Assembly Standing Committee on Privacy and Consumer Protection

We'll just start without meeting. Okay. We're going to call the Privacy and Consumer Protection Committee to begin. Thank you all for being here. Our standard rules will apply today. There will be two witnesses, both for the proponents of the Bill and the opposition. Two minutes for each witness.

After the two sides, after the support presents, we'll invite anybody up to say their name, organization and position. And we will do the same for the opposition as per usual. Please behave yourselves. I know you all will as. As I will try to do.

And with that, we do not yet have a quorum, but we will start as a Subcommitee. Ms. Irwin, would you like to begin? Yeah. We're going to start as a sub committee. We'll call a quorum as soon as we get one. AB 576, when you're ready.

Thank you, Madam Chair. Absolutely. AB 576, I am using to address stakeholder feedback following the enactment of my Bill, AB488. Is the microphone on? Hello. Hello. There it goes. oh, okay.

So this is addressing stakeholder feedback following the enactment of my Bill, AB488 in 2021 and the subsequent adoption of the Department of Justice regulations over past few years. That Bill, which was sponsored by DOJ, addressed the growth of online platforms facilitating charitable solicitations by creating a new registration.

By creating new registration requirements for charitable fundraising platforms and platform charities, it also included a host of guardrails to ensure that both donors and recipient charities were being well served.

While I anticipate that this Bill will grow as stakeholder concerns are vetted, the current inclusion of the application programming Interface for the DOJ's registry list speaks to key functional need raised by stakeholders to more quickly and efficiently update platform listings of charities eligible to solicit in California.

Participation through the stakeholder process has been robust, and I look forward to finding consensus solutions that achieve our shared goal of removing obstacles to Californians confidentially donating to charities of their choice online. Finally, I want to reiterate the commitment I've made previously.

I will keep this Committee and its staff included in the stakeholder conversations as this Bill moves forward. I respectfully ask for your aye vote.

Thank you. Do you have any witnesses with you today in support? Okay. Are there any other Members of the public here today wishing to support this item? Move the Bill. There's a motion by Mr. Lowenthal Subcommitee. Are there any Members of the public here who wish to offer testimony in opposition to the Bill? And seeing none.

Any Members of the public wishing to state a position of opposition. Okay. See none. Are there any questions or comments from Members at the dais? Okay, seeing none. Let me just see really quick, Miss, do we have any Chair's remarks on that or. No, we don't do. Okay, thank you, Ms. Irwin.

We are still operating as a Subcommitee. When we have a quorum, we'll take a roll call vote on this measure. Thank you. You have another item as well. Do you wish to present?

I think it's on consent.

Ah, got it. Yep. Congratulations. Okay. Ms. Wilson, would you be interested in taking up your Bill?

I would. Okay. This will be item number 10, AB 1160. Take your time. We have a little time. And if you have any witnesses in support, they may join you at the table as well.

Let me just make sure he's not on his way.

I will also put out a call to Member offices. We are looking for authors following. Ms. Wilson.

We'll go.

Okay with that. You may begin.

All right, thank you, Mr. Interim Chair and Members for the opportunity to present AB 1160 Hearing Committee today.

I will begin by accepting the proposed Committee amendments detailed in comment number 6, which strengthens the provisions in the Bill by requiring that law enforcement agencies, also known as LEAs, shift existing data storage contracts to a US space company and that all future data collected by drones be stored with the US Company.

In addition, the amendments required that the contract between the LEA and the storage company prohibit the use, sharing or sale of the data by that company. Over the past decade, law enforcement agencies throughout California have increased the use of drone programs due to the operational and safety advantages provided by these technologies.

While law enforcement agencies do already take precautions to ensure that the data they collect remains secure, state law is lacking any minimal requirements as it relates to data protection.

National concerns regarding the use of foreign made drones have led to individual federal agencies restricting the use of certain drones platforms, including a limited ban by the Department of Defense. As a result, several states have followed in that direction with Florida being the largest state to restrict the use of certain foreign made drones.

These debates have largely been binary, focusing on whether or not to ban certain foreign made drone platforms due to possible security risk. However, these ban proposals do not consider the significant differences between military or national law enforcement agencies, use of drone technology and local and state law enforcement operations.

AB 1160 takes a targeted approach through establishing a meaningful safeguards to protect all collected data while ensuring the continued existence of affordable and capable drone programs that are protecting our peace officers and saving lives.

These protections include a requirement that each vehicle contains an option to turn off any data collection programs that are not necessary for the vehicle to function, and a requirement that the law enforcement agency uses an American data storage company to house all data collected, including, but not limited to, video and photographic images.

By establishing these standards, California can limit unnecessary data collection and ensure the data collected by local and state law enforcement is housed domestically, limiting access to all information by foreign entities. To the chair, I'll take one more moment to look and see if my witness has arrived. And if they haven't, I will close. They are not here.

However, there's been multiple testimony given in this Committee. This is a Bill that it's been two years in the making. It was introduced by Senator Umberg last year and had lots of robust debate on it. Didn't get across the finish line.

We reintroduced it this year with getting some of the comments, taking into consideration comments that Members had, including my own concerns and have got us to this point today took language in public safety as well as this Committee, which, as I noted, was accepting the amends. So I now give it back to the chair. But thank you.

Thank you, Ms. Wilson. Are there any other Members of the public here in support of AB 1160? Please come up to the microphone and you can just state your name and position and position of support. No, we're just moving around the Committee room. Okay. Are there any witnesses in opposition to the Bill wishing to testify? Seeing none.

Any Members of the public wishing to see a position of opposition? All right, seeing none. Bring this back to the dais. Is there any Committee Member question or comment? All right. Seeing none. Thank you, Ms. Wilson, for presenting the Bill here today. When we establish quorum, we will be able to take a vote on the measure.

Absolutely. And if I could just make one note, since my witness was not here, something that was sponsored by the California Police Chiefs Association, we work closely with them and as well as those in the privacy community to ensure that we've gotten the language in a great place. And so when the appropriate time, I respectfully ask for an aye vote.

Thank you, Ms. Wilson. We are back to the top of the file. I see some Member Calderon here to present item number one. We'll do them. Okay. All right. We will skip around file. We'll go to item number three. This is AB325 by Assembly Member Aguiar Curry, and we are still operating as a Subcommitee.

I was confused when you were sitting up there.

I appreciate that there's a lot of moving pieces today.

Thank you very much. Thank you, Chair and Members. I appreciate all the work you and Committee staff have done on this bill and all your very thoughtful feedback. Working with your staff on this bill over the past few months has made it stronger, and I commit to staying in partnership as the bill moves forward.

I'd also like to thank my sponsors for their thorough work on this complex issue and all of our supporters from small business, labor, housing, and tech oversight community. Finally, thank you to the Attorney General's Office and former DOJ staff who have continued to provide us with thoughtful feedback.

Members, it doesn't matter if price fixing happens as a direct agreement between people or through artificial intelligence. Either way, it's wrong. In recent years, Californians have faced an affordability crisis, with prices going up on essential goods and services.

The price of eggs, frozen potatoes, chicken, turkey, pork, housing, hotels, and more have skyrocketed. And many of us, including me, thought it was the market forces. But it's not just that. There's so much more to it. For years, companies have been using illegal price fixing algorithms that have created market monopolies, stifled innovation, and hurt small businesses.

So this isn't new, but it has taken experts and prosecutors time to figure out how these price fixing schemes work using modern technology. I've heard from businesses in my district, particularly mom and pop restaurants, that they are frustrated at the cost of even frozen french fries, even oil, cooking oil.

There are four companies, that's right, four companies that control over 97% of the frozen potato products in the United States. Our restaurants rely on these companies for french fries, tater tots, and more. Unfortunately, these four companies have all been found to use the same software to set their prices and artificially limit supply.

These tools benefit large corporations and drive prices up for small businesses. And as I've previously said, they've been using these tools like this for years. It's time our laws catch up with the technology so our constituents don't literally pay the price. With the cost of living these days, we have to prioritize affordability for Californians.

This bill will help that California shouldn't tolerate practices that exploit working families and small businesses. As a solution, AB 325 updates California antitrust laws to address the use of modern tools for illegal price fixing. Members, I've listened to the opposition's concerns and made major amendments to this bill. I provided safe harbors for businesses acting in good faith.

I've explicitly exempted end users of a product who by nature are not part of the price setting schemes. I also struck the sections related to non-public competitor data that caused some confusion. Let's restore good old fashioned competition so nobody has an unfair advantage and consumers don't get shortchanged.

I'll continue to work on this bill to address legitimate business concerns because California families need us to take immediate steps to address the affordability crisis today. I have two of the bill's co-sponsors, Lee Hepner from the American Economic Liberties Project and Teri Olle with the Economic Security Project Action to provide technical support.

Thank you, Madam Majority Leader. Welcome to your witnesses. You'll have two minutes apiece.

Great. Thank... Sorry, is that on? Great. Thank you, Mr. Interim Chair, Members of the Committee. I'm Teri Olle, the Director of Economic Security California Action, a proud co-sponsor of the bill, and I want to thank the Majority Leader for her leadership. Since this is the Privacy and Consumer Protection Committee, I want to talk about why this bill matters so much for consumers, which of course also includes small businesses. It's a basic tenet of capitalism that competition between rivals benefits us all. Fighting over customers with better prices or superior products is what spurs dynamic markets, innovation, and bountiful choice.

When would be competitors agree not to challenge each other, when they collude to fix prices or restrict supply, this is frankly a perversion of the free market and results in higher prices, fewer choices, and stifled innovation. The essence of price fixing is that agreement, which has always been hard to detect since they're not made in public, handshake deals in a smoke filled room if you will. Digital technology has made participating in these agreements easier, but detecting them harder.

And unfortunately this type of price fixing has been going on for many years and we are behind and just playing catch up now. From chicken to housing, from construction equipment to veritable frozen french fry cartels, as a former US DOJ expert recently said, there is a RealPage in every industry where anyone has bothered to look.

As a result, industries lock up competition. They jack up prices for everything from the daily basics to the fun stuff. And let's be really clear, lack of competition never ever benefits the consumer. Rather, regular people are worse off and the affordability crisis that every voter says is their most pressing issue just gets worse. This bill makes it clear that distributing or using a pricing algorithm to set prices with competitors is collusion. Just because it happens through code instead of conversation does not change the violation or the harm.

Bad actors in multiple sectors are trying to find wiggle room to use technology to engage in conduct that has been a violation of antitrust law since the beginning of antitrust law. They need... The need for clarity in the law is what makes this bill necessary, and stopping harm to people is what makes it urgent. I ask for your aye vote. Thank you.

Thank you very much. Before the second witness, I'm going to ask really quickly take a pause and establish a quorum. Madam Secretary.

[Roll Call]

We have a quorum. And apologies for the interruption, you may continue.

Quite all right. Good afternoon, Chair and Committee Members. My name is Lee Hepner. I'm an antitrust attorney and Senior Legal Counsel at the American Economic Liberties Project. I'm currently tracking legislation across 18 states aimed at stemming the harm of algorithmic price fixing.

Just this week, the State of Colorado became the first state to adopt one such bill. State and federal lawsuits have been filed across industries, including federal litigation brought by the Biden Justice Department. Another dozen state Attorney General, both Democrat and Republican, have joined or filed their own suits. The current administration has demonstrated a commitment to aggressive enforcement against collusive pricing algorithms.

This has long been a bipartisan issue. Conservative Justice Antonin Scalia referred to price fixing or collusion as, quote, the supreme evil of antitrust. And courts have condemned the practice with no countervailing business justification for a century. Now, price fixing software is only new for its ability to accomplish the same illegal conduct at a broader scale across otherwise diffuse industries and without detection. And California courts have long recognized this detectability problem.

In 1993, a California Court of Appeal found that, quote, because of the well known wrongfulness of price fixing agreements, conspirators rarely make such agreements in the open or document their illicit agreements. So I think the challenge for courts and lawmakers is to identify how price fixing occurs when it is otherwise undetectable.

And that is precisely what the bill before you seeks to do. It is a common sense approach. When multiple competitors delegate their pricing authority to the same person who uses the same data and the same analysis for each competitor, that eliminates the independent centers of decision making that are the foundation of a healthy economy. Now, there is a role for software to enhance price competition.

This bill does not seek to prohibit lawful independent price competition, even using software. But we're not talking today about competitive price optimization. We're talking about vast schemes raising the prices of food, housing, construction equipment, and much more. I've had the opportunity to vet this bill with public enforcers, colleagues, and litigators, small businesses, and even economists who recognize the breadth of harm that this bill seeks to address. So I commend it to you. And thank you.

Thank you very much. Are there members of the public here wishing to register a position of support? Please approach the microphone. And we are looking for names, organizations, and positions. One second. Let's... I think that button needs to be turned on.

Okay, please continue.

Mariko Yoshihara on behalf of Tech Oversight Project and Equal Rights Advocates in support.

Megan Abell with TechEquity, proud to co-sponsor.

Rachel Mueller on behalf of CAMEO Network in strong support.

Sara Flocks, California Federation of Labor Unions, in support.

Navnit Puryear on behalf of the California School Employees Association in support.

Afternoon, Chair and Members. Happy May Day. Mari Lopez with the California Nurses Association, also representing Small Business Majority, UDW, AFSCME 390, the California Courage Campaign, Western Center on Law and Poverty, California Public Banking Alliance, and Oakland Privacy. Thank you.

Thank you very much. In support, of course. Are there any witnesses that wish to testify in opposition to AB 325? Please come to the witness table. And I'm going to need an extra chair. Okay, thank you. Just split yourselves up. Maybe one here and one by the author. And you can decide who goes first.

Good morning, Chair and Members. Whitney Prout for the California Apartment Association. Well before software AI existed, it was already illegal for competitors to fix prices or secretly share sensitive information to harm competition. The law hasn't changed. It's simply having to adapt to a new environment.

New pricing software tools can raise two related but distinct concerns under antitrust laws. First is price fixing, where competitors agree to set prices. That's clearly illegal. Second, information sharing, where companies unlawfully exchange private, detailed, current data that can reduce competition even without an agreement on prices. These are real risks, and we don't oppose clear, targeted rules to address them in the context of algorithmic pricing tools. But AB 325 doesn't do that.

It makes it automatically illegal for two businesses to use the same software, even if that software only considers the same or similar public data as well as inputs about the user's own business and their goals. It doesn't require any agreement or even any shared private data. That's like banning calculators because someone might use one to cheat rather than just banning cheating.

Rental housing providers use ethically designed revenue management software to help make pricing decisions, looking at public listings, current occupancy, and business goals. While the tool might suggest raising rent in some cases, it may also suggest lowering rent, depending on market conditions and the landlord's priorities.

AB 325 would outlaw this even when no rules are being broken. Outside of the rental housing context, this could even prohibit a small business owner from asking ChatGPT for help setting prices in their Etsy shop simply because someone else may use it for the same purpose.

We've proposed amendments to ensure that the software can't misuse private competitor data, but those amendments have been rejected because the bill's intent is to ban these commercially available tools regardless of the data used. This would force businesses to go back to gut instinct or expensive consultants and leave smaller players behind while big businesses build their own tools. AB 325 doesn't focus on stopping bad behavior. It blocks useful tools that could help people compete fairly.

Thank you.

Good afternoon, Mr. Chair and Members. Chris Micheli on behalf of the Civil Justice Association of California. We remain opposed currently. I would note that, when we received the amendments, they're still under review. But as we indicated in the previous Committee with the Majority Leader, several of the issues, we raised three of them specifically with the language.

First, she did strike the declaratory of existing law language, which we appreciate, as well as the clear and convincing evidence standard. Our members have expressed concern with the known or should have known language that some of the new language there.

We also had expressed a third item, which remains in the bill, which is the joint and several liability concern. We do share the concerns that were outlined by the prior witness and look forward, as we have all along, working with the Majority Leader and her staff and seeing if we can craft an acceptable bill. But respectfully, we do remain opposed at this time. But we do acknowledge, again, the amendments that have already been made by the Majority Leader. Thank you, Mr. Chair.

Appreciate that. Are there any other members of the public here in opposition to AB 325 who wish to register a position of opposition?

Kalyn Dean on behalf of the California Hospital Association in respectful opposition.

Ashley Hoffman on behalf of the California Chamber of Commerce respectfully in opposition.

Catherine Charles on behalf of the Chamber of Progress in respectful opposition. Thank you.

Ryan Allain on behalf of the California Retailers Association in respectful opposition. Thank you.

Andrea Deveau on behalf of TechNet, respectful opposition.

Thank you very much. And seeing no other members of the public wishing to speak, I'll turn this back to the dais. Any questions or comments? Ms. Irwin.

I know that, that the Speaker, that the author is going to work with the opposition. I assume that this is a work in progress, ongoing because I would be concerned when anything paints too broad a brush and when you have this much opposition. I think there's probably still some work to be done.

Certainly will support the bill. But I guess my question maybe for the sponsors or... Are you the sponsors or just the... Okay, it sounds like this just bans using software altogether, software as a service, if two companies are using the same package, is that accurate?

Thank you. Lee Hepner. Through the Chair for the question. The legislation does not seek to ban the use of software to implement a pricing strategy that is based on a business's data, publicly available data, their own pricing strategies. That is very normal to implement or to have a piece of software implement that strategy based on that information.

What this bill gets at is the commonness of an algorithm being used by two or more competitors in the same market and the collusive effect that has the way that it removes that independent competitive dynamic that ultimately drives down prices, improves quality, and results in other benefits for market participants.

Okay, so could you address the opposition statements that it would effectively... You're saying if it's a common algorithm that the company uses, that the software company uses, that two different companies wouldn't be able to utilize it to set prices.

When two competitors use the same tool to set prices, they act as one, and that is the conduct that this bill seeks to make very clear. I think existing law would approach that in a similar fashion. So to the extent that there's a disagreement with the opposition, I'm not sure that I understand their characterization of this bill as prohibiting the use of a pricing algorithm to implement an independently competitive pricing strategy or to curb the use of competitive pricing software. That does not at all comport with what the bill language provides.

Okay, well, it sounds like maybe I would encourage you to get to some common ground on this. Thank you.

Thank you, Ms. Irwin. Assembly Member Wilson.

I'd like to follow up on that line of inquiry. And so the analysis talks about on page six, the RealPage, which multiple people use. So before I'm going to ask opposition the question first and then I want to ask a follow up question related what you're doing. So RealPage is something that's commonly used within the.

Within the, with multi-family units. Right. Can you talk a little bit about why that's important or what you guys are using that for? Because it seems like if you're having an apartment, if I own an apartment complex, I'm going to use RealPage. Somebody who a few blocks down might use it, RealPage. How would I know that that person is using it? So can you explain, like how you're using it?

Sure. I'll do my best to respond to that. So in terms of RealPage, obviously there's been litigation, there's ongoing litigation over that product. I don't know if I'd necessarily say it's widely used by, you know, even many or most actors in the market. Certainly there were some owners that were using that software.

What I would say is that the amendments that we've put forward in this case are seeking to address the problems that have been alleged with products like RealPage and some of the other products that were addressed in the analysis. The allegations in the RealPage case, as well as the RENTmaximizer case that was referenced, all deal with the fact that those products were alleged to have incorporated non-public competitor data, competitively sensitive data, in making those recommendations to owners.

So it was allowing essentially the algorithm to look into what one owner's private data was and incorporate that when it's making a recommendation to another owner. We've suggested amendments to try and get at that issue while not throwing the baby out with the bathwater in terms of ethically designed software.

And so you're fine with being able to use, you guys would like to be able to use algorithms or software that allows publicly used data. And so you agree that the private use of data, like being able to know what that person down the street is actually doing that they haven't publicized, is not appropriate?

Correct. And we've put forward amendments to that end.

Okay, and then your issue is the same then. It's about the... I think, and what caught my eye was the exchange, but with you and my colleague. And so you're saying you're fine, as sponsors of the bill, you're fine with AI tools and things, as long as they're not using private data? You're not fine. Okay, all right, go ahead, go ahead. What were you trying to say?

Maybe I'll try to clarify this. So the bill aims to get at the agreement, not the characterization of the data. So it's the agreement of two or more people or the creation of a tool that facilitates that agreement to set prices in a way that robust competition would not have you do.

But how would someone know that the tool I'm using, somebody else is using that same tool in my market?

I guess I would submit that that is part of, like, typically that's part of the lawsuit discovery process because this is why these agreements are very difficult to detect, kind of like at surface value, you know, at sort of surface level. But what we've seen over the last few months is that it almost feels like every week a new investigation is being publicized and a new case is being brought because someone will see something kind of fishy, like the french fry cartel, and say, huh, kind of curious that all four of my frozen french fry providers have raised the price the exact same amount within a very short period of time.

That seems curious. And then when that, when the owner of this bar in Washington, D.C. took to the Internet and said, isn't this strange, that became actually like the impetus for an investigation that discovered a tool called Potato Track, which was being used by the major frozen french fry producers.

And that tool was being used by the four producers that owned the majority of the market to actually raise the prices at the same time. And so that is that agreement that is being, that is the kernel of what this bill is getting at, is that the kernel of collusion.

It's not if you, if that, if one of those french fry producers had said, like, I don't use that tool and I'm just going to decide to price my frozen french, my frozen potato products however I see fit, that's, that's fine. That's a different deal altogether. But when parties are using the same tool to make a decision about pricing and they're working essentially in cahoots with each other, that is the essence of the agreement.

And I think I understand what you're saying. I'll note that I think when it comes to housing, it might be slightly different. Like noting when it comes to like federal, even when you do your taxes, right, whether you own a, you're an individual organization, you are charged with, in order to be able to take proper deductions, charged with being able to set what the market is, right.

And so I think that when it comes to housing, there may be a slight, I think there might be slight issue with that, but I do get and understand what's about everything but housing. So housing is the one that has me a little bit flagged to the authority just because of that federal requirement to set rent at market rate. It seems like it would be easy to use a program to be able to figure out what that is that has public information. And so that, that is, that concerns me slightly.

And then there's this thought process. And I want to make sure, because I know I was focused more on the housing part and I want to give a chance for the opposition, who's not focused so much on housing to comment on this, if the Chair is okay with that. But the other thing I want to think about is the, this seems like it favors, it could favor large businesses versus small.

I'll say this to the author, not the sponsors. Just because large businesses would have the wherewithal to be able to create their own version to be able to do, to do what they need to do for their pricing. But small businesses are not going to be able to do that. They're going to need the support.

So I don't know if you've thought about small versus large, that kind of thing. So just something to consider and if you want to comment on that, that's great. But before we jump on, I want to on the first topic that I piggybacked off on my colleague, if you wanted to say something not associated with housing. I was more focused on housing. If there was another thought beyond housing, and then speak that. And then to the Chair, I'm done.

May I? May I, Mr. Chair? If I could just take you to the language in Section 1, the first new Section 16729, Subdivision A. If either of the following is true. So it gives you subdivisions 1 and 2. In A1 it is with the intent that the common pricing algorithm be used to recommend prices.

But in A2 it says that they should know or should knows or should know that the common pricing is, was, or will be used. So a much lower standard than in A1, which is intent, which really speaks to the collusive nature that the primary witness has indicated. So I would note that there's a much lower standard in A2 versus A1.

So just maybe in reverse order on that issue, I think it's just somebody doesn't use a tool with the intent that somebody else use it. They use it with the knowledge that somebody else is using it. And in antitrust, mutual assent to the common use of a tool is something that can indicate the presence of an agreement to collude. Assembly Member Wilson, you had mentioned the relative impact on small businesses. I think small businesses often provide the competitive pressure on large businesses to lower their prices.

I think that small businesses have a virtuous role in our economy and do not stand to be harmed by this. I think small businesses are very adept at researching the market, understanding what their own personal revenue targets is, understanding what their consumers are demanding, what they will pay, and setting their prices pursuant to those needs and to the needs of their consumers. And I think that's a fundamental source of really positive competition in our society.

And you'll also see that in some situations small businesses are being compelled or coerced into the adoption of pricing recommendations in exchange for participation in or access to certain data sources. And that's a sort of way where you'll find small businesses saying, please free me from this dynamic.

I would rather not participate in this as a condition of banal, benign, pro-competitive market research. Just a note on the non-competitive data piece Because I know that my colleague at the Apartment Association has brought this up and it's an issue in the RealPage litigation.

The use and exchange of non-public competitor data is one way that courts will infer the existence of an agreement between competitors because there is no competitive self interest for a business to share that information with their competitor. So you'll see that pled in a lot of these cases.

It is not the only way to infer the existence of an agreement. And in fact, over the past hundred years courts have adopted other metrics for understanding when a competitor acts against their competitive self interest. When I see these things pled in cases, I think that the plaintiff is doing a little bit of belt and suspenders because they plead everything that they can in the hopes that something will stick with the court.

So it would be a mistake to leave that out of a complaint, but is certainly not the only source of an agreement. And in fact, even the use of common public information can be the source of an agreement. You can use public data in a manner that does not facilitate an agreement. The inverse applies as well. And so we draw that line in this bill, and we really thought through this I think in an elegant fashion. And I'm happy to continue the discussion with my colleague here.

Thank you for the discussion.

Thank you. I saw Assembly Member Patterson, Petrie-Norris, and DeMaio. Mr. Patterson.

Great, thanks. Hello. Thursday afternoon. So you know, I'm not a lawyer or anything like that, but yeah, you know, so. But I am on the Housing Committee, and so I always do think about this from a housing perspective also. And I happen to become first aware of these types of software when I was on the Rocklin City Council and I found out that an apartment owner had used software.

I thought that was like incredible that you know, I actually got tired when I was looking for apartments going into places and, you know, the rent, I don't know, I don't know how they made rent at that time, but it was always too much. But that said, I think where I'm kind of conflicted on this is there was a statement that I think almost makes this bill unresolvable. And so I want to see if I understood it correctly. But essentially, if two parties are using the same software, then that is what you're trying to prohibit. Is that correct?

Just to put a finer point on it, Assembly Member, it's the same software relying on the same data, performing the same function. So all of those elements have to be true. I think that there are plenty of pro-competitive ways to use software to implement a business's own pricing strategy based on their own revenue targets, based on their own data and market research, including that public data. But this, what we are talking about here is software that is processing the same data to perform the same function. So the tool really is, the sameness of the tool is defined is what is key here.

But even if it's all public information.

Well, I think, yes, correct. Provided that the public information is being processed in the same way and performing the same function. By illustration, a business might set different revenue targets, different benchmarks, different priorities. We want to maximize occupancy. We want to elevate revenues during this period. We want to minimize this, that, or the other thing. We want to increase quality. Those are all independent pricing strategies. And if those come into play, it's not the same tool.

If I may, the example that always comes to mind when we think about, we get kind of caught in the circle of data and whether it's public or private is the fact that in analog days. And I remember walking around the block and looking at, you know, apartments, right, like for sale signs in the window.

And that's how you'd figure out, like, what the market would bear and what you could afford. But similarly, you know, right now, when you pull off the side of the freeway, there are always, like, competing gas stations. Right. On, like both sides. And it would be collusion if the two people in those gas stations, even though the prices could not be more public. Right. If the two owners of those gas stations walked to the middle of the street and decided to start jacking up their prices. Like that is collusion. Fully public data.

And I think that what we're trying to get at here with this, with this piece of legislation, it's that agreement, but how those agreements are actually occurring behind, behind a computer and not out in public. And so that. Well, not that that would be public either.

Obviously, people don't make these agreements in public. But you know what I'm saying. And so we're trying, you know, that is what we're trying to get at and getting precise around how that looks and how to describe that behavior and that conduct is certainly a challenge. That's why the Majority Leader has gone through so many rounds of discussions, rounds discussions and, you know, and really great feedback from so many people to try to get at the kernel of that agreement.

Yeah. So. And I actually, the gas one is a good example. And obviously I know that the Majority Leader, you know, is going to be very thorough as this bill moves forward and do due diligence. But the gas one is a great example because there's an app for that that I actually use on a regular basis to find out where I can go afford gas. Is it collusion if those gas station operators are using that app to set their gas price?

This is one of these questions. We've had some of these hypotheticals come up in our discussions.

That's what I use to purchase my gas.

That's what you use? Yeah. So you're not polluting for sure. And I think the question is hard to say. Right. Like there's some possibility that the gas stations are working together behind the scenes to jack up prices and they're watching to see what, you know, what the market will bear, but we don't know.

And I think that's one of the challenges of what we're seeing with these algorithmic tools is that scratch beneath the surface, sometimes we're finding collusion. Not always, but sometimes. And so sitting here, it's almost impossible for me to say that that is for sure happening.

That's what's kind of scary though. Because we have to make laws. One more question on a type occlusion. This, I swear this will be the last question then I'm make statement. If I'm a, I actually am a licensed real estate broker, really bad at it, which is why I don't do for a living. But if I were to recommend a client, or even on the sale of the purchase of my own house, if I was to recommend a client, set the price of their house based on software that I use that showed me the comps in the area. Is that collusion under this bill?

This is a... Let me think about that for a second. So you're recommending based on comps. Right. Because you're looking at what's been for sale or has sold recently.

Yeah. In fact, there's a lot of software out there that comes up with what your price should be based off of, I assume, algorithms. I don't think people are sitting back there looking at comps.

I've thought about this one because I have a friend who's a real estate agent. She says that whenever this happens where people look at the comps and they say, but my house should be worth X, and then the real estate agent goes like, not really. It's actually worth less. That is an issue that comes up a lot with real estate agents. So again, a little... I mean, hard to say. And I would pass it over to Lee, but I wanted to go back, if you don't mind me asking you a question. The gas station scenario...

I do mind. I'm just kidding.

Okay, I won't then.

I'm just kidding. I'm joking. Not that serious.

In the gas station scenario, if it turned out that that app that you're using to find the low prices, if all those gas stations were actually working together to jack up your prices, that's not okay. Right. Like, that would be the kind of collusion that we would not want to see because that only harms consumers. It doesn't help anyone except the gas station.

But what's interesting is it's totally cool if they walk, drive around town and see the same thing and then jack up my price as a result. That's legal.

They can try it. Sure. Yeah.

So, I mean, well, somebody's gonna have a tough time saying, I just... Okay, here's... Here's my issue with the bill. Just to, like, put this out there. First of all, there's a lot of cases going on, and I think we need some, like, legal resolution around that about what the even the current law is.

The second thing is, I have a lot of concerns to say that public information can't be... I can't use a service in which information that's publicly available to set prices as a business owner. Like, I get it if I shouldn't be talking with a competitor about, you know, how I'm going to do that or whatnot and the strategies around that. But I enjoy public information. I think that's a good thing, and we should welcome more access to that.

And I think that this could have a chilling effect on public information in certain places of prices. And I'm happy to hear a response to that. But I think that's what concerns me about this bill. I understand where you're going, the french fries situation. Don't screw with my french fries. But like...

Assembly Member, if I can be far more blunt than my colleague co-sponsor, if all the app is doing is providing publicly available listings, that is market research. That is benign market research. I don't think there's any issue with anybody up here on this dais with a business running around seeing what their competitors are offering for prices in the real world or looking at actual listings on an app. That's not at all what we're talking about. We're talking about the use of a tool to set or recommend prices. And on its own, that market research is not setting or recommending a price.

It's a very borderline distinction. I get what you're saying, but I'm not smart enough to necessarily... Like these gas station owners. You know, it's like if I owned a gas station, which is a very mom and pop business, by the way. I mean, these aren't owned in a large part by the, you know, refiners and things like that. If I owned one, I would not be necessarily smart enough to set the price based on, you know... Like, I mean, I think we had a hearing where it was kind of said like, yeah, we set, you know, we kind of look at what our costs are and all those.

There's a whole factors that go into it, but these are public information. And I just feel like I don't have an issue if the software is saying, hey, this seems like a fair price based on this public information. And to the extent that that's unclear, I think that's what the court's for. And so that's why I'm concerned with this bill at this point. But I understand where you're going and I think maybe we can get there at some point, but I don't think we're quite there yet for me to be able to support it.

I certainly think we can get there. Thank you, Assembly Member.

Thank you, Assembly Member Patterson. Assemblywoman Petrie-Norris.

Thank you, Mr. Chair. Hang on. Thank you, Mr. Chair. So I too appreciate what I think... What I think the author is trying to do is stop price fixing inclusion, if I understand correctly. But I too have quite a few concerns about the bill as it's currently written and currently in print. And I guess I'm going to start with a couple questions, but I want to start with isn't this already illegal? So price fixing and collusion is illegal in the real world, in the virtual world. So what about the current law is insufficient in the virtual world?

Sure. And thank you for the question, Assembly Member. The answer is that collusion is illegal even if you use a price fixing tool to do collusion. But as we said, detecting how collusion manifests behind a price fixing algorithm is a really serious problem for the courts.

The same way that illegal agreements to fix prices have always been difficult to to identify, the price fixing algorithm further obscures the existence of the algorithm. Meanwhile, the Supreme Court over the past 15 years has made it much harder to bring these cases by elevating the pleading burden in the initial stages of the litigation.

So essentially what courts have said is you need silver bullet evidence of an illegal agreement at the same time as that silver bullet evidence has become virtually undetectable. So what we seek to do is to codify best practices that courts have begun to coalesce around to identify how that illegal agreement manifests through the use of price fixing software.

Okay. I'm also concerned because the one example you gave, it sounded like, so the Potato Gate incident, you said there was like a new case and a new investigation. So that's already kind of covered under current law. What you just explained about how difficult these cases, and I too am not a lawyer, how difficult these cases are to detect, to prosecute, to prove. I don't see anything in this bill that's going to change that. And I guess the problematic thing as well to me is that it just assumes that using an algorithm is price fixing. That's kind of the central premise of the bill, and I think that's a flawed premise.

If I would respectfully just qualify, the intent of the bill is not to prohibit the use of a pricing algorithm. It is to prohibit the use of the same tool by two or more competitors to fix prices. So, I mean, it is the commonness of the pricing algorithm used by more than one competitor in a market, that's how you remove the independent competitive pressure that drives prices down, that improves quality, that drives increased supply.

Yeah, I understand that. I just, like, when we've asked you to sort of articulate the kind of problem statement, I mean, you've said that there's sort of an agreement, there's a kernel of collusion. It feels like there's like this is, it definitely feels like this is opening us up for a lot of fishing expeditions.

And even the way you're describing it, it's like sort of maybe there's a thread. Let's pull on that thread. So I think that you need to get a lot more precise about the problem you're solving and the way that you're solving it in order for me to support that because right now it is just, it's much too broad and I'm not exactly clear how the language before us is actually going to solve the problem you've articulated.

If I just very briefly, I think the problem that we've articulated is that price fixing is ubiquitous across our economy. Collusion is happening in every single industry that you look at. Do a look for price fixing algorithms on an Internet search engine and you will find evidence of price fixing algorithms being used in every single industry that you look at.

The extent and the magnitude of collusion that is depriving consumers of the benefits of competition, that is depriving small businesses of their ability to act independently in a market. This is extraordinarily well documented evidence, and that is the problem that this bill seeks to stem. And if the law was adequate as is, you would see a lot more enforcement of existing law. But it's just not easy enough to bring these cases. And these aren't fishing expeditions. This is ubiquitous harmful conduct occurring across our economy.

Help me understand, though, how... So for those examples, give me... I just, I don't understand enough about this issue area to understand what you just said. So help me understand, like that example that you just said, this widespread collusion, evidence of it online. How is it that you don't have the tools needed to identify and prosecute that today if you're saying there's widespread evidence of it? And how would the tools that are articulated in this proposal help to do that more effectively?

Right. Assembly Member, so this is going to be a bit of a technical response, but what courts will look at at the pleading stage of litigation when a case is brought is for something called a quote, unquote plus factor, circumstantial evidence that courts will derive an inference of an agreement from that additional quote, unquote plus factor.

Over the course of the past century, courts have arrived at dozens of plus factors that create circumstantial inferences of the existence of an illegal agreement. Among those, if the distributor of a pricing tool advertises its tool as performing a collusive function, this is a tool that you can use to set prices.

You can use this tool to raise prices. You can use this tool to, quote, unquote, beat the competition or to neutralize the competition. Another plus factor is when the user of a pricing tool mutually assents to the use of a pricing tool with a competitor. These are not always, you know, the tool in question is not always a price fixing algorithm or a piece of software. Traditionally to spend trade associations have served that kind of hub in a hub and spoke conspiracy. But the plus factors are very hard to identify, very hard to plead.

And what we are doing with this legislation and what AB 325 seeks to do is to codify a plus factor, the distribution of a common algorithm to two or more competitors with the intent that it be used in a certain specific way, and provided that it is using the same data and performing the same function, that that is a codification of a plus factor that a court would ordinarily, we believe, ultimately draw an inference of an illegal agreement to fix prices.

Okay, all right. Which seems a little different than what's kind of written down in the bill, but okay. Thank you.

Thank you. Assembly Member DeMaio.

I really appreciate the questions from all of my colleagues because it underscores the concerns I'm having with the bill being so case specific. And I believe that when we enact statutes that create a civil or criminal penalty, it should be crisp and clear. Because you're going to have prosecutors, investigators being present with a variety of cases and situations where they have to make a judgment call.

That's why it's so important that when we do pass language as to civil and criminal sanction that we are as clear as possible. And if we're not as clear as possible, we have to pump the brakes and refine the legislation. So I don't think this legislation is clear enough.

And I think that the questions that my colleagues on both sides of the aisle have raised is just the evidence of that. You just said something quite interesting. You said, quote, collusion is happening every day and everywhere. And you also said it's, quote, based on well documented evidence.

What stops under our existing antitrust laws from people being prosecuted if, as you're saying, collusion's happening and it's based on well documented evidence? That's not... I mean, those are crimes right now, are they not? Under existing law, those are crimes. If there is collusion and it's well documented evidence, a prosecutor can bring a case if that's true. Am I wrong?

I actually think that these two points that you raise are related. I think that the reason these cases are hard to bring and aren't brought, if you look at the history of Cartwright Act enforcement against price fixing schemes over the past 20 years since the dawn of the pricing algorithm era, you don't see these cases being brought precisely because existing law lacks the clarity that this bill seeks to provide.

So I actually and understand the intent of this bill to provide clarity in the law and to draw that bright line that actually existing price fixing law fundamentally lacks, that causes tools like the Cartwright Act and our historic 130 year old antitrust laws to become unenforceable.

Again, I beg to differ. I think by passing this language, the statutory language, it creates more uncertainty. Let me go on to the issue of intent. How do you prove intent here? Because your bill seems to suggest just the use of the algorithm is evidence of intent, and I don't think that that's necessarily true.

In fact, in most cases people might use a product, commercial product. Because we're all into data these days and so many people are using those chat things, GPT, GBD or whatever. And it's, and the intent is not, it's not collusion. The intent is efficiency. The intent is getting it right actually. So it seems as though you're saying just the use by two competitors of a common tool is evidence of intent. That's what the bill seems to establish here, and I'm not sure that that's proper.

Currently for users, so that's in Section 2, the users would have to know or should have known. And so participation and you buy into the algorithm, you're using the algorithm, you're participating in the use of the algorithm. And you either know that it's being used, as Lee was saying.

The examples where the algorithm is being pitched to you as a way to beat the competition or a way for you to jack your prices, so that you would know that you're participating in a collusive scheme or you should have known. And that I think we hold, you know, we hold business owners to standards all the time around having to know that what they're engaging in is like is legal or illegal. So that part doesn't feel particularly onerous in terms of the standard.

We've heard a lot from proponents. A response from Mr. Micheli.

Well, I would just say, if I may, Mr. Chair. Sorry. In response, remember the Cartwright Act violations can be civil penalties up to $1.0 million if I recall correctly. It's a very significant damage. The concern is that a lot of statements are being made about intent to collude. Intent, intent, intent. Intent is in A1. A2 describes a know or should have known, which is a negligent standard. There is no intent required in a know or should have known. And it also says is, was or will be used.

So I appreciate the statements about intentional collusion between parties, which as you have indicated and many of your colleagues have, is already a violation of California's antitrust laws. The language contained in A2 is much broader than intentional collusion. That's, and that's... May I just finish? That's one concern. The second concern is the lower pleading standards that are being made available and added to the B&P code in Section 2 of the bill. And so in combination, I think it's deeply problematic when you add A2 in combination with Section 2 of the bill.

So I know we started with french fries, and that can... Again, the problem having is that we're passing a statute based upon an analogy, an example. And that could be a bad, you know, bad thing that we want to guard against. But I kind of go to real estate. Redfin, real estate brokerages that have a variety of commercial data packages, the use of data analytics, which some would argue is not publicly available. The data analytics package itself looks at various data points that may be publicly available, but the analytics package then converts those data streams into proprietary.

That's why people can sell it as a package, as a subscription. And I don't know if... My concern is that this might make almost all of real estate illegal because of the types of packages and software streams and data streams that they use. So, again, I'm very concerned about... I understand the intent. It's a worthy intent.

We know that in the era of data and algorithms that it opens up all sorts of opportunities for bad behavior. But I think if we're going to do something there, we should really sharpen the scalpel to make sure that we are not creating situations where people unknowingly are running afoul of antitrust laws. So I can't support the bill today in its present format.

Okay, thank you, Mr. DeMaio. Assembly Member Bennett.

Yeah, I'm going to, I was watching this, by the way, down on TV for this debate, so I'm going to go as fast as I can. I just want to take one example and see if that helps illuminate what I think is the key question in front of us. And that is my colleague's suggestion about pricing and the pricing app for gasoline. And so this is what I think the author and the proponents are intending to say. And my suggestion is, I'm here as a substitute. I'm going to be voting with the, with the Chair's recommendation.

But as this goes forward, this may be the, what I think is the thing you want to clarify as the bill goes forward. If you have a pricing app and all it does is it identifies all the publicly listed gas station prices around, my colleague can use it to decide where to buy and somebody else can use it to decide what price to price their gasoline.

But if that pricing app also identifies because the companies provided proprietary information that everybody else doesn't have some public access to, like these are my shortages, I'm going to have a shortage soon. This is what demand is getting softer. Even though I'm at this price, I'm selling a little bit less. I'm thinking about lowering the price.

That's the kind of information that is not public information that some of these proprietary apps are actually designed to try to do. They get information on what's happening with the vacancy rate, how many people are not renewing their leases for that. That is what should be illegal because that app is designed to try to specifically do that.

And if you make that clear, and as I read the bill and I read the write ups, everything I read says that's what you're trying to do, but it just doesn't specifically say that you're using non-public information as part of the algorithm that would, in my mind, seem to clarify many of these questions that people have in front of them.

So I'll be supporting it, but I would be strongly recommending that you make that modification to deal with the thing. And that I think would keep us from inadvertently... So now, and if I could close with this, which is that if I subscribe to an app that I know is getting proprietary information from a whole bunch of other people, then I should know this is a price fixing app, right.

If I am subscribing to an algorithm that is getting only public information and nothing else, I shouldn't know that that is in fact the case. In fact, if they're asking me for proprietary information then I should know they're asking everybody else for proprietary information and I should be able to very common senselessly.

And the reason why you could make the case for this is that it's just really difficult to prove price fixing. And when you add the additional, you know, it's already hard to get the people in the smoky room. People are careful to not do it that way. When you add the complication of AI and the algorithms like this have that further complication. So with that, thank you very much.

Thank you, Mr. Bennett. Okay. I think everyone's had, almost everyone's had a chance to participate. So seeing no other Members with questions, Assembly Member Aguiar-Curry, would you like to close?

First of all, I want to thank everybody for the, the great conversation because this is a difficult bill. It's complex, and we intend to continue to work on this. And we are continuing to work with the AG's office, other offices, to help us make sure we get it right.

I just want to remind everybody this is really about protecting consumers and keeping things more affordable for our communities. It's also a bill that's not about stifling innovation. We continually want to make sure the innovation's there and making sure it's efficient for businesses. I hope that you will consider that this is a long...

There's lots of work to be done on this, but we need to get past this, and we have opportunities to do that. And those of you that are opposed or whatever, I would love to have you sit and talk to us so. That we can get it right. With that, I respectfully ask for your aye vote.

Thank you, Madam Majority Leader. Is there a motion or a second? Moved by Assembly Wicks and seconded by Mr. Bennett. Madam Secretary, please call the roll.

Item number three, AB 325 by Assembly Member Aguiar-Curry. The motion is do pass to the Appropriations Committee. [Roll Call]

At the moment, that has six to two with a number of people absent. So we will hold the roll open for absent Members. Thank you. Assemblymember Aguiar Curry. At this time, we will go back to item one. Assembly Member Calderon

And while you are getting situated with your supporting witnesses, we are going to take up the consent agenda. We have three bills on the consent agenda. AB979 by some Member Irwin with the motion of do pass. AB995 by Senator Coloza with the motion of do passes amended.

And AB 1387 by Assembly Member Quirk-Silva with a motion of due. Pass. Pass. Madam Secretary, please call the roll.

[Roll Call]

Is there a motion on the consent calendar by Ms. Wilson? Thank you for catching that. And second by Mr. Bryan. Thank you. And back to the roll call.

[Roll Call]

At the moment we have eight. And that will be consent calendar will be adopted. We'll hold the roll open for absent Members. We're gonna go back and clean up item number eight. This is AB576 by Ms. Irwin, but do pass to Appropriations. Is there a motion moved by Ms. Wilson? Second by Ms. Wicks. Madam Secretary, please call the roll.

[Roll Call]

At the moment, that has eight and will be out. We'll hold the roll open for absent Members. And lastly, we have item number 10. AB 1160 DPass is amended to the Appropriations Committee. Is there a motion? Second moved by Wicks, second by Patterson. Madam Secretary, please call the roll.

[Roll Call]

And we have eight on that. It will be out and we'll hold the roll open for absent Members. Back to Ms. Calderon. You're here to present item number one. This is AB75. Please begin.

Thank you, Mr. Chair. Members. AB75 provides new consumer protections to homeowners when insurers use aerial imaging to make decisions about coverage. Insurers have been increasingly using images from drones, aircraft and satellites in lieu of in person inspections to make underwriting decisions. California homeowners have reported that they were blindsided by non renewals based on these pictures.

In many cases, it turned out that the images were inaccurate or outdated. AB75 requires insurers to provide notice before collecting aerial images of a residential insurance policyholder's home and allows policyholders to receive any aerial images taken of their home. If an aerial image is used to non renew, cancel or reduce coverage.

AB75 also ensures that the image is up to date, providing the policyholder with the right to request an in person inspection to verify the accuracy of the image and to remedy the issue if possible. With me today and testify.

To testify in support of the Bill is Claudia Mildner, Assistant Chief Deputy Legislative Director for the Department of Insurance. And we also have Damon Dieterich, Privacy officer and attorney with the Government Law Bureau to provide technical expertise in the event there are questions.

Thank you. There's a motion by Ms. Irwin. Second. Ms. .... You'll have about two minutes.

Sure. Thank you. Good afternoon, Chair. Members of the Committee My name is Claudia Milner, Assistant Chief Deputy Legislative Director with the Department of Insurance. And of course with me is Damon. As Ms. Calderon mentioned, I'd like to thank Assemblymember Calderon for authoring this important consumer protection measure.

AB75 would require residential property insurers in California to give notice before they capture or obtain aerial images of the insured property. The homeowner would have the right to request and receive copies of the images, challenge coverage decisions based on those images, and fix any issues uncovered.

As widely reported by the media and documented in consumer complaints to the Department, insurers are increasingly using aerial imagery to inspect homes and often to deny coverage.

Insurers and their third party vendors are using not just drones, but also satellite images, manned and unmanned aircraft and high altitude balloons to collect images of homes, often without the homeowner's knowledge.

In an opposition letter submitted by the industry, insurers shared that they inspect homeowners properties using images that could be a year and a half or 18 months old, which raises serious questions about whether outdated and inaccurate images are being used to cancel and non renew policies.

AB75 seeks to remedy this by requiring if images are used to act on a policy that they be no more than 45 days old. Consumers are concerned about privacy and lack of transparency in the home inspection process.

Policyholders shouldn't have to fight to know when their property is being surveyed, to understand what information is being assumed from those images and to know how that information is being used to affect their policy.

This measure strikes a necessary balance, allowing insurers to use fast, cost effective aerial data while policyholders gain transparency, access to the images, and the chance to remedy the problems or request a hand on inspection. AB75 ensures consumers are protected not only not not unfairly penalized based on inaccurate, outdated or misrepresented images.

On behalf of Insurance Commissioner Ricardo Lara, I respectfully ask for your aye vote. Thank you.

Thank you very much. And you're here for technical questions? Thank you. Are there any Members of the public wishing to state a position of support?

Good afternoon. Zach se with the League of California Cities in support. Thank you.

Are there any Members here wish to provide any witness of witness statements in opposition? Please come up to the table. Sorry. I want to reconcile something here. Are we. Are we.

I'm here on behalf of the industry for primary opposition as well. I think privacy.

We didn't collude with the industry. I appreciate that.

Are you both okay? We can have two statements and with

Privacy Rights Clearinghouse.

Consumer Federation California.

Their comments will be similar.

Okay.

Seems like Monopoly testing.

We'll see. Would either of you be willing to.

Let's play musical chairs. Okay. So not really. I think we should allow your. On behalf of Pip...

On behalf of APCIA, PIP and NAMC.

Yeah, I mean I think that's an important voice the consumer.

Just to stay state consistent with our rules. If I could ask you two to reconcile who might provide your testimony.

What if we each do a minute and then you wind up with your two in the.

I'm trying to stay consistent with rules here.

My testimony is two.

Okay. Why don't you. Why don't you two combine statement.

Okay.

Okay. Thank you for two minutes and then we'll have two minutes from your perspective.

Thank you.

No, I can go. Becca Cramer-Mowder with Kaiser Advocacy on behalf of Privacy Rights Clearinghouse and respectful opposition. While we appreciate the recent amendments, this Bill still fundamentally fails to protect Californians privacy. Instead, it legitimizes and normalizes a deeply invasive surveillance practice that most homeowners remain completely unaware of. And that has potential to harm California's.

Beyond just insurance impacts, these drone images capture much more than what is needed for insurance purposes. They can capture our children playing in our backyard, security vulnerabilities, neighboring properties, even what is going on inside. With views for the window and other features of our daily life. Without data minimization requirements, these images pose risks to consumers.

Insurance companies have a troubling data security track record. Our database of US reported data breaches documents over 545 different insurance organizations involved in data breaches. Yet the Bill lacks basic data minimization protections. It also lacks safeguards against downstream sharing, making it possible for these insurance industry drone images to be sold to a wide range of buyers.

From immigration enforcement agencies to stalkers to criminals planning break ins. We request for amendments to further address the privacy harms.

Thank you. Thank you Mr. Chair. Thanks for accommodating as well. We honestly didn't know if they were going to come or not or. Or whatnot. We have four issues with the Bill and we are still reviewing the latest set of amendments. We would love to talk with the author and others in more detail.

One, we think consumers ought to automatically receive a copy of any image. They shouldn't have to ask. They should get that copy of the image. Number two, the Bill doesn't pay attention to surplus lines. So Fairplan has grown rapidly. Surplus lines has grown rapidly as well.

Those are essentially unregulated entities that the Department of Insurance does not have regulatory authority over. So let's not ignore that. Number three on the advance notice. We and we're looking at the language that you put in now, Assemblymember on this.

We want to make sure that it isn't a stale old image that they just do an annual notice and then they can trot out that image anytime. We want to make sure the image is fresh. We think that's where you're trying to head. So we'd like to continue to work on that.

And fourth and final, that the Bill doesn't apply because it says that residential property insurance policyholder, which doesn't include an applicant, it should include applicants as well. Thank you. Thank you.

Thank you, Mr. Chair, Members of the Committee, Allison Adey here on behalf of the Personal Insurance Federation, the National Association of Mutual Insurance Companies and the American Property Casualty Insurance Association today. We are currently in an opposed unless amended position on AB75.

We are committed to working with the author to find a way forward and would like to express our appreciation for her and her staff's work as well as the Committee's work on this up to this point. The insurance market is in crisis as many in this room are acutely aware of.

The concerns that remain are purely to ensure that this tool, which reduces cost for inspections and broadens the number of policies that an insurer is able to write, remains accessible to the industry. Insurers must inspect the properties that they insure.

A fundamental component of insurance is confirming that the property aligns with your underwriting standards and importantly, that the policyholder is charged a rate that reflects the their risk. The condition must be confirmed not only at the start of the policy, but throughout the policy term. Insurers only have so many options for inspecting a property.

There are of course, in person inspections where an employee or a vendor of the insurer is sent out to physically inspect the home. Or there are aerial images. Aerial images, as you might imagine, are considerably easier to collect and much, much more affordable which passes on benefits to the consumer if in person inspections become necessary.

More broadly, in addition to the use of aerial imaging, the effect will be that aerial imaging is simply not used. That will affect the number of policies that the insurer can write. They simply cannot inspect the number of properties in person that they can via aerial imaging. It will also increase the cost of insuring each property.

While the cost of an in person inspection can vary depending on location or type of property, companies have shared that it is generally $75 to $100 per inspection. The cost of aerial imaging is a mere fraction of that.

So while we understand the intent of the legislation is to regulate the use of aerial imaging, we must respectfully oppose. We are concerned this Bill, as currently drafted, will exacerbate the issues of availability and affordability in the insurance market in California. We are incredibly grateful again to the author for her work to stabilize this market.

We look forward to continuing to work on this with you. And we are working on updated draft amendments to offer based on the new language.

Thank you very much. Are there other Members of the public here wishing to give a statement or. Sorry, a position of opposition?

Yeah. Thank you. Good afternoon, Chair and Members. Naomi, Padron. And on behalf of the Pacific Association of Domestic Insurance Companies, we have an opposed unless amended position and would align. Our comments with the Personal Insurance Federation. Thank you.

Thank you very much. And we'll turn it back to the dais. I know we have a motion and a second. Is there any Member question or comments? All right. Seeing none. Ms. Calderon, would you like to close?

Yes. Yes. Thank you, Mr. Chair. So, you know, first of all, I want to say that I'm going to continue to work with the opposition. We've been having discussions. This Bill is evolved. It's evolving as we go through this process. And I think I'm confident that we're going to end up with some good policy.

But the number one goal is to protect consumers. And so I think this Bill is aligned with that goal. Respectfully ask for an aye vote.

Thank you, Madam Secretary. Please call the roll.

[Roll Call]

That currently has seven. We will hold the roll up and perhaps the Members. Thank you very much. We are going to go next to Assembly Member Bryan. This Is item number 11 AB 1221. When you and your witnesses and support are situated. You may begin your testimony. And we do have a second witness coming. I see.

Good afternoon, Mr. Chair and colleagues. I'm proud to present AB 1221, which will prohibit the use of invasive and potentially discriminatory surveillance systems in the workplace and will protect worker data from being sold or shared by employers.

Before I begin, I want to thank the committee for their excellent work on this bill, as always, and I accept the committee amendments. Workplace surveillance is not a recent phenomenon, but today's workplace surveillance tools differ in their scale, their speed, and their invasiveness. Employers used to have to monitor video feeds to track workers.

Now, artificial intelligence and tech advancements allow them to not only track worker movements, but also compile massive amounts of data points and analyze them in real time. Current technology includes wearable devices to monitor workers speech patterns, devices that can collect and retain biometric retina tracking, and systems that use emotional, facial and gait recognition.

Gait that's your walk. Employers can use this surveillance data for predictability, predictive behavior analysis to prevent workers from exercising their protected rights, or to figure out deeply personal information such as health or even immigrant status. Employer surveillance tools take various forms.

Call center workers, for example, may be required to use tools that employ emotional recognition and generative AI to analyze interactions. These systems send constant nudges to alter worker behavior and provide data to supervisors for corrective measures. Workers face risks of bias, discrimination, and errors, usually without knowing how algorithms assess their tone, their accent, or their word choice.

Other surveillance tools secretly monitor body movements using gait recognition, flagging suspicious individuals, whether customers or employees, based on how they walk. This can easily lead to discrimination against individuals with physical disabilities. AB 1221 creates a surveillance and data protection structure for transparency, worker protection, and prohibitions on the most abusive technologies.

The bill prohibits the use of the most unreliable and potentially discriminatory types of surveillance, including facial, gait, and emotion recognition technology. It also prohibits the use of these tools to infer protected and personal information about workers, including immigrant and health status, and the likelihood of unionizing or speaking up against workplace violations.

AB 1221 requires advance notice to workers when employers introduce or use new surveillance tools so workers know where they are, how they work, and why they are being monitored in that way.

This bill also enacts really important data protections to prohibit employers from sharing worker data for purposes beyond interpreting the data, and makes both the employer and third party entity liable if worker data is breached or misused. Lastly, this bill requires employers to produce corroborating evidence to validate surveillance output before disciplining or firing a worker.

Essentially, we need a human being to corroborate the outputs of these technologies before disciplinary actions and firing actions can take place. Joining me to testify are Ivan Fernandez with the California Labor Federation and Shane Gusman representing the California Teamsters Public Affairs Council.

Thank you. You'll have two minutes.

Good afternoon, Mr. Chair and members of the committee. Ivan Fernandez from the California Federation of Labor Unions, proud co sponsor of AB 1221. As the assemblymember noted, workplace surveillance is not a new phenomenon. Biggerton agents have been hired in previous years to bus union organizing to the- to the introduction of workplace cameras.

Employers have been using surveillance for decades. However, the tools at the disposal of employers big and small far exceed the capability of any surveillance tool or technology or method that has been previously used. The assemblymember noted the use of sophisticated surveillance tools such as wearable devices, as well as gait, emotional and facial recognition technology.

These tools are not theoretical. They are here widely available and surprisingly affordable. For example, developers such as HumanEyes sell biometric worker ID badges equipped with microphones and sensors to record conversations and movements. These wearable trackers can be used to gather massive swaths of information by listening in on every worker conversation.

Another tool on the market developed by Everseen provides retailers with discreet monitoring to track the bodies of customers and workers on the shop floor.

Powered with algorithmic real time detection loss, this tool can flag suspicious individuals and their mannerisms, a form, as the assemblymember had noted, of surveillance that is likely to flag and discriminate against people with walking disabilities.

Regarding the case highlighted by the assemblymember, those MetLife insurance call center workers were being surveilled by an emotional surveillance tool known as Cogito. The use of this technology is a clear example of how voice, speech patterns, vernacular and a person's accent can all be misinterpreted by an emotion recognition system.

If an algorithm- If an algorithm was trained using a white male English speaker, then the measures of empathy and other emotions would be measured against an inherently limited, biased benchmark. The introduction of these tools only stand to exacerbate the discrimination and inequities workers currently face, and technology is not free of these biases.

AB 1221 will establish first in the nation protections for workers by establishing human oversight, transparency and data protections when workplace surveillance tools are being used. And for these reasons I respectfully urge your aye vote at the appropriate time. Thank you.

Good afternoon. Shane Gusman on behalf of the Teamsters, proud co sponsor of the bill, along with the Amalgamated Transit Union, the Machinists Union, Unite Here, the Utility Workers Union of America and the Engineers and Scientists of California, all in support of the bill. I'll be very brief because I know it's late.

As a previous witness stated, the use of technology, all of these unions, all of the industries they represent, the use of surveillance tools has been around for- for decades. The difference with what we're observing now is the technology has improved from the perspective of some, exponentially.

But also it's getting much cheaper and so it's easier for employers to utilize. And the negative impacts on the worker are- are pretty substantial. You're seeing health and safety impacts because folks feel like they're being watched all the time and not concentrating on what they're doing in healthy and safety sensitive positions.

Loss of autonomy, loss of privacy, and ironically, loss of productivity. So we think it is appropriate for the legislature to take a look at this and institute some appropriate guar- guardrails. And we think that's what this bill does. And we urge your aye vote.

Thank you. And I think that's- your opposition, right? Are you opposed? You're opposed. Okay, great. So we're going to do other support and then we'll come back to you. So, anyone else here in the room in support of this bill, your name, organization and position.

Good afternoon, Madam Chair and members. Robert Hurrell, Executive Director of the Consumer Federation of California, in strong support. Thank you.

Good afternoon, Chair and members Bryan Miramontes with American Federation of State County Municipal Employees, in support.

Navnit Puryear on behalf of the California School Employees Association. Also in support. Thank you.

Megan Abel on behalf of Tech Equity and also California Employment Lawyers Association, in support. Thank you.

Thank you. We will now take the opposition witnesses. I think we're gonna have one. One more, I imagine, with you. So hold on one second.

Perfect. Okay.

When you're ready. And you can do it in whichever order you two prefer. I don't know.

Okay.

Madam Chair, Vice Chair, members of the committee, I'm Jake Parker with the Security Industry Association, which represents 200 companies based in California and many more across the country that provide safety and security products. We understand concerns about potential for overly invasive monitoring of workers.

However, the expansive and untargeted scope of the requirements in the bill will limit effective use of security technology- technologies used in nearly every workplace and even put workers directly at risk. It's hard to imagine this was intended.

This stems from classifying broad tech- broad technology categories as covered surveillance tools without regard to the context and purpose for which they might actually be used, as well as the extremely broad definition of worker data.

The notice required will reveal sensitive information about the locations and specific type of security system components which could be easily shared, misused or exported by bad actors seeking to harm employees or customers. Another provision would effectively prohibit employers from proactively sharing security system video or photos with first responders in emergencies.

And the prohibition on disciplinary action based on covered tools means that businesses would not be able to respond to conduct caught on security cameras, including criminal activity or unsafe behavior.

The bill's complete ban on facial recognition technology is not practical and would disrupt the tens of thousands of California businesses that are using the technology in their operations and for security. Even with this small change allowing for electronic device access, it ignores the many other proven benefits.

For example, would not allow biometric timekeeping or rideshare services that use remote biometric authentication for drivers in order to protect customers. In other applications, it's really critical to the operation of data centers, energy infrastructure, health care facilities and banking.

And as written, the bill would also prohibit commonplace security system features used to protect workers and occupants, for example teachers and students in K12 and on college campuses. It would also eliminate what has become an essential tool in the fight against retail crime and the violence against employees that it brings.

A sweeping prohibition with specific carve outs is backwards when it comes to technologies that have such varied applications. Instead, if there are specific use cases that raise concerns, then restrictions specific to those should be considered while permitting other uses.

You could wrap that looks like you are.

Consider there are different needs across different workplaces. Think about it. These provisions would even extend to correctional facilities where you obviously need more monitoring of people that are workers and those who are incarcerated. Significant changes are needed.

Thank you

SA and our members will work with you to address those.

Thank you so much and our other witness, when you are ready.

Good afternoon Chair Kahn and Vice Chair Dixon and members of the committee. My name is Hetty Holmes and I'm a human resource professional here today on behalf of SHRM and SHRM California in opposition of AB 1221.

Together, SHRM and SHRM California represent nearly 340,000 HR professionals globally and over 27,000 in California supporting workplaces of all sizes and industries. We respectfully oppose Assembly Bill 1221.

While we share the goal of protecting employee rights and promoting transparency, this bill as currently drafted is overly broad, operationally burdensome and could unintentionally harm the very worker it is meant to protect. AB 1221 applies sweeping regulations to virtually all forms of workplace monitoring and automated tools, even low risk uses like scheduling- like scheduling and productivity software.

This bill could impose significant legal and financial burdens, especially on small and mid sized employers without clear guidelines or safe harbors. And it risks discouraging the responsible use of technology that is already helping reduce bias and improve hiring practices.

SHRM's research shows that AI helps organizations identify more diverse candidates among employers using these tools, 69% say it helps them reach racially and ethnically diverse candidates. Over half say it improves gender and age diversity. And nearly one in five say it helps them reach more candidates with disabilities. Thank you.

Thank you so much. With that, any other opposition in the room? Name, organization and position. I think I preempted you with-

Hi, I'm actually here in support. I accidentally, I walked in right after.

No worries. Busy place.

Monica Madrid with the Coalition for Humane Immigrant Rights in support of this bill.

Thank you.

Ashley Hoffman on behalf of the California Chamber of Commerce, in opposition. Thank you.

Thank you.

Shane M. Clary, California Alarm Association, in opposition. Thank you.

Good afternoon. Melissa Koshlaychuck on behalf of Western Growers, in respectful opposition. Thank you.

Cody Boyles on behalf of the California Grocer Association, in opposition.

Good afternoon. Naomi Padron, on behalf of the California Credit Union League, respectfully opposed.

Matt Easley, on behalf of Associated General Contractors of California, opposed.

Margaret Gladstein, on behalf of the California Retailers Association, opposed.

Thank you all. Bringing it back to the committee. Mr. Nguyen?

Move the bill.

Thank you. Thank you.

So this- this does have some overlap with the Elhawary bill that we looked at last, I think it was last week. And so I- I will be supporting again.

But I am concerned about first, I think with her I talked about workers, when- when these tools are used for worker safety and just want to make sure that's- that is still being considered because this is a broad Bill. But some specific questions. This prevents the sharing of worker data with the government agency.

Certainly understand why we would want to do that. But there are- their employers do regularly share data with- with for instance, EDD and the California Civil Rights Department and the Bureau of Labor to just so they get a better understanding of the workforce. Is- Is that the- Is the intention not to share with California departments either?

No, that's, that's absolutely not the intention. And in fact, data currently is very clear that under an investigation can definitely be shared. But we also don't want to stop the generation of some of those employment reports.

I think we're open to clarifying that, but as you've mentioned, we do want to protect worker data from being unauthorized or accessed without authorization, especially given the enormous data breaches we've seen at the federal level. Just trying to be conscious of how to balance that.

Yeah. And so I think that's- that's one thing that I. Because we don't want- we don't want to lose the statistics of what's happening to our, our workforce. And then there is also there is the concern about the surveillance tool that identifies or obtains or infers information protected by state or federal law.

So my concern would be time cards and- and specifically making sure that there are, you know, that we- that the workers get the meal breaks. And- And somehow that does seem that it might conflict with the protections of PAGA. So I don't know if you've thought about that.

No, we are happy to clarify that this, we- we don't want this to impact the use of time cards or any of those things. I think what we're trying to balance here is the ability to use these tools explicitly for union busting. Right.

And preventing employees from having conversations about workplace misconduct or- or, you know, the idea of collectively addressing their workplace grievances. I think that's the heart of what we're trying to get at. Definitely don't want timestamps or other things to get wrapped up into that. So we're happy to clarify.

Okay. And then the last thing is that it prevents the sharing of De identified or aggregate worker data. That type of CC- CCPA does allow that type of information. I mean, it's. That information can be important for research. There's all sorts of things that De identified information can be used for.

And that was something that I worked on with CCPA. So hopefully you can take a look at that and- and it- it seems that it would be good to be consistent with what, what's protected under CCPA.

No, I think that's, that's a very good point and we're happy to look into it. I mean, prior to this line of work, I did a lot of data research myself and actually PRA'd state agencies for aggregate data, law enforcement agencies to write reports about aggregate trends.

I think some of the concern, though, is with these new tools, the kind of data that they're collecting, making sure that even in the aggregate form, it's not dangerous and harmful for it to be, to be transferred.

And so I think we want to look at that and we want to just strike that balance, but it's something that we're happy- happy to look at.

And- And really, you're- you want to make sure that nobody is personally identifiable by the data.

Correct. Or even, you know, there could be the kinds of trends that serve as proxies for, you know, protected class and protective characteristics, especially like when you're talking about gait data and the way somebody walks could very well be a proxy for a disability, even in the aggregate. And so things like that.

We just want to make sure that we're doing our best to make sure that transparency is always available because we learn through research from aggregate data, but that we're- we're protecting workers at a time where advancement is moving very fast and the innovation which we should encourage isn't used in a way that's harmful to everyday people.

Absolutely. Thank you.

And if I may, before I call on, I believe Ms. Wilson, you wanted to speak. I would just point, folks to page 14 of the analysis. The author has accepted some amendments. I shared a similar concern about security information. The bill originally said that anything that obtained information about, for example, pregnancy status.

And I was concerned that in a hospital a security camera that could pick up an eight month pregnant woman is obtaining protected class data. And the author was absolutely willing to work with this committee and we did actually take out the word obtain.

So now it has to infer it, which means it has to be a tool beyond a security camera, a timestamp. It has to be something that actually can go further in- in analyzing and surveilling.

So I- I know that there is more work to be done and didn't mean to diminish that, but just wanted to note the author's already willingness to narrow the bill and ensure we were allowing for things like security cameras. So with that, Ms. Wilson.

And that might help. So I'll look to the chair too in my comments if that's where this applies. And so I'm just noting something to the author that you noted in your testimony and was also referenced in the opposition testimony.

Is you noting the need for a human being to be able to cooperate, this whatever is gathered in order to discipline or terminate. And then the opposition also noted that they're concerned with that as it relates to their concern with that overall and as it relates to criminal activity or unsafe behavior.

And so I don't know if that touches on what you were talking about a little bit with this. I think in the analysis it talks about a security camera and how so, but I just wanted to understand that ability.

When it's primarily used, sometimes there's difficulty in being able to take for example, like one of the, I don't know if it was here or on a similar bill, as was noted where you have a driver who the footage noticed the eyes moving, that they are sleeping or drowsy in a way.

And that that is all primarily surveillance data and an AI tool that says that and then there's an accident and the only thing you have is this eye movement that said that that person actually was at fault because they were falling asleep and they should be terminated. Like is the goal to not have that data?

And I get that you talked about your intent was really about using this in a way that prevents protection for workplace grievances, unions. But I'm just wondering was it meant to be that far reaching?

Definitely have to- Definitely willing to clarify and work through this process. Any employee doing something that is completely egregious, that is caught, you know, kind of on camera. Corroborated by a human reviewer, you know, corroborated with other forms of evidence as well. Like we want employers to be able to act fast.

Well, that's the part I was wondering. So that- Would that qualify as. How would that. How would you corroborate that by a human? That- That particular, the example I gave. Except. But the tool, surveillance tool.

No, no watching it.

So I think you're saying if it's a video containing that. I think you're saying if it's just a tool that surveils. I don't know. Do those have video?

So. So I think what, what I understood and I can't remember who was in this or the other because these are a week apart.

Sure.

But just. And I know there's been article, not articles. What am I trying to say? TV programs, news programs about this. Is the tool for being able to tell drivers, commercial drivers, whether they're sleeping or not or drowsy or not. That is not just the video. That is the eye, supposedly the eye movement, AI measuring.

There wasn't a blink, it wasn't a whatever. So it's not just the video watching. It is the AI tool that's telling that this person is drowsy and driving while drowsy, which is not against the law, but it is in commercial aspects. It's terminable. It's offense where you could be terminated. So I was asking in those situation.

So are you saying the cooperation is that a human watched the video and also agreed. Is that what you were telling me?

Yes.

Okay. Shaking them heads at the Teamsters, which I know the Teamsters know. But yeah. So I'm trying to figure out.

Also what I think what you're pointing out is like the need for this legislation. Right. Because these kinds of tools are coming to line- online so rapidly and many of them have false positive rates. Right. They are not 100% always effective as well. And so I think there's a- there's a need for these guardrails now more than ever.

Definitely more than willing to continue to work through the flexibility to make sure that any employee who's caught doing something egregious on the job, that employers have the tools to address that, but also want to make sure that these tools alone can't be used to analyze, you know, sensitive data, biometric data, facial data, emotional data, and then provide disciplinary recommendations in and of themselves, absent kind of that- that direct supervisor human contact.

That's what we're trying to balance here. But this is a iterative process because similar to the technology entering new space, regulation and legislation in this space is entering a new space. So willing to have these conversations through the process.

But our goal and our intent is to make sure if somebody is doing something egregious, that that is also something that can be addressed.

Thank you.

Thank you. Mr. Lowenthal.

Yes. Thank you, Madam Chair. I want to validate the comments by my colleague from Thousand Oaks, my colleagues from Sassoon and the chair about the- the intricacies of the bill. And I have complete faith in, in the author will be able to work with all the stakeholders associated with this. I love this bill.

I'm so proud of you for bringing this forward. I hope that you would consider me to be a co author on this bill. I want to align myself with the colleagues, with the comments of Mr. Gusman. You know, we- we are-

we do have to vacuum the corners here, and we have to consider every situation and, and there are some gains to be made. And I certainly, you know, understand that from the perspective of HR, the perspective of- of industry itself.

But at the end of the day, we do have to evaluate what type of community, what type of life do we want to live. We- We have a mental health crisis going on right now that is escalating and getting worse and worse. Is this going to make things better or worse?

And truth be told is the technology is moving so rapidly, we can't keep up with the regulation associated with it. It's unfortunate. And the true consequences of this are us, all of us. All of us. Because it could happen here, too. So very much supportive of this bill. Be voting for it today.

And thank you for bringing it forward.

Thank you. I think that was everyone who wanted to speak. So I want to thank the author for his work with this committee. I think this is really important. And I want to say just generally, you know, as chair of this committee, I have the privilege of being in a lot of conversations around artificial intelligence.

And over the last couple years, the thing that has felt missing here domestically, to be frank, so not just in California, is civil society stepping up and talking about what the people need as we enter a new world of AI.

And so I couldn't be more grateful that you are bringing the people, the workers into this room, into the AI conversation and what it means for them in their everyday lives. And so I think this is a really important conversation to have.

I want to thank your partners for doing the work that I know they do every day, but especially here in this committee. And with that, would you like to close?

Yes, Madam Chair. I want to thank all of my colleagues for their comments. It is- It's always a great day when I can make the member from Long Beach proud. In the last committee, I close with a reference to the TV show Severance that I had recently finished. I won't do that again.

But what I will say is I don't want us to lose the humanity in the workplace as we're moving into an artificial age. We need these tech innovations. I'm a strong supporter of that. But we also need the people. And I think our responsibility here in this house and in this legislature is to protect the people.

And that's what this bill is rooted in. I respectfully ask your aye vote.

Thank you. We have a motion and a second.

Please call the roll.

Item number 11, AB 20- 1221 by Assemblymember Bryan. The motion is do pass as amended to the Appropriations Committee. [ROLL CALL]

That Bill has seven eyes. One no. We'll hold it. The roll open for ABs and Members. Mr. Haney, you're up on AB 289. Appreciate your patience. I know you really wanted to be hanging out in privacy today, so.

Such a smart Committee. There's so many questions and comments. Impressive. Thank you, Madam Chair and Members, I want to first start by thanking you and your staff for working with us on this Bill and accept the Committee's amendments.

I also see our Chair of transportation, who is also here, who we worked with extensively on this, to help get it to where we are today. Speeding vehicles. Speeding vehicles pose a deadly threat to construction workers on California's highways.

Over the last three years, there have been five work fatalities in 19 serious injuries that were the result of vehicles entering construction zones. In 2023 alone, there were over 100 vehicle intrusions into highway construction work zones, often at high speeds.

While statewide efforts like the Presence of California Highway Patrol in active construction zones have helped deter speeding drivers. These efforts cannot and do not capture all speeding vehicles through active highway construction zones.

AB289 implements automated speed enforcement in active construction zones, a proven solution to reduce crashes, protect workers, reduce speeding and enhance driver safety, while also keeping in mind privacy protections for drivers.

I want to note for the purposes of this Committee that the Bill includes the same privacy protections established in the existing speed safety system pilot programs recently signed into law in AB 625 and SB 1297, including prohibiting facial recognition, exempting citation records from disclosure under the California Public Records Act, and positioning the speed cameras to only capture rear license plates.

Automated speed enforcement has been proven to save lives in at least 16 other states and if we act with it here in California, we will save lives and protect public safety. We have bipartisan support in the Assembly Transportation Committee and we will continue to engage with the one group in opposition.

Here to testify in support of the Bill are Geoffery Lister, who is the Vice President of operations at Atkinson Construction, and James Thurwacker, legislative advocate for the California Council of Labors.

When you are ready.

Good afternoon Madam Chair and the rest of the Committee Members. Thank you for giving me the opportunity to speak on AB289 Bill that's near and dear to my heart and very important to the workers that are working on our freeways. My name is Geoff Lister. I'm the Vice President of operations, Atkinson Construction.

Our company, we work on, we work on freeways. We build and maintain the critical infrastructure that the Californians rely on every single day. And in performance of our work, we need to put workers out onto the freeway both day and night within traffic. Right. We the the safety of those.

This is the highest risk operation that contractors that work on the state interstate system really put themselves in. And safety is our company's priority number one. The health and safety of our workers is something that is just paramount to us. This being the riskiest operation that we do. We give our employees everything we can to protect them.

We give them high visibility workwear when we're working at night. We try and provide as much lighting as possible. CHP helps our operations. We provide radar feedback signs, we have truck mounted crash cushions, temporary barriers.

Anything and everything we can do to protect our employees, including robust training and comprehensive planning, is what we will provide to our employees. Unfortunately, even with all of the things that I list that we can't provide to our workers, the things that we can't control are the traveling public and what we can't.

We don't have the tool and the most effective tool which is reducing speeds within our construction work zones. In my 21 years of managing California infrastructure projects, I have seen how quickly things can change and change people's lives. 20 years ago I got the opportunity to manage my first construction project.

And on that project our traffic control foreman was struck by a speeding motorist. His name was Tony Rodriguez. Tony to this day resides in a full care facility with massive brain trauma. And at the time he had a one year old and he did not get to participate in raising his now 20 year old son. Sorry about that.

Please take your time.

This Bill provides the opportunity for us as contractors to create safe speed limits, reduce construction zone accidents, crashes. It gives us a chance to change lives, impact lives, save lives, protect our workers inside. Simultaneously, as Matt talked about, it provides protection of the public's privacy. The Bill was written with privacy values in mind. No facial recognition.

It's taking pictures of license plates only. There's no data sharing. This Matt also allude to. There are 16 states that have put this in place. It's proven to change. The data has shown that accidents have been reduced, speeds have been reduced, and the impacts to individuals lives and families are being reduced as well. So I respectfully request your support.

Thank you Madam Chair Members James Thuerwachter with the California State Council of Laborers. We're proud co sponsors. I want to echo everything that Mr. Lister shared with us. I'll be pretty brief. Our Members, comprised of women, people of color and the formerly incarcerated, build and maintain our state's roads and highways.

They don't work in office buildings or behind desks. Instead they're on the front lines ensuring that the roads that we use every day are safe and reliable. Unfortunately, this is very dangerous work. The number of deaths and injuries associated with driving under the influence, speeding and just being distracted have been on a sharp rise.

We've lost workers, have had many close calls and on any given day things could go terribly wrong. AB289 is a common sense approach to slow drivers down where it matters most and it will save lives. I do want to emphasize that we have worked with other stakeholders throughout the process and have taken privacy concerns very seriously.

This Bill limits what is captured and that's faces, not plates. And the data collected will remain private. Ultimately, AB 289 is about safety and not surveillance. The men and women that I represent should be able to perform their jobs without Fearing for their lives.

On behalf of every individual who's worked in the Middle of a highway to ensure the integrity of our transportation infrastructure. I strongly urge you to approve this and vote yes today. Thank you.

Thank you so much. Anyone else here in support of this measure? Name, organization and position, please.

Madam Chair Members. Mike West, on behalf of the State Building Trades, in support.

Thank you.

Patrick Boylow, on behalf of Operating Engineers Local 3, strong support.

Thank you.

Madam Chair, Members of the Committee. Rob Kerry on with the Operating Engineers, Director of Safety and strong support. Thank you.

Good afternoon. Gus Flores with United Contractors. And strong support. Thank you.

Thank you.

John Moffatt on behalf of the American Council of Engineering Companies in support.

Thank you.

Matt Easley, on behalf of Associated General Contractors in California in support.

Thank you. Do we have primary witnesses in opposition? Seeing none. Then we will bring it back to the dais. I'll start by saying I want to thank you for your testimony.

My first year here was my first time attending the Caltrans Memorial that is held here annually for the lives lost on our freeway as a result of these accidents. And I frankly had no idea how many lives are lost in this way. And not just lives lost, but lives ruined.

And it has changed the way I drive in work zones. But we need that for everybody to keep our folks safe. So I want to thank the author for this Bill and I want to thank you both for being here. Seeing no other comments. Would you like to close?

Respectfully ask youraye vote Thank you.

We have a motion and a second, I believe. Is that right? Yes. Yes, and a second. And I think Mr. Ward as well, you got a second and a third. Let's call the roll.

[Roll Call]

That bill has four I's. One no. We believe they're all open for absent Members. Mr. Lee, you are up. Thank you, Mr. Haney. AB 1291.

I think this is the first time I presented Privacy Committee since like my first term. I feel like I haven't had a bill in Privacy Committee.

I would say that the water is warm in here, but it's freezing. But we're happy to have you, Mr. Lee.

Well, thank you, Madam Chair and colleagues. First, I'd like to thank the chair and the committee staff for drafting the contents of this bill last year and their work on this bill this year.

As everyone knows and have most of experience, purchasing live event tickets is often confusing and stressful for people who in turn are more likely to seek tickets through overpriced secondary sellers, fraudulent sellers, or simply give up altogether. This environment exists for a whole range of reasons. The bill attempts to improve one aspect of ticket buying.

The bill requires ticket sellers to electronically deliver a proof of purchase to a customer immediately upon purchase. In addition, that proof of purchase may be used to gain entry to the venue if the person cannot access their ticket.

In order to gain entry, the proof of purchase must be verifiable, verifiably legitimate, and linked to a ticket for the event. In addition, the ticket cannot have already been used. In their letter to the committee, the opposition raises a number of concerns.

They say quote, when tickets are purchased directly through the venue team or authorized ticket provider, fans receive electronic proof of purchase that we can always go back and verify through our own existing systems. This bill is complementary to that existing circumstance.

The opposition also goes on to describe a scenario where someone buys a ticket and gets a legitimate proof of purchase. After getting their ticket, that person sells the ticket to the secondary market and then uses the proof of purchase to enter the venue and the person that bought the ticket from them is left out of the event.

First of all, this bill does not make this more likely because the teams say they already honor proof of purchases for tickets that they can verify. Second, that person was like has likely committed fraud and probably also didn't provide a proof of purchase as required by the spill.

The opposition later further says that they sometimes must deny access because we simply cannot verify the fan has legitimate ticket. Again, the bill in print today validates that stance.

In order for a venue to accept proof of purchase, the venue must be able to verify that the proof of purchase is legitimate and it is linked to a ticket for the event and that actual ticket has not been used.

And pulling one more quote from the opposition letter, if we were mandated to allow any proof of purchase, the use of fraudulent tickets would increase and legitimate paying customers would suffer. In response, I say good news. The bill does not require venues to accept any proof of purchase.

As I just explained, the bill requires a proof of purchase to meet specified conditions, especially it being legitimate and being linked to a real ticket before a venue must accept it for entry. This bill will not solve the many anti customer problems many people see with their ticket seller industry. It won't make getting into Beyonce any easier.

What it will do is add a modicum of certainty for people when they buy their tickets so that they know if they aren't going to receive their ticket until right before the event, then they know that they will be able to get into the venue if something goes wrong with the ticket delivery.

With me to testify today in support is Robert Harrell with the Consumer Federation of California.

Well, I thought it was going to make it easier to see Beyonce. Now I don't know how I feel. Just kidding.

Mr. Harrell, two minutes. When you're ready.

Thank you very much, Madam Chair and members. Robert Harrell, Executive Director of the Consumer Federation of California. This is. I'll be brief. I know it's late for lots of reasons. This is a modest bill. This is a bill this committee has seen before in almost exactly identical form. Very straightforward. Let me just.

The author did a great job of dealing with opposition, so I don't have to speak to that at all. Let me just read the four standards. It's very simple. The four standards that if all the conditions are met, one, the consumer cannot access the ticket they purchased.

That's happening more than it used to be because they're waiting until the last minute to give you your tickets. I myself was in one of these awkward situations. Two, the proof of purchase involved provided is legitimate. Three, the proof of purchase provided is linked to a ticket for the event.

Four, the ticket to which the proof of purchase is linked has not already been used to gain admission to the event. The author kind of spoke to that situation. So it's a very straightforward bill. As many of you know, we've been involved in this issue for a long time. This is a very, very narrow slice.

It's not a panacea, but it moves a little bit in the right direction to help consumers. We urge your I vote.

I ran away from my post. Thank you. Anyone here in support of this bill? Name, organization and position, please.

Jamie Minor on behalf of StubHub in support. Thank you.

Andrea Devoe on behalf of Vivid Seats in support.

Okay, anyone here in opposition to the bill.

Two minutes each, gentleman. However you want to break that up.

Members, Chair of the committee. On behalf of The San Francisco 49ers, the San Francisco Giants, Los Angeles Dodgers, San Diego Padres and Los Angeles Angels, we must respectfully oppose AB 1291.

First and foremost, we're really not sure what the bill actually solves because currently our teams and their venues provide a receipt and a unique identifier or identify the location of the seats that they bought through our authorized ticketing systems and authorized sellers. Our venues utilize electronic tickets to reduce and eliminate fraud while streamlining entry.

The use of electronic tickets has significantly decreased the instances of fraud and has provided fans with the certainty that the ticket they bought is valid. When tickets are purchased directly through the venue, the team, or an authorized ticket provider, fans receive electronic proof of purchase that we can always go back and verify through our own existing systems.

However, we aren't able to verify proof of purchase for tickets that are bought on unauthorized or non integrated marketplaces. Additionally, an individual may have proof of purchase for initially purchasing the ticket, but may have subsequent subsequently resold or transferred the ticket to another individual invalidating their access to that ticket.

In other words, simply having a proof of purchase does not guarantee that a fan has a legitimate ticket. Also, if someone buys a fake ticket, they have a fake invoice. But the bill puts the onus to determine the proof of purchase validity and connect it to an actual ticket on the venue itself.

We simply can't do this if the ticket has left our ticketing ecosystem. In 2026, Levi's Stadium will have the super bowl and FIFA World Cup games. FIFA has already issued a fraud alert for the games. This bill will only increase the ways bad actors create and sell fraudulent tickets.

It will not be difficult to put a fake identifier on a proof of purchase to a fraudulent ticket. Requiring us to sort through this at a venue for an international event like the World Cup or a high profile event like the Super Bowl will create chaos and confusion, leaving the venue liable for potential fines.

Now imagine the Olympics and all those venues being used in 2028. Finally, the bill states that each proof of purchase not honored by a venue operator in violation constitutes a separate $2,500 fine. For those reasons, we respectfully oppose the measure.

2 minutes and 11 seconds. I'm impressed. Your turn.

I'll be shorter. Tim Lynch on behalf of the Golden State Warriors, we also oppose the bill. To put it more succinctly, as my colleague just said, the proof of purchase is not a ticket. The proof of purchase can be used as evidence of the ticket.

But for our frontline workers that deal with these problems every single night, and they do happen every single night, we need a single source of truth, which is the ticket, in order to allow somebody into the venue.

Now, if somebody can't access their tickets, as my colleague said, if they have purchased through our verified systems, the Warriors, in fact, will 100% guarantee we can get you in if you have purchased through our verified partners.

And that doesn't even necessarily include you having a proof of purchase, because we can work through your account potentially to trace it. The other operational disruption that may occur from the bill is the requirement that you shall provide the proof of purchase, as Mr. Harrell said.

But the components of a proof of purchase must include electronic delivery in a manner that's downloadable, copy and saveable, and contains a unique identifier linking it to the ticket purchased. If you buy tickets at the warriors box office, those conditions are not met. We text you your tickets and we hand you a paper receipt.

They will not be able to meet the conditions of this bill under circumstances like that. And we're a big venue. I think there are smaller venues here that will be weighing in who certainly will not be able to meet those criteria. So for those reasons, we're opposed.

Thank you. Anyone else here in opposition to this bill? Name, organization and position. Bless you. A lot of sneezing in this freezing room.

Good afternoon, Madam Chair, Members. Ahwad Kidani, representing the Los Angeles Rams and the Los Angeles Clippers, both of which have substantial stadiums and engaged in World Cup and Olympics coming up. Thank you.

I know we have a lot coming up in California.

Chair and members, Alicia Priego, on behalf of the National Independent Venues Association, in opposition.

Jordan Curley, on behalf of the Music Artists Coalition, in opposition.

Good afternoon, Madam. Good afternoon. Madam Chair and members. Dylan Hoffman, on behalf of the California Arts Advocates, respectfully opposed.

Thank you. Bring it back to the committee. Seeing. No questions. Oh, from the community. Oh, yeah. Oh, sorry, Ms. Petrie. Speak up. Ms. Petrie-Norris.

Okay. All right. So I am a little bit confused because as the opposition explained, it sounds like you could find yourself in a situation, I understand, where I have a ticket, I get my receipt from you.

I then have my receipt, but I sell my ticket to Jackie, and then I show up at the venue and I say, hey, I got my receipt and I go in, and then this person who I sold my ticket to is not allowed to be admitted. So how would we deal with that?

In your scenario, Assembly Member. I don't know if it's you or someone else. That person committed fraud and that they've broken the law and they can be prosecuted under the relevant laws here. I would also note that the opponents all have. Because I took copious notes of what they said. Authorized ticket provider, verified partners.

That's what I heard from Mr. Governor and Mr. Lynch, respectively. That's secondary market participants. I and some buddies have tickets to the A's for the few years they're going to be here in Sac.

And if for whatever reason, we usually do it within the group, but if, for whatever reason, one can't be sold, the A's have a deal. I want to say it's with SeatGeek. I could be confused. It's one of the secondaries and they want you to use them.

That doesn't mean that you couldn't sell it on another secondary, but it's 15 times easier to do it with the one they have an official thing. So I feel like they're kind of trying to purposely make a mountain out of a molehill here.