BILL ANALYSIS                                                                                                                                                                                                    

                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          SB 773            Hearing Date:    4/28/2015
          |Author:   |Allen                                                 |
          |Version:  |4/7/2015                                              |
          |Urgency:  |No                     |Fiscal:      |Yes             |
          |Consultant|Erin Riches                                           |
          |:         |                                                      |

          SUBJECT:  Vehicles:  registration fraud:  study

           DIGEST:  This bill requests the University of California to  
          conduct a study on motor vehicle registration fraud and failure  
          to register a motor vehicle.

          Existing law prohibits a person from driving, moving, or parking  
          a motor vehicle on the highway or in a public parking facility  
          unless it is registered with the state Department of Motor  
          Vehicles (DMV).  Registering a vehicle or renewing a vehicle  
          registration is an easy process that a vehicle owner can  
          typically complete quickly on the DMV's website by providing the  
          vehicle's license plate number and paying annual taxes and fees  
          associated with registration.  Existing law does not require a  
          person to show proof of a California driver's license in order  
          to register a vehicle.

          Existing law requires all drivers and motor vehicle owners to  
          carry evidence of financial responsibility, defined primarily as  
          written evidence of valid automobile liability insurance.   
          Existing law requires all insurance companies to report  
          insurance status information to DMV for all private-use  
          vehicles.  DMV may suspend, cancel, or revoke the registration  
          of a vehicle if it determines that insurance coverage has been  
          cancelled, evidence of insurance coverage has not been submitted  
          to DMV, or false insurance information has been submitted to  
          DMV.  Existing law does not require a person to show proof of a  


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          California driver's license in order to obtain auto insurance.

          Existing law establishes the Motor Vehicle Inspection Program,  
          commonly referred to as the Smog Check Program.  This program  
          generally requires vehicle owners to have their vehicles tested  
          every two years, coinciding with renewal of vehicle  
          registration, with some exceptions, including gas-powered  
          vehicles manufactured prior to 1976, alternatively fueled  
          vehicles, and vehicles six model years of age or newer.  The  
          Smog Check Program provides, for eligible customers: an  
          opportunity to renew a vehicle's registration even if it does  
          not pass a smog test, provided the owner has spent a certain  
          amount on repairs; up to $500 toward emissions-related repairs;  
          or a voucher in return for "retiring" (scrapping) the vehicle.   
          In order to be eligible for a voucher, the vehicle owner must  
          provide evidence that the vehicle has been registered during the  
          prior two years without a substantial lapse.

          Existing law requires an owner to register their vehicle within  
          20 days of accepting employment or establishing residency in  
          California or be subject to specified penalties.  Under the  
          Californians Help Eliminate All the Evasive Registration  
          Scofflaws program (CHEATERS), a person who sees an out-of-state  
          license plate may report it anonymously to the California  
          Highway Patrol (CHP) website.  If there is sufficient  
          information to prove that the owner or driver of the vehicle is  
          a California resident, CHP sends a compliance letter to the  
          owner requiring him or her to properly register the vehicle.   
          This program has brought in roughly 
          $1 million per year in vehicle registration revenues.

          This bill:

          1)Requests the University of California (UC) to conduct a study  
            on motor vehicle registration fraud and failure to register a  
            motor vehicle, and to post a report of the study on its  
            website by January 1, 2017.

          2)Requires the study to include:

                 Quantification of the magnitude of the problem
                 The strategies being used by motorists to commit motor  
               vehicle registration fraud
                 The reasons for the behaviors of motorists who commit  
               fraud in registration of, or who fail to register, their  


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               motor vehicles
                 The costs to the state and local governments in lost  
                 Increases in air pollution
                 Other costs and consequences of those behaviors
                 Recommended strategies for increasing compliance with  
               registration requirements

          1)Requires DMV to share its existing database with the UC  
            researchers conducting the study.  Requires CHP to share  
            information on its efforts to combat registration fraud,  
            including the CHEATERS program, with UC.  


          1)Purpose.  The author states that drivers who bypass the Smog  
            Check Program by failing to register their vehicle can  
            disproportionately impact air quality.  However, California  
            lacks meaningful data on the scope and magnitude of the  
            problem.  This bill will enable the state to gain critical  
            information related to unregistered cars and trucks, as well  
            as policy recommendations on how best to remedy the situation.  
             Along with air quality impacts, registration fraud robs the  
            state and local governments of millions of dollars of revenues  
            needed for transportation projects, law enforcement support,  
            and other programs.  Furthermore, it significantly increases  
            insurance costs for law-abiding citizens because unregistered  
            vehicles are rarely insured.  

          2)How many unregistered vehicles are there?  There are no  
            official estimates of how many unregistered vehicles are  
            currently on California roads.  The author points to various  
            studies which have found that somewhere between 1% and 8% of  
            California's 35 million cars and light trucks are  

          3)Is smog test failure the culprit?  The Bay Area Air Quality  
            Management District, sponsor of this bill, argues that a  
            primary reason that drivers fail to register their vehicles,  
            or fail to renew registration, is because the vehicle cannot  
            pass a smog test.  Although the state offers assistance to  
            vehicle owners whose cars fail smog check, an owner must meet  
            certain eligibility requirements, including providing evidence  


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            that the vehicle has been registered for the last two years  
            without a substantial lapse.  With just 25% of cars on the  
            road being responsible for 75% of smog-forming emissions from  
            all motor vehicles, tightening vehicle registration could help  
            ensure that high-polluting vehicles are repaired or taken off  
            the road. 

          4)What about AB 60?  AB 60 (Alejo, Chapter 524, Statutes of  
            2013) requires the DMV to issue an original driver's license  
            to an individual who is unable to submit satisfactory proof of  
            legal presence in the U.S.  The DMV began issuing these  
            licenses on January 2, 2015.  It is possible that now that  
            many individuals can obtain a legal driver's license who were  
            unable to prior to this year, the state will see an increase  
            in vehicle registration.  However, since drivers are not  
            required to show proof of a valid license in order to either  
            obtain auto insurance or register a vehicle, it is unclear  
            whether AB 60 will impact vehicle registration levels.

          5)Out-of-state plates.  A July 2014 San Jose Mercury News  
            article notes that the average cost of registering a vehicle  
            in California is $143 per year, but registering a new vehicle  
            can cost as much as $400 - more than twice what a driver would  
            pay in Oregon and most nearby states.  Some people are  
            apparently choosing to register their car in a neighboring  
            state in order to avoid California's relatively high  
            registration fees.  This negatively impacts a major source of  
            revenue for California and its local governments, which is why  
            existing law requires an owner to register their vehicle  
            within 20 days of accepting employment or establishing  
            residency in California.

          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  No

           POSITIONS:  (Communicated to the committee before noon on  
                          April 22, 2015.)

          Bay Area Air Quality Management District (sponsor) 



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          None received


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