Arizona ceases enforcement against Uber, Lyft

Arizona officials suspended all state investigations and administrative hearings on ride-sharing companies on Wednesday, saying they want to encourage business while new laws are considered.

The Arizona Department of Weights and Measures announced it would cease enforcement actions against ride-share companies such as Uber and Lyft as part of Arizona Gov. Doug Ducey's agenda of supporting "entrepreneurial style businesses."

The announcement came just days before Super Bowl XLIX and is a boon for ride-share companies, which have been operating unlicensed and unregulated in Arizona for more than a year.

"We have suspended investigations into rideshare programs such as Uber and Lyft – effective immediately," Andy Tobin, the newly appointed director of the Arizona Department of Weights and Measures, said in a statement.

"The department will support the policy decisions now being thoroughly reviewed and investigated by policy makers at the state capital (sic)."

Weights and Measures regulates taxi companies in the state. Until Wednesday, department officials had long accused Uber and Lyft of operating illegally and skirting laws that require anyone transporting passengers to carry a license, commercial plates and minimum insurance.

Department officials last year launched a crackdown on ride-sharing companies, fining drivers up to $1,800 for violations — when they could find them. The tast was difficult because drivers use private cars and display little, if any, evidence of their business.

Tobin, a former state representative and congressional candidate, could not be reached for comment Wednesday. He was appointed department director last week.

Tobin said in his statement that his office had rescinded all proceedings against rideshare companies, including any cases being reviewed by the Office of Administrative Hearings.

"This policy is in keeping with Governor Ducey's agenda of supporting new and entrepreneurial-style businesses, while balancing that with public safety and consumer protections," he said in the statement.

The ride-sharing business is rapidly expanding as popularity grows among consumers who use mobile phones to virtually hail privately owned rides that are cheaper, and in some cases more fuel-efficient, than a regular taxi service.

Gov. Jan Brewer vetoed a bill in April that would have legalized ride-sharing companies in Arizona, saying the bill lacked specific regulation and insurance mandates. It also did not require drug tests for drivers.

Despite the veto, Uber and Lyft continued operating in Arizona.

San Francisco-based Uber is a $40 billion global enterprise that is raising private capital to expand operations. Uber officials maintain they operate a technology company, not a car service, so rules for taxis and other livery services don't apply to them.

They say that Uber drivers are independent contractors, not employees; that the company doesn't own a vehicle fleet the way taxi companies do; and that the company collects fares differently from taxis.

"We need to recognize that ride-sharing is a completely different model," Uber spokeswoman Eva Behrend said in an interview last month. "Cities across the U.S. are embracing this."

Behrend would not address Arizona's specific regulations. She said she was confident Uber would continue working with legislators to pass a similar bill into law this year.

Uber officials tout the company's $1 million umbrella policy protecting passengers. It also requires drivers to carry minimum insurance of $15,000 for injuries, $30,000 for total liability and $10,000 in property damage, which is the minimum any driver must carry to drive a car legally in Arizona.

The coverage is far below Arizona's minimum for commercial drivers — $300,000/$300,000 for injuries and liability. And questions remain about whether personal policies would protect drivers using their personal vehicles as de facto taxis.

Uber upped its coverage for both passengers and drivers after a firestorm of criticism over the Jan. 1, 2014, death of a 6-year-old girl in San Francisco who was run over by an Uber driver. Uber officials said at the time the company wasn't responsible because the driver was between fares.

Uber now covers drivers from the time they log on to the app to pick up fares until they log off. Uber also says if any drivers are denied insurance coverage, it would cover an accident up to $50,000 per individual per incident for bodily injury, $100,000 total per incident for bodily injury and $25,000 per incident for property damage.

Uber's strategy is to move into cities, secretly setting up client bases and contracting with drivers before announcing its presence through social media and other campaigns. It then hires lobbyists and courts lawmakers to change existing regulations or to craft legislation excluding ride-sharing companies from enforcement.

But the company's philosophy of seeking forgiveness rather than permission has resulted in a worldwide backlash over safety issues, background checks and liability.

District attorneys in Los Angeles and San Francisco filed a consumer-protection lawsuit last month accusing Uber of fraud and of misleading the public about its safety procedures. They said Uber touts its background checks on drivers but doesn't fingerprint them, raising significant questions about their value. The attorneys also accused the company of imposing illegal fees on passengers.

Uber has been banned in parts of Belgium, Brazil, Canada, France, the Netherlands, India and Thailand. It is grappling with lawsuits and protests in England, Germany and Spain. It faces increasing scrutiny from U.S. regulators, who accuse the company of illegal operations and of putting drivers on the road without regard to passenger safety.