Department of Transportation Announces a Streamlined Regulatory Exemption Process for Autonomous Vehicles

On June 13, the U.S. Department of Transportation (DOT) and the National Highway Traffic Safety Administration (NHTSA) announced changes to the process for exempting autonomous vehicle companies from the Federal Motor Vehicle Safety Standards (FMVSS) under 49 C.F.R. Part 555.  Part 555 offers an important route for the sale and deployment of innovative autonomous vehicles.  The recent announcement evidences a desire to speed up agency decisions on Part 555 exemptions, though the application process will continue to be a substantial undertaking.

The Part 555 Exemption

Currently, autonomous vehicles operating on public roads in the United States are generally required to comply with all the FMVSS that apply to traditional vehicles with human drivers.  Many of the FMVSS were designed with the assumption that a vehicle would have a driver and such features as a designated driver’s seat, steering wheel, and manual driving and braking controls.

Companies that would like to offer autonomous vehicles that do not comply with all applicable FMVSS may request an exemption under Part 555.  A key requirement of such a request is that the company demonstrate that the vehicle has “an overall level of safety or impact protection at least equal to that of nonexempted vehicles.”  A manufacturer that receives a Part 555 exemption may sell up to 2,500 non-compliant vehicles over a 12-month period.  To date, one company has received a Part 555 exemption for an autonomous vehicle, and several other applications have been submitted.

The Recent Exemption Announcement

DOT’s announcement featured a statement from Secretary Duffy that “the Part 555 exemption process has been rightly criticized for taking years – bogging developers down in unnecessary red tape that makes it impossible to keep pace with the latest technologies.”  In addition, NHTSA’s Chief Counsel Simshauser released a public letter providing more detail on the changes that would be made to the exemption application process.

The Chief Counsel’s letter announced changes to the exemption application process designed to speed up decisions.  The letter observed that “since most ADS operations evolve over time as the technology matures, developing static terms and conditions for the entire lifespan of an exempted vehicle is often challenging and time-intensive.”  Accordingly, the letter discussed two changes to the exemption process:

• First, NHTSA plans to publish “enhanced application instructions that are intended to help manufacturers better understand the application requirements in Part 555 and to provide guidance to manufacturers about the information that will be most helpful to the agency when evaluating their application.” Providing this guidance up front, according to the letter, would reduce the need for the agency to request follow-up information from applicants.
• Second, NHTSA announced it would adopt “a more dynamic and flexible approach to evaluating and overseeing exemptions for ADS-equipped vehicles,” which recognizes that autonomous operations may evolve over time. In particular, “[T]o build flexibility into the Part 555 process while also accounting for the unique aspects of those exemptions, NHTSA intends to develop terms that could be included in Part 555 exemption grants, when appropriate, to condition operations of exempted ADS-equipped vehicles on enhanced and continuing oversight from NHTSA.”  According to the letter, this change “will enable NHTSA to focus its initial review during the application stage and align the Part 555 oversight approach more closely to exemptions administered under NHTSA’s Automated Vehicle Exemption Program (AVEP).”  AVEP, which was first established in 2018, administers applications under a separate regulatory provision that allows for FMVSS exemptions, normally for small numbers of vehicles operating on set routes.  Typically, AVEP exemption applications can be processed more quickly than Part 555 exemptions.

The Larger Context of Exemptions for Autonomous Vehicles

How much the announced process changes will, in practice, speed up the Part 555 exemption process remains to be seen.  NHTSA did not announce any changes to the Part 555 regulation itself, but signaled instead that it may make determinations on requests more expeditiously.  That expedited cadence will need to factor in the public process on exemptions, which requires a Federal Register notice and comment period before NHTSA makes a final determination.

Part 555 also does not provide the only type of regulatory exemption that autonomous and other vehicles may receive from NHTSA.  As discussed above, AVEP offers another route, albeit on a more limited scale.  The agency — both during the current administration and in the previous one — has also recently taken steps to expand the availability of other types of legal exemptions for autonomous vehicles.  In its January proposed rulemaking to establish the ADS-equipped Vehicle Safety, Testing, and Evaluation Program (AV STEP), NHTSA announced that participants in the voluntary program could seek exemptions under two statutory provisions.  And in April, DOT announced that it would expand the availability of exemptions under AVEP to include domestically manufactured non-commercial vehicles.

Final Takeaways

The recent announcement further bolsters the administration’s vocal support of developing autonomous technology.  Navigating the new process for Part 555 exemptions will require technical expertise, familiarity with the relevant regulatory requirements, an understanding of how the application process works, and clear communication with NHTSA, including advocacy on how the proposed exemption furthers DOT policy objectives.  And because Part 555 is just part of a larger ecosystem of exemptions and requirements that apply to autonomous vehicles, companies seeking to deploy their innovative vehicles will want to understand which options match their business plans.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.