Popular ride-sharing startup Lyft got a green light today to continue operating while the California Public Utilities Commission (CPUC) re-examines its policies.

In their efforts to bring new transportation options to urban residents, these services have consistently butt heads with the authorities. In November, we reported that hefty citations were levied against Uber, Lyft and SideCar, prompting users to launch an online petition.

But today, the PUC agreed to suspend the $20,000 fine and cease and desist notice against Lyft. The State is taking six months to perform background checks and assess whether these services are in compliance. The CPUC has not yet reached any similar agreement with Uber and SideCar.

The CPUC is considering new regulations that could legalize ride-sharing. In December it issued a proposal for new rulemaking. The proposal states that this is “a situation not encountered before,” and that it will evaluate how these new businesses are using “mobile communications and social networks to connect individuals wishing to offer and receive low cost and convenient, sometimes shared, transportation.”

Lyft responded to the news by announcing plans to expand into Los Angeles. It has already begun recruiting drivers in its first new city outside of San Francisco.

Since it launched in August, Bay Area residents have become familiar with Lyft’s fleet of moustache-adorned cars. Payment is donation-based and often works out cheaper than a taxi. Users can order a ride from their smartphone in a matter of seconds, and a car will typically arrive in 10 minutes or less.

A commission press release said:

“The terms of the agreement are intended to ensure the public safety of both riders and drivers through the CPUC’s interim oversight of Zimride [Lyft’s parent company] during the rulemaking through safety requirements that include continued proof of insurance, Department of Motor Vehicle checks, and national criminal background checks.”

This is a significant step forward in the protracted battle between ride-sharing services and State authorities. But the fight isn’t over. Today, users launched a petition to show support for Uber in an ongoing regulatory battle in Denver.

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