Virginia Legalizes Ridesharing Services

Published March 16, 2015

Virginia Gov. Terry McAuliffe has approved a bill authorizing ridesharing transportation services such as Lyft and Uber to operate in the state, about eight months after Virginia’s Department of Motor Vehicles banned the companies for operating without the state agency’s permission. 

The new law’s requirements include subjecting drivers to background checks and mandating the companies purchase expensive insurance policies and special licenses for drivers.

‘Ban First, Ask Questions Later’

R Street Executive Director Andrew Moylan says government regulators are struggling to adapt to new sharing-economy businesses like Lyft and Uber.

“Uber and Lyft have been facing aggressive regulators and special interests trying to shut down their businesses in cities and states across the country,” he said. “Rather than modernize rules to recognize technological advancement, many governments have taken a ‘ban first, ask questions later’ mentality to the services.”

Learning from Virginia’s Example

Moylan says Virginia regulators’ struggle to deal with the issue can be educational for government officials elsewhere.

“Virginia is an instructive example because it showed both the worst and best regulators have to offer in response to this important debate,” he said. “The state’s Department of Motor Vehicles sent out a cease-and-desist order to Uber and Lyft in an attempt to shut down the businesses as they were just getting off the ground.”

Moylan says consumer demand for ridesharing services forced regulators to open the market to Lyft and Uber. 

“The public backlash to that move forced the legislature and governor to respond, by passing a commonsense bill that contains only a few regulations in areas where government has a legitimate role: requiring insurance coverage, criminal background checks, and appropriate licensure for drivers,” he said.

‘A Good Commonsense Approach’

Baruch Feigenbaum, assistant director of transportation policy at the Reason Foundation, says the new law is a compromise, lowering regulatory barriers while addressing some people’s consumer-safety fears.

“The Virginia law is a good commonsense approach. We are okay with basic safety checks and driver background checks, assuming both taxicabs and ridesharing companies are treated the same,” he said.

Feigenbaum says deregulating the taxicab industry as a whole would benefit Virginia consumers even more.

“I would also like to see the taxi industry reformed. That industry has many onerous regulations, many that date back 60 years that are no longer relevant,” he said. “When cab drivers complain that they have to follow silly regulations such as paint color, they make valid points.

“Taxi medallions and quotas do nothing but add barriers to entry to the system. Nobody should be subject to anything other than minimum safety and insurance regulations that actually protect the passenger.”

Alexa Moutevelis Coombs ([email protected]) writes from Washington, DC.

Internet Info:

“The Case for Taxi Deregulation,” David Seymour, Frontier Centre for Public Policy,