Yesterday news broke that transportation networking company Uber Technologies has agreed to settle its year-long dispute over regulation of its services by the Maryland Public Service Commission (PSC).

The deal will require the Maryland division of Uber’s higher-end services UberBlack and UberSUV and the independent drivers who use those Uber communication and coordination services to act as if they’re a common carrier subject to the same regulation and driver licensing requirements that apply to taxi and limousines. As part of that, drivers who use Uber will have to file with the PSC. Notably, UberX, the company’s popular low-cost service will not see these regulations applied.

While the settlement could certainly have been worse, it is still a bad deal for the public. The better solution would have been to deregulate all of Maryland’s livery common carriers to allow them to compete with companies like Uber on a level, low-regulation playing field (a point I made recently in the Baltimore Sun).

The Maryland deal is troubling for two reasons:

Unprecedented Common Carrier Ruling: Until now, no state has successfully regulated Uber as a common carrier. When the State of Nevada tried to do so last November, the company pulled out of the state and it has yet to return. In regulating the company’s Maryland subsidiary as a common carrier, the State is wading into unknown regulatory waters.

Detaching UberBlack and UberSUV from UberX: The settlement carves the company’s most popular service—the private ride-sharing coordination service UberX—out of the regulations. At first glance, this seems to be a good thing, but there are reasons to be concerned.

Uber is famous for using its loyal UberX customer base to push back against overzealous regulators, and past attempts to regulate the company have seen massive public outcry. The PSC will avoid much of this turbulence by focusing on the company’s “premium” services (for now). There may be a good reason to exclude UberX drivers from regulation, especially part-time drivers who might only pick up passengers from time to time. Yet, it’s hard not to see this (temporary?) exception as a cynical effort by the PSC to avoid public pushback. Not only has the PSC seen protests in the past, but they have seen regulators in many states relent to Uber public outcry.

The PSC’s deal with Uber is both unnecessary and problematic. The agency has added another layer of bureaucracy on top of yet another of Maryland’s fast-growing companies, to the detriment of the public.

While the final rules have yet to be made public, the move will almost certainly stifle the growth of the premium services it covers, making it harder to get rides for willing customers and providing valuable income to potential drivers. It’s bad for consumers, bad for business, and bad for Maryland as a whole.