U.S. Legislative Issues
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NHTSA Issues New Cybersecurity Guidelines
Following its release of guidelines for automakers regarding self-driving cars, the National Highway Transportation Safety Administration (NHTSA) released a similar set of guidelines or "best practices" on Oct. 24, 2016, for cybersecurity in vehicles, designed to provide guidance for car makers. The non-binding guidance marks a step toward establishing a road map for industry behavior as lawmakers and consumers pressure automakers to show how they will protect increasingly connected and automated vehicles from cyberattacks.
As part of the guidance, NHTSA urges automakers and tech companies to include multiple layers of protections in their designs and consider digital threats based on their level of risk. The agency also suggests that car companies put executives with knowledge and experience in handling cybersecurity issues on their leadership teams, keep track of supply chain threats and update protections as vehicles get older. Employee training was recommended as well to educate the entire automotive workforce on new cybersecurity practices and to share lessons learned with others. NHTSA is soliciting public comments on the proposed guidance for 30 days.
Although the guidance is directed primarily at automakers and tech companies, portions are consistent with NAFA’s white paper, Fleet Management and the Connected Vehicle. For instance, the guidance defines telematics as "the integration of telecommunications and informatics for intelligent applications in vehicles, such as fleet management." On the issue of aftermarket devices, which NAFA also addresses in its white paper, the guidance offered these recommendations:
"The automotive industry should consider that consumers may bring aftermarket devices (e.g., insurance dongles) and personal equipment (e.g., cell phones) onto cars and connect them with vehicle systems through the interfaces that manufacturers provide (Bluetooth, USB, OBD-II port, etc.). The automotive industry should consider the incremental risks that could be presented by these devices and provide reasonable protections.
Aftermarket device manufacturers should consider that their devices are interfaced with cyber-physical systems and they could impact safety-of-life. Even though the primary purpose of the system may not be safety-related (e.g., telematics device collecting fleet operational data), if not properly protected, they could be used as proxy to influence the safety-critical system behavior on vehicles. Aftermarket devices could be also brought on to all ages and types of vehicles with varying levels of cybersecurity protections on the vehicle side of the interface. Therefore, these devices should include strong cybersecurity protections on the units since they could impact the safety of vehicles regardless of their intended primary function."
On Capitol Hill, Sens. Richard Blumenthal (D-CT) and Ed Markey (D-MA) were quick to criticize NHTSA, saying that releasing a guidance proposal is "like giving a take-home exam on the honor code to failing students." "If modern day cars are computers on wheels, we need mandatory standards, not voluntary guidance, to ensure that our vehicles cannot be hacked and lives and information put in danger," the lawmakers said in a statement. The Senators pointed to their proposal, the Security and Privacy in Your Car Act, as a better solution. This measure would direct NHTSA and the FTC to set cybersecurity and privacy standards, and create a system to rate cars based on the strength of their cybersecurity and privacy protections.
Responding to the guidelines, a spokesman for the Alliance of Automobile Manufactures said the auto industry has been forward leaning and proactive in cybersecurity incident preparation and in implementing cybersecurity best practices, pointing to the formation of Auto-ISAC as an example. "The automotive industry and NHTSA share the same goals of enhancing automobile cybersecurity," he said.
Feds Publish Phase 2 Fuel Efficiency Rule
As part of the Administration’s Climate Action Plan, President Obama issued a directive to the agencies in early 2014 to develop Phase 2 greenhouse gas (GHG) standards to shape medium- and heavy-duty powertrain design and emission performance through the next decade.
The rule, formally known as "Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles - Phase 2" was finalized and unveiled by the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) on Aug. 16, 2016.
NAFA remains sharply critical of the final rule, believing that the final Phase 2 standards will force fleets to purchase technologies that are not thoroughly tested and ready for marketplace introduction. This in turn will lead to increased costs, inefficiencies, and uncertainties to the transport segment, and could nullify the proposed intentions of reducing vehicle emissions.
On Oct. 25, NHTSA and EPA officially published the Phase 2 GHG rule for commercial vehicles in the Federal Register, which indicates an effective start date of Dec. 27, 2016.
Taken as a whole, the rule requires engine manufacturers to reduce CO2 emissions by 4-5 percent from 2017 through 2027 and to attain fuel efficiency improvements of 16 percent or better for vocational and heavy-duty vehicles.
Legislation Introduced to Decrease Federal Excise Tax Rate on New Trucks
NAFA applauds Sen. Bill Cassidy (R-LA) and Rep. Tim Ryan (R-OH) for introducing S. 3372/H.R. 6111, the Natural Gas Truck Tax Parity Act of 2016, companion legislation that would amend the Internal Revenue Code to reduce the federal excise tax (FET) rate on the retail sale of heavy trucks and trailers by 35 percent for any automobile truck chassis, automobile truck body, or tractor that is fueled wholly or partially by an alternative fuel. The term "alternative fuel" means compressed natural gas, liquefied natural gas, liquefied petroleum gas, renewable natural gas, hydrogen, and any liquid whose volume is at least 85 percent methanol.
The U.S. tax code currently imposes a 12 percent FET on the sale of all heavy-duty trucks, tractors, and trailers. This tax is the highest FET levied by Congress on any product. The excise tax was originally imposed to help defray the cost of World War I. Since 1955, the excise tax rate on new heavy-duty trucks, tractors and trailers has increased by 300 percent, ballooning from 3 percent to its current rate of 12 percent. If passed, this legislation would provide a permanent 35 percent exclusion from the 12 percent FET for alternative fueled heavy-duty trucks. This exclusion is designed to cover the additional incremental cost of heavy-duty natural gas trucks, ensuring that they do not require more in taxes than comparable diesel-powered trucks.
