```

[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]

                  RIGHT TO REPAIR: INDUSTRY DECISIONS
                        AND LEGISLATIVE OPTIONS

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                COMMERCE, TRADE, AND CONSUMER PROTECTION

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                           NOVEMBER 10, 2005

                               __________

                           Serial No. 109-81

                               __________

      Printed for the use of the Committee on Energy and Commerce

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

                               __________

                     U.S. GOVERNMENT PRINTING OFFICE
27-002PDF                 WASHINGTON : 2005
__________________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512-1800  
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

                    ------------------------------  

                    COMMITTEE ON ENERGY AND COMMERCE

                      JOE BARTON, Texas, Chairman

RALPH M. HALL, Texas                 JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida             Ranking Member
  Vice Chairman                      HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                 FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky               SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia             BART GORDON, Tennessee
BARBARA CUBIN, Wyoming               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
HEATHER WILSON, New Mexico           BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona             ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING,       ALBERT R. WYNN, Maryland
Mississippi, Vice Chairman           GENE GREEN, Texas
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania        JIM DAVIS, Florida
MARY BONO, California                JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  HILDA L. SOLIS, California
LEE TERRY, Nebraska                  CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey            JAY INSLEE, Washington
MIKE ROGERS, Michigan                TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho          MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee

                      Bud Albright, Staff Director

        David Cavicke, Deputy Staff Director and General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

        Subcommittee on Commerce, Trade, and Consumer Protection

                    CLIFF STEARNS, Florida, Chairman

FRED UPTON, Michigan                 JAN SCHAKOWSKY, Illinois
NATHAN DEAL, Georgia                   Ranking Member
BARBARA CUBIN, Wyoming               MIKE ROSS, Arkansas
GEORGE RADANOVICH, California        EDWARD J. MARKEY, Massachusetts
CHARLES F. BASS, New Hampshire       EDOLPHUS TOWNS, New York
JOSEPH R. PITTS, Pennsylvania        SHERROD BROWN, Ohio
MARY BONO, California                BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  GENE GREEN, Texas
MIKE FERGUSON, New Jersey            TED STRICKLAND, Ohio
MIKE ROGERS, Michigan                DIANA DeGETTE, Colorado
C.L. ``BUTCH'' OTTER, Idaho          JIM DAVIS, Florida
SUE MYRICK, North Carolina           CHARLES A. GONZALEZ, Texas
TIM MURPHY, Pennsylvania             TAMMY BALDWIN, Wisconsin
MARSHA BLACKBURN, Tennessee          JOHN D. DINGELL, Michigan,
JOE BARTON, Texas,                     (Ex Officio)
  (Ex Officio)

                                  (ii)

                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Braziel, Robert, Chief Legislative Counsel, National 
      Automobile Dealers Association.............................    72
    Brotherton, Steve, President, Continental Imports............    58
    Cabaniss, John, Director, Environment and Energy, Association 
      of International Automobile Manufacturers, Incorporated....    63
    Cole, Steven J., President and CEO, Council of Better 
      Business Bureaus, Inc......................................    17
    Everett, Bob, Owner, Bayville Auto Care, Incorporated........    61
    Kohm, James A., Associate Director, Bureau of Consumer 
      Protection, Division of Marketing Practices, Federal Trade 
      Commission.................................................    14
    Lowe, Aaron M., Vice President, Government Affairs, 
      Automotive Aftermarket Industry Association................    67
    Nielsen, John, Director, AAA Auto Repair Network.............    54
    Parde, David, President, Coalition for Auto Repair Equality..    20
    Stanton, Michael J., Vice President, Government and 
      International Affairs, the Alliance of Automobile 
      Manufacturers..............................................    27
Additional material submitted for the record:
    Retail Industry Leaders Association, prepared statement of...    91
    Tire Industry Association, prepared statement of.............    92

                                 (iii)

  

 
      RIGHT TO REPAIR: INDUSTRY DECISIONS AND LEGISLATIVE OPTIONS

                              ----------                              

                      THURSDAY, NOVEMBER 10, 2005

              House of Representatives,    
              Committee on Energy and Commerce,    
                       Subcommittee on Commerce, Trade,    
                                   and Consumer Protection,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:08 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Cliff 
Stearns (chairman) presiding.
    Members present: Representatives Stearns, Deal, Radanovich, 
Bass, Ferguson, Rogers, Myrick, Murphy, Blackburn, Barton (ex 
officio), Schakowsky, Towns, Rush, Green, Gonzalez, and Dingell 
(ex officio).
    Staff present: David Cavicke, general counsel; Chris Leahy, 
policy coordinator; Brian McCullough, professional staff; Will 
Carty, professional staff; Andy Black, deputy staff director; 
Julie Fields, special assistant to deputy staff director, 
policy; Terry Lane, press secretary; Billy Harvard, clerk; 
Jonathan Cordone, minority counsel; and Jonathan Brater, staff 
assistant.
    Mr. Stearns. Good morning. The subcommittee will come to 
order.
    As my colleagues may recall from last year's hearing, the 
issue of consumer access to car repair information involves 
complex technology. Complex methods of engaging technology 
including training and the shared goal of allowing Americans to 
take their cars to a mechanic of their choice, including 
getting their own hands dirty if they so choose in their own 
garage. I believe that all parties involved with this issue 
including the independent repair folks, the auto manufacturers, 
the parts manufacturers, the dealers, and so on all agree that 
access to repair and service information is a consumer right, 
and in fact, precluding consumer choice would be detrimental to 
all stakeholders.
    Without choice, consumers will not buy cars that cannot be 
repaired conveniently and for a reasonable amount of money. 
Independent dealers and dealer repair operations will have 
fewer customers and car makes to service. And parts makers will 
sell fewer OEM and aftermarket parts. But even with this market 
based reasoning, we still hear claims that information 
necessary for the repair and servicing of cars is not readily 
available at a reasonable price.
    By way of background, the increasingly computerization and 
complexity of automotive systems and the resulting need for 
more complex information to maintain repair vehicles began with 
the Clean Air Act Amendments of 1990. My colleagues, that piece 
of legislation required for the first time the installation of 
onboard diagnostic or OBMD systems that monitor engine 
functions and malfunctions including misfires and loose fuel 
filler caps which could have an effect on emissions and air 
quality.
    Like many good ideas, OBD had the simple goal of cleaner 
air but also had the unintended effect of adding complexity to 
the repair and service of vehicles because it made inaccurate 
information in fault codes related to the OBD computer systems 
integral to affected repairs. Recognizing this, the EPA now 
requires that the auto manufacturers through their websites 
provide to independent repairs shops all information necessary 
to repair and service these OBD systems.
    A further unintended consequence of OBD is that automotive 
computer systems are being used increasingly to monitor 
functions other than those related to emissions including 
safety and security systems like air bags and ignition keys. 
Therefore, the information needed to repair and service these 
non-emission systems has become just as critical.
    In 2002 to address this additional problem and after some 
legislative pressure, the auto manufacturers represented by The 
Alliance of Automobile Manufacturers and the Association of 
International Automobile Manufacturers agreed voluntarily with 
the Association of Automotive Service Association ASA, an 
organization representing independent repair technicians to 
share non-emissions related information necessary to repair and 
service vehicles via websites and utilize the National 
Automotive Service Task Force to resolve complaints about 
information access. The CARE coalition which also represents 
independent repair technicians and aftermarket parts retailers 
and manufacturers did not join that agreement in part because 
if felt there was no enforcement mechanism.
    Now since that time, Chairman Barton, much to his credit, 
has attempted to achieve agreement between CARE and the 
automakers by continuing to refine H.R. 2048, the Motor Vehicle 
Owners' Right to Repair Act which was crafted in part to 
reflect the 2002 voluntary agreement with the addition of 
finding dispute resolution. In addition last summer, in order 
to facilitate the preferred path of a non-legislative approach 
to this issue, Chairman Barton and Senator Graham of South 
Carolina pushed the auto manufacturers and the CARE camps to 
pick a neutral location, a neutral arbiter, lock the doors and 
come up with a good faith resolution to this issue finally. 
Unfortunately, resolution was not reached.
    It is my understanding that the following elements were 
substantially agreed upon to. The need for and the basic 
information, excuse me, the need for and the basic formulation 
of a third party dispute resolution process. Two as part of 
that process strengthening and new funding for a better 
financed and staffed NASTF. And three, progress on remedies for 
the dispute resolution framework including timeframes and 
procedures.
    It is also my understanding that the following elements 
were still contentious. One, the structure and more importantly 
the board level of governance of the newly restructured NASTF. 
How issues related to information for vehicle security systems 
will be addressed. Three, how to handle information that is not 
published and distributed to dealers, and finally how penalties 
should be calculated.
    My colleagues, this issue at bottom is about access and 
information, the ability to resolve complaints quickly and with 
binding effect and ultimately allowing more consumer choice. I 
believe that the 2002 voluntary agreement, Chairman Barton's 
Bill and the good faith attempt at a binding agreement have all 
these common elements. I also hope victory can be snatched from 
the jaws of defeat and a non-legislative solution is ultimately 
reached. In my opinion, this is achievable and will eliminate a 
great deal of the current problems.
    My objective in this hearing is to understand with 
precision the scope and nature of the problems, again, what 
constitutes acceptable resolution for both parties including 
legislative options, and what each party ultimately wants, non-
legislative agreement or legislation. Regrettably, this is not 
going to be a pleasant process, too much is at stake. But I do 
want to say that I believe both parties have demonstrated good 
faith at trying to reach agreement one way or the other.
    I thank the witnesses for their testimony. I also 
particularly would like to thank Mr. Steve Brotherton who 
represents the Automotive Service Association who is visiting 
from my home congressional district in Gainesville, Florida and 
I welcome him to this au gust committee and with that I would 
yield to my ranking member, Ms. Schakowsky.
    [The prepared statement of Hon. Cliff Stearns follows:]
Prepared Statement of Hon. Clifford Stearns, Chairman, Subcommittee on 
                Commerce, Trade, and Consumer Protection
    Good morning. As my colleagues may recall from last year's hearing, 
the issue of consumer access to car repair information involves complex 
technology, complex methods of engaging technology, including training, 
and the shared goal of allowing Americans to take their cars to a 
mechanic of their choice, including getting their own hands dirty in 
their own garage. I believe that all parties involved with this issue, 
including the independent repair folks, the auto manufacturers, the 
parts manufacturers, the dealers, and so on, all agree that access to 
repair and service information is a consumer right and, in fact, 
precluding consumer choice would be detrimental to all stakeholders. 
Without choice, consumers will not buy cars that can't be repaired 
conveniently and for a reasonable cost, independent and dealer repair 
operations will have fewer customers and car makes to service, and 
parts makers will sell fewer OEM and aftermarket parts. But even with 
this market-based reasoning, we still hear claims that information 
necessary for the repair and servicing of cars is not readily available 
for a reasonable price.
    By way of background, the increasing computerization and complexity 
of automotive systems and the resulting need for more complex 
information to maintain and repair vehicles began with the Clean Air 
Act Amendments of 1990. That piece of legislation required, for the 
first time, the installation of On-Board Diagnostic or OBD systems that 
monitor engine functions and malfunctions, including misfires and loose 
fuel filler caps, which could have an effect on emissions and air 
quality. Like many good ideas, OBD had the simple goal of cleaner air, 
but also had the unintended effect of adding complexity to the repair 
and service of vehicles because it made accurate information and fault 
codes related to the OBD computer systems integral to effective 
repairs. Recognizing this, the EPA now requires that the auto 
manufacturers through their websites provide to independent repair 
shops all information necessary to repair and service these OBD 
systems. A further unintended consequence of OBD is that automotive 
computer systems are being used increasingly to monitor functions other 
than those related to emissions, including safety and security systems 
like air bags and ignition keys. Therefore, the information needed to 
repair and service these non-emissions systems has become just as 
critical. In 2002, to address this additional problem, and after some 
legislative pressure, the auto manufacturers, represented by the 
Alliance of Automobile Manufacturers and the Association of 
International Automobile Manufacturers, agreed voluntarily with the 
Association of Automotive Service Association (ASA), an organization 
representing independent repair technicians, to share non-emissions 
related information necessary to repair and service vehicles via 
websites and utilize the National Automotive Service Task Force (NASTF) 
to resolve complaints about information access. The CARE coalition, 
which also represents independent repair technicians and aftermarket 
parts retailers and manufacturers, did not join that agreement, in 
part, because it felt there was no enforcement mechanism.
    Since that time, Chairman Barton, much to his credit, has attempted 
to achieve agreement between CARE and the automakers by continuing to 
refine HR 2048, the ``Motor Vehicle Owners Right to Repair Act,'' which 
was crafted, in part, to reflect the 2002 voluntary agreement with the 
addition of binding dispute resolution. In addition, last summer, in 
order to facilitate the preferred path of a non-legislative approach to 
this issue, Chairman Barton and Senator Graham of South Carolina pushed 
the auto manufacturer and the CARE camps to pick a neutral location, a 
neutral arbiter, lock the doors, and come up with a good faith 
resolution to this issue. Unfortunately, resolution was not reached.
    It is my understanding that the following elements were 
substantially agreed to:

 The need for and the basic formulation of a third party dispute 
        resolution process.
 As part of that process, strengthening and new funding for a better 
        financed and staffed NASTF.
 Progress on remedies for the dispute resolution framework, including 
        time frames and procedures.
    It also is my understanding that the following elements were still 
contentious:

 The structure and, more importantly, the board-level governance of 
        the newly restructured NASTF.
 How issues related to information for vehicle security systems will 
        be addressed.
 How to handle information that is not published and distributed to 
        dealers.
 How penalties should be calculated.
    My colleagues, this issue, at bottom, is about access and 
information, the ability to resolve complaints quickly and with binding 
effect, and ultimately allowing more consumer choice. I believe that 
the 2002 voluntary agreement, Chairman Barton's bill, and the good 
faith attempt at a binding agreement have those common elements. I also 
still hope victory can be snatched from the jaws of defeat and a non-
legislative solution is reached. In my opinion, this is achievable and 
will eliminate a great many of the current problems.
    My objective in this hearing is to understand with precision the 
scope and nature of the problems, what constitutes acceptable 
resolution for both parties, including legislative options, and what 
each party ultimately wants--non-legislative agreement or legislation. 
Regrettably, this is not going to a pleasant process but I do want to 
say that I believe both parties have demonstrated good faith at trying 
to reach agreement, one way or the other.
    I thank the witnesses for their testimony this morning. I'd also 
like to thank, in particular, Mr. Steve Brotherton, representing the 
Automotive Service Association, who is visiting us from Gainesville, 
Florida, located in my home district. Thank you.

    Ms. Schakowsky. Thank you, Chairman Stearns, for holding 
today's hearing on another important issue to consumers, 
whether the choice of where to take their cars for repairs is 
their own.
    I am glad that we are revisiting the technical challenges 
that currently stop consumers from using the shop around the 
corner like my own Dack Able and that we are taking another 
look at the Motor Vehicle Owners' Right to Repair Act which 
will restore their right to choose where they want to take 
their business.
    Technological developments in car design and maintenance 
have made cars safer and more environmentally sound, however, 
they have also created new obstacles for consumers and 
independent repair shops. Consumers have found that a simple 
repair may not be so simple after all. Even getting a diagnosis 
is more complicated than it was before and many have found that 
they cannot take their cars to the repair shop they have been 
using for years.
    Repair shops for their part are finding that they must 
refer customers to dealers for work they cannot do. It is not 
that the mechanics at the shop are not capable but because they 
cannot get the information they need or they cannot get the 
information they need in a timely fashion to make the necessary 
repairs. So unfortunately, many of our neighborhood mechanics 
have had to send good business elsewhere.
    I believe it is important to protect the trade secrets of 
intellectual property of auto manufacturers. The motor vehicle 
industry is the largest manufacturer in the country and their 
innovations help fuel the economy. However, I believe that 
information necessary to diagnose service and repair vehicles 
sold in the United States should be disclosed to car owners, 
repair shops, and the Federal Trade Commission.
    I believe a balance between protecting the rights of 
manufacturers and the rights of consumers can be found and that 
H.R. 2048 is on the right track toward striking that balance. 
Some of the witnesses here today will report that information 
sharing is already occurring and that automakers and 
independent repair shops have been working together 
voluntarily. That cooperation was initiated in large part by 
the late Senator Paul Wellstone's prodding and is a positive 
change since this issue came to light a few years ago, however, 
there is still room for improvement.
    And I was glad to hear that from January to October the 
stakeholders, many of them witnesses today, did try to work out 
an agreement on better information sharing. Despite your 
efforts, no accord was reached and consumers are the ones who 
will pay for the outstanding dispute. For me, ultimately this 
is about the consumer and eliminating any undue burden on him 
or her. If the industries involved cannot workout a solution, 
then I believe we do need to consider legislation. We do need 
to ensure that the information provided to the car owners and 
independent repair shops is easily accessible, accurate, 
timely, and not priced out of reach.
    Again, I look forward to hearing your ideas on these 
issues. I hope that we can come to a better understanding of 
the impasse so that we can move forward on restoring consumer's 
choice when it comes to mechanics who perform work on their 
cars.
    Thank you.
    Mr. Stearns. I thank the gentlelady.
    Mr. Ferguson?
    Mr. Ferguson. Thank you, Mr. Chairman.
    I appreciate you having this hearing on an issue that 
really faces probably all of our constituents. I have heard 
from many in our district in New Jersey, many of the groups are 
represented here today, heard from regular constituents and 
business people and others. Their arguments thus far have been 
presented in a thoughtful manner, in a reasonable manner, and I 
look forward to hearing more about this issue from some of our 
witnesses today.
    And I think it is important to notice Ms. Schakowsky 
mentioned there are a lot of conversations going on. There are 
negotiations and hopefully agreements being worked out in terms 
of information sharing to try and address what this legislation 
would address. Certainly we always feel, many of us always feel 
that if industry in the private sector can work together to 
come up with solutions to problems that exist, usually it is 
better than legislation. And it is certainly my hope that those 
negotiations and conversations can continue because generally 
it is certainly better when folks in the private sector can 
work out differences and problems rather than inviting the 
Government to get involved because that invariably raises other 
more complex issues.
    In particular today, I would like to recognize and welcome 
a member of our second panel who is from my home State of New 
Jersey, Mr. Bob Everett is the owner of Bayville Auto Care in 
Bayville, New Jersey. He is testifying today on behalf of NFIB, 
the National Federation of Independent Business. He has been 
involved in the auto repair business since 1974, established 
his business in Bayville in 1986. He is the immediate past 
president of the Alliance of Automotive Service Providers of 
New Jersey.
    With that, Mr. Chairman, I would yield back.
    Mr. Stearns. I thank the gentleman.
    The distinguished ranking member of the full committee, Mr. 
Dingell is recognized.
    Mr. Dingell. Chairman, thank you, good morning.
    Mr. Chairman, I am pleased we are holding this hearing 
today. H.R. 2048, the Motor Vehicle Owners' Right to Repair Act 
of 2005 was reportedly introduced to help small independent 
repair shops. It is unfortunate that these kinds of good intent 
are often accompanied by some difficulties. I have feared that 
the bill may impede the competitiveness of the American 
manufacturing industry at a precarious time for the automobile 
industry. While the bill represents a clear improvement over 
the version we considered in the last Congress, I am still 
afraid that this legislation may be in its current form ill-
advised.
    The issue, of course, Mr. Chairman is not as simple as it 
appears. The publicly stated objectives of the legislation are 
vulnerable. Consumers should be able to choose who repairs 
their automobiles. It is not, however, the bill's stated 
objectives with which I am concerned. It is the means through 
which the legislation seeks to achieve the stated objectives 
and the consequences whether intended or not that give me great 
reason for concern. It is possible to help consumers and to 
assist independent repair shops without jeopardizing the rights 
of automobile manufacturers and their suppliers or the 
competitiveness that is so important to them and to us.
    Independent service stations across the Nation have joined 
the world's automobile manufacturers to create the National 
Automobile Service Task Force. This task force was designed as 
the non-legislative means through which the bill's stated 
objectives are being achieved. I am told that independent 
service stations are now receiving information they need to 
prepare all makes and all models of motor vehicles. No one 
should expect an undertaking of this magnitude to be perfect 
products inception. There will also be errors and there will 
always be flaws. The exercise here as in the case of other 
difficult problems requires communication, perseverance, and 
most importantly the willingness of all stakeholders to succeed 
and to work together for the interest of all.
    Mr. Chairman, to the extent the effectiveness of this 
building remains in doubt, I suggest that we engage in suitable 
oversight to discern the facts from their rumor and innuendo 
and to encourage all parties involved in the task to work 
together more diligently. Certainly this would be consistent 
with the traditions of this committee that the findings would 
certainly eliminate our legislative process. A thorough 
examination of how intellectual property and how international 
competitiveness may be affected or may be impaired should also 
be a useful exercise by the committee.
    Mr. Chairman, again I thank you for holding this hearing. I 
appreciate your kindness in recognizing me. I look forward to 
hearing from our witnesses and I look forward to working with 
you and other interested members to bring about a perfection in 
the legislation that would solve of the problems upon which our 
people complain.
    Thank you, Mr. Chairman.
    Mr. Stearns. And I thank the gentleman.
    The full chairman of the Energy and Commerce Committee, Mr. 
Barton.
    Chairman Barton. Thank you, Mr. Chairman for holding this 
hearing today.
    I have been involved with this issue since August of 2001 
for the simple reason I think the driver of the car should 
decide who fixes their car. I believe that honest competition 
makes for better service and lower prices. It is how good 
businesses win customers in America and why bad businesses lose 
customers. Right now, there is not much competition in the 
repair business for automobiles.
    What is at issue here is the way cars and trucks are 
repaired today. Computers and other sophisticated diagnostic 
equipment make your car more reliable than ever. But they also 
mean that even the best shade tree mechanic cannot fix it when 
something goes wrong because they do not know what it is that 
is going wrong. They need the sophistication of the modern 
diagnostic equipment to help them decide what it is that the 
problem--what the problem is. That is the way the manufacturers 
see it too. When your car breaks, they want you to come to 
their name brand dealerships. I understand that. If an 
independent garage cannot get the computer code or the other 
data that they need to diagnose the problem, the dealership is 
your only choice, when your car is under warranty that is 
actually the best choice. However, when the car is not under 
warranty sometimes maybe it is not the best choice.
    Whether a car is foreign or domestic, consumers should be 
able to choose where they have the car repaired and whether 
they choose after market replacement parts or original 
equipment manufacturer parts. Nobody should find themselves 
dropping off a car at their neighborhood service station where 
they have done business for years and years where they have got 
both the mechanics and the tools necessary to fix the car only 
to be told that it cannot be fixed there because the mechanic 
cannot get the information that he or she needs from the car 
company. That is happening now. And the list of who gets heard 
goes on and on. The consumer who cannot get their car fixed, 
the shop owner who loses business, the mechanic who loses his 
job, even the company that makes the tools for the shops that 
cannot use them.
    I wish the industry parties could sort this out but they 
seem absolutely incapable of doing so. The market players that 
achieve voluntary agreements always do a better job than 
politicians or bureaucrats. I was pleased that the participants 
working toward this agreement actually made some progress 
during August and September. I was less than pleased, however, 
to see that after years and years of discussion they still 
could not come to a final resolution. My understanding of those 
meetings leads me to believe that the parties will not reach an 
agreement soon and maybe not ever. I am tempted and I am 
reminded of the ongoing negotiations between the Palestinians 
and the Israelis. There may be good intentions on both sides 
but they never seem to get the final resolution. So here we are 
in this subcommittee today having to do it for them. I do not 
doubt the good faith of the parties involved but the fact 
remains that they cannot agree.
    I appreciate the efforts of automakers especially United 
States automakers who have worked very hard to improve the 
NASTF process to get information to independent repairers. But 
efforts without solutions do not fix broken cars. I have 
introduced legislation in previous Congresses to address this 
important issue that affects consumers and small businesses. 
This Congress has redrafted a legislation to address legitimate 
concerns raised by the industry and the Federal Trade 
Commission. H.R. 2048, the Motor Vehicle Owners' Right to 
Repair Act which I have introduced along with Congressman Towns 
and Congressman Issa which now has over 66 cosponsors including 
many on this subcommittee. The AAA, the NFIB, the Consumer 
Electronics Association, the Retail Industry Leaders 
Association, and the Sixty Plus Senior Citizens Coalition all 
support this legislation.
    My goal is and always has been to put the vehicle owner in 
the driver's seat when it comes to choosing where to have their 
car repaired. It is not about getting any proprietary 
information and this legislation explicitly protects the trade 
secrets of the manufacturers. In fact, automakers currently 
comply with an EPA rule today that specifically protects trade 
secrets when shop work and emission systems is being done. This 
framework should also work for non-emissions repair work. My 
bill simply requires that manufacturers make the same 
information available to both dealers and independent shop 
owners.
    We all know how dependent we are on our cars. They take us 
to work, they take us to school, they take us to Congress, they 
take us to the grocery store, they take us to our relative's 
house to visit on Sunday. If your car does not work, your life 
does not work. You want it fixed and you want it in your 
driveway where it is available for your use. There is a good 
chance that the person who fixes my car works at a service 
station or a small garage, maybe even owns their own operation, 
not a big car dealership. And again, I am not opposed to big 
car dealerships; they are some of my very best supporters. Why 
shouldn't I, the owner of the car, be able to decide which of 
my many folks who can work on a car that I can go to the person 
that I choose not to the dealership because they are the only 
one that has the diagnostic equipment.
    Independent shops who have paid for access to information, 
who have paid for the diagnostic equipment, who have made the 
investment in tools to repair the car, have a right to be able 
to use that and get a timely response when a customer comes 
into their shop and wants to know what is wrong with their car 
and how much it is going to cost to get it fixed. They need 
some recourse when the manufacturer for whatever reason simply 
will not give them the information or allow them the access to 
the codes and things of this sort.
    Presently, independent repairs who repair the vehicle are 
forced to turn their customers away to the dealerships. I know 
that constituents all over the country deserve better than 
this. If an enforceable voluntary agreement can be reached, 
great. But if not, I think it is time to ask Chairman Stearns, 
Ranking Member Schakowsky to move H.R. 2048 and move it sooner 
rather than later. Four years is long enough. It is now time to 
take legislative action and move this process forward.
    With that, Mr. Chairman, I thank you for your willingness 
to hold your hearing, Mrs. Schakowsky for the willingness to be 
a part of it. I look forward to hearing from the witnesses.
    [The prepared statement of Hon. Joe Barton follows:]
 Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy 
                              and Commerce
    I want to thank Chairman Stearns for holding this important hearing 
today.
    I have been involved with this issue since August of 2001, because 
I believe that drivers should decide who fixes their cars. I also 
believe that honest competition makes for better service and lower 
prices. That's how good businesses win customers in America, and why 
bad businesses lose them. Right now there's not much competition, and 
it shows.
    What's at issue here is the way cars and trucks are repaired today. 
Computers and other sophisticated equipment make your car more reliable 
than ever, but they also mean that even a genius shade-tree mechanic 
can't fix it when something goes wrong. The sophistication needed to 
repair modern vehicles makes car repair a little like rocket science.
    That's the way manufacturers see it, too. When your car breaks, 
they want you to come to their brand-name dealerships. And if 
independent garages can't get the computer codes and other data they 
need to diagnose the problem, the dealership is your only choice.
    Whether a car is foreign or domestic, consumers should be able to 
choose where they have the vehicle repaired, and whether they choose 
after-market replacement parts or Original Equipment Manufacturer 
parts. Nobody should find themselves dropping off a car at a 
neighborhood service station, where they've got both the mechanics and 
the tools necessary to fix that car, only to be told that it can't be 
fixed because the mechanic cannot get information from the car company. 
That's what happens now, and the list of who it hurts goes on and on--
the consumer who can't get his car fixed, the shop owner who loses 
business, the mechanic without a job to do, even the company that makes 
tools for shops that can't use them. I'd be happy to let the industry 
parties sort this out, but they seem incapable. Market players that 
achieve voluntary agreements always do a better job than politicians or 
bureaucrats. So I was pleased to see the participants working toward an 
agreement during August and September. I was less happy to see that 
after years of discussion, they still can't find a way to agree. My 
understanding of the meetings leads me to believe the parties will not 
reach agreement soon, and maybe not ever. So here we are, doing it for 
them. .
    I do not doubt the good faith efforts of all parties involved, but 
the fact remains that they cannot agree. I appreciate the efforts the 
automakers have made to use and improve the NASTF process to get 
information to independent repairers. But efforts without solutions 
don't fix broken cars.
    I introduced legislation in the previous Congress to address this 
important issue that affects consumers and small business. This 
Congress I redrafted the legislation to address legitimate concerns 
raised by industry and the FTC. I have sponsored H.R. 2048, the ``Motor 
Vehicle Owners' Right to Repair Act,'' which I introduced along with 
Congressman Towns and Congressman Issa and which now has 66 cosponsors, 
including many on this Subcommittee. The AAA, NFIB, The Consumer 
Electronics Association, The Retail Industry Leaders Association, and 
the 60 Plus Senior Citizens support this legislation. I am pleased to 
see we will hear from some of them today.
    My goal is and has always been to put vehicle owners in the 
driver's seat when it comes to choosing where to have their car 
repaired. It is not about gaining proprietary information, and so my 
legislation explicitly preserves trade secrets. In fact, automakers 
currently comply with an EPA rule that specifically protects trade 
secrets when shops work on emissions systems. This same framework 
should work for non-emissions repair information too and my bill simply 
requires that manufacturers make the same information available to both 
dealers and independent shops.
    We all know how dependent we are on our cars. They take us to work 
and back, to school, to the grocery store, to grandma's house for 
dinner on Sunday. When my car doesn't work, I need it fixed and back in 
my driveway as soon as possible. So do most people.
    There's a good chance that the guy who will fix my car works at a 
service station or a little garage, not at a big car dealership. Why 
shouldn't I be able to go to him, and why shouldn't he be able to 
repair my car? Independent shops who have paid for access to 
information from manufacturers and have made the investment in tools to 
repair the car need a timely response when the information cannot be 
accessed. They need some recourse when there are problems such as this. 
Presently, independent repairers who could have repaired the vehicle 
are forced to turn their customers away to the dealerships. I know my 
constituents deserve better than the status quo. If an enforceable 
voluntary agreement can be reached before we act, great. But I don't 
think American consumers should wait any longer. I have asked Chairman 
Stearns to be ready to markup H.R. 2048 or an alternative very soon, 
probably in December.
    I've been at this for four years now. It can take years to pass a 
law, and that's usually a good thing, but it shouldn't take years to 
get your car fixed.
    Thank you.

    Mr. Stearns. And I thank you for your leadership, Mr. 
Chairman.
    Mr. Gonzalez?
    Mr. Gonzalez. Thank you very much, Mr. Chairman and ranking 
member for bringing this hearing today.
    First of all, I need to tell you at first when this issue 
came up back home I met with my repair and parts people, their 
association to try to get an idea of the extent or degree of 
the problem. And believe it or not, there was even disagreement 
among members of the association as to the extent of it. And 
what I asked for at that time was give me real life examples of 
where you have been stymied and frustrated in gaining the 
necessary information to make the necessary repairs. And I 
really never received one yet I see out in the audience today 
many individuals in the repair business that I think would be 
willing to get me out there in the hall and tell me specifics 
that they--experiences that they have had.
    But the real problem I think comes trying to define what 
this issue is really about. At first, I thought it was about 
information, getting information so you--the diagnostics and 
such. But then it was a debate about well we have to purchase 
expensive equipment because of what the manufacturers are 
doing. I am not real sure what we can do about that. And then 
the last thing was well it really is about parts and in 
replacement parts and why we have to use certain parts.
    And as we go through this debate though, I think everyone 
needs to understand there are certain guiding principles, legal 
in nature that we will always have to defer to that are bigger 
than this bill, bigger than any industry or individual or 
occupation. And some of these things may touch on proprietary 
rights. And these are all very serious issues because we can 
pass all sorts of laws here but whether they can be challenged 
in the courts and we create greater problems. That is the last 
thing that we want to do here.
    It costs more to operate a motor vehicle today than ever 
before just because of what it takes in the way of fuel. And 
this committee specifically has attempted to do something about 
it and we have not been that successful. The last thing we need 
is to add an additional burden to the American consumer of 
costing them a lot more to maintain their vehicles. So 
hopefully in good faith we will approach this issue and really 
find the degree and the nature of the problem and address it. 
Again, as specifically as we can again keeping in line with the 
guiding principles that should guide us in all propositions of 
law and that is we do have the rights of individuals across the 
board to be considered.
    Again, I thank the chairman and I would yield back the 
balance of my time.
    Mr. Stearns. I thank the gentleman.
    Mr. Murphy?
    Mr. Murphy. Thank you, Mr. Chairman.
    I welcome this panel today because it helps set some 
knowledge on important information, an important issue for us. 
The one side holds that manufacturers to invest----
    Mr. Stearns. Recess, it is just a recess in the House so go 
ahead. Excuse me.
    Mr. Murphy. Thank you.
    With the manufacturer to invest heavily in the invention 
and building of automobile parts and automobiles themselves and 
saying they should not be forced to automatically give up their 
proprietary inventiveness and the other side saying that 
consumers should have options and not to constrain by 
monopolies and help lower prices.
    The average car has 17 different computer systems that 
control brakes, ignition, steering, air bag safety features, et 
cetera. Many of us grew up still feeling that we could work on 
some cars like we had when we were teenagers. Now we lift the 
hood, take a look at it, and close it back down because there 
is not much any of us can go do anymore on these cars. We 
understand that they are appreciably more complex and require 
high technology both to analyze anything going wrong with the 
car and also to repair it.
    I am pleased that our Chairman, Mr. Barton has introduced 
H.R. 2048 in order to even the market's playing field and work 
up some solutions. As my colleagues know, the bill requires 
that the same services, training information, and tools 
available to their franchise dealership are also made available 
to independent repair mechanics. Through this process, I think 
all of us intend to protect consumer interest, promote the free 
market, but we also need to simultaneously protect 
manufacturer's rights.
    So I am looking forward to hearing more in this particular 
hearing and hearing both sides of the issue and hope that we 
can come up with a legislative solution to sharpen this bill 
that will really benefit both sides fairly but ultimately to 
benefit the consumer above all.
    I thank the chairman for holding this hearing and I yield 
back the balance of my time.
    Mr. Stearns. I thank the gentleman.
    Mr. Towns?
    Mr. Towns. Thank you very much, Mr. Chairman. Let me thank 
you and also Ranking Member Schakowsky for having this hearing 
today. I think it is important that we begin to have a serious 
dialog.
    As motor vehicles have become more complex, the servicing 
of them has also become a high technology business requiring 
skilled trained technicians and a sizable investment in 
diagnostic and repair equipment. For independent repairers to 
be successful, they need to have access to up to date training 
and specialized tools, as well as, service and repair 
information.
    I became an original cosponsor of this legislation because 
I wanted to ensure that the advanced computer technologists 
that are making vehicles safely and cleaner do not result in 
locking out car owners and independent repairers from being 
able to repair and maintain vehicles. Independent repair shops 
perform between 70 and 80 percent of most warranty and repair 
work. If later model automobiles can only be serviced and 
repaired at automobile dealerships, then the ability of 
consumers to shop around for the best price and most convenient 
service location would be greatly limited.
    In addition, I fear that this may result in many small 
businesses being crippled by their inability to compete with 
franchise dealerships. I have monitored this issue for the past 
4 years and I am pleased with how much information has become 
available to independent repairers. Since the manufacturers 
agreed to provide the same information to the aftermarket that 
they provide for their dealers, the amount of information 
available on their website has increased greatly. And while I 
am sure that some gaps still exist, I am hopeful that 
manufacturers will continue to refine their website and 
increase their access.
    Additionally, Mr. Chairman, I am aware that there have been 
negotiations between the members of the Care Coalition and the 
automobile manufacturers to resolve an outstanding issue. 
Agreement has reached on many of these core issues during these 
negotiations that are facilitated by the Better Business 
Bureau. However, at the end of these discussions, it is my 
understanding that CARE required 50 percent control over the 
board of the National Automotive Service Task Force. Due to 
CARE's requirement, the negotiation fell apart. I was 
disappointed at this outcome and encouraged both sides to 
consider options to continue to explore a non-legislative 
solution if possible. You do not want the Government to get its 
nose under your tent. Please go back to the conference table 
and try again.
    I applaud both sides for their commitment to provide 
consumers with a valuable service and am confident that working 
together you can resolve this issue without the need of 
legislation. That is my hope. That is my prayer. I look forward 
today from hearing from the witnesses. And again, Mr. Chairman, 
I would like to thank you and the ranking member for moving 
forward with this hearing because I think this dialog needs to 
take place and I think it needs to take place now.
    Thank you very much and I yield back the balance of my 
time.
    Mr. Stearns. I thank my colleague.
    Mr. Bass?
    Mr. Bass. Thank you, Mr. Chairman. I will be very brief.
    It is a good hearing and important topic. We need to have 
diversity in repair facilities. We need to protect 
manufacturers. We need to continue the negotiations that as my 
friend from New York has said, are not progressing as they 
should. I hope that can come--we can begin that process again. 
This is an important issue that needs to be resolved and I 
yield back.
    Mr. Stearns. The gentleman yields back.
    Any one else seek opening statement recognition? If not, we 
will go to the first panel.
    [Additional statements submitted for the record follow:]
Prepared Statement of Hon. Barbara Cubin, a Representative in Congress 
                       from the State of Wyoming
    Thank you, Mr. Chairman.
    I'd like to begin by thanking Chairman Stearns for scheduling 
today's hearing on the availability of auto repair information. It is 
especially timely given the recent negotiations between auto 
manufacturers and the aftermarket industry.
    With rapidly advancing computer technology, auto systems and the 
task of repairing vehicles has become more complex. As such, the 
service information developed by manufacturers is necessary not only 
for franchised dealers, but also the independent service providers who 
work on over 70 percent of cars not under warranty.
    In order to ensure the availability of this information, in 2000 
the auto industry established the voluntary National Automobile Service 
Task Force. Although the Task Force has operated for over five years 
now, members of the aftermarket industry still maintain they do not 
have affordable access to the information needed to compete in today's 
marketplace.
    I hope that today's panels will shed light on what industry has 
not, to this point, been able to agree upon. Issues include proposed 
structural changes to the Task Force, mechanisms for dispute resolution 
and enforcement, and vehicle security issues--just to name a few.
    Industry self-regulation is certainly the preferable solution in 
cases like these. By taking legislative action we run the risk of 
disrupting important market forces, which in some cases does more to 
impede healthy competition than to foster it. In lieu of a voluntary 
industry solution, however, as the committee of jurisdiction over 
consumer protection we have an obligation to explore legislative 
options.
    I thank our panels for joining us today and yield back the balance 
of my time.

Prepared Statement of Hon. Tammy Baldwin, a Representative in Congress 
                      from the State of Wisconsin
    Thank you Mr. Chairman. I am very pleased that we are having this 
hearing today.
    I was raised to be frugal and careful with money and I was taught 
that fixing and reusing things has value. Over the years, I have 
purchased several used cars that have eventually had repair and 
maintenance needs. My 1994 Chrysler LeBaron which I use when I am at 
home in Wisconsin will soon see the inside of a repair shop. 
Fortunately, because it is a 1994 model, I have a choice of repair 
options.
    My LeBaron may take its final journey to the junkyard soon, and if 
I then purchase a new car loaded with the latest technologies, my 
repair options could be much more limited due to computer-controlled 
technologies in both core and ancillary systems. My local mechanic 
(with whom my LeBaron and I now have a close relationship) runs a small 
independent local business--Monona Motors. Of course, I hope my 
hypothetical new car would be repair free for many years, but if it 
weren't and the warranty expired, I want to be able to continue my 
relationship with the good folks at Monona Motors. And I would like my 
constituents to be able to chose where they go to repair their car. 
Competition and choice are the pillars of a strong market economy.
    I am pleased that the various stakeholders have been willing to sit 
down at the table to try to come to an agreement that will ensure that 
independent repair shops and others have access to the information they 
need to competently service automobiles. I am disappointed that so far 
a comprehensive agreement remains out of reach.
    Although I am a cosponsor of Chairman Barton's Right to Repair 
legislation, I do understand the very real concerns regarding 
intellectual property and safety. It is my hope that we can find ways 
to address these concerns while moving forward with either a 
comprehensive voluntary agreement or legislation.

    Mr. Stearns. Let me welcome James Kohm, Associated Director 
Bureau of Consumer Protection, Division of Marketing Practices 
of the Federal Trade Commission; Mr. Steven Cole, President and 
CEO of Council of Better Business Bureaus; and Mr. David Parde, 
President, Coalition for Auto Repair Equality; and Mr. Michael 
Stanton, Vice President, Government and International Affairs, 
The Alliance of Automobile Manufacturers.
    Mr. Kohm, we will start with you with your opening 
statement and just pull the mike close to you and turn it on. 
Do you know how to turn it on right there? There you go, good.
    Thank you, welcome.

   STATEMENTS OF JAMES A. KOHM, ASSOCIATE DIRECTOR BUREAU OF 
 CONSUMER PROTECTION, DIVISION OF MARKETING PRACTICES, FEDERAL 
TRADE COMMISSION; STEVEN J. COLE, PRESIDENT AND CEO, COUNCIL OF 
    BETTER BUSINESS BUREAUS, INC.; DAVID PARDE, PRESIDENT, 
  COALITION FOR AUTO REPAIR EQUALITY; AND MICHAEL J. STANTON, 
   VICE PRESIDENT, GOVERNMENT AND INTERNATIONAL AFFAIRS, THE 
              ALLIANCE OF AUTOMOBILE MANUFACTURERS

    Mr. Kohm. Thank you, Mr. Chairman and members of the 
subcommittee.
    I am James Kohm, the Associated Director of the Division of 
Enforcement in the Federal Trade Commission's Bureau of 
Consumer Protection. I am pleased to have this opportunity to 
discuss our participation in the meetings between automotive 
manufacturers and independent repair shops this past summer. 
The written testimony submitted today is that of the Federal 
Trade Commission. My oral presentation and responses to 
questions are my own and do not necessarily reflect the opinion 
of any particular commission or the commission as a whole.
    Let me begin by thanking this subcommittee for the 
opportunity to work with you to resolve the issues before us 
today. Last July at the direction of Chairman Barton and 
Senator Graham, representatives of the automotive manufacturers 
and independent repair shops met for more than 60 hours to try 
and reach a voluntarily agreement on how to make information, 
training, and tools available to automotive service 
professionals. At least one commission staff member attended 
all of these meetings. Both sides worked diligently to try to 
fashion an appropriate mechanism to address those instances 
where the information sharing system had failed. The parties 
looked to the NASTF information sharing structure already in 
place as a model. Despite these diligent efforts on both sides, 
an agreement could not be reached and on September 30, 2005, 
the parties concluded negotiations.
    Although the commission is disappointed with the results of 
these talks, we continue to believe that in the long run a 
voluntary self-regulatory approach is the best solution to the 
concerns that have been raised. However, if you determine that 
legislation is appropriate, we believe that industry 
participants are best situated to resolve particular disputes 
and, therefore, any legislation should buildupon the progress 
the parties made in negotiations this summer.
    In conclusion, I would like to thank the subcommittee for 
focusing attention on this important consumer protection issue 
and for giving the Federal Trade Commission the opportunity to 
discuss its role. We look forward to continuing to work with 
the subcommittee and I would be happy to answer any questions 
that you have.
    [The prepared statement of James A. Kohm follows:]
 Prepared Statement of James A. Kohm, Associate Director, Division of 
  Enforcement, Bureau of Consumer Protection, Federal Trade Commission
    Mr. Chairman and members of the Subcommittee, I am James A. Kohm, 
Associate Director of the Division of Enforcement in the Federal Trade 
Commission's Bureau of Consumer Protection.1 I appreciate 
this opportunity to discuss the Commission's mission and the 
discussions between representatives of the automotive manufacturers and 
representatives of independent auto repair facilities.
---------------------------------------------------------------------------
    \1\ This written statement presents the views of the Federal Trade 
Commission. Responses to questions reflect my views and do not 
necessarily reflect the views of the Commission or any Commissioner.
---------------------------------------------------------------------------
    The Federal Trade Commission (``FTC'' or ``Commission'') is a small 
agency with a big mission: to enhance consumer welfare and protect 
competition in broad sectors of the economy. The FTC enforces the 
Federal Trade Commission Act 2 and other laws that prohibit 
business practices that are anticompetitive, deceptive, or unfair to 
consumers, and seeks to do so without impeding legitimate business 
activity. The FTC also promotes informed consumer choice and public 
understanding of the competitive process.
---------------------------------------------------------------------------
    \2\ 15 U.S.C. Sec.  45(a).
---------------------------------------------------------------------------
    In addition to the FTC Act, the agency has responsibilities under 
more than fifty federal laws, including, most recently, the Controlling 
the Assault of Non-Solicited Pornography and Marketing Act,3 
the Fairness to Contact Lens Consumers Act,4 and the Fair 
and Accurate Credit Transactions Act.5 The Commission's work 
is critical to protect and strengthen free and fair markets in the 
United States and, increasingly, the world. Among the Commission's 
accomplishments are the implementation and enforcement of the National 
Do-Not-Call Registry, the protection of the availability of lower-cost 
prescription drugs, stopping deceptive or abusive lending practices, 
attacking unfair or deceptive practices in e-commerce, and the review 
of corporate mergers reported to the antitrust agencies under the Hart-
Scott-Rodino premerger notification process.
---------------------------------------------------------------------------
    \3\ 15 U.S.C. Sec.  7701 and implementing regulations.
    \4\ 15 U.S.C. Sec.  7601 and implementing regulations.
    \5\ Pub. L. No. 108-159, 117 Stat. 1952 (Dec. 4, 2003), codified at 
15 U.S.C. Sec.  1681 et seq.
---------------------------------------------------------------------------
    Auto repair is undoubtedly an important issue for U.S. consumers. 
U.S. consumers spend more than $80 billion annually to repair and 
maintain the two hundred million cars currently on the 
road.6 Consumers thus have a significant interest in 
automobile repair and maintenance markets that operate properly and 
efficiently, consistent with safety and other quality standards.
---------------------------------------------------------------------------
    \6\ U.S. Census Bureau, Statistical Abstract of the U.S.(2004-
2005).
---------------------------------------------------------------------------
    For some time, members of this Committee--and especially Chairman 
Barton--have considered ways to ensure that independent car repair 
facilities and vehicle owners have access to information and tools 
needed to diagnose, service, or repair vehicles.
    Such access is not as easy or relatively inexpensive as it once 
was. For example, the sophisticated technology used in most cars today 
can require expensive computerized diagnostic tools to diagnose 
problems, as well as knowledge of particular software access or 
computer codes. It can be difficult for one independent repair shop to 
acquire all of the equipment it may need to repair all makes of cars, 
or to easily access all of the information required to make timely 
repairs. Generally, the marketplace will provide strong incentives for 
automobile manufacturers to ensure their customers have an appropriate 
range of repair options because the manufacturers depend on repeat 
purchases of their product. With the increasing sophistication of 
automobiles, however, independent repair shops have been concerned 
about continued access to high tech information and tools.
    To address these issues, market participants have taken some 
initial steps that provide a foundation upon which to build an 
effective self-regulatory mechanism. For example, a group of automotive 
trade associations has created an information-sharing structure, the 
National Automotive Service Task Force (``NASTF''), to aid in the 
provision of timely service information needed by independent repair 
facilities. In addition, third-party information providers, such as 
ALLDATA and Mitchell, can provide useful services to automobile repair 
facilities. The amount of auto repair data available is voluminous and 
not always easily accessible. By packaging data for sale, third-party 
information providers can allow repair facilities to access necessary 
technical information with the speed the marketplace demands.
    More recently, legislation has been proposed to address the 
provision of information to the aftermarket, that involves relations 
among automobile manufacturers, franchised dealers, independent repair 
shops, tool manufacturers and sellers, and--most importantly--
consumers.

                     A VOLUNTARY INDUSTRY SOLUTION
    Chairman Barton and Senator Graham urged representatives of the 
independent auto repair facilities and automotive manufacturers to try 
to reach a voluntary agreement for the provision of service 
information. In response, the parties, with the Commission staff's 
assistance, chose Steven J. Cole of the Council of Better Business 
Bureaus (``CBBB'') as the facilitator. Participants included the 
Coalition of Auto Repair Equality (``CARE'') and the Automotive 
Aftermarket Industry Association (``AAIA''), the Alliance of Automobile 
Manufacturers (``AAM''), the Association of International Automobile 
Manufacturers (``AIAM''), the National Automobile Dealers Association 
(``NADA'') and the Automotive Service Association (``ASA''). FTC staff 
attended all the meetings. The parties began discussions on July 26, 
2005 with an expectation that the facilitation would conclude September 
1, 2005. Because of the progress the parties made, that deadline 
subsequently was extended to September 30, 2005.
    Throughout August and September, the parties, the CBBB, and 
Commission staff met for more than sixty hours to try to reach an 
agreement on what information the auto manufacturers would provide to 
independent auto repair facilities and how they could provide that 
information in an efficient and affordable manner. In addition, the 
parties spent considerable time discussing an appropriate mechanism to 
address those instances where the system failed. In formulating a plan, 
the parties looked to the information-sharing structure created by 
NASTF to provide information, training, and tools to automotive service 
professionals. In the course of their discussions at the CBBB, both 
sides looked to improve the NASTF structure to streamline the process 
and provide the necessary support to technicians who face problems 
obtaining information.
    Despite hard work by both sides, the parties were unable to come to 
an agreement and, on September 30, 2005, concluded negotiations without 
a solution.
    The parties continued to have difficulties in reaching agreement 
regarding such issues as the precise scope of information to be shared, 
access to diagnostic tools, and the breadth of industry interests that 
should be represented in the conflict-resolution organization. The 
Commission is disappointed that the facilitation process was 
unsuccessful. Nonetheless, the parties' efforts to reach agreement were 
significant and should receive consideration throughout the ongoing 
legislative process in which this Committee is engaged.
    Although the parties have failed to reach agreement, the parties' 
work thus far could provide the basis for a solution to this issue. The 
Commission continues to believe that, in the long run, a voluntary, 
self-regulatory approach is the best solution to the concerns that have 
been raised. If the Congress determines, however, that legislation is 
appropriate, the Commission believes it is important that the 
resolution of particular disputes be decided and implemented by 
industry participants rather than the government. Further, any 
governmental intervention in this area requires great care to avoid 
unnecessary impact on existing markets. The Commission is concerned 
that a mandatory, uniform approach could result in higher costs for 
consumers and leave the industry less flexible to address a rapidly 
changing marketplace.
    Mr. Chairman, members of the Subcommittee, thank you for providing 
the Federal Trade Commission the opportunity to appear before this 
Subcommittee. We look forward to working with you.

    Mr. Stearns. Thank you, Mr. Kohm.
    Mr. Kohm. Thank you.
    Mr. Stearns. Mr. Cole?

                   STATEMENT OF STEVEN J. COLE

    Mr. Cole. Good morning, Mr. Chairman and members of the 
subcommittee.
    I am the guy who locked the doors, served lunch, and tried 
to get a deal. So I wish I was telling you something different 
this morning than I am.
    Just by way of introduction, the Council of Better Business 
Bureaus is the umbrella organization for all the Better 
Business Bureaus across the United States and Canada with 
375,000 members.
    In July, we were asked by the Federal Trade Commission with 
the support of representatives of both the auto manufacturers 
and the auto repair industry to serve as a facilitator to try 
to reach an agreement in the design of the third party dispute 
resolution process to resolve the issues of diagnosis and 
repair and service information. I want to say that at the 
beginning of the process, the original parties, The Alliance of 
Automobile Manufacturers and the Coalition for Auto Repair 
Equality agreed to a set of ground rules for the facilitation 
and further agreed to grant the facilitator, me, the authority 
to make decisions regarding participation and the process and 
other procedural issues.
    One early decision I made was to allow additional groups to 
be represented as named parties in the facilitation, the 
Automotive Aftermarket Industry Association, the Association of 
International Automobile Manufacturers, NADA, and the 
Automotive Services Association. I mention that because the 
fact that the issue of who could sit at the table was a 
difficult one requiring my decision and was not the result of 
consensus revealed much about the difficulties of the task 
ahead. A trust between the parties was not at the beginning of 
process a readily available commodity. The truth is I am not 
convinced in the end we had all the needed parties for the 
facilitation. Tool manufacturers were not there, independent 
information providers might have been helpful and this is 
something to bear in mind for the future.
    The group held 10 meetings from its initial session on 
August 3 to its final meeting on September 30. Each session 
lasted between 4 and 6 hours. And I need to say there was 
considerable preparation in advance and work by the parties in 
between each of these meetings.
    At any facilitation or mediation which is how we approach 
this task, the parties trust in the impartiality of the 
neutrals and the attendant confidentiality of process is a 
vital role in the ultimate success or failure. So I will be 
constrained as to the level of detail I may be able to share 
with you this morning.
    As you know, the parties were not able to reach an 
agreement on the full scope of a self regulatory program. This 
was not for one of trying on the part of all the participants. 
I do have some experience in doing this and I believe that each 
party and the experts they brought with them approached this 
facilitation in good faith. Their comportment throughout the 
process only enhanced my opinion of their commitment. In point 
of fact, the parties quickly reached agreement on the utility 
of and the basic nature of a third party dispute resolution 
process which was my initial understanding of the purpose of 
the facilitation in the first place.
    There was not a shared understanding of the scope of the 
problem to be solved but notwithstanding that the parties did 
agree that a progress was possible. They all appeared to 
recognize that a third party dispute resolution process by 
itself would not provide an adequate solution unless 
improvement was made in the two steps that would necessarily 
precede a formal third party process. Nearly all the work of 
the group was focused on either the first step, how the 
manufacturers respond to an initial request for assistance from 
repair facilities or the second step, an expedited fact finding 
which was decided would be conducted by a restructured and 
better funded process through the National Automotive Service 
Task Force, NASTF.
    I am convinced that a third party dispute resolution 
process can work and can be agreed to by the parties once the 
issues related to these first two steps are resolved. As the 
chairman noted, there was tentative substantial agreement on a 
huge number of issues that we dealt with.
    The process ultimately was not able to reach resolution on 
important but a smaller number of issues. First, how should 
NASF be restructured and governed to ensure that all interests 
were represented in a balance manner? How tool related issues 
should be handled both by NASTF and by the third party 
mechanism? And had an agreement been reached, it was the 
party's intention to defer these questions to the newly 
structured NASTF board which raised the stakes for the 
governance issue I just mentioned and Mr. Towns had mentioned 
in his opening statement. How or whether possible issues of the 
cost of the tools will be handled by NASTF and the third party 
if it were alleged that the price of the tool was so high in 
relation to the rest of the market that the price made the tool 
unavailable as a practical matter.
    Fourth, a mutual acceptable method to deal with vehicles 
relating to vehicle security. How to provide the aftermarket 
industry with the practical ability to obtain necessary 
information and codes to complete repairs without compromising 
a consumer's security. It seems that only one or a few of the 
auto manufacturers are unable to reach agreement on a 
methodology but that prevented agreement on this issue.
    Fifth, the extent to which a manufacturer supplied 
information through telephone hotlines should be required to be 
made available to independent repair facilities when it is not 
published in writing and sent routinely to all franchise 
dealers although it is made available to dealers on an as 
needed basis.
    And finally, should there be monetary remedies in the third 
party dispute resolution process and if so how should they be 
calculated and what penalty if any should be assessed if a 
manufacturer failed to comply with a mechanism decision.
    On behalf of the BBB system, I want to thank the committee 
for your attention and especially if you are understanding that 
industry self regulation cannot occupy an important place in 
the marketplace today and that informal dispute resolution 
processes can very effectively compliment the legislative 
process.
    I would be happy to answer questions, thank you.
    [The prepared statement of Steven J. Cole follows:]
  Prepared Statement of Steven J. Cole, President and Chief Executive 
           Officer, Council of Better Business Bureaus, Inc.
    Mr. Chairman and members of the Sub-Committee, my name is Steven J. 
Cole, and I am the President and Chief Executive Officer of the Council 
of Better Business Bureaus, Inc.
    The Council of Better Business Bureaus (CBBB) is the umbrella 
organization for the nation's Better Business Bureau system, which 
consists of 177 local BBB's and branches and 375,000 member businesses 
across the United States and Canada. The CBBB is a nonprofit business 
membership organization tax exempt under section 501(c)(6) of the 
Internal Revenue Code. More than 275 leading edge companies nationwide 
belong to the CBBB and provide support for its mission of promoting 
ethical business practices through voluntary self-regulation and 
consumer and business education.
    In 2004, the Better Business Bureau system provided nearly sixty 
million instances of services--reliability reports, complaint 
processing, educational information and referrals. The CBBB has 
significant experience with--and tailored programs serving--the 
automotive industry. Thousands of auto dealers and independent repair 
facilities are members of local Better Business Bureaus across the 
United States, and as such meet BBB standards for ethical business 
practices and advertising. During 2004, nearly 2.4 million consumers 
contacted the BBB on the Internet or by telephone to obtain BBB reports 
on auto-related products and services from members and non-members 
alike. At the same time, the BBB system handled more than 72,000 
individual consumer complaints involving the automotive industry. In 
addition, the CBBB provides warranty dispute resolution services for 
more than 30 auto manufacturer brands, serving an additional 28,000 
consumers with conciliation, mediation and arbitration services.
    In July of this year, I was asked by the Federal Trade Commission, 
with the support of representatives of both the auto manufacturers and 
the auto repair industry, to serve as a facilitator in an effort to 
assist the various groups in designing a third-party dispute resolution 
process to resolve issues concerning the provision by auto 
manufacturers of diagnostic, repair and service information to vehicle 
owners and repair facilities.
    The process was tasked with very challenging time constraints. It 
was expected that the CBBB would make a report to the Federal Trade 
Commission not later than September 1st on the outcome of the 
facilitation effort.
    At the beginning of the process, the original parties--the Alliance 
of Automobile Manufacturers (AAM) and the Coalition for Auto Repair 
Equality (CARE)--agreed to a set of ground rules for the facilitation 
and further agreed to grant the facilitator the authority to make 
decisions regarding participation in the process and other procedural 
issues. One early decision I made was to allow additional groups to be 
represented as named parties in the facilitation. Those groups were: 
the Automotive Aftermarket Industry Association (AAIA), the Association 
of International Automobile Manufacturers (AIAM), the National 
Automobile Dealers Association (NADA) and the Automotive Service 
Association (ASA). The fact that the issue of who could sit at the 
table was a difficult one requiring my decision, and was not the result 
of consensus, revealed much about the difficulties of the task ahead. 
Trust between the parties was not a readily available commodity. Other 
individuals joined the facilitation at various points to bring 
expertise or other assistance to the process, and one or more observers 
from the Federal Trade Commission attended each formal session.
    The group held 10 meetings from its initial session on August 3rd 
through its final meeting on September 30th. Each session lasted 
between four and six hours, with considerable preparation work by the 
parties between each session. CBBB provided formal progress reports to 
the Federal Trade Commission in letters on September 1st, September 
14th and October 3rd.
    In any facilitation or mediation, the parties trust in the 
impartiality of the neutrals--and the attendant confidentiality of the 
process--plays a vital role in the ultimate success or failure of the 
facilitation. I am therefore constrained as to the level of detail I 
believe I can share with you this morning. I will, however, endeavor to 
provide the Sub-Committee with a flavor of the major issues with which 
the parties were grappling.
    As you undoubtedly know, the parties were not able to reach 
agreement on the full scope of a self-regulatory program. I should 
note, however, that this was not for want of trying on the part of all 
the participants. I believe that each party--and their respective 
experts--approached this facilitation in good faith. Their comportment 
throughout the process only enhanced my opinion of their commitment.
    In point of fact, the parties rather quickly reached agreement on 
the need for--and basic nature of--a third-party dispute resolution 
process, which was my initial understanding of the purpose of the 
facilitation. However, the parties all appeared to recognize that a 
third-party dispute resolution process by itself would not provide an 
adequate solution unless improvement was made in the two steps that 
would necessarily precede a formal third party process. Nearly all the 
work of the group was focused on either the first step (how the 
manufacturers respond to initial requests for assistance from repair 
facilities) or the second step (an expedited ``fact-finding'' which, it 
was decided, would be conducted by a restructured and better-funded 
process through the National Automotive Service Task Force--NASTF). I 
am convinced that a third-party dispute resolution process can work and 
can be agreed to by the parties once the issues relating to these first 
two steps are resolved.
    As my October 3rd letter to the Federal Trade Commission indicated, 
the process ultimately was not able to reach resolution of the 
following issues:

 How should NASTF be restructured and governed to ensure that all 
        interests were represented in a balanced manner;
 How tool-related issues should be handled, both by NASTF and by the 
        third-party mechanism (had an agreement been reached, it was 
        the parties' intention to defer these questions to the newly-
        restructured NASTF board, raising the stakes for the governance 
        issue just mentioned);
 How or whether possible issues of the cost of a tool would be handled 
        by NASTF and the third-party if it were to be alleged that the 
        price of the tool was so high in relation to the rest of the 
        market that the price made the tool ``unavailable'' as a 
        practical matter;
 A mutually acceptable method to deal with issues relating to vehicle 
        security (how to provide the aftermarket industry with the 
        practical ability to obtain necessary information and codes to 
        complete repairs without compromising the consumer's security). 
        It seems that only one or a few of the auto manufacturers were 
        unable to reach agreement on a methodology);
 The extent to which manufacturer supplied information through 
        telephone hotlines should be required to be made available to 
        independent repair facilities when it is not published in 
        writing and sent routinely to all franchised dealers, although 
        it is made available to dealers on an as needed basis; and
 Should there be monetary remedies in the third party dispute 
        resolution process, and if so, how should they be calculated, 
        and what penalty, if any, should be assessed if a manufacturer 
        failed to comply with a mechanism decision.
    On behalf of the Better Business Bureau system, I want to thank the 
Committee for your attention and for your understanding that industry 
self-regulation can occupy an important place in the 21st century 
marketplace and that informal dispute resolution processes can very 
effectively compliment the legislative process.
    I am available to answer any questions you may have.

    Mr. Stearns. Thank you, Mr. Cole.
    Mr. Parde?

                    STATEMENT OF DAVID PARDE

    Mr. Parde. Thank you, Mr. Chairman.
    I am David Parde, President of the Coalition for Auto 
Repair Equality or CARE. CARE appreciates the opportunity to 
appear before you today to discuss H.R. 2048, as well as, 
CARE's discussions with the Automobile Industry Association 
regarding the self regulatory program.
    CARE's members operate businesses at 34,280 locations 
throughout the United States. Of these, 15,270 are automobile 
maintenance and/or repair facilities where consumers bring 
their cars to be worked on by technicians. Our members include 
repair shops such as Midas and Jiffy Lube and companies that 
sell replacement parts to ``do it yourselfers,'' independent 
repair shops that include Advance Auto Parts, O-Reilly Auto 
Parts, Auto Zone, CSK, CAR QUEST, and NAPA all companies that 
sell parts through retail stores, wholesale distribution, and 
also provide repair services through individually owned shops. 
In addition, CARE has partnered with the coalition of 49 
business groups and associations in support of right to repair.
    As you are aware, CARE representatives together with Aaron 
Lowe of the Automotive Aftermarket Industry Association and Bob 
Everett of the Alliance of Automotive Service Providers met 
with representatives from the Alliance AIAM, ASA, and NADA, and 
participated in a series of meetings over 2 months this summer. 
With the Better Business Bureau as our facilitator and the FTC 
staff as observers, we reviewed and discussed numerous 
proposals for a self regulatory program designed to resolve 
issues or problems relating to the availability to the 
aftermarket of automotive diagnostic and repair information, 
tools, and capabilities.
    In addition to the meetings facilitated by the BBB, we held 
two meetings on our own. We twice agreed to extend our imposed 
deadlines and exchange numerous communications. We did make 
progress toward a workable solution. Most notably for us, the 
Alliance and AIM agreed that any program contain an enforcement 
component which had proved to be a roadblock in previous 
discussion among the parties. Despite what we believe were good 
faith efforts, we simply could not agree on certain fundamental 
elements that CARE believes are essential for such a program to 
be successful.
    The program under discussion with the industry associations 
would have required automobile manufacturers to commit in 
writing to abide by a set of voluntary standards for making 
information and tools available to the aftermarket in a similar 
manner and to the same extent as such information is made 
available to the dealerships. The standards also set out a 
process to enforce the commitment made by each company. Under 
the program, technicians seeking information or tools to repair 
a vehicle but were unable to locate the necessary information 
would first be required to contact a representative of NASTF to 
obtain assistance. The parties had agreed that NASTF would be 
reconstituted and employ trained service technicians and staff 
who would act as a buffer between the technician and the 
manufacturer to determine if the information was available and 
if not to make a recommendation about whether it should be made 
available.
    In the event the necessary information was not provided in 
the NASTF process, the technician could bring the complaint to 
an independent third party dispute resolution program. Pursuant 
to certain procedures and time constraints, the third party 
enforcement entity would render a binding decision regarding 
whether the informational dispute should be made available in 
accordance with the voluntary standards agreed to by the 
manufacturer. Any manufacturer faced with a negative final 
decision would be required to provide the information to both 
the technician that brought the complaint and to the 
aftermarket in general and pay a penalty for non-compliance.
    Throughout these discussions, CARE's primary objectives 
were to achieve a program that would be effective in quickly 
communicating needed information to service technicians in a 
fair an impartial manner and incorporating the elements 
articulated by the FTC for an acceptable self regulatory 
system. It is important to note that our goal is to impose the 
same requirement articulated in H.R. 2048 that information 
should be provided to the aftermarket in a similar manner and 
to the same extent as such information is provided to franchise 
dealerships. We made it clear that we were not seeking any 
additional information or anything that could be considered a 
trade secret. In the proposed new arrangement, NASTF would have 
been reorganized as a new organization and would hire 
professional staff to assist technicians seeking service, 
training, or tool information from an automotive manufacturer.
    In previous hearings on the right to repair issue, evidence 
was presented regarding NASTF's track record in assisting 
technicians seeking information and the reluctance by a 
majority of technicians even to contact NASTF in the first 
instance. For these reasons, CARE was initially skeptical about 
whether NASTF was the appropriate body to quickly resolve 
disputes regarding the accessibility of information. 
Nonetheless, we were willing to allow NASTF to act as the first 
response for service information requests provided that 
specific safeguards were put in place to ensure that the newly 
reconstitute structure would be successful in implementing the 
goals of the self-regulatory program and that the third party 
enforcement entity would provide an avenue to either enforce a 
NASTF decision or challenge its correctness. The most important 
safeguard in our view was the creation of a fair and balanced 
board of directors.
    We therefore propose that initial funding for the 
reconstituted NASTF be equally divided between the aftermarket 
industry through CARE and AAIA and the automobile manufacturing 
industry through the Alliance and AIAM. We further propose that 
NASTF be administered by a governing board compromised of eight 
members four of whom would be designees of CARE and AAIA and 
four of whom would be the designees of the Alliance and AIAM. 
This allocation of membership was to ensure that both the 
aftermarket and the manufacture representatives through their 
discussions would have equal presence on the board. 
Nonetheless, CARE remained open to increasing or decreasing the 
size of the board provided that the balance of representation 
was equally allocated between the two sides. The proposal also 
provided that an executive director and support staff be 
employed as the board deemed necessary and that an advisory 
committee equally representative of the manufacturing and 
aftermarket industries be appointed by the board to assist in 
recommending policies to effectuate purposes of the agreement.
    In contrast, the Alliance and AIAM objected to the idea 
that AFA and NADA which had openly aligned themselves with the 
manufacturer associations throughout the discussions be 
considered as part of the manufacturer contingent on the board. 
They further proposed that the composition of the board be left 
open for future discussion. According to the proposal, a 
special working group comprised of the four parties of the 
manufacturer contingent and CARE and AAIA would direct and 
implement all legal and operational steps necessary to 
establish NASTF. Not surprisingly, we were concerned about the 
lopsided representation on a working group that would be tasked 
with setting up NASTF. In addition, were equally concerned that 
decisions regarding the governance of NASTF including the 
composition of the first board be postponed until some 
unspecified date in the future.
    Mr. Stearns. I just need you to sum up.
    Mr. Parde. Thank you, Mr. Chairman.
    I would be happy to answer any questions, thank you.
    [The prepared statement of David Parde follows:]
Prepared Statement of David Parde, President, Coalition for Auto Repair 
                                Equality

                            I. INTRODUCTION
    Mr. Chairman and members of the Committee, I am David Parde, 
President of the Coalition for Auto Repair Equality or CARE. CARE 
appreciates the opportunity to appear before you today to discuss the 
right to repair issue, as well as CARE's discussions with automobile 
industry representatives regarding a self-regulatory program to address 
these problems, and the legislative option presented by H.R. 2048, The 
Motor Vehicle Owners' Right to Repair Act of 2005.
    The Coalition for Auto Repair Equality is a national, nonprofit 
organization representing companies in the $200 billion-a-year, five 
million employee automotive aftermarket industry. CARE's members 
operate businesses at 34,820 locations throughout the United States. Of 
these, 15, 270 are automobile maintenance and/or repair facilities 
where consumers often bring their cars to be worked on by automotive 
technicians. Our members include repair shops such as Midas and Jiffy 
Lube, and companies that sell replacement parts to ``do it 
yourselfers'' and independent repair shops, such as Advance Auto Parts, 
O'Reilly's Auto Parts, and Auto Zone. Other members include CAR QUEST 
and NAPA, companies that sell parts through retail stores and provide 
repair services through individually owned, franchised shops.
    Because CARE was involved in the discussions regarding a proposed 
self-regulatory system, I will first focus on those efforts, and then 
provide CARE's views regarding H.R. 2048.

                      II. INDUSTRY SELF REGULATION
A. Why the Current System is Not Effective
    The National Automotive Service Task Force (NASTF) is a loosely 
organized, voluntary task force funded by the automobile manufacturers. 
It was formed in 2000 purportedly to resolve issues or problems 
relating to the availability of diagnostic and repair tools and 
information for motor vehicles. Our experience shows that NASTF 
operates only as a clearinghouse for complaints from independent repair 
facilities. NASTF receives complaints related to the failure of an 
automobile manufacturer to make certain information available and then 
forwards the complaint to the manufacturer to resolve. Once it receives 
a response from the manufacturer, NASTF communicates the response to 
the repair facility. It does not apply standards regarding when and how 
such complaints should be resolved, and does not attempt to resolve 
complaints regarding the availability of information. Moreover, there 
is no transparency or accountability built into the NASTF process.
    When measured against standards for effective self-regulatory 
programs enunciated by the Federal Trade Commission, the NASTF program 
receives a failing grade. In fact, in a letter to the Alliance of 
Automobile Manufacturers from the FTC (attached as Exhibit A), the 
agency staff indicated that industry programs must be backed up by a 
system of enforcement, incorporating independent, third-party review. 
According to the FTC, such independent review should: (1) be impartial 
and objective; (2) be transparent or public; and (3) apply standards 
consistently. The FTC letter explains that independent review ensures 
that individual companies or other industry members are not the sole 
arbiters of whether their practices comply with relevant standards. As 
described above, NASTF's review system fails to incorporate even one of 
the elements of an effective third-party review system.
    In addition, the FTC has long stressed the need for self-regulatory 
programs to include some form of sanctions for non-compliance with 
codes or standards. Such sanctions may include referral of complaints 
to the FTC, as is the case with several different programs sponsored by 
various segments of the advertising industry. In fact, the FTC stated 
to Congress in a 2000 Report to Congress on Online Profiling that: 
[t]he bedrock of any effective self-regulatory or legislative scheme is 
enforcement. In a self-regulatory context, this means that nearly all 
industry members subject themselves to monitoring for compliance by an 
independent third party and to sanctions for non-compliance.'' The 
current NASTF system, however, provides no such mechanism for 
enforcement.
    There is little doubt that these structural inadequacies have 
contributed to NASTF's failure to facilitate the disclosure of service 
information to aftermarket technicians, as well as the mistrust that 
has developed among the vast majority of the aftermarket industry 
regarding NASTF's ability to correct the kind of problems described in 
the next panel by Mr. Bob Everett, NFIB's representative and the only 
service technician to have participated in the discussions regarding 
the self-regulatory program.
B. Recent Efforts to Achieve an Effective Self-Regulatory Program
    Following the introduction of H.R. 2048, CARE, together with 
representatives from the Automotive Aftermarket Industry Association 
(AAIA), the Alliance of Automobile Manufacturers (Alliance), the 
Association of International Automobile Manufacturers (AIAM), the 
Automotive Service Association (ASA), and the National Auto Dealers 
Association (NADA), at the request of Chairman Joe Barton and Senator 
Lindsey Graham, engaged in a series of discussions this summer over a 
two month period in an attempt to develop a voluntary industry self-
regulatory program that would obviate the need for the proposed 
legislation. These talks were facilitated by representatives of the 
Council of Better Business Bureaus (CBBB) and monitored by the Federal 
Trade Commission staff. As you are aware, the talks were concluded 
without a final resolution that would ensure the timely disclosure of 
automotive repair, diagnostic and tool information to the aftermarket 
industry to the same extent such information is made available to 
franchised dealerships. Although significant progress had been made 
toward developing a workable program with an enforcement component, and 
the participants mutually agreed to continue negotiating for an 
additional month beyond the initial deadline, the automobile 
manufacturer contingent ultimately refused to agree to provisions that 
CARE believes are critical elements of a workable program.
    The program under discussion would have required automobile 
manufacturers to commit in writing to abide by a set of ``voluntary 
standards'' for making information and tools available to the 
aftermarket in a similar manner and to the same extent as such 
information is made available to the dealerships. The standards also 
set out a process to enforce the commitment made by each company. Under 
the program, technicians seeking information or tools to repair a 
vehicle but unable to locate the necessary information would first be 
required to contact a representative of NASTF to obtain assistance. The 
parties had agreed that NASTF would be reconstituted and employ trained 
service technicians who would act as a ``buffer'' between the 
technician and the manufacturer to determine if the information was 
available, and if not, to make a recommendation about whether it should 
be made available.
    In the event the necessary information was not provided in 
accordance with the time requirements of the proposed NASTF process, 
the technician could bring the complaint to an independent, third party 
dispute resolution program. Pursuant to certain procedures and time 
constraints, the third party enforcement entity would render a 
``binding'' decision regarding whether the information in dispute 
should be made available in accordance with the voluntary standards 
agreed to by the manufacturer. Any manufacturer faced with a negative 
final decision would be required to provide the information to both the 
technician that brought the complaint and to the aftermarket in 
general, and pay a penalty for non-compliance.
    Throughout these discussions, CARE's primary objectives were to 
achieve a program that would be effective in expeditiously 
communicating needed information to service technicians in a fair and 
impartial manner, and in incorporating the elements articulated by the 
FTC for an acceptable self-regulatory system. It is important to note 
that our goal was to impose the same requirement articulated in HR 2048 
that information should be provided to the aftermarket in a similar 
manner and to the same extent as such information is provided to 
franchised dealerships. Although the manufacturer contingent stated 
that it agreed in principle with this goal, it ultimately backed away 
from this commitment, as demonstrated below.
C. Issues in Dispute
    1. NASTF Governance--During the discussions facilitated by the 
CBBB, the manufacturers acknowledged some of NASTF's shortcomings, and 
had agreed to form a reconstituted organization and hire professional 
staff to assist technicians seeking service, training or tool 
information from an automotive manufacturer. The new NASTF would have 
had the authority to seek the service information on the technician's 
behalf and communicate directly with the manufacturer pursuant to a 
specified process. In the event the manufacturer failed to provide the 
information, the NASTF staff would prepare a written report of its 
efforts to resolve the inquiry with the manufacturer and make a 
recommendation as to whether the manufacturer should make the 
information available to the technician. In the event that either party 
disagreed with the recommendation, that party would proceed to have the 
dispute resolved by the independent, third party enforcement entity.
    In light of NASTF's poor track record, however, CARE was initially 
skeptical about whether NASTF was the appropriate body to expeditiously 
resolve disputes regarding the accessibility of information. 
Nonetheless, we were willing to allow NASTF to act as the first 
response for service information requests provided that unambiguous, 
specific safeguards were put in place to ensure that the newly 
reconstituted structure would be successful in implementing the goals 
of the self-regulatory program, and that the third party enforcement 
entity would provide an avenue to either enforce a NASTF decision or 
challenge its correctness. The most important safeguard, in our view, 
was the creation of a fair and balanced Board of Directors of NASTF.
    CARE and AAIA therefore proposed that initial funding for the 
reconstituted NASTF be equally divided between the aftermarket industry 
through CARE and AAIA, and the automobile manufacturing industry 
through the Alliance, AIAM, ASA and NADA. We further proposed that 
NASTF be administered by a Governing Board comprised of eight members, 
four of whom would be designees of CARE and AAIA, and four of whom 
would be designees of the Alliance, ASA, NADA and AIAM. This allocation 
of membership was to ensure that both the aftermarket and the 
manufacturer representatives to the discussions would have equal 
presence on the board. Nonetheless, CARE remained open to increasing or 
decreasing the size of the board, provided that the balance of 
representation was equally allocated between the two sides. The 
proposal also provided that an executive director and support staff be 
employed as the Board deemed necessary, and that an Advisory Committee, 
equally representative of the manufacturing and aftermarket industries, 
be appointed by the Governing Board to assist in recommending policies 
to effectuate the purposes of the agreement.
    In contrast, the manufacturers objected to the idea that ASA and 
NADA, which had openly aligned themselves with the manufacturers 
throughout the discussions, be considered as part of the manufacturer 
contingent on the board. They further proposed that the composition of 
the board be left open for future discussion. According to the 
proposal, a ``special working group'' comprised of the four parties in 
the manufacturer contingent--the Alliance, AIAM, ASA and NADA--and CARE 
and AAIA, would ``direct and implement all legal and operational steps 
necessary to establish the NASTF . . .'' Not surprisingly, CARE was 
concerned about the lopsided representation of the manufacturer 
contingent to a working group that would be tasked with setting up 
NASTF. In addition, we were equally concerned that decisions regarding 
the governance of NASTF, including the composition of the first board, 
be postponed until some unspecified date in the future. CARE was 
fearful that the new organization would be severely hampered by 
disputes over governance issues and wanted to resolve these during the 
negotiation process by specifying the procedure for appointing 
representatives to the first board. Under the proposal from AAIA and 
CARE, once the board was organized, there would be nothing to prevent 
the addition of other members that were determined by the board to be 
necessary and appropriate to carry out the functions of the reorganized 
NASTF. The car companies would not, however, agree to an even division 
of the NASTF Board.
    2. Tools and Tool Information--CARE also believes it is crucial 
that any self-regulatory system require that automobile manufacturers 
make their tools and tool information available to the aftermarket. 
Nonetheless, the manufacturers would not commit to making available to 
the aftermarket tools possessing the same diagnostic and repair 
capabilities that are available to dealerships. Without such a 
commitment, tools purchased by independent technicians from the 
manufacturers may not contain needed capabilities to complete a repair.
    In addition, CARE was seeking a commitment that the manufacturers 
make available to tool companies the information needed to manufacture 
tools containing the same diagnostic and repair capabilities that are 
available on dealer tools, subject to reasonable licensing and security 
requirements. Independent technicians would otherwise be forced to 
purchase required tools only at prices set by the automobile 
manufacturers. Given the complexity of this issue, CARE was willing to 
finalize at a later time the details of how such information would be 
made available and how the agreement would be enforced, provided that 
the manufacturers made a commitment to fully release needed tool 
information. The manufacturers would not, however, agree to these 
terms. In fact, the manufacturers sought to limit any obligation 
regarding tool information to information needed to produce only 
``diagnostic scan'' tools (a requirement already in the Clean Air Act) 
and tire pressure monitoring system diagnostic tools. We believed this 
limitation would potentially restrict the aftermarket's ability to 
obtain diagnostic and repair capabilities necessary to service new 
technologies that may develop in the future.
    3. Anti-theft Initialization Information--Many independent repair 
shops find it increasingly difficult, if not impossible, to complete 
repairs on cars that contain immobilizer systems designed to prevent 
the theft of a car. By way of background, it is useful to understand 
some of the mechanics of a car's immobilizer. Immobilizer systems 
require a ``handshake'' between a chip in the ignition key and a chip 
placed on an on-board computer. Unless the handshake occurs, the car 
cannot be started. If a vehicle computer that contains the immobilizer 
chip is changed, the system must be ``reinitialized'' in order for the 
vehicle to be restarted following the repair. Since an immobilizer is 
tied into multiple different systems of a vehicle depending on the 
manufacturer's design, technicians need access to manufacturer 
information about the immobilizer system such that the technician can 
diagnose and repair problems related to the immobilizer and can 
reinitialize any vehicle system required to start the vehicle following 
a repair.
    CARE therefore proposed language that would require the 
manufacturers to make available anti-theft initialization information 
and other information, including any software, necessary for the proper 
installation of on-board computers or necessary for the completion of 
any repair on vehicles that employ integral vehicle security systems. 
CARE was not seeking information to build an immobilizer system; only 
the information needed to restart a car following a repair.
    Although some manufacturers routinely make this information 
available now, the representatives for the Alliance and AIAM indicated 
that at least one of its members did not have the ability to provide 
this information, and that several manufacturers objected in general to 
the requirement that software be provided in connection with any tool. 
This was the case notwithstanding that such information is routinely 
provided to franchised dealerships.
    4. Service Information--Manufacturers maintain ``hotlines'' for 
their dealers to call with questions regarding diagnosis and service, 
and publish technical service bulletins and manuals to distribute 
service information. Although CARE was not seeking an identical 
``hotline'' process for making the service information available to the 
aftermarket, we were seeking a requirement that service information be 
provided to the aftermarket in a similar manner and at the same time it 
is provided by a manufacturer to its dealerships. The manufacturers 
were unwilling to agree to an equivalency requirement for service 
information that is provided through the hotlines but is not yet 
communicated in a formal manner to all of their dealerships. This 
position is especially troubling to CARE since it indicated an outright 
refusal to place the aftermarket on the same footing with franchised 
dealerships in regard to access to basic service and repair 
information.
    5. Cost of Tools and Service Information--Late in the negotiations 
we learned that although the manufacturers had agreed in the 
``voluntary standards'' to provide information and tools at a 
reasonable price, they would not agree to any enforcement of this 
commitment. Although antitrust issues could make it difficult for NASTF 
to resolve disputes over the reasonableness of the cost of information 
or tools, we did not believe these concerns applied equally to an 
independent third party dispute resolution organization.
    In an effort to address our most serious concerns about the cost of 
tools and information, we offered a compromise that would address 
situations when such information or tools are offered at a price that 
is viewed as predatory, meaning that the price is so high as to make 
it, for all intents and purposes, unavailable to the aftermarket. Our 
proposed language would have allowed the resolution entity to make a 
finding that the information was not made available because it was 
offered only at an ``unreasonably prohibitive cost'' to the 
aftermarket. We believed that the focus on cost (as opposed to price), 
would alleviate anticompetitive concerns, and that use of the phrase 
``unreasonably prohibitive'' would limit any inquiry to cases involving 
``price gouging'' or the use of price as a barrier to disclosing 
information to the aftermarket.
    Notwithstanding our attempt at compromise, the manufacturers 
indicated that they would not agree to any enforcement of a reasonable 
price requirement under any circumstances. In fact, they refused our 
offer even if it received a favorable opinion by an independent legal 
expert chosen by the CBBB, thus signaling that their objection was 
primarily based on so called ``policy'' reasons as opposed to legal 
concerns.
    6. Penalties--CARE and AAIA initially sought a provision that would 
have allowed the third party enforcement entity, upon reaching a final 
decision that a manufacturer should have provided information to a 
technician but failed to do so, to require the manufacturer to 
compensate the technician in an amount equal to three times the profit 
he would have earned for the repair. The treble damages approach was an 
attempt to compensate the technician for the loss of the repair in 
question, and any future work he was likely to have received from the 
customer.
    The manufacturers objected to treble requirement and ultimately 
proposed a single payment of $2,000 as compensation for a successful 
challenge against a manufacturer. After much consideration, CARE and 
AAIA agreed to this amount, provided that there would be some incentive 
to ensure that the award is paid in a timely manner. We therefore 
proposed an ``escalation'' clause that would have allowed the 
enforcement entity to impose an additional compensation remedy of 
$11,000 per day for each day the initial amount remained unpaid 
following the due date.
    The manufacturers objected to this compromise and offered no 
suggestion for bridging the gap in our positions.

 III. LEGISLATION IS NEEDED TO ENSURE EQUAL ACCESS TO SERVICE, REPAIR 
                     AND TOOL INFORMATION AND TOOLS
    As described above, CARE and AAIA, together with representatives 
from the associations representing the automobile manufacturers and 
dealers, and ASA, were unsuccessful in reaching a satisfactory self-
regulatory solution that would have met the criteria applied by the FTC 
in evaluating such programs. As such, the aftermarket industry is left 
with the current NASTF process, which, as discussed previously, is 
neither effective nor independent. In light of the current problems 
facing aftermarket repair facilities seeking manufacturer information 
and tools needed to complete service work and repairs on cars, CARE 
strongly supports the passage of H.R. 2048.
    H.R. 2048 sets out reasonable and enforceable standards for 
mandating the disclosure of information to the aftermarket. It states, 
``the same service and training information related to vehicle repair 
shall be made available in the same manner and extent as it is made 
available to franchised dealerships, and shall include all information 
needed to activate all controls that can be activated by a franchised 
dealership.'' By linking the disclosure obligation of the manufacturer 
to the information that is currently provided to franchised 
dealerships, the legislation is carefully crafted to create a level 
playing field for service information and avoids trade secret issues. 
Indeed, the manufacturer contingent did not raise any concerns about 
the disclosure of proprietary information once it understood that CARE 
and AAIA were seeking only an equivalency requirement in relation to 
franchised dealerships.
    CARE also supports the bill's requirement that diagnostic tools and 
capabilities related to vehicle repair that are made available to 
franchised dealerships also be made available to independent repair 
facilities, and to the companies from which they normally purchase 
diagnostic tools. This provision will ensure that tool information is 
made available to tool companies seeking to manufacture generic tools 
and support a competitive market and lower costs for independent repair 
facilities seeking to purchase tools.
    Finally, CARE supports giving the FTC authority to enforce the 
disclosure requirements of the bill. In that the bill's ultimate goal 
is to ensure that American consumers have the opportunity to choose 
among competing repair facilities for convenient, reliable and 
affordable repair of their vehicles, the FTC, as the nation's watch dog 
for consumers, is uniquely positioned to promulgate rules to 
effectively carry out the bill's mandate. The FTC has both the 
expertise and experience to draft rules that ensure that disclosures of 
service information are adequate and meet the equivalency test set out 
in the legislation.
    Thank you for the opportunity to appear today before the 
Subcommittee. I would be pleased to respond to any questions you may 
have.

    Mr. Stearns. And I thank the gentleman.
    Mr. Stanton?

                 STATEMENT OF MICHAEL J. STANTON

    Mr. Stanton. Thank you, Mr. Chairman.
    Almost 500 million non-warranty service events are 
undertaken each year. While we hope that each and every one of 
these events go as well as possible, we recognize that with 
literally millions of pages of service and repair information 
that need to be available, there will be instances where needed 
information is not available.
    To address these situations in the Year 2000, the National 
Automotive Service Task Force or NASTF was created to help 
identify and fix any gaps in the availability and accessibility 
of automotive service information, service training, diagnostic 
tools, and equipment. Working together, the volunteers at NASTF 
have implemented web based links to every automakers service 
information website. NASTF has improved communications between 
automaker engineers and the Equipment and Tool Institute to 
ensure that scanned tool information is available to 
aftermarket tool manufacturers.
    NASTF is currently working with the locksmiths and the 
National Insurance Crime Bureau and has established the NASTF 
Vehicle Security Committee. This committee is working on the 
controversial and highly complex issues of providing 
information to automotive security professionals without 
compromising vehicle security and customer safety.
    Turning to the negotiations, I really would like to thank 
the FTC, the Better Business Bureau and the CARE Coalition. It 
was a grueling process and I think we are all disappointed that 
it did not conclude in a satisfactory non-legislative fix. But 
that is what we were about and we did meet in 10 all day 
negotiating sessions during the month of August and September. 
During the discussions, it was clear that the vast majority of 
service information is readily available today.
    Our talks eventually focused on a small subset of repair 
information used to service and reprogram vehicle security 
systems and immobilizers. Due to the sensitive nature of this 
type of information, automakers, locksmiths, and independent 
repairs are already engaged in identifying and developing 
secure methods to share this information with automotive 
security professionals.
    In addition, the automakers offer the following to further 
improve the process of providing service repair information. 
One, automakers would continue to make vehicle service 
information available to independent service technicians when 
they send it to all of their dealers. The outstanding security 
issues which was the mobilizers and the keys would be addressed 
through the NASTF Vehicle Security Committee. Two, automakers 
would continue to make service information tools and tool 
information available for non-emission repairs and this was a 
big step, consistent with the EPA requirements for emissions 
repairs. So we were going to parallel the regulations that 
exist on the emission repairs now. Three, and this was above 
and beyond what was even in the legislation, automakers would 
provide prompt response to their websites inquiries normally 
within 24 hours. Four, automakers would agree to formalize and 
help fund the NASTF which would then be able to in even greater 
degree to provide independent service technicians, assistance 
in finding service information, as well as, serve as a clearing 
house to resolve repair information and tool access issues. And 
five, automakers would participate in a binding dispute 
resolution program with enforceable remedies for non-
compliance.
    Unfortunately at the very end of the discussions, CARE, a 
lobby group funded by large aftermarket parts manufacturing 
companies demanded effective control over the governance of the 
reconstituted NASTF. CARE's insistence on controlling at least 
50 percent of a NASTF governing board would have significantly 
diminished the voices of the most important stakeholders in 
this issue; repair shops, diagnostic equipment makers, 
automakers, and automotive trainers.
    This development was particularly unfortunate because many 
of the issues that had been agreed to or that were very close 
to agreement would have enhanced the ability of independent 
service and repair owners to obtain the information and to 
resolve potential disputes over such information. In fact, the 
agreements reached or nearly reached on these issues addressed 
concerns that exceed those contemplated in the legislation 
before us.
    Although disappointed, the talks could not be completed. 
Automakers and others continue to work toward ensuring that all 
service and training information necessary for vehicle repair 
and maintenance published and made available to dealers is also 
available to independents. To ensure that the tool information 
necessary to implement the same scan tool functions that 
dealers have is made available to diagnostic equipment 
manufacturers for inclusion in aftermarket scan tools. And 
finally, improving the formalizing the NASTF process that 
identifies gaps in service information and assures that these 
gaps are quickly remedied.
    In conclusion the Alliance believes that this legislation 
is not needed to further this process. In fact, attempts to 
legislate a Federal overly over the current process may well 
undermine the successful resolution of the remaining 
outstanding issues.
    Thank you, Mr. Chairman.
    [The prepared statement of Michael J. Stanton follows:]
 Prepared Statement of Michael J. Stanton, Vice President--Government 
  and International Affairs, The Alliance of Automobile Manufacturers
    Thank you for the opportunity to testify before the Commerce, Trade 
and Consumer Protection Subcommittee regarding H.R. 2048 the ``Motor 
Vehicle Owners' Right to Repair Act of 2005'' and the Council of Better 
Business Bureau's facilitated discussions on this issue. I represent 
the Alliance of Automobile Manufacturers, (Alliance) a trade 
association of 9 car and light-truck manufacturers. Our member 
companies include BMW Group, DaimlerChrysler Corporation, Ford Motor 
Company, General Motors Corporation, Mazda, Mitsubishi, Porsche, Toyota 
Motor North America and Volkswagen of America.
    Alliance member companies have more than 600,000 employees in the 
United States, with more than 230 manufacturing facilities in 35 
states. Overall, a University of Michigan study found that the entire 
automobile industry creates more than 6.6 million direct and spin-off 
jobs in all 50 states and produces almost $243 billion in payroll 
compensation annually.
    Historically, about 75 percent of vehicle service and repairs are 
performed in non-dealer shops. Automakers view these non-dealer shops 
as important players in providing service to their mutual customers, 
the driving public. Just as motor vehicles have become more complex, 
the servicing of them has also become a high technology business 
requiring skilled, trained technicians and a sizeable investment in 
diagnostic and repair equipment. For independent repairers to be 
successful, they need to have access to up-to-date training information 
and specialized tools as well as service and repair information. Today, 
all major automakers have websites where independent technicians can 
access service information.
    Almost 500 million non-warranty service events are undertaken each 
year. While we hope that each and every one of these events is as easy 
to facilitate as possible, we recognize that with literally millions of 
pages of service and repair information that need to be available, 
there will be instances where needed information is unavailable. The 
automakers try to correct these situations as quickly as possible. 
There are situations, however, where access to some desired information 
might not actually be reasonable or appropriate--such as the 
immobilizers that are part of theft deterrent/security systems.
    To address these various situations, in the year 2000, the National 
Automobile Service Task Force (NASTF) was created as a not-for-profit, 
no-dues task force to facilitate the identification and correction of 
gaps in the availability and accessibility of automotive service 
information, service training, diagnostic tools and equipment, and 
communications for the benefit of automotive service professionals. 
NASTF is a voluntary, cooperative partnership between automakers, the 
independent aftermarket repair community, the automotive equipment and 
tool industry, automotive trainers, locksmiths, suppliers, the 
insurance industry, law enforcement, auto dealers and others. The NASTF 
inquiry process, which has been highly publicized for several years in 
major trade publications like Motor and Motor Age Magazines, has 
received fewer than 50 inquiries in the past year about lack of, or 
difficulty in, finding information. The NASTF complaint process is well 
established at this point, readily accessible on the public internet 
(at www.nastf.org) and every complaint and its respective solution is 
transparent on the International Automotive Technicians Network, a 
well-recognized Internet forum of over 48,000 professional independent 
and dealership automobile repair technicians.
    Working together, the volunteers at NASTF have implemented web 
based links to every automakers service information website with 
contact information. NASTF has succeeded in improving communications 
between automaker engineering groups and the Equipment & Tool Institute 
to ensure that scan tool information is readily available to 
aftermarket tool manufacturers. NASTF has reached out to the locksmith 
community and the National Insurance Crime Bureau and established the 
NASTF Vehicle Security Committee to address the controversial and 
highly complex issues surrounding methods to provide information to 
automotive security professionals without compromising vehicle security 
and customer safety.
    Since its inception, automakers and the Automotive Service 
Association (ASA), the nation's largest association of independent 
repair shops and technicians have invited all other interested parties 
to participate in the NASTF voluntary process.

    COUNCIL OF BETTER BUSINESS BUREAUS, INC. FACILITATED DISCUSSIONS
    At the urging of Senator Graham and Energy and Commerce Committee 
Chairman Barton, representatives of the Alliance, the Association of 
International Automobile Manufacturers (AIAM), the ASA and the National 
Automobile Dealers Association (NADA) met with the Coalition for Auto 
Repair Equity (CARE) and the Automotive Aftermarket Industry 
Association (AAIA) in facilitated discussions to negotiate a non-
legislative, self-regulatory program to re-enforce access to 
information and to establish a process to resolve complaints/disputes 
more quickly.
    The parties met in 10 all-day negotiating sessions during the 
months of August and September; the Council of Better Business Bureaus, 
Inc. hosted the meetings. During the discussions it was clear that the 
vast majority of service information is readily available today. Our 
discussions eventually focused on a small subset of repair information 
used to service and reprogram vehicle security systems and 
immobilizers. Due to the sensitive nature of this type of information, 
automakers, locksmiths and independent repairers are already engaged in 
identifying and developing secure methods to share this information 
with automotive security professionals. The NASTF Vehicle Security 
Committee has been actively working on these complex issues for over a 
year.
    In addition, automakers offered the following outline of possible 
steps to further improve the process of providing service/repair 
information:

1. Automakers would continue to make vehicle service information 
        available to independent service technicians when they send it 
        to all of their dealers. The outstanding security issues would 
        be addressed through the NASTF vehicle security committee.
2. Automakers would continue to make service information, tools and 
        tool information available for non-emissions repairs consistent 
        with the EPA requirements for emissions repairs.
3. Automakers would provide prompt response to their website inquiries 
        normally within 24 hours.
4. Automakers would agree to formalize and help fund the NASTF, which 
        would then be able, to an even greater degree, to provide 
        independent service technicians assistance in finding service 
        information as well as serve as a clearing house to resolve 
        repair information and tool access issues.
5. Automakers would participate in a binding dispute resolution program 
        with enforceable remedies for non-compliance.
    Unfortunately, at the very end of the discussions, CARE -- a lobby 
group funded entirely by the larger aftermarket parts manufacturing 
companies -- demanded effective control over the governance of the 
reconstituted NASTF. CARE's insistence on controlling at least 50 
percent of a NASTF governing board would have significantly diminished 
the voices of the most important stakeholders in this issue; repair 
shops, diagnostic equipment makers, automakers and automotive trainers.
    This development was particularly unfortunate because many of the 
issues that had been agreed to, or that were very close to agreement, 
would have enhanced the ability of independent service and repair 
owners to obtain the information and to resolve potential disputes over 
such information quickly and efficiently. In fact, agreements reached, 
or nearly reached, on these issues addressed concerns that exceed those 
contemplated by the legislation the proponents of H.R. 2048 seek to 
enact. On September 30, 2005, the discussions ended without reaching 
final agreement.
    Although disappointed the talks could not be completed, the 
automakers, independent repair shops and technicians represented by 
ASA, the Equipment and Tool Institute, and automotive trainers continue 
to work toward:

 Further assurances that all service and training information 
        necessary for vehicle repair and maintenance published and made 
        available to dealers is also available to independents.
 Further assurances that tool information necessary to implement the 
        same scan tool functions that dealers have is made available to 
        diagnostic equipment manufacturers for inclusion in aftermarket 
        scan tools
 Further improvements/formalization of the NASTF process that 
        identifies gaps in service information and ensures that these 
        gaps are quickly remedied.
    Turning to the text of H.R. 2048, we continue to have concerns 
about the need for the legislation. Beyond that, we also have 
substantial concerns about the language of the legislation and at 
several points its apparent intent.
    First, the findings of the legislation are unnecessarily harsh, 
factually inaccurate in many cases and unfair to the automakers that 
have made significant efforts to provide service information and tools 
to all independent automotive service providers. Automakers are 
committed to making service information and tools available and have 
been doing so for some time. Although important issues were identified 
during our negotiations with the CARE Coalition, we did not hear 
allegations of any widespread breakdown of the systems established by 
automakers to resolve anomalous service information and tool gaps. For 
this reason, we strongly take issue with the statements in the 
``findings'' section of the bill that concludes that automakers have 
systematically engaged in ``a manner that has hindered open 
competition.'' Since ``anticompetitive behavior'' is illegal under 
federal and state law, branding all automakers with this unfounded 
conclusion is both unreasonable and places them at legal risk.
    Moreover, the findings address an issue that goes beyond the scope 
of the legislation: namely, whether consumers should always be able to 
choose between original parts and aftermarket parts for vehicle 
repairs. This issue quickly fell off the table during discussions and 
is not appropriate for the findings of this bill.
    Second, the legislation is not precise in describing the scope of 
what is being sought by the proponents of the bill. For example, the 
language appears to confuse ``information'' with actual diagnostic 
``tools.'' It also appears to override the standard and accepted 
practice of providing some service and training information to the 
independent service providers by means other than that used to 
communicate with dealers. The satellite networks and programs used to 
communicate with dealers cover a wide variety of topics and are not 
appropriate to be opened to independent repair facilities. However, 
hard copies of materials or CD-ROMs of the relevant portions of these 
broadcasts are often used to provide the relevant information on 
service/repair issues to independent facilities. EPA intentionally 
carved out this provision because automakers cannot be expected to 
build special delivery infrastructures for the aftermarket that they 
build for their franchised dealers. The CARE Coalition has not 
otherwise sought access to the satellite-based information delivery 
system of the manufacturers, and this legislation should not force 
changes in the current practices.
    As another example, the text would require making the ``same 
diagnostic tools and capabilities related to vehicle repair'' available 
to the independent service provider as are available to franchised 
dealers. We do not know what is intended by the word ``capabilities'' 
in this context. It could mean that manufacturers would have to grant 
access to their dealer ``hot lines,'' which are used to provide one-on-
one diagnostic help to dealers who call for technical assistance. The 
CARE Coalition has assured us that they are not seeking access to these 
services, and the language should not leave this issue open.
    We also believe that the language is broad enough that it might 
interfere with existing contracts between automakers and their 
franchised dealers, as well as with contracts automakers have with 
fleet purchasers that specify particular provisions regarding obtaining 
warranty and other service.
    We also strongly object to the language in the bill that says that 
failure of a manufacturer to comply is automatically ``an unfair method 
of competition and an unfair or deceptive act or practice in or 
affecting commerce'' under the Federal Trade Commission Act. While 
automakers will always strive to comply with any FTC regulation, minor 
discrepancies should not give rise to an automatic pre-determination 
that they reflect the very serious charge of being ``an unfair method 
of competition and an unfair or deceptive act or practice''. The FTC 
has ample authority to decide when a regulatory violation constitutes 
``an unfair method of competition'' or ``an unfair or deceptive act or 
practice.''
    In conclusion, The Alliance, AIAM, ASA and NADA and others continue 
to address the remaining service information issues and believe that 
legislation is not needed to further this process. In fact, attempts to 
legislate a federal overlay over the current process of providing 
information and attempting to resolve disputes may well undermine the 
successful resolution of the remaining outstanding issues.

    Mr. Stearns. I thank you.
    And I will start the first set of questions for the first 
panel.
    Information is power, in this case, horsepower. Mr. Kohm, I 
think I would ask you just as general opinion and this would--I 
assume this would be the policy of the Federal Trade Commission 
that consumer access to deciphering the complex machine, the 
automobile machine is that a right? Sort of should the 
automotive parts facilities have the rosette of stone to 
decipher these complex machines as a right and not an option in 
your opinion?
    Mr. Kohm. Well Congressman, excuse me----
    Mr. Stearns. I just need a yes or no.
    Mr. Kohm. I think it is not necessarily a right.
    Mr. Stearns. It is not necessarily a right. So a 
fundamental question is do these automotive parts have a right 
to this information? You do not think they have a right?
    Mr. Kohm. That Chairman that----
    Mr. Stearns. Because of propriety information, I will help 
you out here.
    Mr. Kohm. People who sell cars have an interest in 
consumers being able to repair those cars or they will not sell 
the cars. So that I think the market will allow----
    Mr. Stearns. But the car has a warranty let us say for 
50,000 or 100,000 so everybody is going to go back to the 
dealer. But at that point after 50,000 or 100,000, shouldn't 
the consumer be able to go to somebody other than the dealer to 
get it fixed?
    Mr. Kohm. Well, the consumer has an interest in the 
efficient functioning of the market so that they have options 
for repairing their cars.
    Mr. Stearns. Okay, all right.
    Let me say, Mr. Cole, I am pleased to hear that you say 
that the negotiations were in good faith. And I mentioned in my 
opening statements where you had agreement and where you did 
not have agreement. On these issues you mentioned that are 
unresolved, which in your opinion would be the most difficult 
for the parties to resolve through these negotiations? Just the 
one issue you think is the really tough one that you just kept 
running up against a hill and you could not get any further.
    Mr. Cole. Well, let me answer it this way. I think the most 
important issue, I do not know if it is the most difficult but 
the most important issue is the governance issue that Mr. Parde 
and Mike Stanton----
    Mr. Stearns. Okay.
    Mr. Cole. But I think there was another issue lurking here 
and it is close to your rights question. I believe that below 
the surface of the manufacturers have a fear of the 
implications of agreement on potential private class actions 
which were not the subject of our meetings. But I think lurking 
there was a fear of the unknown implication in what they were 
doing.
    Mr. Stearns. Do you think--I am asking the same question I 
asked Mr. Kohm. Do you think consumer's access to this Rosetta 
stone to decipher these complex machines is a right? Is an 
actual right for the consumer?
    Mr. Cole. I think it is important. I do not know that it is 
presently articulated anywhere as a legal right and I think it 
is by and large being provided now when we are talking around 
the margin.
    Mr. Stearns. Okay. Well, let me ask Mr. Parde and Mr. 
Stanton just quickly on that because I have one more question 
before I go.
    Mr. Parde, I mean, do consumers have a right to be able to 
go to these automotive shops other than the dealers and get 
their car repaired?
    Mr. Parde. I believe so.
    Mr. Stearns. Okay.
    Mr. Parde. I think when someone--when you purchase a 
vehicle you have the right to the information to repair that 
vehicle and you----
    Mr. Stearns. Because Mr.--Chairman Barton mentioned it in 
his opening statement is this is a right that the automobile--
that once you buy your car, you own the car. It is your--you 
would have the right to----
    Mr. Parde. I would agree----
    Mr. Stearns. [continuing] understand how it operates and 
where it goes.
    Mr. Parde. I would agree with that.
    Mr. Stearns. And Mr. Stanton?
    Mr. Stanton. Mr. Chairman, we would disagree that they have 
the right to the intellectual property associated with the 
vehicle. But it is in our best interest that any consumer, any 
vehicle owner can take their vehicle to any shop that they 
choose to get it repaired.
    Mr. Stearns. Okay. Mr. Parde, Mr. Stanton testified that 
only 50 inquiries were received through NASTF last year out of 
500 million non-warranty service transactions. This goes to the 
heart of the problem. Are we talking about a problem--how big 
is this problem? That is the real question. I mean are we 
spending these 10 meetings at 4 to 6 hours, you are spending up 
to 60 hours in negotiation. How big is the problem? Does CARE 
assert that the problem is larger than this? If so, please 
comment on the scale of the problem for the committee.
    Mr. Parde. We do believe that it is a big problem. We think 
that the reason there are not many inquiries to NASTF currently 
is that the majority of the aftermarket, the majority of the 
technicians do not trust it, do not believe in it. It is an 
organization that is overseen by the manufacturers, it is run 
by the manufacturers, therefore, most technicians and most 
shops simply do not take the time to submit complaints. I think 
you have seen a picture----
    Mr. Stearns. Okay. I understand.
    Mr.--the FTC, Mr. Kohm, how about the complaints were there 
from--that went to the FTC? How many complaints did you get? 
How big a problem do we have here?
    Mr. Kohm. That we have heard as the committee has 
indicated, we have heard antidotal evidence that----
    Mr. Stearns. Not a lot of serious written complaints?
    Mr. Kohm. But we have no objective evidence of how 
widespread the problem is.
    Mr. Stearns. And Mr. Cole, the Better Business Bureau, what 
kind of written complaints and serious complaints did you get?
    Mr. Cole. We would not be able to tell from our data base 
how many there were but we are not aware presently of a huge 
problem.
    Mr. Stearns. Okay. With that, the ranking member is 
recognized, Ms. Schakowsky.
    Ms. Schakowsky. You do though at the Better Business 
Bureau, Mr. Cole, get 72,000 complaints related to the auto 
industry. Is it that you cannot----
    Mr. Cole. Correct.
    Ms. Schakowsky. [continuing] segregate out those that deal 
with this?
    Mr. Cole. We cannot be sure of what proportion of that 
72,000 may have been an inability to get a repair because of 
the unavailability of information from the manufacturer. I wish 
some day I could have improvements in that data base so I could 
answer that question.
    Ms. Schakowsky. From the consumer point of view in terms of 
making complaints, I do not know that I would necessarily know 
to do that if Dack Gable said well, you know, you will have to 
take this to the dealer.
    Mr. Cole. Absolutely, absolutely, I would not be surprised 
that a consumer would not complain about that issue. All they 
know is they are being referred back to a dealer.
    Ms Schakowsky. Right.
    Mr. Parde, is there a bottom line issue for you, the 50 
percent representation on a governing board on NASTF?
    Mr. Parde. We believe there needs to be a fair and even 
representation by both sides. You know, we proposed a four, 
four in which we would appoint four members and that the 
manufacturers would appoint four members and we think that that 
is the fair way to go, that the aftermarket would be 
represented equally with the manufacturers.
    Ms. Schakowsky. One of you testified that there may be more 
stakeholders. I happen to think that consumers are a 
stakeholder as well, that some way of representing the consumer 
interest separate from that of the--representing the 
aftermarket or the manufacturers. Would that be something that 
you or Mr. Stanton would object to on some sort of a governing 
board having consumer representation?
    Mr. Stanton. We would welcome that. We want the NASTF 
governing board to be broad, to be open to all. It has been in 
existence for 5 years. Earlier I guess last month there was a 
proposal by the Equipment and Tool Institute that suggested 
that there ought to be at least 12 funders of the organization. 
And then just last week in Las Vegas the NASTF stakeholders got 
together and they unanimously voted to enhance the 
organization, so there are lot more stakeholders. Our side, 
their side is not an accurate representation when it comes to 
NASTF. Our side, their side was an accurate representation 
during the facilitated discussions but we do not think this 
alliance will hold forever. Everyone is going to have their own 
interest over time.
    Ms. Schakowsky. Go ahead.
    Mr. Cole. We would not be opposed to adding additional 
members down the road. This was an initial proposal to get this 
organization up and running, get it restructured, 
reconstituted, and that is why we wanted the even on both 
sides. We would not be opposed to adding additional members. We 
never were opposed to that.
    Ms. Schakowsky. What if there were strictly an independent 
board that were not necessarily funded by stakeholders at all 
that were--stood apart from all of the financial interests and 
just judged this--was that ever considered in any way?
    Mr. Stanton. That was never considered. No it was not but 
we have some staff discussions that I think that is an 
excellent, possibly and excellent way to break this----
    Ms. Schakowsky. And what were the other--one of you also 
mentioned that there were some other players. Was it you, Mr. 
Cole?
    Mr. Cole. I mentioned the tool manufacturers, the 
independent information providers that help the independent 
facilities so there are other in addition to the consumer 
stakeholders that--and a lot of the issues that were being 
discussed it was very clear that the parties at the table 
really could not come to an agreement on these tool issues 
because the tool folks were not there. That is just one good 
example.
    Ms Schakowsky. Now are we at a dead end here in these 
negotiations? The way the negotiations are currently 
constituted. And if we wanted to have a non-legislative answer 
would we have to create a new table to do that in your view, 
Mr. Parde?
    Mr. Parde. We want the problem to be solved. I mean we do 
not care if that is----
    Ms. Schakowsky. I do not mean that to be provocative.
    Mr. Parde. Right.
    Ms. Schakowsky. Do you think that it--the way that it was 
that another 10 hours of 6 days of 10 hour meetings is not 
going to resolve this and so do you think that we need to go to 
legislation or is there another way that we could create a 
table where stakeholders could better resolve the issues?
    Mr. Parde. I think that we have had numerous attempts at 
negotiations over the last four of 5 years. I think we have 
gotten to the point where that we would like to see the 
legislation move forward but we are not closing the door on 
being able to continue with negotiations at the same time. As I 
said, we just want to see the problem solved. If that is a non-
legislative solution, we would accept that. But right now it 
appears that the legislative solution is the way to go at this 
point.
    Ms. Schakowsky. Yes. Mr. Stanton, then I will----
    Mr. Stanton. I just want to make the comment that on 
subsequent conversations I think that we were very, very close 
on all of the remaining issues other than the NASTF board. And 
one of the reasons, one of the things we had done was we had 
punted to the NASTF board the whole tool and tool information 
because quite honestly we ran out of time. And to have any 
weighted kind of a board making policy decisions caused us 
great concern.
    So I think that we still are--I know we are very open to a 
non-legislative negotiated solution. I kind of like your idea 
of an independent board to get it away from the biases of the 
various groups. I would be more than happy to take that back to 
our membership.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    Mr. Stearns. The full chairman of the committee, Mr. 
Barton.
    Chairman. Barton. Thank you, Chairman Stearns.
    I want to ask Mr. Cole who represented the facilitator, did 
you personally participate in these negotiations?
    Mr. Cole. I was the facilitator.
    Chairman Barton. You were the facilitator?
    Mr. Cole. Yes, sir.
    Chairman Barton. All right, that is good.
    Mr. Cole. Maybe yes, maybe no, we do not have a deal.
    Chairman Barton. Hey, I have been trying to facilitate for 
4 years so----
    Mr. Cole. Fair enough.
    Chairman Barton. Since I cannot do it, I am not going to 
blame you for not being able to do it.
    Mr. Cole. I appreciate that.
    Chairman Barton. Yes. Your issue No. 1 that you said was 
not resolved, how should NASTF be restructured and governed? Is 
that this dispute over the board? Is that what that is?
    Mr. Cole. Yes, sir, exactly what it is.
    Chairman Barton. What is wrong if they do not like four, 
four, what is wrong with four, four, one or something like Mrs. 
Schakowsky was talking about where we--each side appoints X 
number hopefully smaller rather than larger and then there be 
an independent that is maybe appointed by the BBB, by your 
group as an outside group. Would that work?
    Mr. Cole. Let me speak to that and Mr. Parde may have a 
different view of this so he may want to speak to it.
    When we talk about four, four, it is important to as what 
we are talking about, the manufacturers definitely were 
agreeing to a balanced board essentially is what that meant. 
And there was a dispute as to which--who is in which four. Who 
is representing which side and you could understand that 
because there were different parts of this industry and I am 
not complaining about that but--so everyone is agreeing on 
balance but there is a fear of what would the practical matter 
of one definition of four, four result in versus a different 
definition of four, four.
    Chairman Barton. But Mrs. Schakowsky's suggestion that 
there be a consumer advocate, I mean, it is certainly possible 
to come up with someone or somebody that is truly independent, 
somebody from your group.
    Mr. Cole. And we would be delighted to serve if asked but 
the issue of four/four is not handled by a ninth individual. If 
you feel that the four on the other side includes interests 
that really should be on the other side of the table, it is 
really not four, four. You may view it as a six, two split. And 
there is a difference of opinion as who is representing whom 
and what interest they really have at stake. So if you feel 
aftermarket is on one side and manufacturers are on another but 
the manufacturer side includes some of the aftermarket 
industry, it is a very--it was not clear to anyone at the table 
that we had achieved the balance on that.
    If I may with permission just say one additional thing on 
the question of is it worth trying some more. I mean only the 
parties themselves really know if it is.
    Chairman Barton. I will answer that and the answer is no.
    Mr. Cole. Okay. Well what I wanted to say is and----
    Chairman Barton. We have had at least four different 
deadlines over 4 years and they always--it is like the Paris 
peace talks. You know, the North Vietnamese are always going to 
want to talk more.
    Mr. Cole. And we started out with the shape of the table 
also so I know exactly what you are saying.
    Chairman Barton. But I do not want to be a whiner but 
because of the intense urgency of this and feeling we need to 
get on with it and get this done, we were given a constraint 
that I believe inhibited our chance of reaching----
    Mr. Cole Well I--and that was we had a September 1 deadline 
with August approaching----
    Chairman Barton. You did not just start these negotiations 
when you came into it.
    Mr. Cole. Excuse me?
    Chairman Barton. We did not start these negotiations when 
your group came into it.
    Mr. Cole. Oh, I fully----
    Chairman Barton. We bless you for doing what you have done 
but this has been going on for 4 years.
    Mr. Cole. I understand.
    Chairman Barton. Okay. There have been two Congresses 
elected and unelected in that time period. Okay. We have had a 
President of the United States elected and reelected in that 
time period. I mean it is--I do not think Federal legislation 
is the answer to everything but every now and then see it is 
the answer to some things. And the individuals involved operate 
under good faith but the groups they represent, some of them do 
not want an agreement, they just do not. And the only way to 
make it happen is in a bipartisan fashion, move a bill, and the 
question is, you know, how much discretion to give the FTC and 
the outside groups and what the penalties if any should be when 
there is not resolution.
    I was going to ask you a question about all the six 
outstanding issues that are unresolved but I am already down to 
30 second so I want to go to Mr. Stanton who has done yeoman's 
work representing the manufacturers. My understanding is that 
there is not unanimity among the manufacturers in support of 
this process. To be simplistic, the domestic manufacturers tend 
to be more supportive of the process and the foreign 
manufacturers tend to be less supportive. Is that a true 
statement or an untrue statement?
    Mr. Stanton. Mr. Barton, this was a difficult process even 
within each company there were different views and pulling them 
all together and representing our association and working with 
AIAM. Different companies have different heritages, 
backgrounds, customs. This----
    Chairman Barton. Well I do not need a long drawn out answer 
is it--is your group unified or is it not?
    Mr. Stanton. It is unified.
    Chairman Barton. It is unified. Every manufacturer was 
totally involved in the process and totally supportive. If you 
say that, you are not under oath but that----
    Mr. Stanton. No.
    Chairman Barton. [continuing] strains credibility.
    Mr. Stanton. They were all involved and it was tough.
    Chairman Barton. Well you can be involved and be against 
what is going on.
    Mr. Stanton. Well different manufacturers had different 
issues especially with the security side of the--and how they 
treat key codes and immobilizers and things like that. We all 
wanted to get to the same place but some of the management and 
some of the companies were not as far as others.
    Chairman Barton. All right. I have got to ask Mr. Parde the 
same question. Is your group unified? To me it seems more 
unified than the manufacturers but that is an observation.
    Mr. Parde. Your observation is correct and we are unified.
    Chairman Barton. And what is the single biggest issue in 
terms of legislation is it an enforcement mechanism? Is that 
the most important issue or is there one of these other issues 
that is more important?
    Mr. Parde. Oversight and enforcement is the most important 
issue.
    Chairman Barton. My time has expired, Mr. Chairman. Thank 
you.
    Mr. Stearns. I thank the gentleman.
    Mr. Gonzalez?
    Mr. Gonzalez. Thank you very much, Mr. Chairman.
    The first couple of question and I think it is an 
observation, I started off with opening statements about my 
experience back home and I see it materializing here. The parts 
guys are not necessarily with the repair guys. And aftermarket 
guys--what I am saying is what Mr. Cole is saying. If we want 
an equal division only because you are an aftermarket person 
does not necessarily put you in that particular camp with the 
repair guys or the parts guys. There is so much more going on 
out there and we are naive as members of this committee to 
think we really understand all the nuances.
    But Mr. Cole, I do know this. You are a facilitator. My 
experience in the legal world was when we would mediate the 
closer we got to the trial date, amazing how much we had in the 
way of the meeting of the minds. I think where we stand today 
is simply everybody out there is the same. What happens if the 
House acts? What will we do? What happens in the Senate? We 
have got plenty of time; it will all shake out one way or the 
other. The solution probably is to fashion a bill that would be 
so unacceptable to all sides that it will get you to the 
bargaining table. And that is just by way of suggestion. And I 
actually believe that is probably what is going to happen as 
this thing goes through the House, through the Senate and what 
we say the sausage making process.
    Now if that is what you all want, that is what you all are 
going to end up getting. And I think you are hearing the 
Chairman of the whole committee, Mr. Barton saying he is fed 
up. And what you will end up getting is a whole lot worse than 
what you can do determining your own destiny.
    Mr. Kohm, my whole question then goes back we do not want 
to go back to a time when warranties were voided if you just 
went and had your oil changed somewhere. We want consumer 
choice and quality service and maintenance so that we can 
operate these things. But what is so strange is that we are 
treating the vehicle and its industry and these entities that 
are associated with it totally different from all others. 
Because I have never heard anyone say just because they buy a 
computer, Hewlett Packard or I buy a Zenith TV that I own all 
that technology. And if someone wants to repair it because I 
own it, I can go to the manufacturer and say I own it, 
therefore, I own your patent, trademark, trade secrets. I own 
everything that goes with it. Divulge all that to the repair 
guy that just has it over in his repair shop. So why is the 
automotive industry on the manufacturer's side, the repair 
side, maintenance, and aftermarket parts, why do we treat it 
differently or am I just wrong that we are treating this 
totally differently than we would any other enterprise? What 
makes it distinct and different?
    Mr. Kohm. Well generally, Congressman, it is not distinct 
and different and that is why the commission believes that a 
voluntary self regulatory approach is the appropriate approach 
to addressing this problem.
    Mr. Gonzalez. Okay. Do you foresee that we would have some 
legal problems in attempting to mandate and treat this 
particular industry separate and apart when basically the laws 
will apply equally to all business enterprises?
    Mr. Kohm. Congressman, I have not analyzed the legal issues 
with patents and copyrights but as a general matter, Congress 
could pass laws and we would enforce them.
    Mr. Gonzalez. Mr. Cole, I think in one of the responses you 
said something to Chairman Stearns question. Does a consumer 
have a right, I own the vehicle and such, I would think there 
is an implied right to have the necessary information to get my 
car fixed or whatever, it seems logical. But you said and I do 
not know if this was your quote ``by in large that is being 
provided,'' the information or whatever. Did you make that 
statement?
    Mr. Cole. I did.
    Mr. Gonzalez. And what did you mean by that?
    Mr. Cole. What I meant is I was articulating what seemed to 
be a reasonably shared opinion at the table that the 
manufacturers have generally accepted that information to be 
provided to independent facilities and by in large was being 
provided but the concern was it was not always being provided 
and there were presently not effective remedies in CARE's and 
others point of view to deal with those situations.
    Mr. Gonzalez. And when it is not being provided is it at 
the level that would require a legislative fix, the Federal 
Government to come in and legislate a fix?
    Mr. Cole. I do not feel competent to answer that question.
    Mr. Gonzalez. Okay. I yield back the balance of my time.
    Mr. Stearns. The gentleman yields back.
    Mr. Ferguson? Mr. Ferguson is not here.
    Mr. Murphy?
    Mr. Murphy. Thank you, Mr. Chairman.
    Let me ask some questions of the panel, in particular Mr. 
Parde and Mr. Stanton, some questions that we consumers often 
times ask. And I would like for your candid responses. First of 
all, automobile dealers that are able to do certain repairs, do 
they ever subcontract out repairs to local independent 
mechanics to do some of the work because they cannot either 
they are back up or they do not have the ability to, for 
example, body shop work, et cetera. Does that ever happen, Mr. 
Stanton?
    Mr. Stanton. Yes.
    Mr. Murphy. When that happens do the dealers who have 
propriety information with regard to the tools or testing 
equipment, do they share that with the independent auto repair 
people?
    Mr. Stanton. Mr. Murphy, our position is is that--and we 
made the commitment that independent repair shops would have 
the exact same service information that we give to all of the 
dealers as well. Under the EPA regulations, we have to make the 
same tools available for the aftermarket and diagnostic tools 
that we make for the dealer. So I do not think there is a 
difference of positioning there.
    Mr. Murphy. There is not, okay.
    Would you agree with that, Mr. Parde?
    Mr. Parde. I am sorry. The question----
    Mr. Murphy. With regard to do people with the more 
independent mechanics do they feel that they get the diagnostic 
equipment, the tools, and the parts readily? For example, 
whether they are subcontracting out or they may be the place 
that does the body repair work for dealers. Do they get the 
information and the tools they need?
    Mr. Parde. In some instances yes and other instances no. It 
is not--in some cases it is not the same information as the 
dealers are getting or the same tools that the dealers are 
getting.
    Mr. Murphy. And again that directly contradicts what Mr. 
Stanton is saying?
    Mr. Parde. Yes.
    Mr. Murphy. Okay. Another question I have for both of you, 
do dealers charge more for repairs? This was something like you 
see this on a Seinfeld show and everything else. Someone has--I 
mean this is the fear that people have. You know, I want to 
have this widget fixed. If I go to my dealer it is going to 
cost me X and if I go to somebody else it is going to cost me 
Y. Is there a significant difference?
    Mr. Parde. Generally it is more expensive to go to a 
dealership. It ranges, again it varies and depends on what part 
of the country but it could be as much as a difference between 
30 and 70 percent.
    Mr. Murphy. Mr. Stanton, would you agree?
    Mr. Stanton. I do not, no.
    Mr. Murphy. And another question the public often times 
asks are parts, are tools, are procedures, computer programs 
whatever, are they invented with the intent of making it so you 
can only go to a dealer to get the work done?
    Mr. Stanton. Not from our point of view, no. As a matter of 
fact, there is under the EPA regulations we have to make the 
tools available and we have already committed to make the 
service information available. It is in our best interest that 
our customer has a lifetime experience with their vehicle that 
is a good experience and that includes giving them the option 
to take the vehicle wherever they want to to have it repaired 
and repaired well.
    Mr. Parde. Currently, the only protection that the consumer 
has is on the emissions systems of the car with the EPA 
regulations. That came from the Clean Air Act which was passed 
in 1990. The rest of the vehicle does not have that same 
protection.
    Mr. Murphy. So what other parts are you saying do not have 
the same protection transmission?
    Mr. Parde. Transmission, brakes, airbags, most other 
systems on the car do not have the same protection as what you 
have on the emissions system of the car.
    Mr. Murphy. So for example if someone has an automobile 
that might be in an accident and the dealer refers that person 
to have their car repaired at another body shop and with that 
they need the airbags and the brakes and axel and other things 
fixed that may----
    Mr. Parde. May not be available, that information may not 
be able--be available to that independent service technician.
    Mr. Murphy. Mr. Stanton?
    Mr. Stanton. We disagree. We made the commitment. We are 
not hearing that the information is not available. We have set 
up the NASTF process to deal with any information gaps that 
there are. We only had 50 inquiries all last year. We do not 
think it is an issue.
    Mr. Murphy. I mean what I hear from some of my local repair 
shops that they do say that they have to really push for this, 
sometimes long waits to get information, that it is not an 
automatic thing. And of course the consumer is left with extra 
days for repair time to have those things done. What could be a 
1-day job turns into a 1-week job. Is that your understanding, 
Mr. Stanton?
    Mr. Stanton. No, it is not. There is a whole market that 
has grown up around information, the Alldata's, the Mitchell's 
and they even have on their website that they can provide all 
the information within 30 days, excuse me, within 30 minutes. 
We think that the information is out there.
    Mr. Murphy. Again, but Mr. Parde is saying that the issues 
about what you are saying EPA requires you to have that 
information released it is different, we are talking about 
transmissions, brakes, et cetera are not part of that.
    Mr. Stanton. It is true they are not part of that but the 
manufacturers have all made the commitment, they made it in 
writing to the Senate in 2002 saying that they would make the 
exact same service information available to the aftermarket 
that they make to all their dealers.
    Mr. Murphy. And Mr. Parde, a final comment on that?
    Mr. Parde. Some do, some do not. There is still huge gaps 
in the information and again only the emission systems of the 
car have the protection. There is no oversight and enforcement 
currently with NASTF. I believe in the last hearing that we had 
in this committee, the manufacturers testified that it takes on 
average eight to 15 days to get the information.
    Mr. Murphy. Thank you.
    Thank you, Mr. Chairman.
    Mr. Stearns. I thank the gentleman.
    Mr. Towns?
    Mr. Towns. Thank you very much, Mr. Chairman.
    Mr. Kohm, let me start with you. You know, you made a 
statement if I understood you clearly, you said we should build 
on the success that has been made in the legislation that we 
consider. Could you explain that, that is not clear to me.
    Mr. Kohm. Absolutely Congressman, what the parties had 
worked on, a dispute resolution, excuse me, mechanism through 
the NASTF process to quickly and flexibly resolve disputes 
about information sharing. And that would provide a model if 
the Congress determines that legislation is necessary to 
resolve disputes to enact such a process in other words through 
legislation that is flexible and that is speedy that responds 
to the market rather than an enforcement court based mechanism.
    Mr. Towns. All right, thank you very much.
    What can we do to get this discussion back on track, right 
down the line. Is there anything we can do here short of 
passing this legislation? Right down the line start with you 
Mr. Stanton and come right down.
    Mr. Stanton. You know, during all of this process the 
demand has been on the manufacturers to provide and to provide 
and to provide. And we set up and we agreed to enforcement 
provisions, we agreed to a very quick process to make sure that 
the manufacturers had an opportunity to cure and we had a 
dispute resolution at the end of it. And then it came to the 
governance. And the governance as Mr. Gonzalez said it is not 
one side against the other in this. ASA used to be on the CARE 
side and NADA as you know is not always on the manufacturer's 
side. And the manufacturer is the one that has to do the 
giving. So we just wanted to make sure and our proposal was is 
that it should be open to everyone. There ought to be a 
supermajority that it takes to pass something and we ought to 
be able to protect the rights of the minority because this is a 
voluntary group that is designed to work together and work 
together well and even in our own association we cannot be 
effective if we have one of our members that is on the left 
side and everybody else is on the right side and we take a 
position that does not encompass them so----
    Mr. Stearns. Would the gentleman yield on that?
    Mr. Towns. Yes, I would be glad to yield to the Chairman.
    Mr. Stearns. If I hear you correctly, you are requiring a 
supermajority because almost with that you admit that the 
people you represent are in the minority and are going to be on 
the wrong side so you need a supermajority to override----
    Mr. Stanton. Mr. Chairman----
    Mr. Stearns. I mean that is just ridiculous.
    Mr. Stanton. Mr. Chairman----
    Mr. Stearns. I guess I can go to the speaker and say, you 
know, my friends on the Democratic side are pretty good, you 
know, when they are unified, it makes my life difficult. I want 
to supermajority on this committee so that even when I am wrong 
I can win. I mean that is just horseradish.
    Mr. Stanton. Mr. Chairman, Mr. Barton, the way we view this 
is is that some of the groups that would participate in this 
other than the Alliance, it would be association run so it is 
not like we have 15 automobile manufacturers in there but AAIA, 
ASA, the locksmiths, the training technicians would be there, 
the service excellence--automotive service excellence groups, 
automotive service providers would be involved, ETI, MEMA, 
NADA, SA----
    Mr. Stearns. But they all, everybody, everybody even the 
manufacturers should represent the consumer, the driver, the 
person whose vehicle is attempting to be fixed. I mean, I just 
do not get it. I do not want to take Mr. Towns time and he is 
one of my principal cosponsors on the minority side but to say 
you have to have a supermajority on this board I think just is 
a non-starter.
    Mr. Stanton. Not that you have to have a supermajority but 
the----
    Mr. Stearns. You just said it.
    Mr. Stanton. No, it takes----
    Mr. Stearns. You just said it.
    Mr. Stanton. [continuing] it takes a supermajority to make 
a policy decision so that all the rights of all the voluntary 
participants are protected.
    Mr. Towns. Let me ask you right down the line real fast and 
I will switch the question now. Would a larger board do you 
think solve some of these problems? I am just trying to figure 
out how you might be able to get back to the table and start 
negotiating again. Would a larger board, would that be a 
solution to some of the problems?
    Mr. Parde. Well we felt with our four, four proposal, I 
mean as Mr. Cole stated in his testimony, there is a lot of 
mistrust on both sides here and especially in the beginning of 
this whole process and that is why we thought a four, four 
board would force us basically to work together to try to find 
consensus, to find a way to make things happen and that is what 
we thought would be the best system. Now is a bigger board 
going to make a difference? You know, I do not know. Sometimes 
bigger boards bog things down. But we are not opposed to----
    Mr. Towns. You are bogged down already.
    Mr. Parde. Well we are not even there yet so--but, you 
know, adding additional people, we are not opposed to that. We 
never have been opposed to that. The original proposal was to 
get this organization started and get it moving and get it 
going.
    Mr. Stearns. Would the gentleman yield just for that 
question?
    Mr. Towns. I yield.
    Mr. Stearns. You might, Mr. Towns ask him maybe to have the 
FTC appoint an independent board and ask him--maybe that is a 
question we could ask the FTC.
    Mr. Towns. Yes.
    Mr. Stearns. How about the breakthrough would be that the 
FTC would point all the directors and there would be an 
independent board.
    Mr. Towns. That is a great question, yes.
    Mr. Cole. Well Chairman and Congressman it has been 
suggested that perhaps a solution to this problem would be if 
each side chose a fairly small but equal number and then that 
the majority of the board be made up my neutral parties and 
that may solve the problem of not having exactly equal sides. 
And that seems like a workable solution to me. I think it would 
be best if the parties chose people that they thought were 
truly neutral.
    Mr. Towns. That is not working. Mr. Parde, I would like to 
get your answer to that independent board. I would like to hear 
your response.
    Mr. Parde. I think we would be willing to consider that. I 
would have to, you know, talk to our coalition members about 
that but I think that is something we would consider.
    Mr. Towns. Right. Let me just ask--I know my time has 
expired but I am going to just quickly ask this. Does it bother 
you that we are trying to get our nose under the tent, right 
down the line yes or no?
    Mr. Parde. You have already got your nose under the tent 
with the emissions part of the car. This would simply be 
expanding it to include the whole car at this point.
    Mr. Stanton. Yes.
    Mr. Towns. It bothers you?
    Mr. Stanton. Absolutely.
    Mr. Towns. Okay. Mr. Cole?
    Mr. Cole. We believe in self regulation.
    Mr. Towns. Mr. Kohm?
    Mr. Kohm. The commission too believes that the solution to 
this problem is self regulation.
    Mr. Towns. But, you know, we have been waiting a long time 
for you guys to work this out and it has not been worked out. I 
mean, let us face it. I mean 4 years is a long time.
    I yield back, Mr. Chairman.
    Mr. Stearns. The gentleman yields back.
    Mr. Rogers?
    Mr. Rogers. Thank you, Mr. Chairman.
    So it is unanimous we all think we ought not to be here 
today? Did I understand that correctly?
    I just have a quick question, a couple of questions for Mr. 
Parde, if we will. Does the bill's protections for design and 
manufacturing trade secrets leave unprotected non-repair 
related system operating codes in your opinion?
    Mr. Parde. I do not believe so. I mean it does not affect--
we do not need propriety information. We are not looking for 
proprietary information. We took--we put a lot of effort into 
writing language and putting it into the bill and we even 
strengthened it from the last session to this session so we are 
not looking for that. We do not need that. We would not know 
what to do with it if we had it. We do not manufacture parts. I 
do not believe that it leaves anything open, any propriety.
    Mr. Rogers. So how would aftermarket manufacturers avoid 
triggering warning signals if they do not have operating codes?
    Mr. Parde. I am not a technician, Congressman. There will 
be others on the next panel which will be coming up that can 
probably best answer that.
    Mr. Rogers. Right. You would agree though given the 
intellectual property protection this is an issue that we need 
to be concerned about, would you not? I mean, if I have access 
to an operating code, it is very--I am not even sure I would 
have to reverse engineer anymore. I would not even need to do 
that. I would have all the intellectual property I need.
    Mr. Parde. Intellectual property is an important issue and 
an important discussion and we feel we have addressed it in the 
bill.
    Mr. Rogers. But there is that at least gap on operating 
codes is there not? How would they--I mean you are going to put 
a piece of equipment in there that was going to trigger 
warranty--you are going to create more problems than you solve 
by if they do not have operating codes, they will in fact set 
off these warning signals. I mean that is a real problem, isn't 
it?
    Mr. Parde. It potentially could be. Again, we have people 
on the next panel that will be better to answer that question.
    Mr. Rogers. As long as we can agree that is a problem and 
that is a debate at least we should have about what 
intellectual property is infringed on in this bill, at least 
the potential could be. And we want to do this right. We do not 
want to take anyone's intellectual property, right?
    Mr. Parde. We are only asking for what the dealers are 
getting. If the dealers are getting information then it is not 
proprietary so that is all we are asking for.
    Mr. Rogers. Yes, but if you are you are allowing folks to 
use elect parts and some of those parts have these operating 
codes, you would have to get the operating code not to set off 
the warning signals and if you do that, we--you are asking for 
them to give proprietary intellectual property that would in 
fact allow an accelerated reverse engineering process.
    Mr. Parde. I do not believe that is the case. I mean that 
is not what we are looking for. That is not what we are asking 
for.
    Mr. Rogers. Well at least that is not what you are looking 
for then maybe there is some room to fix it but it is 
absolutely wide open in this bill and that is why we should be 
very careful about trying to introduce a bill and push a 
solution to where we are not quite sure there is a problem yet. 
But I appreciate where you are coming from. I think we are on 
the same sheet of music. I do not think you want to go there. I 
certainly do not want to go there. I think it is wide open in 
this bill to get there and we ought to be really careful about 
how we look at that language.
    Mr. Parde. I would agree with that. I mean we again we are 
not after proprietary information. If we need to strengthen the 
language in the bill to make everybody satisfied or have a 
comfort level with it we would be willing to do that.
    Mr. Rogers. Thank you, sir.
    I would yield back, Mr. Chairman.
    Mr. Stearns. The gentleman yields back.
    Mr. Green?
    Mr. Green. Thank you, Mr. Chairman. I apologize for not 
being here earlier. I would like to ask unanimous consent to 
place a statement in the record.
    Mr. Stearns. So ordered.
    Mr. Green. Just from listening in my office briefly in the 
hearing, I know there is frustration of a lot of members. And 
most of us want to get to the point where, you know, when I buy 
a new car, that car is mine except for when I am paying the 
notes on it but I ought to be able to take it wherever I want 
to to have it fixed. And I know we are trying to split the baby 
in half maybe but that is what we are trying to do.
    And Mr. Stanton it seems like both sides say that there 
would not be a problem with adding members to the board. Would 
you think that if we added members that may be brought in as 
Mr. Kohm said that it would help with making those decisions? 
And I am concerned about supermajorities, too. I know we always 
want unanimous support but adding new board members that are 
not part of the aftermarket or part of the automobile 
manufacturers.
    Mr. Stanton. Absolutely, I said--we said earlier we would 
take back to our members the idea of a totally independent 
board. We definitely would consider that. We would like the 
opportunity to consider that an actuality.
    Mr. Green. Mr. Parde, what do you think about that? Would 
it be more of an independent board instead of having 
representatives on both sides on it?
    Mr. Parde. I think we would, you know, we would consider 
that.
    Mr. Green. Do we need to do legislation for that?
    Mr. Stanton. No, sir.
    Mr. Green. And I am a cosponsor and like the Chairman said, 
you know, Congress does not really need to do this if the 
industries can sit down and do it. And there is a line you have 
to cross. I know that I want to protect patents and innovation, 
and everything else but when you sell that product to someone 
they also have the freedom, should have the freedom to be able 
to come to the dealer or go to whoever. And I think that is 
what we are doing and I think if anything you get out of this 
hearing, unless the industries can work it out for the benefit 
of the consumers in general, then I think you will see this 
bill moving and it would be much cheaper if you all sat down 
and worked it out among yourselves because I tell my 
constituents once Congress gets in, you know, no telling what 
will come out. We are the only thing in the world that can make 
an elephant out of a giraffe. So there is a good Texas saying 
about our country western song about thank God for unanswered 
prayers. If--you might want to do this together working it out 
because if Congress does it then, you know, you may not like 
what--no side may like what we end up with.
    So Mr. Chairman, I thank you for the time and thank you for 
calling the hearing. I was hoping we would have more success 
after the legislation last session and the hearings we had that 
we would have a solution that may be non-legislative but if not 
I will be glad to continue to co-sponsor and work with Chairman 
Barton.
    Mr. Stearns. Would the gentleman just yield before your 
closing?
    Mr. Green. Be glad to.
    Mr. Stearns. Mr. Kohm, Mr. Green touched upon this 
independent board. If Congress we structured this and asked you 
to do it, you could do this, you could set up an independent 
board, right? Do you have the resources and the manpower to do 
this?
    Mr. Kohm. I do not know that we have ever done that before. 
We would have--I would have to go back and talk to people at 
the FTC and see if we could. I think it would be optimal if the 
parties chose those neutral board members so that they all 
truly believed they were neutral.
    Mr. Stearns. Well it might be helpful for you to start 
thinking about it in lieu of legislation and maybe another step 
would be for you to propose to us how an independent board 
would be structured, you would appoint them, and then we would 
come back to you with the instruction to do the same.
    Mr. Kohm. We will certainly--I will certainly go back----
    Mr. Stearns. Okay. I yield back to the gentleman, Mr. Green 
and any additional----
    Mr. Green. I yield.
    Mr. Stearns. Okay. Mr. Deal is recognized.
    Mr. Deal. Thank you, Mr. Chairman.
    Mr. Stanton, there have been testimony, there has been 
testimony here that certain parts of what you were trying to 
negotiate have actually be agreed to. Have those provisions 
that were agreed to actually been implemented?
    Mr. Stanton. I said in my testimony that to the--there was 
a lot that was agreed to that was part of the overall program 
but what was agreed to as far as providing service information 
is happening today. Regarding tool and tool information, the 
vast majority of what was promised there is happening today as 
well. The manufacturers made the commitment to do that.
    Mr. Deal. Mr. Parde, do you agree with that assessment?
    Mr. Parde. No, I do not.
    Mr. Deal. What is--from your perception what is, what has 
not been implemented that was agreed to in the negotiations?
    Mr. Parde. I do not believe any of it has been implemented 
that was agreed to in the negotiations at this point.
    Mr. Deal. Okay. With regard to the magnitude of the 
problem, I believe some testimony was that there had only been 
50 inquiries received through NASTF and that there were some 
500 million non-warranty service transactions last year. Do you 
have any indication, Mr. Parde, as to the magnitude of the 
number of problems or instances in which the roadblocks exist 
now in trying to get vehicles repaired?
    Mr. Parde. That is a tough number to get your hands around 
but, you know, we hear consistently about problems on a daily 
basis. You know, again going back to the NASTF situation and 
why there are so few complaints, we think that is because again 
people just do not trust the system, they do not believe in the 
system as it exists today. I will give you example of that 
going back to 2002 before Senate Committee, the Commerce 
Committee on this legislation or similar legislation. ASA who 
now is opposed to this legislation but at the time supported 
it, testified in that hearing that there were 161,437,500 
rejected incidents of non-repair that year while at the same 
time NASTF showed less than 100 complaints going on at the same 
time. So you have ASA saying over 161 million incidents of non-
repair but NASTF only received 100 complaints.
    Mr. Deal. Mr. Stanton, do you want to respond?
    Mr. Stanton. Yes, we got into this at length and I think 
that is part of the big problem that we are having here is how 
big of an issue are we really working with. But as a result of 
the EPA regulations, the manufacturers have to create their own 
websites and this is another place for technicians to find 
independent--or to find service information. And our 
manufacturers are not getting the hits on their websites so in 
the negotiations I went to one of them that has double digit 
market share and they have a grand total of 16 annual 
subscriptions, 16 monthly or excuse me, 16 monthly on a daily 
basis which goes from 24 to 72 hours, they are averaging about 
100 a month. Out of, you know, a half a billion repairs, that 
is not much use.
    Mr. Parde. Again, I think that goes back to the trust 
issue. There is not--some of the websites are hard to navigate 
with, some of them are extensive, some of them are hard to get 
into. And you have cases where, you know, independent repairs 
will find their own way to try to get the information however 
they can get it. Some of them are getting a lot of the 
information from friends that work at dealerships or under the 
table. They are not going to take the time to go onto a website 
that may take them quite a while to try to even find the 
information.
    So again, it is back to the effectiveness of this and how 
it works and how it operates. And you do not have a large, 
excuse me you do not have a large segment of the aftermarket 
industry that supports it right now. There is one organization 
out of 49 or actually there are 49 groups that support this 
legislation. Out of those 49, 42 of them are after market 
groups and one that does not support this legislation and those 
groups, you know, are simply not participating at this point.
    Mr. Deal. Mr. Kohm, does the FTC have any proposal as to 
how to resolve the issue of the scope of the information that 
should be made available? Have you come up with any proposal 
there?
    Mr. Kohm. No, we do not, Congressman.
    Mr. Deal. At some point, somebody has got to make that 
decision either by agreement or legislatively. Are there 
concerns that have not been raised here in the testimony thus 
far that--about that scope of information that you would like 
to comment on?
    Mr. Kohm. No, Congressman, I think through the negotiations 
this summer and through the testimony that you have now heard 
exactly what we heard this summer. That I think that there is 
some considerable agreement on the provision of information, 
that there is some considerable disagreement on the provision 
of tool information, although the parties were willing to send 
that into a NASTF process if they could formulate such a 
process that they both agreed on and that seems like a workable 
solution.
    Mr. Deal. Mr. Chairman, my time has expired.
    I would yield back.
    Mr. Stearns. The gentleman yields back.
    Mr. Rush?
    Mr. Rush. Thank you, Mr. Chairman for this hearing. I 
really want to comment the response of this legislation for the 
outstanding work that needs done on this particular issue.
    And as I heard the chairman of the full committee, Mr. 
Barton ask his questions and as I heard the response and as 
they say my children, young children say sometimes I began to 
feel him and I was drawn to or it reminded me rather of my 
mother and some of my young days with my mother. Invariably 
when I was not doing things to please her, she would always say 
a word to the wise should be sufficient. And when I did not 
bring good grades home or I was calling in school she would 
look at me and with a stern face and very firmly say a word to 
the wise should be sufficient. Staying out to late, a word to 
the wise should be sufficient. And I did not realize the 
meaning of that or I did not take it seriously until I 
continued in my ways and the punishment was a consequence or 
the firmness was a consequence. I did some things that I did 
not want her to do or did not like her doing to me. And I just 
think that for this--for those who are here, the automobile 
industry, a word to the wise should be sufficient.
    I want to also say that there is a--and I do not want to 
offend anybody but my colleague from Texas indicated that there 
was a song but there is another song that brought--that 
brings--that I am reminded of and it is--and again I do not 
want to offend anybody but it just keeps reverberating in my 
head, you know, it is cheaper to keep her. And I think it is 
also would be much cheaper for the industry to handle this 
issue themselves without the Congress intervening and without 
this committee intervening. It would much, much cheaper for you 
and you would have probably a more successful experience with 
each other than with the Congress with this committee.
    I am concerned about the disparate impact that this may 
have on small minority businesses. As you know, a self 
regulating model and we talked about the self regulating model 
and Mr. Kohm, my question is directed to you. A self regulated 
model would be best but I am concerned about the time. The time 
is of the essence and my small business constituents cannot 
wait for you all to really work this thing out. And so my 
question is without an independent board, how can we be assured 
that minority owned dealers, minority owned repair shops, and 
minority consumers would be adequately protected without having 
this independent board to oversee this process?
    Mr. Kohm. Well Congressman, the optimal solution we believe 
is an approach that is flexible and an approach that allows for 
a speedy decision that helps those independent businesses in 
the marketplace actually repair cars and that a self-regulatory 
model is one that has that flexibility and that would contain 
the speed necessary so that repairs could actually get made. 
The problem with the court process is it is long, it is 
expensive, it is drawn out and does not provide those pieces 
that are necessary for small business.
    Mr. Rush. Well, Mr. Cole, I think, might be able to address 
this. This is regarding an unrelated issue from the matter of 
concerns right here but it is something that still is important 
to my constituents. And I am getting complaints and I am not 
sure if it is warranted or not but I am getting complaints from 
my constituents that there are codes that is embedded in the 
computers in these, in some of these vehicles that can be 
disabled or immobilized to allow these vehicles to be 
immobilized if for say late payment or non payment of car 
notes. You know in this area of really trying economic times 
when someone might fall a month or 2 months behind on their car 
notes, are you aware of technology that will allow the lender 
or someone to immobilize their car so that an individual cannot 
go to work or if they are in an emergency situation need the 
car and cannot--how is that emergency--are you aware of any 
type of technology that currently exists that will allow a 
third party to immobilize a vehicle for non-payments or any 
other reason?
    Mr. Cole. I do not have any information on that other than 
I have read that same--in the media I had seen reference----
    Mr. Rush. Is there any witness here who might have any 
insight into this technology?
    Mr. Stanton. Mr. Rush limited. I think that technology does 
exist and generally though it is used for law enforcement and 
then it is even used very, very judiciously and obviously you 
do not want to stop a moving vehicle but I think the technology 
is out there in limited scope.
    Mr. Rush. So this, you know, so the complaints does have 
some merit in other words that I am getting?
    Mr. Stanton. A little bad comes with the good maybe.
    Mr. Rush. Okay. All right, Mr. Chairman, I yield back.
    Mr. Stearns. Yields back.
    Mr. Bass?
    Mr. Bass. Thank you, Mr. Chairman.
    This is a thorny little issue. I feel like I am moderating 
sort of a fistfight here.
    Mr. Stearns. I know what you mean.
    Mr. Bass. Mr. Stanton, is there anything at all in this 
bill that you support?
    Mr. Stanton. We do not think that there is a need for 
legislation.
    Mr. Bass. At all, not anything, we do not need to do a 
thing, nothing?
    Mr. Stanton. We need to solve the problem of making sure 
that all of the information is out there. That the tool 
information is there, that the tools are there and we are 
working to do that and we think that it is better done on a 
voluntary basis cooperatively than it is through legislation.
    Mr. Bass. And what makes you think if it is done on a 
voluntary basis that anything is going to happen that has not? 
It has not worked so far, why is it going to work in the 
future?
    Mr. Stanton. I think it is working. I do not think there is 
any question that from the time of 2000 when the NASTF was 
created to 2002 when we made our commitment to the 
implementation of the EPA regs that the information is getting 
out there.
    Mr. Bass. Okay. There is no representative here now from 
the repair stations. That is the second panel. Is that correct? 
How about the dealers? Is that the second panel also? Okay, we 
will defer those questions then because I want to find out what 
it means to be a dealer because there are costs associated with 
the title of being an authorized dealer and I assume you have 
access to special training and people from the manufacturers 
come and show you and so you pay, you have a higher overhead 
and there are more costs associated with the operation of your 
facility and in return for that, you have to charge more per 
hour to fix a car but presumably you can boast at least that 
you have a better, you offer a more reliable repair service 
because you focus only on the specific make. There--Mr. Parde, 
is it Parde, is that how you pronounce your last name?
    Mr. Parde. Parde.
    Mr. Bass. Parde, Mr. Parde, you represent the aftermarket 
parts manufacturers, correct, NAPA, that kind of thing?
    Mr. Parde. They are not manufacturers. None of our 
companies manufacture parts.
    Mr. Bass. Okay. And the auto manufacturers are concerned 
that you might have access to proprietary drawings and that 
sort of thing. Is that correct?
    Mr. Parde. I believe that is one of their arguments, yes.
    Mr. Bass. And----
    Mr. Parde. That is simply not the case. Again----
    Mr. Bass. Why is that?
    Mr. Parde. Well again, we do not manufacturer the parts, we 
sell parts, we also do service on vehicles. We do not make the 
parts. We would not know what to do with the information. I 
mean we are not after proprietary information. We do not need 
it and we have stated so in the bill and we have stated so in 
public and we will continue to say so. And if there is, you 
know, if the manufacturers wish to work with us on language 
that would make them feel better and then be willing to then 
support the bill if that language is put in, we would be happy 
to do that.
    Mr. Bass. When you sell parts, don't you--the parts for a 
specific brand name of car, do you have to pay anything to the 
manufacturer for--to say it works on a Ford, or a Chevy, or a 
Chrysler or it is only if you have the logo of the company on 
the part?
    Mr. Parde. Any of the parts that we sell at our stores are 
manufactured by the same people who manufacture the parts for 
the manufacturer. Many of our parts are boxed with the name of 
the company or many of our stores offer both what is considered 
an original part and a generic part so.
    Mr. Bass. Okay. Mr. Stanton, do--I apologize, you may have 
answered this already but do repair stations outside of 
environmental issues and security issues which we have 
discussed, do the repair stations have access to all of the 
same software that the dealers do?
    Mr. Stanton. Outside of the security issues, yes, and that 
was our commitment.
    Mr. Bass. And--all right. Amongst other concerns in this 
bill, you are worried about on Page 5, Line 6, manufacturer's 
disclosure requirements that repair stations have access to the 
same diagnostic tools and capabilities. Is that a concern and 
what is the nature of that concern?
    Mr. Stanton. Well our construct of the bill which is better 
than the last Congress still does not solve the intellectual 
property issues. The findings are I guess if true, the FTC 
would probably already be taking issue with us. It requires the 
aftermarket parts be accommodated and then combine that with 
the terms of capabilities in Section 3, you end up with the 
possibility of someone interpreting the fact that you would 
have to provide the information for aftermarket parts used in 
vehicles which gets right to the intellectual property issues.
    Mr. Bass. Okay. My time has expired. I am not sure I am any 
further along this than I was before but it has been helpful, 
thanks.
    Mr. Stearns. The gentleman yields back.
    Ms. Myrick?
    Ms. Myrick. Well like others who have already stated, I 
would prefer that you all worked this out among yourselves 
rather than Congress getting involved because we do complicate 
things.
    Mr. Stanton. Yes.
    Ms. Myrick. And who knows what the end result is going to 
be. But when I sit here and listen to what I have heard so far 
this morning, you know, Mr. Stanton you say you are giving 
everything that they need and of course we know the emissions 
information is mandated by EPA and that is on the websites and 
so forth. But, you know, if--technically it seems like if you 
were giving everything that was needed that we would not be 
here today because the other people would not be saying well we 
do not have what we need to do the job. So I will listen more 
but it concerns me, you know, and Ms. Schakowsky, I know 
suggested maybe setting up something different relative to a 
panel that could come to some conclusions but I hope you will 
seriously consider something like that because in all honesty 
it is not always good when Congress gets involved. I mean if we 
have to do the job we will. I think you have heard the 
frustration of most of the people who have spoken about Joe 
saying 4 years this has been going on and we want to get it 
solved. I mean, you know, it is kind of like enough is enough. 
So the more help you can give independently without us having 
to do it, the better off you all are going to be.
    Oh, and I yield back.
    Mr. Stearns. The gentlelady yields back.
    Ms. Blackburn?
    Ms. Blackburn. Thank you, Mr. Chairman and I thank all of 
you for being here and for your time.
    I agree with everybody else. I wish you all could just 
agree to get along and work it out yourselves.
    Mr. Parde, I do want to talk with you for just a moment. 
You just made a statement a few moments ago that we just--
regarding the aftermarket parts and the intellectual property 
that is used in those parts. And you said well if we had the 
information we would not know what to do with it. And I would 
caution you sir, or ask you to use caution there are lots of 
people out there that would know exactly what to do with that 
information.
    Now when I was in the State Senate in Tennessee, I 
represented a little place called Spring Hill with a little 
plant called Saturn, part of GM. I live in Williamson County, 
Tennessee and we expect to have a new constituent called 
Nissan. So I will caution you, sir, that in my life as a 
marketer and in my private life before coming to Congress, I 
did a good bit or work with the retail industry and I saw 
intellectual property and piracy and theft decimate an 
industry. I represent the world's largest community of 
songwriters and it just kills me to see what intellectual 
property theft is doing to that industry. Information on the 
wrong hands does great damage to the U.S. economy and I would 
just ask you, please to be aware of that.
    Now with that said, have a tremendous number of shade tree 
mechanics and small repair shops that make up my wonderful 
district that goes from Nashville to Memphis, Tennessee, Mr. 
Stanton do you--we have talked a lot about information and I 
question your response on your website with saying you have 
only had the 50 inquiries. I think availability, ease of access 
to information, those things are very important. And I would 
want to know, I want to hear from you if I have a shop in 
Summer, Tennessee that is trying to repair a 2005 Mountaineer 
are they going to be able to get the information, the tools 
easily accessible so that those owners of that vehicle are not 
forced to drive to either Jackson or Memphis or Nashville? Are 
they guaranteed that they can do that?
    Mr. Stanton. There is not a guarantee but if they have a 
2005 vehicle it should be covered under warranty and other than 
routine service would go back to the dealer anyway. I know we 
have had this discussion before and your shade tree mechanics 
would encourage that as well. Under the EPA guidelines though 
once a vehicle is out in the marketplace for 6 months, all of 
the emissions information has to be made available, tools have 
to be made available Ms. Blackburn. Okay, all right. I get the 
drift.
    Mr. Stanton. Okay.
    Ms. Blackburn. Thank you, sir.
    Watching my time here, Mr. Kohm, looking at this from 
consumer protection is there anything that you view as anti-
competitive in the current market or would you foresee with the 
growth of technology future anti-competitive behavior if the 
current regulations are not changed?
    Mr. Kohm. I do not know that I can see to foresee the 
future in a rapidly changing market. However this is a market 
with a number of competitors and no collusion that we know of. 
That seems like an official----
    Ms. Blackburn. That is all I want to know.
    Mr. Cole, I wish you well. You have a big job. And I 
thought it was interesting in your testimony it looks like that 
you feel like there was progress on the first and second steps. 
Am I correct in that? And the third--so just let me ask you 
that.
    Mr. Cole. Yes.
    Ms. Blackburn. So by saying, making your statement in your 
testimony about the first and second steps, I assume that you 
believe that there is agreement or resolution that could be 
arrived at there.
    Mr. Cole. I do, let me clarify. The assignment originally 
given was characterized can you help facilitate the creation of 
the dispute resolution program. That took very little time to 
do. But the parties were smart enough to realize that the NASTF 
process and how that was governed was as important and so all 
the discussion about the independent board or another kind of 
board and all those conversations we have been having are about 
a set of issues that were not on the table before.
    Ms. Blackburn. Okay. My time has expired. I will just say I 
really do honestly believe you all would like to resolve this 
yourselves and not have us resolve it for you so I wish you all 
well.
    Mr. Chairman, I yield back.
    Mr. Stearns. The gentlelady yields back. If not, we will 
now thank the Panel #1 and ask the members of Panel #2 to come 
forward. I thank you folks.
    Panel #2 we have John Nielsen, Director AAA Auto Repair 
Network; Mr. Steve Brotherton, President of Continental 
Imports. He is here on behalf of the automobile, the Automotive 
Service Association. Mr. Robert Everett, Owner, Bayville Auto 
Care on behalf of the National Federation of Independent 
Business; Mr. John Cabaniss, Director, Environmental Energy 
Association of International Automobile Manufacturers; Mr. 
Aaron Lowe, Vice President, Government Affairs, Automotive 
Aftermarket Industry Association; and finally Mr. Robert 
Braziel, Chief Legislative Counsel, National Automobile Dealers 
Association.
    Let me welcome each of you folks here and Mr. Nielsen, we 
will start out with your opening statement and just move the 
mike close to you and if you do not mind, just turn it on.

STATEMENTS OF JOHN NIELSEN, DIRECTOR, AAA AUTO REPAIR NETWORK; 
STEVE BROTHERTON, PRESIDENT, CONTINENTAL IMPORTS; BOB EVERETT, 
    OWNER, BAYVILLE AUTO CARE, INCORPORATED; JOHN CABANISS, 
 DIRECTOR, ENVIRONMENT & ENERGY, ASSOCIATION OF INTERNATIONAL 
  AUTOMOBILE MANUFACTURERS, INCORPORATED; AARON M. LOWE, VICE 
PRESIDENT, GOVERNMENT AFFAIRS, AUTOMOTIVE AFTERMARKET INDUSTRY 
  ASSOCIATION; AND ROBERT BRAZIEL, CHIEF LEGISLATIVE COUNSEL, 
            NATIONAL AUTOMOBILE DEALERS ASSOCIATION

    Mr. Nielsen. Thank you, Mr. Chairman.
    I am pleased to be here today on behalf of AAA in support 
of H.R. 2048, the Motor Vehicle Owners' Right to Repair Act.
    My name is John Nielsen. I am the director of AAA's Auto 
Repair Network and my primary responsibility in that role is to 
make certain that AAA members are able to locate quality repair 
facilities that can quickly and efficiently service their 
vehicles at a reasonable and competitive cost. I coordinate the 
objective inspection and approval of a network of more than 
7,500 repair facilities. These represent both new and non-new 
car dealerships. We have independent and aftermarket.
    AAA has represented the interests of car owners for over 
100 years and currently serves more than 48 million members. 
That represents one quarter of U.S. households. We support 
Right to Repair as a necessary measure to ensure our members' 
safety and their access high quality, convenient, and 
competitively priced auto repair.
    In supporting this bill, AAA's goal has been to ensure that 
manufacturers make service and training information, as well 
as, the appropriate diagnostic tools available to any repair 
facility not just those franchised dealers. Ideally, this 
should occur voluntarily and we were disappointed that the 
issues associated with right to repair could not be resolved 
through self-regulating programs. Absent that we remain 
committed to the need for legislative action.
    Our members and many independent repair facilities in AAA's 
approved auto repair network continue to tell us of instances 
where technicians do not have the information or tools they 
need to fix today's vehicles. It is difficult to quantify the 
extent of a problem because a customer focused repair shop will 
always find a way to take care of their customer and not lose 
them forever.
    In many cases, the problem is transparent the shop is 
taking care of the problem whether they are going to a 
dealership and paying under the table for information, whether 
they are actually taking the car to the dealership for 
information remains transparent to the consumer. But the fact 
that the independent technicians have to go through a number of 
steps, some of them certainly not what we would consider 
normal. It is not in the consumer's best interest.
    Problems do persist and customers are denied choice among 
quality and qualified repair options. They are inconvenienced 
and regrettably some AAA members are left with no choice but to 
drive their vehicle long distances for repairs and service. 
Consumers are essentially denied something they buy when they 
drive their new car off of the lot and that is access to the 
data necessary to get their vehicles repaired.
    AAA's support for the Right to Repair Bill is based on 
three simple yet very important objectives. The first is 
consumer choice, the second is vehicle safety, and the third is 
the right of car owners to access or have access to the data 
generated by their vehicles. Despite some positive steps toward 
making more information available to independent repair 
facilities much of what is provided is incomplete, difficult to 
find, or prohibitively expensive. As a result, instead of 
fixing the problems themselves, some repair technicians are 
forced to put customers back out on the road searching for a 
dealer shop that may not have an available appointment, may not 
be nearby, or may not even be opened.
    Many of our members prefer to use dealer facilities. In no 
way do we say that aftermarket or dealer is a better solution. 
But as I say, many of our members choose dealer facilities and 
many choose the services offered by independent facilities. AAA 
believes our members deserve and need choice to ensure good 
quality service and a fair price in auto repair. And this can 
only occur if all facilities have access to the same 
information and tools.
    Technology has made the vehicles we drive smarter. More 
than 80 percent of the systems on some cars are monitored or 
controlled by a computer. Computers in the car can tell us of 
the need of an oil change, trouble with an oxygen sensor, or 
problems with brakes, and even if our tire pressure is too low. 
And it can do this before there is actually a problem with a 
vehicle. It makes sense that the information necessary to 
diagnose and repair any of these problems should be available 
to all repair technicians both within and outside of the 
dealer's network.
    These days it is hard to mention this issue without someone 
telling you of their own experience with a repair problem. I 
would like to present you with a scenario that typifies what we 
hear. Imagine traveling on a Saturday afternoon, the dashboard 
light comes on in your vehicle and warns you that there is a 
malfunctional problem with your antilock braking system. You 
stop at the first service station and ask for help. The 
technician checks the vehicle and determines the vehicle is not 
mechanical but rather is an electrical system that he does not 
have access to. The closet dealer for that make of car is 25 
miles away. And by the way, it will not open until Monday 
morning. Is it safe to keep driving the vehicle on your trip or 
should you drive it to the repair shop and wait until Monday. 
Or really is it safe to drive at all, should you simply have a 
tow truck pick it up and take it to the shop. Can the dealer 
service the car Monday or are they booked until midweek?
    This situation could just have easily involved supplemental 
restraints, electronic traction and stability control, airbags, 
et cetera. Each has the potential to compromise the safety of 
the vehicle's owner and the vehicle's passengers, as well as, 
other motorists. At the same time, the inability of independent 
technicians to repair comfort features like climate control may 
not create dangerous situations but they can certainly cause 
inconvenience for motorists.
    AAA believes that when you drive off the lot with your car, 
you own more than just the vehicle, you own the information 
necessary to have it repaired by a trusted service provider of 
your choosing. That is why there is an independent technician 
or a dealership. To the extent that the manufacturers contend 
that certain information is not available because it should be 
considered intellectual property, we need to look no further 
than the clear language of H.R. 2048 which states that 
manufacturers do not have to disclose any propriety design 
information. At the same time, whether it is viewed as 
intellectual property or real property, this repair information 
is really the property of the car owner.
    Simply put, this legislation is about putting common sense 
into the repair process, ensuring that consumers get a choice 
in repair service whether they choose a dealership or an 
independent shop.
    I thank you very much for the opportunity to share AAA's 
views on this important issue. I would be happy to answer any 
questions.
    [The prepared statement of John Nielsen follows:]
 Prepared Statement of John Nielsen, Director, AAA Auto Repair Network
    Thank you, Mr. Chairman and members of the subcommittee. I am 
pleased to be here today on behalf of AAA in support of HR 2048, the 
Motor Vehicle Owners' Right to Repair Act.
    My name is John Nielsen. I am the director of AAA's Auto Repair 
Network. My primary responsibility is to make certain AAA members are 
able to locate quality facilities that can quickly and efficiently 
service their vehicles at reasonable cost. I coordinate the objective 
inspection and approval of a network of more than 7500 AAA-approved 
repair facilities that are both franchised new car dealerships and 
independently-owned repair shops.
    AAA has represented the interests of car owners for over 100 years, 
and currently serves more than 48 million members' a quarter of all 
U.S. households. We support Right to Repair as a necessary measure to 
ensure our members' safety, and their access to high quality, 
convenient, and competitively priced auto repair.
    In supporting this bill, AAA's goal has been to ensure that 
manufacturers make service and training information, as well as the 
appropriate diagnostic tools, available to any repair facility, not 
just those in a franchised dealer network. Ideally, this should occur 
voluntarily. We were disappointed that the issues associated with Right 
to Repair could not be resolved through a self-regulatory program. 
Absent that, we remain committed to the need for a legislative 
solution.
    Our members and many independent repair facilities in AAA's 
approved auto repair network continue to tell us of instances where 
technicians do not have the information or tools they need to fix 
today's vehicles. It's difficult to quantify the extent of the problem 
because a customer-focused repair facility always will find ways to 
work around a situation in order to minimize customer frustration. In 
many cases the problem is transparent to the consumer. But the fact 
that independent technicians frequently have to go through multiple 
steps searching for information they need to repair a customer's car is 
not in the consumer's best interest.
    Problems do persist and consumers are denied choice among qualified 
repair options; they are inconvenienced, and regrettably some AAA 
members are left with no choice but to drive their vehicle long 
distances for repairs. Consumers are essentially denied something they 
buy when they drive their new car off the lot--access to the data 
necessary to get their vehicle repaired.
    AAA's support for the Right to Repair bill is based on three 
important objectives: consumer choice, vehicle safety, and the right of 
car owners to access the data generated by their vehicle.
    Despite some positive steps toward making more information 
available to independent repair facilities, much of what is provided is 
incomplete, difficult to find, or prohibitively expensive. As a result, 
instead of fixing the problem themselves, some repair technicians are 
forced to put customers back out on the road searching for a dealer 
shop that may not have an available appointment, may not be nearby, or 
may not even be open.
    Many of our members prefer to use dealer facilities. But, many 
choose to use the services of independents. AAA believes our members 
deserve and need choice to ensure good quality service and a fair price 
in auto repair. This can only occur if all facilities have access to 
the same information and tools.
    Technology has made the vehicles we drive smarter. More than 80% of 
the systems on some cars are monitored or controlled by a computer. 
Computers in the car can tell us about the need for an oil change, 
trouble with an oxygen sensor, problems with brakes, and even if our 
tire pressure is too low--before there is a problem or critical safety 
breakdown. It makes sense that the information necessary to diagnose 
and repair any of these problems should be available to all repair 
technicians, both within and outside of dealers' networks.
    These days, it is hard to mention this issue without someone 
telling you of their own experience with a repair problem. Here is a 
scenario representative of what we hear: Imagine traveling on a 
Saturday afternoon. The dashboard light comes on warning of a 
malfunction with the antilock brake systems. You stop at the first 
service station and ask for help. The technician checks the vehicle and 
determines the problem is not mechanical, but rather, is in an 
electrical system only the dealer has access to. The closest dealer for 
your make of car is 25 miles away and won't open until Monday morning. 
Is it safe to keep driving the car on the trip? If not, is it safe to 
drive the car to the dealer and wait until Monday, or do you need a tow 
truck to pick up the car? Can the dealer service the car Monday, or are 
they booked until later in the week?
    This situation could just as easily have involved the supplemental 
restraint system, or the electronic traction and stability control 
system. Each has the potential to compromise the safety of the 
vehicle's owner and passengers and other motorists as well. At the same 
time, the inability of independent technicians to repair ``comfort 
features'' like climate control may not create dangerous situations, 
but they can certainly cause inconvenience for motorists.
    AAA believes that when you drive off the lot with your car, you own 
more than just the vehicle; you own the information necessary to have 
it repaired by a trusted service advisor of your choice, whether it is 
an independent technician or dealership. To the extent that the 
manufacturers contend that certain information is not available because 
it should be considered intellectual property, we need to look no 
further than the clear language of HR 2048, which states that 
manufacturers do not have to disclose any proprietary design 
information. At the same time, whether it is viewed as intellectual 
property or real property--this repair information is really the 
property of the car-buyer.
    Simply put, this legislation is about putting common sense into the 
repair process, ensuring that consumers get a choice in repair service, 
whether they choose a dealership or an independent.
    Thank you for the opportunity to share AAA's views on this 
important consumer issue. I will be happy to answer any questions at 
this time.

    Mr. Stearns. Thank you.
    Mr. Brotherton, welcome.

                  STATEMENT OF STEVE BROTHERTON

    Mr. Brotherton. Good morning, Chairman Stearns, Members of 
the subcommittee, my name is Steve Brotherton.
    Mr. Stearns. I just need you to turn your mike on and just 
pull it a little bit closer to you if you do not mind. Yes, 
perfect.
    Mr. Brotherton. Again, my name is Steve Brotherton. I am 
the President and owner of Continental Imports in Gainesville, 
Florida. I have owned my own repair facility since 1978. We are 
a European specialty shop servicing mainly Mercedes and BMW. I 
hold a Bachelor of Science from the University of Florida in 
Metallurgical Engineering and have served as President of the 
Automotive Service Association's local chapter in Gainesville, 
Florida. I am a contributing editor for Import Car Magazine and 
serve as Vice President of the IAI BMW SP, an internet 
technician group for BMW's.
    I am here representing the Automotive Service Association, 
our national trade association. ASA is the oldest, largest 
trade organization in the automotive industry with the 
distinction serving only businesses that perform service and 
repairs for the motoring public. ASA's Board of Directors is 
made up of independent repair shop owners, small business men 
and women. I repair automobiles.
    ASA has testified before the Congress including this 
subcommittee on several occasions regarding the automotive 
service information issue. Prior to the fall of 2002, we 
believed there was a problem in obtaining service information 
from automotive manufacturers. In September 2002, ASA signed a 
voluntary agreement with the Automotive Service Manufacturers 
asserting the same emissions and non-emissions related service 
information, training information, diagnostic tools as provided 
franchised new car dealers. The automakers have kept this 
commitment in my estimation. Reports from the aftermarket 
equipment and tool industry indicate that our industry is 
receiving more technical information from automakers than ever 
before.
    In order to deal with issues that may arise with service, 
training, and tool information, the automotive industry 
established the National Automotive Service Task Force, NASTF. 
This inclusive voluntary organization involves automakers, 
independent repair shop owners, technicians, aftermarket 
information providers, trainers, aftermarket manufacturers, 
distributors and others interested in moving our industry 
forward. The NASTF meets twice a year. Committees specializing 
in problem solving work throughout the year on issues such as 
NFS systems, service information, training, communication and 
tool information.
    At the NASTF's meeting during the automotive industry week 
this past week, participants voted overwhelmingly to set up a 
formal structure and hire professional staff for the NASTF. 
There were more than 200 attendees at the NASTF meeting. Last 
year NASTF received 48 complaints regarding service, training, 
and tool information. All 48 complaints were resolved. Please 
notes these--I also put two of those complaints. Please note 
that these complaints pale in the light of the 451 million 
repairs handled by independent repairers each year. Independent 
repairs perform 75 percent of automotive repairs. Typically 
these repairs occur after the vehicle warranty period has 
expired.
    ASA participated in the recent Better Business Bureau 
meetings arranged by the Federal Trade Commission on service 
information. ASA found the meetings productive and was sorely 
disappointed when the talks did not result in resolution of the 
right to repair debate. ASA believes the October 3, 2005 Better 
Business Bureau letter to the FTC is an accurate depiction of 
the discussions. ASA agrees that the resolution was possible on 
core issues such as strengthening and new funding of the NASTF 
process; remedies for a third party dispute resolution 
framework; timeframes for problem resolution; and dispute 
resolution procedures.
    ASA references the restructuring and governance issues as 
the primary reason the talks failed. Auto parts distributors 
insisted that any NASTF board of directors be comprised of 50 
percent parts distributors and 50 percent automakers. This 
concerned ASA for several reasons. First, the principle 
participants in this debate should be independent repairers and 
automotive manufacturers not parts distributors. Second, NASTF 
is a voluntary industry organization. No closed facilitation 
process should dictate governance standards for any 
organization in existence for several years operating 
successfully. How frustrating it might be for those industry 
leaders toiling in the last several years to resolve industry, 
service, training, and tool concerns to learn that their 
lawyers, lobbyists, and Government bureaucrats who have not 
intended or participated in NASTF have now established a 
structure and board of directors for this same organization.
    I would advocate this morning that out industry, post Clean 
Air Act Amendment of 1990 had a serious service information 
problem. At the urging of congressional leaders, we met with 
our adversaries, the automakers, and realized we had more in 
common than we realized. We agreed on an industry solution 
after extensive dialog. Our September 2002 agreement has been 
successful. Is it perfect? No. With nearly 500 million vehicle 
repairs a year, the NASTF is a necessity for assuring that 
information gaps caused by new technology are resolved in an 
environment of problem-solving, not regulation and litigation.
    ASA believes we have an agreement with the automakers that 
is working in today's highly technical environment. The NASTF 
is an industry process allowing us to work together in an 
environment of problem solving versus regulation and 
litigation. Please allow us to continue to move our industry 
forward working together. We do not need Federal intervention 
in the service information issue. We should know we 
successfully repair vehicles every day and are the 
beneficiaries of these efforts.
    If our voluntary, industry service information process 
fails, we will be the first to be asking Congress--we will be 
the first to line up asking Congress' help. We see no signs of 
failure to date.
    Thank you for allowing us to testify again before your 
committee.
    [The prepared statement of Steve Brotherton follows:]
Prepared Statement of Steve Brotherton, Continental Imports, on Behalf 
                   of Automotive Service Association
    Good Afternoon Chairman Stearns, Members of the Subcommittee, my 
name is Steve Brotherton. I am the President and owner of Continental 
Imports in Gainesville, Florida. I have owned my own repair facility 
since 1978. We are a European specialty shop servicing primarily BMW's 
and Mercedes. I hold a Bachelor of Science from the University of 
Florida in Metallurgic Engineering and have twice served as President 
of the Automotive Service Association's (ASA) Local Chapter in 
Gainesville, FL. I am a contributing editor for Import Car Magazine and 
serve as Vice President of IAI BMW SP an internet technician group for 
BMW.
    I am here today representing the Automotive Service Association 
(ASA), our national trade association. ASA is the oldest and largest 
trade organization in the automotive industry with the distinction of 
serving only those businesses that perform service and repairs for the 
motoring public. ASA's Board of Directors is made up of independent 
repair shop owners, small business men and women. I repair automobiles. 
This is indicative of my business' mission statement and that of my 
trade association.
    ASA has testified before the Congress, including this Subcommittee, 
on several occasions regarding the automotive service information 
issue. Prior to the fall of 2002, we believed there were problems in 
obtaining service information from automobile manufacturers. In 
September 2002, ASA signed a voluntary agreement with the automobile 
manufacturers assuring the same emission and non-emission related 
service information, training information and diagnostic tools as 
provided franchised new car dealers. The automakers have kept their 
commitment. Reports from the aftermarket equipment and tool industry 
indicate that our industry is receiving more technical information from 
automakers than ever before.
    In order to deal with issues that may arise with service, training 
and tool information, the automotive industry established the National 
Automotive Service Task Force. This inclusive, voluntary organization 
involves automakers, independent repair shop owners, technicians, 
aftermarket information providers, trainers, aftermarket manufacturers, 
distributors and others interested in moving our industry forward. The 
NASTF meets twice a year, and committees specializing in problem-
solving work throughout the year on issues such as anti-theft systems, 
service information, training, communication and tool information. At 
the NASTF's meeting during Automotive Industry Week this past week, 
participants voted overwhelmingly to set up a formal structure and hire 
professional staff for the NASTF. There were more than 200 attendees at 
the NASTF meeting.
    Last year, the NASTF received 48 complaints regarding service, 
training and tool information. All 48 complaints were resolved. Please 
note that these complaints pale in light of the 451 million repairs 
handled by independent repairers each year. Independent repairers 
perform 75 percent of automotive repairs. Typically these repairs occur 
after the vehicle warranty period has expired.
    ASA participated in the recent Better Business Bureau (BBB) 
meetings, arranged by the Federal Trade Commission (FTC), on service 
information. ASA found the meetings productive and was sorely 
disappointed when the talks did not result in the resolution of the 
Right to Repair debate. ASA believes the October 3, 2005, BBB letter to 
the FTC is an accurate depiction of the discussions.
    ASA agrees that resolution was possible on core issues such as:
 Strengthening and new funding of the NASTF process.
 Remedies for a third-party dispute resolution framework.
 Time frames for problem resolution.
 Dispute resolution procedures.
    ASA references the restructuring and governance issue as the 
primary reason the talks failed. Auto parts distributors insisted that 
any NASTF Board of Directors would be compromised of 50% parts 
distributors and 50% automakers. This concerned ASA for several 
reasons. First, the principle participants in this debate should be 
independent repairers and automobile manufacturers, not parts 
distributors. Second, the NASTF is a voluntary, industry organization. 
No closed facilitation process should dictate governance standards for 
an organization in existence for several years, operating successfully. 
How frustrating it might be for those industry leaders toiling for the 
last several years to resolve industry service, training and tool 
concerns to learn that lawyers, lobbyists and government bureaucrats, 
who have not attended or participated in the NASTF, have now 
established a structure and Board of Directors for this same 
organization. The message would resonate throughout the automotive 
repair industry, ``We are the FTC and we are here to help.''
    I would advocate this morning that our industry, post Clean Air Act 
Amendments of 1990, had a serious service information problem. At the 
urging of congressional leaders, we met with our adversaries, the 
automakers, and realized we had more in common than we realized. We 
agreed on an industry solution after extensive dialogue. Our September 
2002 agreement has been successful. Is it perfect? No. With nearly 500 
million vehicle repairs a year, the NASTF is a necessity for assuring 
that information gaps caused by new technology are resolved in an 
environment of problem-solving, not of regulation and litigation.
    ASA believes we have an agreement with the automakers that is 
working in today's highly technical environment. The NASTF is an 
industry process allowing us to work together in an environment of 
problem-solving versus regulation and litigation. Please allow us to 
continue to move our industry forward, working together. We do not need 
federal intervention in the service information issue. We should know, 
we successfully repair vehicles everyday and we are the beneficiaries 
of these efforts.
    If our voluntary, industry service information process fails, we 
will be the first in line asking for the Congress' help. We see no 
signs of failure to date.
    Thank you for allowing us to testify again before your Committee.

    Mr. Stearns. Thank you, Mr. Brotherton.
    Mr. Everett?

                    STATEMENT OF BOB EVERETT

    Mr. Everett. Good afternoon. Mr. Chairman and members of 
the subcommittee, I am Bob Everett, owner of Bayville Auto Care 
in Bayville, New Jersey. I am here on behalf of the 600,000 
members of the National Federation of Independent Business. 
NFIB represents over 24,000 small automotive repair shops like 
mine and they strongly support H.R. 2048, the Motor Vehicle 
Owners' Right to Repair Act of 2005. When NFIB asked its 
members in January of 2003 if automobile manufacturers should 
be required to disclose to car buyers and repair shops 
information needed to repair or maintain their vehicles, 77 
percent of NFIB members said yes.
    In addition to the 24,000 NFIB members who own independent 
garages, there are many other small business groups that 
support H.R. 2048 including the Alliance of Automotive Service 
Providers, the service station dealers, the Tire Industry 
Association, and the automatic transmission rebuilders. 
Together, they and others bring over 30,000 additional small 
businesses to the table all in full support of H.R. 2048. I am 
also a member of the Automotive Service Association and I feel 
that it is important for the subcommittee to know that ASA does 
not speak for all repair shop owners. I am one of many ASA 
members that disagree with our association's position on this 
issue.
    I was fortunate to be able to participate in the recent 
negotiations at the invitation of CARE and AAIA. It should be 
noted that I was the only repair shop owner and technician to 
participate in these meetings. There are three issues from 
those negotiations which I would like to briefly address.
    Opponents to this legislation like to say that NASTF has 
eliminated the need for this bill. We disagree. NASTF has 
received very few complaints because it has proven to be clumsy 
and ineffective. NASTF considers an incident closed once any 
response is received by the person that makes the initial 
complaint regardless of whether it helps solve the problem. The 
industry has recognized the futility of this venture. You have 
heard today that NASTF has worked so well that the industry has 
decided to formalize the organization with new structure. I 
would make the argument that it has not worked which is why it 
needs new structure. NASTF's mission does not include oversight 
and enforcement and does little to help a technician get his 
customer's vehicles fixed in a timely manner.
    As in much of this world, most people need to know what is 
in it for me. It is perceived that there is nothing in NASTF 
for the average technician and the process is extremely 
frustrating. Also, the leadership of NASTF is dominated by 
opponents of this legislation leading to the organization to be 
used extensively in the political arena. This would have to 
drastically change for the group to gain credibility. All of 
these factors combined to make a perception of NASTF as a waste 
of time. Perhaps that is unfair but it is reality. H.R. 2048 
will provide the enforcement mechanism needed to fix the 
problem.
    The issue of tool information was another major sticking 
point and it has become very clear in the real world that the 
accessibility to diagnostic tools at a reasonable cost is a key 
factor. Paying $25 to $100 for a piece of information is 
useless if I cannot get the tools needed to make it work. Our 
efforts during the negotiations were to have the OEM's agreed 
to release information to tool manufacturers needed for them to 
develop the appropriate diagnostic tools. We were willing to 
let open competition in the marketplace control the prices of 
tools for our repair shops and ultimately the cost of related 
repairs for the consumer.
    Security issues were also a significant area of 
disagreement. We are not just talking about making keys for 
vehicles. With modern computer technology, all systems are 
becoming interrelated. If the vehicle does not start due to a 
malfunctioning security system, a repair shop needs access to 
determine exactly the cause whether it was from a faulty key, 
an ignition switch, security module, or other item. 
Furthermore, because of the relationships between various 
components in the modern vehicle, security information is 
needed to properly make each item recognized or talk to the 
other . To put it simply, if the dealer techs need this 
information to repair a vehicle and they do, so do we. There 
are many ways to ensure security on the modern vehicle and our 
industry would be willing to work with the OEM's on solving 
this issue, but to date they have not agreed to give us this 
information.
    H.R. 2048 is based on a consumer's right to repair a 
vehicle that he or she purchased and it will ensure that this 
right remains as automotive technology continues to evolve. 
Enacting this bill into law will be a dual victory for small 
business and the consumers they serve each day. Thank you for 
the opportunity to testify.
    [The prepared statement of Bob Everett follows:]
Prepared Statement of Bob Everett, Owner, Bayville Auto Care, on Behalf 
           of the National Federation of Independent Business
    Mr. Chairman and members of the Subcommittee, I'm Bob Everett, 
owner of Bayville Auto Care in Bayville, New Jersey. I'm here on behalf 
of the 600,000 members of the National Federation of Independent 
Business (NFIB). NFIB represents over 24,000 small automotive repair 
shops like mine, and they strongly support H.R. 2048, the Motor Vehicle 
Owners Right to Repair Act of 2005. When NFIB asked it members in 
January of 2003 if ``automobile manufacturers should be required to 
disclose to car buyers and repair shops information needed to repair or 
maintain their vehicles,'' 77% of NFIB members said ``yes''.
    As a small business owner, I have been involved in the car repair 
business since 1974. I established Bayville Auto Care in 1986, and 
began my career at a family owned gasoline service station. Currently, 
I am the immediate past president of the Alliance of Automotive Service 
Providers of New Jersey, an industry trade association representing 
over seven thousand service providers nationally. Included among my 
many certifications, I received the 2000 NAPA/ASE Certified Automotive 
Technician of the Year award, the most prestigious in our industry.
    The Motor Vehicle Owners Right to Repair Act attempts to address an 
inequity in the car repair market by guaranteeing consumers the right 
to choose how and where they have their vehicles repaired. As more and 
more of a vehicle's functions are controlled by onboard computers, 
independent repair facilities have found it more difficult to obtain 
the information necessary to repair their customer's cars. When this 
information cannot be obtained from the manufacturers, NFIB members 
find themselves in the difficult position of having to tell their 
customers they are unable to make repairs and refer them to a local 
dealer.
    In addition to the 24,000 NFIB members who own independent garages, 
there are many other small business groups that support H.R. 2048. The 
Automotive Aftermarket Industry Association (AAIA), the Service Station 
Dealers (SSDA), the Tire Industry Association (TIA) the Automatic 
Transmission Rebuilders (ATRA) and the Automotive Engine Rebuilders 
Association (AERA) bring over 30,000 other small businesses to the 
table, all in full support of HR 2048. I am also a member of the 
Automotive Service Association, and I feel that it is important for the 
Subcommittee to know that ASA does not speak for all repair shop 
owners.
    I was fortunate to be able to participate in the recent 
negotiations at the invitation of CARE & AAIA. There are three issues 
from those negotiations, which I would like to briefly address. It 
should also be noted that I was the only shop owner and technician to 
participate in these meetings.
    Opponents to this legislation like to say that the National 
Automotive Service Task Force (NASTF) has eliminated the need for this 
bill. We disagree. NASTF has received very few complaints because it 
has proven to be clumsy and ineffective. NASTF considers a complaint 
closed once any response, regardless of whether it helps, is received 
by the person that makes the initial complaint. The industry has 
recognized the futility of this venture. NASTF's mission does not 
include oversight and enforcement and does little to help a technician 
get his customers vehicle fixed in a timely manner. As in much of this 
world, most people need to know ``what's in it for me''. It is 
perceived that there is nothing in NASTF for the average technician and 
the process is extremely frustrating. The leadership of NASTF is 
dominated by opponents of this legislation and this has to change for 
the group to gain credibility. All of these factors combine to make the 
perception that NASTF is a waste of time. Perhaps that is harsh, but it 
is reality. HR 2048 will provide the enforcement mechanism needed to 
truly fix the problem.
    The issue of tool information was also a major sticking point. It 
has become very clear in the real world that the accessibility, at a 
reasonable cost, to diagnostic tools is a key factor. Paying $25- $100 
for a piece of information is useless if I can not get the tools needed 
to make it work. Our efforts during the negotiations were to have the 
Original Equipment Manufacturers (OEMs) agree to release the 
information to tool manufacturers needed for them develop the 
appropriate diagnostic tools. We were willing to let open competition 
in the market place control the prices of tools for our shops and, 
ultimately, the cost of related repairs for the consumer.
    Security issues were also major issues of disagreement. We are not 
just talking about making keys for vehicles. With modern computer 
technology, all systems are becoming interrelated. If the vehicle does 
not start due to a malfunction in the security system, we need access 
to determine exactly the cause, whether it is from a faulty key, 
ignition switch, security module or other item. Furthermore, because of 
the relationships between various components in the modern vehicle, 
security information is needed to properly make each item recognize or 
``talk'' to the other. To put it simply, if the dealer tech needs the 
information to repair a vehicle (and they do), so do we. There are many 
ways to insure security on the modern vehicle, and our industry would 
be willing to work with the OEMs on solving this issue, but to date 
they have not agreed to give us the information.
    Restoring competition to the marketplace is good for the consumer 
and good for small business. It is very important to note that H.R. 
2048 does not require auto manufacturers to disclose any trade secrets 
or proprietary information, and NFIB members are not asking for that. 
They do, however, insist on level playing field. We are not looking for 
a competitive advantage over the manufacturers or dealers--we just want 
to be able to serve our customers and run our businesses.
    H.R. 2048 is based on a consumers' right to repair a vehicle that 
he or she purchased, and will ensure that this right remains as 
automotive technology continues to evolve. Enacting this bill into law 
would be a dual victory for small business and the consumers they serve 
each day. Thank you for the opportunity to testify.

    Mr. Stearns. Thank you very much, Mr. Everett.
    Mr. Cabaniss?

                   STATEMENT OF JOHN CABANISS

    Mr. Cabaniss. Good morning----
    Mr. Stearns. Cabaniss, sorry.
    Mr. Cabaniss. That is okay. I have heard--that has been 
done a lot worse than that.
    Good morning, Mr. Chairman and members of the subcommittee. 
I am John Cabaniss and I am speaking today for the Association 
of International Automobile Manufacturers. I have been with AIM 
for 10 years, prior of that I worked for EPA for 15 years. For 
5 years, I have served as the Chairman of the National 
Automotive Service Task Force, a voluntary cooperative activity 
involving the auto service industry, the equipment and tool 
industry, and automakers.
    During August and September, AIM participated in the 
facilitation meetings hosted by the Better Business Bureaus. 
Personally, I attended only the first meeting but I worked 
closely with our team throughout the process. I have been 
involved in vehicle service issues for over 40 years and 
involved in the so called right to repair issue even before 
legislation was introduced 5 years ago.
    I have testified several times on right to repair 
legislation. It was very clear throughout the facilitation 
process that the two sides agree on most issues. All parties 
are pro consumer choice all parties support the aftermarket 
service providers, information providers, the training 
providers, and the tool companies. All parties generally agree 
the current NASTF process is working effectively. Automakers 
already make all service and training information available to 
all technicians via the internet at the same time it is 
available to dealers. Why do we do this? Because no automaker 
wants a reputation for producing vehicles that are difficult to 
repair or which can only be serviced at specific sometimes 
inconvenient locations.
    With all due respect, we believe that proponents of this 
bill fail to appreciate this basic built in market incentive 
for the dissemination of service and repair information. We 
support a cooperative approach that allows all stakeholders to 
be involved in developing workable solutions and addressing new 
issues that given the face of technological change are certain 
to emerge. It may be tempting to think there are only two 
principal groups concerned about these issues, automakers on 
the one hand and those that are represented by CARE on the 
other. In fact, there is a much larger group of stakeholders 
involved including tool companies, the independent information 
providers, the training providers, technicians, shop owners, 
dealers, locksmiths, and so on.
    A viable NASTF program which all parties agree should be 
the centerpiece of a voluntary solution must be open to all 
stakeholders. This is the case today. Automakers already work 
with tool companies to facilitate the transfer of tool related 
information. Automakers already offer for sale to independent 
shops all factory tools available to dealers. Automakers 
already work with independent training providers to address any 
training issues. Other work in progress includes developing a 
way to deal with security related information and addressing 
some issues related to collision repairs. If any gaps are 
identified, automakers will work within the NASTF process to 
address them.
    The formalization of NASTF has been under serious 
consideration since the April general meeting. NASTF has been 
successful for 5 years operating as a group of volunteers 
sharing a common mission. But its activities have grown to the 
point where some full-time staff support is needed. A proposal 
for a 3-year transition period to establish an organization 
with a full-time staff and budget was submitted in mid-August. 
A special NASTF stakeholder meeting was held in October to 
discuss the proposal and at the November 2 general meeting 
there was support, a general vote of report called with no 
descending votes.
    For the record, automakers oppose H.R. 2048 because we 
believe legislation is unnecessary and counterproductive. The 
types of problems identified by proponents such as the cost of 
accessing automaker websites, format differences in websites, 
occasional content errors and lack of enforcement are not 
issues which will be effectively addressed in regulations. The 
current automaker websites and cost structure are based on EPA 
regulations. It is unlikely the FTC would conclude any 
significant changes are needed. Occasional content errors are 
addressed through a process of continuous improvement with or 
without regulation. And Federal regulatory and enforcement 
processes are laden with procedural steps which do not lend 
themselves to addressing problems quickly. The only thing that 
further regulation would clearly do is slow down the process 
and delay further progress. This outcome benefits no one, not 
the service industry, not the automakers, and not consumers.
    In conclusion, automakers fully support the NASTF process 
and will continue to work cooperatively with the service 
industry on any issues. We welcome the support and 
participation of all stakeholders to improve and expand this 
voluntary process to make it more effective. Bringing 
everyone's efforts to bear can only improve our ability to 
provide the information, training, and tools needed by the 
service industry.
    Thank you.
    [The prepared statement of John Cabaniss follows:]
   Prepared Statement of John Cabaniss, Association of International 
                        Automobile Manufacturers
    Thank you for the opportunity to testify before the Subcommittee 
regarding vehicle service technology issues. My name is John Cabaniss. 
I am the Director for Environment and Energy at the Association of 
International Automobile Manufacturers (AIAM), 1 on behalf 
of which I am testifying today. I have been in my current job with AIAM 
for ten years. Prior to that, I worked in the U.S. Environmental 
Protection Agency's (EPA) motor vehicle emissions program for fifteen 
years and in the State of Virginia's air pollution control program for 
about ten years. I grew up with an automotive trades background. Both 
my father and my grandfather were shop owners and technicians for many 
years.
---------------------------------------------------------------------------
    \1\ The Association of International Automobile Manufacturers 
(AIAM) is a trade association representing 14 international motor 
vehicle manufacturers, which account for 40 percent of all passenger 
cars and 20 percent of all light trucks sold annually in the United 
States. AIAM members have invested over $27 billion in U.S.-based 
production facilities, have a combined domestic production capacity of 
2.8 million vehicles, directly employ 93,000 Americans, and generate an 
additional 500,000 U.S. jobs in dealerships and supplier industries 
nationwide. AIAM members include Aston Martin, Ferrari, Honda, Hyundai, 
Isuzu, Kia, Maserati, Mitsubishi, Nissan, Peugeot, Renault, Subaru, 
Suzuki and Toyota. AIAM also represents original equipment suppliers 
and other automotive-related trade associations. For more information, 
visit our website at www.aiam.org.
---------------------------------------------------------------------------
    For the past five years, I have had the privilege of serving as the 
chairman of the National Automotive Service Task Force (NASTF), a 
voluntary, cooperative activity involving the automotive service 
industry, the equipment and tool industry, and automakers.2
---------------------------------------------------------------------------
    \2\ NASTF itself takes no positions on issues.
---------------------------------------------------------------------------
    The focus of today's hearing is on the discussions between the 
proponents of H.R. 2048, represented by the Coalition for Automotive 
Repair Equality (CARE) and the Automotive Aftermarket Industry 
Association (AAIA), and the opponents of the legislation, represented 
by AIAM, the Alliance of Automobile Manufacturers (Alliance), the 
Automotive Service Association (ASA), and the National Automobile 
Dealers Association (NADA). These discussions were held at the request 
of Chairman Barton and Senator Lindsey Graham during August and 
September of this year, were facilitated by the Council of Better 
Business Bureaus (CBBB), and observed by representatives of the Federal 
Trade Commission. The goal was to reach a non-legislative agreement 
over the ``right to repair'' issue.
    Personally I participated only in the initial meeting of the 
facilitation group, but I worked closely with our facilitation team 
throughout the process. I have been involved in vehicle service issues 
in one way or another for over 40 years. I have been involved 
specifically in the ``right to repair'' issue even before legislation 
was introduced in Congress five years ago. I have testified several 
times before Congressional committees in opposition to the ``right to 
repair'' legislation with my most recent testimony being on June 28, 
2005 before the House Subcommittee on Workforce, Empowerment, and 
Government Programs. That testimony is attached to this statement for 
the record of this hearing.
    It was very clear throughout the CBBB facilitation process that the 
two sides were in agreement on most issues and lacked agreement on very 
few.

 All parties are pro consumer choice.
 All parties support aftermarket service providers.
 All parties support independent information providers.
 All parties support independent training providers.
 All parties support equipment and tool providers.
 All parties agree independent shops need open and timely access to 
        the same information, tools, and training that are available to 
        dealers.
 All parties agree the current voluntary, cooperative NASTF process is 
        working effectively.
    The only significant area of disagreement is that we believe the 
current cooperative NASTF process is working and government 
intervention is unneeded and counter-productive, while proponents 
support legislation and a regulatory program.
    Automakers already make all vehicle service and training 
information available to independent technicians via the Internet at 
the same time it is available to dealers. Why do we do this? Because 
very simply no automaker wants to develop a reputation for producing 
vehicles that are difficult to repair or which can only be serviced at 
specific, sometimes inconvenient, locations. With all due respect, we 
believe that proponents of this bill fail to appreciate this basic, 
built-in market incentive for the dissemination of service and repair 
information.
    As I mentioned, we support a cooperative approach that allows ALL 
interested stakeholders to be involved in the process of developing 
workable solutions to managing and accessing large volumes of 
information and addressing new issues that, given the pace of 
technological change, are certain to emerge. It may be tempting to 
think that there are only two principal groups concerned about these 
issues--automakers on the one hand and those represented by CARE on the 
other. In fact, there is a much larger number of stakeholders currently 
involved in the NASTF process, including tool companies, independent 
information providers, training providers, technicians, shop owners, 
dealers, locksmiths, and others. A viable NASTF program--which all 
parties agreed in the context of the CBBB talks should be the 
centerpiece of a voluntary solution--must be open to all stakeholders 
and incorporate decision-making procedures that are open and 
transparent.
    This is the case today. For example, automakers are already working 
with the Equipment & Tool Institute (ETI), the trade organization 
representing tool companies, through the NASTF Equipment and Tool 
Committee to facilitate the transfer of information they use to design 
and manufacture generic tools for the aftermarket. In addition, 
automakers offer for sale to independent shops all factory tools 
available to dealers. Automakers are already working with independent 
training providers through the NASTF Training Committee to address any 
training issues. Other work in progress includes developing a 
methodology for dealing with security related information through the 
NASTF Vehicle Security Committee and addressing some issues related to 
collision repair information through the NASTF Service Information 
Committee. If any gaps are identified in any of these areas, automakers 
work within the NASTF process to address them.
    The formalization of NASTF as an organization with full-time staff 
has been under serious consideration since the April 2005 NASTF general 
meeting. While NASTF has been very successful in its first five years 
operating as a group of volunteers sharing a common mission, its 
activities have grown to the point where some full-time staff support 
is needed. A proposal for a three-year transition period to establish a 
permanent organization with a full-time staff and budget was submitted 
by ETI in mid August. A special NASTF meeting of a wide range of 
stakeholders was convened on October 19, 2005, to discuss the ETI 
proposal. It was agreed that a follow-up meeting would be scheduled to 
sort out details. On November 2, 2005, the semi-annual NASTF general 
meeting was held with over 150 participants in attendance. The ETI 
proposal was discussed and a general floor vote of support was called 
with no dissenting votes. We are currently working with interested 
stakeholders to schedule the follow-up meeting in mid December.
    For the record, automakers oppose H.R. 2048 because we believe such 
legislation is unnecessary and counter-productive.3 The 
types of problems identified by proponents of H.R. 2048, such as, the 
cost of accessing automakers' websites, format differences in 
automakers' websites, occasional content errors in information, and 
lack of enforcement are not issues which will be effectively addressed 
in regulations by FTC or any other agency. Given that the current 
automaker websites and cost structure are based on EPA's emissions 
regulations and approved by EPA, there is no reason to believe that the 
FTC would conclude that any significant changes are needed. Occasional 
content errors need to be and will be addressed through a process of 
continuous improvement, with or without regulation. And federal 
regulatory and enforcement processes are laden with procedural steps, 
which do not lend themselves to addressing problems quickly. As noted 
by the FTC in a recent letter to Representative John Dingell, self-
regulatory programs are often the best way to address matters in an 
expeditious manner. This is especially true in such a dynamic area as 
information technology. The only thing that further federal regulation 
under H.R. 2048 would clearly do is slow down the process and delay 
further progress while the parties educate the FTC on the issues and 
debate the merits of regulatory approaches. This outcome benefits no 
one--not the service industry, not the automakers, not consumers.
---------------------------------------------------------------------------
    \3\ More information on the automakers' position on H.R. 2048 is 
available at www.
carfixinfo.org.
---------------------------------------------------------------------------
    In conclusion, automakers are completely committed to the National 
Automotive Service Task Force and to continuing to work cooperatively 
with the service industry on service technology issues. We welcome the 
support and participation of all parties in the service industry to 
improve and expand this voluntary process to make it even more 
effective. Bringing everyone's efforts and resources to bear on 
producing results, not rhetoric, can only improve our ability to 
provide the information, training, and tools needed by the service 
industry.
    Thank you for the opportunity to address the Subcommittee on this 
important issue.

    Mr. Stearns. Thank you, Mr. Cabaniss.
    Mr. Lowe?

                   STATEMENT OF AARON M. LOWE

    Mr. Lowe. Mr. Chairman, members of the subcommittee, thank 
you for the opportunity to testify in support of the Motor 
Vehicle Owners' Right to Repair Act.
    My name is Aaron Lowe and I am Vice President of Government 
Affairs for the Automotive Aftermarket Industry Association. 
AAIA is a national trade association with 8,243 member 
companies and affiliates representing more than 54,000 vehicle 
repair shops and parts stores.
    Right to repair legislation introduced this year by 
Representative Barton has been revised in two very important 
areas. One the revised legislation clarifies that the 
aftermarket only needs access to the same information that is 
available to the new car dealer. No more and no less. The new 
provision ensures that right to repair legislation is 
consistent with the trade secret protections provided in the 
Clean Air Act and which were crafted by this committee back in 
1990 and there has--I point out very little if no problems in 
implementation by EPA. So we do not see the proprietary issue 
as the major problem or stumbling block to this legislation, 
especially the new version.
    Second, the bill has been clarified such that it would not 
create a new system for service information availability. We do 
not believe in new infrastructure for non-emissions related 
information or tools within the best interest of the either the 
car companies or the aftermarket. There already is a system in 
place to make information and tools available that was due both 
to the EPA and California regulations. Under these rules, it 
would simply extend those requirements to non-emissions related 
information and provide enforcement authority to the Federal 
Trade Commission.
    In fact, the bill is now consistent with the promises that 
the car companies have made back in 2002 with one very 
important difference. The legislation would be enforceable. The 
difference is critical. Dealership profits are no longer driven 
by new car sales alone but also parts and service revenue. 
Absent legislation or enforceable agreement AAIA is concerned 
that car companies will set their promises aside in their drive 
to maximize profits in their parts and service operations.
    Notwithstanding the above, AAIA and the collation partners 
recognize that regulatory intrusion in the market is not always 
the best answer and therefore we agreed to meet with the car 
companies last July to determine if the non-regulatory solution 
could be developed. There were many positive sides of the merge 
from these meetings including the willingness by the car 
companies to discuss a system whereby their commitments could 
be enforced and thereby ensuring that they will make 
information, tools, and tool capabilities available to us long 
after the legislative battle has faded from memory.
    Further, car companies appear willing to discuss 
enhancements that would ensure NASTF would be tasked quickly 
and effectively resolving service information and tool 
disputes. However, for the third party agreement enhanced NASTF 
to work, we believe that there needs to be a fair and balanced 
management of the organization and each manufacturer must be 
willing to enter into a clear and comprehensive agreement as to 
what information and tools are going to be made available. 
Unfortunately while the broad outlines of an agreement appeared 
within reach, critical issues remain unresolved. When 
emphasized that while the governance issue was the last issue 
that we dealt with, it was not by itself the whole reason that 
the negotiations ended.
    A key reason of concern to our industry was the need for a 
commitment by the manufacturers to make both the tools and the 
tool capabilities available to our industry. Advances in 
technology demand that independent service center entities have 
access to the same diagnostic and repair capabilities that are 
available to the dealerships. The car companies would not 
commit to ensuring that the tools they sell our industry would 
have the same capabilities as those provided to the dealer 
franchises.
    Similarly, we ant the car companies to make service 
information or tool information available to our tool company 
suppliers to include the same repair and diagnostic 
capabilities that are available to the dealer tools. It was 
agreed to in the discussion that this was a very complex issue 
and that parties were not at the table. Therefore, we were 
willing to leave the details of exactly what would be required 
to be made available, how it would be made available, and how 
it would be enforced to future negotiations. However, we felt 
that it was critical that the car companies agreed to fully 
release tool information and that a timeframe be developed for 
the details to be worked out. The car companies did not agree 
to those terms. In fact, the car companies could not commit to 
any enforcement mechanisms providing tool information or making 
it available at a reasonable cost.
    Further, one of the most difficult and frustrating problems 
is the immobilizer issue. While some car companies are making 
this information available, the negotiators for the car 
companies could not agree to make this information available in 
this agreement because some manufacturers refuse to do so.
    Another issue that caused considerable concern were that 
car companies could not agree on the scope of service 
information that was going to be required to be provided. Much 
information regarding repairs was made available to the dealers 
required hotlines. While we did not request access to the 
hotlines themselves, it is important that critical service 
information is developed to fix cars that is provided to all 
dealers through these hotlines is readily available to 
technicians as well.
    Finally, the car companies were unwilling to establish a 
governance of the new organization as part of the agreement. We 
simply felt we do not want to put our industry in a handicap 
position regarding the quick and effective organization of 
NASTF and could derail the agreement before the first problem 
was ever solved.
    The halt of the negotiation was a tough decision and one we 
did not take lightly. It is important to remember that the 
deadline was extended several times and there were--however 
following tough weeks of negotiations, we were convinced or 
became convinced that right to repair legislation was still 
necessary to ensure the independent aftermarket can obtain the 
same information and tools that are available to the new car 
dealers.
    In conclusion, we can only speculate as to the competitive 
position that our industry would be in had this committee not 
had the foresight to take action and ensure competition with 
the inclusion of service information availability provisions in 
the Clean Air Act. The small businesses that comprise the 
independent aftermarket now ask the committee to take one 
additional step to ensure competition for all the vehicle 
service with the passage of this legislation.
    Thank you for the opportunity to testify.
    [The prepared statement of Aaron M. Lowe follows:]
    Prepared Statement of Aaron M. Lowe, Vice President, Government 
          Affairs, Automotive Aftermarket Industry Association
    Mr. Chairman and members of the Subcommittee, thank you for the 
opportunity to testify in support of the Motor Vehicle Owners Right to 
Repair Act of 2005 (HR 2048). My name is Aaron Lowe and I am vice 
president of government affairs for the Automotive Aftermarket Industry 
Association. AAIA is a national trade association with 8,243 member 
companies and affiliates representing more than 54,000 vehicle repair 
shops and parts stores.
    In the late nineties, the House Energy and Commerce Committee 
approved amendments to Clean Air Act legislation that would require car 
companies to share all emissions related service information and tools 
with the aftermarket that they provide their franchised dealerships. 
The amendment became necessary due to provisions in the Act that would 
require 1994 and later vehicles be equipped with emission control 
computers that monitored and controlled nearly every emissions related 
function. This Committee was concerned that unless steps were taken to 
ensure competition, car companies would make access to these OBD 
systems proprietary, thus increasing the cost to car owners of 
maintaining their emissions systems. Similar service information 
availability rules were enacted in the State of California in 2000.
    Since passage of the Clean Air Act in 1990, these computers have 
expanded beyond emissions to now control virtually every vehicle system 
on a vehicle including brakes, air bags, suspension and entertainment. 
Therefore, while the Clean Air Act service information rules have 
helped ensure that our industry can obtain tools and information for 
emissions related systems, there is no such requirement for non-
emissions related systems. It is for this reason that the Motor Vehicle 
Owners Right to Repair Act was first introduced in 2001--to ensure that 
the actions undertaken to preserve competition for car owners on 
emissions related repairs, also carry forward for non-emissions related 
systems.
    Right to Repair legislation introduced this year by Rep. Joe Barton 
has been revised in two very important areas. One, the legislation 
clarifies that the aftermarket only needs access to the same 
information that is available to the new car dealers, no more and no 
less. During hearings held last year by this Subcommittee, car 
companies charged that the aftermarket parts companies were after their 
blue prints in order to make the job of designing and producing 
replacement parts less costly. This is not and never was the case with 
this bill. Aftermarket parts manufacturers will continue their long 
standing tradition of building components that are, as good, or better 
than the car company parts that they replace. However in order to 
further allay manufacturer fears, the bill now further specifies that 
car companies only need to ensure access to the same tools and 
information available to the new car dealer, making the Right to Repair 
legislation consistent with the Clean Air Act requirements regarding 
proprietary information.
    Second, the bill is not intended to create a new system for service 
information availability. We do not believe that a new infrastructure 
for non-emissions related information or tools is in the best interest 
of either the car companies or the aftermarket. There already is a 
system in place to make information and tools available to our industry 
due to both EPA and California regulations for service information 
availability. Under these rules, each car company is required to 
maintain a web site that contains all of their emissions related 
service information. The bill would simply extend these requirements to 
non-emissions related information and provide enforcement authority to 
the Federal Trade Commission (FTC) should a manufacturer not comply 
with the bill's requirements.
    In fact, the bill now is consistent with a letter that the car 
companies and the Automotive Service Association sent to the Senate 
Commerce Committee in 2002. In that letter, the manufacturers promised 
to make emissions and non-emissions related information available to 
our industry. The one difference between the letter and the legislation 
is that the promises made by the manufacturers would now be 
enforceable. This difference is critical due to the fact that the 
aftermarket and car company service and parts networks are locked in a 
major competitive battle for the dollar of the car owner.
    Dealership profits are no longer driven by new car sales alone, but 
also parts and service revenue. According to the National Automobile 
Dealers Association (NADA), even though dealership parts and service 
department sales comprise just 11.8 percent of typical dealer's total 
sales, it contributes 48 percent of the total operating profit. New car 
sales make up 60 percent of total sales, but only contribute 35 percent 
of total profit. Absent legislation or an enforceable agreement, AAIA 
is concerned that car companies will set their promises aside in their 
drive to maximize profits from their parts and service operations.
    While our industry does not have a problem competing on a level 
playing field for service and repair work, the use of electronics and 
computers on late models by the car companies threatens to shift the 
playing field and reduce competition in the aftermarket. Small service 
facilities and their customers will suffer as a direct result.
    Notwithstanding the above, AAIA and its coalition partners 
recognize that regulatory intrusion in the market is not always the 
best answer and therefore we agreed to meet with the car companies last 
July to determine if a non-regulatory solution could be developed. 
These negotiations were facilitated by the Better Business Bureau and 
monitored by the Federal Trade Commission.
    Unfortunately, while there was significant progress and much 
positive discussions during the two month long negotiations, these 
sessions ended without an agreement that would satisfy both the car 
companies and the independent aftermarket. Among the positive signs 
that emerged from these meetings was the willingness of the car 
companies to discuss a system whereby their commitment could be 
enforced and thereby better ensuring that they will continue to make 
information, tools and tool capabilities available to us long after 
this legislative battle has faded from memory.
    Further, over the past year, the aftermarket has expressed strong 
concerns that the National Automotive Service Task Force (NASTF), which 
was established by the car companies to address service information 
issues, was an ineffective organization in resolving information and 
tool issues. Our main concern was that absent an enforcement element, 
whether government or third party, the organization could not 
effectively address a car company's reluctance to provide service 
information or tools. Further, the absence of any structure or staff 
for the organization meant that it could not quickly and effectively 
resolve issues raised by independent shops as evidenced by the 
extensive time currently necessary for NASTF to resolve complaints. 
These problems led most technicians to forgo the NASTF process and to 
take matters into their own hands, using back door methods to obtain 
the tools and information they need to serve their customers. During 
the negotiations, the car companies appeared willing to discuss the 
establishment of an effective organization which, combined with third 
party enforcement, could help quickly resolve information issues for 
independents.
    However for the third party agreement and the enhanced NASTF to 
work, AAIA believes that there must be a fair and balanced management 
of the organization and each manufacturer must be willing to enter into 
a clear and comprehensive agreement as to what information and tools 
they are going to make available to independents. Only under these 
circumstances would we be able to develop a service information and 
tool availability system that would work in practice and obtain the 
needed credibility with the industry to ensure it would be used. 
Unfortunately, while the broad outlines of an agreement appeared within 
reach, critical governance issues and an unwillingness by the 
manufacturers to commit to full availability of service information, 
tools and tool information led to the break down of the negotiations.
    A key issue of concern to our industry was the need for a 
commitment by the manufacturers to make both their tools and the tool 
capabilities available to the aftermarket. Advances in technology 
demand that independent service entities have access to the same 
diagnostic and repair capabilities that are available to the new car 
dealerships. The car companies would not commit to ensuring that those 
tools possessed the same capabilities as those provided to the dealer 
franchises. As the Subcommittee heard at its hearing on this subject 
last year, in many cases, the tools purchased by independents from the 
car company have missing capabilities that often prevent a technician 
from completing a repair.
    Similarly, we wanted car companies to make available information 
needed by tool companies to include the same diagnostic and repair 
capabilities that are available on dealer tools. During negotiation on 
this area, we made it clear that we were not going to hold the car 
companies responsible for whether or how the tool companies used the 
capabilities in this instance, but that they would need to commit to 
making tool information available under reasonable licensing and 
security conditions. It was agreed during the discussion that this was 
a very complicated issue and that the parties representing the tool 
industry were not at the table. Therefore we were willing to leave the 
details of exactly what would be required to be made available, how it 
would be made available, and how it would be enforced to future 
negotiations. However, we felt that it was critical that, at minimum, 
the car companies agreed to fully release tool information and that a 
time frame be developed for the details to be worked out. The car 
companies could not agree to those terms. In fact the car companies 
could not agree to any enforcement mechanism for providing the tool 
information or making it available at a reasonable cost.
    In addition, the companies would only commit to providing scan tool 
information and tire pressure monitoring. This reluctance to move 
beyond scan tools could be critical since diagnostic and repair 
capabilities may in the future be provided through avenues beyond the 
current scan tools and therefore we did not want to limit the future 
viability of this agreement by only focusing on current technology.
    Further, one of the most critical problems facing independents on a 
day-to-day basis is attempting to repair vehicles equipped with 
immobilizer systems. These systems help reduce theft by preventing a 
car from being started unless a chip on the key makes a handshake with 
a chip in the vehicle engine systems. While some car companies are 
making this information available, the negotiators for the car 
companies could not agree to make mobilizer information available 
because some manufacturers are refusing to make it available to 
independents. It is imperative that this problem be solved or a system 
designed to lock out thieves will lock out repair shops as well. Due to 
the fact that many manufactures have successfully been able to provide 
access for independents without jeopardizing vehicle security and the 
fact that all of the car companies make this capability available to 
their dealer, AAIA can only conclude that, given a commitment from the 
car companies, that they could develop a secure system whereby an 
independent can reinitialize a theft system without being forced to tow 
the vehicle to a dealership.
    Another issue that caused considerable concerns was that the car 
companies could not agree on the scope of the service information that 
would be required to be provided under the agreement. The manufacturers 
were only willing to make manuals and technical service bulletins 
available to our industry. In fact, much information regarding repairs 
is made available through their private dealer hotlines. While we are 
not demanding access to the actual hotlines, it is important that 
critical service information that is developed to fix cars, and which 
is provided to all dealers through their hotlines, needs to be readily 
available to independent technicians as well.
    Finally, the car companies were unwilling to establish the 
governance of the new organization as part of the agreement. The 
aftermarket had put forward a proposal that would provide for the equal 
representation on the original board for the new NASTF with four 
members being appointed by the car companies and four by the 
aftermarket. Since the governance of this organization was crucial to 
whether it succeeded in ensuring that information and tools are made 
available, we felt it was critical for the viability of both the 
organization and the agreement, that the governance issue be settled in 
advance. The car companies wanted to have this issue resolved later 
after the agreement was signed. We simply felt this would put our 
industry in a handicapped position regarding the quick and effective 
organization of NASTF and could derail the agreement before the first 
problem was solved.
    The halt of the negotiation was a tough decision and one we did not 
take lightly. It is important to remember that the deadline for a 
settlement was extended three times because we felt that it was 
important that we do everything possible to reach an agreement. 
However, following weeks of tough negotiations, we are convinced that 
Right to Repair legislation is necessary to ensure that the independent 
aftermarket can obtain access to the same information and tools that 
are available to the new car dealers.
    In conclusion, you likely will hear from the manufacturers today 
that they are fully committed to making service information available 
to our industry and that, in fact, it is in their best interest to do 
so in order to promote customer satisfaction. While we agree with that 
statement, it is important to remember that in Canada, which has a very 
similar aftermarket to the U.S., independent service facilities are 
denied access to many of the same service information web sites that 
are available to U.S. technicians. Further, when our sister 
organization in Canada attempted to organize a voluntary system north 
of the border, that request was denied by the associations representing 
the Canadian auto manufacturers. Of course, at this point there are no 
service information laws or legislation in Canada, a fact that the 
aftermarket is attempting to rectify.
    We can only speculate as the competitive position that our industry 
would be in had this Committee not had the foresight to take action to 
ensure competition with the inclusion of service information 
availability provisions in the Clean Air Act. The small businesses that 
comprise the independent aftermarket now ask the committee to take one 
additional step to ensure competition for all vehicle service with the 
passage of the Motor Vehicle Owners Right to Repair Act.
    Thank you for the opportunity to testify on this important issue. I 
am available to answer any questions from the Subcommittee regarding 
the legislation or the negotiations.

    Mr. Stearns. Thank you.
    Mr. Braziel?

                   STATEMENT OF ROBERT BRAZIEL

    Mr. Braziel. Mr. Chairman, members of the subcommittee on 
behalf of the National Automobile Dealers Association, I 
appreciate the opportunity today to discuss the state of the 
automotive maintenance and repair industry. My name is Robert 
Braziel and I serve as Chief Legislative Counsel, a post I have 
held for the past 6 years.
    The National Automobile Dealers Association is the national 
trade association that represents 20,000 franchise dealerships 
with over 1,000,000 employees, about half of whom work in 
dealership service and parts departments. In 2004, franchise 
automobile dealers provided 369,125 service stalls, employed 
279,150 technicians, and carried a parts inventory valued at 
$5.6 billion. Franchise dealerships located throughout the 
country and in all your congressional districts have many of 
the best trained and best equipped automotive technicians 
maintaining, servicing, and repairing today's sophisticated and 
complex motor vehicles.
    Diagnosing and fixing today's automobiles requires that 
shops invest significantly in information, equipment, and 
training. Dealerships make such investments because vehicle 
manufacturers and the motoring public demand nothing less. In 
fact, successful repair facilities in today's world must make 
continuing investments in tools, training, and information to 
adequate serve their customers.
    In addition to performing warranty and other repairs on 
their franchise vehicles, franchise dealerships are 
increasingly engaged in the service of used vehicles for which 
they do not hold a franchise. In that situation, an automobile 
dealer stands in the same place as an aftermarket service 
provider. Needing to make choices about the kinds and type of 
maintenance and repair services they want to pursue based on 
the financial investment that may be required.
    There have been a number of members who have raised issues 
of equivalency of outcome but essentially what we are talking 
about is equivalency of access. To get to equivalency of 
outcome, you have to make the investments in today's world.
    Of the nearly $500,000 million non-warranty service evens 
annually, the aftermarket not the franchise dealer performs 
roughly 75 percent of the service. The aftermarket has the 
ability to maintain that high level because it has access to 
all the following, manufacturer specific service information 
provided through third party information providers like 
Mitchells, Alldata, and Identifix; manufacturer specific 
websites containing service information; manufacturer specific 
training materials, manufacturer specific diagnostic tools 
covering both emission and non-emissions functions; diagnostic 
tools developed from tool information provided to toolmakers by 
vehicle manufacturers. One point should be made that the 
franchise dealer does not obtain that tool information. He uses 
the diagnostic tool purchase from the manufacturer.
    Motor vehicle manufacturers have an economic interest in 
providing this level of access. They want their vehicles 
repaired correctly by well equipped and trained service 
technicians.
    The National Automotive Service Task Force was initiated in 
2000 to facilitate the flow of automotive service information, 
training information, tools, and tool information to market 
participants. Stakeholders in NASTF have developed it into an 
effective information clearinghouse that also provides for an 
inquiry system in cases where a gap and information is 
suspected. As the number of parties have mentioned, there were 
48 inquiries out of 500 million service events.
    Despite the facts about access and operations of NASTF, 
large parts distributors under the coalition for automotive 
repair equality along with the Automotive Aftermarket Industry 
Association are seeking the Federal Government to take over the 
automotive repair industry on the premise that information is 
not available or being withheld. Frankly, it remains difficult 
for independent service providers to comprehend how a Federal 
Government entity without any experience in automotive repair 
issues would do a better job than the private sector addressing 
these issues.
    During August and September of this year, the Better 
Business Bureau convened the facilitation. The facilitation was 
hamstrung from the beginning by CARE's refusal to even discuss 
the nature and scope of the issue we reportedly were trying to 
solve. Nevertheless, we did reach agreement on critical areas. 
The October 3 letter also noted several issues that were not 
resolved. While NADA actively sought resolution of those 
issues, CARE's demand for a controlling stake in NASTF's board 
prevented any agreement from taking place. No one interested 
party, particularly parts distributors should have a 
controlling interest in NASTF. Any board of NASTF should be 
balanced with all stakeholders including vehicle manufacturers, 
service providers, information providers, toolmakers, and 
training providers. Notably a CARE controlled NASTF would not 
have only diminished the interests of many important 
stakeholders but could have raised antitrust concerns.
    Given the impasse at the negotiation level, I would like to 
speak just a moment to the legislation. And again the 
proponents of the legislation have said that they are only 
seeking the information and diagnostic tools that the dealer, 
franchise dealer has. The manufacturers have made that 
commitment since 2002 to provide both the diagnostic tool and 
that service information. I believe a careful reading of the 
legislation will indicate that the reach goes beyond those two 
items.
    The National Automobile Dealers Association and its members 
continue to believe that the current voluntary and cooperative 
private sector effort remains vastly preferable for the 
individual service technician. Federal regulation as a number 
of members have noted is rarely superior to a private sector 
system that stakeholders agree works.
    In closing, I would like to emphasize one final point. This 
entire issue suffers from the fundamental misperception that 
automobile manufacturers unduly favor their franchise 
dealerships. That is simply untrue. If it were true, 
manufacturers would not have set up openly available websites 
for emissions and non-emissions information. If it were true, 
manufacturers would not be making available to everyone the 
same training materials franchise dealerships must obtain. If 
it were true, manufacturers would not be making available to 
everyone the same manufacturers specific diagnostic tools they 
require their dealerships to purchase. If it were true, 
manufacturers would not be providing non-emissions tool 
information to third party toolmakers at no charge. If it were 
true, the aftermarket providers would not perform 75 percent of 
non-warranty repairs.
    On behalf of NADA, I appreciate the opportunity to testify 
and look forward to your questions.
    [The prepared statement of Robert Braziel follows:]
   Prepared Statement of Robert Braziel, National Automobile Dealers 
                              Association

                              INTRODUCTION
    On behalf of the National Automobile Dealers Association, I 
appreciate the opportunity to discuss the state of the automotive 
maintenance and repair industry. My name is Robert Braziel, and I serve 
as the Chief Legislative Counsel, a post I have held for the past six 
years.

          FRANCHISED DEALERS AND AFTERMARKET SERVICE PROVIDERS
    The National Automobile Dealers Association (NADA) is the national 
trade association that represents 20,000 franchised dealerships with 
over one million employees, about half of whom work in dealership 
service and parts departments. In 2004, franchised automobile dealers 
provided 369,125 service stalls, employed 279,150 technicians, and 
carried a parts inventory valued at $5.6 billion. Franchised 
dealerships located throughout the country and in all your 
congressional districts have many of the best-trained and best-equipped 
automotive technicians maintaining, servicing and repairing today's 
sophisticated and complex motor vehicles.
    Diagnosing and fixing today's automobiles requires that shops 
invest significantly in information, equipment, and training. 
Dealerships make such investments because vehicle manufacturers and the 
motoring public demand nothing less. Automobiles will become even more 
complex in the future, requiring even more sophisticated, highly 
trained technicians. While diagnostic tools are necessary for repair 
work, they alone are not sufficient. Trained technicians must still 
analyze the information tools provide and, often through the process of 
elimination, pinpoint the exact problem. Tools often help find problems 
generally, but technicians solve them. For all these reasons, 
successful repair facilities in today's world must make continuing 
investments in tools, training and information to adequately serve 
their customers.
    In addition to performing warranty and other repairs on their 
franchised vehicles, franchised dealerships are increasingly engaged in 
the service of used vehicles for which they do not hold a franchise. In 
that situation, an automobile dealer stands in the same place as an 
aftermarket service provider, needing to make choices about the kind 
and types of maintenance and repair services they want to pursue based 
on the financial investment that may be required. Accordingly, 
franchised automobile dealers have a unique perspective to view the 
automotive repair industry, both as a franchised dealer and an 
aftermarket service provider. Viewed from both perspectives, there is 
no question access to the information and tools necessary to service 
and repair motor vehicles has never been better if a service provider 
is willing to make the requisite investments.

                ACCESS IN THE AUTOMOTIVE REPAIR INDUSTRY
    Of the nearly 500 million non-warranty service events annually, the 
aftermarket performs roughly 75 percent of the service, while 
franchised dealers handle the other 25 percent. The aftermarket has the 
ability to maintain that high level because it has access to all of the 
following:

 Manufacturer specific service information provided through third-
        party information providers like Mitchells, Alldata, and 
        Identifix;
 Manufacturer specific websites containing service information;
 Manufacturer specific training materials;
 Manufacturer specific diagnostic tools covering both emissions and 
        non-emissions functions;
 Diagnostic tools developed from tool information provided to 
        toolmakers by vehicle manufacturers;
    Motor vehicle manufacturers have an economic interest in providing 
this level of access. Motor vehicle manufacturers want their vehicles 
repaired correctly by well-equipped and trained service technicians. 
The simple fact is that a frustrated or dissatisfied customer is not 
likely to be a repeat buyer.

                                 NASTF
    The National Automotive Service Task Force (NASTF) was initiated in 
2000 to facilitate the flow of automotive service information, training 
information, tools, and tool information to market participants. 
Stakeholders in NASTF have developed it into an effective information 
clearinghouse that also provides for an inquiry system in cases where a 
gap in information is suspected. Of the roughly 500 million non-
warranty service events performed in 2004, NASTF was called upon to 
resolve only 48 inquiries. For those doing math, 48 out of 500 million 
is .000000096.
    Despite the facts about access and the operations of NASTF, large 
parts distributors, under the Coalition for Automotive Repair Equality 
(CARE) along with the Automotive Aftermarket Industry Association 
(AAIA), are seeking a Federal government takeover of the automotive 
repair industry on the premise that information is not available or 
being withheld. Under the legislation supported by these parts 
distributors, but opposed by independent garages of the Automotive 
Services Association (ASA), the Federal Trade Commission would engage 
in rulemaking to develop a government controlled regime to oversee the 
flow of vehicle service, training and tool information. Frankly, it 
remains difficult for independent service providers to comprehend how a 
Federal government entity without any experience in automotive repair 
issues would do a better job than the private sector addressing these 
issues. Rather than working to enhance NASTF for the betterment of all 
service providers, CARE and AAIA choose instead to pour resources into 
legislation that seeks Federal regulation and enforcement.

               BETTER BUSINESS BUREAU (BBB) FACILITATION
    During August and September of this year, the Better Business 
Bureau convened a facilitation with representatives of NADA, ASA, CARE, 
AAIA, the Alliance of Automobile Manufacturers (AAM), and the 
Association of International Automobile Manufacturers (AIAM). That 
facilitation was hamstrung from the beginning by CARE's refusal to even 
discuss the nature and scope of the issue we reportedly were trying to 
solve. Nevertheless, the BBB's letter of October 3 noted agreement of 
the parties on many core issues ``including strengthening and funding 
of the NASTF process, rigorous time frames that would need to be 
observed, dispute resolution procedures, and many remedies for a third 
party dispute resolution framework.''
    The October 3 letter also noted several issues that were not 
resolved. While NADA actively sought resolution of those issues, CARE's 
demand for a controlling stake in NASTF's board prevented any agreement 
from taking place. No one interested party, particularly parts 
distributors, should have a controlling interest in NASTF. Any board of 
NASTF should be balanced with all stakeholders, including vehicle 
manufacturers, service providers, information providers, toolmakers, 
and training providers. Notably, a CARE controlled NASTF would have not 
only diminished the interests of many important stakeholders, it also 
could have raised serious antitrust concerns.

                       LEGISLATION AND REGULATION
    Given the current impasse predicated on CARE's demand for control 
of NASTF, let me now turn to the legislation before us. I would like to 
briefly highlight three important issues for committee members to 
consider. The first is that you will be displacing a working private 
sector entity made up of market participants and putting the Federal 
Trade Commission, which has no automotive repair knowledge or 
background, in control of the flow of information through a new 
regulatory regime. Second, while recent revisions to the bill struck 
previous language explicitly providing for private rights of action for 
car owners, NADA continues to be concerned that private rights of 
action against automobile manufacturers under state laws will be 
encouraged by a number of findings in the bill. Third, we still view 
the legislation as requiring disclosure of information beyond that 
possessed by a franchised dealer and thus potentially compromising 
intellectual property rights. Our view on that issue is reinforced by 
the fact that it is large parts distributors, not independent repair 
shops, who are the prime proponents of this legislation.

                               CONCLUSION
    Like the independent repairers at the Automotive Services 
Association, the National Automobile Dealers Association and its 
members continue to believe that the current voluntary and cooperative 
private sector effort remains vastly preferable for the individual 
service technician than a government command and controlled process. 
Federal regulation is rarely superior to a private sector system that 
stakeholders agree works.
    In closing, I want to emphasize one final point. This entire issue 
suffers from the fundamental misperception that automobile 
manufacturers unduly favor their franchised dealerships. That is simply 
untrue.
    If it were true, manufacturers would not have set up openly 
available websites for emissions and non-emissions information. If it 
were true, manufacturers would not be making available to everyone the 
same training materials franchised dealerships must obtain. If it were 
true, manufacturers would not be making available to everyone the same 
manufacturer specific diagnostic tools they require their dealerships 
to purchase.
    If it were true, manufacturers would not be providing non-emissions 
tool information to third party toolmakers at no charge. If it were 
true, aftermarket providers would not perform 75% of non-warranty 
repairs.
    On behalf of NADA, I appreciate the opportunity to testify and look 
forward to your questions.

    Mr. Stearns. Thank you.
    I will start with my question first. And I think we have on 
the second panel two individuals who are actually operating in 
the field, Mr. Everett and Mr. Brotherton so these are not part 
of the Washington infrastructure. In fact, one of the 
individuals can actually vote for me so I have to be careful. 
But you both, the two of you are sitting beside to each other 
and you are both on the opposite side here so I am going to try 
to ask a question.
    Now Mr. Everett, you are from Bayville Auto, Bayville, New 
Jersey, right?
    Mr. Everett. Yes, sir.
    Mr. Stearns. Is that close to Atlantic City?
    Mr. Everett. We are about 50 miles north of Atlantic City 
right on the coast near Tom's River.
    Mr. Stearns. Okay. Is business pretty good?
    Mr. Everett. It is--my shop is doing okay.
    Mr. Stearns. Well let say compare it with 10 years ago. How 
was the business 10 years ago?
    Mr. Everett. Well my shop for the last 10 years has grown 
steadily as it has expanded.
    Mr. Stearns. Okay.
    Mr. Everett. Although there is definitely new challenges in 
our industry now.
    Mr. Stearns. So let us say 10 years ago you had 20 
employees?
    Mr. Everett. I would say 10 years ago it was easier to make 
money with the size of the operation at the time. Today it is 
much more difficult.
    Mr. Stearns. So the profit margin has gone down.
    Mr. Everett. Yes.
    Mr. Stearns. But the business has gone up so you are 
doing----
    Mr. Everett. Yes.
    Mr. Stearns. [continuing] a bigger volume with less percent 
profit?
    Mr. Everett. Correct.
    Mr. Stearns. Mr. Brotherton, what about you? How long has 
your business been in place?
    Mr. Brotherton. We have been in business 28 years and our 
business sort of stabilized at probably an amount of car 
repairs about 10 years ago.
    Mr. Stearns. So it is pretty much the same size it has been 
for the last 10 years?
    Mr. Brotherton. Yes.
    Mr. Stearns. Okay. And Mr. Everett is probably in more of a 
burgeoning market than you are. I know Gainesville is a 
university town that the university is getting bigger but, you 
know, industry coming in there has not been very good.
    Mr. Brotherton. We are an awful big shop.
    Mr. Stearns. Okay.
    Mr. Brotherton. We have a 22 bay shop.
    Mr. Stearns. Okay, 22 bays. Now Mercedes is a pretty 
expensive car to repair, right?
    Mr. Brotherton. Yes.
    Mr. Stearns. And you said BMW's and Mercedes generally.
    Mr. Brotherton. Yes.
    Mr. Stearns. And Mr. Everett, what kind of cars do you deal 
with?
    Mr. Everett. We service all makes and models.
    Mr. Stearns. So you will do a Ford, a Chrysler, imports, 
Mercedes, you will do them all?
    Mr. Everett. Yes. We do not do as many of the high end cars 
as maybe in some other areas. They are just not in our market.
    Mr. Stearns. If you can tell me, this year, how many 
customers do you have to refer to the local dealer, the BMW, 
Mercedes, Chevrolet, Ford dealer because you could not get the 
necessary information from the manufacturer? Just 
approximately.
    Mr. Everett. We are a pretty progressive shop.
    Mr. Stearns. Okay.
    Mr. Everett. We have become very, very good at finding work 
around to find a way to take care of our customers as somebody 
had indicated before.
    Mr. Stearns. You will just do whatever it takes?
    Mr. Everett. Yes, and some--well what I do know is that it 
costs our customers more time and more money than it should and 
it is becoming more and more difficult. I hear that not just in 
our own shop but I hear it from a lot of our members.
    Mr. Stearns. I know but you might tell me specifically, I 
mean here you are testifying on behalf of this kind of bill 
that Mr. Chairman Barton has. Can you specifically tell me 
where you have actually had to refer people to local dealers? 
Can you say I can remember on May 3 I had this Ford I could not 
get the part, this Chrysler. I mean, can you give me that kind 
of detail or not?
    Mr. Everett. Well we have had to on numerous occasions call 
outside vendors that specialize in certain areas that have 
special connects through backdoors and cars that we should not 
have been able to repair, we have been able to because of our 
leadership position in our market we have been able to take 
advantage of, you know, special arrangements. We should not 
have to do that and those arrangements are quickly getting 
cutoff so. I certainly know several other shops that just give 
up and send it back to the dealer. They are not as diligent 
as----
    Mr. Stearns. But not your shop?
    Mr. Everett. In my shop?
    Mr. Stearns. Other dealers you say give up but your shop 
does not. You seem like you have been able to overcome this 
problem.
    Mr. Everett. In my shop, I can think of one Mercedes that 
we had to send back to the dealer.
    Mr. Stearns. One Mercedes, okay. Mr. Brotherton, yes?
    Mr. Brotherton. I know exactly how many I have sent, two.
    Mr. Stearns. In this year?
    Mr. Brotherton. Yes, one Honda.
    Mr. Stearns. Yes.
    Mr. Brotherton. And one Audi. The Audi I could have got the 
equipment but I have not presented--I have not done that yet 
because it is a low volume part of my business. The Honda had a 
key issue and----
    Mr. Stearns. Can you specify the equipment we are talking 
about for the record.
    Mr. Brotherton. The Honda, their factory tool does not--
they have removed the immobilizer function, the programming of 
keys.
    Mr. Stearns. Okay.
    Mr. Brotherton. So we had to send a Honda. But I can do 
that for Mercedes, I can do that for BMW, I can do every system 
on the car for all those instances and I can do it because I 
bought the tools because I invested in it, I capitalized my 
shop, we have the training----
    Mr. Stearns. It occurs to me when you buy these tools, do 
you have to buy the tools that Mercedes tells you to buy or can 
you buy generic tools?
    Mr. Brotherton. I can buy what I want but if I want to do 
the job completely then----
    Mr. Stearns. You have to buy Mercedes tools.
    Mr. Brotherton. [continuing] I have to buy the Mercedes 
tools.
    Mr. Stearns. Okay. So you have got--your people are all 
trained and they use Mercedes tools and you have had no problem 
with cooperation from Mercedes in all that?
    Mr. Brotherton. We use--regularly I am on line right now 
because I was a member of the OEM audit, preliminary audit for 
the OEM websites and I am on--I have a half of year from 
Mercedes and I have been using it regularly but I was using it 
beforehand on a daily basis as necessary.
    Mr. Stearns. Okay.
    Mr. Brotherton. I have bought over the years volumes of 
manuals to work on the cars that I work on. I work on 10 car 
lines and I work on two of them real well. I plan on working on 
them as well as a dealer does.
    Mr. Stearns. Mr. Everett, I think it is in your court here 
to make the case. I mean, Mr. Brotherton says there are only 
two this year. He has--how many bays did you say you had?
    Mr. Brotherton. Twenty-two bays, we have done 10,000 
invoices, probably two to three repairs per invoice.
    Mr. Stearns. So Mr. Everett now I need those kind of 
statistics from you, too if possible. Is that a fair question 
for you?
    Mr. Everett. Yes, I think that is a fair question. I would 
purport that Mr. Brotherton's shop has a little different, 
little unique business plan compared to most independent repair 
shops.
    Mr. Stearns. It is very narrow in----
    Mr. Everett. It is very narrow, it is very specialized. It 
is much more like a dealer.
    Mr. Stearns. Yes.
    Mr. Everett. Much more like a dealer scenario so it is 
easier for him to spend that extra money or that extra 
investment to develop those relationships.
    Mr. Stearns. But he is not a dealer. He is not a dealer. 
You do not sell new Mercedes or BMW's?
    Mr. Brotherton. No.
    Mr. Stearns. Okay, go ahead.
    Mr. Everett. No, but the model is very similar to a 
dealership where it is one or two car lines that he works on on 
a regular business.
    Mr. Stearns. Okay.
    Mr. Everett. On a regular application. In a repair shop 
like mine which I feel better, is a better example of most 
repair shops in this country, I could not survive on just one 
make or model. There is not enough of one particular make or 
model in my area.
    Mr. Stearns. Yes.
    Mr. Everett. The cars that he is working on are higher line 
cars so you get more money to repair those in a general aspect. 
So the challenges that he faces in his specialized repair shop 
are much different than the great majority of repair shops out 
there. Those challenges are easier to focus on and maintain 
because you are seeing the same cars all the time.
    Mr. Stearns. I suspect though you are coming to this 
hearing and you are advocating for this bill. You should have 
statistics with you specifically from your shop to convince us 
that this bill is needed I would say. I mean but I also have a 
feeling that you are a good businessman and that you have grown 
the shop and that you make the customer happy and you----
    Mr. Everett. We fight to do that.
    Mr. Stearns. If necessary you will make the parts yourself. 
I mean, it looks like you are the type of guy that will do 
whatever it takes so----
    Mr. Everett. Practically, yes.
    Mr. Stearns. [continuing] you might be the average person 
in Ocala, Florida or maybe Gainesville is not a----
    Mr. Everett. Excuse me.
    Mr. Stearns. Go ahead.
    Mr. Everett. That is correct. And I would hate to, you 
know, of course in any way mislead the subcommittee. We have 
been able to find work around. I know that we fight, we have to 
fight to do that. We have to fight harder all the time.
    Mr. Stearns. Yes.
    Mr. Everett. And lots of scars from that. I also hear from 
other shops that maybe are not as progressive and they simply 
give up and send it back to the dealer.
    Mr. Stearns. Yes.
    Mr. Everett. And that hurts their business, it hurts their 
community, hurts their families that work at those shops right 
on down the line. We are very----
    Mr. Stearns. Mr. Brotherton says that not only did he get 
the tools that Mercedes told him he has had his people trained. 
So often times they can, the dealer can give you the 
information but if you do not have the people that are trained, 
you do not have the tools, you cannot do the job. So it is, you 
know, we are talking about just--not just information but the 
dealer training and the giving of the tools.
    Mr. Everett. That is an excellent point. And the 
aftermarket has developed very, very solid training programs. 
It is a condition of employment in my shop in writing that my 
employees must go to training every single month. We have 
become very good at if the information is available, teaching 
our guys how to repair these cars. And that is one of the 
tricky arguments we have when we talk to our consumers that it 
is very easy for them to get the wrong impression that we are 
not capable of fixing the cars. That is not the case at all it 
is a question of when the information is not available that we 
cannot fix it. And that is one of the reasons why we fight so 
hard not to send that car back to the dealer. You lose 
confidence from your customers. They just think well Bob just 
cannot fix my car anymore. That is a very difficult thing.
    Mr. Stearns. My time has expired.
    Do you have quick question or quick----
    Mr. Brotherton. I would like to make a statement that 
although I work on a high line of cars. I also work on 10 car 
lines. I work on Volkswagens, I work on Hondas, I work on 
Jaguars, Volvos, and Saabs. I have a factory tool for all of 
those cars. And it was my business decision to buy those tools, 
to make information accessible for myself and it is accessible. 
It is only a matter of the commitment of the shop. It is 
strictly a matter of the commitment of the shop. It is 
accessible.
    Mr. Stearns. My time has expired.
    Ms. Schakowsky?
    Ms. Schakowsky. With all due respect to the other 
panelists, I want to focus on this as well because I think it 
kind of gets to the heart of the matter.
    And so Mr. Brotherton, you represent the Automotive Service 
Association that you say is the largest of the auto repair 
shops. How did you come to the position that you are taking? 
Did you survey your members you represent in your view the 
majority of small and medium auto repair shops?
    Mr. Brotherton. My position happens to be the same as the 
ASA position. I am not at the moment in any functional capacity 
of ASA. I have a personal experience with this issue because I 
was involved with----
    Ms. Schakowsky. But let me just say, I am looking at the 
statement of Mr. Steve Brotherton, Automotive Service 
Association before the U.S. House Energy and Commerce 
Committee. Are you not speaking for them?
    Mr. Brotherton. I am speaking representing their point of 
view.
    Ms. Schakowsky. And that is why I am asking how is that 
point of view determined?
    Mr. Brotherton. My point of view, I mean, the way it was 
determined for me was from----
    Ms. Schakowsky. No, I am asking how the association--you 
are representing an official position of an association that I 
know Mr. Everett himself is a member of, right, so I am just 
wondering what the process was. I think we have to have 
confidence that when you speak for an association that there 
was a process to assess that you are accurately representing 
the interests of the associations.
    Mr. Brotherton. Which point are you making? I----
    Ms. Schakowsky. I want to know how, did you survey, were 
the members surveyed? I am looking around this room and I 
suspect that there are a number of people wearing yes on 2048 
badges that are also members of ASA as is Mr. Everett. So I am 
just curious.
    You told me for example, Mr. Everett that 79 percent of 
NFIB or 77 percent of NFIB numbers were surveyed and said that 
they supported this legislation.
    Mr. Everett. That is correct.
    Ms. Schakowsky. Was there a percent of ASA members that you 
know that support, that oppose this legislation?
    Mr. Everett. And that was directed to me, ma'am?
    Ms. Schakowsky. No, I am asking Mr. Brotherton.
    Mr. Brotherton. I would imagine that there probably are. 
And the ASA, I presume is a representative association. They 
elect leaders and----
    Ms. Schakowsky. Yes, I would like them to get from ASA that 
information.
    Mr. Brotherton. I am not----
    Ms. Schakowsky. I know. I just thought if I could ask you 
to----
    Mr. Brotherton. I am a technical expert I know what the 
issues are that we are talking----
    Ms. Schakowsky. Let me--okay, Mr. Everett you----
    Mr. Everett. Yes, I would just like to add to that. Our 
coalition actually did a survey of ASA members and according to 
the survey we performed at that time, the majority of ASA 
members had stated that they had problems with information 
access in this particular area. Unfortunately I am not in 
agreement with the leadership of our association and the 
position they have taken. Although, of course, they questioned 
our survey there but we have actually even tried even--I 
certainly know ASA never asked me what my opinion was, although 
they know now.
    Ms. Schakowsky. One of the ways that we are trying to get 
at to measure the extent of the problem is the number of times 
that a customer has to be turned away and sent back to the 
dealer. But what I am getting from you is that that is not the 
only way to judge whether or not we have a problem on our hands 
and I wondered if you could go into that a little bit more, 
what those problems are.
    Mr. Everett. I would agree with you there that we--the 
better shops, the more aggressive shops, the more well equipped 
shops still are very good at using their relationships perhaps 
out the backdoor through the loop back at the dealer and 
getting some information that is more of a privilege that we 
normally would not be able to get. I can tell you that it is 
becoming very, very difficult for us to repair the car in a 
timely and cost effective manner. And I definitely have had 
many instances where they are holding a car over another day or 
two or three to get stuff taken care of for my customers. That 
has cost them time, it has cost them money. And in a lot of 
cases to keep my customer as a businessman, I will end up 
eating that extra inconvenience, even lend them a car if I have 
to. That I have had many instances over the year and the 
problem is getting worse I guess.
    I first starting working on this instance, issue I guess 
back in 1998. I went to an ASA convention in Detroit, Michigan. 
I was invited to a special hearing with Charlie, the man who at 
the time was in charge of the information rule with the EPA and 
we had the mechanical ops committee from ASA there along with 
one of my colleagues that did a presentation about this problem 
that we saw coming down the road. This was back in 1998. And at 
that point we asked ASA what their position was. They did not 
have one at that time. From that point in, they continued, they 
developed a position. For a long time they were on our side of 
the table. Unfortunately, they cut a deal and switched to the 
other side.
    Ms. Schakowsky. Let Mr. Brotherton----
    Mr. Brotherton. Just to give you an answer to your specific 
question. The ASA has a democratically elected board of 
directors who unanimously decided to support the automaker 
agreement. In a survey that they sent out to members, 99 
percent of the respondents supported the agreement.
    Ms. Schakowsky. And did the survey go out to all the 
members?
    Mr. Brotherton. I would presume it was sent to all the 
members, that is what they told me, yes.
    Ms. Schakowsky. Mr. Everett?
    Mr. Everett. Ms. Schakowsky, I was handed the specifics 
from the survey that was done. The overwhelming level support 
is consistent along the lines of automotive service providers. 
Ninety-eight percent supported H.R. 48, Automotive Service 
Association members 93 percent, and Automotive Aftermarket 
Industry Association members 94 percent, members of the State 
automotive retail trade groups 92 percent.
    Ms. Schakowsky. This is what survey?
    Mr. Everett. This is the survey that our group has done by 
the Terrance Group, Lakes, Nell, and Perry Associates, key 
findings of the survey of automotive aftermarket retailers.
    Ms. Schakowsky. Okay.
    Mr. Everett. So it is by in large from 90 percent of the 
shops and members of the aftermarket feel there is a problem 
with information access.
    Ms. Schakowsky. Well we have got a serious discrepancy here 
obviously. So Mr. Brotherton are all these people who obviously 
tool time off from work and came here and--are they just 
inadequate in their--I mean, what--how do we end up with this--
are you denying that these are problems or are you----
    Mr. Brotherton. No, it is easy to see I would deny that. I 
mean, physically I have got the information to do what I need 
to do to fix cars. I have the tools.
    Ms. Schakowsky. In a costly and timely way for people who 
may not have the kind of business that you have?
    Mr. Brotherton. I send my--to give you a figure, there is 
50,000 members of the IAPM, that is an internet based 
technician group worldwide but most of their members are in the 
United States. There is somewhere in the neighborhood of 
250,000 certified AFC masters. If you were to take those 
relationships with those figures, you would notice that the 
ones that are participating in the finding of technical 
information are the ones that are able to find the information 
to fix cars.
    Ms. Schakowsky. So would you recommend to me that I go back 
to the auto--the car repair shop owners that met with me in my 
district and just tell them, sorry, you do not have a problem.
    Mr. Brotherton. They just need to get on the ball. It is--
--
    Ms. Schakowsky. So all these guys are just not on the ball?
    Okay, all right, I thank you, I yield.
    Mr. Stearns. The gentlelady's time has expired.
    The chairman of the full committee, Mr. Barton.
    Chairman Barton. Thank you, Mr. Chairman.
    I want to follow up on Ms. Schakowsky's questions here with 
you Mr. Brotherton. You at one time, I think supported 
legislation or was a part of a group that did but you have now 
changed your position and you are opposing. Is that correct?
    Mr. Brotherton. Yes, that is correct.
    Chairman Barton. Okay. And you have, you are a repair--do 
you own a repair shop or repair vehicles?
    Mr. Brotherton. I have what is called a Boss Service 
Center.
    Chairman Barton. Okay. Have you ever had any trouble 
getting any information from specific automobile manufacturers?
    Mr. Brotherton. In the late 1990's we had a terrible 
problem. It looked like it might be the end of our business but 
that has been totally changed by this agreement.
    Chairman Barton. All right. Well your website has a 
statement on it that--and I want to quote it. I am told this is 
verbatim from it. ``You might have to take exception to the 
statement of good online sites for VW, Audi, and Porsche. They 
sell their information or info in bits and pieces. They are 
widely told to not be in compliance with the intent of the 
NASTF agreement.'' And it is signed Steve. Is that your 
statement or another Steve's statement?
    Mr. Brotherton. This sounds like it is not off of my 
website. But it is very easily something I could have said. 
There are a lot of issues if you put them into perspective. I 
did as I stated maybe 30,000 repairs individual repairs this 
year and two of them I could not do.
    Chairman Barton. Well this is from a Steve Brotherton who 
is the owner, technical information specialist of Continental 
Imports in Gainesville, Florida or purported to be. So are you 
saying that this is an imposter or this is not you?
    Mr. Brotherton. What is the issue? I do not deny making 
that statement. I believe that Volkswagen and Porsche, Porsche 
is not a signer of this agreement. And Volkswagen and Audi both 
use a paid for document when you are dealing with information 
and I would not agree that they are doing a very good job.
    Chairman Barton. Well I am told that they were a signer as 
of the 2002 agreement. Is that not true?
    Mr. Brotherton. My impression both Volkswagen and Audi 
signed but Porsche did not.
    Chairman Barton. So the way to say everything is okay is 
just have the manufacturers not sign any of these volunteer 
agreements and then they can do whatever they want to but the 
end result is that your customers or other repair shops 
customer's do not get their vehicles repaired at an independent 
repair shop. Is that a solution in your opinion?
    Mr. Brotherton. The solution is not--that is in effect is 
not perfect and it is working tremendously for people that are 
doing 90 percent or 99 percent of the repairs. Porsche is a 
very limited market.
    Chairman Barton. Okay. Well I do not want to browbeat you, 
you came here voluntarily and you are trying to do good work 
and you have every right to the position that you take so I am 
just--it seems kind of interesting that this statement----
    Mr. Brotherton. Well I----
    Chairman Barton. [continuing] seems to be somewhat at 
variance with your written testimony.
    Mr. Brotherton. I have taken exception to many of the 
problems that exist including the security problems with Honda, 
Nissan, Audi, and Volkswagen have made it very difficult and I 
cannot do it right now but it is not because it is not 
available.
    Chairman Barton. Okay. I want to ask a question of, is it 
Braziel?
    Mr. Braziel. Yes.
    Chairman Barton. You are representing the dealers.
    Mr. Braziel. Yes, sir.
    Chairman Barton. What is their primary concern about this 
agreement, volunteer agreement or the legislative solution if 
we have to go that route?
    Mr. Braziel. I think that as I mentioned in my testimony 
that we believe that a voluntary private sector solution is the 
best answer.
    Chairman Barton. How do you enforce--I do not disagree with 
that but how do you enforce it? We cannot even get your group, 
not you personally but to agree on representation on this 
board. I mean----
    Mr. Braziel. Well I think that there is agreement to have a 
fair and balanced board. The question is what is that fair and 
balanced board? And as a number of people mentioned, this is--
there are many different sides to this debate. And I understand 
why manufacturers do not want me on their floor and I 
understand why aftermarket providers do not want me on their 
floor. So I think we have to find a way that, you know, anybody 
who is a stakeholder in the information needs to be 
represented. And if could just make one final point on that 
issue. It seems to me if you look at everybody around that 
table, not the table at the BBB but all the stakeholders, the 
only party, everybody other than the manufacturers are the ones 
seeking that information. So I do not know that we necessarily 
need some type of precise formula to have a 50/50 board because 
everybody's position other than the manufacturers and the 
manufacturers have the information, everybody else needs the 
information.
    Chairman Barton. But the dealers and I am not--I have a 
good relationship with my dealers in my district in my State so 
I am not browbeating the dealers but when a dealer has an issue 
on a repair issue or a parts issue, there is a--in almost every 
case a rapid response to that issue.
    Mr. Braziel. Um-hum.
    Chairman Barton. Your dealers have to pay for the equipment 
and pay for--I mean it is not a free service but an independent 
repair operator does not have it, does not have that leverage, 
does not have that, you know, sometimes the system works, 
sometimes it does not. But when it does not work, it really 
does not work big time and, you know, that is a difference and 
I think you would agree with that.
    Mr. Braziel. Well I think clearly due to the level of 
investments that a dealer makes in a service or training, the 
equipment that he is required to do by the manufacturer----
    Chairman Barton. But the independent repair shops have to 
buy the equipment and pay for the computer program and all. 
They are not--it is not coming to them UPS for free, I mean 
they are having to----
    Mr. Braziel. Absolutely, no question about that but I 
thought the intent was to ensure that access and we believe 
that access to be good for all markets.
    Chairman Barton. I want to ask one more question with the 
chair's indulgence. I want to give an antidote. I have a 
vehicle, a Ford vehicle that was under warranty and of course 
it is always the case just out of warrant I had transmission 
problems. So I tool it to my dealer where I live. I have a 
personal relationship, a very positive relationship with this 
particular dealer. And I took it into the repair operation and 
they suggest Mr. Barton, it is a transmission problem. I think 
the quote was just to kind of look at it it was going to be 
$500 and then once they looked at it it was going to be in the 
neighborhood of $2,000 to $3,000 to repair it. And it had been 
out of warranty just like months or so I, you know, I said I 
cannot afford that. I cannot pay it. I wish I could but I 
simply cannot. So I called an independent repair shop in a 
different community about 15 miles away who was an expert in 
transmission and had a good reputation and I said can you look 
at it and they said yes because the car was still drivable. I 
said will you charge me anything to look at it? He said no. And 
then I told him what the people at the dealership had told me 
and he said well I cannot guarantee it but based on that, I 
think I can do it for, repair it for $1,000 which is not cheap. 
I mean, my God, you know. I just had a baby and $1,000 buys a 
lot of Pampers. And so I had told the dealership that I would 
let them know because I, you know, I needed to get it repaired. 
So I called back out there and said I am going to take it over 
to this other community and they are going to work on it over 
there but I want to thank you all for taking a look at it and 
la-de-da. And then the guy said well what are they going to 
charge you? I said, well it is not for certain but he says it 
should not be more than $1,000. Well then I am literally 
walking out the door to hop in the car to go to the other 
community and the dealer himself calls me back. And he says 
Joe, I understand la-de-da, yeah, yeah, yeah. He said we will 
do it for $1,000.
    Now you have to have a competitive alternative. And I am 
not saying the initial estimate at the dealership was a bad 
estimate. I mean it was--but if it had not been for the 
independent repair shop and, you know, that would not have 
happened. So all we are trying to do in this whole bill is to 
give people the consumers the opportunity to choose and there 
are going to be a lot of opportunities when they are going to 
choose the dealer. But there are going to be some opportunities 
for whatever reason they are not going to and we need to not 
end this bill to make that happen.
    With that I yield.
    Mr. Stearns. The gentleman yields back.
    Mr. Deal?
    Mr. Deal. Thank you, Mr. Chairman.
    We have had a lot things said here today that are very 
contradictory as others have observed. But I am going to take 
exception to something that was said but probably not intended 
in the way that I took it. And that is whether or not 
independent service dealerships or dealers are on the ball. The 
truth of the matter is that these are true entrepreneurs. They 
do not have a supply chain from a manufacturer that guarantees 
that the customer is going to come to them. If they are not on 
the ball, they are out of business. So I think they are 
definitely on the ball. The question is can we make them in a 
fair and competitive environment so that nobody is advantaged 
or disadvantaged.
    There are some phrases that this panel has used which I 
think are very good phrases and I want to explore them. Mr. 
Braziel you said that the real question is equivalency of 
access. And I think most everybody has agreed that is really 
the issue, equivalency of access. Other statements that were 
made is Mr. Lowe said that we were really talking about two 
areas here, that is tools and diagnostic capabilities. Those 
were the two big categories. Do we all sort of agree on that? 
Okay, let us dissect those two if we might. First of all with 
regard to tools, we have heard conflicting statements on the 
tools. Mr. Cabaniss says that the tools are already being 
offered for sale. Mr. Lowe says that that was part of the 
agreement where it broke down was that they were not willing to 
make those tools available under the same circumstances.
    Let me see if I can unravel the issue about tools first of 
all. Mr. Cabaniss, let me start with you and then Mr. Lowe if 
you would follows up on that issue.
    Mr. Cabaniss. With, excuse me, with respect to tools, the 
manufacturers, auto manufacturers currently make all tool 
information available for emissions and non-emission functions 
available to the tool companies. There are some cases where 
licensing agreements are required but in most cases that 
information is provided for no charge. It is then up to the 
tool companies themselves to decide how they use that 
information. They would have to look at their business case and 
decide whether they are going to build those functions into the 
tools they sell or not. The manufacturers have no control over 
how they use that information but it is available.
    Now with regard to the facilitative agreement discussions, 
our problem with talking about tool and tool information had 
nothing to do whatsoever with this availability today or 
tomorrow. Our concern was discussing how to deal with tool 
information in the context of the BBB discussions was simply 
the fact that the tool companies were not at the table and that 
if we are going to have discussions that cover how to deal with 
tool issues and how to, you know, what problems there may be 
with the current system, then it only made sense to us that 
tool companies had to be part of those discussions and part of 
finding a solution. And so that is the--why we in the 
facilitation process resisted the discussions about tools.
    Mr. Deal. All right. Mr. Lowe, would you comment?
    Mr. Lowe. Sure. There are two issues here and it is 
important to understand the distinction. There are tools that 
are provided by the car companies to the aftermarkets that are 
``the only tools'' and they are sold and they are supposed to 
be sold and have the same capabilities. But we were told during 
negotiations were that the tool that we get as an aftermarket 
is often different than the tool that is sold to the dealer and 
that they would not guarantee that they would be the exact 
same--have the same capabilities as the tool the dealer got. 
They sold it to a distributor who gave it to us and that was 
the end of their responsibility and that was unacceptable to 
us. There are discontented in some cases for just warranty 
administration and that is fine with us. But what we wanted was 
a commitment that they were the same repair and diagnostic 
capabilities and they were not willing to do that.
    The other issue on tools is the capability provided to our 
tool manufacturer suppliers so that they can put their 
capabilities into the tools. So what we agreed to there was as 
Mr. Cabaniss stated correctly that we were--because the tool 
companies were not there and because it is a very complicated 
issue as to what is available and how it is provided, we were 
willing to punt that issue to after the negotiations. However, 
we wanted a commitment in the agreement that all diagnostic 
capabilities and repair capabilities were going to be made 
available to us and that there would be a timeframe set for 
when the agreement would be set with the tool companies and 
that also did not--was not happening as far as the agreement. 
And we could not come to an agreement on that. So that is what 
I was referring to in the tool issue. It may be that, you know, 
as we were able to get through that we might be able to fix it 
but they were being very obtuse about that issue.
    Mr. Deal. Mr. Everett, did you want to comment on that?
    Mr. Everett. Yes, I would agree with Mr. Lowe. In some 
cases there is an aftermarket version of the tool and an OEM 
version of the tool. Sometimes they say it is the same but when 
we end up getting the tools, we find that they are not always 
actually the same. There have been plenty of instances like 
that. Like Mr. Lowe said, what we were also looking for was for 
them to make the commitment that they would release it to our 
aftermarket companies so that we could let the free market, you 
know, adjust the cost of the tool. Sometimes these tools are 
quite expensive and it is just not economically feasible for a 
shop to purchase that tool. We were willing to let our market 
and our suppliers work that out.
    Mr. Deal. So we need to expand the table even further to 
bring the tool manufacturers into this debate and they were not 
there.
    Mr. Everett. We were willing to bring them in later on, we 
just wanted the commitment at the time. We recognized that it 
was a very complicated issue.
    Mr. Deal. And that still has not been resolved?
    Mr. Everett. Correct. They would not make the commitment 
and release the information needed for our tools----
    Mr. Deal. I would encourage everybody to work on that part 
of it.
    Mr. Everett. And the other part was they wanted to limit us 
to just what is known as scan tools. We see as the industry is 
progressing that there are other tools other than what is 
commonly referred to as scan tools which basically just hook 
into the computer system that is coming down the line. The most 
common thing out there right now is some manufacturers require 
a different tool to reset tire pressure monitors, as simple as 
filling the tire up and re-monitoring the--resetting the PPMS 
system on the car. And we could see lots of other tools coming 
down the road. If they were not included, we could be right 
back here again.
    Mr. Deal. It sounds to me like this could be a major part 
of the disagreement until it is resolved.
    Okay. Let me go to the second part and that was the 
diagnostic capability. They obviously have some overlap between 
the tools and diagnostic capability. What is the biggest 
problem if there is with the diagnostic capabilities or is 
there a problem with diagnostic capability being able to be 
received by the people who are not at the dealership level.
    Mr. Lowe. I think from, you know, we thought diagnostic 
tool capabilities were the same that they provide the 
information to the tool companies. There was the issue of the 
information, definition of service information in that we 
thought that the information that comes from the hotlines 
needed to be provided to the independent aftermarket if it was 
being provided to all their dealers to fix the car. So we were 
concerned that the independents could be bypassed if 
information was just going through the hotlines to the dealer 
facilities then we could not have access to that information. 
They were only willing to give us what was printed or what was 
on their TFC or a manual.
    Mr. Deal. Mr. Braziel, what is your take on that?
    Mr. Braziel. I would say this. The issue that we are 
getting to is, you know, how much are we going to put into a 
dispute resolution system. I think it gets back to your 
original point that without the toolmakers there, it becomes 
very difficult for these parties to negotiate. With regard to 
the hotline, the manufacturers were concerned that that would 
lead to untold dispute resolutions over whether something was 
told to one single dealer by one dealer tech hotline so they 
wanted a bright line of when we publish something to send it to 
all our dealers. That is the bright line that we know of that 
we are making that available to the aftermarket. I think quite 
frankly most of those dealers tech hotline questions are 
probably vehicles under warranty and it is not going to be in 
the manufacturer's interest once they have a solution to a 
problem to withhold that information from their dealers.
    Mr. Deal. Mr. Chairman, you have been very gracious and I 
am over my time.
    I yield back.
    Mr. Stearns. I thank the gentleman.
    Ms. Blackburn?
    Ms. Blackburn. Thank you, Mr. Chairman. And thank you all 
for your patience and for hanging with us on this.
    Mr. Braziel, I think with you for just a minute. We were 
talking in the last panel. I said that about the board 
governance.
    Mr. Braziel. Um-hum.
    Ms. Blackburn. And let me ask you for a moment. Do you see 
this as a 50/50 split as to which--I want to hear your comments 
on this.
    Mr. Braziel. Sure. I made those comments to the chairman a 
minute ago. The 50/50 issue just to explain how difficult----
    Ms. Blackburn. Let me stop you then because if you made 
them to the chairman that is while I was walking back down from 
the office and I will get it from the transcript. I do not want 
to take my time for that.
    Now I want you to tell me, we have talked a little bit 
about my district and what I have at this district and Mr. 
Everett, I have got a lot of NFIB member shops that are in my 
district. So Mr. Braziel, let us say we are out in rural West 
Tennessee and we are down in Summer, Tennessee and somebody has 
a car and something happens and they cannot get to Jackson or 
Memphis and they need to get into one of those shops but there 
is not a dealer there that is going to service that particular 
car. These folks have driven out of town and bought that car. 
So are the diagnostic, the tools, the codes, everything that is 
required to service a new car are they available to independent 
dealers? Would they be able to get some help? I mean or are 
they just going to be stuck and have to have it towed back into 
Memphis or Nashville or Jackson to get that car fixed?
    Mr. Everett. Well I think I mentioned earlier that, you 
know, we have to kind of distinguish between equivalency of 
access and equivalency of outcome. And the question is whether 
it is accessible. Yes, it is accessible. I think Mr. Brotherton 
can speak to that that he has all the information and the tools 
that he needs.
    Ms. Blackburn. Sounds like it does, 10 lines that he works 
on.
    Mr. Everett. And so the question really becomes one of 
investment. Are you willing to make the, you know, based on the 
business model that you are working on----
    Ms. Blackburn. So you would see it as a choice issue?
    Mr. Everett. Absolutely. And we face the same circumstance 
when, you know, we are working on a used vehicle. We are going 
to make an independent business decision----
    Ms. Blackburn. Okay, great. I am going to go to Mr. Everett 
and Mr. Brotherton and Mr. Everett, to you first. The websites 
that have been referenced repeatedly today, do you use those 
and can you get the information that you need in your shop from 
those websites to fix the vehicles that roll in?
    Mr. Everett. We have lots of sources for information out 
there. The websites are one of the resources.
    Ms. Blackburn. Do you use them?
    Mr. Everett. We go through services that we contract with 
to provide information. I have been on the sites a few times 
and looked around and stuff. We count on a third party to 
utilize----
    Ms. Blackburn. Okay, like Mitchells.
    Mr. Everett. Excuse me, utilizes them regularly.
    Ms. Blackburn. Okay. Have you heard of providers 
complaining about not having access to automaker service 
information?
    Mr. Everett. Yes, all the time.
    Ms. Blackburn. You hear it all the time?
    Mr. Everett. Yes, from our members that are forced to for 
whatever reason send the vehicles back to the dealer. If it is 
too hard, too difficult, too expensive----
    Ms. Blackburn. Okay. You are speaking for NFIB. Have you 
all logged this? Can you provide us with the number of times 
because we heard from Mr. Stanton that on his system there has 
only been 50 complaints so is that something that is 
quantifiable?
    Mr. Everett. The only method that is out there right now 
that has attempted to quantify them is the NASTF process. And 
as I said in my testimony, it is perceived as just ineffective 
and a waste of time. Are members have not been participating in 
that. It just does not seem--there is nothing in it for the 
technician. They go through it and the idea of a complaint on 
NASTF being resolved is simply somebody answers and it does not 
matter whether cars actually get fixed or not. It is just a 
waste of time in production shop. It is very difficult for 
participants to do that.
    Ms. Blackburn. Okay. My time is about to expire. Thank you, 
I appreciate this. I do hope as we have said earlier with the 
previous panel that you all can work this out and we do not 
have to do this for you. I do think you would rather work it 
out than have us do it and anyone who has an entrepreneurial 
bone in their body would rather keep Government from making the 
decision for them so I wish you all well.
    Mr. Chairman, I yield back.
    Mr. Stearns. The gentlelady yields back.
    I do not think there is any additional members who would 
seek to ask any further questions so I will conclude the 
hearing. But I would say to all of you and to audience thank 
you for coming and participating, also to those in the back who 
are participating and supporting the bill. We appreciate you 
coming here too and I know it is a lot of sacrifice for you to 
leave your jobs and so forth.
    After hearing this, I think I am going to recommend to Mr. 
Barton, the Chairman, that somehow we craft a letter to the 
Federal Trade Commission to help create an independent board 
structure and a binding dispute resolution mechanism that sort 
of resolves the fundamental problem. I do not know how you feel 
about that but I am going to recommend to Mr. Barton, the 
Chairman that he look at that and I will do that only after 
talking to the Federal Trade Commission to see if they can put 
it in place and how they feel about it and actually working 
with the minority and majority and others but it seems to me 
after 10 hearings and 4 to 6 hours in these hearings and 
hearing some of the disputes that have just come out of this, 
that it might be something that all of you would consider as an 
independent board structure through the Federal Trade 
Commission. With that, the subcommittee is adjourned.
    [Whereupon, at 1:35 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]
     Prepared Statement of the Retail Industry Leaders Association
    Dear Chairman Stearns: On behalf of the Retail Industry Leaders 
Association (RILA), I am writing in support H.R. 2048, the ``Motor 
Vehicle Owners' Right to Repair Act.'' This important legislation 
improves consumer choices and protects the rights of ordinary Americans 
who enjoy performing maintenance on their own automobiles. We 
appreciate that you have scheduled today's hearing to consider this 
important issue, and urge you to support and schedule a vote on 
H.R.2048 in this session of Congress.
    The Retail Industry Leaders Association (RILA) represents the 
nation's most successful and innovative retailer and supplier 
companies--the leaders of the retail industry. Retail is the second 
largest industry in the U.S., representing $3.8 trillion in annual 
sales and 12 percent of our nation's workforce. RILA member retailers 
and suppliers operate 100,000 stores, manufacturing facilities and 
distribution centers throughout every congressional district in every 
state, as well as internationally. The leadership of its Board of 
Directors includes some the world's leading retail companies, including 
Best Buy Co., Inc., Wal-Mart Stores, Inc., Target Corp., Michaels 
Stores, and other top retailers.
    While current automobile technology undoubtedly provides many 
benefits to consumers, we understand that the inaccessibility of 
information related to those technologies is preventing car owners from 
repairing and maintaining their own vehicles. It may also be preventing 
them from choosing their own auto mechanic or the parts needed to make 
repairs. Currently, only automobile manufacturers and their dealers--
not independent repair shops or owners themselves--have complete access 
to all of the information that is needed to make repairs and perform 
maintenance.
    We believe it is unfair to deny consumers access to information 
about the products they purchase. In order to make informed decisions, 
consumers ought to be provided with as much information as possible 
about the products that they wish to purchase, including information 
about the proper care and maintenance of automobiles.
    That is why we support H.R. 2048, legislation that would require an 
automobile manufacturer to disclose to the vehicle owner--or to the 
repair shop that they choose--the information necessary to diagnose, 
service, or repair their vehicle. We believe that when a consumer 
purchases an automobile, they have a right to expect that they own not 
just the vehicle, but also the information necessary to properly 
maintain or restore their property.
    Several of our retail member companies carry automobile aftermarket 
products, including AutoZone, Inc., CSK Auto Corp., PEPBOYS AUTO, as 
well as general retailers Wal-Mart Stores Inc., Sears Holdings Corp., 
and others. This legislation would directly benefit millions of 
customers who shop at those retailers every year by improving their 
ability to perform routine maintenance on their automobiles. Finally, 
we also support the bill because it embodies an important principal 
embraced by the entire RILA membership--that government policies should 
promote free market competition by enhancing consumer choice and 
expanding consumer access to price competitive merchandise.
    Again, we thank you for holding this important hearing, and ask 
that you support passage of H.R. 2048 in this session of Congress. If 
you have any questions about this matter, or any other aspect of RILA's 
government affairs program, please don't hesitate to contact me.
                                 ______
                                 
          Prepared Statement of the Tire Industry Association
    Chairman Sterns, Members of the Subcommittee, on behalf of the 
5,300+ members of the Tire Industry Association (TIA), thank you for 
the opportunity to submit testimony for the record. This hearing on 
``Consumer and Mechanic Access to Industry Information on Car Parts'' 
is very important to the automotive industry and specifically the tire 
industry.
    My name is Roy Littlefield and I am the Executive Vice President of 
the Tire Industry Association. TIA is an international association 
representing all segments of the tire industry, including those that 
manufacture, repair, recycle, sell, service or use new or retreaded 
tires, and also those suppliers or individuals who furnish equipment, 
material or services to the industry. The Tire Industry Association 
(TIA) has a history that spans more than 80 years and includes several 
name changes. Originally known as the National Tire Dealers & 
Retreaders Association (NTDRA), the organization gave birth over the 
years to the American Retreaders Association (ARA) and the Tire 
Association of North America (TANA). ARA changed its name to the 
International Tire & Rubber Association (ITRA) and merged with TANA in 
2002 to form the current Tire Industry Association (TIA), which now 
represents every interest in the tire industry.
    The majority of TIA members are independent tire retailers who also 
perform automotive service. Our members have found it increasingly 
difficult over the years to service new vehicles due to the limited 
``sharing of information'' from the automobile manufacturers. As new 
technology develops, this information is not readily disseminated 
outside the network of automobile dealers. This is why TIA fully 
supports the Vehicle Owner's Right to Repair Act (H.R. 2048). The House 
version of the bill has been reintroduced by Representative Joe Barton 
(R-TX) and we urge every Member of Congress to support this crucial 
legislation.
    The Vehicle Owners' Right to Repair Act would mandate that the auto 
manufacturers--including all original equipment manufacturers (OEMs)--
provide affordable access of all vehicle service information and tools 
to independent repair facilities. Anything available to the auto 
manufacturers' franchised dealers would be available to the independent 
repair facilities. At this time, the bill could not be more important 
to our members.
    On April 8, 2005, the National Highway Traffic Safety 
Administration (NHTSA) issued its final Tire Pressure Monitoring System 
(TPMS) rule. The Transportation Recall Enhancement, Accountability and 
Documentation (TREAD) Act passed as a result of the Ford/Firestone 
crisis in 2000 included a mandate that all new passenger vehicles be 
equipped with a TPMS. According to this regulation, all passenger and 
light truck vehicles must be equipped with a TPMS system by September 
1, 2007. One of TIA's largest concerns with the latest TPMS ruling is 
that the government is ignoring the need of independent tire dealers 
and automotive service providers to be given the OEM information 
necessary to install, service, maintain, recalibrate and fix these TPMS 
systems. Our members will be dealing with these monitoring systems, yet 
there are a variety of different companies that manufacture them, and 
all are slightly different. TIA members will need information from the 
OEMs to figure out each TPMS system and that information is not always 
easily accessible or available. The time for passage of the Right to 
Repair Act has never been more important to the tire industry or more 
critical to our members.
    I am aware of the automobile manufacturers' agreement with the 
Automotive Service Association (ASA), promising that repair information 
and tools would be forthcoming--implying that there is no need for this 
bill. TIA, while viewing that agreement as a step in the right 
direction, sees no enforcement mechanism in the agreement and therefore 
still fully supports the Motor Vehicle Owners' Right to Repair Act. TIA 
remains concerned that without the legislation, the auto manufacturers 
could back out of this agreement at any time, forcing the industry to 
start the battle all over again from the beginning. TIA is also aware 
that many of the auto manufacturers are putting service information on 
the Internet but we hear from our independent dealer members that the 
information is not complete and still very costly. Furthermore, some 
auto manufacturers never signed the ASA agreement and therefore feel no 
obligation to provide any information to any independent dealers.
    The automobile manufacturers that signed the letter of agreement 
with ASA oppose passage of the Right to Repair Act. THIS MAKES NO 
SENSE! If these manufacturers plan to keep their end of the agreement 
and make information accessible and affordable to independent service 
providers, this legislation only backs up their commitment to the 
automotive service industry. The fact that these manufacturers oppose 
this legislation causes me to question their commitment to the 
agreement and forces TIA to keep supporting the legislation.
    Consumers deserve the right to take their vehicle to their mechanic 
of choice. They should not be forced to return to auto dealerships for 
service because independent providers do not have access to the tools 
and information they need to repair a vehicle. This is another critical 
aspect of this legislation.
    Last Congress the Right to Repair Act had over 100 bipartisan 
cosponsors. There were concerns voiced by the Federal Trade Commission 
about the bill and the FTC's role in enforcement. These concerns have 
been addressed in H.R. 2048. The Act never intended to force the auto 
manufacturers to give away proprietary information or ``trade 
secrets''. This point has been clarified in the ``new & improved'' 
bill. Also, this year's bill clarifies the FTC's involvement with 
enforcing the mandate on auto manufacturers.
    Recent negotiations between the auto manufacturers and the 
aftermarket were held in an attempt to come to a non-legislative 
resolution on the right to repair issue. These negotiations have broken 
down without a final solution. TIA strongly urges this Subcommittee to 
move H.R. 2048 to allow independent repair facilities access to the 
information they need to service vehicles.
    I urge every member of this Subcommittee to support the Right to 
Repair Act by cosponsoring the bill. TIA is committed to seeing this 
legislation pushed through Congress for the betterment of businesses 
performing automotive repair and to ensure that the tire industry can 
service tire pressure monitoring systems during routine maintenance.
    If you have any questions about my testimony, please contact me at 
800-876-8372 x 108 or [email protected].
                                 ______
                                 

                                 

```