Assembly Standing Committee on Judiciary

Good morning, everyone. Welcome to the Assembly Judiciary Committee. Rules for witness testimony are each side will be allowed two main witnesses each. Witnesses will have approximately two minutes to testify in support of or opposition to the bill. Additional witnesses should state their names, organization, if any, in their position.

As we proceed with witnesses and public comment, I want to make sure everyone understands Committee has rules to ensure we maintain order to run a fair and efficient hearing in order to facilitate the goal of hearing as much from the public within the limits of our time.

The rules for today's hearing includes no talking or loud noises from the audience. Public comment may be provided only at a designated time, must be limited to your name, organization, and support or opposition of a bill. No engaging in conduct that disrupts, disturbs, or otherwise impedes the orderly conduct of this hearing.

And please be aware that violations of these rules may subject you to removal or other enforcement processes. We are awaiting quorum, but we will begin since we have our Vice Chair with us as a Subcommitee, and I see we have Senator Glazer here, and I appreciate his promptness. Item two, SB 393.

Thank you, Chair, and I know that it's been a high workload this last few weeks for you and your staff, so I so appreciate all the work and the ability to consult on all these bills. So thank you very much. I want to--this bill that's before you today, SB 393, helps affordable housing developers facing a CEQA lawsuit brought in bad faith to recoup some of the cost of the litigation.

Under existing law, a defendant, in this case the builder, in a CEQA lawsuit that is, that is against an affordable housing project may motion the court to require the plaintiff, the entity bringing the CEQA lawsuit forward, to post a bond up to $500,000 if the builder satisfies the following: the housing project is affordable, the court agrees, the CEQA lawsuit was brought in bad faith, the builder proves the entity bringing the lawsuit forward will not face undue economic harm.

This last requirement has been nearly impossible for any affordable housing developer to meet because it's difficult to find any admissible information about the entity's finances. This difficulty is in part because those bringing a CEQA action may file anonymously or set up an organization to hide the individual members' identities. In my district, a 130 unit affordable housing project has been significantly delayed by litigation.

After the court agreed the--after the court agreed that the lawsuit was brought in bad faith and the environmental concerns were unsubstantiated, the court granted a bond only after the plaintiff accidentally admitted information about their finances, showing they would not be unduly harmed by posting a bond.

In fact, one report found that this case was the only known one where the court granted the builder a bond due to the difficulty to prove anything about the plaintiff's true identity and finances. This bill that's before you balances the scales by instead allowing the entity bringing the CEQA lawsuit forward to submit evidence to the court that they would be unduly economically burdened if it were required to post a bond.

This bill then directs the court to consider that evidence when making its decision on whether to grant the bond and the final amount. This bill will help make affordable housing developers whole when they are unfairly targeted for illegitimate environmental concerns.

With me to testify in support is Andrea Osgood, Chief of Real Estate Development and Executive Vice President of Eden Housing, and Marina Espinoza, Policy Director at the California Housing Consortium. I also have here at the dais, Andrew Sabey with Cox, Castle and Nicholson, who specializes in land use policy, to answer any technical questions. And with that, I respectfully ask for an aye vote.

My name is Andrea Osgood, and I'm with Eden Housing, in support of SB 393. Eden is one of California's oldest nonprofit housing developers, and having developed more than 11,000 affordable homes across the state. We work closely with elected officials to win approval for our projects and ensure they comply with local zoning.

Nonetheless, we have seen an increase in the number of lawsuits against our projects from anonymous groups whose members are not required to identify themselves. In one recent case in Livermore, Eden is still fighting in court more than three years after receiving unanimous approval from the City Council.

This is a 100 percent union project with a project labor agreement that will create high-wage jobs in addition to 130 homes for low-income families. Yet a group of anonymous, well-funded opponents used the spurious CEQA challenge to delay this project for years in spite of judges dismissing their arguments as, quote, 'almost entirely without merit.'

These delays forced Eden to return 68 million dollar tax credit award and are threatening other funding sources for this development as well. Courts have the authority under existing law to require the opponents to pay the $500,000 bond for damages when they deem anti-housing lawsuits have been brought in bad faith or for the purposes of delay.

Eden was able to obtain this bond, in this case, the first ever awarded since the law was created in 1982, but only after individuals behind this lawsuit made a series of mistakes that expose their wealth. It remains difficult for providers like Eden to use this law since it requires us to prove these anonymous groups have the ability to pay the bond.

SB 393 addresses this issue by shifting the burden of proof to require those filing what the courts consider bad faith lawsuits against affordable housing projects to show why they do not have the ability to pay instead. This would offer a small amount of redress to groups like nonprofit--like Eden, who continue to have to defend ourselves against these expensive legal actions. Thank you.

Thank you.

Good morning, Chair and Members. Marina Espinoza with the California Housing Consortium. CHC is an affordable housing advocacy organization focused on the production and preservation of low-income housing. Expanding affordable housing opportunities for lower income families in high resource areas, like Downtown Livermore, is a critical strategy for affirmatively furthering fair housing.

While experiences like those described by Eden Housing are not expansive, they are not unique, and more importantly, they have a chilling effect on the state's ability to address its housing shortage. Affordable housing developers like Eden Housing cannot afford years of costly legal battles and will continue to shy away from providing the affordable housing we need and communities of opportunity.

Promoting greater housing opportunities in areas that have good schools, access to parks, and other community amenities is proven to have better economic, health, and educational outcomes for people living in those communities. Locating affordable housing in high opportunity areas would result in more racial integration of neighborhoods and offer new economic opportunities to low-income people.

SB 393 makes a modest change that would provide some protection to housing developers facing bad faith lawsuits that challenge affordable housing projects. By shifting the burden to prove the plaintiff's financial hardship from the defendant onto the plaintiff, we hope this will deter frivolous lawsuits whose sole goal is to stop affordable housing from being built. For these reasons, I urge your support on this bill today.

Thank you. Is there anyone else here in support of SB 393?

Good morning. Jaime Huff, on behalf of Civil Justice Association of California, in support. Thank you.

Thank you.

Seamus Garrity from Lighthouse Public Affairs, on behalf of SPUR, Habitat for California, and CivicWell--I mean, and Eden Housing--sorry--in support.

Thank you.

Cassie Gilson with Axiom Advisors, on behalf of the California Building Industry Association, in support.

Thank you.

Scott Govenar, on behalf of the Construction Employers Association, in support.

Thank you. Is there anyone here in opposition to SB 393? We'll bring it back to committee. Any questions or comments? Yes, Madam Vice Chair.

Thank you, Chair, and Senator Glazer, I'm delighted to see this bill. On the local government side of things, just to share your frustrations too, as a member of the City Council for eight years, we would approve a planning commission recommendation and a council recommendation to support a housing project, only to see it stop.

And I actually, when we've had some CEQA discussions, previous bills on the floor, in fact, I cited one development that's in North LA County. I'm not, I'm from Orange County, so I have nothing to do with it, it's just that I read a story in the LA Times that particular day that I spoke on this on the floor, that it had been tied up in CEQA lawsuits, non-meritorious lawsuits for over 20 years in Santa Clarita, I believe it is. I have no connection with it whatsoever.

But it meant 25,000 homes have not been built in those ensuing years. I don't even think they've reached it. So I commend this bill. I commend what you're trying to do and just chip away at some of the ecosystem that encourages these CEQA lawsuits. I do want to comment, though, for the public record that my understanding is that one of my colleagues, Assembly Republican Leader James Gallagher, had almost the identical bill in 2022 and it never made it out of this committee. So a good author here too. So I applaud your efforts and I'm in full support and I'll make a motion. Oh, I can't. Yeah. Okay. So anyway, so thank you.

Assembly Member Reyes.

Senator, as I understand, this is only when we're talking about affordable housing projects.

Yes.

It's not for all projects?

Yes.

And I know in the analysis, it talked about a growing number of environmental, other lawsuits from anonymous local groups opposed to good housing projects. If it's housing, affordable housing, I can absolutely be in support, and most especially because of the witness here before us, my former ledge director. If you have her as a witness, then I've got to be for the--I've got to be for this bill. So when the time is right, I'll do a second.

Thank you. And thank you, Senator, for bringing this forward. I agree with the comments from Assembly Member Reyes. I think that it's narrowly focused to affordable housing. I have great respect. Sounds good for Eden Housing, wonderful projects, certainly in South San Jose and other parts, all around the Bay Area in California.

And I think the shifting of the burden as well as allowing for some more transparency, I agree with the point that there are these shadow groups that neighbors for good quality, whatever they call themselves, and you know, you need to dig a little deeper to see who's really opposing some of these projects.

And I think that creating some kind of even playing field in terms of transparency and the shifting that burden, I hope it helps meets the expectations of what you're trying to do, Senator. And so we don't have a quorum yet. Would you like to close?

Just to say that this bill is helpful; one of the things that you can't unring is that they lost their 68 million dollar tax credit in all this litigation, and that's a very difficult thing. If I was going to be around here in the Legislature a little longer, I think it's one of the reforms I would encourage folks to consider as to how to protect them from that important financing that was jeopardized by this action.

Thank you. And then, so we'll, I guess, move on to the next bill, so we can't put it up for a vote, and, you know--

Thank you. Thank you very much.

In 2022, maybe we didn't have as charming of an author, so, yeah. Or Chair, you know. Item Six: SB 827.

Chair, I want to thank you and your staff for the work that we did on this bill and for the excellent analysis detailing the history in the space. There is quite a history in it. Let me say I'm accepting the Committee amendments.

This bill basically applies existing existing statutory authority that we grant to the Department of Transportation's Inspector General--to the Inspector General at the San Francisco Bay Area rapid transit district. It provides the BART IG with explicit access to records, property, and confidential records unless state law explicitly precludes access.

In addition, while discussing audit results this year, the BART Audit Committee found that the lack of subpoena power is an obstacle to the IG being able to hold individuals responsible for criminal activity against BART.

Recent amendments therefore grant the Inspector General the authority to issue subpoenas in cases that they don't cooperate for the records or the property necessary for investigations and audits.

To address the concerns of labor unions neither neutral or opposed to this bill, the Committee amendments do the following. One, it requires the bard Inspector General to notify an employee she is interviewing of the rights to have union representation present and notify the employee of their collectively bargained rights.

Two, it should an employee decide to waive those rights, the IG must have the employee sign a waiver and maintain that waiver for up to two years. Three, when interacting with any union, the IG shall do so in a manner consistent with all labor laws, Weingarten rights, and collectively bargain rights.

And finally, four, prior to issuing a subpoena to an employee, the IG should seek prior voluntary cooperation in accordance with relevant labor laws and collectively bargain rights. In 2018, Bay Area voters created the Inspector General as part of a ballot measure that also gave regional transportation authorities the power to raise bridge tolls to finance transportation improvements.

This crucial office gives the public and the system riders an independent set of eyes and ears to monitor the agency's spending and operations. However, current law does not grant that BART Inspector General sufficient Independence necessary to do her job. This bill provides that Independence. With that, respectfully ask for your support today. With me to testify is Alex Torres on behalf of the Bay Area Council.

Thank you, Senator, Mr. Chair, and Members. Again, Alex Torres on behalf of the Bay Area Council. We represent over 320 of the largest employers in the ninth county Bay Area.

We're extremely invested in the successive part because the success of BART is absolutely critical to the economic success of our region and moving our workforce, making sure folks have an affordable means of transportation. The council was also the sponsor of the enabling legislation to create BART and establish BART. So we're extremely invested in the success of BART, making sure that BART is able to grow and thrive.

But while we're having these conversations around the fiscal cliff and asking Bay Area taxpayers to double down on that investment in BART, and as BART deals with challenges like fare evasion and other issues, we want to make sure there's sufficient oversight that's absolutely critical to not only the long term success of BART, but the success of the Bay Area.

So I think that to the Senator's point, the challenges with the office of the Inspector General have been well documented. What the measure does, as the Senator articulated, is align those roles and responsibilities with other existing similar offices.

And so again, for that reason, for the focus of making sure we have that sufficient base of oversight before we go back to ask the Bay Area taxpayers for more resources, we think this is a really critical measure. So hear and support today, urge your aye vote. Thank you.

Thank you. Is there anyone else here in support of SB 827?

Good morning. Charles Watson, on behalf of BART. BART has a support if amended position. We greatly appreciate the amendments that the Senators made to the bill and look forward to reviewing the most recent set. Thank you.

Thank you. Is there anyone here in opposition to SB 827?

Mr. Chair, Members, Matt Broad, here on behalf of the Amalgamated Transit Union to remove our opposition with the Committee amendments. Thank you.

Thank you.

Mr. Chair and Members. Terry Brennand, on behalf of SEIU California, we'd like to thank you and your staff for the hard work and the amendments. We appreciate it. We're also removing our opposition at this time.

Thank you.

Good morning, Mr. Chair and Committee Members. Similarly, Ask Me California. We will be removing our opposition with Committee amendments, and we appreciate the great work of your Committee. Thank you.

Thank you. Yeah, I'm gonna thank the Senator. I know this was--there was a lot of back and forth on this. I appreciate you for being flexible and understanding the concerns of some of the unions, of course, that employ are wonderful employees at BART.

And I think this strikes a balance where it's protective of those labor rights while still allowing the Inspector General to have enough authority to really have that oversight that I know that you've been such a champion of for so many years. Are there any other questions or comments from Madam Vice Chair?

I'll just echo your comments, Mr. Chair. I think this is an excellent bill. I know you've worked hard on this, and by evidence of how it moved through the Senate and now the Assembly, I hope the success continues.

So thank you for doing the right thing for transparency, and to make sure we maintain best practices and all we do in public agencies, public and private agencies. Transparency is good. Thank you.

Senator, would you like to close?

Well, I think this is a six year saga, so this is my last year in the Senate. Perhaps this is the right moment to hopefully have success in this oversight. Thanks again to the Chair and the Committee for the work. And with that, respectfully ask for an aye vote at the appropriate time.

Thank you. All right, we'll move on. Item 15, SB 1287.

These bills just get easier and easier. Members, first off, I want to note that the Chair and I have reached an agreement on two of the committee amendments that are in your analysis. One is to add the phrase and content neutral quote unquote after reasonable and before time, and I'll detail that in a moment.

And to also delete the words, quote, their obligation to comply with, unquote, in the acknowledgement of the student code of conduct. And I thank you and your staff for your work on this bill throughout the weekend. I don't know if you get overtime, Alison. Maybe not. Maybe we should talk to the union about that. Okay.

This bill, Ms. McKinnor has really laughed at that. Okay, I got you laughing. That's a good sign. This bill does four things. First, it requires public post secondary education institutions to adopt and enforce policies in students code of conduct that prohibit violence, harassment, intimidation, and discrimination, interfering through force or intimidation with First Amendment rights.

Second, with the committee amendments, it requires them to develop or enforce reasonable and content neutral time, place, and manner restrictions. Third, it requires the development of mandatory training programs on how to engage respectfully and annual reporting to the Legislature on the implementation of these programs.

And lastly, with the committee amends, the bill asks each student to acknowledge the code of conduct. By implementing these provisions, the bill affirms the role that California's public colleges and universities must take to ensure that all students are able to exercise their free speech rights and exchange views respectfully.

In recent months and weeks, we've witnessed an alarming trend of escalating harassment, intimidation, and violence targeted at marginalized groups on our campuses. This obviously threatens the safety and well being of our students, faculty, and staff. Our colleges have a responsibility to promote free speech while preventing discrimination and harassment. But where does free speech cross the line into speech that is not protected? The Supreme Court has affirmed that colleges need not tolerate speech that is inconsistent with their basic educational mission.

This bill aligns with this responsibility by requiring campuses to Institute policies that explicitly prohibit actions that lead to hostile environments on campus, environments which divide and marginalize students, preventing the exchange of ideas that is so valued on campuses. Even when dealing with divisive issues, all student voices have the right to be heard and none should be silenced. I believe this legislation will restore an environment of civil discourse on our campuses. Providing testimony today is Cliff Berg, who I'll let him introduce himself and who he represents.

Thank you. Cliff Berg here on behalf of JPAC, the Jewish Public Affairs Committee. I want to first thank the author for bringing forward this extremely important measure and also want to echo his comments thanking the committee staff for working closely with him on amendments to the bill.

JPAC is pleased to be here in support of SB 1287, which would require institutions of higher education to update and enforce provisions in their student codes to prevent instances of intimidation, harassment, and violence on college campuses. This bill would also require each system of higher education to develop training programs to educate students on civil discourse.

JPAC is a coalition of over 30 leading Jewish community organizations across the state. As the voice of California's Jewish community to the State Capitol, we advocate in Sacramento on behalf of the Jewish community's concerns and broadly shared values.

Our member organizations include Jewish federations, Jewish community relations councils, Jewish family services agencies, and others, collectively serving hundreds of thousands of Californians of all backgrounds and representing the interests of California's 1.2 million Jews.

The protections in SB 1287 are particularly urgent for our community, which has experienced a 2000% increase in antisemitic incidents on college campuses and the five months since the Hamas attack on October 7, 2023 compared to the same period the year prior.

But the growing trend of intolerance for differing viewpoints is a threat to everyone in a diverse and pluralistic society. Free speech is a cornerstone of democracy, and harassment, intimidation, and violence against people with differing viewpoints threaten our shared values.

Institutions of higher education must be accountable for preserving students rights to safely engage in activities protected by the United States and California constitutions. There is a broad consensus that stronger measures must be taken in this regard. As part of his ongoing investigation of unchecked antisemitism at UC Berkeley, the House Committee on Education and Workforce expressed grave concerns regarding the inadequacy of UC Berkeley's response to antisemitism on campus.

There was a widespread feeling among Jewish students as well as their families and within the broader Jewish community that many campus administrators do not understand the severity of the crisis and have been unwilling to take appropriate action to meet this moment. Administrators are simply not dealing with these incidents on their campuses.

As a result, students are being deprived of their right to participate fully and equally in the education process. SB 1287 offers a tangible solution to address this problem by requiring colleges and universities to update their student codes of conduct to explicitly address violence, harassment, and intimidation.

Furthermore, the provisions mandating each system of higher education to develop training programs to educate students on how to constructively engage with each other will begin to address the culture of intolerance and hostility on campuses by promoting civil discourse. The ability to peacefully and respectfully disagree with others is foundational to succeeding in a diverse society. For these reasons, JPAC urges your support of SB 1287.

Thank you. Is there anyone else here to express support for SB 1287?

Mr. Chair and Members, Scott Govenar, private citizen in support.

Margaret Gladstein, private citizen in support.

Jeff Weiner, Jewish Family Children's Services in the Bay Area in support.

All right, thank you. And before we proceed, if we can have quorum established. Thank you.

[Roll Call]

All right, established quorum. Is there anyone here, or we have witnesses in opposition to SB 1287.

Good morning, Chair Kalra and Committee Members. My name is Cynthia Valencia. I am a Legislative Advocate with the ACLU California Action. We appreciate the Committee staff and the author for working on several amendments to address some of the serious concerns that community members and we have raised.

We want to recognize that the Senator has accepted the amendment regarding the softening of language regarding the student code of conduct that we have flagged and many others have flagged in our opposition. So thank you, Senator and committee staff, for taking the concerns of advocates and community members.

However, we do remain in opposition of SB 1287 unless it is amended to address some of the concerns that we have outlined regarding the overbroad language and definitions of hostile environment because we believe that it could still lead to the chilling of speech and it has some punitive measures regarding student protest activity in the name of civility on college campuses. We strongly believe that students must be able to receive a higher education in California without being punished for their rights of freedom of expression and peaceful protest.

We want to be clear that, still, neither the First Amendment nor California law protects the behaviors on campus that crosses the line into targeted harassment or that creates a pervasively hostile environment for vulnerable students. Existing law already authorizes educational institutions to prohibit or punish violence, vandalism, or acts that disrupt free speech rights of students.

Existing law already authorizes institutions to adopt codes of conduct that prohibit unlawful harassment, threats that impair a student's ability to participate fully in the educational process. These existing laws and policies are intended to ensure safe, inclusive educational environments without encroaching on our vital constitutional freedoms.

These existing laws and policies are applicable to every one of the specific incidents that have been identified in the author's and speaker's comments supporting the need for the legislation. I just want to reiterate that real social change comes from working to address the underlying causes of inequality and bigotry, not from censorship of discourse. We ask the committee to vote no on SB 1287.

Thank you.

Hello, Chair and Members. My name is Maya Steinhart, and I am a Jewish Sacramento State student who spent four nights at the Sac State Student Encampment for Palestine. While there, I wore my star of David publicly and helped lead a Shabbat service. I never felt threatened. I was embraced as a Jewish student.

Like many other Jewish students across the nation. I felt more welcomed than I did as an undergrad in the Jewish Student Hillel, a supporter of this bill. As a Jewish American and an educator, I urge you to vote no. Student movements shape history, as they did with civil rights, free speech, Vietnam, and the divestment to end South African apartheid. These movements have a record of being on the right side of history. Sometimes our closely held beliefs are challenged. While it may be uncomfortable, it's not necessarily a bad thing.

Some white students and school personnel may have felt uncomfortable with integration. It did not mean that they were discriminated against or that it caused them harm. Not all Jews support Zionism, a nationalist movement to create and maintain a Jewish ethno-religious state, just like not all Christians are Christian nationalists. Jewishness and our relationship to Israel and Zionism is not monolithic. The idea that all Jews have a single, organized view of Israel and Zionism plays into...

Point of order. Can we stick to the contents of the bill, please?

Yeah, if you want to focus on some of the details of the bill.

This is in response to all of their witnesses and the arguments that their witnesses have made, as well as their argument for why this bill is necessary.

Okay, go ahead and proceed.

Thank you. The idea that all Jews have a single organized view of Israel and Zionism plays into antisemitic tropes. Jewish Voice for Peace. It is an example of an anti-zionist Jewish led organization. Criticism of Zionism and Israel's treatment of the Palestinian people is not antisemitic.

Conflating them makes it harder to identify the very real instances of antisemitism that do occur. I fully condemn acts of antisemitism, but question if this bill is really designed to protect students or rather to silence us. College campuses should be a place where the free exchange of ideas, even uncomfortable ones, should be protected, not stifled and sanctioned.

Thank you.

This bill sets us on a dangerous course, and I urge you to vote no.

Is there anyone else here in opposition to SB 1287?

Thank you, Mr. Chair, Members, and staff. Mitch Steiger with CFT, a Union of Educators and Classified Professionals. Very much appreciate working with the author and staff. We're still evaluating the amends, but we remain opposed unless amended. Thank you.

Thank you.

Thank you, Mr. Chairman and fellow Senators. Orlando Fuentes with the California Democratic Party. I'm a Regional Director, one of 22 volunteers throughout the state state, representing Sacramento County and two others to the east of us. Sacramento County Democratic Party voted to oppose SB 1287, and I've been asked by many of my grassroots constituents to come and speak today in opposition to 1287.

Thank you.

Thank you.

Good morning, committee. My name is David Mandel. I'm an active member with the Sacramento chapter of Jewish Voice for Peace. I'm representing more than 100,000 supporters and members throughout California. We oppose this bill for the reasons that Maya outlined.

Thank you.

Even with the amendments, the chilling effect of this bill is likely to stay.

Good morning. My name is Wendy Greenfield. I am the chapter leader of Jewish Voice for Peace in the South Bay, and we are just very strongly against this and hope that you vote no. Thank you so much.

Thank you.

David Ramirez, UCLA student in strong opposition.

Thank you.

Celene Aridin, President of the UC Student Association that represents the 230,000 plus undergraduates at the UC. We also strongly encourage you all to vote no today. Thank you.

Thank you.

Caroline Nguyen. I'm Policy Director of the UC Student Association, and we are in strong opposition.

Thank you.

My name is Valeria Cantor Méndez. I'm a recent graduate of UC Davis, and I urge you to vote no.

Thank you.

I'm Sherry Drobner. I'm a Jewish American, and I urge you to vote no.

Thank you.

My name is Susan Pelican, and I come from Woodland. I represent Indivisible State Strong. We all encourage you to vote no.

Thank you.

Silvia Solis Shaw on behalf of the California Faculty Association in opposition.

Thank you.

Haiganoush Preisler, UC Berkeley alumni, and I'm opposed to this bill.

Thank you.

Barry Preisler, also a graduate of UC Berkeley, opposed.

Thank you.

I'm Fred Bialy, a UC alumni, and I am opposed to this bill. Thank you.

Thank you.

Hi, good morning. Marshall Nakatani, on behalf of UAW 4811, which represents 48,000 academic workers across the University of California system, in opposition. Thank you.

Thank you. All right, we'll bring it back to committee. Assembly Member Bauer-Kahan.

Thank you, Mr. Chair. So I want to thank the author for bringing this bill, and I want to highlight the importance of it right now and what it does. I want to start by saying my first job in law school was at the ACLU. I was tasked with protecting free speech for those who very few would want to protect. It is what the ACLU has done historically and continues to do, and I think it's a value they have.

But as was evidenced by the testimony from the ACLU that free speech is not without limits. And that is what the courts have said, and that is what the law says. And I think what was unmentioned by those allegedly here protecting constitutional rights today was that we have two constitutional rights that are now butting heads on our campuses.

And for some reason, nobody is here arguing on the opposition side that we should protect equal protection to access to education for every single Californian who has a right to the education that we work so hard in this body to protect, to fund, and to enable every single day. We have the best higher education institutions in the world.

It's something we should all be proud of, and there should be no Californian who doesn't feel safe showing up every single day to receive that education. And in October, I showed up at UC Berkeley, and I sat at a roundtable with students to hear the firsthand from Jewish students what they were experiencing.

And it was the most appalling thing I'd heard in my time in the Legislature. And part of what I think made it so hard for me... And God, I have way too many opportunities to do Holocaust education around here was my own history. We talk a lot about the horrors of the Holocaust as it relates to the gas chambers, to the trains of humans sent off to their death, the burning Jewish bodies. But we don't talk enough about the years that led up to it. My grandparents were kicked out of school.

My grandmother would talk about sitting in her apartment in Vienna and watching as the other kids got to go to school. And she was no longer allowed to access education because she was Jewish. And in those schools, kids were being taught to hate Jews so that they would sit silently by as they were killed en masse.

When I sat and listened to the Jewish students talk about being told in class they were Jewish so they didn't have a right to talk anymore. So one student told me happened. Another who was walking down the street in his kippah, and someone yelled at him slurs I won't repeat into this microphone at UC Berkeley.

I was appalled that that was what was happening on our campuses. And then it only got worse when I had to watch at UCLA students block the main campuses, demanding that other students put on bracelets in order to access their education, and literally thought, well, they could just put a star on them like my family had to wear in order to get their education. And yet, God, the silence is deafening. How few people showed up to support this bill. And I want to thank those citizens who did stand up. And so the bill is incredibly narrow. It has been all long, but it is even more so at this point.

It does exactly what the opposition said, apparently is already law, but they still oppose it, which is to prohibit violent, harassing, intimidating, or discriminatory conduct that creates a hostile environment on campus, prohibit conduct that limits or denies a person's ability to participate and benefit from the free exchange of ideas or the educational mission, something I think is constitutionally required, and establish reasonable time, place, and manner restrictions, which courts have also clearly said our universities have a right to do.

All we're asking for is for the universities to do their job, to protect our students, to protect every student. And I really want to thank the amendment that says it's content neutral because what our community knows so well is that we may be first, but we won't be the last.

And so this protection is for us today, but truly, it is for everyone who will be denied access to education, who will be harassed in the way students are being harassed across the CSU and UC systems right now, and allow for people to learn and grow and disagree.

When I was in college, the issue that people were taking over college hall for, which happened in my University, was the genocide in Darfur, and there was a free exchange of those ideas, and that is right. But nobody was stopped from going to class. Nobody was harassed.

The things protected in this bill remained intact, and that is the failure on our campuses right now. And I want to thank you for protecting our students because I'm married to a UC Berkeley grad, my brother's a UC Berkeley grad. I couldn't be more proud to live in Bear territory. But I also know that I want every one of my constituents to have access to that education.

Assembly Member Reyes.

Thank you, Mr. Chair. As I read through this and read through the analysis, it's clear that it's content neutral. At least that's the way it should be. But I had some questions, and I think they've come up, also, and also in the analysis. For instance, in the analysis, page four, and I quote, the committee's review of CSU codes of conduct suggests that they already conform to the requirements of this bill. All of them mention that reasonable time, place, and manner restrictions apply to student speech and expression on campus.

The second thing addressed in the bill also is addressed at page five of the analysis. And I quote, the colleges must provide training on how students might engage each other in an atmosphere of mutual respect. And then in parentheses... Yet many colleges and universities already provide student orientations that stress the importance of diversity and inclusion, values that presumably include training each other with mutual respect. Those two policies that are included in the bill are already law. The last two, one is to report to the Legislature. The other had to do with the obligation to comply.

And as I understand, that amendment was offered by the committee and accepted by you, Senator. The question then, and I recognize that we are talking about something that has happened on our campuses that allowed for students to not feel safe, and that should never happen.

Our students all should have a right to be able to be on campus. Our students also should all be allowed to be able to voice their opinion, even if it's against the university, against the world, because that's what free speech is about. But the safety of our students also has to have the, has to be valued equally. As I read through the analysis, but my question was still what is the bill aiming to solve for what remains that needs to be solved that we don't already include in our laws.

Through the Chair? Thank you, Assembly Member, for your thoughtful comments. I don't think that there are many feel that whether you feel that these rules and standards are in place on campuses, that they have been effectively carried out and that the safety of students has not been protected, as we've looked at the scene over the last eight months or so in California. So on one hand, if you're saying it's repetitive, good, because then you would see very little objection to this bill that's before you.

And that's, of course, the irony of some of the opposition, is to make that similar claim. But we think it highlights and emphasizes the standards that we as Californians want to see fully complying with the First Amendment and engaging students in a more active way than has happened, in the hopes that we can promote civility at a higher standard than we have seen. And, of course, requires them to engage with the Legislature on how they're doing that work. So those are, I think, modest improvements that come out of this legislation.

And I know that our Chair has worked and the committee has worked with the proponents and with you, Senator, to come up with the amendments in recommending an aye, and I'm going to follow the Chair's recommendation. It still remains a question that if that if we, and I recognize you're saying if it's repetitive, then why are we objecting? Right. But I do want to say how important it is to be able to protect the free speech, but equally important, how important it is to protect the safety of our students. That is extremely important.

Thank you. Thank you.

Assembly Member Haney.

Thank you. And some of the questions that I had were just brought forward by my colleague. I do want to say that, and I also appreciate my other colleague speaking with so much passion and from her own personal experience. And I think all of us have been deeply concerned about what's happening on our campuses.

We have students who do not feel safe to be on campus, do not feel that they can be themselves, have to hide their identity in order to be there. That should never be acceptable. And then we also have students who feel that they cannot exercise their free speech rights and feel that that is being impeded on.

And so I think that much of what is in this bill, to the extent it's stating and restating in a strong way what should be the policies on our campuses, I think that makes sense. And to the extent that it can help to provide a framework for an understanding of the type of behavior and expectations and also free speech rights that we want to make sure we maintain on our campuses, I think that's critical. I do want to say, because, and I want to ask you, the question of the author.

You and I have had a lot of conversations about the role of the Legislature and the University of California in particular. And we had a constitutional amendment that would have allowed for us to extend certain labor protections and labor laws as it related to the University of California.

And part of the reason why I think you had concerns about that was because there was a sense that that was better left to the University of California and the CSU to make those decisions themselves and to sort of have their own governance and autonomy around that.

I think for this, one of my questions would be, why is the Legislature the best authority to be extending these sort of policies and defining these kind of policies? And why isn't this something that the university is best positioned to do themselves? They're certainly, you know, dealing with these issues on a day to day basis.

They're, they're trying to define for their students and their faculty and others what the best way forward is. Why is this something that we should be writing for them and requiring of them? And why isn't something that the governing bodies of these institutions, similar to with some of the labor protections, should be able to define for themselves?

Through the Chair. I think that the bill advises them to do these things, doesn't tell them exactly how to do it. So I think it does provide a level of broad state direction with the autonomy of the institutions to do what they see as best in terms of complying. In regard to the University of California, as you know, we can't mandate that they do these things. It's a suggestion, so it certainly doesn't interfere with their Independence.

In regard to your measure from the previous year, there were a lot of unintended consequences that came from what you were suggesting, including the impact on tuition and cost to the campuses and how it would affect students and their families. So it's a much broader discussion than just the autonomy issue.

But look, I think that, as you know, even in labor standards, we set broad standards for the state and we ask people to comply. In some cases, we force them to comply. In other cases, we advise them to comply. I think this is no different in what's before you today.

Through the Chairs. I appreciate that. And I do, again, want to say I am grateful that you're taking this issue on because it is a critically important one. And I want to thank you and the Chair for the ways that you have addressed some of the questions because, ultimately, our goal here is not to punish or isolate or chill free speech. It's to create an environment of inclusion and safety for all students. And I really appreciate the amendments that really highlighted that.

I do want to just ask, through the Chair, a question of the opposition, because I was looking at, in particular the ACLU letter. It seems that the number one concern they're requiring as a condition of enrollment was addressed by the amendments. And it seems like the remaining issues are more around the specificity of some of the pieces of the bill. And that does seem to me in line with what the author said, that some of this is not going into such specificity because there's some opportunity for the campuses to define some of these things and look at it on a case to case basis as to how they would analyze these.

So I'm not sure I would agree that we wanna define it with such specificity and that there is actually, in terms of the guidance, some role for the university to determine these. So through the Chair, for the opposition, I'm really glad that the amendment was taken and thank the author for that.

And then in terms of the remaining issues, what are the remaining concerns around the language? And if you could speak to maybe this question that I have as to whether why it isn't better to give some ability for universities to define some of these terms themselves as opposed to us with such specificity defining it for them.

For us, fundamentally, as an organization that wants to preserve the protest activities and free speech activities of students, we remain in opposition unless amended because, especially for the hostile environment definition. As we said in our opposition and some other organizations in their opposition, there's still some overly broad language that we believe could be interpreted in a way that could be used in a way to punitively chill and used against students in their speech.

And I want to be clear that it's not just about currently on what's happening on campuses right now. It's for the future. For any instances, if there is some sort of situation with administration on campuses that students want to protest or take action on, it's going to be the institutions that are going to implement policies and to limit on how students can protest on campuses. That they're going to be able to limit or place restrictions on how students can engage in protest activities.

That's what our concern is. It's for the future. It's not just for right now or these situations. That's why we will maintain opposition or have concerns about institutions placing limits on free speech activities or be able to punish or create penalties on students for protest activities.

Thank you. And I would just say I share some of those concerns in terms of, I mean, the reality is that there's already limitations, generally speaking, on First Amendment rights and what have you. But if you look at the language under the hostile environment, it requires that it be subjectively and objectively offensive and that it's so severe or pervasive that it limits or denies person... So I think that there are some kind of built in protections that it's not just someone's walking by and says, I feel offended, but there's got to be a little bit more to it than that in the analysis.

That being said, you know, I also look at, I look at all legislation as to not just what is happening at the moment, but this is what could happen in next year, five years, 10 years from now. And that could be hard to do, especially in the environment that we're in.

If we remove who the sponsor is, who the opposition is. Let's just look at the actual bill itself. For the most part, it's just kind of codifying existing policies and law without a limiting First Amendment rights. And colleges must provide training on how students might engage each other in an atmosphere of mutual respect.

It requires colleges to adopt rules, procedures, in the students go to conduct prohibiting violent harassing, timidity, and discriminating conduct that creates a hostile environment on campus. As indicated in analysis, those campuses already do that. And I think that sometimes we restate what existing policies are from the legislative standpoint to reiterate the importance of it.

Or as we've seen these last few months, there may be a lack of consistency, and it might be helpful to actually get some consistency in terms of how these rules are applied. And I think that's where the final item of the report to the Legislature and if there are any violations of the code will allow us to monitor it to see if it's really, truly being applied in a content neutral way and that certain communities aren't being targeted more by college campuses' policies than others.

We want to make sure this is as even handed as possible. So the bill, actually, I think it doesn't do as much as the opposition may be concerned with, but I do think it reiterates the importance of establishing some kind of policies that create for a safe environment while not limiting First Amendment rights.

Look, you know, I might be aging myself, but I remember when I was an undergrad marching against after the Rodney King beatings, and I've been pepper sprayed protesting the Iraq War. I've been arrested with union brothers and sisters on picket lines. And the ability to conduct civil disobedience is a hallmark of our nation. Quite frankly, that's how our nation started. It was an act of civil disobedience. And so that is why it was important.

And I really appreciate the author on taking the amendment to limit the requirement of students to acknowledge the code of conduct and removing the obligation to comply with. Because I really feel that would have had a chilling effect on students, on the sense of a student's ability to speak out and potentially protest in ways that are, again, without harassing or violent or affecting others, but in ways that have been traditionally a part of kind of our American history, especially on college campuses.

It's a difficult moment to be having these conversations, but I think this bill protects that ability to be able to express yourself, protects the ability for, especially on college campuses, to have that free exchange of ideas and the ability to protest while ensuring that codes of conduct exist that we can then take a look at as a Legislature and see how they're being applied and what have you.

Again, I appreciate all that. I've gotten feedback on this from all sides over the last few weeks, and I really appreciate it, especially from those that are my constituents. And I'm grateful to the author for being open to have these conversations in a manner that I think has got us to a place where we're protecting those constitutional rights, but also having some template in place for safer campus environments. Would you like to close?

Thank you, Chair Kalra. I really appreciate your summary that you just provided with a really broad perspective and understanding and sensitivity. I want to say thank you to my colleague from Orinda for her storytelling, important storytelling about history. I particularly appreciated the Assemblywoman. The discussion about it wasn't just the holocaust, but the years before.

And that's what I think a lot about too. It's a big motivator for me to be involved in the bill that's before you. You know, the first amendment rights are precious for everybody, and there's nothing that ever could occur in this legislation that would ever interfere with that because I know there'd be folks that would take immediate litigation. So we have... Our interests are aligned in that regard in terms of protecting those First Amendment rights.

But the emphasis is on for everybody. For everybody on a college campus that have this privilege to advance their education, hopefully in a safe and healthy environment, which this bill tries to promote. I want to thank the Chair again and the committee staff for the work that we have done, and I sincerely encourage an aye vote today.

Thank you. Madam Secretary, if you take a roll call vote on SB... Oh, we need a motion. Do we have a second? We have a motion and a second. If we take a roll call vote, please, on SB 1287.

Motion is do pass as amended to Appropriations. [Roll Call]

Okay, we'll place that bill on call. Thank you.

Senator Wiener has two bills on for today. First up is SB 966. I have to go to Arts. Yeah, I have to run over to Arts Committee really quick, which is right across the hall. Okay, we have established quorum. We just need to have a Member here, and I have.

Our Committee is waiting on the only Bill you have left, Senator Wiener, I apologize. We may have to take a short recess. The Arts Committee only has my Bill left to hear, and we have no Members here.

Okay. Will I be bumped then, if I do that? No. Okay, I'll be next.

No, no, you won't be bumped. You're here and ready to present. I'm just waiting to see if we can have any other Members here. Give me one moment.

Okay, thank you.

Okay. So why don't we go ahead and proceed? I think we have Members on their way. And in the interest of time, let's get started on SB 966. Is that okay?

That's okay? Yep. Are you sure?

Okay. Yeah. So again, file item eight, SB 966.

Thank you very much, Mister Chair.

Okay.

Apologies, Mister Chair. Thank you, Mister Chair. I'm here today to present Senate Bill 966 to enact long overdue regulation of pharmacy benefit managers who are huge players in the healthcare industry and have little to no oversight and consumer protection in place.

First, I want to start by asking the Committee, we have author amendments that we were asking the Committee to adopt if the Bill moves out of Committee today. PBM's are middlemen, if I may use a gendered term, in the healthcare industry. And they started out as small administrative actors to help health plans negotiate formularies and drug prices.

Today, the PBMs are so massive, particularly the big three, that they are frequently bigger than the health plans. They can own a health plan. They own their own pharmacies frequently, and they enjoy unbelievably powerful leverage within healthcare, which drives up drug pricing and also completely undermines local independent pharmacies and even chain pharmacies.

So this Bill does a few things. First, for the first time, it requires that PBM's get licensed in California under the oversight of the Department of Insurance. Second, it stops the PBM's from destroying independent pharmacies. And it does so. Here we go. Thank you.

And this is file. Thank you, Mister Chair. This is just for the Members. Note is SB 966, file eight.

Thank you, Mister Chair. The Bill, in addition to requiring licensure, puts a stop to the PBM's efforts to undermine and destroy independent pharmacies. And it does so by prohibiting the practice of patient steering, where PBM's effectively manipulate or force patients to only use the PBM's pharmacy instead of their local neighborhood pharmacy.

And they have various ways that they accomplish that. It also prohibits the practice of spread pricing, where the PBM charges a higher price to the health plan for drugs and then pays the pharmacy a lower price, which harms the pharmacy and of course, creates a spread that increases costs within the healthcare system.

And then the Bill addresses the incentives that PBM's currently have to favor higher priced drugs. Colleagues you may have seen in both the New York Times and Wall Street Journal were recent scathing exposes about how PBM's are driving up the cost of drugs.

And that is because a key form of compensation they have are drug rebates, where they will price the drug let's say at $1,000 and then give a quote, unquote, rebate to the health plan of, let's say 500.

So instead of just charging 500, they price it at 1000 and they rebate that 500 and then take a cut of that rebate percentage. And so the higher the cost of the drug, the higher the rebate and the higher the cut that the PBM receives.

And that's why, for example, on many formularies, there is no generic insulin, there is only name brand insulin. And I could go on and on so that rebates will not be prohibited, but they will have to pass the entire rebate through to the health plan, which will help readjust incentives.

So, colleagues, this is an overdue piece of legislation. I do want to stress this Bill, to the surprise of many, received a unanimous bipartisan support, a vote in the Senate. Literally every Democrat, every Republican, everyone voted for. It has bipartisan support, regulation of PBM's in Congress.

This is an issue whose time has come, and I respectfully ask for an aye vote. With me today to testify is Clint Hopkins, a pharmacist and owner of Pucci's Pharmacy here in Sacramento, and Rachel Blucher, the legal counsel for the California Pharmacist Association, which is one of our sponsors. Thank you.

Thank you. Good morning, Mister Chair and Members. I am Doctor Clint Hopkins, pharmacist, owner of Pucci's pharmacy, independently owned in Sacramento, right here. Since 1930, as Senator Wiener has mentioned, allowing PBM's to continue unregulated in California is a danger to consumers. PBM's continue. I'm sorry.

In our previous hearings, the opposition has pointed out that we don't have data. In June 2022, the FTC announced an inquiry to the largest six PM's, requiring them to provide data. They have ignored the FTC, likely in hopes that an Administration change may find them less scrutiny.

A recent study from three access advisors on the drug buprenorphine naloxone, 82 milligrams sublingual tablets, which cost $95.60, showed that health plans were charging $112, I'm sorry, $100.12 above the cost. And pharmacies were reimbursed $18.77 below the cost, a spread of $118.89 for a drug which only cost $95.60.

The opposition also argued that spread pricing protects employers from high cost drugs in the future. None of us know the cost of drugs that aren't on the market yet. So are they effectively admitting to us that they overcharge to pad their coffers as a purchaser of Healthcare, where can I opt out of such a scheme?

And the answer is, I cannot. The opposition has also stated that generic substitution is required in California. Well, that's true, but only when the PBM allows it.

An example of PBM's overriding generic substitution with a brand only requirement is in our own state Medicaid program, where we have implemented Naidac plus or national average drug acquisition cost plus pricing. But the PBM still has enough influence with rebates that they obtained from the brand manufacturer to require the brand name to be dispensed.

Take Truvada, for example, which before a generic was available, cost $1,842 per bottle. The generic only cost 14. It begs the question, how much of a rebate could the PBM be getting? For too long, PBM's have operated in the shadows, extracting exorbitant amounts of money from the system that they've designed for the drugs we dispense.

PPBM's continue to find ways to scam pharmacies and consumers using practices such as effective rates and spread pricing. Without this Bill, PBM's will continue to run afoul, causing pharmacies to close, local jobs to be lost, and patients to lose access to health care in their communities. I respectfully request your aye vote. Thank you.

Thank you. Hi, good morning. Rachel Blucher, on behalf of the California Pharmacists Association. In the interest of time, I'm here for technical questions. Thank you.

Heard other support? Do we. Good morning. Do we have others in support, please.

Abby Alvarez, on behalf of the San Francisco AIDS foundation and APLA Health.

Good morning. Fred Noteworth, representing pharma in support. Thank you.

Good morning. Lizzie Cuzona here on behalf of the California State Association of Psychiatrists, in support. Thank you.

Good morning. Vivian Liang with Northeast Medical Services in support. Thank you.

Madam Chair Members Randy Martin on behalf of the AIDS Healthcare Foundation, which operates 14 community based pharmacies across the state, in strong support of this Bill. Thank you.

Jennifer Snyder with Capital Advocacy, on behalf of the National Association of Chain Drug Stores and also the California Life Sciences, in support.

Good morning. Madam Chair. Alex Kahn, on behalf of the California Chronic Care Coalition, a proud co-sponsor as well as the ALS Association in support.

Good morning. Moira Topp, on behalf of Biocom California, in support.

Good morning. Tim Madden, representing the California Rheumatology Alliance, in support.

Brandon Marchy, with the California Medical Association, in support.

Michelle Rivas, California Pharmacists Association, in support.

Megan Subers is on behalf of the Los Angeles LGBT Center, a co sponsor in support. Thank you.

Okay, do we have any major witness in opposition? Please come forward.

Thanks. Chair Dixon and Members of the Committee, my name is Bill Head with PCMA, the PBM Trade Association. Here respectfully in opposition to SB 966. We do not oppose being licensed or having transparency requirements and reporting data to the state that can be analyzed and reported back to the Legislature.

However, this legislation goes far beyond oversight and imposes restrictions on the very tools that plans contract PBM's to provide a PBM's are the only entity in the drug supply chain that exert any downward pressure on the drug price.

I will focus my comments today, though, on one provision I think relevant to this Committee's jurisdiction, and that is section 17080 which in essence imposes a fiduciary obligation on a PBM to the patient.

A similar provision, it actually calls it fiduciary provision, was in the Senate version originally and was taken out, but now it's couched in different terms, but essentially it's the same provision. There is a distinction between a PBM and a health plan, even those that are vertically integrated. PBM's contract with numerous entities, numerous health plans.

Each one of those health plans has a legal fiduciary requirement to the enrollee. Under federal law, this would establish a state fiduciary obligation on the PBM to the enrollee, creating conflict, confusion, and, we think, frivolous litigation that will lead to higher costs ultimately for payers and for patients.

Some states do impose a good faith and fair dealing requirement on PBM's dealing with patients, but not a single state imposes a requirement like this. Two states previously had PBM fiduciary requirements and both repealed them.

We believe this provision, along with the other provisions that, unrelated to the reporting and licensing, are going to add to the cost of care for the payer and ultimately for the patient. For these reasons, we ask that you've not advanced SB 966.

Thank you, Mister Chair Members. John Winger. On behalf of America's health insurance plans, we're the National Trade Association for Health Plans. Health plans, large businesses, labor groups all use PBM's voluntarily to manage their drug benefit and ultimately reduce the cost of drugs.

I would say there's a lot of provisions in this Bill that take away our options for when we're contracting with a PBM. And so that's where our opposition primarily lies, particularly with, we've talked about transparency, we've talked about licensing. I think that's a conversation we're willing to have.

But just outright banning contract provisions prior to receiving that data or doing a thorough analysis we think is a little bit premature. We do have issues with the banning of spread pricing in particular. That is an option for payers to create more stability in the drug spend and create more stability in the premium.

I think I would disagree with the mischaracterization of my previous testimony. When there is a drug that comes mid year that's at a skyrocketing high costs, that's not because of the plan. That's because of the manufacturer that set that price. And so spread pricing does protect some of our payers against those, those grossly inflated prices mid year.

There's been comments made that, that PBM's are driving up the cost of drugs. I would say there was a US House oversight Committee that did a multi year investigation with subpoena power that was conducted and they found all these claims to not be true.

And I would just quote this data that was never before or been shared with the public undermines industry claims that price increases are primarily due to increasing rebates and discounts paid to PBM's. In addition, documents show that PBM's secured contractual provisions that disincentivize drug companies from raising list prices.

Without those provisions secured by PBM's, drug companies likely would have raised list prices even more. And so we just fundamentally disagree with the characterization of what PBM's do in the drug chain, and we are opposed. Thank you.

Thank you. Is there anyone else here in opposition to SB 966?

Good morning, Chair Members, Martin Vindiola, on behalf of the California State Association of Electrical Workers and the Western States Council of Sheet Metal Workers, in opposition. Thank you.

Thank you.

Good afternoon, Mister Chair or. Good morning, Mister Chair Members Jet Hampton with California Association of Health Plans here in opposition.

Thank you.

Good morning, Chair Members. Naomi Padron, on behalf of the Association of California Life and Health Insurance companies, in respectful opposition.

Thank you.

Anthony Butler Torres with the California Hispanic Chamber of Commerce in opposition.

Thank you. All right, we'll bring it back to Committee for any questions, comments. I believe we do have a motion, but not a second yet.

I'll ask a question. Thank you, Senator, for introducing this Bill. I think it's an important step forward, although I do have some questions on some of the aspects. Just explain, if you would, your positioning the Department, the insurance Commissioner, to oversee this new regulation.

Sure. So when we first introduced the Bill that we designated the Board of Pharmacy as the regulatory body, we got a lot of feedback on that decision, and we ultimately made a change there because Members did not want to see that, and so we did at that point, shift it over to the Department of Insurance.

I will say this as diplomatically as I can. The Department of Managed Healthcare has a lot on its plate. I want to make sure that this, if this Bill is passed inside into law, I want to make sure it gets fully implemented and enforced.

There have been some challenges with enforcement at DMHC, which I hope are going to improve. But at the moment there are some challenges.

Okay, another question, the civil action just, I don't think this is a papa related Bill, and it's maybe not even a private right of action, but there are some remedies that individuals can seek. If you could explain that there's no.

Private right of action in the Bill. The enforcement is by the Attorney General. So I don't know if you want to add anything to that. Miss Blutcher.

Yeah, thank you very much for the question. There is no private right of action, as Senator Wiener said. And I think that there initially was, and that was taken out of the Bill in response to concerns. And so we very much were responsive to that and took that out as was, has been discussed in the analysis.

And I think the opposition brought up.

There is some clarification around the duty of care to ensure that ultimately the protection of the consumer is intact, but it does not create a private right of action and really only applies in situations when there might be a conflict between a duty of care that the PBM owes to the plan and to the consumer.

And so that is a limited set of circumstances. We're not intending to allow consumers to enforce that.

Okay, then one final question to the opposition.

I've met in my own community with a couple of independent pharmacies, and they've shown me the data work that they're tracking, and the cost of the drugs that the PBM requires is significantly higher than the drugs that they would get elsewhere, or they know that the cost is elsewhere for a lower priced drug.

I've heard this now from a number of independent pharmacies. So now I'm concerned, and to kind of direct the pharmaceutical purchases to the major retailers, I just am concerned about the smaller independent pharmacies. How do you respond to that?

And that's a valid question, and we'd love to have that discussion about the impact on pharmacies, and we hope the data is going to show that. But we're putting policy ahead of the data analysis. Right. Let's find out the answer to those questions and then determine policy.

But this bow goes beyond the data collection and analysis and presupposes a conclusion, and it puts in all these other additional restrictions. We're not opposed to, to being transparent and giving the data to find out the answer to that. And how wide is it common? Does it happen? In what instances does it happen?

So we're not opposed to that for those reasons. But this Bill goes, already determines the outcome of that analysis and has decided that we're going to make all these other public policy decisions without doing the analysis.

Well, I think data is important. I just concerned with the lack of competition in the marketplace for pharmaceutical drugs, particularly for the small little guy or gal competing against the large national brands. I'm just concerned about that. So anyway, thank you very much. Thank you Chair.

Assembly Member Patterson.

Great. Thank you. I wanted to first ask the opposition what, you know, that I saw this Bill last week. It all kind of runs together.

So, but, you know, the Committee amendments on the AG bringing a claim, and I just wanted to see, you know, what your thoughts were, if that was part of the conversation or if you expected that.

No, and we would like to work with the sponsors on changing that. We can appreciate this need for accountability, and we would, you know, we'd be amenable to the notion of, as other states have done, is PBM's having a good faith in fair dealing requirement when it comes to enrollees?

But you're putting, you're putting them at odds with the plan, who does have a fiduciary obligation to the enrollee, and it's going to create an inherent conflict because you're saying they both have an ultimate duty to the enrollee and that supersedes any contract obligations. By definition, the PBM is contracting with the fiduciary.

So anything the PBM does outside of that, the patient has recourse through their health plan fiduciary.

Yeah, and there's already good faith dealing through AB 315 as well. I think we're still reviewing the amendments. It's a lot, it's been kind of a moving target. It was mentioned that this flew out of the Senate. That Bill was a lot different than it has been here.

A lot's been put in, in the second house that we've had issues with.

And this new one, I think the components of it, when you're looking at putting that duty on top of the broad discretion that the AG is going to have to bring actions, it might not be a specific private right of action, but it feels private right of action light, you know, because it's pretty broad discretion and could be used pretty aggressively.

So we do have some concerns with that.

I'm sorry. I just need to be really clear here. There's no private right of action in the Bill. The Attorney General enforces the law just like the Attorney General enforces many laws.

And so we often, in this building, because I've had bills where we start with a private right of action, and in the end, we are sort of forced into an Attorney General enforcement. And that's what it is here. It's an Attorney General enforcement. It does not feel like a private right of action.

It's not a private right of action. And in terms of the fiduciary duty, ultimately this system should always be and only be about delivering care to patients.

And so that's why they're, you know, whether you call it, whether it's a duty of fair dealing or fiduciary duty, yes, the PBM should have a duty to the patient, and that's why that is in there. It does not create a private right of action.

Thank you to Senator and the opposition on the, you know, you mentioned that there have been a lot of changes, I think, with, you know, I've, the one thing that I sort of take a little issue with is that we have, I, now, I did have a full set of hair when I joined the Legislature 18 months ago.

But since that time, we've been discussing PBM's in several legislative hearings. And I won't say that I understand the issues at all. I've met with pharmacists on all sides and companies, and they've been kind of dabbling around the edges. And so we knew that there was some smoke being created around concerns with PBM's.

And we say, hey, we want to have a conversation on that. Well, I kind of feel like we've had those conversations, conversations over the last 18 months.

And so, you know, not to say we always go with the direction, but, I mean, I'll just give, you know, I was talking with one of the pharmacists in my district, also an independent pharmacist, and he was kind of walking me through how the audit goes for him, a random audit.

And, you know, there's like little practices like that, and who knows what PBM that was or who it was. But I think that are bringing sort of a sense of frustration.

And I think despite flaws that I think I see in the Bill, you know, for example, I've mentioned last time, I do not love whatsoever Department of Insurance being in charge of this. And much as much faith I have in the Insurance Commissioner.

You know, my district really demands that he focuses on, you know, bringing the insurance market, you know, for property back on, you know, get that figured out, sorted out ASAP, maybe like a couple years ago.

So I think there are some things that I don't love about the Bill, but I think, you know, to me, it's, how would we dabble around it some more? You know, what would. I mean, data, you know, I mean, what would be something you guys would actually support and not oppose?

Because I haven't seen you, you know, maybe you have sponsoring legislation.

No, we would love the opportunity to work on legislation that would have licensing, that would be accountable for that licensing, that would have data and have analytics and have reporting done to you. Because I think what you said is very, we find very common is that this is a complex, the drug supply chain is complex. Right.

So you're put in the position of really just picking a side. Right. Rather than making, you know, I think, policy choices based on data and better understanding of the drug supply chain.

One thing that's sort of been, I think, remiss, although the author has been very good about bringing this up, is ultimately really, it starts with the manufacturer and the drug prices. Right, and then we're sort of having to play catch up based, you know, on that. And how do we sort of, you know, do this?

I think the frustrating thing for us, too, is where is the consumer in this? What is the consumer impact on this? We want to talk about the grow pharmacies, independent pharmacies, but where's, what's the consumer impact? Because from our perspective, at the end of the day, this is going to negatively impact patients. Yeah.

And I would just say, I don't know what the conversation has been in the last 18 months. We haven't been at the table on any of that. We've had a couple conversations with the sponsors and the author, which has been appreciated. I haven't really seen any info hearings.

There was maybe one in a Select Committee hearing that we got about two minutes of testimony on. So there really hasn't been a ton of discussion. But I would say we thought we were getting to a better place in the Senate, and then we had a ton of amendments dropped on us in the second house.

We've offered amendments multiple times through this process. All of it's been rejected. So we've tried to be at the table, but it's just, there seems to be a fundamental disagreement on that, I guess.

And I just also want to say, this is not, I want to be very clear. This is not like there's never been work on PBM transparency or regulation, and this Bill just materialized out of nowhere. Not only have a whole bunch of other states, they're way ahead of us. Red states, blue states, very bipartisan.

But Assembly Member Wood did a Bill a few years back, I can't remember the Bill number, AB 315, that was also opposed, and that was about greater transparency. So there's a lot of data out there. There's been a lot of work.

There's been a lot of academic and policy related data work in Congress, at state level, at universities, in the press, both Wall Street Journal and New York Times. There's been a lot here. And so this is not like writing on a blank slate.

Can I ask you a question, Senator? You know, obviously, you've gone through how many is this? The fourth one. Fourth one. And there have been, you know, changes along the way.

And I know just with piece of legislation I have is, you know, that it always makes this used to not happen back in the day, but it's happened, you know, it happens now, basically, where you continue to work on it even after it passes policy, policy committees and you talk with the chairs of the committees and things like that.

Is this like the final form or you think conversations will continue to occur?

Yeah, and I also, just before I answer that, I want to know, in terms of changes that have happened in the Assembly, the fundamental structure of the Bill is the same. The obligations, the things that they object to at heart in terms of spread, pricing, rebates, etcetera. That's not meaningfully different in terms of the Bill.

I think the Bill is in fantastic shape. Of course, there are times when the Administration comes in over the summer and says, this is what we need to see. And I can never predict whether the Administration will do that on any given Bill and what they'll say. So obviously, that's always out there.

But we view this Bill as being well baked. And you've now seen it twice, you know, made a lot of changes to it since the beginning, including removing the private right of action and so forth. So we think the bill's in good shape, and I really appreciated your support in Health Committee.

Thank you. Was there a private right in the Senate initially?

There was, and we removed it in the Senate. Okay. Yeah.

Thank you very much.

Thank you, and, Senator, thank you for bringing this forward. I know we've both done a lot of work in the healthcare space, especially in terms of costs.

And I think there are different choke points, and I think there's no doubt that this is an area that needs some kind of oversight in terms of the cost as the PBM.

We've seen different, as indicated by your work, as well as the analysis that there are points at which, when it goes to PBM's, that I think needed further analysis and oversight in terms of ensuring that we're not adding costs, the consumer and cost of the healthcare system overall. And so I appreciate your work on this.

It's complicated, no doubt about it, but I also agree. I think the Bill is in a good position and a good place right now, and you'll all await what the Administration has to say about that. Would you like to close?

I think we've said it all for an aye vote.

All right, Madam Secretary, take a roll call vote on SB 966.

Roll Call

All right, we'll place that Bill on call. That was the fastest roll call I ever heard. That's impressive.

And then Item Ten: SB 1047.

Thank you, sir.

Thank you, Senator.

Thank you.

Okay. Yeah. Like right here. Right here and here. Or you can go here. What is it?

Okay. Thank you, Mr. Chair and thank you to you and your committee for working with us on SB 1047, a bill to try to improve safety outcomes around our incredibly exciting innovation in AI.

First of all, I want to say that I'll be accepting the amendments outlined in the analysis that were crafted in consultation with the committee regarding whistleblower protections, restructuring the enforcement section, and then some technical and clarifying amendments that flowed out of the Privacy Committee.

And as I stated in privacy and I will state here again today, that I will continue to work to refine this bill in consultation with the committee, but also in consultation with stakeholders in the community and in the AI space, including the open source space. So I introduced this bill in February, but the work started much earlier.

My team and I have had hundreds of conversations with folks in the AI space and academia, policy, et cetera, starting in early 2023. We, in fact, last fall, September, took the unprecedented step of introducing an intent bill with a detailed outline of what ultimately became SB 1047.

Our goal has always been to be very transparent about this and to welcome constructive feedback, and we have made significant changes to the bill even before it came to Assembly committees based on feedback from people in the AI space, including in the open source space. I do want to say, and I did a letter that I know was submitted around.

I never have any issue with anyone opposing any bill that I author. That's democracy, and it's welcome and important, and I heartily welcome constructive feedback, even from critics or opponents of bills. I do think it's important that we be accurate when we talk about the bill.

Unfortunately, there have been some dialogue about this bill that has spread some unwarranted fear and concern within, especially the startup community. This bill applies to large labs, where they're spending over 100 million dollars to train incredibly large and powerful models that don't even exist today, but will soon.

This bill is pro-innovation in many ways, and I support innovation in the AI space. This bill is not going to send any AI developers to prison. There have been statements that if you're, if you develop a model and release it, and it does something that you didn't anticipate or something like that, or harm someone, you're going to go to prison. That is false.

The bill has a standard perjury provision that just like if you lie, intentionally lie and misrepresented the government on a driver's license application or a tax return or a CalFresh application, that is perjury. Not if it was a mistake, but if you lie, and that's the case here.

And so this idea that this is gonna send developers to prison is a scare tactic and I would ask folks to stop making that claim. The liability that's created in this bill is incredibly focused and narrow. Only the Attorney General can file a lawsuit, and only if someone does not perform a safety evaluation or violates provision of the bill, and I think it's important for people to understand that AI developers can get sued today.

If you release a model today, not even a big one, even a small one, and it causes harm to someone, someone can sue you for that under background tort law, and that's true in California and probably every other state, and that is the law today, and not just the Attorney General, but any private party who's harmed, and so what we're doing, this bill, this bill in terms of liability, is so profoundly more narrow than existing tort law; only the Attorney General, only in very limited circumstances.

I also just want to stress that the bill, we worked very hard to be as clear as we can be about the bill requires, and fundamentally what the bill requires is that if you are going to train and release one of these massively large models, which models that could cause incredible good to happen in the world, cure disease, you know, find cures for diseases, find solutions for climate change, models that absolutely can make the world a better place for everyone.

And that's why this is so important and so exciting. But just to say that if you're going to be training and releasing these models that are so incredibly powerful, do an evaluation of large risks, and if you identify a significant, huge risk of huge harm, take basic steps to try to reduce that risk, not eliminate it.

Life is not about eliminating risk. It's about reducing risk. There has been a lot of talk about how, 'oh, this is impossible,' or 'we can't do this,' or 'this testing doesn't exist.' I want to be really clear. All of the large labs over and over again at the White House, in South Korea a month or so ago, in statements that they made, all of the large labs have committed to doing these safety evaluations. They've all committed to it over and over again.

They have entire policies that they've released about what they're going to do to do responsible scaling of their AI models. And that's all we're asking folks to do. We continue to have an open door. If someone says, 'hey, the way you, the way you, the language you've used around the testing is wrong; we think it should be phrased differently,' I'm all ears.

But this is a reasonable bill. It requires these basic, very light touch safety measures. It requires you, if a model is still in your possession, to be able to shut it down, not after you release it. It's in your possession. It requires cloud services to actually know who is buying up a whole bunch of space to do this kind of development so they know who their customer is.

It requires pricing transparency, and it creates CalCompute to try to expand access to compute so that people who do not have a lot of resources can innovate. This is a good bill whose time has come, and I respectfully ask for your aye vote.

And the one last thing I want to say, there's been some, also some dramatic statements about how this is going to somehow undermine innovation or push companies out of California. I think I and many people completely dispute that. We hear that in this building a lot. We heard it when the data privacy law was pending that it was going to push everyone in California out. It didn't. California led the way. We should lead the way again. I ask for your aye vote.

With me today to testify is Dan Hendrycks, the Director of the Center for AI Safety, one of our sponsors, and Sunny Gandhi, the Vice President of Political Affairs of Encode Justice, also one of our sponsors. We also have, for technical questions around safety testing, Chris Painter, who's the Policy Director of Model Evaluation and Threat Research, METR. Ask for an aye vote.

Thank you.

Chair and Members, my name is Dan Hendrycks. I'm an AI researcher and the Director of the Center for AI Safety, a nonprofit research institute aimed at ensuring AI systems are beneficial and aligned with human interests. Our sister organization, the Center for AI Safety Action Fund, is a co-sponsor of Senator Wiener's SB 1047.

SB 1047 is a crucial and necessary step to ensure the safe development of increasingly advanced AI systems. As these systems become rapidly more general and more powerful, it is imperative that we put in place safeguards to mitigate their risks.

My research contributions include the GELU activation function, which is used in ChatGPT and other state of the art AI models, and I've made some of the most used benchmarks for evaluating the capabilities of frontier AI systems. I also research ways to measure the safety of these models.

An example is the Weapons of Mass Destruction Proxy evaluation that I created with Scale AI. However, purely technical research solutions are not sufficient. We need a multi-pronged approach that includes proactive government policies to complement and strengthen technical AI safety measures.

By setting clear requirements around safety testing, security, and transparency for the most advanced AI systems, SB 1047 will create powerful incentives for companies to prioritize safety. California has an opportunity to lead the world by example in responsible technology governance. By passing SB 1047, we can balance reaping the immense benefits of AI while mitigating its most severe risks. That's why I urge you to support this important legislation. Thank you.

Thank you.

Good morning, Chair Kalra and Members of the Committee. My name is Sunny Gandhi, and I'm the Vice President of Political Affairs at Encode Justice, one of three co-sponsors of SB 1047. We are the leading global youth movement for safe, equitable AI with over 1,000 members across every inhabited continent.

Encode Justice was created to give young people a voice in shaping how AI systems will affect our future. Since then, we have advised stakeholders ranging from the White House to the European Union, and with Congress now failing to act, we look to California to lead the way. That's why we're proud to sponsor SB 1047.

It requires the developers of frontier AI systems to test their models for catastrophic hazards, implement common sense safety practices, and report their findings to the government. This legislation will help ensure that AI development in California is safe, secure, and equitable. Despite the clear need for these safeguards, advocating for this bill has come with significant challenges.

Both me personally and Encode Justice as an organization have had our professional credibility undermined, our people threatened, and the legitimacy of our voice questioned. Let me be clear. We are here because our future is at stake. SB 1047 asks for extremely reasonable safeguards that only target the largest players.

At a summit in Seoul just one month ago, almost every major AI lab voluntarily committed to similar measures. We are simply codifying what the industry itself acknowledges as best practices in a way that clarifies and reinforces existing law. For 20 years, we have seen social media impact society with a cascade of negative consequences.

Why would we let tech companies do the same now and set the agenda on AI? A decade ago, nobody bothered to think about asking Facebook, 'have you even attempted to work out the effects of your algorithms on society? Have you tried to mitigate those harms?' Maybe if they had, the world would be a better place. I urge you to think about that as you vote. Thank you for your time.

Thank you. Is there anyone else here in support of SB 1047?

Kim Stone, Stone Advocacy, on behalf of Consumer Watchdog, in support.

Thank you.

Ari Kagan, on behalf of Momentum, a startup that I founded, and on behalf of Economic Security California, one of the sponsors of the bill. I urge your support.

Thank you.

Thank you. Teri Olle with Economic Security California Action, proud co-sponsor of the bill. Thank you.

Thank you.

Tyler Tratten, on behalf of Center for AI Safety Action Fund, co-sponsor, in support.

Thank you.

Mr. Chair and Members, Terry Branham, on behalf of SEIU California, in support.

Thank you.

Mariko Yoshihara, on behalf of Tech Equity, in support.

Thank you. Is there anyone here in opposition to SB 1047?

Good morning, Chair and Members. Laura Bennett, on behalf of California Chamber of Commerce, in strong opposition to SB 1047. First and foremost, our member companies take the safe and secure innovation of AI seriously. However, we unfortunately continue to disagree with the route by which SB 1047 attempts to get there. We believe that the bill goes far beyond safeguards.

It makes certain developers guarantee that they can prevent certain harms subject to significant criminal and civil liability. While we are continuing to analyze the impact of the committee amendments, specifically as they relate to liability, based on our initial assessment, we believe our issues will persist.

SB 1047's almost exclusive focus on developer liability places an untenable level of risk on developers that are just one part of the AI value chain, as opposed to holding bad actors accountable for the harm they cause. Requiring frontier model developers to implement full shutdown capabilities and to certify, under penalty of perjury, that a model will not lead to certain outcomes, regardless of the interfering actions of a third party is not only unreasonable, but unrealistic. Consider the equivalent of SB 1047 in terms of road safety.

It's akin to requiring designers or developers of engines of a certain horsepower to certify that no one can use or misuse the engine to build a car or other product that is unreasonably dangerous and then holding them account--automatically liable for any resulting harm of the end product, even if their component was not defective and they had no role in the development of someone else's product.

Neither an engine manufacturer nor an AI model developer can make such a certification when there are so many multiple intermediary factors. Requiring them to do so would upend traditional product liability law and slow, if not stop, cutting edge AI development and innovation, including both open source development and the development of closed source models.

Stated another way, this bill will not lend to safer technology. Regardless of intent, the impact extends far beyond a handful of large developers and trickles downstream, disrupting the entire AI ecosystem from startups and small businesses using AI to AI startups that lose the possibility of building on the latest, more capable AI models to researchers. For these and other reasons, we oppose SB 1047.

Thank you.

So, good morning, Mr. Chairman and Members. My name is Ion Stoica, and I've been a professor at UC Berkeley since 2000. I am currently doing research in AI and I am leading the Sky Computing Lab at Berkeley. Over the past 15 years at Berkeley, we have created some of the most successful open source projects for AI and big data.

We have created the de facto standard for big data processing, one of the systems which has been used by OpenAI to train their ChatGPT models, the most popular open source systems to serve language models, and chatbot arena arguably is the most trusted system to evaluate the capabilities of large language models, which has been recently used by companies like Google and OpenAI to evaluate their own models.

I am also the co-founder of four companies, Conviva Databricks, Anyscale, and Opaque. Of those, the last three are built on the open source software we developed at Berkeley and are commercializing AI in one form of another. Opaque is a security company which aims to protect user privacy and data confidentiality.

I reviewed this bill in its current form and I am all for reasonable checks and balances for AI development and deployment, but this is not the way to go. While this bill is called safe and secure innovation from frontier artificial intelligence models, in its current form, it will do the opposite.

It will hurt the innovation in California, and it will result in a more dangerous, rather than a safer world. Let me explain. First, if this bill passes, when it comes to open source models, I predict that within one year we will all use open source models developed overseas, likely in China. Why?

Because this law will discourage our building open source models in California, and likely us, and Chinese open source models are already very competitive. Indeed, three out of top six open source models today are from China, according to our chatbot arena evaluation. Second, if this bill passes, then California will lose its competitive edge when it comes to AI.

Why? Because as a researcher in such a fast growing field, you do not want to become subject to arbitrary limitations. You go elsewhere where you can do your best research. More and more PhD students of Chinese origins will go back to China, while others might consider going to Saudi Arabia or UAE, where they can enjoy huge funding for their research. And this is already happening.

Thank you.

One more. One more.

Thank you. I've already allowed you, actually, but I appreciate it. Thank you. Is there anyone else here in opposition to SB 1047?

Good morning, Chair and Members. Naomi Pajarna on behalf of the Computer and Communications Industry Association, respectfully opposed.

Good morning. Jamie Huff on behalf of the Civil Justice Association of California, respectfully opposed. Thank you.

Good morning, Mr. Chair. Chris Micheli on behalf of the Los Angeles Area Chamber of Commerce in respectful opposition. Thank you.

Thank you.

Lizzie Cootsona, here on behalf of TechNet in respectful opposition. Thank you.

Thank you.

Good morning. Chris Lengerich from Context Fund in the open source AI community in respectful opposition.

Thank you.

Good morning, Mr. Chair. Stephanie Morwell here on behalf of the Consumer Technology Association and the California Fuels and Convenience Alliance in opposition.

Thank you.

Jennifer Snyder on behalf of the California Life Sciences. We have an opposed unless amended position. Thank you.

Thank you.

Cassie Gilson on behalf of Andreessen Horowitz in opposition.

Thank you.

Robert Singleton with Chamber of Progress, respectfully opposed.

Thank you.

Moira Topp on behalf of Orange County Business Council in opposition.

Thank you.

Steven Stenzler with Brownstein on behalf of the Bay Area Council in respectful opposition.

Thank you. And Senator, I know that there was some of the comments in opposition include that this would be untenable risk on developers, but it's my understanding that there are already many companies that already voluntarily commit to this and, in some cases, even stronger standards internally.

Yeah. So, and thank you for that. We... They're already saying that they're doing this or committing to doing it. They're already subject to liability in California or any other state that they go to. And that, again, as I said at the beginning, that's any model. Do a model, and if I develop a model and I release it and someone uses that model to burn down a building, they can sue both. And that'll be litigated in the courts. But in terms of litigation exposure, that risk exists today, and it is profoundly broader than what is in this bill.

I also just want to say there have been some, you know, respectfully, some statements. This bill does not require a developer to guarantee that there will not be a harm. That is not in the bill. That's not what the bill does. That is simply untrue. This is not a strict liability law.

This is not you have to just guarantee. That is not true. To do a safety evaluation and certify that you've done so and whether you've identified one of these massive harms where there's a reasonable risk of it happening and then take mitigations to try to reduce that risk.

And I agree the developer is one part of the AI value chain, along with the end users and et cetera. No one is saying that the application or the use of a model should not be covered. And there are various bills moving through the Legislature now to address that around algorithmic discrimination, around deep fakes and so forth.

So absolutely. But to suggest that the development phase of the model should just be off the table doesn't make sense. And I appreciate the analogy to an auto manufacturer. So if you are building a car or a plane or a ship, that it's absolutely correct that if someone misuses that, if I take that plane and I fly it and I either negligently or intentionally crash it into a building, that's, you know, a crime or I'm liable and the person should be accountable.

But we also tell auto manufacturers or plane manufacturers that you have to do safe... You, you're not... You also have to engage in a safety protocol in terms of designing that engine in a way not to ensure that there will never be a problem or a misuse, but to reduce the risk.

So that was not an analogy that I used, but the opposition just used that. And I think we do put safety obligations all along that chain, and that's what we are doing here, I think, in a very light touch, reasonable way, requiring evaluations that they already say are appropriate and that they are doing or will be doing.

And to the concern regarding if a model enters the open space realm and potential liability, what do you say to that potential liability once it's in the open space realm?

Yeah. So for open source, and I agree with the opposition that open source is incredibly important. And again, if someone open sources a model today and someone uses it to do harm, that open source developer can be sued today. They'll contest it, it'll be litigated, and obviously it's a developing area of the law, but that open source developer can be sued today. And I will say that Meta, which is like sort of the biggest open source, as far as I know, the biggest open source model developer has also...

They've also said publicly that they're doing that testing and they made that commitment. In addition, one issue that the open source folks had conveyed to us was they were very concerned that an open source developer would be required to ensure the shutdown capability for their model even though they're open sourcing it and no longer have it in their possession.

And we made an amendment to the bill to make explicit what we had always intended, that once it's no longer in your possession, you are not responsible for ensuring that it can be shut down. In addition, if a model is significantly changed, fine tuned past a certain threshold, the original developer is no longer responsible. It effectively becomes a new model. And so we've made changes to the bill in direct response to critiques from the open source community, and we continue to have an open door to that kind of constructive feedback.

Any other questions or comments from colleagues? Assembly Member Connolly?

Yeah, I'll take a stab at a couple. And really wanted to thank the author for wading into this important but complex area. I think we're all trying to wrap our minds around, societally, what we're talking about here and really balancing the desire for innovation along with safety as well.

So as you noted, and I think it was reiterated by the Chair, many of the biggest companies are voluntarily committed to many of the precautions outlined in this bill. That's good. On the other hand, it's concerning that presently we're having to rely on voluntary effort.

So I guess what I would ask the opposition is, is it concerning that we are, that we should rely only on voluntary commitments when we are talking about catastrophic harms? How can we be confident that companies will always honor those commitments? And did you, in fact, sign on to the voluntary commitments? If not, why not?

So that's a great question, and there are a few answers here. But first and foremost, I think that what we are regulating here, we are regulating some hypothetical risks, and we are using some hypothetically tests. So if we really want to lead, so what we should do, I think we should create this kind of some research Institute fund the research, to fund the research to better understand how these models are working in a transparent manner, develop tests, develop benchmarks and then publish these benchmarks.

And then what this, what happens today, every of the model providers, if the benchmark is credible, they are going to evaluate their models against these benchmarks. If they don't, the third party can use this benchmark to evaluate. It's a huge pressure in terms of public pressure, marketing pressure, peer pressure to do well on these benchmarks.

There is no need for a law for that. And if you have, if you understand the risks, if you understand the test and people don't do it now, then you can mandate. But now it's too early. It's like car industry. When did we regulate car industry? We didn't regulate in 1900. And the other biggest problem of this bill is, fundamental problem in my mind, is that we are saying that in order to make the model safe, we need to limit the cost and the compute.

But ask yourself in every other industry, if you want to build a safer car, a safer plane, a safer ship. Is going to be more or less expensive? It's more expensive, much more expensive. So basically you ask the developers to choose between a capable open source model or a less capable and maybe safer model. Why don't let the developers build the most powerful model and the safest model?

Assembly Member, perhaps Mr. Hendrycks could also respond to that, if that would be appropriate.

Absolutely. And I guess the pushback is, I mean, in effect, do we wait for a catastrophe before regulating for safety? That's the dilemma.

And I will say before turning over to Mr. Hendrycks that, with cars, we can debate should it been regulated in 1900, 1910, 1940. We know that by the time it got regulated in the sixties, massive number of people had died. But Mr. Hendrycks?

Yeah, I think it's important to get ahead of these risks. We didn't do that with social media, and there were implications from that. I think relying on voluntary commitments is not necessarily the most reliable way to ensure safety. We can see there have been many articles where Meta just disbands over...

They release it on Friday evening, so nobody notices that they just banned their responsible AI team. And Microsoft has done that. We've seen high profile incidents of this happening with OpenAI, or there being an exodus of any other safety people. So relying on the AI companies just to take care of all of this themselves or to stick to what they said is not necessarily as safe as if there are some actual incentives for them in place.

So that's why I think it's important to try and get ahead of these risks and just target some of the most severe ones. And it's in keeping with things that they've already been saying. So it's testing that they've committed to several times in the White House voluntary commitments. The Executive Order has that, the Seoul commitments have that. So I don't think we're pushing for anything too unreasonable here.

Thank you. And just given the fact that we've had Members kind of running all over to committees this morning, is there a motion on the bill? Right, I'll second it. Assembly Member Patterson.

Great, thank you. I had the opportunity to... I'm learning today that Judiciary gets every bill that's already gone through a policy committee, and they're learning that...

Welcome to the Judiciary Committee.

Yeah. Still mad at Mr. Essayli.

Join the club.

Hey, hey, hey. But you know, can we... You know, I've had a lot of time to think about this, and ever since we voted on it in Privacy, I think that was committee came through. I have almost, like you said I would, been reached out, a lot of people have reached out to me just, I think, from all over the world.

Basically on every medium you could think of, email, text message, I don't know, my number must be in the ether somewhere, but, you know, Facebook messenger. And so I think, you know, my two concerns at this point are, I think the idea that these models should be tested.

I mean, I don't think that's a bad, bad idea. I think, like you said, it's kind of something that they've committed to, and I think that's a good thing. Where I kind of struggle a little bit with is, one is I've talked with other governments as well, other states and others, about what they're doing. And I do have interest in California continuing to be a hub for this. And the opposition individual from Berkeley. Are you from Berkeley, sir?

I am from Berkeley since 2000.

But I assume you weren't born in Berkeley and not or Alabama. Okay.

Yeah, for my PhD. I did my PhD at Carnegie Mellon University in Pittsburgh. Then I came to Berkeley.

Okay, great. Well, thank you. You know, I think that's kind of an attractive component, is that we're drawing people into California for the research and the technology and the things that we have here that are unique globally. And I know it's not your intent to mess that up in any way. I know that that's very interesting, important to you as well. But I do... The way that the penalties are structured in this bill, I just wonder if there's an avenue where we can say, hey, let's test these models, let's get some reporting back and let's...

I don't know really how you would enforce it if, you know a model's messed up. So I kind of understand, in a way, why you wanted some enforcement mechanisms in there, but I'm concerned that they might be a little heavy. They might be heavy handed for something we don't... We're not testing yet, and we should. We should test them. I'm just wondering if maybe the penalties are such that we might distract from investment here into California.

So, if I may.

Yeah, please.

Through the Chair. So, in terms of the penalties, I wanna... And I sound like a broken record, I know, but I can't remember who was here, at which point in time. People were in and out.

I've kind of been in and out.

Yeah, yeah.

In and out of consciousness is what I meant.

It's that time of year. And by the way, I want to apologize to members of the public for how our institution works that you presented to a committee, and people are walking in and out, and it's very disconcerting, but that's how we roll here in the Legislature. In terms of the penalties. You know, I will say again, these are very... Because there's no private right of action, because it's only the Attorney General. We know from just other contexts, the Attorney General does not have the capacity to run around suing everyone.

You and I have had this conversation around housing where the Attorney General has filed like almost no lawsuits, but a few in the most extreme situations, because they have to make choices about capacity and resources. And so when you limit the ability to enforce only to that one entity, the Attorney General, it's going to be...

That's going to happen in the rarest of circumstances. The most extreme cases. People can be sued not simply because their model caused harm, but only if they didn't do the testing they were supposed to do, didn't do what they were supposed to do under the bill.

And catastrophic harm caused is caused, and then only one person has the ability to do it. So I just want to really emphasize it's a very narrow liability as opposed to background tort law, which is much broader. In terms of attracting people to California, that's really important to me too.

I represent San Francisco, and that is incredibly important to me. And we were very mindful of that in crafting this law. To be clear, what triggers the coverage of this law is not if you are physically in California, it's doing business in California. So if you go, you're going to go to, you know, the proverbial Miami, which everyone said they were doing. And Miami was not the thing that people said it was going to be. Go to Miami to build your model.

Unless you're going to say I'm not going to do any business in California, then you're going to be covered as well if you're doing business in the State of California. I want to stress the bill does not require permission to train or release a model, it doesn't require a license. We said no. I said no to those ideas. Doesn't impose strict liability if your model causes harm. There are people who want that. I said no to that as well. And we try to be light touch on the bill. I know there are people who disagree with that. That was our approach.

Yeah, I think I said in the last committee, nobody's described this to me as light touch, pro or opponent to it. But, so can I ask you in terms of the... You mentioned that existing law... This is where I wish Mr. Essayli was here because I'm not an attorney, but you mentioned existing law allows litigation for violations of some other law out there, existing law. So if that's the case, why add something for the Attorney General?

Well, this is, yeah, you're right. So it's existing tort law. If you, any product that you make, whether it's an AI model or anything else, if it causes harm, someone can sue. You can defend against the lawsuit, and you can have all sorts of defenses for why you're not responsible. But someone can certainly sue you if you train and release an AI model that ends up being used in some way to cause harm.

This is what I think is a benefit of the bill. This actually defines a responsibility. Do this testing. And so it's not intended to replace any other law or tort doctrine that may be out there. We're not doing that. But this is a very specific thing where we're requiring safety testing, frankly, to reduce the risk that that other tort law would ever even be implicated. And so that's the goal here.

Okay, one last question, Mr. Chair, if you wouldn't mind. So you mentioned on a previous bill that I had also seen in another committee that you never really know what the Administration is going to do in the summer. He has mentioned on this particular topic that he's obviously seems to be wanting to take a hands off approach. I don't actually know that. Right. I mean, he's been kind of busy with objectionable items that we'll talk about later this week. But do you, have you had any conversations? I mean, where do you think this will end up?

I mean, do you think the Governor would support, is this the direction that you think the Administration wants to go on AI? Whatever discussions you're having, obviously, you know, is one thing. I'm just there. This is, this has been something he has opined on, I guess, is what I'm saying. And so I'm wondering, this seems to be a little bit different than what he's opined on the, at least publicly.

I speak for Scott Wiener, not Gavin Newsom. So great respect for the Governor. I do not speak, I would never purport to speak for him. So I can't say. The Governor has made statements about not, I think, understanding the need for regulation and not wanting the regulation, wanting to strike the right balance.

This is what I heard in my interpretation. So that it's nothing stifling innovation. That's my goal too, and that's the goal of this bill. And we, as always, welcome feedback from the Administration because ultimately nothing becomes law without the Governor's signature, since the Legislature has abdicated its power to override vetoes. We haven't done it in almost half a century.

I recommend we should do that on occasion.

So he... So it doesn't become law unless the Governor signs it. And so we absolutely, we eagerly welcome feedback from the Governor. This is a Governor who cares deeply about tech innovation in California. He's been a leader in that space, and we absolutely welcome his feedback. We also continue to welcome constructive feedback from the AI community and the open source community in particular.

Great. Be a fun summer.

Thank you. We have a motion on the table. Any further comment? All right, well, again, thanks for bringing these easy bills that have no complexity to them at all, to the Assembly Judiciary Committee. But I do appreciate your work on this. I also appreciate I had the opportunity to read your six page response letter.

I think it was very thorough and addressed a lot of the concerns, I think, that have been raised. And I know there will be continued work in this space. I represent San Jose, you represent San Francisco. Those two places and all the parts in between are really where this innovation is occurring, and none of us want to stifle that. And I think your bill strikes the appropriate balance in that regard. Would you like to close?

Respectfully ask for an aye vote.

Thank you. Madam Secretary, take a roll call vote on SB 1047.

Motion's do pass as amended to Appropriations. [Roll Call]

All right, that will be placed on call. Thank you.

Thank you very much, colleagues. Thank you, Mr. Chair.

All right, Senator Umberg. The good news is that we've dispensed with the Glazer/Wiener bills, and so now we can proceed with the rest of hearing. Chair Umberg.

Thank you. My sympathy does go to those whose names are at the beginning of the alphabet today. And, Mr. Chair, if you thought that last bill was easy, then this is a no brainer. So let me describe what SB 42 does. SB 42 is a cleanup bill for Care Court structure.

Care Court provides for an individual to petition the court to have a family member or someone else basically engaged, enrolled, come under the jurisdiction of Care Court. But one of the glitches that we've seen is that sometimes the petitioner is not informed as to what's going on.

So what this bill does, it gives the judge the ability to notify the petitioner as to the status of the case. Unless that notification or the court determines that notification will be detrimental to the client or if it constitutes a HIPAA violation. Otherwise, the court then can notify the petitioner. Urge an aye vote. I do not have any witnesses other than myself here.

And, Senator, you accept the amendments?

I do.

Thank you so much. Anyone else here in support?

By the way, I should thank the Chair and your staff, particular Ms. Alison Merrilies, for their assistance on this and other bills.

Thank you so much. Is there anyone else? We have a motion. Is there a second? We have a motion and a second. Is anyone else here in support of SB 42? Is there anyone here in opposition to SB 42?

Good morning, Mr. Chair and Committee Members. Deb Roth with Disability Rights California, here in regretful opposition to this bill. When Care Court was first enacted two years ago, DRC opposed the bill.

We were very concerned about the lack of data to support any program like it, and we didn't think it would be helpful to drag people into an adversarial proceeding, a courtroom for mental health treatment. But Care Court, was enacted and a lot of state resources have been allocated for its success.

So we genuinely hope that the people who enter Care Court are helped by that. What the author just stated as the reason for the bill is already permissible under the Care Court statute. The court has discretion to keep people involved. If the court chooses not to keep people involved, I'd like to think that they have a very good reason for it.

But what the author is proposing under SB 42 is to flip the script so that the default is this construct that would violate privacy laws, except that there's going to be amendments so that you don't really have to violate privacy laws, but you have to start to contort yourself to make it work. And you really don't need to do that because what the author wants to accomplish can occur under existing law. Thank you.

Thank you.

Hi, good afternoon. My name is Clare Cortright. I'm the policy director for Cal Voices. We're a peer run organization, so we're run by and for people with serious mental illness, including myself. We're here quite a bit opposing things, and I have come to the conclusion that my task is to help you all understand what it is like to be us and what world we inhabit.

We had a very brief conversation with the author's office about this bill, but unfortunately, because of the late amendment, we haven't had a full conversation. Our understanding is, as Ms. Roth testified to, that the existing statute allows a judge, at her discretion, to assign ongoing notice rights to a private party petitioner who has been substituted out for the county in a case.

This bill would remove that discretion and give a private party, a private petitioner and non party to the case, a right to be told in writing the status of the case and the reason for that status. For example, the petition is proceeding to hearing because the respondent does in fact have schizophrenia.

Here's a document with the seal of the California on it. On September 23, '23, an article appeared in the Los Angeles Time that I was extensively quoted in for the opposition. In it, Ms. Nan Ibarra alleged her son believed that he was Satan and everything in his mind was suspect, that he was, quote, a two year old that he did drugs and did not take his medications. This is what's at stake for us.

My family, although I vexed them with my mental illness, would never do that to me. This man was--his privacy was invaded. He was defamed and dragged in the pages of the LA Times by his mother. The LA Times did not even give him an opportunity to rebut. This is what I need you to understand.

These hearings are private in the first place because we face systemic hate in society, discrimination. We lose our jobs, we're evicted. We lose custody of our children. We're held up to disrepute. And sometimes our lives are endangered like Jordan Neely's was. It seems like a small change. We don't believe that it is. We would like our privacy protected. And we think the existing statute is a better balance. Thank you.

Thank you. Anyone else here in opposition to SB 42?

Hello, Chair and Members. Rachel Bogwitt, with ACLU California Action, in opposition to this bill, with ongoing privacy concerns. Also registering the opposition of Mental Health America of California. Thank you.

Thank you. We'll bring it back to Committee. We already have a motion. Any other questions or comments? Assemblymember Bauer-Kahan.

Thank you, Mr. Chair. I just wanted to give the author an opportunity because I know this has been an issue that most of us have struggled with is how do we care for the Californians who currently need us to support them and what is the best way to do that.

And the last thing I think many of us want is for folks to be dying on the streets. And that is really the effort that this has behind this. But I think that it is important to hear from those with lived experience.

So I want to thank you for being here and sharing your experience and speaking for others as well as you did so eloquently. But I know the heart of the Senator. And so I know he would absolutely care deeply about the privacy of those involved in the dignity therein. So I wanted to give him an opportunity to address it.

So let me make sure that I didn't confuse the issue. What this bill does is it actually does provide a requirement that the court provide notice to the petitioner. And I'll read from the bill: "Unless it's likely that it would be detrimental to the treatment or well being of the respondent." So.

And I do appreciate the lived experience of those who are engaged either in Care Court or in this same space. We have lived experience. I have lived experience myself. My family has lived experience. And to the extent that we as legislators, we view everything through the prism, at least I do, of personal experience.

And you extrapolate to the general case may not always be accurate, but I will extrapolate from our specific experience is that with our family member who was schizophrenic and had many other challenges in life, is that that person would be gone, in jail, homeless, in the hospital, various places.

And had this existed and had we petitioned the court, then as we would follow this, we would know. We would know what the status is. Maybe it's been dismissed, or maybe it hasn't been dismissed, but maybe this person has missed their court appearance.

Maybe we can help them make their court appearance so that the court can, as is conceived, make sure that they have shelter, for example, or that they have some sort of treatment. That's the whole purpose.

So this is a challenging area, and that's why we've exempted and we provided the court to have to make a decision if it would be detrimental. So, for example, if the petitioner turns hostile towards that family member for whatever reason, of course you wouldn't want that person to be notified of the whereabouts of the individual.

And the same thing goes with sensitive medical information that would be HIPAA protected. That should not be in any court order. And we would expect that the court would follow the law in that respect. But yes, I mean, to answer all your questions. Very challenging area. So with that, I would urge an aye vote.

Thank you.

Thank you. Yeah. I also famously, a couple years ago, did not support Care Court. And I still have concerns about its implementation and rolled out, as does Senator Umberg and all of us. It is a very complex area that we've delved into on this specific narrowness of this ask of this bill today.

I'll support this with the protections and guardrails in place of the private information, healthcare information, and giving the court the discretion to make determinations as to when it may not be appropriate to do so.

And my eyes and ears are still wide open in terms of how Care Court has rolled out, obviously with the Administration taking a huge role in doing that. And so with that, would you like to close?

Simply urge an aye vote.

Thank you so much. Madam Secretary, take a roll call vote on SB 42.

Motion is do pass as amended to Appropriations. [Roll Call]

We'll place that on call. Thank you so much.

Thank you very much. Thank you.

Senator Becker. Senator Becker. Senator Becker snuck in because there was a bunch of Senators here earlier, and so he was waiting, biding his time. Item seven, SB 942.

It's an honor, Chair, to appear before your Committee, I think for the first time. And here to present SB 942, the California Artificial Intelligence Transparency Act. The bill takes a bold step to addressing the proliferation of AI generated content. First, I'll just say I know that this is a issue that you've struggled with.

Many on this Committee are involved in various efforts trying to address this proliferation of AI generated content, and we're all trying to strike that right balance and trying to figure out as the technology is moving so, so, so quickly, what is our role here in California? I will say first I'll be accepting the Committee amendments that make clarifying changes to the bill's enforcement. Again, I won't go into detail.

I think you all know about, obviously the proliferation, the deepfakes that we saw clone voicemails of President Biden months ago, where obviously everyone's on close watch with this upcoming critical election, statewide and nationally, and transparency is needed.

The EU has taken steps to address this through the AI Act, which mandates transparency standards, including the requirement to inform users when they're interacting with AI system, and to clearly mark synthetic audio, video, text and images as artificially generated or manipulated, both for users and in a machine readable format.

In line with EU legislation, SB 942 serves to address the growing uncertainties surrounding AI generated content by requiring large gen AI system providers to do three things. Number one, label AI generated content with latent disclosures.

Two, supply an AI detection tool for users to query whether content was created by AI, and three, enforce third party licenses to the extent tactically feasible to prevent undisclosed content publication. In this way, this bill serves to address the challenges posed by AI generated content.

I will say we're actively collaborating with the opposition to address their concerns and ensure this does strike the right balance. I said this is a moving target here, and we are trying to strike that right balance. And I'm fortunate to be joined by an expert in these issues and cybersecurity and privacy generally, Tom Kemp.

Thank you. Good morning, Chair Kalra and Committee Members. I want to make a few additional points that build upon Senator Becker's remarks. Number one, this bill is based on a bipartisan proposal at the federal level called the AI Labeling Act. This is what Senator Schatz said.

People deserve to know whether or not the videos, photos, and content they see and read online are real or not. And I agree with this bipartisan sentiment. Number two, this bill only applies to the largest providers of generative AI. So it won't stifle innovation.

Number three, the largest AI providers have already pledged to deliver this capability as part of Biden's executive order on AI, and SB 942 puts these commitments into practice. Number four, large AI providers, as Senator Becker has referenced, already have to deliver comparable transparency as part of the EU AI Act.

So if they can and will deliver this for European consumers, we think that they can also do so for California's. Number five, SB 942 takes a pragmatic approach. It does not require specific technical implementations such as watermarking.

As affiliate Professor Jay Jezema of the University of Washington said, SB 942 does not, quote, does not have a heavy handed set of requirements. Number six, recent changes to the bills have addressed many opposition concerns coming out of the Privacy Committee.

For example, a critic just recently wrote that recent changes have, quote, fixed the biggest issues I've had with the bill. And number seven, finally, recent technical advances such as the new release of Google Synth ID and Meta and Snapchat's labeling capabilities that they've released have made this technically possible. So, in summary, let's get ahead of the curve with concerns around AI transparency, unlike what's happened with social media in the past.

Thank you. Is there anyone else here in support of SB 942? Is there any? Is there anyone here in opposition to SB 942?

Good morning, Mr. Chair and Members. My name is Lizzie Kutzona. I'm with Shaw Yoder Antwih Schmelzer and Lange, and I'm here on behalf of my client, Tech Net, in respectful opposition to SB 942. First of all, we really appreciate the progress that has been made on the bill and the productive conversations we've had with the author's office.

Overall, we agree with the intent of SB 942 to create greater trust in user generated content online by fostering the adoption of disclosures. Our members are working through the recent amendments and putting together feedback on a number of AI bills, including SB 942. Upon our initial read, we think the amendments move the bill in the right direction.

A couple of issues to highlight that we look forward to continue to work with the author on, First, clarifying definitions such including terms such as synthetic and manifest disclosure. Secondly, identifying what aspects are and are not technically feasible. And finally, considering the potential trade offs of mandating the creation of AI detection tools and how they could potentially be utilized by bad actors to find loopholes in the technology. For these reasons, we are respectfully opposed at this time, but look forward to continuing conversations with the author.

Thank you. Anyone else here in opposition to SB 942?

Mr. Chair and Members, Carl London, on behalf of the Recording Industry Association of America, have some of the same concerns. We have had very productive conversations with the author, and we look forward to a long, hot July of going nowhere and doing absolutely nothing but working on this bill. So thank you very much.

You don't want me to hold you to that.

Laura Bennett with California Advisors on behalf of Cal Chamber in opposition.

Thank you.

Good morning, Chair and Members. Naomi Pajarno, on behalf of the Computer and Communications Industry Association. We're respectfully opposed, but would echo the comments made by Technet.

Thank you. All right, bring it back to Committee. Any questions, comments or motions? We have a motion. Is there a second? Is there a second? I'll second it. And I want to thank Senator Becker. I think that you're the appropriate author in terms of delving into this space, which is complex.

I know we've dealt, we've been looking a lot into this space, as well as our Privacy Chair, Bauer-Kahan, on how to grapple with AI, especially in the public realm. And so, as even the opposition indicated, productive conversations continue. And I know that you have a deep interest not only protecting consumers, but also protecting this industry as well.

And I'm confident you'll be able to find a way to be able to do that in this particular bill as well. I think that it's in a good place now, but I know that there are still some opposition concerns, and I'm confident you'll continue to have those conversations. Would you like to close?

Thank you. Yeah. We'll continue to work with opposition. I may call them from the beach. But I know that there, again, are still things to work through as we, you know, work on this moving target, but very happy with the progress that we've made and respectfully ask for an aye vote.

Thank you. Madam Secretary, if we can have a roll call vote on SB 942.

Motion is do pass as amended to Appropriations. [Roll Call]

Place that on call. Thank you. Yes, we appreciate the Senators that are here ready to work. Senator Smallwood-Cuevas. SB 1089.

Thank you so much, Mr. Chair and Assembly Members. Good afternoon. Hot afternoon.

It's not afternoon yet, thankfully. Yeah. SB 1089.

Oh, wait, is it still morning? Oh, okay. Well, look at me. Thought we were in the evening already. Thank you. Yes, we're going to do 1089 and want to say thank you, Members, I'm pleased to present a special, which is a priority bill of the Legislative Black Caucus's reparation package, and I want to thank your Committee for your thoughtful analysis as well.

In 2020, the state Legislature passed AB 3121 to authorize a reparations task force to study the ongoing effects of slavery on African Americans in our state. And after years of study, the task force offered hundreds of recommendations and actions for the Legislature to follow in order to address the enduring inequalities in wealth and housing and health for black communities, and knowing that when one of our communities is suffering, all of our communities suffer.

The disparities illustrated in the task force report are of no coincidence, but rather predictable outcome of decades of disinvestment of industry from minority communities who prioritize suburban white neighborhoods over our lower income black and brown communities, which they deem to be undesirable. The numbers simply speak for themselves.

One in five black people face food insecurity, while white neighborhoods on average have four times as many supermarkets as those in predominantly black neighborhoods.