Auto dealerships and service centers often utilize storage tanks for fuel, waste oil, and wastewater oil-water separators.  They should closely review and understand Pennsylvania’s regulation of aboveground and underground storage tanks, especially important changes issued in late December 2018.  Many new requirements became effective at that time, yet the Pennsylvania Department of Environmental Protection (“PADEP”) and the regulated community are still grappling with the practical application of some provisions.  Owners and operators of regulated storage tanks should already be in compliance with the new requirements that are in effect.  They should also continue to track additional developments, as some provisions are phased in and PADEP continues to release new forms and guidance.  A few noteworthy changes for auto dealerships and service centers are briefly summarized below.

Background on the Final Rulemaking

The rulemaking was intended to align Pennsylvania’s storage tank program with the federal program administered by the U.S. Environmental Protection Agency (“EPA”).  Under federal law, state agencies may develop their own regulatory programs to apply in lieu of the federal program, but the state program must be at least as stringent as the federal program.  In 2015, EPA amended the federal underground storage tank (“UST”) regulations, giving state agencies three years to amend their own regulatory programs to match the federal program.

Defining USTs

One of the notable changes in the rulemaking concerns the definition of USTs.  Previously, many in the regulated community operated wastewater treatment tank systems, including oil-water separators (“OWSs”), as exempt from regulation.  The rulemaking changed this, however, as this exemption now only applies to wastewater treatment tank systems that are regulated under certain sections of the federal Clean Water Act.  On the other hand, the definition of aboveground storage tank (“AST”) specifically exempts flow-through process tanks, including OWSs.  As applied to automotive dealerships and service centers, the use of a parking-lot OWS may trigger compliance obligations under the recent rulemaking, but PADEP has yet to release any guidance addressing this issue.  Unfortunately, owners of previously unregulated/deferred storage tanks were only given sixty days from December 22, 2018, to register newly regulated tanks (deadline of February 20, 2019).  As the regulated industry awaits further PADEP guidance, there is no indication whether PADEP would exercise enforcement discretion where the owner failed to register a tank because the obligation was unclear when the deadline passed.  Stay tuned.

“Suspected Releases” and Release Reporting

There are also important changes to the release investigation and reporting procedures.  They now require owners and operators of USTs to conduct an investigation whenever an “indication of a suspected release” occurs.  “Suspected release” remains undefined under the new regulations, but there is a list of six conditions that constitute an “indication of a suspected release,” such as the presence of water in a UST system.

Once the investigation of the suspected release is completed, owners and operators of USTs are required to report confirmed releases.  Additionally, owners and operators of USTs are now required to report suspected releases when an investigation is inconclusive (i.e., the investigation cannot determine whether a release has or has not occurred).  As before, when an investigation confirms that no release has occurred, no further action is required aside from recovering and removing the regulated substance.

New Periodic Testing and Inspection Requirements

Looking forward, two new regulatory provisions added by the final rulemaking will be phased in over the next two years.  The first provision addresses periodic testing requirements for overfill prevention equipment, containment sumps, spill prevention equipment, and release detection equipment.  Generally, this equipment must be tested at least every three years using the specifications of the original manufacturer, an approved code of practice, or PADEP guidance.

The second provision concerns monthly and annual walkthrough inspection requirements.  By December 22, 2019, owners of USTs must begin to conduct and document monthly walkthrough inspections for spill and release detection equipment.  Similarly, owners of USTs must inspect containment sumps and handheld release detection equipment annually.

Changes to PADEP’s Reports and Forms

Along with the new testing and inspection provisions, PADEP released a number of new forms and reports that must be completed by owners and operators of storage tanks to evidence compliance with the new regulatory requirements.   Additionally, PADEP revised several existing forms, such as the permitting and registration application.  Owners and operators of storage tanks should ensure that the forms used in their operations are up-to-date.

Complying with the New Storage Tank Regulations

Although many of the regulations have been effective since December 2018, several questions remain regarding the status of certain storage tank features, such as OWSs.  Auto dealerships, service centers, and other entities potentially affected by the regulations should thoroughly review the changes and remain apprised of additional developments and PADEP interpretations.  If you have any questions concerning how the new storage tank regulations apply to your operations, you may contact the authors or other members of McNees’s Auto Dealer Practice Group.

A recent client meeting (with experienced accounting and financial professionals as well as legal advisors) ended with the participants trading stories of attempted fraud, phishing or hacking attempts foisted on our clients, employees, colleagues and family members.  Each of us present had multiple stories.  These threats keep us up at night as much as (or more than) the substance of our professions such as tax legislation, financial market instability, trade threats and the like.

Damages from successful fraud schemes result in everything from the annoying and costly (lost productivity) to the catastrophic (substantial monetary loss or data theft).  While not specifically related to estate planning or our auto dealer practice, I thought I’d share a few common scenarios (just a drop in the bucket of the many, many variants of criminal creativity):

  • Call from a Government Agency. These calls follow short, tight scripts with a (usually) recorded warning from the “IRS,” “Social Security,” or “Medicare” about a tax delinquency, fraud affecting your social security number, or an offer for a free DNA testing kit.  It’s important to remember that the real agencies never communicate in this fashion.
  • The Grandchild in Trouble. In this scenario, a grandparent gets a call from his “grandchild” who has been arrested, often while traveling abroad.  The scammers perfectly calibrate their communication to reel in the sympathetic relative and get him to send money to the scammers.  If you think no one would fall for this, consider that the loss from family/friend imposter scams totaled $41 million between November 2017 and October 2018!
  • Phishing. Email with attached files from a work colleague, friend or family member.  The masked email address seems real enough to entice the recipient to click on the attachment.  Once that’s done, the hacker and/or a virus is potentially in your system.
  • Wire Transfers. This is a massive area of fraud in which a change of wire instructions just before closing on a transaction results in a transfer of funds to criminal third parties.

Given the ubiquity of these threats, it’s likely that you have heard of each of these in some form.  Usually we know to just hang up, delete the email and move on.  Particularly for older relatives, friends and colleagues however, they may be novel and therefore effective.  Hopefully, sharing the existence of these threats makes them less potent.  Abundant additional information and resources are available through the Federal Trade Commission, AARP, Consumer Finance Protection Bureau, and the FBI.

The Trump Administration initiated an investigation on automobile imports in May of 2018.  The Department of Commerce, which undertook the investigation, submitted its report to the President in February of 2019, but the Administration has not made it public.  Nevertheless, on May 17, 2019, President Trump announced his determination that U.S. imports of automobiles and certain auto parts threatened the national security.  More specifically, the President concluded that these imports affect American companies’ global competitiveness and their ability to undertake research and development on which U.S. military superiority depends.  These determinations, made under Section 232 of the Trade Expansion Act of 1962, give the President the broad authority to respond to these national security concerns, including the ability to unilaterally impose tariffs on the subject goods.   As a result, President Trump has threatened such tariffs on a number of occasions.

It seems that this threat of tariffs, at least for the moment, is being used as leverage in an effort for the U.S. Trade Representative (USTR) to reach favorable agreements with Japan and the European Union.  The Administration’s broad agenda, as reported by the Congressional Research Service, is intended to expand domestic automobile manufacturing, address bilateral trade deficits, and reduce disparities in tariff rates between U.S. and its trading partners.  (Presumably, countering the potential national security threat is also on the list.)  Notably, the U.S. tariffs for passenger cars is 2.5%, while the E.U. tariffs on U.S. passenger cars is at 10%.  Reports are that the Administration is considering tariffs of up to 25-30% on imported vehicles and parts, excluding those from Canada, Mexico and South Korea, all of which have separate trade agreements with the United States.

The automobile industry, including the NADA, is universally opposed to the potential tariffs.  Most studies indicate that auto tariffs could have significant negative effects on not just the auto industry but the U.S. economy generally.  For the moment, President Trump has put the tariff decision on hold until at least November while the USTR undertakes negotiations.  Accordingly, the industry will be holding its breath until then.

In 2015, Sergio Marchionne publicly made a case for mergers among automotive manufacturers.  The need for intensive amounts of capital for research and development was one of the key factors he cited for support.  Since 2015, the importance of research and development has remained, if not grown, as all vehicle manufacturers are looking towards the eventual electrification of virtually all their fleets.  Estimates for the cost of research, development and implementation of electrification have risen fourfold over the last five years to over 300 billion dollars.

Recent on-again and off-again talks between Renault and Fiat Chrysler have reignited the discussion of the need for mergers of vehicle manufacturers.  While it is yet to be seen whether any merger between Renault and Fiat Chrysler will be negotiated (which would of course also involve Nissan and Mitsubishi), it is clear that the international automotive industry is in a state of consolidation.  It is worth noting that automotive manufacturers are not the only players in the industry considering or discussing merger opportunities, but their suppliers are as well.

However, nothing in the discussions between Renault and Fiat Chrysler should surprise anyone who follows the industry.  Since 1998, the list of mergers (both successful and failed) is fairly long:

Year Manufacturers Deal Value
1998 Daimler/Chrysler $43.1 billion
1999 Ford/Volvo Cars $6.5 billion
2001 Renault/Nissan $1.8 billion
2009 Geely Volvo $1.8 billion
2011 Volkswagen/MAN $7.4 billion
2014 Fiat/Chrysler $3.7 billion
2014 Volkswagen/Scania $9.2 billion
2016 Nissan/Mitsubishi $2.2 billion
2017 PSA/Opal and Vauxhall $2.2 billion

In addition to the above mergers or alliances, other automotive manufacturers are also working in global alliances on joint products.  The list of joint ventures includes Volkswagen and Ford, as well as Toyota and Suzuki.  Multiple industry observers are of the mind that there will continue to be mergers, joint ventures and alliances throughout the industry.  These consolidations are driven by a number of factors, the principal of which continues to be the need for cost-sharing concerning expenses related to the electrification of vehicles.  For instance, Volkswagen expects to spend $50 billion on the transition to electric vehicles while Daimler, which is a quarter of Volkswagen’s size, has indicated it will spend over $20 billion towards electrification.

The interesting question is whether consumers will see any tangible changes as a result of the consolidation of the automotive industry.  Certainly, vehicle platforms and technology will be shared among merger partners.  However, as has been demonstrated time and time again, local tastes and preferences will continue to have a huge effect on the delivery of vehicles to particular regions of the world.  Additionally, there are always the potential for culture clashes within merged companies which can lead to their failure.  Finally, many manufacturers are substantially owned by nation states or are significantly supported by national governments.  This ownership will, of course, lead to impediments to mergers, be they in the form of guarantees  requested for job security or other demands.  There are some reports that the interference of the French government in the Renault/Fiat Chrysler discussions are what caused them to break off previously.

With merger activity continuing and new tech companies enter the vehicle world, it will be interesting to watch the industry and see what of the existing automotive manufacturers survive and thrive over the next five to ten years.  Of course, the bigger interest will be what vehicles we are driving.

If you have serviced a customer’s vehicle and have not been paid, you may have a lien. This type of lien is created by law and is properly called a garageman or repairman’s lien (often mistakenly called a mechanic’s lien).   If you have done the following regarding the repair performed, you should have a garageman/repairman’s lien:

  1. Secured consent of the owner to perform work on the vehicle – it will be best if this consent is in writing;
  2. Performed the work;
  3. Remain in possession of the vehicle, remain in possession of the vehicle – to be clear – remain in possession of the vehicle; and
  4. Have not been paid.

All four criteria are required. Note that if you release the vehicle from your possession, your lien goes with it.

What this lien gives you is a priority. This means that if another party has a lien on the vehicle, even if it is the secured lender who financed the purchase, your garageman/repairman’s lien is ahead of that lien, meaning you get paid first. So, do not even release the vehicle to another lienholder trying to repossess the vehicle, unless that lienholder pays you what you are owed (and they will often do that).

To actually get paid for the services, you will need to take some additional affirmative steps. First, we recommend that a lien search be conducted on the vehicle. If you find that there is a recorded lienholder on the title, the first best step may be to contact the lienholder in writing and advise them of the debt you are owed and to notify them that you have a garageman/repairman’s lien, which is superior to their lien. This may result in the lienholder paying the debt you are owed or placing additional pressure on the vehicle owner to pay the debt.

If contact with the lienholder does not get you paid, your next best step is to file a civil complaint for breach of contract and unjust enrichment, and seek damages for the amount owed. For amounts up to $12,000, this can be done at the Magisterial District Court. For amounts larger than $12,000, you will need to file in County Court of Common Pleas. Remember, you are entitled to payment for valid storage fees and for your court filing fees and costs. If you are successful and secure a judgment for money damages, you will then proceed to have the judgment executed, meaning that the vehicle will be sold and you will get paid first (after the sheriff’s office) from the proceeds of the sale. If the vehicle sells for less than what you are owed, you will also have the option to pursue other assets of the customer to receive full payment. Note that a business entity is required to use an attorney for anything filed in the County Court of Common Pleas, which will be for amounts in excess of $12,000 and to execute on any judgment. Unless you have a contract with the customer that entitles you to attorney’s fees (and we rarely see that in the repair world), you will not be entitled for reimbursement for your attorney fees.

There is a constant drip of news about data security breaches, identity thefts and cybersecurity, to the point that it can become background noise. That is, until it happens to you, as I recently found out.

Several weeks ago, I got a call from the administrator of my 401(k) asking if I had requested another distribution from my account.  Someone posing as me had managed to obtain a significant distribution from my 401(k) plan. They had my social security number and enough background information about me to convince the Plan Administrator to make the distribution. Coupled with the fact that they knew where to look for my 401(k) account, a data breach seems the likely source used by this particular criminal. This has become an all too familiar story for employers and other businesses in our current environment.

As businesses that routinely collect sensitive information from both customers and employees, auto dealers are attractive targets for data thieves. Every auto dealer should take a hard look at its current data security regime and ensure that they are taking adequate steps to protect both their employee and customer information.

This is particularly so here in Pennsylvania, given a decision by the Pennsylvania Supreme Court last fall. In that case, Dittman v. UPMC, the Pennsylvania Supreme Court established that an employer owes its employees a duty of reasonable care to protect their electronically stored information, and that UPMC was liable to its employees for breaching that duty.

While the Court in Dittman only imposed this duty on employers, it is not a stretch to see the Court extending its reasoning to other relationships where a business collects and stores personal information, and then fails (in the court’s opinion) to adequately safeguard it. Even without a Court extending the rationale in Dittman, several states have passed laws protecting their citizens from data breaches, and more are being considered by state legislators at present. In this digital age, auto dealers need to be sure that their systems are secure from both internal and external threats, and that they have taken all prudent and reasonable precautions to safeguard the data that they have collected.

Dealers rightfully depend on their DMS vendors to safeguard their data, but that may not limit the dealer’s liability. DMS contracts routinely disclaim any guarantee of data security. Further, they contain limitations of liability that purport to limit the amount the DMS vendor must pay in damages to the amount paid by the dealer under the DMS contract, or less. These provisions in the contract can make recovering for data breach losses more difficult.

Dealers need to be proactive in defending their customers’ and employees’ data. This includes using appropriate security software, adopting strong data security policies, and training employees on what steps to take, and what things not to do, to avoid a data breach. Employee training should be ongoing, and employee compliance should be monitored. The IT system, and all devices that interface with it need to be protected, including devices owned by employees.

In addition to all the preventative steps that a dealer takes, it is also necessary to have an appropriate breach response plan in place. Understanding how you need to react in the face of a breach can significantly lessen the damage that you suffer. You should also be sure that you are carrying appropriate and adequate insurance to cover losses you might sustain. Sadly, it seems that it is no longer a question of IF you will get hacked, but WHEN, as I can personally attest.

Reports of excessive inventory seem to be everywhere.  Sales have slowed, but manufacturer output has not followed suit.  This presents opportunities for dealers to acquire vehicles that are hot sellers, and to gain sales and profits.  It also presents the very real risk of vehicles stacking up not only on manufacturer lots, but also on dealer lots and on dealer floorplans.

In this environment, it is an appropriate time to revisit the protections provided by the Pennsylvania Board of Vehicles Act (“Act”) to dealers regarding new vehicle inventory.

First, the Act does not allow a manufacturer to force a dealer to purchase any new vehicle (this provision extends to parts and accessories as well).  Rather, a new vehicle must be ordered voluntarily by the dealer.  A manufacturer can encourage its dealers to purchase inventory, but it cannot force its dealers to do so.  An exception to this is that a manufacturer can have a provision in its sales and service agreements requiring its dealers to “market a representative line of those vehicles which the manufacturer is publicly advertising.”  When a manufacturer representative is pressuring a dealer to take excessive or unpopular inventory, the dealer has the right to say no.

Second, the Act does not allow a manufacturer to force a dealer to purchase a new vehicle with “special features, accessories or equipment not included in the list price of such vehicles as publicly advertised by the manufacturer or distributor.”  A dealer can resist acquiring oddly configured vehicles.

Third, the Act does not allow a manufacturer to “delay, refuse or fail” to provide a dealer with a reasonable quantity of ordered new vehicles, taking into consideration the dealer’s facility and sales potential (this provision extends to parts and accessories as well).  A dealer has the right to be provided with a reasonable inventory of new vehicles.

It can be challenging to resist manufacturer pressure to purchase excessive numbers of vehicles or unpopular vehicles.  The Act provides protection in the form of a backstop against such aggressive manufacturer behavior.  As the industry works through this period occasioned by unprecedented inventory levels, dealers should be extra diligent in monitoring new vehicle inventory and pushing back where a manufacturer is applying pressure on the dealer to maintain an inventory that is not consistent with reasonable business practices.

Corruption in the transportation industry has been a problem for many years.  From Volkswagen’s diesel scandal, to the most recent investigation into illegal payments made by Fiat Chrysler to United Auto Workers’ former vice president, the auto industry has struggled with keeping things honest.  In an industry focused increasingly on innovation and adaptation, the “old ways” nevertheless die hard.  Uber, a relatively a new entrant into the transportation field, is wrestling with the same issues the auto industry has battled for years.

In recent SEC filings, the ubiquitous ride-hailing company disclosed that it has been under investigation by the DOJ for two years for potential violations of the Foreign Corrupt Practices Act (“FCPA”).  The investigation relates to conduct that allegedly occurred in Indonesia, Malaysia, China and India.  The disclosure was made in documents Uber filed this April as part of its initial public offering, in which it seeks a valuation of around $100 billion.

In simple terms, the FCPA is an anti-bribery law.  It prohibits companies or their representatives from corruptly offering, paying, promising to pay, or authorizing payment of anything of value, either directly or through a third party, to a foreign government official or its representative to obtain or to retain business or to gain an unfair advantage.  The phrase “anything of value” has been broadly interpreted to include all kinds of gifts, including jewelry, cars, travel and entertainment.  Because the statute has no monetary threshold, meaning that even the smallest gifts are prohibited.  To be illegal, the payments must be made with a “corrupt” motive and must be intended to cause an official to take an action that would benefit the payor.  Willful blindness or deliberate ignorance of bribery will also support a violation.  Moreover, the payment need not be made directly to the foreign official; payments to friends or family may also violate the Act if made to influence the official.

Several auto manufacturers have faced FCPA investigations and prosecutions, including AB Volvo, Daimler, and Fiat.  In 2017, the DOJ charged five individuals for participating in a bribery scheme involving Rolls-Royce and its American subsidiary.  Rolls-Royce paid $170 million to resolve the DOJ charges and the majority of the individuals charged pleaded guilty.

In Uber’s case, the problematic conduct ranges from “small payments” made to police in Indonesia, to a corporate donation of “tens of thousands of dollars” made to a government-backed entrepreneurial program in Malaysia.  According to reports, after the donation, a Malaysian government pension plan sponsor invested $30 million in Uber, and the government passed favorable legislation benefitting Uber’s growing presence in the country.

So, what does this mean for Uber?  At the moment, it’s unclear.  FCPA violations carry both civil and criminal penalties, with penalties up to $2 million for each violation.  In its disclosure, Uber relayed that it is cooperating with the DOJ and it remains to be seen whether any charges will be filed.  Under the DOJ’s Corporate Enforcement Policy, companies that self-disclose and remediate FCPA violations may be offered leniency and even declination of prosecution.

Uber’s disclosure is yet another reminder that all companies operating overseas would be wise to have a compliance program aimed at identifying and preventing these types of illegal grease payments.  If Uber finds itself on the wrong side of the law on this, it could mean substantial fines and increased compliance costs, which will inevitably impact the Company’s bottom line, along with its 22,000 employees and drivers in the U.S. and around the World.

When we think of financing motor vehicles in the auto industry, our minds often draw to compliance with consumer protection laws and avoiding the attention of enforcement agencies on both the state and federal level—states’ attorneys general, the Federal Trade Commission, the Consumer Financial Protection Bureau and the Department of Justice all may investigate and prosecute dealerships who take advantage of consumers in the terms for financing the sale of a motor vehicle.

The financing of motor vehicles, however, also creates dealer obligations to financial institutions and creditors, including those creditors financing vehicles as dealer inventory. A dealer’s failure to uphold obligations to creditors can create other legal troubles for that dealer. Two pending Federal court cases reveal that a dealer who makes misrepresentations when selling vehicles to a customer can have problems—ones that don’t stop at the government’s efforts to protect the little guy, but which extend to banks and other financers.

Reagor-Dykes Auto Group and Ford Motor Credit

Ford Motor Credit Company, LLC is credited with discovering a pattern of fraudulent behavior that is contributing to the collapse of a major auto dealer in Texas. Bart Reagor and Rick Dykes, the two namesakes of the Reagor-Dykes Auto Group, personally guaranteed loan agreements for floor plan financing at the Group’s various dealerships. After Ford Credit sought an emergency audit of the Dealership Group in July 2018, the Group’s CFO admitted that he had fraudulently reported the auto group’s financial information to Ford Credit. Ford Credit became suspicious of the fact that the group’s dealerships would report an unusually large amount of sales the week before each quarterly audit. Shortly after the emergency audit, the Reagor-Dykes Auto Group entities filed for bankruptcy, and Ford filed a lawsuit in the United States District Court for the Northern District of Texas, alleging that Reagor-Dykes engaged in the following practices, each of which constitute breaches of the Group’s loan agreements:

  • Reagor-Dykes sold vehicles sometimes 55 days before reporting to Ford Credit (as reflected by Department of Motor Vehicle records) in violation of the Dealerships’ obligation to repay the sale price for the vehicle within 7-day of the sale;
  • Reagor-Dykes sought floor financing for a vehicle at one dealership, then moved the vehicle to another Reagor Dykes dealership for additional floor financing; and
  • Reagor Dykes obtained floor financing for vehicles which had already been sold to customers.

Ford claims that the personal guarantees permit Ford to seek immediate compensation from Reagor and Rick Dykes as guarantors for the violations alleged. Ford filed a motion for summary judgment against the Guarantors for more than $112 million in damages plus post-judgment interest and attorneys’ fees. Ford claims that the fact that the amount owed by Reagor and Dykes is undisputed entitles Ford to immediate recovery.

Guarantors and former owners of the Auto Group, Reagor and Dykes, do not appear to deny that the fraud occurred in their responsive pleadings. They claim, however, that Ford knew about the out-of-trust sales long before the June 2018 audit. Thus, they argue that Ford actively permitted the fraudulent sales to occur and materially altered the terms of the underlying loan agreement. Under Texas law, where a creditor and debtor materially alter an agreement without the guarantor’s consent, the guarantor is absolved of liability on the debt. Reagor and Dykes argue that Ford’s knowledge and consent to the Dealerships’ fraudulent behavior relieves the Owners’ of liability on the Guarantees. The District Court‘s determination of the merits of Ford Credit’s claims and the related defenses is still pending.

Coad Toyota and Capital One

Capital One Auto is suing Missouri dealership Coad Toyota for misrepresenting the value of certain financed vehicles, seeking more than six hundred thousand dollars in damages. Capital One alleges that Coad inflated the state sales tax owed on financed vehicle purchases, represented that customers made down payments where they actually had not, and engaged in “powerbooking” (misrepresenting the existence of vehicle features or options in order to inflate the overall value of the vehicle). As a result, Capital One claims that it suffered monetary losses in the form of diminished value of the liens it holds on those vehicles. Should Capital repossess a customer’s vehicle on default, Capital One may not be able to recover all that they are owed because the resale value of the vehicle would not fully cover the balance. Coad has until April 29, 2019 to file an answer to Capital One’s Complaint.

It is important to remind dealership employees involved in sales and financing that despite the pressure to make sales happen, they should always provide truthful information in the sales documents. Fudging the numbers might seem to help a customer in the moment, but the potential effects of such misrepresentations can damage the dealership’s relationships with financers and can still hurt the customer later. The Federal Trade Commission notes that inflating the numbers for a borrower to obtain approval for a loan increases that borrower’s risk of default by obligating them to greater debt than they may be able handle. Additionally, when a purchase money loan is secured by a vehicle whose true value does not cover the amount borrowed, there is greater risk that the lender will need to obtain a deficiency judgment against the customer even after repossession to cover the amount owed on the loan. In the end, no one wins when the value of a transaction is inflated.

Moreover, both cases demonstrate the importance of reporting accurate information to all third parties in relation to a transaction, including the relevant state agencies. Both Ford Credit and Capital One cite information that the dealers reported to state agencies as evidence of fraudulent activity. Both dealerships are facing or likely to face additional problems correcting the bad information they provided to the agencies and any violations that may result.

Pennsylvania already counted itself as one of the more than 30 states with autonomous vehicle laws; however, the Platooning and Highly Automated Vehicles Act (the “Act”), signed into law by Governor Tom Wolf on October 24, 2018, provided a glimpse of where automated vehicles are already operating in our society.  While immense public attention has been poured on autonomous personal vehicle development and testing, the Act highlighted that the commercial space is where our economy can and will more quickly benefit from autonomously operating of vehicles.

The Act established the Highly Automated Vehicle Advisory Committee to advise PennDOT with respect to technical guidelines, best practices and methods of overseeing the development, and eventual introduction, of highly automated vehicles.  The creation of this Committee followed the Autonomous Vehicle Policy Task Force, whose final report establishing testing guidelines for autonomous vehicles in the Commonwealth was published in November 2016.

In addition to forming that Committee, the Act made two additions to existing law on the use of autonomous vehicles in the Commonwealth.  First, the Act added authorizations for PennDOT and the Turnpike Commission to create highly automated work zones, in which highly automated work zone vehicles may be used in conjunction with construction and repair projects.  Specifically, a “highly automated work zone vehicle” was defined in the Act as “[a] motor vehicle used in an active work zone, as implemented by the department or the Pennsylvania Turnpike Commission, as applicable, which is: (1)  equipped with an automated driving system; or (2)  connected by wireless communication or other technology to another vehicle allowing for coordinated or controlled movement.  PennDOT requested this authority in order to pilot  autonomous truck mounted attenuators, which are vehicles positioned at the beginning of construction zones to shield workers from collisions.  The Act, however, granted substantially broader authority to use autonomous vehicles in work zones.  The language in the Act covered any use of such vehicles, including those types of automated construction equipment already on the market.

Finally, the Act authorized PennDOT to regulate “platooning” and authorized platooning on certain Commonwealth roadways, including the Turnpike.  Platooning was defined as the act of operating a number of autonomous or semi-autonomous vehicles in a convoy with each vehicle following closely to the vehicle in front of it.  This addition contemplated a lead vehicle operated by a human driver with autonomous vehicles following along in a line.  As automation takes hold, trucking companies and the military will reduce costs by having a single driver leading a convoy of autonomous vehicles.  For now, platoons were limited to 3 vehicles, with the first being operated by a human.  That number, however, will likely increase as these technologies are more widely utilized and proven.

With the passage of the Act and the successful completion of the second annual Pennsylvania Automated Vehicle Summit in 2018, Pennsylvania made clear its intention to remain at the forefront of autonomous vehicle development.