On June 15, 2017, Texas Governor Greg Abbott signed a bill that will allow autonomous vehicles (AVs) to operate on the state’s roads. Texas is now one of 17 states (Alabama, Arkansas, California, Colorado, Florida, Georgia, Louisiana, Michigan, New York, Nevada, North Dakota, South Carolina, Tennessee, Utah, Virginia, Vermont, plus Washington D.C.) that have passed legislation related to AVs. Governors in Arizona, Massachusetts, Washington and Wisconsin have also issued executive orders related to AVs. Wisconsin Governor Scott Walker has formed a committee to determine AV best practices, and Washington Governor Jay Inslee formed a similar interagency work group.

According to the National Conference of State Legislatures, 33 states have introduced legislation related to AVs thus far in 2017. Some municipalities are also looking to welcome AVs to their streets. Late last year test projects were launched in Boston, and its Mayor is committed to developing policy recommendations for regulating AV technology and use. But the wave of state and municipal actions creating standards for the use of AVs could lead to a patchwork of laws that some in the industry fear will burden manufacturers and drivers. They prefer a nationwide standard.

Federal lawmakers are attentive to these concerns, and are working to respond. Earlier this year Senators John Thune (R-S.D.) and Gary Peters (D-Mich.) began drafting proposed bipartisan legislation intended to encourage innovators to continue advancing self-driving technology while still maintaining driver safety. On June 13, they joined with Senator Bill Nelson (D-Fla.) to announce a framework for legislation that aims to clarify the role of state and federal governments in regulating the use of AVs. They hope to have a bill ready by August.

On the House side, the Energy and Commerce subcommittee recently circulated discussion drafts of 14 different bills concerning national laws for AVs, each addressing different issues facing this burgeoning industry. One bill targets design and production, forbidding states and municipalities from regulating the “design, construction, mechanical systems, software systems, or communications systems” of AVs. Another would reaffirm state authority over issues such as insurance, licensing, registration, and traffic regulation.

With state and federal legislation on the horizon, companies involved in the development of AV technology must prepare for the legal issues it will present. AV advocates assert that the technology can drastically reduce the number of traffic-related fatalities on U.S. roads, but new liability issues will also arise. One high profile fatal accident has already highlighted those issues. In May 2016, Ohio resident Joshua Brown was killed in a Florida accident when his Tesla Model S equipped with Tesla’s Autopilot system collided with a semi-trailer truck. The accident immediately raised national concern about the safety of AV-equipped cars.

In January 2017, the National Highway Traffic Safety Administration issued a report stating that it had discovered no defects in Tesla’s Autopilot system, and that it could reduce accidents by as much as 40%. The National Transportation Safety Board also opened an investigation of the accident, and on June 19, 2017 issued a preliminary factual report. The NTSB found that the driver ignored seven visual warnings on the instrument panel and six aural warning to “hold steering wheel” before the crash, and had his hands off the wheel for 37 minutes before the impact. These findings highlight the fact that Autopilot-equipped cars are not self-driving. But it could be argued as a basis for design defect and failure to warn claims that the “Autopilot” name implies a self-driving capability, and thereby encourages drivers to be less vigilant and attentive to their surroundings and potential dangers. Despite the NHTSA finding that the Autopilot system could significantly reduce accidents, it did not prevent this fatality.

As with other new developments, AV technology gives rise to new issues which Congress and state governments are beginning to address. Designers and manufacturers must strive to enhance potential safety benefits, to reduce the chances for driver confusion, and to make both the capabilities and the limitations of the technology clear to users. AV systems can be designed to capture data and driver actions to improve their systems and to deal with new liability exposures. The technology creates both opportunities and challenges for the industry, insurers, and lawyers.