It is practically a law of nature: Technology advances more quickly than our legal system can adapt. As we now enter what many call the fourth Industrial Revolution (4IR), the pace of innovation will only increase, leading to an ever-widening delta between law and technology. Emblematic of the problem created by this legal and regulatory void is the emergence of automated vehicles (AVs) and a more modern transportation system. The advances will improve efficiencies and quality of life, but the real benefit to our society lies in the potential to eliminate the 40,000 deaths in the United States and 1.2 million deaths annually worldwide caused by motor vehicle accidents.
Advances in automotive tech are going to expose the chasm between technology and law in ways we have not experienced in the past. For starters, the current regulatory scheme is ill equipped to evaluate how safe this new technology is and how it should be introduced into the market. Traffic-related litigation already consumes enormous judicial resources. The lack of a proper understanding among legal professionals as to how AV technology works will only slow AV deployment, as stakeholders will be forced to navigate competing common-law decisions. It is also clear that the federal government does not have much interest in actively regulating AV technology at this juncture and is instead adopting a hands-off approach regarding AV regulation. Simply put, our government does not currently have the means, resources, understanding, or desire to adapt quickly enough in this space.
Fortunately, we can look to other private industry standards for guidance when attempting to fill or, at the very least, manage this void until the legal system reaches cruising speed. This article reviews how industry standards have been used in other situations for insight into how industry participants can bridge this same divide in the AV space. This article also raises the concern that reliance on these standards by industry stakeholders may present legal risk to those parties as they try to move AV technology into the mainstream. Ultimately, our government and judiciary will need to rely on these private standards and use them as a means to analyze and validate these new life-saving products.
The Current Landscape
Currently, 36 states and the District of Columbia have passed AV legislation or have attempted to regulate AVs through executive orders. Only 19 states allow for testing of AVs on public roadways, and 12 permit testing of AVs without a human driver present. At the federal level, the situation appears bleak. While the SELF DRIVE Act passed in the House of Representatives, the AV START Act (the SELF DRIVE Act’s Senate counterpart) has not been called to a vote. Even with bipartisan support, the current political climate makes it unlikely that comprehensive AV legislation will become law anytime soon. Several recent, high-profile accidents involving AVs have not helped quell fears about the state of the technology.
In addition to pending legislation, the National Highway Traffic Safety Administration (NHTSA) has, on three separate occasions, released a series of “best practices” for original equipment manufacturers (OEMs) and state governments regarding AV manufacturing and governance. The most recent guidance, Automated Vehicles 3.0: Preparing for the Future of Transportation, was released in October 2018. Like version 2.0, the latest version of the guidance falls in line with the current administration’s deregulatory agenda, making it clear that OEMs need not wait to test or deploy AVs. Safety advocates have complained that OEMs thus far have largely ignored NHTSA’s voluntary guidelines, and safety advocates have called for more stringent regulations.
Aside from a general disagreement about how the industry should be regulated, there is a concern that a heavy-handed regulatory approach could stunt growth. While one may assume that a delay in the name of safety is warranted, it is often forgotten by critics of AV technology that as long we delay AV distribution, the death toll associated with traditional automobiles will continue to rise.
Looking Backward to Move Forward
As we move forward, stakeholders invested in AV success need to ensure that these vehicles are designed to be as safe as possible without overburdening the industry and ultimately delaying AV deployment. The history of aviation can provide guidance on how a nascent industry can develop into a safe, efficient, and universally accepted means of travel.
In 1926, Congress passed the Air Commerce Act, which established the Aeronautics Branch (AB). While safety oversight was a concern, Congress also wanted to avoid placing an excessive burden on the fledgling airline industry. In turn, the AB developed detailed rules with extensive consultation with aviation business leaders. In addition to limiting the burden placed on the airline industry, the act was passed during the Coolidge administration, which was primarily focused on reducing government spending.
As airplanes grew more advanced and more customers took to the skies, basic regulations were deemed inadequate to ensure the safety of the flying public. The AB was converted into the Bureau of Air Commerce (BAC), and new commercial airline safety rules were issued in 1935. Yet, this increased regulation did not upend the airline industry and halt its growth. Instead, the BAC oversaw a several hundred-fold increase in the number of pilots, airmail revenue, and passengers carried between 1927 and 1937, while the rate of fatal accidents per aircraft mile decreased by a factor of 10 for scheduled airline service and by a factor of 4 for other flying.
In 1958, Congress passed the Federal Aviation Act and created the Federal Aviation Administration (FAA), the agency responsible for regulating airplanes to this day. While the FAA has broad regulatory authority in the aviation space, industry standards still play a major role in influencing airline regulations. The FAA Industry Training Standards (FITS), for example, are a series of aviation safety guidelines the FAA develops in conjunction with industry leaders and academics. The purpose of FITS is to provide training guidelines for pilots of technologically advanced aircraft in order for them to develop in-depth knowledge of potential safety mechanisms and risk management skills. Within FITS, it is the role of industry leaders and academics to generate the appropriate standards, while the FAA’s responsibility is to promote the industry-accepted guidelines.
Multiple parallels can be drawn between the regulatory landscape of the AV industry today and the sentiment held by government officials and industry participants at the dawn of the age of commercial aviation. Like the Coolidge administration, the current administration also remains focused on deregulating private industry wherever possible. As stated previously, NHTSA’s release of Automated Vehicles 3.0 aims to limit the federal government’s role in AV development for the time being. Furthermore, the Trump administration shares the Coolidge administration’s belief that regulating a newly developing industry could limit its growth potential.
Even if the AV START Act becomes law and NHTSA issues regulations regarding AV manufacturing, it is likely that the agency will allow AV industry stakeholders broad discretion, similar to that afforded to airline companies by the FAA. Moreover, NHTSA is also likely to work with industry leaders to develop self-regulatory standards instead of binding regulations. In fact, NHTSA’s most recent AV guidelines were developed with input from industry leaders, and the agency in the past has encouraged state and local officials to work with stakeholders when developing regulations.
Another, more recent, example of an industry experiencing a regulatory and legal evolution can be seen in the explosion of personal data use by organizations. While improper data use rarely results in the endangerment of human lives, the collection and misuse of individuals’ personal data have become hot button issues of late, due to the seemingly never-ending disclosure of data breaches.
In parallel to AVs, access to, use of, and improper dissemination of one’s personal data via the Internet were not issues that the legal system had to contend with previously. As an increasing number of individuals shared personal details about themselves online, organizations began to develop a new business model whereby individuals paid for a service by providing their personal data. The data collected were then used by other organizations to engage in targeted advertising. The rapid collection of personal data, combined with a failure on behalf of many organizations to take necessary steps to protect the data, has led to a rash of high-profile data breaches. While these data breaches are highly troubling, the limited regulation of the Internet during its development helped spur the information age and allowed nearly all individuals to enjoy similar services regardless of income level. This model has been responsible for significant job growth (2.6 new jobs added for every job lost to technology-related efficiencies), the creation of entirely new industries, and 21 percent of global gross domestic product growth over the past five years.
As was the case with the aviation industry, Internet-based organizations were, for the most part, given free rein early on to use and collect personal information as they saw fit because the government did not want to hurt the industry by overregulating. In recent years, however, both federal and state governments have begun to regulate how personal data are managed. All 50 states have some form of a data breach notification law, while the federal government looks to enforce appropriate privacy protections via a patchwork of laws and regulations. Private companies have also begun self-regulating in this space. The Network Advertising Initiative (NAI) is a trade group that prescribes guidelines for advertising companies to follow in order to protect user privacy. Its code of conduct focuses on its members providing consumers with clear and meaningful notice about their data collection practices, along with offering an opt-out option for consumers who do not wish to receive targeted advertisements.
If NHTSA’s most recent guidance is any indication, it seems that the federal government is adopting a similar mind-set for AVs as it did early on for Internet companies and is avoiding passing encumbering regulations that could hinder industry growth. Thus, it is possible that the federal government will provide a minimal regulatory framework as an incentive for industry leaders to develop their own standards, as the NAI does in the data privacy space.
The history of the building and construction industry can act as another guide for AV stakeholders looking to develop private standards to fill the legal and regulatory void. The U.S. General Services Administration (GSA) is the agency responsible for recognizing model building codes that federal buildings must abide by. Instead of developing these codes itself, the GSA adopts nationally recognized codes from private organizations, like the International Code Council and the National Fire Protection Association.
The deference given by the federal government to private standards in building construction could be emulated with regard to AVs. As discussed earlier, the absence of AV regulations opens the door for international organizations to take the lead on developing AV deployment standards. The Society of Automotive Engineers (SAE), for example, has had success in setting AV guidelines through its standardization of automation levels and is currently working on standardizing AV testing. Groups like the SAE may continue to find themselves in the driver’s seat when it comes to setting AV standards.
What’s Next for AVs?
It is important to note that the regulation of the aviation, construction, and Internet data industries did not begin in earnest until after passenger planes took flight, after buildings were constructed, and after personal data had already been collected en masse. Observations were made, regulations were instituted, and legislation was passed to address problems as they arose. As market participants gained experience and the government gained insight, it became easier to determine where regulation was necessary. The AV space will likely follow a similar trend. The government, fearing early intervention could stymie growth, will continue with its hands-off approach or act collaboratively with industry participants to further develop the AV market.
There is a concern, however, that the court system will not follow the government’s lead. While stakeholders often use private industry guidelines to establish necessary operative parameters and regulatory agencies often defer to these industry-accepted standards, courts tend to chip away at them, establishing more stringent requirements via common law. Class action lawsuits have historically been a useful tool in ensuring that consumer needs are met and rogue companies are kept in line. Often, however, courts look to industry standards as a mere guide of whether a company acted reasonably or, worse, ignored industry standards altogether. See, e.g., Perez v. Townsend Eng’g Co., No. CIV.A.4:05-CV-02337T, 2008 WL 2486532, at *3 (M.D. Pa. June 19, 2008); Howard v. Omni Hotels Mgmt. Corp., 203 Cal. App. 4th 403, 426, 136 Cal. Rptr. 3d 739, 756 (2012). Individual judicial decisions, however, should not be allowed to effectively establish new, more stringent standards for AV industry stakeholders to adhere to. Stakeholders must be allowed to determine the level of risk deemed acceptable for their industry.
Why should AVs be treated differently than other products that have come onto the market? The answer is twofold. First, time is our enemy in this instance. Traditional vehicles kill tens of thousands of people a year. AVs have the potential to significantly reduce that number. Each day we delay placing AVs on roadways is another day we must accept deaths caused by traditional vehicles. Second, AVs are self-improving. When it comes to driving dynamics, there will rarely be a need for a recall, refund, or replacement as these vehicles are consistently learning, adapting, and updating based on their own road-going experiences. Class actions will increase manufacturer costs and force slowdowns in the production process. Fewer AVs produced means fewer AVs on the road, ultimately extending the time it takes for AVs to learn about the vast network of roadways that make up this country. To make matters worse, courts seldom rule in concert on any one particular issue. What results is not merely a patchwork of legislation or regulations, but also a patchwork of equally damaging common-law decisions. Conflicting common law in different jurisdictions forces AV industry stakeholders to cater their product to meet the needs of each individual jurisdiction, further increasing stakeholder risk, increasing production and legal costs, and ultimately delaying distribution.
It should be noted that as the market matures and it becomes clear what a successful product looks like, the government can and should slowly become more involved. This transition will take time and the industry will suffer some growing pains in the interim. The long-term goal, of course, is to ensure that both products and services that come to market are safe and change lives for the better. Legal interference, however, will slow this process. Because the auto industry is responsible for an average of 40,000 deaths per year, we can no longer afford to drive along in the slow lane.
Michael R. Nelson is a partner at Eversheds Sutherland (US) LLP in New York City, New York. Trevor J. Satnick is an attorney in the Litigation Practice Group and Privacy and Data Security teams at Eversheds Sutherland (US) LLP in New York City, New York. Ali Jessani, also with Eversheds Sutherland (US) LLP in Washington, D.C., is not yet admitted to practice.
Copyright © 2018, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).