BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 516

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          Date of Hearing:  April 27, 2015


                                 Jim Frazier, Chair

          AB 516  
          (Mullin) - As Amended April 20, 2015

          SUBJECT:  Vehicles:  temporary license plates

          SUMMARY:  Requires vehicles sold or leased without a permanent  
          license plate to be affixed with a temporary license plate  
          (TLP).  Specifically, this bill:  

          1)Authorizes a first-line service provider to charge a two  
            dollar ($2) transaction fee to cover the cost of processing  
            TLPs for a vehicle.  Specifies that a dealer is provided the  
            option of passing the transaction fee onto the customer.  

          2)Requires by January 1, 2017, the Department of Motor Vehicles  
            (DMV) to develop or contract with a private industry partner  
            to develop a TLP system that is to be used by DMV, dealers,  
            and first-line service providers to issue TLP's at the time a  
            vehicle is sold.  Requires the TLP system to begin operation  
            on January 1, 2017.


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          3)Permits a vehicle to operate with TLPs until either:

             a)   The permanent license plates and registration card are  
               received by the vehicle owner; or, 

             b)   90 days have lapsed from the vehicle's selling date.  

          1)Specifies that if TLPs are not issued for a vehicle, the  
            existing report-of-sale requirements are to remain in effect. 

          2)Increases the document processing charge a dealer under the  
            Business Automation Program (BPA) may charge a customer from  
            $80 to $95.  

          3)Authorizes a dealer to charge the TLP transaction fee to a  
            customer or lessee of the vehicle.  

          4)Requires BPA motor vehicle dealers to affix, at the time of  
            sale, a TLP to a motor vehicle sold without a permanent  
            license plate.  

          5)Specifies that it is a felony for a person to alter, forge,  
            counterfeit, or falsify a TLP. 

          6)Requires TLPs to be affixed to the front and rear of the  
            vehicle and requires the owner to remove TLPs upon receipt of  
            permanent plates.  


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          EXISTING LAW: 

          1)Establishes BPA and authorizes DMV to enter into contractual  
            agreements with private industry partners, if certain criteria  
            are met, to provide specific services that include processing  
            vehicle registration and titling transactions.  

          2)Authorizes a motor vehicle dealer to charge a purchaser or  
            lessee of a motor vehicle a document processing charge, as  

          3)States any person who alters, forges, counterfeits, or  
            falsifies a certificate of ownership, registration card,  
            license, or license plate is guilty of a felony, as specified.  

          4)Allows a vehicle displaying a copy of the report of sale to be  
            operated without license plates or a registration card until  
            either the license plates and registration card are received  
            by the purchaser or the expiration of a 90-day period  
            beginning with the date of sale of the vehicle, whichever  
            occurs first.  

          5)Requires a dealer or lessor-retailer to submit to DMV an  
            application and relevant fees for registration or transfer of  
            registration of a vehicle within 30 days for a used vehicle or  
            20 days for a new vehicle.  

          6)Provides a dealer or lessor-retailer a specified response time  
            if DMV returns a registration application, contingent on the  
            type of vehicle.  

          7)Requires a new motor vehicle dealer to participate in DMV's  


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            electronic vehicle registration program (EVR).  

          8)Requires license plates to be attached upon receipt by a  
            vehicle owner.  

          FISCAL EFFECT:  Unknown 

          COMMENTS:  At the time of retail sale, the vehicle dealer is  
          responsible for applying to DMV for the registration of a new  
          vehicle and the transfer of registration for a used vehicle.   
          Before the dealer can deliver the vehicle to the buyer, the  
          dealer must affix to the vehicle's windshield a DMV-created  
          report-of-sale notice showing that the vehicle is in the process  
          of being registered.  The dealer then has 20 days for a new  
          vehicle or 30 days for a used vehicle to deliver to DMV the  
          application and fees necessary to register the vehicle in the  
          buyer's name.  

          Prior to 2001, once DMV received and processed the application,  
          DMV issued and mailed to the new owner two license plates, a  
          vehicle registration card, and the appropriate registration  
          stickers for the vehicle's rear license plate.  The two license  
          plates must remain affixed to a vehicle, but the vehicle was  
          allowed to be operated for 180 days after purchase while  
          displaying a report-of-sale notice rather than license plates  
          with registration stickers.  

          In 2001, under SB 46 (Polanco), Chapter 127, DMV established the  
          EVR program where motor vehicle dealers may enter into contracts  
          to act as DMV business partners for vehicle registration and  
          titling purposes.  A business partner either directly, or  
          through a service provider, communicates electronically with DMV  
          to register a vehicle it has sold and then mails license plates,  
          registration cards, and registration stickers to the buyer.  Up  


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          until 2011, DMV estimated that less than half of new car dealers  
          participated in the voluntary EVR program.  

          AB 1215 (Blumenfield), Chapter 329, Statutes of 2011,  
          implemented significant changes to the vehicle registration  
          process including, requiring new car dealers to participate in  
          the EVR program, reducing the period a vehicle may operate a  
          vehicle with a report-of-sale notice to 90 days, and requiring  
          license plates to be attached upon receipt by the vehicle owner.  
           The successful implementation of AB 1215 has resulted in  
          industry stakeholders indicating that vehicle owners are now  
          receiving permanent license plates between 14 to 30 days on  
          average.  Furthermore, in those instances where vehicle  
          registration delays have occurred, industry stakeholders  
          indicate the delays typically relate to titling/financing issues  
          rather than dealer errors.  

          AB 516 proposes to develop a statewide TLP system to ensure  
          purchased vehicles are identifiable to law enforcement and toll  
          operators during the period between the point of sale and when  
          permanent license plates are received by the purchaser.   
          Specifically, AB 516 requires either DMV or a first-line service  
          provider develop a TLP system, requires dealers to affix TLPs on  
          a vehicle at the point-of-sale, and requires a vehicle owner to  
          remove TLPs and affix permanent license plates on their vehicle  
          upon receipt.  AB 516 also proposes to increase the document  
          preparation fees a BPA dealer may charge a purchaser by $15 to a  
          total of $95 and also establishes a $2 TLP transaction fee to  
          also be passed onto the purchaser.  

          Overall, proponents argue that a TLP system will assist law  
          enforcement and also help toll agencies mitigate deliberate toll  
          evaders.  For example, in fiscal year 2013-14, the Bay Area Toll  
          Authority generated approximately $690 million in toll revenues  
          however experienced a $7 million loss in revenue tied to  
          vehicles with no license plate.  The author asserts that this  
          legislation will "improve public safety by enabling law  


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          enforcement to identify vehicles involved in traffic violations,  
          hit-and-run accidents, and other criminal activity.  AB 516  
          requires new and used auto dealers to install temp tags at the  
          point of sale so vehicles are identifiable to law enforcement  
          and toll operators from the point they purchase the vehicle and  
          leave the lot."   

          Committee concerns:  While the bill's overall intent to develop  
          and implement a TLP system is promising, the TLP system as  
          proposed in this bill leaves several technical implementation  
          issues unresolved relative to how the TLP system will be linked  
          to other relevant systems and instances of fraud. 

          In regards to the TLP system, it remains unclear how the TLP  
          system, the DMV vehicle registration database, and law  
          enforcement's California Law Enforcement Telecommunications  
          System (CLETS) will all communicate in real time.  In states  
          such as Florida, Wisconsin, and South Carolina, the DMV in each  
          respective state administers the issuance of TLPs and permanent  
          license plates under one system.  AB 516 authorizes DMV or a  
          first-line service provider to develop a TLP system, however  
          does not speak to how the system will be operated and managed if  
          developed by an entity other than DMV.

          Regarding fraud, states such as Colorado, Pennsylvania, and  
          Florida have all reported incidents of TLP fraud.  In Florida,  
          for example, TLPs with unregistered identification numbers have  
          been affixed to vehicles that then use Florida's toll roads.   
          When these vehicles come up as "no reads," the toll authorities  
          send pictures of the vehicle and fraudulent TLP to state patrol  
          in attempt to capture these vehicles through law enforcement.   
          While this method may be effective in regions where pro-active  
          enforcement is utilized on the toll roads, it is unclear how  
          other regions will mitigate the use of fraudulent TLPs by  
          deliberate toll evaders.  


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          Previous legislation:  AB 2197 (Mullin) of 2014, similar to this  
          bill, would have required vehicles sold or leased without a  
          permanent license plate to be affix1ed with a TLP.  AB 2197 was  
          held in the Assembly Appropriations Committee on the suspense  



          Alameda County Transportation Commission 

          California Lien Agents Association 

          California New Car Dealers Association 

          California State Sheriffs' Association


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          Car Dealers Saving Lives

          Golden Gate Bridge Highway and Transportation District 

          Metropolitan Transportation Commission 

          San Francisco County Transportation Authority 


          None on file 

          Analysis Prepared by:Manny Leon / TRANS. / (916) 319-2093