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PHOENIX -- Arizona Gov. Jan Brewer on Thursday vetoed legislation that would have exempted Uber and other rideshare companies from insurance regulations imposed on traditional taxi and livery companies.

Saying the bill does not offer fundamental safeguards that protect passengers, she vetoed the bill just one day after the state House of Representatives gave final approval to House Bill 2262.

"Consumer safety must not be sacrificed for the sake of innovation," Brewer wrote in her veto letter.

Brewer took issue with several provisions of the bill, including the part that exempts rideshare companies from the commercial insurance requirements that require traditional taxi and livery companies to insure drivers at all times on the job. An Uber driver who is working on the road but has not yet received a request for a ride is not insured unless the driver's personal insurance denies the claim, in which case Uber provides its contingent policy.

"In the larger context, this uncovered exposure likely would have led to significant increases in insurance rates for all Arizona consumers and unnecessary litigation," she wrote.

Uber is one of several new companies that partner people seeking rides with freelance drivers using web-based applications. The San Francisco-based company issued a statement expressing disappointment in the veto but vowing to press ahead with efforts in Arizona.

"Arizonans want competition. Arizonans want choice. They lost both tonight," the statement said. "With the veto of HB 2262, Governor Brewer has taken an action that will slash quality jobs, restrict access to a best-in-class transportation option and set Arizona back in the innovation economy. Ridesharing as we know it is dead in Arizona, despite the support of tens of thousands of residents across the state, both houses of the Legislature and a unified industry -- a clear movement for competition and choice."

The so-called Uber bill was one of the bigger issues of contention within the state Legislature this session. Democrats and Republicans were split within their own parties. Proponents of the bill said government should stay out of the way and let new companies like Uber innovate, while opponents said the lack of regulations pose a public safety threat.

The bill would not have required Uber drivers to be drug tested, a provision that the governor said should be in the bill when she expressed concerned over it this week.

"Arizona employers have effectively used employee drug testing as a way to ensure a drug free workplace," she wrote. "This is a vital tool to ensure that passengers and other drivers on the road are protected from drivers operating under the influence."

Lyft, another rideshare service, said they worked closely with lawmakers the bill and issued a statement, calling Brewer's veto as a "disappointing decision."

"Despite the fact that Lyft's peer-to-peer business model does not currently fall under Arizona regulations, the facts show that Lyft's safety measures far surpass those currently required by the state for other transportation providers. We worked diligently with state leaders on HB 2262, which would have provided a regulatory framework by enacting safety regulations far more strict than those currently in place for taxis and limos, including a zero-tolerance policy and drug testing program with firm exclusions and consequences, unlike other transportation providers in Arizona. This would have been in addition to Lyft's existing rigorous requirements that the company already has in place, which include background checks, vehicle inspections and commercial insurance policies.

"Today's disappointing decision goes against Arizona's commitment to innovation and entrepreneurship, but we will continue to stand strong as a community and do everything possible to ensure a path forward that allows ridesharing to thrive in Arizona. The voices of the people of Arizona deserve to be heard - they deserve more transportation choices, and they have enthusiastically welcomed Lyft to their cities for affordable, convenient and safe rides and economic opportunity."

Brewer insisted the state welcomes the rideshare industry and offers a business-friendly environment, but said the legislation would have increased costs for all drivers, put citizens at risk of insurance gaps, and subjected the public to danger because Uber drivers would not be drug-tested.

The bill was sponsored by Rep. Tom Forese, R-Gilbert. KTAR's Jeremy Foster contributed to this report.

Associated Press,

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