Technology and car rental companies h  ave threatened to challenge the new ride-hailing regulations in Sao Paulo, according to a Reuters report.

Unveiled by Sao Paulo Mayor Joao Doria, the new rules restrict drivers of out-of-town vehicles from working with ride-hailing services in Sao Paulo, says the report.

The new rules have consequences for drivers from Sao Paulo suburbs along with rental car companies like Localiza Rent A Car — most of its fleet vehicles are registered at its headquarters in the state of Minas Gerais, according to the report.

Uber called the requirement of local vehicle registration “unconstitutional” in an emailed statement to Reuters.

“This decision does not make legal sense,” Roberto Mendez, Localiza’s chief financial officer, told Reuters. “We have to evaluate the situation. We understand that there are legal aspects that we could challenge.”

Localiza and rival Movida Participacoes have been renting vehicles to drivers of ride-hailing services. The rental companies have also offered monthly contracts for ride-hailing drivers. The new rules could affect these arrangements since most of Sao Paulo’s rental fleet is registered in other cities, says the report.

Click here for the full Reuters report.