BILL ANALYSIS                                                                                                                                                                                                    






           ----------------------------------------------------------------- 
          |SENATE RULES COMMITTEE            |                        SB 773|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
           ----------------------------------------------------------------- 


                                   THIRD READING 


          Bill No:  SB 773
          Author:   Allen (D)
          Amended:  6/1/15  
          Vote:     21  

           SENATE TRANS. & HOUSING COMMITTEE:  10-0, 4/28/15
           AYES:  Beall, Cannella, Bates, Gaines, Galgiani, Leyva,  
            McGuire, Mendoza, Roth, Wieckowski
           NO VOTE RECORDED:  Allen

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 5/28/15
           AYES:  Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

           SUBJECT:   Vehicles:  registration fraud:  study


          SOURCE:    Bay Area Air Quality Management District

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


          Existing law:
          
          1)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 Web site by providing  








                                                                     SB 773  
                                                                    Page  2


            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.

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

          3)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.

          4)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  







                                                                     SB 773  
                                                                    Page  3


            brought in roughly $1 million per year in vehicle registration  
            revenues.

          This bill:

          1)Requests the 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 Web site by January  
            1, 2017.

          2)Requires the study to include:

              a)    Quantification of the magnitude of the problem.

              b)    The strategies being used by motorists to commit motor  
                vehicle registration fraud.

              c)    The reasons for the behaviors of motorists who commit  
                fraud in registration of, or who fail to register, their  
                motor vehicles.

              d)    The costs to the state and local governments in lost  
                revenues.

              e)    Increases in air pollution.

              f)    Other costs and consequences of those behaviors.

              g)    Recommended strategies for increasing compliance with  
                registration requirements.

          3)Requires DMV to enter into an agreement with the UC  
            researchers conducting the study to share vehicle registration  
            information.  Requires CHP to share information on its efforts  
            to combat registration fraud, including the CHEATERS program,  
            with UC.  

          Comments
          
          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  







                                                                     SB 773  
                                                                    Page  4


          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.  

          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 unregistered.  

          Is smog test failure the culprit?  The Bay Area Air Quality  
          Management District, the source 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 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. 

          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.

          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  







                                                                     SB 773  
                                                                    Page  5


          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.:YesLocal:   No

          According to the Senate Appropriations Committee:

           Unknown UC costs, ranging from minor to the low hundreds of  
            thousands in the 2016 calendar year to perform the study.   
            (General Fund)

           Minor costs to DMV in 2015-16 to provide vehicle registration  
            records.  (Motor Vehicle Account)

           Minor costs to CHP in 2015-16 to provide information on  
            registration fraud efforts.  (Motor Vehicle Account)


          SUPPORT:   (Verified5/28/15)


          Bay Area Air Quality Management District (source)
          California Air Pollution Control Officers Association
          California Public Parking Association
          Metropolitan Transportation Commission


          OPPOSITION:   (Verified5/28/15)


          None received


          ARGUMENTS IN SUPPORT:     The Bay Area Air Quality Management  
          District, source of this bill, states that a significant number  
          of motorists deliberately avoid the smog check program by either  
          failing to register their vehicles, registering their vehicles  
          in other states, or through other fraudulent schemes.  Given  







                                                                     SB 773  
                                                                    Page  6


          that vehicles which have not passed a smog test produce  
          emissions that are potentially several orders of magnitude  
          greater than the average registered vehicle on the road, the  
          public health impacts of unregistered vehicles can be extremely  
          high.  This bill will address this problem by helping to  
          determine both the size of the unregistered vehicle fleet and  
          strategies to increase vehicle registration compliance.


          Prepared by:Erin Riches / T. & H. / (916) 651-4121
          6/1/15 14:06:50


                                   ****  END  ****