(Bloomberg) -- California has retracted a notice that said private drivers for ride-sharing companies such as Uber Technologies Inc. and Lyft Inc. must have a commercial license plate or risk getting a citation.

The California Department of Motor Vehicles released a notice on Jan. 5 saying that a 1935 law requires any vehicle used to transport a person for hire must possess a commercial plate. Jean Shiomoto, director of the DMV in Sacramento, said in a Jan. 23 statement that the agency is rescinding the alert because of uncertainty about how the law relates to more recent regulations affecting ride-share operators.

Requiring drivers to obtain commercial auto insurance could increase costs for ride-share companies. Lawsuits against Uber, Lyft and other car-booking companies have mounted this year as they seek to crack open the U.S. taxi and limousine market, estimated by IbisWorld Research to be an $11 billion industry. Uber, founded in 2009, is the most highly valued U.S. technology startup.

“We jumped the gun, and we shouldn’t have,” Shiomoto said in the statement. “The matter requires further review and analysis which the department is undertaking immediately.”

The DMV will meet with regulators and the industry “in the coming days,” according to the statement.

Special Reports /

California mandates commercial plates for Uber ... and then takes it back

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