Debate put Ducey on defensive on Uber, Theranos

Gov. Doug Ducey (Photo by Gage Skidmore/Flickr)
Gov. Doug Ducey (Photo by Gage Skidmore/Flickr)

Incumbent Gov. Doug Ducey repeatedly throws around the phrase that Arizona is “open for business” as both a commercial for the state and as proof his policies are what’s driving the state economy.

But this week, in the second of two gubernatorial debates, Ducey found himself on the defensive for policies and laws he signed that ended up with the death of one pedestrian and thousands of Arizonans getting inaccurate blood test results.

And the governor’s claim that his policies have resulted in the Arizona economy doing so much better than surrounding states depends on what data are considered.

Ducey crows that since he took office in January 2015, the state has added about 242,000 private sector jobs. That does outstrip the 192,000 jobs added in the prior 43 months.

But at the height of the recession, the state’s jobless rate topped 11 percent. By the time Ducey took office, it already had fallen back to 6.4 percent. It’s now at 4.6 percent.

The governor uses the line that the last time the Arizona unemployment rate was this low “people were renting their videos from Blockbuster.”

For the record, that was in January 2008. Now just a single Blockbuster store remains in Oregon.

But the state appears to have settled into what could be a new normal, with that jobless rate having barely budged in the past year.

The unemployment figure also is higher than not just the national rate of 3.9 percent. But it also is higher than Utah, Nevada, Colorado — and even California whose regulation and tax policies Ducey repeatedly says is driving businesses to move to Arizona.

New Mexico’s rate matches Arizona.

And Arizona’s unemployment rate still remains a full point higher than its historic low of 3.6 percent in July 2007.

It isn’t just Ducey who is looking at the figures he wants.

During the debate, Democrat David Garcia claimed that at the end of 2017 Arizona’s rate of job growth was lower than surrounding states with the exception of New Mexico.

That’s true — as a snapshot of that period of time.

But there are more recent figures. And the latest report from the U.S. Bureau of Labor Statistics put Arizona’s current year-over-year job growth at 2.9 percent. While less Utah and Nevada have faster job growth, the Arizona numbers are better than California, Colorado and New Mexico.

There are some bright signs on the horizon.

Kiplinger Magazine predicts that job growth in Arizona this year will be the seventh fastest in the nation and that the jobless rate by the end of the year should hit 4.5 percent. And the writers credit “Arizona’s more flexible regulatory environment” as attractive to business.

In this March 20, 2018, photo provided by the National Transportation Safety Board, investigators examine a driverless Uber SUV that fatally struck a woman in Tempe, Ariz. The fatality prompted Uber to suspend all road-testing of such autos in the Phoenix area, Pittsburgh, San Francisco and Toronto. (National Transportation Safety Board via AP)
In this March 20, 2018, photo provided by the National Transportation Safety Board, investigators examine a driverless Uber SUV that fatally struck a woman in Tempe. (National Transportation Safety Board via AP)

U.S. News & World Report is a little less positive, putting Arizona at No. 14 in its list of the best states for growth. And USA Today lists Arizona at No. 24, citing the state’s high poverty rate and “below average educational attainment rates at both the high school and college level.”

That “flexible regulatory environment” has its own flip side.

Earlier this year a woman walking her bicycle across a dark Tempe street, away from an intersection, was struck and killed by an autonomous vehicle that Uber was testing. A video revealed the backup driver was watching a TV show.

Uber’s testing in Arizona was no accident. In fact it was directly related to the governor issuing an executive order in 2015 allowing designers of autonomous vehicles to begin testing them on Arizona roads with minimal state oversight and regulation. More to the point, Uber specifically moved its 16 test vehicles out of California in a high-profile move, complete with a photo-op for Ducey, because that state wanted the cars to be registered as test vehicle and have the company file various reports — things that Arizona did not demand.

Ducey said at the time that proves Arizona is friendlier for business than its neighbor to the west.

“The message today is Arizona’s open for business,” he said. “We’re welcoming this technology. We’re not pushing it out of our state.”

It took three more years for Ducey to actually issue some more specific safety rules, including that the vehicles have to comply with all traffic laws and the operator can be cited — even if the operator turns out to be the corporation that built the vehicle and there’s no one behind the wheel.

And only after the fatal accident did Ducey rescind Uber’s ability to test its cars in Arizona.

On Tuesday, the governor defended opening up the state to testing of autonomous vehicles, saying it needs to be seen through the lens of the larger goal of public safety.

“We lose over 800 Arizonans a year on our highways due to human error from drivers,” he said.

And the death of the pedestrian?

“What happened in that accident was tragic,” Ducey said. “But I want to see the 38,000 people that die in avoidable accidents across the United States, I want to see that problem solved.”

Then there’s Theranos.

In this April 6, 2015, photo, Gov. Doug Ducey hands a pen to Rep. Heather Carter, R- Cave Creek, after he signed legislation to make it easier for Theranos to market its services. Behind Ducey from left are Elizabeth Holmes, founder of Theranos, and Rep. Eric Meyer. (Photo by Howard Fischer/Capitol Media Services)
In this April 6, 2015, photo, Gov. Doug Ducey hands a pen to Rep. Heather Carter, R- Cave Creek, after he signed legislation to make it easier for Theranos to market its services. Behind Ducey from left are Elizabeth Holmes, founder of Theranos, and Rep. Eric Meyer. (Photo by Howard Fischer/Capitol Media Services)

In 2015, state lawmakers approved – and Ducey publicly signed – legislation to expand the kinds of laboratory tests that people can seek without a doctor’s recommendation. But the real point of the measure was to allow Theranos, which lobbied for approval, to market its unique method of doing accurate tests with just a minimal amount of blood.

Turns out the company’s claims were bogus, with Theranos subsequently admitting that more than 10 percent of the test results given to Arizonans by the company were “ultimately voided or corrected.”

Ducey chalked that up to “bad actors,” saying there ultimately was accountability – in the form of a consumer fraud lawsuit brought by Attorney General Mark Brnovich who got $4.6 million in refunds. And the company is now out of business.

But the governor was unapologetic for signing the legislation.

“We still want to be a welcoming place to medical innovations in the state of Arizona while protecting public health and public safety.”

And sometimes Ducey didn’t even bother to wait for legislation.

Shortly after taking office in 2015, Ducey fired the director of the Department of Weights and Measures.

The reason? Shawn Marquez had been enforcing laws regulating taxi cabs against Uber and Lyft. Those laws specifically require anyone transporting people for money to conduct background checks on drivers and have insurance coverage.

More to the point, Marquez told Ducey he intended to run a “sting” operation on the rideshare services as the Super Bowl was coming to Arizona.

Ducey did more than fire Marquez.

He appointed former House Speaker Andy Tobin to run the agency. And then Ducey, who acknowledged that the laws on offering rides for money actually applied to rideshare companies, told Tobin not to enforce those laws while legislators looked for a fix.

It actually took several more months of non-enforcement for lawmakers to actually approve a measure which provided parallel but somewhat different laws to govern the ridesharing services and the people who drive for them.

State to open institute to develop autonomous technology

A Waymo vehicle detects an approaching police cruiser using microphones, cameras, radar and light-based lasers, slowing down and allowing it to pass. The response to emergency vehicles was the focal point of a June 28 demonstration. (Photo by Andrew Nicla/Arizona Capitol Times)
A Waymo autonomous vehicle detects an approaching police cruiser using microphones, cameras, radar and light-based lasers, slowing down and allowing it to pass. The response to emergency vehicles was the focal point of a June 28, 2017  demonstration.
(Photo by Andrew Nicla/Arizona Capitol Times)

Four years after allowing companies to test driverless cars on Arizona streets, Gov. Doug Ducey is moving to make the state the center of testing for the next generation of autonomous automobiles.

In an executive order signed Thursday, Ducey created the Institute for Automated Mobility to promote cooperation among state agencies, the state’s three universities and private industry to ascertain exactly what’s needed to ensure that people are safe, both inside and outside of autonomous vehicles. And that includes everything from including designing facilities to test the technology before it’s deployed and procedures to figure out what went wrong after there’s an accident.

But the goal also includes helping the state adopt policies for operation of these vehicles on state roads, ranging from who is liable in case of accidents to what happens when a police officer pulls over a car or truck and there’s no one behind the wheel.

Jack Weast, the chief systems architect of the autonomous driving group of Intel, said testing autonomous vehicles is far different than the kind of testing vehicle manufacturers already do, much of that in Arizona. The first step, he said, is figuring out what kind of test track or facility is needed.

He said the standard oval test track used by manufacturers is of no use in determining what a vehicle’s programming will do when confronted with any given situation. And while computer simulations can help look for obvious flaws, what’s needed to truly test a vehicle’s artificial intelligence is something that is closer to a real-world scenario.

And that, Weast said, is part of what the institute will design.

“That’s where we’re going to look to existing crash studies and things that will help us understand what are the kind of scenarios that need to be tested to get assurance that the vehicle is making safe decisions,” he said. The goal, Weast said, is construction of a “first-of-its-kind test facility that’s focused on safety verification, not just trying to create a city in the middle of the desert.”

Arizona first allowed companies to begin testing their self-driving vehicles on Arizona roads in 2015.

In March, a vehicle being tested by Uber struck and killed a woman crossing the street in Tempe. And two months later the governor signed legislation allowing 200-pound automated “personal delivery devices” to operate at up to seven miles per hour on sidewalks through August 2020.

But Kirk Adams, the governor’s chief of staff, said it was not wrong to allow testing to occur here, even without answers to some of the questions his boss now wants the institute to resolve. And Adams said it hasn’t been necessary until now to answer those questions.

Take the issue of liability.

That vehicle in the Tempe accident was owned by Uber, with an Uber employee behind the wheel.

“The line of liability is very clear in that case,” Adams said.

The situation is different, he said, if sometime in the future an Arizonan could go to a car lot and buy a fully autonomous vehicle.

“It’s your vehicle, it’s titled in your name,” Adams said, but actually is being “driven” with technology created by the manufacturer and its suppliers. “Where does the liability go?”

Then there are things like the design of streets and even planning and zoning decisions.

“How do our roads need to be designed differently to accommodate more pull-outs for cars as people purchase subscription services for autonomous vehicles rather than own it themselves?” he asked.

All that is anticipation of Level 5 automation, meaning absolutely no human interaction. That, in turn, goes to the testing procedures that the universities will set up with private companies, though the only private firm to sign up so far is Intel.

Sethuraman Panchanahan, a vice president at Arizona State University who Ducey appointed as his adviser for science and technology, said he envisions a “concierge-style service” designed to help business partner complete their research and development projects.

Sandra Watson, CEO of the Arizona Commerce Authority, was more direct in saying that creation of the institute should give Arizona a jump over other states in attracting companies here.

“We’d like to make sure that all automated vehicle technology is being tested in our state,” she said. And that means more than just cars but also trucks and even drones, aerial and ground, that are not designed to carry passengers.

Adams said that last category has cutting-edge applications already being tested.

“It’s almost the size of a golf cart machine in San Francisco that makes your pizza for you while it’s delivering it for you, so that it arrives at your destination hot,” he said.

He acknowledged that raises questions about the safety of having a driverless vehicle weighing several hundred pounds, with an oven at 500 degrees, running around the streets. Adams said the testing contemplated here, coupled with the policy discussions, that the institute is designed to answer.

But it’s also an economic development tool designed to attract industry.

“We want Arizona to be seen as a place where they can get quality research and development with our universities,” Adams said. Consider just one project at Arizona State University.

“If they can put sensors and mirrors on vehicles to Mars, there’s an application for autonomous sensors here on Earth.

There’s one other element of what the institute is designed to figure out: What went wrong after an autonomous vehicle crashes.

Adams said the idea is transparency, with everyone involved – including all the companies in the institute – sharing the information. Still, he said, there may be some bumps, particularly as a firm claims “proprietary technology” they want to keep secret.

“But there also should be a way for regulators to validate what did or did not happen in the event something goes wrong,” Adams said.