BILL ANALYSIS                                                                                                                                                                                                    Ó

          |SENATE RULES COMMITTEE            |                        SB 773|
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                                UNFINISHED BUSINESS 

          Bill No:  SB 773
          Author:   Allen (D) 
          Amended:  6/15/16  
          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

           AYES:  Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

           SENATE FLOOR:  40-0, 6/2/15
           AYES:  Allen, Anderson, Bates, Beall, Berryhill, Block,  
            Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,  
            Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson,  
            Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning,  
            Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner,  
            Stone, Vidak, Wieckowski, Wolk

           ASSEMBLY FLOOR:  79-0, 8/24/16 - See last page for vote
           SUBJECT:   Vehicles:  registration fraud

          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.

          Assembly Amendments change the date by which the UC is requested  


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          to post the study on its Web site from 2017 to 2018, and change  
          the sunset date of this bill from 2020 to 2021.  


          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  
            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  


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                                                                     Page 3

            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) Web site.  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  

          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, 2018.

          2)Requires the study to include:

              a)    Quantification of the magnitude of the problem.

              b)    Strategies used by motorists to commit motor vehicle  
                registration fraud.

              c)    Reasons for behaviors of motorists who fraudulently or  
                fail to register their motor vehicles.

              d)    Costs to the state and local governments in lost  

              e)    Increases in air pollution.


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              f)    Other costs and consequences of those behaviors.

              g)    Recommendations to increase 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 the UC.  

          4)Sunsets provision 1) - 3) above on January 1, 2021.

          5)Requires DMV to post on its Web site, and other appropriate  
            online venues used by DMV for public outreach, detailed  
            instructions to motorists describing how to prevent theft of  
            vehicle registration license plate tabs. 

          1)Purpose.  The author states that drivers who bypass the Smog  
            Check Program by failing to register their vehicles 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  


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            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. 

          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.:YesLocal:   No


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          According to the Assembly Appropriations Committee:

          1)One-time costs to UC, ranging from minor to the low hundreds  
            of thousands of dollars in 2017. Costs would vary depending on  
            the extent to which the study could be incorporated into  
            existing research efforts and the extent to which multiple  
            campuses would be involved in the study.

          2)Costs for DMV to provide vehicle registration records and to  
            post the required information on its website would be minor  
            and absorbable. Costs for the CHP to provide information on  
            registration fraud efforts would also be minor and absorbable.  
            [Motor Vehicle Account]

          3)To the extent the study would lead to cost-effective means of  
            reducing vehicle registration fraud, the state and local  
            governments could realize significant increased revenues.  
            Based on average total registration fees, for every 100,000  
            vehicles avoiding such fees, the revenue loss totals about $17  
            million. (About 33 million vehicles were registered in  
            California in 2014.)

          SUPPORT:   (Verified8/24/16)

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

          OPPOSITION:   (Verified8/24/16)

          None received

           ASSEMBLY FLOOR:  79-0, 8/24/16
           AYES:  Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bigelow, Bloom, Bonilla, Bonta, Brown, Burke, Calderon,  
            Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper,  
            Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines,  


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                                                                     Page 7

            Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,  
            Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger  
            Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,  
            Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes,  
            McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,  
            O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez,  
            Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,  
            Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
           NO VOTE RECORDED:  Brough

          Prepared by:Erin Riches / T. & H. / (916) 651-4121
          8/25/16 17:30:44

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