BILL ANALYSIS
SB 1404
Page 1
Date of Hearing: June 22, 2010
ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING
Paul Fong, Chair
SB 1404 (Pavley) - As Amended: May 10, 2010
SENATE VOTE : 21-12
SUBJECT : Elections: ballot cards and voting systems.
SUMMARY : Requires voting system vendors and ballot paper
manufacturers to notify the Secretary of State (SOS) of any
flaws or defects that they discover in their products.
Specifically, this bill :
1)Defines the following terms, for the purposes of this bill:
a) "Defect" means any flaw in the hardware or documentation
of an approved or conditionally approved voting system that
could result in a state of unfitness for use or
nonconformance to the manufacturer's specifications.
b) "Failure" means a discrepancy between the external
results of the operation of any software or firmware in an
approved or conditionally approved voting system and the
manufacturer's product requirements for that software or
firmware.
c) "Fault" means a step, process, or data definition in any
software or firmware in an approved or conditionally
approved voting system that is incorrect under the
manufacturer's program specification.
2)Requires a voting system vendor that knows of, or becomes
aware of, a defect, fault, or failure in the voting system or
a part of the voting system, to make the following written
notifications of that defect, fault, or failure:
a) In the case of a voting system that is being submitted
to the SOS to be reviewed, notification to the SOS of any
defect, fault, or failure known to the vendor as part of
the application for review;
b) In the case of a voting system that has been submitted
to the SOS to be reviewed, but for which the SOS has not
SB 1404
Page 2
completed his or her report on the examination of the
system, notification to the SOS of any defect, fault, or
failure that becomes known to the vendor;
c) In the case of a voting system that has been approved by
the SOS, notification to the SOS and to all local elections
officials who use the system within 30 calendar days after
the vendor learns of the defect, fault, or failure; and,
d) In the case of a voting system that is approved by the
SOS prior to the effective date of this bill, notification
to the SOS and to all local elections officials who use the
system not later than January 8, 2011 of any defect, fault,
or failure known to the vendor prior to January 1, 2011.
3)Requires the SOS to notify the United States Election
Assistance Commission (EAC) or its successor entity of any
defect, fault, or failure disclosed to the SOS by a voting
system vendor pursuant to this bill.
4)Requires a ballot card manufacturer or finisher to disclose
any known flaw or defect in its manufacturing or finishing
process or manufactured or finished ballot cards in writing to
the SOS not later than five working days before the SOS begins
his or her initial inspection of that manufacturer's or
finisher's facilities. Requires a ballot card manufacturer or
finisher that has been approved by the SOS to notify the SOS
and affected local elections officials in writing within two
business days after it discovers any flaw or defect in its
manufacturing or finishing process or manufactured or finished
cards.
5)Requires the SOS to inspect manufacturing and storage
facilities for ballot cards biennially, instead of
periodically, and requires the SOS to inspect finishing
facilities for ballot cards biennially.
6)Permits the SOS to seek injunctive and administrative relief
when a voting system or part of a voting system is defective
due to a known hardware, software, or firmware defect, fault,
or failure that has not been disclosed as required by this
bill. Permits the SOS to seek all of the following relief for
a known but undisclosed defect, fault, or failure in a voting
system or part of a voting system approved or conditionally
approved for use in California:
SB 1404
Page 3
a) Refund of all moneys paid by a local agency for a voting
system or part of a voting system that is defective due to
a known but undisclosed defect, fault, or failure, whether
or not the voting system has been used in an election;
b) A civil penalty from the offending party or parties, not
to exceed $50,000 per violation; and,
c) A penalty of $1,000 for each day between the deadline
for the vendor to disclose the defect, fault, or failure
and the day when the required disclosure is filed with the
SOS.
7)Provides that, for the purposes of monetary penalties provided
for in this bill, a defect, fault, or failure constitutes a
single violation regardless of the number of voting system
units in which the defect, fault, or failure is found.
8)Provides that all monetary penalties levied pursuant to the
provisions of this bill, other than the refund of moneys paid
by a local agency for a voting system, shall be deposited in
the General Fund.
9)Requires regulations adopted by the SOS governing ballot cards
to govern the finishing and quality standards of such cards.
10)Repeals an obsolete provision of law that establishes a
revolving fund for the purchase of ballot paper.
11)Changes terminology in the Elections Code from "punchcards"
to "ballot cards."
12)Makes corresponding changes.
EXISTING LAW :
1)Requires ballot paper and punchcards used by any jurisdiction
in California to be tinted and watermarked or overprinted with
a design furnished by the SOS in a manner that the watermark
or overprint is plainly discernible.
2)Requires the SOS to adopt regulations governing the
manufacture, distribution, and inventory control of
punchcards. Requires the SOS to inspect the manufacturing and
SB 1404
Page 4
storage facilities for punchcards periodically. Requires the
SOS to approve each punchcard manufacturer prior to that
manufacturer providing punchcards for use in California
elections.
3)Prohibits a user, vendor, or manufacturer from warehousing
ballot paper or punchcards furnished or released by the SOS
for a specific election for any subsequent election without
the advance written authorization of the SOS.
4)Establishes a revolving fund for the purchase of ballot paper
and punchcards.
5)Permits a person or corporation owning or being interested in
a voting system or a part of a voting system to apply to the
SOS to examine it and report on its accuracy and efficiency to
fulfill its purpose. Requires the SOS to complete his or her
examination without undue delay.
6)Permits the SOS to seek injunctive and administrative relief
when a voting system has been compromised by the addition or
deletion of hardware, software, or firmware without prior
approval.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
1)Purpose of the Bill : According to the author:
Under current law, ballot vendors or voting system vendors
are not required to inform the Secretary of State about
previously undisclosed flaws in their product before or
after an election. This lack of disclosure can result in
serious delays or jeopardize or nullify votes in counties.
The [SOS] inspects ballot manufacturing facilities and
voting systems for potential problems or flaws before
approving their use for California elections. However
existing law does not require a ballot manufacturer or a
voting system vendor to notify the [SOS] of any flaws in
their products that are undiscovered before or after the
Secretary's inspection.
SB 1404
Page 5
An incident in Humboldt County in which Premier Elections
Systems' GEMS software deleted nearly 200 votes cast during
the November 2008 elections illustrated the consequences of
not requiring vendors to notify the [SOS] or anyone else
when they learn of a problem.
Although Premier was aware of the problem and made limited
attempts pre-election to notify individual counties of the
software flaw, the [SOS] was not informed and there was no
public disclosure of the flaw.
SB 541 (2009), a similar version of this bill, was vetoed
by the Governor last year because of concerns about the
civil penalties placed on voting system vendors. This bill
clarifies that the penalty in the measure would apply to
each defect, flaw or failure, not to each machine that may
contain a defect, fault or failure.
2)Humboldt County Incident : As noted by the author, this bill
is prompted in part by an incident in Humboldt County during
the November 2008 election that resulted in the deletion of
nearly 200 votes cast in that election. The deletion was
caused by a programming error in a version of the GEMS
election management software produced by Premier Elections
Solutions (formerly Diebold). That programming error caused
the first batch of ballots counted by a central count server
at an election to be deleted under certain circumstances.
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, SOS or to the public. When the Humboldt County
employee who had been notified of the work-around left
Humboldt County for another job in 2007, that employee did not
pass the information about the work-around along to anyone
else in the county elections official's office.
3)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
SB 1404
Page 6
the SOS. Existing law also requires the SOS to adopt
regulations governing the manufacture, distribution, and
inventory control of ballot paper.
This bill codifies a number of the regulations adopted by the
SOS pursuant to existing law. Among the regulations codified
by this bill are a requirement that ballot manufacturing and
storage facilities be inspected biennially (the Elections Code
requires such facilities to be inspected "periodically") and a
requirement that the SOS approve and inspect ballot finishing
facilities (which is not explicitly required by the Elections
Code).
4)Arguments in Opposition : The Election Technology Council
(ETC), which is a national trade association of voting system
manufacturers, writes the following in opposition to this
bill:
The ETC represents voting system manufacturers providing
over 90% of the voting systems used in the United States,
including all of the voting system manufacturers currently
operating within the State of California. Our collective
assessment is that this bill, if enacted, would create an
extremely unwieldy and potential damaging environment for
the voting industry in the State of California with the
additional potential of increased costs for California's
local election officials. Additionally, we view the bill
as being unnecessarily redundant to the requirements of the
United States Election Assistance Commission ("EAC") under
its Voting System Guidelines processes and procedures. . .
.
In light of the economic conditions that all states, local
jurisdictions and their voting system providers face, any
proposed legislation that attempts to put into place a
series of financial penalties will directly impact the
overall costs to California's county customers and
ultimately California taxpayers. If it is necessary to
institute a penalty as a means of protecting the interests
of the California public, then the potential for
decertifying products or prohibiting business activities
are sufficient alone. From an industry viewpoint, it is
clear that an arbitrary fee established for penalties, as
proposed in SB 1404, has the potential to
disproportionately affect smaller new entrant providers.
SB 1404
Page 7
In effect, these penalties will force those providers who
have a smaller footprint to conduct a cost-benefit
assessment on the continued viability of operating in the
State of California. The cumulative effect of these
punitive financial policies, as outlined in SB 1404, could
also result in fewer providers from which local elections
officials may select voting systems in the future.
5)Previous Legislation : SB 541 (Pavley) of 2009 was
substantially similar to this bill, except that it did not
contain the explicit provision included in this bill that
specifies that a single defect, fault or failure on multiple
units of a voting system constitutes a single violation, and
not a violation for each unit. SB 541 was vetoed by Governor
Schwarzenegger, who expressed concern that the bill could have
subjected voting system vendors to substantial civil
penalties.
REGISTERED SUPPORT / OPPOSITION :
Support
Secretary of State Debra Bowen (sponsor)
City of Millbrae
Opposition
Election Technology Council
Analysis Prepared by : Ethan Jones / E. & R. / (916) 319-2094