Auto Innovators sends comments on proposed rule banning China, Russia technology

The Alliance for Automotive Innovation (Auto Innovators) recently sent 15 pages of comments to the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) in response to proposed rules that would ban Chinese and Russian connected vehicle technology in the U.S. 

“The comments reiterate the auto industry’s commitment to U.S. national security and the shared goals of the rulemaking; and express support for a rule that mitigates unacceptable risks associated with information and communications technology and services (ICTS) designed, developed, manufactured, or supplied by foreign adversaries in connected vehicles in the U.S.,” an Auto Innovators press release on the comments says. 

The BIS published a notice of proposed rulemaking (NPRM) on Sept. 23 outlining proposed rules to address national security risks associated with information and communications technology and services (ICTS) integral to connected vehicles designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of China and Russia. 

A comment period was open until Oct. 28. The BIS is expected to finalize the rules and publish them in the Federal Register. 

The rule limits the ban to Vehicle Connectivity Systems (VCS) and Automated Driving Systems (ADS).

Manufacturers and importers would be given until the 2027 model year to comply with software and the 2030 model year for hardware.  Exemptions exist for vehicles produced prior to those deadlines.

Auto Innovators tells the BIS in its comments that there are areas within the proposed rule where adjustments or clarifications could further facilitate implementation for OEMs. 

The letter focuses on four key recommendations: 

• • Resolve definitional ambiguities 
  • Reduce unintended impacts of the software prohibition 
  • Ensure sufficient time to transition supply chains 
  • Protect proprietary and confidential business information 

Resolve definitional ambiguities 

“To foster transparency and predictability with respect to compliance with, and enforcement of, this new rule, BIS and industry should be aligned in their understanding of the scope of the rule,” the letter says. “At present, several terms or concepts outlined in the NPRM would benefit from additional clarity.” 

ADS is defined by BIS as hardware and software capable of performing the entire dynamic driving task for completed connected vehicles. It adds that the definition corresponds to automation Levels 3, 4, and 5 as defined by SAE International standard J3016. 

Auto Innovators asks BIS to clearly state that the definition does not include a Level 1 or 2 driving automation system or the hardware and software that perform driving tasks in those systems. 

BIS defines VCS as a hardware or software item for a completed connected vehicle that has the function of enabling the transmission, receipt, conversion, or processing of radio frequency communications at a frequency over 450 megahertz. 

“It is our understanding from the NPRM that BIS does not intend to capture within the definition of ‘Vehicle Connectivity Systems’ other systems (e.g., power supply) that lack an independent wireless connection but may exchange data with a ‘Vehicle Connectivity System,’” Auto Innovators says. 

Auto Innovators also notes that BIS has explained in the NPRM that most keyless entry fob immobilizers along with certain internal wireless sensors and relays are exempt from the definition. 

The letter says that the definition doesn’t communicate what is exempt and asks that BIS clearly exclude these items within the definition. 

Other definitions addressed by Auto Innovators include covered software, foreign interest, hardware bill of materials, persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary, software bill of materials, and VCS hardware. 

Reduce unintended impacts of the software prohibition 

“Software that directly enables vehicle connectivity, such as cellular technology, was developed years ago and may very well have included persons who, under this rule, would have been considered persons under the ownership, control, or direction of a foreign adversary,” Auto Innovators says in its letter. “Determining retroactively whether such a person was ever involved in the development of software, particularly with respect to software that is not specific or unique to vehicle connectivity systems or automated driving systems, is nearly impossible.” 

Auto Innovators says that as the NPRM is drafted, some OEMs may be unable to offer some basic connectivity options in their vehicles out of the inability to verify past ownership, control, or direction of those involved. 

“For this reason, we recommend that any software prohibitions apply prospectively and not to legacy vehicle connectivity system software developed prior to the effective date of the final rule,” the letter says. “We also recommend that the rule not apply to automated driving system software if that software was developed prior to the effective date of the final rule, but only if the connected vehicle manufacturer can demonstrate that: (a) no foreign adversary maintains access to or control of that software; and (b) it has used industry best practices to conduct a full and comprehensive review of the software after such time that any foreign adversary had any access to or control of it.” 

Ensure sufficient time to transition supply chains

“As we noted in our comments to the ANPRM, the automotive supply chain that has developed to support increasingly sophisticated and advanced vehicles is one the world’s largest and most Complex,” the letter says. “This, combined with the fact that vehicle systems undergo at least three to four years of engineering, testing, and validation before production, means that components cannot be easily swapped or altered to source from a different supplier.” 

The model year 2030 timeline for hardware would be challenging for some OEMs and vehicle connectivity system hardware importers, the letter says. 

“BIS should consider providing modestly more time (i.e., at least one additional year) for some manufacturers to either identify alternative suppliers or allow for their current suppliers to come into compliance if needed and to conduct the testing and validation that is required before new hardware components are integrated into production vehicles,” the letter says. 

Auto Innovators adds that vehicle models do not generally undergo major redesigns every model year. OEMs typically do a major redesign every four to six years. 

“To address this, we suggest that BIS make clear that the prohibitions apply only to vehicle models undergoing a major redesign in or after MY 2030 (or MY 2031, if BIS adjusts the timeline),” the letter says. “Alternatively, BIS could phase-in the prohibition so that it applies to approximately 1/3 of a manufacturer’s vehicles in year one, 2/3 of the manufacturer’s vehicles in year two, and all of a manufacturer’s vehicles in year 3. This should minimize production disruption and allow manufacturers and their suppliers to more easily accommodate adjustments at such time that vehicle models undergo a major redesign.” 

Protect proprietary and confidential business information 

The NPRM connected vehicle manufacturers submit a Software Bill of Materials (SBOM) and a Hardware Bill of Materials (HBOM) to BIS as part of its Declaration of Conformity. 

“Some information, including information about specific suppliers, contained within an SBOM or HBOM is decidedly proprietary in a highly competitive auto industry,” the letter says. 

It asks the BIS that OEMs be required to certify that an SBOM and HBOM have been developed but not submit it as the Declaration of Conformity. 

“Rather, the pertinent portions of the SBOM or HBOM would be made available to BIS upon request in connection with an audit or investigation and, in these instances, handled as confidential business information,” the letter says. 

A Morgan Lewis Report published earlier this month says major vehicle manufacturers that have been reliant on Chinese or Russian technology may face considerable challenges if the proposed rule moves forward as is. 

“To ensure they do not inadvertently engage in prohibited transactions, these companies will likely need to overhaul their compliance systems, conducting deep supplier audits with a specific focus on VCS and ADS,” the report says. “This could also mean rethinking sourcing strategies, especially for key components such as connectivity and ADS systems. Suppliers of microcontrollers, software, sensors, and telecommunications equipment that incorporate such technology will need to diversify their sourcing or invest in developing alternative technologies, all of which could significantly reshape their supply chain.” 

According to JD Supra, violations for not following the proposed rule carry a maximum civil penalty per violation of $368,136 and a maximum criminal penalty of $1 million.

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Photo courtesy of metamorworks/iStock

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