Welcome to The On-Ramp, the newsletter from Venable's Autonomous and Connected Mobility team. The On-Ramp explores legal and policy developments in the world of autonomous vehicles, smart infrastructure, emerging mobility technologies, and electrification, from Capitol Hill to the U.S. Department of Transportation and beyond.

Congress was out on recess for the month of August, but the Biden administration was active in issuing policies and regulations related to emerging technologies. Lawmakers also face a busy schedule upon their return. The House still needs to pass all 12 of its spending bills, which will then need to be reconciled with the Senate's versions—all of which needs to happen before the federal government runs out of funding on September 30, 2023. Given the condensed timeline, it's likely that lawmakers will pass a short-term funding measure, known as a Continuing Resolution, to avoid an impending government shutdown. Other tasks awaiting Congress include passing the Federal Aviation Administration Reauthorization bill, which stalled in the Senate prior to the August recess because of disagreements over pilot training requirements.

White House Activity

Biden Administration Signs Executive Order on Outbound Investments

On August 9, 2023, President Biden signed an executive order (EO) declaring a national emergency to deal with the threat posed by the advancement of countries of concern in areas of sensitive technologies and products critical for the military, intelligence, surveillance, or cyber-enabled capabilities of such countries, and the risk of certain U.S. investments exacerbating this threat. The EO is focused on technologies and products in the semiconductor and microelectronic, quantum information, and artificial intelligence sectors.

Under the EO, the secretary of the treasury is directed to issue, subject to public notice and comment, regulations that either prohibit or require notification to the secretary of certain transactions involving covered foreign persons in certain sectors. Prohibited transactions would include those that the secretary of the treasury determines to involve technologies and products that pose a particularly acute national security threat, because of their potential to significantly advance the military, intelligence, surveillance, or cyber-enabled capabilities of countries of concern.

The EO directs the secretary to assess, within 1 year of the effective date of the regulations issued, whether to amend the regulations, including whether to adjust the definition of "covered national security technologies and products" to add or remove technologies and products identified. The EO would also require a report to the president, within 1 year, assessing the effectiveness of the regulations imposed and any recommendations for modifications.

Congressional Activity

House Energy and Commerce Committee Holds Hearing on AV Legislation

On July 26, 2023, the House Energy and Commerce Subcommittee on Innovation, Data, and Commerce held a legislative hearing to consider two draft autonomous vehicle (AV) bills. During the hearing, titled "Self-Driving Vehicle Legislative Framework: Enhancing Safety, Improving Lives and Mobility, and Beating China," lawmakers discussed a draft bill by Rep. Bob Latta (R-OH) and another draft bill by Rep. Debbie Dingell (D-MI). Witnesses at the hearing included (1) Mark Riccobono, president, National Federation of the Blind; (2) John Bozzella, president and CEO, Alliance for Automotive Innovation; (3) Gary Shapiro, president and CEO, Consumer Technology Association; and (4) Dr. Philip Koopman, Ph.D., associate professor, Carnegie Mellon University.

The hearing provided House members an opportunity to discuss the importance of developing a legislative framework for the deployment of AVs, what would be required of such a framework, and the challenges the U.S. faces regarding competition from other countries, particularly China. Discussion and questions from members were focused on AV safety, NHTSA's standing general order (SGO) requirements, arbitration and liability issues, competition with China, preemption of state and local law, and potential workforce impacts.

U.S. Department of Transportation Activity

NHTSA Issues Proposed Rule to Update Fuel Economy Standards for Passenger Cars and Light Trucks

On August 17, 2023, the National Highway Traffic Administration (NHTSA) issued a Notice of Proposed Rulemaking (NPRM) to update fuel economy standards for passenger cars and light trucks. The NPRM would require a 2% per year improvement in fuel economy for passenger cars, and a 4% per year improvement for light trucks beginning in model year 2027 through model year 2032. NHTSA estimates that, if implemented as proposed, these new standards could result in an average fleet fuel economy of 58 miles per gallon by 2032. The NPRM also includes a 10% per year improvement for commercial pickup trucks and work vans (with gross vehicle weight ratings of more than 8,500 pounds and less than 14,001 pounds) beginning in model year 2030 through model year 2035.

NHTSA is requesting comment on the proposal as well as additional alternative fuel economy standards identified in the NPRM. Comments are due October 16, 2023.

Grants and Funding Opportunities

• Federal Highway Administration (FHWA) Announces Grants to Accelerate Innovation in Highway Projects. On August 22, 2023, the FHWA announced $8.8 million in grant funding under the Accelerated Innovation Deployment (AID) demonstration program. The funding was awarded to 10 projects across 8 states and the District of Columbia. The AID program supports the dissemination and deployment of proven transportation innovations through any phase of a highway transportation project. Among the recipients is the Maine Department of Transportation, which will use the funding to support a pilot project to improve the agency's ability to manage data through sensors and other technological advancements and to provide insights on how to recognize, respond to, and analyze incidents statewide.
• Department of Transportation Announces Second Year of SMART Grant Funding. On August 8, 2023, USDOT announced a Notice of Funding Opportunity (NOFO) for Stage 1 grants under the Strengthening Mobility and Revolutionizing Transportation (SMART) grant program. Stage 1 Planning and Prototyping solicits applications for projects that use advanced data and technology, and that provide significant benefits to a local area, a state, a region, or nationally. Projects must demonstrate at least one of the following technologies: (1) Coordinated Automation; (2) Connected Vehicles; (3) Intelligent, Sensor-Based Infrastructure; (4) Systems Integration; (5) Commerce Delivery and Logistics; (6) Leveraging Use of Innovative Aviation Technology; (7) Smart Grid; and (8) Smart Technology Traffic Signals. This NOFO makes available up to $50,000,000 for FY23 Stage 1 grants. USDOT anticipates funding up to 30 projects under this NOFO, with a minimum award amount of $250,000 and a maximum of $2,000,000. Applications are due October 10, 2023.

Other Federal Agency Activity

Department of the Treasury Publishes ANPRM on Outbound Technology Investments in Countries of Concern

As directed by President Biden's EO on Outbound Investment, the Department of the Treasury published on August 14, 2023 an Advanced Notice of Proposed Rulemaking (ANPRM) titled "Provisions Pertaining to U.S. Investments in Certain National Security Technologies and Products in Countries of Concern."

The ANPRM has two components: (1) regulations prohibiting certain types of investment by a United States person in a covered foreign person whose business involves certain categories of advanced technologies and products and (2) regulations requiring notification to the secretary regarding certain types of investments by a United States person in a covered foreign person whose business involves certain categories of technologies and products. The focus of both components is on investments that could enhance a country of concern's military, intelligence, surveillance, or cyber-enabled capabilities.

The Treasury Department does not anticipate conducting a case-by-case review of all outbound investments—instead leaving it to the discretion of the parties involved whether the investment is permitted—does not intend to impede all U.S. investments into a country of concern or impose sector-wide restrictions, and does not intend the regulations to apply retroactively. The Treasury expects to create a carveout or exception for specific types of investments, such as investments into publicly traded securities or exchange-traded funds. The focus, as in the EO, will be on investments in the semiconductors and microelectronics, quantum information technologies, and AI systems sectors.

Comments are requested on all aspects of the proposed regulations, including definitions used in the regulations and the specific, identified areas of national security technologies and products for the purposes of prohibited or notifiable transactions. Comments are due September 28, 2023.

Joint Office of Energy and Transportation Stands Up Electric Vehicle Working Group

The Joint Office of Energy and Transportation announced members of the recently established Electric Vehicle Working Group (EVWG). The EVWG will comprise industry experts and leaders, including representatives from vehicle, component, and battery manufacturing companies; public utility companies; local and regional elected officials; state energy planners; and labor officials representing transportation industry workers. Members of the working group also include officials from the U.S. Departments of Energy and Transportation, the Environmental Protection Agency, the Council on Environmental Quality, the General Services Administration, and the U.S. Postal Service.

The EVWG was created by the Bipartisan Infrastructure Law (BIL) and established in June 2022. The EVWG's mandate includes making recommendations to the secretaries of transportation and energy regarding the development, adoption, and integration of light-, medium-, and heavy-duty EVs into the energy and transportation systems in the United States.

The first meeting of the EVWG is scheduled for September 26.

State Activity

CPUC Approves Permits for AV Companies in San Francisco

On August 10, 2023, the California Public Utilities Commission (CPUC) approved resolutions granting additional operating authority for two AV companies to conduct commercial passenger service in San Francisco. The approved resolutions allow the companies to offer passenger service in their autonomous vehicles without a safety driver present throughout the city, at all hours, day or night, and to collect fares for these rides.

Companies are required to have, as a prerequisite for deployment in California, an Autonomous Vehicle Deployment Program Permit issued by the California Department of Motor Vehicles (DMV). This DMV permit is distinct from the CPUC permit. Under the CPUC program, companies are required to submit an Advice Letter to enter the market as a passenger carrier using driverless vehicles or to make significant alterations to their current driverless passenger service.

The CPUC voted 3-1 to approve the resolutions following a public hearing.

* The authors would like to thank Tess Brennan, an Autonomous ＆ Connected Mobility Analyst in Venable's Washington, DC office, for her assistance in writing this newsletter.