BILL ANALYSIS                                                                                                                                                                                                    

                                                                     SB 773

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          Date of Hearing:  June 13, 2016


                                 Jim Frazier, Chair

          773 (Allen) - As Amended May 31, 2016

          SENATE VOTE:  40-0

          SUBJECT:  Vehicles:  registration fraud

          SUMMARY:  Requests the University of California (UC) to conduct  
          a study on motor vehicle registration fraud.  Specifically, this  

          1)Makes legislative findings and declarations regarding vehicle  
            registration fraud and the negative impacts associated with  
            vehicle registration fraud.

          2)Requests UC to conduct a study on motor vehicle registration  

          3)Provides that the study is to include, but not be limited to,  
            identifying the magnitude of vehicle registration fraud,  
            methods used by motorist to commit vehicle registration fraud,  
            and the cost to the state and local governments in lost  
            revenues, effects on air pollution, and recommended strategies  
            for increasing compliance with registration requirements.

          4)Requires the Department of Motor Vehicles (DMV) to enter into  
            an agreement with UC to share vehicle registration  


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          5)Requires the Department of the California Highway Patrol (CHP)  
            to share information related to efforts to combat registration  
            fraud, including the California Help Eliminate All the Evasive  
            Registration Scofflaws (CHEATERS) program.

          6)Requests UC to complete and post the study on its Internet Web  
            site no later than January 1, 2017.

          7)Requires DMV to post on its Internet Web site detailed  
            instructions for motorists that describe how to prevent theft  
            of vehicle registration tabs.

          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 DMV.

          2)Requires that a registration fee of $43 be paid to DMV for an  
            initial vehicle registration or registration renewal to fund  
            the operations of DMV and CHP related to enforcement of the  
            statutes of the Vehicle Code.

          3)Requires all drivers and motor vehicle owners to carry  
            evidence of financial responsibility.  Further requires all  
            insurance companies to report insurance status information to  
            DMV for all private-use vehicles.

          4)Authorizes DMV to suspend, cancel, or revoke the registration  
            of a vehicle if DMV determines that insurance coverage has  
            been cancelled, evidence of insurance coverage has not been  


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            submitted to DMV, or false insurance information has been  
            submitted to DMV.

          5)Requires an owner to register their vehicle within 20 days of  
            accepting employment or establishing residency in California  
            or be subject to specified penalties.

          6)Establishes the Motor Vehicle Inspection Program, commonly  
            referred to as the Smog Check Program, and requires vehicle  
            owners to have their vehicles tested every two years,  
            coinciding with renewal of vehicle registration, with certain  
            exceptions provided.

          7)Establishes CHEATERS program, administered by CHP, allowing a  
            person who identifies an out-of-state license plate to  
            anonymously report to the vehicle to CHP.

          FISCAL EFFECT:  Unknown

          COMMENTS:  Vehicle registration fraud continues to be a  
          significant public policy issue for states across the country.   
          States such as Iowa, New York, New Jersey, Illinois, and  
          Wisconsin have attempted to crack down on vehicles illegally  
          registered to avoid higher government fees and insurance  
          premiums.  For example, the Iowa Department of Transportation  
          recently canceled more than 450 vehicle titles and registrations  
          obtained using false or fictitious information and operating in  
          New York City.  Similarly, in California in 2014, using  
          information provided through the CHEATERS hotline, CHP carried  
          out an enforcement campaign targeting drivers with out-of-state  
          license plates or expired license plate tags.  Through this  
          enforcement campaign, the state was ultimately able to collect  
          $1.9 million in unpaid registration fees.

          While the CHEATERS program allows motorists to voluntarily  


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          report vehicles with out-of-state license plates, the state  
          currently lacks adequate data to determine the methods and  
          magnitude of vehicle registration fraud within the state.  The  
          Bay Area Air Quality Management District, the sponsor of this  
          bill, notes that in addition to out-of-state vehicle fraud,  
          motorists fail to register their vehicle or fail to renew  
          registration because their vehicle cannot pass smog testing,  
          resulting in unknown but likely deleterious effects on air  
          quality.  Although some studies have indicated the number of  
          unregistered vehicles operating in state is somewhere between  
          1%-8%, no official data exist of how many unregistered vehicles  
          are currently operating on California roads that are associated  
          with these illegal activities.  As a result, the lack of  
          accurate data impedes the state's ability to assess the negative  
          impacts associated with this illegal activity on air quality,  
          state and local government revenues, and insurance premiums.

          With this bill, the author intends to allow the state to gather  
          data on the scope and magnitude of vehicle registration fraud  
          and the number operating unregistered vehicles within the state.  
           The author notes that 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.  In turn, the study will develop effective policy  
          recommendations that will potentially lead to recouping millions  
          of dollars in lost revenue that can be used for vital services  
          such as CHP enforcement, removing abandoned vehicles, and  
          transportation projects.

          Proposed author's amendments:  Because this bill was introduced  
          last year but not yet heard in this committee, the author  
          proposes amending the bill in committee to the change the date  
          that by which UC is requested to post a report of the study from  
          January 1, 2017 to January 1, 2018 to allow adequate time to  
          complete the study.  The author also proposes amending the bill  
          to change the sunset date of the bill's provisions from January  
          1, 2020 to January 1, 2021, for the same reasons.


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          Bay Area Air Quality Management District (Sponsor)

          3M Company

          California Air Pollution Control Officers Association

          California Public Parking Association

          Metropolitan Transportation Commission

          Natural Resources Defense Council

          Valley Clean Air Now


          None on file


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