The Uber Technologies Inc. application is displayed on an Apple Inc. iPhone 5s and iPad Air. Photographer: Andrew Harrer/Bloomberg

Uber and Lyft now have permanent legal status in Virginia.

Gov. Terry McAuliffe (D) on Tuesday signed legislation setting a regulatory framework for the app-based car services— and allowing them to legally operate in the state.

The new regulations require such companies:

  • Pay $100,000 for a license to operate in the state.
  • Drivers must be at least 21 years old and properly licensed to drive.
  • Drivers must undergo a background check –including a comprehensive review of history of felonies and a search of the sex offender and crimes against minors registry.
  • The company or the driver must have insurance that covers up to $1 million in accident damage and they must abide by a zero-tolerance policy regarding the use of drugs and alcohol.

A result of months of negotiations between lawmakers, the Virginia Department of Motor Vehicles and the two companies, the new rules put an end to a past of uncertainty for the app-based ride-sharing services. Just a year ago, Virginia officials had fined the two companies more than $35,000 in civil penalties and in June, DMV commissioner Richard D. Holcomb sent a cease and desist letter to both companies saying “I am once again making clear that Uber must cease and desist operating in Virginia until it obtains proper authority.

Uber and Lyft had vowed to continue operating in the commonwealth and after escalating tension, McAuliffe and  Attorney General Mark R. Herring announced last summer a temporary deal that allowed the companies to continue operating in the state.  That agreement was a temporary solution until lawmakers developed the more comprehensive legislation.

“Virginia is leading the way on attracting and supporting innovative companies in every sector of our economy,” McAuliffe said in a statement.

Virginia officials say the reached compromise ensures the safety of passengers, and promotes a level playing field for transportation providers, while it addresses the concerns of the services’ impact on the taxi industry. The legislation also is seen as good news for the industry and its growing consumer base that prefers the app-based services to traditional taxis.

“Virginia has taken a stand for innovation and consumer choice,” Uber spokesman Taylor Bennett said in a statement. “We’re excited to make the Commonwealth a permanent home and look forward to continuing to provide access to safe rides and job opportunities to thousands of Virginians.”

Herring said other states grappling with regulating the growing industry  should look up to Virginia “where we have found a balance between safety, passenger protection, and innovation.”

“This law will strengthen our economy, give consumers more transportation options, and further cement Virginia’s reputation as a national leader for pro-business policies and reasonable regulation,” he said.

Uber, Lyft and other car services have ignited tension across the United States in recent years. Cabbies, in particular, have complained about ride-share drivers having an unfair advantage because they don’t face the same licensing and permitting requirements as cab drivers. This has prompted policymakers across the country to find ways to regulate the new services.