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Using Environmental Law to Open Proprietary Car Software
-- By GreggBadichek - 13 Jan 2016
The Problem
Proprietary software permitted Volkswagen to deceive its consumers and governmental entities into believing that their “clean diesel” emissions technology had met and surpassed fuel economy standards. Had the software been open, Volkwagen's cheating would have been noticed almost immediately; consumers would have saved billions of dollars, and Volkwagen would have saved its reputation. It is feasible to imagine several ways in which proprietary software harms users' agency beyond GHG emissions specifically, or environmental problems generally.
Demanding open software must be tempered: allowing users to alter their car's software could lead to unexpected safety hazards in a tightly regulated industry. A reasonable middle ground is software that is publicly readable, but can not be edited. This would allow car companies to protect their software's function, yet open it up to the broad scrutiny of countless individual simulations. Readers could even suggest edits to the software to improve its functionality and efficiency.
Importantly, this freedom to read would allow the public to examine software and locate code that compromises privacy, reporting their findings to companies and to everyone else. They could also predict the ways in which car software could evolve to threaten privacy upon the advent of smart-grid technology. Providing this information to other consumers would increase consumer knowledge of a functional utility, in theory making that market more efficient. It may not make users care about their privacy, but it would allow them a means to start making a fuss about it. What legal mechanisms could bring about this change in car software readability?
Solutions from Environmental Law
Financial disclosure protocols and agency regulations are legal tools with which private citizens can force car software to open.
Sue the EPA and DOT
If these agencies are empowered to analyze vehicle emissions in the physical sense, they should be able to do so in the digital sense. Private parties can test GHG emissions, but have tremendous difficulty testing "software emissions." Thus a lawsuit against these agencies on the grounds that their failure to examine software is a failure of their duty outside of discretion may close the gap, and move agencies towards examining software. Citizens are empowered to sue the agency for neglect of duty under the Clean Air Act's citizen suit provision. The EPA must prescribe by regulations "standards applicable to the emission of any air pollutant from any class or classes of new motor vehicles or new motor vehicle engines, which in [its] judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare." Greenhouse gases are air pollutants under the Clean Air Act. Another non-discretionary duty in this case is the special emphasis that the EPA shall give "to research and development into new and improved methods, having industry-wide application, for the prevention and control of air pollution resulting from the combustion of fuels."
The EPA may accomplish this more efficiently through litigation than through rulemaking. This approach would substantively resemble the EPA’s regulation by litigation against seven U.S. engine manufacturers producing heavy-duty diesel fuel engines in the 1990s. The EPA had assessed that when these engines were operating under non-Federal Test Procedure (FTP) conditions, particularly highway driving conditions, the engines produced higher emissions levels of NOx than under FTP-conditions. Essentially, the electronic controllers on the engines had been cheating. Rather than engage in years-long litigation, the car company defendants settled in October 1998. The breadth of the suit permitted an industry-altering settlement regime. Numerous resulting consent decrees created a new set of test protocols that addressed the shortcomings of prior regulations. The EPA could have modified the FTP to adopt additional test procedures at any time without suing the engine manufacturers, but would have been required to slog through a longer notice-and-comment procedure that would not so urgently motivate the defendant companies.
Disclosure and Shareholder Lawsuits
Under SEC guidance, Regulation S-K, requiring public agencies to disclose certain information to investors, contains four items through which disclosure of climate change risks and contributions should be made. Two of them are ways to get to a car's code. Item 303 requires the company to disclose management's discussion and analysis of industry trends that are likely to have a material effect on the company's liquidity. Potentially this could include an industry shift towards readable software, particularly if a regulatory regime change arises post-Volkswagen. Item 503 meanwhile requires the company to assess "risk factors," which could include contributions to, or regulations in light of, climate change. Companies may choose to include increased software scrutiny under these items, as post-Volkswagen car company investors will be much more keen to know if the company is complying with all relevant regulatory regimes. Should the company not disclose that information sua sponte, shareholders may demand, or even sue, the company to force them to be more open about their complicated software, its functions, and its potential flaws.
The complication here is that the software in question would be protected as a “trade secret,” and would not need to be disclosed under discovery. Even a meritorious suit with standing established would run into this roadblock, which would persist so long as software remains copyrightable. Thus litigation alone would not suffice—it would need to accompany in industry-wide movement towards an economy where withholding software becomes prohibitively expensive.
Conclusion: Necessary Cooperation
Both legal maneuvers ultimately rely on some voluntary action and cooperation with regulators or shareholders on the part of the regulated car companies. Against an agency suit, the companies would need to recognize the long-term benefits of settlement; the companies would also need to recognize that non-disclosure threatens the value of their machines. Ideally, these companies would recognize that post-Volkswagen, legal pressure would accompany and increase a high cost of proprietary software, and they would move away from it altogether.
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