    [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
                                       ______

                             U.S. GOVERNMENT PUBLISHING OFFICE

    98-448                         WASHINGTON : 2016
    -----------------------------------------------------------------------
      For sale by the Superintendent of Documents, U.S. Government Publishing
      Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
             DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
                              Washington, DC 20402-0001

                        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:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        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:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        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:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        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:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        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:]

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        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.
                                  ----------

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     [all]