California taxi drivers are hoping that companies like Uber and Sidecar would be finished after state authorities conduct a formal investigation into the businesses.

State regulators launch inquiry into regulating ridesharing services

State authorities will begin a formal investigation into how to regulate ride-sharing companies such as Lyft, Sidecar and Uber — an inquiry that could eventually legitimize the controversial businesses.

For the past two years, the California Public Utilities Commission has struggled to provide oversight of the burgeoning industry, which relies on mobile devices and informal payment systems as an alternative to the more rigid — and regulated — taxi industry. The commission has issued cease-and-desist orders to the startups and levied fines of $20,000 apiece.

However, all three businesses continue to operate undeterred, explaining that the commission’s laws did not take into account technological innovations that the companies are employing.

On Thursday, the commission opened an order instituting rule-making, a formal investigation that will explore aspects of ride-sharing, technological innovations, safety, insurance and jurisdiction over the companies. In six months, the commission anticipates a proposed decision on how to regulate the companies.

Sunil Paul, founding partner of Sidecar, said the investigation will be good for his company.

“We’re cautiously optimistic that the investigation will result in rules that will support innovation and support the benefits that Sidecar represents, which are reductions in emissions and congestion and more affordable transportation options,” Paul said.

Mark Gruberg, a spokesman for United Taxicab Workers, a cabdriver organization opposed to the ride-sharing companies, said he too is hopeful the investigation will result in positive changes for his industry.

“I really hope that this makes clear that those kind of companies are illegally providing taxi services,” Gruberg said. “These companies are operating under fraudulent pretenses, and I think the commission has every right to regulate them out of business.”

wreisman@sfexaminer.com

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