BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1404
                                                                  Page  1

          Date of Hearing:   August 4, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                    SB 1404 (Pavley) - As Amended:  May 10, 2010 

          Policy Committee:                              ElectionsVote:5-2

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill requires voting equipment vendors to notify the  
          Secretary of State (SOS) regarding discovered defects in their  
          systems.  Specifically, this bill:

          1)Specifies that the SOS's statutorily required "periodic"  
            inspection of manufacturing, finishing, and storage facilities  
            involving ballot cards must be conducted biennially.

          2)Requires a ballot card manufacturer or finisher, with regard  
            to any known flaw or defect in its production or process that  
            could adversely affect the casting or tallying of votes, to:

             a)   Notify the SOS within five days before the start of the  
               inspection per (1).

             b)   Once approved by the SOS, to notify the SOS and affected  
               local elections officials within two business days of  
               discovering a flaw or defect.

          3)Requires the vendor of a voting system or part of a voting  
            system, in applying to the SOS certification of that system,  
            to notify the SOS of any known defect, fault or failure, as  
            specified.

          4)Requires a vendor per (3) to notify the SOS of any defect,  
            fault, or failure discovered after the application is complete  
            but before the SOS completes its examination report of the  
            system.

          5)Requires the SOS, after receiving a vendor's notification of a  
            defect, fault, or failure, to notify the United States  








                                                                  SB 1404
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            Election Assistance Commission (EAC) as soon as practicable.

          6)Requires the vendor of a voting system or part of a voting  
            system already certified by the SOS, upon learning of a  
            defect, fault, or failure in the system, to notify the SOS and  
            affected local elections officials within 30 calendar days,  
            and requires such notification by January 8, 2011 regarding  
            any defect, fault, or failure known to a vendor prior to  
            January 1, 2011.

          7)Authorizes the SOS to seek the following relief for an  
            undisclosed defect, fault or failure of a voting system or  
            part of a voting system approved for use in California:

             a)   Refund all moneys paid by a local agency for the system.

             b)   A civil penalty of up to $50,000 per violation and a  
               penalty of up to $1,000 per day after the deadline  
               established in (6).  Penalty revenues are to be allocated  
               to the General Fund.

          8)Repeals an obsolete provision of law establishing a revolving  
            fund for the purchase of ballot paper.

           FISCAL EFFECT  

          1)Absorbable costs to the SOS for biennial inspections of ballot  
            card manufacturing and finishing facilities, as the bill is  
            generally consistent with the office's current practice. The  
            SOS indicates that there are currently 27 such entities.

          2)Minor absorbable costs to the SOS for enforcement of the  
            bill's provisions, and potential General Fund revenue from  
            civil penalties. 

           COMMENTS  

           1)Purpose  .  This bill, sponsored by the Secretary of State, was  
            prompted in part by an incident in Humboldt County during the  
            November 2008 election that resulted in the deletion of nearly  
            200 votes cast due to a programming error in software produced  
            by Premier Elections Solutions (formerly Diebold).  The  
            programming error caused the first batch of ballots counted by  
            a central count server to be deleted under certain  
            circumstances.








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          Premier knew of this problem at least four years prior to the  
            November 2008 election, and developed a "work-around" to avoid  
            the deletion of ballots.  While Premier did notify elections  
            officials in the 11 affected California counties of the  
            "work-around," they did not explain why it was necessary.   
            Furthermore, Premier did not provide notice of the defect to  
            the National Association of State Election Directors (NASED),  
            the EAC, the SOS or the public.  The Humboldt County employee  
            who had been notified of the "work-around" left for another  
            job in 2007 and did not pass this information along to anyone  
            in the county elections official's office.

           2)Ballot Paper Manufacturing Facilities  :  Under existing law,  
            any manufacturer who wishes to sell ballot paper or ballot  
            cards to jurisdictions in California must first be approved by  
            the SOS.  This bill codifies a number of the SOS-adopted  
            regulations governing the manufacture, distribution, and  
            inventory control of ballot paper, including requirements that  
            ballot manufacturing and storage facilities be inspected  
            biennially (the Elections Code only requires such facilities  
            to be inspected "periodically") and that the SOS approve and  
            inspect ballot finishing facilities (which is not explicitly  
            required by the Elections Code).
           
          3)Opposition  . The Election Technology Council (ETC)-a national  
            trade association of voting system manufacturers-argues that  
            the potential for penalties could discourage some vendors from  
            continuing to operate in California, which could reduce the  
            options to local elections officials for these services.

           4)Prior Legislation  . SB 541 (Pavley) of 2009, which was  
            substantially similar to this bill, was vetoed. The governor  
            was concerned that SB 541 could have subjected voting system  
            vendors to substantial civil penalties.
           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081