This week, the California State Senate approved a bill that would create the nation’s first electronic license plate. Having already passed the state’s assembly, the bill now goes to Gov. Jerry Brown (D) for his signature.

The idea is that rather than have a static piece of printed metal adorned with stickers to display proper registration, the plate would be a screen that could wirelessly (likely over a mobile data network) receive updates from a central server to display that same information. In an example shown by a South Carolina vendor, messages such as “STOLEN,” “EXPIRED,” or something similar could also be displayed on a license plate.

The bill’s language says that for now, the program would be limited to a “pilot program” set to be completed no later than January 1, 2017.

“The pilot program shall be limited to no more than 0.5 percent of registered vehicles for the purpose of road testing and evaluation,” the bill states.

Other states, including South Carolina and New Jersey, also have similar bills in progress. A South Carolina company, Compliance Innovations, did not immediately respond to Ars’ request for comment. That company has been leading the charge in the Palmetto State to implement electronic license plates.

State isn’t getting location data directly, for now

Not surprisingly, though, privacy concerns abound. After all, if the state’s authorities can send and receive data to your digital license plate, then they have to know where you are. That would make the use of the increasingly ubiquitous license plate readers completely irrelevant—law enforcement likely would be able to either directly access location data in real-time and/or get historical travel data.

The state senator who introduced the bill, Sen. Ben Hueso, a Democrat who represents San Diego, did not respond to Ars’ multiple requests for an interview or comment. It still remains unclear as to exactly why this bill was proposed and what its objectives are. The precise technical details of the program are similarly unclear, as is how long plate information would be retained and who would have access to it.

Update Tuesday September 9, 12:00am CT: Lourdes Jimenez, Hueso's spokesperson said by e-mail that the bill would "provide this authorization and create statutory parameters for the [Department of Motor Vehicles] testing of alternative technologies, while still providing flexibility on program and testing details."

Still, privacy advocates are skeptical.

“We've been talking to Sen. Hueso on the bill, and it's gotten some amendments that address some of the location privacy issues—within the pilot, the DMV would not be receiving any location information,” Lee Tien, a staff attorney at the Electronic Frontier Foundation (EFF), told Ars. “But the company that operates the plates would [have access, and] they are going to be controlling what's on the plates.”

The privacy advocate likened the proposed system to a moving wiretap that reveals an individual’s vehicle location constantly.

California leaning towards a small, unknown startup

Various local media have reported that the state's Department of Motor Vehicles (DMV) would save $20 million in postage by not having to mail renewal stickers. The DMV did not immediately respond to Ars’ request to confirm this figure. Further, the bill—known officially as SB 806—did not originate with the DMV.

“The California Department of Motor Vehicles does not have a position on SB 806,” Artemio Armenta, a DMV spokesperson, told Ars in July 2013.

Update 7:34pm CT: Armenta also confirmed to Ars that "postage costs associated with vehicle licensing and registration does exceed $20 million annually."

But the state senate’s five-page analysis (PDF) notes that one San Francisco-based company would stand to gain from this test, particularly if it gets the green light:

A supporter of this bill is Smart Plate Mobile, a company that holds a patent on a digital electronic license plate, which is essentially a computer screen that can take on the size and appearance of a standard California license plate (i.e., a 12” by 6” white, reflectorized rectangle with blue characters and “California” in red across the top). This product also allows that screen, once a vehicle comes to a stop for four seconds or longer, to display a different image on the plate such as an advertisement. This bill does not authorize the display of anything other than the existing California license plate on a screen, but thus far it appears that Smart Plate is the company most interested in participating in such a pilot project. Smart Plate has offered to make its product available to DMV to test.

Smart Plate Mobile’s founder, Michael Jordan, declined to speak to Ars. The company's website doesn't appear to have been up since earlier in the year.

It’s unclear exactly how Smart Plate Mobile came to be mentioned in the bill's analysis for the pilot, particularly when there are other patent holders on very similar technologies, including General Motors. However, there doesn’t seem to be much evidence that those previous patent holders have done much to advance their technology at the state level.

Smart Plate Mobile’s reported Sacramento lobbyist, Jim Lites, told Ars that the bill is actually about making the DMV more efficient. He added that the DMV, though, “has indicated that they only want to pilot this or other devices with fleet owners,” such as a delivery company like UPS or FedEx or something similar.

“Large fleet owners do not have any more efficient process for renewing their registration than you and I do for one or two cars,” Lites noted. “The talk has been that the efficiency is to be gained in the fleets and let's start there. Until the DMV comes up with regulations as to how they’re going to implement the pilot, it won’t affect anyone.”

Jimenez added late Monday that the state has yet to choose a vendor.

"SB 806 does not have a sponsor, nor is it tailored to any specific product," she added. "This bill simply authorizes the DMV to work with qualified vendors to test new products. If this bill passes, all vendors will have to go through a public Request for Proposals (RFP) process before DMV contracts out."

She also added that the pilot program was "not only for commercial fleets."

Still, the lobbyist also seemed to dismiss the privacy concerns, saying that ordinary citizens shouldn’t have anything to worry about.

“It just happens to coincide with the NSA issues and the surveillance cameras all over the place—this is not designed or intended to interact with that,” he said.

The EFF’s Lee Tien and other civil libertarians clearly don’t see it this way.

“We are worried about any kind of location tracking issue,” he said. “In its pilot phase, we thought that getting a bunch of privacy protections at the beginning [was the best way to go], and we're asking and requiring them to get a report to the legislature. I've talked already to the state DMV privacy officer; we're expecting to continue to monitor this [situation].”

Jimenez also noted that there are some privacy-minded "parameters."

"For example, AB 806 has the following provisions: 1) specify that the pilot is voluntary; 2) prohibit DMV to receive or retain GPS data; 3) report of all tested products and their features, specifically those that include the ability for GPS tracking," she wrote by e-mail.