The Public Utility Commission on Thursday issued an unprecedented $11.4 million fine against Uber Technologies Inc. for giving rides in Pennsylvania without state permission in 2014.
The penalty, approved in a 3-2 vote at the commission’s public meeting in Harrisburg, is substantially less than the proposed fine of $50 million recommended by administrative law judges in November.
But the amount — more than six times the PUC’s next-highest fine — bothered the two dissenting commissioners who pointed out Uber has caused little actual harm in the Commonwealth while providing a useful service that customers like.
In a statement, Uber vowed to appeal.
The commission’s majority found the fine was necessary given the gravity of Uber’s high-profile spurning of its authority. The San Francisco-based ride-share company, which uses a smartphone app to connect drivers in their own vehicles to those in need of a ride, moved into Pennsylvania in early 2014. It defied a cease-and-desist order for several months before receiving a two-year, experimental license to operate in November of that year.
“It must be recognized that Uber has engaged in the most unprecedented series of willful violations of commission orders and regulations in the history of this agency,” said Commissioner John F. Coleman Jr., reading the joint motion to approve the fine with Chairman Gladys M. Brown. Commissioner Andrew G. Place gave the third vote of approval.
Mr. Coleman went on, “If the commission is unable to impose a penalty that reasonably corresponds to the very large number of proven violations, when would it be able to do so? Would the message we send, albeit unintended, [be] that Uber is ‘too big to fine?’”
In their dissent, commissioners Robert F. Powelson and Pamela A. Witmer expressed alarm at the amount of the fine, arguing Uber’s benefits should be weighed against actual harm it has caused.
Uber’s penalty is more than six times the previously largest fine of $1.8 million, issued last December against Hiko Energy, a New York-based electric retail supplier found to have spiked power rates to thousands of customers during the historically cold winter of 2013-14.
In 2013, the commission levied two $500,000 fines against UGI Utilities for a February 2011 natural gas explosion in Allentown that killed five people and leveled property.
The commission last year settled with Lyft, Uber’s ride-share rival, for $250,000 for similar violations. Lyft also was charged with operating in Pennsylvania without the needed approvals.
At the meeting, Ms. Witmer acknowledged that Uber committed a “serious violation” of state law when it disobeyed a cease-and-desist order issued July 1, 2014, and that compliance with commission has been “at the very least, uneven.” Despite its disruption, she said, Uber brought “an immediate and substantial benefit to customers” by “providing wide-ranging, fast and user-friendly transportation, often to underserved areas.”
“The company was responding to market demand by providing a requested service about which the commission received no consumer complaints,” Ms. Witmer said. “I cannot support such a grossly disproportionate outcome.”
Mr. Powelson suggested a penalty of $2.5 million. He said the only documented harm caused by Uber were nine traffic accidents that resulted in property damage but no bodily harm.
“It’s unpersuasive to argue there was an actual safety risk as a result of Uber’s operations,” he said.
In the 17 months since receiving its experimental license, he added, Uber has shown a “continuing willingness to comply with commission directives” and has been “good corporate citizen” in Pennsylvania.
In a phone interview after the meeting, Mr. Powelson called the fine a “setback for the innovation economy.” He also questioned the commission staff’s efforts to reach a settlement with the company as it had done with Lyft.
“You look at the Lyft settlement, you look at that and think, ‘Wait a minute, what am I missing with Uber?’” Mr. Powelson said. “I personally struggled with whether we had fair and equitable treatment.”
The PUC’s investigative arm has cited Uber’s unwillingness to provide information as reason to decline a settlement. In recommending the $50 million fine in November, investigators “took the position that a settlement conference would be unlikely to be productive in view of Uber’s continued failure to answer discovery or comply with the numerous orders.”
Uber plans to fight the decision in court.
“We are disappointed by today’s decision and shocked by the amount of the civil penalty, which is 45 times higher than the penalty paid by Uber’s competitor for the same activity,” the statement read, referring to Lyft’s fine. “We look forward to making our case to the Commonwealth Court. In the meantime, we will continue to work in good faith with the commission.”
Though the decision closes one of the most contentious cases before the commission, the regulatory haze over ride-sharing in Pennsylvania is likely to persist until a permanent license is crafted.
State lawmakers in the House Consumer Affairs Committee are considering a bill that would direct the PUC to do just that. The committee on April 11 declined to vote on the bill, and there are no scheduled hearings as of Thursday.
Daniel Moore: dmoore@post-gazette.com, 412-263-2743 and Twitter @PGdanielmoore.
First Published: April 21, 2016, 3:23 p.m.
Updated: April 22, 2016, 3:54 a.m.
