[House Hearing, 117 Congress] [From the U.S. Government Publishing Office] RIGHT TO REPAIR AND WHAT IT MEANS FOR ENTREPRENEURS ======================================================================= HEARING before the SUBCOMMITTEE ON UNDERSERVED, AGRICULTURAL, AND RURAL BUSINESS DEVELOPMENT OF THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTEENTH CONGRESS SECOND SESSION __________ HEARING HELD SEPTEMBER 14, 2022 __________ [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 117-065 Available via the GPO Website: www.govinfo.gov ______ U.S. GOVERNMENT PUBLISHING OFFICE 48-581 WASHINGTON : 2022 HOUSE COMMITTEE ON SMALL BUSINESS NYDIA VELAZQUEZ, New York, Chairwoman JARED GOLDEN, Maine JASON CROW, Colorado SHARICE DAVIDS, Kansas KWEISI MFUME, Maryland DEAN PHILLIPS, Minnesota MARIE NEWMAN, Illinois CAROLYN BOURDEAUX, Georgia TROY CARTER, Louisiana JUDY CHU, California DWIGHT EVANS, Pennsylvania CHRISSY HOULAHAN, Pennsylvania ANDY KIM, New Jersey ANGIE CRAIG, Minnesota SCOTT PETERS, California BLAINE LUETKEMEYER, Missouri, Ranking Member ROGER WILLIAMS, Texas PETE STAUBER, Minnesota DAN MEUSER, Pennsylvania CLAUDIA TENNEY, New York ANDREW GARBARINO, New York YOUNG KIM, California BETH VAN DUYNE, Texas BYRON DONALDS, Florida MARIA SALAZAR, Florida SCOTT FITZGERALD, Wisconsin MIKE FLOOD, Nebraska Melissa Jung, Majority Staff Director Ellen Harrington, Majority Deputy Staff Director David Planning, Staff Director C O N T E N T S OPENING STATEMENTS Page Hon. Jared Golden................................................ 1 Hon. Claudia Tenney.............................................. 2 WITNESSES Ms. Gay Gordon-Byrne, Executive Director, Digital Right to Repair Coalition, North River, NY..................................... 5 Mr. Brian Clark, Co-Owner, The iGuys' Tech Shop, LLC, Conway, NH. 7 Mr. Ken Taylor, President, Ohio Machinery Co., Broadview Heights, OH, testifying on behalf of the Associated Equipment Distributors (AED) in his capacity as 2022 Chairman............ 9 Mr. Jim Gerritsen, Marketing Manager, Wood Prairie Family Farm, Bridgewater, ME................................................ 11 APPENDIX Prepared Statements: Ms. Gay Gordon-Byrne, Executive Director, Digital Right to Repair Coalition, North River, NY.......................... 29 Mr. Brian Clark, Co-Owner, The iGuys' Tech Shop, LLC, Conway, NH......................................................... 45 Mr. Ken Taylor, President, Ohio Machinery Co., Broadview Heights, OH, testifying on behalf of the Associated Equipment Distributors (AED) in his capacity as 2022 Chairman................................................... 50 Mr. Jim Gerritsen, Marketing Manager, Wood Prairie Family Farm, Bridgewater, ME...................................... 54 Questions for the Record: None. Answers for the Record: None. Additional Material for the Record: Alliance for Automotive Innovation........................... 57 Association of Equipment Manufactures (AEM).................. 59 Automotive Aftermarket Suppliers Association (AASA).......... 63 Automotive Right to Repair Myth and Fact..................... 66 FiXCO Statement.............................................. 67 iFixit Statement............................................. 68 Illegal Tampering Coalition Statement........................ 108 Motorcycle Industry Council (MIC), the Specialty Vehicle Institute of America (SVIA), and the Recreational Off- Highway Vehicle Association (ROHVA) Statement.............. 110 National Association of Manufacturers........................ 112 National Farmers Union....................................... 114 North American Equipment Dealers Association (NAEDA)......... 118 PIRG Statement............................................... 119 Right-to-Repair in the Auto Industry......................... 126 U.S. PIRG & IAMERS Statement................................. 128 RIGHT TO REPAIR AND WHAT IT MEANS FOR ENTREPRENEURS ---------- WEDNESDAY, SEPTEMBER 14, 2022 House of Representatives, Committee on Small Business, Subcommittee on Underserved, Agricultural, and Rural Business Development, Washington, DC. The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 2360, Rayburn House Office Building, Hon. Jared Golden [chairman of the Subcommittee] presiding. Present: Representatives Golden, Carter, Peters, Williams, Stauber, Tenney, and Flood. Chairman GOLDEN. Okay. Good morning. I call this hearing to order. Without objection, the Chair is authorized to declare a recess at any time. I would like to begin by noting a few requirements. Standing House and Committee rules continue to apply during hybrid proceedings. All Members are reminded that they are expected to adhere to these rules including the rules of decorum. House regulations require Members to be visible through a video connection throughout the proceeding, so please keep your cameras on. Also, please remember to remain muted until you are recognized in order to minimize background noise. In the event that a Member encounters technical issues that prevent them from being recognized for their questioning, I will move to the next available Member of the same party and I will recognize that Member at the next appropriate time slot provided they have returned to the proceeding. With that, I will begin with an opening statement. Advances in technology have created countless benefits for small businesses and consumers. Today, entrepreneurs can sell their offerings globally and customers have more access to the products and services they want than ever. At the same time, increased technological adoption has created unintended consequences that can harm entrepreneurs, particularly in rural communities like those that we represent. Since the 1990s, consumer electronics, automobiles, and a variety of other products have become more complicated to fix and maintain. Large manufacturers and corporations have increasingly moved to limit the ability of consumers and independent, small businesses to make repairs on a range of essential products. These repair restrictions can impact small firms across various industries, often increasing costs and sometimes upending business models. In a 2021 report to Congress, the Federal Trade Commission outlined numerous ways that manufacturers inhibit the ability to make repairs on everyday products like mobile phones, automobiles, agricultural machinery, and medical equipment. These methods range from making products physically harder to open, to requiring access to proprietary diagnostic software to initiate even minor repairs. These practices frustrate consumers by forcing them to go to manufacturers for repair or to replace their products entirely. Repair restrictions also negatively impact small firms by raising costs and limiting repair options for small businesses that depend on machinery. Take, for example, small independent farmers. For generations, small farmers have been able to make their own repairs on the spot and continue working when a tractor or other piece of important equipment breaks down. Yet, today, a modern tractor can come equipped with hundreds of censors. A malfunction in just one can cause an entire machine to stop working and force a farmer to stop their harvest to haul equipment to a dealership that is hours away or wait for a field technician. I have heard firsthand from Maine farmers that these delays can cost small farms days in wasted productivity and thousands of dollars in revenue. But these restrictions do not just impact entrepreneurs that use machinery; they also make it difficult for the many independent businesses that work to repair these products. Independent repair shops frequently offer lower prices than larger manufacturers. For instance, in the medical equipment sector, independent servicers often work on equipment for about $150 to $250 an hour, while large manufacturers charge up to $500 to $600 per hour with a 4-hour minimum. Decades of evidence have made it clear that repair restrictions do cause costs to go up. They hurt small businesses, and they encourage waste while increasing the profits of corporations. Given these adverse effects, the proliferation of restrictions should be addressed. That is why we should explore common-sense and bipartisan Right to Repair laws that protect consumers and small businesses. Several of my colleagues have already introduced proposals to restrict the ability of large companies to monopolize repair and aftermarket products. Today, we will take a closer look at actions that Congress can take to ensure the right to repair for small businesses, independent shops, and for individual consumers. I would now like to yield to the Ranking Member, Ms. Tenney, for her opening statement. Ms. TENNEY. Thank you, Mr. Chairman. And thank you to the witnesses. Thank you for your remarks as well. I am also a small business owner and my cousins and my brothers' in-laws are also farmers. So I am also a lawyer, so I have a unique perspective I think on this issue which I think is a very important one. And thank you. The right to repair is alluring in its simplicity. In theory, it seems obvious that if you buy something, you own it, and you should have the freedom to do what you want with it. America is, after all, a nation of thinkers and innovators. That freedom to innovate is part of what makes our country great. From a more practical standpoint--I always have to have the legal side of it--the right to repair has its benefits. No more wasting valuable time and resources waiting for only the authorized professionals to repair a product at a fixed price. The right to repair, if properly designed, can create a world of consumer choice, competitor pricing, and potential cost savings. However, when this issue is examined in full depth, it becomes substantially less black and white. There is, in fact, a significant amount of gray when it comes to the right to repair. Years ago, machines were simpler. They consisted of nuts, bolts, and other mechanical parts. Today, many machines are essentially sophisticated super computers. They perform seemingly miraculous feed thanks to delicate and complex electronic components integrated with highly specialized proprietary software. Even with all the possible tools and resources at one's disposal, attempting to self-fix or modify products with electronic components could lead to disastrous results, such as product failure, or even worse, serious injury to the consumer. In addition, these alterations can put the privacy and security of the user at risk requiring product manuals and their software to be 100 percent open source risk bad actors tampering with hacking and damaging the product, as well as stealing consumers' private data. We cannot open our producers to this type of liability. Looking at the bigger picture, I harbor serious concerns over the potential theft of American manufacturers' intellectual property if forced to divulge such information under Right to Repair laws. We could be inviting foreign and potentially hostile entities to steal American innovation right out from under us. American manufacturers could be stuck with a bill for the upfront research, development, and production costs. Then they would have to turn around and compete against foreign companies making similar products based off of stolen American intellectual property. This is famously true with China each year as they steal our intellectual property. This would handicap American manufacturers on the world stage sending negative ripple effects throughout our economy while at the same time providing a windfall to our global competitors. The last thing I will mention here is that we should be mindful of the downstream impacts of the right to repair and consumers and small businesses, not just manufacturers. The right to repair might create new markets where small and independent repair shops could flourish. We have seen this successfully happen within the auto industry. However, the right to repair may also harm small businesses, like small dealerships and authorized repair shops. Also, small businesses and sometimes corporations that provide products, replacement parts, and professional repair services to the customers. In short, the right to repair makes perfect logical sense when designed in a thoughtful manner that considers the realities of the industry. A cautious, measured, and well- informed approach is required when considering these next steps. It is my hope today that we can engage our esteemed witnesses in such a great discussion. Thanks again to our witnesses for their contributions. I just want to, for the record, introduce two letters that we received if I may, Chairman. The Alliance for Automotive Innovation. This record, if this letter could be introduced. Also a letter addressed to both the Chairman and Ranking Member form the National Association of Manufacturers. So I just want to say thank you to the witnesses. I really look forward to a great discussion with the Chairman and with our Members. Thanks again, and I yield back. Chairman GOLDEN. Thank you, Ms. Tenney. All good points. I look forward to talking more about the issue. I will quickly take a moment to explain how the hearing will proceed. Each witnesses is going to have 5 minutes to provide an opening statement and each Committee Member will have 5 minutes for questions following that. Please ensure that your microphone is on when you begin speaking and that you return to mute when finished. With that, I will introduce our witnesses. Our first witness is Ms. Gay Gordon-Byrne, the founding Member of the Digital Right to Repair Coalition. And she serves as its executive director. Ms. Gordon-Byrne has had a full career starting in the 1970s in the technology sector, trained first as a systems software engineer and then expanding into sales and marketing for many corporations. Her broad experience gave her specific into manufacturers' design and maintenance, resulting in her 2014 book, Buying, Supporting, and Maintaining Software and Equipment: An IT Manager's Guide to Controlling the Product's Lifecycle. She is a frequent guest and panelist at conferences such as the National Association of States Attorneys General. A month ago, her TED Talk in the summer of 2021 or her research and testimony the FTC Workshop, nixing the fix, which resulted in the 2021 report to Congress by the same name. Thank you for joining us today, and we look forward to hearing your testimony. Second, we will hear from Mr. Brian Clark, the co-owner and CTO of iGuys Tech Shop in North Conway, New Hampshire. Mr. Clark started his business out of necessity in 2012 being the only independent phone repair shop in town. He manages day-to- day operations and takes a lead on repairs and support work. He has testified on behalf of state right to repair bills twice in New Hampshire and approaches this issue from the perspective of a small business owner in a rural area. Thank you, Mr. Clark. Third is Mr. Jim Gerritsen, who along with his wife Megan and son Caleb, have run the Wood Prairie Family Farm in Northern Maine. That is in my congressional district. They have been running that for over 45 years now. The Gerritsens specialize in growing organic, early generation, Maine certified seed potatoes, seed crops, and grain. In addition to farming, Jim has been active in the organic community for over 4 decades. He helped found the Organic Seed Growers and Trade Association. He has served on its board of directors since its inception and has been its long-time president. On Earth Day in 2014, Jim spoke to the United Nations General Assembly about the advantages of organic farming. Thank you, Mr. Gerritsen for being here today. I look forward to your testimony. And I will yield to the Ranking Member to introduce our final witness. Ms. TENNEY. Thank you. It is my pleasure to introduce Mr. Ken Taylor, Chairman of the Associated Equipment Distributors for AED, whom he is representing today. AED is an international trade association representing companies involved in the distribution, rental, and support of equipment used in construction, mining, forestry, power generation, agriculture, and industrial applications. Its membership consists of independent distributors, including small businesses that sell, rental, and provide after-market equipment support, manufacturers, and suppliers of business services. In addition to his leadership at AED, Mr. Taylor is the president and Chairman of the board of Ohio Machinery Company, an authorized dealer for construction, vehicle, and agricultural equipment. He is a third generation owner having assumed the role of president after his father and he is joined in the company by his daughter Jillian. Mr. Taylor is an active contributor to the industry and his community having served and currently serving in leadership roles in various organizations such as the Foundation for Appalachian Ohio; Ohio Equipment Distributors Association; Cooperation Association of Tractor Dealers, Inc.; Ohio Contractors Association; the Fisher Institute for Professional Selling at the University of Akron; and I Build America-Ohio. Mr. Taylor, I just want to say thank you for your valuable contributions to the community, for joining us today, and for your extensive involvement in organizations throughout the State of Ohio where I went to law school. I look forward to hearing your testimony and I yield back, Mr. Chairman. Chairman GOLDEN. All right. Thank you all for joining us today. We will begin with Ms. Gordon-Byrne. You are recognized for 5 minutes. STATEMENTS OF GAY GORDON-BYRNE, EXECUTIVE DIRECTOR, DIGITAL RIGHT TO REPAIR COALITION; BRIAN CLARK, CO-OWNER, THE IGUYS' TECH SHOP, LLC; KEN TAYLOR, PRESIDENT, OHIO MACHINERY CO.; JIM GERRITSEN, MARKETING MANAGER, WOOD PRAIRIE FAMILY FARM STATEMENT OF GAY GORDON-BYRNE Ms. GORDON-BYRNE. Thank you very much, Mr. Chairman and ranker. As you have already explained, right to repair is very near and dear to my heart, and it is particularly near and dear to me because I do live in an underserved rural area of Upstate New York. And having been a technology person for most of my career, I hope that I can speak well to this. If we cannot fix our stuff, and I mean it in a very general sense because anything that has a chip in it right now I call ``stuff'' so I do not have to mention any manufacturers. But if we cannot fix our stuff, we are in the position of we have got to throw it away, buy new, or do without. Throwing away is why we have an e-waste problem. Most of our states and municipalities are not beginning to collect the full extent of what is now e-waste. And that winds up being a taxpayer expense. If we are buying new, that is also a very limiting factor for people, particularly people that are already on public assistance of some kind which last I saw is about 50 percent of the population. So it is a big problem for people that are not wealthy. And then going without is why we have a digital divide. So I think it is a very serious problem. It is not a trivial problem. It affects everything that we buy. And when I was preparing for testimony at the Federal Trade Commission, I looked at manufacturer policies and pretty much concluded, as did U.S. PIRG that about 90 percent of the products on the market today are already repair monopolized, meaning that the only option for repair, if there is one, is through the manufacturer. So this eliminates all competition. These are now starting to be recognized in the courts as actual monopolies and there is some discussion among the state attorneys general, et cetera, of how they might approach these monopolies and try to untangle them. Obviously, rural people, such as myself and a number of the Members here, are already underserved just because everything is far away. We do not have much access to medical care. Education is distant. High speed internet is still a problem. And even getting groceries. I mean, I am 15 miles from a grocery store. I have to plan ahead. If something breaks in my house, I really do have to fix it because the nearest technician could be 45 or 100 miles away. So I live in a community where repair is kind of in our DNA and we need to be able to do it. And that is not just consumers. That is also all the businesses in town. They face the same problems and they need the same options to be able to fix their stuff. Now, urban areas, which I know has been a question, how is it that urban areas are underserved? Well, they are really underserved if they do not have money, which is not the same as distance, although they may also have, let's say public transit might not go to the mall where there is a local store. So it is even harder for people in underserved urban communities to get access to what I would call price competitive repair. And most of those people simply do without. So in order to turn this ship around, we really do have to make repairs more widely accessible. It is not even so much money as it is availability. Farmers, in particular, always tell us that they do not mind paying. They just have to have their stuff fixed. So the key to keeping all this working is to have the option of competition for repair, which we have discovered works pretty well using the legislative template that the auto industry began with. They passed their first bill in Massachusetts in 2012. It rapidly led to an agreement that is now a national agreement. It is not perfect but it is working. And we copied it. I literally sat down and wrote the first bill by taking out the word ``automobile'' and stuffing in the word ``digital electronic product.'' And the philosophy is the same. A state can say, Mr. Manufacturer, if you are going to do business in my state, you must provide fair and reasonable access to the same parts, tools, diagnostics, and service information that you are currently only providing on an exclusive basis to your dealership. Now, this means that the manufacturer--and I have been a manufacturer so I feel I can speak with some confidence-- manufacturers never put secrets in their repair documentation because they would never be secret. They do not put crypto keys in their repair documentation because that would also get around the internet almost instantly. So what the dealerships and the authorized providers get is actually a very limited set of tools. The diagnostic tools may be ``proprietary'' but they are not mystical. They are reporting on whether or not a connection from part A to part B is functional. These things can be done without using the manufacturer. This is incredibly tedious. So as a practical business opportunity, people that cannot buy the manufacturer diagnostics cannot really be in business, which is a huge problem for people like Brian. So the unlocking is basically the Massachusetts law turned into electronics and it has worked well. We have got 10 years of experience with that law. The sky did not fall. People are not driving around on terrible brake systems because the local mechanic fixed them instead of the dealership. They are not losing access to their bank accounts because of some crypto mythology. So I think we are pretty confident that that model works. Now, we have actually got that bill going in 43 different states. And New York passed the first bill this year for consumer electronic--it is not strictly consumer electronics but---- Chairman GOLDEN. If we could just get close to---- Ms. GORDON-BYRNE.--general electronics. Colorado passed a really quite different bill enabling repair of powered wheelchairs. So we are on a roll. We know that Congress has some work to do. It would be very, very helpful if we could get some of the copyright restrictions that do apply to repair, if we could get those lifted. But other than that, I think we have got a good template and I think we can satisfy Ms. Tenney's concerns as well. Thank you. Chairman GOLDEN. Thank you very much. We will now recognize Mr. Clark. STATEMENT OF BRIAN CLARK Mr. CLARK. Good morning, Mr. Golden, Mr. Tenney. Thanks for hearing my testimony today. As mentioned, my name is Brian Clark. I am the co-owner of a small, independent repair, consumer electronics repair shop located in the town of Conway, New Hampshire. We specialize in repair of all smartphones and tablets, as well as Apple branded computers. We also provide data recovery and micro soldering services. We founded the business in 2012. We recognized the Conway area desperately needed local options for repair of devices that were becoming increasingly important to everyday life. Conway lies in a very rural part of the state in the heart of the White Mountains, a very popular tourist destination. The permanent population of the area that we serve is somewhere around 100,000 people based on 2020 census data. This is covering a very large area at over 1,000 square miles. We serve around 1,200 to 1,500 paying customers every year on average. As an independent shop, we have no affiliation with any manufacturer. Even as the industry has evolved over the last decade, we still find that it is best for our business and more importantly for our customers to remain independent. Any paths to becoming an authorized repair facility are far from ideal and are generally incredibly invasive to our business and restrictive in what we can do for our customers. Of course, there are drawbacks to our choice, as most manufacturers continue to offer independent shops little to no official access to genuine parts, repair manuals, tools, or schematics. Manufacturers want control over how and whether your device gets repaired by forcing customers to authorized repair. For Apple devices, the nearest authorized repair facility, in this case an Apple Authorized Service Provider or AASP, is about 45 minutes from my shop. The nearest Apple Store is about 1 hour, 15 minutes away. For Samsung and Google devices, the closest facility is about 1 hour, 30 minutes away. If you have a device from another manufacturer such as Motorola or LG, mail-in repair is your only option. Because New Hampshire becomes increasingly rural as you go north, all of these authorized repair options are located in the more densely populated southern parts of the state. This means that most of our customers would need to drive an additional 45 to 90 minutes, after already frequently driving over an hour or more just to reach us. This situation is far from unique to northern New Hampshire. I do want to be clear on that. There are countless locations around the country where similar, or worse, situations can be encountered. Over the decade that we have been in business, we have seen countless scenarios repeat and replay themselves over and over again for our customers. In my written testimony, I play out four examples of real world scenarios that are incredibly common for a rural repair shop like mine. With the limited time I have here today, I would like to highlight the common threads that come into play in these scenarios that we see so frequently. First of all, the devices that we service have become tools. Tools that are integral to people's day-to-day lives at home, at work, and in businesses. Access to timely repair for folks that find themselves without these tools is crucial, and in rural areas that would be nearly impossible without independent repair. Time and time again we are able to get folks back up and running with far less interruption to their lives than if they were forced to use solely authorized repair options. Misleading information. When contacting authorized repair, consumers are not always given completely truthful information. More specifically, they are told that certain things cannot be repaired when they really mean that the manufacturer does not offer an authorized repair option for the customer's problem. This practice is very unfriendly to the consumer and as part of an effort to replace replacement of devices, something that is not always easy to do in rural areas. Keeping technology in use is important. Not everyone cares to have the latest and greatest tech. Not everyone can afford the latest and greatest tech as Ms. Gordon-Byrne alluded to. We found this especially true in rural areas like ours. Independent repair gives folks in these situations the option to keep their device going even if the manufacturer no longer wishes to provide official repair. The last thing is data. The information we keep on these devices is often priceless. A business owner frequently has contacts and communication on their device that would be irreplaceable if lost. Almost all of us keep photographs and other personal data on our devices that would be devasting to lose. Authorized repair generally provides no options for a situation where data recovery is needed. Their point of view is that if you did not back it up, it is your fault. In summary, the presence of reliable independent consumer electronics repair in rural areas is crucial for the quality of life of residents, as well as the economy of these areas. Despite this clear importance, manufacturers continue to ignore the need and frankly make it unnecessary challenging for businesses like mine to operate. Independent repair is ready, willing, and able to fill the void the major manufacturers have left particularly in these rural markets. All we ask is that manufacturers give us reasonable paid access to parts, tools, and documentation to continue to offer these services for years to come. Thank you for your time. Chairman GOLDEN. Thank you. And I believe that our third witness up in Maine has technical difficulties so we are going to go ahead and recognize you, sir. STATEMENT OF KEN TAYLOR Mr. TAYLOR. Chairman Golden, Ranking Member Tenney, and other distinguished Members of this Subcommittee, it is an honor to appear before you today both as Associated Equipment Distributors' (AED) 2022 Chairman and as president of Ohio Machinery Co. AED is the international trade association representing independent companies that sell, rent and service equipment used in many applications, including construction, agriculture, forestry, energy, mining, material handling and industrial production. Ohio Machinery Co. was founded in 1945, and I am the third generation from my family to run the business, following both my father and my grandfather. Right to repair is a simple slogan; however, the policy proposals surrounding the issue are complex with significant consequences. At the outset, I want to make it clear; AED Members support customers' right to repair their machinery, and distributors make available diagnostic tools, repair information, parts, and remote customer support. Idle, non-functioning equipment equals lost time and money. Whether it is on a farm during harvest or on a road building project, there is absolutely zero incentive to not do everything we can as equipment dealers and manufacturers to keep a machine running. That can mean repairs completed by a dealership service technician, the customer, or a third-party provider. The equipment industry is highly competitive, and if Ohio Machinery Co. is not providing proper and timely service, nothing is stopping the customer from moving to one of my many competitors and their products. However, we do not support unfettered access to critical on-board software and information pertaining to environmental and safety protections or key operational functions which is what proposals in various states and Congress would do. The tractors we are selling today are not the same as those sold by my grandfather or even my father. While customers can complete most repairs to their machinery, government, environmental, and safety regulations, as well as technological developments that have made equipment more efficient and productive necessitate restrictions and access to source code and software that ensure key operational functions are not modified or disabled. Right to repair legislation currently being considered in Congress will completely alter the equipment industry's distribution model. Manufacturers of equipment rely on a network of independent, mostly family-owned, small-to-medium- sized companies to sell, rent and service the equipment. These dealers make significant investments in their employees, including training service technicians to repair and maintain the latest high-technology machinery. Many AED Member facilities are located in rural and underserved areas, creating well-paying careers and economic opportunity. Equipment dealers also invest extensive capital in parts inventories to ensure repairs and maintenance can occur as soon as possible. Out-of-service equipment is not merely an inconvenience; it can ruin a farmer's harvest or delay completion of a bridge or roadway. However, right to repair proposals require original equipment manufacturers to sell parts and diagnostic tools directly to the public at cost, without profit, completely circumventing the equipment dealer. Aside from effectively dismantling the equipment distribution industry's aftermarket parts business and thereby putting many equipment dealers out of business, logistically, it is impractical and would only exacerbate inflationary pressures in the equipment market and create long delays in parts availability. For many equipment dealers, parts revenue produces the majority of income for the business, though parts margins are far from inordinate. If parts are required to be provided at cost, many dealers would be put out of business. Anyone can walk into an AED Member facility, or go online, and buy OEM parts for their equipment. There is no restriction on who can purchase parts, whether it is an equipment owner, a third-party service provider, an equipment operator, or a Member of the general public. However, there will be no incentive for an equipment dealer to carry parts inventory if the manufacturer or the dealer is forced to sell without the ability to make a profit. For the equipment industry, right to repair proposals are a solution in search of a problem. AED Members provide customers and third-party repair providers with parts, tools, and other resources to complete the overwhelming majority of equipment repairs. Enacting these proposals will stifle entrepreneurship and the result will be an unprecedented intrusion by government into the free enterprise system. I reflect on my grandfather and the reasons he got into the equipment distribution industry. He was looking for a better life for his family, the opportunity to create well-paying jobs and careers for his employees, and the privilege of giving back to the community, including in underserved areas like Appalachia. Most equipment dealers have similar stories because the United States allows entrepreneurs to pursue their dreams. Unfortunately, I worry that should these right to repair policies become law, the viability of the equipment distribution industry will be severely hampered, resulting in lost economic activity, job creation, technological advancements, and a less competitive America. Chairman Golden, Ranking Member Tenney, and Members of the Subcommittee, thank you for the honor of appearing before you today. I look forward to answering any questions you may have. Thank you. Chairman GOLDEN. Thank you, sir. Subject to the call of the Chair, we are going to take a brief recess to try and sort out some technological difficulties. [Recess] Chairman GOLDEN. We will bring this hearing back into order. And we will now recognize Mr. Gerritsen for 5 minutes for your opening statement. Thank you. STATEMENT OF JIM GERRITSEN Mr. GERRITSEN. Okay. Thank you for your patience. Sorry, but we had trouble with our rural internet. Good morning, Congressman Golden and Congresswoman Tenney, and Members of the Subcommittee. I am Jim Gerritsen from the State of Maine. I am a family farmer. I work closely with our son, who is the chief mechanic on the farm. We both strongly support the concept of preserving the right of farmers and independent shops to repair the equipment that farmers own. We urge Congress to codify traditional farmer and independent shop repair rights by passing legislation that serves the public good by leveling the economic playing field, restraining monopoly control, and thereby uplifting the economy and enhancing the freedom and liberty of working Americans. For almost 50 years, along with my family, I have been growing organic crops on our farm. We are located in Aroostook County, the northernmost county in the State of Maine, referred to as the ``Potato Empire.'' To this day, Aroostook County grows more acres of potatoes than any other county in the United States except one. On our farm we raise organic Maine certified seed potatoes and other types of organic seed. Our crops have all been certified organic for 40 years, including the last 20 years under regulation by USDA National Organic Program. For over 40 years we have retailed our crops directly to our retail customers and beginning 33 years ago we opened an organic seed business with a mail order catalog, later adding a web store. My wife and I have now handed our farm down to our son, Caleb Gerritsen. He is a skilled mechanic. After high school, he increased his knowledge and ability by earning a degree in diesel hydraulic mechanics at the local community college. Caleb does an excellent job maintaining our tractors and equipment. In Aroostook County, it is extremely common for farmers to do most of their own equipment repair work. By design, in order to increase our own financial farm viability, we long ago consciously made the strategic decision to only own equipment that we ourselves are able to repair. Therefore, we have avoided purchasing modern, electronically sophisticated farm tractors and equipment which contain computer chips. For example, on our family farm we rely upon older equipment going back to the 1970s, equipment that we have repaired and rebuilt ourselves. We would never choose to place ourselves into a vulnerable position of being at the mercy of malfunctioning electronic sensors, then being involuntarily forced into ``limp mode,'' and becoming locked out of our own equipment, having to wait until a mechanic from the dealership came out on their time schedule to get us going again. When a problem as common and as minor as water condensation in a diesel tank can cause a sudden ``limp mode'' activation, say during peak planting or peak harvest, not only does that place an individual farmer and our livelihood at risk, but it really places the nation's food security at risk. Within the entire economy, there is growing concentration, growing monopoly control, and I think that this hurts all Americans. And within agriculture, I think the situation is extreme. Right here in Aroostook County, the local John Deere dealership last year, which had been owned for 63 years by a local family, they sold out to a company that has 63 John Deere dealerships. And that type of concentration I do not think is correct in a free market economy. And I think that when you have concentrated monopoly power that it works against the interests of citizens. And I think only under that kind of condition would you have the boldness for a tractor company to engage in putting this kind of proprietary limitation on farmers who with good intention bought the equipment and then are prevented from working on it themselves or having a local mechanic that they know and trust work on it. In closing, let me encourage your Subcommittee to work together and create legislative remedies that will provide America's ailing family farms with greater resiliency, increase fair market competition, and provide Americans with a more stable food supply. Congress should enjoin the U.S. Department of Justice to vigorously enforce existing laws which restrain monopolies, including the Sherman Antitrust Act of 1890. We are living in a new era. Therefore, appropriate modernized legislation will be necessary to adjust to the times and force farm equipment manufacturers and software companies to play fair, prevent abuse and manipulation of markets, and be effectively restrained from the negative consequences of monopolistic behaviors. Thank you for this opportunity. Chairman GOLDEN. Thank you. And thanks for overcoming the technological challenges there. We will go ahead and move to Q and A at this point beginning by recognizing myself for 5 minutes. I will start with you, Ms. Gordon-Byrne. You talked about a Massachusetts law, a Right to Repair law, which has been in existence it sounds like for about 10 years. Can you tell us a little bit about how the law has worked to benefit independent repair shops that have been most hurt by restrictions? Ms. GORDON-BYRNE. Certainly. The law required auto manufacturers doing business in the State of Massachusetts to provide access to the same diagnostic tools, software, software updates, and regular tools as were being made available only to the dealerships. And they did not have a parts requirement because the auto parts industry is pretty open. The only thing we really changed in the template bill was to add a parts requirement. But it worked very well. It has enabled independent mechanics to stay in business. And they very much expected to go out of business. We had some information from Snap-On Tools, pretty famous, that they were really, really financially stressed until the law was passed and then they were able to grow again, the only reason that I know that my local mechanic can even work on my car. Chairman GOLDEN. Thank you. I appreciate that. On the issue of software updates and diagnostic tools, with my Armed Services Committee hat on, it reminds me a little bit of some of the problem we have with the readiness of our naval fleet ships coming into port and sitting there for much longer than necessary is they wait for software updates because of the contracts and various other reasons the Navy is not even in possession of. It has become quite a problem. Mr. Clark, there are, as you pointed out with Apple, several different levels of affiliation that can increase access to parts for independent repair shops. Can you explain these affiliations and why is it that you have remained independent? What is the benefit to you or to your customers? Mr. CLARK. So I mentioned the Apple authorized service provider status in my testimony and that is the highest level that an independent shop like mine could gain. But the higher level you get, the more access you get to parts and information, but the more restrictive it is and the more Apple controls what you do. It is very, very difficult to become an AASP. It is very invasive to your business. Now, I should also mention that it is also difficult to gain a true understanding of what you have to do because Apple makes everybody sign so many NDAs it is hard to get truthful information as to the process. But it has leaked out to a certain extent. There is also Apple's relatively new IRP program, Independent Repair Provider program. Again, less access to parts and tools and software but a little less invasive, but still frightfully invasive to a person's business. You are open to audits at any time, both financial, and, also, they can just walk into your store and check on what you have in stock at any time that they want. And again, all of that, the knowledge we have on that is limited by those NDAs. People just cannot talk about it. Apple did just introduce their self-service repair option but for that you have to put in the serial number of a device to even be able to order parts. So as an independent shop, I cannot even use that program to order parts to keep in stock. I have to put a customer's device in. I can order the part and then wait 5 to 7 days to receive it. It really just does not work for us. And our customers. Thank you. Chairman GOLDEN. Thank you. Mr. Taylor, some of the concerns you raised were concerns about environmental regulations as well as kind of safety. People given the option to bypass some of these things would go ahead and do so. Is it a concern about personal liability for your business or is it just a strong kind of like feeling that the environmental regulations are important? I mean, my take is that generally farmers, just as an example, will find a way around these things given the opportunity. Is it not really up to them once they own the equipment? What is the concern for you as a business owner as it relates to safety or environmental regulations? Mr. TAYLOR. Some personal experience. Both trade-in situations. So had a farm tractor. Traded it in and it was ``chipped.'' And the chipping allows it to put more horsepower to the ground and really a farmer needs to get work done in a short amount of time. So when we took that machine in on trade, as a dealer, we cannot let it leave our facility chipped. We have to put extra cost into the unit for it to be a valid product to sell. Same with a truck. We had a CAT truck at the time where all of the gear was taken off of the engine. And again, if it enters our premises, then we are going to have to add all that equipment. And I think that with that truck the gear was probably $10,000 or $12,000 of material that someone had to pay for for that truck to be a viable trade in and then to be sold again. So, I think it is the regulations. It is the laws that are applicable here both with environmental and safety but it is also the practical cost issues associated with people messing with the technology makes our life difficult as a dealer. Chairman GOLDEN. That is an interesting point. Thank you. That is the 5 minutes that I have so we will now recognize the Ranking Member. Ms. TENNEY. Thank you. The witnesses, that was great testimony. I am just going to bring a couple of angles. Whenever government gets in the middle of it, it tends to overplay. I know all the witnesses talked about competition, and I heard an all or nothing approach. I am from New York State, and even as a lawyer, most of the bills that I looked at of any significance coming through our Codes Committee, which was our Committee of jurisdiction, there was an angle for the trial lawyers to find liability on someone, particularly small business owners without taking that into regard. So that is my concern, the liability issue. I am concerned about intellectual property. Ma'am, you mentioned competition. You also mentioned competition. We mentioned competition. It seems to me that there could be a reasonable middle ground here on some of these issues because I will give you a perfect example. When I was young in our printing business, I learned how to operate a press in the 1970s, beginning of the 1980s, and it was hard work. I mean, there were no computers and no chips. You had to know how to gauge the water, the ink, and how to deal with the press. Now we actually operate a press that are very expensive and you can operate them in a suit and never get any ink on you and be very clean. And the technology is very different. And, also, as the lawyer, former lawyer for our company, I have gone in and seen these very expensive presses with duct tape on them. And that is because a lot of our employees are former farmers, especially dairy farmers. They are like MacGyver. They can fix anything and they can make anything run, even if it has a chip in it. So, but I do think there is a middle ground. But I wanted to ask you, and just to respond maybe to some of the comments made by, you know, I love the vintage farmer and the idea of that. We still have people in our communities, very rural upstate New York, who use vintage equipment. We also have a lot of Amish farmers who are still using horses. So could you just explain to me a little bit on maybe replying to that and how we could find a way to make sure we protect our supply chains the way they are now to make sure the small business owners and dealers are protected, but also, how do we kind of bring this all together? A little elaborate on what you just said to Mr. Golden possibly. Mr. TAYLOR. I have to say at the outset I think that our industry has many differences with consumer electronics in other industries. We have, for instance, as a CAT dealer, we have a tool called Electronic Technician. And you can buy the customer version of Electronic Technician. And that facilitates more repairs than if you did not have the tool. Right on CAT's website today there are instructions for the ``do it myself'' owner of equipment or engines. We will engage with that customer and find a solution, whether that is in-person, on the phone, over a chat, whatever it might be. We will engage with that equipment owner to come up with a solution. There is going to be inevitably, perhaps, some cost that is extraordinary because of the remoteness, perhaps, of that company, but I think we are always looking at the end result, which is uptime. And so our whole business functions on uptime. So we are going to figure that out. It just may not be as efficient a solution as would be in an urban area perhaps. Ms. TENNEY. So quick question, potentially a solution to you, and I am going to ask this of Mr. Clark. Is there a way that we can negotiate and keep competition in play that manufacturers can actually work with and make it easier to create authorized repair facilities and get more people involved in that process so that people in rural areas can have greater access to people that are highly trained? I am going to ask you that quickly because I want to ask Mr. Clark about that because he includes in his testimony that it is incredibly invasive and tough to be an authorized repair facility. And I just want to get your quick answer and see what his response is. Mr. TAYLOR. Well, my quick answer would be that setting up a dealership in an area is probably at minimum a $500 million investment in our type of business. So you are going to see us look for economies of scale and cover any---- Ms. TENNEY. But quickly, can you not contract with someone like Mr. Clark and train him so that he could be someone in that rural area? Is that something that could be done? Mr. TAYLOR. Well, really, there would need to be an approval from a manufacturer. So we are the distributor in the middle and the manufacturer would have to allow that. Ms. TENNEY. Okay. So, but I am saying there could be a contract. So Mr. Clark, is that something that you would consider a potential solution? I am running out of time. Mr. CLARK. If it were that easy, sure. I will answer your question with a little bit of a question. Why does Apple need to see my financials to order parts from them? Why do they need to visit my shop to see what accessories I am selling to buy parts from them? That is what is problematic for a business like mine. It just does not make any sense why they need to have so much control over my business just to get parts. Just to get tools. Ms. TENNEY. I think they are basic financial statements; would they not be? I am just guessing. Mr. CLARK. Again, it is hard to know because it is all hidden behind nondisclosure agreements. Ms. TENNEY. My time has expired but I would love if we can revisit. Thank you so much. Thank you. I appreciate that. Mr. TAYLOR. Could I just simply add as a dealer, we have very high standards of what they want to see the customer experience. And so those standards will not be sacrificed. And therefore, when we move outside the authorized dealer network, there is no ability to control standards and the companies meeting those standards. So it is just not even a discussion point. Chairman GOLDEN. Thank you. Next, we will recognize Representative Carter. Mr. CARTER. Thank you, Mr. Chairman. And thank all of you. Listen, we hear much from manufacturers who suggest that their restrictions are imposed because of intellectual property rights. Can you share your view on how much that bleeds over into and how it impacts you? Chairman GOLDEN. Who are you addressing? Mr. CARTER. Anyone. Anyone who would like to answer it. Ms. GORDON-BYRNE. I will give a swing at that. Intellectual property is not involved in repair. Many people assume that it is but it is not. Our copyright law, the DMCA of 1998, has specific provisions in it to allow people to back up and restore all of their licensed software at no copyright peril. Patents are already public. So if Chinese people are ripping off patents, nothing about right to repair is going to add to that capability. That has already been done. That horse is out of the barn, so to speak. And there is really no actual period. The copyright law and I believe it was Senators Leahy and Grassley requested a study of the copyright office back in 2016 and 2017 about the specific rights under copyright law and under the 1201 exemption process. And they found that there is nothing wrong with copyright law. Mr. CARTER. Excuse me. We continue to hear that manufacturers are still leaning on this as a barrier. Are you saying that that is not correct? Are they just doing it erroneously? Ms. GORDON-BYRNE. They are pretty disingenuous. Mr. TAYLOR. I would say today in the equipment business, the innovation that is occurring is extraordinary. Hard parts at one time were a part of a product's competitive advantage, and today as much as hard parts as the software and the code that provides more power, more efficiency, longevity, all the features that one wants in a piece of equipment, a tool on a job, software supports much of that today which is just an entirely different picture. It is new ground for all of us to cope with, I think. Mr. CARTER. So, I am sorry to interrupt. Real quickly before my time elapses. So, (a) how can we help with that? Because if, in fact, there is a remedy in place yet, manufacturers are still using this, then obviously tell us how we can from this Committee standpoint help address that so it is no longer a barrier. And then lastly, you guys can answer this, whoever wants to, but lastly, I represent several rural areas in Louisiana. And obviously, people have issues with repair. In the city, there is access to more repair shops. How do you handle, how do you deal with those rural areas who do not have a plethora resources as relates to close proximity to have their trucks repaired or their vehicles repaired? Ms. GORDON-BYRNE. I do not know if you are asking Ken or myself, but the solution for repair in general is having more. The more businesses that can form that can provide repair services locally, the more options there will be for our communities. So, it would be very helpful, I think, for your constituents to be able to use a local shop as opposed to having to drive to let's say New Orleans. So what you could do would be to help support some of the bills that are already in Congress. That will make things easier. Mr. TAYLOR. I think one of the challenges is the amount of training that is required for an individual that might be local in a community far away from a dealer. The training and knowledge that is required to effectively make a repair are extensive. And so I guess, perhaps, if the repair shop were willing to pay a fee for the training to help them perhaps do more, maybe not everything they want to do but more, that could be arranged. But is that a cost that that business is willing to bear? Mr. CARTER. And going back to the add-on about what can we do to assist in the area of the so-called intellectual property barrier, is there something that we can do from this Committee's standpoint to assist with ferreting out that falsehood and forcing them to do the right thing if they are, in fact, doing the wrong thing? Ms. GORDON-BYRNE. Well, let me jump back in on that one. There is a bill that was filed by Rep. Mondaire Jones and I think Victoria Spartz in their Committee that was addressing a specific problem of copyright law that does need to be fixed by Congress. There is a longstanding prohibition on making tools to make it easier to copy VCR tapes. That is how old it is. And it needs to be updated because it is standing in the way of people building tools that would be necessary to fix modern equipment. I do not mean physical tools. I mean software tools. So that would be something that would be very helpful. Mr. CARTER. If you would be so kind as to send some information to us I would greatly appreciate it. Mr. Chairman, I yield back. Chairman GOLDEN. Thank you. Next up we will recognize Representative Williams. Mr. WILLIAMS. Thank you, Chairman. And thank all of you for being here today, and Representative Tenney for helping us lead. We are here today to discuss the notice of the Right to Repair. As a small business owner, and in full disclosure, 89 years in the car business, 51 years I have been in the business. Chrysler, Dodge, Jeep, Ram, Chevrolet, you name it, for 51 years, and I am also a rancher, calf-cow operation, Angus, Black Angus back in Texas. So I understand this complex topic firsthand. Maybe as much or more than anybody in this room. And it is not as cut and dry as it may seem. So I made a few notes here, and there is no organization to them but it was commented earlier. Leveling the playing field. Well, what the heck does that mean? Leveling the playing field. And I know one of our witnesses is in the potato business. I am sure they would not sell their potatoes at cost. In many cases we are asked to do things at cost, and nobody knows what cost is anyway. That is a phony word. And I cannot buy equipment. If I cannot buy the equipment. If I cannot buy the equipment, I am out of business. Well, you do not have to pay cash for the equipment. You can finance the equipment. You can also wrote 100 percent off of it this year and take a tax deduction. And someone said, too, that a lot of people, regardless of their income class or whatever, are not getting repairs done, I fix everybody. We do not ask them what their class is. So everybody is getting fixed. Independents, quite frankly, are the best customers I have got in my car business. I have got six parts trucks. I am just going to put another one in when I get back because we have got so much business taken to independent mechanics. Independent people. They are the best customers I have got. So they are getting good service. And the truth of the matter is, if you cannot fix it, send it to the franchise dealer. This happens all the time. Independent people send it to us and we fix it. And the customer has no problem with that. Independents have access to parts. It is me. I have got millions of dollars' worth of parts and we will deliver them to you. We will do everything. You have got access to parts. And we talk about how complicated it is. Well, just go to the dealer and get it fixed. Because I know what happens. You bring it to me. I fix it. And you mark it up 10 percent. No problem. Everybody makes a little. And all of us should remember this. The reason these repairs are so hard is because the government has demanded this. Not consumers, not me, not you. The government has demanded it. So, let's just understand that there is a pecking order here that works and the government does not need to be involved in it. And many proposals that we talk about tend to simply the issue without addressing the serious consequences this type of government intrusion will impose in the free market. And we have talked about it. Government, when they get involved, write it off. It really gets messed up and the consumer is the one that gets hurt. Manufacturers make significant investments in research and development of their products and services, and by forcing them to share their models for third parties to excess it removes all incentives to innovate. And remember, you have access. Okay? And on top of that there needs to be significant discussions on consumer privacy. We talked about that and data security. And some of the data, it could be assessed if anyone had an open handbook, it is sensitive and proprietary. We must ensure that we are not opening the door for hackers. We all have a hacker story. And we could be just making their life easy to take advantage of unknowing consumers. So it is critical we look at this issue from all angles and proceed with caution before we try to get the government more involved. And quit talking about cost and quit talking about selling for nothing. Because if you are selling at cost and selling for nothing there is no service to anybody. I cannot buy parts. I cannot deliver the parts. So we need to quit talking about that. The other side talks about it a lot but profit is a really good word. That is why we are all in business. So Mr. Taylor, how will your business ability compete to be affected if right to repair legislation passes and what legislative proposal do you believe would do the most harm to the equipment distributors' industry and why that you represent and are? Mr. TAYLOR. I would have to pick the parts topic. In my agricultural business, we are an AGCO and a CLAAS dealer. We are not John Deere. We are not Case IH. We are not the dominant player but we have a good size business. And 75 percent of our profit for that division comes from the parts business. We make an okay amount selling a tractor, used or new. Service, we lose money just because we are trying to get the customer service challenge done and so far we have not solved that yet. So we rely extensively on the parts profit just to stay open for that division. So I would say that is probably the most frightening aspect of some of these proposals is that parts will be sold at cost and then that would push the burden back on the manufacturer, and suddenly the manufacturer would have to figure out how to distribute the parts and whether that is through UPS or through some other channel. And that is added cost to their business. And so there would be an inflationary impact on that. Mr. WILLIAMS. Mr. Chairman, I yield my time back. The process works. Let's keep it that way. Chairman GOLDEN. We are going to recognize Representative Peters. Mr. PETERS. Thank you, Mr. Chairman. Really interesting discussion. On one hand you have got these repair shops just want to do a good job for their customers and feel like sometimes the suppliers or the manufacturers are too rigid. And on the other hand you have got manufacturers or businesses that are worried that the small shops will not maintain quality or privacy or intellectual property. So it is a hard balance. I was going to ask Mr. Taylor about the intellectual property and security concerns, especially as technology continues to improve. Tell me about the risks of the IP violations some of your Members are worried about. What are the risks to them? Mr. TAYLOR. The IP issue is more related to the manufacturers than it is to us a dealer. I think the primary concern we would have is the, well, environmental and safety both. Really to comply with regulation, there are designs in both the engine technology, exhaust technology that are high hurdles to reach. And the manufacturer spends a heck of a lot of R and D on that technology. We are in the field and we are going to have to support the manufacturers' expectations of that equipment in the field. Will we get mixed up in an argument and a lawsuit over a product that has been altered? Everyone sues everyone when there is a problem. I think a dealer could be pulled in pretty easily to an IP problem. The safety part of this, heavy equipment is pretty dangerous and today some of the technology that is software based is sensors that sense the proximity of a person or a vehicle. If any of that was tampered with, I think we would all be pointing fingers at who altered that machine so that they could avoid any of those restrictions. So I think the risk is when there is a violation, we are going to be pulled into any of these kinds of problems. And the manufacturer is going to be concerned that its IP is out on the market. Mr. PETERS. So Ms. Gordon-Byrne, so my understanding is now that the FTC is taking action to enforce against a warning law against bad actors that illegally restrict consumers' choice of how to fix their products, they are trying to enforce the law that we already have in the books, can you tell me if that is a satisfactory situation and how that enforcement can help small businesses, or what do we need to do beyond that? Ms. GORDON-BYRNE. If you could elaborate a little bit about which particular enforcement action you are talking about because I am not aware of all of them. I know a lot of them but not all. Mr. PETERS. I do not have particular actions in mind. It is just that there is existing law in the books about illegally restricting consumers' choice and why do you think the FTC has adequate authority to enforce those laws today? Ms. GORDON-BYRNE. I am probably not qualified to say what the FTC has the authority to do but what they have been doing is something they could have been doing the past 20 years and it would have been enormously helpful to not have the proliferation of monopolized repair that we have today. So I am aware that they are going after some particularly obvious cases. I think Harley-Davidson, famous example. They were telling their customers that they were not allowed to repair their stuff with an independent mechanic, which is actually contrary to federal law. So I am excited about that. Mr. PETERS. Okay. I mean, I also think that that is part of what we have to weigh, too, in terms of creating new rules. I guess Mr. Williams kind of hinted at that as well. Mr. Clark, repair shops like yours, can only have a few, often a few employees to help consumers keep their products operating. How do consumers/customers react when you tell them about the warning message they might receive to their phones if their phone is repaired with aftermarket parts? And have you lost business because of that? Mr. CLARK. So far the response has been such that we have not lost any customers from that so far. There are some people who have a lot of questions about it. They may not fully understand it but frankly, they just deal with it because they have to. They do not feel like they have a choice. They can have me fix their device in an hour or they can drive and take an entire day and hope that Apple will fix it. So, yeah, lack of choice does not help the fact. That drives some of the reason why they do not seem to be bothered by that. Mr. PETERS. Okay. Well, I appreciate it. Mr. CLARK. Sure. Mr. PETERS. Mr. Chairman, my time has expired and I yield back. Thank you. Chairman GOLDEN. Thank you. We will now recognize Representative Stauber. Mr. STAUBER. Well, thank you, Chair Golden, Ranking Member Tenney for holding this really important hearing. And I am grateful to be a part of it. On one hand the consumers are looking for freedom to repair products they own in a timely and cost-efficient manner. Why should rural Minnesotans have to wait for engineers from Silicon Valley to come fix a product they would happily fix themselves if given the chance? Minnesotans have always been a ``fix it ourselves'' kind of people. On the other hand, we want manufacturers to continue to research, innovate, and invest in the safety and efficacy of their products. The modernization of products we have seen over the last few decades has been outstanding, but it has also created a very complicated regulatory landscape. We must be thoughtful and considerate as we consider this issue to ensure we do not have any unintended consequences. So Mr. Gerritsen, in your testimony you mentioned that you made the conscious decision to only own farm equipment you can repair yourself. Do you feel your farm has missed opportunities to produce more should you have had more advanced equipment that you had an ability to repair yourself? Chairman GOLDEN. Sir, if you could unmute yourself. Mr. GERRITSEN. Thank you for the question. I would say that a farmer's purpose is like any business and that is to make the most profit for their efforts. Our interest is not in increasing production. It could well come at a higher cost and we would be making less. So our strategy has been to increase our independence and our farm by ability by keeping as many things within our control as we can. So many years ago we saw, especially the sophisticated electronics and chips, that that was simply a direction we were not interested in going in. So we do not, you know, increase in production is not of a high importance to us. Maintaining viability, increasing profitability, that is what is important to us, and I think that is probably what is most important to most farmers. Mr. STAUBER. And the second question, Mr. Gerritsen, do you know other farmers who became as you suggest as vulnerable to this more advanced equipment? And if so, what did they do to ensure? Mr. GERRITSEN. Well, about 15 or 20 years ago I received a phone call from an editor at one of the large farm magazines and he was incredulous that he had somewhere picked up the idea that we did not go for modern equipment that had chips in it. And I assured him that our reasoning, you know, we felt that it was sound and that, in fact, I could have given him at that time, I told this to him, I could give him the names and phone numbers of half a dozen farmers I know across the country that have the same philosophy as we do. So it has been interesting to me that within the last 4 to 5 years, the major media has picked up the fact that a lot of farmers are finding that they can buy older American-made tractors, say from the 1970s, buy the tractor, rebuild it, and for $50,000 or less have a tractor that is the equivalent of a $200,000 to $300,000 tractor, one that they can repair. So I think it is an increasing trend. I believe that some of the equipment in terms of relation to the Farmgate value of crops, I think some of the equipment has just become unaffordable for family farmers. And being innovative, family farmers are finding a good solution and that is using equipment, American-made equipment. Mr. STAUBER. Thank you very much for your answer. The newly elected Member from Minnesota's 1st District, Brad Finstad is a farmer and he says that he gets up in the morning knowing something is going to break and he is going to fix it himself, so. Mr. Taylor, have you ever interacted with equipment where the safety features had been overridden or manipulated for machine performance? Mr. TAYLOR. I keep forgetting to hit the button. One of the most common safety items is a backup alarm. And yes, I think during my career with some customers they operated a machine without a backup alarm. And that is just a fundamental safety factor there. So if I were to pick one that would be the one that is most obvious that either it was disabled or it failed and they continued to operate the machine even though the backup alarm was---- Mr. STAUBER. Thank you very much. Mr. Chair, I am out of time. Thank you. I yield back. Chairman GOLDEN. Thank you. Next, we recognize Representative Flood. Mr. FLOOD. Thank you, Mr. Chair. From Nebraska, right to repair, a complex issue. I am from the state where I was in the legislature. One of the first states to really confront this with a state regulation. And I understand the frustration of people, particularly farmers, that want to fix their own equipment when it breaks down. But before the federal government leaps into action pursuing a federal right to repair mandate, we should carefully examine, and I think something that we have not touched on enough, are some of the self-repair functions that are already accessible. The Executive Director of the Digital Right to Repair Coalition, Ms. Gordon-Byrne, shared that if we were to pursue right to repair as a national policy, we would have more local repair options. And I think we are forgetting the value of self-repair. Some manufacturers are increasingly offering customers remote support that can help them troubleshoot through some of the most difficult equipment problems. So Mr. Taylor, can you comment on self-repair, those options available in the Caterpillar equipment that you sell? Mr. TAYLOR. Yes, I can. And I will mention that a major trust in Caterpillar's strategy today is what is called services growth. And services growth is all about providing more services to the customer ultimately to drive more parts sales for Caterpillar, the manufacturer. And so the amount of focus we have today on determining new services and new strategies to ultimately sell more parts for Caterpillar, which is just a major goal of ours as a distributor, the focus has risen enormously in the last couple of years in the field. Like I say, right on CAT's site, and I have not myself visited the site to review some of these repair procedures, but it is Self- Service and it is a much more extensive list of possibilities than ever was available before. We rarely wanted to give tools to the customer in our past back in my grandfather's generation, maybe in my dad's, too. But today, to maximize parts sales for the equipment in the field, it means that we have to try every strategy to do that. And this self-service strategy is one of those strategies to put a genuine part in the hands of a customer versus a will-fit aftermarket-type part. So it used to be maybe the features were durability and productivity and resale value. Today it is fuel consumer. It is hours between oil changes. And if we can help that ``do it myself'' customer buy the cab part to do the work themselves, we are one part ahead every time we do that. Mr. FLOOD. Thank you, Mr. Taylor. I want to touch on intellectual property for a moment. If proprietary information is easily made available to third parties, do you anticipate that manufacturers will continue to invest in future research and development? And I am looking for just a brief answer here. Mr. TAYLOR. I will confess to being very confused about this topic, that this information is available to the public first of all. Mr. FLOOD. Right. Mr. TAYLOR. And, no, if all of that was free off the shelf, you would see much less investment. Mr. FLOOD. And see, that is what is so interesting to me because property rights in Nebraska are at the top of Ag owner landowners' lists. We are talking about real property rights. When you talk about intellectual rights, I would think there would be a similar desire to protect those and to maintain the IP rights value. I think it is important to note that in January of this year, a Chinese national in Missouri plead guilty to conspiracy to commit economic espionage. The man attempted to steal the algorithm behind a farming software platform, proprietary technology was used to boost the farmer's productivity. The Department of Justice found he was part of a program focused on advancing the Chinese effort sin industry and technology and his plan was to bring the software he stole back to China. I would strongly caution that we caution against any federal action that could inadvertently let our guard down against China. And I think that is a real pressing threat. And would say that the bigger priority for me, getting more broadband into rural American so that we can first and foremost explore self-repair. Because I think that is really the direction we should be going. So I yield back. Thank you. Chairman GOLDEN. Thank you. I am going to do another round of questions and anyone remaining is welcome to have more opportunities to ask questions as well. I was telling the Ranking Member, just listening to people talk about the issue of intellectual property, theft, particularly as it relates to China, there is a good report out there available to the public as well as to Members of Congress written by the AI Commission which talks extensively about the current problem of intellectual property theft. And it is massive, the scale of it. I think it is astounding when you look at the numbers ranking in the billions of dollars of lost revenue per year. So something I think Congress should be looking at no matter what. Even with no matter what we may or may not do as it relates to right to repair, this is a bit problem that is taking place right now. Mr. Gerritsen, my family has a business where they are still operating some pretty old equipment, some of it is actually older than I am, honestly, so 1970s and early 1980s equipment as well. I think one of the first challenges you start to see is the availability of parts, and then even you reach a point where the parts are not even available and then you have got to have people who start learning how to machine their own parts if you want to continue to repair and operate it. I am guessing that your family has coped in similar ways. Do you have concerns about the sustainability of the approach that you have chosen to take as it relates to older equipment and the ability to continue to repair it down the road? Or do you foresee a future out there for a farm family such as yourselves, where you would just have no choice but to make that move over to electronic equipment? Mr. GERRITSEN. Yeah. Congressman Golden, as you know, farmers in Maine are survivors. We will survive. I think it is going to be harder because of the proliferation of computer chips. But to be truthful, what I am hoping is that because so many family farmers are shifting to older equipment that this is going to trigger a market response and that there will be manufacturers that find that they can make a good living by manufacturing some of the parts that, you know, may now be 50 years old, that there is a demand for it. So I do think that American farmers are very innovative and if the demand is shifting towards older equipment, I am hoping that that is going to help make that repair parts available. But, you know, by the time we have to get into chipped tractors, I will not be around so I am here today trying to convey that we have got a problem for family farmers ahead and part of the important solution is to give freedom of access to repairing. And if a farmer buys a piece of equipment, it should be understood that they are buying the totality of it. It is not that they are buying simply the metal and not the brains behind it. And this is a traditional right that we have always had. And I think that it is best to improve that level playing field by decentralizing it and allowing as much interaction across the economy as you can with as many players as you can. Chairman GOLDEN. You mentioned that your son took it upon himself to go and get extra training so that he knew how to do these repairs in-house. And while I think I understand correctly that it is your opinion that you, as the owner of the equipment, ought to have access to information that would help you understand even what needs to be repaired, et cetera, the right to have access to that information. But I just want to clarify. You do not expect when it comes to like new parts, you expect that you would pay not at cost but rather that anyone selling you that part has the right to make some form of profit; is that accurate? Mr. GERRITSEN. Of course. We are all business people and we all have to make a profit on what we are doing to maintain it. So, of course. But, on the other hand, you know, 20 years ago I bought a distributor cap at Ag Co and back then it was $75. And it was probably, you know, had a couple of dollars' worth of parts I int. So, you know, reasonable profit is a good idea. And sometimes I think under monopoly conditions I think reasonableness is kind of thrown out the window. Mr. TAYLOR. I might take issue with that statement that there is an unreasonable profit on a part like that. The population of that particular machine that is 50 years old is so low that for a manufacturer to design and begin again manufacturing such parts, probably the cost is not even represented by the cost of that part that you paid. It is such a small population to address with that part. If it is not economical, no one is going to do it. Chairman GOLDEN. Thank you. More questions from you? Ms. TENNEY. Yes, thank you. Chairman GOLDEN. Of course. Ms. TENNEY. I will just ask a couple. I want to kind of finish up on where I was, and I believe I did not get a chance to follow up I think with Ms. Gordon-Byrne. You made kind of an extraordinary statement. You said that regarding copyright law and processes that they are already available and accessible and that the exemption under the 1201 and that the manufacturers were pretty disingenuous. So you did not say they were completely disingenuous but there are some concerns there. I just wanted to kind of clarify, and maybe you could clarify for me an explanation that intellectual property is a lot more than just copyrights. I just wrote this down on a sheet of paper and under copyright law I am copyrighted on this now automatically and I choose to put it in the Library of Congress and, you know, that is pretty simple. But when you get into patents, trademarks, trade secrets, and other more detailed work that somebody does, it is sort of a founding principle of innovation in our country that you create something, you get it protected. That is why we have an elaborate patent law process. So, I am just curious as to if you would be willing as I asked in my previous round of questions, on some kind of compromise where the manufacturer could actually contract say with Mr. Clark and say that we would like to train you and have you in a position where you can actually have the credibility. You know, whether it is financially based on your reputation, based on your willingness to sign maybe a nondisclosure agreement and other protections for that intellectual property. Is that something that would be considered and is considered under the current laws that are in play outside of the automotive industry? Ms. GORDON-BYRNE. Well, it is actually not my compromise to make; it is a choice of the legislatures. Ms. TENNEY. I understand that. But would you propose that? Would that be something that would be acceptable to you? Because it protects intellectual property. The exposure to liability for manufacturers, which has been described by Mr. Taylor, and then, yeah, protect the ability of someone's right to repair. I think there is maybe a middle ground here because I do not like to look at this as a zero sum game; it is either all or nothing. And as Mr. Taylor pointed out in the situation with the vintage farm equipment, it is similar when you have people that are repairing vintage cars. That is expensive stuff to get, you know, if you want to repair an old car. So is there a compromise that can be made where we can negotiate and make an agreement with people like Mr. Clark to be able to handle some of the repairs without compromising the intellectual property or the rights or the innovation of manufacturers? Or the sort of paradigm supply chain that we have in place now? Ms. GORDON-BYRNE. Absolutely. There is a lot of room for discussion. And I think we have to start on a little bit more of a factual basis which is that repairing things is not what a lot of people assume it is. It is literally the process of figuring out that something is broken, buying the spare part, and stuffing the spare part in. There is very little beyond that that is repair. All of these concerns about modifying emissions and chipping tractors, that is just not repair. So what we are really asking for is the right to do something extremely simple that has become overcomplicated by these questions. And absolutely, we want to protect IP rights. I wrote a book. I have the copyright on that book. Many of our Members are also manufacturers and they have rights. They have patent rights. And we are not trying to interfere with any of those rights. So, yeah. We can talk through all of these issues. I think most of them are nonissues to tell you the truth because when you get down to the nuts and bolts about what fixing something really is, it is not what a lot of people think it is. Ms. TENNEY. Right. But if I may reclaim my time on that. Ms. GORDON-BYRNE. Of course. Ms. TENNEY. You are talking about sort of saying that there really are not any concerns about this. And I think of my son is in the Marines. Mr. Golden was in the Marines. We were talking about some of the equipment there. When we leave behind billions of dollars' worth of equipment in a country or somewhere and we worry about reverse engineering and our hard work and innovation and money that went into creating these products, whether it was by the Department of Defense and the taxpayers or by a company that is investing in R and D, to say that that is just, you know, look, we do not have respect for what you have put into that, you kind of said, well, these concerns are not really there. My concern is that we do have, you know, just because somebody creates a little device and it looks just like a block, there is a lot of engineering that could have gone into that because it is critical whether it is an airline part or something that would save lives. We talked about off the record here about just the environmental issues. So I am just saying I think that there is a middle ground. It is not just all or nothing. Like, let's just open it up but let's give people in a competitive way the option to be able to negotiate what they feel that they can comfortably reveal and allow the right to repair. Because I do not think a manufacturer does not want the ability to repair out there. I think they want to be able to find a way to protect themselves and exposure to liability, and also make sure the consumers are happy. So I think there is a middle ground. I was just thinking in the legislation. Ms. GORDON-BYRNE. No, I completely agree. Ms. TENNEY. It is up to you about the time. You are the Chair. Ms. GORDON-BYRNE. Oh, I am sorry. I completely agree about there being middle ground. But when it comes to repair, it is like we have to talk through some of these issues and not just go over them because there are a lot of assumptions that are incorrect. And when the Federal Trade Commission did their study and I was at the study, they spent 2 years investigating all these claims. And they found literally only a single instance of a single phone that may have hurt somebody to talk about the safety problems. And the auto industry was there and the agriculture industry was there. It is not like they were ignored. So we have to make sure we are dealing with reality. We need some evidence of the problems. One of the things that was clear today is that parts pricing is a problem. And we learned about that about a year ago and we immediately said, let's fix it. So there are a variety of state legislatures that have already looked at language that allows for, obviously, people need to make a profit. So what was kind of essentially a drafting mistake is now not a problem. But we just have to get that information out there. There is nothing in the legislation that we are proposing that is asking for any form of software. I came from the computer industry. My dad designed computers. I know that you can have a computer with software on it and not violate anybody's IP. Ms. TENNEY. If I could ask you one last question. Ms. GORDON-BYRNE. Sure. Ms. TENNEY. Of all the legislation that has been enacted in the states, and you cited that there were 43--I am not sure I got that one right. Ms. GORDON-BYRNE. Forty-three attempts. Ms. TENNEY. Which state, and who is out there, has the best model legislation that you would propose? Ms. GORDON-BYRNE. Well, I have to go with the bill that we got passed this year in New York. Ms. TENNEY. Okay. Ms. GORDON-BYRNE. But that is still not comprehensive. Agriculture and heavy equipment are not in the bill. Home appliances are not in the bill. Wheelchairs are not in the bill. No medical equipment is in the bill. Ms. TENNEY. Okay. But you would say New York? Ms. GORDON-BYRNE. Well, New York is the furthest along. Obviously, they passed it. It is a pretty good template. Ms. TENNEY. Thank you. Mr. TAYLOR. If I could add a comment. I really do not agree that the repair process is simple and not complex and that we are really not talking about, I guess, it is not simple. In our case, the tooling that could be required, the testing, diagnostic equipment that could be required to complete a repair is hugely expensive and may be required for a particular repair, whether that is in the shop or in the field. And so that is just one aspect of how our industry is very different from some of the other industries and under discussion here. And if I could just add one other related comment. I find it kind of ironic that we are here talking about repair in general. Repair things. Our country over the last 40 years stopped producing technicians, people that like to repair things. There are a few farmers that are still producing some great people who we love to hire but a very small quantity today. In all the trades and for us service technicians, people are not on the street. They are not coming out of the schools. We have--means to go create people, to attract them into the business, train them, time on the job. Huge incentives such as signing bonuses, all kinds of things. So I would just make a point that our whole country needs a better repair program, and that includes everybody. And today there is a dire shortage of people available to repair all of the things that us white collar people love to use in our work and in our pleasure. Chairman GOLDEN. Thank you. That was a good exchange. That is going to wrap it up for us here today. Very quickly I will just say, of course, thank you, all four of you, for taking the time to join us today. And for answering our questions. Clearly, there is a lot that we want to look at here in this Committee and in Congress as it relates to repair restrictions which can create significant headaches for consumers. As we have heard from individuals like Mr. Clark or for small business owners, as we heard from people like Mr. Gerritsen, by ensuring a right to repair we can help increase competition across a variety of industries. I think we learned today you have got to look at the differences between various industries, of course, and products, but hopefully, today's hearing serves as a jumping-off point for ongoing conversations about policies that can help protect the rights of consumers and small businesses in order to be able to repair the products that they now own and prevent manufacturers from having undue monopolies on repair. So we look forward to working as a Committee to explore bipartisan actions to accomplish this goal. And without objection, Members will have 5 legislative days to submit statements and supporting materials for the record. If there is no further business before the Committee, without objection, we will adjourn. Thank you. [Whereupon, at 11:41 a.m., the subcommittee was adjourned.] A P P E N D I X [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] [all]