By Verne Kopytoff
FORTUNE -- Napping behind the wheel of Google's autonomous car while zooming down the highway is possible, theoretically. But is it legal? Who's liable if there's a crash? Will car owners need specific training?
California officials are trying to draft rules for autonomous vehicles, the futuristic cars that chauffeur passengers around town without a driver. The job is proving to be a complicated one as officials try to anticipate the potential legal and safety issues. Virtually all aspects of driving must be reexamined. The complexity foreshadows the work by states across the country if and when they legalize autonomous vehicles in the coming years.
"It's still very much in its infancy," said Bernard Soriano, deputy director for California's Department of Motor Vehicles. "Things come up on a daily basis that we're surprised by and make us say, 'Yes, we should be considering that.'"
In addition to California, Nevada and Florida have passed laws allowing driverless cars to be tested within their borders. Legislators in a number of states like Michigan, Massachusetts, Texas, Washington, Oregon, and Wisconsin are considering the possibility. Up until a couple of years ago, the reality of millions of autonomous cars on the road seemed like fodder for a science fiction film. But since then, Google (GOOG), along with car manufacturers like Audi and BMW, have made rapid advances with the technology and started testing it on public roads.
In California, the effort to draft rules for autonomous vehicles is a work in progress. The Department of Motor Vehicles, which is in charge of the job, recently held its first in a series of public hearings on the matter. The goal is to complete the regulations for testing cars by early next year. The question is what criteria manufacturers will have to meet to get a permit to tool around on public streets and what rules their test drivers will have to follow.
Proof of financial wherewithal -- insurance or a bond -- to cover any damages if there's an accident is near the top of the list. So is the readiness of test drivers to take over the wheel if something goes haywire. Other matters aren't so clear-cut like privacy. What kind of information will the car's computers record, and will it include any data about any vehicles driving alongside?
At the same time, California is also working on a more comprehensive set of rules for the general public, in anticipation that they will someday be able to put their cars on autopilot. These regulations will be far more detailed, according to Soriano, who hopes to finish them by 2015.
Autonomous car maintenance is, of course, critical. But how far should the state go to verify it? Take the navigation system, for example. The state could require manufacturers to ensure that such systems work properly. Or it could establish an expiration date at which the equipment must be replaced. Another option is to require regular inspections.
Who can drive an autonomous car is another issue of debate. Anyone can sit back while the technology steers. Last year, for example, Google made headlines by posting a video online showing its autonomous car taking a blind man to Taco Bell. Whether the future rules will allow it is another matter, however.
Officials are looking at whether autonomous car owners need specific training. If so, who will provide it? A passenger may also be required to sit behind the wheel and be ready to take over if something goes wrong. Such a rule would, of course, preclude the blind along with others like children who are too young to have a driver's license. "The main theme is ensuring public safety," Soriano said.
Whether autonomous cars will be issued specific license plates is unclear. The uncertainty speaks to the details officials are considering as part of the process. Soriano explained that identifying an autonomous car with a license plate or other marking may be hazardous. Fellow drivers on the road may decide to inch too close to see if it automatically swerves. "There's pros and cons," Soriano said.
For help with the rules, California's DMV has teamed with an alphabet soup of government agencies including law enforcement, the insurance department, and highway construction and maintenance department. It's also seeking the input of manufacturers, academics, and privacy groups.
Nevada was the first state to approve the testing of autonomous vehicles in 2011 and the first come up with a set of rules. Officials took eight months to issue them after a crash course in autonomous vehicle technology. "We'd never heard of autonomous vehicles before," said Heather Hawkins-Fancher, an analyst with the Nevada Department of Motor Vehicles who worked on the rules. "We had to become experts."
In Nevada, manufacturers must fill out a lengthy application explaining their cars' capabilities and their track record. They must also chose the type of geography they wish to use -- interstate highways or urban environment, for example -- and show that they have a bond of $3 million to cover liability. In terms of mechanical requirements, the cars must have a system to alert passengers about any technology problems and allow them to take control. Additionally, the car must retain any sensor data collected for 30 seconds prior to any collision.
Those awarded a permit -- Google, Audi, and Continental, so far -- are required to operate their cars with two passengers inside. Driver's licenses and prior training with autonomous vehicles are required. Both passengers must also "actively monitor for any aberration in the functioning of the autonomous vehicle," according to the rules. Dozing off while being taxied around is clearly forbidden.
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