BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 20
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          SENATE THIRD READING
          SB 20 (Simitian)
          As Amended August 25, 2009
          Majority vote 

           SENATE VOTE  :26-9  
           
           JUDICIARY           7-3         APPROPRIATIONS      12-1        
           
           ------------------------------------------------------------------ 
          |Ayes:|Feuer, Brownley, Evans,   |Ayes:|De Leon, Ammiano, Charles  |
          |     |Jones, Krekorian, Lieu,   |     |Calderon, Coto, Davis,     |
          |     |Monning                   |     |Fuentes, Hall, John A.     |
          |     |                          |     |Perez, Skinner, Solorio,   |
          |     |                          |     |Torlakson, Hill            |
          |     |                          |     |                           |
          |-----+--------------------------+-----+---------------------------|
          |Nays:|Tran, Knight, Silva       |Nays:|Audra Strickland           |
          |     |                          |     |                           |
           ------------------------------------------------------------------ 
           SUMMARY  :  Requires that a notice required under California's  
          data security breach law must contain specified information and  
          a copy of notice must be sent to appropriate state agencies, as  
          specified.  Specifically,  this bill  :   

          1)Provides that when an agency, person, or business is required  
            to issue a data security breach notification pursuant to  
            existing law, that notification must be written in plain  
            language and shall include at a minimum all of the following  
            information:

             a)   The name and contact information of the reporting  
               agency, person, or business;

             b)   A list of the types of personal information, as defined,  
               that were reasonably believed to have been the subject of  
               the breach;
              
             c)   The date, estimated date, or date range of when the  
               breach occurred, if that information is possible to  
               determine at the time the notice is provided;

             d)   Whether the notification was delayed as a result of a  
               law enforcement investigation, if that information is  








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               possible to determine at the time the notice is provided; 

             e)   A general description of the breach incident, if that  
               information is possible to determine at the time the notice  
               is provided; and,

             f)   The toll-free telephone numbers and addresses of the  
               major credit reporting agencies if the breach exposed a  
               social security number or driver's license or state  
               identification card number. 

          1)Provides that, at the discretion of the reporting agency,  
            person, or business, the notification may include other  
            information, including information about what the agency has  
            done to protect the individuals affected by the breach and  
            what steps those individuals may take to protect themselves. 

          2)Provides that an agency, person, or business that is required  
            to issue a data security breach notification to more than 500  
            California residents must also submit a notification to the  
            Attorney General.

          3)Provides that if substitute notice is used, as permitted by  
            existing law, then the reporting person, business, or agency  
            must also provide notification to the Office of Information  
            Security within the office of the State Chief Information  
            Officer. 

           EXISTING LAW  : 

          1)Requires any state agency that  owns or licenses  computerized  
            data that includes personal information to disclose any breach  
            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.  Requires any state  
            agency that  maintains  , but does not own, personal information  
            to notify the owner or licensor of the data of any breach.   
            Provides further that disclosure shall be made in the most  
            expedient time possible and without unreasonable delay.  

          2)Requires any person or business that conducts business in  
            California, and that  owns or licenses  computerized data that  
            includes personal information to disclose any breach of the  
            data to any resident of California whose unencrypted personal  








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            information was, or is reasonably believed to have been,  
            acquired by an unauthorized person.  Requires any person or  
            business that  maintains  , but does not own, personal  
            information to notify the owner or licensor of the data of any  
            breach.  Provides further that disclosure shall be made in the  
            most expedient time possible and without unreasonable delay.  

          3)Provides that notice required under the above provisions may  
            be made by written notice or electronic notice, if the latter  
            is consistent with federal electronic signature standards.  
            Provides, however, that substitute notice may be used if the  
            person, business, or agency determines that the cost of  
            providing notice would exceed $250,000 or that the affected  
            class of subject persons exceeds 500,000, or the person,  
            business, or agency does not have sufficient contact  
            information.  

          4)Provides that substitute notice, when used, shall consist of  
             all  of the following:

             a)   E-mail notice when the e-mail address of subject persons  
               is known;

             b)   Conspicuous posting of the notice on the Web site of the  
               person, business, or agency if the person, business, or  
               agency maintains one; and,

             c)   Notification to major statewide media.  

          5)Notwithstanding the above notice requirements, a person,  
            business, or agency that maintains its own notification  
            procedures as part of an information security policy that is  
            consistent with the requirements of the security breach law,  
            shall be deemed to be in compliance with the notification of  
            state law if the agency, person, or business notifies subject  
            persons in accordance with its own policies.  

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          analysis, minor absorbable costs for state agencies to comply  
          with the specified notification requirements. 
           
          COMMENTS  :  Under existing law, a person, business, or state  
          agency that keeps, maintains, or leases computerized data that  
          contains personal information must provide appropriate notices  








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          if that 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.  However, 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 by requiring notices to contain specified information  
          that will be useful to the affected resident and ensure that  
          there is greater uniformity in the content of security breach  
          notices.  In addition, this bill would require that notification  
          be sent to the state Attorney General's office for any breaches  
          that affect more than 500 California residents.  Finally, this  
          bill would also provide that if "substitute notice" is used, as  
          permitted by existing law, then a copy of the notice should also  
          be sent to the Office of Information Security within the office  
          of the State Chief Information Officer.  

          According to the author, although existing California law  
          requires notices in the event of a data breach, it is more or  
          less silent on the required  content  of those notices.  As a  
          result, the author contends, existing notices often fail to  
          provide the affected individual with critical information about  
          the nature and scope of the breach.  According to the author,  
          without such information, the consumer is often uncertain about  
          how to respond to the breach.  The author believes that this  
          measure will "make relatively modest but helpful changes" that  
          provide affected individuals with useful knowledge about the  
          security breach.  Finally, the author rejects as unfounded the  
          argument made by some opponents that revealing the exact time of  
          the breach and the number of persons affected will somehow  
          provide information that will help the computer hacker.  The  
          author responds that "the hacker already knows when they [sic]  
          have been successful.  The point here is to provide affected  
          individuals with crucial information."  The author points out  
          that the inclusion of the date of the breach - which some  
          opponents strenuously object to - allows the affected consumer  
          to examine their records and determine, with greater precision,  
          if they have been victimized by identity theft.  

          Two recent amendments - one deleting the requirement that the  
          notice include the number of persons affected, and a second  
          clarifying that the notice may include an estimated date or date  








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          range in lieu of a specific date of a breach - have apparently  
          removed all previously registered opposition to the bill. 


           Analysis Prepared by  :   Thomas Clark / JUD. / (916) 319-2334 

                                                                FN: 0002366