A write-up of the afternoon sessions is now available here!

March 15, 2019 – 10:00 AM – 5:30 PM

Room 1225, Jeffries Hall, University of Michigan Law School 

In the case of automated driving, how and to whom should the rules of the road apply? This deep-dive conference brings together experts from government, industry, civil society, and academia to answer these questions through focused and robust discussion.

To ensure that discussions are accessible to all participants, the day will begin with an introduction to the legal and technical aspects of automated driving. It will then continue with a more general discussion of what it means to follow the law. After a lunch keynote by Rep. Debbie Dingell, expert panels will consider how traffic law should apply to automated driving and the legal person (if any) who should be responsible for traffic law violations. The day will conclude with audience discussion and a reception for all attendees.

(Re)Writing the Rules of the Road is presented by the University of Michigan Law School’s Law and Mobility Program, and co-sponsored by the University of South Carolina School of Law.

Schedule of Events

Morning Sessions 

  • 10:00 am – 10:45 am

Connected and Automated Vehicles – A Technical and Legal Primer

Prof. Bryant Walker Smith

Professor Bryant Walker Smith will provide a technical and legal introduction to automated driving and connected driving with an emphasis on the key concepts, terms, and laws that will be foundational to the afternoon sessions. This session is intended for all participants, including those with complementary expertise and those who are new to automated driving. Questions are welcome. 

  • 10:45 am – 11:15 am
Drivers Licenses for Robots? State DMV Approaches to CAV Regulation

Bernard Soriano, Deputy Director for the Califorina DMV and James Fackler, Assistant Administrator for the Customer Services Administration in the Michigan Secretary of State’s Office, discuss their respective state’s approaches to regulating connected and autonomous vehicles.

  • 11:15 am – 12:00 pm
Just What Is the Law? How Does Legal Theory Apply to Automated Vehicles and Other Autonomous Technologies?

Prof. Scott Hershovitz    

Human drivers regularly violate the rules of the road. What does this say about the meaning of law? Professor Scott Hershovitz introduces legal theory and relates it to automated driving and autonomy more generally.                  

Keynote & Lunch

  • 12:00 pm – 12:30 pm
Lunch

Free for all registered attendees!

  • 12:30 pm-1:30 pm

Keynote – Rep. Debbie Dingell

Rep. Dingell shares her insights from both national and local perspectives.  

Afternoon Sessions

(Chatham House Rule)

  • 1:30 pm – 3:00 pm
Crossing the Double Yellow Line: Should Automated Vehicles Always Follow the Rules of the Road as Written?

Should automated vehicles be designed to strictly follow the rules of the road? How should these vehicles reconcile conflicts between those rules? Are there meaningful differences among exceeding the posted speed limit to keep up with the flow of traffic, crossing a double yellow line to give more room to a bicyclist, and driving through a stop sign at the direction of a police officer? If flexibility and discretion are appropriate, how can they be achieved in law?

A panel of experts will each briefly present their views on these questions, followed by open discussion with other speakers and questions from the audience.

Featured Speakers:

Justice David F. Viviano, Michigan Supreme Court

Emily Frascaroli, Counsel, Ford Motor Company

Jessica Uguccioni, Lead Lawyer, Automated Vehicles Review, Law Commission of England and Wales

  • 3:15 pm – 4:45 pm
Who Gets the Ticket? Who or What is the Legal Driver, and How Should Law Be Enforced Against Them?

Who or what should decide whether an automated vehicle should violate a traffic law? And who or what should be responsible for that violation? Are there meaningful differences among laws about driving behavior, laws about vehicle maintenance, and laws and post-crash responsibilities? How should these laws be enforced? What are the respective roles for local, state, and national authorities?

A panel of experts will each briefly present their views on these questions, followed by open discussion with other speakers and questions from the audience.

Featured Speakers:

Thomas J. Buiteweg, Partner, Hudson Cook, LLP

Kelsey Brunette Fiedler, Ideation Analyst in Mobility Domain

Karlyn D. Stanley, Senior Policy Analyst, RAND Corporation

Daniel Hinkle, State Affairs Counsel, American Association for Justice

  • 4:45 pm – 5:30 pm 
 Summary and General Discussion                                     

Participants and attendees close out the day by taking part in wide discussion of all of the day’s panels.

By Wesley D. Hurst and Leslie J. Pujo*

Cite as: Wesley D. Hurst & Leslie Pujo, Vehicle Rental Laws: Road Blocks to Evolving Mobility Models?, 2019 J. L. & Mob. 73.

I.          Introduction

The laws and regulations governing mobility are inconsistent and antiquated and should be modernized to encourage innovation as we prepare for an autonomous car future. The National Highway Traffic Safety Administration (“NHTSA”) has concluded that Autonomous Vehicles, or Highly Automated Vehicles (“HAVs”) may “prove to be the greatest personal transportation revolution since the popularization of the personal automobile nearly a century ago.” 1 1. Federal Automated Vehicles Policy, NHTSA 5 (2016), https://www.transportation.gov/sites/dot.gov/files/docs/AV%20policy%20guidance%20PDF.pdf. × Preparation for a HAV world is underway as the mobility industry evolves and transforms itself at a remarkable pace. New mobility platforms are becoming more convenient, more automated and more data driven—all of which will facilitate the evolution to HAVs. However, that mobility revolution is hindered by an environment of older laws and regulations that are often incompatible with new models and platforms.

Although there are a number of different mobility models, this article will focus on carsharing, peer-to-peer platforms, vehicle subscription programs, and rental car businesses (yes, car rental is a mobility platform). All of these mobility models face a host of inconsistent legal, regulatory and liability issues, which create operational challenges that can stifle innovation. For example, incumbent car rental, a mobility platform that has been in place for over 100 years, is regulated by various state and local laws that address everything from driver’s license inspections to use of telematics systems. Although physical inspection of a customer’s driver’s license at the time of rental is commonplace and expected in a traditional, face-to-face transaction, complying with the driver’s license inspection for a free-floating carsharing or other remote access mobility model becomes more problematic.

Part B of this article will review current federal and state vehicle rental laws and regulations that may apply to incumbent rental car companies and other mobility models around the country, including federal laws preempting rental company vicarious liability and requiring the grounding of vehicles with open safety recalls, as well as state laws regulating GPS tracking, negligent entrustment, and toll service fees. Part C poses a series of hypotheticals to illustrate the challenges that the existing patchwork of laws creates for the mobility industry. 2 2. Note: This article focuses on existing laws applicable to short-term rentals of vehicles, rather than long-term leases (including the federal Consumer Leasing regulations, known as “Regulation M,” which are set forth in 12 C.F.R., Part 213). For a more detailed discussion of long-term vehicle leasing laws, see Thomas B. Hudson and Daniel J. Laudicina, The Consumer Leasing Act and Regulation M, in F&I Legal Desk Book (6th edition 2014). × For instance, whether a mobility operator can utilize GPS or telematics to monitor the location of a vehicle is subject to inconsistent state laws (permitted in Texas, but not California, for example). And vehicle subscription programs are currently prohibited in Indiana, but permitted in most other states. Similarly, peer-to-peer car rental programs currently are prohibited in New York, but permitted in most other states. Finally, Part D of the article will offer some suggested uniform rules for the mobility industry.

First, however, we offer the following working definitions for this article:

  • Carsharing” – a membership-based service that provides car access without ownership. Carsharing is mobility on demand, where members pay only for the time and/or distance they drive. 3 3. About the CSA, Carsharing Ass’n., https://carsharing.org/about/ (last visited May 7, 2019). ×
  • Peer-to-peer Carsharing” or “Rentals” – the sharing of privately-owned vehicles in which companies, typically for a percentage of the rental charge, broker transactions among car owners and renters by providing the organizational resources needed to make the exchange possible (i.e., online platform, customer support, driver and motor vehicle safety certification, auto insurance and technology). 4 4. Car Sharing State Laws and Legislation, Nat’l Conf. of St. Legislatures (Feb. 16, 2017), http://www.ncsl.org/research/transportation/car-sharing-state-laws-and-legislation.aspx. Since most personal auto policies do not cover commercial use of personal vehicles, if the peer-to-peer platform does not provide liability and physical damage coverage, there likely will be no coverage if the vehicle is involved in an accident during the rental period. As noted above, peer-to-peer carsharing platforms currently do not operate in New York, based, in part, on the New York Department of Insurance’s findings that a peer-to-peer platform operator’s insurance practices (including sale of group liability coverage to vehicle owners and renters) constituted unlicensed insurance producing. See RelayRides, Inc. Consent Order (N.Y. Dep’t of Fin. Serv., 2014). Although a detailed discussion of insurance-related issues is beyond the scope of this article, the Relay Rides experience in New York illustrates the need for the insurance industry and insurance laws to evolve to accommodate new mobility models. See Part B.2.d. for a discussion of legislative approaches that several states have taken to address the insurance issues implicated by the peer-to-peer model (including a 2019 New York bill). ×
  • Subscriptions” – a service that, for a recurring fee and for a limited period of time, allows a participating person exclusive use of a motor vehicle owned by an entity that controls or contracts with the subscription service. 5 5. See Ind. Code § 9-32-11-20(e) (2018). The prohibition on vehicle subscription services in Indiana originally expired on May 1, 2019, but was recently extended for another year through May 1, 2020. The Indiana definition also provides that “[Subscription] does not include leases, short term motor vehicle rentals, or services that allow short terms sharing of a motor vehicle.” A bill pending in North Carolina uses similar language to define “vehicle subscription” for purposes of determining highway use tax rates. See H.B. 537 (N.C. 2019). As further discussed in Part C below, it is not clear whether other states would take the same approach and classify a subscription model as distinct from rental or leasing instead of applying existing laws. × Typically, the subscriber is allowed to exchange the vehicle for a different type of vehicle with a certain amount of notice to the operator. This is a developing model with a number of variations, including whether the subscription includes insurance, maintenance, a mileage allowance, or other features and services.
  • Vehicle Rental” – a customer receives use of a vehicle in exchange for a fee or other consideration pursuant to a contract for a period of time less than 30 days. 6 6. See Cal. Civ. Code § 1939.01 (Deering 2019). Although for purposes of this article, we use a traditional 30-day period to define short-term rentals, we note that the time period for rentals varies by state (or even by statute for a particular state) with some defining a short-term rental for periods as long as 6 months or even one year. See, e.g., Md. Code Ann., Transportation § 18-101 (LexisNexis 2019) (defining “rent” as a period of 180 days or less). Compare 35 Ill. Comp. Stat. 155/2 (2019) (defining “rent” as a period of one year or less for purposes of the Illinois Automobile Renting Occupation and Use Tax), with 625 Ill. Comp. Stat. 27/10 (defining “rental company” as one that rents vehicles to the public for 30 days or less for purposes of the Illinois damage waiver law). ×
  • Mobility Operators” – any person or entity that provides access to a vehicle to another person whether by an in-person transaction, an app-based or online platform, or any other means and whether the entity providing the access is the owner, lessee, beneficial owner, or bailee of the vehicle or merely facilitates the transaction.

II.          Existing Laws: Lack of Uniformity and Certainty

As noted above, a patchwork of federal, state (and in some cases city or county) laws regulate short-term car rentals (in addition to generally applicable laws affecting all businesses, such as privacy and data security laws, 7 7. In addition to general privacy and data security concerns applicable to all businesses, the advent of HAVs and connected vehicles may trigger additional privacy and data security issues for mobility operators. For example, issues surrounding the control, access, and use of vehicle-generated data is still unsettled and the subject of much debate. See, e.g. Ayesha Bose, Leilani Gilpin, et al., The Vehicle Act: Safety and Security for Modern Vehicles, 53 Willamette L. Rev. 137 (2017) for additional information on this topic. × the Americans with Disabilities Act (“ADA”), employment law, and zoning laws). Car rental laws have developed over time and typically address:

  1. State and local taxes and surcharges;
  2. Licensing and operational requirements, including airport concessions and permits for picking-up and dropping-off passengers;
  3. Public policy issues, such as liability insurance and safety recalls; and
  4. Consumer protection matters, like rental agreement disclosures, restrictions on the sale of collision damage waivers, prohibitions on denying rentals based on age or credit card ownership, and restrictions on mandatory fees. 8 8. See, e.g., Final Report and Recommendations of the National Association of Attorneys General Task Force on Car Rental Industry Advertising and Practices, 56 Antitrust & Trade Regulation Report No. 1407 (March 1989) at S-3 (“NAAG Report”). The NAAG Report includes “guidelines,” which were intended for use by states in providing guidance to car rental companies on compliance with state unfair and deceptive practice laws, Id. at S-5. ×

As is often the case with regulated industries, state and local vehicle rental laws vary considerably, which can lead to uncertainty and inefficiency. For example, a multi-state operator may need to vary product offerings and pricing, customer disclosures, and agreement forms, depending upon the state in which the rental commences. 9 9. Typically, a state law will apply to a transaction if the renter accepts delivery of the vehicle in that state, regardless of where the rental company’s physical offices are located, where the vehicle is typically parked, or where the vehicle is returned. See, e.g., 24 Va. Code Ann. § 20-100-10 (2019) (“The term [rental in this State] applies regardless of where the rental agreement is written, where the rental terminates, or where the vehicle is surrendered.”). × The uncertainty and inefficiency increases dramatically when considering whether and how existing vehicle rental laws apply to new mobility platforms and services since many of the existing laws do not address or even contemplate modern technology like self-service, keyless access to vehicles, digital agreements, or telematics fleet management.

The following paragraphs provide a brief overview of some of the existing laws.

A.         Federal Law

1. Graves Amendment

The federal Graves Amendment, 10 10. 49 U.S.C.S. § 30106 (LexisNexis 2019). × passed in 2005, preempts any portion of state law that creates vicarious liability for a vehicle rental company based solely on ownership of a vehicle. Specifically:

An owner of a motor vehicle that rents or leases the vehicle to a person . . . shall not be liable . . . by reason of being the owner of the vehicle . . . for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of the rental or lease, if– (1) the owner . . . is engaged in the trade or business of renting or leasing motor vehicles; and (2) there is no negligence or criminal wrongdoing on the part of the owner . . . 11 11. Before passage of the Graves Amendment, many car leasing and renting companies ceased activities in states with unlimited vicarious liability laws based solely on ownership, such as New York. See Graham v Dunkley, 852 N.Y.S.2d 169 (App. Div. 2008); see also Susan Lorde Martin, Commerce Clause Jurisprudence and the Graves Amendment: Implications for the Vicarious Liability of Car Leasing Companies, 18 U. FLA. J.L. & Pub. Pol’y 153, 162 (2007). ×

Determining whether the Graves Amendment applies to a particular case involves an analysis of both factual and legal issues. The factual issues include a determination of whether:

(A) the claim involves a “motor vehicle”;

(B) the individual or entity is the “owner” of the motor vehicle (which may be a titleholder, lessee, or bailee) or an affiliate of the owner;

(C) the individual or entity is “engaged in the trade or business of renting or leasing motor vehicles”; and

(D) the accident occurred during the rental period. 12 12. Johnke v. Espinal-Quiroz, No. 14-CV-6992, 2016 WL 454333 (N.D. Ill. 2016). ×

    The legal issues include:

(A) whether the owner is being sued in its capacity as owner (as opposed to the employer or other principal of another party); and

(B) whether there are allegations that the owner was negligent or criminal. 13 13. Id. ×

Perhaps not surprisingly, the Graves Amendment has been highly litigated, from early challenges to its constitutionality, 14 14. See, Rosado v. Daimlerchrysler Fin. Servs. Trust, 112 So. 3d 1165 (2013); Garcia v. Vanguard Car Rental USA, Inc., 540 F.3d 1242 (2008); Rodriguez v. Testa, 993 A.2d 955 (Conn. 2009); Vargas v. Enter. Leasing Co., 60 So. 3d 1037 (Fla. 2008). × to later assertions that it does not apply to a particular case because the vehicle’s owner was not “engaged in the business of renting or leasing,” 15 15. See e.g., Minto v. Zipcar New York, Inc., No. 15401/09 (N.Y. Sup. Ct., Queens County Mar. 17, 2010); Moreau v. Josaphat, et al., 975 N.Y.S.2d 851 (N.Y. Sup. Ct. 2013). × or that an accident did not occur during the “rental period.” 16 16. Currie V. Mansoor, 71 N.Y.S.3d 633 (App. Div. 2018); Chase v. Cote, 2017 Conn. Super. LEXIS 3533 (2017); Marble v. Faelle, 89 A.3d 830 (R.I. 2014). ×

Two New York cases are instructive to operators of newer mobility models. In Minto v. Zipcar New York, Inc. 17 17. See Minto v. Zipcar New York, Inc., No. 15401/09. × and Moreau and Duverson v. Josaphat, et al., 18 18. See Moreau, 975 N.Y.S.2d 851. × a New York court examined whether carsharing company Zipcar was “engaged in the trade or business of renting or leasing motor vehicles” for purposes of the Graves Amendment – despite the fact that it touted itself as an alternative to car rental.

In the 2010 Minto case (which the Moreau case closely followed), the court stated that Zipcar’s advertising, which contrasted the company to “‘traditional car rental cars’, d[id] not foreclose the possibility that it is nevertheless also in the rental car business, although not of a traditional sort.” 19 19. See Minto v. Zipcar New York, Inc., No. 15401/09 at 2. × The court then noted that the Graves Amendment did not define “trade or business of renting or leasing motor vehicles.” 20 20. Id. × As a result, it analyzed the “constituent terms” of “renting” and “leasing” to determine whether Zipcar was a rental company for purposes of the Graves Amendment 21 21. Id. See also Moreau, 975 N.Y.S.2d at 855-856. × and concluded that the key features of a “lease” or rental” were the “transfer of the right to possession and use of goods for a term in return for consideration.” 22 22. See Minto v. Zipcar New York, Inc., No. 15401/09 at 2-3. × With these definitions in mind, the court focused on the requirement that Zipcar members pay fees in exchange for the right to use Zipcar vehicles, which it found to be “little different from ‘traditional rental car’ companies, notwithstanding Zipcar’s marketing statements that contrast it with those companies” and held that Zipcar was covered by the Graves Amendment. 23 23. Id. at 3. × As further support of its conclusion, the Minto court noted that the Zipcar marketing “shows that the company competes with traditional car-rental companies and serves a similar consumer need.” 24 24. Minto v. Zipcar New York, Inc., No. 15401/09 at 4. ×

2. Safe Rental Car Act

The Raechel and Jacqueline Houck Safe Rental Car Act of 2015 (“Safe Rental Car Act”) 25 25. Raechel and Jacqueline Houck Safe Rental Car Act of 2015, S. 1173, 114th Cong. (2015) (codified as amended in scattered sections of 49 U.S.C.). × places limits on the rental, sale, or lease of “covered rental vehicles”. 26 26. 49 U.S.C.A. § 30120(i) (2017). × A “covered rental vehicle” is one that: (A) has a gross vehicle weight rating (“GVWR”) of 10,000 pounds or less; (B) is rented without a driver for an initial term of less than 4 months; and (C) is part of a motor vehicle fleet of 35 or more motor vehicles that are used for rental purposes by a rental company. 27 27. 49 U.S.C.A. § 30102(a)(1) (2017). × A “rental company” is any individual or company that “is engaged in the business of renting covered rental vehicles,” and “uses, for rental purposes, a motor vehicle fleet of 35 or more covered rental vehicles, on average, during the calendar year.” 28 28. 49 U.S.C.A. § 30102(a)(11) (2017). ×

Under the Safe Rental Car Act, after receiving notice by electronic or first class mail of a NHTSA-approved safety related recall, a rental car company may not rent, sell, or lease an affected vehicle in its possession at the time of notification, until the defect has been remedied. The rental car company must comply with the restrictions on rental/sale/lease “as soon as practicable,” but no later than 24 hours after the receipt of the official safety recall notice (or within 48 hours if the notice covers more than 5,000 vehicles in its fleet). 29 29. 49 U.S.C.A. § 30120(i)(1) and (3) (2017). The 24-hour/48-hour time requirement applies only to vehicles in the possession of the rental company when the safety recall is received, and does not require rental companies to locate and recover vehicles that are on rent at that time. × If the safety recall notice indicates that a remedy is not immediately available, but specifies interim actions that an owner may take to alter the vehicle and eliminate the safety risk, the rental company may continue to rent (but not sell or lease) the vehicle after taking the specified actions. 30 30. 49 U.S.C.A. § 30120(i)(3)(C) (2017). Once a permanent remedy becomes available, the rental company may not rent affected vehicles until those vehicles have been repaired. ×

Despite the federal recall legislation, several states have introduced bills for similar legislation with California passing a law in 2016 that extends the restrictions on rental, sale, and lease to fleets of any size, as well as to cars loaned by dealers while a customer’s own vehicle are being repaired or serviced. 31 31. Cal. Veh. Code § 11754 (Deering 2019). × Effective January 1, 2019, the California prohibitions on the rental, lease, sale, or loan of vehicles subject to safety recalls also apply to “personal vehicle sharing programs,” which are defined as legal entities qualified to do business in the State of California that are “engaged in the business of facilitating the sharing of private passenger vehicles for noncommercial use by individuals within the state.” 32 32. Cal. Veh. Code § 11752 (West 2019); Cal Ins. Code § 11580.24(b)(2) (West 2011). ×

B.         State Law

Several states, including California, 33 33. Cal. Civ. Code §§ 1939.01 – 1939.37 (West 2017). × Hawaii, 34 34. Haw. Rev. Stat. Ann. §437D (West 2019). × Illinois, 35 35. 625 Ill. Comp. Stat. 27 (West 2019); 625 Ill. Comp. Stat. 5/6-305 (West 2019). × Nevada, 36 36. Nev. Rev. Stat. Ann. §§ 482.295–482.3159 (West 2019). × and New York, 37 37. N.Y. Gen. Bus. Law § 396-z (McKinney 2019). × have comprehensive vehicle rental laws that regulate a variety of issues, including minimum age requirements; sales of damage waivers; limitations on amounts recoverable from renters, fees that a vehicle rental company may charge; recordkeeping practices; general licensing or permit requirements; 38 38. See, e.g., Conn. Gen. Stat. Ann. § 14-15 (West 2018); D.C. Code § 50-1505.03 (2019); Del. Code Ann. Tit. 21 § 6102 (West 2019); Haw. Rev. Stat. Ann. § 251-3 (West 2019); Minn. Stat. Ann. § 168.27 (West 2019); Nev. Rev. Stat. Ann. § 482.363 (West 2019); N.J. Stat. Ann. § 45:21-12 (West 2019); Okla. Stat. tit. 47, § 8-101 (2004); 31 R.I. Gen. Laws Ann. § 31-5-33 (West 2019); W. Va. Code Ann. § 17A-6D-1 (West 2019); Wis. Stat. Ann. § 344.51(1m) (West 2018). × imposition of short-term rental taxes and surcharges; airport concession and permit requirements; limitations on the use of telematics; deposit and credit card restrictions; required display of counter signs; and required disclosures on rental agreements (including specified language, font size/style, and placement on written agreements). California even requires rental companies to warn their customers that operation of a passenger vehicle can expose individuals to certain chemicals that are known to cause cancer and birth defects, and therefore the customers should avoid breathing exhaust and take other precautions. Other states regulate one or more of these issues, with most states varying the specific requirements. For example, approximately 21 states regulate the sale of damage waivers with states taking different approaches on several key issues, including the permissibility of selling partial or deductible waivers, customer disclosures, and the permissible bases for invalidation of a waiver. 39 39. The typical damage waiver statute requires vehicle rental companies to disclose the optional nature of the waiver on the front of the rental agreement form and/or signs at the rental counter. Some statutes also regulate the content of the waiver and its exclusions. See, e.g., Cal. Civ. Code § 1939.09 (Deering 2019). Hawaii, Illinois, Maryland, New York, and Wisconsin require the distribution of brochures summarizing the damages waiver and its terms, and rental companies selling damage waivers in Louisiana and Minnesota must file a copy of the rental agreement before using it. Haw. Rev. Stat. Ann. § 437D-10 (LexisNexis 2019); 625 Ill. Comp. Stat. Ann. 27/20 (LexisNexis 2019); La. Stat. Ann. § 22:1525 (2018); Md. Code Ann. Com. Law § 14-2101 (LexisNexis 2019); Minn. Stat. Ann. § 72A.125 (West 2019); N.Y. Gen. Bus. Law § 396-z(4) (Consol. 2019); and Wis. Stat. Ann. § 344.576 (West 2018). ×

In addition to the issues noted above, most states prohibit rental of a vehicle without first inspecting the renter’s driver’s license to confirm that it is “facially valid” and (1) comparing the signature on the license with the renter’s signature written at the time of rental; and/or (2) comparing the photo with renter. 40 40. See, e.g., Fla. Stat. Ann. § 322.38(1-2) (LexisNexis 2018); 625 Ill. Comp. Stat. Ann. 5/6-305(b) (LexisNexis 2019); Nev. Rev. Stat. Ann. § 483.610 (LexisNexis 2019); Md. Code Ann. Transp. § 18-103(a), (b) (LexisNexis 2019); Wash. Rev. Code Ann. § 46.20.220 (LexisNexis 2019); W. Va. Code Ann. § 17B-4-6 (LexisNexis 2019). × Moreover, case law from various states provide guidance on what may or may not constitute negligent entrustment (which is excluded from the Graves Amendment). Finally, some states have begun to recognize the emergence of new mobility models and have either amended existing laws or passed new legislation to address the new models.

The paragraphs below summarize typical state laws (and how they vary) on several of these issues, including use of telematics systems; tolls and other fees, negligent entrustment, and peer-to-peer car sharing programs.

2. Telematics Systems and Vehicle Technology

Many mobility operators equip their rental vehicle fleet with global positioning systems (GPS) or other telematics systems (collectively “Telematics Systems”) to track vehicles for a variety of purposes, including fleet management; locating and recovering vehicles that are not returned by the due-in date (or that have been reported missing); calculating information related to the use of the vehicle, such as mileage, location, and speed; and providing services to renters, such as roadside assistance, maintenance, and navigation. Connected cars and HAVs will provide even more data that mobility operators can use to manage their fleets and enhance the user’s experience. 41 41. See, e.g., Avis Budget Group Boosts Fleet of Connected Cars with 75,000 In-Vehicle Telematics Units From I.D. Systems, Avis Budget Group (Dec. 17, 2018), https://avisbudgetgroup.com/avis-budget-group-boosts-fleet-of-connected-cars-with-75000-in-vehicle-telematics-units-from-i-d-systems-2/. (last visited May 8, 2019). ×

At the same time, mobility operators that use Telematics Systems to impose fees related to vehicle use (e.g., fees for traveling outside a geographic area or excess speeding), may face customer complaints or even litigation. For example, rental companies have been subject to suit in the past when they used GPS to collect location or speed information about a vehicle while on rent and impose additional fees on customers who violated geographic limitations of the rental agreement or state speed limits. 42 42. See Turner v. American Car Rental 884 A.2d 7 (Ct. App. Ct. 2005); Proposed Judgement, People v. Acceleron Corp., (Cal. Super. Ct. 2004), https://oag.ca.gov/system/files/attachments/press_releases/04-129_settle.pdf. ×

Four states, including California, Connecticut, Montana, and New York, currently have laws that specifically regulate “rental company” use of Telematics Systems. Specifically:

CaliforniaCalifornia generally prohibits rental companies from using, accessing, or obtaining information about a renter’s use of a rental vehicle that was obtained from “electronic surveillance technology” (“a technological method or system used to observe, monitor, or collect information, including telematics, . . . GPS, wireless technology, or location-based technology”), including for the purpose of imposing fines or surcharges.  However, electronic surveillance technology may be used if:

(1) The rented vehicle is missing or has been stolen or abandoned;

(2) the vehicle is 72 hours past the due-in date (and the company notifies the renter and includes required disclosures in the rental agreement);

(3) the vehicle is subject to an AMBER Alert; or

(4)  in response to a specific request from law enforcement pursuant to a subpoena or search warrant. 43 43. See Cal. Civ. Code § 1939.23(a) (West 2019). ×

Rental companies that use electronic surveillance technology for any of the reasons identified above also must maintain certain records of each such use for one year from date of use. 44 44. Id. The records must include any information relevant to the activation of the GPS, including: (1) the rental agreement; (2) the return date; (3) the date and time the electronic surveillance technology was activated; and (4) if relevant, a record any communication with the renter or the police. The record must be made available to the renter upon request, along with any explanatory codes necessary to read the record. × Rental companies may also use telematics at the request of renters, including for roadside service, navigation assistance, or remote locking/unlocking – as long as the rental company does not use, access or obtain information related to the renter’s use of the vehicle beyond that which is necessary to render the requested service. 45 45. See Cal. Civ. Code § 1939.23(b) (West 2019).  In addition, rental companies may obtain, access, or use information from electronic surveillance technology for the sole purpose of determining the date and time of the start and end of the rental, total mileage, and fuel level. × Like most of the other provisions of the California Vehicle Rental law, customers cannot waive these requirements. 46 46. See Cal. Civ. Code § 1939.29 (West 2019). The only provisions of the California vehicle rental law that a customer may waive are those related to business rentals, rentals of 15-passenger vans, and driver’s license inspection exceptions for remote access programs. ×

ConnecticutConnecticut’s non-uniform version of UCC Article 2A, 47 47. Conn. Gen. Stat. § 42-2A-702 (2013). × (which applies to both short-term and long-term consumer and commercial leases) regulates the use of “electronic self-help,” including the use of GPS devices to track and locate leased property to repossess the goods (or render them unusable without removal, such as remotely disabling the ignition of a vehicle). Before resorting to electronic self-help, a lessor must give notice to the lessee, stating:

      • That the lessor intends to resort to electronic self-help as a remedy on or after 15 days following notice to the lessee;
      • The nature of the claimed breach which entitled the lessor to resort to electronic self-help; and
      • The name, title, address and telephone number of a person representing the lessor with whom the lessee may communicate concerning the rental agreement.

In addition, the lessee must separately agree to a term in the lease agreement that authorizes the electronic self-help. A commercial lease requires only that the authorization is included as a separate provision in the lease, which implies that a consumer lease requires the express, affirmative consent of the lessee. 48 48. Conn. Gen. Stat. § 42-2A-702(e)(2)-(3) (2013). Lessees may recover damages, including incidental and consequential damages, for wrongful use of electronic self-help (even if the lease agreement excludes their recovery). Conn. Gen. Stat. § 42a-2A-702(e)(4). In addition, a lessor may not exercise electronic self-help if doing so would result in substantial injury or harm to the public health or safety or “grave harm” to third parties not involved in the dispute – even if the lessor otherwise complies with the statute. Conn. Gen. Stat. § 42a-2A-702(e)(5). ×

Montana Montana requires a “rental vehicle entity” providing a rental vehicle equipped with a GPS or satellite navigation system to disclose in the rental agreement (or written addendum) the presence and purpose of the system. 49 49. See Mont. Code Ann. 61-12-801(1)(a) (2019). For purposes of the Montana law, a “rental vehicle entity” is a business entity that provides the following vehicle to the public under a rental agreement for a fee: light vehicles, motor-driven cycles, quadricycles, or off-highway vehicles. Mont. Code Ann. 61-12-801(2)(b)-(c) (2019). A “rental agreement” is a written agreement for the rental of a rental vehicle for a period of 90 days or less. Mont. Code Ann. 61-12-801(2)(a) (2019). × If the GPS or satellite navigation system is used only to track lost or stolen vehicles, disclosure is not required.

New York – New York prohibits a “rental vehicle company” from using information from “any” global positioning system technology to determine or impose fees, charges, or penalties on an authorized driver’s use of the rental vehicle. 50 50. N.Y. Gen. Bus. Law 396-z(13-a). New York defines a “rental vehicle company” as “any person or organization . . . in the business of providing rental vehicles to the public from locations in [New York]. NY Gen. Bus. Law 396-z(1)(c). × The limitation on use of GPS, however, does not apply to the rental company’s right to recover a vehicle that is lost, misplaced, or stolen.

More recently, vehicle infotainment systems, which may include Telematics Systems like GPS, have come under scrutiny. In a putative class action filed against Avis Budget Group in December 2018, the plaintiff asserted that:

(a) a customer’s personal information may be collected and stored automatically by a vehicle each time the customer pairs his or her personal mobile device to the vehicle infotainment system to access navigation, music streaming, voice dialing/messaging, or other services; and

(b) failure to delete the customer data after each rental violated customers’ right to privacy under the California constitution, as well as the California rental law electronic surveillance technology provisions.

As of the date of this article, the defendant had removed the case to federal court and filed a motion to compel arbitration based on the terms and conditions of the rental agreement. 51 51. See Complaint, Kramer v. Avis Budget Group, Inc., Case No. 37-2018-00067024-CU-BT-CTL (Ca. Super. Ct., San Diego County 12/31/2018). The federal case number is 3:19cv421 (S.D. Cal.). Similar claims have been filed against other companies in California and all were initially removed to federal court, however, one of the cases has been remanded to state court. ×

2. Tolls and Other Fees

Several states, including California, Nevada, and New York, limit the types and even the amounts of fees that rental companies can charge. For example, California prohibits additional driver fees, and Nevada and New York cap those fees. In other states, a fee that appears to be excessive or punitive may be unenforceable. Generally, a fee is more likely to be enforced if it is fully disclosed, and the customer can avoid paying it by either not selecting a particular product or service (such as supplemental liability insurance or an additional driver) or not engaging in a particular behavior (such as returning the car late or with an empty gas tank). 52 52. See, e.g., Blay v. Zipcar, Inc., 716 F. Supp. 2d (D. Mass. 2010); Reed v. Zipcar, Inc., 883 F. Supp. 2d 329 (D. Mass. 2012). Cf. Bayol v. Zipcar, Inc., 78 F.Supp.3d 1252 (N.D. Cal. 2015). ×

Although disgruntled customers may complain about any fee that they believe is excessive or “hidden,” over the past several years, toll program charges have been among the most disputed in the car rental industry. Indeed, several class action claims have been filed against rental companies alleging inadequate disclosure of toll payment terms, failure to disclose use of third parties, unauthorized charges to the customer’s credit card, breach of contract, and similar claims. 53 53. See Doherty and Simonson v. Hertz, No 10-359 (NLH/KMW) 2014 WL 2916494 (D.N.J. Jun. 25, 2014) (approving over $11 million settlement of class action case based on assertions that inadequate disclosure of a rental company’s toll program violated consumer protection laws and breached the rental agreement); see also Mendez v. Avis Budget Group, Inc., No. 11-6537(JLL), 2012 WL 1224708 (D. N.J. Apr. 10, 2012); Readick v. Avis Budget Group, Inc., No. 12 Civ. 3988(PGG), 2013 WL 3388225 (S.D. N.Y. Jul. 3, 2013); Sallee v. Dollar Thrifty Automotive Group, Inc., et al., 2015 WL 1281518 (N.D. Okla. Mar. 20, 2015); Maor v. Dollar Thrifty Automotive Group, Inc., 303 F.Supp.3d 1320 (S.D. Fla. 2017). × State and local attorneys general have also investigated or filed civil claims against rental companies based on similar allegations. 54 54. See infra, note 55. ×

The increase in customer complaints and litigation likely stems from innovations in both toll collection methods and rental car toll payment processing (both of which seem likely to become an integral part of the connected car/HAV ecosystem). For example, an increasing number of toll roads and bridges are all-electronic. At the same time, many rental companies have introduced optional toll service products that permit renters to use electronic toll roads and lanes during the rental, some of which are provided by third parties. Often, a renter who declines to purchase the toll service at the time of rental will be subject to higher fees if he or she incurs toll charges by driving on an all-electronic road or lane during the rental.

The typical complaint focuses on alleged lack of or inadequate disclosure of the toll payment-processing program. For example, in recent settlement agreements with the Florida Attorney General, Avis Budget Group, Inc., and Dollar Thrifty Automotive Group, Inc. both agreed to disclose that Florida has cashless tolls, along with details about the rental company’s toll service options, and how the toll service charges can be avoided (such as by paying in cash, programming a GPS to avoid toll roads, contacting local authorities for other payment options, or using a personal transponder that is accepted on the toll road). 55 55. In February 2019, Hertz settled a case with the City Attorney of San Francisco for $3.65 million. The case alleged that the Hertz toll fee program as applied to the Golden Gate Bridge (an all-electronic toll road) failed to adequately disclose the fees or to provide customers the ability to opt-out. See Julia Cheever, Hertz Reaches $3.65 Million Settlement with SF over Golden Gate Bridge Tolls, San Francisco Examiner (Feb. 19, 2019), http://www.sfexaminer.com/hertz-reaches-3-65-m-settlement-sf-golden-gate-bridge-toll-fees/. See also Office of the Att’y Gen. of Fla.v. Dollar Thrifty Automotive Group, Inc., No. 16-2018-CV-005938 (Fla. Cir. Ct Jan. 7, 2019), https://myfloridalegal.com/webfiles.nsf/WF/TDGT-B8NT5W/$file/Final+Signed+DT AG+Settlement+Agreement+1+11+19.pdf.; In re Investigative Subpoena Duces Tecum to Avis Budget Group, Inc. and Payless Car Rental System, Inc., No 2017 CA 000122 (Fla. Cir. Ct. Jul. 7, 2017), http://myfloridalegal.com/webfiles.nsf/WF/JMAR-AP6LZQ/ $file/Settlement+Agreement+Avis.pdf. ×

Finally, state legislatures are taking notice of the tolling issues with several states proposing new legislation to regulate rental company toll programs and fees. As of January 1, 2019, Illinois became the first state to directly regulate toll programs by establishing maximum daily fees for toll programs if the rental company fails to notify the customer of the option to use a transponder or other device before or at the beginning of the rental. 56 56. See 625 Ill. Comp. Stat. 5/6-305. ×

3. Negligent Entrustment.

As noted above, the federal Graves Amendment protects “rental” or “leasing” companies from vicarious liability for their customers’ accidents based solely on ownership of the vehicle; however, the rental or leasing company is still liable for its own negligence or criminal wrongdoing. As a result, one common challenge to a rental or leasing company’s assertion of the Graves Amendment as an affirmative defense is a claim that the rental or leasing company somehow negligently entrusted the vehicle to the customer.

A vehicle owner may be liable for negligent entrustment if: (1) it provides a vehicle to a person it knows, or should know, is incompetent or unfit to drive; (2) the driver is in an accident or otherwise causes injury; and (3) that injury is caused by that person’s incompetence. 57 57. See Osborn v. Hertz Corp., 205 Cal.App.3d 703, 708-709 (1989). × To be found liable for negligent entrustment in the vehicle renting or leasing context, the rental or leasing company generally must have some special knowledge concerning a characteristic or condition peculiar to the renter that renders that person’s use of the vehicle unreasonably dangerous. Plaintiffs’ counsel typically allege that negligent entrustment is at issue where the driver appears to be intoxicated at the time of the rental or has a known substance abuse problem; where a renter is known by the rental company and its agents to be a reckless driver; or  where the rental company has reason to know that the renter may cause injury to others.

On the other hand, courts around the country have found that the following circumstances did not constitute negligent entrustment:

(1) failure to research the renter’s driving record; 58 58. See Flores v. Enterprise Rent-A-Car Co., 116 Cal. Rptr. 3d 71, 78 (2010). ×

(2) failure to recognize the signs of habitual drug use (when renter was not under the influence at the time of rental); 59 59. See Weber v Budget Truck Rental, 254 P.3d 196 (Wash. Ct. App. 2011). ×

(3) renting to an individual whose license had been suspended, but who had not yet received notification of the suspension; 60 60. See Young v. U-Haul, 11 A.3d 247 (D.C. Cir. 2011). ×

(4) failure to administer a driving test or to ensure that the driver is capable of actually operating the vehicle; 61 61. See Reph v. Hubbard, No. 07-7119, 2009 WL 659910 at *3 (E.D. La. 2009). ×

(5) renting to an individual who does not speak English fluently; (6) renting to an individual with an arm splint who did not indicate that the splint would interfere with his ability to drive; 62 62. See Mendonca v. Winckler and Corpat, Inc., No 1-5007-JLV, 2014 WL 1028392 (D.S.D. 2014). ×  and

 (7) renting to a former customer who previously reported an accident in a rental car and also allegedly returned a car with illegal drugs left behind. 63 63. See Maisonette v. Gromiler, No. FSTCV176031477S, 2018 WL 3203887 (Conn. Super. Ct. 2018). ×

4. State Laws Addressing New Mobility Platforms

More recently, some states have begun to recognize the emergence of new mobility models and have amended existing laws or passed new laws to address some of the issues. For example:

  • In 2011, California amended its insurance code to include a “personal vehicle sharing” statute, which regulates insurance aspects of “personal vehicle sharing programs” that facilitate sharing of private passenger vehicles (i.e., vehicles that are insured under personal automobile policies insuring a single individual or individuals residing in the same household) for non-commercial purposes, as long as the annual revenue received by the vehicle’s owners from the personal vehicle sharing does not exceed the annual expenses of owning and operating the vehicle (including the costs associated with personal vehicle sharing). 64 64. See Cal. Ins. Code 11580.24 (West 2018). Oregon and Washington have similar laws. ×
  • In 2012, California amended its driver’s license inspection statute to exempt membership programs permitting remote, keyless access to vehicles from driver’s license inspection requirements. 65 65. Cal. Civ. Code § 1939.37 (Deering 2019). × As of the date of this article, a similar draft bill is pending in Massachusetts. 66 66. H.D. 4139 (Mass. 2019). A similar bill came into effect in Florida on July 1, 2019. See Fla. Stat. Ann. § 322.38 (West 2019). ×
  • In 2015, Florida and Hawaii amended their laws to impose modified car rental surcharges on “carsharing organizations” (i.e., membership programs providing self-service access to vehicles on an hourly or other short-term basis). 67 67. Fla Stat. Ann. § 212.0606 (LexisNexis 2019); Haw. Rev. Stat. Ann. § 251 (LexisNexis 2019). ×
  • Maryland passed the first comprehensive “Peer-to-Peer Car Sharing Program” law in 2018. The Maryland law defines a “peer-to-peer car sharing program” as, “a platform that is in the business of connecting vehicle owners with drivers to enable the sharingof motor vehicles for financial consideration” 68 68. Md. Code Ann., Ins. § 19-520(a)(9) (LexisNexis 2019). Illinois also passed a peer-to-peer car sharing/rental law in 2018, but that law was vetoed by then-Governor Rauner. Michael J. Bologna, Illinois Governor Pumps the Brakes on Car-Sharing Taxes, Bloomberg; Daily Tax Report: State (August 31, 2018), https://www.bna.com/illinois-governor-pumps-n73014482161/ (last visited May 15, 2019). × and extends a number of vehicle rental law requirements, including those related to safety recalls, 69 69. Md. Code Ann., Transp., § 18.5-109 (LexisNexis 2019). ×  collision damage waiver sales, 70 70. Md. Code Ann., Com. Law, § 14-2101 (LexisNexis 2019). ×  limited lines licensing in connection with the sale of car rental insurance, 71 71. Md. Code Ann., Ins., § 10-6A-02 (LexisNexis 2019). × airport concession agreements, 72 72. Md. Code Ann., Transp. § 18.5-106 (LexisNexis 2019). ×  and recordkeeping requirements, to peer-to-peer car sharing programs. 73 73. Md. Code Ann., Ins. § 19-520 (LexisNexis 2019). × It also exempts the Peer-to-Peer Car Sharing Program operator and the shared vehicle’s owner from vicarious liability based solely on vehicle ownership in accordance with the Graves Amendment. 74 74. Md. Code Ann., Ins. § 19-520(e) (LexisNexis 2019). ×

 As of June 2019, the following states have pending, or have passed, peer-to-peer car sharing/car rental (or personal motor vehicle sharing) legislation: Arizona, California, Colorado, Georgia, Hawaii, Indiana, Iowa, Massachusetts, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, Washington, and West Virginia. 75 75. Arizona H.B. 2559 (Ariz. 2019) and S.B. 1305 (Ariz. 2019); A.B. 1263 (Cal. 2019); S.B. 090 (Colo. 2019); H.B. 378 (Ga. 2019); H.B. 241 HD2 SD 1 (Haw. 2019) and S.B. 662 SD2 (Haw. 2019); Pub. L. No. 253 (Ind. 2019) (to be codified at Ind. Code § 9-25-6-3); H.F. 779 (Ia. 2019); H.D. 4139 (Mass. 2019); L.B. 349 (Neb. 2019); S.B. 478 (Nev. 2019); H.B. 274 (N.H. 2019); A.B. 5092 (N.J. 2019); S.B. 556 (N.M. 2019); S.B. 5995 (N.Y. 2019); H.B. 2071 (Wash. 2019); H.B. 2762 (W. Va. 2019). × The scope of the pending bills ranges from extension of rental tax obligations to peer-to peer rentals to more comprehensive schemes similar to that passed in Maryland in 2018.

III.          The Challenge of Compliance

As demonstrated in the brief survey of existing rental laws above incumbent vehicle rental companies (especially those that operate in several states) must navigate numerous and often-inconsistent federal and state laws in their day-to-day operations. In addition to the challenges created by inconsistencies in the substantive requirements of the laws, not all of the laws use the same definition of “vehicle rental company” (which may vary depending upon the length of the transaction and the type of vehicle rented), so it is possible for an entity or transaction to be considered a “rental” in some, but not all, states or for some, but not all, purposes. 76 76. See Minto v. Zipcar New York, Inc., No. 15401/09 (N.Y. Super. Ct., Queens County Mar. 17, 2010). ×

In recent years, the challenge of compliance with existing laws – most of which did not contemplate anything other than a face-to-face handover of vehicle and keys — has increased as new entrants and incumbent operators attempt to innovate and take advantage of new technology to improve operations and customer experience. For example, use of kiosks, keyless access and GPS fleet management are all innovations that can improve the customer experience, which existing vehicle rental laws fail to facilitate. Enter the newer mobility operators, and things become even more interesting, with a close analysis of the definition of “rental company,” “rental vehicle,” and other key terms becoming even more important. To provide some context, consider a few hypotheticals:

Hypothetical 1 A 26-year old driver with a facially valid, but recently suspended driver’s license, rents a car in Arizona and is involved in an accident injuring a third party. Under Arizona law and indeed the law of all states, the rental car operator meets its statutory obligations by inspecting the driver’s license and confirming that it is facially valid. There is no duty to conduct any further investigation into the status of the driver’s license or the driving record of the prospective renter. Under this simple fact pattern, the rental car company has no liability to the injured third party for the negligence of the renter (beyond any state mandated minimum financial responsibility limit). Should the outcome be the same for a carsharing operation where the user accesses the vehicle through an app without any direct in-person contact with personnel of the operator? What about an owner of small fleet of cars who “rents” his vehicles through a peer-to-peer rental platform? How about a subscription program where an employee delivers a vehicle to a “lessee” or “renter” who has elected to switch the model of car being used?

Hypothetical 2 A California carshare member has had possession of a vehicle for three days and the operator receives notice that the member’s credit card is expired. The member has not responded to inquiries from the operator. If the carsharing transaction is considered to be a rental, as noted above, in California and a few other states, the mobility operator is precluded by statute from utilizing the vehicle’s GPS to locate the vehicle (at least until certain time periods have expired). Should that same limitation apply to the carshare operator? What if the purpose was to make sure that vehicles are properly distributed around a region so that it can serve its members’ anticipated demands? What about the renter of a peer-to-peer vehicle who is late with the car – can either the owner of the car or the peer-to-peer platform assist in locating the car via the vehicle’s GPS system? Can the operator of a subscription program utilize GPS to track the location of vehicles?

Hypothetical 3 A 30-year old renter with a valid license rents a vehicle through a peer-to-peer platform and two days later causes an accident resulting in substantial property damage and injuries. Pursuant to the federal Graves Amendment, if a peer-to-peer rental is characterized as a car rental transaction, the vehicle owner might argue there is no vicarious liability for the actions of the driver (assuming there was no negligence in how the transaction was handled). It is possible the arguments would vary if the owner of the vehicle operated a small fleet of cars, which it placed on a peer-to-peer platform. A few courts have concluded that the Graves Amendment protection extends to carshare operations. 77 77. See id. × Should that protection extend to the individual or small fleet owner that utilizes a peer-to-peer platform? Is there any basis to extend the Graves Amendment protection to the platform operator given that it typically does not own the vehicles?

Currently, the answers to many of the questions raised above are unclear with scant guidance from state legislatures or courts. As a result, a mobility operator generally must look to the definition of “rental company” to determine whether its model is or may be covered by a particular law. And that inquiry may lead an incumbent car rental operator to argue that it should no longer be subject to the outdated vehicle rental laws and regulations either.

IV.          Proposal

There is an ongoing debate in the mobility industry as to the extent that some models need to comply with existing laws and regulations related to the rental car industry. In particular, some peer-to-peer companies resist the application of those rules to their operations and argue that they are merely a technology company providing a platform to connect drivers with cars, and therefore are not subject to taxes, licensing requirements, or consumer protection laws governing incumbent rental companies. 78 78. See Turo, Inc. v. City of Los Angeles, 2019 U.S. Dist. LEXIS 6532 (C.D. Cal. 2019) (dismissing as unripe a peer-to-peer platform provider’s claim that it is immune from liability for state law violations under Section 230 of the Communications Decency Act and denying motions to dismiss claims that the City of Los Angeles misclassified the peer-to-peer platform provider as a rental company). × However, others urge that if all mobility operators are offering essentially the same services (use of a non-owned vehicle), then it seems more accurate to consider all mobility operators in the same business – mobility. As the New York Supreme Court noted in the Zipcar cases discussed in Part B, the services provided by a carsharing company (Zipcar) served a similar consumer need and were “little different from ‘traditional rental car’ companies, notwithstanding marketing statements that contrast it with those companies.” 79 79. See Minto v. Zipcar New York, Inc., No. 15401/09; see also Orly Lobel, “The Law of the Platform,” 101 Minn. L. Rev. 87, 112 (November 2016). ×

Setting aside those differences, there is some value to the mobility industry as a whole in consistent laws and regulations on some issues across the country and, of course, in protecting the safety and privacy of users. What follows are a few recommendations that could form the basis for a set of uniform laws applicable to the mobility industry. 80 80. The authors are unaware of any existing model laws for car rental or the broader mobility industry. Although the National Association of Attorneys General issued the NAAG Report on car rental practices and “guidelines” in 1989, those Guidelines were not intended to serve as model and uniform law, but rather guidance on compliance with state unfair and deceptive trade practice laws. See supra note 8. In addition, the NAAG Guidelines are now 30 years’ old and somewhat outdated in light of the changes in technology and the evolution in the mobility industry discussed in this article. ×

A.         Standardized Terms and Definitions 

Mobility operators, consumers, and regulators would benefit if federal and state laws used more consistent definitions for key terms and phrases. The definitions of the different platforms at the beginning of this article could be a starting point (which we repeat here without citations for ease of reference):

  • “Carsharing” – a membership-based service that provides car access without ownership. Carsharing is mobility on demand, where members pay only for the time and/or distance they drive.
  • “Peer-to-Peer Carsharing or Rentals” – the sharing of privately-owned vehicles in which companies, typically for a percentage of the rental charge, broker transactions among car owners and renters by providing the organizational resources needed to make the exchange possible (i.e., online platform, customer support, driver and motor vehicle safety certification, auto insurance and technology).
  • “Subscriptions” – a service that, for a recurring fee allows a participating person exclusive use of a motor vehicle owned by an entity that controls or contracts with the subscription service. Typically, the subscriber is allowed to exchange the vehicle for a different type of vehicle with a certain amount of notice to the operator. The term of the subscription can vary, but should be subject to a periodic renewal by the subscriber (user).
  • “Vehicle Rental” – a customer receives use of a vehicle in exchange for a fee or other consideration pursuant to a contract for an initial period of time less than 30 days.
  • “Mobility Operators” – any person or entity that provides access to a vehicle to another person whether by an in-person transaction, an app-based or online platform, or any other means and whether the entity providing the access is the owner, lessee, beneficial owner, or bailee of the vehicle or merely facilitates the transaction.

In addition, standard definitions for the terms, “rental” and “rental company” would provide additional clarity for all mobility operators, and to the extent feasible, the more narrow term “rental” and its derivatives should be replaced with “mobility.”

“Rental” should focus on the service provided and be distinguished from long-term leases (which are subject to additional laws and regulations, including federal Regulation M). As a starting point, “rental” could be defined as the right to use and possess a vehicle in exchange for a fee or other consideration for an initial period of less than 90 days. 81 81. Although the definition of “consumer lease” is a transaction for a period exceeding 4 months, we note that other federal laws, such as Graham-Leach-Bliley impose additional requirements on leases of at least 90 days. See 12 C.F.R. § 213.2(e)(1) (2011); 16 C.F.R. § 313.3(k)(2)(iii) (2000). ×

“Rental Company” or “Mobility Company” should be defined as “any corporation, sole proprietorship or other entity or person who is engaged in the business of facilitating vehicle rental transactions.” 82 82. See, e.g., H.B. 2762 (W. Va. 2019). × A de minimis exemption for individuals renting private vehicles through a peer-to-peer or other private vehicle program could apply (e.g., no more than X vehicles available for rent during a 12-month period). 83 83. See id. ×

A more uniform definition for “Rental Vehicle” or “Mobility Vehicle” also could produce more consistency across or even within states since some existing vehicle rental laws currently apply only to “private passenger vehicles,” while others apply more broadly to “motor vehicles.” Before proposing model language, however, we believe that regulators and industry experts need to consider several important (and somewhat thorny) issues.

For example, consider the rental of a pick-up truck to a contractor for use at a construction site. If a law applies only to rentals of “private passenger vehicles,” then the pick-up truck likely would not be subject to the law. On the other hand, if the law applies more broadly to “motor vehicles,” then the pick-up truck rental likely would be covered. The policy argument for covering our hypothetical pick-up truck rental may be weaker for consumer protection statutes, like required disclosures for sales of damage waiver or child safety seat rules. On the other hand, using a broader definition of “rental vehicle,” which would include the hypothetical pick-up truck, may better serve the general public policy goals of the Graves Amendment, the Safe Rental Act, and laws related to liability and insurance.

B.         Use of GPS and Telematics Technology

The use of this technology for locating and monitoring vehicles for a legitimate business, operational, maintenance or safety purpose should be permitted. Those states that have restricted the use of GPS tracking have done so to protect the privacy of renters. Operators in states where there is no statutory limitation often provide a full disclosure to users that vehicle location and other data may be monitored. We believe there are certain mobility models and circumstances where location and other data should be monitored – as long as there is full disclosure. For example, a free-floating carshare operator should be allowed to monitor vehicle location for the purpose of serving anticipated demand. Similarly, an operator of an EV fleet should be allowed to monitor a vehicle’s battery charge and location to ensure an adequate charge level for the next user. Finally, mobility operators should have the right to use GPS or other technology to locate vehicles that have not been returned on time or when the operator otherwise has reason to believe that the vehicle has been abandoned or stolen, or to track mileage driven or fuel used for purposes of charging associated fees (provided there is appropriate notice and full disclosure to the user). On a broader scale, uniform regulation that permits some vehicle monitoring, as long as done in a manner to protect the privacy of a user and with full disclosure, should be adopted across all mobility platforms.

C.         Vehicle Access

Provided there is an initial verification of a driver’s license, a mobility operator that either allows access to vehicles without in-person contact or does not require signing of a rental agreement at the time of rental should be subject to a provision similar to the following:

If a motor vehicle rental company or private vehicle rental program provider facilitates rentals via digital electronic, or other means that allow customers to obtain possession of a vehicle without in person contact with an agent or employee of the provider, or where the renter does not execute a rental contract at the time of rental, the provider shall be deemed to have met all obligations to physically inspect and compare a renter’s driver license pursuant to this article when such provider:

  1. At the time a renter enrolls, or any time thereafter, in a membership program, master agreement, or other means of establishing use of the provider’s services, requires verification that the renter is a licensed driver; or
  2. Prior to the renter taking possession of the rental vehicle, the provider requires documentation that verifies the renter’s identity. 84 84. Id. ×

D.         Graves Amendment    

The Graves Amendment, by its language, applies to the business of “renting or leasing” vehicles. A few state court cases have confirmed that Graves applies to carsharing. That application should be expressly adopted on a national basis and extended to all mobility models that involve a vehicle “owner’s” grant of the right to possess and use a vehicle in exchange for a fee or other consideration (including loaner vehicles).

Similarly, subscription programs which operate somewhere between incumbent car rental and vehicle leasing programs, at their core involve the short-term use of a vehicle in exchange for payment. Provided the subscription program complies with state rental car laws or applicable subscription legislation, the operation should be subject to the Graves Amendment. For that reason, we recommend that state legislatures either refine the Indiana/North Carolina definition of “subscription” to clarify that the model is a rental or lease for purposes of the Graves Amendment or simply state that subscription models are exempt from state vicarious liability laws based on vehicle ownership.

Peer-to-Peer platforms raise some issues when considering the Graves Amendment. On the one hand, an end-user is paying money to use a vehicle that belongs to someone else much like an incumbent rental car operation. On the other hand, a true “peer”-or individual- who occasionally lists his or her personal vehicle for rent when not using it may not really be in the business of renting cars. Much of the recent Peer-to-Peer legislation addresses this and related issues. Our suggestion is that Peer-to-Peer be subject to express state legislation and that such legislation impose sufficient operational, safety and economic obligations on operators, including required insurance coverage. In the absence of Peer-to-Peer legislation, an operator should have to comply with existing state rental car regulations especially if the operator somehow claims it is subject to the Graves Amendment.

E.         Americans with Disabilities Act

    Compliance with and exceptions to the ADA is complex. However, we propose that all mobility operators with fleets above a certain size must provide adaptive driving devices for selected vehicles, as long as the customer provides advance notice (which may vary depending upon the operator’s location and fleet size) and the adaptive driving devices are compatible with vehicle design and do not interfere with the vehicle’s airbag or other safety systems.

F.         Disclosure Requirements

All operators must provide sufficient disclosures to users regarding the following matters: fees, charges, damage waivers, added insurance, and vehicle technology. However, typical requirements in the existing state rental laws, including specified placement and font size for disclosures and in-person acknowledgment of receipt of those disclosures, simply do not contemplate modern technology, including digital agreements and remote access.  We propose the 2018 amendment to the New York vehicle rental law as the model for addressing required disclosures and formatting in electronic and/or master, membership agreements. That amendment provides:

(a) Notwithstanding any other provision of this section, any notice or disclosure of general applicability required to be provided, delivered, posted, or otherwise made available by a rental vehicle company pursuant to this section shall also be deemed timely and effectively made where such notice or disclosure is:

(i)       provided or delivered electronically to the renter at or before the time required provided that such renter has given his or her expressed consent to receive such notice or disclosure in such a manner; or

(ii)      included in a member or master agreement in effect at the time of rental.

(b)  . . . Notices and disclosures made electronically pursuant to this subdivision shall be exempt from any placement or stylistic display requirements, including but not limited to location, font size, typeset, or other specifically stated description; provided such disclosure is made in a clear and conspicuous manner. 85 85. N.Y. Gen. Bus Law § 396-z(16). ×

G.         Other Issues

There are, of course, other issues the industry can consider. For example, some states (New York and Michigan) have laws requiring rental car companies to make vehicles available to younger drivers, subject to certain conditions. Some uniformity on the ability of mobility operators to set minimum age requirements would reduce risk. Additionally, there are inconsistent laws across the country regarding the amount of time a rental car company must wait after a renter fails to return a car before it can notify law enforcement. Appropriate and consistent rules as to when an operator can start to recover a valuable (and mobile) asset would help promote growth in the industry.

The mobility revolution involves a number of different players with disparate and sometimes competing interests. Not all the participants will agree on all the issues, however, we offer the above suggestions to encourage discussion and to advance some level of consistency on a few points.


Wes Hurst is an attorney with a nationwide Mobility and Vehicle Use Practice. He represents rental car companies, carsharing companies, automobile manufacturers and companies pursuing new and emerging business models related to mobility and the use of vehicles. Wes is a frequent speaker and author on mobility related topics. Wes is in the Los Angeles office of Polsinelli and can be reached at whurst@polsinelli.com.

Leslie Pujo is a Partner with Plave Koch PLC in Reston, Virginia. In her Mobility and Vehicle Use Practice, Leslie regularly represents mobility operators of all types, including car rental companies, RV rental companies, automobile manufacturers and dealers, carsharing companies and other emerging models. Leslie is a frequent speaker and author on car rental and other mobility topics and can be reached at lpujo@plavekoch.com.

* The authors wish to thank Naila Parvez for her assistance

By Bryan Casey

Cite as: Bryan Casey, Title 2.0: Discrimination Law in a Data-Driven Society, 2019 J. L. & Mob. 36.

Abstract

More than a quarter century after civil rights activists pioneered America’s first ridesharing network, the connections between transportation, innovation, and discrimination are again on full display. Industry leaders such as Uber, Amazon, and Waze have garnered widespread acclaim for successfully combatting stubbornly persistent barriers to transportation. But alongside this well-deserved praise has come a new set of concerns. Indeed, a growing number of studies have uncovered troubling racial disparities in wait times, ride cancellation rates, and service availability in companies including Uber, Lyft, Task Rabbit, Grubhub, and Amazon Delivery.

Surveying the methodologies employed by these studies reveals a subtle, but vitally important, commonality. All of them measure discrimination at a statistical level, not an individual one. As a structural matter, this isn’t coincidental. As America transitions to an increasingly algorithmic society, all signs now suggest we are leaving traditional brick-and-mortar establishments behind for a new breed of data-driven ones. Discrimination, in other words, is going digital. And when it does, it will manifest itself—almost by definition—at a macroscopic scale. Why does this matter? Because not all of our civil rights laws cognize statistically-based discrimination claims. And as it so happens, Title II could be among them.

This piece discusses the implications of this doctrinal uncertainty in a world where statistically-based claims are likely to be pressed against data-driven establishments with increasing regularity. Its goals are twofold. First, it seeks to build upon adjacent scholarship by fleshing out the specific structural features of emerging business models that will make Title II’s cognizance of “disparate effect” claims so urgent. In doing so, it argues that it is not the “platform economy,” per se, that poses an existential threat to the statute but something deeper. The true threat, to borrow Lawrence Lessig’s framing, is architectural in nature. It is the algorithms underlying “platform economy businesses” that are of greatest doctrinal concern—regardless of whether such businesses operate inside the platform economy or outside it. Second, this essay joins others in calling for policy reforms focused on modernizing our civil rights canon. It argues that our transition from the “Internet Society” to the “Algorithmic Society” will demand that Title II receive a doctrinal update. If it is to remain relevant in the years and decades ahead, Title II must become Title 2.0.


Introduction

For the rational study of the law the blackletter man may be the man of the present, but the man of the future is the man of statistics.

—Oliver Wendell Holmes, Jr. 1 1. Oliver Wendell Holmes, The Path of the Law, 10 Harv. L. Rev. 457, 469 (1897). ×

The future is already here—it is just unevenly distributed.

—William Gibson 2 2. As quoted in Peering round the corner, The Economist, Oct. 11, 2001, https://www.economist.com/special-report/2001/10/11/peering-round-the-corner. ×

It took just four days after Rosa Parks’ arrest to mount a response. Jo Ann Robinson, E.D. Nixon, Ralph Abernathy, and a little-known pastor named Martin King, Jr. would head a coalition of activists boycotting Montgomery, Alabama’s public buses. 3 3. Jack M. Bloom, Class, Race, and the Civil Rights Movement 140 (Ind. U. Press ed. 1987). × Leaders announced the plan the next day, expecting something like a 60% turnout. 4 4. Id. × But to their surprise, more than 90% of the city’s black ridership joined. The total exceeded 40,000 individuals. 5 5. See History.com Editors, How the Montgomery Bus Boycott Accelerated the Civil Rights Movement, History Channel (Feb. 3, 2010), https://www.history.com/topics/black-history/montgomery-bus-boycott. ×

Sheer numbers—they quickly realized—meant that relying on taxis as their sole means of vehicular transport would be impossible. Instead, they got creative. The coalition organized an elaborate system of carpools and cabbies that managed to charge rates comparable to Montgomery’s own municipal system. 6 6. Id. × And so it was that America’s first ridesharing network was born. 7 7. More precisely, the first large-scale ridesharing network making use of automobiles. ×

Fast forward some sixty years to the present and the connections between transportation, innovation, and civil rights are again on full display. Nowadays, the networking system pioneered by Montgomery’s protestors is among the hottest tickets in tech. Newly minted startups launching “ridesharing platforms,” “carsourcing software,” “delivery sharing networks,” “bikesharing” offerings, “carpooling apps,” and “scooter sharing” schemes are a seemingly daily fixture of the news. And just as was true during the Civil Rights Movement, discrimination continues to be a hot-button issue.

Industry leaders such as Uber, Amazon, and Waze have garnered widespread acclaim for successfully combatting discriminatory barriers to transportation that stubbornly persist in modern America. 8 8. See infra Part I. × But alongside this well-deserved praise has come a new set of concerns. Indeed, a growing number of studies have uncovered troubling racial disparities in wait times, ride cancellation rates, and service availability in the likes of Uber, Lyft, Task Rabbit, Grubhub, and Amazon Delivery. 9 9. See infra Part I(A). × The weight of the evidence suggests a cautionary tale: The same technologies capable of combatting modern discrimination also appear capable of producing it.

Surveying the methodologies employed by these reports reveals a subtle, but vitally important, commonality. All of them measure discrimination at a statistical—not individual—scale. 10 10. See infra Part I(A). ×

As a structural matter, this isn’t coincidental. Uber, Amazon, and a host of other technology leaders have transformed traditional brick-and-mortar business models into data-driven ones fit for the digital age. Yet in doing so, they’ve also taken much discretion out of the hands of individual decision-makers and put it into hands of algorithms. 11 11. See infra Part II(D). × This transfer holds genuine promise of alleviating the kinds of overt prejudice familiar to Rosa Parks and her fellow activists. But is also means that when discrimination does occur, it will manifest—almost by definition—at a statistical scale.

This piece discusses the implications of this fast-approaching reality for one of our most canonical civil rights statutes, Title II of the Civil Rights Act of 1964. 12 12. Civil Rights Act of 1964, tit. II, 42 U.S.C. § 2000a (2018). × Today, a tentative consensus holds that certain of our civil rights laws recognize claims of “discriminatory effect” based in statistical evidence. But Title II is not among them. 13 13. See infra Part II(B). Major courts have recently taken up the issue tangentially, but uncertainty still reigns. × Indeed, more than a quarter century after its passage, it remains genuinely unclear whether the statute encompasses disparate effect claims at all.

This essay explores the implications of this doctrinal uncertainty in a world where statistically-based claims are likely to be pressed against data-driven companies with increasing regularity. Its goals are twofold. First, it seeks to build upon adjacent scholarship 14 14. Of particular note is a groundbreaking piece by Nancy Leong and Aaron Belzer, The New Public Accommodations: Race Discrimination in the Platform Economy, 105 Geo. L. J. 1271 (2017). × by fleshing out the specific structural features of emerging business models that will make Title II’s cognizance of disparate effect claims so urgent. In doing so, it argues that it is not the “platform economy,” per se, that poses a threat to the civil rights law but something deeper. The true threat, to borrow Lawrence Lessig’s framing, is architectural in nature. 15 15. Lawrence Lessig, The Law of the Horse: What Cyberlaw Might Teach, 113 Harv. L. Rev. 501, 509 (1999) (describing “architecture,” “norms,” “law,” and “markets” as the four primary modes of regulation). × It is the algorithms underlying emerging platform economy businesses that are of greatest doctrinal concern—regardless of whether such businesses operate inside the platform economy or outside it. 16 16. And, needless to say, there will be a great many more companies that operate outside of it. ×

Second, this essay joins other scholars in calling for policy reforms focused on modernizing our civil rights canon. 17 17. See, e.g., Leong & Belzer supra note 14; Andrew Selbst, Disparate Impact in Big Data Policing, 52 Georgia L. Rev. 109 (2017) (discussing disparate impact liability in other civil rights contexts). × It argues that our transition from the “Internet Society” to the “Algorithmic Society” will demand that Title II receive a doctrinal update. 18 18. See Jack Balkin, Free Speech in the Algorithmic Society: Big Data, Private Governance, and New School Speech Regulation, 51 U.C. Davis L. Rev. 1149, 1150 (noting that society is entering a new post-internet phase he calls the “Algorithmic Society”). × If the statute is to remain relevant in the years and decades ahead, Title II must become Title 2.0.

I.          The Rise of Data-Driven Transportation

Today, algorithms drive society. They power the apps we use to skirt traffic, the networking systems we use to dispatch mobility services, and even the on-demand delivery providers we use to avoid driving in the first place.

For most Americans, paper atlases have been shrugged. Algorithms, of one variety or another, now govern how we move. And far from being anywhere near “peak” 19 19. Gil Press, A Very Short History of Digitization, Forbes (Dec. 27, 2015), https://www.forbes.com/sites/gilpress/2015/12/27/a-very-short-history-of-digitization/#1560b2bb49ac (describing digitization technologies in terms of “peak” adoption). × levels of digitization, society’s embrace of algorithms only appears to be gaining steam. With announcements of new autonomous and connected technologies now a daily fixture of the media, all signs suggest that we’re at the beginning of a long road to algorithmic ubiquity. Data-driven transportation might rightly be described as pervasive today. But tomorrow, it is poised to become the de facto means by which people, goods, and services get from Point A to B.

Many have high hopes for this high-tech future, particularly when it comes to combatting longstanding issues of discrimination in transportation. Observers have hailed the likes of Uber and Lyft as finally allowing “African American customers [to] catch a drama-free lift from point A to point B.” 20 20. E.g., Latoya Peterson, Uber’s Convenient Racial Politics, Splinter News (Jul. 23, 2015), https://splinternews.com/ubers-convenient-racial-politics-1793849400. × They’ve championed low-cost delivery services, such as Amazon and Grubhub, as providing viable alternatives to transit for individuals with disabilities. 21 21. See, e.g., Winnie Sun, Why What Amazon Has Done For Medicaid And Low-Income Americans Matters, Forbes (Mar. 7, 2018), https://www.forbes.com/sites/winniesun/2018/03/07/why-what-amazon-has-done-for-medicaid-and-low-income-americans-matters/#7dbe2ff1ac76; Paige Wyatt, Amazon Offers Discounted Prime Membership to Medicaid Recipients, The Mighty (Mar. 9, 2018), https://themighty.com/2018/03/amazon-prime-discount-medicaid/. × And they’ve even praised navigation apps, like Waze, for bursting drivers’ “very white, very male, very middle-to-upper class” bubbles. 22 22. E.g., Mike Eynon, How Using Waze Unmasked My Privilege, Medium (Oct. 2, 2015), https://medium.com/diversify-tech/how-using-waze-unmasked-my-privilege-26 355a84fe05. × It is through algorithmic transportation, in other words, that we’re beginning to glimpse a more equitable America—with our mobility systems finally exorcised of the types of discrimination that stubbornly persist today, some fifty years after the passage of modern civil rights legislation.

A.         Out With the Old Bias, In With the New?

As with seemingly all significant technological breakthroughs, however, algorithmic transportation also gives rise to new challenges. And discrimination is no exception. Already, multiple studies have revealed the potential for racial bias to infiltrate the likes of Uber, Lyft, Grubhub, and Amazon. 23 23. See infra notes 14 – 28. See also, e.g., Jacob Thebault-Spieker et al., Towards a Geographic Understanding of the Sharing Economy: Systemic Biases in UberX and TaskRabbit, 21 ACM Transactions on Computer-Human Interaction (2017). × The National Bureau of Economic Research’s (“NBER”) groundbreaking study revealing a pattern of racial discrimination in Uber and Lyft services is one such exemplar. 24 24. Yanbo Ge, et al., Racial and Gender Discrimination in Transportation Network Companies, (2016), http://www.nber.org/papers/w22776. × After deploying test subjects on nearly 1,500 trips, researchers found that black riders 25 25. Or riders with black-sounding names. × experienced significantly higher wait times and trip cancellations than their white counterparts.

The NBER’s piece was preceded—months earlier—by a similarly provocative report from Jennifer Stark and Nicholas Diakopoulus. 26 26. See Jennifer Stark & Nicholas Diakopoulus, Uber Seems to Offer Better Service in Areas With More White People. That Raises Some Tough Questions., Wash. Post (Mar. 10, 2016), https://www.washingtonpost.com/news/wonk/wp/2016/03/10/uber-seems-to-offer-better-service-in-areas-with-more-white-people-that-raises-some-tough-questions/. × Using a month’s worth of Uber API data, the scholars found a statistical correlation between passenger wait times and neighborhood demographic makeup. The upshot? That Uber’s patented “surge pricing algorithm” resulted in disproportionately longer wait times for people of color, even after controlling for factors such as income, poverty, and population density.

Another example comes from Bloomberg, which reported in 2017 that Amazon’s expedited delivery services tended to bypass areas composed of predominantly black residents. 27 27. See David Ingold & Spencer Soper, Amazon Doesn’t Consider the Race of Its Customers. Should It?, Bloomberg (Apr. 21, 2016), https://www.bloomberg.com/graphics/2016-amazon-same-day/. × Bloomberg’s findings were subsequently buttressed by a Washington Post piece revealing that the “delivery zones” of services such as Grubhub, Door Dash, Amazon Restaurants, and Caviar appeared highly limited in low-income, minority-majority areas. 28 28. Tim Carman, D.C. has never had more food delivery options. Unless you live across the Anacostia River., Wash. Post (Apr. 2, 2018), https://www.washingtonpost.com/news/food/wp/2018/04/02/dc-has-never-had-more-food-delivery-options-unless-you-live-across-the-anacostia-river/?utm_term=.dead0dca9e8a. ×

B.         Discrimination’s Digital Architecture

While the patterns and practices uncovered by these reports vary dramatically, they share one commonality whose importance cannot be overstated. Each of them measures racial bias at a statistical—not individual—scale.

As a structural matter, this observation is in some sense unavoidable. When discrimination occurs in traditional brick-and-mortar contexts, it generally does so out in the open. It is difficult to turn someone away from Starbucks, 29 29. This example is pulled from an all-too-recent headline. See Rachel Adams, Starbucks to Close 8,000 U.S. Stores for Racial-Bias Training After Arrests, N.Y. Times (Apr. 17, 2018), https://www.nytimes.com/2018/04/17/business/starbucks-arrests-racial-bias.html. × after all, without them being made aware of the denial, even if the precise rationale is not clear.

But as the means by which Americans secure their transportation, food, and lodging goes increasingly digital, the “architecture” 30 30. See Lessig, supra note 15. × of discrimination will take on a different face. Our interactions with cab companies, public transportation providers, and delivery services will be mediated by algorithms that we neither see nor necessarily understand. And face-to-face interactions with service providers, meanwhile, will become a thing of the past.

In countless respects, this transition is cause for celebration. A society driven by algorithms is one that holds genuine hope of eliminating the types of overt discrimination that drove civil rights reforms of past eras. But in its stead, an emerging body of evidence suggests that subtler forms of discrimination may persist—ones that could challenge the doctrinal foundations on which our civil rights laws currently rest.

II.         When Blackletter Civil Rights Law Isn’t Black and White

When it comes to holding private entities that provide our transportation, food, and lodging accountable for racial discrimination, the usual suspect is Title II of the Civil Rights Act. Title II sets forth the basic guarantee that “[a]ll persons [are] entitled to the full and equal enjoyment of the goods, services, facilities, privileges, advantages, and accommodations of any place of public accommodation. . . without discrimination or segregation on the ground of race, color, religion, or national origin.” 31 31. Civil Rights Act of 1964, 42 U.S.C. § 2000a(a) (2018). × The statute defines “public accommodation” broadly as essentially any “establishment affecting interstate commerce.” 32 32. See id (with the exception of a few carve outs—private clubs being one such example). ×

Pursuing a Title II claim requires, first, establishing a prima facie case of discrimination. To do so, claimants must show they: (1) are members of a protected class; (2) were denied the full benefits of a public accommodation; and (3) were treated less favorably than others 33 33. Id (specifically, “. . . treated less favorably than others outside of the protected class” who are similarly situated). × outside of the protected class. 34 34. Having established a prima facie case, the burden of persuasion then shifts to the defendant. For simplicity’s sake, this piece strictly analyzes prima facie claims and does not delve into the complexities of burden shifting and justifying legitimate business decisions under modern antidiscrimination law. ×

A.         The Intent Requirement and the Man of Statistics

At first blush, establishing these prima facie elements using the types of evidence documented by the reports noted in Part I(A) may seem straightforward. But there’s just one tiny detail standing in the way. As it turns out, no one knows whether Title II actually prohibits the kinds of racial disparities uncovered by the studies.

Not all civil rights laws, after all, allow claimants to use statistically-disparate impacts as evidence of discrimination. Title VI, for example, does not, whereas Title VII does.

This distinction owes, in large part, to the antidiscrimination canon’s “intent requirement,” which draws a doctrinal dividing line between acts exhibiting “discriminatory intent” and those, instead, exhibiting “discriminatory effects.” 35 35. See Implementation of the Fair Housing Act’s Discriminatory Effects Standard, 78 Fed. Reg. 11,460 (Feb. 15, 2013) (codified at 24 C.F.R. § 100.500(1) (2014)). × To oversimplify, acts of intent can be understood as overt, “invidious acts of prejudiced decision-making.” 36 36. Susan Carle, A New Look at the History of Title VII Disparate Impact Doctrine, 63 Flo. L. Rev. 251, 258 (2011). × Acts of effect, meanwhile, are those that “actually or predictably . . . result[] in a disparate impact on a group of persons” even when the explicit intent behind them is not discriminatory. 37 37. See Implementation of the Fair Housing Act’s Discriminatory Effects Standard, supra note 35. ×

Ask Rosa Parks to give up her seat for a white passenger? The civil rights claim filed in response will likely take a narrow view of the interaction, examining the discrete intent behind it. Systematically route buses in such a way that they bypass Rosa Parks altogether? Under the right circumstances, this could be evidence of discrimination equally as troubling as in the former scenario. But the civil rights claim it gave rise to would likely entail a far wider view of the world—one that couched its arguments in statistics. 38 38. Title VII offers plaintiffs a “disparate impact” framework under which they may prove unlawful discrimination alongside the more traditional “disparate treatment” model. 42 U.S.C. § 2000e-2(k)(l)(A) (1994). ×

Today, a tentative consensus holds that theories involving discriminatory effects are available under the Fair Housing Act, the Age Discrimination and Employment Act, certain Titles of the Americans With Disabilities Act, and Title VII of the Civil Rights Act. When it comes to Title II, however, the jury is still out. Neither the Supreme Court, a major circuit court, nor a federal administrative body has resolved the issue to date, and “there is a paucity of cases analyzing it.” 39 39. Hardie v. Nat’l Collegiate Athletic Ass’n, 97 F. Supp. 3d 1163, 1163 (S.D. Cal. 2015), aff’d, 861 F.3d 875 (9th Cir. 2017), and superseded by, 876 F.3d 312 (9th Cir. 2017). ×

B.         Hardie’s Open Question

Uncertainties surrounding Title II’s scope most recently came to a head in Hardie v. NCAA. The case involved a challenge to the collegiate association’s policy of banning convicted felons from coaching certain tournaments. The plaintiff, Dominic Hardie, alleged that the policy disparately impacted blacks, putting the question of Title II’s “discriminatory effect” liability at center stage.

The court of first impression ruled against Hardie, finding that Title II did not cognize such claims. But on appeal, the case’s focal point changed dramatically. In a surprise turn of events, the NCAA abandoned its structural argument against disparate impact liability outright. Instead, it conceded that Title II did, in fact, recognize statistical effects but asserted that the NCAA’s policy was, nonetheless, not a violation. 40 40. See id. (“On appeal, the NCAA does not challenge Hardie’s argument that Title II encompasses disparate-impact claims. . . . Instead, the NCAA asks us to affirm entry of summary judgment in its favor on either of two other grounds advanced below, assuming arguendo that disparate-impact claims are cognizable under Title II.”). ×

Thus, when the case came before the 9th Circuit, the question of whether Title II encompassed discriminatory effects was, essentially, rendered moot. The court ruled in favor of the NCAA’s narrower argument but went out of its way to emphasize that it had not decided the question of discriminatory effect liability. And no other major appeals court has addressed the issue since.

C.         Title II’s Fair Housing Act Moment

It was not long ago that another civil rights centerpiece—the Fair Housing Act of 1968 (FHA)—found itself at a similar crossroads. The FHA makes it illegal to deny someone housing based on race. But a half century after the statute’s passage, the question of whether it prohibited disparate effects had not been tested in our highest court.

By 2015, the Supreme Court had twice taken up the issue in two years. 41 41. See Gallagher v. Magner, 619 F.3d 823, (8th Cir. 2010), cert. dismissed, 565 U.S. 1187, 132 S.Ct. 1306 (2012); Mt. Holly Gardens Citizens in Action, Inc. v. Twp. of Mt. Holly, 658 F.3d 375 (3rd Cir. 2011), cert. dismissed, 571 U.S. 1020, 134 S.Ct. 636 (2013). × And twice, the cases had settled in advance of a ruling.

Then came Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, alleging that a state agency’s allocation of tax credits disparately impacted the housing options of low-income families of color. 42 42. Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 135 S. Ct. 2507, 2514 (2015) [hereinafter “Inclusive Communities”]. × This time, there was no settlement. And the ruling that followed was subsequently described as the “most important decision on fair housing in a generation.” 43 43. Kristen Capps, With Justice Kennedy’s Retirement, Fair Housing Is in Peril, Citylab (Jun. 28, 2018), https://www.citylab.com/equity/2018/06/what-justice-kennedys-retirement-means-for-fair-housing/563924/. ×

Writing for the 5-4 majority, Justice Kennedy affirmed that the FHA extended to claims of both discriminatory intent and effect. 44 44. But his ruling, according to some commenters, took a troublingly narrow view of viable disparate impact claims. × Kennedy was careful to note that the FHA’s passage occurred at a time when explicitly racist policies—such as zoning laws, racial covenants, and redlining—were the norm. But the Justice, nonetheless, stressed that more modern claims alleging racially disparate impacts were also “consistent with the FHA’s central purpose.” 45 45. See Inclusive Communities supra note 42. ×

D.        The New Back of the Bus

Much like the FHA, Title II arrived on the scene when discriminatory effect claims were far from the leading concern among civil rights activists. As Richard Epstein writes:

“Title II was passed when memories were still fresh of the many indignities that had been inflicted on African American citizens on a routine basis. It took little imagination to understand that something was deeply wrong with a nation in which it was difficult, if not impossible, for African American citizens to secure food, transportation, and lodging when traveling from place to place in large sections of the country. In some instances, no such facilities were available, and in other cases they were only available on limited and unequal terms.” 46 46. Richard A. Epstein, Public Accommodations Under the Civil Rights Act of 1964: Why Freedom of Association Counts as a Human Right, 66 Stan. L. Rev. 1241, 1242 (2014). ×

The paradigmatic act of discrimination, in other words, was intentional, overt, and explicitly racial.

Today, however, we are heading toward a world in which this paradigm is apt to turn on its head. Gone will be the days of racially explicit denials of service such as the well-documented phenomena of “hailing a cab while black,” “dining while black,” “driving while black,” or “shopping while black.” 47 47. See, e.g., Matthew Yglesias, Uber and Taxi Racism, Slate (Nov. 28, 2012), http://www.slate.com/blogs/moneybox/2012/11/28/uber_makes_cabbing_while_black_easier.html; Danielle Dirks & Stephen K. Rice in Race and Ethnicity: Across Time, Space, and Discipline 259 (Rodney Coates ed., 2004). × But as an increasing body of evidence suggests, inequality will not simply disappear as a consequence. Rather, discrimination will go digital. And when it does occur, it will likely manifest not as a discrete act of individual intent but instead as a statistically disparate effect.

With this future in view, forecasting the consequences for Title II requires little speculation. Absent the ability to bring statistically-based claims against tomorrow’s data-driven establishments, Title II could be rendered irrelevant. 48 48. In effect, this means that the greatest threat to the statute may not be the doctrinal uncertainty posed by “platform economy businesses,” per se. Instead, it could be the algorithmic “architecture” that drives such companies, regardless of whether they adopt a “platform” business model. ×

If America is to deliver on its guarantee of equal access to public accommodations, its civil rights laws must reach the data-driven delivery services, transportation providers, and logistics operators that increasingly move our society. 49 49. No matter one’s ideological view, the dismantling of legislation through mere technological obsolescence would be a troubling outcome. × Failing to do so simply because these business models were not the norm at the time of the statute’s passage could lead to tragic results. As Oliver Wendell Holmes, Jr. wrote more than a century ago:

“It is revolting to have no better reason for a rule of law than that it was laid down in the time of Henry IV. It is still more revolting if the grounds upon which it was laid down have vanished long since, and the rule simply persists from blind imitation of the past.” 50 50. See Holmes supra note 1 at 469. ×

To save one of our antidiscrimination canon’s most iconic statutes from such a fate, all signs now suggest it will need a doctrinal update. Title II, in software parlance, must become Title 2.0.

III.       A Policy Roadmap for Title 2.0

With the foregoing analysis in our rearview mirror, it is now possible to explore the road ahead. The policy challenges of applying Title II to a data-driven society appear to be at least threefold. Policymakers should establish: (1) whether Title II cognizes statistically-based claims; (2) what modern entities are covered by Title II; and (3) what oversight mechanisms are necessary to detect discrimination by such entities? The following sections discuss these three challenges, as well as the steps policymakers can take to address them through judicial, legislative, or regulatory reform.

A.         Statistically-based Claims in a Data-Driven Society

The first, and most obvious, policy reform entails simply clarifying Title II’s cognizance of statistically based claims. Such clarification could come at the judicial or regulatory level, as occurred with the FHA. Or it could come at the legislative level, as occurred with Title VII.

Though the question of whether litigants can sustain statistical claims under Title II may seem like an all-or-nothing proposition, recent experience shows this isn’t actually true. Short of directly translating Title VII theories to Title II, there exist numerous alternatives. Justice Kennedy himself noted as much in Inclusive Communities when he remarked that “the Title VII framework may not transfer exactly to [all other] context[s].” 51 51. See Inclusive Communities, supra note 42. ×

Nancy Leong and Aaron Belzer convincingly argue that one framing might involve adopting a modern take on discriminatory intent claims. The scholars assert that even if intent is deemed essential under Title II, statistically based claims could nevertheless satisfy the requirement. 52 52. See Leong & Belzer supra note 14, at 1313. × In their telling, the intent requirement could manifest through a company’s “decision to continue using a platform design or rating system despite having compelling evidence that the system results in racially disparate treatment of customers.” 53 53. See id. × Under this view, the claim would then be distinguishable from unintentional claims because “once the aggregated data is known to reflect bias and result in discrimination,” its continued use would constitute evidence of intent. 54 54. See id. Indeed, this argument may become especially compelling in a world where improved digital analytics enable much more customized targeting of individuals or traits. With more fine-grained control over data-driven algorithms, it may become much more difficult to justify the use of those that appear to perpetuate bias against protected groups. ×

Not only would this approach countenance Kennedy’s admonition in Inclusive Communities “that disparate-impact liability [be] properly limited,” 55 55. See Inclusive Communities, supra note 42. × it may also offer an elegant means of addressing the concerns raised by dissenting opinions that Title II claims demonstrate a defendant’s discriminatory “intent.” 56 56. See, e.g. id. (Justice Alito’s dissent highlighted Title II’s “because of” language). × Policymakers should, therefore, take this line of analysis into consideration when clarifying Title II’s scope.

B.         Public Accommodations in a Data-Driven Society

Although this essay has thus far presumed that large-scale algorithmic transportation services like Uber and Amazon are covered by Title II, even that conclusion remains unclear. As enacted, Title II is actually silent as to whether it covers conventional cabs, much less emerging algorithmic transportation models. 57 57. See, e.g., Bryan Casey, Uber’s Dilemma: How the ADA Could End the On Demand Economy, 12 U. Mass. L. Rev. 124, 134 (citing Ramos v. Uber Techs., Inc., No. SA-14-CA-502-XR, 2015 WL 758087, at *11 (W.D. Tex. Feb. 20, 2015)). × A second policy reform, therefore, would entail clarifying whether Title II actually covers such entities in the first place.

Here, understanding the origins of the Civil Rights Act of 1964 is again useful. The statute lists several examples of public accommodations that were typical of America circa 1960. 58 58. Civil Rights Act of 1964, tit. II, 42 U.S.C. § 2000a(b) (2018). × Some courts have suggested that this list is more or less exhaustive. 59 59. See Leong & Belzer supra note 14, at 1296. × But that view is inconsistent with the law’s own language. 60 60. Civil Rights Act of 1964, tit. II, 42 U.S.C. § 2000a(a) (2018) (prohibiting discrimination in “establishment[s] affecting interstate commerce”). × And numerous others have taken a broader view of the term “public accommodations,” which extends to entities that were not necessarily foreseen by the statute’s original drafters. 61 61. See, e.g., Miller v. Amusement Enters., Inc., 394 F.2d 342, 349 (5th Cir. 1968) (“Title II of the Civil Rights Act is to be liberally construed and broadly read.”). ×

Policymakers in search of analogous interpretations of public accommodations laws need look no further than the Americans With Disabilities Act (ADA). Like Title II, the ADA covers places of public accommodation. And, again like Title II, its drafters listed specific entities as examples—all of which were the types of brick-and-mortar establishments characteristic of the time. But in the decades since its passage, the ADA’s definition has managed to keep pace with our increasingly digital world. Multiple courts have extended the statute’s reach to distinctly digital establishments, including popular websites and video streaming providers. 62 62. See Nat’l Ass’n of the Deaf v. Netfix, Inc., 869 F Supp. 2d 196, 200-02 (D. Mass. 2012) (holding the video streaming service constitutes a “public accommodation” even if it lacks a physical nexus); National Federation of the Blind v. Scribd Inc., 97 F. Supp. 3d 565, 576 (D. Vt. 2015) (holding that an online repository constitute a “public accommodation” for the purpose of the ADA). But see Tara E. Thompson, Comment, Locating Discrimination: Interactive Web Sites as Public Accommodations Under Title II of the Civil Rights Act, 2002 U. Chi. Legal F. 409, 412 (“The courts, however, have not reached a consensus as to under what circumstances ‘non-physical’ establishments can be Title II public accommodations.”); Noah v. AOL Time Warner Inc., 261 F Supp. 2d 532, 543-44 (E.D. Va. 2003) (holding that online chatroom was not a “public accommodation” under Title II). ×

Policymakers should note, however, that Uber and Lyft have fiercely resisted categorization as public accommodations. 63 63. See Casey, supra note 57. The Department of Justice and numerous courts have expressed skepticism of this view. But, to date, there has been no definitive answer to this question—due in part to the tendency of lawsuits against Uber and Lyft to settle in advance of formal rulings. × In response to numerous suits filed against them, the companies have insisted they are merely “platforms” or “marketplaces” connecting sellers and buyers of particular services. 64 64. See id. × As recently as 2015, this defense was at least plausible. And numerous scholars have discussed the doctrinal challenges of applying antidiscrimination laws to these types of businesses. 65 65. See generally id.; Leong & Belzer supra note 14. × But increasingly, companies like Uber, Lyft, and Amazon are shifting away from passive “platform” or “marketplace” models into more active service provider roles. 66 66. See Bryan Casey, A Loophole Large Enough to Drive an Autonomous Vehicle Through: The ADA’s “New Van” Provision and the Future of Access to Transportation, Stan. L. Rev. Online (Dec. 2016), https://www.stanfordlawreview.org/online/loophole-large-enough/ (describing Uber’s and Lyft’s efforts to deploy autonomous taxi fleets). Other platform companies in different sectors are acting similarly. See, e.g., Katie Burke, Airbnb Proposes New Perk For Hosts: A Stake in The Company, San Francisco Bus. Times (Sept. 21, 2018), https://www.bizjournals.com/sanfrancisco/news/2018/09/21/airbnb-hosts-ipo-sec-equity.html. × All three, for example, now deploy transportation services directly. And a slew of similarly situated companies appear poised to replicate this model. 67 67. See Casey, supra note 66(noting the ambitions of Tesla, Google, and a host of others to deploy similar autonomous taxi models). × For most such companies, passive descriptors like “platform” or “marketplace” are no longer applicable. Our laws should categorize them accordingly.

C.         Oversight in a Data-Driven Society

Finally, regulators should consider implementing oversight mechanisms that allow third parties to engage with the data necessary to measure and detect discrimination. In an era of big data and even bigger trade secrets, this is of paramount importance. Because companies retain almost exclusive control over their proprietary software and its resultant data, barriers to accessing the information necessary even to detect algorithmic impacts often can be insurmountable. And the ensuing asymmetries can render discrimination or bias effectively invisible to outsiders.

Another benefit of oversight mechanisms is their ability to promote good corporate governance without the overhead of more intrusive command-and-control regulations. Alongside transparency, after all, comes the potential for extralegal forces such as ethical consumerism, corporate social responsibility, perception bias, and reputational costs to play meaningful roles in checking potentially negative behaviors. 68 68. See Bryan Casey, Amoral Machines; Or, How Roboticists Can Learn to Stop Worrying and Love the Law, 111 Nw. U. L. Rev. Onlineat 1358. There was, for example, a happy ending to the recent revelations regarding racial disparities in Amazon delivery services. See Spencer Soper, Amazon to Fill All Racial Gaps in Same-Day Delivery Service, Bloomberg (May 6, 2016), https://www.bloomberg.com/news/articles/2016-05-06/amazon-to-fill-racial-gaps-in-same-day-delivery-after-complaints. × By pricing externalities through the threat of public or regulatory backlash, these and other market forces can help to regulate sectors undergoing periods of rapid disruption with less risk of chilling innovation than traditional regulation. 69 69. As importantly, this encourages proactive antidiscrimination efforts as opposed to retroactive ones. See Mark Lemley & Bryan Casey, Remedies for Robots, U. Chi. L. Rev. (forthcoming 2019). Without meaningful oversight, the primary risk is not that industry will intentionally build discriminatory systems but that “[biased] effects [will] simply happen, without public understanding or deliberation, led by technology companies and governments that are yet to understand the broader implications of their technologies once they are released into complex social systems.” See Alex Campolo et. al, AI Now 2017 Report (2017). ×

Some scholars have proposed federal reforms—akin to those put forward by the Equal Employment Opportunity Commission, 70 70. 29 C.F.R. § 1602.7 (1991). × the Department of Housing and Urban Development, 71 71. 24 C.F.R. §§ 1.6, 1.8 (1996). × and the Department of Education 72 72. 34 C.F.R. § 100.6 (1988). × —as a means of implementing oversight mechanisms for Title II. 73 73. See Leong and Belzer supra note 14. × But state-level action, in this instance, may be more effective. A multi-fronted push that is national in scope provides a higher likelihood of successful reform. And much like the “Brussels Effect” documented at an international level, intra-territorial policies imposed on inter-territorial entities can have extra-territorial effects within the U.S. 74 74. See Anu Bradford, The Brussels Effect, 107 Nw. U. L. Rev. 1 (2012). × As the saying goes: “As goes California, so goes the nation.” 75 75. This saying is equally applicable to numerous other populous states. ×

As a parting note, it cannot be stressed enough that mere “disclosure” mechanisms are not necessarily enough. 76 76. See Andrew Selbst & Solon Barocas, The Intuitive Appeal of Explainable Machines, Fordham L. Rev. (forthcoming 2019). × For oversight to be meaningful, it must be actionable—or, in Deirdre Mulligan’s phrasing, “contestable.” 77 77. Dierdre Mulligan, et al., Privacy is an Essentially Contested Concept: A Multi-Dimensional Analytic For Mapping Privacy, 374 Phil. Trans. R. Soc. 1, 3 (2016), https://www.law.berkeley.edu/wp-content/uploads/2017/07/Privacy-is-an-essentially.pdf. × That is, it must allow downstream users to “contest[] what the ideal really is.” 78 78. See id. × Moreover, if oversight is to be accomplished through specific administrative bodies, policymakers must ensure that those bodies have the technical know how and financial resources available to promote public accountability, transparency, and stakeholder participation. Numerous scholars have explored these concerns at length, and regulators would do well to consider their insights. 79 79. See, e.g., id.; Solon Barocas & Andrew Selbst, Big Data’s Disparate Impact, 104 Cal. L. Rev. 671 (2016); Lilian Edwards & Michael Veale, Slave to the Algorithm? Why a “Right to an Explanation” Is Probably Not the Remedy You Are Looking For, 16 Duke L. & Tech. Rev. 21 (2017); Alex Campolo et al., supra note 69; Bryan Casey et al., Rethinking Explainable Machines: The GDPR’s ‘Right to Explanation’ Debate and the Rise of Algorithmic Audits in Enterprise, Berk. Tech. L. J. (forthcoming 2019). ×

Conclusion

Following any major technological disruption, scholars, industry leaders, and policymakers must consider the challenges it poses to our existing systems of governance. Will the technology meld? Must our policies change?

Algorithmic transportation is no exception. This piece examines its implications for one of America’s most iconic statutes: Title II of the Civil Rights Act of 1964. As algorithms expand into a vast array of transportation contexts, they will increasingly test the doctrinal foundations of this canonical law. And without meaningful intervention, Title II could soon find itself at risk of irrelevance.

But unlike policy responses to technological breakthroughs of the past, those we have seen so far offer genuine hope of timely reform. As Ryan Calo notes, unlike a host of other transformative technologies that escaped policymakers’ attention until too late, this new breed “has managed to capture [their] attention early [] in its life-cycle.” 80 80. See Ryan Calo, Artificial Intelligence Policy: A Primer and Roadmap, U.C. Davis L. Rev. (forthcoming 2018). ×

Can this attention be channeled in directions that ensure that our most important civil rights laws keep pace with innovation? That question, it now appears, should be on the forefront of our policy agenda.


Legal Fellow, Center for Automotive Research at Stanford (CARS); Affiliate Scholar of CodeX: The Center for Legal Informatics at Stanford and the Stanford Machine Learning Group. The author particularly thanks Chris Gerdes, Stephen Zoepf, Rabia Belt, and the Center for Automotive Research at Stanford (CARS) for their generous support.

By David Redl

Cite as: David Redl, The Airwaves Meet the Highways
2019 J. L. & Mob. 32.

I applaud and congratulate the University of Michigan for launching the Journal of Law and Mobility. The timing is perfect. The information superhighway is no longer just a clever metaphor. We are living in an era where internet connectivity is a critical part of making transportation safer and more convenient.

Internet connectivity has powered the U.S. and global economies for years now. In the early stages, dial-up connections enabled users to access a vast store of digital information. As the internet and its usage grew, so did the demand for faster broadband speeds. Finally, wireless networks untethered the power of broadband Internet so consumers could have fast access when and where they want it.

We are now seeing technology advances in the automotive sector begin to better align with what has occurred in the communications space. The possibilities for what this means for human mobility are truly exciting. Challenges abound, however, with questions around the security and safety of self-driving vehicles and how to create the infrastructure and policies needed for vehicle connectivity. While many of these will be sorted out by the market, policy levers will also play a role.

In the late 1990s, the Federal Communications Commission (FCC) agreed to set aside radio frequencies for intelligent transportation systems (ITS), persuaded that emerging advances in communications technologies could be deployed in vehicles to increase safety and help save lives. 1 1. Amendment of Parts 2 and 90 of the Commission’s Rules to Allocate the 5.850-5.925 GHz Band to the Mobile Service for Dedicated Short Range Communications of Intelligent Transportation Services, Report and Order, 14 FCC Rcd. 18221 (Oct. 22, 1999). × Specifically, the FCC allocated the 75 megahertz of spectrum between 5850-5925 MHz (5.9 GHz band) for ITS. 2 2. Id. × The automobile industry’s technological solution was to rely primarily on a reconfiguration of IEEE Wi-Fi standards 3 3. The Working Group for WLAN Standards, IEEE 802.11 Wireless Local Area Networks, http://www.ieee802.org/11/ (last visited Oct. 31, 2018). × suitable for ITS (802.11p) so vehicles could “talk” to one another and to roadside infrastructure. 4 4. Accepted nomenclature for these communications include vehicle-to-vehicle (V2V), vehicle-to-infrastructure (V2I), or more generally vehicle-to-x (V2X). Other applications include vehicle-to-pedestrian. × The FCC in turn incorporated the Dedicated Short Range Communications (DSRC) standards into its service rules for the 5.9 GHz band. 5 5. Amendment of the Commission’s Rules Regarding Dedicated Short-Range Communication Services in the 5.850-5.925 GHz Band (5.9 GHz Band), 19 FCC Rcd. 2458 (Feb. 10, 2004). ×

The National Telecommunications and Information Administration (NTIA), by statute, is the principal advisor to the President of the United States on information and communications policies, including for the use of radiofrequency spectrum. NTIA also is responsible for managing spectrum use by federal government entities. As such, NTIA seeks to ensure that our national use of spectrum is efficient and effective. Over the past two decades, innovations in wireless technologies and bandwidth capacity have completely changed what is possible in connected vehicle technology. 2G wireless evolved to 3G, and then 4G LTE changed the game for mobile broadband. 5G is in the early stages of deployment. Meanwhile, Wi-Fi not only exploded in usage but in its capability and performance. Many vehicles in the market today are equipped with wireless connectivity for diagnostic, navigation and entertainment purposes. Yet DSRC as a technology remains largely unchanged, notwithstanding recent pledges from proponents to update the standard. 6 6. See IEEE Announces Formation of Two New IEEE 802.11 Study Groups, IEEE Standards Association (June 5, 2018), https://standards.ieee.org/news/2018/ieee_802-11_study_groups.html. × This stasis persists despite the technological leaps of advanced driver assistance systems, enhanced by innovations in vehicular radars, sensors and cameras.

This situation is not new or novel as traditional industries continue to grapple with the pace of technological change in the wireless sector.  In fact, the automotive sector has faced the challenge of wireless technological change before, struggling to adapt to the sunset of the first generation of analog wireless networks.  This leads to the question of whether, as some promise, DSRC effectively broadens a vehicle’s situational awareness to beyond line-of-site as the industry creeps toward autonomous driving – or has innovation simply left DSRC behind? The answer is important to the question of whether it makes sense to continue with DSRC for V2X communications.  Regardless of how the question is answered, we must address who should answer it.

One distinction between V2X communications for safety applications and most other communications standards choices is that a fragmented market could have drastic consequences for its effectiveness, given that vehicles must be able to talk to each other in real time for the entire system to work. This is why the National Highway Transportation Safety Administration (NHTSA) initially proposed a phased-in mandate of DSRC beginning with cars and light trucks. 7 7. See Federal Motor Vehicle Safety Standards; V2V Communications, 82 Fed. Reg. 3854 (Jan. 12, 2017). ×

This question of whether to mandate DSRC has also been complicated by inclusion in 3GPP standards of a cellular solution (C-V2X), first in Release 14 for 4G/LTE, 8 8. Dino Flore, Initial Cellular V2X Standard Complete, 3GPP A Global Initiative (Sept. 26, 2016), http://www.3gpp.org/news-events/3gpp-news/1798-v2x_r14. The updates to the existing cellular standard are to a device-to-device communications interface known as the PC5, the sidelink at the physical layer, for vehicular use cases addressing high speed and high density scenarios. A dedicated band is used only for V2V communications. × and continuing with Release 15 and especially Release 16 for 5G, targeted for completion in December 2019. 9 9. Release 16, 3GPP: A Global Initiative (July 16, 2018), https://www.3gpp.org/release-16. × It raises the legitimate question of whether leveraging the rapid innovation and evolution in wireless communication technology is the right way to ensure automotive safety technology benefits from the rapid pace of technological change, and what role the federal government should play in answering these questions.

Despite the federal government’s legitimate interest in vehicle safety, as is true in most cases I question whether the federal government should substitute its judgement for that of the market. A possible solution that strikes a balance between legitimate safety needs and technological flexibility are federal performance requirements that maintain technological neutrality.

Moreover, because the spectrum environment has changed drastically since the 1990s many are questioning whether protecting this 75 megahertz of mid-band spectrum for ITS use is prudent. The 5.9 GHz band is adjacent to spectrum used for Wi-Fi 10 10. Table of Frequency Allocations, 47 C.F.R. § 2.106 (2018). × , which makes it unsurprising that some are calling for access to 5.9 GHz spectrum as a Wi-Fi expansion band. 11 11. Sean Kinney, Is DSRC Dead? Cable cos want FCC action on 5.9 GHz, RCR Wireless News, (Oct. 17, 2018), https://www.rcrwireless.com/20181017/policy/dsrc-fcc-cable-companies. × Other still question whether V2V safety communications require protected access to all 75 megahertz. NTIA, the FCC, and the Department of Transportation continue to study the feasibility of whether and how this band might be shared between V2V and Wi-Fi or other unlicensed uses and remain committed to both the goal of increased vehicle safety and the goal of maximum spectrum efficiency. 12 12. See DSRC and U-NII-4 Prototype Device Testing, Federal Communications Commission, https://www.fcc.gov/oet/unii-4banddevice (last visited Nov. 1, 2018). ×

While I am optimistic that wireless technologies will bring a new level of safety to America’s roadways, a number of other policy and legal issues, including user privacy and cybersecurity, will persist as challenges despite being addressed in current solutions. If we are to see the kind of adoption and reliance on V2X safety applications and realize the systemic improvements in safety they portend, Americans must have trust in the security and reliability of these technologies.

The marriage of communications technology with transportation will help define the 21st century, and potentially produce enormous benefits for consumers. A lot of work remains, however, to ensure we have the right laws, regulations and policy frameworks in place to allow private sector innovation to flourish. This forum can play an important role in moving the dialogue forward.


David Redl is the Assistant Secretary for Communications and Information at the U.S. Department of Commerce, and Administrator of the National Telecommunications and Information Administration.