and charter buses also fall into this category.

The category is different from what are called 'passenger-stage corporations' such as Super Shuttle and other airport shuttle services, which can charge individuals separate fares.

In an emailed statement, Uber spokesperson Eva Behrend told CBS San Francisco, "We thought we had seen it all, and then the California PUC decided they would try to shut down app-based carpooling. The only conclusion we can come to is that the PUC doesn't like technology, environmental progress, or anything that might make California a better place to live."

Lyft said its LyftLine carpool service helps to improve commutes and contributes to carbon reduction and improved air quality and said it looked forward to having the CPUC to reassess the decision, according to Re/code. "We welcome the opportunity to discuss this new form of shared transit with President Peevey and the CPUC to ensure that residents continue to have access to this innovative and sustainable transportation option."

Forbes reported that the CPUC invited Uber to try and get the law on charter-party carriers changed. "If Uber believes that § 5401 is outdated, it may petition the Legislature for a modification. Unless and until the Legislature modifies §5401, the Commission must enforce state law."

CNet reported that Uber and Lyft competitor Sidecar also received a warning letter from the CPUC about its new Shared Rides feature, used by some 13,000 passengers between May and August.

The San Francisco Business Times reported that 100,000 people volunteered to test the UberPOOL service during its pre-launch period.

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