BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 20
                                                                  Page  1

          Date of Hearing:   July 15, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                    SB 20 (Simitian) - As Amended:  July 7, 2009 

          Policy Committee:                              JudiciaryVote:7-3

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill establishes additional notification requirements  
          following a security breach of a computerized data system.  
          Specifically, this bill:

          1)Requires the notification required by state agencies and  
            private entities following a security breach to contain  
            specified information, including the date and time of the  
            breach, the types of personal information believed to have  
            been breached, a general description of the breach and the  
            number of persons affected, and toll-free phone numbers and  
            addresses of major credit reporting agencies if the breach  
            exposed a bank account or credit card number, a social  
            security number, or a driver's license or California  
            identification card number.

          2)Provides state agencies and private entities discretion to  
            include in the breach notification:

             a)   Information on steps taken to protect individuals whose  
               personal information has been breached.

             b)   Advice on what such individuals can do to protect  
               themselves.

          3)Requires a state agency or private entity that is required to  
            notify more than 500 California residents of a breach to  
            electronically submit a copy of the notification, excluding  
            any personally identifiable information, to the Attorney  
            General.

          4)Requires the breach notification to be submitted, in the case  








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            of a state agency, to the Office of Information Security  
            within the office of the State Chief Information Officer, and  
            in the case of a private entity, to the Office of Privacy  
            Protection within the State and Consumer Services Agency.

           FISCAL EFFECT  

          Minor absorbable costs for state agencies to comply with the  
          specified notification requirements.

           COMMENTS  

           1)Purpose  . Under existing law, a person, business, or state  
            agency that keeps, maintains, or leases computerized data that  
            contains personal information must notify anyone whose  
            personal information is compromised as a result of a data  
            breach.  The law permits the person, business, or state agency  
            to use "substitute notice" if the number of persons affected  
            would make personal notice prohibitively expensive or  
            impractical, or if the affected person's contact information  
            is not available. Beyond these provisions, existing law does  
            not create any requirements as to the form and content of the  
            required notices. This bill seeks to correct that deficiency.

           2)Prior Legislation  .  SB 364 (Simitian) of 2008, which contained  
            similar, but somewhat more expansive notification  
            requirements, was vetoed.  The governor argued that the bill  
            "could lead consumers to believe that all data breaches result  
            in identity theft" and expressed concern that the bill would  
            "place an additional unnecessary cost on businesses without a  
            corresponding consumer benefit."

            AB 1656 (Jones) of 2008, which also required specified  
            information in the breach notification and, in addition,  
            required that specified items be disclosed to affected  
            California residents if the owner or licensee of the  
            information was the issuer of the credit or debit card, was  
            also vetoed.  In 2007, a similar bill, AB 779 (Jones) was also  
            vetoed.

           3)Opposition  .  Several companies and associations representing  
            insurers, bankers, and other business interests are opposed to  
            the notifications containing the date of the breach and the  
            number of persons affected.  These entities believe such  
            provisions "are unnecessary, not helpful to customers, and may  








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            actually be harmful to customers and companies attempting to  
            protect their information systems from hackers."

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081