SB 111-DIGITAL PRODUCT REPAIR  1:42:00 PM CHAIR MERRICK reconvened the meeting and announced the consideration of SENATE BILL NO. 111 "An Act relating to the diagnosis, maintenance, and repair of products that use digital electronics to operate; adding an unlawful act to the Alaska Unfair Trade Practices and Consumer Protection Act; and providing for an effective date." CHAIR MERRICK said this is the second hearing of SB 111 in the Senate Community and Regional Affairs Committee. She invited the bill sponsor to comment on the bill before opening public testimony. 1:42:19 PM SENATOR DUNBAR said his intention is to introduce an amendment at the next hearing, noting that some public testimony may reference medical products that will be addressed in that amendment. He said his office has received a number of emails containing claims which are not connected to what the bill actually does. SB 111 does not limit the ability of shops to sell parts, though that has been cited as a critique. He said the goal is to protect consumers, owners, and both independent and licensed repair shops by ensuring broader access to products. He noted that amendments will be presented in future hearings. 1:43:23 PM CHAIR MERRICK opened public testimony on SB 111. 1:43:45 PM ALLEN SCHAEFFER, Executive Director, Engine Technology Forum, Frederick, Maryland, testified in opposition to SB 111. He said among Engine Technology Forum members are "on and off" [road] manufacturers of engines and equipment. He said SB 111 is overly broad and would result in unintended consequences, particularly by facilitating illegal tampering with emissions controls. He used off-road engines and equipment as an example. MR. SCHAEFFER explained that for the past 10 years, the Environmental Protection Agency (EPA) has required new off-road engines and equipment to meet near-zero emissions under the federal Clean Air Act. Since 2014, engines have used advanced computer systems to manage combustion and rely on multiple emission-control technologies, such as oxidation catalysts, particulate filters, and selective catalytic reduction systems, to meet the standard. 1:44:52 PM MR. SCHAEFFER emphasized that right to repair legislation like SB 111 is unnecessary. He said manufacturers have responded to customer requests and entered into memoranda of understanding (MOUs) in the agricultural sector to provide tools and training needed to service these systems safely and responsibly. He expressed that these efforts are working. MR. SCHAEFFER cautioned that SB 111 would increase air pollution in Alaska by enabling tampering with emissions systems. He noted that parts of Alaska are already in non-attainment for fine particle emissions. He observed that some operators dislike the EPA requirements because newer tractors are more complex, more expensive, and sometimes perceived as less powerful. As a result, some individuals deliberately or accidentally bypass or disable emissions systems to save costs or boost performance. MR. SCHAEFFER cited EPA enforcement actions as evidence that tampering is widespread. He referenced a July 2023 consent agreement and final order against a Fairbanks company, which paid a $117,000 penalty for installing 55 defeat devices and tampering with emissions controls on heavy-duty vehicles. MR. SCHAEFFER expressed his belief that for these reasons, SB 111 would harm Alaska and the environment and urged the committee to reject the bill. 1:46:35 PM CHUCK WINTERS, President, Airport Equipment Rentals, Inc. - John Deere Dealership, Soldotna, Alaska, testified in opposition to SB 111 in its current form. He stated that his company has operated in Alaska since 1986. It has provided rental, sales, and support for construction, road building, bridge, utility, and heavy-duty handheld equipment. He said the business employs Alaskans in six locations and sustains many good-paying careers. He expressed concern that SB 111 would financially harm his business and jeopardize the prosperity of its employees. MR. WINTERS argued the expectations that SB 111 will serve as a quick fix for product support needs are misguided. He explained that the bill's mandate on service parts pricing would undermine longstanding contracts with original equipment manufacturer (OEM) partners such as John Deere and others. He emphasized that the company has made significant investments in customer support resources, maintaining inventory, application expertise, timely technical support, and consistent standards for product support. MR. WINTERS said it is unreasonable for the State to mandate the sale of repair parts to independent providers and customers at the most favorable price offered to dealers. He explained such requirements would undercut dealerships, revenue expectations, and destabilize their annual budgets. MR. WINTERS said he could delve deep into each one of these points, emphasizing as currently written, SB 111 is "an absolutely awful bill" for his company, its OEM partners, and many other businesses across Alaska. He expressed appreciation for the committee's time. 1:49:32 PM KELLY DROOP, Alaska Regional Manager, Pape Kenworth Alaska, Anchorage, Alaska, testified in opposition to SB 111. She stated that Pape Kenworth operates semi-truck dealerships in Anchorage and Fairbanks, supporting customers from Dutch Harbor to Prudhoe Bay. The company also operates Ditch Witch West and material handling dealerships in Alaska, providing utility equipment and Hyster and Yale lift trucks across many industries. She cautioned that SB 111 would have far-reaching, unintended consequences for customer service and safety in utility, construction, agriculture, warehousing, and aerial reach equipment sectors. MS. DROOP explained that dealerships are obligated by manufacturers to meet high standards for parts, training, and customer support. In her 35-year career, she has seen equipment advance to the point where digital and electronic expertise is essential to maintain fleets safely and effectively. She emphasized that Pape Kenworth carries millions of dollars in parts inventory and invests heavily in employee training. She said this allows the company to actively support remote and local customers with the software tools, parts, and expertise that they need. She said the company helps troubleshoot and repair over the phone and in person to provide customers with the tools, expertise, and technical support needed to maximize fleet uptime. 1:50:52 PM MS. DROOP argued that it is unprecedented to legislate that manufacturers provide wholesale pricing directly to independent repair providers and customers who do not bear the same obligations as a dealer network. She warned that mandating wholesale pricing would cause irreparable financial damage to dealerships, which provide warranty services, technical expertise, and local availability of parts. She said such damage would ultimately harm customers by undermining the sustainability of dealer networks. MS. DROOP urged SB 111 be amended to exclude off-road vehicles and other forms of equipment, stating that protecting Alaska's dealerships is essential to keeping them open and supporting Alaskans. 1:51:37 PM SENATOR DUNBAR asked whether Pape Kenworth would sell to independent repair shops if it did not have to charge wholesale prices and what the markup would be. MS. DROOP replied that Pape Kenworth already does so. She explained that customers and independent repair shops purchase software, licensing, and tools to connect to trucks and equipment, as well as parts from Pape Kenworth. She said the market largely drives those sales, as shops have the option to purchase from other dealerships based on price and availability, both critical factors in Alaska where shipping delays are common. 1:52:32 PM SENATOR DUNBAR asked whether there are any cases where Pape Kenworth does not share software with independent repair shops. MS. DROOP responded that independent repair shops can purchase Pape Kenworth's software to install on their laptops and connect to equipment. That is already available. 1:53:10 PM SCOTT MUGRAGE, President, Alaska Farm Bureau, Delta Junction, Alaska, testified in opposition to SB 111. He stated that the right to repair has been a longstanding issue for farmers, and the Farm Bureau sought private-sector solutions. In 2023, the American Farm Bureau signed a memorandum of understanding (MOU) with John Deere, a historic step, to ensure farmers and ranchers could repair their tractors and other equipment. Other MOUs were signed with Case New Holland (CNH), AGCO, Kubota, and CLAAS, covering about three-quarters of the U.S. agricultural machinery market. MR. MUGRAGE said the MOUs allow manufacturers to protect intellectual property while ensuring farmers and independent repair shops can make reasonable repairs. They provide access to diagnostics, repair codes, manufacturer manuals, product guides, and diagnostic tools, as well as assistance in ordering parts. He emphasized that when equipment breaks during Alaska's short growing season, major disruptions happen on the farm, which is why it is essential for timely repairs. Farmers must have the freedom to choose where repairs are made to control costs. MR. MUGRAGE stressed that Alaskan farmers are often thousands of miles from equipment dealers, making travel impractical. For this reason, access to repair tools and resources is vital. 1:56:03 PM ROSE FELICIANO, Executive Director for Washington and the Northwest, TechNet, Seattle, Washington, testified in opposition to SB 111. She said TechNet opposes the bill because the definition of digital product is incredibly broad. The bill defines it as product that depends for its functioning, in whole or in part, on digital electronics embedded in or attached to the product. She explained that most other states that have right to repair legislation have focused on consumer electronic products or they have focused on agricultural equipment. She said SB 111 is drafted way beyond those categories. She stated the wording of SB 111 could actually apply to systems running the electrical grid, critical infrastructure, and a wide range of products. She identified this as TechNet's primary concern. MS. FELICIANO noted that a number of states have passed right to repair legislation. The Consumer Technology Association (CTA) and TechNet developed model legislation that she believes specifically addresses consumer electronics. She expressed willingness to work with lawmakers on that narrower focus. She emphasized TechNet's opposition to SB 111 in its current form, reiterating that the digital product definition is so expansive it covers far more than cell phones or tractors. 1:57:52 PM SENATOR DUNBAR asked whether she sent TechNet's narrower definition to his office. MS. FELICIANO replied that she would send the language that CTA and TechNet developed. 1:58:30 PM DUSTIN BRIGHTON, Director, Repair Done Right Coalition, Fayetteville, Arkansas, testified in opposition to SB 111. He explained that the Repair Done Right Coalition is composed of companies, organizations, and individuals committed to ensuring products are repaired and maintained in a safe, private, and authorized manner. It opposes SB 111 because the bill mandates original equipment manufacturers of digital electronic equipment make tools, parts, and documentation available to third-party repair providers. He argued this would create physical safety risks and threaten the security and privacy of Alaskans. MR. BRIGHTON emphasized that original equipment manufacturers (OEMs) already provide safe, secure, and affordable repair options through authorized networks. He said mandating companies outsource repair services to third parties, undermines manufacturers' ability to guarantee product safety and security. He noted that many companies now offer consumer-friendly repair programs, but cited studies raising concerns about third-party repairs. A 2021 study by the University of Guelph found that personal data from computers was accessed in at least 50 percent of cases when serviced by third-party repair shops. Similarly, a 2024 UL Solutions white paper found that 88 percent of aftermarket battery brands failed to meet regional safety standards. He said these findings highlight the risks of relying on unverified repair providers and demonstrate why consumers are safer when repairs are performed with manufacturer-provided equipment and services. Manufacturers should be able to ensure that products are repaired by professionals whom they trust and whom they know will go about the repair with safety and security as the top priority. MR. BRIGHTON affirmed his organizations dedication to working with lawmakers to promote digital safety but rejects unwarranted intervention which could compromise cybersecurity in Alaska. 2:00:55 PM ERIC WAREHAM, Vice President of Government Affairs, North American Equipment Dealers Association, Kansas City, Missouri, testified in opposition to SB 111. He stated that memoranda of understanding (MOUs) between the American Farm Bureau Federation and manufacturers have been in place for two years. These agreements are reassessed every six months, making them "living documents" that can be updated more readily than legislation. He explained that the MOUs include a complaint portal, available to Farm Bureau members and non-members, through which individuals can raise concerns. He noted that only two complaints have been filed in the past two years, both resolved to his knowledge. MR. WAREHAM observed that, because of these MOUs, states such as New York, Oregon, California, and Minnesota have exempted off- road equipment from right to repair laws due to added safety and emissions concerns. He referenced AS 45.45.870(c), which contains an exemption for motor vehicles, highlighting the longstanding basis for such provisions. MR. WAREHAM reiterated the Association's position that it wants MOUs to work as a private-sector solution. He piggybacked onto the comments about stocked inventory, stating that legislation disincentivizing dealers from stocking parts would have the opposite of its intended effect. He explained that the purpose of SB 111 is to reduce downtime for producers and farmers. However, reducing dealer incentives to carry inventory would instead increase downtime, particularly in Alaska, where access to parts is critical. Parts can be ordered, but they will not be on hand. 2:03:14 PM KATIE REILLY, Vice President, Environmental Affairs and Industry Sustainability, Consumer Technology Association, Arlington, Virginia, testified in opposition to SB 111. She said the Consumer Technology Association (CTA) is the trade association representing the U.S. consumer technology industry and includes manufacturers of devices covered under this bill. She addressed areas of concern with SB 111 and the definition of "digital product, which include: • The bill has broad and vague language. • The bill is extremely misaligned with the industry stance on repair. • The bill's language will create confusion for producers. • The bill does not ensure reasonable accommodation for industries while ensuring that consumers and independent repair shops can make repairs without substantially compromising safety and security concerns. She noted that other states have recognized this and put it into law. • The definition of digital productis very broad [indiscernible audio]. • The bill lacks clear parameters for providing documentation, tools, and parts in line with what manufacturers supply to authorized repair providers. • It does not contain sufficient consumer protection and enforcement provisions through a private right of action. 2:04:36 PM MS. REILLY emphasized that most right to repair bills focus on providing consumers with options to repair products. By contrast, SB 111 extends far beyond typical consumer products and provides little accommodation for manufacturers that have invested in supporting consumers as well as independent and authorized repair providers. MS. REILLY noted that CTA and TechNet developed model bill language. She urged the committee not to move SB 111 forward. 2:05:24 PM DYANI CHAPMAN, State Director, Alaska Environment, Anchorage, Alaska, testified in support of SB 111. She said Alaska Environment is a statewide nonprofit focused on clean air, water, and open space. She stated that the ability to repair electronics, from cell phones to dishwashers to tractors, provides broad benefits. From an environmental perspective, repair reduces E-waste, one of the world's fastest growing waste streams, which contains toxic materials. She cautioned that rural landfills in Alaska [indiscernible audio] expose communities and wildlife to hazardous substances from broken electronics. MS. CHAPMAN said that repair also lowers pollution created by manufacturing new products. She said if all Alaskans extended the average lifespan of their televisions by one year, it would reduce pollution equivalent to taking 1,127 cars off the road. She said repair saves Alaskans money, referencing a study that estimated repair saved families an average of $382 annually per household. 2:06:32 PM MS. CHAPMAN emphasized that manufacturer repair is often inaccessible in Alaska. More than one-third of Alaskans, including all residents of Fairbanks and Juneau, live over 100 miles from an authorized Apple repair center. All Alaskans live over 500 miles from an authorized Maytag or Lenovo service provider, with the nearest in Seattle. She said this lack of access applies to many other products as well. MS. CHAPMAN said SB 111 would allow Alaskans to make local communities more resilient by using local businesses and talent to keep devices running, rather than relying on global supply chains to constantly deliver new goods. She encouraged the committee to pass SB 111. 2:07:34 PM DARBI GOTTLIEB, Director, State Government and Regional Affairs, AdvaMed, Phoenix, Arizona, testified on SB 111 with support for an amendment to exempt medical devices. She said AdvaMed is the largest trade association representing the medical technology industry, with more than 600 members spanning the full spectrum of health technology innovators and manufacturers. MS. GOTTLIEB expressed appreciation to the sponsor and staff for their openness in working with the medical technology industry on this issue. She emphasized that patient safety is AdvaMed's top priority. She explained that medical devices are heavily regulated by the Food and Drug Administration (FDA), and their repair, whether an MRI machine or an insulin pump, is much different from repairing consumer devices such as cell phones or computers, particularly because patient care and safety could be impacted. MS. GOTTLIEB said AdvaMed looks forward to working with the sponsor's office on amendment language to exempt federally regulated medical devices and align Alaska's right to repair legislation with laws across the country. 2:08:55 PM MARK OURADA, Director, State Government Affairs, National Electrical Manufacturer's Association, Arlington, Virginia, testified with concerns about SB 111. He said his Association is part of the Repair Done Right Coalition and outlined a threefold rationale for its concerns: • Security risks of giving unauthorized users access to technical information. • Safety risks associated with certain types of unauthorized repair. • Threats to intellectual property. MR. OURADA acknowledged that SB 111 contains a section on trade secrets but raised concerns about how copyright issues would be addressed. He noted that access to software code poses a threat to manufacturers' intellectual property. MR. OURADA raised concerns with the bill's definition section. He drew on his experience as a former legislator and said he is keenly aware of unintended consequences. He cautioned that the terms "digital product" and "manufacturer" are drafted so broadly that they could encompass nearly anything. He questioned whether the legislation was ever intended to cover business-to- business products, grid infrastructure, or medical equipment. He urged the committee to tighten up SB 111 before it is reported from committee. 2:11:04 PM MATTHEW TOTTY, representing self, Anchorage, Alaska, testified in support of SB 111 as a heavy equipment technician specializing in material handling equipment. He said his perspective comes from personal experience, noting that it is often difficult in Alaska to maintain and repair equipment in the private sector and in government services. He explained that, in some cases, manufacturers have no in-state dealers even though their equipment is used in Alaska. In these cases, a technician must be flown in with their computer; he characterized this as unreasonable. MR. TOTTY expressed his belief that there needs to be reasonable access. He acknowledged the concerns from testifiers about granting too much access, stating that some limits may be appropriate. He expressed his belief, however, that the general purpose of this bill is sound. 2:12:28 PM KYLE LIEBMAN, Director of Service, Ditch Witch West, Portland, Oregon, testified in opposition to SB 111. He said that he oversees the service for 14 dealership locations on the web, including Alaska. Ditch Witch West provides underground utility equipment and related services, offering parts and whole goods for underground construction equipment, maintenance and warranty repairs, trained service technicians and parts personnel, on site parts delivery, and repair services. MR. LIEBMAN expressed strong opposition to SB 111, stating the bill would jeopardize the company's financial viability in Alaska. He explained that requiring manufacturers to sell parts to the public at wholesale prices would undermine the dealer network and impair its ability to provide essential services. He further warned that granting unrestricted access to machine operation software would create significant safety risks. Untrained individuals could alter or disable critical safety parameters, leading to unsafe working conditions. MR. LIEBMAN said different machines are equipped with a variety of service and safety features designed to protect operators and those in the vicinity of the machines. These features include hydraulic systems over-pressure protections, limitations on electrical functions, safety sensors that prevent machine operation when the operator is not present, safety sensors that disable moving parts during maintenance and repairs, and electrical strike detection to prevent electrocution while operating the machine. If tampered with, these systems could expose operators and bystanders to serious hazards. He said the integrity of these safety systems is critical to prevent accidents and assure safe operation in the field. MR. LIEBMAN emphasized that fair margins on parts are essential to sustaining service locations and compensating skilled personnel. These employees are vital to ensuring the ongoing support provided to Alaskan customers. He expressed his belief that SB 111 compromises the ability of Ditch Witch to operate safely, fairly, and sustainably and undermines the safety and success of customers and community. 2:15:05 PM SENATOR DUNBAR asked about "fair margin" on parts and goods. MR. LIEBMAN replied that if Ditch Witch were required to sell at wholesale pricing, the same rate it receives from its manufacturer, there would be no margin left to support services or operations. 2:16:15 PM IVAN HAZELTON, representing self, Juneau, Alaska, testified in support of SB 111. He said, as a 32-year skilled information tech who has repaired computers and other equipment at the University of Alaska, the ability to repair equipment in Alaska is vital for many reasons. [Indiscernible audio] He strongly supports this legislation and the right to repair. 2:18:02 PM CHAIR MERRICK closed public testimony on SB 111. [SB 111 was held in committee.]