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2020-21 Has Revealed Problems in Supply Chains and Distribution

The various crises of the past year have disrupted many industries, and transportation logistics is no exception. The pandemic has demonstrated the fragility of our supply chains, as logistics providers have been overwhelmed and overworked and businesses have been faced with long delays and uneven availability of important products. Further, we have grown increasingly aware of the importance of supply chains to consumers’ everyday lives, perhaps most memorably when we were all desperate to find toilet paper a year ago. More seriously, the integrity of our supply chains is having literally life-or-death consequences for hundreds of thousands of people in the realm of medical supplies. Since the beginning stages of the pandemic, we were confronted with our supply chains’ inability to deliver adequate amounts of testing kits, PPE, and pharmaceuticals. Recently, the government invoked the Defense Production Act (DPA) to put higher priority on the Covid-19 vaccine in the supply chain. Even after the pandemic’s impacts are no longer felt so strongly in our supply chains, extreme weather events will likely continue to disrupt distribution, as just happened in Texas.

The Promise of AVs to Remedy Transportation Logistics’ Woes

While government actions like the DPA may be positive developments in our present moment, the recently revealed defects in our supply chains will require more than temporary band-aids enacted in reaction to crises. Amidst the disorder in our current supply chains, entrepreneurs and industry professionals see an opportunity for emerging technologies to make our supply chains more reliable, efficient, and better able to foresee and cope with future disruptions. Industry commentators especially highlight the potential of autonomous vehicles for their potential to remove the human factor that has proven so vulnerable in the pandemic. In contrast to people, AV systems can run 24/7, are not subject to 14-day quarantines, and will never exacerbate the already worrisome long-standing driver shortage due to illness. Thus, AV systems could provide the transportation logistics industry the efficiency and reliability that consumers so badly need during emergencies like the coronavirus crisis. Experts in government and industry have long  recognized that increasing automation in the trucking industry would have these advantages, as well as the added benefits of cost savings, reduced congestion, increased energy efficiency, and improved road safety.

Obstacles to AV Implementation: Disparate Regulations

While companies like TuSimple, Aurora and Waymo are already making progress on autonomous freight routes in the US and elsewhere, they are charging ahead without much coordinated help on the governmental level. One of the main challenges for these companies are the conflicting standards they face when traveling between states, since no preempting federal legislation has been passed and state regulations remain a disparate patchwork. Analysts have noted the “sheer divergence of law” between state and local governments, and leaders in government and industry have been discussing the need to harmonize the AV regulatory regime for years.

Some key areas of variance in state laws are: whether or not AVs are exempted from follow-too-closely statutes (which effectively prohibit automated platooning), definitions of automation, and whether or not a human operator is required. For instance, during TuSimple’s planned AV route from Phoenix to Houston, the company would have to pass through New Mexico, which lags behind neighboring states in terms of AV-enabling legislation (their state legislature is currently working on a bill that would authorize AV testing and platooning, while Arizona and Texas have authorized driverless testing for years).

This patchwork poses an obvious problem for long-haul trucking across state lines, thus hindering  AV technology’s potential as a solution to the aforementioned supply chain issues.

Removing Roadblocks

If the federal government wants to be proactive in helping the private sector resolve supply chain problems with innovation in the AV space, it should set about harmonizing local regulations. Government leaders have repeatedly stated that they aim to “promote regulatory consistency among State, local, tribal and territorial, and international laws and regulations so that AVs can operate seamlessly nationwide and internationally.” Continuing to dialogue with industry leaders and utilizing the resources of the Department of Transportation and the National Highway Traffic Safety Administration to coordinate between state and local governments will be crucial to fostering innovation with smart regulation. Another avenue is federal preemption, which could be targeted at specific areas of conflicting regulations which stifle innovation in and implementation of AV tech, like follow-too-closely statutes. Of course, new regulations should be designed in concert with industry leaders and with plenty of time for public comment, the same way rulemaking and research have been conducted to this point.

If the federal government remains inactive and allows the conflicting patchwork of state regulations to persist, industry commentators have suggested that AV stakeholders in the private sector have an alternative method to harmonize regulations: legal challenges under the Commerce Clause. Dormant Commerce Clause doctrine holds that because Congress has the power to regulate interstate commerce, states are constitutionally barred from actions that discriminate against or unduly burden foreign commerce, even in the absence of federal regulation. The foundational case of Hunt v. Washington State Apple Advertising Commission provided the relevant test for facially neutral laws that have discriminatory impact: the state law is unconstitutional if it either (a) has a hidden protectionist purpose or (b) the burden on foreign commerce outweighs the local benefits. AV stakeholders may have a workable argument that conflicting regulations between states put an undue burden on interstate commerce that outweighs any local benefits.

These kinds of litigations have occurred in the commercial trucking industry before. Legal professionals have compared potential challenges by AV stakeholders to Consolidated Freightways Corporation’s successful challenge to Iowa’s statutory prohibition on the use of 65-foot double-trailer trucks, even though these trucks were permitted in surrounding states and studies showed that the illegal vehicles were no less safe than the legal ones. The burden on the trucking company’s ability to engage in interstate commerce was large enough and the local safety benefits were small and unsubstantiated enough to overcome the strong presumption of validity imputed to local safety measures.

Applying this legal doctrine to conflicting AV regulations seems like a logical extension. For instance, follow-too-closely statutes in states like Kansas could be held invalid as applied to AV commercial trucks if courts are satisfied that they unduly burden the flow of commerce by preventing platooning (which researchers say should reduce congestion, increase energy efficiency, and provide more efficient business models) and insufficiently serve the local interests of highway safety that they are designed to further (studies show that platooning actually improves road safety). Some legal observers even suggest that states’ omissions to act on AV-enabling legislation should be scrutinized for burdening innovation and commerce with regulatory uncertainty.

Therefore, while the current legislative patchwork poses an obstacle to technological innovation and the promise it holds for commercial freighting, AV leaders have multiple ways in which to pursue a more hospitable regulatory environment. Working together with lawmakers to coordinate across jurisdictions rather than working against them in litigation may be a more efficient way forward, and more enticing to an industry that would rather not provoke legislators’ ire. However, the legal doctrine seems to be on the side of promoting AV innovation here, and is a tool ready to be picked up if necessary. Regulators would be wise to start paying closer attention to the need to harmonize regulations, as the last year has made unmistakably clear that our supply chains need improvement, and technological disruption looks to be a promising solution.