Clearing the California Regulatory Hurdles for Autonomous Vehicles

Fenwick's John McNelis shares his recipe for obtaining an autonomous vehicle testing permit and the extra legwork needed to obtain the permit to transport members of the public.

Within the next four years, most residents in U.S. cities will have used autonomous transportation. While people are often reluctant to give up control, there is mounting evidence that as we experience the safety and benefits of autonomous transportation our willingness to accept this groundbreaking lifestyle change increases significantly.

One type of autonomous transportation that, justifiably, receives significant attention is of autonomous vehicles. Driverless testing of autonomous vehicles occurs daily all around the country. It is so common in Northern California that it is unusual to have a day where you do not see an autonomous vehicle being tested on the roads.

California requires a permit in order to test autonomous vehicles and the regulatory process for applying for this permit is confusing. It becomes even more so if the goal is to transport members of the public using an autonomous vehicle, e.g., autonomous ride-hailing. The following overview sets forth the recipe for obtaining an autonomous vehicle testing permit and the extra steps necessary for obtaining the permit needed to transport members of the public in an autonomous vehicle.

DMV Requirements

In order to test autonomous vehicles on public roads in California, a company must apply for an autonomous vehicle testing permit with the California Department of Motor Vehicles (DMV). Once approved, the permit is valid for two years, subject to various reporting requirements. The DMV has different applications and procedures depending upon whether the testing will be done with or without a safety driver in the vehicle who is responsible for taking over control of the vehicle if necessary. Most of the permit requirements are the same for both a “drivered” (i.e., testing with a driver) and driverless permit. Due to public safety concerns, the requirements for driverless testing are more stringent. They require that a control center be in constant communication with the vehicle and that a person in the control center be able to safely take control of the vehicle remotely at any time.

In the situation where there is a driver in the testing vehicle, the DMV wants to ensure that if a driver needs to take over operation of the autonomous vehicle that the driver be identified as a “safe” driver. Accordingly, as part of the drivered permit application, the autonomous vehicle company must identify all potential drivers. The DMV then performs a check of the potential driver’s records to ensure there are no violations of such a type that the potential driver is deemed not safe. In addition, the company must submit an employer pull notice (EPN), which results in the company being notified if the potential driver has a reportable action, e.g., a lapsed license, after the initial DMV records check.

The company must also submit a manufacturer’s testing permit in which the company acknowledges that the vehicles to be authorized under the permit have been tested under controlled conditions (e.g., on non-public roads), which simulate the operational design domain e.g., weather, speed, limitations, and that it is safe to operate the vehicle in these conditions.

The company must also provide proof of (1) proper training of vehicle operators, (2) vehicle registration, including a description and certification of the autonomous technology, and (3) insurance, including a minimum of being able to respond to a $5 million judgment. The company must also pay an annual application fee which is currently $3,600 and covers 10 vehicles and 20 drivers-operators.

In order to increase transparency, the DMV requires that detailed safety reports be submitted. All collisions involving an autonomous vehicle that result in property damage or bodily injury must be reported within 10 days. Also, occurrences of disengagements of a vehicle’s autonomous mode caused by either the failure of the technology or when circumstances require that the test driver take immediate control of the vehicle in order to maintain safe operation must be reported annually.

CPUC Requirements

In addition to the above requirements, additional hurdles must be overcome for a company to provide AV service to any member of the public, including journalists and potential investors. The California Public Utilities Commission (CPUC) authorized a pilot program for providing AV services to the public, which includes such additional requirements as: (a) obtaining a transportation charter-party carrier (TCP) authorization from the CPUC while also (b) defining the operational design domain for the vehicle, and (c) operating without passengers under the operational design domain for at least 30 days after obtaining the relevant DMV AV manufacturer’s permit, prior to accepting any passengers.

The CPUC authorized AV passenger service on a pilot basis in Decision 18-05-043 and set forth yet more requirements for companies that want to use autonomous vehicles for passenger service. These additional requirements reiterate the DMV regulations and include a requirement that any passenger service operating under the DMV and CPUC pilot programs not charge any monetary compensation for rides.

This requirement not to receive payment for any rides is controversial and has generated significant pushback from AV companies that want to test the viability of various fee models. The CPUC is aware of the concerns based on feedback in public meetings. The CPUC may revisit the issue but is likely concerned that once passenger compensation occurs, it will be difficult for the CPUC to continue moving forward at its preferred slow and deliberate pace during this pilot phase.

A suggestion for a company that is interested in obtaining a permit to provide passenger service is to first apply for TCP authority in order to obtain a TCP number, drivers permits and vehicle permits then, thereafter, applying for a drivered/driverless AV permit. This makes the process go more smoothly.


While the procedure for applying for an autonomous vehicle testing permit can be confusing and intimidating, understanding the requirements, being careful about submitting the proper information, and being open to talking to the DMV to work through issues will streamline the process.

Originally published July 31, 2020 by The Recorder.


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