The California Consumer Privacy Act of 2018 prohibits a business from selling the personal information of a consumer if the business has actual knowledge that the consumer is less than 16 years of age, unless the consumer, in the case of a consumer at least 13 years of age and less than 16 years of age, or the consumers parent or guardian, in the case of a consumer who is less than 13 years of age, has affirmatively authorized the sale of the consumers personal information.

The California Age-Appropriate Design Code Act requires, beginning July 1, 2024, a business that provides an online service, product, or feature likely to be accessed by children to comply with specified requirements, including a requirement to configure all default privacy settings offered by the online service, product, or feature to the settings that offer a high level of privacy, as prescribed, and requires a business, before any new online services, products, or features are offered to the public, to complete a Data Protection Impact Assessment for any online service, product, or feature likely to be accessed by children and maintain documentation of this assessment as long as the online service, product, or feature is likely to be accessed by children.

This bill would prohibit a social media platform, as defined, from using a design, algorithm, or feature that the platform knows, or by the exercise of reasonable care should have known, causes child users, as defined, to do any of certain things, including experience addiction to the social media platform.

This bill would provide that a social media platform is not in violation of the bill if the social media platform instituted and maintained a program of at least quarterly audits, as defined, of its designs, algorithms, and features that have the potential to cause violations of the provision described above, and the social media platform corrected, within 30 60 days of the completion of the audit, any design, algorithm, or feature discovered by the audit to present more than a de minimis risk of violating that provision.

This bill would subject a social media platform that knowingly and willfully violates these provisions to a civil penalty not to exceed $250,000 per violation, an injunction, and an award of litigation costs and attorneys fees in an action brought only by certain public attorneys, including the Attorney General.

This bill would make those provisions applicable to selling any require a dealer that sells or leases a vehicle propelled by a battery-powered motor at a price greater than to provide notice to a consumer if the price exceeds the manufacturers suggested retail price. price, as specified.

Existing law, the Consumer Legal Remedies Act, provides that specified unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or that results in the sale or lease of goods or services to any consumer are unlawful.

This bill would make those provisions applicable to selling any vehicle propelled by a battery-powered motor at a price greater than the manufacturers suggested retail price.

Date of Hearing: August 16, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

SBPCA Bill Id:SB 680

Author:(Skinner) – As Amended Ver:July 13, 2023

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill prohibits a large social media platform from using a design, algorithm, or feature that the platform knows or should have known causes a child user to incur specified harms. Violations of this prohibition are enforceable through a civil cause of action that may be brought by a public prosecutor.

Specifically, this bill:

1. Prohibits a social media platform from using a design, algorithm, or feature that the platform knows, or by the exercise of reasonable care should have known, causes a child user to do any of the following:
   1. Inflict harm on themselves or others, where harm is defined as physical, mental, or emotional harm.
   2. Develop an eating disorder, as defined.
   3. Experience addiction to the social media platform, where addiction is defined as use of a platform that indicates preoccupation or obsession with, or withdrawal or difficulty to cease or reduce use of, the platform and causes physical, mental, emotional, developmental, or material harms to the user.
2. Specifies that a social media platform shall be deemed to have caused a child user to inflict harm on themselves or others if, as a result of a design, algorithm, or feature, the platform sends a child user any of the specified information:
   1. Information about how to obtain a firearm in violation of the portion of the Penal Code that regulates control of deadly weapons, and the child user obtains or uses the firearm.
   2. Information regarding how to obtain a controlled substance, and the child user obtains or uses the controlled substance.
   3. Information regarding how to die by suicide, and the child user acts on this information or becomes suicidal.
3. Subjects a social media platform that knowingly and willingly violates these provisions to a civil penalty of up to $250,000 per violation, an injunction, and award of litigation costs and attorney’s fees.
4. Authorizes specified public prosecutors, including the Attorney General, to bring a claim under this bill.
5. Exempts a social media platform from liability under this bill if it demonstrates it did both of the following:
   1. Instituted and maintained a program of at least quarterly audits of its designs, algorithms, and features that have the potential to cause a violation.
   2. Corrected, within 60 days of the completion of an audit, any design, algorithm, or feature discovered to present more than a minimal risk of a violation.
6. Clarifies that a social media platform is not liable for any of the following:
   1. Conduct protected under Section 230 of the federal Communications Decency Act.
   2. Conduct protected under the First Amendment or under Article I, Section 2 of the California Constitution.

FISCAL EFFECT:

1. Costs (General Fund) to the Department of Justice (DOJ) to bring enforcement actions. DOJ projects staffing costs of $259,000 in fiscal year (FY) 2023-24 and $465,000 in FY 2024-25 and ongoing to hire an additional attorney and the legal complement of one legal secretary. These estimates also include $75,000 in annual expert consultant costs beginning in 2024. Actual costs to DOJ will depend on the discretion of the Attorney General in choosing whether to file enforcement actions and the workload associated with each action filed.
2. Costs (Trial Court Trust Fund, General Fund) of an unknown but potentially significant amount to adjudicate actions authorized by the bill. It costs approximately $1,000 to operate a courtroom for one hour. Actual costs to the courts will depend on the number of violations, the number of actions filed by public prosecutors, and the amount of court time needed to adjudicate each action. Although courts are not funded on the basis of workload, increased pressure on the Trial Court Trust Fund may create a need for increased funding for courts from the General Fund. The 2023-24 budget includes $105 million from the General Fund to backfill declining revenue to the Trial Court Trust Fund.

COMMENTS:

1. Purpose. According to the author:

It is well documented that features built into social media platforms are designed to maximize the time users spend on the platform and direct users to specific content independent of whether the user requested or searched for that content. Children are particularly vulnerable to the addictive design features of these platforms with the result that kids and teens stay on these products for far longer than is healthy. Additionally, content directed to children has been found to promote dangerous and harmful practices and products that may cause the child user to inflict harm on themselves or others. Examples of this content direction include research that documented teen girls on the platform TikTok were recommended suicide content within 8 minutes, and directed to eating disorders content every 39 seconds. […] SB 680 will enable the Attorney General and other prosecutors to hold social media platforms accountable for knowingly or carelessly addicting children to their platforms…or assisting children in inflicting harm on themselves or others.

1. Background. Social media platforms are intentionally designed to encourage users to stay on a platform as long as possible. There is a significant amount of research showing the damaging effects that excessive social media use has on children in particular. Whistleblower accounts indicate social media companies are aware of these effects but have nevertheless continued to actively recruit child users and maximize their use of these platforms. The analysis of this bill by the Assembly Committee on Privacy and Consumer Protection thoroughly documents the evolution of social media platform features, the way they prey on a user’s innate desire for stimulation and social belonging, and the unique danger they pose to children. As noted by that committee:

[T]he industry has moved away from a tools-based technology environment to an addiction-based environment. It has its own goals and pursues them relentlessly. That goal is largely a quest for the profits that come from the monetization of human attention and engagement by selling over a billion people’s attention to advertisers, regardless of the cost to humanity.

Public health officials, former tech company executives and employees, and others have called for government regulation of the social media industry to protect consumers – particularly children – from the identifiable harms caused by these social media platform features.

This bill prohibits a large social media platform from using a design, feature, or algorithm that the platform knows causes a user under age 16 to inflict harm on themselves or others, develop an eating disorder, or experience addition to the social media platform. The bill contains a safe harbor that eliminates liability for a social media company if it implements a specified audit system and corrects, within 60 days of an audit, any features that present “more than a de minimus” risk of causing a harm prohibited by the bill. A violation of the bill’s prohibition on harmful features is enforceable by specified public prosecutors, who may bring civil actions for injunctive relief, litigation costs and attorney’s fees, and a significant penalty of up to $250,000 per violation.

As discussed in the analysis of this bill by the Assembly Judiciary Committee, there are credible concerns about the constitutionality of this approach and the feasibility of establishing that a particular social media platform feature caused an actionable harm to a child user. This is an area of the law that is uncertain, evolving, and very actively litigated. If chaptered, this bill will almost certainly be challenged in court.

1. Related Legislation. AB 1282 (Lowenthal) requires the state Mental Health Services Oversight and Accountability Commission to report to the Legislature a statewide strategy to address mental health risks associated with the use of social media by children and youth. AB 1282 is pending in the Senate Appropriations Committee.

AB 1394 (Wicks) requires social media platforms to provide a mechanism through which users can report child sexual assault material (CSAM) and creates a civil cause of action for victims of commercial sexual exploitation to sue social media platforms for features that were a substantial factor in causing their exploitation. AB 1394 is pending in the Senate Appropriations Committee.

SB 287 (Skinner) is substantially similar to this bill. SB 287 was held on the Senate floor.

SB 646 (Cortese) creates a civil cause of action that allows any person, including the parent or guardian of an affected minor, to bring a civil action in court against a person or entity that distributes CSAM depicting the person filing suit. SB 646 is pending in this committee.

Analysis Prepared by: Annika Carlson / APPR. / (916) 319-2081

Date of Hearing: July 11, 2023

ASSEMBLY COMMITTEE ON PRIVACY AND CONSUMER PROTECTION

Jesse Gabriel, Chair

SBPCA Bill Id:SB 680

Author:(Skinner) – As Amended Ver:June 12, 2023

SENATE VOTE: Not relevant

SUBJECT: Features that harm child users: civil penalty

SYNOPSIS

This bill is intended to protect child users, defined as those under the age of 16, from large social media platforms’ deployment of designs, algorithms, or features that a platform knows or reasonably should have known causes a child user to inflict harm on themselves or others, develop an eating disorder, or experience addiction to the social media platform. It seeks to achieve this goal in two ways. First, and most importantly, it would provide social media companies a liability shield if they institute and maintain a program of at least quarterly audits of designs, algorithms, and features that have the potential to cause child users to suffer the enumerated harms, and proceed to correct these designs, algorithms, or features.

Second, the bill would allow public prosecutors to seek significant financial penalties and injunctive relief against social media companies that knowingly and willfully use such features—if they cause a child user to, in fact, inflict harm on themselves or others, develop an eating disorder, or experience addiction to the platform. Requiring platforms to be responsible for the harms they intentionally cause is one of the policies consistently recommended by experts in human centered technology design. This bill seeks to implement that recommendation on the state level.

The bill has been introduced in response to widespread documentation, including by the United States Surgeon General, of the harms that social media can present to child users, as well as Facebook whistleblower Frances Haugen’s testimony and documentation that the company knew of the harms its platforms and algorithms were causing young users—yet persisted in using them.

This bill is sponsored by the Office of Attorney General Rob Bonta. It is supported by California District Attorneys Association, California Federation of Teachers, NextGen California, and a number of nonprofit organizations concerned with health and children’s welfare. It is opposed by the California Chamber of Commerce, TechNet, various other technology trade associations, and by privacy groups, including Electronic Frontier Foundation.

The bill was previously heard by the Assembly Judiciary Committee, where it passed on an 8-0-3 vote.

SUMMARY: Prohibits a social media platform from using a design, algorithm, or feature that the platform knows or reasonably should have known causes a child user to inflict harm on themselves or others, develop an eating disorder, or experience addiction to the social media platform. Specifically, this bill:

1. Defines the following terms:
   1. “Addiction” means a use of one or more social media platforms that does both of the following:
      1. Indicates preoccupation or obsession with, or withdrawal or difficulty to cease or reduce use of, a social media platform; and
      2. Causes physical, mental, emotional, developmental, or material harms to the user.
   2. “Audit” means a good faith, written, systemic review or appraisal by a social media platform that provides reasonable assurance of monitoring compliance with this bill and that meets both of the following criteria:
      1. The review or appraisal describes and analyzes each of the social media platform’s current and forthcoming designs, algorithms, and features with the potential to cause a violation of 2) below.
      2. The review or appraisal includes any plans to change designs, algorithms, and features that pose more than a minimal risk of a violation of 2) below.
   3. “Child user” means a person who uses a social media platform and is younger than 16 years of age.
   4. “Eating disorder” means a behavioral condition characterized by a severe and persistent disturbance in eating behaviors and associated distressing thoughts and emotions, including anorexia nervosa, bulimia nervosa, and avoidant restrictive food intake disorder.
   5. “Harm” means physical, mental, or emotional harm.
2. Prohibits a social media platform from using a design, algorithm, or feature that the platform knows, or by the exercise of reasonable care should have known, causes a child user to do any of the following:
   1. Inflict harm on themselves or others.
   2. Develop an eating disorder.
   3. Experience addiction to the social media platform.
3. Specifies that a social media platform shall be deemed to have caused a child user to inflict harm on themselves or others if, as a result of a design, algorithm, or feature, the platform sends a child user any of the specified information:
   1. Information about how to obtain a firearm in violation of the portion of the Penal Code that regulates control of deadly weapons, and the child user obtains or uses the firearm.
   2. Information regarding how to obtain a controlled substance, and the child user obtains or uses the controlled substance.
   3. Information regarding how to die by suicide, and the child user acts on this information or becomes suicidal.
4. Makes a social media platform that knowingly and willfully violates 2) subject to a civil penalty of up to $250,000 per violation, an injunction, and an award of litigation costs and attorney’s fees. Establishes a four year statute of limitations.
5. Authorizes the following entities to bring a claim under this bill:
   1. The Attorney General.
   2. A district attorney.
   3. A city attorney of a city having a population in excess of 750,000.
   4. A county counsel of any county within which a city has a population in excess of 750,000.
   5. With the consent of the district attorney, a city prosecutor in a city that has a full-time city prosecutor.
6. Exempts a social media platform from liability under this bill if it demonstrates it did both of the following:
   1. Instituted and maintained a program of at least quarterly audits of its designs, algorithms, and features that have the potential to cause a violation of 2).
   2. Corrected, within 30 days of the completion of an audit, any design, algorithm, or feature discovered to present more than a minimal risk of a violation.
7. Clarifies that a social media is not liable for any of the following:
   1. Conduct protected under Section 230 of the Communications Decency Act.
   2. Conduct protected under the First Amendment or under Article I, Section 2 of the California Constitution.
8. Excludes from the bill a social media platform controlled by a business entity that generated less than $100,000,000 in gross revenue during the preceding year.
9. Provides that the bill does not negate or limit a cause of action under common law or any other statute, including any cause of action that may have existed or exists against a social media platform under the law as it existed before January 1, 2024.
10. Declares any waiver of the provisions of the bill to be contrary to public policy, void, and unenforceable.
11. Includes a severability clause.

EXISTING FEDERAL LAW:

1. Establishes, under Section 230 of the Communications Decency Act, that no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider. (47 U.S.C. § 230(c)(1).)
2. Exempts from Section 230 protection violations of federal criminal law; intellectual property law; state law that is consistent with Section 230; communications privacy law; and sex trafficking law. (47 U.S.C. § 230(e).)
3. Establishes the Children’s Online Privacy Protection Act of 1998 (COPPA), which regulates the collection of personal information from a child under the age of 13. (15 U.S.C. §§ 6501-6506.)

EXISTING STATE LAW:

1. Defines “social media platform” as a public or semipublic internet-based service or application that has users in California and that meets both of the following criteria:
   1. A substantial function of the service or application is to connect users in order to allow them to interact socially with each other within the service or application. (A service or application that provides email or direct messaging services does not meet this criterion based solely on that function.)
   2. The service or application allows users to do all of the following:
      1. Construct a public or semipublic profile for purposes of signing into and using the service or application.
      2. Populate a list of other users with whom an individual shares a social connection within the system.
      3. Create or post content viewable by other users, including, but not limited to, on message boards, in chat rooms, or through a landing page or main feed that presents the user with content generated by other users. (Bus. & Prof. Code § 22675(e).)
2. Defines “social media company” as a person or entity that owns or operates one or more social media platforms. (Bus. & Prof. Code § 22675(d).)
3. Establishes the California Consumer Privacy Act (CCPA). (Civ. Code §§ 1798.100-1798.199.100.)
4. Prohibits a business from selling or sharing the personal information of consumers if the business has actual knowledge that the consumer is less than 16 years of age, unless the consumer, in the case of consumers at least 13 years of age and less than 16 years of age, or the consumer’s parent or guardian, in the case of consumers who are less than 13 years of age, has affirmatively authorized the sale or sharing of the consumer’s personal information. A business that willfully disregards the consumer’s age is deemed to have had actual knowledge of the consumer’s age. (Civ. Code § 1798.120.)
5. Establishes the California Age-Appropriate Design Code Act, which places a series of obligations and restrictions on businesses that provide online services, products, or features likely to be accessed by children. (Civ. Code §§ 1798.99.28-1798.99.40.)
6. Establishes the “substantial factor” test as the general causation standard under California tort law. (Rutherford v. Owens-Illinois, Inc. (1997) 16 Cal. 4th 953, 968-9.)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS:

1) Background. This bill, sponsored by Attorney General Rob Bonta, seeks to ensure that social media companies regularly audit and update their platforms to ensure that they do not cause children to harm themselves or others, develop eating disorders, or experience addiction to these platforms. By so doing, the bill would help ensure that large and profitable social media companies consider the substantial harm their platforms are causing children and weigh those considerations against their profits.

2) Author’s statement. According to the author:

It is well documented that features built into social media platforms are designed to maximize the time users spend on the platform and direct users to specific content independent of whether the user requested or searched for that content. Children are particularly vulnerable to the addictive design features of these platforms with the result that kids and teens stay on these products for far longer than is healthy. Additionally, content directed to children has been found to promote dangerous and harmful practices and products that may cause the child user to inflict harm on themselves or others. Examples of this content direction include research that documented teen girls on the platform TikTok were recommended suicide content within 8 minutes, and directed to eating disorders content every 39 seconds. […] SB 680 will enable the Attorney General and other prosecutors to hold social media platforms accountable for knowingly or carelessly addicting children to their platforms…or assisting children in inflicting harm on themselves or others.

3) What this bill does. This bill would authorize public prosecutors to bring civil claims against large social media platforms (those that generated $100 million or more in gross revenue during the prior calendar year) that use a design, algorithm, or feature that the platform knew or should have known causes a user under the age of 16 to do any of the following:

1. Inflict harm on themselves or others.

2. Develop an eating disorder.

3. Experience addiction to the social media platform.

The definitions of the terms “harm,” “addiction,” and “eating disorder” are set forth in paragraph 1) of the SUMMARY above.

The bill also implements a safe harbor provision to allow compliant platforms to avoid liability. In order to benefit from the safe harbor, platforms must do both of the following:

1. Institute a program of quarterly audits of their designs, algorithms, and features that have the potential to cause a violation.

2. Correct a design, algorithm, or feature discovered by the audit that presents more than a minimal risk of violation within 30 days of completing the audit.

Finally, the bill would authorize a court to award a civil penalty of up to $250,000 per violation, grant injunctive relief, and/or award attorney’s costs and fees for a knowing and willful violation of the bill’s prohibitions.

4) The infinite feed and the quest for “likes.” There are two key technological inventions that fundamentally altered the way people engage with social media: the infinite scroll and the “like” button.

In 2006, engineer Aza Raskin, developed the infinite scroll. At the time, he viewed it as a way for people on the internet to more easily use search engines or platforms like Yelp. The idea behind the infinite scroll was that users would no longer be limited to only 10 items per page while viewing search results. Rather than having to click through to the next page, they would be able to simply scroll through all of the results. While the infinite scroll was created for one type of internet use, it was quickly adapted for another, the social media infinite feed. Raskin, now the co-founder of the Center for Humane Technology, has publicly stated that this creation is one of his greatest regrets. In hindsight, Raskin notes that the infinite scroll has been used for mindlessness and for “weaponizing mindlessness at scale” as social media companies, like Facebook, Twitter, and TikTok, compete to get users’ attention and keep them on their sites longer. According to Raskin, people spend more time on these social media platforms because they are infinitely scrolling than if they did not have that technology. It equates to approximately 200,000 human lifetimes a day that are being wasted, based on his calculations. (Center for Humane Technology, The Three Rules of Humane Tech, Your Undivided Attention Podcast (Apr. 6, 2023), transcript available at https://assets-global.website-files.com/5f0e1294f002b1bb26e1f304/642f41e223acbcf73d0eadf6_spotlight-your-undivided-attention-three-rules-of-humane-tech-transcript.pdf )

The second, and perhaps more profound, key innovation in social media that keeps billions of people glued to their feeds every day is the introduction of the “like” button on Facebook in 2009. Leah Pearlman, a former Facebook employee who is one of the people credited with the implementation of the feature, has said that it came about as a way of solving a redundancy issue where users would express their approval of a post with one word comments, which would then have the impact of causing more meaningful comments to get lost in the sea of one word approvals. Using a “like” button allowed users to easily express approval while reserving comments for fuller reactions and statements. It quickly became clear that beyond simply being an efficient way to express approval, the button fed people’s deep need to receive social validation. According to Pearlman, “The stats went up so fast—all the stats we thought would be affected, but 50 comments became 150 likes, almost immediately. Those people would start making more status updates, so there was way more content and it all just worked.” (Morgans, The Inventor of the ‘Like’ Button Wants You to Stop Worrying About Likes, Vice Magazine (Jul. 5, 2017) available at https://www.vice.com/en/article/mbag3a/the-inventor-of-the-like-button-wants-you-to-stop-worrying-about-likes.)

The “like” button on Facebook became the driving force in an increasingly potent and complex news-feed ranking algorithm: the more likes a post got, the more people Facebook would show it to. Likes became an asset for brands and advertisers, and a rich source of data for Facebook itself, telling the company about each user’s preferences and browsing habits. Additionally, likes became a powerful incentive for social media users. The like counter on each post became an explicit measure of its popularity, and an implicit measure of its value. Consciously or otherwise, users learned what sorts of posts would rack up likes and wrote more like that, while learning to avoid those that garnered only a few. (Will Oremus, How Facebook designed the like button—and made social media into a popularity contest, Fast Company (Nov. 15, 2022) available at https://www.fastcompany.com/90780140/the-inside-story-of-how-facebook-designed-the-like-button-and-made-social-media-into-a-popularity-contest.)

Over time, people have come to use the number of likes that a post receives to judge others and themselves. Receiving more likes for a post than someone else receives for their post often provides a person with an increased sense of self-worth and superiority. Conversely, receiving too few likes can negatively impact someone’s self-esteem, sometimes in very significant ways if the user relies only on social media likes to measure their worth. After posting a picture on any platform, users often crave the assurance it provides. Users become dependent on likes and positive comments as signs of validation rather than developing an internal sense of worth that is not dependent on the opinions of other social media users.

5) Social media addiction. Intentional product decisions by social media companies have resulted in products rife with features designed to engage and, in some cases, addict users through well-known psychological mechanisms. For example, social media sites often contain variable reward features, colloquially known as “slot machine” features. These features are predicated on the well-established psychological finding that the most effective way of maintaining a behavior is not with a consistent, predictable reward, but with unpredictable rewards that vary in their frequency or magnitude. Variable reward features on social media apps include “pull-to-refresh” affordances and unexpected notifications and animations encouraging a user to engage with new content.

Social media sites often build engagement and, in turn, addict users, through features that capitalize on human desires for social validation and social reciprocity. The encouragement to publicly “like” or favorite another user’s content or message provides a sense of validation while also nudging the receiver of a “like” to “like” content as well, generating a mutually-reinforcing network of engagement. Snapchat’s “snap streaks” feature capitalizes on the desire for social reciprocity by encouraging users to exchange content daily. The feature employs a system of emoji badges that indicate how many days the streak has lasted and when the streak is about to expire. Finally, social media products tend to addict users by omitting natural stopping cues from products. Nearly all social media products contain a near-infinite feed of content with no logical end. Moreover, the content in this feed is often only partly displayed on the screen, which is designed to encourage users to continue to scroll to see the content. (Bhargava and Velazquez, Ethics of the Attention Economy: The Problem of Social Media Addiction, Business Ethics Quarterly (July 2021) available at https://www.cambridge.org/core/journals/business-ethics-quarterly/article/ethics-of-the-attention-economy-the-problem-of-social-media-addiction/1CC67609A12E9A912BB8A291FDFFE799/share/08cfe97de12fef45b5175836cfd00d3941a74b78.)

The U.S. Surgeon General recently stated:

Social media platforms are often designed to maximize user engagement, which has the potential to encourage excessive use and behavioral dysregulation. Push notifications, autoplay, infinite scroll, quantifying and displaying popularity (i.e., ‘likes’), and algorithms that leverage user data to serve content recommendations are some examples of these features that maximize engagement. According to one recent model, nearly a third (31%) of social media use may be attributable to self-control challenges magnified by habit formation. Further, some researchers believe that social media exposure can overstimulate the reward center in the brain and, when the stimulation becomes excessive, can trigger pathways comparable to addiction. Small studies have shown that people with frequent and problematic social media use can experience changes in brain structure similar to changes seen in individuals with substance use or gambling addictions. (Social Media and Youth Mental Health: The U.S. Surgeon General’s Advisory (May 23, 2023) p. 9, available at https://www.hhs.gov/sites/default/files/sg-youth-mental-health-social-media-advisory.pdf.)

Social media reinforces certain negative patterns by triggering the release of dopamine, a chemical in the brain that makes you feel good. The constant novelty and endless scrolling content create an addictive cycle of refreshing, much like someone in Las Vegas playing a slot machine. The unpredictability, coupled with social validation features, keeps you coming back. Platforms take advantage of our instinct to belong. Throughout human history, belonging to a group was necessary for our survival; our brains are wired to care what people think of us. When we receive social validation, the reward centers in our brain light up, triggering a release of more dopamine. Even the expectation of a positive reward releases more of that feel-good chemical which keeps us coming back during times of anxiety and stress. We become conditioned to seek regular and constant feedback with likes, comments, and shares. This creates a cycle of increased social media use and a decrease in mental health. (Center for Humane Technology, Extractive Technology is Damaging our Attention and Mental Health, available at https://www.humanetech.com/attention-mental-health.)

According to the Wall Street Journal’s reporting on the internal documents leaked by a Facebook whistleblower, Frances Haugen, Facebook knew that the features built into the platform had the potential to addict users. Internal Facebook researchers found that 1 in 8 of its users report engaging in compulsive use of social media that impacts their sleep, work, parenting or relationships. These patterns, which Facebook refers to as “problematic use,” mirror what is perhaps more appropriately known as internet addiction. (Wells, et al., Is Facebook Bad for You? It Is for About 360 Million Users, Company Surveys Suggest, Wall Street Journal (Nov. 5, 2021), available at https://www.wsj.com/articles/facebook-bad-for-you-360-million-users-say-yes-company-documents-facebook-files-11636124681.)

6) Impact of social media on children. According to the recent U.S. Surgeon General’s advisory on the impact of social media on children’s mental health, social media use by youth is nearly universal. Up to 95% of youth ages 13–17 report using a social media platform, with more than a third saying they use social media “almost constantly.” Although age 13 is commonly the required minimum age used by social media platforms in the U.S., nearly 40% of children ages 8–12 use social media. As of 2021, the Surgeon General notes that 8th and 10th graders now spend an average of 3.5 hours per day on social media. (Social Media and Youth Mental Health, supra, p. 7.)

Writing in support of this bill, the California Academy of Family Physicians provides the following information:

The Centers for Disease Control and Prevention (CDC) reports that children in the U.S. ages eight to 10 spend an average of six hours per day in front of a screen; kids ages 11 to 14 spend an average of nine hours per day in front of a screen; and youth ages 15 to 18 spend an average of seven-and-a-half hours per day in front of a screen, with much of that time viewing social media content. Research has revealed that the intentional design of these social media platforms—design that uses artificial intelligence to maximize “user engagement”—causes addiction to the platform, particularly for children.

In his advisory, the Surgeon General warns, “[T]he current body of evidence indicates that while social media may have benefits for some children and adolescents, there are ample indicators that social media can also have a profound risk of harm to the mental health and well-being of children and adolescents. At this time, we do not yet have enough evidence to determine if social media is sufficiently safe for children and adolescents.” (Social Media and Youth Mental Health, supra, p. 4.) The advisory goes on to describe why young people are at greater risk than adults:

Brain development is a critical factor to consider when assessing the risk for harm. Adolescents, ages 10 to 19, are undergoing a highly sensitive period of brain development. This is a period when risk-taking behaviors reach their peak, when well-being experiences the greatest fluctuations, and when mental health challenges such as depression typically emerge. Furthermore, in early adolescence, when identities and sense of self-worth are forming, brain development is especially susceptible to social pressures, peer opinions, and peer comparison. Frequent social media use may be associated with distinct changes in the developing brain in the amygdala (important for emotional learning and behavior) and the prefrontal cortex (important for impulse control, emotional regulation, and moderating social behavior), and could increase sensitivity to social rewards and punishments. As such, adolescents may experience heightened emotional sensitivity to the communicative and interactive nature of social media. Adolescent social media use is predictive of a subsequent decrease in life satisfaction for certain developmental stages including for girls 11–13 years old and boys 14–15 years old. Because adolescence is a vulnerable period of brain development, social media exposure during this period warrants additional scrutiny. (Ibid., p. 5.)

Among the impacts of social media on mental health are increased neuroticism and anxiety, higher rates of depression, lower self-esteem, decreased attention spans, poor impulsivity, and brain patterns that look like attention-deficit hyperactivity disorder (ADHD). (Center for Humane Technology, Extractive Technology is Damaging our Attention and Mental Health, available at https://www.humanetech.com/attention-mental-health.)

The studies reviewed by the Surgeon General’s Office point to a higher risk of harm in adolescent girls and those already experiencing poor mental health. “For example, a study conducted among 14-year-olds found that greater social media use predicted poor sleep, online harassment, poor body image, low self-esteem, and higher depressive symptom scores with a larger association for girls than boys.” (Social Media and Youth Mental Health, supra, p. 7.)

What is more concerning are the issues that this bill seeks to address: the fact that social media companies have known for some time that social media use can be harmful to young users, and despite that knowledge, have continued to use algorithms and other design features to capture and hold their attention. In the fall of 2021, much of the country was enthralled by Frances Haugen’s testimony regarding Facebook’s internal research regarding the impact of social media on users, particularly young users. (Note: Facebook’s parent company renamed itself “Meta” shortly after Haugen’s testimony, an apparently unrelated event.) Haugen’s testimony claimed that social media companies are part of the reason for the child and teen mental health crisis—and that Facebook was aware of the correlation. Haugen, a former Facebook employee, testified, “Facebook chooses to mislead and misdirect. Facebook has not earned our blind faith.” According to a Facebook study leaked by Haugen, more than 13% of teen girls in the U.K. reported their suicidal thoughts became more frequent after beginning to use Instagram; another leaked study found 17% of teen girls reported their eating disorders worsened after using the platform. (Allyn, Here are 4 key points from the Facebook whistleblower’s testimony on Capitol Hill, National Public Radio (Oct. 5, 2021), available at https://www.npr.org/2021/10/05/1043377310/facebook-whistleblower-frances-haugen-congress.)

Haugen’s testimony portrays the extent to which Facebook knew of its products’ effects on the mental health of children, as well as the company’s efforts to nonetheless recruit children to their platforms. According to Haugen, internal Facebook studies have confirmed anecdotal accounts that its amplification algorithms, such as engagement-based rankings on Instagram, “can lead children from very innocuous topics like health recipes […] to anorexia promoting content over a very short period of time. […] So Facebook knows that they are leading young users to anorexia content.” (Haugen, Facebook Whistleblower Frances Haugen Testifies on Children & Social Media Use: Full Senate Hearing Transcript (Oct. 5, 2021), available at https://www.rev.com/blog/transcripts/facebook-whistleblower-frances-haugen-testifies-on-children-social-media-use-full-senate-hearing-transcript.)

Reports compiled within Facebook also detail the severe harm to body image visited upon teens and young adults, especially women, as a result of social comparison on these platforms. Young, impressionable users are particularly susceptible to the long-term mental and physical health impacts of this type of troublesome content. (Wells, et al, The Facebook Files: Facebook Knows Instagram Is Toxic for Teen Girls, Company Documents Show, Wall Street Journal, (Sep. 14, 2021) available at https://www.wsj.com/articles/facebook-knows-instagram-is-toxic-for-teen-girls-company-documents-show-11631620739.) Haugen testified:

Facebook has studied a pattern that they call problematic use, what we might more commonly call addiction. It has a very high bar for what it believes it is. It says you self-identify that you don’t have control over your usage and that it is materially harming your health, your schoolwork, or your physical health. Five to [six percent] of 14 year olds have the self-awareness to admit both those questions. It is likely that far more than 5 to [six percent] of 14 year olds are addicted to Instagram. (Haugen, Facebook Whistleblower, supra.)

Haugen also referenced internal reports from Facebook indicating that Instagram makes “body image issues worse for one in three teen girls,” and that “13% of British users and 6% of American users trace their desire to kill themselves to Instagram.” According to Haugen, these negative effects are exacerbated by the inability of most parents to understand and address these unfamiliar problems, and the ensuing isolation that children experience as a result. (Ibid.)

These revelations underscored the culpability of some social media companies in propagating features detrimental to the wellbeing of youth. Studies corroborate that certain patterns of internet use can be harmful to the mental and physical wellbeing of children. Such problematic patterns of use are often encouraged by intentional design choices that maximize engagement with profit-motivated online services.

6) Attention-extractive business models and the importance of requiring ethical design. Before the advent of social media and smart phones, technology, including the personal computer, was considered a tool: an object that is passive, awaiting a person to use it. As an example, a blender is a tool that waits in a kitchen cabinet until it is needed. It does not take anything from the user. Something is not a tool, in this sense, if it demands information from the user and seduces and manipulates the user to extract information and divert the user’s attention from other tasks. Many of the applications on smartphones are designed to capture and monopolize the user’s attention through the use of notifications, the infinite feed, the constant need for social validation, and the ability to increase users’ fears of missing out on information. As a result of this business model, the industry has moved away from a tools-based technology environment to an addiction-based environment. It has its own goals and pursues them relentlessly. That goal is largely a quest for the profits that come from the monetization of human attention and engagement by selling over a billion people’s attention to advertisers, regardless of the cost to humanity.

Humane technologists, many of whom were formerly tech executives who developed and profited from the creation of Facebook, Google, Twitter, and Pinterest, to name a few, have sounded the alarm about the destructive nature of social media and are calling for a fundamental shift from the extraction model of technology development to a human centered, ethical model. (For more information on their concerns, see Netflix’s 2020 documentary The Social Dilemma.) Aza Raskin and Tristan Harris, the co-founders of the Center for Humane Technology, for example, argue that the foundational operating models and incentives of current technologies need to change so that it is aligned with humanity’s best interests, rather than prioritizing profits. Causing harm to individuals and society, in their view, is not a “cost of doing business; we do not need to accept the current, negative effects we are facing. Technologies like social media and artificial intelligence can and should increase our well-being, strengthen our democracies, and improve our shared information environment.” (Center for Humane Technology, Key Issues Overview, available at https://www.humanetech.com/key-issues#moving-forward.)

Many humane technologists are asking government to step in to regulate social media, which is now operating in a largely lawless environment. Recommended policy changes include everything from restoring the same level of protections for kids and advertising, such as those once used to regulate advertising during Saturday morning cartoons, to banning behavioral advertising and microtargeting/hyper-personalization. These technologists also caution against approaches that involve industry self-regulation, content moderation, uncoordinated action, and laws that address individual problems without fixing their source. (Center for Human Technology, The Dark Side of Social Media, available at https://www.humanetech.com/infographic-dark-side-social-media.)

7) Analysis. The first question before this Committee is whether or not there is a need to protect consumers—in this case, children under the age of 16—from a potentially-harmful product: social media platforms. As discussed in detail above, there is an abundance of evidence demonstrating that social media can be harmful to children. The Surgeon General’s report discusses the potential harms to children from social media use generally. The evidence from Facebook’s internal documents suggests that the damage, at least for that platform, is knowing and willful. It would appear, then, to be sound policy to protect children from identifiable harms.

Recognizing the need to protect children, the question then becomes how to go about doing so. This bill proposes to do so in two ways. First, and most importantly, it would provide social media companies a liability shield if they (i) “institute[] and maintain[] a program of at least quarterly audits of…designs, algorithms, and features that have the potential to cause” child users to inflict harm on themselves or others, develop an eating disorder, or experience addiction to the platform; and (ii) correct these designs, algorithms, or features. This should be an uncontroversial undertaking. There does not seem to be any sound policy reason for businesses to use designs, algorithms, and features that they know increase the risk of children under the age of 16 suffering these harms. The argument that social media platforms will simply bar younger users rather than be subject to this bill is a tacit admission that these platforms are unsafe for children to use; it is also perhaps the best argument that they ought to be redesigned with child safety in mind.

Second, the bill would allow public prosecutors to seek significant financial penalties and injunctive relief against social media companies that knowingly and willfully use such features—if they cause a child user to, in fact, inflict harm on themselves or others, develop an eating disorder, or experience addiction to the platform. Causation under this bill is a high bar. Under California tort law, it requires a showing that the defendant’s act was a substantial factor in causing the harm. (Rutherford v. Owens-Illinois, Inc. (1997) 16 Cal. 4th 953, 968-9.) The causation cannot be merely theoretical. (Ibid.) Requiring platforms to be responsible for the harms they intentionally cause is one of the policies consistently recommended by experts in human centered technology design. (See, e.g., Center for Human Technology, Policy Reform Tool Kit: Accountability for Harms, available at https://www.humanetech.com/policy-reforms.) This bill seeks to implement that recommendation on the state level.

Questions of whether or not the policies in this bill would violate the First Amendment or are preempted by federal law fall outside of this Committee’s jurisdiction, but are discussed in detail in in the Assembly Judiciary Committee’s analysis of the bill. The following are relevant excerpts from that analysis:

First Amendment concerns. The opposition, consisting of a coalition of tech industry organizations, raises numerous concerns including the potential that SB 680 runs afoul of the First Amendment . . . As a threshold issue, in order to fall under the scope of the First Amendment’s speech protections, a bill or law must limit or promote speech. Courts have yet to answer the question of whether an algorithm in particular would constitute speech. Moreover, it is plausible that when faced with the question, a court would find that rather than the speech itself, an algorithm is the mechanism by which speech is delivered to certain consumers. [On the other hand,] if algorithms are determined to be a tool for dissemination of speech, attempts such as this to regulate their use and development would not be subject to restrictions stemming from the First Amendment.

Section 230 of the Communications Decency Act. The federal Communications Decency Act (CDA) provides that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider,” and affords broad protection from civil liability for the good faith content moderation decisions of interactive computer services. (47 U.S.C. Sec. 230(c)(1) and (2).) Though Section 230 was originally passed in response to judicial inconsistency with respect to the liability of internet service providers under statutes pertaining to “publishers” of content created by others, it has since been interpreted to confer operators of social media platforms and other online services with broad immunity from liability for content posted on their platforms by others. [...]

The bill explicitly exempts from liability 1) any conduct protected by Section 230, and 2) any conduct protected by the First Amendment to the United States Constitution or Section 2 of Article I of the California Constitution. These prohibitions seemingly attempt to foreclose the risk that the bill as a whole and claims brought under its provisions would violate Section 230 and the Constitution.

To summarize this extensive case law, courts have seemingly distinguished between a feature of a platform developed and implemented by the platform which seemed reasonably likely to cause harm (such as the SnapChat filter in Lemmon [v. Snap, Inc. (2021) 995 F.3d 1085]) and a facially neutral tool used to disseminate information (such as the algorithm in Twitter [v. Taamneh (2023) 598 U.S. __, 143 S. Ct. 1206]). If challenged, the survival of this measure may turn on the proponent’s ability to argue that imposing liability for the platform’s designs, features, or affordances is more akin to the facts of Lemmon than those of Twitter. In the context of individual claims against platforms brought under this bill’s provisions, plaintiffs would likely need to make a similar showing in order to avoid being dismissed under a Section 230 argument, which would necessitate a case by case determination of the facts.

8) Committee amendments. All of the proposed amendments set forth below are to provisions of the Civil Code that would be enacted by this bill.

1714.48. […] (b) A social media platform is not in violation of this section if it demonstrates it did both of the following:

(1) The social media platform instituted and maintained a program of at least quarterly audits of its designs, algorithms, and features that have the potential to cause violations of subdivision (a).

(2) The social media platform corrected, within 30 60 days of the completion of an audit described in paragraph (1), any design, algorithm, or feature discovered by the audit to present more than a de minimis risk of violating subdivision (a).

This amendment would provide social media platforms an additional 30 days to, after an audit, correct designs, algorithms, and features that place child users at a more-than-minimal risk of causing children to inflict harm on themselves or others, develop an eating disorder, or experience addiction to the platform. This additional time is arguably necessary given the complexity of rewriting and testing software.

1714.48. […] (g) For purposes of this section: […]

(7) (A) “Social media platform” has the same meaning as defined in Section 22675 of the Business and Professions Code.

(B) “Social media platform” does not include a standalone direct messaging service that provides end-to-end encrypted communication or the portion of a multi-service platform that uses end-to-end encrypted communication.

This amendment serves several purposes. As noted in the SUMMARY above, under this bill, a social media platform would be deemed to have caused child users harm if, as a result of its design, algorithm, or feature, the platform sends a child user any of the following:

1. Information about how to obtain a firearm in violation of the portion of the Penal Code that regulates control of deadly weapons, and the child user obtains or uses the firearm.
2. Information regarding how to obtain a controlled substance, and the child user obtains or uses the controlled substance.
3. Information regarding how to die by suicide, and the child user acts on this information or becomes suicidal.

It follows that, in order to minimize their potential liability, social media platforms must screen the content they send child users so as to avoid providing them such information. However, as noted in analyses of other bills heard this year by the Privacy Committee, such as AB 1394 (Wicks), “applications that provide 100% end-to-end encrypted direct messaging…play an important role in ensuring the privacy of sensitive communications, such as political organizing and obtaining information about reproductive healthcare.” It would subvert important policy goals of the state to require social media platforms to scan users’ end-to-end encrypted communications for harmful content. This amendment would solve the dilemma by exempting such communication services from the definition of “social media platform.” In other words, even if a child user were to obtain information about how to illegally purchase a gun through encrypted communications and then purchased the gun, the platform would not be liable. The importance of maintaining the privacy of these communications is too important, particularly given the assault on reproductive and other freedoms at the U.S. Supreme Court and in many states.

1714.48. […] (i) This section does not negate or limit a cause of action under common law or any other statute, including any cause of action that may have existed or will exists against a social media platform under the law as it existed enacted before January 1, 2024.

This amendment is meant to ensure that the bill is not construed to interfere in any way with provisions of the Age Appropriate Design Code, enacted by AB 2273 (Wicks, Chap. 320, Stats. 2022) that take effect on July 1, 2024.

9) Related legislation. SB 287 (Skinner, 2023), a substantially similar bill, would prohibit a social media platform from using a design, algorithm, practice, affordance, or feature that the platform knows or should have known causes child users to experience specified harms, including receiving content that facilitates purchase of a controlled substance or the development of an eating disorder. Status: Held, Senate Floor.

AB 1282 (Lowenthal, 2023) would require the state Mental Health Services Oversight and Accountability Commission to report to the Legislature a statewide strategy to understand, communicate, and mitigate mental health risks associated with the use of social media by children and youth. Status: Senate Appropriations Committee.

AB 1394 (Wicks, 2023) would require social media platforms to provide a mechanism for users to report child sexual abuse material in which they are depicted, and provides platforms 30-60 days after receiving a report to verify the content of the material and block it from reappearing. The bill would also provide victims of commercial sexual exploitation the right to sue social media platforms for deploying features that were a substantial factor in causing their exploitation. Status: Senate Judiciary Committee.

AB 2273 (Wicks, Chap. 320, Stats. 2022) established the California Age-Appropriate Design Code.

AB 2408 (Cunningham, 2022) would have prohibited a social media platform from using a design, feature, or affordance that the platform knows, or should know by the exercise of reasonable care, causes a child user to become addicted to the platform. The bill was held in the Senate Appropriations Committee.

AB 1138 (Gallagher, 2019) would have prohibited a for-profit social media website or application from allowing a person under 16 years of age to create an account without first obtaining the consent of the person’s parent or guardian. The bill was vetoed by Governor Newsom.

AB 2105 (Maienschein, Chap. 166, Stats. 2018) authorized treble damages in a civil action brought by, or on behalf of, or for the benefit of, a person who is a minor or nonminor dependent and is a victim of commercial sexual exploitation.

ARGUMENTS IN SUPPORT. Writing in support of the bill, The Kennedy Forum states:

In light of the increase in teen suicides, teen fentanyl deaths, access to illegal weapons, and known social media addiction among children and youth, it can no longer be legal for social media companies to knowingly or carelessly cause harms to their child users. Thus, the Kennedy Forum wishes to express its SUPPORT of Senate Bill (SB) 680: Safeguarding Our Children. Child death and suffering caused by social platforms will continue so long as the platforms are lawfully able to invent and deploy profitable practices they know or should reasonably know harm our children. [. . .]

The parallel rise between the youth mental health crisis and social media usage is raising alarms everywhere, including at social media companies themselves. Facebook confirmed a “…significant, positive correlation between adolescent social media use and depressive symptoms.” A 2020 analysis concluded that “Among teen users [of Instagram] who reported suicidal thoughts…6% of American [teen] users traced the desire to kill themselves to Instagram.” Other research confirms that excessive use of digital and social media has a documented relationship to increases in suicide-related outcomes in teens and children, such as suicidal ideation, plans, and attempts.

Additionally, social media platforms are knowingly causing to children extend beyond harming their general mental health. For example, social media platforms knowingly or carelessly have been documented to deluge body image anxious teen girls with pro-anorexia content and facilitate the sale of lethal fentanyl to children.

ARGUMENTS IN OPPOSITION. A coalition of five organizations, including TechNet, the California Chamber of Commerce, and the Chamber of Progress, write in opposition to the bill:

[We] must respectfully oppose SB 680, which imposes such an extreme standard of liability on social media platforms for delivering user content that companies would have no choice but to limit or cease operations for kids under 16. Furthermore, SB 680 runs afoul of established first amendment principles and jurisprudence and is unambiguously preempted by federal law.

Our member companies prioritize the safety and privacy of teens that access their sites and platforms. We strongly believe children deserve a heightened level of security and privacy and there are a number of efforts within the industry to incorporate protective design features into their websites and platforms. Our companies have been at the forefront of raising the standard for teen safety and privacy across our industry by creating new features, settings, parental tools, and protections that are age-appropriate and tailored to the differing developmental needs of young people. This bill would upend those efforts in favor of an ill-conceived and likely unconstitutional private right of action designed to punish our companies rather than protect teen users.

Also writing in opposition, the Electronic Frontier Foundation notes:

We appreciate the ongoing conversation we have had with the supporters of this bill and the author's office. We recognize their genuine concern for children, and their openness to feedback. Unfortunately, we think this bill ultimately fails to accomplish its goals of protecting children and fundamentally runs afoul of both federal law and the First Amendment.

As we stated in our opposition last year to A.B. 2408, which bears several similarities to this bill, we believe S.B. 680—despite its intentions—would be preempted by a federal law protecting online speech, 47 U.S.C. § 230 (“Section 230”). It ignores that many aspects of a service are inseparable from the user-generated content that they publish. Under the logic of Lemmon v. Snap, Inc., 995 F.3d 1085 (9th Cir. 2021), there is no support for the proposition that California—or any state—can avoid Section 230’s preemption by simply claiming that some or all aspects of an online service’s interactive features are defective or dangerous.

Lemmon held that Section 230 did not apply to a specific defective product claim based on specific allegations about a product created by a service. The Ninth Circuit’s narrow decision was the correct result in an early stage of a case, and its careful reasoning avoided undermining Section 230 in ways that would harm online speech.

REGISTERED SUPPORT / OPPOSITION:

Support

Attorney General Rob Bonta (sponsor)

American Academy of Pediatrics, California

American Association of University Women – California

California Academy of Family Physicians

California District Attorneys Association

California Federation of Teachers AFL-CIO

California Youth Empowerment Network

Children’s Advocacy Institute

Common Sense Media

Consumer Federation of California

Girl Scouts Heart of Central California

#HalfTheStory

Jewish Family and Children's Services of San Francisco, the Peninsula, Marin and Sonoma

Counties

Mental Health America of California

NextGen California

Parents Television and Media Council

Steinberg Institute

The Kennedy Forum

Opposition

California Chamber of Commerce

Chamber of Progress

Civil Justice Association of California

Computer and Communications Industry Association

Electronic Frontier Foundation

NetChoice

Oakland Privacy

TechNet

Analysis Prepared by: Jith Meganathan / P. & C.P. / (916) 319-2200, Julie Salley / P. & C.P. / (916) 319-2200

Date of Hearing: June 27, 2023

ASSEMBLY COMMITTEE ON JUDICIARY

Brian Maienschein, Chair

SBPCA Bill Id:SB 680

Author:(Skinner) – As Amended Ver:June 12, 2023

SENATE VOTE: Not relevant

SUBJECT: FEATURES THAT HARM CHILD USERS: CIVIL PENALTY

KEY ISSUE: SHOULD SOCIAL MEDIA PLATFORMS BE LIABLE FOR A CIVIL PENALTY OF UP TO $250,000 IN A CIVIL ACTION BASED UPON THE PLATFORM’S USE OF A DESIGN, ALGORITHM, OR FEATURE THAT THE PLATFORM KNOWS OR REASONABLY SHOULD HAVE KNOWN CAUSES A CHILD USER SPECIFIED HARM?

SYNOPSIS

Social media has become an engrained element of our society on both a national and global level. Across platforms social media is used as an all-purpose tool, including maintaining personal relationships, keeping up to date with current events, organizing, developing professional relationships, and dating. As social media has grown, so have its impacts on every day users lives, particularly those of younger users. Research has developed demonstrating negative effects of social media on young users’ mental health and indicated significant levels of addiction.

This bill makes social media platforms liable in a civil action brought by specified public prosecutors for specified harm suffered by minors on the platforms stemming from the platform’s own algorithm, design, or feature that the platform knew or should have known would cause a minor user to do any of the following: 1) inflict harm on themselves or others, 2) develop an eating disorder, or 3) experience addiction to the social media platform. The bill also implements a safe harbor provision, discussed in further detail in the COMMENTS section of this analysis. The bill authorizes, for a knowing or willful violation, a civil penalty of up to $250,000, as well as issuance of an injunction, and recovery of attorneys’ costs and fees.

This bill is sponsored by the California Department of Justice and supported by a diverse coalition of law enforcement organizations, community organizations, and health professionals. It is opposed by a coalition of tech industry advocates. Should this bill be approved by this Committee it would be referred to the Assembly Committee on Privacy and Consumer Protection, which has primary jurisdiction over the bill.

SUMMARY: Authorizes a civil claim against a social media platform that uses a design, algorithm, or feature that the platform knows or reasonably should have known causes a child user specified harm. Specifically, this bill:

1. Prohibits a social media platform from using a design, algorithm, or feature that the platform knows, or by the exercise of reasonable care should have known, causes a child user to inflict harm on themselves or others, develop an eating disorder, or experience addiction to the social media platform.
2. Protects a social media platform from liability if it can demonstrate that it instituted audits, as defined, of its designs, algorithms, and features that have the potential to cause a violation and corrected, within 30 days of the completion of an audit, any design, algorithm, or feature discovered by the audit to present more than a de minimis risk of a violation.
3. Makes a social media platform that has knowingly and willfully violated 1) subject to a civil penalty of up to $250,000 per violation, an injunction, and an award of litigation costs and attorney’s fees.
4. Authorizes the following entities to bring a claim:
   1. The Attorney General;
   2. A district attorney;
   3. A city attorney of a city having a population in excess of 750,000;
   4. A county counsel of any county within which a city has a population in excess of 750,000;
   5. With the consent of the district attorney, a city prosecutor in a city that has a full-time city prosecutor.
5. Clarifies that a social media is not liable for either conduct protected under Section 230 of the Communications Decency Act, the First Amendment to the United States Constitution, or Section 2 of Article I of the California Constitution.
6. Establishes a statute of limitations of four years after the cause of action was accrued.
7. Defines the following for purposes of this bill:
   1. “Addiction” means a use of one or more social media platform that indicates preoccupation or obsession with, or withdrawal or difficulty to cease or reduce use of, a social media platform and causes physical, mental, emotional, developmental, or material harms to the user.
   2. “Audit” means a good faith, written, systemic review or appraisal by a social media platform that provides reasonable assurance of monitoring compliance with this section that meets the following criteria:
      1. The review or appraisal describes and analyzes each of the social media platform’s current and forthcoming designs, algorithms, and features that have the potential to cause a violation and
      2. The review of appraisal of appraisal includes any plans to change designs, algorithms, and features that pose more than a de minimis risk of a violation.
   3. “Child user” means a person who uses a social media platform and is younger than 16 years of age.
   4. “Harm” means physical, mental, or emotional harm. Specifies that a social media shall be deemed to have caused a child user to inflict harm on themselves or others if, as a result of a design, algorithm, or feature, the platform sends a child user any of the specified information.
8. Excludes from inclusion under its provisions a social media platform that is controlled by a business entity that generates less than $100,000,000 in gross revenue during the preceding year.
9. Provides that the section does not negate or limit a cause of action under common law or any other statute, including any cause of action that may have existed or exists against a social media platform under the law as it existed before January 1, 2024.
10. Includes a severability clause.

EXISTING LAW:

1. Provides that every person is responsible, not only for the result of their willful acts, but also for an injury occasioned to another by the person’s want of ordinary care or skill in the management of their property or person, except so far as the latter has, willfully or by want of ordinary care, brought the injury upon themselves. (Civil Code Section 1714 (a).)
2. Establishes the Privacy Rights for California Minors in the Digital World (PRCMDW), which prohibits an operator of an internet website, online service, online application, or mobile application (“operator”) from the following:
   1. Marketing or advertising specified products or services, such as firearms, cigarettes, and alcoholic beverages, on its internet website, online service, online application, or mobile application that is directed to minors;
   2. Marketing or advertising such products or services to minors who the operator has actual knowledge are using its site, service, or application online and is a minor, if the marketing or advertising is specifically directed to that minor based upon the personal information of the minor; and
   3. Knowingly using, disclosing, compiling, or allowing a third party to use, disclose, or compile, the personal information of a minor with actual knowledge that the use, disclosure, or compilation is for the purpose of marketing or advertising such products or services to that minor, where the website, service, or application is directed to minors or there is actual knowledge that a minor is using the website, service, or application. (Business and Professions Code Section 22580.)
3. Requires, pursuant to the PRCMDW, certain operators to permit a minor user to remove the minor’s content or information and to further inform the minor of this right and the process for exercising it. (Business and Professions Code Section 22581.)
4. Requires, pursuant to the Parent’s Accountability and Child Protection Act, a person or business that conducts business in California, and that seeks to sell any product or service in or into California that is illegal under state law to sell to a minor to, notwithstanding any general term or condition, take reasonable steps, as specified, to ensure that the purchaser is of legal age at the time of purchase or delivery, including, but not limited to, verifying the age of the purchaser. (Civil Code Section 1798.99.1 (a)(1).)
5. Establishes the CCPA (California Consumer Privacy Act of 2018), which grants consumers certain rights with regard to their personal information, including enhanced notice, access, and disclosure; the right to deletion; the right to restrict the sale of information; and protection from discrimination for exercising these rights. It places attendant obligations on businesses to respect those rights. (Civil Code Section 1798.100 et seq.)
6. Establishes the California Privacy Rights Act of 2020 (CPRA), which amends the CCPA and creates the California Privacy Protection Agency (PPA), which is charged with implementing these privacy laws, promulgating regulations, and carrying out enforcement actions. (Civil Code Section 798.100 et seq.; Proposition 24 (2020).)
7. Prohibits a business from selling or sharing the personal information of consumers if the business has actual knowledge that the consumer is less than 16 years of age, unless the consumer, in the case of consumers at least 13 years of age and less than 16 years of age, or the consumer’s parent or guardian, in the case of consumers who are less than 13 years of age, has affirmatively authorized the sale or sharing of the consumer’s personal information. A business that willfully disregards the consumer’s age shall be deemed to have had actual knowledge of the consumer’s age. (Civil Code Section 1798.120.)
8. Establishes the California Age-Appropriate Design Code Act, which places a series of obligations and restrictions on businesses that provide online services, products, or features likely to be accessed by children. (Civil Code Section 1798.99.28 et seq.)
9. Requires a business that provides an online service, product, or feature likely to be accessed by children (“covered business”) to take specified actions, including to:
   1. Undertake a Data Protection Impact Assessment for any online service, product, or feature likely to be accessed by children, as specified;
   2. Estimate the age of child users with a reasonable level of certainty appropriate to the risks that arise from the data management practices of the business, or apply the privacy and data protections afforded to children to all consumers;
   3. Provide any privacy information, terms of service, policies, and community standards concisely, prominently, and using clear language suited to the age of children likely to access that online service, product, or feature;
   4. If the online service, product, or feature allows the child’s parent, guardian, or any other consumer to monitor the child’s online activity or track the child’s location, provide an obvious signal to the child when the child is being monitored or tracked;
   5. Enforce published terms, policies, and community standards established by the business, including, but not limited to, privacy policies and those concerning children; and
   6. Provide prominent, accessible, and responsive tools to help children, or if applicable their parent or guardian, exercise their privacy rights and report concerns. (Civil Code Section 1798.99.31.)
10. Provides that a covered business shall not engage in specified activity, including:
    1. Using the personal information of any child in a way that the business knows or has reason to know is materially detrimental to the physical health, mental health, or well-being of a child;
    2. Profiling a child by default, except as specified;
    3. Collecting, selling, sharing, or retaining any personal information that is not necessary to provide an online service, product, or feature with which a child is actively and knowingly engaged, except as specified;
    4. Using the personal information of a child for any reason other than a reason for which that personal information was collected, except as specified;
    5. Collecting, selling, or sharing any precise geolocation information of children by default unless the collection of that precise geolocation information is strictly necessary to provide the service, product, or feature requested and then only for the limited time that the collection of precise geolocation information is necessary to provide the service, product, or feature; and
    6. Collecting, selling, or sharing any precise geolocation information without providing an obvious sign to the child for the duration of that collection that precise geolocation information is being collected. (Civil Code Section 1798.99.31.)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: Social media has become a ubiquitous element of our society. Across platforms, social media is used as a tool to establish and maintain personal relationships; keep up to date with current events; engage in political organizing; and develop professional relationships. In the United States alone, approximately 70 percent of people use some form of social media. These demographics broken down by age demonstrate a significant percentage of younger users. Approximately 84 percent of people between the ages of 18 and 29 years old use at least one social media site, while the utilization rate for those between the ages of 50 to 84 years drops to 73 percent. Participation rates also vary between the social media platforms themselves. For example, while 65 percent of users between 18 and 29 years old use Snapchat, only 42 percent have Twitter accounts. Perhaps particularly relevant to this bill, over 70 percent of 18 to 29 year-olds use Instagram, while that number drops to 48 percent for those between 30 to 49 years old, and to 29 percent for those between the ages of 50 and 64. (Social Media Fact Sheet, (April 7, 2021) Pew Research Center available at: https://www.pewresearch.org/internet/fact-sheet/social-media/.) As usage of social media apps and websites has grown, so has research on its consequences. The prevalence of social media in daily life impacts all demographics but has, perhaps predictably, had an outsized effect on younger populations (who not coincidentally, use it the most).

For more than a decade, researchers have documented a behavioral disorder known as problematic use of social networking sites. (Hussain, et al., Problematic Social Networking Site Use and Comorbid Psychiatric Disorders, supra.) Information leaked from a Facebook whistleblower in 2021 demonstrates that the company tracks the prevalence of “problematic use,” finding that one in eight users report problematic use behaviors. (Lyons, Facebook reportedly is aware of the level of ‘problematic use’ among its users (Nov. 2021) The Verge, available at https://www.theverge.com/2021/11/6/22766935/facebook-meta-aware-problematic-use-addiction-wellbeing.) Social media platforms have faced criticisms that their intentional product decisions to develop features that are designed to engage and, in some cases, addict users through well-known psychological mechanisms. (Bhargava, Ethics of the Attention Economy: The Problem of Social Media Addiction (2020) Business Ethics Quarterly.) Social media platforms often contain variable reward features, colloquially known as “slot machine” features. These features are predicated on the well-established psychological finding that the most effective way of maintaining a behavior is with unpredictable rewards that vary in their frequency or magnitude. Variable reward features on social media apps include “pull-to-refresh” prompts and unexpected notifications and animations encouraging a user to engage with new content.

In addition to allegations of addicting users, platforms have been accused of causing additional health concerns among their younger users. Critics highlight concerns of a growth in the sale of controlled substances, such as fentanyl, and the risk of content online that triggers eating disorders. In May 2022, The New York Times reported on the development of a dangerous and disturbing trend whereby teens and young social media users are targeted for the sale of fentanyl. The article described how overdoses are the leading cause of preventable death among those between 18 and 45 years of age, and the role that social media in particular has played in that trend. Specifically, the Times article described:

[M]uch as drug dealers in the 1980s and ‘90s seized on pagers and burner phones to conduct business covertly, today’s suppliers have embraced modern iterations – social media and messaging apps with privacy features such as encrypted or disappearing messages. Dealers and young buyers usually spot each other on social media and then often proceed by directly messaging each other.” (Fentanyl Tainted Pills Bought on Social Media Cause Youth Drug Deaths to Soar, Jan Hoffman (May 19, 2022) New York Times available at https://www.nytimes.com/2022/05/19/health/pills-fentanyl-social-media.html.)

In an earlier article reflecting on the impact of social media on the development of eating disorders among teenagers, the New York Times described how “young people have formed online communities where they discuss eating disorders and swap tips for the best ways to lose weight and look skinny. Using creative hashtags and abbreviations to get around filters, they share threads of emaciated models on Twitter as inspiration, create YouTube videos compiling low-calorie diets, and form group chats on Discord and Snapchat to share how much they weigh and encourage others to fast.” (Kate Conger, Kellen Browning, and Erin Woo, Eating Disorders and Social Media Prove Difficult to Untangle, The New York Times (October 22, 2021).)

According to the author:

It is well documented that features built into social media platforms are designed to maximize the time users spend on the platform and direct users to specific content independent of whether the user requested or searched for that content. Children are particularly vulnerable to the addictive design features of these platforms with the result that kids and teens stay on these products for far longer than is healthy. Additionally, content directed to children has been found to promote dangerous and harmful practices and products that may cause the child user to inflict harm on themselves or others. Examples of this content direction include research that documented teen girls on the platform TikTok were recommended suicide content within 8 minutes, and directed to eating disorders content every 39 seconds. Further there is clear evidence that social media sites increasingly facilitate the purchase of controlled substances, such as fentanyl, and illegal firearms, including ghost guns.

A report from the Colorado Attorney General found that social media platforms know of these sales but have ineffective rules against drug dealing on their sites and uneven enforcement against such open sales. SB 680 will enable the Attorney General and other prosecutors to hold social media platforms accountable for knowingly or carelessly addicting children to their platforms, enabling the sale of controlled substances or illegal weapons, or assisting children in inflicting harm on themselves or others.

This bill authorizes public prosecutors to bring civil claims against social media platforms that use a design, algorithm, or feature that the platform knew or should have known would cause a minor user to do any of the following: 1) inflict harm on themselves or others; 2) develop an eating disorder; or 3) experience addiction to the social media platform. The bill also implements a safe harbor provision, discussed in further detail below, and authorizes a court to award a civil penalty of up to $250,000, grant an injunction, and award attorney’s costs and fees for a knowing or willful violation of the bill’s prohibitions.

Establishing causation under this bill may pose a significant challenge for plaintiffs. In order to demonstrate causation for purposes of establishing liability in civil litigation, a plaintiff must demonstrate that the defendant’s act was the cause of the harm, typically determined through a but-for test: e.g., but for the defendant’s actions, the petitioner’s harm would not have occurred. With the bill in question, a plaintiff would face the challenge of demonstrating that, but for the platform’s algorithm, design, or feature, the minor user would not have inflicted harm on themselves or others, developed an eating disorder, or experienced addiction to the platform.

The causation element is particularly challenging in the context of either a child user who inflicts harm on themselves or others, or develops an eating disorder. For example, it is difficult to imagine that a petitioner would be able to readily establish that, absent the platform’s algorithm, design, or feature, a minor user would not have developed an eating disorder. Eating disorders are complex mental health diagnoses that have a myriad of causes. A 13 year-old girl, who may be constantly inundated with images of models on the covers of magazines, in movies and on popular television shows, may also receive ads for diet pills or videos of influencers, showing their meals for the day, on social media. However, it seems plausible that the other examples of disordered eating that surround the user on a daily basis could trigger an eating disorder, even absent the girl’s social media feeds. Similar examples could apply to claims brought for harms resulting from a user’s injury to themselves or others.

Considering the challenge of establishing causation under this bill, it seems that only the most egregious violators are likely to be held accountable under its provisions. By the same token, it seems unlikely, given the challenge in bringing a successful claim, that social media platforms would be unfairly inundated with frivolous lawsuits (as opponents fear).

Safe harbor provision. The bill proposes a safe harbor provision to allow compliant platforms to avoid liability. In order to benefit from the safe harbor, platforms must do both of the following: 1) institute a program of quarterly audits of its designs, algorithms, and features that have the potential to cause a violation; and 2) correct a design, algorithm, or feature discovered by the audit that presents more than a de minimis risk of violation within 30 days of completing the audit. The bill specifies that an audit means a good faith, written, systemic review or appraisal by a social media platform that provides reasonable assurance of monitoring compliance that 1) describes and analyzes each of the social media platform’s current and forthcoming designs, algorithms, and features that have the potential to cause a violation; and 2) includes any plans to change designs, algorithms, and features that pose more than a de minimis risk of constituting a violation.

Theoretically, this safe harbor provision would provide an incentive for platforms to maintain a practice of reviewing their features. However, opponents of the measure contend that the language of the safe harbor does not provide sufficient specificity to be effective. They posit that, “it is unclear how a feature would cause a child to do any of the prohibitions […] or even whether the risk is to one child, to multiple children, or to the average user.” They point to similar ambiguities in requiring a platform to “correct” an algorithm, design, or feature. Finally, the opponents argue that the safe harbor actually functions as a “gotcha” provision, whereby a platform that fails to sufficiently correct a de minimis risk would satisfy the threshold for a court to find a platform liable and impose a civil penalty of $250,000 for a knowing or willful violation.

However, if a platform’s audit of a specific algorithm, design, or feature does not reveal more than a de minimis risk of harm to child users, a platform would not automatically be liable for a willful or knowing violation, even in the event that element is ultimately determined to pose a risk of harm to a child user. The safe harbor does not seem to modify the requirement that a platform knowingly and willfully implement a design, feature, or affordance causes one of the specified harms to a child user before a court may issue the civil penalty. Rather, it seems that liability would only attach if the plaintiff were able to demonstrate, for example, that at the point of the initial audit, a platform was aware of the risk and failed to remove or halt the implementation of the feature. As long as a platform removes a feature once an audit reveals it poses more than a de minimis risk, or the platform reasonably believes that the design, feature, or algorithm does not pose a risk at the point of the audit, it appears the platform would benefit from the safe harbor.

Nonetheless, there seems to be room for interpretation on this point. Therefore, in order to achieve the goal of incentivizing platforms to engage in an effective audit practice, the author may wish to consider clarifying whether the de minimis harm would be to an average child user, and whether a platform that becomes aware of a risk stemming from a design, feature, or algorithm of which they were not previously aware, would be able to avoid liability by removing or fixing the identified feature.

The question of whether it is reasonable to expect platforms to remove or fix a design, feature, or algorithm within 30 days is outside the purview of this Committee and more appropriately addressed by the Assembly Committee on Privacy and Consumer Protection, which has primary jurisdiction over this bill.

First Amendment concerns. The opposition, consisting of a coalition of tech industry organizations, raises numerous concerns including the potential that SB 680 runs afoul of the First Amendment. More specifically, the coalition writes that SB 680 “examines what content is being posted on social media and the editorial decision of platforms to show that content. […] SB 680 is unconstitutional because it imposes liability on social media platforms for whether certain types of third-party content are shown to child users, as well as the expressive choices social media platforms make in designing their user experience. This violates the First Amendment rights of both minors and social media platforms.”

As a threshold issue, in order to fall under the scope of the First Amendment’s speech protections, a bill or law must limit or promote speech. Courts have yet to answer the question of whether an algorithm in particular would constitute speech. Moreover, it is plausible that when faced with the question, a court would find that rather than the speech itself, an algorithm is the mechanism by which speech is delivered to certain consumers. This approach has already been suggested by the recent Supreme Court decision in Twitter, Inc. v. Taamneh, discussed in more detail in the context of Section 230 of the Communications Decency Act, below. If algorithms are determined to be a tool for dissemination of speech, attempts such as this to regulate their use and development would not be subject to restrictions stemming from the First Amendment.

Section 230 of the Communications Decency Act. The federal Communications Decency Act (CDA) provides that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider,” and affords broad protection from civil liability for the good faith content moderation decisions of interactive computer services. (47 U.S.C. Sec. 230(c)(1) and (2).) Though Section 230 was originally passed in response to judicial inconsistency with respect to the liability of internet service providers under statutes pertaining to “publishers” of content created by others, it has since been interpreted to confer operators of social media platforms and other online services with broad immunity from liability for content posted on their platforms by others.

Section 230 also indicates that “[n]othing in this section shall be construed to prevent any State from enforcing any State law that is consistent with this section,” but further provides that “[n]o cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section.” (47 U.S.C. Sec. 230(e)(3).) The latter provision has generally been interpreted to expressly preempt any state law that has the effect of treating a social media or other online platform as the publisher of information posted by other users, including prescriptive requirements relating to content moderation. This is consistent with the law’s original intent, which was to ensure that internet platforms facilitating the sharing of content can do so without considerable risk of liability in the event that content is not meticulously policed.

Since the development of social media platforms, the extent of Section 230’s immunity shield has been heavily litigated. Questions have arisen regarding what elements of a user’s experience and therefore of a social media platform’s business model, benefit from Section 230, and which fall outside its scope. In Fair Housing Council v. Roommates.com, LLC, Roommates.com was sued by a coalition of fair housing councils in California for allegedly violating the federal Fair Housing Act and state housing discrimination laws. (Fair Housing Council of San Fernando valley v. Roommates.com, LLC, 521 F.3d 1157 (2007).) The claim was based largely on the website’s search function which appeared to prefer certain profiles over others, seemingly on the basis of elements of the user’s identity, including their gender and sexual orientation, which were collected by Roommate.com through a mandatory questionnaire developed by the website. The District Court ruled in favor of Roommates.com, holding that the website was protected by Section 230. The council subsequently appealed to the Ninth Circuit, which held that the website’s use of the information they required users to submit in order to utilize the website rendered Roommate.com outside the protection of Section 230. In its analysis, the court reasoned that a “website operator can be both a service provider and a content provider: If it passively displays content that is created entirely by third parties, then it is only a service provider with respect to that content. But as to content that it creates itself, or is ‘responsible, in whole or in part’ for creating or developing, the website is also a content provider.” (Roommates.com, LLC, 521 F.3d at p. 1163 (2007).)

Just two years later, in Barnes v. Yahoo! Inc., the Ninth Circuit established a three-part test for determining whether a website benefits from the liability shield of Section 230. According to Barnes, Section 230 “only protects from liability (1) a provider or user of an interactive computer service (2) whom a plaintiff seeks to treat, under a state law cause of action, as a publisher or speaker (3) of information provided by another information content provider.” (Barnes v. Yahoo! Inc., 570 F.3d 1096, 1100 - 1101 (2009).)

In Lemmon v. Snap, Snap (commonly known as Snapchat) attempted to argue that the CDA immunized them from liability in a negligent design lawsuit, brought by parents whose children were killed in a car accident that the parents claim was a result of Snap’s negligent design of a new feature. (Lemmon v. Snap, Inc. (2021) 995 F.3d 1085.) In support of their position, Snap argued that Section 230 shielded them from liability for the publication of third party materials. (Id. at pp. 1090 – 1091.) The Ninth Circuit applied the three-pronged test set forth by Barnes v. Yahoo! Inc. (2009) 570 F.3d 1096 described above. (Id. at p. 1091) The court ultimately decided against Snap “because the Parents’ claim turns on Snap’s design of Snapchat.” (Id. at p. 1092). While the merits of the parents’ claim in Lemmon were not ultimately adjudicated, nonetheless this case may indicate that basing liability on a platform’s own feature that they knew or reasonably should have known would be a substantial factor in causing harm to its users may preserve a law from being struck down under a Section 230 preemption argument.

Most recently, the Court issued a decision in a pair of cases addressing the same issue – whether a platform can be held liable for aiding and abetting terrorists attacks that were Twitter v. Taamneh and Google v. Gonzalez. In November 2015, the Islamic State (ISIS) took responsibility for a series of coordinated terrorist attacks in Paris. Among the at least 130 people killed was 23-year-old American Nohemi Gonzalez. Shortly after Nohemi’s death, her father filed suit against Google, Twitter, and Facebook, arguing that the platforms were liable for aiding and abetting international terrorism by failing to appropriately respond to, or address, terrorist organizations’ use of their services. (Gonzalez v. Google LLC, (Oyez) available at: https://www.oyez.org/cases/2022/21-1333.) They additionally argued that Google was not immune under Section 230 because their algorithm recommended ISIS videos to their users who ultimately conducted the acts of terrorism. The petitioners lost in both district court and on appeal to the Ninth Circuit, and subsequently appealed to the United States Supreme Court. Earlier this month, the Court issued its decision in both matters, holding that “the failure to allege that the platforms here do more than transmit information by billions of people – most of whom use the platforms for interactions that once took place via mail, on the phone, or in public areas – is insufficient to state a claim that defendants knowingly gave substantial assistance and thereby aided and abetted ISIS’ acts. A contrary conclusion would effectively hold any sort of communications provider liable for any sort of wrongdoing merely for knowing that the wrongdoers were using its services and failing to stop them.” (Twitter, Inc. v. Taamneh, (2023) 143 S. Ct. 1206, 1213.) The Court reached their decision without any discussion of Section 230, implying an even more challenging path for holding platforms liable for the use of their algorithms.

The bill explicitly exempts from liability 1) any conduct protected by Section 230, and 2) any conduct protected by the First Amendment to the United States Constitution or Section 2 of Article I of the California Constitution. These prohibitions seemingly attempt to foreclose the risk that the bill as a whole and claims brought under its provisions would violate Section 230 and the Constitution.

To summarize this extensive case law, courts have seemingly distinguished between a feature of a platform developed and implemented by the platform which seemed reasonably likely to cause harm (such as the SnapChat filter in Lemmon) and a facially neutral tool used to disseminate information (such as the algorithm in Twitter). If challenged, the survival of this measure may turn on the proponent’s ability to argue that imposing liability for the platform’s designs, features, or affordances is more akin to the facts of Lemmon than those of Twitter. In the context of individual claims against platforms brought under this bill’s provisions, plaintiffs would likely need to make a similar showing in order to avoid being dismissed under a Section 230 argument, which would necessitate a case by case determination of the facts.

Ultimately, if challenged on the basis of preemption under Section 230 or First Amendment principles, a court will likely answer the questions of whether a platform’s algorithms, designs, or features are considered speech and whether any liability may attach based on their implementation.

Pending litigation challenging the constitutionality of the California Age Appropriate Design Code Act. Last year the Legislature passed and the Governor signed the California Age-Appropriate Design Code Act (AB 2273 (Wicks, Stats. 2022, Chap. 320). The new law implements various standards for businesses that cater to minor users. Three months after the Governor Newsom signed the bill into law, NetChoice (a coalition of technology-related trade associations) challenged the law on various bases, including First Amendment and preemption grounds. (Mengting Xu, Lawsuit Challenges Constitutionality of California Age-Appropriate Design Code, California Lawyers Association, available at: https://calawyers.org/privacy-law/lawsuit-challenges-constitutionality-of-california-age-appropriate-design-code/.) Depending on its scope, a decision in the case challenging the Age Appropriate Design Code may impact the viability of this measure, were it to become law.

ARGUMENTS IN SUPPORT: This bill is sponsored by the California Department of Justice. and supported by a diverse coalition of community-based religious organizations, progressive policy advocates, health care advocates, law enforcement organizations, and children’s health organizations. The sponsors write the following regarding the measure:

As children spend more time on social media platforms, it is apparent that the use of social media platforms can lead to harmful outcomes to children in a number of ways. For example, social media platform addiction has a negative impact on healthy socialization in children and contributes to feelings of social isolation in young people. Other research indicates that time spent on social media is correlated with rates of suicide and depression among teens, especially girls. Conversely, research also shows that reducing social media usage can result in positive health outcomes. In one experimental study, college students randomly assigned to limit their social media use displayed reductions in loneliness and depression after only three weeks, as compared to those who did not limit their usage.

Because operators of social media platforms primarily earn their revenue through digital advertising to their users and by keeping people attached to their platforms, these companies have a strong financial incentive to design their products to maximize the time users—including children—spend on their social media. This leads to, and perhaps is even designed to lead to, social media platform addiction in children. That addiction poses an immediate and very real threat to the physical and mental health of our children.

At the California Department of Justice, we recognize the need to ensure safer online environments for children to learn, explore, and play. The Attorney General has announced a nationwide investigation into whether Meta and TikTok provided and promoted their social media platforms to children and young adults, despite knowing that such use is associated with increased risks of physical and mental health harm to young people, including depression, eating disorders, and even suicide

In support of the measure, the American Academy of Pediatrics writes the following:

This bill would hold these companies financially responsible for certain harm they know they are causing our children through their failure to act with basic care in their operations. With an important focus on prevention, the bill will also motivate the platforms to audit their practices for child harm and promptly fix these harmful practices.

America has an unprecedented child mental health crisis pre-dating COVID and there is growing concern among experts on the impact of social media use. During the time that Instagram use rose from 1 million users to 1 billion, suicide among girls years 10 to 14 doubled. The cause-and-effect relationship between at least part of this unprecedented crisis and the parallel rise in social media use among children was confirmed by Facebook itself in its own internal research:

• “Among teen users [of Instagram] who reported suicidal thoughts… 6% of American [teen] users traced the desire to kill themselves to Instagram.”

• “Teens blame Instagram for increases in the rate of anxiety and depression."

SB 680 offers these handful of multi-billion-dollar corporations a specified financial incentive not to make business decisions they know or should know will hurt children. The bill provides an off-ramp from such liability if companies do what they should be doing anyway – auditing their practices and fixing what is harmful to children.

This bill strikes the right balance between the need to protect children and the ability of platforms to operate effectively with child wellbeing in mind. If this bill became law, children and teens would have great control over what they see and be free from involuntary addiction, the sale of fentanyl-laced pills, pro-eating disorder and suicide content, and dangerous choking challenges

The Jewish Public Affairs Committee of California (JPAC) submits the following:

We are in an unprecedented and exploding youth mental health crisis that researchers, clinicians, and whistleblowers attribute in significant part to their social media use. During the time that Instagram use rose from 1 million users to 1 billion, suicide among girls aged 10 to 14 doubled. Facebook’s internal research revealed that teens blame Instagram for increases in the rate of anxiety and depression. They also found that, among teen users in the United States who reported suicidal thoughts, 6% traced the desire to kill themselves to Instagram.

SB 680 creates financial disincentives for the biggest social media companies to make business decisions that they know will hurt children. Specifically, it makes it unlawful, with damages and penalties up to $250,000 per violation, for knowingly or carelessly causing child users to inflict harm on themselves or others, develop an eating disorder, or experience addiction to the social media platform. With an eye towards prevention, it provides a “safe harbor” that removes this liability if companies start doing what they should be doing anyway: auditing their practices quarterly and voluntarily ceasing practices that cause these harms.

ARGUMENTS IN OPPOSITION: This bill is opposed by a coalition of tech industry advocates. They raise the following concerns about the measure:

SB 680 is unconstitutional because it imposes liability on social media platforms for whether certain types of third-party content are shown to child users, as well as the expressive choices social media platforms make in designing the user experience. This violates the First Amendment rights of both minors and social media platforms. Courts have repeatedly upheld and protected platforms’ First Amendment rights to decide how to moderate and present content on their platforms. Likewise, because the bill would result in limited or restricted access to teens, it infringes upon their First Amendment rights to receive information and express themselves.

Additionally, SB 680’s “overbreadth” appears both “real” and “substantial,” and is thus arguably unconstitutional, because it sweeps in social media activity that might negatively affect a relatively small amount of children but prove to be of utility to many more (i.e., organizing children’s social media feeds to highlight content they are more interested in).

The bill also directly interferes with the expressive rights of both the minors who will be banned from social media services and the service providers themselves. The imposition of liability for harm to a minor (the bill does not require the provider to know that a user is under 18 to trigger liability) amounts to a requirement to age verify all users of social media services, interfering with constitutionally-protected rights of adults and minors alike. As the Supreme Court emphasized in Packingham v. North Carolina, 582 U.S. ___, 137 S.Ct. 1730 (2017): “For many,” social media platforms “are the principal sources for knowing current events, checking ads for employment, speaking and listening in the modern public square, and otherwise exploring the vast realms of human thought and knowledge,” such that “to foreclose access to social media altogether is to prevent the user from engaging in the legitimate exercise of First Amendment rights.” Id. at 1737. To the extent SB 680 has the practical effect of foreclosing minors’ access to social media “altogether” (e.g., because SB 680 makes it practically impossible for social media platforms to offer their services to children in California), the law would raise grave concerns under the First Amendment.

Children have First Amendment rights to both receive information and to express themselves. Protecting children from self-harm is an important objective, but SB 680 makes no attempt to even reasonably scope the restrictions on social media platforms to that goal, let alone to “narrowly tailor” the law as the Constitution requires. Accordingly, broad regulations restricting youth expression have been struck down on First Amendment grounds. Holding unconstitutional a California law prohibiting the sale of violent video games to minors, the Supreme Court declared that, “whatever the challenges of applying the Constitution to ever advancing technology, the basic principles of freedom of speech and the press, like the First Amendment’s command, do not vary when a new and different medium for communication appears.”

[…]

The terms in SB 680 are so vague and ambiguous that the only result will be a substantial increase in litigation because companies will be unable to operationalize the requirements. For example, the bill authorizes a cause of action for any design, algorithm, or feature that causes a child user to do any of the conduct in items (a)(1-3). It is unclear whether “causes” means the social media platform is the only cause, a contributing or substantial factor, or whether the bill intends to impose strict liability for this conduct. It is also unclear how a design or feature alone would cause a child user to do any of the prohibited conduct without taking into account the content the design or feature provided.

Additionally, when trying to operationalize these requirements, or to complete an audit, should companies be considering designs or features that could cause any child user, multiple child users, or the average child user to access content described in (a)(1-3)? The answer will impact companies’ analysis of what constitutes a de minimis risk of violating subdivision (a). Even completely dismantling any and every design and content-serving feature would not prevent any child user from receiving content described in (a)(1-3).

Finally, the definition of “addiction” not only fails to comport with accepted clinical criteria for behavioral addictions but is so broad as to include anyone who uses a social media platform and suffers any amount of physical, mental, emotional, developmental, or material harm. If the definition of “addiction” from SB 680 was applied to books, music, sports, or other after school activities one would likely find millions of children to be addicts. SB 680’s ambiguity, combined with the outrageous fine of $250,000 per violation and promise of attorney’s fees, will result in a flood of frivolous lawsuits.

REGISTERED SUPPORT / OPPOSITION:

Support

California Department of Justice (sponsor)

#HalfTheStory
AJC San Francisco
American Academy of Pediatrics, California
American Association of University Women - California
American Jewish Committee (AJC) San Diego
American Jewish Committee - Los Angeles
California Academy of Family Physicians
California District Attorneys Association
California Federation of Teachers AFL-CIO
California Youth Empowerment Network
Children's Advocacy Institute
Common Sense Media
Consumer Federation of California
Fairplay
Girl Scouts Heart of Central California
Hadassah
Jewish Center for Justice
Jewish Community Federation and Endowment Fund
Jewish Community Relations Council of Sacramento
Jewish Community Relations Council of Silicon Valley
Jewish Democratic Club of Silicon Valley
Jewish Democratic Club of Solano County
Jewish Family & Children's Service of Long Beach and Orange County
Jewish Family & Community Services East Bay
Jewish Family and Children's Services of San Francisco, the Peninsula, Marin and Sonoma Counties
Jewish Family Service San Diego
Jewish Family Services of San Francisco
Jewish Family Services of Silicon Valley
Jewish Federation of Greater Los Angeles, the
Jewish Federation of Greater Santa Barbara
Jewish Federation of The Greater San Gabriel and Pomona Valleys
Jewish Federation of The Sacramento Region
Jewish Long Beach
Jewish Public Affairs Committee
Mental Health America of California
Parents Television and Media Council
Progressive Zionists of California
Steinberg Institute
The Kennedy Forum

Opposition

California Chamber of Commerce
Chamber of Progress
Civil Justice Association of California
Computer and Communications Industry Association
Netchoice
TechNet-Technology Network

Analysis Prepared by: Manuela Boucher-de la Cadena / JUD. / (916) 319-2334

 THIRD READING  

Bill No: SB 680

Author: Skinner (D)

Amended: 4/27/23

Vote: 21

SENATE JUDICIARY COMMITTEE: 8-1, 4/25/23

AYES: Umberg, Allen, Ashby, Caballero, Durazo, Laird, Min, Wiener

NOES: Wilk

NO VOTE RECORDED: Niello, Stern

SUBJECT: Battery-powered motor vehicle price: consumer notice

SOURCE: Consumer Federation of California

DIGEST:

This bill requires a dealer that sells or leases a vehicle propelled by a battery-powered motor to provide notice to a consumer if the price exceeds the manufacturer’s suggested retail price (MSRP), as specified.

ANALYSIS:

Existing law:

1. Prohibits selling a vehicle at a price other than that advertised. (Veh. Code § 11713(a).)
2. Requires the California Air Resources Board (CARB), in adopting rules and regulations to achieve the maximum technologically feasible and cost-effective greenhouse gas emissions reductions authorized, to ensure that statewide greenhouse gas emissions are reduced to at least 40 percent below the statewide greenhouse gas emissions limit no later than December 31, 2030. (Health & Saf. Code § 38566.)
3. Establishes the Clean Cars 4 All Program, which is administered by CARB to achieve air quality improvements and benefit low-income residents by replacing high-polluter vehicles with cleaner and more efficient vehicles or a specified mobility option. (Health & Saf. Code § 44125.)
4. Requires the California Energy Commission to conduct a statewide assessment every two years of electric vehicle (EV) charging infrastructure needed to support the levels of EV adoption required for the state to meet its goals of putting at least five million zero-emission vehicles (ZEVs) on California roads by 2030, and of reducing emissions of greenhouse gases to 40 percent below 1990 levels by 2030. (Pub. Res. Code § 25229.)

This bill requires a dealer that sells or leases a vehicle propelled by a battery-powered motor to provide notice to a consumer if the price exceeds the manufacturer’s suggested retail price, as specified.

Background

Given the existential climate crisis, California has set ambitious goals regarding lower emissions in the state. Relevant here, the state has set a goal of transitioning to zero-emission vehicles making up 100 percent of new cars and trucks sold in California by 2035.

Unfortunately, recent estimates put current progress at just under 20 percent. The author argues that one reason for this dismal progress is the steep pricing of electric vehicles in the state, with dealers severely marking up sale prices and thereby decreasing sales.

To assist in reaching these ambitious goals, this bill requires dealers to clearly notify consumers when the purchase price of battery-powered vehicles are at a rate greater than the manufacturer’s suggested retail price (MSRP).

This bill is sponsored by the Consumer Federation of California. It is supported by various consumer groups. It is opposed by the California New Car Dealers Association and the California Chamber of Commerce.

Comments

The Legislature and Governor’s Office have taken bold strides over the years to address the impending climate catastrophe. A core focus of this work has been a reduction of gas-powered vehicles and a move to ZEVs. For instance, previous legislation codified a state goal of putting at least five million ZEVs on California roads by 2030.

This bold goal has been drastically expanded by recent administrative decisions that have expanded the scope and timeline of the state’s ZEV transition. On September 23, 2020, Governor Gavin Newsom issued Executive Order N-79-20 which established the following goal:

It shall be a goal of the State that 100 percent of in-state sales of new passenger cars and trucks will be zero-emission by 2035. It shall be a further goal of the State that 100 percent of medium- and heavy-duty vehicles in the State be zero-emission by 2045 for all operations where feasible and by 2035 for drayage trucks. It shall be further a goal of the State to transition to 100 percent zero-emission off-road vehicles and equipment by 2035 where feasible.

In response to this Executive Order, CARB has adopted regulations aimed at phasing out the sale of petroleum-fueled vehicles. The ZEV Strategy prioritizes accelerating large scale, affordable, and equitable ZEV market development to improve air quality, reduce greenhouse gas emissions, provide access to ZEV, and improve the workforce needed to maintain ZEV infrastructure.

Cumulative ZEV sales reached 760,000 in September 2020 and currently account for about 8% of new vehicle sales in California. ZEV sales include battery-electric vehicles (59%), plug-in hybrids (40%), and hydrogen fuel cell electric (1%). Exponential growth will be needed to achieve the goal of 100% ZEV sales by 2035.

For its part, the federal government has also pushed an ambitious ZEV transition plan. President Joe Biden issued his own executive order calling for 50 percent of new passenger car sales to be of electric vehicles powered by batteries and fuel cells or plug-in electric hybrids by the end of the decade.^[1] However, there is still a long way to go, given that in 2020, electric vehicles made up only 3.8 percent of sales.

Transparency in ZEV pricing

The author argues that dealers of these vehicles have exploited market conditions and are drastically marking up the sale prices of these vehicles. The author points to evidence that dealers have marked up ZEVs by as much as 95 percent. The data shows that dealer markups are pervasive across the industry and country, with more than 80 percent of U.S. car buyers paying above MSRP.^[2]

Motortrend explains the market:

At the root of it are simple laws of supply and demand, exacerbated by plain old greed. These vehicles are highly anticipated and have either limited reservation slots available or long waiting lists. Dealers charge markups because, simply put, people are excited enough about the vehicles to pay whatever it takes. In some cases, this can mean tens of thousands of dollars or more above the Manufacturer's Suggested Retail Price (MSRP).

Dealers can get away with this because they're effectively allowed to charge what the market will bear. The S in MSRP is critical: Thanks to strong state franchise laws pushed by dealers and their political allies, automakers cannot dictate the final sale price of a vehicle. That's why nearly all vehicle sales at dealerships are negotiations.^[3]

In fact, the practice has prompted major car manufacturers to chastise dealers and threaten withholding deliveries if price gouging is not contained.

It should be noted that the market for vehicles has been erratic:

Carmakers cut production in 2020 during the initial waves of coronavirus infections. Prices fell, and perfectly good autos sat on dealer lots for months.

Then in 2021, buyers’ appetite roared back just as supply chain snags, especially in microchips, hampered manufacturers. Some 15 million vehicles were sold last year, up from 14.6 million in 2020, according to Cox Automotive. Labor shortages and soaring inflation also weighed on the industry’s output. And there was a trickle-down effect on the used car market, where prices climbed 40 percent in January compared with the same period last year, according to the Bureau of Labor Statistics.^[4]

One of the central targets is the new Ford F-150 Lightning, a zero-emission pickup truck. As stated on Ford’s website, due to high demand, the current model year is no longer available for retail orders.^[5]

This bill initially directly targeted the practice by making it unlawful to sell any vehicle propelled by a battery-powered motor at a price greater than MSRP. However, this bill was drastically amended in response to opposition concerns and now provides that if a dealer sells or leases a battery-powered vehicle at a price that exceeds the MSRP, the dealer shall provide clear and conspicuous notice to a consumer that the price so exceeds it. “Dealer” and “vehicle” are defined to have the same meaning as otherwise provided in the Vehicle Code.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 5/4/23)

Consumer Federation of California (source)

California Rural Legal Assistance Foundation

Comite Civico del Valle

Consumer Attorneys of California

Consumer Watchdog

East Bay Community Law Center

Latino Equity Advocacy and Policy Institute

National Consumers League

OPPOSITION: (Verified 5/4/23)

California Chamber of Commerce

California New Car Dealers Association

ARGUMENTS IN SUPPORT: A coalition of consumer groups writes in support:

As consumers switch over to electric-powered vehicles to meet the California mandate by 2035, some dealers are charging $30,000-$40,000 or more above the Manufacturer’s Suggested Retail Price (MSRP) for EVs, which are already significantly more expensive than combustion-engine same vehicles. Forcing consumers to pay outrageous prices for literally the exact same vehicle without features being added is pernicious and perhaps the ultimate junk fee. The number one barrier to more widespread adoption of EVs is affordability and auto dealers’ imposing excessive markups is thwarting consumers’ ability to meet the states’ mandate. In January 2022 more than 80% of US car buyers paid above MSRP, compared to 0.3% for the same month in 2020.

ARGUMENTS IN OPPOSITION: Writing in opposition, the California New Car Dealers Association argues:

SB 680 comes at an especially curious time, as the CEOs of the nation’s largest automakers have publicly admitted to constraining vehicle supply despite surging demand, resulting in significantly higher vehicle prices as they reign in record profits.

Prepared by: Christian Kurpiewski / JUD. / (916) 651-4113

5/5/23 13:17:57

**** END ****

1. Dino Grandoni & Brady Dennis, Biden calls for half of new cars to be electric or plug-in hybrids by 2030 (August 5, 2021) The Washington Post, https://www.washingtonpost.com/climate-environment/2021/08/05/biden-aims-big-boost-electric-cars-by-2030/?itid=lk_inline_manual_5. All internet citations are current as of April 4, 2023. ↑

2. Jacob Bogage & Aaron Gregg, Car dealers are raising prices. Automakers are pushing back. Consumers are stuck in between (February 12, 2022) The Washington Post, https://www.washingtonpost.com/business/2022/02/12/ford-gm-dealer-markups/. ↑

3. Scott Evans, GM to Dealers: Don’t Gouge Customers on Hummer EV, Z06, Silverado EV, Lyriq (January 20, 2022) Motortrend News, https://www.motortrend.com/news/gm-letter-dealer-markup-msrp/. ↑

4. Jacob Bogage & Aaron Gregg, Car dealers are raising prices. Automakers are pushing back. Consumers are stuck in between (February 12, 2022) The Washington Post, https://www.washingtonpost.com/business/2022/02/12/ford-gm-dealer-markups/. ↑

5. 2023 Ford F-150 Lightning, Ford, https://www.ford.com/trucks/f150/f150-lightning/. ↑

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: SB 680 (Author:Skinner)

Version: February 16, 2023

Hearing Date: April 25, 2023

Fiscal: No

Urgency: No

Consultant: CK

SUBJECT

Consumer Legal Remedies Act

DIGEST

This bill makes it unlawful pursuant to the Consumer Legal Remedies Act to sell any motor vehicle that is propelled, partially or exclusively, by means of a battery-powered motor at a price greater than the manufacturer’s suggested retail price.

EXECUTIVE SUMMARY

Given the existential climate crisis, California has set ambitious goals regarding lower emissions in the state. Relevant here, the state has set a goal of transitioning to zero-emission vehicles making up 100 percent of new cars and trucks sold in California by 2035.

Unfortunately, recent estimates put current progress at just under 20 percent. The author and sponsors argue that one reason for this dismal progress is the steep pricing of electric vehicles in the state, with dealers severely marking up sale prices and thereby decreasing sales.

To assist in reaching these ambitious goals, this bill makes it unlawful pursuant to the Consumer Legal Remedies Act (CLRA) to sell any motor vehicle that is propelled, partially or exclusively, by means of a battery-powered motor at a price greater than the manufacturer’s suggested retail price (MSRP). This controls the ceiling on vehicle pricing to ensure more Californians are able to afford these vehicles.

The bill is sponsored by Consumers for Auto Reliability and Safety and the Consumer Federation of California. It is supported by a wide array of consumer groups. It is opposed by the California New Car Dealers Association and the California Chamber of Commerce.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Establishes the Consumer Legal Remedies Act (CLRA), which prohibits unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer. (Civ. Code § 1750 et seq.)
2. Provides that any consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 of the Civil Code may bring an action against that person to recover or obtain any of the following:
   1. actual damages, but in no case shall the total award of damages in a class action be less than $1,000;
   2. an order enjoining the methods, acts, or practices;
   3. restitution of property;
   4. punitive damages;
   5. court costs and attorney’s fees to a prevailing plaintiff. However, reasonable attorney’s fees may be awarded to a prevailing defendant upon a finding by the court that the plaintiff’s prosecution of the action was not in good faith; and
   6. any other relief that the court deems proper. (Civ. Code § 1780(a), (e).)
3. Prohibits selling a vehicle at a price other than that advertised. (Veh. Code § 11713(a).)
4. Requires the California Air Resources Board (CARB), in adopting rules and regulations to achieve the maximum technologically feasible and cost-effective greenhouse gas emissions reductions authorized, to ensure that statewide greenhouse gas emissions are reduced to at least 40 percent below the statewide greenhouse gas emissions limit no later than December 31, 2030. (Health & Saf. Code § 38566.)
5. Establishes the Clean Cars 4 All Program, which is administered by CARB to achieve air quality improvements and benefit low-income residents by replacing high-polluter vehicles with cleaner and more efficient vehicles or a specified mobility option. (Health & Saf. Code § 44125.)
6. Requires the California Energy Commission to conduct a statewide assessment every two years of electric vehicle (EV) charging infrastructure needed to support the levels of EV adoption required for the state to meet its goals of putting at least five million zero-emission vehicles (ZEVs) on California roads by 2030, and of reducing emissions of greenhouse gases to 40 percent below 1990 levels by 2030. (Pub. Res. Code § 25229.)

This bill makes it unlawful pursuant to the Consumer Legal Remedies Act to sell any motor vehicle that is propelled, partially or exclusively, by means of a battery-powered motor at a price greater than the manufacturer’s suggested retail price.

COMMENTS

1. California’s consumer protection laws

The Legislature has long considered consumer protection to be a matter of high importance. State law is replete with statutes aimed at protecting California consumers from unfair, dishonest, or harmful market practices. These consumer-protection laws authorize consumers to enforce their own rights and seek remedies to make them whole.

The CLRA was enacted “to protect the statute’s beneficiaries from deceptive and unfair business practices,” and to provide aggrieved consumers with “strong remedial provisions for violations of the statute.” (Am. Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1, 11.) The CLRA prohibits “unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer,” (Civ. Code § 1770(a)), and prohibits conduct “likely to mislead a reasonable consumer.” (Colgan v. Leatherman Tool Grp., Inc. (2006) 135 Cal. App. 4th 663, 680; internal quotation marks omitted.)

Among other things, the CLRA prohibits merchants from “representing that a transaction confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law,” or representing that goods “are of a particular standard, quality, or grade” when they are of another. (Civ. Code § 1770.) Consumers who are harmed by unlawful practices specified in the Act have a right of action under the CLRA to recover damages and other remedies, including actual damages; an order to enjoin the unlawful act; restitution; punitive damages; or any other relief that the court deems proper. (Civ. Code § 1780.) Additionally, the statute authorizes courts to award attorney’s fees to prevailing plaintiffs and contains mechanisms for securing remedies on a class wide basis. (Civ. Code §§ 1780, 1781.) Consumers who are over the age of 65 are eligible to additionally seek and be awarded, in addition to the above remedies, up to $5,000 where the trier of fact finds certain circumstances are met.

1. Zero-emission vehicle goals

The Legislature and Governor’s office have taken bold strides over the years to address the impending climate catastrophe. A core focus of this work has been a reduction of gas-powered vehicles and a move to zero-emission vehicles (ZEVs). For instance, previous legislation codified a state goal of putting at least five million ZEVs on California roads by 2030.

This bold goal has been drastically expanded by recent administrative decisions that have expanded the scope and timeline of the state’s ZEV transition. On September 23, 2020, Governor Gavin Newsom issued Executive Order N-79-20 which established the following goal:

It shall be a goal of the State that 100 percent of in-state sales of new passenger cars and trucks will be zero-emission by 2035. It shall be a further goal of the State that 100 percent of medium- and heavy-duty vehicles in the State be zero-emission by 2045 for all operations where feasible and by 2035 for drayage trucks. It shall be further a goal of the

State to transition to 100 percent zero-emission off-road vehicles and equipment by 2035 where feasible.

In response to this Executive Order, CARB has adopted regulations aimed at phasing out the sale of petroleum-fueled vehicles. The ZEV Strategy prioritizes accelerating large scale, affordable, and equitable ZEV market development to improve air quality, reduce greenhouse gas emissions, provide access to ZEV, and improve the workforce needed to maintain ZEV infrastructure.

Cumulative ZEV sales reached 760,000 in September 2020 and currently account for about 8% of new vehicle sales in California. ZEV sales include battery-electric vehicles (59%), plug-in hybrids (40%), and hydrogen fuel cell electric (1%). Exponential growth will be needed to achieve the goal of 100% ZEV sales by 2035.

For its part, the federal government has also pushed an ambitious ZEV transition plan. President Joe Biden issued his own executive order calling for 50 percent of new passenger car sales to be of electric vehicles powered by batteries and fuel cells or plug-in electric hybrids by the end of the decade.^[1] However, there is still a long way to go, given that in 2020, electric vehicles made up only 3.8 percent of sales.

1. Bringing the purchase of ZEVs within reach

This bill seeks to support these ambitious goals by increasing access to battery-powered vehicles sold in this state. The author argues that dealers of these vehicles have exploited market conditions and are drastically marking up the sale prices of these vehicles. The author points to evidence that dealers have marked up ZEVs by as much as 95 percent. The data shows that dealer markups are pervasive across the industry and country, with more than 80 percent of U.S. car buyers paying above MSRP:

^[2]

Motortrend explains the market:

At the root of it are simple laws of supply and demand, exacerbated by plain old greed. These vehicles are highly anticipated and have either limited reservation slots available or long waiting lists. Dealers charge markups because, simply put, people are excited enough about the vehicles to pay whatever it takes. In some cases, this can mean tens of thousands of dollars or more above the Manufacturer's Suggested Retail Price (MSRP).

Dealers can get away with this because they're effectively allowed to charge what the market will bear. The S in MSRP is critical: Thanks to strong state franchise laws pushed by dealers and their political allies, automakers cannot dictate the final sale price of a vehicle. That's why nearly all vehicle sales at dealerships are negotiations.^[3]

In fact, the practice has prompted major car manufacturers to chastise dealers and threaten withholding deliveries if price gouging is not contained.

This bill directly targets the practice by making it unlawful to sell any vehicle propelled by a battery-powered motor at a price greater than MSRP. This allows consumers to directly enforce this unprecedented price protection.

Writing in opposition, the California New Car Dealers Association argues:

The California New Car Dealers Association (CNCDA) strongly opposes SB 680 (Skinner), which would impose a first-in-nation statutory price cap on vehicles sold in the State of California by giving out-of-state, global automakers the discretion to set California vehicle prices as they see fit. To be clear, SB 680 would statutorily require dealers to sell electric vehicles (EVs) at or below the Manufacturer’s Suggested Retail Price (MSRP), which represents the price that a car manufacturer recommends a vehicle be sold for without any independent oversight. SB 680, however, would turn this suggested retail price into a mandated retail price. SB 680 comes at an especially curious time, as the CEOs of the nation’s largest automakers have publicly admitted to constraining vehicle supply despite surging demand, resulting in significantly higher vehicle prices as they reign in record profits.

It should be noted that the market for vehicles has been erratic:

Carmakers cut production in 2020 during the initial waves of coronavirus infections. Prices fell, and perfectly good autos sat on dealer lots for months.

Then in 2021, buyers’ appetite roared back just as supply chain snags, especially in microchips, hampered manufacturers. Some 15 million vehicles were sold last year, up from 14.6 million in 2020, according to Cox Automotive. Labor shortages and soaring inflation also weighed on the industry’s output. And there was a trickle-down effect on the used car market, where prices climbed 40 percent in January compared with the same period last year, according to the Bureau of Labor Statistics.^[4]

One of the central targets is the new Ford F-150 Lightning, a zero-emission pickup truck. As stated on Ford’s website, due to high demand, the current model year is no longer available for retail orders.^[5]

While it is unclear what the bill’s effect on the supply of such vehicles will be, it seeks to level the playing field for car buyers to purchase certain ZEVs at a time when such cars are in high demand. A coalition of consumer groups writes in support:

As consumers switch over to electric-powered vehicles to meet the California mandate by 2035, some dealers are charging $30,000-$40,000 or more above the Manufacturer’s Suggested Retail Price (MSRP) for EVs, which are already significantly more expensive than combustion-engine same vehicles. Forcing consumers to pay outrageous prices for literally the exact same vehicle without features being added is pernicious and perhaps the ultimate junk fee. The number one barrier to more widespread adoption of EVs is affordability and auto dealers’ imposing excessive markups is thwarting consumers’ ability to meet the states’ mandate. In January 2022 more than 80% of US car buyers paid above MSRP, compared to 0.3% for the same month in 2020.

The California Consumers Legal Remedies Act (“CLRA”), passed in 1970, was designed to protect Californians from unfair business practices, such as false advertising. As gas prices soar, and zero-emission vehicle demand rises, California can help ensure that ZEVS are affordable by categorizing dealer mark-ups above the MSRP as an unfair business practice under the Consumer Legal Remedies Act. SB 680 will give consumers all remedies available under CA’s existing Consumer Legal Remedies Act and is the first-in-the-nation legislation that will help address the crisis we all face in mitigating climate change by accelerating the replacement of California’s aging fossil-fuel fleet with newer, safer, more fuel-efficient EVs.

Responding to the concerns raised, the author has agreed to amend the bill to remove the existing provisions and instead provide for clear transparency from dealers when they are selling these vehicles for a price over MSRP:

Amendment

Replace the contents of the bill with the following:

Add Civil Code Section 1784.2.

(a) For purposes of this section, the following definitions apply:

(1) “Dealer” has the same meaning as in Section 285 of the Vehicle Code.

(2) “Vehicle” has the same meaning as in Section 670 of the Vehicle Code.

(b) If a dealer sells or leases a vehicle that is partially or exclusively propelled by a battery-powered motor at a price that exceeds the manufacturer’s suggested retail price, the dealer shall provide clear and conspicuous notice to a consumer that the price exceeds the manufacturer’s suggested retail price.

SUPPORT

Consumer Federation of California (co-sponsor)

Consumers for Auto Reliability & Safety (co-sponsor)

California Rural Legal Assistance Foundation

Coalition for Clean Air

Consumer Attorneys of California

Consumer Federation of America

Consumer Watchdog

East Bay Community Law Center

Latino Equity Advocacy and Policy Institute

National Consumers League

OPPOSITION

California Chamber of Commerce

California New Car Dealers Association

RELATED LEGISLATION

Pending Legislation:

SB 493 (Min, 2023) requires the California Energy Commission (CEC) to assess the energy resources needed to meet state goals to transition medium and heavy-duty vehicles to zero-emission vehicles (ZEVs), and it requires the California Air Resources Board (CARB) to use the CEC’s assessment to create a strategic plan to achieve this transition. SB 493 is in the Senate Appropriations Committee.

SB 507 (Gonzalez, 2023) expands the scope of information the California Energy Commission (CEC) must consider when assessing the state’s need for electric vehicle (EV) charging infrastructure. SB 507 is currently in the Senate Transportation Committee.

AB 579 (Ting, 2023) requires that, commencing January 1, 2035, all newly purchased or contracted school buses of a local educational agency (LEA) be zero-emission vehicles. AB 579 is currently in the Assembly Appropriations Committee.

Prior Legislation:

AB 2700 (McCarty, Ch. 354, Stats. 2022) required the CEC to gather and report fleet data needed to support utilities’ plans for grid reliability and enhanced vehicle electrification. The bill also requires utilities to report how distribution investments made, pursuant to the bill, support climate goals as part of specified filings with the CEC and CPUC.

SB 676 (Bradford, Ch. 484, Stats. 2019) required the CPUC to establish EV-grid integration strategies for certain LSEs. The bill also required POUs to consider EV-grid integration strategies in their IRPs and required CCAs to report specified information to the CPUC regarding EV-grid integration activities.

AB 2127 (Ting, Ch. 365, Stats. 2018) required the CEC to conduct a statewide assessment every two years of EV charging infrastructure needed to support the levels of EV adoption required for the state to meet its goals of putting at least five million ZEVs on California roads by 2030, and of reducing GHG emissions to 40 percent below 1990 levels by 2030.

**************

1. Dino Grandoni & Brady Dennis, Biden calls for half of new cars to be electric or plug-in hybrids by 2030 (August 5, 2021) The Washington Post, https://www.washingtonpost.com/climate-environment/2021/08/05/biden-aims-big-boost-electric-cars-by-2030/?itid=lk_inline_manual_5. All internet citations are current as of April 4, 2023. ↑

2. Jacob Bogage & Aaron Gregg, Car dealers are raising prices. Automakers are pushing back. Consumers are stuck in between (February 12, 2022) The Washington Post, https://www.washingtonpost.com/business/2022/02/12/ford-gm-dealer-markups/. ↑

3. Scott Evans, GM to Dealers: Don’t Gouge Customers on Hummer EV, Z06, Silverado EV, Lyriq (January 20, 2022) Motortrend News, https://www.motortrend.com/news/gm-letter-dealer-markup-msrp/. ↑

4. Jacob Bogage & Aaron Gregg, Car dealers are raising prices. Automakers are pushing back. Consumers are stuck in between (February 12, 2022) The Washington Post, https://www.washingtonpost.com/business/2022/02/12/ford-gm-dealer-markups/. ↑

5. 2023 Ford F-150 Lightning, Ford, https://www.ford.com/trucks/f150/f150-lightning/. ↑

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: SB 680 (Author:Skinner)

Version: February 16, 2023

Hearing Date: April 18, 2023

Fiscal: No

Urgency: No

Consultant: CK

SUBJECT

Consumer Legal Remedies Act

DIGEST

This bill makes it unlawful pursuant to the Consumer Legal Remedies Act to sell any motor vehicle that is propelled, partially or exclusively, by means of a battery-powered motor at a price greater than the manufacturer’s suggested retail price.

EXECUTIVE SUMMARY

Given the existential climate crisis, California has set ambitious goals regarding lower emissions in the state. Relevant here, the state has set a goal of transitioning to zero-emission vehicles making up 100 percent of new cars and trucks sold in California by 2035.

Unfortunately, recent estimates put current progress at just under 20 percent. The author and sponsors argue that one reason for this dismal progress is the steep pricing of electric vehicles in the state, with dealers severely marking up sale prices and thereby decreasing sales.

To assist in reaching these ambitious goals, this bill makes it unlawful pursuant to the Consumer Legal Remedies Act (CLRA) to sell any motor vehicle that is propelled, partially or exclusively, by means of a battery-powered motor at a price greater than the manufacturer’s suggested retail price (MSRP). This controls the ceiling on vehicle pricing to ensure more Californians are able to afford these vehicles.

The bill is sponsored by Consumers for Auto Reliability and Safety and the Consumer Federation of California. It is supported by a wide array of consumer groups. It is opposed by the California New Car Dealers Association and the California Chamber of Commerce.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Establishes the Consumer Legal Remedies Act (CLRA), which prohibits unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer. (Civ. Code § 1750 et seq.)
2. Provides that any consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 of the Civil Code may bring an action against that person to recover or obtain any of the following:
   1. actual damages, but in no case shall the total award of damages in a class action be less than $1,000;
   2. an order enjoining the methods, acts, or practices;
   3. restitution of property;
   4. punitive damages;
   5. court costs and attorney’s fees to a prevailing plaintiff. However, reasonable attorney’s fees may be awarded to a prevailing defendant upon a finding by the court that the plaintiff’s prosecution of the action was not in good faith; and
   6. any other relief that the court deems proper. (Civ. Code § 1780(a), (e).)
3. Prohibits selling a vehicle at a price other than that advertised. (Veh. Code § 11713(a).)
4. Requires the California Air Resources Board (CARB), in adopting rules and regulations to achieve the maximum technologically feasible and cost-effective greenhouse gas emissions reductions authorized, to ensure that statewide greenhouse gas emissions are reduced to at least 40 percent below the statewide greenhouse gas emissions limit no later than December 31, 2030. (Health & Saf. Code § 38566.)
5. Establishes the Clean Cars 4 All Program, which is administered by CARB to achieve air quality improvements and benefit low-income residents by replacing high-polluter vehicles with cleaner and more efficient vehicles or a specified mobility option. (Health & Saf. Code § 44125.)
6. Requires the California Energy Commission to conduct a statewide assessment every two years of electric vehicle (EV) charging infrastructure needed to support the levels of EV adoption required for the state to meet its goals of putting at least five million zero-emission vehicles (ZEVs) on California roads by 2030, and of reducing emissions of greenhouse gases to 40 percent below 1990 levels by 2030. (Pub. Res. Code § 25229.)

This bill makes it unlawful pursuant to the Consumer Legal Remedies Act to sell any motor vehicle that is propelled, partially or exclusively, by means of a battery-powered motor at a price greater than the manufacturer’s suggested retail price.

COMMENTS

1. California’s consumer protection laws

The Legislature has long considered consumer protection to be a matter of high importance. State law is replete with statutes aimed at protecting California consumers from unfair, dishonest, or harmful market practices. These consumer-protection laws authorize consumers to enforce their own rights and seek remedies to make them whole.

The CLRA was enacted “to protect the statute’s beneficiaries from deceptive and unfair business practices,” and to provide aggrieved consumers with “strong remedial provisions for violations of the statute.” (Am. Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1, 11.) The CLRA prohibits “unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer,” (Civ. Code § 1770(a)), and prohibits conduct “likely to mislead a reasonable consumer.” (Colgan v. Leatherman Tool Grp., Inc. (2006) 135 Cal. App. 4th 663, 680; internal quotation marks omitted.)

Among other things, the CLRA prohibits merchants from “representing that a transaction confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law,” or representing that goods “are of a particular standard, quality, or grade” when they are of another. (Civ. Code § 1770.) Consumers who are harmed by unlawful practices specified in the Act have a right of action under the CLRA to recover damages and other remedies, including actual damages; an order to enjoin the unlawful act; restitution; punitive damages; or any other relief that the court deems proper. (Civ. Code § 1780.) Additionally, the statute authorizes courts to award attorney’s fees to prevailing plaintiffs and contains mechanisms for securing remedies on a class wide basis. (Civ. Code §§ 1780, 1781.) Consumers who are over the age of 65 are eligible to additionally seek and be awarded, in addition to the above remedies, up to $5,000 where the trier of fact finds certain circumstances are met.

1. Zero-emission vehicle goals

The Legislature and Governor’s office have taken bold strides over the years to address the impending climate catastrophe. A core focus of this work has been a reduction of gas-powered vehicles and a move to zero-emission vehicles (ZEVs). For instance, previous legislation codified a state goal of putting at least five million ZEVs on California roads by 2030.

This bold goal has been drastically expanded by recent administrative decisions that have expanded the scope and timeline of the state’s ZEV transition. On September 23, 2020, Governor Gavin Newsom issued Executive Order N-79-20 which established the following goal:

It shall be a goal of the State that 100 percent of in-state sales of new passenger cars and trucks will be zero-emission by 2035. It shall be a further goal of the State that 100 percent of medium- and heavy-duty vehicles in the State be zero-emission by 2045 for all operations where feasible and by 2035 for drayage trucks. It shall be further a goal of the

State to transition to 100 percent zero-emission off-road vehicles and equipment by 2035 where feasible.

In response to this Executive Order, CARB has adopted regulations aimed at phasing out the sale of petroleum-fueled vehicles. The ZEV Strategy prioritizes accelerating large scale, affordable, and equitable ZEV market development to improve air quality, reduce greenhouse gas emissions, provide access to ZEV, and improve the workforce needed to maintain ZEV infrastructure.

Cumulative ZEV sales reached 760,000 in September 2020 and currently account for about 8% of new vehicle sales in California. ZEV sales include battery-electric vehicles (59%), plug-in hybrids (40%), and hydrogen fuel cell electric (1%). Exponential growth will be needed to achieve the goal of 100% ZEV sales by 2035.

For its part, the federal government has also pushed an ambitious ZEV transition plan. President Joe Biden issued his own executive order calling for 50 percent of new passenger car sales to be of electric vehicles powered by batteries and fuel cells or plug-in electric hybrids by the end of the decade.^[1] However, there is still a long way to go, given that in 2020, electric vehicles made up only 3.8 percent of sales.

1. Bringing the purchase of ZEVs within reach

This bill seeks to support these ambitious goals by increasing access to battery-powered vehicles sold in this state. The author argues that dealers of these vehicles have exploited market conditions and are drastically marking up the sale prices of these vehicles. The author points to evidence that dealers have marked up ZEVs by as much as 95 percent. The data shows that dealer markups are pervasive across the industry and country, with more than 80 percent of U.S. car buyers paying above MSRP:

^[2]

Motortrend explains the market:

At the root of it are simple laws of supply and demand, exacerbated by plain old greed. These vehicles are highly anticipated and have either limited reservation slots available or long waiting lists. Dealers charge markups because, simply put, people are excited enough about the vehicles to pay whatever it takes. In some cases, this can mean tens of thousands of dollars or more above the Manufacturer's Suggested Retail Price (MSRP).

Dealers can get away with this because they're effectively allowed to charge what the market will bear. The S in MSRP is critical: Thanks to strong state franchise laws pushed by dealers and their political allies, automakers cannot dictate the final sale price of a vehicle. That's why nearly all vehicle sales at dealerships are negotiations.^[3]

In fact, the practice has prompted major car manufacturers to chastise dealers and threaten withholding deliveries if price gouging is not contained.

This bill directly targets the practice by making it unlawful to sell any vehicle propelled by a battery-powered motor at a price greater than MSRP. This allows consumers to directly enforce this unprecedented price protection.

Writing in opposition, the California New Car Dealers Association argues:

The California New Car Dealers Association (CNCDA) strongly opposes SB 680 (Skinner), which would impose a first-in-nation statutory price cap on vehicles sold in the State of California by giving out-of-state, global automakers the discretion to set California vehicle prices as they see fit. To be clear, SB 680 would statutorily require dealers to sell electric vehicles (EVs) at or below the Manufacturer’s Suggested Retail Price (MSRP), which represents the price that a car manufacturer recommends a vehicle be sold for without any independent oversight. SB 680, however, would turn this suggested retail price into a mandated retail price. SB 680 comes at an especially curious time, as the CEOs of the nation’s largest automakers have publicly admitted to constraining vehicle supply despite surging demand, resulting in significantly higher vehicle prices as they reign in record profits.

It should be noted that the market for vehicles has been erratic:

Carmakers cut production in 2020 during the initial waves of coronavirus infections. Prices fell, and perfectly good autos sat on dealer lots for months.

Then in 2021, buyers’ appetite roared back just as supply chain snags, especially in microchips, hampered manufacturers. Some 15 million vehicles were sold last year, up from 14.6 million in 2020, according to Cox Automotive. Labor shortages and soaring inflation also weighed on the industry’s output. And there was a trickle-down effect on the used car market, where prices climbed 40 percent in January compared with the same period last year, according to the Bureau of Labor Statistics.^[4]

One of the central targets is the new Ford F-150 Lightning, a zero-emission pickup truck. As stated on Ford’s website, due to high demand, the current model year is no longer available for retail orders.^[5]

While it is unclear what the bill’s effect on the supply of such vehicles will be, it seeks to level the playing field for car buyers to purchase certain ZEVs at a time when such cars are in high demand. A coalition of consumer groups writes in support:

As consumers switch over to electric-powered vehicles to meet the California mandate by 2035, some dealers are charging $30,000-$40,000 or more above the Manufacturer’s Suggested Retail Price (MSRP) for EVs, which are already significantly more expensive than combustion-engine same vehicles. Forcing consumers to pay outrageous prices for literally the exact same vehicle without features being added is pernicious and perhaps the ultimate junk fee. The number one barrier to more widespread adoption of EVs is affordability and auto dealers’ imposing excessive markups is thwarting consumers’ ability to meet the states’ mandate. In January 2022 more than 80% of US car buyers paid above MSRP, compared to 0.3% for the same month in 2020.

The California Consumers Legal Remedies Act (“CLRA”), passed in 1970, was designed to protect Californians from unfair business practices, such as false advertising. As gas prices soar, and zero-emission vehicle demand rises, California can help ensure that ZEVS are affordable by categorizing dealer mark-ups above the MSRP as an unfair business practice under the Consumer Legal Remedies Act. SB 680 will give consumers all remedies available under CA’s existing Consumer Legal Remedies Act and is the first-in-the-nation legislation that will help address the crisis we all face in mitigating climate change by accelerating the replacement of California’s aging fossil-fuel fleet with newer, safer, more fuel-efficient EVs.

SUPPORT

Consumer Federation of California (co-sponsor)

Consumers for Auto Reliability & Safety (co-sponsor)

California Rural Legal Assistance Foundation

Coalition for Clean Air

Consumer Attorneys of California

Consumer Federation of America

Consumer Watchdog

East Bay Community Law Center

National Consumers League

OPPOSITION

California Chamber of Commerce

California New Car Dealers Association

RELATED LEGISLATION

Pending Legislation:

SB 493 (Min, 2023) requires the California Energy Commission (CEC) to assess the energy resources needed to meet state goals to transition medium and heavy-duty vehicles to zero-emission vehicles (ZEVs), and it requires the California Air Resources Board (CARB) to use the CEC’s assessment to create a strategic plan to achieve this transition. SB 493 is in the Senate Environmental Quality Committee.

SB 507 (Gonzalez, 2023) expands the scope of information the California Energy Commission (CEC) must consider when assessing the state’s need for electric vehicle (EV) charging infrastructure. SB 507 is currently in the Senate Transportation Committee.

AB 579 (Ting, 2023) requires that, commencing January 1, 2035, all newly purchased or contracted school buses of a local educational agency (LEA) be zero-emission vehicles. AB 579 is currently in the Assembly Appropriations Committee.

Prior Legislation:

AB 2700 (McCarty, Ch. 354, Stats. 2022) required the CEC to gather and report fleet data needed to support utilities’ plans for grid reliability and enhanced vehicle electrification. The bill also requires utilities to report how distribution investments made, pursuant to the bill, support climate goals as part of specified filings with the CEC and CPUC.

SB 676 (Bradford, Ch. 484, Stats. 2019) required the CPUC to establish EV-grid integration strategies for certain LSEs. The bill also required POUs to consider EV-grid integration strategies in their IRPs and required CCAs to report specified information to the CPUC regarding EV-grid integration activities.

AB 2127 (Ting, Ch. 365, Stats. 2018) required the CEC to conduct a statewide assessment every two years of EV charging infrastructure needed to support the levels of EV adoption required for the state to meet its goals of putting at least five million ZEVs on California roads by 2030, and of reducing GHG emissions to 40 percent below 1990 levels by 2030.

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1. Dino Grandoni & Brady Dennis, Biden calls for half of new cars to be electric or plug-in hybrids by 2030 (August 5, 2021) The Washington Post, https://www.washingtonpost.com/climate-environment/2021/08/05/biden-aims-big-boost-electric-cars-by-2030/?itid=lk_inline_manual_5. All internet citations are current as of April 4, 2023. ↑

2. Jacob Bogage & Aaron Gregg, Car dealers are raising prices. Automakers are pushing back. Consumers are stuck in between (February 12, 2022) The Washington Post, https://www.washingtonpost.com/business/2022/02/12/ford-gm-dealer-markups/. ↑

3. Scott Evans, GM to Dealers: Don’t Gouge Customers on Hummer EV, Z06, Silverado EV, Lyriq (January 20, 2022) Motortrend News, https://www.motortrend.com/news/gm-letter-dealer-markup-msrp/. ↑

4. Jacob Bogage & Aaron Gregg, Car dealers are raising prices. Automakers are pushing back. Consumers are stuck in between (February 12, 2022) The Washington Post, https://www.washingtonpost.com/business/2022/02/12/ford-gm-dealer-markups/. ↑

5. 2023 Ford F-150 Lightning, Ford, https://www.ford.com/trucks/f150/f150-lightning/. ↑