By Steven DeBaun, Partner, Best Best & Krieger & Gregory Rodriguez, Of Counsel, Best Best & Krieger.
Emerging “smart” technologies are dominating discussions in the transportation world. At the recent Transportation Research Board conference in Washington, D.C., one definitely gets the sense that we are at a turning point concerning how people view and use transportation — from the quick rise of ride sharing to the increase in pilot projects for the eventual rollout of automated vehicles. While revolutionary and exciting, there are many legal issues that come with the new technologies and ideas being integrated into the transportation sector. These are in addition to the looming need for a long-term funding solution for future maintenance and improvement of our country’s aging transportation infrastructure.
While technology tends to be in front of the law, discussing and tracking developments concerning new smart transportation technologies now can help public agencies from a risk-planning standpoint. It can also help in identifying grant funding and partnership opportunities, so agencies are not left in the rear view mirror as technology speeds by.
The following are transportation themes and legal issues that we expect to be trending in 2016:
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Autonomous Vehicles: The viability of autonomous vehicles hitting streets and highways within the next five years is an exciting and hot discussion topic. The White House and Department of Transportation recently announced a budget proposal of nearly $4 billion over the next 10 years to accelerate the development and adoption of safe autonomous vehicle technologies through increased pilot projects across the country.
As part of the smart implementation of this new technology, state and local governments should start considering a number of issues, including broadband connectivity, new street design incorporating revised traffic and pedestrian patterns to accommodate drop-offs and pick-ups, potential loss of revenues from traffic and parking tickets, modifications to vehicle and traffic codes, and insurance and liability issues — just to name a few.
As the development of this exciting technology evolves, the roles between cities, states and the federal government will need to be clarified, similar to the ongoing discussion concerning drones. We expect to see more states like California proposing autonomous vehicle regulations, especially as more pilot projects hit the streets, which may lead to confusion and inconsistencies across state lines. Accordingly, states and local agencies should closely monitor rulemakings by neighboring jurisdictions, states and the DOT to ensure they have a voice in the development of the legal and regulatory framework that will come with the integration of new autonomous technologies.
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On Demand Mobility: With increases in urban populations, studies have seen a decline in car ownership. Trends show that more people are making decisions on what mode of transportation is going to get them there fastest — rideshare like Uber or Lyft, light rail or commuter rail, bus, bikeshare and/or walking. Now, imagine if all that information was available on your phone and you could pay for it all with one method of payment. The transit industry is working toward such “bundling” of transportation services and transit agencies are working to update payment platforms to allow fare cards to be jettisoned for more modern forms of payment. Mobile payment apps are being developed by transit agencies across the country, including TriMet, MBTA and CTA.
By making it more convenient and efficient for riders to pay for transit, the more likely people are to consider public transportation as a viable option. While such new technologies have the ability to increase ridership and fare revenue, these trends also have large legal implications, particularly from a data-privacy standpoint, that need to be carefully considered and mitigated. It is important for transit agencies to consider they are dealing with sensitive financial and ridership information, which is often regulated by complicated state and federal laws. Also, with the recent increase in data breach cases, it is prudent to consider whether new forms of insurance, such as cybersecurity insurance, should be integrated into a project.
We are also seeing more collaboration between companies like Lyft and transit agencies, such as Dallas Area Rapid Transit. The term of art for such collaboration is helping commuters travel the “first and last mile.” While such partnerships are cutting-edge and revolutionary, public agencies must remember there are still public bidding requirements that need to be potentially considered when entering into these partnerships. While there may be exceptions to such contracting requirements, it is important to make sure exceptions are properly applied in a public and transparent process, which will help ensure only positive press is generated for a project.
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Non-Traditional Funding: Fortunately, transportation can transcend politics, as we witnessed with the passage and signing into law of the FAST Act (Fixing America’s Surface Transportation Act) at the end of 2015. However, many believe the FAST Act may be the last “mega” surface transportation bill for some time, which likely means a reduction in federal matches for large transit projects. With future reductions in federal matching dollars, expect to see more public-private partnerships, publicly financed toll roads and lanes and low-interest loans sponsored by the federal government, such as the Railroad Rehabilitation and Improvement Financing Program. Additionally, naming rights are increasingly being sold for new transit corridors. The most obvious potential issues with these trends is the importance of contract negotiation, compliance with applicable state and federal laws, consideration of potential public bidding requirements and anticipating any public perception issues with the sale of naming rights on a public project. Also, when federal funds are involved, it is critical to make sure a public agency understands and follows the federal grant requirements and the federal laws and regulations incorporated therein. Failure to do so opens up the risk of failing an audit and having to pay back federal funds received on a project, which will also make it more difficult to receive federal grant funding in the future.
Finally, local transportation funding, such as sales tax measures, will continue to be a critical funding tool in the face of shrinking federal and state funding. Due to the importance of sales tax proposals and the need for voter support, it is essential to carefully craft the language and goals of a measure, ensure appropriate public outreach and input, and carefully manage the spending of funds from an approved measure in an open and transparent process.
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Long Term Revenue Outlook: While the FAST Act’s passage provided some funding security, the Highway Trust Fund is still expected to become insolvent in 2021. Although miles being driven are up, any increase in the gas tax (not raised since 1993) is apparently off the table when discussing long-term funding solutions to keep our transportation network up-to-date, and ready for the next generation of mobility. Accordingly, we continue to expect policies and ideas that address a long-term revenue raising mechanism for future transportation projects. In fact, the White House has proposed a new $10 per barrel fee on oil to be paid by oil companies with a portion of revenues going into the Highway Trust Fund and toward other transportation infrastructure needs. Additionally, the FAST Act supports funding for pilot programs based on “vehicle miles traveled” mechanisms like Oregon has implemented. We expect the debate and conversations concerning a long-term funding solution to continue as an important transportation topic for the near future.
As smart technologies are starting to integrate more and more into our transportation network, now is the ideal time to start planning, discussing and developing uniform best practices and laws to prepare for the next generation of transportation. We are looking forward to the ride and, in the meantime, do not be surprised to look over at the car next to you in traffic and find there’s no one in the driver’s seat!
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Steve is a partner in BB&K’s Riverside office where he provides legal counsel to regional planning and transit agencies on a variety of issues, including transportation infrastructure projects. Greg is an attorney in BB&K’s Washington, D.C. office where he provides legal and regulatory guidance on transportation infrastructure projects.