Updated — Dec. 18, 8:10 p.m. ET
Uber has agreed to halt service in Portland, Oregon, for three months to give officials time to hash out new regulations that would allow the popular ride-sharing service to pick up passengers within city limits.
The move comes just days before a judge was scheduled to consider a request filed by the city to force the company to stop operating within city limits, the Oregonian reported.
In exchange for withdrawing temporarily from the market, Uber said in a statement that Portland had agreed to drop its lawsuit. And if new regulations aren't in place by April 9, Uber said city officials will allow ride-sharing companies to operate "as they pursue a long-term solution."
The company added that it will continue pick-ups through Sunday.
Portland's crackdown followed a sting operation during which transportation officials said they documented multiple instances of Uber drivers illegally accepting ride requests. Because Uber drivers are not permitted under the city's private ride-for-hire regulations, passengers can only be dropped off within city limits, not picked up.
Drivers who do pick up passengers in Portland are likely violating city codes that carry substantial penalties, Portland Bureau of Transportation spokesman Dylan Rivera told BuzzFeed News.
The PBOT requires private for-hire vehicles to have an LPT and taxi driver permit, a taxi company permit, and taxi license plates. The penalty for violating the rules starts at $1,000 to $1,500 for a first offense, and then grows to $2,500 and $5,000 for second and third offenses, respectively.
"Our main concern is public health and safety, because the state invested in the cities the responsibility to do that," Mayor Charlie Hales said in a statement. "Beyond that, though, is the issue of fairness. Taxi cab companies follow rules on public health and safety. So do hotels and restaurants and construction companies and scores of other service providers."
Rivera said Uber had initially made no contact with the PBOT to discuss how to work within the the city's regulations and has instead saturated the markets directly outside city limits — a likely strategic play to increase demand in the larger and more central market that the company is after.
"This isn't unprecedented for [Uber] to enter the market like this," Rivera said. "It's happening in other parts of the country. So we're not surprised but we're certainly frustrated and disappointed."
In addition to having the proper permits, the PBOT requires companies providing private for-hire vehicles to perform background checks that are renewed and updated annually, as well as a rigorous Automotive Service Excellence (ASE) certified mechanical inspection of their vehicles.
PBOT had issued two civil penalties to Uber after the sting operation — one for operating without a company permit and another for operating without a vehicle permit.
In a statement at the time, Uber said Portland needed to "modernize" its transportation regulations and accommodate public demand.
"We appreciate the way residents have welcomed Uber into the Rose City, their support illustrates why it's time to modernize Portland transportation regulation," the statement read. "In less than 4 hours, nearly 7,000 Portland residents have signed the petition in support of Uber and we remain hopeful that the city will listen to Portlanders who want safe, reliable, hassle free ride options now."
In response to threats from Portland authorities to shut down its service, the California-based ride-sharing company had urged existing riders to sign a petition to Hales asking him to "stand with Uber" — a petition the company credited with helping to achieve the agreement announced Thursday.