AUTONOMOUS DRIVING AND REGULATORY PATHWAYS – A BRAZILIAN APPROACH FROM THE U.S. EXPERIENCE

by: Rodrigo Sardenberg, Senior Associate, Compliance, Business Investigations and White-Collar Crime – FAS Advogados in cooperation with CMS

by: Martin Wodraschke, Head of CMS Automotive & Mobility IFG, CEE German Practice – CMS Law Firm

The promise of reducing accidents and revolutionizing sectors such as automakers and insurance companies faces an urgent challenge: creating clear rules to allow testing and safe circulation of autonomous vehicles on the streets.

Thinking about autonomous vehicles may seem futuristic, but it is also a reflection on the present. In Europe, different countries have already regulated the development and introduction of the technology in traffic, such as Germany, the first country in the world to do so in 2021, and the United Kingdom, very recently. In the United States, a pioneer country for autonomous vehicles (“AV”), commercial AV based mobility service provider like Uber and Waymo are already on the market and in the US-States Texas and California local state regulation are already in place.

Comparing the existing legal framework for AV vehicles globally for instance the liability for car crashes is regulated inconsistent. Further, research showed that the regulatory framework for AVs follows two different regulatory approaches: the pro-business approach, leaving the providers freedom and the regulatory approach which tries to eliminate the security risk of the AVs.

In Brazil, the first car to travel on urban roads for more than 70 km was IARA in 2017, a technology developed by the Federal University of Espírito Santo. Today, it is applied in port operations and logistics through the Espírito Santo-based startup Lume Robotics, involving different companies in the sector and state entities. However, the regulatory scenario does not keep up with the speed of Brazilian innovation. Although Bill 1317/2023 is currently proceeding in the National Congress, although its current text has much to gain from the maturity of international experiences.

Given the expectation that it will enhance traffic safety, grant mobility also for elderly or handicapped people, secure extra time to driver for emails or reading as well as have repercussions on several sectors of the economy, such as in-car entertainment providers and insurance companies, if the impact of autonomous driving is as significant as expected, it is essential to have clear rules that ensure precisely this purpose. It must be avoided that over regulation hinders the development of AV businesses by determining only allowed and prohibited safety limits. Further, inconsistent rules regarding the driver’s liability for car crashes caused or not by a malfunction of the driving system will discourage customers to rely on their driving system or pay extra for the auto pilot/driving assistant.

This is because the promise that technology will increase traffic safety by reducing the human error factor, significantly lowering accident rates, has as a counterpart the relevant risk of system’s decision or failures that cause lethal or non-lethal accidents. Also, it cannot be ignored that traffic is an essentially human environment, filled with unpredictable and uncontrollable factors, such as a pedestrian crossing outside the crosswalk or countless other examples.

In other words, the current moment in Brazil is not only important, but indeed essential and it represents an opportunity to allow autonomous driving to be truly safe in the Brazilian experience. So, what can we learn from international experiences?

Changing traffic rules is a sensitive endeavor, with various implications and challenges related to social and institutional acceptance. From the perspective of international experience, we observe the conservative German approach and the British model, which already establishes preliminary liability for insurers. Within the scope of this brief reflection, we turn to the legal developments taking place in the United States.

Despite the contrast between California and Texas laws, both states are concerned with identifying the human presence in the safe operation of autonomous driving. While California requires a human operator who, to some extent, monitors the circulating vehicles remotely or onboard, Texas law lacks clarity regarding continuous monitoring. However, it imposes duties on the manufacturer and the owner to keep the autonomous driving system (SAE levels 4 and 5[1]) operating in accordance with traffic laws.

Despite their differences, both regulations aim to ensure safety and damage reduction measures, especially for the manufacturer. In other words, starting from the freedom-responsibility binomial as a premise, it is up to the manufacturer to do everything within their reach to ensure that autonomous driving is as safe as possible for passengers and the entire community.

In other words, acting freely, because it is allowed or not prohibited by law, imposes duties and precautions whose noncompliance may lead to significant legal consequences. Just imagine an accident, caused or not by a malfunction in the system, resulting in serious injuries or even the death of one of the parties involved. Note that the same example may be applicable, for instance, to a hypothetical test on a highway and to a not-so-distant future of app-based passenger transport.

Texas regulation generically imposes the duty of safety, requiring autonomous driving to comply with traffic laws and be licensed by regulatory agencies. California law, for example, requires that, during the testing phases, companies have a human operator who, in real time, monitors the operation of each of the vehicles. This remote operator, according to the text, must be able to take control of the vehicle remotely and place it in a minimum risk condition and be trained to “safely execute the duties,” including how to react to dangerous situations and potential accidents.

Although imperfect, the experiences of California and Texas can serve as guidance, especially due to the importance of imposing, at the regulatory level, guidelines on safety duties and organizing the bureaucracy related to licenses and specific authorizations from regulatory agencies.

In Brazil, the legal gap presents, on one side, the challenge of technological development under the risks of a lack of legal and regulatory support, and on the other side, the opportunity to discuss and propose the adaptation of this development to the Brazilian legal system. Companies already operating or planning to operate in Brazil face a complex scenario, in which the notion of safety and care must be suited to these circumstances. We have the chance now that we don’t just adapt a foreign legal regimes but discuss the different regulatory approaches and develop a tailored legal framework which suits best to the Brazil country.

[1] Society of Automotive Engineers – SAE is the international entity that, together with the International Organization for Standardization – ISO, develops technical standards for the development and circulation of autonomous vehicle technology. The automation levels listed by these entities range from 0 to 5. Level 3 defines conditional automated driving, while levels 4 and 5 differ between high and full driving automation, meaning that the driver’s/passenger’s level of attention is an important distinguishing factor.