Autonomous Vehicles

2020 Business Issues Guide

Autonomous Vehicles

Laws/Regulations Must Coincide with Technological Advances

Autonomous vehicles (AV) programs are quickly becoming more prevalent. More than 30 states and the District of Columbia have enacted AV legislation with most of the action occurring since 2018. Since promulgation of California’s regulations in 2012 and 2014, more than 50 entities have applied to the California Department of Motor Vehicles (DMV) to test AV technology on California roadways. In the meantime, cars have grown increasingly reliant on AV technology to become “smarter” with each model, incorporating additional sensors, brake assist, and other semi-autonomous features to help people drive more safely and efficiently.

AV technology is already everywhere. Our floors are cleaned by robot vacuums that sense and maneuver around furniture and drive our pets crazy (and make for cute internet cat videos). Autonomous technology in jet planes controls the flights we take around the world. And we send autonomously controlled rockets to explore space. AV technology is being developed, not just for commuters, but for commercial transit as well. Encouraging the development of and providing incentives for deploying AV technology will be essential to continue California’s place as a technological leader.

The Basics

Autonomous Means Many Things to Many People. California defines an AV as a vehicle equipped with autonomous technology that is capable of operating the vehicle without active physical control or monitoring by a human operator. There are six levels of AV technology, which derive from the Society of Automotive Engineers (SAE) International and are set forth in the figure on the next page. Different regulations apply to each level of automation.

Many states are using SAE International’s Taxonomy and Definitions for Terms Related to Driving Automation Systems for On-Road Motor Vehicles, standard J3016 as the basis for their regulations. Use of a standard set of regulations is imperative to avoid conflicting regulations that would impede travel between states. The National Conference of State Legislatures maintains a searchable database of AV bills at in an attempt to keep states on a consistent path and pave the way for streamlined deployment across the United States. Division 16.6, Section 38750 of the California Vehicle Code requires the DMV develop regulations for testing and public use of autonomous vehicles.

DMV Finalizes AV Testing and Deployment Regulations. The California DMV AV testing regulations were first developed in September 2014. Since then, at least 50 manufacturers have applied to the DMV for approval. Updated regulations were finalized on February 26, 2018. These regulations incorporate by reference the SAE International J3016 standard, and contain training, notice and annual reporting requirements for testing, including the requirement that a human be behind the wheel for testing even in fully autonomous vehicles.

Recognizing the rapid advancement in technology, the DMV also promulgated regulations for the post-testing deployment of AVs in California, including completion and certification of completion of safety testing, significant insurance coverage requirements, a law enforcement interaction plan, and, for Level 5 AVs, a communication link between the vehicle and a remote operator, as well as the ability to transmit collision data. Although this regulation does not allow for testing of commercial or freight AV technology, the DMV indicates that it is evaluating the unique safety and economic impacts of commercial AV through further study.

CPUC Considers Revision to Deployment Rules. Although the DMV is the agency charged with evaluating the safe operation of vehicles. The California Public Utilities Commission (CPUC) has asserted jurisdiction over autonomous vehicles in California. The CPUC is charged with regulating charter-party carriers of passengers, defined as those engaged in the transportation of persons by motor vehicle for compensation (Public Utilities Code Section 5360).

This jurisdictional divide causes some conflicts. For example, the DMV’s AV testing permit regulations prohibit charging fees to passengers during the AV testing period. However, once the AVs meet the DMV’s stringent testing regulations and qualify for an AV deployment permit, compensation and fees are allowed. Upon deployment, the vehicle itself is then on a similar playing field as all other DMV-approved vehicles.

The CPUC’s last major decision on AV deployment holds that CPUC-approved pilot projects of AV-related passenger carriers may not charge compensation—even if they have a deployment permit and are deemed safe by the DMV. Because of this decision, companies have a disincentive to deploy AVs in California and major pilot programs are underway in Arizona and Nevada instead.

The effect of this conflict is that while companies may seek a deployment permit from the DMV, which says they may operate safely on California’s roadways, the CPUC says these companies must continue to offer these services for free until other “forthcoming decisions regarding AVs.”

The challenge is this: why would commercial enterprises spend the time, resources and money to deploy passenger-AV technology in California when they will be prohibited from collecting any fees for doing so until some as yet-to-be-determined time? Such a conundrum only has the effect of stifling competition and encouraging companies to invest elsewhere.

The Policy Issues

Funding for AV Infrastructure. The transportation funding bill SB 1 (Beall; D-San Jose; Chapter 5, Statutes of 2017), in addition to providing much-needed repairs for California roadways, also allows for transportation dollars to be used for infrastructure improvements to support AV deployment. SB 1 states that “[t]o the extent possible and cost effective, and where feasible, the department and cities and counties receiving funds under the program shall use advanced technologies and communications systems in transportation infrastructure that recognize and accommodate advanced automotive technologies that may include, but are not necessarily limited to, charging or fueling opportunities for zero-emission vehicles, and provision of infrastructure-to-vehicle communications for transitional or full autonomous vehicle systems.”

Safety. We humans have an outsized notion of our ability to safely navigate the roadways. Test it by trying to merge onto any highway onramp at rush hour. The perception of the safety of AVs has been hampered by some high-profile accidents, with a recent study conducted by research firm J.D. Power and Associates and the National Association of Mutual Insurance Companies (NAMIC) finding that 4 out of 10 Americans “would never ride” in a fully automated vehicle.

Despite these fears, experts predict that AVs will end up much safer than human-controlled ones. According to the California Office of Transportation Safety, traffic fatalities increased 7% from 3,387 in 2015 to 3,623 in 2016, and the 2015 Mileage Death Rate (MDR)—fatalities per 100 million miles traveled—was 1.01. According to National Highway Transportation Safety Administration (NHTSA) data, which was collected from all 50 states and the District of Columbia, 37,461 lives were lost on U.S. roads in 2016, an increase of 5.6% from calendar year 2015. NHTSA found that distracted driving and drowsy driving fatalities declined, while deaths related to other reckless behaviors—including speeding, alcohol impairment, and not wearing seat belts—continued to increase.

AVs use a variety of technology, most of which does not depend upon attention spans, number of cocktail decisions, or whether your newborn kept you up all night. Computers do not listen to music, and they ignore (or can simultaneously respond to) texts while navigating roadways. Various technology is being tested by some or all of the manufacturers.

Many automakers have advocated skipping straight to Level 5 automation for added safety. They argue, perhaps rightly, that humans are not capable of resuming control quickly enough to make human backups useful, and that skipping to Level 5 would allow regulators to adapt more quickly to technology. Experts project, depending upon the level of AV used, as much as a 90% reduction in collisions, with the ensuing preservation of life.

Currently, the final regulations from the California DMV require that a human backup be used during all testing. In enacting future legislation on AVs, policy makers must balance safety, avoid conflicting regulations with other states and the federal government, and avoid overly prescriptive and burdensome regulations that impede the continued safe testing and deployment of AV technology.

Legislative and Regulatory Action in 2020

AVs and Ride Sharing. A study by the Boston Consulting Group estimated that by the end of the next decade, fully 20% to 25% of U.S. rides will be logged by Level 5 AVs operated by ride-sharing services. With several deployment programs underway, the CPUC is re-evaluating its rules around compensation, shared rides, safety plans, and data collection. Pending regulatory decisions will guide the future of whether California can be a leader in this technology, or whether companies will choose other states with less restrictive policies for larger scale deployment.

Commercial Testing and Deployment. The DMV anticipates continued exploration of testing and deployment of trucks and commercial vehicles in the coming years. Several California companies are in development for commercial use. Governor Gavin Newsom’s Office of Planning and Research published a set of principles at to help guide the policy discussion.

Overall, the Legislature must tread carefully when legislating in these areas, being sure to keep pace rather than get too far ahead of the technology curve and hinder innovation or cause unnecessary fear of new technology.

CalChamber Position

California should encourage the development of AV technology for transit and commercial operations. It should ensure that laws and regulations keep pace with advancing technology, are not duplicative, do not conflict with federal or other state laws, that California laws allow companies to receive compensation for their DMV-approved programs, and that regulation is not overly burdensome, all while maintaining consumer safety. With such a balance, California can remain at the technological forefront of AV development.

January 2021

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Staff Contact

Leah B. SilverthornLeah B. Silverthorn
Policy Advocate
Climate Change, Energy, Environmental Regulation, Transportation