On Monday, the University of California’s Office of the President (UCOP) determined that, as a result of a perceived shortfall in regulation, it would not reimburse faculty members who use transportation network companies (Uber, Lyft, Sidecar, etc.) or other peer-to-peer services like Airbnb while engaged in UC-related business. The message is recreated below:
UCOP’s Office of General Counsel has determined that third-party lodging and transportation services, commonly referred to as peer-to-peer or sharing businesses, should not be used because of concerns that these services are not fully regulated and do not protect users to the same extent as a commercially regulated business. As the market matures and these businesses evolve, the university may reconsider whether reimbursement of travel costs provided by peer-to-peer or sharing businesses will be allowed.
Therefore, until further notice, please do not use services such as Uber, Lyft, Air B&B or any other similar business while traveling on or engaging in UC business.
What or who would drive the president of the University of California (Janet Napolitano) to steer recklessly into a collision with the regulatory decision of another duly delegated California state body that has far greater expertise? Why does Ms. Napolitano even have a position on how TNCs should be regulated?
This is an instructive example of the unexpected reach of state bodies and their ability to choose winners. The UCOP has decided to augustly articulate a legal, but policy-deficient, rationale for their judgment about the sufficiency of the current regulatory regime.
What precisely does the UCOP mean by “not fully regulated”?
Setting aside the other peer-to-peer services, in California, TNCs are regulated by the California Public Utilities Commission (CPUC). The CPUC has promulgated preliminary regulations and insurance requirements to TNCs which, while still being refined, do hold the force of law. In fact, the CPUC has already issued licenses to operate to five separate providers of TNC services. As far as the CPUC is concerned, it has enough of a handle on the situation to allow for TNCs to continue to operate.
The sufficiency of the regulation surrounding TNCs is more about resolving hitherto latent ambiguities which have been emphasized by incumbent industries. No doubt, such concerns deserve serious attention from regulators and policy-makers alike. But, such attention does not signal that TNCs are somehow without “full regulation.”
More frustrating still is that the UCOP has determined, with no or limited subject-matter expertise, that other “commercially regulated businesses” offer consumers a greater degree of protection. Here, the UCOP is conflating different activities. TNCs are under the regulatory purview of the CPUC because they are considered charter-party carriers – a designation populated by limousine services. They are not regulated as taxis are, by local authorities. Since TNCs have a different regulator and a different business model, comparisons between their regulatory environment and the regulatory environment in which taxis exist is awkward and misleading.
The UCOP, if utterly compelled to act, should have at least done so with an eye on the angle that the California Legislature is taking. There is little doubt that, whatever the final product looks like, there will be a meaningfully cognizable difference between what is required of taxis and what is required of TNCs. The University of California, unfortunately, is doing its part to express a policy preference for disregard of other state regulators and apparently for onerous regulation. California-licensed TNCs are lawful vendors. In fashioning its policy judgment, the UCOP erred.
This post was authored by Ian Adams, an Associate Policy Analyst at the R Street Institute.