The California Department of Motor Vehicles retracted on Saturday an advisory requiring anyone who transports people for money to commercially register their vehicles.
The Sacramento Bee reports the DMV's move came amid an outcry by rideshare companies who said such a requirement would threaten their business, and by state lawmakers who said the department was applying outdated rules to a new kind of business.
"We jumped the gun, and we shouldn't have," DMV director Jean Shiomoto said in a statement. "The matter requires further review and analysis, which the department is undertaking immediately."
Ride-for-hire companies Uber and Lyft had argued that lawmakers and the California Public Utilities Commission already recognized their "transportation network business" as distinct from other commercial transportation businesses, such as taxicabs. The companies allow people to use their own vehicles to transport customers who hailed a ride using a smartphone app.
The DMV advisory issued earlier this month stated that "even occasional use of a vehicle in this manner requires it to be registered commercially." A department spokesman said the advisory clarified existing law which has been in the books in California since 1935.
Last year, lawmakers sent Gov. Jerry Brown a bill that required transportation network companies to carry more extensive insurance. The rideshare companies said that law, to take effect July 1, acknowledged the legality of such transactions.
The DMV pledged to look into the effect of "recent regulatory and statutory changes affecting ride share operators" on the older law.