Category: Transportation

Restrictions on Personal Electronic Devices, including Laptops, on Flights from 10 Airports

No personal electronic devices (PEDs) larger than a cellphone or smartphone, such as a laptop computer or e-reader, can be carried into the cabin of airplanes flying directly to the U.S. from 10 airports in the Middle East, North Africa, and Turkey, the DHS and TSA announced on March 21, 2017.

Following are the airports:

  • Abu Dhabi International Airport, Abu Dhabi

  • Dubai International Airport, Dubai

  • Cairo International Airport, Egypt

  • Queen Alia International Airport, Jordan

  • Kuwait International Airport, Kuwait

  • Mohammed V Airport, Casablanca, Morocco

  • Hamad International Airport, Qatar

  • King Abdul-Aziz International Airport, Jeddah, Saudi Arabia

  • King Khalid International Airport, Riyadh, Saudi Arabia

  • Ataturk International Airport, Istanbul, Turkey

The carriers involved will have 96 hours, until early in the morning of March 25, to comply with this directive.

No American carriers are affected because none have direct flights to the U.S. from the 10 airports. Based on itineraries, the following carriers have been notified and will be affected:

  • Egypt Air

  • Emirates Airways

  • Etihad Airways

  • Kuwait Airways

  • Qatar Airways

  • Royal Air Maroc

  • Royal Jordanian Airlines

  • Saudi Arabian Airlines

  • Turkish Airlines

All passengers will be subject to these restrictions, including U.S. citizens, regardless of Trusted Traveler Status. Approved medical devices will be allowed on board, but only after additional screening is conducted. TSA advises passengers with connections through one of the 10 airports to place large electronic devices into their checked baggage at their originating airport.

The DHS states that it has put these restrictions in place because “[the agency’s] information indicates that terrorist groups’ efforts to execute an attack against the aviation sector are intensifying . . . .” These restrictions will remain in effect indefinitely “until the threat changes.” TSA emphasizes that it “continually assesses and evaluates the current threat environment and adjusts security measures as necessary to ensure the highest levels of aviation security without unnecessary disruption to travelers.”

In addition to the new PEDs process, all travelers to the U.S. should be prepared for the possibility that their electronic devices might be “detained” for examination and inspection upon arrival in the U.S. Indeed, in February 2017, after the issuance of the first travel ban, Sidd Bikkannavar, a U.S.-born NASA scientist who works at NASA’s Jet Propulsion Laboratory returning from Patagonia was held at the George Bush Intercontinental Airport in Houston until he agreed to unlock his phone.

Following the DHS announcement, the U.K. announced a similar restriction on direct flights to the U.K. affecting airports in Egypt, Jordan, Lebanon, Tunisia, Turkey, and Saudi Arabia. This restriction will affect British carriers including British Airways as well as foreign carriers. Canada may soon announce such restriction as well.

ARTICLE BY Meredith K. Stewart of Jackson Lewis P.C.
Jackson Lewis P.C. © 2017

Cybersecurity: Yes, They Will Hack Your Car

Auto Traffic, NightimeAuto manufacturers are increasingly equipping vehicles with rapidly advancing technologies, raising concerns regarding how the public will be affected by these changes. Manufacturers are beginning to implement automated driving and vehicle-to-vehicle (V2V) communication capabilities into their cars, extending potential cybersecurity threats and associated safety issues to road users.

As consumers, we already see cybersecurity threats and breaches in many areas of our day-to-day lives. With the spike of auto-driven and connected cars across the auto industry, these same threats and breaches have a strong potential to sprout in our lives on the road as well.

NHTSA has outlined the factors it will consider in evaluating cybersecurity threats as potential safety-related defects. They are as follows:

  • The amount of time elapsed since the vulnerability was discovered (e.g., less than one day, three months, or more than six months)

  • The level of expertise needed to exploit the vulnerability (e.g., whether a layman can exploit the vulnerability or whether it takes an expert to do so)

  • The accessibility of knowledge of the underlying system (e.g., whether how the system works is public knowledge or whether it is sensitive and restricted)

  • The necessary window of opportunity to exploit the vulnerability (e.g., an unlimited window or a very narrow window)

  • The level of equipment needed to exploit the vulnerability (e.g., standard or highly specialized)

Additionally, NHTSA’s guidance suggests policies that manufacturers :

  • Participating in the Automotive Information Sharing and Analysis Center (Auto-ISAC), which became fully operational in January 2016

  • Developing policies around reporting and disclosure of vulnerabilities to external cybersecurity researchers

  • Instituting a documented process for responding to incidents, vulnerabilities, and exploits and running exercises to test the effectiveness of these processes

  • Developing a documentation process that will allow self-auditing, which may include risk assessments, penetration test results, and organizational decisions

  • For original equipment, developing processes to ensure vulnerabilities and incidents are shared with appropriate entities throughout the supply chain

  • As vehicle technologies continue to progress, we expect that NHTSA’s guidance will evolve to address future concerns

To continue reading through NHTSA’s enforcement plans on motor vehicle safety as it pertains to recent technological advances, be sure to check out Thursday’s post on automated vehicle regulations.

ARTICLE BY Christopher H. Grigorian & R. Nicholas Englund of Foley & Lardner LLP

© 2017 Foley & Lardner LLP

U.S. Airways Vs. Sabre: 3 Ways To Prove Healthy Market Competition

Airplane, Sky, U.S. AirwaysAt the heart of any antitrust suit lies the intent to foster healthy competition in the market. But what, exactly, does healthy competition foster? Lower prices, sure. But, more importantly, better products, better services, and more innovative ways to provide them, as well as fair negotiations among vendors.

Successful defense of an antitrust suit starts with proof of healthy competition. A recent battle of the experts in the $134M trial between airline giant, U.S. Airways (recently merged with American Airways), and Sabre Holdings Corp., a trip-planning conglomerate, offered three indicators to successfully prove healthy market competition:

Innovation

In the trial, U.S. Airways claimed Sabre—as part of a conspiracy to increase airfares and damage U.S. Airway’s position in the market—forced it into an unfair, anti-competitive contract in 2006. At the time Sabre, which boasted a large share of the trip-booking market, served as one of the primary sources of airfare data for a massive network of travel agents responsible for a significant portion of U.S. Airways bookings. In the suit, U.S. Airways claimed it had no choice but to contract with Sabre in order to maintain access to this large travel agent network. Sabre’s expert, however, University of Chicago economics professor Kevin Murphy, pointed to U.S. Airway’s plea as the exact type of reasoning that is detrimental to the market, i.e., lack of innovation.

According to Murphy, U.S. Airways could have researched, planned and implemented the creation of a new technical platform, a “bridge” Murphy called it, to the numerous travel agents that would have alleviated the need to utilize Sabre’s connection. In other words, there was opportunity to innovate had U.S. Airways found the cost of the project in conjunction with the end result—which would have alleviated the need to partner with Sabre—more valuable than the contract with Sabre. Motive and opportunity to innovate around stagnant models is a sign of healthy market competition. In addition, the “threat” of creating a new model, as Murphy put it, also has value and would have impacted negotiations.

Negotiation

To further his argument that the Sabre-U.S. Airways contract was the result of healthy competition, Murphy also pointed to the stern negotiations U.S. Airways and Sabre entered into prior to execution of the contract. Witnesses at the trial testified that U.S. Airways took very stern negotiating positions before a final value was agreed upon between the parties. Murphy explained this could not have occurred had Sabre truly possessed the type of anticompetitive market power U.S. Airways claimed. If that had been the case, Sabre would have simply named their price and left U.S. Airways powerless to refuse. Fair bartering among vendors for provision of unique, in-demand services is another indicator of healthy market competition.

Valuation

One of the primary points of contention between U.S. Airways’ expert and economist Murphy was Sabre’s “full content” contracts, a requirement by Sabre that air carriers provide access to any and all fares they offer. U.S. Airways’ expert referred to this as a “no discount” constraint. In other words, if the consumer knows the carrier has previously priced a flight at $200, that prevents the carrier from now telling the consumer—with a straight face, at least—that the true value of the flight is $300 but will be generously offered at a discount for only $200. Full disclosure, according to U.S. Airways, limits the carrier’s ability to alter pricing to suit demand. Murphy, however, explained “full content” actually increases competition because it drives prices down. If consumers have all options available at the time of booking, they will often choose the lowest priced option that suits their need. This is the cornerstone of competition. Full disclosure allows for unfettered comparison shopping and enables the consumer to value all options according to personal preference and necessity. If certain options (which are often not simply the lowest-priced) begin to advance, this spawns innovation among market competitors to match consumer desire and the cycle begins anew: innovation, negotiation, valuation.

ARTICLE BY Annie Dike of IMS ExpertServices

© Copyright 2002-2017 IMS ExpertServices, All Rights Reserved.

NAFTA: Mexican Trucking Program

NAFTA Mexican carriers long-haul deliveriesPresident Trump’s plans to renegotiate the North American Free Trade Agreement (NAFTA) may also impact a controversial program that allows Mexican carriers to make long-haul deliveries in the U.S.

As part of the NAFTA agreement, the U.S. and Mexico agreed to allow trucks from each country to carry goods across the border for deliveries anywhere inside each of their respective countries, but the program faced challenges from the get-go.  In 2007, the George W. Bush Administration launched a trial program to expand Mexico’s trucking operations beyond the border. However, the program ended in 2009 after Congress defunded the program following pressure from labor unions.

Following retaliatory tariffs imposed by Mexico, the Obama Administration established a new pilot program in 2011 that would allow long-haul operations in the United States by Mexican drivers, beyond the 25-mile “buffer zone” that allows U.S. truckers to transfer and begin transport of merchandise further into U.S. territory.   U.S. labor unions objected but failed in their legal challenges against the program, and it was made permanent in January 2015.  The International Brotherhood of Teamsters, together with other groups, sued the Department of Transportation in 2015 over a report that they argued was not based on sufficient data to allow for these long-haul deliveries.  The program remains in effect while that case is still pending.

Safety has been one of the biggest concerns raised by critics of the program.  However, a 2014 Congressional Research Service report suggests safety likely has less to do with whether the truck originates in the U.S. or Mexico, and more to do with the type of truck being used:

Drayage carriers, whose trucks make short-haul movements and spend much time idling while awaiting customs processing, tend to use older equipment. Long-haul trucks tend to carry relatively high-value goods or temperature-controlled cargo, because lower-value goods and less time-sensitive goods can be carried over long distances much more economically by rail or water. If shippers are willing to pay a substantial premium over rail or water transport to truck their product long distances, it seems plausible that they would choose a reliable trucker with modern equipment to avoid risk of delay or spoilage.

Opponents of the program are almost certain to call for its repeal as part of any new NAFTA negotiations.  Representative Peter DeFazio (D-Oregon), Ranking Member of the House Transportation Committee, opposes the long-haul program and has already said he plans to raise the issue with Trump Administration officials.

ARTICLE BY Mayte Gutierrez of Squire Patton Boggs (US) LLP

© Copyright 2017 Squire Patton Boggs (US) LLP

United Auto Workers Announces ‘Buy Union American-Made’ Ad Campaign

american-made carsLooking to piggyback off the “keep jobs in America” theme touted by President Trump, the United Auto Workers (UAW) Union announced an ad campaign that urges people to buy union- and American-made cars.  UAW President Dennis Williams said the campaign could be similar to the “Look for the Union Label” jingle in in the 1970s in support of the now-defunct International Ladies’ Garment Workers’ Union. “If it’s not built in the United States, then don’t buy it,” Williams said in news reports.

Williams clarified that the union is urging consumers to buy union-made vehicles first, then those made at non-union factories in the U.S. The union-made then American-made caveat could put the UAW in a tricky spot with Detroit automakers, however, as five of the top eight cars on the 2016 American-Made Index by Cars.com are made by either Toyota or Honda. The Toyota Camry, built in Georgetown, Kentucky, and Lafayette, Indiana, tops the list. By contrast, the popular Ford F-150 pickup did not make the list because it fell below the 75-percent eligibility threshold for domestic-parts content.

The UAW did not specify when the ads might start running or how much they might cost. Presumably, the ads would be funded with UAW members’ dues, which average about two hours’ pay per month.

ARTICLE BY John T.L. Koenig of Barnes & Thornburg LLP

© 2017 BARNES & THORNBURG LLP

2017 Automotive Forecasts Unveiled During Detroit Auto Show Week

traffic on highway detroit auto showIt is “Auto Show” week in Detroit, as the city hosts the 2017 North American International Auto Show.  This week includes press unveils of new and updated models, the latest mobility technologies at the AutoMobili-D pavilion, the charity preview featuring 17,000 auto industry players in tuxedos and long dresses and, of course, predictions for where the automotive market in North America is going in 2017.

Some of those predictions were reviewed at the Association for Corporate Growth’s “Automotive Outlook” event held on January 10that the beautiful and buzzing Detroit Athletic Club.  The featured speakers included Michael Robinet, Managing Director, Automotive Advisory Solutions at IHS Markit (IHS), one of the most respected forecasters in the automotive industry, and Dave Andrea, Executive Vice President of Research for the Center for Automotive Research (CAR), one of the most respected researchers in the automotive industry.  As expected with speakers of this caliber, the content was excellent.

Several themes emerged from the forecasts.

The North American Automotive Industry Will Be Flat This Year.

In 2016, a total of 17.55 million cars and light trucks were sold in North America, a record.  For 2017, IHS forecasts 17.6 million units and CAR forecasts 17.5 million units.  These are great numbers by historical reference, but are further evidence of the “plateauing” of the industry that we have observed recently.

President Elect Trump Has Added Some Uncertainty to the Market.

This sounds like an understatement, but it is worth emphasizing.   There is increased uncertainty regarding trade policy, including potential renegotiation of the NAFTA  treaty and/or increased tariffs on cars imported from Mexico.  There is also increased uncertainty regarding energy policy, including whether the higher Corporate Average Fuel Economy (CAFE) standards, due to become fully effective in 2025, will be relaxed (although product plans are becoming less alterable as we get closer to that date and hybrids already play an increasing role in those plans), and the impact of energy policy and oil prices on car buying decisions.  Tax reform may also drive activity in unknown ways.

It is All About the Mix.

The overall automotive market in North America is strong, but not all segments are strong.  Light trucks and SUV’s/CUV’s continue to do well; passenger cars/sedans are much softer; and the adoption of electric cars continues to be relatively modest (although the new Chevrolet Bolt, a 238 mile range EV that received the Motor Trend Car of the Year Award for 2017 earlier this week, is expected to be well received – pictured above).  This mix impacts OEMs and automotive suppliers in different ways, and both IHS and CAR cautioned attendees to “look beneath the waves/look beneath the water line” (pick your metaphor) to see what is really going on in detail in the market.

Connected and Autonomous Vehicle Development is Accelerating.

The industry is in a modern “race to the moon” to achieve full vehicle autonomy, which is still a ways off, but within the planning horizon.  We are moving to Level 3 now – autonomy with driver intervention. While widely adopted, on road Level 5, full autonomy without intervention, is still far out there in the mid-2020’s at best.  In my mind, technology will continue to move faster than standards setting and harmonization, infrastructure improvements, and full consumer acceptance.  In the interim, automotive companies must operate in the current market, adjust to the emerging ridesharing and car sharing models as Vehicle Miles Traveled continue to be split in different ways, and develop and implement enhanced connectivity and safety features (ADAS) as the march to autonomy continues.

Risk is Rising/Disintermediation Will Occur.

With mobility models changing, nontraditional players coming into the market, political and regulatory uncertainties increasing, and vehicle price increases (with the enhanced content) beginning to challenge affordability for many consumers, the risks in the market are increasing overall.  Will OEMs and large Tier 1’s continue to be the technology integrators in the future, or will others increasingly play that role?  Players that adapt to these risks most nimbly and correctly will be rewarded, while others will be challenged.

In 2017 overall, it will be a pleasure and thrill to be part of one of the most interesting and watched industries: the mobility industry.

ARTICLE BY Steven H. Hilfinger of Foley & Lardner LLP

© 2017 Foley & Lardner LLP

Senate Commerce Committee to Hold Chao Nomination Hearing; President-Elect Trump Infrastructure Proposal Update; “Drones Over People” Rule Expected Soon

transportation truck Elaine ChaoThe Senate Commerce, Science, and Transportation Committee will hold a nomination hearing for Transportation Secretary-designate Elaine Chao. In addition to serving as the Secretary of Labor under President George W. Bush, she served as Deputy Secretary at US DOT under President George H. W. Bush, Chairman of the Federal Maritime Commission under Presidents Ronald Reagan and George H. W. Bush, Maritime Administration Deputy Administrator under President Reagan, and a White House Fellow at US DOT under President Reagan. Because of her experience in these positions, Elaine Chao will bring considerable substantive transportation knowledge and experience overseeing large organizations to bear as the Secretary of Transportation. We expect she will enjoy easy confirmation by the Senate.

Elaine Chao will likely be initially tasked with crafting and then moving Trump’s infrastructure proposal through Congress. In response to the Senate’s nominee questionnaire, Ms. Chao identified several issues that she would focus on as Secretary of Transportation. These included (1) effective enforcement of safety measures, strengthening US DOT’s planning and acquisition practices, and considering new technologies in infrastructure; (2) expediting the process of making repairs and building new construction and decreasing regulatory burdens; and (3) striving for equity between urban and rural areas and among modes of transportation.

Ms. Chao’s list of focus areas is so broad as to cover nearly all key functions of the Department of Transportation, so it does not provide significant insight into what her priorities as Secretary would be. However, there are a few issues we believe Ms. Chao will prioritize. These include regulatory reform, Buy America, and private sector innovation, such as support for autonomous vehicles to improve vehicle safety and for public-private partnerships to advance capital project more efficiently.

President-Elect Trump Infrastructure Proposal Update

Throughout the presidential campaign, President-elect Trump advocated for a large infrastructure investment package, however there are few details known about the proposal at this time. Trump initially said he would “at least double” Secretary Clinton’s $275 billion infrastructure proposal, and has at times called for un-named measures to support $1 trillion in infrastructure investment.

During the campaign, Trump associated himself with an infrastructure proposal drafted by Wilbur Ross, his nominee for Commerce Secretary, and Peter Navarro, recently named as the head of a new National Trade Council to advise the President on trade issues. The Ross-Navarro proposal would provide a tax credit to equity investors in infrastructure projects with the aim of attracting greater private investment in such projects and lowering project finance costs. The proposal relies on dynamic scoring to offset the tax expenditure. Revenues gained through tax reform (including one-time funding through deemed repatriation tax on overseas earnings) has been often cited as a viable pay-for for infrastructure funding, and many believe it would be difficult to fund an infrastructure package independent of tax reform legislation.

Because equity investors support a very small fraction of transit and highway projects – those with a dedicated revenue stream to pay back such investment – tax credits for equity investments are viewed by many transportation stakeholders as only a small part of the solution to our infrastructure investment gap. Stakeholders and even some Members of Congress have made clear that any infrastructure package must include grant funding in addition to finance tools.

Trump’s selection of anti-spending crusader Rep. Rick Mulvaney (R-SC) as the Director of the Office of Management and Budget appears to signal strong fiscal discipline by the next President – in any future infrastructure spending and across the Federal budget – so few expect Trump to propose a large stimulus-style spending bill like the one Congress and President Obama adopted in 2009. House and Senate Republican leaders have publicly stated there must be responsible methods of paying for any infrastructure spending.

With reauthorization of the FAST Act still a few years away, Trump’s still-developing proposal is likely to be seen by many transportation stakeholders as the best opportunity to advance their particular interests. While both Congress and the Trump Administration may have little appetite to take on difficult issues in what Trump has billed as a much-needed investment in America’s infrastructure and economy, some straightforward provisions are likely to travel on this bill. On a broader scale, any infrastructure package could also be an opportunity to secure a long-term revenue solution for the Highway Trust Fund (HTF). By the end of the FAST Act in 2020, HTF revenues will support only 55 percent of authorized spending from the HTF. So many transportation stakeholders view Trump’s large infrastructure investment bill as a well-suited vehicle to address this funding shortfall before the end of 2020. However, the Trust Fund’s systemic revenue shortfall has not become any easier to solve, due to: the growing size of the shortfall; bipartisan objections to raising the federal fuels tax; and little support for scaling back popular infrastructure programs.

While the President-elect prioritized infrastructure investment in his campaign, there are a number of potential impediments to successfully advancing a large infrastructure package. Congressional Republicans have recently identified reform of the Affordable Care Act, tax reform, and regulatory reform as the first proposals they will advance in the 115th Congress – not Trump’s transportation plan.

Another potential impediment is that an infrastructure package is simply not a must-pass bill: the FAST Act is in place until 2020. In 2017, the transportation committees in Congress will be focused on an upcoming Federal Aviation Administration (FAA) reauthorization deadline. The current FAA extension expires September 30, 2017, and reauthorizing aviation programs will likely be a priority for House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA).

One Congressional effort that would build support for infrastructure spending is the return of earmarks. The House is likely to vote on a bill early in 2017 that would reestablish earmarks. In the past, infrastructure bills often enjoyed enormous bipartisan support because many Members were able to secure direct funding for projects in their district or State through earmarking. At this time, it is unclear if earmark supporters have the votes to overturn the earmark ban.

Regulatory Activity

“Drones Over People” Rule Expected Soon

The Federal Aviation Administration (FAA) continues to work on a proposed rule allowing the operation of unmanned aircraft systems (UAS) over people, and has been expected to release the proposed rule before the end of the Obama Administration on January 20, 2017. The proposed “drones over people” rule will significantly expand allowable UAS operations, likely allowing the operation of UAS over individuals that are not directly involved in the operation of the UAS. After the “drones over people” rule is issued, FAA will focus on drafting a propose rule allowing beyond visual-line-of-sight operations. These newly proposed rules follow the final rule on the Operation and Certification of Small Unmanned Aircraft Systems, which went into effect on August 29, 2016.

This Week’s Hearings:

  • On Wednesday, January 11, the Senate Commerce, Science, and Transportation Committee has scheduled a confirmation hearing on the expected nomination of Ms. Elaine Chao to be Secretary of the United States Department of Transportation.

  • On Wednesday, January 11, the Senate Homeland Security and Governmental Affairs Committee has scheduled a confirmation hearing on the expected nomination of General John Kelly to be Secretary of the United States Department of Homeland Security.

  • On Thursday, January 12, the Senate Commerce, Science, and Transportation Committee has scheduled a confirmation hearing on the expected nomination of Mr. Wilbur Ross to be Secretary of the United States Department of Commerce.

ARTICLE BY Timothy W. Drake of Squire Patton Boggs (US) LLP

© Copyright 2017 Squire Patton Boggs (US) LLP

Automotive Industry in 2016: Record Sales! But…

Car Shopping, keys As has been reported all over, it looks like the Automotive Industry will set some sales records in 2016 (see here, here, and here for example). As summarized by JD Power, “The full-year sales forecast of 17.5 million units would surpass the total from 2015 by about 5,000 units. Light trucks figure into the upsurge, along with higher incentives—eclipsing $4,000 per vehicle for the first time on record—as automakers clear out 2016 model-year vehicles.” When read that way, this news is less encouraging than it appears on its face.

Setting sales records is almost never bad. However, if they are set with huge incentives, discounts, and an intention to clear out inventory, that is obviously not any reason to anticipate further growth in 2017. In fact, a deeper dive into the numbers shows some slightly less favorable statistics. For example, the Wall Street Journal reports that “Retail sales, which strip out sales to fleet buyers, such as rental-car companies, were expected to reach 14.1 million units for the year, a 1.2% decline from 14.2 million units in 2015.”

What will 2017 bring?

There is no reason to think that sales will set another record. The Automotive industry is very cyclical and higher incentives, higher inventories and deeper discounts may sell more vehicles in the short run, but often leads to educed profitability and lower sales in the long run. Is your company planning for potential slower sales in 2017? What have you done with your supply chain and customers? If you have not already planned for the second half of 2017, or even that start of 2018, you are likely already behind.

ARTICLE BY Jeffrey A. Soble & Foley & Lardner LLP

© 2016 Foley & Lardner LLP

Navigating Connected Cars in 2017: Data Protection

connected carsIt’s a fact: today’s marketplace has given connected cars the green light. As an OEM or supplier accelerating to create products to meet industry demand, what challenges can you anticipate in 2017? Here we describe where we believe your attention should be focused during the upcoming year…

Data Protection

The manufacturing industry is now one of the most hacked industries. It has been said that the modern day car is a computer on wheels. That is not quite right. The modern-day car is a network of several computers on wheels. Cars today can have 50 or more electrical control units (ECUs) – each of which is analogous to a separate computer – networked together. There will be an estimated 250 million connected cars on roads around the world by 2020. These cars will have 200 or more sensors collecting information about us, our cars and our driving habits.

With significant advances in smart phone car-connectivity and onboard infotainment systems, our cars are collecting more and more information about our daily lives and personal interactions. As a result, privacy and security of connected cars has evolved and quickly risen over the last year to a top priority of carmakers and suppliers. Here are our top 4 tips for addressing these privacy and security issues and concerns in 2017:

  • Practice “security by design.” This is a concept recently espoused by federal regulators, namely, the National Highway Traffic Safety Administration and the Federal Trade Commission, as well as industry self-regulatory organizations. With security by design, a company addresses data security controls “day 1” while products, components and devices are still on the drawing board. Data security practices evolve over time, and the days of building it first and then layering security on top are now over. Risk assessments addressing potential threats and attack targets should be dealt with during the design process. Security design reviews and product testing should be conducted throughout the development process. Secure computing, software development and networking practices should address the security of connections into, from and inside the vehicle.

  • Practice “privacy by design.” While security deals with the safeguards and measures implemented to protect the data from unauthorized access or use, privacy focuses on the right and desire of individuals to keep information about themselves confidential. During the design process, companies should understand and identify what personal information will be collected by a component or device, what notice should be provided to or consent obtained from consumers before collecting that personal information, how should the personal information be used, are those intended uses legal, with whom will the personal information be shared, and is that sharing appropriate and legal. With this information identified, the company can reconcile privacy requirements with security safeguards during the design and development process.

  • Establish an appropriate data security governance model. Executives and senior management can no longer blindly delegate data security to the security engineering team. Regulators, courts and juries are demanding that senior management become involved in and accountable for data security. While the precise governance model will depend on the nature and size of the organization, the company should actively consider what level of executive oversight is appropriate, and then document those conclusions in a data security governance policy. This will serve the dual purposes of enhancing data security of vehicles and component parts, while also bolstering the company’s defenses in the event of a security incident or investigation.

  • Address the entire supply chain. Whether it is the finished vehicle or a component part, most companies relevant to the data security ecosystem will rely on suppliers that play a role in data security. Hardware, software, development tools, assembly, integration and testing may all be provided by one or more suppliers. Companies impacted by this scenario should conduct appropriate due diligence and risk assessments with respect to its suppliers, both at the commencement, as well as periodically throughout, the relationship. Contractual provisions should also be utilized to address data security requirements for the relevant suppliers.

ARTICLE BY Chanley T. Howell & Pavan K. Agarwal of Foley & Lardner LLP

© 2016 Foley & Lardner LLP

Obama Administration DOT to Continue Issuing Regulations; Potential DOT Secretaries in Trump Administration

Obama Administration DOTObama Administration DOT to Continue Issuing Regulations

The Obama Administration’s Department of Transportation (DOT) is expected to continue issuing regulations until President-Elect Donald Trump takes office in January. Over the final two months of the Administration, DOT is expected to issue regulations banning cellphone calls on flights and requiring freight trains to use two crew members. Additionally, DOT is expected to issue guidance on vehicle-to-infrastructure technologies, a proposed rule on vehicle-to-vehicle communications, and a proposed rule on operating unmanned aircraft systems (drones) over crowds.

While President-Elect Trump has indicated he will immediately begin undoing regulations and reversing President Obama’s executive actions, it is unclear whether the incoming Trump Administration will prioritize looking at DOT regulations and transportation-related executive actions.

Potential DOT Secretaries in a Trump Administration

The President-Elect Donald Trump’s transition team is currently evaluating potential picks for DOT Secretary. Individuals that have been discussed as candidates include: Representative John Mica (R-FL), a current member of the House Transportation and Infrastructure Committee who lost his reelection campaign this year; James Simpson, a former commissioner of New Jersey’s Department of Transportation and a former head of the Federal Transit Administration; and Mark Rosenker, a former National Transportation Safety Board Chairman; Greg Hughes, the speaker for Utah’s house of representatives; and former Representative Harold Ford Jr. (D-TN), a potential democratic cabinet pick.

This Week’s Hearings:

  • On Friday, December 2, the House Oversight and Government Reform Subcommittee on Transportation and Public Assets will hold a hearing titled “A Safe Track?: Oversight of WMATA’s Safety and Maintenance.” The witnesses will be announced.

ARTICLE BY Timothy W. Drake of Squire Patton Boggs (US) LLP

© Copyright 2016 Squire Patton Boggs (US) LLP