With Biden order, ‘right to repair' in federal focus

WASHINGTON — President Joe Biden's executive order to promote competition in the U.S. economy ratchets up the pressure on the Federal Trade Commission to take action on "right to repair," an issue that has often pitted automakers against independent repair shops and aftermarket parts retailers.

The order signed this month by the president urges the FTC to issue rules on repair restrictions imposed by all manufacturers, potentially tipping the scale in favor of independent shops and consumers and forcing automakers to settle their grievances on the long, drawn-out battle over access to vehicle repair information and parts.

Biden's directive comes as major automakers continue to challenge a 2020 amendment to Massachusetts' right to repair law in federal court, with a decision by the judge expected in August.

The president's expansive order — and pending action by the FTC — lends further momentum to right to repair, positioning the issue as a federal priority.

For automakers, it could mean "they're no longer going to have a monopoly on car repairs," said Darrell West, vice president of governance studies at the Brookings Institution, a Washington public policy organization. "We're likely going to see independent repair shops put in a stronger position."

While the executive order does not specifically call out the auto sector, it does magnify the importance of consumers' ability to repair equipment in a cost-effective manner, said Odia Kagan, a partner at law firm Fox Rothschild in Philadelphia.

"How to and to which manufacturers this applies would become clear once the FTC issues the expected regulations," she told Automotive News.

Right to repair advocates who represent independent shops and consumers say they are expecting the FTC to move quickly.

"No one's got a bigger megaphone than the administration, and so them bringing more attention to the automotive right to repair issue is really important," said Justin Rzepka, executive director of the Consumer Access to Repair Coalition, a group of independent auto parts and repair companies, associations and insurers.

"It's hard to argue this doesn't help our side, bringing more attention to this issue," he added.

The commission — led by Chairman Lina Khan and flanked by two Democratic and two Republican commissioners — is scheduled to meet Wednesday, July 21, to vote on whether to issue a new policy statement on repair restrictions following the FTC's report to Congress on the topic.

The report issued in May catalogs the types of repair restrictions used by manufacturers in the auto industry and other sectors, summarizing explanations for those restrictions as well as repair advocates' arguments against them.

It also suggests solutions to complaints across a range of consumer products — including vehicles, cellphones and farm equipment — either through state or federal law, voluntary cooperation by industry or new FTC regulations.

"Legislation is often difficult to enact when there is well-funded opposition," said Joshua Sarnoff, a DePaul University law professor. "The FTC rule-making is a way to proceed, which can largely avoid the lobbying efforts of the auto industry."

The Alliance for Automotive Innovation — the trade association that is challenging Massachusetts' updated right to repair law, which expands access to telematics data — said it is "carefully reviewing" the president's order and its impact on the industry.

John Bozzella, CEO of the alliance, said the FTC's report shows "automakers are the premier example of how to give consumers widely available options for repairing their products" when compared with other industries.

The FTC report said "the auto industry has shown that in certain contexts, self- regulation can significantly increase consumers' repair options," citing a memorandum of understanding signed by automakers, independent repair shops and aftermarket parts makers in 2014. The agreement, which came about after Massachusetts passed its own automotive right to repair law in 2013, gave shops in all states the same access to diagnostic and repair information.

In its legal battle with Massachusetts Attorney General Maura Healey, the alliance has argued that the state's amended law conflicts with several federal laws, poses cybersecurity and vehicle safety risks and sets an impossible timeline for compliance.

DePaul University's Sarnoff said Biden's executive order probably has "little effect" on either the Massachusetts law or the automakers' lawsuit to block its enforcement.

But "if the FTC does issue the rules and they survive legal challenge, then the auto industry's fight to prevent third-party repair at the state level is essentially superseded, so it is a big deal," Sarnoff said.

Paul McCarthy, president of the Automotive Aftermarket Suppliers Association, which applauded Biden's order, said his group has invited automakers to join them in establishing a joint governance body to "set the rules of the road" to ensure safe and secure access to data.

"Massachusetts might be called a symptom," McCarthy said. "I think we can definitely find a cure at the national and federal level — and we should — to addressing this and making it all work."

Robert O'Koniewski, executive vice president of the Massachusetts State Automobile Dealers Association, said the right to repair discussion should play out in Congress and not through regulation by the FTC, so all stakeholders — including dealers — can have a seat at the table.

"If there's really a legitimate problem out there at this point, then it really demands a legislative fix at the federal level," he said. "We want to be part of that conversation, if it were to happen."