Liability Issues Create Potholes on the Road to Driverless Cars

Arizona lawmakers last year were debating a law laying out guidelines for an up-and-coming technology: self-driving vehicles. Then they got to a question they couldn't steer around: Who is to blame if a driverless car gets in a wreck?

When there is no driver, the answer turns complicated, and the possible targets of lawsuits expand. Is it the company that designed the technology? The car's owner, or a passenger who should have assumed control? The auto maker that built the car?

Concerns from the last group helped keep a bill introduced last year by Arizona State Rep. Jeff Dial from leaving committee. "Their concern is that somebody comes along and modifies their vehicles, and they could be held liable if that technology doesn't work," said Mr. Dial, a Republican.

The skirmishing over laws to allow self-driving cars is a lesson in the difficulties that arise when new technologies run into the dollars-and-cents concerns of corporations.
Fully driverless cars that can drive you from home to work with the push of a button are still years away, experts say. But auto makers and technology companies including Google Inc. GOOG +0.05%have been testing the technology for years and say it can lead to safer, faster and less polluted roads.

At the Detroit auto show this month, Nissan Motor Co. 7201.TO +4.36%Chief Executive Carlos Ghosn predicted that driverless cars would be in showrooms by around 2020. Audi AG NSU.XE -1.20%and Toyota Motor Corp. 7203.TO +0.23%showed off self-driving technology at the Consumer Electronics Show in Las Vegas this month.

Some states are starting to consider how the legal landscape should change for vehicles in which a driver isn't always in control.
Arizona is one of more than half a dozen states that have weighed bills for the driverless road. But only California, Nevada and Florida have passed laws on the subject. And most of those measures haven't reached far.

The main effect of a law passed in California last year was to direct the state's Department of Motor Vehicles to come up with rules by 2015. Florida's Legislature last year gave its motor-vehicle agency until 2014 to prepare a report on the cars.

Nevada, where legislators have gone the furthest, in 2011 became the first state to pass legislation on the topic. At the Legislature's direction, Nevada's Department of Motor Vehicles developed 22 pages of rules governing driverless vehicles and licensed Google, Audi and auto-parts maker Continental AG CON.XE +0.66%to test them on public roads, said DMV director Troy Dillard.

So far, Nevada doesn't allow self-driving cars for anything but testing. The vehicles must first go through 10,000 hours of testing on closed tracks, and the tester has to put up a bond of at least $1 million to cover any potential liability.

Special licenses for private owners of driverless vehicles are on the horizon, Mr. Dillard said. "This has never been done anywhere in the world," he said. "Autonomous vehicles 1.0 is what we've come up with."

Bryant Walker Smith, a lecturer at Stanford Law School who has studied driverless vehicles, said the new laws leave many issues unaddressed. In part, that is because fully driverless vehicles are many years away.

"We don't actually have a fully self-guided car," Mr. Smith said. "We don't know how various aspects of that will be introduced. We don't know how they will ultimately perform or what 'safe' is.…It would be much easier to analyze the legal uncertainty if we had an actual product out there."

Liability was the sticking point in Arizona, said Mr. Dial, the state legislator. After he introduced his bill, he was contacted by a local representative of the Alliance of Automobile Manufacturers, the auto industry's main trade group, which raised the questions about auto-maker liability. Last week, he introduced a new bill that he hoped would allay those concerns, though now he is getting questions from the insurance industry, he said.

"You're seeing more and more people interested in developing these cars," Mr. Dial said. "I would like to just put some clarity out there, since we are seeing these cars already being demonstrated."

Florida has taken tentative steps toward addressing liability. A late amendment to that state's legislation exempted the original car maker from liability if injuries resulted from a modification into a self-driving vehicle.

The provision was sought by the Alliance of Automobile Manufacturers.

The group in September urged California Gov. Jerry Brown to veto that state's legislation, which lacked an exemption similar to Florida's. But the governor, a Democrat, signed the measure.

Auto makers trumpet the potential safety benefits of driverless cars, saying they could ease traffic jams and react to hazards more quickly that drivers can.

There are "huge benefits" to the technology, said Gloria Bergquist, vice president of the auto makers' alliance. But she said it is preferable for liability laws to come at the federal level to avoid a patchwork of different state laws. "The liability costs for this could be huge," she said.

The federal government has done little on driverless cars, however. The National Highway Traffic Safety Administration in October said it planned to conduct research on automated driving but hasn't issued any rules.

Author: Dan Strumpf

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