BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 811
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: desaulnier
VERSION: 4/13/09
Analysis by: Jennifer Gress FISCAL: yes
Hearing date: April 14, 2009
SUBJECT:
Specially constructed vehicles: emissions standards and testing
DESCRIPTION:
This bill requires the Department of Motor Vehicles (DMV) to
register specially constructed vehicles previously registered
outside this state that apply for registration in California to
be assigned the model year of the calendar year the vehicle was
first registered.
ANALYSIS:
Existing law prohibits the operation upon public highways any
motor vehicle that has not been registered with DMV. Existing
law requires vehicles that have been sold by one individual or
entity to another or that have been previously registered in
another state to be re-registered with DMV. In registering a
vehicle that had been previously registered in another state,
DMV grants "full faith and credit" to the out-of-state
certificate of title and thus uses the information on that
document to register the vehicle in this state. An application
for registration shall be accompanied by payment of a sales and
use tax that is based upon the vehicle's value and a certificate
of compliance indicating that the vehicle has passed its smog
inspection.
To meet federal air quality standards, existing law requires
that California-registered, gasoline-powered cars and light-duty
trucks undergo biennial smog inspections to measure motor
vehicle-related pollutants. New vehicles six model-years old
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and newer, vehicles with a pre-1976 model year, electric
vehicles, large commercial vehicles, motorcycles, and until
January 1, 2010, diesel vehicles are exempt from the smog check
program.
The current smog inspection involves testing for the gaseous
emissions of hydrocarbons, carbon monoxide, and oxides of
nitrogen. Emissions standards have become more stringent over
time and are established by model year. For example, a 2007
model year vehicle must produce fewer emissions to pass its smog
inspection than a 1990 model year vehicle. If a vehicle fails
any component of a smog inspection, the vehicle owner must, with
some exceptions, repair the vehicle and pass a subsequent smog
inspection before being able to register or renew the
registration of the vehicle.
Under existing law, DMV is authorized to register up to 500
specially constructed vehicles. A specially constructed
vehicle, sometimes referred to as a "kit car," is defined as a
vehicle that is "built for private use, not for resale, and is
not constructed by a licensed manufacturer or remanufacturer."
Upon registration with DMV, a specially constructed vehicle
shall be inspected by smog inspection facilities authorized to
perform "referee" functions for the purposes of determining the
vehicle model year or the engine year used in the vehicle and
thus the appropriate emission control application for that model
year. In determining the model year of the vehicle or the
engine (the vehicle owner may choose whether the model year
determination is based on the vehicle or on the engine), the
referee shall compare the vehicle or engine to those of the era
it most closely resembles. The referee shall assign the 1960
model year if the vehicle or the engine does not sufficiently
resemble a previously manufactured vehicle or engine.
If DMV receives an application for registration of a specially
constructed passenger vehicle or pickup truck after it has
already registered 500 such vehicles during that calendar year,
and the vehicle has not been previously registered, DMV shall
assign the vehicle the same model year as the calendar year in
which the application is submitted for purposes of determining
emissions control equipment and inspection requirements for the
vehicle. This subjects the vehicle to the more stringent
emission standards of a later model year. Vehicle owners that
were not registered as specially constructed may re-apply for
registration as a specially constructed vehicle in future years.
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If those efforts are successful, then the vehicle would be
subjected to the inspection process whereby an authorized
referee determines the model year of the vehicle or its engine,
which is likely to result in less stringent emission standards.
This bill requires DMV to register specially constructed
vehicles previously registered outside this state that apply for
registration in California to be assigned the model year of the
calendar year the vehicle was first registered.
COMMENTS:
1.Purpose . According to the sponsor, the California Office of
the Attorney General, several states have registration laws
that allow a specially constructed vehicle to be assigned a
certificate of title bearing the same model year designation
as the vehicle it most closely resembles. A California
resident who built in 2008 a kit car designed to resemble a
1965 vehicle can first register his or her vehicle in another
state, be assigned the 1965 model year, and then re-register
the vehicle in California as a 1965 vehicle, allowing the
vehicle to avoid smog inspection requirements.
The specially constructed vehicle industry is aware of this
loophole and the Attorney General's Office has seen a rise in
California residents who are purchasing these vehicles
out-of-state and returning them to California to avoid
emission requirements. Based un the Attorney General's
Office's prior investigations, it is estimated that between
3,000 and 5,000 specially constructed vehicles will be brought
into California every year that will not be required to comply
with California's vehicle emission requirements.
Additionally, as long as this loophole exists, it is believed
that the California-based kit car industry will suffer as
people seeking to avoid California emissions standards will
simply stop purchasing vehicles within the state and instead
purchase and take delivery of specially constructed vehicles
out-of-state.
By assigning the model year using the first year of
registration, rather than the year on the title, to a
specially constructed vehicle coming into this state, this
bill will close this loophole and treat all specially
constructed vehicles equally for emission and inspection
purposes, regardless of whether they were first registered in
California or another state.
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2.How the loophole works . The Attorney General's Office has
identified multiple pathways by which a California resident
may first register his or her vehicle in another state, some
legal, some not.
Creation of fraudulent out of state title: Using a computer,
a person can create fraudulent title documents. In California
the Attorney General has a number of cases were fraudulent
title documents were created for specially constructed
vehicles to avoid emission requirements and taxes and fees.
DMV does not inquire as to the authenticity of registration
documents or inquire with the foreign jurisdiction if the
vehicle was previously registered. The Attorney General's
Office reports that it has cases involving the arrest of
individuals whose sole business was selling these fake
registration documents. This process is a crime.
Non-title States/Title-washing: A number of states register
vehicles that are within their jurisdiction without title
simply using the bill of sale. Fraudulent registration
services abuse this process and, for a set fee, will
"purchase" the vehicle from the owner. The purchase documents
will include the price, vehicle description, and VIN. The
"purchase" is a sham transaction as the vehicle never leaves
the owner's possession. The registration service will then
submit these documents to that state's department of motor
vehicles and generate title documents. The vehicle is then
resold to the owner who then uses these documents to register
the vehicle in California. This process is a crime.
California variation on non-title: A California registration
service will submit false documents to DMV stating that the
vehicle has been in storage for more then seven years and that
the title has been lost. (DMV vehicle records expire and are
purged over the passage of time.) The registration service
verifies a vehicle's identification number and provides
statements signed under penalty of perjury that the vehicle is
owned by the registered owner. DMV creates new title
documents and the vehicle is registered. The Attorney
General's Office identified several vehicles registered as
1965 vehicles using this process. This process is a crime.
Non-resident registration. A number of states allow
non-residents to register vehicles in their state. If these
non-resident states allow a specially constructed vehicle to
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be registered legally as the model year it replicates, a
California resident can register their specially constructed
vehicle in that state and then transfer the registration to
California. California will honor the out-of-state
registration and emission testing is avoided. This process is
legal.
Resident registration through a limited liability corporation
(LLC). In those states requiring that only residents of that
state may register vehicles, a resident from another state can
nonetheless register a vehicle in that state by establishing
an LLC there. In some states, an LLC that is located in the
state is considered a person under that state's law. As such,
the LLC can be used to purchase and register the vehicle
within the state. Under this scenario, a California resident
creates the LLC (via an attorney who charges a fee), registers
the vehicle legally in that state, and then transfers
registration documents to California to avoid emissions
standards. This process is legal.
3.Determining original year of registration . This bill requires
DMV to assign to specially constructed vehicles that were
previously registered outside this state the model year of the
vehicle's original registration, which in many cases is
expected to be different from the year contained on the
vehicle owner's certificate of ownership. The ease with which
a vehicle owner and DMV are able to obtain appropriate
documentation and to verify this year may vary according to
various factors, including the registration and titling
procedures of the state from which the vehicle has been
previously registered. The author or committee may wish to
consider an amendment to require DMV to assign as the model
year the calendar year that the vehicle is being registered in
California in those situations when it is unable to ascertain
the year that the vehicle was originally registered.
RELATED LEGISLATION
SB 232 (Benoit) eliminates the 500 cap on the number of
specially constructed vehicles that DMV may register with a
model year of the vehicle the specially constructed vehicle most
closely resembles. Senate Transportation and Housing Committee.
AB 318 (Emmerson) permits BAR to charge a fee, not to exceed its
actual costs, for each referee inspection performed on specially
constructed vehicles participating in an amnesty program. Set
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for hearing on April 14th in the Assembly Business and
Professions Committee.
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
April 8, 2009)
SUPPORT: Attorney General's Office (sponsor)
Coalition for Clean Air
Sacramento Metropolitan Air Quality Management
District
OPPOSED: None received.