SAN FRANCISCO—In a Thursday hearing, a federal judge appeared greatly skeptical that Airbnb and other short-term rental websites should be able to halt a new local law imposed by the city and county of San Francisco that would require the company to verify listings with the city first.

"How does facilitating the rental of an unregistered short-term unit constitute a lawful transaction?" US District Judge James Donato asked of Jonathan Blavin, an attorney representing Airbnb.

As Ars reported previously, the new 2016 San Francisco law expands upon a previous ordinance that Airbnb itself helped initially draft. That ordinance requires hosts to have registration numbers and pay a $50 fee for the privilege. (According to NBC Bay Area that fee will rise to $250 next month.) The ordinance is designed to provide the city with additional revenue and to help regulate housing stock in a city where the median one-bedroom apartment rent is over $3,800—one of the highest in the nation.

Airbnb sued San Francisco in June 2016 and has asked a federal court to stop the law from being enforced. The startup has filed similar lawsuits over nearly identical laws in two other California cities, Santa Monica and Anaheim, in Los Angeles and Orange County, respectively. (The Anaheim case has since settled, while the Santa Monica case remains active.)

The San Francisco law also requires that listings on sites like Airbnb clearly publish this new registration number, and the law also holds both the host and the "platform" (Airbnb) potentially civilly and criminally liable for non-compliance. Among other potential penalties, Airbnb or other platforms could be forced to pay $1,000 each time such a site processes a booking from an unlicensed host.

Blavin responded by saying that it will require Airbnb and sites like it to screen its listings, which it does not want to be forced to do. Both Airbnb and HomeAway (a similar site/service) argued that they are protected under Section 230 of the Communications Decency Act—the famed law that protects "computer service" providers from being found liable for speech made by its users.

Under that logic, such sites cannot be held accountable for what its users post, despite the fact that the city requires hosts to publish their new registration numbers. In essence, Airbnb argues, it does not want to be in the position to be the city’s sheriff. However, Airbnb also benefits financially from allowing unlawful listings to continue, particularly given that a large portion of San Francisco Airbnb listings currently don’t comply with the law. (Blavin also admitted that Airbnb once had a required field on its website forcing San Francisco hosts to input this number before submitting a list, but it was later removed.)

For its part, San Francisco says that it has crafted the law narrowly within the confines of Section 230 to target those websites that act as booking agents or payment processors—not websites that merely publish information.

Harsh words for city, too

Judge Donato seemed baffled that San Francisco couldn’t simply provide a way for Airbnb and other sites to interface with the city’s database to validate whether a host’s number was legitimate.

"In our wonderful modern age, that could be a fully automated API," he said. For his part, Blavin countered that this would require Airbnb to transmit personal information (names, addresses), which it does not want to do.

The judge also chastised San Francisco for not providing an easy way for sites like Airbnb to perform these checks before beginning to enforce the law next month. "What's the city's vision for making sure this doesn't turn into an exercise in bureaucratic futility?" Judge Donato said. Sara Eisenberg, a deputy city attorney, suggested a system like how Uber requires drivers to simply send a scan of their driver’s license one time.

Later, Donato continued his warning to the city when speaking to James Emery, another deputy city attorney for San Francisco.

"If the host lies to Airbnb and comes up with a facsimile, Airbnb is on the hook, right?" he said. "It seems to me the only way this works is if the city provides some up or down binary. For strict criminal liability—you have to make it work for them if they're on the hook on the back end. My point is you are Fort Knox. You hold all the information about whether something is legal or not—you gotta open up the vault. How are you going to do that? He [meaning Emery] said ‘I'm happy to help’—that's not a plan when you're going to prosecute somebody."

"We're going to develop an enforcement plan, and it's going to work," Emery replied.

"That's not good enough," the judge fired back. "You understand that, right?"

Emery responded that if a host was putting up a fake counterfeit number to pacify the concerns of Airbnb, "I think it’s speculative and far-fetched that the city would put the hammer down."

But Judge Donato wasn’t convinced. "There's no guarantee that it won’t."