Clear federal regulations would lower legal risks for AV developers

In October the Department of Transportation (DOT) released its latest policy statement on AV technologies, which is broadly in line with past guidance. But if the DOT wants to “ensure safety without hampering innovation,” maintaining the status quo is not the correct approach.

Why it matters: Although some companies may worry about heavy-handed regulation curtailing the advancement of AV technology, the unknown risks of litigation and liability have the greatest potential to derail progress at this stage of development.

Details: The new DOT policy reiterates that state and local governments cannot set safety standards different from the Federal Motor Vehicle Safety Standards. But there's still room for liability under state common law. Even if an automaker complies with the FMVSS, for example, a court could find that it caused harm to vehicle owners that would entitle them to compensation.

What's needed: Federal regulations for the design, data collection and communication systems of AVs would allow developers to understand, and plan for, their risks and liabilities. As it stands, they need to account for not only the laws of 50 states, but also creative plaintiffs’ attorneys and an unpredictable judiciary. Federal pre-emption will help to manage this otherwise impossibly complex task.

• If an AV is in an accident, someone could cherry pick from the patchwork of state regulations to bring a lawsuit — claiming, for example, that the manufacturer could have prevented the accident, or at least minimized injury, by using a different vehicle communication system.
• Federal regulations for such a system that supersede state law could greatly limit this litigation risk. If well designed, they will provide clarity to manufacturers while still setting high standards for safety.

The bottom line: Concrete federal regulations could provide safety, stability and certainty. Otherwise, a patchwork of state laws governing design defects, privacy and cybersecurity could inhibit innovation.

Michael Mallow is a partner and Rachel Straus is an associate with Sidley Austin LLP’s Consumer Class Action Defense practice.

This article has been prepared for informational purposes only. It does not constitute legal advice or reflect the views of Sidley Austin LLP.