Pennsylvania Officials: $11M Fine Against Uber Could Stunt Tech Growth

May 9, 2016

Pennsylvania Gov. Tom Wolf and Pittsburgh-area officials want the state’s regulators to greatly reduce their record-setting $11.4 million fine against ride-sharing company Uber.

The Public Utility Commission fined Uber last month for operating six months in 2014 without the required approval.

The company has said it would appeal and that it was “shocked” by the fine. Uber said no one was harmed and Pennsylvania has since approved its operation.

The PUC, which also regulates buses and taxis, approved a fine considerably lower than the $50 million recommended by a pair of administrative law judges in November, but still the largest in agency history. The next largest fine, $1.8 million, was levied against an electric company that ran afoul of regulations with a savings plan for customers.

“We are writing today to address fairness in business regulations, and especially fairness toward one business — Uber — which is investing hundreds of millions of dollars in the Commonwealth of Pennsylvania and is poised to invest millions more,” the May 3 letter said.

The letter, which doesn’t suggest any specific figure for a fine, was signed by the Democratic governor, Pittsburgh Mayor Bill Peduto and Allegheny County Executive Rich Fitzgerald.

The commission has since granted Uber and its competitor, Lyft, temporary operating licenses that expire in January. The state House Consumer Affairs Committee voted on May 4 to grant ride-sharing companies permanent permission to operate in Pennsylvania. The measure now moves to the full House.

San Francisco-based Uber Technologies Inc. uses citizen drivers who use their own cars to give people rides. Riders request and pay for Uber service through a smartphone app. The PUC raised concerns about ride-sharing because there was no uniform way to ensure vehicle safety and because of concerns over whose insurance would cover damages if an Uber car crashed or otherwise injured someone, among other issues.

Despite those concerns, Uber operated without a license and was cited for each day that occurred.

The Public Utility Commission split 3-2 on the fine, with dissenting commissioners arguing for leniency and a smaller fine because of the regulatory gray area that exists because ride-sharing services don’t fit neatly into state transit regulations.

But in ordering the fine, the commission said it “must be recognized that Uber has deliberately engaged in the most unprecedented series of willful violations of commission orders and regulations in the history of this agency.”

Commission press secretary Nils Hagen-Frederiksen said only that the PUC has received the letter from Wolf, Peduto and Fitzgerald and that “it is being reviewed.”

Wolf and the others contend innovative companies might be discouraged from investing in Pennsylvania if the fine is allowed to stand. Among other things, they note Uber has picked Pittsburgh as its world headquarters for advanced technology research and for testing self-driven vehicles.

“However, this could all be lost if we send the message that Pennsylvania is not a welcoming place for 21st century businesses and other job-creators looking to make our state a home,” the letter said.

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