Given that Uber is perceived as a symbol of 'Silicon Valley greed' to some politicians/constituents, a few high profile accidents would present a witch hunt opportunity for someone.
Not sure how much practical damage politicians could do but at a $50B-ish valuation there's little room for fatal error. Even a 1-2 year delay in getting self-drivers on the road would cost Uber billions.
But beta testing their cars on real streets could lead to disaster. Even from a non-legal PR risk perspective, it's dicey.
If one of these things runs over a cute kid, the attempt to skirt the law will backfire. That said challenging the law isn't necessarily skirting the law, but that's how techcrunch is portraying it. I'm too lazy to read the docket of the case.