Sep 5, 2018

Pennsylvania's Innovative Approach to Regulating Innovation

Autonomous Vehicles Policy Offers a Case Study in Soft Law
Jennifer Huddleston Skees Research Fellow, Adam Thierer Senior Research Fellow

In a forthcoming paper with Ryan Hagemann in the Colorado Technology Law Journal, we argue “soft law” is becoming the dominant form of technological governance. While our paper focuses on technological governance at a federal level, state and local governments are also shifting towards soft law mechanisms. A clear example of this is the Pennsylvania Department of Transportation’s guidance on autonomous vehicles (AVs).

Like “soft law” governance at the federal level, state soft law actions can take a variety of forms. In some ways, it is easier to define soft law by what it is not, rather than by precisely what it is. Soft law lacks the formal structures and enforcement mechanisms of “hard law,” such as formal rulemaking or legislation. As a result, soft law is often criticized for lacking the enforcement mechanisms and legitimacy of more formal regulations. Soft law can come in many forms, from agency-issued guidance to collaborative processes like “sandboxing” and multi-stakeholder meetings. These processes often lead to standards and best practices for developers in the affected field.

In general, soft law is more efficient and adaptable for new technologies, which often face a “pacing problem” in which traditional regulatory processes threaten to slow innovation through their inability to keep up with emerging technologies.

Last fall, the National Highway Traffic Safety Administration (NHTSA) issued updated guidance regarding standards for autonomous vehicles. However, this guidance made clear that these were recommendations and not to be taken as the force of law. Legislative actions like the AV START Act or SELF Drive Act have been discussed in Congress over the past year, but have not yet been passed into law.

Several states have attempted to fill this void and provide a policy framework for autonomous vehicles. By 2018, 29 states had enacted legislation regarding autonomous vehicles and the governors of 10 more states had issued executive orders on the topic. But many of these laws merely allow regulatory agencies to consider actions related to driverless cars or study their implications, and they do not regulate autonomous vehicles directly.

The Pennsylvania Department of Transportation has taken a unique approach by providing regulatory guidance for autonomous vehicle innovators who wish to test there without imposing more formal legislative requirements. Much like the federal regulators, Pennsylvania officials chose to sit down with innovators and work to develop voluntary safety guidance while also leaving the door open to flexible experimentation with still better systems. Critics have argued that such guidance is toothless and lacks enforceability. Yet, much like federal soft law efforts, providing guidance and best practices can improve certainty while also encouraging ongoing experimentation. Importantly, it does so by removing the fear of a heavy-handed regulatory response or innovation-stifling liability.

Other states have established more formal regulatory regimes for AVs, but these lack the flexibility of soft law to evolve as the technology does. For example, California’s DMV requirements for autonomous vehicles have more “teeth,” but also have burdensome requirements that make it difficult for innovators to start testing or to deploy more unique technologies. Meanwhile, states like Texas and Florida have much more open-ended laws addressing driverless cars, but those rules are not as adaptable for wide deployment beyond the testing phase as Pennsylvania’s soft law guidance. Many of the most innovation-friendly AV regulations have come through executive orders. Other than their increased enforceability, these orders have many of the same issues that soft law actions do because they can be easily revoked if a new governor comes in.

With Pennsylvania’s AV guidance, we now have more evidence that soft law will become the primary governance mechanism for emerging technology, not only at a federal level but at a state and local level as well. There are many advantages to this approach for both regulators and innovators, but there are also risks and tradeoffs that, if misused, could prevent innovation. Hard law will still play a role, albeit a more limited one.

State officials should follow the lead set by Pennsylvania and make a good faith effort to collaborate with innovators to achieve a balanced approach to AV policy. The goal should be to allow innovation to flourish while also increasing the public’s comfort with the new technology. Done right, this approach will help ensure that these much-needed, life-saving technologies get on the road as quickly as possible.

Photo credit: Jared Wickerham/AP/Shutterstock

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