Legislation

As I wrote about last time, the Uniform Law Commission recently passed the Uniform Automated Operation of Vehicles Act. Today, I want to focus on Sections 5, 6, and 7 of that Act, which are titled, respectively, “Vehicle Registration,” “Automated-Driving Provider,” and “Associated Automated Vehicle.” The three sections are meant to complement each other and the generally applicable rules regarding motor vehicle registration in a state. The Comments to Section 7 give a nice synopsis of the way these three sections interact:

Existing state law generally requires the registration of a motor vehicle that is operated on a public road. If an automated vehicle qualifies as such a motor vehicle, it too must be registered. The person seeking that registration—typically the vehicle owner—must comply with all conditions of registration under existing law. Section 5 of this act adds a further condition: For the owner of an automated vehicle to register the vehicle, an automated driving provider must have designated that vehicle as an associated automated vehicle. Section 6 specifies how an entity declares that it is an automated driving provider, and Section 7 specifies how that entity then designates its associated automated vehicles. These three sections work together with existing law to ensure that a properly registered automated vehicle has a legal driver when it is under automated operation. In general, only if an automated vehicle is associated with an automated driving provider may it be registered and operated on public roads.

The Act’s comments are fairly dense, but we can work through them section by section. Under current state law, the owner of a motor vehicle must generally register that vehicle with the state according to state registration rules. The Act retains that requirement for the owner of an automated vehicles, but also adds a new condition of registration. Under Section 5, an automated vehicle may be registered only if an entity has:

(1) declared itself to be an automated driving provider (ADP) (explained in Section 6) and

(2) designated that particular automated vehicles as one of its associated automated vehicles (explained in Section 7).

The vehicle owner and the ADP do not necessarily have to be the same legal person. The vehicle owner could be an individual, and the ADP could be an original equipment manufacturer (OEM) like Ford, Honda, or Tesla. The manufacturer, or some other entity like an insurer or fleet operator, would declare themselves to be the ADP to the state, and declare the automated vehicles to be one of its associated vehicles, but the individual would own and register the car. This has the effect of “compelling” vehicle manufacturers, or some other entity, to declare themselves to be the entity legally defined as the driver for any consequences that arise from the vehicles actions on public roads. The comments to Section 6 clarify:

To become an automated driving provider, an entity must make an affirmative declaration that includes specific representations. This means that, first, an entity does not become an automated driving provider against its will and, second, not every entity can become an automated driving provider. Subsection (a) identifies three basic qualifications, at least one of which a provider must satisfy, and subsection (c) identifies four key requirements, all of which the provider must satisfy.

To qualify as an ADP, an entity must have either participated substantially in the development of the system, submitted safety self-assessments with NHTSA, or be a registered manufacturer with NHTSA. The purpose of these sections is to require registration with the state, ensuring that every automated vehicle on a state’s roads has an entity associated with it, against whom the state can credibly enforce relevant provisions of the state vehicle code.

Manufacturers are not required to register as an ADP. But they will be incentivized to declare themselves as ADP’s for the simple reason that if they do not, their customers will be unable to register or use their vehicles in a state that has adopted the Act. If customers in one state were unable to register Ford vehicles but could register Honda vehicles, then everyone in that state would buy Honda automated vehicles and nobody would buy Ford. Under Section 7, once an ADP has designated an associated automated vehicle, the association remains until the ADP is not recognized by the state agency, ceases to exist under principles of corporate law, or affirmatively withdraws the designation.

This approach is a great way to allow manufacturers of automated vehicles to select the states in which they wish to be responsible for their vehicles. If they register as an ADP in Arizona, but not New Mexico, then their customers will be able to register and drive their vehicles on the public roads in Arizona, but not New Mexico. This can allow manufacturers to choose where they accept liability for the automated features of their vehicles.

However, this could cause problems. Assuming uniform adoption of the Act (which is unlikely), if manufacturers are selective with the states where they register as ADP’s then there could be adjacent states where a manufacturer is an ADP in state X, and not in state Y. If customers in state X drive their automated vehicle across the border into state Y, there could be legal questions if the manufacturer is liable for accidents that occur in state Y, especially if they specifically chose not to register there. This could lead to geofencing at state borders, requirements that shift control back to the human driver as they cross state borders, or a whole host of other potential solutions. These solutions could also cause problems. What if a driver is asleep as the vehicle crosses into a state where that manufacturer has not registered? What if the driver overrides and continues allowing the vehicle to drive? Has liability shifted from the manufacturer to the owner given the owner’s conscious choice?

Questions of tort liability, jurisdiction over manufacturers, and technological work-arounds could abound if OEM’s are selective with their registration as ADPs. But they should be allowed to select where they want to sell their automated vehicles if they will be required to legally be identified as the responsible entity. Sections 5, 6, and 7 of the Automated Vehicle Act will likely cause much debate in states that consider adopting the Act.

The Uniform Law Commission (“ULC”) is a non-governmental body composed of state-selected lawyers who oversee the preparation of “Uniform Laws” to be proposed to the states for adoption. The group’s most well-known body of law will be familiar to any lawyer or law student who paid attention in first-year contracts: the Uniform Commercial Code (UCC). Not all projects of the ULC are as successful as the UCC. In fact, many are never adopted by any state.

The ULC appointed a Drafting Committee on Highly Automated Vehicles in 2017.  The Committee recently completed an Automated Vehicles Act, titled “The Uniform Automated Operation of Vehicles Act,” which is a “uniform law covering the deployment of automated driving systems (SAE levels 3 through 5).” The Act is intended to cover a vast array of issues likely to be faced by states in the coming decades as autonomous vehicles become more ubiquitous. The ULC description of the Automated Vehicles Act states:

The Uniform Automated Operation of Vehicles Act regulates important aspects of the operation of automated vehicles.  This act covers the deployment of automated vehicles on roads held open to the public by reconciling automated driving with a typical state motor vehicle code.  Many of the act’s sections – including definitions, driver licensing, vehicle registration, equipment, and rules of the road – correspond to, refer to, and can be incorporated into existing sections of a typical vehicle code.  This act also introduces the concept of automated driving providers (ADPs) as a legal entity that must declare itself to the state and designate the automated vehicles for which it will act as the legal driver when the vehicle is in automated operation.  The ADP might be an automated driving system developer, a vehicle manufacturer, a fleet operator, an insurer, or another kind of market participant that has yet to emerge.  Only an automated vehicle that is associated with an ADP may be registered.  In this way, the Automated Operation of Vehicles Act uses the motor vehicle registration framework that already exists in states – and that applies to both conventional and automated vehicles – to incentivize self-identification by ADPs.  By harnessing an existing framework, the act also seeks to respect and empower state motor vehicle agencies.

The final version of the act can be downloaded here.

This Act is a step in the right direction. It does much of the leg-work for state legislatures to exempt autonomous vehicles from a variety of state laws by providing language which can be easily inserted into various state vehicle codes. States can choose to enact certain parts of the Uniform Act, picking and choosing the sections or phrases they want and discarding the rest. This is beneficial because it will likely mean more states will enact some form of AV exemption. However, it also means there could be substantial variation between states that adopt some but not all of the Act. The passage of a Uniform Act by the ULC does not ensure there will be uniform adoption.

The act is not very long, only 28 pages including all the comments and legislative notes. There are many sections that deserve a more extensive dive, but I want to begin with a subsection that relates to a topic I’ve written about before: Platooning. The Act does not include a provision that would legalize platooning, but it does contain a single provision that addresses state laws regarding minimum following distance: Section 9 (h). Section 9 covers “Rules of the Road.” Subsection (h) states:

A provision of [this state’s vehicle code] imposing a minimum following distance other than a reasonable and prudent distance does not apply to the automated operation of an automated vehicle.

The comment to the section clarifies subsection h:

[T]his section provides that a numerical minimal following-distance requirement does not apply to the automated operation of automated vehicles. These numerical minimums may be unnecessarily large for automated vehicles that react faster than human drivers. However, the common “reasonable and prudent” following-distance requirement continues to apply. This bracketed subsection (h) differs in scope from following-distance legislation enacted in some states to facilitate the platooning of vehicles, particularly commercial trucks, that use advanced technologies but may not necessarily qualify as automated vehicles.

As I’ve written about before, platooning vehicles that follow at incredibly close distances could be considered “reasonable and prudent” given the connected nature and quick response times of the technology. If the Uniform Act were adopted in some states, it could present the opportunity to argue that there is, or should be, a reasonable car standard applied to autonomous vehicles. The act also solves the problems of states with 300-500-foot following distance requirements for trucks.

The passage of the Act is exciting for many reasons. It shows that the legal world is taking autonomous vehicles seriously, and is taking fundamental steps to create a legal framework within which these vehicles can operate. It also provides a baseline for states to modify their existing laws to allow autonomous vehicles to be exempted from many requirements that need not apply to autonomous vehicles. For example, there is no need for a steering wheel or gas pedals in an AV. There may be a need for a large touchscreen like in the various Tesla models, which would be distracting in traditional vehicles. The Act will hopefully spark discussions about the proper way to regulate autonomous vehicles at the state level, and may even spark debate over the merits of varied state or uniform federal regulation.

Last time I wrote about platooning, and the potential economic savings that could benefit the commercial trucking sector if heavy duty trucks were to implement the technology. This week, I’m writing about one of the current barriers to implementing platooning both as a commercial method, and in the larger scheme of highway driving.

One of the most readily identifiable barriers to the widespread implementation of truck platooning is the ‘Following Too Close’ (“FTC”) laws enforced by almost every state. There is currently a patchwork of state legislation which prevents vehicles from following too closely behind another vehicle. Violating these laws is negligence per se.

For those who don’t quite remember 1L torts, negligence per se essentially means “if you violate this statute, that proves an element of negligence.” Therefore, if one vehicle is following too closely behind another vehicle in violation of an FTC statute, that satisfies the breach element of negligence and is likely enough to be fined for negligent driving.

These laws are typically meant to prevent vehicles from following dangerously close or tailgating other vehicles. The state laws that regulate this conduct can be divided into roughly four categories. Some states prescribe the distance or time a driver must remain behind the vehicle in front of them; others impose a more subjective standard. The subjective standards are far more common than the objective standards.

Subjective Categories

  • Reasonable and Prudent” requires enough space between vehicles for a safe stop in case of an emergency. This FTC rule is the most common for cars and seems to be a mere codification of common-law rules of ordinary care.
  • “Sufficient space to enter and occupy without danger” requires trucks and vehicles with trailers to leave enough space that another vehicle may “enter and occupy such space without danger.” This is the most common rule for trucks.

Objective Categories

  • Distance-Based: Some states prescribe the distance at which a vehicle may follow another vehicle; others identify a proportionate interval based on distance and speed. These are the most common rules for heavy trucks and frequently set the minimum distance between 300 and 500 feet.
  • Time: Timing is the least common FTC, but the two jurisdictions that impose this rule require drivers to travel “at least two seconds behind the vehicle being followed.”

It is easy to see how, given the close distance at which vehicles need to follow to benefit from platooning, any of these laws would on their face prohibit platooning within their borders. However, several states have already enacted legislation which exempts the trailing truck in a platoon from their “Following Too Close” laws. As of April 2019, 15 states had enacted legislation to that effect. Additional states have passed legislation to allow platoon testing or pilot programs within their states.

However, despite some states enacting this legislation, a non-uniform regulatory scheme does not provide  the level of certainty that will incentivize investment in platooning technology. Uncertain state regulation can disincentivize interstate carriers from investing in platooning, and could lead to a system where platooning trucks only operate within single state boundaries.

Although the exemptions are a step in the right direction, non-uniformity will likely result in an overall lower platooning usage rate, limiting the wide-spread fuel efficiency and safety benefits that are derived when platooning is implemented on a large, interstate scale. Without uniform legislation that allows platooning to be operated consistently across all the states, the need for different systems will hinder the technology’s development, and the rate at which trucking companies begin to adopt it.

However, even if not all states pass legislation exempting platooning vehicles from their FTC laws, there could be a way around the subjective elements. The most common subjective law, “Reasonable and Prudent” requires only enough space that the vehicles can safely stop in case of an emergency. When considering a human driver this distance is likely dozens of feet, given the speed at which cars travel on the interstate. However, recall from last week that platooning vehicles are synchronized in their acceleration, deceleration, and braking.

If the vehicles travel in tandem, and brake at the same time and speed, any distance of greater than several feet would be considered “reasonable and prudent.” Perhaps what needs to be developed is a “reasonable platooning vehicle” standard, rather than a “reasonable driver” standard, when it comes to autonomous vehicle technology. Then again, considering the ever-looming potential for technological failure, it could be argued that following that close behind another heavy vehicle is never reasonable and prudent, once again requiring an exemption rather than an interpretive legal argument for a new “reasonableness” standard.

Either way, to ensure certainty for businesses, more states should exempt platooning vehicles from their “Following Too Close” laws. Otherwise, the technology may never achieve a scale that makes it worth the early investment.

In a recent article published on Reuters Regulatory Intelligence, a DC-area lawyer said the following regarding the potential of implementing no-fault insurance “to” automated vehicles:

“Drivers have an inherent incentive to drive safely, so as not to be injured or killed on the roadways. That inherent incentive is what mitigates the “moral hazard” of a no-fault system. But in a no-fault model for autonomous vehicles, the incentives toward safety would be degraded given that manufacturers do not suffer the physical consequences of unsafe operation, as do drivers.”

Intuitively, this seems right. Yet, I thought: is there more to it? What does a world with an AV no-fault insurance scheme would look like?

This might be puzzling at first: what does one mean with no-fault AV insurance? In a more standard setting, a no-fault insurance system means that one gets the benefits of their own insurance without regard to the actual “fault” (such as negligence) and that civil suits on the basis of one’s fault are banned or severely restricted. No-fault systems are straightforward and predictable, although potentially less “just,” to the extent that a negligent driver may get away with nothing more than a deductible to pay or eventually a higher premium.

There was, and there still is, a good policy ground behind no-fault systems around car accidents: avoiding the social cost of civil litigation, and shifting the financial cost of such litigation towards the insurers, between whom things are more often than not settled out of court. Those we want to protect with no-fault insurance schemes are drivers (and passengers), and that is a majority of the population.

Now let’s consider AVs. Who do we want to protect? Passengers, for sure. But drivers? There is no driver! Or rather, there are many drivers. To some extent, at least under a layman’s understanding of the term “driver,” all the actors along the supply chain are driving the AV. Or, to be more precise, it is difficult to pinpoint a single driver: the “operator”? The software designer? And that is already assuming that there is a single entity who designed the software or operates what may be a fleet of AVs. And there may be others, as the AV industry continues to evolve; we can already see that various paths are taken by industry players, some acting for a form of vertical integration, others relying on a variety of suppliers, in a less streamlined way.

Do these all these industry players deserve extra protection? They are all corporate entities after all, and as the lawyer mentions in the above article, none of them are subject to physical injury in case of an accident. While expensive litigation can drive corporations to the ground, the case for shifting costs to insurers, when it comes to AV drivers, appears less clear. What is clear, though, is that human victims of an accident involving an AV ought to be as protected as if the accident did not involve an AV, and maybe even more.

The final answer will come from lawmakers. Moreover, one should not forget that no-fault insurance is mandatory only in a minority of US states, despite being prevalent in the rest of the world. Yet I believe there might be a case here to adopt a legal scheme which would both guarantee a litigation-free recourse to human accident victims, potentially in the form of an industry-funded guarantee fund, while giving the opportunity to the various players along the supply chain to fight it out, in court if need be, on the basis of the reality of their involvement in the cause of the accident; they are all sophisticated players after all and all share in the benefits of the risk they create. The stories of human victims, though, are what may “kill” the industry, if not enough care is taken to ensure a high level of legal protection.

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.

Back in January, I wrote about the auto industry’s growing sense that a set of nationwide regulatory standards was needed to govern automated vehicles (AVs). To date, twenty-nine states and Washington, DC have enacted AV-related legislation. A handful more have adopted Executive Orders or developed some other form of AV regulation. As the number of states with varying regulatory regimes continues to rise, the industry and some experts have grown concerned that the need to comply with a patchwork of disparate laws could hinder development of the industry.

Despite these concerns, and bipartisan support, the federal AV START Act died in the Senate at the close of 2018. After passing the House, a group of Senate Democrats became concerned that the bill focused too much on encouraging AV adoption at the expense of meaningful safety regulation. After the bill went down at the end of the year, the industry significantly reduced its lobbying efforts. This led some observers to conclude that the effort to pass AV START would not be renewed any time soon.

Never ones to let a good acronym go to waste, several members of Congress have begun work to revive the American Vision for Safer Transportation Through Advancement of Revolutionary Technologies (AV START) Act. Over the summer, a bipartisan group of lawmakers in both chambers held a series of meetings to discuss a new deal. Their hope is that, with Democrats now in control of the House, the safety concerns that stalled the bill in the upper chamber last winter will be assuaged earlier in the process.

Congress’ efforts, spearheaded by Senator Gary Peters (D-MI) appear to be making at least some headway. Both the House Committee on Energy and Commerce, and the Senate Committee on Commerce, Science and Transportation, sent letters to a variety of stakeholders requesting comments on a potential bill.

The legislature appears to be moving forward deliberately however, and to date no hearings on the subject have been scheduled in either the House or Senate. As Congress once again builds an effort to pass comprehensive AV legislation, this blog will be following and providing updates.

Cite as: Raphael Beauregard-Lacroix, (Re)Writing the Rules of The Road: Reflections from the Journal of Law and Mobility’s 2019 Conference, 2019 J. L. & Mob. 97.

On March 15th, 2019, the Journal of Law and Mobility, part of the University of Michigan’s Law and Mobility Program, presented its inaugural conference, entitled “(Re)Writing the Rules of The Road.” The conference was focused on issues surrounding the relationship between automated vehicles (“AVs”) and the law. In the afternoon, two panels of experts from academia, government, industry, and civil society were brought together to discuss how traffic laws should apply to automated driving and the legal person (if any) who should be responsible for traffic law violations. The afternoon’s events occurred under a modified version of the Chatham House Rule, to allow the participants to speak more freely. In the interest of allowing those who did not attend to still benefit from the day’s discussion, the following document was prepared. This document is a summary of the two panels, and an effort has been made to de-identify the speaker while retaining the information conveyed. 

Panel I: Crossing the Double Yellow Line: Should Automated Vehicles Always Follow the Rules of the Road as Written?

The first panel focused on whether automated vehicles should be designed to strictly follow the rules of the road. Questions included – How should these vehicles reconcile conflicts between those rules? Are there meaningful differences between acts such as 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, or driving through a stop sign at the direction of a police officer? If flexibility and discretion are appropriate, how can this be reflected in law? 

Within the panel, there was an overall agreement that we need both flexibility in making the law, and flexibility in the law itself among the participants. It was agreed that rigidity, both on the side of the technology as well as on the side of norms, would not serve AVs well. The debate was focused over just how much flexibility there should be and how this flexibility can be formulated in the law.

One type of flexibility that already exists is legal standards. One participant emphasized that the law is not the monolith it may seem from the outside – following a single rule, like not crossing a double yellow line, is not the end of an individual’s interaction with the law. There are a host of different laws applying to different situations, and many of these laws are formulated as standards – for example, the standard that a person operating a vehicle drives with “due care and attention.” Such an approach to the law may change the reasoning of a judge when it would come to determining liability for an accident involving an AV. 

When we ask if AVs should always follow the law, our intuitive reaction is of course they should. Yet, some reflection may allow one to conclude that such strict programming might not be realistic. After all, human drivers routinely break the law. Moreover, most of the participants explicitly agreed that as humans, we get to choose to break the law, sometimes in a reasonable way, and we get to benefit from the discretion of law enforcement. 

That, however, does not necessarily translate to the world of AVs, where engineers make decisions about code and where enforcement can be automatized to a high degree, both ex ante and ex post. Moreover, such flexibilities in the law needs to be tailored to the specific social need; speeding is a “freedom” we enjoy with our own, personal legacy cars, and this type of law breaking does not fulfill the same social function as a driver being allowed to get on the sidewalk in order to avoid an accident. 

One participant suggested that in order to reduce frustrating interactions with AVs, and to overall foster greater safety, AVs need the flexibility not to follow the letter of the law in some situations. Looking to the specific example of the shuttles running on the University of Michigan’s North Campus – those vehicles are very strict in their compliance with the law. 1 1. Susan Carney, Mcity Driverless Shuttle launches on U-M’s North Campus, The Michigan Engineer (June 4, 2018), https://news.engin.umich.edu/2018/06/mcity-driverless-shuttle-launches-on-u-ms-north-campus/. × They travel slowly, to the extent that their behavior can annoy human drivers. When similar shuttles from the French company Navya were deployed in Las Vegas, 2 2. Paul Comfort, U.S. cities building on Las Vegas’ success with autonomous buses, Axios (Sept. 14, 2018), https://www.axios.com/us-cities-building-on-las-vegas-success-with-autonomous-buses-ce6b3d43-c5a3-4b39-a47b-2abde77eec4c.html. × there was an accident on the very first run. 3 3. Sean O’Kane, Self-driving shuttle crashed in Las Vegas because manual controls were locked away, The Verge (July 11, 2019, 5:32 PM), https://www.theverge.com/2019/7/11/20690793/self-driving-shuttle-crash-las-vegas-manual-controls-locked-away. × A car backed into the shuttle, and when a normal driver would have gotten out of the way, the shuttle did not.

One answer is that we will know it when we see it; or that solutions will emerge out of usage. However, many industry players do not favor such a risk-taking strategy. Indeed, it was argued that smaller players in the AV industry would not be able to keep up if those with deeper pockets decide to go the risky way. 

Another approach to the question is to ask what kind of goals should we be applying to AVs? A strict abidance to legal rules or mitigating harm? Maximizing safety? There are indications of some form of international consensus 4 4. UN resolution paves way for mass use of driverless cars, UN News (Oct. 10, 2018), https://news.un.org/en/story/2018/10/1022812. × (namely in the form of a UN Resolution) 5 5. UN Economic Commission for Europe, Revised draft resolution on the deployment of highly and fully automated vehicles in road traffic (July, 12, 2018), https://www.unece.org/fileadmin/DAM/trans/doc/2018/wp1/ECE-TRANS-WP.1-2018-4-Rev_2e.pdf × that the goal should not be strict abidance to the law, and that other road users may commit errors, which would then put the AV into a situation of deciding between strict legality and safety or harm. 

In Singapore, the government recently published “Technical Reference 68,” 6 6. Joint Media Release, Land Transport Authority, Enterprise Singapore, Standards Development Organization, & Singapore Standards Council, Singapore Develops Provisional National Standards to Guide Development of Fully Autonomous Vehicles (Jan. 31, 2019), https://www.lta.gov.sg/apps/news/page.aspx?c=2&id=8ea02b69-4505-45ff-8dca-7b094a7954f9. × which sets up a hierarchy of rules, such as safety, traffic flow, and with the general principle of minimizing rule breaking. This example shows that principles can act as a sense-check. That being said, the technical question of how to “code” the flexibility of a standard into AV software was not entirely answered. 

Some participants also reminded the audience that human drivers do not have to “declare their intentions” before breaking the law, while AV software developers would have to. Should they be punished for that in advance? Moreover, non-compliance with the law – such as municipal ordinances on parking – is the daily routine for certain business models such as those who rely on delivery. Yet, there is no widespread condemnation of that, and most of us enjoy having consumer goods delivered at home.

More generally, as one participant asked, if a person can reasonably decide to break the law as a driver, does that mean the developer or programmer of AV software can decide to break the law in a similar way and face liability later? Perhaps the answer is to turn the question around – change the law to better reflect the driving environment so AVs don’t have to be programmed to break it. 

Beyond flexibility, participants discussed how having multiple motor vehicle codes – in effect one per US State – makes toeing the line of the law difficult. One participant highlighted that having the software of an AV validated by one state is big enough a hurdle, and that more than a handful of such validations processes would be completely unreasonable for an AV developer. Having a single standard was identified as a positive step, while some conceded that states also serve the useful purpose of “incubating” various legal formulations and strategies, allowing in due time the federal government to “pick” the best one. 

Panel II: Who Gets the Ticket? Who or What is the Legal Driver, and How Should Law Be Enforced Against Them?

The second panel looked at who or what should decide whether an automated vehicle should violate a traffic law, and who or what should be responsible for that violation. Further questions included – 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?

The participants discussed several initiatives, both public and private, that aimed at defining, or helping define the notion of driver in the context of AVs. The Uniform Law Commission worked on the “ADP”, or “automated driving provider”, which would replace the human driver as the entity responsible in case of an accident. The latest report from the RAND Corporation highlighted that the ownership model of AVs will be different, as whole fleets will be owned and maintained by OEMs (“original equipment manufacturers”) or other types of businesses and that most likely these fleet operators would be the drivers. 7 7. James M. Anderson, et. al., Rethinking Insurance and Liability in the Transformative Age of Autonomous Vehicles (2018), https://www.rand.org/content/dam/rand/pubs/conf_proceedings/CF300/CF383/RAND_CF383.pdf. ×

Insurance was also identified as a matter to take into consideration in the shaping up of the notion of AV driver. As of the date of the conference, AVs are only insured outside of state-sponsored guarantee funds, which aim to cover policy holders in case of bankruptcy of the insurer. Such “non-admitted” insurance means that most insurers will simply refuse to insure AVs. Who gets to be the driver in the end may have repercussions on whether AVs become insurable or not. 

In addition, certain participants stressed the importance of having legally recognizable persons bear the responsibility – the idea that “software” may be held liable was largely rejected by the audience. There should also be only one such person, not several, if one wants to make it manageable from the perspective of the states’ motor vehicle codes. In addition, from a more purposive perspective, one would want the person liable for the “conduct” of the car to be able to effectuate required changes so to minimize the liability, through technical improvements for example. That being said, such persons will only accept to shoulder liability if costs can be reasonably estimated. It was recognized by participants that humans tend to trust other humans more than machines or software, and are more likely to “forgive” humans for their mistakes, or trust persons who, objectively speaking, should not be trusted.

Another way forward identified by participants is product liability law, whereby AVs would be understood as a consumer good like any other. The question then becomes one of apportionment of liability, which may be rather complex, as the experience of the Navya shuttle crash in Las Vegas has shown. 

Conclusion

The key takeaway from the two panels is that AV technology now stands at a crossroads, with key decisions being taken as we discuss by large industry players, national governments and industry bodies. As these decisions will have an impact down the road, all participants and panelists agreed that the “go fast and break things” approach will not lead to optimal outcomes. Specifically, one line of force that comes out from the two panels is the idea that it is humans who stand behind the technology, humans who take the key decisions, and also humans who will accept or reject commercially-deployed AVs, as passengers and road users. As humans, we live our daily lives, which for most of us include using roads under various capacities, in a densely codified environment. However, this code, unlike computer code, is in part unwritten, flexible and subject to contextualization. Moreover, we sometimes forgive each others’ mistakes. We often think of the technical challenges of AVs in terms of sensors, cameras and machine learning. Yet, the greatest technical challenge of all may be to express all the flexibility of our social and legal rules into unforgivably rigid programming language. 

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.” 8 8. 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. 9 9. 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. 10 10. 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). 11 11. 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. 12 12. 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. 13 13. 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, 14 14. 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. 15 15. 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. 16 16. 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, 17 17. 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 . . . 18 18. 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. 19 19. 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. 20 20. Id. ×

Perhaps not surprisingly, the Graves Amendment has been highly litigated, from early challenges to its constitutionality, 21 21. 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,” 22 22. 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.” 23 23. 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. 24 24. See Minto v. Zipcar New York, Inc., No. 15401/09. × and Moreau and Duverson v. Josaphat, et al., 25 25. 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.” 26 26. 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.” 27 27. 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 28 28. 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.” 29 29. 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. 30 30. 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.” 31 31. 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”) 32 32. 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”. 33 33. 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. 34 34. 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.” 35 35. 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). 36 36. 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. 37 37. 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. 38 38. 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.” 39 39. Cal. Veh. Code § 11752 (West 2019); Cal Ins. Code § 11580.24(b)(2) (West 2011). ×

B.         State Law

Several states, including California, 40 40. Cal. Civ. Code §§ 1939.01 – 1939.37 (West 2017). × Hawaii, 41 41. Haw. Rev. Stat. Ann. §437D (West 2019). × Illinois, 42 42. 625 Ill. Comp. Stat. 27 (West 2019); 625 Ill. Comp. Stat. 5/6-305 (West 2019). × Nevada, 43 43. Nev. Rev. Stat. Ann. §§ 482.295–482.3159 (West 2019). × and New York, 44 44. 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; 45 45. 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. 46 46. 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. 47 47. 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. 48 48. 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. 49 49. 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. 50 50. 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. 51 51. 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. 52 52. 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. 53 53. 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, 54 54. 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. 55 55. 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. 56 56. 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. 57 57. 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. 58 58. 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). 59 59. 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. 60 60. 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. 61 61. 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). 62 62. 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. 63 63. 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. 64 64. 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; 65 65. 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); 66 66. 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; 67 67. 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; 68 68. 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; 69 69. 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. 70 70. 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). 71 71. 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. 72 72. Cal. Civ. Code § 1939.37 (Deering 2019). × As of the date of this article, a similar draft bill is pending in Massachusetts. 73 73. 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). 74 74. 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” 75 75. 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, 76 76. Md. Code Ann., Transp., § 18.5-109 (LexisNexis 2019). ×  collision damage waiver sales, 77 77. Md. Code Ann., Com. Law, § 14-2101 (LexisNexis 2019). ×  limited lines licensing in connection with the sale of car rental insurance, 78 78. Md. Code Ann., Ins., § 10-6A-02 (LexisNexis 2019). × airport concession agreements, 79 79. Md. Code Ann., Transp. § 18.5-106 (LexisNexis 2019). ×  and recordkeeping requirements, to peer-to-peer car sharing programs. 80 80. 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. 81 81. 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. 82 82. 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. 83 83. 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. 84 84. 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. 85 85. 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.” 86 86. 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. 87 87. 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. 88 88. 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.” 89 89. 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). 90 90. 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. 91 91. 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. 92 92. 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

“Safety.” A single word that goes hand-in-hand (and rhymes!) with CAV. If much has been said and written about CAV safety already (including on this very blog, here and there,) two things are certain: while human drivers seem relatively safe – when considering the number of fatalities per mile driven – there are still too many accidents, and increasingly more of them. 

The traditional approach to safely deploying CAVs has been to make them drive, drive so many miles, and with so few accidents and “disengagements,” that the regulator (and the public) would consider them safe enough. Or even safer than us!  

Is that the right way? One can question where CAVs are being driven. If all animals were once equal, not every mile can be equally driven. All drivers know that a mile on a straight, well-maintained road by a fine sunny day is not the same as a mile drive on the proverbially mediocre Michigan roads during a bout of freezing rain. The economics are clear; the investments in AV technology will only turn a profit through mass deployment. Running a few demos and prototypes in Las Vegas won’t cut it; CAVs need to be ready to tackle the diversity of weather patterns we find throughout the world beyond the confines of the US South-West.

Beyond the location, there is the additional question of whether such “testing” method is the right one in the first place. Many are challenging what appears to be the dominant approach, most recently during this summer’s Automated Vehicle Symposium. Their suggestion: proper comparison and concrete test scenarios. For example, rather than simply aiming for the least amount of accidents per 1000’s of miles driven, one can measure break speed at 35mph, in low-visibility and wet conditions, when a pedestrian appears 10 yards in front of the vehicle. In such a scenario, human drivers can meaningfully be compared to software ones. Furthermore, on that basis, all industry players could come together to develop a safety checklist which any CAV must be able to pass before hitting the road. 

Developing a coherent (and standardized?) approach to safety testing should be at the top of the agenda, with a looming push in Congress to get the AV bill rolling. While there are indications that the industry might not be expecting much from the federal government, this bill still has the possibility of allowing CAVs on the road without standardized safety tests, which could result in dire consequences for the industry and its risk-seeking members. Not to mention that a high-risk business environment squeezes out players with shallower pockets (and possibly innovation) and puts all road users, especially those without the benefit of a metal rig around them, at physical and financial risk were an accident to materialize. Signs of moderation, such as Cruise postponing the launch of its flagship product, allows one to be cautiously hopeful that “go fast and break things” mentality will not take hold in the automated driving industry.

*Correction 9/9/19 – A correction was made regarding the membership to 1958 Agreement and participation at the World Forum.

For the past several months, this blog has primarily focused on new legal questions that will be raised by connected and automated vehicles. This new transportation technology will undoubtedly raise novel concerns around tort liability, traffic stops, and city design. Along with raising novel problems, CAVs will also add new urgency to longstanding legal challenges. In some ways, this is best encapsulated in the field of privacy and data management.

In recent decades, the need to understand where our data goes has increased exponentially. The smartphones that most of us carry around every day are already capable of tracking our location, and recording a lot of our personal information. In addition to this computer/data generation machine in our pockets, the CAV will be a supercomputer on wheels, predicted to generate 4,000 gigabytes of data per day. Human driven vehicles with some automated features, such as Tesla’s with the company’s “Autopilot” functionality, already collect vast amounts of user data. Tesla’s website notes that the company may access a user’s browsing history, navigation history, and radio listening history, for example.

In response to this growing concern, California recently passed a sweeping new digital privacy law, set to take effect in 2020. Nicknamed “GDPR-Lite” after the European Union’s General Data Protection Regulation, California’s law “grants consumers the right to know what information companies are collecting about them, why they are collecting that data and with whom they are sharing it.” It also requires companies to delete data about a customer upon request, and mandates that companies provide the same quality and cost of service to users who opt out of data collection as those who opt in.

In comparison to the GDPR, California’s law is relatively limited in scope. The California Consumer Privacy Act (CCPA) is tailored to apply only to businesses that are relatively large or that are primarily engaged in the business of collecting and selling personal data. Furthermore, CCPA contains few limitations on what a business can do internally with data it collects. Instead, it focuses on the sale of that data to third parties.

In many ways, it remains too early to evaluate the effectiveness of California’s approach. This is in part because the law does not take effect until the beginning of next year. The bill also enables the California Attorney General to issue guidance and regulations fleshing out the requirements of the bill. These as-yet-unknown regulations will play a major role in how CCPA operates in practice.

Regardless of its uncertainties and potential shortcomings though, CCPA is likely to play a significant role in the future of American data privacy law and policy. It is the first significant privacy legislation in the US to respond to the recent tech boom, and it comes out of a state that is the world’s fifth largest economy. CCPA’s implementation will undoubtedly provide important lessons for both other states and the federal government as they consider the future of data privacy.

Americans have traditionally had an understandable skepticism towards government collection of our data and monitoring of our private communications. The uproar caused by the Snowden leaks in 2013 was followed by increased public attention to data privacy. In a 2014-15 survey, 57% of respondents said that government monitoring of the communications of US citizens was unacceptable. Over 90% of respondents found it important to be able to personally control what data about them was shared, and with whom. The public has expressed similar concerns about data-sharing among private companies. Nearly 2/3 of Americans say that current laws do not go far enough to protect their privacy, and would support increased regulation of advertisers.

Limitations on government collection of private data are built into the Fourth Amendment, as applied to collection of digital data in Carpenter. But there is no analogous limitation on the ability of corporations to share our data far and wide, as anyone who has seen a targeted Facebook ad pop up minutes after searching for an item on Amazon knows. Indeed, First Amendment cases such as Sorrell v. IMS Health, in bolstering protections for commercial speech, may significantly restrict the ability of Congress to regulate private companies selling our data amongst themselves. While many targeted ads can make data sharing seem harmless (I see you just bought a watch. Perhaps I can interest you in these 73 similar watches?), at times it may be more nefarious. 

Public unease with data sharing may be especially warranted in the case of mobility data. The majority of Americans move about the world in cars. While many of those trips are innocuous, some may be trips to an unpopular church, to the home of a secret paramour, or to the scene of a crime. Even the innocuous trips may be simply embarrassing (maybe you ate at a fast food restaurant a few more times than you should have, or fibbed to your spouse once or twice about working late when you were actually getting an after-work drink with friends). These are the type of excursions that, if your car were continuously collecting data on its whereabouts, could easily be sold to a private actor that would be willing to use it against you.

The concern that a private company could abuse access to your personal data just as easily as the government has led legal scholar Jeffrey Rosen to propose a new Constitutional amendment. Such affronts to dignity, as Rosen describes this all-consuming data collection and sale, are problematic enough that we need an amendment to bar unreasonable searches and seizures by either the government or a private corporation. Mercatus Center Senior Research Fellow Adam Theirer has argued that Rosen’s proposal is ill-advised, but still supports making it easier for consumers to restrict access to their private data.

Under current doctrine, the path to heightened protections from abuse of our personal data by private companies is unclear. In Carpenter, the Court took account of the changing nature of technology to limit the government’s ability to collect our information from corporations under the Fourth Amendment. Going forward, the Court should bear in mind the public’s desire for privacy, and the increasing prominence of data collection companies such as Google, Amazon, and soon, CAV operators. As in Carpenter, they should adjudicate with changing technology in mind, and seek to enable Congress’ ability to legislate limits on the ability of private companies to sell our personal data.

To date, twenty-nine states have enacted legislation related to connected and autonomous vehicles (CAVs). Eleven governors have issued executive orders designed to set guidelines for and promote the adoption of CAVs. In response to this patchwork of state laws, some experts have argued that the federal government should step in and create a uniform set of safety regulations.

Partially responding to such concerns, the National Highway Traffic Safety Administration (NHTSA) issued A Vision for Safety 2.0 in September, 2018. The guidance document contains voluntary guidance for the automotive industry, suggesting best practices for the testing and deployment of CAVs. It also contains a set of safety-related practices for states to consider implementing in legislation.

The NHTSA document is likely to have some effect on the development of safety practices for the testing and deployment of automated vehicles. While not mandatory, the guidance does give the industry some indication of what the federal government is thinking. Some companies may take this document as a sign of what they will be required to do if and when the Congress passes CAV legislation, and begin to prepare for compliance now. Furthermore, this nudge from the federal government could influence state action, as legislators with limited expertise on the subject look to NHTSA for guidance in drafting their CAV bills.

Without new legislation however, the force of NHTSA’s guidance will be blunted. No manufacturer is required to follow the agency’s views, and state legislatures are free to continue passing conflicting laws. Such conflicts among states could make it difficult to design a vehicle that is able to meet all state standards and travel freely throughout the country. To date, this has not been an acute problem because CAVs, where they are deployed, operate only within a tightly limited range. As use of these vehicles expands however, uniform standards will begin to appear more necessary.

A late push for CAV legislation in the last Congress petered out in the December lame duck session. After unanimously passing the House in 2017, the bill stalled when Senate Democrats balked at what they saw as its lack of sufficient safety protections. With Congress’ schedule blocked by the government shutdown, CAV legislation has been put on the back burner so far in 2019. At some point though, Congress is likely to take up a new bill. The Senators who were key drivers of the CAV bill in the past Congress, Gary Peters (D-MI) and Jon Thune (R-SD) remain in the Senate. Both Senators retain their influential positions on the Committee on Commerce, Science, and Transportation. The key change from the previous Congress will be the dynamic in the newly Democratic-controlled House. While a bill passed unanimously last term, it remains to be seen whether the new House will be held back by the same consumer safety concerns that led the Senate to reject the bill last term.

As autonomous vehicle technology continues to march forward, and calls for a uniform nationwide regulatory system are expected to grow. We will be following major developments.

Transportation as we know it is changing dramatically.  New technology, new business models and new ways of thinking about how we move are being announced almost daily.  With all this change, come inevitable questions about legality, responsibility, and morality.  Lawyers and policy makers play a leading role in answering these challenging questions.  The newly launched Journal of Law and Mobility, will serve an important role as the leading source for scholarship, commentary, analysis, and information, and enable a meaningful dialogue on a range of mobility topics.

In order to facilitate this needed dialogue, it is important at the outset that we ground ourselves in the terminology used to describe “mobility.”  There are a lot of terms being used by different people in the industry, government and media that can be confusing or ambiguous to those not familiar with the technology.  Terms such as “semi-autonomous,” “highly automated” or “connected and automated vehicles” can describe a wide range of vehicles, from “self-driving cars” that actually have self-driving capability, to cars that are connected and communicating with each other, but have lower levels of automation that provide assistance to drivers.

It is very important that we are clear and concise when having a discussion about mobility, because while there are common issues in each area, there are many unique aspects of each technology that merit different discussion.  Fortunately, we have a framework that helps us have clearer discussion about automated technology, the SAE levels of driving automation.  This document describes 6 levels of automation, from Level 0 – no automation, to Level 5 – full automation, and the responsibilities associated with each level of automation in terms of monitoring and executing the Dynamic Driving Task (DDT).  The SAE taxonomy has become so widespread, that even governmental entities such as the National Highway Traffic Administration (NHTSA) and the California Department of Motor Vehicles (CA DMV) are utilizing these levels of automation in their policy statements and rulemaking.

The CA DMV went even further, and specifically regulates the use of certain terminology.  In their Driverless Testing Regulations issued in February, 2016, they specifically require that “no manufacturer or its agents shall represent in any advertising for the sale or lease of a vehicle that a vehicle is autonomous” unless it meets the definition of SAE Levels 3-5.

Lawyers know the importance of words for legal purposes, but terminology is also important for consumers, particularly for building the trust that will be required for successful deployment of self-driving vehicles.  There is already some data suggesting that consumers are confused, for example a finding from an MIT AgeLab survey question that asked respondents if self-driving vehicles are available for purchase today, with nearly 23% saying “yes” – despite the fact that no Level 3 or higher vehicle is actually for sale yet.

NHTSA’s 2017 policy statement addresses this concern, it includes “Consumer Education and Training” as one of the twelve safety design elements of the Voluntary Safety Self-Assessments it suggests that manufacturers complete, citing a need for explicit information on system capabilities to minimize potential risks from user system abuse or misunderstanding.  Legislation that passed the House last year, the SELF DRIVE Act, would take this a step further by mandating that the Department of Transportation (DOT) do research to determine the most effective method and terminology for informing consumers about vehicle automation capabilities and limitations, including the possible use of the SAE levels.

SAE is not the only organization to tackle this problem, there are similar definitions developed in Europe by the German Association of the Automotive Industry (VDA) and the Germany Federal Highway Research Institute (BASt).  Whether we utilize one of these definitional frameworks or not, what is most important is that we are specific about what we are discussing, to enable clear and effective dialogue as we endeavor to solve the important issues ahead.