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[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]

    LEGISLATIVE HEARING ON VIN DATABASE AND AUTO WHISTLEBLOWER BILLS

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

                                HEARING

                               BEFORE THE

           SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 25, 2015

                               __________

                           Serial No. 114-78

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov
                                   ______

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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
GREG WALDEN, Oregon                  GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILL JOHNSON, Missouri               JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                     Massachusetts
RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California7
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota

           Subcommittee on Commerce, Manufacturing, and Trade

                       MICHAEL C. BURGESS, Texas
                                 Chairman
                                     JANICE D. SCHAKOWSKY, Illinois
LEONARD LANCE, New Jersey              Ranking Member
  Vice Chairman                      YVETTE D. CLARKE, New York
MARSHA BLACKBURN, Tennessee          JOSEPH P. KENNEDY, III, 
GREGG HARPER, Mississippi                Massachusetts
BRETT GUTHRIE, Kentucky              TONY CARDENAS, California
PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas                  G.K. BUTTERFIELD, North Carolina
ADAM KINZINGER, Illinois             PETER WELCH, Vermont
GUS M. BILIRAKIS, Florida            FRANK PALLONE, Jr., New Jersey (ex 
SUSAN W. BROOKS, Indiana                 officio)
MARKWAYNE MULLIN, Oklahoma
FRED UPTON, Michigan (ex officio)

  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     1
    Prepared statement...........................................     2
Hon. Janice D. Schakowsky, a Representative in Congress from the 
  State of Illinois, opening statement...........................     3
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................    52
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, prepared statement........................    53

                               Witnesses

John Bozella, President and CEO, Association of Global Automakers     5
    Prepared statement...........................................     7
    Answers to submitted questions...............................    64
Joe LaFeir, Senior Vice President, Automotive IS&S, Inc..........    13
    Prepared statement...........................................    15
    Answers to submitted questions...............................    68
Cleveland Lawrence, III, Co-Director, Taxpayers Against Fraud....    18
    Prepared statement...........................................    20
    Answers to submitted questions...............................    70
William C. Wallace, Policy Analyst, Consumers Union..............    29
    Prepared statement...........................................    31
    Answers to submitted questions...............................    75
Shane Karr, Vice President, Federal Affairs, Alliance of 
  Automobile Manufacturers.......................................    38
    Prepared statement...........................................    40
    Answers to submitted questions...............................    77

                           Submitted Material

Statement of LKQ Corporation, submitted by Mr. Butterfield.......    54
Statement of the American Car Rental Association, submitted by 
  Mr. Butterfield................................................    56
Statement of the American Association of Motor Vehicle 
  Administrators, submitted by Mr. Butterfield...................    60
Statement of Experian, submitted by Mr. Burgess..................    61

 
    LEGISLATIVE HEARING ON VIN DATABASE AND AUTO WHISTLEBLOWER BILLS

                              ----------                              

                       FRIDAY, SEPTEMBER 25, 2015

                  House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:05 a.m., in 
room 2322, Rayburn House Office Building, Hon. Michael C. 
Burgess, M.D., (chairman of the subcommittee) presiding.
    Present: Representatives Burgess, Lance, Guthrie, 
Bilirakis, Brooks, Mullin, Schakowsky, Kennedy, Butterfield, 
and Pallone (ex officio).
    Staff Present: James Decker, Policy Coordinator, CMT; 
Melissa Froelich, Counsel, CMT; Kirby Howard, Legislative 
Clerk, Paul Nagle, Chief Counsel, CMT; Olivia, Trusty, 
Professional Staff, CMT; Dylan Vorbach, Staff Assistant; 
Michelle Ash, Minority Chief Counsel, Commerce, Manufacturing, 
and Trade; Jeff Carroll, Minority Staff Director; Lisa Goldman, 
Minority Counsel; Rick Kessler, Minority Senior Advisor and 
Staff Director, Energy and Environment; and Adam Lowenstein, 
Minority Policy Analyst.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. The subcommittee on Commerce, Manufacturing, 
and Trade will now come to order. The chair will recognize 
himself for 5 minutes for the purpose of an opening statement.
    And I do want to welcome everyone to our hearing this 
morning on the draft companion legislation to the Motor Vehicle 
Safety Whistleblower Act, and the discussion draft of the 
Improving Recall Tracking Act.
    In 2014, there were over 63 million vehicles recalled in 
the United States due to safety concerns. This represents the 
highest number of vehicle recalls in more than three decades.
    Under current law, vehicle manufacturers are required to 
report defects and noncompliance to the National Highway 
Traffic Safety Administration. The chairman of the full 
committee, Mr. Upton, has seen to it with the good work he did 
on the TREAD Act, but there have been times when the reporting 
has been slow.
    The Motor Vehicle Safety Whistleblower Act is intended to 
foster greater attention and greater responsiveness to vehicle 
safety defects. It does so by providing an incentive to 
automotive employees and to contractors who report potential 
safety violations to the United States Department of 
Transportation that otherwise would be concealed or unreported. 
The bill encourages employees to report safety problems within 
their companies first to allow the automaker the opportunity to 
address safety issues. This is an important point because it 
keeps the incentive to work within the system. The bill is 
meant to enhance current early reporting systems that have 
already been instituted by Congress. Furthermore, the bill is 
designed with the express purpose of exposing and stopping 
instances of wrongdoing and protecting the safe and well-being 
of the public.
    In addition to the Motor Vehicle Safety Whistleblower Act, 
we have an opportunity to examine the discussion draft of the 
Improving Recall Tracking Act. This proposal would direct the 
Department of Transportation to establish a national database 
of vehicle identification numbers and driver registration 
information. It is intended to facilitate the consumer 
notification process in the event of a safety recall.
    In light of recent recalls, it has become apparent that one 
of the main challenges of removing defective vehicles from the 
road is making certain that the right consumers are notified of 
the defect in a timely manner. This hearing will give us an 
opportunity to discuss how a national database housing current 
driver registration information and current vehicle 
identification numbers could help improve the consumer recall 
notification process beyond that which is in place today. We 
will also hear how the industry is currently responding to 
these challenges so we can factor in improvements of the 
system.
    Vehicle safety is a serious issue. It continues to be a 
concern for this subcommittee and for the driving public. In 
past hearings on this subject, I have said that Americans 
deserve better, Americans deserve more. The legislative 
proposals we will consider today are a step in the right 
direction toward providing the driving public with confidence 
that the vehicles they are driving are safe and that the recall 
process works. I will, in anticipation, thank the witnesses for 
their testimonies. And I look forward to an engaging discussion 
on these measures.
    With that, the chair yields back and recognizes the 
subcommittee ranking member, Ms. Schakowsky, for 5 minutes for 
an opening statement.
    [The prepared statement of Mr. Burgess follows:]

             Prepared statement of Hon. Michael C. Burgess

    Good morning. I want to welcome everyone to today's hearing 
on the draft companion legislation to the Motor Vehicle Safety 
Whistleblower Act, and the discussion draft of the Improving 
Recall Tracking Act.
    In 2014, there were over 63 million vehicles recalled in 
the United States due to safety violations. This represents the 
highest number of vehicle recalls in more than three decades.
    Under current law, vehicle manufacturers are required to 
report defects and noncompliance to the National Highway 
Traffic Safety Administration. Our Chairman has seen to it with 
the good work he did on the Tread Act. But there still have 
been times when the reporting has been too slow.
    The Motor Vehicle Safety Whistleblower Act is intended to 
foster greater attention and responsiveness to vehicle safety 
defects. It does so by providing an incentive to automotive 
employees and contractors who report potential safety 
violations to the U.S. Department of Transportation that are 
concealed or go unreported. The bill encourages employees to 
report safety problems within their companies first to allow 
automakers the opportunity to address possible issues. This is 
an important point because it keeps the incentive to work 
within the system. The bill is meant to enhance current early 
reporting systems that have already been instituted by 
Congress. Furthermore, the bill is designed with the express 
purpose of exposing and stopping instances of wrongdoing, and 
protecting the safety and wellbeing of the public.
    In addition to the Motor Vehicle Safety Whistleblower Act, 
we will have an opportunity to examine the discussion draft of 
the Improving Recall Tracking Act. This proposal would direct 
the Department of Transportation to establish a national 
database of vehicle identification numbers and driver 
registration information. It is intended to facilitate the 
consumer notification process in the event of a vehicle safety 
recall.
    In light of recent recalls, it has become apparent that one 
of the main challenges of removing defective vehicles from the 
road is making sure that the right consumers are notified of 
the defect in a timely manner. This hearing will give us an 
opportunity to discuss how a national database housing current 
driver registration information and vehicle identification 
numbers could help improve the consumer recall notification 
process beyond the processes that are in place today. We will 
also hear how the industry is currently responding to these 
challenges so we can figure out how to improve the system.
    Vehicle safety is a very serious issue that continues to be 
a concern for this subcommittee and the driving public. In past 
hearings on this subject, I have said that Americans deserve 
more. The legislative proposals we will consider today are a 
step in the right direction towards providing the driving 
public with confidence that the vehicles they are driving are 
safe and the recall process works. I thank the witnesses for 
their testimonies and I look forward to an engaging discussion 
on these measures.

       OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. Thank you, Mr. Chairman. It is so nice to 
meet on a quiet day where there is no real news to be talking 
about except for this. But even in connection with this, I did 
want to mention that I think this committee can also be 
focusing on very big issues and big news. And I look forward, I 
hope, to focusing on Volkswagen and their fraudulent emissions 
testing, cheating, that was revealed earlier this month.
    As you pointed out, that the law already does require auto 
manufacturers to report defects. And here we have a situation 
of deliberately building in a defect. And we need to talk about 
that. I have a piece of legislation, the Vehicle Safety 
Improvement Act, which I think would actually do the real deal 
in terms of making sure that we deal with auto safety.
    I want to recognize and welcome a friend of mine, Will 
Wallace, and a friend of this committee, who is testifying 
today on behalf of Consumers Union. He is an outstanding former 
staffer of the subcommittee and I know will bring important 
insight to this issue.
    With more than 95 million American vehicles subject to 
safety recall over the past 2 years, we obviously have to 
improve the oversight of the auto industry and the efficacy and 
timeliness of recalls. I believe, unfortunately, that these 
bills miss the mark. While I support efforts to enhance the 
communication between auto companies and drivers whose cars are 
subject to recall, I don't believe that the vehicle 
identification number, VIN Database, discussion draft would 
achieve this goal.
    Manufacturers are already able to access the names and 
addresses of drivers whose vehicles are subject to a recall. 
The difference in the discussion draft is that those records 
would be free of charge to the auto companies. And, yet, the 
bill would impose significant costs on NHTSA and the States 
with no funding provided to implement the new database. The 
Illinois Secretary of State's Office has communicated to us 
that he has serious concerns about the lack of financial 
support.
    The second bill is intended to encourage auto industry 
whistleblowers. And while I appreciate the inclusion of 
language allowing whistleblowers to receive compensation and 
anonymity for coming forward, I have concerns about the bill's 
stipulations. Mr. Chairman, you said that it is good that the 
whistleblower has to report their concerns directly to the 
company first internally. And while one could make an argument 
that this might speed things up, I also really worry that 
provisions would discourage whistleblowers from acting and put 
them at professional risk for doing so, which really has been 
the history of whistleblowers. They have not done well vis-a-
vis the companies that they work for.
    There is a broader and more impactful legislative 
alternative to improve auto safety, as I said. My Vehicle 
Safety Improvement Act, which is cosponsored by Ranking Member 
Pallone and nine other members of this committee, is the 
alternative. It increases the amount and accessibility of 
information auto manufacturers must share with NHTSA and the 
public, and the public, about vehicle safety issues, and 
provides new authority to expedite auto recalls if they pose an 
imminent hazard of serious injury or death.
    So that is what I am hoping that we are going to be able to 
do rather than I believe these bills, which kind of nibble 
around the margins. I am not just disappointed, I am actually 
frustrated. And I again urge the subcommittee to take up the 
Vehicle Safety Improvement Act. And I look forward to a 
discussion about what Volkswagen has been doing. And I yield 
back.
    Mr. Burgess. The chair thanks the gentlelady. The 
gentlelady yields back.
    Does anyone on the Republican side seek time for an opening 
statement? Seeing none. Any further members on the Democratic 
side that seek time for an opening statement? Seeing none.
    Again, we want to thank our witnesses for being here today 
and for being willing to take time to give testimony before the 
subcommittee. Our witness panel for today's hearing includes: 
Mr. John Bozzella, the President and CEO for the Alliance of 
Global Automakers; Mr. Joe LaFeir, Senior Vice President at IHS 
Automotive; Mr. Cleveland Lawrence, III, the Co-Director of 
Taxpayers Against Fraud; Mr. William Wallace, the Policy 
Analyst at the Consumers Union; Mr. Shane Karr, Vice President 
for Federal Affairs at the Alliance of Automotive 
Manufacturers.
    We do appreciate all of you being here today. We will begin 
the panel with Mr. Bozzella. He will be recognized for 5 
minutes to summarize his testimony. Mr. Bozzella, you are 
recognized for 5 minutes. Thank you.

 STATEMENTS OF JOHN BOZELLA, PRESIDENT AND CEO, ASSOCIATION OF 
     GLOBAL AUTOMAKERS; JOE LAFEIR, SENIOR VICE PRESIDENT, 
  AUTOMOTIVE IS&S, INC.; CLEVELAND LAWRENCE III, CO-DIRECTOR, 
   TAXPAYERS AGAINST FRAUD; WILLIAM WALLACE, POLICY ANALYST, 
   CONSUMERS UNION; AND SHANE KARR, VICE PRESIDENT, FEDERAL 
         AFFAIRS, ALLIANCE OF AUTOMOBILE MANUFACTURERS

                   STATEMENT OF JOHN BOZELLA

    Mr. Bozzella. Thank you, Mr. Chairman, Ranking Member 
Schakowsky, members of the subcommittee, thank you very much 
for the opportunity to testify today.
    I am John Bozzella, CEO and President of the Association of 
Global Automakers. As the ranking member has mentioned, the 
very troubling facts that have come to light involving 
Volkswagen will likely have significant implications for the 
industry. And I look forward to working with the subcommittee 
and discussing these issues as we move on.
    I have been asked for our perspective on two bills, the 
Motor Vehicle Safety Whistleblower Act and the Improving Recall 
Tracking Act. In 2012, Congress included strong whistleblower 
provisions in MAP-21. We agree that whistleblower protection is 
a valuable tool for ensuring that safety concerns will be 
promptly identified, investigated, and remedied. The bill 
before the subcommittee builds on this law. Whistleblower 
protections have been incorporated into the safety practices of 
our members because they recognize that the manufacturer and 
its employees are the first line of defense in identifying and 
remedying safety concerns. Our member companies have instituted 
internal controls that empower employees to communicate with 
their employer about any problem they observe that could impair 
product quality or safety. For example, manufacturers train 
their employees specifically on product defect and safety 
issues and have dedicated safety officers who are responsible 
for following up on concerns raised by employees.
    In addition, manufacturers have established hotlines that 
empower employees to communicate potential problems. Such 
systems allow the company to take appropriate remedial steps, 
in many cases before the affected vehicles leave the factory. 
But no system is foolproof. We recognize that whistleblower 
statutes can play an important role in improving motor vehicle 
safety.
    The implementing regulations should give companies every 
reason and incentive to be informed of the problems promptly so 
that they can investigate the issues and make any repairs that 
are needed. While it is important for whistleblowers to be able 
to report safety issues directly to NHTSA, the process should 
ensure that employees are not incentivized to shortcut or 
circumvent internal systems that would result in quicker 
problem resolution. Our shared goal is to address defects, find 
remedies, and take care of the customer as quickly as possible. 
This is why the manufacturer needs to be a critical part of the 
process from the beginning.
    The second bill before the subcommittee would establish a 
national VIN database using registration data collected by 
State DMV offices. We agree DMVs could help improve recall 
completion rates. This bill would allow manufacturers access to 
the most up to date information from the DMVs, which they could 
use to more effectively communicate recall notices to vehicle 
owners. In addition, DMVs could be encouraged to notify 
everyone who registers a motor vehicle about the recall status 
of their vehicle.
    This bill also directs NHTSA to enable batch searching and 
processing of VINs on its SaferCar.gov Web site. We are aware 
that the current NHTSA system has limitations. But it is our 
understanding that some vendors have developed tools that 
enable batch processing. We believe the subcommittee should 
ensure that the processes created by this bill are not 
unnecessarily duplicative.
    Increasing recall completion rates is a priority for Global 
Automakers. That is why we are conducting research along with 
the Auto Alliance to help understand what drives consumers to 
respond to recall campaigns. We look forward to briefing the 
subcommittee on the research findings soon.
    Thank you again for the opportunity to appear before you 
today. And I would be happy to answer any questions that you 
might have.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman.
    [The prepared statement of Mr. Bozella follows:]
    
    
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    Mr. Burgess. Mr. LaFeir, you are recognized for 5 minutes 
to summarize your testimony please.

                    STATEMENT OF JOE LAFEIR

    Mr. LaFeir. Chairman Burgess, Ranking Member Schakowsky, 
thank you for allowing me to testify, and members of the 
subcommittee.
    I am Joe LaFeir, Senior Vice President, Information Systems 
and Solutions for IHS, where I lead the company's automative 
data solutions business, which includes recall processing. 
IHS's foundation in the automotive industry reaches back to the 
advent of the automobile. Since then, IHS has worked with 
nearly all manufacturers to facilitate the recall process.
    IHS remains an industry leader in vehicle recall data 
processing and provides this service to most manufacturers 
today. The draft Improving Recall Tracking Act proposes to 
establish a national VIN database and driver information to aid 
in recall notification. In addition, the bill requires batch 
searching of the current SaferCar.gov.
    To be clear, we do not oppose the batch searching 
provision. We are here today to express our opposition to the 
proposed new database. As with any good idea, the private 
sector has already developed a highly effective and robust 
solution. So the legislation simply directs the Federal 
Government to attempt to replicate what already exists. If 
enacted, the legislation will limit innovation and use taxpayer 
funds to create a Federally-run database that would be less 
efficient and likely less capable than current market 
solutions.
    Today, the private sector's real time data processing is 
accomplished utilizing best in class system technologies. Using 
processes developed over decades, companies like IHS process 
billions of records each year from tens of thousands of sources 
and thousands of file formats. Companies like IHS also employ 
thousands of people, many of whom are devoted to data 
processing to support recall.
    IHS acquires, standardizes, assembles data to create 
mailing lists to provide notice to affected consumers. We 
assist with the fulfillment of recall notices, measurement of 
campaigns through their completion. We provide real time 
reporting to our OEM customers. Further, following completion 
of recall notice mailings, we gather open recall information 
and provide that to the public through our subsidiary CARFAX 
and its vehicle history report service.
    This bill would require registration information to be 
gathered from each state. Automotive data companies use 
registration as just one data point and many proprietary 
sources to determine the best possible address to contact the 
owner of a recalled vehicle. As proposed, this database would 
not provide the same level of data that we can provide today in 
the private sector. Using private sector data solutions, we can 
identify and provide addresses for the vast majority of car 
owners. While there are a few exceptions, recall notification 
return mail rates typically range in the single digits. And the 
private sector continues to innovate further to reduce these 
numbers. Given the private sector's success in providing 
notice, perhaps the focus should be placed on addressing why 
some notified consumers get their cars remedied and others do 
not.
    In conclusion, the legislation, while well-intended, does 
not create a better solution than what exists today. In an era 
where Federal budgets are limited, this bill would direct NHTSA 
to attempt to duplicate a product and service that the market, 
using private capital, has created decades ago. The private 
sector continues to innovate, going well beyond the 
requirements of this legislation.
    I appreciate the invitation to testify, and look forward to 
your comments.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman.
    [The prepared statement of Mr. LaFeir follows:]
    
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    Mr. Burgess. The chair recognizes Mr. Lawrence for 5 
minutes for a summary of your testimony please.

              STATEMENT OF CLEVELAND LAWRENCE, III

    Mr. Lawrence. Good morning, Mr. Chairman, Ranking Member 
Schakowsky, Ranking Member Pallone, and members of this 
subcommittee. And thank you for inviting me to testify at 
today's hearing on the proposed Motor Vehicle Safety 
Whistleblower Act. My comments will be restricted to that bill 
only.
    My name is Cleveland Lawrence, III. I am a Co-Executive 
Director of Taxpayers Against Fraud and its sister 
organization, TAFEF Education Fund, which are two non-profit 
public interest organizations dedicated to combating fraud 
against taxpayer dollars through the promotion and protection 
of False Claims Act laws and qui tam provisions, which allow 
whistleblowers with evidence of fraud against government 
entities, to file suit on behalf of the government in exchange 
for financial rewards of at least 15 and up to 30 percent of 
the government's recovery if their suits are successful.
    My organizations also support the goals of the IRS, SEC, 
and CFTC whistleblower programs, which do not have qui tam 
provisions but still offer monetary rewards to whistleblowers 
in exchange for original information about significant tax, 
securities, and commodities fraud.
    I first joined TAF in 2008 and became co-executive director 
in 2013. I am an attorney by training and spent the first 6 
years of my career as an associate at the international law 
firm of Weil, Gotshal & Manges, where, among other things, my 
practice included defending whistleblower claims brought under 
the False Claims Act. Having examined whistleblower claims from 
both sides over the past 15 years, I can say without 
reservation that the Federal False Claims Act is the model 
statute for any effective whistleblower law or program.
    Since that law was overhauled in 1986, the False Claims Act 
has returned more than $40 billion to the U.S. Treasury. This 
result is in large part due to the significant role that 
whistleblowers have played in exposing fraud on the Federal 
fisc. For example, according to the U.S. Department of Justice, 
False Claims Act cases have recovered $5.69 billion for the 
Federal Government just last fiscal year alone, with nearly $3 
billion of that total resulting from lawsuits filed by 
whistleblowers. The success of the False Claims Act over a near 
30-year period should not and has not been ignored. More than 
half of the States have False Claims Act statutes now. And at 
the government's urging, most of these laws mimic the Federal 
statute.
    Similarly, the IRS, SEC, and CFTC now have provisions that 
reward whistleblowers, all of which are modeled on the False 
Claims Act. While I applaud and fully endorse the effort to 
enact whistleblower legislation to make automobiles and road 
travel safer, I cannot support the proposed Motor Vehicle 
Safety Whistleblower Act in its current form, as it suffers 
from many of the deficiencies that have already been corrected 
under the False Claims Act, IRS, SEC, and CFTC arenas. I will 
discuss two of the primary weakness of the bill, either of 
which is enough to significantly derail the program.
    First, the bill lacks guaranteed minimum rewards and gives 
the Secretary of Transportation unfettered discretion over the 
amount of an award up to a maximum to give to whistleblowers 
whose information resulted in monetary sanctions recovered by 
the government from an automobile manufacturer, parts supplier, 
or dealership, including the option to award no award at all. 
Decades of experience make clear that any whistleblower program 
will inevitably fail unless it guarantees minimum rewards for 
those who risk their careers to come forward.
    Before the False Claims Act was overhauled in 1986, it did 
not guarantee minimum rewards either. And the program did not 
effectively remedy fraud, bringing in only about $54 million 
dollars in the year before it was amended. But since then, we 
have seen the outstanding success of the statute, bringing in 
billions of dollars each year in the recent years. 
Whistleblowers are simply unable to risk their livelihood 
without the assurance of some compensation for doing so and 
reporting fraud or misconduct by their companies to the 
government. The SEC and CFTC, similarly, have guaranteed 
minimum rewards to whistleblowers for their information, as has 
the IRS. The concept of incentivized integrity works. But a 
whistleblower program that does not ensure minimum rewards can 
offer little more than an illusory promise.
    The second issue with the bill is the internal reporting 
requirement. I can think of no other effective law enforcement 
paradigm that requires that the target of the investigation is 
notified before the government can investigate. In my 
experience, whistleblowers often prefer to report internally. 
But since not all internal compliance programs are equal, they 
have to make the choice about whether or not reporting 
internally to the company will target them for retaliation. In 
addition, by requiring a whistleblower to report internally, 
the government effectively cuts off access to continued 
information about the misconduct within the company, giving the 
company an opportunity to coach further witnesses, destroy 
evidence, or otherwise thwart what could be an effective secret 
government internal investigation.
    I urge the committee to correct these two issues, because 
without these corrections the program is doomed to failure. I 
am happy to answer your questions. Thank you.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman.
    [The prepared statement of Mr. Lawrence follows:]
    
    
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    Mr. Burgess. Mr. Wallace, you are recognized for 5 minutes 
for your testimony. Thank you.

                STATEMENT OF WILLIAM C. WALLACE

    Mr. Wallace. Good morning, Chairman Burgess, Ranking Member 
Schakowsky, and members of the subcommittee.
    I am Will Wallace, a policy analyst for Consumers Union, 
the advocacy arm of Consumer Reports. We are an independent, 
non-profit organization that works with consumers and for 
consumers for a fair, just, and safe marketplace, and to 
empower consumers to protect themselves. Consumers Union and 
Consumer Reports have fought for decades to make cars safer and 
hold companies accountable for the products they sell. We have 
pushed for effective rules and laws and for safety features 
such as seatbelts, air bags, and electronic stability control.
    Our auto test center works every day to evaluate safety 
technologies. And we communicate with millions of consumers to 
help them make informed choices and stay safe. We appreciate 
the opportunity to testify.
    Today's hearing is timely, given the news lately about auto 
safety and corporate wrongdoing. The Federal settlement with 
General Motors over ignition switches linked to at least 174 
deaths was very disappointing because it didn't nearly go far 
enough to hold auto companies accountable for hiding the truth. 
Right on its heels came the news that Volkswagen had cheated on 
emissions control testing for some 11 million diesel vehicles 
and covered it up. These news items are sending shock waves 
through the industry, our government, and the public. The 
resulting erosion of confidence can't be overstated. And 
lawmakers need to take action to address this corporate 
accountability crisis.
    The discussion draft and bill before you today attempt to 
address pieces of the problem. One, the Improving Recall 
Tracking Act aims to tackle low recall completion rates, while 
the other, the Motor Vehicle Safety Whistleblower Act, seeks to 
root out concealed defects. While we are pleased that the 
subcommittee is pursuing these worthy goals, Consumers Union 
believes that the two proposals fall far short both in terms of 
meeting their objectives and in terms of improving the flawed 
system that is supposed to ensure safety defects are identified 
and repaired before people get hurt.
    The GM fiasco, along with crises involving defects in 
Toyota, Takata, and Chrysler products among others, made clear 
that auto companies must do far more to ensure their vehicles 
are safe. And NHTSA must do far more to hold auto companies 
accountable. Yet, the drafts before the subcommittee today are 
strikingly limited in their ambition.
    The Improving Recall Tracking Act could possibly help 
companies reach owners of older vehicles in case of a recall if 
it were fully funded. But the bill doesn't authorize that 
funding, despite requiring NHTSA and the States to carry out a 
substantial amount of new work. NHTSA, in particular, needs to 
be able to hire more staff to protect the public the way we all 
expect, not have them stretched more than they already are.
    Similarly, the Whistleblower Act could incentivize auto 
industry employees to give NHTSA information about concealed 
defects. Just imagine how much suffering could have been 
prevented if a GM engineer had reported the flawed ignition 
switch to NHTSA in 2006 or 2007. However, we are concerned the 
bill may not be as effective as it could be, primarily because 
of the lack of an established minimum award that at least 
covers the loss of earnings a whistleblower could face by 
sacrificing his or her career.
    More broadly, though, the discussion draft and bill today 
don't do nearly enough for consumer safety. Instead, we urge 
you to take up bolder legislation, such as H.R. 1181, the 
Vehicle Safety Improvement Act. That bill would address 
shortfalls in current law, such as NHTSA's inadequate civil 
penalties authority and the loophole that allows dealers to 
sell recalled used vehicles before they are repaired. In 
addition to these measures, Consumers Union also encourages the 
enactment of a criminal penalties provision to deter executives 
from hiding defects.
    The bill would strengthen NHTSA by authorizing the 
additional funding it badly needs, giving it imminent hazard 
authority like CPSC and FDA have, and making sure it receives 
more detailed information from manufacturers through early 
warning reporting. The bill would empower consumers by giving 
them free access to more safety information and by making 
NHTSA's existing databases, which can be clumsy, confusing, and 
hard for an ordinary consumer to use, more timely and more 
readily searchable. The Vehicle Safety Improvement Act would 
create an auto safety system that is proactive, identifying 
defects before they reach epidemic proportions. And we urge 
members to advance it. We also urge members to create a strong 
safety title for a possible highway bill. In addition to 
requiring that rental car companies fix recalled vehicles 
before they offer them to consumers, as the Senate 
transportation bill does, such a safety title should include 
the needed reforms just outlined. Thank you.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman.
    [The prepared statement of Mr. Wallace follows:]
    
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    Mr. Burgess. Mr. Karr, you are recognized for 5 minutes for 
your testimony please.

                    STATEMENT OF SHANE KARR

    Mr. Karr. Thank you, Mr. Chairman, Ranking Member 
Schakowsky, Ranking Member Pallone. I appreciate the 
opportunity to testify on behalf of the Alliance of Automobile 
Manufacturers today.
    I know that our time is limited. And my complete statement 
is submitted for the record. So I will limit my remarks here 
and try to focus on the big picture. You have asked me to 
testify about these two--the discussion draft and a bill today. 
Let's talk first about the Improving Recall Tracking Act. Auto 
manufacturers are committed to keeping their products safe. And 
when a safety defect is identified, we want to undertake a 
recall. And we want all of the recalled vehicles to be 
repaired.
    There are at least two challenges to completing repairs on 
recalled vehicles. One, of course, is consumer motivation. In 
this country, consumers make the choice whether or not to get 
their vehicles repaired. We want them all to get their vehicles 
repaired. We urge them to get their vehicles repaired. You all 
have done that from the dais over the course of the last couple 
of years. But, at the end of the day, consumers make that 
choice.
    In an effort to sort of understand why people wouldn't get 
their vehicles repaired, my CEO, when he was testifying in 
front of the committee earlier this summer, noted that we were 
undertaking the first of its kind comprehensive study into 
consumer motivations. Global Automakers and the National 
Automobile Dealers ended up joining us. And we have been 
working together. And, as Mr. Bozzella stated, we are close to 
wrapping that up and look forward to briefing you all. We have 
actually been in touch about setting up a briefing for you all 
next month.
    But putting consumer motivation aside, we know and you all 
saw over the last year or two that reaching all consumers in 
the first place is a significant challenge. It just is. One of 
the great things about the U.S. is we are a highly mobile 
economy. People move at the rate of about 17 percent a year. 
NHTSA, in analyzing vehicle completion--recall completion 
rates, has said that for those new vehicles in the sort of zero 
to 4 year-old time frame, about 83 percent of those get 
repaired. It is a very high percentage. But as soon as you 
start tracking further out, the completion rate numbers fall 
off dramatically.
    Five to ten years, 44 percent completion rate. Over 10 
years, 15 percent completion rate. At least part of the 
explanation for that is the challenge associated with actually 
reaching subsequent owners of vehicles. Mr. LaFeir's testimony 
is terrific. My companies, I think all of them probably use his 
service to contact consumers. But in reading his testimony, 
they admit that part of the problem is there is not uniformity 
among the states in the records they keep with regard to 
registration, how quickly those are updated. That is part of 
the reason why his company is so effective and why my companies 
use it is because they reach all these different data points 
beyond registrations so that we can notify consumers. The draft 
not only requires this information to be submitted into a 
national VIN database that would be accessible for recall 
purposes, but it effectively standardizes the information that 
would be collected and the timetables.
    So it would, in fact, ensure that when we go to undertake a 
recall, we have a comprehensive set of timely contact 
information to work from and try to reach these owners of older 
vehicles who are still required to register those vehicles in 
the States. My testimony notes some other technical issues with 
the bill. But I think from the big picture standpoint, that is 
the issue that we are focused on. And it's worthy of further 
consideration.
    With regard to the Motor Vehicle Safety Whistleblower Act, 
I would say just very briefly, that bill was introduced in the 
Senate last fall. The Alliance immediately reached out to staff 
on both sides of the aisle and Members. That bill had very 
strong bipartisan support. We expressed our concerns and worked 
through them. I never heard, frankly, in that time the issues 
that are being raised here today. That bill obviously passed by 
unanimous consent in the Senate. And we wouldn't object to you 
all taking it up and passing it over here. And with that, I 
will let myself open for questions.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman.
    [The prepared statement of Mr. Karr follows:]
    
    
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    Mr. Burgess. It occurs to the chair that I omitted to 
announce to the subcommittee that members, pursuant to 
committee rules, all members' opening statements will be made 
part of the record.
    And then I do want to thank all of you for your testimony 
this morning and sharing your observations with us. We will 
move into the question portion of the hearing. I will start by 
recognizing myself for 5 minutes.
    And, Mr. Karr, let me come back to you. You mentioned in 
your testimony that the Auto Alliance, joined by the Global 
Automakers and the National Automobile Dealers Association, 
announced that it was conducting the study on what motivates 
consumers to have their recalled vehicles remedied and you 
mentioned that you were going to be having a briefing in the 
near future.
    Can you pull back the curtain just a little bit and share 
with the subcommittee this morning some of the insights you may 
have gained as to what motives a consumer to have a defect 
remedied?
    Mr. Karr. I would like to be able to do that, but I just 
saw the preliminaries myself. And, you know, I wouldn't want to 
mischaracterize anything off the top of my head. We will 
schedule a full briefing and get the folks who actually 
conducted the survey in here as well, so you will all have the 
opportunity to ask them questions as well.
    I guess one thing that is relevant to this hearing that we 
learned is that the vast majority of people who knew that they 
had had a vehicle recalled within the past 2 years, the vast 
majority of those people knew because they were contacted by 
the manufacturer. Even more than we expected. Given all the 
news media and social media and everything else, the vast 
majority of people----
    Mr. Burgess. Let me ask you a question about that if you 
are at liberty to answer it. So they had already been 
contacted. Had they done the follow through to actually 
schedule an appointment or had their vehicle defect remedied at 
that point?
    Mr. Karr. Remember, part of the reason for doing the survey 
was to find out really why people who didn't get their vehicles 
repaired, you know, why they didn't--why that didn't happen. So 
we talked to a lot of people who had gotten their vehicles 
repaired. We talked to a fair number of people who intended to 
get their vehicles repaired in short order. And, interestingly, 
there was a group of people who said, ``I know my vehicle is 
under recall, but I don't intend to get it repaired.'' That was 
a small minority of the folks that we talked to. But, yes, we 
talked to all of those people.
    Mr. Burgess. Well, this is, of course, with other hearings 
into the air bag issues, one of the things that has really 
concerned the subcommittee; how to get the word out to people 
to get their vehicles repaired, and the very dangerous 
situation that may exist in some vehicles.
    Apparently the older the vehicle, the greater the risk. And 
the real problem of once you are on the third or fourth owner 
of a vehicle, it becomes very difficult to track them down. And 
then, as you point out, the compliance rate may be lower. You 
would think with a severe safety defect, something that could 
blow up in your face, your family's face, you would want it 
fixed, and it is a little concerning that we haven't been able 
to do better with that.
    I am going to assume, and correct me if I am wrong, that 
the manufacturers themselves, we can legislate all we want up 
here, but is there any place for the manufacturer placing an 
incentive out there before the consumer public, hey, we would 
like to see your vehicle in here and we will make it worth your 
while to do so, half price on an oil change or vacuum the floor 
mats. Are there incentive programs that are being looked at?
    Mr. Karr. Yes, I think that there actually are even 
examples of incentive programs that have been undertaken by a 
couple of my members surrounding the recent recalls. So, 
absolutely, I think that that is something to look at.
    Interestingly enough, for a lot of consumers, they 
apparently have concerns if they bring their vehicle in to be 
recalled, that they will be upsold on other things. So part of 
this may be assuaging those concerns going forward. There are a 
lot of different reasons. And it will be interesting, I think 
you all will find it interesting to unpack why people do or 
don't do what they do.
    Mr. Burgess. Well, we anxiously look forward to those 
briefings and perhaps have an opportunity to have you back and 
discuss those. You mentioned in your testimony, the 
manufacturers are committed to keeping their products safe. And 
you believe that, right?
    Mr. Karr. Absolutely.
    Mr. Burgess. And, Mr. Bozzella, I spent my productive years 
in the healthcare industry, and we talked about something in 
the healthcare industry called continuous quality improvement. 
You all do that in the manufacturing process. Is that just a 
matter of course?
    Mr. Bozzella. Yes, it is.
    Mr. Burgess. And it just seems like it would fit in a 
culture of continuous quality improvement that if someone sees 
something that is not right, you would want them to bring it 
forward. I can't imagine a culture where an employee would say 
this is going to be a real problem. If I just hang onto this 
for a while, it might be a very valuable lawsuit for me in the 
future. Nobody wants that kind of environment, do they?
    Mr. Bozzella. No. No. You are exactly right. And I think 
the key there is not only to create that environment but to 
continue to enhance and develop it through more training, 
hotlines, both internal and third-party hotlines, the kinds of 
things that I think you are hearing our members' companies are 
doing. I think it is critical.
    Mr. Burgess. Great. Thank you. My time has expired. The 
chair will recognize the ranking member of the subcommittee, 
Ms. Schakowsky, 5 minutes for your questions, please.
    Ms. Schakowsky. Thank you, Mr. Chairman. Mr. Karr, with all 
due respect, if Ford or GM said to their stockholders, you know 
what, consumer motivation just isn't there. This is a free 
country and people are free not to buy our cars. I am having to 
assume that in marketing automobiles, which you can hardly turn 
on the television, it is either a drug ad or it is a car ad, 
that consumer motivation is deeply researched and figured out 
and a lot of money is spent to do that.
    So don't you think that if the manufacturers were really 
serious about getting unsafe cars off the road--I look forward 
to your research. But this idea that, well, consumers, they 
just don't really want to do it. Really? They want to drive 
unsafe cars?
    Mr. Karr. So, I absolutely agree with you that we need to, 
and I think my companies are very clearly demonstrating, and 
actually one of my comments, I should say, in the testimony to 
the draft bill is actually that, the way the draft bill is 
written, it actually only would allow us access to that 
database for the owner notification letters that are required 
under Title 49. And my guys are doing kind of creative and 
innovative things to reach out and motivate consumers.
    And so we would like you all to consider allowing us to use 
contact information for these more creative means. Having said 
that, I do just want to say that the owner notification 
letters, they are, NHTSA fairly strictly lays out for us what 
we can say.
    Ms. Schakowsky. I get them. I get it. And I get them. And 
there has to be a better way. And I wanted to ask Mr. LaFeir, 
one of the things that we know is that nearly 20 percent of 
recalled cars are never repaired, recall completion, 44 percent 
for vehicles 5 to 10 years old, 15 percent for vehicles over 10 
years old. And, in fact, the average age of cars on the road is 
11.4 years.
    So what can we do? I know you have this private sector 
database which in my testimony I said I thought, it is sort of 
unusual for me, I am saying let's not have a government 
solution, let's have a private sector solution, sort of a 
reversal here. Anyway, so how do we get to the drivers of older 
cars?
    Mr. LaFeir. I think we have good tools to get the contact 
and to get the notification out. I think the motivation changes 
as the vehicles get older. I think data and data analytics are 
advancing to the point where we can probably put more energy 
into understanding are there particular groups that are 
behaving differently than others? And that may be an area to 
focus on.
    Ms. Schakowsky. OK. Mr. Lawrence, this is speculation but 
it seems to me since Volkswagen quite deliberately built into 
their cars this fraudulent emissions switch, whatever they call 
it, do you think that if a whistleblower internally had said, 
oh, this is really bad and you have got to fix it, that that 
would have done the trick?
    Mr. Lawrence. Certainly not. In our experience, most 
whistleblowers actually do report the misconduct of their 
company up the chain of command and, generally speaking, only 
contact the government after they have suffered the retaliation 
from the company for bringing their concerns to management.
    The False Claims Act takes the exact opposite approach and 
does not require whistleblowers to bring their information 
directly to the fraud feasors. Instead, it requires 
whistleblowers actually to submit their information under seal 
and only provide it to the government so as not to tip off the 
target that the government might be investigating potential 
wrongdoing or fraud.
    Ms. Schakowsky. So it is possible that this requirement 
could actually make cars more dangerous in the sense that it 
would require this internal communication?
    Mr. Lawrence. It certainly adds another step to the process 
of getting the information to the appropriate government 
officials. And that delay could certainly result in a more 
dangerous environment.
    Ms. Schakowsky. One quickie for Mr. Wallace, the limit on 
violations and civil penalties for violations, it seems $35 
million for GM was too little. What do you think we should do?
    Mr. Wallace. Well, I think we desperately need to raise 
those in order to provide an effective deterrent against 
corporate wrongdoing. Especially because we just have to make 
sure that this is not the cost of doing business. These 
penalties cannot be considered merely the cost of doing 
business. It must be a real deterrent.
    Ms. Schakowsky. Thank you. I yield back.
    Mr. Burgess. The gentlelady yields back. The chair thanks 
the gentlelady. The chair recognizes the ranking member of the 
full committee, Mr. Pallone, 5 minutes for questions, please.
    Mr. Pallone. Thank you, Mr. Chairman. While this is a 
hearing on legislative initiatives relating to safety, our 
committee has direct oversight responsibilities regarding both 
clean air and deceptive practices. And I would be remiss if I 
didn't bring up the following issue. As you know, last week, 
the EPA issued a notice of Clean Air Act violations to 
Volkswagen and its related companies stating that Volkswagen 
had manufactured and installed defeat devices in certain model 
year cars that, ``bypass, defeat, or otherwise render 
inoperable elements of the vehicle's emission control system.'' 
Volkswagen has not denied the EPA's assertion so far. In fact, 
the EPA has said Volkswagen has admitted it designed and 
installed defeat devices in these vehicles.
    In my opinion, to think that one of the world's biggest and 
most established automakers deliberately set out to perpetrate 
this kind of scam on consumers is mind boggling and an outrage 
that harms both consumers and producers. On the one hand, we 
have consumers who trusted that Volkswagen played by the rules 
and that purchased cars had the attributes the company said 
they had. Dare to learn the truth about clean diesel was one of 
Volkswagen's advertisements. The reality appears to be that its 
diesel isn't clean and the ads are not true.
    Nearly half a million U.S. consumers and millions more 
around the world have been lured by the idea of a more 
efficient, less polluting fossil fuel vehicle that now looks to 
be neither. And those people who are now saddled with vehicles 
that if repaired, and I am not sure that is the right word, 
probably won't meet the fuel economy standards that these 
consumers thought they were paying for. And the cars, 
themselves, have probably lost a tremendous amount of their 
resale value.
    On the other hand, you have Volkswagen casting doubt on the 
industry as a whole. The company hasn't just harmed itself, it 
has harmed the entire industry. Volkswagen's actions, if 
everybody is wondering whether Volkswagen is the only one with 
this problem. So to that end, EPA released a letter being sent 
to vehicle manufacturers notifying them that the agency is 
adding new evaluations designed to find potential defeat 
devices.
    Mr. Bozzella and Mr. Karr, what do you say to the American 
consumer, and how do we ensure that they are compensated not 
just for the economic loss, but for the fraud that appears to 
have been perpetrated on them? Let's start with Mr. Bozzella 
and then Mr. Karr.
    Mr. Bozzella. Ranking Member Pallone, thank you very much. 
As I mentioned a few minutes ago in my testimony, the very 
troubling facts that have come to light involving Volkswagen 
will likely have significant implications for the industry. So 
I do look forward to working with you and the committee 
discussing these issues as we go forward.
    Mr. Pallone. Mr. Karr, can you respond?
    Mr. Karr. Thank you, Ranking Member. Unfortunately, I don't 
have any more insight into the facts than have been publicly 
recorded. I think this is a very unfortunate situation. 
Volkswagen is a company that has shown its commitment to the 
American market, including producing vehicles in the United 
States. But these allegations are not good. And it will clearly 
have ramifications going forward, as it should.
    Mr. Pallone. Thank you. Mr. Wallace, representing Consumers 
Union, the policy division of Consumer Reports, would you care 
to comment?
    Mr. Wallace. Yes. This is a very serious, calculated 
violation of the law. We at Consumer Reports, we pulled our 
recommendations of the diesel versions of the Passat and the 
Jetta. And our CEO, Marta Tellado, recently called for the 
company and the government response to this betrayal to be 
significant enough to right the wrongs that have occurred and 
to bring true justice to the consumer, because this is just 
that egregious.
    Mr. Pallone. It appears to be totally intentional. That's 
the point.
    Mr. Wallace. Exactly.
    Mr. Pallone. That is the most important point. I don't know 
what you say to people at Consumer Reports who are duped into 
recommending some of these cars to the public and how you 
convince all of us and our constituents that Volkswagen is an 
anomaly and that we can afford to trust the industry at all. 
Mr. Wallace, did you want to comment? The concern now is that 
this isn't just one car manufacturer, there might be others.
    Mr. Wallace. Well, I work here in our policy office in D.C. 
But I know that we have a team of committed engineers and 
technicians up at our test track. And I can tell you that as an 
organization, Consumer Reports will absolutely put pressure on 
the manufacturer to make sure that it makes things right.
    Mr. Pallone. All right. Thank you very much. Thank you, Mr. 
Chairman.
    Mr. Burgess. The chair thanks the gentleman. The chair 
would note to the gentleman that his concerns are not--they are 
actually shared by both sides of the dais on the subcommittee 
as to where the appropriateness of this investigation is. And 
it is a work in progress. So watch this space. Mr. Butterfield, 
you are recognized for 5 minutes for questions please.
    Mr. Butterfield. Thank you very much, Mr. Chairman. And I 
apologize for being in and out of the room. But the 
developments this morning regarding the Speaker's impending 
resignation has just caused a lot of telephone traffic in my 
office both from the media and from constituents. And so I have 
been back and forth.
    But, Mr. Chairman, one of the laudable goals of the VIN 
look-up registration legislation is to enable manufacturers to 
reach more owners of recalled vehicles so that more vehicles 
will get repaired. And so I would like to focus my questions 
today on the rental car safety bill that I introduced with the 
support of Ranking Member Schakowsky and Congresswoman Capps, 
H.R. 2198. Companion legislation passed the Senate with 
bipartisan support as part of the Senate's highway bill.
    The legislation will help maximize the number of recalled 
cars that get fixed. That bill is the Raechel and Jacqueline 
Houck Safe Rental Car Act, which is supported by the rental car 
industry. Yes, it is. Consumer organizations, General Motors, 
Honda, and others. That is very impressive. It would ensure 
that rental car companies fix recalled vehicles in their fleets 
before, before renting or selling them. And so to you, Mr. 
Wallace, what is the Consumers Union's position on 2198 if you 
all have one?
    Mr. Wallace. We strongly support the bill. We think it is 
well past time that it passes this Congress and close this 
safety gap that exists. We would also note that it has very, 
very broad support. And it is only now, it is just up to 
Congress to get it through.
    Mr. Butterfield. Would it be correct to say that this 
legislation is critical and it is important?
    Mr. Wallace. Yes.
    Mr. Butterfield. All right. And to you, Mr. Karr, does your 
organization support 2198?
    Mr. Karr. The Alliance does not support the bill as 
introduced. We have had numerous conversations with staff, 
primarily on the Senate side, where the counterpart originated, 
and proposed a number of possible changes to address our 
concerns, and would be happy to meet with you all and your 
staff.
    Mr. Butterfield. Can you quantify this for me? What 
percentage of recalled vehicles are subject to a do not drive 
warning?
    Mr. Karr. Subject to an actual do not drive, it is a small 
percentage, under 10 percent.
    Mr. Butterfield. That is what we have been informed, yes. 
Are there any Federal safety standards that dictate when 
manufacturers must issue the do not drive warning?
    Mr. Karr. There are not. However, manufacturers, when a 
manufacturer issues a recall, before they do that, that has to 
be basically approved through NHTSA. We submit the language and 
the proposal for the recall to NHTSA. And they review it and 
approve it before it goes out.
    Mr. Butterfield. Thank you. I am standing between my 
colleagues and votes on the floor.
    Mr. Chairman, I ask unanimous consent that two letters be 
submitted for the record, one from LKQ Corporation and the 
other from the American Car Rental Association and others.
    Mr. Burgess. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Butterfield. In addition, Ms. Schakowsky, as she was 
leaving, asked that I present for the record a statement from 
the American Association of Motor Vehicle Administrators. I ask 
unanimous consent.
    Mr. Burgess. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Butterfield. Thank you. I yield back.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman. The chair does want to thank the panel for being 
here this morning and for your time and the expert testimony 
that you have provided to us.
    Seeing no further members wishing to ask questions, I would 
like to take a moment to recognize the contribution of our 
clerk, Kirby Howard, who after many years of service to the 
subcommittee on the staff is leaving for new career 
opportunities. And we obviously wish him well in his future 
endeavors.
    And also before we conclude, I wanted to include the 
following document to be submitted for the record by unanimous 
consent, that will be easy, a letter on improving the Recall 
Tracking Act submitted by Experian. Without objection, so 
ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Burgess. Pursuant to committee rules, I remind members 
they have 10 business days to submit additional questions for 
the record. I ask the witnesses to submit their responses to 
these questions within 10 business days upon receipt of the 
question.
    And, without objection, further proceedings of this 
subcommittee are adjourned.
    [Whereupon, at 11:00 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    Everyone knows I'm from Michigan--the auto state--and that 
is something I take great pride in. Folks also know that I am 
disappointed that this committee has been forced to hold 
multiple hearings over the past few years on motor vehicle 
recalls. But even when facing these issues, I remain an 
optimist. I believe that cars are safer today than ever before 
and the data shows that. The new technologies that are being 
developed and deployed will make us even safer on the road. 
Today, we continue our work to keep families in Michigan and 
across the country safe on the roads by focusing on two bills 
to improve safety.
    The Motor Vehicle Safety Whistleblower Act goes great 
lengths to ensure that safety violations don't go unreported. 
Almost fifteen years ago, in the wake of the tragic 
circumstances involving Ford-Firestone, I authored the 
bipartisan TREAD Act to get automakers to identify and fix 
defects earlier and remove flawed cars from the road 
immediately. While that law has prevented several safety issues 
from becoming serious disasters, the early warning reporting 
regime is greatly dependent on the commitment of the auto 
industry to make it a success. The safety incentives provided 
in the Motor Vehicle Safety Whistleblower Act are meant to help 
foster that commitment because as we know, reporting delays 
cost lives.
    The Improving Recall Tracking Act is another legislative 
proposal we will review today. With any recall, consumers must 
be notified of the defect so they can get their vehicles fixed. 
It is unacceptable that there continue to be vehicle owners 
that have not been notified of a defect or serious safety risk 
because they cannot be located. Currently, we have 50 different 
state systems to notify consumers of safety issues leading to 
unfortunate delays in getting lifesaving information out to the 
right people. I am also troubled that the challenge of 
notifying consumers could get worse as the development of new 
technology platforms enable owners to sell vehicles in 
nontraditional ways.
    Consumer notification is a key part of ensuring that the 
recall process works. During today's review of the Improving 
Recall Tracking Act, I look forward to hearing about how the 
private sector is working with the auto industry to identify 
consumers affected by a safety recall. I also look forward to 
hearing how driver registration and vehicle identification 
numbers are kept up to date in databases maintained by 
manufacturers and commercial entities, and what considerations 
are being made to improve the consumer notification process.
    As I have said before, there can be no margin of error when 
it comes to vehicle safety. Lives are on the line--and the 
public deserves the peace of mind that they are safe every time 
they get behind the wheel. I thank Chairman Burgess and this 
subcommittee for its continued commitment to protecting the 
driving public.
                              ----------                              

             Prepared statement of Hon. Frank Pallone, Jr.

    Thank you Mr. Chairman. Today we are discussing two bills 
related to automobile safety; one intended to help automakers 
more easily find the current owners of recalled cars and one 
intended to provide incentives for whistleblowers to submit 
safety defect information to the National Highway Traffic 
Safety Administration or NHTSA [NIT-suh].
    While I appreciate the effort by this Committee to take 
action on auto safety, these measures fall short.
    According to NHTSA, more than 32 thousand people lost their 
lives on U.S. roads in 2014. Much more needs to be done to 
improve the system for detecting and reporting safety defects 
to NHTSA, and to reduce the number of defective cars that reach 
consumers in the first place.
    Earlier this year, Subcommittee Ranking Member Schakowsky 
and I, with a number of other members, introduced the Vehicle 
Safety Improvement Act of 2015 (V.S.I.A.). Our bill would 
address a number of urgent auto safety issues.
    V.S.I.A. improves the Early Warning Reporting system by 
making more reported information public and requiring 
manufacturers to provide significantly more information about 
any fatality involving a safety defect. It includes imminent 
hazard authority for NHTSA, allowing the agency to expedite a 
recall order, and increases fines for manufacturers that 
violate vehicle safety laws.
    In addition, it will eliminate geographically limited 
regional recalls and require reviews of safety standards for 
back seat passengers and pedestrians.
    Regarding today's two bills, I am concerned that they will 
have little impact on auto safety and divert scarce resources. 
I cannot support them as currently drafted.
    I hope that we can work together to ensure that these bills 
will truly improve auto safety. And I also hope that together 
we can take broader actions that will make a larger impact on 
auto safety.
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