CPUC says lease length for rideshare vehicles must exceed four months

Lyft’s new partnership with General Motors to lease vehicles for drivers who “rideshare” may encounter a roadblock in California, in the form of state regulators.

The California Public Utilities Commission’s administrative law judge issued a clarifying legal order that was made public Friday, addressing how long a vehicle must be leased to be legally eligible to drive for Lyft or Uber.

CPUC administrative law Judge Robert Mason and Commissioner Liane Randolph wrote that the driver lease term agreement must exceed four months.

It was not immediately clear what effect this ruling will have on the number of new services that offer short-term car rentals specifically for those who want to drive for Uber and Lyft, some of which offer car rentals for as short as a single day.

Uber, Lyft and other such companies are commonly known as “rideshares,” but legally are called Transportation Network Companies in California, or TNCs.

One commissioner signaled worry about leasing vehicles for the purposes of ridesharing at the last CPUC meeting on March 17.

“Can you go to Enterprise, then rent a car and drive for a TNC?” Commissioner Mike Florio asked at the meeting. “A daily, weekly or even potentially monthly rental doesn’t meet the test.”

“It might,” he said, “help to clarify that a little more.”

The ruling on leased vehicles comes amid the CPUC’s second phase of sweeping regulations for Uber and Lyft, which will not become binding until voted on by the commission. That vote was scheduled for mid-March, but was delayed until April.

It isn’t just General Motors’ partnership to provide leased vehicles for Lyft drivers that may be affected by this ruling. Hyrecar, Breeze, Enterprise and others all offer some form of car rental or leasing service to prospective Uber or Lyft drivers.

Hyrecar listed Toyota Prius vehicles from $30 to $63 on its website for rent in San Francisco.

The CPUC judge’s order on leased vehicles reads, “No matter what vehicle ownership arrangement a driver chooses, the driver must also have personal use of the vehicle.”

In its decision, the CPUC wrote it is relying on public utilities code, as well as various sections of the California Vehicle Code to define what it considers a leased vehicle.

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