BILL NUMBER: SB 1386	CHAPTERED
	BILL TEXT

	CHAPTER  915
	FILED WITH SECRETARY OF STATE  SEPTEMBER 26, 2002
	APPROVED BY GOVERNOR  SEPTEMBER 25, 2002
	PASSED THE SENATE  AUGUST 30, 2002
	PASSED THE ASSEMBLY  AUGUST 26, 2002
	AMENDED IN ASSEMBLY  AUGUST 23, 2002
	AMENDED IN ASSEMBLY  AUGUST 5, 2002
	AMENDED IN ASSEMBLY  JULY 25, 2002
	AMENDED IN ASSEMBLY  JUNE 30, 2002
	AMENDED IN ASSEMBLY  JUNE 20, 2002
	AMENDED IN ASSEMBLY  JUNE 6, 2002
	AMENDED IN SENATE  MARCH 20, 2002

INTRODUCED BY   Senator Peace
   (Principal coauthor:  Assembly Member Simitian)

                        FEBRUARY 12, 2002

   An act to amend, renumber, and add Section 1798.82 of, and to add
Section 1798.29 to, the Civil Code, relating to personal information.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1386, Peace.  Personal information:  privacy.
   Existing law regulates the maintenance and dissemination of
personal information by state agencies, as defined, and requires each
agency to keep an accurate account of disclosures made pursuant to
specified provisions.  Existing law also requires a business, as
defined, to take all reasonable steps to destroy a customer's records
that contain personal information when the business will no longer
retain those records.  Existing law provides civil remedies for
violations of these provisions.
   This bill, operative July 1, 2003, would require a state agency,
or a person or business that conducts business in California, that
owns or licenses computerized data that includes personal
information, as defined, to disclose in specified ways, any breach of
the security of the data, as defined, to any  resident of California
whose unencrypted personal information was, or is reasonably
believed to have been,  acquired by an unauthorized person.  The bill
would permit the notifications required by its provisions to be
delayed if a law enforcement agency determines that it would impede a
criminal investigation.  The bill would require an agency, person,
or business that maintains computerized data that includes personal
information owned by another to notify the owner or licensee of the
information of any breach of security of the data, as specified.  The
bill would state the intent of the Legislature to preempt all local
regulation of the subject matter of the bill.  This bill would also
make a statement of legislative findings and declarations regarding
privacy and financial security.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  (a) The privacy and financial security of individuals
is increasingly at risk due to the ever more widespread collection of
personal information by both the private and public sector.
   (b) Credit card transactions, magazine subscriptions, telephone
numbers, real estate records, automobile registrations, consumer
surveys, warranty registrations, credit reports, and Internet Web
sites are all sources of personal information and form the source
material for identity thieves.
   (c) Identity theft is one of the fastest growing crimes committed
in California.  Criminals who steal personal information such as
social security numbers use the information to open credit card
accounts, write bad checks, buy cars, and commit other financial
crimes with other people's identities.  The Los Angeles County
Sheriff's Department reports that the 1,932 identity theft cases it
received in the year 2000 represented a 108 percent increase over the
previous year's caseload.
   (d) Identity theft is costly to the marketplace and to consumers.
   (e) According to the Attorney General, victims of identity theft
must act quickly to minimize the damage; therefore expeditious
notification of possible misuse of a person's personal information is
imperative.
  SEC. 2.  Section 1798.29 is added to the Civil Code, to read:
   1798.29.  (a) Any agency that owns or licenses computerized data
that includes personal information shall disclose any breach of the
security of the system following discovery or notification of the
breach in the security of the data to any resident of California
whose unencrypted personal information was, or is reasonably believed
to have been, acquired by an unauthorized person. The disclosure
shall be made in the most expedient time possible and without
unreasonable delay, consistent with the legitimate needs of law
enforcement, as provided in subdivision (c), or any measures
necessary to determine the scope of the breach and restore the
reasonable integrity of the data system.
   (b) Any agency that maintains computerized data that includes
personal information that the agency does not own shall notify the
owner or licensee of the information of any breach of the security of
the data immediately following discovery, if the personal
information was, or is reasonably believed to have been, acquired by
an unauthorized person.
   (c) The notification required by this section may be delayed if a
law enforcement agency determines that the notification will impede a
criminal investigation.  The notification required by this section
shall be made after the law enforcement agency determines that it
will not compromise the investigation.
   (d) For purposes of this section, "breach of the security of the
system" means unauthorized aquisition of computerized data that
compromises the security, confidentiality, or integrity of personal
information maintained by the agency.  Good faith acquisition of
personal information by an employee or agent of the agency for the
purposes of the agency is not a breach of the security of the system,
provided that the personal information is not used or subject to
further unauthorized disclosure.
   (e) For purposes of this section, "personal information" means an
individual's first name or first initial and last name in combination
with any one or more of the following data elements, when either the
name or the data elements are not encrypted:
   (1) Social security number.
   (2) Driver's license number or California Identification Card
number.
   (3) Account number, credit or debit card number, in combination
with any required security code, access code, or password that would
permit access to an individual's financial account.
   (f) For purposes of this section, "personal information" does not
include publicly available information that is lawfully made
available to the general public from federal, state, or local
government records.
   (g) For purposes of this section, "notice" may be provided by one
of the following methods:
   (1) Written notice.
   (2) Electronic notice, if the notice provided is consistent with
the provisions regarding electronic records and signatures set forth
in  Section 7001 of Title 15 of the United States Code.
   (3) Substitute notice, if the agency demonstrates that the cost of
providing notice would exceed two hundred fifty thousand dollars
($250,000), or that the affected class of subject persons to be
notified exceeds 500,000, or the agency does not have sufficient
contact information.  Substitute notice shall consist of all of the
following:
   (A) E-mail notice when the agency has an e-mail address for the
subject persons.
   (B) Conspicuous posting of the notice on the agency's Web site
page, if the agency maintains one.
   (C) Notification to major statewide media.
   (h) Notwithstanding subdivision (g), an agency that maintains its
own notification procedures as part of an information security policy
for the treatment of personal information and is otherwise
consistent with the timing requirements of this part shall be deemed
to be in compliance with the notification requirements of this
section if it notifies subject persons in accordance with its
policies in the event of a breach of security of the system.
  SEC. 3.  Section 1798.82 of the Civil Code is amended and
renumbered to read:
   1798.84.  (a) Any customer injured by a violation of this title
may institute a civil action to recover damages.
   (b) Any business that violates, proposes to violate, or has
violated this title may be enjoined.
   (c) The rights and remedies available under this section are
cumulative to each other and to any other rights and remedies
available under law.
  SEC. 4.  Section 1798.82 is added to the Civil Code, to read:
   1798.82.  (a) Any person or business that conducts business in
California, and that owns or licenses computerized data that includes
personal information, shall disclose any breach of the security of
the system following discovery or notification of the breach in the
security of the data to any resident of California whose unencrypted
personal information was, or is reasonably believed to have been,
acquired by an unauthorized person. The disclosure shall be made in
the most expedient time possible and without unreasonable delay,
consistent with the legitimate needs of law enforcement, as provided
in subdivision (c), or any measures necessary to determine the scope
of the breach and restore the reasonable integrity of the data
system.
   (b) Any person or business that maintains computerized data that
includes personal information that the person or business does not
own shall notify the owner or licensee of the information of any
breach of the security of the data immediately following discovery,
if the personal information was, or is reasonably believed to have
been, acquired by an unauthorized person.
   (c) The notification required by this section may be delayed if a
law enforcement agency determines that the notification will impede a
criminal investigation.  The notification required by this section
shall be made after the law enforcement agency determines that it
will not compromise the investigation.
   (d) For purposes of this section, "breach of the security of the
system" means unauthorized acquisition of computerized data that
compromises the security, confidentiality, or integrity of personal
information maintained by the person or business.  Good faith
acquisition of personal information by an employee or agent of the
person or business for the purposes of the person or business is not
a breach of the security of the system, provided that the personal
information is not used or subject to further unauthorized
disclosure.
   (e) For purposes of this section, "personal information" means an
individual's first name or first initial and last name in combination
with any one or more of the following data elements, when either the
name or the data elements are not encrypted:
   (1) Social security number.
   (2) Driver's license number or California Identification Card
number.
   (3) Account number, credit or debit card number, in combination
with any required security code, access code, or password that would
permit access to an individual's financial account.
   (f) For purposes of this section, "personal information" does not
include publicly available information that is lawfully made
available to the general public from federal, state, or local
government records.
   (g) For purposes of this section, "notice" may be provided by one
of the following methods:
   (1) Written notice.
   (2) Electronic notice, if the notice provided is consistent with
the provisions regarding electronic records and signatures set forth
in  Section 7001 of Title 15 of the United States Code.
   (3) Substitute notice, if the person or business demonstrates that
the cost of providing notice would exceed two hundred fifty thousand
dollars ($250,000), or that the affected class of subject persons to
be notified exceeds 500,000, or the person or business does not have
sufficient contact information.  Substitute notice shall consist of
all of the following:
   (A) E-mail notice when the person or business has an e-mail
address for the subject persons.
   (B) Conspicuous posting of the notice on the Web site page of the
person or business, if the person or business maintains one.
   (C) Notification to major statewide media.
   (h) Notwithstanding subdivision (g), a person or business that
maintains its own notification procedures as part of an information
security policy for the treatment of personal information and is
otherwise consistent with the timing requirements of this part, shall
be deemed to be in compliance with the notification requirements of
this section if the person or business notifies subject persons in
accordance with its policies in the event of a breach of security of
the system.
  SEC. 5.  This act shall become operative on July 1, 2003.
  SEC. 6.  This act deals with subject matter that is of statewide
concern, and it is the intent of the Legislature that this act
supersede and preempt all rules, regulations, codes, statutes, or
ordinances or all cities, counties, cities and counties,
municipalities, and other local agencies regarding the matters
expressly set forth in this act.