Relax, Virginia: Uber and Lyft Are Now Completely Legal

Popular, sometimes renegade, car services Uber and Lyft are making nice with Virginia officials, with Governor Terry McAuliffe announcing that his administration will allow the ride-sharing providers to operate legally in the Commonwealth. The deal, which includes several legal stipulations that the two companies agreed to follow, cancels out cease-and-desist orders the Virginia Department of Motor Vehicles issued in June when Lyft and Uber’s UberX service were labeled illegal.

A statement from McAuliffe’s office says the framework announced today is temporary, but could lead to future legislation giving companies like Uber and Lyft wide berths to operate over the objection of some very angry cabbies. The cease-and-desist orders came down June 5 after the DMV said the companies’ “ride-sharing” services—in which private citizens offer themselves as drivers-for-hire for users of smartphone apps—violated state livery regulations. The DMV also slapped Uber and Lyft with hefty fines.

But the DMV’s action also put Virginia at the forefront of jurisdictions waging regulatory wars with ride-sharing companies, and McAuliffe, who likes to position himself as a “business-friendly” governor, was quick to distance himself from his motor-vehicle regulators. In a statement today, he sounds as encouraging toward the San Francisco-based technology-and-transportation companies as any public official.

“In order for Virginia to remain economically competitive, it is important that we welcome innovative companies like Uber and Lyft and provide them with the resources they need to safely and effectively operate in the Commonwealth,” McAuliffe says. “Technology—specifically related to smart phones—continues to advance at a rapid pace, and I am pleased that we were able to work together to find a swift solution that will provide Virginia’s workers, students, and families with more transportation options.”

With today’s agreement, which includes paying off the fines, Uber and Lyft get to operate legally in Virginia, provided they meet several requirements negotiated with McAuliffe’s office and Attorney General Mark Herring, including:

• Extensive background checks of drivers, with immediate disqualifiers including convictions for any felony, fraud, sexual offenses, or violent crimes, or registration as a sex offender.
• Zero tolerance for the use of drugs or alcohol by any drivers, and a suspension pending investigation of any driver accused of violating the zero-tolerance policy.
• Maintaining documentation for each driver of his or her background check, sex-offender registry check, driving record, proof of insurance, valid driver’s license, Social Security number, vehicle registration, and proof of vehicle safety inspection. Documentation must be available to DMV on demand to investigate any complaints, and must be available for periodic audits to ensure compliance.
• Only employing drivers who are properly licensed and over 21, and vehicles that carry a maximum of seven passengers and are properly registered and inspected for safety and emissions, where applicable.
• Rigorous insurance requirements, including requiring drivers to maintain automobile liability insurance, maintaining on behalf of all drivers an additional $1,000,000 of coverage from the moment a driver accepts a trip request until the passenger leaves the vehicle, and liability insurance for drivers who are logged onto the companies’ software but not providing services.Only accepting rides booked through the companies’ mobile device apps, not street hails.

These rules do not actually add that much of a burden to Uber and Lyft, both of which have long insisted they conduct background checks on their drivers and carry $1,000,000 liability policies when their drivers are activated. While this arrangement is officially temporary, it is designed to be transformed into permanent regulation when the Virginia General Assembly convenes in 2015. And now McAuliffe gets to be best buds with the companies, which, at least officially, are gushing over the deal.

“Virginia has led the way in embracing innovative industries,” says Dave Estrada, Lyft’s vice president of government relations.

Find Benjamin Freed on Twitter at @brfreed.

Benjamin Freed

Staff Writer

Benjamin Freed joined Washingtonian in August 2013 and covers politics, business, and media. He was previously the editor of DCist and has also written for Washington City Paper, the New York Times, the New Republic, Slate, and BuzzFeed. He lives in Adams Morgan.