State and Local

By David Pimentel†, Michael B. Lowry†, Timothy W. Koglin†, and  Ronald W. Pimentel†


Cite as: David Pimentel, et al., Innovation in a Vacuum: The Uncertain Legal Landscape for Shared Micro-mobility, 2020 J. L. & MOB. 17.



Abstract

The last few years have seen an explosion in the number and size shared micro-mobility systems (“SMMS”) across the United States. Some of these systems have seen extraordinary success and the potential benefit of these systems to communities is considerable. However, SMMS have repeatedly ran into legal barriers that either prevent their implementation entirely, confuse and dissuade potential users, or otherwise limit SMMS’s potential positive impact.

This paper reflects a detailed study of state laws relating to SMMS and the platforms commonly used in these systems. The study uncovered many inconsistencies with micro-mobility laws across the country. Currently, many states lack clear definitions for these emerging forms of transportation, which do not otherwise fit neatly in the categories contemplated by existing law. Several states lack clear, state-level policies, which has led to discrepancies between state and local regulations. Further, there are several areas of micro-mobility law that are sharply inconsistent between states. All of these differences leave users confused as to what the law is and may discourage them from riding.

A number of states are attempting to remedy inconsistencies and legislative silence by passing and proposing laws that regulate the use of electric bikes (“e-bikes”) and electric scooters (“e-scooters”), but even these efforts are unlikely to bring the consistency that is needed. Federal authorities should act to create uniform laws and work with states to adopt them, otherwise, the lack of a legal infrastructure may threaten to stifle the innovation and undermine SMMS’s promised returns.

Introduction 1 1. Funding for this research was provided by a grant from the Pacific Northwest Transportation Consortium (PacTrans), USDOT Transportation Center for Federal Region 10. Additional funding for research assistance was provided by the University of Idaho College Of Law. Thanks also to Ken McLeod of the League of American Bicyclists, Andrew Glass Hastings of Remix, Steve Hoyt-McBeth and Briana Orr of the City of Portland, Chris A. Thomas of the law firm of Thomas, Coon, Newton and Frost, and Asha Weinstein Agrawal of San Jose State University, all of whom were generous with their time, responding to questions and requests and advising the authors on these topics. Credit for design and creation of the searchable state law database, and all the coding it required, belongs exclusively to Timothy Koglin. Thanks to Spencer Felton, Erin Hanson, Brandon Helgeson, Jacqueline Maurer, and Jamie Schwantes for outstanding research of the laws of all 50 states and of the District of Columbia, for populating the database, and for assistance in compiling the report and the early drafts of this paper. ×

The first bike-share programs in the United States appeared in 2010 and since then micro-mobility sharing of electric bikes (“e-bikes”) and electric scooters (“e-scooters”) has greatly expanded. 2 2. Alex Baca, What Cities Need to Understand About Bikeshare Now, Bloomberg Citylab (April 24, 2018, 10:17 AM), https://www.bloomberg.com/news/articles/2018-04-24/a-mostly-complete-taxonomy-of-bikeshare-so-far. × The legal environment, however, has been slow to embrace these innovations, or even to address them. The success or failure of shared micro-mobility systems (“SMMS”) may turn on the legal environment in which they attempt to operate. This study surveyed the laws governing bicycles, e-bikes (bicycles equipped with electric motors to assist in propulsion), and e-scooters (stand-up kick scooters powered by an electric motor) in all fifty states and the District of Columbia, and created a searchable database summarizing these laws as they may affect SMMS. The survey revealed serious issues and challenges for SMMS, as the development of the legal landscape has failed to keep pace with shared micro-mobility innovations.

Structure of the sharing systems

Two separate models of SMMS have emerged. Some systems have fixed docking stations where bicycles are picked up and returned. Other systems are “dockless,” and use GPS systems and cell phone apps to help users locate available bicycles. The user can leave the bicycle in almost any location when the trip is completed, and the next user can find and claim it for its next use. While bike-share systems have been implemented using both docking and dockless systems, e-bike and e-scooter systems overwhelmingly favor the dockless approach. It is common to see multiple systems using different mobility devices in operation side-by-side in the same municipality, essentially competing with each other. 3 3. Susan Shaheen & Adam Cohen, UC Berkeley: Transp. Sustainability Research Ctr., Shared Micromobility Policy Toolkit: Docked and Dockless Bike and Scooter Sharing (2019), https://escholarship.org/uc/item/00k897b5#main; Nicole DuPuis, Jason Griess & Connor Klein, Nat’l League of Cities, Micromobility in Cities: A History and Policy Overview (Laura Cofsky ed., 2019), https://www.nlc.org/sites/default/files/2019-04/CSAR_MicromobilityReport_FINAL.pdf. ×

These dockless systems raise additional challenges not seen in earlier docked systems. Docked systems typically require some level of municipal cooperation to provide land in ideal locations to place the docking stations as well as lengthy investments of time and capital to get the systems up and running. Dockless systems require none of these. Instead, they can pop-up in a city overnight with little to no notice to any government officials or the general public. This lack of notice and cooperation can lead to serious legal problems down the road.

Regardless of how the SMMS is structured, the legal regime that governs the use of the mobility – rules governing who can ride, where they can ride, how riders must be equipped, etc., as well as riders’ perception of those laws – can have an outsized impact on the success of the system. This project was aimed at ascertaining and analyzing these various laws across the country.

Potential benefits of shared micro-mobility

SMMS serve a wide variety of purposes, including flexible mobility, emission reductions, individual financial savings, reduced traffic congestion, reduced fuel use, health benefits, improved multimodal transport connections, “last mile” connection to public transport, and equity (greater accessibility for minority and lower-income communities). 4 4. Peter Midgley, Urban Mobility Advisor, Address at Global Consultation for Decision Makers on Implementing Sustainable Transport (2019), https://sustainabledevelopment.un.org/content/documents/4803Bike%20Sharing%20UN%20DESA.pdf; Benjamin Schneider, What Keeps Bike Share White, Bloomberg Citylab (July 14, 2017, 9:07 AM), https://www.citylab.com/equity/2017/07/what-keeps-bike-share-white/533412; James Woodcock, et al., Health Effects of the London Bicycle Sharing System: Health Impact Modelling Study, theBMJ (Feb. 13, 2014), https://www.bmj.com/content/348/bmj.g425. ×  Most of these objectives – with the exception of health benefits – are served equally well by e-bike and e-scooter sharing systems.

But while e-bikes and e-scooters cannot deliver the health benefits that would come from getting users to travel under their own power, they offer other benefits that traditional bicycles lack. These include (1) the ability to travel with minimal physical effort, (2) the ability to use without getting sweaty, (3) the capacity to travel longer distances or on hillier terrain, (4) the ability to use in all types of clothing (at least for e-scooters – which are compatible with dresses in a way that bicycles are not) and, (5) the promise of an entirely different level of fun. To the extent that these attractions lure people out of their cars, when traditional bicycles would not, these new micro-mobility sharing systems have the potential to generate societal benefits well beyond the promise of a basic bike-sharing system.

All of these benefits speak strongly in favor of SMMS, suggesting that local governments should be supportive of them. Indeed, some municipalities have invested heavily in these systems, subsidizing them, or otherwise committing public funds to their installation and operation. At the same time state and, to a lesser degree, local governments operate legal regimes that have the potential to undermine all these benefits, particularly where users receive confusing or mixed messages about what is legal and what is not.

This study

The research team set out to examine the relevant laws in all fifty states and the District of Columbia. It developed a list of questions related to sharing platforms, falling into nine categories: Definitions, Age Restrictions, Safety Equipment, Licensing Requirements, Where to Ride, Riding Under the Influence, Insurance Requirements, Sidewalk Clutter, and Shared Micro-Mobility Regulations. The research team then developed a database in Microsoft Access to facilitate the collection, storage and analysis of the state laws, and employed graduate students from the University Of Idaho College Of Law for the summer of 2019 to research the laws in each state and input them into the database.

The researchers used the LexisNexis legal database, Westlaw, and state-operated websites in each assigned jurisdiction to find the relevant laws. Since this is an emerging field of law, many states have legislation pending at various stages of the legislative cycle. For the purposes of this study, any laws that had been fully enacted by the state government were included as the relevant law, even if they had not yet gone into effect. Any laws that were pending in the state legislature or were awaiting the governor’s signature were not considered for this study.

The research team met weekly to discuss any unclear laws and to ensure that similar situations were logged in a consistent manner. After the states were completed, researchers checked a sampling of each other’s work to ensure that the data collection had been done in a consistent manner. Any and all discrepancies that were identified were raised for discussion, clarification, and ultimately harmonization.

Discussion

Even the most cursory review of the data collected reveals some compelling conflicts and gaps in the legal and regulatory regime that governs micro-mobility-sharing systems in the United States. These legal deficiencies threaten the success of such ventures, and limit society’s ability to achieve the myriad benefits that such innovations promise. Most of the examined laws regulate the use of micro-mobility (bikes, e-bikes, and e-scooters) and not sharing systems. While the problems discussed below do not apply exclusively to these shared systems, many of them are made exponentially more problematic because of the typical role shared mobility plays. The following discussion will highlight some of the largest legal problems and the specific difficulties they pose for the successful implementation of SMMS.

  1. Legal Inconsistency/Ambiguity

The most prevalent legal problems the study revealed were the numerous inconsistencies and ambiguities in the laws regulating the use of micro-mobility. Inconsistencies arise in a few distinct ways and each presents a slightly different problem to SMMS. Each of these inconsistencies is no more than a minor inconvenience to experienced riders who are either familiar with their local specifications, or know what kind of laws vary in different states and how to fill those gaps when riding in a new location. Anyone who has invested in a means of micro-mobility is likely to have invested some effort in learning the rules that govern its use. To misquote Socrates, they are wise because they know what they do not know.

However, the inexperienced or recreational rider, or the tourist, may be caught completely unaware of any variation or change in the law. Since these casual or inexperienced riders are the target market for most SMMS, inconsistent laws pose a potentially crippling impediment to their success. In our research laws were grouped into two categories. First, laws that are inconsistent with other laws in the same state, here called internal inconsistency. Second, laws that are inconsistent between states, here called external inconsistency – but perhaps better characterized as state-by-state variations in the law. Before addressing the external consistency issues, we will turn to the more acute problem of internal consistency: where even within a single state, sharp differences, ambiguities, and even conflicts exist in the applicable laws.

a. Internal inconsistency in the laws

While most laws are not facially inconsistent, several states’ statutory schemes create confusion that unnecessarily burdens riders. E-scooters in Oregon, for example, are banned from sidewalks and prohibited from traveling faster than 15 mph. But simultaneously, mobility devices used in the street are prohibited from traveling in the roadway at less than the normal speed of traffic. 5 5. Or. Rev. Stat. §§ 814.512-524 (2020) (Defining the offense of “unlawful operation of a motor assisted scooter.”). ×  Thus, if traffic flows at 25 mph, the scooter is required by law to travel no faster than 15 mph, but no slower than 25 mph. 6 6. The conflict is arguably reconciled Or. Rev. Stat. § 814.520, which suggests that a rider may avoid liability for the separate offense of “improper operation of a motor assisted scooter” for driving too slowly if she keeps as close to the right edge of the roadway as possible. But because it is not clear whether “improper operation” is the same offense as “unlawful operation,” the legal requirements remain, at best, ambiguous. At worst we have an outright conflict. ×   Even if there is a way to read these laws together consistently, it is certainly not clear at first glance. The resident who may want to use the new SMMS to help commute to work or the tourist who wants to use it to get around town cannot easily tell how fast or where they can ride.

Other issues can arise when a state does not clearly define e-bikes or e-scooters. Even when an e-bike or e-scooter is not defined by statute, it may fall within another statutory definition, such as motorcycle, moped, or more broadly, motor vehicle. This categorization can lead to more restrictive regulations of e-bikes and e-scooters, such as requiring driver’s licenses, registration, or insurance. For example, New York does not define e-bike or e-scooter. Because motor vehicles are defined as “every vehicle operated or driven upon a public highway which is propelled by any power other than muscular power,” e-bikes and e-scooters both fall within this category. 7 7. N.Y. Veh. & Traf. Law § 125 (McKinney 2020). ×  New York state law also requires that every motor vehicle be registered in order to drive on public highways. 8 8. N.Y. Veh. & Traf. Law § 401 (McKinney 2020). ×  However, as of 2019, the Department of Motor Vehicles did not allow for the registration of e-scooters or e-bikes, which appeared to render riding these devices in public illegal according to their website at the time. 9 9. Motorized devices that cannot be registered in New York, N.Y. State Dep’t of Motor Vehicles, https://web.archive.org/web/20190316092234/https:/dmv.ny.gov/re gistration/motorized-devices-cannot-be-registered-new-york (last visited July 25, 2020) (That agency site was recently changed to indicate that e-bikes may be operated “on some streets and highways in New York State,” and e-scooters will receive the same treatment later this year). Electric Scooters and Bicycles and Other Unregistered Vehicles, N.Y. State Dep’t of Motor Vehicles, https://dmv.ny.gov/registration/electric-scooters-and-bicycles-and-other-unregistered-vehicles (last visited July 25, 2020). ×  This is but one example of how bureaucratic operations can frustrate legislative actions. The inconsistency, in turn, is likely to result in user confusion.

Additionally, state laws can conflict with the laws of the state’s own counties or municipalities. In an emerging field such as shared micro-mobility, some city ordinances conflict directly with their state law. Direct conflicts are likely to occur when a city chooses a position quickly and the state subsequently adopts a contrary position that is incompatible with the local law without allowing for local variation of the matter. While the state law presumably supersedes the local ordinance, the conflicting local law remains on the books. A couple of examples may illustrate.

Sometimes a local law is more restrictive than a state law, so the discrepancy may not create a direct conflict. California state law, for example, identifies three classes of e-bikes and allows all to be ridden on sidewalks. 10 10. Cal. Veh. Code § 21207.5 (West 2020). ×  West Hollywood, CA, however, recently banned the use of all classes of e-bikes on sidewalks. 11 11. West Hollywood, Cal., Mun. Code § 10.04.030 (2020). ×  In this situation, it is possible for both laws to be valid, depending on whether the state law is read to pre-empt local variation or not. If not pre-empted, the local, more restrictive law simply imposes higher standards than required by the state. Nonetheless, the inconsistency can create difficulties for riders. In King County, Washington, for example, adult users of bicycles are required to wear helmets, but elsewhere in the state they are not. 12 12. King County, Wash., Bd. of Health Code § 9.10 (2018). ×  Once again, the SMMS user – i.e. an occasional or casual rider – is far more likely to be caught off guard.

Finally, state and local laws may define or classify mobility devices differently. For example, the city of Seattle defines e-bikes in a manner that does not mirror the three-category classification system for e-bikes adopted by the State of Washington. 13 13. Seattle, Wash., Mun. Code §11.14.055; Wash. Rev. Code Ann. § 46.04.169 (West 2020). ×  The definition provided by Seattle only encompasses what would be Class 1 and Class 2 e-bikes according to Washington State law, leaving Class 3 e-bikes outside of the city’s definition. This creates the potential for regulatory issues if Class 3 e-bikes are not considered e-bikes at all in Seattle, affecting riders’ abilities to ride on bicycle paths or be subject to other restrictions or protections offered to e-bike riders.

b. Externally inconsistent laws

The legal system has long grappled with the problem of state-by-state variations in the law. Some such variations have been celebrated, where local control has been hailed as a benefit of federalism. But there are limits to how and where such variation can or should be tolerated, and the problems of “external inconsistency” have at times demanded remedial attention. Sometimes the federal government has to step in and pre-empt the field, in order to achieve a desirable consistency in the law: examples include historically federal concerns, including bankruptcy, 14 14. See generally, Oleksandra Johnson, The Bankruptcy Code as Complete Preemption: The Ultimate Trump?, 81 Am. Bankr. L.J. 31 (2007). × securities and banking regulation, 15 15. Jay B. Sykes, Cong. Research Serv., R45081, Banking Law: An Overview of Federal Preemption in the Dual Banking System (January 23, 2018), https://fas.org/sgp/crs/misc/R45081.pdf. ×  immigration, 16 16. See generally, 8 U.S.C. ×  and national security. 17 17. See, e.g., USA PATRIOT Act, Pub. L. No. 107-56), 115 Stat. 272 (2001). In the 1990s, federal jurisdiction expanded to include violence against women. The inability to enforce restraining orders across state lines prompted Congress to federalize an area of law long reserved to the states. Lisa N. Sacco, Cong. Research Serv., The Violence Against Women Act (VAWA): Historical Overview, Funding, and Reauthorization, 3rd ed., (2019), https://fas.org/sgp/crs/misc/R45410.pdf. ×  Other times, states have chosen voluntarily to align their laws with each other’s: examples include the adoption of the Uniform Commercial Code. 18 18. States’ eagerness to facilitate commercial transactions for businesses within the state meant that states were happy to adopt a national standard, so interstate transactions could be more easily affected. At present 49 of the 50 states have adopted all or substantially all of the UCC. Tracey George & Russell Korobkin, Selections from the Restatement (Second) Contracts and Uniform Commercial Code, 4-5 (2019). ×  Similar efforts have yielded an overwhelmingly consistent motor vehicle code, making it easy for drivers to traverse the country without worrying that they will run afoul of obscure and idiosyncratic state laws. At the same time, some areas of law – such as Tort Law and Family Law – have been held to be squarely within the province of the states, where uniformity is not necessarily desirable as a matter of federalism. 19 19. Tort reform laws are all over the map, with all kinds of different approaches taken in the various states. Family Law, of course, has become a battleground as these local variations – affecting the rights of interracial, same-sex, and polygamous unions, among others – have come under attack for perceived violations of constitutional guarantees. See e.g. Reynolds v. U.S., 98 U.S. 145 (1879); Loving v. Virginia, 388 U.S. 1 (1967); Obergefell v. Hodges, 576 U.S. 644 (2015). ×  Justice Louis Brandeis famously praised this aspect of our federal system, noting that “a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” 20 20. New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932). ×

The “laboratories of democracy” concept has borne fruit for micro-mobility use. The state of Idaho adopted in 1982 its “Idaho stop law” that allows cyclists to treat “stop” signs as if they were “yield” signs, and to treat red lights as if they were “stop” signs. 21 21. Asmara M. Tekle, Roll On, Cyclist: The Idaho Rule, Traffic Law, and the Quest to Incentivize Urban Cycling, 92 Chi.-Kent L. Rev. 549 (2017). ×  The resounding success of this experiment has led other jurisdictions to follow suit. 22 22. Delaware has adopted the stoplight portion of the Idaho Stop, redubbing it the “Delaware Yield.” Del. Code Ann. tit. 21 § 4196A(c) (2020). Colorado State law specifically allows for local adoption of either the Idaho or Delaware models but does not adopt either at the state level. Colo. Rev. Stat. § 42-4-1412.5 (2019). Oregon has adopted the limited Delaware model. Or. Rev. Stat. §§ 814.414, 416 (2020). Arkansas has fully adopted the Idaho Stop. Ark. Code. Ann. § 27-51-1803 (2020). Washington has enacted legislation authorizing the Delaware version which will go into effect on Oct. 1, 2020. Increasing Mobility Through the Modification of Stop Sign Requirements for Bicyclists, 2020 Wash. Sess. Laws 6208. ×

At the same time, the patchwork of legal requirements for bicycle and other micro-mobility use in different states may sow confusion, particularly for travelers who may find themselves using bikeshare in different states, or in communities situated on a state border. Such issues arise, for example, on roads surrounding the Chipman Trail bike route, which connects Washington State University in Pullman, Washington (WSU), with the University of Idaho in Moscow, Idaho, eight miles east. At the start of a recent community-organized ride that started on the WSU campus, the riders had to be cautioned that they were in Washington now, and needed to stop at stop signs. 23 23. The Tour de Lentil, associated with the annual Lentil Festival in Pullman Washington, is a 50k/100k/150k ride that takes place every August. John Nelson, Tour de Lentil Provides Challenging Ride Through the Palouse, The Spokesman-Review (Aug. 11, 2017), https://www.spokesman.com/stories/2017/aug/11/tour-de-lentil-provides-challenging-ride-through-t/. The Fondo on the Palouse, a “century” (100-mile ride) which starts in Moscow, Idaho, encounters similar issues, as its route straddles the Washington-Idaho border. About the Fondo on the Palouse, The Fondo on the Palouse, http://fondopalouse.org/ (last visited July 19, 2020). ×  There, the ride was organized by a local cycling club who was familiar with the differences and intricacies of the two states’ laws, so the riders were able to prepare for the change in laws. However, if a solo rider or group of friends decided to take the bikes from WSU’s campus bike sharing program along that same trail for a Saturday ride, they would be unlikely to know that the governing laws had changed on them mid-ride. Absent a reminder or notification of some kind they are unlikely to even think to look up the law to see if there was any discrepancy.

While the laws governing cars are largely consistent across the country, inconsistency persists in the laws applying to bicycle use and even more so in those governing e-bike and e-scooter use. This is a particular concern given that a significant number of users of such systems are travelers and tourists – people from outside the relevant jurisdiction and therefore ill-equipped to know local laws. 24 24. Virginia Tech, Virginia Tech Capital Bikeshare Study: A Closer Look at Casual Users and Operations 10 (2012), https://ralphbu.files.wordpress.com/2012/01/vt-bike-share-study-final3.pdf. ×  Similar problems emerged in the early days of automobiles, and the need for consistent laws governing motor vehicle transportation became apparent. A special committee was appointed at the federal level to draw up a uniform code – one that facilitated effective automobile use – and pressure was put on the state legislatures across the country to adopt it. This eliminated idiosyncratic rules that may have existed in different cities and states and allowed manufacturers to produce vehicles that were legal in every state. 25 25. See J. Allen Davis, The California Vehicle Code and the Uniform Vehicle Code 14 Hastings L. J. 377 (1963). ×  Drivers could then have some confidence of the rules of the road when crossing state lines. While traffic laws are not entirely uniform in the U.S. (e.g. some states – including Washington, Oregon, and Idaho – allow left turns on red lights when the driver is turning onto a one-way street, for example), the exceptions are very few and largely minor.  Even the traffic signals and signage have been made standard across jurisdictions. 26 26. This standardization occurred over time as automobiles became more widespread. Clay McShane, The Origins and Globalization of Traffic Control Signals, 25 J. of Urban History 379, 389 (1999), https://sites.tufts.edu/carscultureplace2010/ files/2010/09/McShane-traffic-signals-1999.pdf. ×  Efforts to bring uniformity to the laws governing cycling – much less to the laws governing the use of e-bikes, e-scooters, or SMMS in general – have yet to bear fruit.

Laws that dictate where each platform can and cannot be ridden, “where to ride” laws, present particularly troublesome external inconsistency. Most states allow bicycles to be ridden on the sidewalk or the street so the rider can choose to ride where they feel the most comfortable. However, e-bikes and e-scooters, the primary platforms for dockless SMMS, are restricted much more and far less consistently. E-bikes are burdened slightly, as in about half of states they cannot be ridden on sidewalks. E-scooters, as the newest platform on the scene, are treated the most inconsistently. Over a third of states do not have any regulation at all regarding where e-scooters are allowed. 27 27. See infra Section 2.b. and Figure 4. ×  In those states that do address e-scooters, about half allow them to be ridden on the street and half do not. A handful of states prohibit e-scooter use on the shoulder of the road or the bike lanes. Twenty-three states allow e-scooters to be ridden on sidewalks while six prohibit their use there; the remaining states are silent on the issue. If an individual purchases one of these platforms, especially an e-scooter, it is reasonable to expect that they would look up the rules for the use of their new device in their own state. 28 28. A neighbor of author David Pimentel, however, acquired a motorized scooter in 2019, and after a discussion with a police officer, is now afraid to ride it anywhere. The police officer was unable to advise him where, or whether, such a vehicle could be used in the city limits. ×  However, it seems far less likely that the typical SMMS user would know the details about where they are allowed to ride or take the time to research the question, even if it were easy to find answers, which it often is not. Further, many riders who do not know where they can ride may forgo using the SMMS altogether because of their questions.

Other types of laws also raise external inconsistency issues. For instance, helmet laws vary dramatically in various states (see Figures 1.1 and 1.2). In over 20 states, there is no requirement that anyone wear a helmet when using a bicycle, an e-bike, or an e-scooter. Many states impose helmet requirements on bicycle riders under a certain age. Six states require helmets for all users of e-bikes.

FIGURE 1.1 – Mandatory Helmet Laws

Helmets are required . . .

FIGURE 1.2 – Mandatory Helmet Laws

Helmets are required . . .

Laws requiring helmet use can be particularly burdensome for bike-sharing systems because the typical user does not carry a helmet with her/him. 29 29. Gigi Douban, A Pothole for Bike-Sharing Programs: Helmets, Marketplace Morning Report (Sep. 4, 2015), https://www.marketplace.org/2015/09/04/business/pothole-bike-sharing-programs-helmets/; David Gutman, Will Helmet Law Kill Seattle’s New Bike-Share Program?, Seattle Times (Dec. 19, 2016), https://www.seattletimes.com/seattle-news/transportation/will-helmet-law-kill-seattles-new-bike-share-program/; Emily Elias, Helmets Pose Challenge For Vancouver Bike Share Program, CBC (July 19, 2013) https://www.cbc.ca/news/canada/british-columbia/helmets-pose-challenge-for-vancouver-bike-share-program-1.1379433. × Attempts to share helmets along with bikes have not been well received by the public, presumably because of concerns about the cleanliness of shared helmets. 30 30. Gutman, supra note 29. × Some speculate that the failure of Seattle’s first bike-share venture was due to the strictures of the mandatory helmet law there; 31 31. Id. × more recent success with SMMS in Seattle may be due to local police’s decision to relax their enforcement of King County’s mandatory helmet laws. 32 32. David Gutman, Helmets may be Seattle Law, but Many Bike-Share Riders Don’t Wear Them, Seattle Times, (Aug. 9, 2017), https://www.seattletimes.com/seattle-news/transportation/helmets-may-be-seattle-law-but-many-bike-share-riders-dont-wear-them/. ×

The “ins.tructions” commonly provided by the micro-mobility sharing services are unhelpful on this score, as they may simply tell the user to wear a helmet, without indicating whether the helmet is required by law (e.g. the instruction video for Bird scooters, inside the Bird app, includes a “Bring your own helmet” instruction, without further elaboration to clarify whether this is a legal requirement or just a prudent recommendation). 33 33. App: Bird, How to Ride, (Bird Rides, Inc.) (available on Google Play or the Apple App Store), www.bird.co/how/. × This uncertainty can serve as a deterrent to would-be riders. 34 34. Ronald W. Pimentel, Michael B. Lowry, David Pimentel, Amanda K. Glazer, Timothy W. Koglin, Grace A. Moe, & Marianna M. Knysh, If You Provide, Will They Ride? Motivators and Deterrents to Shared Micro-Mobility, 6 Int’l J. Bus & Applied Soc. Sci. 26, 31 (2020). ×

E-bike and e-scooter riders also face uncertainty about the application of Driving Under the Influence (“DUI”) laws. In many states, it is not at all clear whether the e-bikes and e-scooters qualify as “motor vehicles” for purposes of DUI statutes. A small handful of states have attempted to clarify this by passing separate laws governing Riding Under the Influence (“RUI”), which explicitly apply to micro-mobility users. These laws typically impose lesser punishments for RUI than the state imposes for DUI violations, which makes sense since an intoxicated driver is endangering the lives of others (pedestrians, car passengers, etc.) at a level far beyond the dangers posed by an intoxicated e-scooter rider. A general breakdown of state law treatment of these issues is shown in Figure 2.

FIGURE 2 – “Riding Under the Influence” Legislation*

*A few states have both RUI laws specifically applicable to micro-mobility, and separate DUI laws that apply equally to micro-mobility, introducing potential for contradiction and inconsistency (see discussion of such issues above). The states that fall into both the DUI and the RUI categories are depicted in the “RUI Law Applies” section of the pie charts above.

Naturally, some level of inconsistency is necessary. Not every community has the same needs, and the laws that are appropriate in New York City may not be appropriate in Moscow, Idaho (pop. 24,000). However, a common foundation of legal rules for micro-mobility use, short of complete uniformity, is important if those transportation modalities are to take hold in American cities. For instance, some kind of baseline system that applies broadly but allows for limited local variation based on the specific needs of the location, where those local variations could be clearly demonstrated to potential riders, would go a long way to solving both internal and external inconsistency issues.

  1. (Lack of) Awareness of the law

Even if inconsistent laws were aligned, micro-mobility users still might not know what the laws are. Someone who is unaware of the law will have difficulty complying with it and, as noted above, the uncertainty may scare riders off altogether.

a. Ignorance and (mis)perception of the applicable laws

It is far from clear, even for a lawyer trained to interpret statutes, which existing laws may apply to a particular mode of micro-mobility. In some states, the term “pedestrian” is interpreted to include bicyclists on sidewalks, so laws that give pedestrians the right-of-way simultaneously give bicyclists the right-of-way. 35 35. E.g. Mich. Comp. Laws § 257.660c (2020). × In thirty-five states, the word “vehicle” is interpreted to include bicycles, which lumps bicycles in with other vehicles and subjects them to the laws governing vehicular traffic. 36 36. E.g. Or. Rev. Stat. § 814.400 (2020). ×

As for e-bikes and e-scooters, the problem is even more difficult. Because most of these laws were passed before e-bikes and e-scooters came on the market, laws cannot reflect the legislature’s intention concerning them. Pullman, Washington, requires that all scooters be equipped with a “muffler,” for example, in an ordinance that must have been drafted during an era of gas-powered scooters; 37 37. Pullman, Wash., Code § 12.11.020(8) (2019). × it is, of course, a ridiculous requirement to impose on virtually silent e-scooters. Even the most well-informed user is left to wonder whether an e-bike is a “motor-driven cycle” within the meaning of the statute, for example, or whether an e-scooter is a “motor vehicle.” Exacerbating the problem, there does not appear to be any consensus or consistency, state-by-state, on what these terms mean.

Potential users of SMMS being unaware of the laws governing the mobility presents two separate problems. The first is that users may unwittingly violate the law. They may assume that e-scooters are legal on sidewalks, and ride them there, illegally disrupting pedestrian traffic and unwittingly subjecting themselves to liability. The second concern is that the uncertainty itself will be a deterrent to use of the mobility. A potential user may be tempted to rent a scooter or a bike but may err on the side of caution and avoid using the device altogether when unsure of whether it’s legal to ride without a helmet, or to ride without a driver’s license, or to ride on the running path that goes through the park or along the river. A July 2019 survey of users and non-users in the Northwest suggest that uncertainty about the law can significantly discourage use of SMMS. 38 38. Pimentel, supra note 34, at 31. × Uncertainty about where it is legal to ride provides at least a slight deterrent effect for 74% of potential users (See Figure 3).

FIGURE 3 – Deterrent Effect of Legal Uncertainty

b. Statutory silence

The lack of legislation in many jurisdictions leaves both the purveyors of SMMS and their customers in the dark about what is legal and what is not. The laws are reasonably comprehensive as they apply to bicycles, but significant gaps exist for newer technologies, particularly e-scooters, which do not fit so easily into pre-existing categories. While some states are already working to get laws on the books that govern the use of such mobility, many more legislatures either have failed to perceive a need or have been unwilling or unable to muster the political will or material resources to respond to it. Figure 4 shows the conspicuous gaps which exist in several states’ legislation regarding where riders can use various devices, particularly e-scooters. It unrealistic to expect states to have comprehensive legal regimes in place regarding these newer devices; it is understandable that legislatures may have trouble keeping up with new technologies. However, SMMS will be hamstrung in any states that fail to grapple with basic issues, such whether these devices can be ridden on their sidewalks, or on their streets, or on both, or on neither.

FIGURE 4 – Where to Ride Table

c. Emerging legislation

By 2019, new laws were in the works in a number of states. New York’s legislature introduced a bill that defined “bicycles with electric assist” and “electric scooters,” stipulating that e-bikes are subject to the same regulations as bicycles while e-scooters are subject to new regulations laid out in the bill. 39 39. S.B. 5294 (N.Y. 2019). The bill was vetoed by the Governor in December 2019. × The Hawaiian legislature introduced two separate bills to govern the use of these devices. The first set a minimum age of fifteen for e-bike riders, and included e-bikes within the definition of bicycles, thus subjecting them to most of the same regulations that govern non-motorized bicycles. 40 40. H.B. 812 (Haw. 2019). × The second defined “electric foot scooters,” set a minimum riding age of fifteen, and subjected e-scooters to many of the same laws that govern bicycles. 41 41. H.B. 754 (Haw. 2019). × Similarly, Alaska introduced a bill that defined e-bikes without a classification system, and clarified that they are not motor vehicles or subject to any registration requirements. 42 42. H.B. 123 (Alaska 2019) ×

The wave of new legislation presents both challenges and opportunities for SMMS. If the laws passed aid the implementation and operation of SMMS or facilitate the platforms that they use, then SMMS may be well on their way to becoming a permanent fixture of American cities. Additionally, states have the opportunity to see what laws are the most successful and to copy them, laying the groundwork for a more consistent, if not entirely uniform system. One example is the three-tiered e-bike classification system. This system was first implemented in California in 2015 and has since been adopted almost completely in twenty-five other states, making it by far the most common classification system. 43 43. Claudia Wasko, Why More States Need to Adopt the Three-Class Ebike System, Bosch, https://www.bosch-ebike.com/us/everything-about-the-ebike/stories/three-class -ebike-system/# (“In 2015, California was the first state to adopt this ‘3-Class’ approach, and since then, 25 other states followed suit: Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Maine, Maryland, Michigan, New Hampshire, New Jersey, Ohio, Oklahoma, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming.”). × A consistent and coherent classification system is a prerequisite to any unified e-bike laws that could come in the future. However, advocates (including SMMS providers) must act quickly to lobby for favorable laws, as it will become much harder to implement favorable laws after states have enacted barriers.

  1. Laws addressing shared micro-mobility implementation and use directly

Some states have adopted laws that focus on sharing systems, recognizing the difference between regulating e-bike or e-scooter use and regulating the businesses or systems set up to share them. As of this writing, Alabama is the only state that has comprehensive shared micro-mobility law that covers bicycles, e-bikes, and e-scooters. Four other states, Arkansas, Nevada, Utah, and Washington, have enacted statewide regulations concerning e-scooter sharing systems exclusively. However, most states’ statutory schemes are either silent on this issue or leave the regulation of these systems to the local government.

Without any laws regulating the sharing systems directly, many problems are likely to arise which are specific to SMMS. One such problem is the “pop-up” SMMS start-ups. Without statewide regulations in place, SMMS providers may be able to enter a market more or less overnight with no warning to the local government. This presents a number of problems, many of which have already been discussed. These problems can be prevented with simple state-wide schemes which include regulations for startup procedures that allow SMMS to operate but require additional cooperation between the providers and the cities they serve.

Even when states do enact SMMS-specific laws, another issue emerges: shared micro-mobility laws that differ from the existing laws. For example, Alabama defines a “scooter” as:

[A] device weighing less than 100 pounds that satisfies all of the following:

(a)  [h]as handlebars and an electric motor;

(b)  [i]s solely powered by the electric motor or human power; [and]

(c)  [h]as a maximum speed of no more than 20 mph on a paved level surface when powered solely by the electric motor. 44 44. Ala. Code § 32-1-1.1(60) (2020). ×

By this definition, an e-scooter would qualify simultaneously as a “scooter” and as a motor vehicle in the Alabama Code. 45 45. Ala. Code § 32-1-1.1(33) (2020). × Conversely, the definition for a “shared micromobility device” is a type of transportation device, including a scooter that is used in a shared micro-mobility device system. 46 46. Ala. Code § 32-1-1.1(64) (2020). × The “shared micromobility device[s]” are subject to the same laws and regulations as a bicycle, and not a motor vehicle. 47 47. See e.g. Seattle Times Editorial Bd., Opinion, Hold Bike-Share Vendors Accountable, Seattle Times (Sep. 5, 2019), https://www.seattletimes.com/opinion/editorials/hold-bike-share-vendors-accountable/; Quemuel Arroyo, Op-ed: Where Do We Put All Those Dockless E-Scooters?, StreetsBlog NYC (Feb. 4, 2020), https://nyc.streetsblog.org/2020/02/04/op-ed-where-do-we-put-all-those-dockless-e-scooters/; Elizabeth Chou, LA Looks to Improve Parking of Dockless Scooters and Bikes. Here’s How, L.A. Daily News (Oct. 22, 2019), https://www.dailynews.com/2019/10/22/la-looks-to-improve-parking-of-dockless-scooters-and-bikes-heres-how/. × As a result, scooters that are privately owned are subject to rules and regulations pertaining to motor vehicles, such as licensing requirements, while scooters that are used within a SMMS are subject to a different set of rules and regulations, including an exemption from the licensing requirement.

  1. Parking and Storage

While there are several deficiencies in the laws governing SMMS (including the absence of them), the research painted a more encouraging picture about the problems of parking and storage. One of the most common complaints about dockless systems is the concern that the bicycles, e-bikes, or e-scooters get left in inconvenient places. 48 48. See Arroyo, supra note 48. × Accordingly, the research team looked at the laws governing the problem.

Part of the concern is one of untidy or unsightly clutter, but the greater concern is about obstructing sidewalks and other thoroughfares of pedestrian traffic, creating a nuisance and a safety-related tripping hazard, as well as limiting access to the sidewalk for people with disabilities. 49 49. See Arroyo, supra note 48. × While this concern often prompts critics to call for banning SMMS, 50 50. Leif Reigstad, The Rise and Fall of Dockless Bike Sharing in Dallas, Texas Monthly, (Aug. 7, 2018), https://www.texasmonthly.com/news/rise-fall-dockless-bike-sharing-dallas/. × most states already have statutes that address the issues of clutter or obstruction, and the problem is simply a matter of finding a way to enforce these laws in the context of shared bikes, e-bikes, and e-scooters. Alabama, the state with the most comprehensive statewide shared micro-mobility legislation, specifically prohibits shared micro-mobility devices from being parked in a manner that impedes normal pedestrian movement. 51 51. Ala. Code § 32-19-2(c) (2020). × However, many other states that currently lack shared micro-mobility legislation already have laws that prohibit all vehicles or specific micro-mobility devices from impeding pedestrian and other traffic. Still others list specific locations where such vehicles can and cannot be parked or delegate such decisions to local authorities. In total, thirty states already have statutes preventing micro-mobility devices from being strewn on or about the sidewalks.

Since laws preventing SMMS devices from cluttering the street are already in place, the problem may come from the difficulties of enforcement. Law enforcement may be hesitant to seize or ticket SMMS devices without clear directives. They are also likely even more hesitant to ticket a user who leaves them in an improper location because they plausibly may not know the requirements. Perhaps comprehensive SMMS laws such as those discussed above can help clarify these laws with regard to shared devices and enable law enforcement to manage the situation more effectively.

This problem may be one of perception more than reality. People are more likely to remember the few times they were walking down the sidewalk and had to step around an obstructing scooter or bicycle than they are to remember the countless times that they walked down the street without any such obstruction. Or they may remember an inflammatory picture they have seen in the press of unwanted and unloved bike-share bikes heaped in huge piles, and perceive a problem in the U.S., even though those pictures were taken in China. 52 52. See generally, Dan Gardner, The Science of Fear: Why We Fear the Things We Shouldn’t-- and Put Ourselves in Greater Danger (2008) (discussing the “availability heuristic”). × Indeed, despite conspicuous complaints about the clutter associated with shared micro-mobility, 53 53. Reigstad, supra note 50. × a study in Spokane Washington found the problem to be at most minor (finding that 96% of e-scooters were parked in a “preferred area” and that 98% of them were parked upright). 54 54. Toole Design, Spokane Shared Mobility Study Final Recommendations 18 (2019), https://static.spokanecity.org/documents/projects/shared-mobility/spokane-shared-mobility-report.pdf. ×

  1. Creating laws that favor bicycles and other micro-mobility to further promote SMMS

Laws that make bicycling, and other micro-mobility use easier will necessarily make SMMS more attractive to potential users; and laws that burden the mobility-user will have the opposite effect. The Idaho stop laws, for example, make cycling vastly more efficient and attractive. 55 55. See Tekle, supra note 21. × State laws that expect cyclists to adhere to the laws that govern motor vehicles, in contrast – failing to account for the fact that bicycles have different capabilities, needs, and safety concerns – impose heavier burdens on cyclists and place them at greater risk of harm. 56 56. David Pimentel, Cycling, Safety, and Victim-Blaming: Toward a Coherent Public Policy for Bicycling in 21st Century America, 85 Tenn. L. Rev. 753 (2018). ×

As noted above, mandatory helmet laws may also be a barrier to SMMS success. While it is tempting to cling to these laws as a fundamental safety measure, such laws have been sharply criticized as counter-productive, from a safety perspective, 57 57. Luke Turner, Australia’s Helmet Law Disaster, 64 IPA Review 28, 28–29 (Apr. 2012), http://www.vehicularcyclist.com/ozdisaster.pdf; Craig Baird, Bike helmets can make roads more dangerous for cyclists, says Bike Regina, Regina Leader-Post (May 2, 2017), https://leaderpost.com/news/local-news/bike-helmets-can-make-roads-more-dangerous-for-cyclists-says-bike-regina; Sue Knaup, Are Helmet Programs Scaring Kids Away from Bicycling?, The Bike Helmet Blog (Nov. 10, 2015), https://www.bikehelmetblog.com/2015/11/are-helmet-programs-scaring-kids-away.html. × and for the implicit message that micro-mobility is very dangerous and therefore something to be avoided. 58 58. Rosenthal, E., To Encourage Biking, Cities Lose the Helmets, N.Y. Times (Sept. 29, 2012), https://www.nytimes.com/2012/09/30/sunday-review/to-encourage-biking-cities-forget-about-helmets.html; Knaup, supra note 57. × That message, as well as the victim-blaming message that responsibility for cyclist safety lies solely with the cyclist, rather than with the drivers who hit them, can only discourage ridership. 59 59. Peter Walker, The Big Bike Helmet Debate: “You Don’t Make it Safe by Forcing Cyclists to Dress for Urban Warfare,” The Guardian (Mar. 21, 2017), https://www.theguardian.com/lifeandstyle/2017/mar/21/bike-helmet-cyclists-safe-urban-warfare-wheels; Pimentel, supra note 56. ×

Laws that permit, or prohibit, riding bicycles on sidewalks or off-road paths and trails may have an impact as well. If people know that they can be cited for riding where they feel safe to ride, they may opt not to ride at all. For example, in a busy urban center, someone may be happy to ride an e-scooter on the sidewalk, but if they know that e-scooters are legal only in the street (as is the case in the states of Washington and California), they may stay off the scooter altogether. 60 60. Cal. Veh. Code § 21235(g) (Deering 2020); Wash. Rev. Code Ann. § 46.61.710 (LexisNexis 2020). ×   Of course, the laws of states, such as Florida and South Dakota, that ban the use of scooters in the streets too, or of the twenty states that are silent on the subject, generate serious uncertainty about whether they can be used legally anywhere.

Conclusions

The wheels of transportation innovation turn much faster than the wheels of legislation. The legal system struggles, playing catch-up with industry changes. That alone does not necessarily constitute a problem. However, the lack of a legal infrastructure may threaten to stifle the innovation and undermine the potential benefits of SMMS in America. This comprehensive study of applicable laws exposes the gaps and inconsistencies in these laws and illustrates some of the impact of these legal deficiencies. The hope is that federal authorities may intervene, promulgating standardized legal rules for shared micro-mobility, as they have for automobiles, which would clarify and harmonize the scattershot approach heretofore taken. If the federal government is unwilling or unable (politically or otherwise) to act, perhaps interested parties – bicycling advocates, safety advocates, industry representatives, and regulators – can combine forces to produce a “uniform law,” one that states may be willing to adopt, much as they have the Uniform Commercial Code. The searchable database of the compiled state laws on this subject created in this study can support such efforts, as well as future research. In the meantime, innovators should be aware of and sensitive to how the variegated legal landscape may impact the results and the future of shared micro-mobility.


David Pimentel is Associate Dean and Professor of Law at the University of Idaho. Before beginning his academic career, he served as staff in the U.S. federal judiciary, including one year as a Supreme Court Fellow, before going abroad to do rule of law development work in post-conflict countries (Bosnia, Romania, and South Sudan). He also spent four years with a United Nations war crimes tribunal in the Netherlands, where he developed an appreciation for cycling as transportation. Intrigued by Idaho’s bicycle laws, he has recently published scholarship on the public policy behind legal regulation of bicycle usage and of shared micro-mobility systems.

Dr. Michael Lowry is an associate professor of Civil Engineering at the University of Idaho with a research focus on transportation planning. He serves on the National Academy of Science Committee for Bicycle Transportation and the Committee for Transportation Investment Decision-Making. He teaches courses on transportation safety, benefit-cost analysis, and geographic information systems. He was awarded the College of Engineering Outstanding Young Faculty award for excellence in teaching and research. Dr. Lowry has been a visiting scholar in Spain, Norway, the Netherlands, and the United Kingdom.

Timothy W. Koglin is a recent graduate of the University of Idaho College of Law and (soon to be) member of the Washington State Bar Association. He spent time at the United States Military Academy and Washington State University before graduating from Liberty University with a B.S. in History. He spent the last two years of law school as the research assistant for David Pimentel working on a wide range of legal topics including parenting, sports, and transportation.

Ronald W. Pimentel has been a marketing professor for 30 years and also had a 12-year career in industry doing marketing and sales. He completed a BA in Art/Design at BYU, an MBA at UC Berkeley, and a Ph.D. in marketing at The University of Arizona. He is currently a Scholarly Associate Professor of marketing and the Faculty Director of the Professional Sales Certificate program at Washington State University Vancouver. Ron has published three book chapters, and many journal articles and conference proceedings. Recent research has included inter-disciplinary work on shared micro-mobility.

Like many industries, the automated vehicle industry faced setbacks due to this year’s many COVID-19 related local and regional lockdowns. In the spring, as the first wave of the virus spread, many companies had to stop testing to protect the human safety drivers and, in the case of Bay Area companies, follow local “shelter in place” orders. One partial exception to the rule was Waymo, which has been testing fully automated vehicles without safety drivers in Arizona, was able to keep some of those fully automated vehicles operating, since there were no drivers involved.

Beyond shutting down on-the-road testing, the AV industry has seen other COVID-related fallout. Due to the pandemic Ford delayed the launch of their robotaxi service to 2022, while GM’s Cruise unit laid off 8% of their staff in May. Yet desire to invest in the AV industry appears to remain strong. Zoox, which had (at least temporary) laid off its safety drivers in April, was bought by Amazon in June. Over the summer companies have begun to announce new testing sites – with Aurora testing automated semis and cars in Dallas-Fort Worth, and a Chinese AV developer, AutoX, launching a test around PayPal’s headquarters in San Jose, CA. Closer to home, Russian AV developer Yandex announced it would begin testing in Ann Arbor, their first test in the US, while May Mobility’s AV service in Grand Rapids will resume service at the end of August.

Indeed, two other developments in Michigan show that AV and mobility-related work is still an important focus, even during periods of major upheaval. In July the state of Michigan launched the Office of Future Mobility and Electrification, which is led by the “chief mobility officer.” The office’s structure and mission is based off work done by Detroit’s Office of Mobility Innovation – and hopes to recreate that office’s success at a state level. Part of the office’s mission will be to consolidate the work of 135 different councils, boards, and commissions spread out across 17 state agencies and departments – all of which have been working on some element of mobility. Earlier this month a second major announcement pointed to just how dedicated the state seems to be toward new mobility tech. On August 13th, a public-private partnership, named “CAVNUE,” was announced, with its goal being the creation of a 40-mile long testing corridor between Detroit and Ann Arbor. The corridor would be designed for testing both connected and automated vehicles as well as infrastructure. If this project is successful, it would be a major boon for the many companies in Southeast Michigan – and would signal a move to greater public testing of emerging mobility technology beyond more controlled environments like MCity.  

One lesson of the past year has been that the future can change very quickly, making rosy predictions of future AV successes harder to believe than in “the before time.” But these developments seem to show the AV industry finding its way forward. The future promise (and challenge) of AVs hasn’t diminished, even in our rapidly changing present.

This week a California Superior Court ruled that transportation network company (“TNC”) titans Uber and Lyft have to classify drivers as employees, rather than independent contractors. The suit, spearheaded by the state’s Attorney General, sought to bring the two ride-sharing companies into compliance with Assembly Bill 5 (“AB 5”), which reclassified an array of “gig economy” workers as employees. When gig economy workers are reclassified as employees, they gain access to minimum wage requirements, overtime and sick leave, workers’ comp, disability insurance, and (importantly, in the COVID-19 era) unemployment insurance. Given those added benefits, employees can cost a company 20 to 30 percent more than an independent contractor, which is in part fueling opposition to bill and the ruling.

The decision comes after months of COVID-19 related disruptions that have cratered the ridesharing services at the core of Lyft and Uber’s business models. Lyft has reported a 61% revenue drop in the second-quarter of 2020, though it also reported an uptick in ridership in July. Uber reported a 75% drop in US ridership over April, May, and June of this year. Various lockdowns contributed to that drop – indeed, according to Uber’s own reports, nearly a quarter of its entire business comes from four US metro areas – NYC, Chicago, LA, San Francisco – along with its London operations. While the company has claimed encouraging signs from markets in nations like New Zealand, where the virus is under control, it remains to be seen if that success can be replicated in the US, where the virus is still spreading. In May, Uber announced two rounds of layoffs, cutting roughly 25% of its workforce (around 6,700 people), while Lyft cut 20% of its workforce in April.

Uber’s precarious financial situation makes its response to the Superior Court ruling all the more interesting – toying with a potential state-wide shutdown of their services, a least temporarily. In an interview, Uber CEO Dara Khosrowshahi indicated that if the company’s appeal of this week’s ruling fails, Uber may have to shut down service as they adjust to the new rules – with reductions in service outside major markets upon the service’s reactivation. That shutdown period also times out with the November election, where California voters will decide on Proposition 22, which would exempt ridesharing drivers from being classified as employers under AB 5. In a New York Times op-ed, Khosrowshahi has proposed a “third way” between employee and independent contractor. This system would require all gig economy companies to establish funds to give their workers cash payments to be used for benefits, with payouts based on the hours worked. By requiring all gig companies to pay in, individuals working for multiple companies at the same time remain covered as they switch from app to app. In response to this proposal, critics point out that Uber could already establish such a system, at least for their own drivers, if it wanted to.

California is far from the only place where ridesharing companies are being pushed to change the relationship the companies have with their drivers. In June, Seattle passed a law requiring paid sick time for TNC drivers during the COVID-19 crisis (the leave requirement would expire 180 days after the crisis has ended…). The Seattle bill grants one paid day of leave for every 30 calendar days worked (either full or part time). In Washington, D.C., a Lyft driver has challenged the company’s lack of sick days, arguing drivers should be classified as employees under city law. Indeed, as the pandemic spread workers across the nation have spoken up about the difficulty of obtaining any sick leave from gig economy companies, even when they showed symptoms of COVID-19.

Unemployment insurance has been a major focus in these disputes, especially as drivers have been unable to work due to lockdowns or COVID-related reductions in demand. Traditionally, when drivers are classified as independent contractors, they lose the ability to claim unemployment, as their “employer” doesn’t pay into the system. At the start of the COVID crisis, Congress set up a separate unemployment fund for self-employed workers, though that fund ran out at the end of July. Even while the funds were available,  however, many gig workers had a hard time obtaining them, as existing state unemployment systems struggled to adapt to new rules while being slammed with claims from millions of people newly out of work. In California, the issues surrounding Assembly Bill 5 complicated the process, as the Federal funds were marked for people classified as independent contractors, which, thanks to AB 5, now did not include many gig workers. Drivers in New York, frustrated at their inability to obtain unemployment funds sued the state government, and have won, at initially, building their arguments off two earlier rulings that deemed gig workers eligible for unemployment benefits. Part of the disputes in both California and New York involve the lack of earnings data for drivers, which the state needs to calculate their unemployment eligibility, with a lawyer for the State of New York accusing Lyft and Uber of “playing games” to prevent turning over said data. Elsewhere, the Pennsylvania Supreme Court ruled on a similar case – finding that an Uber driver was not “self-employed” for the purposes of unemployment benefits, while the Massachusetts A.G. has also recently brought suit to reclassify Uber and Lyft drivers as employees.

As the pandemic drags on, it’s hard to know what will happen next. The shortfalls of the current system have been made manifest – something clearly needs to change. Perhaps that could come in the form of Uber’s proposed “third way,” but such a system would need to be much better defined than it is now to prove it could offer a level of benefits comparable to those offered to employees. At the same time, if gig workers are to be counted as full employees, could that limit the entry of new gig companies? The massive growth of companies like Uber and Lyft was fueled in part by the cost savings that came from using independent contractors. Could new companies hope to cut into existing or new markets while also providing greater employee benefits?

For now, I’d say it’s more important to focus on the existing problem. Uber and Lyft are sophisticated technology companies, and both should be more than able to adapt their system to make their drivers employees. Given the COVID-19 related reductions in demand, the time seems right for them to make that change everywhere, not just in California. After all, according to their own plans, Uber won’t be dealing with human drivers forever, so future employee expenses will supposedly reduce with time. And while the pandemic may have harmed Uber’s ridesharing, it has helped grow its delivery service, UberEats. Even if automated vehicles replace gig drivers, they will be less able to replace workers for services like TaskRabbit or Instacart, where human labor is still central. And with expanded government-based safety nets seemingly a distant possibility, for the time being, workers will still need employer-based benefits of one form or another. Just as ridesharing companies disrupted the way people move through the world, it seems the time is right to disrupt the relationship between those companies and drivers that form the core of the TNC workforce.

The California DMV recently released several 2019 reports from companies piloting self-driving vehicles in California. Under state law, all companies actively testing autonomous vehicles on California public roads must disclose the number of miles driven and how often human drivers were required to retake control from the autonomous vehicle. Retaking control is known as “disengagement.” The DMV defines disengagements as:

“[D]eactivation of the autonomous mode when a failure of the autonomous technology is detected or when the safe operation of the vehicle requires that the autonomous vehicle test driver disengage the autonomous mode and take immediate manual control of the vehicle.”

Because of the proprietary nature of autonomous vehicle testing, data is not often publicly released;  this is one of the few areas where progress data is made publicly available. The 60 companies actively testing in California cumulatively traveled 2.88 million miles in 2019. The table below reports the various figures for some of the major testers in California.

Company Vehicles Active in CA Miles Driven in 2019 Engagements Engagements per 1,000 miles Average Miles Between Engagements
Waymo 153 1.45 Million 110 0.076 13,219
GM Cruise 233 831,040 68 0.082 12,221
Apple 66 7,544 64 8.48 118
Lyft 20 42,930 1,667 38.83 26
Aurora ? 13,429 142 10.57 95
Nuro 33 68,762 34 0.494 2,024
Pony.ai 22 174,845 27 0.154 6,493
Baidu 4 108,300 6 0.055 18,181
Tesla 0 0 0 0 0

What these numbers make clear is that there are several contenders who have made significant progress in the autonomous vehicle space, and there are some contenders which are not yet so competitive. Companies like Waymo, GM Cruise, and Baidu (which also tests extensively in China) have made incredible progress in decreasing the frequency at which a driver must engage with an automated vehicle. Others, like Apple, Lyft, and Aurora, while making progress, are nowhere near as sophisticated in avoiding engagements yet. Noticeably Tesla, the manufacturer frequently in the news for its “Autopilot” feature, does not test on public roads in California. The company says it conducts tests via simulation, on private test tracks, public roads around the world, and “shadow-tests” by collecting anonymized data from its customers during normal driving operations.

What these numbers seem to illustrate is that the autonomous vehicle industry is not all on par, as many often believe. It is often said that Henry Ford did not conceive the idea of an automobile; he perfected it. Similarly, companies like Waymo or GM may be the first to perfect autonomous vehicles, and gain an incredible market advantage once they do so. They are striving to be the Ford’s in this space, while others look like they’re still manufacturing carriages. However, despite these impressive numbers from a select few, the companies themselves think these metrics “do[] not provide relevant insights” (per Waymo) and that the idea that they give any “meaningful insight . . . is a myth” (per GM Cruise).

Why are the head and shoulder leaders on these metrics saying that they provide very little indication of progress on the technology? Disengagement reports may not be the best way for these companies to build trust and credibility in their products. They are only transparent in that they provide some data with no detail or context.

I was having a conversation about these disengagement numbers with a colleague* this week, and the topic of driver distraction arose. In the CA tests, the driver is constantly alert. Once these vehicles are in use for the general public, a notification to engage may not be effective if the driver is distracted. One reason these numbers do not provide particularly useful information is that for the metrics to be useful, at least two things must be true:

  • If the vehicle does not indicate it needs to disengage, no technical errors have been made; and
  • The driver is paying attention and can quickly engage when necessary.

In California testing, the drivers behind the vehicle are always alert and ready to take over. They may take over when the vehicle indicates they must, because of a malfunction or poor conditions. The driver can also engage when the vehicle has done something incorrectly, yet does not indicate that the driver needs to take over. This could include veering into a lane or failing to recognize a pedestrian.

One of the allures of autonomous vehicles is that a driver may not need to be 100 percent engaged for the vehicle to function correctly. However, current technology has not yet achieved this  result, as reiterated this past week by the National Transportation Safety Board (NTSB). The NTSB is an independent federal agency, which lacks enforcement power, but makes recommendations which are considered thorough and are taken seriously by policymakers.

The NTSB put forward many findings on Tuesday, February 25th regarding a Tesla crash that killed a California driver in March 2018. (A synopsis of the NTSB report and findings can be found here.) The facts of the crash involved driver of a Tesla in Autopilot mode, which struck a barrier between the highway and a left exit lane. NTSB found that the Tesla briefly lost sight of the lines marking the highway lane, and started to follow the right-most lane marker of the exit lane (because of fading on the highway lines) caused the vehicle to enter the “gore area.” This same action had apparently occurred several times in this exact vehicle, but the driver on previous trips was paying attention and was able to correct the vehicle. This time, the driver was playing a mobile game and did not correct the vehicle, causing the crash. Here was how NTSB presented three of their findings:

The Tesla’s Autopilot lane-keeping assist system steered the sport utility vehicle to the left into the neutral area of the gore, without providing an alert to the driver, due to limitations of the Tesla Autopilot vision system’s processing software to accurately maintain the appropriate lane of travel. (emphasis added)

The driver did not take corrective action when the Tesla’s Autopilot lane-keeping assist system steered the vehicle into the gore area, nor did he take evasive action to avoid the collision with the crash attenuator, most likely due to distraction by a cell phone game application. (emphasis added)

The Tesla Autopilot system did not provide an effective means of monitoring the driver’s level of engagement with the driving task.

Here we see a combined failure of both (1) and (2) presented above, combined with an inability to adequately monitor driver engagement. The vehicle took an action which it assumed to be correct, and thus did not notify the driver to take over. This combined with the driver not paying attention, failing to notice the need to disengage, and resulted in the crash. This tragic accident highlights that the AV industry still has many areas to improve before higher SAE level vehicles are ready for mass adoption. (The ADAS on the Tesla was SAE Level 2)

As I discussed last week, the federal Department of Transportation has taken a rather hands-off approach to regulation of automated vehicles, preferring to issue guidance rather than mandatory regulations. The  National Transportation Safety Board (NTSB) criticized this approach in their Tesla crash findings. The NTSB wrote that there has been “ Insufficient Federal Oversight of Partial Driving Automation Systems.”

The US Department of Transportation and the National Highway Traffic Safety Administration (NHTSA) have taken a nonregulatory approach to automated vehicle safety. NHTSA plans to address the safety of partial driving automation systems through enforcement and a surveillance program that identifies safety-related defect trends in design or performance. This strategy must address the risk of foreseeable misuse of automation and include a forward-looking risk analysis.

Because the NTSB lacks enforcement power, it cannot compel industry actors or other government agencies to take any action. It can only perform investigations and make recommendations. NTSB Chairman Robert Sumwalt had much to say regarding distracted driving, the AV industry, and the lack of government regulations in the hearing on Tuesday, February 25th.

“In this crash we saw an over-reliance on technology, we saw distraction, we saw a lack of policy prohibiting cell phone use while driving, and we saw infrastructure failures, which, when combined, led to this tragic loss,”

“Industry keeps implementing technology in such a way that people can get injured or killed . . . [I]f you own a car with partial automation, you do not own a self-driving car. Don’t pretend that you do.”

“This kind of points out two things to me. These semi-autonomous vehicles can lead drivers to be complacent, highly complacent, about their systems. And it also points out that smartphones manipulating them can be so addictive that people aren’t going to put them down,”

Chairman Sumwalt is right to be frustrated. The DOT and NHTSA have not regulated the AV industry, or ADAS as they should. Tragic accidents like this can be avoided through a variety of solutions; better monitors of driver engagement than torque-sensing steering wheels, lock-out functions for cell-phones when driving, stricter advertising and warning regulation by companies offering ADAS. Progress is being made in the AV industry, and automated vehicles are getting smarter and safer every day. But incidents like this that combine a failure of technology, regulation, and consumer use, do not instill public confidence in this incredible technology that will be beneficial to society. It only highlights how much farther we still have to go.

*I would like to thank Fiona Mulroe for the inspiration to take this approach to the disengagement report

Tesla and the State of Michigan have settled Tesla’s constitutional challenge to Michigan’s refusal to grant Tesla’s request for a Class A license, which would have allowed Tesla to open a company-owned dealership in the state. The lawsuit, which was filed in federal court in the Western District of Michigan in 2016 and was scheduled to go to trial this year, grew out of a 2014 legislative amendment to Michigan’s automobile dealer law that made it unlawful for an automobile manufacturer to open its own retail store in the state, essentially forcing automobile manufacturers to distribute cars through franchised dealers. I detailed the nefarious circumstances and effects of the 2014 legislation in Tesla, Dealer Franchise Laws, and the Politics of Crony Capitalism, 101 Iowa L. Rev. 573 (2016).

There are two important terms to the settlement: (1) the state will not contest Tesla’s right to operate service centers in Michigan through a subsidiary; and (2) the state will not contest Tesla’s right to market cars to consumers in Michigan through a “gallery” model. This settlement  allows Tesla to sell and service cars in Michigan as it wants, and thus represents a total victory for Tesla in Michigan. It could also be a tipping point in Tesla’s ongoing battle for the right to engage in direct distribution in other states.

In my view, the service component is the more important aspect of the settlement. Tesla was already able to sell cars to customers in Michigan by marketing them over the Internet and delivering them out of state, so the agreement on the gallery marketing model is helpful but not essential. On the other hand, until today Tesla was prohibited from opening a service center in Michigan, which required Michigan Tesla owners to drive to Ohio for service. It will now be able to open service centers in Michigan through a subsidiary. (The subsidiary requirement will not impose any greater burden than a few hours of corporate lawyer time). Having access to service centers in Michigan will significantly increase the appeal of owning a Tesla in the Wolverine State.

The settlement also allows Tesla to open galleries in the state, although it still may not transact “sales” of its cars in the state. In effect, this means that Tesla can have sales people show its cars to potential customers in retail spaces (i.e., malls), arrange for test drives, help customers figure out what options they want on their car, and facilitate the paperwork. The customer will then have to complete the actual sales transaction over the Internet or telephone with Tesla in California (or wherever Tesla houses its sales function). The car will then be delivered to the customer in Michigan, which will increase the convenience of the buyer experience. The only remaining limit is that the sales contract needs to say that title will transfer out of state; otherwise, the customer can configure and order the car from within the state. 

There is no good reason to deny Tesla the right to open whatever sort of sales operation it wants in Michigan, but this remaining limitation will have relatively little effect on Tesla’s business model. Even in states where Tesla has complete freedom to sell cars as it wants, it doesn’t generally open traditional dealerships with lots of inventory sitting on a lot. The company operates on a custom order basis and usually uses the sort of galleries it will now be able to open in Michigan. So, while still arbitrary and annoying, the Michigan settlement gives Tesla everything it needs to compete in Michigan.

Tesla is clearly a big winner in this settlement. Who are the other winners? And who are the losers? 

Other new electric vehicle manufacturers, like Ford and Amazon-backed Rivian Motors (which will begin selling cars in 2020) and Faraday Future (which hopefully will be able to get to market eventually) will benefit from the trail Tesla has blazed. Having settled on these terms with Tesla, it would seem legally very difficult for the state to deny a similar arrangement to any other company situated like Tesla. 

The car dealer’s lobby, which has fought tooth-and-nail to stop Tesla from distributing directing on a state-by-state basis, is clearly a big loser. Michigan, the state with the most pro-dealer law on direct distribution, has now opened the doors for new EV companies to bypass the traditional dealer model entirely.

In the short run, traditional car companies like General Motors and Ford are also losers. GM, in particular, has backed the dealers politically in opposing the right to engage in direct distribution, apparently because forcing Tesla to distribute through the dated and increasingly inefficient dealer model will slow Tesla’s market penetration. Not only does the Michigan settlement allow Tesla to avoid the cumbersome dealer model and to start gaining significant market share in America’s car capital, but it’s far from clear that traditional car companies that do franchise independent dealerships would be eligible to operate their own direct distribution system on a similar model. In other words, the Michigan settlement may permit Tesla and other EV manufacturers to leapfrog traditional car companies on distribution.

Just as there is no good basis in public policy to limit Tesla’s right to engage in direct distribution, there is also no reasonable basis to prohibit it to traditional car manufacturers either. As I have previously detailed at length, there is simply no consumer protection reason that any car company shouldn’t be able to choose how it sells cars to consumers. As companies like Tesla and Rivian accustom car buyers to the benefits of dealing directly with the manufacturer, there will be increasing competitive pressure on GM, Ford, Chrysler, and foreign auto makers to seek legislative changes in hold-out states like Michigan that still prohibit direct distribution.

Finally, although the immediate consequences of the settlement will be felt only in Michigan, the settlement will put increasing pressure on other hold-out states that still block Tesla from selling to consumers. The more states that allow direct distribution and the more customers that experience it, the less credible the dealers’ lobby will be in arguing that direct distribution harms consumers. With new entry by other companies like Rivian on a direct distribution model, the political and legal battles over car distribution are at a tipping point. Although there will still be a place for franchised dealers to play a role in car distribution for some time, the inflexible and mandatory system created by the dealer laws of the mid-twentieth century is on its last legs.

Over the last few years, emerging mobility technologies from CAVs to e-scooters have become the targets of malicious hackers. CAVs, for example, are complicated machines with many different components, which opens up many avenues for attack. Hackers can reprogram key fobs and keyless ignition systems. Fleet management software used worldwide can be used to kill vehicle engines. CAV systems can be confused with things as simple a sticker on a stop sign. Even the diagnostic systems within a vehicle, which are required to be accessible, can be weaponized against a vehicle by way of a $10 piece of tech.

For mobility-as-a-service (“MaaS”) companies, the security of their networks and user accounts is also at threat. In 2015 a number of Uber accounts were found for sale on the “dark web,” and this year a similar market for Lime scooter accounts popped up. Hacking is not even required in some cases. Car2Go paused service in Chicago after 100 vehicles were stolen by people exploiting the company’s app (the company is now ending service in the city, though they say it’s for business reasons).

The wireless systems used for vehicle connectivity are also a target. On faction in the current battle over radio spectrum is pushing cellular technology, especially 5G tech as the future of vehicle-to-vehicle communication. While 5G is more secure than older wireless networks, it is not widespread in the U.S., leaving vulnerabilities. As some companies push for “over-the-air” updates, where vehicle software is wirelessly updated, unsecure wireless networks could lead to serious vehicle safety issues.

So what can be done to deal with these cybersecurity threats? For a start, there are standard-setting discussions underway, and there have been proposals for the government to step up cybersecurity regulation for vehicles. A California bill on the security of the “internet-of-things” could also influence vehicle security. Auto suppliers are putting cybersecurity into their development process. Government researchers, like those Argonne National Labs outside Chicago, are looking for vulnerabilities up and down the supply chain, including threats involving public car chargers. Given the ever-changing nature of cybersecurity threats, the real solution is “all of the above.” Laws and regulations can spark efforts, but they’ll likely never be able to keep up with evolving threats, meaning companies and researchers will always have to be watchful.

P.S. – Here is a good example of how cybersecurity threats are always changing. In 2018, security researchers were able to hack into a smartphone’s microphone and use it to steal user’s passwords, using the acoustic signature of the password. In other words, they could figure out your password by listening to you type it in.

Earlier this month, Connecticut’s Governor Ned Lamont announced and released the details of his plan to upgrade and “transform” the state’s transportation system. The plan, Connecticut 2030 (CT2030), allocates $21 billion primarily to improving Connecticut’s highways, airports, mass transit, and ports and is pitched as “what Connecticut families and employers deserve.” While that is a wonderful goal, as usual, I have questions. However, I want to go over the basics of CT2030 before getting into those questions.

“CT2030 will result in nothing short of a transformation of the economy and quality of life in Connecticut. When residents are able to travel to and from at drastically quicker rates, families can thrive, employees are more productive, and businesses are able to grow and provide more opportunities.”

Impact of CT2030

Overall, the main point of CT2030 seems to be enabling people and business to move more quickly and more efficiently. Gov. Lamont aims to achieve CT2030’s goals by addressing four main focus areas mentioned above: highways, airports, mass transit, and ports.

Highways. The main thrust of CT2030’s highway plans appear to center significantly on I-84, I-91, and I-95. This makes sense, seeing as to it that multiple spots along each of these highways rank within the top 100 worst traffic bottlenecks in the United States. These three highways will be the focus of projects such as lane additions, exit enhancements, bridge improvements, and “user fee” installations (i.e. tolls).

Mass Transit. This portion of CT2030 focuses on public transportation in the forms of railways and buses. Again, the plans here are “all about less time commuting and more time with your family.” Railways would look forward to projects for straightening and upgrading tracks, replacing aging bridges, installing new signaling systems, and adding new cars and locomotives. Buses, in a much smaller endeavor, would receive upgrades providing consistency for users across the state’s bus system. These upgrades include fitting all bus stops with shelters for protection against bad weather and signs with information on operating routes, as well as providing real-time information updates via text message or phone app.

Airports. This seems to be one of the most underdeveloped aspects of CT2030. The two enhancements to Connecticut’s aviation sector are (1) connecting the Bradley International Airport to surrounding areas via direct railway lines, and (2) the development of a “fully functioning regional airport in South-Central CT.”

Ports. Connecticut’s four major ports and the associated maritime industry annually generate an estimated $11.2 billion. The projects for these ports are unique to each location. They include dredging to allow for larger ships and freighters to pass through more frequently and the implementation of a high-speed ferry system to provide services for commuters as well as tourists.

Now for some questions:

What about induced demand? Congestion can’t always be solved by simply adding more lanes, no matter how logical that solution would seem. And it does make sense: remove the congestion by removing the bottleneck. However, this reasonable answer runs full speed into the issue of induced demand. The phenomenon of induced demand can be stated simply: “When you provide more of something, or provide it for a cheaper price, people are more likely to use it.” This means that increasing capacity does little to relieve busy roadways when traffic acts as a “gas” and the “volume expands to fill the capacity.”

“Widening a highway is no more a solution to traffic than buying bigger pants is a solution to overeating.”

David Andrew, Hartford Courant

While some experts argue that induced capacity doesn’t cause as much strife as people claim, the potential is still something that should be taken into account. If CT2030 centers on reducing highway commute time through widening projects, there needs to be at least some discussion addressing the possible negative impacts, such as an increase in urban sprawl, carbon emissions, and more.

What about pedestrian infrastructure? While CT2030 allocates approximately $21 billion to its various projects, only an estimated $52 million would be dedicated to the Community Connectivity Program (CCP), a “grant program for municipalities to make improvements to sidewalks” that “helps local communities make necessary improvements for pedestrians.” If my math is even close to correct – honestly, no promises – this amounts to less than half of a percent.

Admittedly, I’m using the term “pedestrian infrastructure” broadly to include traffic calming and bicycle infrastructure in addition to traditional pedestrian infrastructure while CT2030 narrows the scope of CCP down to sidewalk projects. However, this doesn’t defeat the question of why so little focus is dedicated to pedestrian infrastructure.

There are plenty of unanswered questions and unaddressed concerns still surrounding CT2030. One major question mark is whether it will actually be implemented. This is thanks to Gov. Lamont and state legislators starring in leading roles opposite one another in a multi-season drama. With this in mind, it will be interesting to see how and if Connecticut moves forward with CT2030 or any rival transportation plans.

On November 19, the NTSB held a public board meeting on the 2018 Uber accident in Tempe, Arizona, involving an “automated” (actually level 3) Uber-operated Volvo SUV. One woman, Elaine Herzberg, a pedestrian, died in the accident. In the wake of the report, it is now a good time to come back to level 3 cars and the question of “safety drivers.”

Given that the purpose of the meeting was to put the blame on someone, media outlets were quick to pick up a culprit for their headlines: the “safety driver” who kept looking at her phone? The sensors who detected all kinds of stuff but never a person? Uber, who deactivated the OEM’s emergency braking? Or maybe, Uber’s “safety culture”? A whole industry’s?

The Board actually blames all of them, steering clear of singling out one event or actor. It is probably the safest and most reasonable course of action for a regulator, and it has relevant implications for how law enforcement will handle accidents involving AVs in the future. But because we are humans, we may stick more strongly with the human part of the story, that of the safety driver.

She was allegedly looking at her phone, “watching TV” as one article put it; following the latest episode of The Voice. The Board determined that she looked at the road one second before the impact. That is short, but under more normal circumstances, enough to smash the brakes. Maybe her foot was far from the pedal; maybe she just did not react because she was not in an “aware” state of mind (“automation complacency,” the report calls it). In any case, it was her job to look on the road, and she was violating Uber’s policy by using her phone while working as a safety driver.

At the time of the accident, the Tempe police released footage from the dash cam, a few seconds up to the impact, showing a poorly-lit street. The relevance of this footage was then disputed in an Ars Technica article which aims to demonstrate how actually well lit the street is, and how just the front lights of the car should have made the victim visible on time. Yet, I think it is too easy to put the blame on the safety driver. She was not doing her job, but what kind of job was it? Humans drive reasonably well, but that’s when we’re actually driving, not sitting in the driver seat with nothing else to do but to wait for something to jump out of the roadside. Even if she had been paying attention, injury was reasonably foreseeable. And even if she would have been driving in broad daylight, there remains a more fundamental problem besides safety driver distraction.

The [NTSB] also found that Uber’s autonomous vehicles were not properly programmed to react to pedestrians crossing the street outside of designated crosswalksone article writes. I find that finding somewhat more appalling than that of a safety driver being distracted. Call that human bias; still I do not expect machines to be perfect. But what this tells us is that stricter monitoring of cellphone usage of safety drivers will not cut it either, if the sensors keep failing. The sensors need to be able to handle this kind of situation. A car whose sensors cannot recognize a slowly crossing pedestrian (anywhere, even in the middle of the highway) does not have its place on a 45-mph road, period.

If there is one thing this accident has shown, it is that “safety drivers” add little to the safety of AVs. It’s a coin flip: the reactivity and skill of the driver makes up for the sensor failure; in other cases, a distracted, “complacent” driver (for any reason, phone or other) does not make up for the sensor failure. It is safe to say that the overall effect on safety is at best neutral. And even worse: it may provide a false sense of safety to the operator, as it apparently did here. This, in turn, prompts us to think about level 3 altogether.

While Uber has stated that it has “significantly improved its safety culture” since the accident, the question of the overall safety of these level 3 cars remains. And beyond everything Uber can do, one may wonder if such accidents are not bound to repeat themselves should level 3 cars see mass commercial deployments. Humans are not reliable “safety drivers.” And in a scenario that involves such drivers, it takes much less than the deadly laundry list of failures we had here to have such an accident happen. Being complacent may also mean that your foot is not close to the pedals, or that your hands are not “hovering above the steering wheel” as they should (apparently) be. That half second extra it takes to smash the brakes or grip the wheel is time enough to transform serious injury into death.

The paramount error here was to integrate a human, a person Uber should have known would be distracted or less responsive than an average driver, as a final safety for sensor failure. Not a long time ago, many industry players were concerned about early standardization. Now that some companies are out there, going fast and literally breaking people (not even things, mind you!), time has come to seriously discuss safety and testing standards, at the US federal and, why not, international level.

A University of Michigan Law School Problem Solving Initiative class on AV standardization will take place during the Winter semester of 2020, with deliverables in April. Stay tuned!

Earlier this week, Raphaël wrote about the role for no-fault insurance in an age of automated vehicles. The post raised several important questions about the future of the auto insurance industry as technology advances:

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

While Raphaël’s questions will be extremely important for the industry going forward, I want to pose a slightly different question here: Should drivers of Level 4 or Level 5 automated vehicles be required to purchase insurance at all?

Today, every US state except New Hampshire and Virginia require vehicle owners to purchase auto insurance. In a world where human drivers are in control of the vehicle, this makes sense. While flawed product designs or other manufacturer errors may contribute to car accidents today, many if not most accidents also involve some element of operator error.

In a world of fully autonomous vehicles however, this will no longer be the case. The human sitting in what is today the driver’s seat will not be in control of the vehicle in any meaningful way. Every movement such a vehicle makes will have been designed and programmed by the manufacturer or some company along its supply chain.

Given the extent of manufacturer control, would it be reasonable to have accident payouts determined by the law of products liability? Or perhaps, as Michigan Law professor Kyle Logue argued in a recent article, liability should be apportioned through a scheme of strict enterprise liability, in which automakers would be “unconditionally responsible for the economic losses resulting from any crashes of their vehicles.”

Even with the heightened manufacturer liability that may accompany highly autonomous vehicles, some room may be left for owner error, and thus for traditional insurance. Owners may be held responsible for routine maintenance of their vehicles, for ensuring software is upgraded in a timely fashion, or for actions taken if the vehicle is ever taken out of autonomous mode. But even if some minimal level of owner responsibility leads lawmakers to reject Professor Logue’s theory of enterprise liability in favor of maintenance of insurance requirements for owner/operators, insurance’s role will surely be different than it is today.

Which brings me back to a version of Raphaël’s questions that I started with. Who is the true operator of an AV, and what are they responsible for? Answering these background questions will go a long way towards determining the future of auto insurance in the era of automated vehicles.

I recently wrote about a renewed federal push to regulate automated vehicles. I’ve previously highlighted a range of state regulatory schemes, including California’s relatively strict set of regulations. Meanwhile, the advent of truly automated vehicles, which seemed imminent when Waymo announced its driverless shuttle service in Phoenix, now may be farther away than we expected. Waymo’s shuttle’s still have human safety drivers, and the technology has not advanced as quickly as expected to handle all the vagaries of the road.

But as Congress and the states struggle to get a regulatory handle on this new technology, a recent Tesla update raises an important question. Is the regulatory state agile enough to adapt when the automated vehicle market evolves in unexpected ways?

Last week, Tesla unveiled “Smart Summon,” a feature in some vehicles that allows the user to summon the car to their location. With a range of 200 feet, Smart Summon is primarily designed for use in parking lots. At least one video shows its successful use in a Costco parking lot, avoiding pedestrians and other vehicles to meet its owner at the storefront. However, the feature is not limited to use in parking lots, and videos have emerged of users trying out Smart Summon on public roads, and even running in front of their vehicle to try and make the car chase them. Despite the potential dangers this technology presents, no one has yet been injured or hit by a driverless Tesla being summoned.

Despite the seriousness with which California takes automated vehicle regulation, state authorities have determined that Teslas equipped with Smart Summon are not autonomous, and thus do not need to meet California’s AV standards. Based on regulatory definitions, this is probably the correct. A state DMV spokesperson said the state defines AVs as vehicles able to drive without active physical control or monitoring by a human. Smart Summon requires a user to be attentive to their smartphone. Furthermore, its inability to operate more than 200 feet from a human controller means that it would not satisfy SAE autonomous driving level four or five.

Despite not being a true AV though, it’s clear that Smart Summon presents many of the same dangers as one. It operates in unpredictable parking lots, filled with pedestrians and vehicles and shopping carts all moving around each other in unpredictable ways. It is the sort of environment that can get dicey for a human driver, with our experience and understanding of the subtle signals humans give off to make an otherwise unexpected move a little bit more predictable. And despite a small-print company warning that Smart Summon requires “active driver supervision,” the amount of supervision anyone can truly give a moving vehicle from 200 feet away is certainly questionable.

And yet, these vehicle are not AVs. Instead, they seem to fall within an increasingly muddled gray area of transportation that is something short of fully automated, but requires much less than full and active driver attention. In California’s current regulatory environment, this technology fits neatly into a gap.

A year ago, many people assumed we were rapidly approaching the rise of Level 4 automated vehicles that could operate smoothly on city streets. Regulations developed at the time are written with that sort of technology in mind. Even one year out, legislators were not thinking of how to assure the safety of something like Smart Summon.

So how should something like Smart Summon be regulated? What will autonomous—or semi-autonomous—technology look like a year from now, and how can government agencies prepare for it? Given the unpredictable nature of an early stage technology, regulators will continue struggling to answer these questions.

The European Union recently adopted new rules to help consumers repair household appliances like refrigerators and televisions. The rules require manufacturers to provide spare parts for years after sale – the number of years depending on the device. The “Ecodesign Directive” is intended to help protect the environment by extending the life of consumer appliances. The regulation also applies to servers, requiring firmware updates for 7 years post-production. These regulations are part of a larger battle over consumers’ right to repair their belongings, including vehicles. Vehicles are already part of the right to repair discussion, and the deployment of technically complicated CAVs will ramp up that conversation, as some manufacturers seek to limit the ability of individuals to repair their vehicles.

One current battle over the right to repair is taking place in California. In September of last year, the California Farm Bureau, the agricultural lobbying group that represents farmers, gave up the right to purchase repair parts for farm equipment without going through a dealer. Rather than allowing farmers to buy parts from whomever they’d like, California farmers have to turn to equipment dealers, who previously were unwilling to even allow farmer’s access to repair manuals for vehicles they already owned. A big part of the dispute stems from companies like John Deere placing digital locks on their equipment that prevent “unauthorized” repairs – i.e. repairs done by anyone other than a John Deere employee. The company even made farmers sign license agreements forbidding nearly all repairs or modifications, and shielding John Deere from liability for any losses farmers may suffer from software failures. Some farmers resorted to using Ukrainian sourced firmware to update their vehicle’s software, rather than pay to hire a John Deere technician. The California case is especially ironic, as the state has solid right to repair laws for other consumer goods, requiring companies to offer repairs for electronics for 7 years after production (though companies like Apple have been fighting against the state passing even more open right to repair laws).

In 2018, supporters of the right to repair were boosted by a copyright decision from the Librarian of Congress, which granted an exception to existing copyright law to allow owners and repair professionals to hack into a device to repair it. The exception is limited, however, and doesn’t include things like video game consoles, though its’ language did include “motorized land vehicles.”

So how could battles over the right to repair influence the deployment of CAVs? First off, given the amount of complicated equipment and software that goes into CAVs, regulations like those recently adopted in the EU could help extend the lifespan of a vehicle. Cars last a long time, with the average American vehicle being 11.8 years old. Right to repair laws could require manufactures to supply the parts and software updates needed to keep CAVs on the road. New legislation could protect consumer access to the data within their vehicle, so they don’t have to rely on proprietary manufacturer systems to know what’s going on inside their vehicle. A 2011 study of auto repair shops showed a 24% savings for consumers who used a third-party repair shop over a dealership, so independent access to data and spare parts is vital to keeping consumer maintenance costs down. People are very used to taking their cars to independent repair shops or even fixing them at home, and many consumers are likely to want to keep their ability to do so as CAVs spread into service.

P.S. – Two updates to my drone post from last week:

Update 1 – University of Michigan (Go Blue!) researchers have demonstrated a drone that can be used to place shingles on a roof, using an interesting system of static cameras surrounding the work-site, rather than on-board cameras, though it remains to be seen how many people want a nail gun equipped drone flying over their head…

Update 2 – UPS has been granted approval to fly an unlimited number of delivery drones beyond line-of-sight, though they still can’t fly over urban areas. They have been testing the drones by delivery medical supplies on a North Carolina hospital campus.

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.” 61 61. 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. 62 62. 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. 63 63. 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). 64 64. 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. 65 65. 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. 66 66. 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, 67 67. 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. 68 68. 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. 69 69. 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, 70 70. 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 . . . 71 71. 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. 72 72. 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. 73 73. Id. ×

Perhaps not surprisingly, the Graves Amendment has been highly litigated, from early challenges to its constitutionality, 74 74. 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,” 75 75. 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.” 76 76. 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. 77 77. See Minto v. Zipcar New York, Inc., No. 15401/09. × and Moreau and Duverson v. Josaphat, et al., 78 78. 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.” 79 79. 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.” 80 80. 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 81 81. 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.” 82 82. 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. 83 83. 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.” 84 84. 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”) 85 85. 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”. 86 86. 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. 87 87. 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.” 88 88. 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). 89 89. 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. 90 90. 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. 91 91. 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.” 92 92. Cal. Veh. Code § 11752 (West 2019); Cal Ins. Code § 11580.24(b)(2) (West 2011). ×

B.         State Law

Several states, including California, 93 93. Cal. Civ. Code §§ 1939.01 – 1939.37 (West 2017). × Hawaii, 94 94. Haw. Rev. Stat. Ann. §437D (West 2019). × Illinois, 95 95. 625 Ill. Comp. Stat. 27 (West 2019); 625 Ill. Comp. Stat. 5/6-305 (West 2019). × Nevada, 96 96. Nev. Rev. Stat. Ann. §§ 482.295–482.3159 (West 2019). × and New York, 97 97. 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; 98 98. 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. 99 99. 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. 100 100. 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. 101 101. 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. 102 102. 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. 103 103. 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. 104 104. 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. 105 105. 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. 106 106. 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, 107 107. 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. 108 108. 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. 109 109. 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. 110 110. 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. 111 111. 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). 112 112. 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. 113 113. 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. 114 114. 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). 115 115. 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. 116 116. 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. 117 117. 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; 118 118. 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); 119 119. 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; 120 120. 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; 121 121. 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; 122 122. 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. 123 123. 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). 124 124. 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. 125 125. Cal. Civ. Code § 1939.37 (Deering 2019). × As of the date of this article, a similar draft bill is pending in Massachusetts. 126 126. 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). 127 127. 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” 128 128. 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, 129 129. Md. Code Ann., Transp., § 18.5-109 (LexisNexis 2019). ×  collision damage waiver sales, 130 130. Md. Code Ann., Com. Law, § 14-2101 (LexisNexis 2019). ×  limited lines licensing in connection with the sale of car rental insurance, 131 131. Md. Code Ann., Ins., § 10-6A-02 (LexisNexis 2019). × airport concession agreements, 132 132. Md. Code Ann., Transp. § 18.5-106 (LexisNexis 2019). ×  and recordkeeping requirements, to peer-to-peer car sharing programs. 133 133. 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. 134 134. 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. 135 135. 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. 136 136. 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. 137 137. 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. 138 138. 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.” 139 139. 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. 140 140. 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. 141 141. 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.” 142 142. 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). 143 143. 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. 144 144. 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. 145 145. 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

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.

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.

California has become the second state in the nation to permit connected and automated vehicles (CAVs) to operate on public roads without a safety driver. With the recent announcement that Waymo has obtained approval to test driverless CAVs in a handful of Northern California communities, the state joins Arizona on the leading edge of the driverless vehicle revolution. Similar to the Arizona experiment, which I wrote about recently, California has positioned itself to play a key role in shaping the speed and direction of growth in the CAV industry.

California’s regulatory apparatus, while not without its critics, will provide an interesting contrast to the relatively lax system enacted by Arizona. The remainder of this post will explore the key differences between these two approaches to governance of CAVs.

Arizona requires merely that CAV operators submit written confirmation to the State that each vehicle complies with all relevant federal law, that it is capable of reaching a “minimal risk condition” when necessary, and that it be capable of complying with traffic and safety laws. California, by contrast, has a handful of more specific requirements. In addition to the need to comply with federal law, California requires that driverless CAV operators:

  • Notify local authorities in communities where testing will take place
  • Submit a law enforcement interaction plan
  • Certify that the vehicles meet the autonomous vehicle Level 4 or 5 definition of the Society for Automotive Engineers
  • Maintain a communication link between the vehicle and a remote operator
  • Inform the DMV of the intended operational design domain
  • Submit an annual disengagement report to the DMV
  • Submit collision reports to the DMV within 10 days of a crash

In addition to these requirements for driverless vehicle testing, California has a further set of requirements before driverless CAVs can be certified for public use. This supplemental set of requirements generally revolves around data recording and security against cyber-attacks.

Critics have argued that even California’s approach to CAVs is not safety conscious enough. Consumer Watchdog, a California public interest group, has raised an alarm that the state is merely taking Waymo’s word that it has met requirements “without any real verification.” The organization has also suggested that California’s regulations are not substantively strict enough, arguing that they are turning people “into human guinea pigs for testing [Waymo’s] robot cars.” Proponents though, argue that the safety concerns are overblown in light of the potential for vast improvements relative to error-prone human drivers.

While the debate over how much regulation is proper persists, it is notable how quickly California seems to be following in the footsteps of Arizona in the rollout of CAVs. One key argument in favor of Arizona’s light touch regulation is that it has positioned the state to take the lead in development of this new technology. California’s oversight, while not enough for some, is undoubtedly more rigorous than that of its neighbor to the east. Arizona’s approach does appear to have given the state a short head start in the CAV race. California’s progress, though, indicates that modest increases in state oversight may not present a substantial barrier to the adoption of this new technology.

By the end of this year, Alphabet subsidiary Waymo plans to launch one of the nation’s first commercial driverless taxi services in Phoenix, Arizona. As preparations move forward, there has been increasing attention focused on Arizona’s regulatory scheme regarding connected and automated vehicles (CAVs), and the ongoing debate over whether and how their deployment should be more tightly controlled.

In 2015, Arizona Governor Doug Ducey issued an executive order directing state agencies to “undertake any steps necessary to support the testing and operation of self-driving vehicles” on public roads in the state. The order helped facilitate the Phoenix metro area’s development as a key testing ground for CAV technology and laid the groundwork for Waymo’s pioneering move to roll out its driverless service commercially in the state. It has also been the target of criticism for not focusing enough on auto safety, particularly in the aftermath of a deadly crash involving an Uber-operated CAV in March.

As the technology advances and the date of Waymo’s commercial rollout approaches, Governor Ducey has issued a new executive order laying out a few more requirements that CAVs must comply with in order to operate on Arizona’s streets. While the new order is still designed to facilitate the proliferation of CAVs, it includes new requirements that CAV owners affirm that the vehicles meet all relevant federal standards, and that they are capable of reaching a “minimal risk condition” if the autonomous system fails.

Along with these basic safety precautions, the order also directs the Arizona Departments of Public Safety and Transportation to issue a protocol for law enforcement interaction with CAVs. This protocol is a public document intended both to guide officers in interactions with CAVs and to facilitate owners in designing their cars to handle those interactions. The protocol, issued by the state Department of Transportation in May, requires CAV operators to file an interaction protocol with the Department explaining how the vehicle will operate during emergencies and in interactions with law enforcement. As CAVs proliferate, a uniform standard for police interactions across the industry may become necessary for purposes of administrative efficiency. If and when that occurs, the initial standard set by Waymo in Arizona is likely to bear an outsized influence on the nationwide industry.

Critics have called the new executive order’s modest increase in safety requirements too little for such an unknown and potentially dangerous technology. Even among critics however, there is no agreement as to how exactly CAVs should be regulated. Many have argued for, at minimum, more transparency from the CAV companies regarding their own safety and testing procedures. On the other hand, advocates of Arizona’s relaxed regulatory strategy suggest that public unease with CAVs, along with the national news coverage of each accident, will be enough to push companies to adopt their own stringent testing and safety procedures.

This more hands-off regulatory approach will get its first close-up over the next few months in Arizona. The results are likely to shape the speed and direction of growth in the industry for years to come.

 

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.