BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 1714

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          Date of Hearing:  April 18, 2016


                                 Jim Frazier, Chair

          AB 1714  
          (Brough) - As Amended April 12, 2016

          SUBJECT:  Department of Motor Vehicles:  services:  third-party  

          SUMMARY:  Expands the types of transactions for which the  
          Department of Motor Vehicles (DMV) may establish contracts with  
          private industry partners to include processing and payment  
          programs for driver's license renewals.

          EXISTING LAW:  

          1)Requires an applicant for an original or renewal of a driver's  
            license to provide DMV with information including the  
            applicant's true full name, age, sex, mailing address,  
            residence address, social security account number or proof of  
            legal presence in the United States or proof of residency in  
            California, and a full-face photograph of the applicant.

          2)Requires DMV to report information from an applicant for a  
            driver's license or identification card relating to voter  
            registration to the Secretary of State.


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          3)Requires the renewal of a driver's license every 5 years.

          4)Authorizes DMV to conduct driver's license renewals by mail  
            for persons under the age of 70 who have not renewed their  
            license by mail twice consecutively.

          5)Authorizes DMV to establish contracts for electronic programs  
            that allow qualified private industry partners to provide  
            services that include processing and payment programs for  
            vehicle registration and titling transactions.

          6)Requires a new motor vehicle dealer to use electronic programs  
            provided by a specific type of private industry partner to  
            register a vehicle the dealer sells or leases if DMV permits  
            the transaction to be processed electronically, except for  
            off-highway or recreational vehicles.

          FISCAL EFFECT:  Unknown

          COMMENTS:  Existing law, [SB 46 (Polanco), Chapter 127, Statutes  
          of 2001], establishes DMV's Business Partner Automation (BPA)  
          program and authorizes the department to enter into contracts  
          that allow private industry partners to process specific  
          vehicle-related transactions, such as vehicle registration and  
          titling.  Under this program, a business partner communicates  
          with DMV either directly or through a service provider to  
          complete the transaction.  In 2011, 

          AB 1215 (Blumenfield), Chapter 329, Statutes of 2011, required  
          licensed new motor vehicle dealers to participate in the BPA  
          program and electronically process all vehicle sales and leases.  
           Since that time, the BPA program has grown to become the  
          primary processing method for these transactions, and more than  


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          $1.2 billion in annual vehicle-related state revenue is received  
          by the state through the BPA program.
          AB 1714 would similarly allow DMV to conduct transactions  
          through private industry partnerships relating to driver's  
          license renewals.

          According to the author, AB 1714 would improve DMV customers'  
          experiences with the department by streamlining the role DMV  
          plays in providing license renewal services through a  
          public-private partnership with industry partners.  The author  
          intends this bill to alleviate the wait times that DMV customers  
          often encounter in local DMV field offices.  The author cites  
          the 25 million customer transactions handled by DMV in 2013 and  
          the growth in the proportion of Californians eligible for  
          driver's licenses under AB 60 (Alejo), Chapter 524, Statutes of  
          2013, as evidence of the significant volume of work undertaken  
          by DMV that could be lessened through additional private  
          industry participation.

          As the author notes, the Administration has indicated a shift  
          towards eliminating the need for some DMV transactions to be  
          conducted in field offices through an $8 million proposal in the  
          2016-17 state budget to fund self-service kiosks to conduct DMV  
          transactions in places like grocery stores.

          According to the American Association of Motor Vehicle  
          Administrators, 18 other states outsource some motor vehicle  
          functions to private industry.

          Committee concerns:  While the BPA program has been successful  
          in demonstrating the potential for streamlining DMV functions  
          through the use of private industry participation, the  
          transactions authorized to be conducted under that program are  
          constrained to vehicle registration and titling.  The complexity  
          of those transactions and information involved is significantly  


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          different from that of driver's license renewals.

          In addition to basic identification information, driver's  
          license renewals require the applicant to provide additional  
          information, for example, information relating to social  
          security, immigration status, and voter registration.  That  
          information must all be verified by DMV with the Social Security  
          Administration, the Department of Homeland Security, and the  
          Secretary of State.  While it is often necessary for government  
          agencies to share this kind of information, authorizing private  
          vendors to collect and examine that information is  
          inappropriate.  Furthermore, encouraging DMV customers to share  
          that information with private vendors would likely create a  
          threat to those customers' privacy and identification security.   
          If DMV were to be required to collect and verify that  
          information as part of the transactions conducted by industry  
          partners, it would likely eliminate whatever value was added by  
          outsourcing those functions.

          The functions that DMV performs related to identification are  
          also closely related to ensuring that license holders are  
          appropriately certified for safely operating motor vehicles.   
          While DMV currently has extensive control over who is able to  
          receive a driver's license and how an applicant's abilities are  
          tested, delegating that control to private industry could result  
          in substandard enforcement of requirements, unsafe licensure, or  
          fraud.  For example, the holder of a highly-regulated commercial  
          driver's license might be subjected to all the requirements  
          established by state and federal law when renewing that license  
          through DMV, but when renewing through a private vendor,  
          inconsistencies in how that vendor operates compared to the  
          department could lead to a renewal that would not otherwise meet  
          state and federal requirements.  In that example, since federal  
          requirements on interstate trucking include rules on commercial  
          licenses, a worst-case scenario in improper licensure through a  
          private vendor could result in the state's forfeiture of some  
          federal transportation funds.


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          While there may be some functions of DMV that might be  
          appropriate for delegation to private industry partners, as  
          shown by the success of the BPA program, the transactions  
          specified in this bill are not those functions.

          Double referral: This bill will be referred to the Assembly  
          Public Employees, Retirement & Social Security Committee should  
          it pass out of this committee.

          Related legislation: AB 2107 (Frazier), authorizes DMV to enter  
          into agreements with qualified private industry partners to  
          carry out certain electronic registration transactions related  
          to the International Registration Plan.  AB 2107 passed out of  
          this committee on April 4, 2016, with a vote of 16-0, and is  
          currently awaiting a hearing in the Assembly Appropriations  

          Previous legislation: AB 1215 (Blumenfield), Chapter 329,  
          Statutes of 2011, required new car dealers to participate in a  
          program to electronically title and register vehicles that they  
          sell and to post specified warning notices on some used cars.

          SB 46 (Polanco), Chapter 127, Statutes of 2001, established the  
          BPA program, allowing qualified private industry partners to  
          process specific vehicle-related transactions and electronically  
          transmit the transaction information to the department's vehicle  
          registration database.



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          None on file


          None on file

          Analysis Prepared by:Justin Behrens / TRANS. / (916) 319-2093