AB 2996 Could Allow DMV to Arbitrarily

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The California Department of Motor Vehicles (DMV) is attempting to create a way to raise the rates charged for motor vehicle reports through Assembly Bill 2996. Earlier this year, the DMV attempted to raise the rates from $2 to $4 by proposing to raise rates under the guise of an emergency regulation review. (See Insurance Journal West, April 14, 2002). The California Supreme Court denied the proposal on June 21 after a public outcry in opposition of the increase.

The DMV has responded by adding Section 1810 to AB 2996, which would allow the director of the DMV to arbitrarily increase fees for any amount at any time. The bill text reads: “Section 1810 of the Vehicle Code is amended to read: 1810. (a) Except as provided in Sections 1806.5, 1808.2, 1808.4, 1808.5, 1808.7, 1808.8, and paragraph (2) of subdivision (a) of Section 12800.5, the department may permit inspection of, or sell, or both, information from its records concerning the registration of any vehicle or information from the files of drivers’ licenses at a charge sufficient to pay at least the actual cost to the department for providing the inspection or sale of the information, including, but not limited to, costs incurred by the department in carrying out subdivision (b), with the charge for the information to be determined by the director. This section does not apply to statistical information of the type previously compiled and distributed by the department.”

The bill, introduced by the Committee on Budget, has already been amended once in the Assembly and twice in the Senate. An anonymous source that provides background screening on a nationwide basis to employers told Insurance Journal “Section 1810 seems to say that the director of the DMV would then have the authority to increase rates at his or her discretion, and to any amount that they decide to raise them.

“It’s a budget bill, and it’s to raise money for the budget and if it gets passed, then everything in the bill goes into effect,” he added. “It seems obvious that their intention is to raise rates. To what amount, we don’t know. Maybe it’s simply to raise rates to the $4 level that they asked for originally, which is 100 percent increase of the rate. It seems to be me that the likelihood would be very high that they follow through and raise the rates. Why else would they have this bill?”

If the director of the DMV were to raise the rate charged to obtain motor vehicle reports, the insurance industry and the California public as a whole would feel the effects of the increase. Insurers who access the reports when making a decision to provide coverage for drivers and motor vehicles would likely have to pass on the rate hike in the form of premium increases for their consumers. Similarly, employers who access the reports as part of a character screening process are also going to face increased costs. “It’s a huge expense,” said the source.

As the legislative session nears its end, the source urged fellow members of the insurance industry to take action. “If people are going to act, this is the critical time. This is the busiest time in the legislature.

“The very best way of getting it deleted is by sending a letter and an e-mail to each person on the committee. Committee members do respect the public. Having had experience myself of actually testifying in front of these committees, and bringing with me letters of support, I find that they do listen and they are very sensitive to the public’s feelings about legislation. Without any opposition at all, how would the legislators know the effects of this one section? It may very well be that they didn’t consider the effects of this legislation.”

The source added, “I’m not opposed to the DMV raising rates, as long as they are open and justified in explaining what their costs are and the reason they need to raise the rates to that level. It seems to give an open checkbook to the director of the DMV.”

To write California Assembly members in opposition to this bill, e-mail: