Eric Tanenblatt on Robots and Red Tape: Regulatory Uncertainty in Uber’s Self-Driving Bet

Eric Tanenblatt

Tuesday, September 13th, 2016

When Uber sets loose the world's largest commercial fleet of autonomous vehicles on the streets of Pittsburgh, Penn., this month, the pioneering experiment in self-driving will likely fix the ride-sharing giant on course for a dramatic collision with obstinate lawmakers and antique regulations.

Acutely regulated verticals, like those in health care and finance, are most vulnerable to economic disruption: When regulation stifles competition or makes difficult the entrance of new actors, the value proposition for incumbent innovation is nil. And that's what makes Uber's futuristic robotic ride-sharing so remarkable. Whereas before Uber leapt headlong into a highly controlled space, they're entering now into a regulatory dead zone.

Driverless cars represent the true Wild West of public policy, a regulatory bedlam where the hand of the law is neither felt nor seen and only those exceedingly brave or possibly a little foolish venture out.

Not since the early proliferation of motor vehicles so dramatically outpaced safety regulations in the 19th century has American transportation jumped so far forward so fast. And it's not just America speeding into the driverless future. Elsewhere, in Singapore, a software company has begun road-testing the world's first autonomous taxi service.

What awaits Uber and other driverless pioneers is a daunting public policy campaign to align existing, outmoded law and regulation with the faster-than-expected reality of robotic rides: Pittsburgh, like 41 other states and the federal government, lacks any regulation governing the operation of driverless vehicles.

In the absence of a cohesive local, state and federal regulatory framework, serious questions remain unanswered on driverless ride-sharing, including passenger safety and insurance liability and interstate travel.

Of course, it's not entirely accurate to call Uber's Pittsburgh trial balloon strictly driverless — at least not yet: Each vehicle will be staffed by a specially trained safety driver or engineer. The eventual goal is to eliminate drivers (and all the accoutrements used in the normal operation of a vehicle) entirely. And it's in that truly driverless moonshot where the questions of safety and liability abound.

But where there's regulatory uncertainty, there's opportunity. And if anyone can thrive in that environment, it's Uber, which has proven uncommonly adept at navigating public policy thickets when it began chafing entrenched taxi services across the country.

The National Highway Traffic Safety Administration, which plots the federal government's motor vehicle regulations, is soon expected to issue guidance on autonomous vehicles. Unlike its first experiment in ride-sharing — that is, on-demand hailing — Uber has the potential to shape public policy in utero rather than decades after adoption.

Public policy isn't made in a vacuum, though. If coming regulation actually enables (rather than stifles) autonomous vehicles, it's entirely possible that the nature of urban life will be radically overhauled.

Consider: Every car-sharing vehicle, according to a study by the University of California at Berkeley, removes between nine and 13 vehicles from the road. But imagine now if that same car-sharing vehicle ran in constant operation. Parking decks would vanish as urban green spaces sprouted. City streets would unclog as bike routes swelled.

By the most audacious estimates, American roadways are at least four years from truly driverless cars; more conservative researchers believe this Jetsons-like future lies as many as 18 years out. But even the conservative estimate will miscarry if technologists and regulators don't come to the negotiating table in earnest.

The public policy challenge — how to provide a wide berth for testing and deployment while still ensuring rider, motorist and pedestrian safety — is not an insignificant one. And yet it's not insurmountable. How effectively Uber influences the contouring of driverless regulation will define not only transportation in the 21st century, but also the nature of modern cities.

Eric Tanenblatt is a leader of the Public Policy and Regulation practice at the global law firm Dentons.  He previously served in the Administrations of President George H. W. Bush and President George W. Bush, acted as a senior advisor to the late U.S. Senator Paul Coverdell, and served as chief of staff to Governor Sonny Perdue.