Gerald W. Brock & Lindsay M. Abate (Scherber)
In August 2014, the National Highway Traffic Safety Administration (NHTSA) issued an Advanced Notice of Proposed Rulemaking (ANPRM) and an accompanying technical report to initiate the rulemaking process to establish a new Federal Motor Vehicle Safety Standard (FMVSS No. 150) that would require vehicle-to-vehicle (V2V) communication capabilities in new passenger cars and light truck vehicles. NHTSA believes that requiring such capabilities will “facilitate the development and introduction of a number of advanced safety applications…[that would] warn drivers of possible safety risks in situations where other technologies have less capability.” NHTSA asserts that V2V technology has the potential to address some of “the most deadly crashes that U.S. drivers currently face,” but that manufacturers will not have the incentive to develop V2V capabilities absent regulation.
NHTSA should proceed with extreme caution as it decides whether to move forward with a costly, highly prescriptive V2V communication mandate for which benefits are far too dependent on unpredictable variables. In assessing NHTSA's ANPRM and associated technical report, we identified several areas that require further analysis and possible reevaluation. Specifically, we argued:
1. The market failure that requires regulation has not been clearly demonstrated.
While NHTSA implies that network goods, such as V2V communication, require government intervention to induce collective action and avoid market failure, we provided examples such as the Picturephone, facsimile, and compact disc player, to demonstrate that several factors allow markets to function adequately despite the presence of network effects. First, if a small number of users have substantial demand for communication among themselves, they may constitute a viable network that will grow over time. Second, if demand for the product is low, the market may fail even if network effects are overcome. Finally, one or more large firms may overcome network effects through administrative forms of coordination. We hope NHTSA will take these principles into account as it continues to evaluate whether a market failure is indeed present.
2. It is impossible to predict the future course of technology with enough confidence to prescribe a specific detailed standard that will remain in effect for many years.
To illustrate this concern, we described the U.S. government's previous experience attempting to predict and standardize what it perceived as the “best” technology in the realms of data communications and television. As we demonstrated, despite expertise and significant research, it is far too difficult to accurately forecast the ways in which technology and markets will develop long-term. Thus, anticipatory standardization should be avoided whenever possible. When new technological requirements are necessary, however, they should be developed with sufficient flexibility to allow modification in light of future innovation and events.
3. The cost-benefit analysis appears to underestimate some costs and overestimate some benefits.
Specifically, after evaluating NHTSA's cost and benefit estimates against the regulatory principles set forth in Executive Order 12866, we believe that the agency failed to take sufficient account of the adverse distributive impact a mandate would have on early adopters and low income individuals. We also believe that the agency should place greater weight on consumer acceptance costs, such as privacy and cyber security risks. Finally, we hope the agency will reassess the accuracy of its estimates relating to the development and maintenance of the proposed security and communications systems, specific safety applications, and roadside equipment. With respect to benefits, we urge the agency to more thoroughly evaluate the extent to which after-market deployment levels, driver response to warning messages, and the future availability of substitute technologies will impact the realization of V2V's potential benefits.