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Senate Judiciary Committee California State Senate
Follow its sittingsSpeaker 1
Those Thank of you who are here for folks who are on the committee, for example, Senator Weiner, it's going to be a little while before we get to those bills. All right. Senator Alvarado Gill, the floor is yours.
Speaker 4
Thank you, Chair Umberg, members of the committee who will be joining us shortly, and members of the public for joining us today. Today, I'm presenting on Senate Bill one two three four, which ensures that when a juvenile court orders a parent or guardian to undergo drug testing in a dependency case, the testing panel includes fentanyl. This bill honors the memory of children who have tragically lost their lives due to fentanyl poisoning and recognizes the profound impact these losses have on families. We know these families as angel families and the lives lost angel babies. Under current law, courts already have the authority to order drug testing in dependency cases.
However, there is no requirement that fentanyl be included in those tests. Senate Bill twelve thirty four addresses the gap in a simple and targeted way. It does not expand when drug testing can be ordered, and it does not create new requirements for families. Instead, it ensures that when testing is already deemed necessary, fentanyl, one of the deadliest and most prevalent substances in today's drug addiction crisis, is included in that drug panel. Fentanyl has become an increasing threat to children.
And between 2015 and 2023, fentanyl poisonings in The U. S. Rose by more than nine hundred percent. This was among children 12 and over fifteen hundred percent among teenagers. In a recent study by the University of Davis, in 2023, we studied the deaths of fifteen children under the age of five that lost their lives due to fentanyl exposure.
Speaker 2
And thanks to my colleagues in the Senate, like Senator Cortez from San Jose area, we've seen monumental legislation come through this body. So today, I'm asking you to continue to protect the lives of angel babies. Senate Bill one, two, three, four is a narrow practical step that strengthens an existing process without adding new family centered structural burdens. It's a measure that's focused on child safety during one of the most critical stages in the dependency system, family reunification. This measure has received broad bipartisan support, including from the chair and the vice chair of this committee thank you for your co authorship as well as law enforcement and public safety organizations across the state, county sheriffs, probation departments, and district attorneys.
Speaker 4
I respectfully ask for you to support this bill and continue in our fight to take on the fentanyl crisis here in our great state of California.
Speaker 1
If anyone here in the audience is in support of SB1234 and wish to be heard, please approach the microphone. Seeing no one approaches the microphone, let's turn to the opposition. If you're opposed to SB1234, please approach the microphone. Seeing no one approaching the microphone, let's bring it back to committee for questions. Senator McNerney, do you have any questions?
No.
Speaker 2
I I certainly appreciate the author for bringing this bill forward. And just to clarify, the testing would apply to the guardians, not to the not to the child. Right?
Speaker 4
That's correct. So we currently in juvenile court, if there is a family reunification plan where there is a known addiction of one of the guardians or parents, we are already testing. Unfortunately, fentanyl is not part of that panel. So, yes, the testing would be on the, guardian or caregiver.
Speaker 4
Yes. I just kindly ask for your aye vote and understand that we are in subcommittee now and look forward to being able to move this bill to the next committee.
Speaker 1
Thank you. At the appropriate time, I assume there will be a motion and then we'll take it up for a vote.
Speaker 1
Alright. I see senator Alvarado Gil. I mean, I'm sorry, Errigine. I see both of you here. I see Senator Errigine as well.
Thank you. Go ahead. The floor is yours.
Speaker 5
Well, thank you, Mr. Chair, members present Senate Bill twelve fifty seven. I will be accepting the committee amendments. This bill requires the Attorney General to publish annually a publicly available report that summarizes immigration enforcement incidents and activities that occur in California, as well as to submit that report to the governor and the legislature. SB twelve fifty seven authorizes the Attorney General to request information directly from designated safe locations of immigration enforcement incidents at locations like schools, hospitals, and courthouses and places of worship in order to prepare such a report.
And the attorney general will also be empowered to take enforcement action to assure compliance with this bill. Put this in context, California is home to 11,000,000 immigrants. And from January to October 2025 alone, 18,000 arrests were recorded in our state. These enforcement actions have produced fear across communities, causing people to miss medical care, avoid school, and withdraw from public life. The Attorney General already collects immigration enforcement misconduct information online through an online portal, as well as information that is shared with his office directly.
This bill will build on that practice by making that information publicly accessible on an annual basis. This builds on legislation we passed last year, such as SB 81, SB 98, and SB 49, to ensure effective enforcement oversight of these laws. Transparent reporting restores trusts and helps the state build hold entities responsible for adherence to the laws meant to protect patients, students, workers, and providers accountable at designated state locations. This bill is proudly sponsored by the Latino Coalition for a Healthy California and TODEC Legal Center. We thank them for unwavering commitment to immigrant health and justice.
And with me to testify today is Mar Viles, the policy director with the Latino Coalition for Healthy California and Luz Gallegos, executive director at the TODEC Legal Center. The appropriate time and respectfully ask for my vote.
Speaker 20
Good afternoon, chairs and members. My name is Marvelles. I am the policy director for the Latino Coalition for Healthy California. Our organization advances and protects Latino health through policy and advocacy with a vision of ending Latino health inequities in our state, and we are proud cosponsors of s b twelve fifty seven. S b twelve fifty seven represents a significant step in guaranteeing the effective enforcement of protections for immigrant communities that were signed into law last year.
Speaker 6
Additionally, it provides essential accountability to the public regarding violations of these laws and the circumstances surrounding immigration enforcement within our state. SB twelve fifty seven requires the California attorney general to publish an annual report on immigration enforcement incidents at designated safe locations, including at schools and health care facilities. Last year, s p 81, which protects health spaces from unlawful immigration enforcement, was made state law. However, the truth is is that although laws like SB 81 were passed, sensitive locations like hospitals and clinics continue to deal with the impacts of violent, fear inducing, and disruptive activities by immigration enforcement. Health care providers and health care workers continue to be the front lines between ICE and immigrant patients.
Therefore, providing and reporting data of when these incidents take place is one of the strongest accountability tools we have. Without accurate public data, unlawful actions go undetected, and fear continues to spread. The gathering and reporting of data will assist the state in ensuring that entities comply with regulations designed to safeguard patients, students, workers, and providers at specified safe locations. For these reasons, I ask for your I vote. Thank you.
Speaker 7
Hello, Chair. My name is, Luz Gallegos. I am the executive director for TODEC Legal Center. We are a lifeline for immigrants and their families in California's Inland Empire and Coachella Valley. For over forty years, TODEC has been a hub for healing, organizing, community transformation led by people who live and work in rural and inland communities.
In TODEC, we firmly believe that those closest to the pain should be closest to the power. We are here to to today as a proud cosponsor of s b twelve fifty seven authored by senator Aragin because as as an organization on the front lines, we need stronger transparency and accountability by our state to protect immigrant communities. We are guided by our community struggle, and it is our responsibility to uplift community stories to inform and educate systems to find solutions that reflect the pain of community. Enforcement activities in what we used to be considered safe public spaces is is cornering vulnerable families and children not to seek medical care, education, attend mass, or leisure. On 01/15/2026, an immigration operation by federal authorities was reported within boundaries of the Coachella Valley Unified School District.
The presence of this operation affected multiple families as several parents and students traveling to work on their way to school were stopped by immigration officers. The incident generated concern and confusion among district administrators, educators, and community members. Several parents were detained in this operation. This operation impacted their several families. These types of operations continue to cause chilling effects amongst community, including kids that are going through trauma and do not want to leave the safety of their home.
Speaker 51
Recently, a parent showed how when taking their children to a doctor's appointment saw immigration agents outside the clinic turned around and never rescheduled. They never went back. Families continue to share the that once they see enforcement near service sites, it changes everything. Whether they seek care, go to school, or even attend church. We have had We have had some of our regions' churches and community
Speaker 1
Thank parks very much. If you could go ahead and wrap it up. You urge an I vote, I assume. Yes.
Speaker 8
Good afternoon, chair members. Karen Stout here on behalf of UnidosUS. We share the support's concerns and are in support. Thank you.
Speaker 9
Good afternoon, Chair. Johnny Pineda, on behalf of the Latino Coalition for Healthy California co sponsor Latino Health Access and in support. Thank you.
Speaker 10
Afternoon, chair and members. Sandra Poole with Western Center on Law and Poverty in support.
Speaker 11
Good afternoon, members. Erica Cervantes on behalf of Alliance for Better Community in support.
Speaker 11
Good afternoon, chair and members. Brandon Chiu on behalf of SEIU California in support.
Speaker 12
Good afternoon, committee from Cal State Long Beach. I'm Kaili Carrasco, and I'm in support of this bill.
Speaker 10
Good afternoon. Obin Olerebe from Center for Family Health Initiative in support.
Speaker 14
Good afternoon, committee. I'm from Cal State Dominguez College and I support
Speaker 1
Thank you very much. Anyone else in support of SB one two five seven, please approach the microphone. Seeing no one approaching, let's turn to the opposition. If you're opposed to SB twelve fifty seven, please approach. Going once, going twice.
Alright. Not seeing anyone in opposition approaching the microphone. Let's bring it back to committee. Questions or comments by committee members? Seeing none.
Oh, do I see one? Okay. Senator Niello.
Speaker 5
How will the data be collected? Well, right now, there's an online portal the attorney general's office has where individuals are able to submit information on incidents that happen. In addition, information is already provided to the Attorney General's Office as well through complaints that are made or just through information that's shared with the Attorney General staff. So, this will be the information that's received from the AG's Office, albeit it's not gonna be complete because it's contingent on that information that is publicly reported or is reported to the attorney general. That would be the the way that the information would be collected.
Speaker 5
Well, once again, this will be based on information that is directly reported to the AG. And I would imagine that the AG's office would also be contacting those designated locations, whether it's healthcare providers or schools as well.
Speaker 5
Yeah. Or information that they become aware of through lawsuits or or other other complaints that are filed.
Speaker 5
Yeah. It's it's it's based on the information that they receive or the information that is publicly available. I've and I would point out I'll just note there's a lot of fear on the part of individuals who may be the subject of immigration enforcement, or who work in a hospital or work in a school who see an incident happening from coming forward and reporting that information as well, and we want people to be comfortable doing so.
Speaker 15
I would point out that sanctuary jurisdictions create issues of enforcement. If ICE is going after people who have committed crimes and going after criminal activity for potential deportees and the sanctuary jurisdiction refuses to cooperate, That makes it much more difficult. And, because of that, they end up having to cast a wider net, and, that ends up in the appearance of ICE going after people who are not guilty of criminal activity, but which would not be the case if the, subject jurisdiction were to cooperate with with ICE relative to enforcement of people who have been guilty of of criminal activity.
Speaker 1
Alright. Other questions or comments? Seeing no other questions or comments, Senator Egem, would you like to close?
Speaker 5
Yeah. Just on that last point. I mean, this is something that came up in discussion of other legislation, including a bill by Senator Jones, and I'm gonna stick stick to the merits of this bill. But this idea that collateral arrests are the only way that we're gonna be able to get the worst offenders off our streets. And I'll just note that the data shows that the vast majority of people who've been the subject of immigration enforcement, those 18,000 arrests that have happened in California, the vast majority of them have no prior criminal record.
Speaker 15
And we do have laws in California that are specifically focused on, ensuring that people that commit serious or violent felonies that law enforcement local law enforcement and CDCR can collaborate to have those people go into the custody of ICE because we want to protect our communities from serious or violent felons. But the vast majority of people are being swept up into this dragnet that is resulting in innocent people who just are going to school, going to an appointment to get their green card renewed, going to a medical appointment, and are being arrested and deported and are being separated from their families. That's wrong. That's synthetical to the state of California. That's why we passed SB 81 and all the laws we passed last year.
Speaker 5
But we need information so that we can understand what is happening in California, so we can fine tune these laws to make them more effective, and so we can also protect Californians of all backgrounds. So I respectfully ask her and I vote on the bill.
Speaker 1
Arne, thank you very much. We don't have a quorum, but the appropriate time, I expect to be a motion, and we'll take it up for vote. Alright. I see senator Choi and senator Gonzales here. Senator Choi.
Speaker 17
Thank you, committee chair and members. I'm so pleased to present senate bill eleven seventy six, which would prohibit foreign entities identified as adversaries by The US director of national intelligence from purchasing agricultural land in California. Specifically, this bill would prohibit nonmarket economies, adversarial governments, and the business controlled by governments that pose a national security risk from purchasing, acquiring, leasing or holding any controlling interest in California agricultural land. The United States Department of Agriculture released a report in January 2025 detailing how many acres of U. S.
Farmland is owned by foreign entities. The report indicated over 46,000,000 acres of U. S. Agricultural land are owned by foreign entities, with the 18% of this land being held by countries on the federal government's list of nations that pose a threat to national security. This report also revealed that approximately 1,400,000 acres of California agricultural land are owned by foreign entities.
Agricultural land often surrounds critical infrastructure, military bases, and water systems in California. This is especially concerning. As just last month, the FBI warned policy departments across our state that Iran might launch drone strikes in California. While many states such as Virginia, Hawaii, and Oregon have passed laws to better protect their agricultural land from being controlled by foreign enemies. California lags behind.
SB eleven seventy six establishes common sense protections for California's agricultural land, ensuring that the state is protected no matter when geopolitical tensions arrive arise. SB seven eleven seventy six establishes a process for the California attorney general to auto prohibited foreign actors found in violation of the bill's provisions to divest itself and their land within ninety days. The bill does not apply to The US allies, federally recognized tribes, or agricultural land that is dedicated to research and development. With me today in support is Shanti Landon from the Placer County Board of Supervisors. I would like to invite Shanti to to the front or either that place.
Come to me.
Speaker 18
You. Good afternoon, chair and members. My name is Shanti Landon. I serve on the Placer County Board of Supervisors, and I'm here today in support of SB eleven seventy six. I wanna focus my comments on why this bill matters from a local government and implementation perspective.
In counties like Placer, agricultural land is not just an economic asset. It's directly tied to public safety, land use planning, and long term resource management. Much of our ag land sits adjacent to or intertwined with critical infrastructure, including water conveyance systems, energy corridors, and transportation routes. These aren't abstract concerns for us. They are part of our day to day responsibilities.
What s b eleven seventy six does, importantly, is give the state a clear and enforceable framework moving forward. It establishes a defined process led by the attorney general to review potential violations and, if necessary, require divestment with appropriate due process. That clarity is critical for local governments. We're not left guessing how these situations would be handled or who has authority. I also wanna highlight that this bill is per perspective and targeted.
It doesn't disrupt existing ownership, and it includes important exemptions for research activities and federally recognized tribes. That balance really matters. It ensures that we're addressing the risk without creating unnecessary instability. I know the committee had raised some important illegal and policy questions, and so I wanna really briefly speak to those first on the issue of foreign policy. While that is primarily a federal role, this bull this bill is grounded in federal determinations, specifically the annual threat assessment and non market economy designations.
Speaker 16
It aligns state policy and existing federal frameworks rather than creating a separate or conflicting standard. Secondly, on equal protection concerns, this bill is focused on foreign governments and business entities tied to identified national security risks, not individuals based on national origin. At the end of the day, this is about responsible forward looking governance. Local governments are tasked with protecting land use, infrastructure, and community safety over the long term. SB eleven seventy six provides a narrowly tailored tool Thank to help you.
Speaker 1
I'm sorry. One second. Most important thing we're gonna do today, if you'll hold for just one moment, Committee Assistant Porter, could you call the roll for a purpose of establishing a quorum?
Speaker 11
Nilo here. Allen? Ashby? Caballero? Here.
Caballero here. Duraso? Here. Duraso here. McNerney?
Here. McNerney here. Reyes? Here. Reyes here.
Stern? Stern here. Valadares? Wahab? Weber Pearson?
Weiner? You have quorum.
Speaker 9
No worries, Mr. Chairman. Joseph Stefanoni, California State Grange in support.
Speaker 1
Thank you. Anyone else in support, please approach s B 1176. If you're opposed to s b eleven seventy six, now is the time to approach. Seeing no one approaching, let me bring it back to committee for questions. Questions by committee members.
Seeing none, I I have a few. And and maybe, senator Choi, either you or your, witnesses might, respond. In terms of, issues, supervisor, just wondering if if there's a particular issue in Placer County.
Speaker 18
We do not currently see a major issue in Placer County. It's really looking at the broader community and just foreseeing potential problems in the future.
Speaker 1
Yeah. Have have you seen any evidence of foreign governments buying property in Placer County?
Speaker 18
We so it's hard to determine. But from what we've seen, there there is a small percentage. It's not a large majority, by any means.
Speaker 1
Right. And and as you say, it's hard to determine. So how would a seller make a determination as to whether or not it's a foreign government or an agent of a foreign government or even a straw buyer?
Speaker 18
It would have to be a process with the assessor's office and, working with our agricultural commissioner to determine where that purchase is coming from and whether those agricultural lands are covered under the Williamson Act and what kind of, impacts we might see from that.
Speaker 1
So if I were selling a piece of agricultural property, is it my burden to make sure that that the purchaser is not one of the prohibited purchasers?
Speaker 18
I don't believe so. And maybe senator Choi can speak to that. But my understanding is that that would not be on the burden of the seller. It would be on, the burden of the assessor and the state to determine whether that's a foreign government coming in.
Speaker 17
Once this bill is implemented, we should it'll be widely known, and the land brokers will have to inform the buyer whether the person is identified as a foreign government agency or individual living in legitimately living in this country. So I don't think that there will be any confusion who would the broker say.
Speaker 1
Just to be clear, so the broker then would have to do the investigation to make sure that whatever that, you know, one two three LLC is not the agent of a foreign government. Is that your understanding?
Speaker 17
Okay. Details can be worked out later. However, at this time, once the bill is established, it should be widely publicized and the broker will inform the purchaser. They will usually know who the purchaser is when when they approach the end of their client, who who they are, whether the person is living in this country or agents are from foreign other other countries. If they are question questionable and that's the first stage.
But after that that person has passed the initial stage, you've been informed by the broker and the next stage will be through registration in the title registration process. The who do who whom the name will be under for the ownership of the land, the property. So at that time, clearly all all all be known.
Speaker 1
Okay. So if the broker makes a mistake, fails to investigate. So for example, let's say it's a straw buyer. Straw buyer meaning somebody that uses an innocuous LLC to purchase the land, and the broker doesn't investigate, would the broker become liable then in terms of damages to the to the seller?
Speaker 17
I I didn't intend to to give liability to to to the broker, but eventually the purchaser will will know that. And the third layer of the protection will be attorney general. Later, if that becomes identified as a foreign entity, And that's the time as I stated that they they need to divest within ninety ninety days. Okay.
Speaker 1
And so it's the right now the director of national intelligence is Tulsi Gabbard. So if Tulsi Gabbard says, you know what, we're in a beef with Canada, and we're gonna put Canada on the list, that would fall under the purview of the law?
Speaker 17
Yeah. That adversary list is is under the department of Federal Intelligence. So that's beyond our control. Whatever reason, at this time, notably targeting North Korea, China, and Iran, obvious adversarial countries toward toward our country's interest.
Speaker 1
So Right now, we're in a beef with the Vatican. So if Tulsi Gabbard put the Vatican
Speaker 17
I don't know. I don't know into specific criteria since that I'm not the evaluator of which country should be listed in the adversarial
Speaker 3
A comment. I I I I think I understand, you know, where you're coming from, senator Choi. I just unfortunately feel that there's too many risks as far as including people who are not adversarial, but who fall into the the category of being foreign foreign born or foreign actor. And we just have a a history of applying it discriminatorily, and that's my biggest concern is how this would be applied. And it's been applied in small ways and big ways in a very discriminatory manner.
So I I I that's my
Speaker 17
biggest concern. It's not a measure. This measure is not to discriminate any legitimate residence in this country. We are talking about the foreign governments' agencies under individual or or company formed or their department, whichever forms maybe they are non US citizens or permanent residents. I buy house here, you know, just because I come from foreign country, that doesn't really deter me.
So anyone legitimately who are living in this country would not be subject to this law measure.
Speaker 15
Just as I understand it, the our current list is Belarus, China, Iran, North Korea, and Russia. And I I'd just like to point out that allowing land sales to any of those countries is a severe risk, particularly with China and particularly if it is close to a sensitive facility otherwise, like a military base, as an example. And, I think to, deny that risk and not support this bill for the concerns stated such as the dispute with the Vatican. There really isn't any dispute with the Vatican. But I understand those concerns, where they're coming from currently, but I don't think that we can deny the serious security risk of allowing land, again, close to sensitive locations, is a a significant security risk for the country and for the state.
Speaker 1
Alrighty. Thank you. Other comments or questions? Seeing none. Just to to complete the list, senator Yelo, includes Angola, Armenia, Azerbaijan, Belarus, China, Georgia, Iran, Kyrgyzstan, Laos, Moldova, North Korea, Russia, Tajikistan, Turkmenistan, Uzbekistan, and and Vietnam.
Is it your view, senator Choi, that well, let me let me ask it in a little bit different way. Do you agree with me that if a foreign government were seeking to gain some sort of advantage that rather than having, for example, Putin himself buy the land, that they would probably use a straw buyer? In other words, another they would disguise the purchase of the property. Does that sound right?
Speaker 17
They could. Right. So we need to identify who they are and through the investigation, it can be identified eventually.
Speaker 1
And that's the question, is that at the point in time of sale, as I understand it, would be the broker's responsibility to investigate. Is that what your understanding is?
Speaker 17
No. I I didn't see that. To investigate the initial identification who the buyer is so that they can properly inform the purchaser of what the California law is. And then also, this similar measure is not just for for the first time in California. To my knowledge is about 20 other states already implemented this major similar law and have been practicing and with no problem.
Speaker 14
I I I do want to sort of reiterate the concerns of the chair because I share them. I I think that when we are introducing legislation, we want a law signed by the governor, then we need to know who is going who has the legal responsibility to to disclose, to to investigate, to determine whether or not this piece of property, this agricultural piece of property is being sold to a foreign government on this list or a straw buyer representing that foreign government on the list. And so I do want to ask the question again, who has the responsibility, Who is legally responsible for investigating and determining who it's being sold to?
Speaker 17
Yeah. At at this time, my intent was that eventually the purchaser has to have have the ultimate responsibility.
Speaker 14
But the purchaser would have no interest in following our laws. They're already on the list.
Speaker 17
Yeah. Initially, they may cheat without revealing their identity correctly even they may lie, but eventually it can be revealed. It it
Speaker 14
But the question then is, how would it be revealed and whose responsibility is it to make sure that it is revealed and discovered?
Speaker 17
I think, as I stated, the three stages along the way, initial information by the broker and secondly, the title company and thirdly, attorney general.
Speaker 14
But the title company would be more interested in the seller and the seller's identification as opposed to the buyer's identification.
Speaker 17
Yeah. Buyers so eventually, will become the property owner and which form, which name it is listed under that suspicion can raise and that attorney general can start investigation into it.
Speaker 14
I think the concept that you that you raise here, I think, is good. They're making sure that that our agricultural property is not falling into the hands of our enemies. Right? Mhmm. I think that that that idea is good.
I think that the enforcement aspect of this is this double referred? It is double referred?
Speaker 14
Okay. So I I I would hope that if should it come out of committee today, I would hope that before it gets to agriculture that there is a clear designation of who has the responsibility. Someone needs to be told, you are responsible to determine whether this particular buyer is on this list. Yeah. And if it's the broker, then it has to be noted that the broker is responsible so that the broker knows that they have this responsibility.
They then have to do their due diligence. If it falls on the seller, the seller needs to know whoever it is it falls on. I and I heard, I think, testimony or perhaps from you that the the the auditor or or the the the the whoever it is that's in charge of the assessor. Thank you. The assessor eventually, hopefully, will discover it, but we can't hold the assessor responsible for an action that happened that they had no responsible responsibility for.
So somebody has to be held responsible. Somebody has to have that duty to to do due diligence, to discover whether or not the buyer is on that list. And I I would hope that before it gets to agriculture, should it come out of committee, that that is something that that is worked on before it gets to the floor. I I the concept is understandable. As our colleague has said, there are concerns about discriminatory application, about who's put on the list and depending on who is in the administration and who their their their enemies, their personal enemies are that make their way onto the list.
The the the concept, I understand, but I I and I I will vote for it today. But coming to the floor, I do want to be sure that there are protections so that we don't have that discriminatory application to the to to this process and that we do have the I we we have identified who it is that's responsible for determining who it's being sold to and that it's not being sold to someone who is on the list.
Speaker 17
Your points are very well taken and I did not get into that detailed level. But before that next committee meeting reviews this bill, I will work on that. And my intent is not penalizing internal process like a broker or assessor or title company. It should be more of a natural reveal.
Speaker 17
that's But in the process, it should become so evident that the entities are suspicious, then our AG can take an investigation. So I will put my thinking cap and consult with people and come up with the the process we need to identify where the burden will be Yes. Placed for identifying who the purchaser is.
Speaker 14
Because this is judiciary, and we're looking at the legal process, and that part is missing. Thank you.
Speaker 17
I hear your points, well taken. And since, another committee will have to go through, if, this passes out of this committee, I will work on that specific areas of concern. Right now, you identified two different areas, nondiscrimination and responsibility of identifying who the purchaser is. I'll work on that. And I respectfully ask for your eye force that this is a very serious matter for the not certain group, not to discriminate anybody for the sake of our country, for the security of our country since we are living in a unfortunately, fighting over hegemony who's gonna take over and control the world, and enemies come many different forms.
So agricultural land is the phenomenal number. Over 40 something million acres have been already purchased. This is a very serious matter for our national security and even agricultural, you know, production. So I ask for your I vote.
Speaker 11
This is file item number four, SB eleven seventy six. The motion is due to pass to the Senate Agriculture Committee. Umburg? No. Umberg, no.
Nilo?
Speaker 11
Nilo, aye. Allen? Ashby? Caballero? No.
Caballero, no. Duraso? No. Duraso, no. McNerney?
Reyes? Reyes, aye. Stern? Valadares? Wahhab?
Weber Pearson? Weiner? No. Weiner, no. 24.
Speaker 1
24? We'll put that on call. Alright. I see senator Gonzales here. Senator Gonzales, you have a quorum and the floor.
Speaker 27
Alright. We're already doing well so far. Okay. Good afternoon, mister chair and members. I wanna begin by accepting the committee amendments and thanking the committee staff for their excellent work.
Speaker 19
Thank you, as always. I'm here to present SB eleven forty six, which will protect Californians from deceptive AI generated health advertisements. The rapid advancement of AI and generative AI technology has made it increasingly difficult to distinguish between real and fake content. One investigation found that in a single month, there were, nearly 100 videos that appeared across social media sites in which fictitious doctors gave health advice or attempted to sell health related products. This deception carries serious, consequences, including consumers foregoing proven treatments, ingesting unsafe supplements, or spending money on products with no proven medical benefit, all based on the advice of a healthcare provider who does not exist.
SB eleven forty six will address this issue by requiring advertisements for health products or services that use AI generated or altered images, audio, or video of a health care provider to clearly disclose that the content is AI generated and that the depicted person is not actually a health care provider. SB eleven thirty 46, excuse me, is, going to help with the integrity of our health care system. Testifying in support today, I have George Sorries from the California Medical Association and Lawrence Gayden from the California Dental Association. I respectfully ask for an I vote.
Speaker 50
chair members. George Sorries of the California Medical Association. We're the proud sponsor of SB eleven forty six by senator Gonzalez, and I would like to thank the senator for authoring this important measure and the work that the committee and the staff have done on this bill thus far. SB eleven forty six seeks to crack down the growing use of artificial intelligence to create fraudulent advertisements for health related products that uses physicians' images without their consent or knowledge. Deepfake doctors on digital platforms are garnering millions of views, while endorsing non FDA approved weight loss supplements and questionable treatments and devices.
Speaker 21
These scams frequently target elderly and those with chronic conditions, leading patients to waste money on ineffective products, or delay seeking necessary medical care. Bad actors are exploiting the credibility of the medical profession, and weaponizing the trust between doctors and patients. The bill establishes simple, common sense transparency requirements for the advertisements of health related consumer products and services. If the ad uses AI, the generators significantly alter a physician's likeness, including their physical appearance and their voice. They must include a clear and conspicuous disclosure informing consumers and that the content was created using AI.
This bill empowers the attorney general to take enforcement action against fraudulent actors and gives individual physicians a narrowly tailored mechanism to legally defend themselves against scammers who have used their image without consent. Lastly, this bill does not prohibit the use of AI in legitimate healthcare settings. It builds on previous CMA sponsored legislation, which prevents AI from misrepresenting itself as a licensed healthcare professional. These bills focus specifically on transparency and consumer protection. The physician and patient relationship is built on trust.
When scammers use AI to steal a doctor's identity, they're not just committing fraud. They're putting lives at risk. SB eleven forty six is a common sense measure to restore integrity to the health information online and hold scammers accountable. For these reasons, we ask that you support this measure today. Happy to answer any questions.
Thank you.
Speaker 20
Afternoon. My name is Lawrence Gayden. I'm here on behalf of the California Dental Association, representing 27,000 dental professionals across the state, urging your support on SB eleven forty six. CDA fully supports the intent to maintain patient protection as the use of AI in dentistry and health care at large continues to grow. AI systems, when used properly, help create more administrative efficiencies and streamline processes that providers review and approve.
However, with the rise of hyper realistic AI deepfakes that depict dentists endorsing products and services, the goodwill and faith of our providers are being exploited to sell services and products that often rely on false or deceptive health claims. It is important that there are guardrails for the these emerging technologies that can guarantee protection for consumers from misleading sales pitches and maintain integrity and credibility within our health care systems. SB eleven forty six assures that what consumers see and hear from our dental professionals remains just that and allows consumers to gauge the credibility of health advice when AI is used to impersonate a dental professional. For these reasons, we ask for your I vote.
Speaker 1
Thank you very much. Anyone else in support of eleven forty six, please approach microphone.
Speaker 1
Thank you. Others in support. Seeing no one else approaching, let's turn to the opposition. If you're opposed to SB eleven forty six, please approach microphone. Seeing no one approaching, let's bring it back to committee for questions and comments.
Questions and comments by committee members? Seeing Senator D'Araso
Speaker 1
moved the bill. Senator Cabello, did you have a question? Alright. Seeing no other questions or comments.
Speaker 1
chair. You. Senator Gonzalez. Okay. It's it's been moved by Senator D'Araso.
Comminence to supporter, please call the roll.
Speaker 11
This is file item number five, SB eleven forty six. The motion is to pass as amended to senate appropriations. Umburg? Aye. Umburg aye.
Nilo?
Speaker 11
Nilo aye. Allen? Aye. Allen I. Ashby?
Capayero. Capayero I. Duraso. Duraso I. McNerney.
McNerney I. Reyes. Reyes I. Stern. Valadares.
Wahab. Weber Pearson, Weiner. Seven to zero.
Speaker 1
Senator I see senator Grayson. Senator Grayson. Senator Grayson, floor is yours.
Speaker 22
Thank you, mister chair and esteemed members of the committee. Good afternoon. I would like to first thank the committee for their great work and collaboration with my office, and I will be accepting the committee's suggested amendments. I am pleased to present to you s b nine eighty eight. It's a bill that would provide a series of reforms to the auto glass industry, governing insurance assignments, repair disclosures, billing practices, and claims solicitation.
Across The United States, windshield glass related losses in comprehensive auto insurance are frequent with an average of 12 to 14,000,000 claims being filed per year. From 2015 to 2019, California alone accounted for roughly 2,160,000 auto glass claims. Motor vehicle glass has become so increasingly sophisticated, incorporating advanced technologies such as heads up displays, embedded antennas, RAIN sensors, and advanced driver assistance systems, we know as ADAS components such as cameras and lane departure sensors. These technological features make glass replacement more complex, requiring special installation and precise calibration to ensure proper functionality. Along with the rise of claims and the greater cost of repairs, the number of motor vehicle glass repair replacement services has grown rapidly in recent years.
Many shops actively seek new customers through inducements such as gift cards, cash, or even discounts. These businesses often rely on a business structure that allows for assignment of benefits, AOB arrangements, allowing the repair shops, to bill insurers directly while the consumer has very little visibility into the cost or the services performed. While convenient, this model can lead to poor outcomes for consumers, including inflated claims or overbilling, failure to properly calibrate advanced driver assistance systems, and reduced safety. Moreover, this practice also lessens consumer choice and transparency, with some insured being led to specific repair shops or being misled about the need for calibration resulting in vulnerable consumers. Furthermore, increasing overbilled claims can be denied and or litigated by insurers contributing to rising premiums.
The combination of aggressive marketing, a o AOB use, and limited oversight increases financial and safety risk, underscoring the need for stronger consumer protections. The California Motor Vehicle Glass Act responds to this need for consumer protection by restricting a person from assigning policy benefits to repair shops preventing AOB abuse. The bill also requires shops to provide upfront estimates and itemized invoices reflecting reasonable charges. Ultimately, s b nine eighty eight will help to reduce fraudulent claims, ensure safety, protect consumer choice, and stabilize the insurance cost. I acknowledge that there is opposition, and it is not my intent to weaken or harm independent shop flexibility, but simply to create best practices and follow model legislation that has been adopted across many, many states.
With that, through the chair, I would like to introduce my witness, Tom Tucker, Vice President of Legislative Affairs for Safe Lake.
Speaker 23
Afternoon, Mr. Chair and members of the committee. Tom Tucker, Vice President of Legislative Affairs for Safelight. As our distinguished sponsor said, this is model legislation. It is nothing more than best practices to help stabilize the insurance market, reduce insurance fraud, reduce auto glass litigation.
And if we keep our eyes and as we think about this bill on the consumer, there's nothing in this bill that favors one party or another. It really is about the consumer. I've I've read some of the testimony and comments from some of the opponents, and some of the things that they're asking for or they're asking the committee to repeal or amend doesn't make a lot of sense. One of the issues is they don't want a claim number before you begin work. It takes two minutes, two minutes to get a claim number from an insurer.
That's it. A claim number ensures that the consumer, the glass shop, and the insurer all aligned on payment, cost, and all services aligned. Without a claim number, the insurer the insurer, the customer, can be left with outstanding costs at the end. That's why this is an important piece of the legislation. Assignment of benefits.
Prohibiting the assignment of benefits is something that many states across the country are trying to do, because assignment of benefit allows the third party, the glass shop, to negotiate with the insurer on behalf of the consumer. And if there's dispute, the glass shop can then sue the insurer on behalf of the consumer, and the consumer is not even aware. And it leads to higher premiums. These are really simple best practices. That's all there is.
And we'd be more than happy to answer any questions. This bill has been passed in six states. It was signed by the governor of Virginia last night and just one hour ago passed the Illinois House 114 to zero. Its best practice has been passed in Florida, New York, Iowa.
Speaker 1
All righty. Thank you, sir. I assume your urge and I vote. Yeah, all right.
Speaker 1
Thank you. Next witness, please. If there are no other witnesses in support of SB nine eighty eight, if there are, please approach. Seeing no one else approaching, let's turn to the opposition. If you're opposed to SB nine eighty eight, please approach
Speaker 24
Good afternoon, Sharon members. Naomi Padron on behalf of the Pacific Association of Domestic Insurance Companies.
Speaker 1
Thank you. All right. Anyone else wish to testify in support? Seeing no one else coming forward, let's turn to the opposition. If you're opposed to s b nine eight eight, now is your opportunity.
Now is your time. No one approaching? Alright. Bring it back to committee. Questions by committee members.
Yeah. Okay. Senator Reyes first, then we'll go to senator Niello.
Speaker 14
Thank you so much, senator, for for bringing this forward. I think safety is something that everybody is going to that part, everyone is going to agree on. I have heard from many of the independent glass owners, and their opposition goes beyond just a a claim number. I think eventually every every repair is going to have a claim number. And I I think that their opposition has more to do with the bias that this creates.
They argue that it gives more control as noted in in the in the analysis, that gives more control to insurance companies and their preferred networks. And I will tell you honestly that the only commercial I ever hear about is Safelite. And so if Safelite becomes the preferred network for a for insurance companies, then the independent glass companies are not going to get their share of work assigned to them by the insurance companies who are going to have total control. It they also argue, as noted, that it benefits the larger players, and it hurts independent repair shops. Now specifically on the assignment of benefits, they do argue, as noted, that consumers must navigate claims themselves and repairs may be slower or more confusing.
I appreciate that if there is a problem that the glass company can then sue on behalf of the consumer because of the assignment of benefits. But independent glass owners, we're talking about the smaller ones, quite frankly. They feel that they are not going to receive and have not received in the past the same referrals from insurance companies because they are not the preferred in the preferred network. How do you respond? Or is this something that you can work on specifically with the Independent Glass Association to make sure that that they there is a way to to to be sure that they are included, that they there isn't a bias against them.
Speaker 22
Absolutely. And thank you, senator, for that, observation and question. Being a small business owner myself, very, very protective of small businesses here in California that make up the backbone of California's economy. So to address that, the bill aims to at upholding best practices for all auto glass, in the businesses. It's not focused on regulating independent shops, but rather aimed at protecting.
So the the lens that we're looking at this bill is through the lens of consumer protection, not trying to determine what glass company is more appropriate over another. The committee amendments, as a matter of fact, they took they went further to define this aim towards upholding best practices. So by indicating that all persons should benefit from this bill, not just the insured itself. So we have further addressed some of the concerns surrounding the bill by specifying that this bill is referring to person or business primarily engaged in automotive glass replacement. And further, we have also addressed the concerns on what reasonable price is to specify that a reasonable price for repair replacement or installation of automotive glass charged by a motor vehicle glass repair shop within a specific geographical area.
So we're trying to do is spread it out to make sure that everybody has access, everybody is a part of the network, everybody, is in consideration. Whatever the insurance companies have as far as their protocol, that's not what this bill actually does. Now I do wanna also when it comes to the assignment of of benefit, which is also another very important, the pro the prohibition of the assignment of, of benefits is actually considered a consumer protection. And I also sit on, the, NCOIL, so, that's the National Conference of Insurance, legislators. And this was a model legislation that came out from that, and that very discussion was very thorough.
However, the assignment of benefits is that contract in which the policyholder transfers their rights, as you already know, under the insurance policy of a third party through the chair, I would ask that my sponsor go a little more legal or in-depth on that. But it's just simply saying this, the consumer should not be cut out at any given point in time. Now whether or not the glass company needs to take legal action against an insurer, I think the consumers should always be at least aware of what's happening and not completely cut out because an assignment was made.
Speaker 14
sorry. Because that would have been another one of my questions. Yes. So I wanted to be sure
Speaker 23
Sure. Senator, it's a great question. To your question specifically about hurting small businesses, this strengthens the anti steering laws. That's what this bill does. And so every insurer requires consumer choice.
And so the first question that's asked of every consumer, no matter if you're a large shop or small shop, do you have a preference for a glass shop? And if you have a preference, you are sent to that shop of preference. So this does not hurt small businesses. This does not discriminate at all. It allows best practices, period.
Speaker 14
Now and forgive me for pushing back, if I may, through the through the chair. One of the complaints from our our small, independent glass association members is that oftentimes when there is a need for the glass repair that consumers receive phone calls from the bigger not the independent glass companies, but the bigger ones without naming names, and they then are in the ear of the consumer. So when they are asked, do you have a preference? The only one who has called them is the big the big glass company, and then that's the name that they give.
Speaker 23
I can I can assure you that every every carrier has specific scripting that they give for for glass providers or TPAs, where we manage the glass programs, that you have to follow? The first line of every script, from very large insurers to the to the small ones, do you have a preference of a glass shop? We honor preference, period. It's it's it's against the law. It's a best practice.
Speaker 55
And if there's any specific allegation and I'll just use safe light because I can only speak for my company if there's a specific allegation of steering or large companies in the ear, We keep records for seven years of every transaction, digitally, on the phone, email. And we pull those records all the time. And oftentimes, what we hear, we come to these type hearings, and you've heard these complaints. But when you pull the record, it's a different story. But
Speaker 14
I understand what you're saying, but what record would there be about a phone call that might might have been made?
Speaker 23
Any any phone call from Safelight, I can only speak for Safelight, is recorded. Any interaction with the consumer is recorded. It's we have a data retention policy of seven years. We keep every interaction with the consumer. And so we don't call consumers.
The calls come to us.
Speaker 14
Now, logistically speaking, the insurance company receives a request for the windshield to be repaired, would they say here are five local windshield repair companies, a glass repair companies? Or after if they if if I were to be asked, do I do I have a preference? I have no idea unless I do research. And so if I'm asked, I'm going to say I don't know. So are they given then maybe five local glass companies that might be able to do the repair?
What's the next step if they say I have no preference?
Speaker 23
Sure. Each carrier has a different process. Every carrier has a different process. I will tell you I'll just use one of the larger ones, State Farm. They have a rotation.
Good for them. To your point, whatever's in the geographic area, they pull all of those glass shops in the area. And and then if you if you wouldn't mind, I'll just use you all as glass shops. Distinguished gentleman
Speaker 23
then you would get the second one, you get the next and it rotates so that everyone is in the pool getting the work, whether you're a network shop or a non network shop. That's how it works.
Speaker 14
Alright. So it it the the the purpose of the bill is good, and I I understand it. I think because I had so many phone calls from our independent glass companies, I I was seriously because I am seriously concerned. I I I do want and and you as a small business owner recognize how important it is to make sure that when we put in, especially if this is a law we are passing that is going to be implemented, that we're we make sure that that the the the smaller independent companies also receive their fair share of this business. If they don't have the capacity, then they don't have the capacity.
But if they do and they are in this rotation, then I personally want to make sure that they are going to be included. If we're doing this for the benefit of the consumer, the consumer should have available to them their options because I don't know if any of my other colleagues say, if they were to be asked, if they would say, my preference for to replace my windshield is this company. Because unless we've done some research or we call somebody, we're not going to know what to answer.
Speaker 14
then the next step should be here are five or whatever it is. I I that that is my concern is these independent glass company, companies, I want to make sure that they are protected.
Speaker 1
Alrighty. Thank you. Other questions or comments? Seeing Senator Niyo. Oh, I'm sorry.
Senator Niyo.
Speaker 15
A comment. K. In my other life, I'm an automobile dealer, and we perform this kind of work, a lot of it. So I feel it's a bit of a a conflict, and I will be abstaining.
Speaker 1
Alright. Thank you. Is there a motion? Oh, did you accept the amendments?
Speaker 1
Moving the bill. Alright. Senator Cabello has moved the bill. Would you like to close?
Speaker 22
Yes. Mister chair, thank you very much. And I appreciate the concerns of my colleague, committee member, and, am fully committed that if this bill would pass out of committee here today, I will continue to have an open door, open ear, especially to the small independent operators, and make sure that we can get to a landing spot to where everybody benefits from this, but primarily the focus is on the benefit of the consumer. Thank you. All right.
I respectfully ask for a no vote.
Speaker 1
Thank you very much. Committee assistant reporter, please call the roll.
Speaker 11
This is file item number seven, SB nine eighty eight. The motion is due pass as amended to Senate appropriations. Hamburg?
Speaker 11
Allen? Ashby? Caballero? Aye. Caballero aye.
Duraso? Aye. Duraso aye. McNerney aye. McNerney aye.
Reyes? Aye. Reyes aye. Stern? Valadez?
Wahab? Weber Pearson?
Speaker 1
70. We're gonna put that on call. And I also understand, senator Grayson, unfortunately, our colleague, senator Laird, could not be here, but you're gonna present his bill. Is that right?
Speaker 22
Thank you, mister chair. I am presenting senate bill twelve eighty eight on behalf of senator Laird. SB twelve eighty eight ensures that nonprobate assets make it into the hands of the individuals and nonprofits as intended by establishing a clear framework for notification and verification of beneficiaries and eliminate barriers to access funds. Nonprobate transfers are intended to avoid lengthy court processes, reduce costs, and ensure timely distribution.
Speaker 22
practice, beneficiaries, particularly nonprofit organizations, often face significant obstacles in accessing funds. Financial institutions are the only entities that know who beneficiaries are and how to contact them. However, there is no requirement for any party to notify beneficiaries when an account holder passes away, often leaving beneficiaries in the dark about their status. When beneficiaries come forward to claim funds, they face barriers to access. Nonprofits can be required to open new accounts, provide personal information about board members or the descendant that they likely do not have, and simultaneously submit claims with other co beneficiaries that they may not even know or even exist.
This can delay access for years. For these reasons, SB twelve eighty eight modernizes Californians, California's nonprobate laws by requiring financial institutions to make a good faith effort to notify beneficiaries within sixty days of receiving proof of death, establishing clear and manageable verification requirements for beneficiaries, allowing independent beneficiary claims, prohibiting mandatory opening of accounts, and providing liability protection for institutions acting in good faith. The author is committed to continuing conversations with opposition to address concerns while being mindful to ensure that the heart of the bill is maintained. Administrative convenience should not override the rights of beneficiaries to be notified of and access gifts left to them. With me to speak through the chair is Melanie Sadik, President and CEO of Valley Humane Society and Juliana Tedlow, representing Cal Nonprofits.
Speaker 12
Hello. Good afternoon, chair and members. My name is Melanie Sadik. I am the president and CEO of Valley Humane Society in Pleasanton, California. In 2021, our organization was named as a beneficiary of a donor's IRA, along with eight other nonprofits, including KQED, Monterey Bay Aquarium, and Best Friends Animal Society.
We were lucky that the donor's sister found paperwork identifying the account and notified us. We reached out to the bank to begin the process, which required beneficiary paperwork in opening an account. Opening an account created barriers. It triggered the federal know your customer requirements, which included personal information, including Social Security numbers and home addresses for our board members and me, a request that's not easily met when volunteer board members have privacy concerns. We provided everything requested, but our application was rejected again and again.
Speaker 35
This went on for two years with no clear explanation why, until we finally learned that all nine nonprofits were required to submit paperwork within the same ninety day window, starting when the first nonprofit submitted. But none of us knew each other or how to get in touch. Thankfully, the donor's sister stayed committed to honoring her sister's wishes. With her help, I connected the nonprofits, coordinated a joint submission, and after two years and four months, we were finally funded. This delay meant a delay in impact for the communities we serve.
Speaker 12
Years of stress for a family member trying to ensure her sister's wishes were honored and significant nonprofit resources spent just to ask or ask access our funding. Our experience is not unique. Nonprofits across California are facing similar challenges. These accounts sit outside of trusts and probate, so beneficiaries rely on financial institutions to carry out donor intent. Today, that process can be inconsistent and difficult to navigate.
SB1288 creates a clearer, more reliable framework that is reasonable, fair, and honors donor intent.
Speaker 22
right. Good afternoon, chair and members. Julianna Tetlow, here on behalf of Cal Nonprofits, a 10,000 member organization statewide policy alliance. As the proud cosponsor of s b twelve eighty eight, this bill addresses a quiet but significant gap in our system of transferring assets after someone passes away. Today, many Californians are advised by financial advisers and tax professionals to keep certain assets, like brokerage accounts and securities, outside of a trust.
Speaker 28
These are called nonprobate assets, and they transfer directly to named beneficiaries without court involvement. That structure can be efficient, but unlike assets held in trust, there is no trustee or fiduciary responsible for ensuring beneficiaries are notified or connected to the asset. As a result, beneficiaries may have no idea they've been left a gift because there is a responsibility gap where nobody is in charge of moving assets. This means intended gifts go delayed or unclaimed. SB twelve eighty eight simply creates that missing connection and removes unnecessary barriers to receiving assets.
Under the bill, when a financial institution receives proof of death, it must make a reasonable good faith effort to notify beneficiaries within a defined time frame, a standard that is well established in law. Beyond notification, SB twelve eighty eight also removes several practical barriers that routinely prevent beneficiaries, especially nonprofits, from successfully accessing funds by prohibiting unnecessary requirements like opening new accounts, synchronizing claims amongst multiple beneficiaries, and by limiting documentation to what is reasonably needed to verify an entitlement. Also standardizes what nonprofits need to provide, such as an employer identification number and basic contact information. Taken together, these changes mean that once a beneficiary is identified, the process of actually receiving the asset is efficient, predictable, and aligned with original intent. At its core, SB1288 is about honoring donor intent, reducing inefficiencies, and bringing transparency and consistency to a system that currently lacks both.
I'm happy to answer any technical questions, and we respectfully request your I vote.
Speaker 1
Thank you. Perfect timing. Others in support of SB twelve eighty eight, please give us your name, your affiliation, and your position.
Speaker 29
Thank you, Mr. Chair. Jennifer Fearing here, in support of SB twelve eighty eight, on behalf of a number of nonprofits who asked me to convey their support: to Leomi, Creative Alternatives, Meals on Wheels Orange County, SPCA L. A, Union Station Homeland Services Homeless Services, Starting Over Strong, Starting Over, Pathpoint Joybound Pets and People and Pets, and California Academy of Sciences.
Speaker 16
Clifton Wilson, on behalf of the California Animal Welfare Association, also known as Cal Animals. Thank you.
Speaker 31
Mr. Chairman, members, Michael Gutting, Lighthouse Public Affairs here in support on behalf of Habitat California.
Speaker 1
Thank you. Anyone else in support? Seeing no one else approach the microphone, if you're opposed to S. P. Twelve eighty eight, please come to the floor.
Speaker 29
Ms. Mr. Chair, I believe I'm the only member in opposition. May I take a couple Chair. Of minutes?
Afternoon, Mr. Chair and members. Joanne Betancourt, representing CFMA excuse me the Securities Industry and Financial Markets Association. CFMA is a national trade association of broker dealers, investment banks, and asset managers, many of whom call California home. CFM members play an important role in helping clients plan, achieve lifetime goals, including legacy planning.
They take their registered entity responsibilities very seriously. This includes ensuring that the right individual or entities gets the money, safeguards against fraud, complying with all federal, state and SRO law laws excuse me, rules and obligations. The transfer process can be cumbersome. We understand that the frustration when the process takes a little bit longer and is more complicated than anyone would like. We do have significant concerns with the legislation and oppose it in its current form.
The author and the author's staff and sponsors have reached out to us, we're very appreciative of that. The bill sponsor has expressed willingness to discuss several of our concerns. Number one, exemption language for conflicts with federal, state, and SRO obligations. Number two, additional instances beyond court orders, li liens, levies, and may delay transfer. Three, language clarifying beneficial the beneficiary's obligation to return the funds in certain circumstances and clarity on what constitutes a credible source.
We have submitted draft amendment language to the sponsor and the author and look forward to working productively on these issues. I did want to highlight a couple of issues, though. The industry is subject to a wide range of due diligence, tracking, and recording recordkeeping requirements designed to protect against securities fraud, market manipulation and money laundering. There are ex ex there are also tax compliance and reporting issues that need to be addressed. Exemption lay language similar to Indiana law, where there is Thank a
Speaker 21
Chris Schultz with the California Bankers Association. We align our comments with our friends at CFMA. These sponsors have identified a challenging issue. I think there is an opportunity to work through it. I did want to highlight two things.
Speaker 32
The bill applies not only to nonprofit beneficiaries, but to every beneficiary. And second of all, when the information was collected from beneficiaries, financial institutions did not know they had the obligation to go find that beneficiary. So the bill applies retroactively. So if once the bill goes into effect, if somebody wrote down Chris's gorilla sanctuary twenty years ago on a beneficiary designation form, the burden is now on the financial institution to try to go find that, nonprofit beneficiary. They didn't know they were going to need to find them when they collected that information.
Prior to this, it had been the obligation of the decedent, right, to do their own estate planning, to notify their beneficiaries of their assets. It flips the burden out to the financial institution. Just want the committee to be aware of that. Thank you.
Speaker 1
Alrighty. Thank you. Others opposed? SB twelve eighty eight, please approach. Seeing no one approaching.
And, Senator Grayson, if you'd like to respond, that's great. Otherwise, Senator Grayson is filling in for Senator Laird. My guess is that Senator Laird's staff is probably watching, and so they've heard your your comments and concerns. Bring it back to committee for questions or comments. Yes.
Senator is.
Speaker 14
Just a comment. I I think, do thank the senator for bringing this forward. My my aunt was a member of a religious order. They were named in a in a as the beneficiary, and it wasn't until so many years later that they finally found out and about it and, this bill would have alleviated that, long, long delay. So I thank him for presenting this.
Speaker 15
In addition to that, there's the risk of, what could be law called lost legacies, via the unclaimed property function of the state of California. And if in in particular it is a security or interest bearing type of asset, it is immediately liquidated. And so the beneficiaries don't would not have the ability to participate in how that might be handled. And that's an issue here because the eschete period, that is the period of time in between supposed contacts by the account holder, is only three years. When unclaimed property was started, it was, I think, initially at least seven years, maybe nine.
It has been gradually reduced so that the state gets more money to use in its general fund. It's an insidious process. I have a bill that's gonna cure that though, and that will that will increase the eschief period from the minimum of three years, which is unreasonably short, along with a couple of other issues. And so I just want to alert everybody to that opportunity to cure that particular problem here.
Speaker 1
Thank you. Thank you, senator Nielo. I I can't wait. Alright. Other questions or comments?
Seeing none, is there a motion? Senator Caballero moves the bill. Alright. Senator Grayson, would you like to close on behalf of senator Laird?
Speaker 11
This is file item number 16, SB1288. The motion is to pass. Hamburg? Aye. Hamburg aye.
Nilo?
Speaker 11
Milo aye. Allen? Allen I, Ashby, Caballero Aye. Caballero I, Duraso Aye. Duraso I, McNurney, Reyes Aye.
Reyes I, Stern, Valderas, Wahhab, Weber Pearson, Pearson, aye. Weiner, Weiner, aye. 80.
Speaker 1
80. Put that on call. Thank you, senator Grayson. I see senator Padilla here, and I see senator Smallwood Cuevas here. Senator Padilla, you're up.
Senator Padilla, SB nine forty one, file number nine.
Speaker 31
present. SB nine forty one would prohibit the sale of commissary items in private detention facilities at prices that exceed 35% markup above vendor costs. You may know, in California, every ICE detainee is held in a private detention facility operated by a private corporation on private property and under contract with the federal government. There are seven such facilities in our state, two of which are located in my district. In these facilities, detention authority, of course, rests with the federal government, but day to day conditions of confinement and commercial practices are controlled by the contracted entities and operate within our state.
Speaker 36
Private commissaries typically operate within these centers and sell essential items such as food, drinking water, hygiene products, and clothing. They're often is well operated by third party vendors and set prices without any meaningful oversight. Through interviews with individuals who are currently or previously detained in these facilities, the 2023 UCLA report found that costs in these facilities were significantly higher than in our own state prisons. One individual reported spending approximately $100 per week at a private detention facility commissary, compared to about the same amount per month while incarcerated in a state prison. Markups in this regard can typically range from 75 to over 300%.
Speaker 31
Within private detention facilities, detained individuals have limited access, at times, to clean water, and are often given inadequate meals, forcing many to rely on these commissaries to obtain basic needs. When the pricing markup are exploitive, the costs of these necessities are often the burden is shifted to the incarcerated individuals' families. This bill mirrors the framework of SB four seventy four, which ensured these same protections in state facilities. It does not alter any federal immigration enforcement priorities, detention decisions, custodial authority. Here with me today is Regina Garza, Special Assistant Attorney General.
Speaker 33
Thank you. Good afternoon, Mr. Chair, members. My name is Regina Garza. I'm the Special Assistant Attorney General for the California Department of Justice.
On behalf of the Attorney General Rob Bonta, who is a proud co cosponsor of this bill, I would like to thank senator Padilla for bringing forward this important bill to end excessive pricing practices at the commissaries and private detention centers that adversely affect both the detainees and their families. The seven civil immigration detention facilities in the state are privately operated and have a bed capacity of over 8,100. These are civil detention detainees held only for civil immigration related reasons. To address the growing concerns for health and safety of the people in the civil detention facilities, the legislature enacted AB 103 in 2017 to require the California Department of Justice to review and report on conditions of confinement at these immigration detention facilities. During these reviews, we have found individuals needing to purchase the most basic hygiene items from the commissary, including instant ramen, water, salt, soap, shampoo, and over
Speaker 33
medications just to compensate for the items that are not provided by the facilities themselves. In November, our inspection at the California City Detention Center found detainees held in extremely cold conditions without weather appropriate clothing or sufficient blankets. Detainees reported that they were issued only T shirts and had to purchase sweaters. One group reported making makeshift sleeves and scarves out of socks. Many detainees have interviewed that we've interviewed over the years have reported issues with the quality and the quantity of food provided at these facilities and that they must resort to buying food from the commissary to supplement their diets.
Speaker 37
Detainees who are vegetarian or have other dietary restrictions have reported particularly difficult difficulty meeting
Speaker 35
Jackie Gonzalez, co executive director of immigrant defense advocates, proud co sponsor, and strong support. Thank you.
Speaker 16
Cal Wisslow with the California Community Foundation California Community Foundation in support.
Speaker 1
Thank you. Oh, this is in support. Seeing no one else approach the microphone, let's turn it over to the opposition. If you're opposed to SB nine forty one, please come forward. Seeing no one coming forward.
Alright. Bringing back to committee. Questions by committee members? There are no Senator Rasmussen Bill. Senator Niello has a question.
Speaker 15
Question of enforcement. These are, entities that contract with the federal government. Do we have jurisdiction to enforce?
Speaker 31
Mr. Chairman, Senator, thank you for the question. Of course, we are The answer is yes. We do not have jurisdiction, obviously, over enforcement related or immigration related operations at the facility, or obviously to interfere with the contractual relationship between the vendor and the federal government, as you know, that would present other legal issues. But in terms of the commercial transactions that are occurring within the state, the answer is yes.
Speaker 1
All righty, thank you. Other questions or comments? Been moved by Senator Reyes, community assistant supporter. Please call the roll. Oh, I'm sorry, we'd like to close.
Speaker 11
This is file item number nine, SB nine forty one. The motion is due pass. Umberg?
Speaker 11
Nilo, aye. Allen? Aye. Allen, aye. Ashby?
Caballero Aye. Caballero I, Duraso Aye. Duraso I, McNurney, Reyes Aye. Reyes I, Stern, Valadez, Wahab, Weber Pearson? I.
Weber Pearson, I. Weiner? Weiner, I. Eight to zero.
Speaker 36
Thank you, Mr. Chair. Good afternoon, colleagues. I am proud to present SB nine zero nine. This bill strengthens enforcement of California's public works laws by updating contractor registration fees and penalties, indexing them to inflation, and reinvesting penalty revenue into the state Public Works Enforcement Fund to support staffing and investigations.
When the state spends public dollars construction, workers should be paid the wages they earn. Responsible contractors should be able to compete fairly, and taxpayers should know their money is supporting lawful, high quality work. And behind these numbers are real people. In one California case, we had a construction worker, Javier Gonzalez, who described wage theft as a robbery in broad daylight. Another worker shared that missing pay meant he could not buy enough food for his four children or keep up with the rent on his family's mobile home in Anaheim.
This is why this bill matters. When workers are underpaid on public projects, the harm is immediate. Missing wages will mean missed rent, groceries, childcare, and gas money to get to the next job. Wage theft and labor violations remain a serious problem on public works projects, and penalties have not been meaningfully updated in over a decade. As a result, enforcement has fallen behind in real ways.
Speaker 30
Penalties have lost deterrent value over time. Staffing shortages have delayed investigations recovery, and too many bad actors have been able to treat violations as just the cost of doing business, skirting the law laws that we have worked very hard to pass in this House. Between 2017 and 2023, workers received the full amount owed in only 12% of wage cases. A Tuohy '24 state auditor report also highlighted severe staffing shortages and major backlogs at the Labor Commissioner's office. SB nine zero nine addresses that problem by updating outdated contractor registration fees and penalties, tying them to inflation, and generating dedicated revenue to support enforcement.
Speaker 36
And we know, in our time of structural deficits, having the resources to truly enforce is critical. The revenue that is deposited into the state Public Works Enforcement Fund to help support staffing and investigations ensures the enforcement system is working and that we are enforcing laws, and that the system functions as intended. Importantly, this does not create a general fund cost. It is a practical way to strengthen enforcement using revenue generated within the existing public work system. And with me to testify today is Matt Cremins with the California Nevada Conference of Operating Engineers, and Keith Dunn with the state Building Traits.
Speaker 58
Thank you, Mr. Chair and members. Matt Cremins here on behalf of the California Nevada Conference of Operating Engineers. We are proud sponsors of SB nine zero nine, which would modernize public works contractor registration fees, update prevailing wage penalties, and take a critical step to ensure that our state's public works enforcement capabilities are as robust as the current laws that we have in statute. I'm actually gonna abbreviate my testimony here as I know we have Mike West from the state building trades in attendance today who's gonna share some real life experiences with wage theft.
Speaker 37
But simply put, senators, this bill is about prioritizing enforcement and, again, ensuring that our state policy is set in a way where it prioritizes the enforcement of our state labor laws. As I'm sure this committee knows well, wage theft and wage theft and misclassification in the construction industry remains rampant. A recent UC Berkeley study found that one in five construction workers will experience wage theft throughout their career their careers. And the growing frequency of wage theft can also can be seen at the labor commissioner's office, which a recent state audit found had 47,000 backlogged wage theft cases were taking an average of eight fifty four days to issue decisions on. So, with that being said, SB nine zero nine seeks to take a small but important step to ensure that we are better prioritizing enforcement of our public works laws, and it's going to do so in three ways.
First and foremost, it's gonna update contractor registration fees for the first time in almost a decade. And it's important to note this is the sole dedicated source of public works enforcement funding. It's also going to update prevailing wage penalties for the first time since 2012. And that's supposed to be a a set of penalties that are supposed to deter contractors from cheating. Lastly, and perhaps most importantly, this bill is going to ensure more steady streams of funding for public works enforcement by mandating that when the labor commissioner is able to collect a penalty, a minimum of 50% of those penalties must go back into the public works enforcement fund to further protect workers.
Happy to answer any questions or concerns and would respectfully request an I vote.
Speaker 59
Good afternoon, mister chair and senators. My name is Mike West, and I represent the state building and construction trades council of California. Wage theft takes on many forms, some more familiar than others, like misclassification and failure to pay prevailing wages. However, there are many tactics and schemes used by bad actors to steal wages of construction workers, and here are a couple of examples. A bad employer may bring workers in one at a time and ask if they'd rather get laid off or receive a $1 an hour raise in pay.
Speaker 38
If they choose the raise, they're asked to sign off that they received prevailing wages on public works projects, which they did not. Then the process repeats itself until they have enough signatures on certified payroll, and there's nothing that keeps them from being laid off soon afterwards. This next scenario is a completely made up name, but let's say a company is called Acme Painting. Sometimes workers would receive Acme bucks instead of real money, to buy high visibility vests and other personal protective equipment normally provided by an employer at no charge to keep them safe on the job. Another tactic would be to lay off, even for one day, a worker just short of three months of employment and then rehire them as a new hire to avoid paying for health care benefits.
Another, sometimes money's collected with the understanding it's going into a four zero one ks when no such plan actually exists for that worker. And the final story comes from a colleague that was approached at a social event. It was actually a wedding reception. And a contractor that was found liable for wage and hour violations came up to him and recognized him and said, no hard feelings. For each one of these, I have to pay wages and penalties.
I get away with a dozen more, and that becomes part of their business model. So for these reasons and more, we request your aye vote on SB nine zero nine to update registration fees and penalties for wage and hour violations. Thank you for your time.
Speaker 39
Mr. Chairman and member of Scott Wichard, on behalf of the California State Pipe Trades Council, the State Association of Electrical Workers, the California Coalition of Utility Employees, the Western States Council of Sheet Metal Workers, and the Elevator Constructors Union, in proud support. Thank you. Ms. Thank you.
Speaker 40
Afternoon. Cassidy Mancini on behalf of the California School Employees Association in support.
Speaker 16
Good afternoon, Chairmembers Conor Gusman, on behalf of Teamsters California in support. Thank you.
Speaker 15
I am Mike Greenlee, International Union of Payners and Allot Trades, District Council sixteen. Ears nine vote.
Speaker 9
Good afternoon, Chair members. Elmer Lazarda with the California Federation of Labor Unions, proud cosponsors in support.
Speaker 4
Good afternoon. Erica Valentine, UA Local three ninety three, in support.
Speaker 1
Thank you. All right. Anyone else in support? Please approach, seeing no one. Let's turn to the opposition.
If you're opposed to SB nine zero nine, now's your time.
Speaker 42
Good afternoon, Mr. Chair, members of the committee. Felipe Fuentes here on behalf of the Associated General Contractors of California. We respectfully oppose SB nine zero nine. Let me start by saying that AGC supports strong and fair enforcement of public works laws.
Responsible contractors want a level playing field, and we support efforts to ensure workers are paid correctly and projects comply with the law. Our concern with SB nine zero nine is not the goal, it's the structure. The bill removes the statutory cap on the contractor registration fees and allows the Department of Industrial Relations to set and adjust those fees annually without a transparent public process. That creates uncapped and unpredictable cost exposure for contractors, particularly small and mid sized firms. At the same time, the bill significantly increases penalties across multiple areas, prevailing wage, payroll records, apprenticeship compliance, and ties those increases to inflation going forward.
So what you have is a system here where costs go up annually, penalties increase automatically, and there's no limited, there is limited opportunity for public input or oversight in how those costs are set. The bill also directs 50% of penalty revenue into the enforcement fund. That raises a structural concern, because it creates a dynamic where the enforcement system is partially funded by the penalties it generates. So, from a judiciary perspective, that's a question of incentives and balance. We're also concerned that increasing fees and penalties does not address the underlying issue identified by the author and the state auditor, namely delays in backlogs and enforcement.
If anything, increasing penalties without improving administrative capacity risks more disputes, more appeals, and longer resolution timelines. And, ultimately, these increased costs and risk will be reflected in higher bids, reduced competition, and increased costs for public agencies and taxpayers. So for those reasons, we are opposed to this bill, but, again, let me reiterate that we support fair enforcement, and this bill creates a system with greater cost, greater risk, and less transparency. For those reasons, we can't
Speaker 1
support it. You, Mr. Fuentes. All right. Anyone else opposed to SB nine zero nine?
Please approach, seeing no one else approaching. Bringing back the committee for questions and comments. Seeing this Senator D'Araso has moved the bill.
Speaker 3
Yeah. I I wanna thank the author for raising this. There is something like a billion to $2,000,000,000 a year in wage theft. There is so much exploitation out there of workers, especially when it comes to hard earned wages that don't get paid. So, you know, as long as there's a part of industries that, take advantage of that and make that part of their business plan, then we have no choice but to keep addressing what kind of penalties.
It doesn't seem to work. Let's try higher penalties. I mean, it's only on that part of the industry that needs to straighten up and and stop stealing from workers. So thank you for your and I'm proud to move your bill.
Speaker 1
Senator Cabello, just for avoidance of doubt, if there was anyone else who was either supporting or opposing SB nine zero nine, now is the time. Going once, going twice. Okay. Thank you. Senator Caballero.
Speaker 43
Thank you, Mr. Chair. Well, want to associate myself with what my colleague here just said. I think part of the challenge is that when when some people cheat, they end up hurting the whole the whole system. And the theft is is real, and it's massive.
So the question I have for mister Fuentes is that what's what is the mechanism? I'm gonna assume that all of all of your associates do the right thing. So in terms of turning the attention to the the people who see it as the cost of doing business, to not pay overtime, to not pay meal and rest periods, to not pay prevailing wage on public contracted work for which they are getting compensated as if it was a public works project. What's the what's the the solution? Because part of what I've been shown are documents that indicate that they're still showing up for public works projects in in other cities.
And then and then they have these judgments against them by the Department of Industrial Relations that are in the multiple hundreds of thousands of dollars, and they're not paying them. They've those judgments have been there for years. And and those workers, in the meantime, are are out money that they should have had. So so so what I'm I wrote down what you said, and I understand the the the process that you're talking about. What's the solution to how do you how can we get their attention in a way?
I mean, it may be that our solution is you can't bid for a public works project anymore. You're off. Or you lose your license or something like that, which is much more drastic, right? But I'm wondering if you have a solution.
Speaker 42
Well, I'll start by saying that, again, we're absolutely unified in the goal here. We don't support scoff laws, we want to make sure that contractors do what they're supposed to do. And we agree with the sponsors on that point. But I think creating a complementary system, where there isn't as much transparency, overdoing what we should be doing, and that's properly funding the agency that's charged with the enforcement, making sure that we're using as government every effort to clear out that backlog, I think the answer is there. And, that's going to be more impactful from our perspective than it is to create a new system and deputize a different part of a system.
Let's fix the system. So it really falls back on you all, I think, to help with that.
Speaker 43
I understand. I thank you for I'm going to be supporting your bill today, but I really do think we should we should look at licenses and, you know, restricting the ability of of those contractors to be able to continue to do what they've been doing up to this point. Because to have hundreds of thousands of dollars that you and your workers and you have no intention of paying, You've got no payment plan. You're not doing anything. I just at some point, we just have to say, I'm sorry, but your right to do business in the state is is is gone.
Speaker 43
Hate to do that because that's pretty drastic, but I do appreciate what you're doing, which is just increasing the fines and the fees.
Speaker 1
Sure. Sounds like a job for the state treasurer. All right. All right. Other questions?
Senator Andreas, yes.
Speaker 14
Thank you. I one of the comments that was made is that the biggest problem is the backlog. Is it the backlog or is it the fact that there are already judgments that are not being paid and when you have workers that have not been paid?
Speaker 36
I'd say it's it's all of the above. It's the backlog and the constant enforcement that has that's necessary to keep going after these employers who just will not pay their judgments and ensure that the workers are made whole. And I completely agree, with your your question because what ends up happening is that, you know, we have put additional monies into the labor commissioner's office. We did emergency hiring. We've done all of the steps, but the truth of the matter is we have a significant portion of our employer community that will not follow the law, and it's across a number of sectors.
So when you say what's the problem, it is the problem of, you know, having to chase after every single employer who has been held accountable, who has judgments levied against them, in some cases putting liens on properties, and still not getting the workers paid. So this is, you know, the opposition talked about our investment. We have invested in enforcement. But this problem is not getting smaller. It's continuing to grow.
And unfortunately, you know, the majority of jobs that are created now are low wage, many of them unregulated. And so the problem just continues to to grow and grow. This, I think, is a a solution to helping to, one, generate enforcement while also, you know, the prices are going up on all of us. Right? So we wanna make sure that we are all paying our fair share to make sure that our enforcement standards are high enough to go after these bad actors so that we can level the playing field for the good ones.
Because who's paying the price is not just the workers, but it's also those contractors who are doing the right thing. And so, you know, this is an unfortunate situation, but this is where we are. And I absolutely agree with Senator Caballero Caballero on this. We've got to figure out what it takes to actually make these bad actors, these outlaw employers do the right thing and hold them accountable. And, unfortunately, that means, you know, looking at steeper and steeper penalties.
Speaker 14
I understand that there are occasions where a judgment is taken against a an employer based on the name, and they change their name and begin and bid on other jobs. Is that something that does happen?
Speaker 36
It is, and that's part of why why our enforcement costs are so high because, you know, you receive another claim from another set of workers under another subsidiary or an LLC that's been, created. And if comes to find out, you know, part owner from the firm that was found to have violated the law has now started, you know, found a brother, a cousin, or someone else to start another entity in the same practices. So, you know, bad actors tend to multiply. So as we get more sophisticated in our enforcement, as we are able to win for workers, there's always schemes. And unfortunately, we have a lot of industries and a lot of workers in California and a lot of schemes.
And that is one of the schemes that, again, our labor commissioner, those investigators who work day in and day out to to to, make workers whole are are having to face these challenges. And it costs us a lot of money. It costs a lot of revenue to make sure that we are ensuring this level playing field. So absolutely correct. And my final question, and
Speaker 14
going back to senators Caballero and Durazo Yeah. Will you consider in your bill if a public works bid is made, there are licenses attached to who is going to do the job. And should there be a judgment which is not paid, will you consider including in there about the loss of a license for those who have been who've had judgments issued against them and have no payment plan that has been put together?
Speaker 36
Well, I I certainly am open to looking at ways to strengthen this bill. And, you know, obviously, we we still continue to work with the opposition on this as well. I think there are a lot of bills that we need to bring forward in this area. I don't think this this is not the silver bullet. I think we have many more to explore.
We see at the local level in counties and cities that now have wage enforcement offices as well, where they are looking very closely at, you know, what makes a good employer and who do we wanna do business with. And if you have this track record of violating our wage and hour laws, you may not get the points and bid points you need to be successful. You may have your license revoked. You may have your contract canceled. So I think there are definitely precedent for those kinds of strategies at the local level, and certainly, I think the state, we do need to explore that moving forward.
I know in some sectors, for example, in the car wash industry, we've looked at some of those harsher approaches because of how vicious the wage theft is and insidious the wage theft is. So, you know, I think as we are looking across this problem and as we're seeing that it is growing instead of reducing in our in our in our economy, we've got to explore. All of the options have to be on the table.
Speaker 14
And to be clear, we have many good actors. We have many good contractors who put bids in and get the job done and
Speaker 14
Pay their workers just as, you know, the the the way they bid it. And kudos to them. And we we appreciate that the majority are there, but we do have those. And in the end, it's the workers who who are injured the most through all of this. Absolutely.
My experience comes from being a an attorney representing injured workers for over thirty years, knowing that in workers' comp, it's the same process. They they get injured. They have no insurance. They just start the company with a different name. And there are bad actors, and I appreciate you and appreciate the work that you're doing in this bill.
Speaker 1
Thank you, senator Reyes. Other comments, questions? Seeing none, think senator D'Rosso has moved the bill?
Speaker 36
Well, I just appreciate the conversation and the expertise on this, dais who've had experiences in this space. This is about California creating a level playing field, protecting workers, and strengthening our enforcement. This is a win win win, in my view, and, I really appreciate, and I vote on this bill.
Speaker 1
All righty, thank you very much. Commissus Porter, please call the roll.
Speaker 11
This is file item number 10, SB nine zero nine. The motion is due pass to the Senate Appropriations Committee. Umberg? Aye. Umberg aye.
Nilo? No. Nilo, no. Allen? Aye.
Allen, aye. Ashby? Caballero? Caballero I. Duraso.
Aye. Duraso I. McNerney. McNerney I. Reyes.
Reyes I. Stern. Valadares. Wahab. Weber Pearson.
Weiner. 6 to one.
Speaker 1
Next, ordinarily, we would have file number 8SB1290, but it looks like senator Allen has taken physical possession of the podium. So we'll we'll we'll let you go. Yes. Right. Right.
Speaker 10
My goodness. I've got witnesses come back on the plane, who's got 1290? Is that,
Speaker 1
Senator Otto. But you're you're up. Here? She's File number 11. Okay.
SB 1093.
Speaker 10
Well, thank you, mister chair. Very good morning, good afternoon to you. So let me thank the let me start by thanking the committee for its its hard work on the bill. I will be accepting the committee amendments to be taking in Senate Housing Committee due to the timing. Opportunities to preserve unsubsidized affordable housing are especially important today when the state's affordable housing funding is oversubscribed and our existing housing stock is under increasing threat from climate related disasters.
We know that mobile homes are the largest source of unsubsidized affordable housing in the country, and they provide an important homeownership opportunity for many fellow Californians. The twenty eighteen Camp Fire resulted in the destruction of over 30 mobile home parks in Paradise, the vast majority of which have not been rebuilt. And only I think something like 700 rent stabilized units were destroyed in the recent Palisades fire in my district, approximately half of which were in two mobile home parks in the Palisades Bowl and in Tahitian Terrace. This bill is directly informed by the experiences of my constituents in the aftermath of the climate disaster that we experienced there, climate related disaster, but also the struggles that we've heard from other mobile home residents in other parts of the state, folks who experienced the fires the Tubbs Fire, the Camp Fire, etcetera. The bill does four major things.
First of all, it requires consistent and transparent communication from the mobile home park owners after a disaster until the park is rebuilt or until a closure or change of use is approved. This requirement doesn't bind owners to pursue any specific path. Residents simply deserve not to be left in the dark without any understanding of what's happening and when, if ever, they may be able to return home. Secondly, it requires park owners to provide residents with timely access to the property after any evacuation orders are lifted or the region is approved for resident access. One of the really sad things that we all grappled with is that after a major fire, people want to go back to their properties.
They want to sift through what may be left. They want to see if they can find their wedding ring or, you know, a piece of a memento. And and sometimes they do find things, quite frankly. I know this because I walked with constituents personally. And yet the poor folks, at the mobile home parks, not only do they lose their properties associated because of the fire, they lose the right to go back to the property after the fire without the permission of the landlord.
And in some cases, they were denied the right to go back to their properties. We anyhow, we want to make sure that there's some rights associated with access to the properties. And basically if yeah, I can get into the details if people want. Third, the bill fixes an oversight from legislation passed last year that unintentionally strips residents of their rights to appropriate reimbursement should a park owner choose to close the park or change the use of the park after a disaster. Prior to last year, state law required owners to compensate residents for the full in place market value of the mobile home, even if in the event of a disaster where the park or mobile home has been destroyed.
So can you imagine what that entails? It doesn't make sense to make park owners responsible for the physical replacement value of the mobile home that's destroyed in a disaster. That's the responsibility of the homeowner's insurance. So last year, legislation passed that removed the entire requirement for compensation in the event of a disaster. But remember, mobile homes values are not purely based on their physical structure.
The leasehold interest that homeowners hold also needs to be accounted for. And this value is not covered under homeowners insurance and it was not lost due to the disaster. So if a resident loses the leasehold value of their mobile home park, it's because of the discretionary decision a park owner made not to reopen the park and allow them to rebuild their property. So this bill ensures that if park owners makes make the decision to close or change the use of the park instead of rebuilding, that residents are made whole and compensated for their lost leasehold value. Finally, the bill requires park owners to thoroughly consider the benefits, costs and available resources for rebuilding and preserving the mobile home park and the equity that mobile home park owners have invested in their properties.
Environmental testing, relocation feasibility, economic costs to the greater community should all be considered before a decision to close or redevelop the land is made. This bill provides residents that have been displaced by the disaster with guarantees of transparent communication, the opportunity to salvage any personal items, the assurance that the ability to return and rebuild their homes has been thoughtfully considered, and the right to be fairly compensated for the loss of their right to return. And so testifying, in support of the bill with me today, we have John Brown, a resident of The Pacific Palisades Bowl Mobile Estates and also co president of the Pacific Palisades Bowl Community Group, and then also Brian Augusta is here with California Rural Legal Assistance Foundation.
Speaker 46
Good afternoon, Chair Umberg members. Thank you. Thank you, Senator Allen. My name is John Brown. I am a husband and father of two young kids.
Fifteen months ago, my family lost our home in the Palisades fire. As president of the Palisades Bowl community group now, I represent about 400 residents in the same position, roughly 170 households, seniors, veterans, teachers, young families. It's an amazing community there. We're ready to rebuild. We have plans, financing.
Our lots are cleared. We have a builder, but there's no and there's no proof of any underground infrastructure issues, that the park is even damaged because there hasn't been an assessment of that yet. I can't tell my kids though that we can go home. So it's not because of the fire, it's because the park owner has locked the gate and gone silent on us. The mobile home residency law outlines what an owner must do if they rebuild, if they decide to rebuild after a disaster, but it says nothing about what they must do if they choose not to.
Speaker 57
Current law does not require the owner to communicate with us, access the property, or assess the property, let us back in so they don't. We have economic assistance lined up if the owners need it to cooperate with us to rebuild. We have everything ready to go except the park owners want to take this as an opportunity to profit. This is the gap we're living in. I was up here last year working, trying to get our rights put in place, and here I still am.
Speaker 46
Nothing has changed for us. My kids are still displaced from their home, we just want to go home. Hundreds of us have begged they we begged for weeks to get back into the park, and and like it was described, we couldn't get back in. And by the time we did, you know, our our belongings, our heirlooms were scavenged by, you know, people that went into the park that were able to get in. There's been no plan, no timeline.
Our residents are running out of money, options. In some cases, they're passing away. And, you know, the property's already being marketed right now as a blank slate is the way that it's being marketed. SB ten ninety three, we think, is straightforward. It doesn't tell an owner what they need to do with their property.
It simply requires that they responsibly toward the people who are living there on the day a disaster. It requires communication, protects our rights of access.
Speaker 46
Oh, conclude quickly. I'm so sorry. I didn't hear you. Yeah. I just want to say, I just hope that, you know, no park owner would be incentivized, you know, to hope for a disaster like this, and that we could have rights to go back home.
Speaker 46
And I urge an I vote. I'm so sorry for going over. Thank you so much.
Good afternoon, Vice Chair and members. Brian Augusta, on behalf of the California excuse me, Rural Legal Assistance Foundation. Pleased to support this legislation. You know, on behalf of our low income clients living in rural areas, the Camp Fire really that the, author mentioned really tells the story with so many units lost, and those parks have not reopened. And imagine being the homeowners, many of them seniors, not only losing your home and value associated therewith, but also having no reliable information about if or when you might be provided replacement housing or whether it will reopen, but also limitations that are often imposed preventing you from even coming onto your property to gather whatever little belongings might still remain.
Speaker 47
So, in support of that, and the other provisions of this bill that clarify the value that must be replaced if the park ultimately closes, we're strongly in support of this measure, and we would urge an I vote.
Speaker 15
Are there others, in support of the bill that, would like to come forward, identify yourself, your, organization, and your position on the bill?
Speaker 25
Katie Hawley, council member for the city of Chico, located in Butte County, home of the twenty eighteen Camp Fire in support. Thank you.
Speaker 15
Thank you. Are there any others in support? Seeing no one coming forward, let's hear now from the opposition.
Speaker 52
Senator Mr. Chair, members, thank you for the time. My name is Chris Weiszhocki with WMA, and I'm here to urge a no vote on SB ten ninety three. WMA believes ten ninety three is punitive and fails to recognize that owners of the park destroyed in a disaster have also suffered great economic and personal losses. In the Tubbs Fire, for example, instead of rebuilding Journey's End mobile home park, the city of Santa Rosa and an affordable housing provider worked collaboratively with the owner to build 162 apartments for low income seniors 62 years and older.
Speaker 48
It took six years. The second phase will add an additional 38 units, and the third phase will add an additional 30 more. In the Paradise fire, 30 parks burned down, but only five or so reopened. The number of parks didn't drop because of anything the park owners were doing. Instead, the number dropped because no one wanted to move back and there weren't any customers.
This meant that those owners no longer even had a business to go back to to raise their families and operate a mobile home park. Ten ninety three also fails to recognize what truly happens in a disaster. The two parks that burned in the Senator's District happen to be two of the most unique mobile home parks in America. Rewriting state law to try to address these two individual parks fails to recognize how other communities can recover from fires. SB ten ninety three would only add costs and layers of delays to projects like the rebuild of Journey's End and potentially bankrupt and eliminate the owners in Paradise from trying to salvage something from the change of use or the closure of the park.
Finally, after the fires, we reached out to the author, the city, and the governor to see if we could work together to find a way everyone could work together, but we heard nothing in return until last year's bills were introduced. For these reasons and those raised in our letter, we urge a no vote on SB ten ninety three. It fails to recognize the realities of how communities can recover from disasters. Thank you.
Speaker 53
Good afternoon. My name is Dan Ruttaro, in opposition to the bill. My law firm, Ruttaro Law Group, represents the owners of the Tahitian Terrace mobile home park that was destroyed in the January 2025 fires. SB ten ninety three requires the park to provide status updates on numerous required investigations and studies, but imposes no requirements on the residents to provide contact information for those updates. The park, meanwhile, is subject to a 2,500 per resident and per day penalty for not providing the updates.
Speaker 49
If you had, for example, 200 residents in a park, that would be a massive daily penalty of $500,000 The proposed amendment changes it to say the park made can make reasonable efforts to get the contact information, but the law fails to say what constitutes reasonable efforts, leaving the park owner still particularly, liable. As to the programs and opportunities to rebuild which HCD is to put on a list, the fires occurred some fifteen months ago, and my client still has not been advised of any that any such programs even exist. There is also no deadline by which HCD must compile the list. A park owner, meanwhile, could be fined $500,000 a day for failing to obtain information about these programs, which may not even exist. SB ten ninety three recognizes there's going to be debris, metals, asbestos, contaminants on the park property, but nonetheless requires the park to give access to the residents within seven days of an lifted evacuation order.
Since there is no requirement that HCD approve liability waivers by a certain time, this bill is effectively requiring park owners to place residents in harm's way and to do so without a signed liability waiver. Finally, it's important to remember that it was not the park owner's fault that these horrible, disastrous fires happened in January 2025. Those responsible for causing these fires should be responsible for paying for the homes. Thank you.
Speaker 1
right. Others in opposition to SB ten ninety three. Afternoon, Mr. Chairman, members. Trent Smith, on behalf of the California Mobile Home Park Owners Alliance, also in opposition.
Thank you. Anyone else opposed to SB ten ninety three? Please approach. Seeing no one else approaching, let's bring it back to committee. Questions, comments by senator D'Rasso, then senator Nieto.
Speaker 3
Yeah. I wanna thank the author. I I suspect this has been very, very difficult to get to the bottom of what the issues, the problems, and everything that was you know, the dynamic of everything that's going on for the residents. So I appreciate that you've rolled up your sleeves to to get to the bottom of of a lot of of that. Is there anything about what the opposition is saying that makes any sense to you all?
Or I'm not asking you to to take any amendments. I'm just wondering if there are things that might make sense. But mostly, I just wanna acknowledge you and your witnesses, especially the gentleman who spoke, who was a former resident. Just raise, you know, what what what could be potential issues that they raise that
Speaker 10
Yeah. Mean, the one I mean, certainly, the concern about this ballooning into some massive new liability, you know, without providing reasonable mechanism for compliance, I'm certainly sensitive to. I thought we got them largely addressed by the committee's amendments, but I'm certainly happy to if we want if you want greater specificity about what we consider safe harbor. We're not trying this is not about trying to play gotcha. We just want to make sure that there is an opportunity to information sharing with the residents.
Maybe this is even just getting it up on the website and letting people know about the website. So this isn't I'm not trying to create some massive new financial liability just on that issue. So I'm happy to work with the opposition on coming up with a reasonable mechanism for informing the residents about what's going on on the property.
Speaker 15
Thank you. I appreciate what you're trying to do, and these, of course, are disasters, horrible disasters to which the park owners are submitted also. Yep. And I I think there isn't quite enough allowance for that. As I said, I understand, but I think perhaps the burdens go a little bit too far as the opposition witnesses stated, and I I can't support the bill as it's currently constituted because of that.
Thank
Speaker 14
There were two things the opposition said that I noted. One was that there's no requirement for the residents to provide their contact information. Aren't the residents paying rent for their space?
Speaker 10
Yeah. I exactly. And so that's why that's why I think the committee put in this idea of of kind of make taking reasonable steps if if we wanna delineate it further. But it it it it seems to me a bit of a red herring, though I don't run a mobile home park, so I I don't know. Maybe I'm missing something.
Okay. But we're happy to
Speaker 14
Combs? Other question, and that was there was an objection to allowing residents to return to the property within seven days. Is it seven days after the disaster or seven days after an evacuation order has been lifted?
Speaker 10
It's the latter. But it's true that these are messy places after the fire, and I grapple with this. We know there are dangers associated with going back. That being said, this is something that's so important for people to go back to their properties. And so if if there's a way for us to figure out how to to do this in a safer manner, I'm I'm so I'd love to figure it out with the with the opposition.
But, you know, I recognize there's some dangers. But, you know, at the end of the day, we're not telling everybody else they can't go back to their homes because of the dangers. And these are these people's homes. I understand it's also a property of the owners. I get that too.
But we want to give people the opportunity to go back to their homes. That's really psychologically important for people.
Speaker 1
Other questions or comments? Seeing none. Senator Allen, I I know you have been quite flexible, and I know you will continue to be flexible, and I know you really wanna solve this problem in a way that's that's reasonable. So Yeah. I I take you at your word that you're gonna continue to work with the opposition.
There's no magic formula. Seven days, eight days, nine days, there's no magic formula. No magic formula in in terms of of how one provides notice, that kind of thing. So with that, would you like to close?
Speaker 10
Well, I appreciate what you just said. Maybe I'll take that as a close. I you know, but I do invite the committee's engagement and, the vice chair's engagement on, on how to land those sticky issues, because I certainly want to be fair here. This is not about a gotcha bill. This is about making this experience better these folks, while recognizing the incredible loss that the the park owners are are suffering too.
I I want to strike a a fair balance here. I it just feels to me that the current status quo doesn't provide enough for for all these folks who lose everything. And it's that's that's the spirit that drives me here and I I'm but I'm I'm you know, know we're in the first committee and I'm I'm really anxious to to get this to a place where everybody feels good about where we are. With that, Iris, I forgot to hand
Speaker 1
Well, that's the beauty of our system. This is double referred, so it gives you an opportunity to continue to work to Yep. Create that balance. All right. Thank you.
Committee Assistant Porter, please call the roll.
Speaker 11
This is file item number 11, SB ten ninety three. The motion is due to pass to the Senate Housing Committee. Umberg?
Speaker 11
Allen, aye. Ashby? Caballero? Aye. Caballero, aye.
Duraso? Aye. Duraso, aye. McNerney? Aye.
McNerney, aye. Reyes? Stern? Aye. Stern, aye.
Valadez?
Speaker 1
All right. Thank you. 7 to one. 7 to one. We're gonna put that on call.
I see senator Hurtado here. Filing number eight, s b twelve ninety. Thank you, senator Hurtado.
Speaker 24
Thank you, Mr. Chair and, members. I'm here to present SB twelve ninety. I would like to start off by thanking the chair and committee staff for working closely with my office and the bill sponsors. I will be accepting the amendments outlined in the committee analysis that further strengthen the bill's intent while adding in necessary safeguards.
Speaker 45
SB two ninety provides the California Department of Justice with a targeted early stage investigative tool to access procurement records for public contracts over $100,000 so that the state can determine whether collusion or anticompetitive conduct is occurring, which ultimately hurts our constituents. In the Central Valley, the people that I represent work extra hard for every dollar they earn. And I'll tell you, I gave a tour to three different classes today, and the one bill idea that the eight year old one eight year old had was to get rid of taxes. So, taxation is at the top of their minds to these eighth graders, and I know that it's definitely at the top of their mind when it comes to their parents. And so, you know, I believe that Californians, and now children as well, want to feel confident that when their tax dollars are invested, whether on services, local projects or infrastructure, that there are real enforcement tools in place to ensure those dollars are spent fairly and honestly.
Speaker 24
SB twelve ninety provides that enforcement. And with me today is deputy attorney general Anthony Liu from the Office of Legislative Affairs at the California Department of Justice, And we also have Supervising Deputy Attorney General Michael Georgiansen, representing the DOJ's antitrust section, here to answer any technical questions.
Speaker 50
Thank you. Good afternoon, Anthony. Liu from the AG's office. We're the sponsor of
Speaker 50
to thank Senator Hurtado for authoring this bill to provide us new tools under the Cartwright Act to enable early investigation of bid rigging and other potential violations of law related to public procurement. So in public procurement, whenever business contracts are awarded by means of soliciting competitive bids, coordination among bidders undermines the bidding process and can be illegal. And as a general matter, bid rigging and collusion are difficult to detect and difficult to prosecute without access to the right information from the bidding and procurement process. And now when violations of the law go undetected, the result is the potential overpayment of millions of California taxpayer dollars for public contracts awarded to bid rigging due to potential bid rigging collusion and price fixing. And page seven of the committee analysis describes in more detail some of the various forms that can take.
I'm going to be more quick here. I want to thank the committee consultant and the chair for their engagement over the past week to help craft the amendments that the author is accepting today. These amendments ensure that the new authority under this bill may not be used to enable any fishing expedition and may be only used for the purpose of identifying bid rigging and violations related to public procurement. That's our goal of this bill. The amendments also strengthen existing protections to protect the confidentiality of the information that is provided to DOJ under this bill.
Speaker 49
So in conclusion, with the enhanced early access and ability to examine public procurement information provided to public entities by bidding companies, DOJ can help ensure fair competition for public contracts, deter anticompetitive conduct, and safeguard the efficiency and value of government spending of our tax dollars. And so for those reasons, the A. J. Respectfully urges you to vote aye, And with me, have Mike Jorgensen to answer technical questions.
Speaker 1
Okay. Thank you very much. Alright. Anyone else in support of s p twelve ninety, please approach the microphone. Going once, going twice.
Alright. Now, let's turn to the opposition. If you're opposed to s p twelve ninety, now is a good time to speak your peace. Alright. Seeing no one approaching, let's bring it back to committee.
Committee members. Yes, senator Leo.
Speaker 15
Thank you, mister chair. For the attorney general's office, how would you go about, selecting entities, investigating entities, under the authority of this bill?
Speaker 39
So the attorney general's office, the antitrust section, gets, leads in a variety of ways. It could be, insiders, public procurement officers themselves, reliable news sources and articles, tips through our public inquiry unit. That's, in short, a variety of other ways, perhaps also local D. A. Referral, other attorneys representing, grief companies.
Speaker 15
Could you see yourself asking questions about the Capital Annex Project? There's been quite a bit of controversy about that, and there is no information being released. Is that perhaps the sort of thing that you might wanna take a look at?
Speaker 50
Mike is not from Sacramento. He's I know he's squinting here, the Capital Annex project. I'll have to get you an answer for that. I mean, I don't know enough. I'm sorry.
Speaker 15
Would you be taking a look potentially, as an example, at the Capital Annex project? There's been, as you know, quite a bit of controversy about that and a little information being provided publicly. Would that perhaps be the sort of thing that you might want to take a look at?
Speaker 50
Well, think that's I mean, I'm not sure if that's in the scope of the bill, but we would receive tips from anyone if anyone wanted to make a tip to our public inquiry unit, for example. I'm not exactly sure what you're referring to around the Capital Annex project.
Speaker 15
I'm referring to the fact that there is very little public information being put forth as to the status of the project costs, etcetera. But I gather, based upon what you've said, that your investigation would be based upon input to your office from people that might suspect that there's issues. Is that what I heard?
Speaker 51
So, any public procurement over $100,000 would be the scope of the proposed bill here, the Capital Annex Project. Difficult to always discuss any pending investigation, acknowledging it, admitting that we have an investigation, but if it's public procurement and it fits the necessary sort of gating issues within this bill, yes, it would allow better access by our office to public procurement bidding.
Speaker 1
Thank you. Alright, thank you. Other questions or comments? Seeing none, somebody moves the bill. Senator D'Arrasso's
Speaker 3
Just real quick, I just want to thank the author and the attorney general and everybody who was involved in this. I get the the objective, the the goal here. It was and I'm glad it went from being too broad and, you know, demanded contracts and documents without the kind of scope that that we need to to protect ourselves. We don't want what is happening at the federal level to happen at the local level as far as anything anybody decides they wanna investigate because they feel like doing it that day. So I really appreciate all the amendments that were made.
Thank you. Alright.
Speaker 1
Anything else? Nope. There's been a motion. Senator D'Araso has moved the
Speaker 24
Thank you, mister chair. I think that I'm gonna just go back to those third graders that I met with today. They they obviously you know, they have the weight of the taxes, and I think that, you know, kinda carries from their parents and their families. And this is what it's all about, right? We want to make sure that no one's taking advantage of those hard earned dollars that should be going,
Speaker 24
the day to our children and invest it in their futures. That's what this bill is about, and, I respectfully ask for a nay vote.
Speaker 11
This is file item number eight, SB twelve ninety. The motion is to pass to the Senate Local Government Committee. Humberg? Aye. Humberg, aye.
Nilo? Allen? Ashby? Ashby I, Caballero, Caballero I, Duraso I, McNerney, McNerney I, Reyes I, Stern I, Valadares Wahhab? Weber Pearson?
Aye. Weber Pearson, I. Weiner? 8 to 0?
Speaker 1
8 to 0. We'll put that on call. Alright. So normally, we would be going next to senator Caballero, but in deference to former assembly member, Dom Cortese, we're gonna entertain his son coming forward with senator D'Arrasso. So There's only two of us in this room that know what I'm talking about right now.
Speaker 53
Thank you, Mr. Chair. Boomers it's boomer talk. Thank you very, very much for hearing us today. I'm here with Senator D'Razzo to present SB thirteen nineteen, which is a joint authored bill called the Private Equity Sunshine Act.
The analysis suggests considering an amendment that would take the bill out of the Public Records Act. I want to just acknowledge that right away. Due to the short timeline for double referred bills, we commit to considering that amendment at a later date. The bill builds on existing law to provide meaningful transparency regarding private equity investments made by California's public pensions. Public pension funds invest the retirement savings of workers, And those funds should be subject to clear, comparable reporting.
For the most part, is. At the federal and state levels, there are reporting and transparency requirements covering the public pension funds investments in publicly traded securities. If you have a public pension with CalPERS and you visit their website, you can see how your money is being invested for the most part. However, the pension systems can also invest worker dollars in alternative investments that are not subject to the same transparency requirements as securities. This matters because, for example, there's no required comparison showing whether private investments outperform public market alternatives after accounting for significant fees charged by private equity firms, risk analysis, and so forth.
Speaker 13
Without that comparison, it's difficult to determine whether higher costs and risks are justified. There's also limited visibility in the companies owned through these investments. Private equity firms can control or influence company operations through ownership stakes, including decisions about management, staffing, and business practices. Workers are often in the dark about who ultimately owns or controls the company they work for or how these decisions are made. I'm going to turn it over now to Senator D'Razzo, with the sheriff's permission, to say a few words, and she will introduce our witnesses today.
Speaker 3
Thank you, senator and, members of the committee. I'm proud to present this bill today. Transparency is not a burden. It is a baseline. California's workers have earned nothing less.
California's public pension funds hold the retirement security of millions of workers who spent their careers in service to our great state. These workers earned their pensions. They deserve to know that their money is being managed wisely, transparently and in their best interest. An increasing share of this money is flowing into private equity. Unlike publicly traded securities, these investments operate in the dark, with limited standardized reporting, inconsistent disclosure and no required comparison showing whether they outperform the public markets.
This bill changes that. This bill brings basic accountability to a corner of our financial system that has long avoided it. It requires pension funds to show, in very plain terms, how private equity investments stack up against public market benchmarks. This is also about power. Private equity firms make decisions about jobs, staffing, business operations, work and workers are often the last to know who is really calling the shots.
This must change. Today, we have Richard McCracken, senior counsel of McCracken, Stemberman and Holsberry and Patrick Henning, chief deputy treasurer of the state of California, to testify in support. Jordan Fine will with Unite Here Local eleven is available for questions. Thank you, Mr. Chair.
Thank
Speaker 54
Good morning. I'm Richard McCracken. I speak for Worker Power, which is a nonprofit advocacy organization associated with Unite Here Local eleven. The increasing turn to private equity investments by public pension funds is very understandable. They are under a great deal of pressure to increase their funding.
And the promise of private equity is to do better than the public markets. The public markets have historically been the way that public pension funds invested. That is, they invest in publicly traded stocks and bonds. But now the portfolios of many public pension funds, including the biggest one of all, CalPERS, have a very substantial amount in private equity. Private equity is a term that covers, I won't say a multitude of evils, but a very different assortment of types of investment.
But the leading one is leveraged buyouts. You may recall the term leveraged buyouts. They turned into private equity because of the appropriateness attached to leverage buyouts. The leverage buyouts cause a great deal of trouble for a lot of people. They cause a lot of risk for the funds because the rate of bankruptcies among the firms that have been acquired through private equity is nine times greater than the average.
Speaker 6
According to a Cal Poly study in 2019, the rate of bankruptcy among firms that have been acquired by private equity is eighteen percent. Eighteen percent of those taken private through leveraged buyouts go bankrupt. It's a big risk. So a fair comparison, which this bill would require, is that when a public fund invests in a private equity investment, that a benchmark be picked at that time, a public sector, public market comparison, like Standard and Poor. And then as the length of this very long investment goes on, the performance has to be compared to what would have happened if the same amount of money had been put in that public index.
Speaker 54
Yes. And so we urge your, yeah, guest vote for this measure. Thank you very
Speaker 31
Mr. Chairman, thank you, for your time, and I'll try to be as brief as I possibly can. As you've already heard, this, bill is about transparency. We have new investment opportunities that come in front of us. We just want to be able to see what the companies are, how they are situated, and be able to compare them, as Mr.
Speaker 55
McCracken said, to other investments that we make. The treasurer sits on both CalPERS and CalSTRS, has a unique view of our public pension funds. California has a whole variety of different, funds that are like this, that this bill will also, attempt to, get a better view in for other fiduciaries like myself. And all told, we have over, a trillion dollars invested in these types of companies and others. But these pension funds are looking to make the best investments possible.
With that, thank you for your time and ask for your support.
Speaker 38
Mr. Chair and members, Mike West, on behalf of the State Building and Construction Trades Council, also in support. Thank you.
Speaker 20
Chair and members, Pat Moran with Aaron Reed and Associates representing the Retired Public Employees Association in support. Thank you.
Speaker 34
Ms. Chair members, Sarah Fox, California Federation of Labor Unions in strong support.
Speaker 16
Good afternoon, Chair and members. Conor Gussman on behalf of Teamsters California I'm sorry, unite here in support.
Speaker 11
Jenna Thompson, the UFCW Western States Council, in support. Susan Minato, Unite Here, 11. And California, Unite Here, in support.
Speaker 15
Mike Greenlee, political director, International Union of Pairs and Allied Trades in support.
Speaker 4
Erica Valentine, UA Local three ninety three in strong support, standing with the building
Speaker 1
Thank you. Anyone else in support? Now's the time. Alright. Let's turn the opposition.
If you're opposed to s p thirteen nineteen. Seeing no one. Alright. Let's bring it back to committee for senator Stern.
Speaker 26
Yeah. Thank you. Appreciate the measure. Just reading through the analysis, and
Speaker 26
hoping, the author I I I didn't hear a discussion about the the Section 2514.7(five), its reference on page 10 of the analysis, and just this constitutional question. I was hoping maybe you or your sponsors could comment on the on that issue.
Speaker 53
Yeah, I'll ask Mr. McCracken to approach Okay. And answer the question.
Speaker 26
Yeah. The the analysis says the bill could run afoul of the amendment by reference rule, as established under, California Constitution Article four, Section nine, and then American Long v. Wilson. Was just wondering if you could comment on, do you see that as there being any constitutional infirmities with that amendment by reference issue here?
Speaker 54
Because the as I understand it, this is not an area that I claim any great expertise in.
Speaker 54
So but what I've been informed is that the legislative council does not believe that there is a problem there. And I I what the bill does, of course, is to to amend one section of the statute concerning the the public records act. And and there is a cross reference in another section of the government code to to this one we're talking about, but that's not altered at all. Okay. If that answers your question, I hope it does.
Speaker 56
I I think so. I mean, I guess I'm I'm trying to understand just the the flow of this legislation in the context of, say, the Cooley legislation that preceded it, and why choose the Public Records Act versus a disclosure process that doesn't say, you know, that just focuses on performance, and maybe the first category of, you know, the performance of these alternative measures, these alternative investment vehicles versus, you know, some of the other kinds of information that a CPRA would require disclosure of, including addresses, number of workers at the companies, the, you know, those kinds of questions about as opposed to just performance and cost.
Speaker 54
Yes. Senator, the existing statute requires quite a lot of information about private equity investments. So, we've amended that existing list. And the existing list requires such things as the address of the private equity investment, its vintage year, as well as its internal rate of return. The fees and other expenses charged, those are already in the statute.
Right. And so, all we've done is two main things. There are a couple of ancillary ones, but the two main things are to add a provision that I described in my testimony about the comparison of the risk and liquidity adjusted results of the private equity investment to a public index that's been chosen in advance. And the second thing is to require that there be a disclosure of the investments made by the private equity manager in enterprises or activities that employ human labor. So, in addition, no names and addresses of employees, but simply a head count of employees and the standard occupational category for each one of them, or for the group.
So that we know where the money's going, and whether it's being used in a positive way, socially and economically, or if it's being used in a destructive way. And we know many stories about the destructive ways in which private equity through leveraged buyouts has sometimes been used.
Speaker 54
We can tell the same things about public market investments because of the disclosures that are made by companies issuing publicly traded stocks and bonds. And their reports are far more detailed than this.
Speaker 54
No. And one of the the you can find that information out, though, because you let's take a a major California employer like Disney. By looking at all their securities reports, I can tell you with quite a lot of precision how many employees they have in each location doing basically what types of work. But I can divide that from the publicly traded securities reports. Yeah.
And So this is this is actually a much lower level of disclosure than those publicly traded securities have.
Speaker 26
Sure. Okay. I just want to make sure that we're getting good apples to apples comparison here so that we understand where you know, not just on a performance basis, but on this sort of workforce or human labor impact that we're getting equally deep dive data on the public market investments versus these alternative vehicles so that we don't sort of stack the deck one way or another, but that we're getting a good, honest take. I will I'll be supporting the measure today, but I'll keep a close eye on that issue going forward.
Speaker 1
Thank you, Senator Stern. Other questions or comments? Seeing none, is there a motion? Senator Caballero moves the bill. Alright.
Would you like to close?
Speaker 1
Okay. Thank you very much. All right. Committee supporter, please call the roll.
Speaker 11
This is file item number 15, SB thirteen nineteen. The motion is due passed to the Senate Labor Public Employment and Retirement Committee. Umberg? Aye. Umberg, aye.
Nilo?
Speaker 11
Caballero, aye. Durasso? Aye. Durasso, aye. McNerney?
McNerney, aye. Reyes? Aye. Reyes, aye. Stern?
Aye. Stern, aye. Valadares? Wahhab? Weber Pearson?
Speaker 1
Next, file number 12, SB ten ninety one by Senator Caballero, followed by file number 14, SB eleven ninety four by Senator Caballero.
Speaker 43
Mr. Chair, if it's okay with you, can I start with filing item number 14? I may have a witness issue.
Speaker 43
Thank you very much, Mr. Chair and members, for the opportunity to present SB eleven ninety four, which would codify the Immigration Legal Fellowship Project, which has proven to be a successful model to expand access to immigration legal services in some of the most underserved regions of the state. The fellowship began as a pilot project in 2019 in response to President Trump's federal administration as it pursued repressive immigration enforcement, creating fear and confusion for many immigrant families and children in California. While access to immigration counsel and legal services has been limited, the environment created under this administration magnified the severity of the issue and demonstrated the clear need for trusted legal services and community based support to assist individuals navigating the complex immigration system. The fellowship was designed to increase the number of qualified immigration attorneys who could defend California residents against deportation and family separation.
The first fellowship cohort was deployed in 2021, and the program has not only created a sustainable immigration attorney pipeline to areas hardest hit, but has also strengthened trust in public institutions and ensured individuals receive accurate legal representation during some of the most critical moments of their lives. The fellowship has provided legal representation services to nearly 2,500 individuals across 39 counties. Local organizations who have hosted fellows have gained the requisite experience required in order to be eligible to apply for state legal service funding and are in a better position to leverage philanthropic support. The president's inhumane immigration activities has made it clear that the need to continue a proven program to develop removal defense capacity and strengthen the immigration attorney workforce pipeline has never been more urgent. SB eleven ninety four, bless you, builds on a successful model, ensure California is prepared to safeguard the immigrant community, and provides ongoing access to legal support in the face of the federal administration that has shown a blatant disregard for the rule of law.
With me to testify in support today is Neri Lozano, a fellow from the Centro de la Familia, and Vanessa Guerrero, Deputy Attorney General from the California Department of Justice.
Speaker 38
Afternoon, chair and members. My name is Vanessa Guerrero, and I'm a deputy attorney general in the California Department of Justice. The attorney general is proud to sponsor SB eleven ninety four. This legislation makes permanent the Immigration Legal Fellowship Project, which was first championed through a budget request by then assembly member Rob Bonta. The fellowship expands access to critical immigration counsel in the most underserved rural regions of the state.
Speaker 57
The fellowship was established to address the fact that many regions in the state, particularly rural communities, lack a sufficient number of trained immigration attorneys and qualified removal defense services to protect communities from unlawful immigration practices. The fellowship has provided legal services to over 2,000 individuals and reached over 40 counties. Although the fellowship has demonstrated the effectiveness of the model in building removal capacity, strengthening host organizations, and growing a durable rural legal workforce, without sustained funding for this critical workforce development, gaps in representation will persist. Attorney General Bonta is committed to continuing his support of this pivotal fellowship. I thank you for your consideration, and I respectfully ask for your I vote.
Speaker 9
Good afternoon, mister chair and senators. My name is Neddy Lozano. I am an immigration lawyer at Central La Familia in Fresno, and I am here in support of, s b eleven ninety four. The immigration fellowship was born five years ago out of need, out of the need to represent our most vulnerable communities across California, farm workers and immigrant families in remote areas without access to any immigration lawyers. Since 2021, the fellowship has met this need in communities throughout the Central Valley, the Central Coast, and the Inland Empire.
Speaker 58
I represent my community members in Fresno. I am a product of the Central Valley and an immigrant myself. I was born in Mexico, and I went on to attend Fresno State and then law school. But I wanted to return to the Central Valley to advocate for my community. This is one of the main goals for the fellowship, to select fellows with ties to the communities to help establish lasting legal infrastructure in Legal Desert zones.
We fellows receive invaluable training and support from immigration law organizations such as IRC, ILD, change lawyers, and, CDSS. This state and public interest partnership collaboration is vital because the result is providing legal representation to those who otherwise would have would have no hope. In closing, I'll do so with a success story. Through the fellowship, we filed a successful habeas corpus petition, in, in December. A married man with a family who was denied who was detained during a routine ice check-in, which he had been attending for the previous three years, was arrested, detained without any justification.
He spent three months in the hellhole that is known as the California Detention Center. He spent his birthday, New Year's, and Christmas there. Our team helped him secure the release and reunited with his family, and the government could not oppose the habeas because there was no justification. And the judge even did not did not allow the government to move the our client out of the jurisdiction because that's what they do. So this fellowship has real Thank very much.
Speaker 1
Alright. Thank you. Thank you very much. Okay. Others in support, please approach the microphone and give us your name, your affiliation, and your position.
Speaker 47
Good afternoon. Javier Vazquez with Centro La Familia, a host organization, in support.
Speaker 35
Jackie Gonzalez, co executive director of immigrant defense advocates, proud co sponsor and in strong support.
Speaker 43
Adriana Melgosa, Executive Director of the Watsonville Law Center in the Central Coast, in support.
Speaker 17
Good afternoon, chairs and members. Abraham Midoy, California Policy and Governance Affairs Manager with the Immigrant Legal Resource Center, in strong support. Thank you.
Speaker 9
Hi, Vie Gomez with Centro La Familia, ILFP Fellowship Product, immigration attorney in support.
Speaker 57
Marina Garcia, supervising, DOJ accredited representative from Centro Legal de la Raza in Oakland, in full support.
Speaker 12
Virginia Klein, managing attorney at Centro Legal de la Raza, in full support.
Speaker 1
Thank you. Anyone else in support of SB eleven ninety four? Please approach. Seeing no one, let's turn to the opposition. If you're opposed to SB eleven ninety four, please approach the microphone.
Seeing no one approach the microphone, let's bring it back to committee for questions, comments. Questions? Yes, Senora Reyes.
Speaker 14
This sounds like a great program. I'd love to be added as a co author with your permission. And my other question is, is there a budget request also associated with this?
Speaker 43
Yes. And this is a program that has been funded by the state for a number of years. And why this is really important is that when One California was created as a fund to provide legal services for immigrants, There were whole areas of the state that had no attorneys that qualified in order to receive the money. The Central Coast is one area and the Central Valley is another. So really warms my heart to see all these young attorneys that are capable of of addressing the issues that we find in in in the Central Valley.
So, yes, there is a budget request, and it's been funded in the past, so I don't expect it'll be controversial.
Speaker 1
Okay. Senator Reyes has moved the bill. Other questions or comments? Senator de Raso.
Speaker 3
Yes. I was around when we were trying to channel funding, especially to the rural areas and other areas that didn't have it. And certainly, you all and all the organizations here have created capacity, then you can provide more of the resources that are needed. So I'm really proud and and glad what you've you all have done, especially in the in our rural areas. Thank you.
Speaker 1
Thank you. Thank very or comments? Alright. Thank you, senator Caballero. You devoted your entire professional career to representing those who have little or no voice.
And this continuation is a true mark of a professional, so I'm very proud and I'd love to be as a co author also.
Speaker 43
Yeah. I respectfully ask for your I vote. One of the things that I'm very, very proud of of about is that the one California had a requirement that you had to have been providing services for for at least three years. So if you had areas where there weren't any attorneys, they were ineligible to receive the money. And the programs that have come in to be helpful do know your legal rights.
Well, it's great to let people know what their legal rights are, but if there are no attorneys to defend them, then that becomes a problem. And that's what this program does. They are now eligible because they've been in operation for three years for the one California. So I respectfully ask for your I vote.
Speaker 11
This is file item number 14, SB eleven ninety four. The motion is due passed to the Senate Human Services Committee. Umberg? Aye. Umberg, aye.
Nilo? No. Nilo, no. Allen? Ashby?
Aye. Ashby, I. Caballero? Aye. Caballero, I.
Duraso? Aye. Duraso, I. McNerney?
Speaker 11
McNerney, I. Reyes? Aye. Reyes, I. Stern?
Valadez? Wahab? Weber Pearson, Weiner.
Speaker 1
Seven to one. That bill is back on call. Next, file item number 12, SB ten ninety one.
Speaker 43
Thank you, Mr. Chair, for the opportunity to present SB ten ninety one, an important bill to stabilize low income families in their communities and prevent tenant displacement through the acquisition and preservation or AC rehab, of existing rental housing. Specifically, this bill creates a Community Anti Displacement and Preservation Program, or CAP, within the Department of Housing and Community Development. The program would provide financial resources and technical building to community organizations, nonprofit affordable housing developers, and local jurisdictions that wish to acquire unsubsidized housing developments that currently exist and are naturally affordable, and preserve them as affordable rental housing or homeownership opportunities. As California's affordable housing crisis worsens, unsubsidized affordable housing is disappearing, and fewer low income families can find stable housing.
As rent outpaces demand, housing becomes less accessible, more unaffordable, displacing people from their homes and communities. Acquisition and preservation of unsubsidized affordable housing is a proven successful local model that prevents displacement and grows the supply of affordable housing. SB ten ninety one is one important step to prevent displacement, homelessness, and to stabilize families in their communities in homes they can afford. So with me today to testify is Andres Ramos, legislative counsel with public advocates, and Deshanae Cantley, a resident of Unincorporated South Los Angeles and board member of the Beverly Vermont Community Land Trust, if she's still available. She had a plane to catch.
Oh, great. Welcome.
Speaker 30
Good afternoon, chair and members of the committee. My name is Deshanae Cantley. I'm a lifelong South Los Angeles resident currently living in unincorporated Westmont area. And after being homeless for several years, in 2014, I signed the lease with my apartment complex with the security knowing that as long as my landlord was in charge, that I would be able to have affordable housing. And because the housing was affordable, I was able to manage and care for my children who have now graduated and moved on with their lives.
And so and sometimes I would have to take a extra job every now and then. We had a great mixture of diversity of elders, families, and disabled residents. Some of them have been living there for over twenty years. But in 2021, all of that changed when the owners sold the building. All of the residents of the 10 unit building were offered $3,000 buyout to move out the building.
And that may sound like a lot. With rents going up, that's nearly enough to forward the first, last, and security deposit of another apartment near nearby. The new landlord came with a lease that was with unreasonable requirements, so I lobbied together, and we started a tennis association. However, since then, the rent has tripled, and this may be the year that I am maxed out and forced to leave. If that happens, I do not know where else I could live affordable in my own neighborhood.
Speaker 41
During the process of forming a tenant association, we reached out to numerous nonprofits, including three different community land trusts, in hopes that one of them could support us and keep the rents affordable. But instead, they didn't have the resources. In my community in my community and in so many across California, residents of buildings that are reasonably unaffordable today are at high risk of being displaced when their buildings are purchased on a private market. When this happens, too many tenants are
Speaker 30
and we lose affordable housing to those communities, so we desperately need. By creating the CAP program, you can help keep families like me and their families protected by affordable housing. Thank you, and please vote yes on s b ten ninety one. Thank you. Thank you.
Speaker 43
Good afternoon, chair and members. My name is Andres Ramos. I serve as legislative counsel with Public Advocates. We are a nonprofit law firm that works to uplift the needs of low income communities and communities of color. We are proud to cosponsor SB ten ninety one, which would establish the Community Anti Displacement and Preservation Program, or CAP.
Speaker 59
As we all know, our state has an ongoing housing and homelessness crisis, which requires a comprehensive approach to address. One key tool to address this crisis is the acquisition and preservation of existing units of housing to promote long term affordability and to prevent displacement and homelessness. In communities across California, local nonprofits, community land trusts, cities and housing authorities have been doing innovative acquisition preservation work for over a decade. These organizations are purchasing rental housing from the private market where low income households live today and preserving it as deed restricted housing for the long term. CAP was envisioned and designed based on the lessons learned and best practices from these local efforts.
The design of this program is grounded in this engagement with local practitioners, as well as lessons learned from other state programs at HCD. Modeled after the success of HCD's Golden State Acquisition Fund, which for over a decade has provided acquisition capital for land to build new affordable housing, CAP is designed as a partnership between HCD and nonprofit lenders who can distribute program funds quickly and efficiently to the nonprofit organizations and public sector housing partners that need to purchase these residential buildings at the speed of the market. These local nonprofit developers, community based organizations, or housing authorities that manage these buildings as deed restricted affordable housing, either as affordable rental or homeownership opportunities. SB ten ninety one also includes dedicated technical assistance to pair with the program in order to support organizations to grow their capacity in this work. The program both prevents displacement and homelessness for residents living in these buildings today while also growing our supply of deed restricted, affordable homes for decades to come.
For these reasons, we respectfully urge your I vote on SB ten ninety one. Thank you.
Speaker 15
Others, in support, approach the microphone and state your name, organization, and position on the bill.
Speaker 44
Hi. My name is Ila Osterk. I'm a student at College of the Sequoias and Visalia in Tulare County. I'm here with Power California Action, and I am expressing my support of this bill of this bill.
Speaker 60
Afternoon. Ruth Sosa Martinez on behalf of Power CA Action in strong support.
Speaker 60
Hello. Good afternoon. Michelle Parasut with Public Advocates on behalf of the Sacramento Housing Alliance, the California Community Land Trust Network, Housing Now California, and the California Green New Deal Coalition.
Speaker 10
Benjamin Henderson with the Western Center on Law and Property in support. Joe Delgado, Power California, Long Beach in support.
Speaker 11
Graciela Castillo Cranes on behalf of Enterprise Community Partners, a proud sponsor of the legislation.
Speaker 8
Porvabadisharji with Housing California in strong support of s p ten ninety one and a proud cosponsor, also sharing support for the bill today on behalf of Housing NAP.
Speaker 61
Hi there. I'm Amna with Power CA Action. I'm in strong support of bill nine eighty two. Thank you.
Speaker 12
I'm Jimena Romero. I'm a student at Stenger High School on behalf of Power California Action, and I support.
Speaker 47
Good afternoon, chair and members. Brian Augusta, on behalf of the Rural Community Assistance Corporation, the California Coalition for Community Investment, the California Coalition for Rural Housing, and the California Rural Legal Assistance Foundation in support. Sir?
Speaker 1
All right. If you're opposed to SB ten ninety one, please approach the microphone. Going once, going twice. Alright. No opposition.
So let's bring it back to committee for questions or comments. Questions or comments by committee members?
Speaker 15
You might have stated this and maybe I missed it, but, how will this be funded?
Speaker 43
Good question. This bill, I'm working with, Senator Cabaldon on the housing bond bill, and there is a provision in that housing bond for for this particular way to create affordable housing. The beauty of this is these are already existing units, so we don't have to wait for them to be built. It's a matter of acquiring the properties and doing the kind of rehab that may be necessary, and and it doesn't displace the people that have been living in those units. So it's a it would be it it it is anticipated being in the bond.
The bond would go to the voters in November. And if the bond passes, then it would be funded. If the bond doesn't pass, it would not be funded.
Speaker 14
mean, this isn't the appropriations committee, but another another funding source, of course, is the new homeownership funding that is being proposed even within the budget.
Speaker 43
That is correct. I mean, ultimately, can fund it in the budget apart from this, but right now, it's, anticipated to be part of a bond request.
Speaker 1
Alrighty. Thank you. Senator DiRasso has moved the bill. Would you like to close?
Speaker 11
This is file item number 12, SB ten ninety one. The motion is due to pass to the Senate Appropriations Committee. Umberg? Aye. Umberg, aye.
Nilo? Allen? Ashby, Ashby I, Caballero, Caballero I, Durasso I, McNurney, McNurney I, Reyes, Reyes I, Stern, Valadares? Wahhab? Weber Pearson?
Weber Pearson I. Weiner? 7 to 0.
Speaker 1
70. We're gonna put that on call. Alright. Let's take up the consent calendar. Is there a motion on the consent calendar?
Senator Caballero moves the consent calendar. Committee supporter, please call the roll. On
Speaker 11
the consent calendar, Umberg. Umberg I, Nilo. Nilo I, Allen, Ashby, Ashby I, Caballero I, Duraso I, McNerney I, Reyes I, Stern, Valadares, Wahhab, Weber Pearson. I. Weber Pearson I.
Weiner. What
Speaker 1
90? We'll put that on call. Alright. I understand senator wiener has some bills. So what the rumor is.
Senator Weiner, let's start with file item number 18, SB eight seventy five. If you'd like to, sure. Okay. And I know that there's a number of folks here. Senator Weiner, I am looking at file number 19 s b nine eighty two.
I've never seen so many listed supporters and opponents on a bill in my career here in the legislature. But then I turned to SB ten seventy four and that eclipsed it. So
Speaker 1
just to review the bidding, Senator Weiner, before we get started, I know that there's folks that have traveled distances to voice serve you on these issues. So we're gonna do two minutes on each side. Two minutes for I'm sorry. Let me back up. Each witness will have two minutes.
The two primary witnesses in support will each have two minutes. The two primary witnesses in opposition will each have two minutes. And then, those of you who are supportive, you'll approach the microphone and just give us your name, your affiliation, your position. The same thing goes for the opposition. The same thing goes on both bill all three of the bills that senator Weiner's about to present.
Alright. Senator Weiner, go ahead. The floor is yours. Thank
Speaker 2
you very much. Mr. Chair, I'm, here to present Senate Bill nine eighty two, the Affordable Insurance and Recovery Act, a first in the nation legislative plan to tackle California's intertwined affordability and climate crises. The cost of home insurance has become an absolute crisis for Californians. Rates in California have risen nearly 30% above inflation over the past decade, with increases as high as 150% in some areas.
And with private insurers refusing to renew a record number of home insurance plans, a massive number of Californians are now relying on the state's insurer of last resort, the Fair Plan. As enrollment surges and as risk soars, the Fair Plan is seeing costs rise to unsustainable levels. The plan the Fair Plan is currently seeking approval to raise rates more than 35% on policyholders after they were forced to pay out more than $3,500,000,000 for just two fires, horrible fires, in Los Angeles last year alone. As enrollment surges, excuse me, needless to say, Californians can't afford to pay any more for their housing. This crisis is especially acute for those who survive extreme weather events.
The road to recovery is long we heard that earlier today on a different bill And for some, the high cost of insurance means they will never be able to return to the homes they lost. For those pondering homeownership in our state, the growing price of insurance, and the growing price of protecting this crucial investment can cast doubt on that dream. With California's paying such a massive cost for climate related disasters, and we have to be clear, these disasters are fueled, whether in whole or in part, by climate change, we have to ask who's not paying? We know that the victims, the survivors are paying in profound ways, taxpayers are paying, and of course policy holders are paying with much higher premiums. Who's not paying?
The answer is the fossil fuel industry. The corporations whose products fueled this crisis by fueling climate change. The fossil fuel companies who knew decades ago, many, many years ago, that their product would lead to these disasters because that's what the science says, yet they suppressed what they knew, they manipulated policymakers for decades, and they obstructed the transition to clean energy. That should have happened a long time ago. Californians should not have to continue to pay the full cost of climate driven disasters, given the role that this industry has played in getting us to this point.
We need to provide a path to insurance affordability as we tackle the challenges of life on the front lines in the climate crisis in our state. Opponents of this bill, as you have all heard and you will hear again today, say that this legislation will raise gas prices, kill jobs, and drive costs. That is inaccurate. First of all, gas prices are driven by global market forces, not hypothetical legislation or litigation. We know that the war in Iran has increased, has exploded gas prices in this country as it has across the country.
And covered entities, these oil companies are making massive profits from that war. They're profiting from it. And that's what happens. They profit and we pay. The oil companies profit and we pay.
Second, the opposition's study of hypothetical litigation costs tells a very, very misleading story. All potential benefits of litigation recoveries for Californians are omitted from their study. They just ignore all of those benefits for Californians. That money doesn't just disappear. People use it, that recovery, to recover financially, to pay their insurance bills, to make investments in their home, to actually have a home.
Those investments provide jobs and support local economies, whether construction workers or anyone else who is helping in the recovery. It allows communities the chance to recover. Finally, we know that the costs of climate disasters are already here. It's not hypothetical. We're all paying it, and we see it.
And the only people not paying are the oil companies. SB nine eighty two will provide a path to affordability by holding oil companies accountable. I wanted to stress, we were all here last year for s b two two two, and this committee did not pass that bill, and we heard the feedback. And this bill is profoundly narrower than the bill last year. The bill last year allowed private rights of action for people who are victimized or for insurance companies seeking subrogation.
That's gone. Only one person can file a lawsuit, the attorney general. In addition, unlike the bill last year, there is no joint and several liability, and so oil companies will be responsible for their pro rata portion of the climate disasters. And so this is a narrower bill. It's about recovering increased costs for insurance, for the fair plan, and I respectfully ask for your I vote.
With me today is Gail Ali, who along with her husband Rashid lost her home in the Eaton fire, and Louise Bedworth, the executive director of the Center for Law, Energy, and the Environment at UC Berkeley School of Law. We also have, for technical support, if there are technical questions, Gordon Levitt from the Center for Climate Integrity. Thank you, Senator Weiner. Ma'am, the floor is yours.
Speaker 52
Thank you. Thank you all for being here. I'm a retired teacher and was a proud vice president of my local CTA chapter. My husband and I lived in Altonita for more than thirty years. We raised our family and built our lives there because it reflected our values, diversity, creativity, and neighbors who look at it at out for one another.
Last year, while celebrating our forty third wedding anniversary, fires destroyed our homes. Everything we owned was gone, furniture, cars, family photos, my husband's music studio, my photo studio, a life erased. We are only able to rebuild because of GoFundMe grants and community support. Rebuilding gives us hope, but we still don't know what insurance will be available or at what cost in the years ahead. What truly angers me is knowing that this wasn't just bad luck.
Speaker 18
I've since learned that back in the eighties, years before we bought our home, Exxon's own scientists warned the effects of their products would be catastrophic. They chose to hide the truth and spend millions on PR campaigns that are still running today. They keep profiting while putting our communities in danger. While so much of our community has lost everything, I mean everything and so many families can barely afford food, let alone rebuild, the five largest oil corporations made nearly 400,000,000,000 in profit over the last three years. Right now, survivors and taxpayers are the only ones paying for the rising costs of these disasters.
Speaker 52
Insurance company executives cite climate change when arguing for steep rate hikes. These are costs we are already paying today. We're really hurting. Through the oil corporations, we could use your help. We support SB nine eighty two because it simply asks oil corporations to also pay their fair share.
Before you vote today, I ask you to think about this. If your home, your entire community burned down, does it seem fair that the oil corporations that helped cause the fire pay nothing when the survivors and Californians have already paid so much.
Speaker 52
We're not asking for a lot. Alright. Just saying. Thank you. They have to pay
Speaker 1
something Yes. To That's trite words, know, but we're sorry for your loss. Sorry. Next witness, please.
Speaker 35
Chair Umburg, members of the committee. I'm Louise Bedsworth. I'm executive director of the Center for Law, Energy, and the Environment at UC Berkeley. In my role, I conduct research on California climate, energy, and energy policy. I've served as a coordinating lead author on the state's climate change assessment, both in the fourth and fifth assessments.
Speaker 25
And I've led research on the cost of climate change and what it means for households and businesses and local governments in California. So I just want to go through four key points today: what we know about how the climate is already changing in California and what is projected to evolve over this century what we know about is contributing to the these changes, how climate is affecting costs to households, businesses, and government and contributing to our affordability challenges, and then finally, the finance and governance challenges that we face in reducing these risks. As you all are aware, California has one of the most robust climate change research programs in the country, if not the world. And we've conducted a series of climate change assessments that have helped us to understand what the future likely looks like for California. And there's a few key things we know.
Speaker 35
One, some amount of warming is locked in. If we stopped emitting today, we're still gonna be experiencing for, impacts of climate change for decades, if not longer. Extreme heat events, wildfire, and extreme storms are expected to increase in frequency and severity as we're already seeing. Our average conditions are shifting and changing, and by the end of this century, our average maximum daily temperature is likely to be five and a half to almost nine degrees higher than it is today. The average area burned by wildfire will increase by 77% by the end of the century if emissions continue to arise, and heat waves in the state's urban areas will increase and could result in two to three times more heat related deaths.
And we're already experiencing these changes, and we have a series of climate change indicators that show us this. There's a growing body of literature that have helped us tie these changes to the changing climate and then increasingly to contributors to climate change. These aggregate costs that we hear from disasters
Speaker 35
We do not take position on legislation really sharing information about the cost and the finance challenges of addressing
Speaker 1
I'm getting that vibe. But it okay. Yes. Alright. Alright.
Okay. Alright. Now we're gonna turn to the Me Too testimony in support. So if you're in support of SB nine eighty two, please approach, give us your name, your affiliation, and your position.
Speaker 34
Thank you, members of the committee. R. L. Miller, Climate Hawks vote. I'm also speaking on behalf of three fifty Bay Area Alliance, three fifty Southland Legislative Alliance, three fifty South Bay, California, and I'm a wildfire survivor.
Thank you.
Speaker 27
Hi. I'm Michelle Stilts Skokin. I'm from Altadena, and I have a surviving home that's contaminated, and I support nine eighty two. Thank you.
Speaker 46
Good evening. Nicholas Hernandez, a former firefighter and organizer at EWS, proud supporter of SB nine eight two. Also, relaying support on behalf of EFSN, every fire survivors network representing over 10,000 EDN fire survivors and Palisades fire survivors supporting nine eight two. Thank you.
Speaker 62
Richard Schnarr, citizen of Santa Ana, I strongly support SB nine eighty two.
Speaker 25
Katie Hawley, district five council member for the city of Chico, home of the Park Fire, in strong support.
Speaker 39
Dominic Bendinelli, a resident of Buena Park and wildfire survivor, urging support.
Speaker 11
Lexi Blair, fourth year public policy major at UC Riverside with California Voters, in strong support. Olivia
Speaker 8
Purdy, public policy major at University of California Riverside, in strong support.
Speaker 10
Will Breger, Climate Action California and three fifty Sacramento, in support. Thank you.
Speaker 43
Clara East, on behalf of the Friends Committee on Legislation of California, strong support.
Speaker 7
My name is Derr. I am a constituent of Anna Caballero, and I am in support of SB nine eight two.
Speaker 12
My name is Eliana Guilirayala, and I'm with California Environment Voters, and I support.
Speaker 63
Andres Camilla, Campaigns Manager with California Environment Voters and proud cosponsor. Thank you.
Speaker 23
We can now talk, extension of Senator Caballero, and I support. -My name is Tom Zhang, a STEM educator with the Seneca Games, and I support.
Speaker 15
-John Adams, California Environmental Voters and SEIU five twenty one, and I'm in support.
Speaker 13
Sierra Kos, co executive director of extreme weather survivors, proud cosponsor. And
Speaker 13
been asked by our friends of the San Diego Flood Survivors Group and also Shelltown Resilience, representing hundreds of flood survivors, to also relay their strong support.
Speaker 14
Sayida Lagunas with California Environmental Voters and residents of the Inland Empire in strong support.
Speaker 57
Hello. I'm Vanessa Villanueva. I'm coming from the Inland Empire with the Empire of Voters, and I am in strong support as well.
Speaker 8
Ariana Standish with extreme weather survivors and representing Mendocino County homeowners on the fair plan in strong support. Molly Thompson. I'm a K-twelve educator, and I also represent 350 Sacramento as a volunteer, and I strongly support. Thank you.
Speaker 29
Viveka Reemazumdar. I'm the lead organizer at the multi faith, multiracial organization, L. A. Voice, and I'm an Eat and Fire El Dina survivor. Strong support.
Speaker 9
Carlos Lopez with the California School Employees Association in support.
Speaker 23
William Pevek on behalf of Climate Health Now, a coalition of California health care professionals in support.
Speaker 61
Anna Karen Estrada on behalf of Climate Positive Consulting, Day Anu, a Jewish call to action, Climate Action Los Angeles and the Los Angeles Climate Reality Project. Me too. Thank you. From Los Angeles.
Speaker 25
Hi. My name is Ashley Jackson, and I am in Sabrina Cervantes' district. And I am in support of SB 92 on behalf of Center of Environmental Health, Third Act Sacramento, Elders Climate Action Northern California Chapter, and San Francisco Bay Physicians for social responsibility. Thank you.
Speaker 8
Hello. My name is Carimel Valenzuela Ibarra. I'm a first year public policy major at the UC Riverside School of Public Policy, and I support this bill.
Speaker 29
Hi. My name is Jennifer Phuong Nguyen, and I am a master's of public policy candidate at UC Riverside, and I support.
Speaker 8
Ms. Elie Foreman, former volunteer firefighter and member of the Screen Actors Guild, in strong support.
Speaker 12
Ms. Hi. I'm Sarah Shore. On behalf of Make Pluthers Pay, we represent tens of thousands of Californians, and we're in strong support.
Speaker 14
Elly Cohen, CEO of the Climate Center, we are in strong support. Thank you, Senator, and thank you, Committee.
Speaker 10
Afternoon. Luis Lopez, on behalf of Alliance for a Better Community, based out of Los Angeles, in strong support.
Speaker 25
Good evening. Kim Stone, Stone Advocacy on behalf of Consumer Watchdog in enthusiastic support.
Speaker 64
Mr. Chair and members, Leanne Tratton, Tratton Price, representing Enviro voters and also, giving support for, Endangered Habitats League, Good Power, and Courage California. Thank you.
Speaker 25
Good afternoon. Yvette Martinez. I'm with Extreme Weather Survivors and the Dolores Huerta Foundation. She asked me to, speak on her behalf today. Thank you.
Speaker 8
Hello, senators. My name is Renna. I'm speaking on behalf of Greenpeace USA, San Fernando Valley Climate Reality Project, Green America, three fifty Sacramento, Comunidas Financial Planning, three fifty Bay Area Action,
Speaker 34
Good evening, Pahua, in support of SB nine eighty two, and also in behalf of ThinkShift Communication, Vocero, Elders Climate Action Southern California Chapter, Alliance of Californians for Community Empowerment and Mowing and Vaping Politics, also a constituent of senator Gabbiero. Thank you.
Speaker 44
My name is Isla Osterk. I'm a student at College of Desequoias located in the heart of the Central Valley, and I'm expressing my strong support for this bill. Good
Speaker 11
evening. Ruth Sosa Martinez on behalf of Power CA Action and strong support. Thank you.
Speaker 12
Good evening. My name is Jimena Romero. I'm a senior at Sanger High School and a constituent of senator Caballeros. I'm here on behalf of Power California action to express my strong support. Thank you.
Speaker 61
There. I'm Amna Ali, on behalf of Power C Action, based in Central Valley. I'm here, with strong support for Bill nine eighty two. Thank you.
Speaker 45
My name is Christopher Estrada, student at UC Merced, and I am a constituent of senator Caballero. I strongly support. Thank you.
Speaker 61
My name's Akhira Stovall, student at Fresno City and a constituent of senator Gabbione. I support.
Speaker 25
Hi. My name is Sofia Sanchez. I'm a constituent of senator Caballero, and I'm in strong support.
Speaker 18
Asha Sharma, on behalf of Leadership Council for Justice and Accountability and Planning and Conservation League, in support. Thank you.
Speaker 19
Raquel Mason, on behalf of the California Environmental Justice Alliance. Seha, action.
Speaker 8
Doctor. Lisa Patel, constituent of Senator Weiner, also a practicing pediatrician for premature infants, hospitalized children, in support.
Speaker 36
Hi. I'm Jacqueline Haney. I'm from Fresno, California. I'm an EMT. I'm with Power CA Action, and I'm in strong support of SB nine eighty two.
Speaker 1
Thank you. If there's anyone else in the hallway, in the room, who's in support of SB nine eighty two, now's the time to come forward. If you're in support of SB nine eighty two, please come forward now. All right. Now we're going to turn to the opposition.
If you're opposed to SB nine eighty two, please come forward. Two minutes each.
Speaker 62
Thank you, Mr. Chair. Chris McKaylee, on behalf of the Civil Justice Association and a organization 60 organizations in respectful opposition, like we were at SB two twenty two. California and a number of states and local jurisdictions, have filed lawsuits against the fossil fuel companies on climate change liability, litigation, and, as we're aware, have been, unsuccessful in doing so. And what this bill would do instead is, of course, tip the scales of justice and ensure that there is a victory in court.
So, basically, the bill is trying to change state law to ensure, that they can achieve in court what they haven't been able to achieve, so far. As your analysis notes, there's a pending U. S. Supreme Court case on whether or not the state filed lawsuits claiming climate change liability can proceed in state courts or not. At a minimum, we should await that ruling by the high court.
Speaker 19
It was noted that this bill is substantially narrower. Respectfully, the only real change that we see is elimination of the PRA. And quite candidly, with our opposition, we believe, regardless of whether it's brought by a private citizen or the attorney general, all of our significant policy concerns remain with this bill, constitutional, and otherwise. In fact, this year, the bill goes even further. It includes, some price controls, which are otherwise unprecedented in state law, absent a federally or gubernatorial declared, emergency.
Speaker 62
Frankly, I think, for the business community, the concern is, if this legislation is successful, what industry is going to be targeted next? It proposes retroactive strict liability. And, respectfully, the way I at least read the current state of the bill, joint and several, the language about market share says the court or jury may use, not shall. The, committee analysis addresses two points. One is preemption.
The other is due process. We have additional constitutional concerns
Speaker 62
I am. I was getting around to that, but I have a few other points before I got to that conclusion, Mr. Chair.
Speaker 25
Good afternoon, Chair and members of the committee. My name is Lisa Diminovich. I'm a partner at Alsula Berzon LLP and a proud resident of Altadena. And I'm here on behalf of the State Building Construction Trades of California. And we strongly urge this committee not to advance SB nine eighty two to the floor.
Speaker 28
Beyond the legal infirmities in this bill, this committee should consider who ultimately absorbs the cost. It's not fossil fuel executives, but working families with unaffordability in gas prices. This bill will ensure the closure of additional refineries, leading inevitably to catastrophic job loss of good middle class jobs in the state. This committee's role is to be the legislature's guardian of legal soundness, and s b nine eighty two fails that test on multiple grounds. The US Supreme Court is currently reviewing Suncor Energy versus Boulder County, which will determine whether federal law preempts precisely this type of bill.
Speaker 25
Advancing the bill now is not only premature, but it is also an invitation to costly losing litigation that will tie up California courts and taxpayer resources for years. If preempted, it gives false hope to Californians, and it directs resources away from effective efforts that can actually help. Even setting federal preemption aside, this bill is constitutionally defective on its face. It imposes strict liability for past actions without any requirement to prove misconduct or causation, a clear due process violation. Its first amendment carve out is illusory.
The bill contains no mechanism to distinguish protected speech from unprotected conduct, meaning courts will be unable to enforce the limitation and will likely invalidate the provision entirely. The bill's market share analysis framework calculated on worldwide capitalization with no rational nexus to California specific harm cannot survive strict constitutional scrutiny.
Speaker 1
You. Okay. If you're opposed to SB nine eighty two, please approach the microphone, give us your name, your affiliation. Certain of you, let the folks know in the hallway that we can start to queue up.
Speaker 39
Mr. Chairman and members, Scott Wetch, on behalf of the California State Association of Electrical Workers and the California State Pipe Trades Council, in opposition.
Speaker 37
Thank you, Chair and Members. Matt Cremins, on behalf of the California Nevada Conference of Operating Engineers, in respectful opposition.
Speaker 22
Mike Beloat, on behalf of the Family Business Association, in opposition.
Speaker 53
Harry Hines, local four eight seven, International Brotherhood of Painters and Allied Trades. I strongly urge a no vote.
Speaker 16
Afternoon, Chair members. Conor Gussman on behalf of Teamsters California in respectful opposition. Thank you.
Speaker 42
Eric Mashinsky, UA Local three ninety three. Solidarity with, the billing trades, California State Billing Trades and California State Pipe Trades Council. Urge you no vote. Thank you.
Speaker 22
Leon Marshall, IBW Local three zero two, strongly opposed. Derek Cole, IBW Local three zero two, we stand in solidarity with the state Building Trades, and strongly oppose. Thank you.
Speaker 4
Good afternoon. Erica Valentine, UA Local three ninety three, stand strongly in opposition with the California State Building Trades, California State Pipe Trades, and UA Local three ninety three. We urge all of you to please make a no vote.
Speaker 15
Mr. Chair and members, Paul Diera representing the Western States Petroleum Association. Strong opposition. Mike Greenlee, International Union of Partners in Allied Trades, District Council sixteen, standing with Building Trades in opposition.
Speaker 7
Fred Lehman, Plumbers and Steamfitters, Local three forty three, standing with the state building trades in opposition. Lowell Homan, vice president of Local four eighty seven Union in Sacramento. Opposed.
Speaker 22
Danny Barrett, UA Local three forty three, Napa Solano County. Strongly oppose.
Speaker 65
Chuck Leonard, Plumbers and Steamfitters, Local three forty two. We stand, with our brothers and sisters, with the state, building trades. Thank you.
Speaker 12
Sarah Bridges on behalf of the California Manufacturers and Technology Association. I was also asked to speak on behalf of the Business Properties Association in opposition. Thank you.
Speaker 32
Brandon Bracamonte, on behalf of Sprinkler Fitters Local four eighty three, we strongly oppose. Thank you.
Speaker 9
Good evening. My name is Randy Lloyd, UA Local three forty two Plumbers and Steamfitters. I stand here today in complete alignment with the California State Building Trades in strong opposition of SB nine eighty two. Thank you.
Speaker 9
Eddie Alvarez, LAOC Building Trades, resident of District 20 Absolutely no.
Speaker 41
With the heat and frost insulators, Local sixteen, and we're standing strong with the stability trades and opposition of this. Thank you.
Speaker 41
Timothy Jeffries, boilermakers of international brotherhood of boilermakers. I am representing thousand boilermakers in the state of California standing in support of the state bill and trades in opposition of the bill.
Speaker 42
Good afternoon. Peter LaRome Munoz on behalf of the Bay Area Council, respectfully opposed.
Speaker 2
Martin Rodriguez, ironworkers, local four thirty three. We're in opposition and stand with state building construction trades. Strongly oppose.
Speaker 1
Joe Zapp, local five four nine, bill Boilermaker. I stand in solidarity with the building trades. Strongly opposed.
Speaker 54
Good afternoon. Mitch Ponce. I'm a representative of the Iron Workers' Local four thirty three in Los Angeles and president of the LA Orange County Building Construction and Trades Council, and we strongly oppose this bill.
Speaker 15
Good evening. Jason Lindsay, Iron Workers Local three seventy eight in strong opposition.
Speaker 14
Marcy Hogan, Doran, Local five forty nine Board of Bankers. I'm in straw I stand in solidarity with the trading council in opposition. Good
Speaker 47
afternoon. James Ashcroft, Ioworkers Local three seventy eight. We stand in solidarity with the state building trades and strongly oppose.
Speaker 63
Good evening. Troy Arndzen, business manager, financial secretary for the Iron Workers Local one eighteen, and we stand with the state building trades and strongly oppose. Thank you.
Speaker 47
Frank Capeners, Ironworkers, Logo three seventy eight in, solidarity with the building trades and a strong opposition.
Speaker 23
Randy Thomas, business manager, Boilermakers Local five forty nine, Pittsburgh, California, Strong opposition.
Speaker 11
Tamisha Maynard, Local ninety two, women's committee chairwoman. I strongly oppose.
Speaker 9
Jonathan Brown, international brotherhood of boilermakers, local ninety two. I strongly oppose.
Speaker 38
Kevin Ferrer, Sacramento Sierra Building and Construction Trades Council. We stand in solidarity with the state building trades, strongly oppose. Thank you.
Speaker 46
John Hershey, on behalf of 1,800 UA Local four forty seven plumbers, pipe fitters, HVAC technicians with the state pipe trades, state building trades in opposition. Thank you.
Speaker 66
John Sisley, representing San Bernardino and Riverside Counties, Local three sixty four, plumbers and pipe fitters, we strongly oppose.
Speaker 47
Jamie Holland, Boulder Maker, business agent, Local ninety two, representing 2,000 members, Southern California. We strongly oppose.
Speaker 9
Ricardo Sandoval with the Ironworkers, I strongly oppose. Francisco with the Ironworkers, local three seventy eight, and I strongly oppose.
Speaker 26
Mr. Chair and members, Chris Schimoto, on behalf of the California Council for Environmental and Economic Balance, respectfully opposed.
Speaker 10
Good afternoon, Chair Emberg and members of the committee. John Kendrick from the California Chamber of Commerce. We oppose as a cost driver, formerly known as Job Killer. Thank you.
Speaker 9
Mr. Chair and members, Horace Gonzalez on behalf of California's Business Roundtable, in opposition. Good afternoon, Mr. Chair and members of Wes Frankel here on behalf of the American Chemistry Council and the California Hotel and Lodging Association, in respectful opposition.
Speaker 16
Jonathan Clifton Wilson, on behalf of the Kern County Board of Supervisors, as well as the Western Propane Gas Association, both in respectful opposition. Thank you.
Speaker 42
Afternoon. Jacob Brent with the California Retailers Association in respectful opposition. Good afternoon. I'm Jackie Anas, behalf
Speaker 15
Evening. Mark Moliner, California State Building Trades Northern Regional Director, strongly opposed. Thank you.
Speaker 1
Thank you. If you are opposed to SB nine eighty two, if you're staying in the hallway or in the room, now is the time for you to approach the microphone. Alright. Let's bring it back to committee. Questions, comments by committee members?
We'll start with Senator Niello, then we'll go to Senator McNerney.
Speaker 15
Mr. Chair, I am a fan of Professor McKaylee, and he indicated he had a couple more points, and I'd like to hear them.
Speaker 62
Thanks. We're thank Mr. Chair, if I may. In addition to the preemption and due process, I think, as the other witness mentioned, First Amendment Commerce Clause and other concerns. The other point is that there's quite a bit of ambiguity in the language, not just on the liability piece in 3508.50.1, subdivision but also the broad definition of climate attributable damage.
And I think that should also be taken into consideration, the absolute breadth of the language and the retroactivity and that strict liability. Thank you, Mr. Chair.
Speaker 15
Thank you. If if I may, Senator Wiener, I'm not going to argue price. As you said, it is a global market. Although I would point out that we have a structural increase in our cost here in California that is due to unique circumstances in California. But we will continue to fluctuate with the global market but will always be a buck or 2 higher than the rest of the country and that's because of things that we do.
Greenhouse gas concentrations and climate change is also global. The vast majority of greenhouse gas emissions are emitted outside of California. Vast emissions. California is responsible for less than 1% of the greenhouse gases emitted in the world. China, by virtue of its coal fired utility plants, emits more greenhouse just the those utility plants emits more greenhouse gases than the entire US economy.
So oil companies and their customers, by the way, emit an infinitesimally small amount of the greenhouse gases that are in the atmosphere. Now I'm no apologist for oil companies, and that is not my point. But even if we could get past the part of this bill circumventing the legal process as was testified, and if it were proportional as the bill states, if your approach was successful and proportionally applied, it would hardly register in terms of proportional impact. Again, I want to stress, climate change is a global phenomenon and California is responsible for less than 1% of the greenhouse gases that are emitted worldwide. Now, again, I'm not arguing price, but I will argue supply.
And I would like to ask your second witness who here is here not with a position, but at least with information, would like to ask her what is her estimation of what this bill might cause with regard to refining capacity in California. Is she still here?
Speaker 35
I don't I think one thing that is important about this bill is that the intention is addressing the global impacts of climate, which don't matter doesn't matter where the emissions occur because they are globally mixed. And so California is experiencing the impacts from the globally mixed greenhouse gas emissions. So we are experiencing the impacts that are due to not just our emissions, but the emissions that have occur occurred around
Speaker 35
But I think then the we are bearing a disproportionate cost of the impacts that we are experiencing because we're experiencing such severe impacts. So this looks at building new tools to address that cost. Maybe I'll let Mr. Levitt speak.
Speaker 15
Well, specifically, my question was, do you have any estimation as to what impact this legislation would have on refining capacity in California moving forward, particularly recognizing the fact that two refineries have just recently closed?
Speaker 63
Thank you for your question, Senator Niello. Neither the opposition or proponents' economic analysis have addressed that question of impact on refineries in terms of prices. It's very speculative as you mentioned yourself. The two refineries have closed recently based on other factors without this bill being in play. The other points that I would like to, address that you made is that the market share liability framework allows the state to get a fair share of liability from the defendants that can be held into California court.
So that's all within existing civil procedure, constitutional boundaries. The bill adheres to that. The other point that I wanna draw attention to is that the opposition can't have it both ways here. This can't be both unbounded liability that will break the state's economy, as they would say in their report, and so limited of an impact in terms of a remedy for Californians that it's not worth doing. So I would just ask which is it in that.
This bill addresses a very narrow range of costs and is conceptually different than the cases that the opposition referenced currently considered by the United States Supreme Court, which are around consumer protection. And then the final, point that I would make is that the Supreme Court, in granting that, also asked the parties to brief standing and jurisdiction without the parties asking for that. So it's possible that they will dispose of the case after oral argument based on those grounds without addressing the preemption merits. Any other questions?
Speaker 15
No. I'm arguing primarily the latter point, but I think the former point is still important because exactly because of the political pressures in California, two refineries have closed. We are almost entirely dependent upon foreign sources for gasoline in California. And I think we have to consider it very likely that additional refineries will close because it is the official position of the state of California that we will no longer allow fossil fuel burning vehicles. I don't think that's going to be successful, but nonetheless, that's the policy.
So what's the future for refineries here in California? Refineries would have to question that. I would suggest that that suggests that the refinery capacity will continue to dwindle. And as we are increasingly dependent upon foreign gasoline supplies, we will have some very significant supply challenges and there's going to be a lot of drivers in line in gas stations that are not going to be very happy. But it is true, the disproportionate effect in California of any effect impact of climate change because we emit so little of the greenhouse gases.
We are responsible for so such a small amount of it, and yet we are experiencing these impacts. And, again, the bill, as senator Rinner, you said, you were looking for proportional impacts. If it's proportional and the oil companies in California and their customers are responsible for tenths of a percent of total global emissions, that's a pretty small proportion. But again, California is emitting such a small amount of the greenhouse gases that could be responsible for climate change, it's very difficult to assess the responsibility that this bill does. In fact, I would suggest impossible.
Speaker 2
So I wanna thank the author for bringing this forward and the witnesses on both sides. We all have some responsibility for climate change. We drive our cars. We eat our buildings. We eat climate we eat energy intensive foods.
However, the fossil fuel industry owns the lion's share of responsibility for climate change, and they've known about climate change for a very, very long time. I first heard about climate change in 1969 as a cadet plebe at West Point in military engineering class. 1969. These oil companies have known about this for a long time. And
Speaker 2
only have they known about it for a long time, but they've been very aggressive in suppressing information, the scientific information about climate change. Similar to what the tobacco companies did about the risks of smoking for lung cancer. Now today, science can allocate responsibility for climate disasters to different sectors of the economy. The entities that are most responsible for climate change, that ignored known science and risk for the purpose of massive profits, should be held accountable. You know, I've seen senator Weiner respond to opposition, and I would believe that you would, want to work, after this committee to improve the bill.
Nobody wants to see the California economy tank because of that, and I think that's something that we can work around. Senator? Oh, I'm always happy to work with folks. The opposition has made clear to me that that that they're they don't they don't have space to work on this, that it's a ride or die hard no. If that changes, then, I always have an open, door to work with opposition.
I always want our any legislation with my name on it, I want it to be as good as it can be. Thank you. Mister chairman, I yield there.
Speaker 1
Other questions or comments? Seeing no other oh, I'm sorry. Okay. Okay. Let me let me go to to senator Gomez Reyes, then to senator Weber Pearson, then to senator Duraso.
Okay.
Speaker 14
I would align a lot of my comments with my colleague, Sarutjakan McNerney. It's good to see so many friends here on both sides, to see my friends from the operating engineers of building trades, IBW, teamsters, pipe trades, plumbers and pipe fitters, labor fed, boilermakers, iron workers. These are all friends that we work with on so much of our legislation. It's also good to see friends like RL Miller here, students from UCR, CalEnviro voters, I e res somebody who identified themselves as an Inland Empire resident, and hello to you wherever you are. Also fire survivors that spoke, leadership council, Ellie Cohen from the Climate Center, Courage California, NRDC, and so many others To see our friends that we work with on so much of our legislation to be completely opposed on on important legislation.
As I went through this, I saw it through the same lens as my colleague to to see what it is that was known. With so much we think about lawsuits, when we think about legislation, we think about who knew and when did they know it. And having known it, did they use it for the benefit of the community, of the people, or did they use it for their profit? And looking at what we have through that lens, I I I can't help but see that the fossil fuel industry knew about this for decades. Their scientists knew about it.
But rather than listen to their scientists, and this is directly from the from the analysis, rather than listen to their scientists, fossil fuel companies embarked on a decades long campaign of climate change denial with manufacturing doubt about the science and turning the issue into a debatable one. And for years and years, that's all we've been doing is debating. Does it really cause problems? Well, I can tell you in my community where we have so many warehouses and so many trucks coming in and out, spewing their their diesel fuel, it is much more than 1% caused by fossil fuels. The harm to the community is so much is caused so much by the by by the fossil fuel industry and everything that that they that that they bring into the community.
And, yes, we choose to drive our cars, but fossil fuel industry knew about this for decades. Their scientists knew about it. Their scientists told fossil fuel companies and they chose to ignore it. Not only chose to ignore it, they did everything in their power to put doubt into people's minds. Claims there was also talk about the lawsuits that were filed.
The there's a lawsuit in in in Montana. The supreme court has upheld the trial court's order. The the the lawsuit here in California filed by the attorney general, it it it's currently on pause, and that is that is understandable. But I think if we had legislation such as this, the attorney general would have much more power to move forward. And it isn't to just you file a lawsuit and you win.
You have to prove this. But at least there is this possibility of proving something that the fossil fuel industry knew for so, so long. And I think that if somebody knows something and hides it and then tries to put the doubt into the into the minds of everybody else, it's unconscionable, quite frankly. And I think that having this legislation is important. I think having the attorney general be the person who represents the people of the state of California would allow him to then put the evidence forward and show what damage.
If it is 1%, it is 1%. My guess is that it's going to be much greater because you will find pockets of communities that are more affected than others. And with that, I would move the bill at the appropriate time.
Speaker 27
Thank you, chair. I wanna thank, senator Weiner for bringing this bill back again. Your bills are always very, interesting, but most importantly, they, tackle very important, very impactful issues. And so I thank you for, having the backbone to do what many of us should be able to do. I wanna thank all of those who came out and spoke, those in support and also in opposition.
Speaker 47
And, you know, like senator Reyes, you know, loved people on both sides of this issue and couldn't help but to wonder what the home insurance costs are for some of the union members who were represented today. You know, some people here talked about proportionality. And I mentioned this last time with the previous bill. When a disaster occurs, a wildfire, a flood like we had in my district a couple of years ago that looked like New Orleans at the time, some kind of climate crisis hits. The residents have to pay the cities and the counties.
Speaker 27
But those who caused it do not. And when we talk about proportionality, there is a huge player that has not had to step up and be held accountable for the consequences of their business and actually just kinda be good neighbors. We have we need to start thinking as a global community because we all have to live and survive on this one earth. And when that happens, when we start thinking about this, then we stop blaming other people and we work we figure out how we can work together. Because the same people who are utilizing your products to drive in their homes are the same ones that are now hurting.
And, you know, I supported this bill last year. I supported this year. A proud co author of this bill. And I just hope that we can get to a point where we stop trying to point fingers and point blame and shirk our responsibility because at the end of the day, it ends up hurting all of us. And there's been some conversation about if this bill were to go forward who would bear the cost that the cost would go back to the residents of California at at the the gas pump and things like that.
And if that did happen that would be the choice of the companies because they have made billions and billions and billions of dollars in profit. I think it's over almost 400,000,000,000 over the last few years. And you can't tell me that they cannot utilize some of those funds to help out the witnesses who came and spoke today who lost their homes. So I appreciate Senator Reyes moving the bill. I look forward to voting for it and really hope that this year it gets out of this committee.
So thank you.
Speaker 3
Thank you, mister chair. And I wanna thank also everyone who came today. These are obviously difficult decisions for everybody we could see within the same communities differences. And we can't deny that our climate is changing, and it's doing so in response to human activity. It's clear that the working poor are hurt more by climate change than others than others.
Speaker 26
And we do need to act with urgency, but we need to make sure that we do so in a way that doesn't harm low income people and working people even more than what they're facing. In the face of devastating climate driven wildfires and in our desire to ensure the stability of the fair plan and to help ensure homeowners can both find and afford homeowners insurance, which I support. We must also consider the impact of our policies on Californians who can't afford to buy a home. Those renters would be net losers under this proposal. They don't have homeowners insurance policies, but they are consumers of gasoline and other goods that would increase in costs under this proposal.
Speaker 3
So as we look to hold accountable those who, yes, have profited from harming the environment and deepening the climate crisis, we must also closely examine the impact of our policies on the most economically vulnerable. And this unfortunately, this proposal does not do that. And for that reason, I will not be supporting today.
Speaker 40
Yes. I applaud the author for his tenacity on this and and your willingness to bring it back and try again with a couple of modifications. I align myself with the comments, of the senator from East LA, senator Drazo. This is, you know, really tough because these are two very important priorities for all of us, accountability in the environment as well as affordability. Last year, one of my biggest concerns was affordability.
That concern is even greater this year than it was last year, particularly on this issue. Two of the biggest issues, insurance and access to being able to transport yourself and afford gasoline, and and earn a living wage in this community. I also have concerns, which I have shared with the author, about the due process component of this on the retroactive piece. I think there is a question about changing the law retroactively and not allowing an opportunity to be compliant with that in advance. So while while everything stated is fair and true that folks have known about climate change, when you change the rules, regardless of the topic of the rules in the law, you have to give an opportunity for due process.
And I don't think this bill quite affords that. I do think some version of this bill will pass some time, and I look forward to being able to support that version. But timing is everything. And for me, this is the wrong timing on this bill, and it still needs a little bit more work. So I will not be supporting it today.
Speaker 43
Thank you very much. Well, wanna also thank everybody for being here today. Many of you were around when we started the hearing, and so appreciate your your tenacity as well. And I appreciate the author and his tenacity. I did not support the bill the last time, and I appreciate all the people that said they're from the district.
Thank you for being engaged, and thank you for being here. I didn't support it last year for pretty much the same reasons that I won't be supporting it today. I think there's a sweet spot here, but I also have issues with the with the retroactivity. And and, you know, the this legislature really likes to punch the oil industry. And, you know, they may deserve it.
I'm I'm not saying they don't. But a big part of what we've asked them to do, but then we've tied their hands, is to go green. There are Californians, many who you heard from today, who have a good union job because of the work that the oil and the gas industry is doing. And what we've asked the oil companies to do is to be greener, to produce energy in a way that is less destructive of the environment. But then what we do is we don't make it possible for them to do that.
And I think the sweet spot, quite frankly, is to say we make this perspective and then we create an opportunity for them to be able to utilize new green energies, new technologies to be able to create energy that is not oil and gas, that are other forms of energy, that get rid of waste. And in rural California, we have a lot of waste. I venture to say that all of you that that shop at Amazon, now I'm gonna get in trouble for calling them out, have all those Amazon boxes as well that need to be recycled. And part of the challenge is what do we do with waste that we create? And we can create energy.
So green jobs accountability and affordability become really important. And the number one the number one issue people talk to me about in my district are good jobs because we're losing the ability to grow veg fruits and vegetables and nuts. And what we're growing are solar panels. And I know the authors heard this, my mantra, which is that I'm all for solar panels. But when you start putting them on prime ag land or ag land that's very productive instead of on buildings and on parking lots, you're starting to use up land that otherwise could be used for other other purposes that create really good jobs.
And those solar panels, the jobs are low wage to begin with, and they're they're temporary. And that's blowing dust in a valley that has some pretty serious health issues related to the valley fever and blowing dust. So in my district, the ability to transition oil out of the Central Valley and bring in better better better green union jobs and create energies to reduce the energy costs for the families that live there is gonna be really important, and this doesn't get there. So I think there's a sweet spot, but not today. Thank you, mister chair.
Speaker 14
Thank you, mister chair, for allowing me a second opportunity. Two of our colleagues have specifically mentioned the retroactivity in the bill. And my question to you is, is this will you consider taking out the retroactivity in this bill?
Speaker 2
Excuse me. The answer is yes. We would be willing to remove the retroactivity if that's what it took to get it through this committee. I don't think there's a constitutional problem with retroactivity and for the reasons outlined in the analysis. But as a matter of policy, I understand the policy objection to retroactivity, and we would be willing to remove it.
Speaker 1
Okay. Thank you, Senator Weiner. I have a few questions. And and I apologize. The council for the building trades from Auschwiler I'm sorry.
Your name again is?
Speaker 1
Diminovich. Mister Diminovich, I'm gonna ask you to assume certain things, if you can't assume them, then you let me know. Okay. So assume that climate change is real.
Speaker 1
Alright. And and assume that the fossil fuel industry has in some ways contributed to climate change. Do you agree with that?
Speaker 1
Okay. And assume also that while California may be, in terms of its emissions, small on a global scale, that California has a responsibility to step forward in this space with respect to climate change. Do do you assume that? Sure. Alright.
Yes. You you had said that there are more effective ways than dealing with it through the the bill that has been proposed by senator Wiener. And what what did what are your thinking? What what's your thinking on that?
Speaker 25
Sure. What I mean by that is by proposing a bill that has multiple legal obstacles to it that will never actually generate the the promises of it, it's not it's not doing any good. And if you're then having the state defend the bill for years, if it's let's say the supreme court comes out and says it's a preempted law, and then it's gonna be challenged as preempted. And if you keep pushing and defending this bill, it's gonna use all kinds of resources of the attorney general's office that could be devoted
Speaker 1
to What's focusing the alternative? Assuming all those things I mentioned, what's the alternative?
Speaker 25
So one of the our one of our oppositions to the bill is the fact that it's strict liability. It's not tied to actual misconduct. So, you know, when you talk about tobacco reform or, pharmaceutical, you had to prove misconduct. This bill doesn't do that. This bill is just strict liability, that you existed in this space.
You are strictly liable That's
Speaker 1
a different for issue my though. What what should we do if we wanted to be proactive? We wanna act affirmatively in this space. I get what we shouldn't do. What what should we do?
Speaker 25
You should have bills that focus on misconduct. Bills that are are are measured towards bad actors and are legally sound so that they can stay and be enforced.
Speaker 25
I would suggest bills that do that, that look at at misconduct and and go after that. And and and Okay. You know, there's all kinds of players that have been talked about here that could be looked at and challenged.
Speaker 1
Let let me let me turn now to the professor. And again, I apologize. I don't have the professor's name from from Berkeley, one of the proponents. Senator Weiner? Thank you.
Speaker 40
So there's been some issues raised with respect to strict liability, to retroactivity, to incentivizing the fossil fuel industry to to change their methodology, if it's possible. So in terms of the current state of the law, we we've heard I mean, there's some differences between the tobacco industry and and the oil industry. We we cannot shut down and we could not shut down the oil industry. We live in vehicles that are powered by gasoline, and we will continue to do so for some period of time. It's not illegal.
Speaker 1
Unlike tobacco, which was was harmful, it could right now, using the same structure, methodology as was used in the tobacco litigation, could we do that today in California with respect to the fossil fuel industry?
Speaker 35
I don't know if I'm the right person to speak to that. I think the the science has been able to demonstrate. We obviously have all think everyone has agreed climate change is real. Primary contributor is greenhouse gases resulting from the combustion of fossil fuels. Increasingly, we are able to attribute the damages from a specific event to both climate change and how much worse it is because of that.
And increasingly, the science has gotten to a point where we're able to then tie it back to sources of emissions as well, which have been able to show the footprint of the fossil fuel industry on these damages and impacts that are occurring. And then, you know, so I think that's I think that is where we are right now on that on that science of attribution.
Speaker 1
So, I actually wasn't talking about attribution. I was talking about the theory of liability.
Speaker 1
But let let's turn to the theory of liability. Are there other any other theories of liability with respect to any other industry, including the tobacco industry, rely on strict liability?
Speaker 63
Yeah. Thank you, chair. So the most prominent one that I would point out is, CERCLA, the comprehensive environmental response and cleanup liability act federally. But then there are state analogs to that as well. And functionally, this bill is a cost recovery piece of legislation.
So you have to have an event that has the unambiguous fingerprints of climate change on it shown scientifically. So that's the extreme events that cause massive damages to California communities. It's not every little extreme weather event. The bill isn't structured that way. So the first gate that the attorney general would have to go through is showing that climate change has its fingerprints all over this event, and there would be expert witnesses, testimony, all the due process, and then the court would decide how to divide up the liability.
The strict lie or yeah.
Speaker 1
I mean, just to to use senator Reyes' question and point, there there in the theory of strict liability, basically, you assume causation. Right?
Speaker 10
You assume harm that you don't have to show with individual actors. You still have to show general causation, which is what that event based determination is, and the market share component of the liability. And functionally, with difficult products or difficult legal problems where you have industries that are complex, the causes of their products have intermingled harms, so think asbestos, think, DES, which, you know, was a drug given to pregnant mothers that cause birth defects in children. The courts have come up with theories of liability to address those diffused harms. Because, because recovery for Californians is so important, the strict liability standard serves that purpose of recovering a fair share of costs quickly for residents.
Speaker 63
And and this is the AG stepping in here using the police power of the state, parents patriarch on behalf of all Californians statewide impact
Speaker 1
because What what would an industry do in in terms of going back to, in this case, 2016? And there's no change of behavior that will modify whatever happened in 2016. That's why I was asking the question before about if if we are about incentivizing behaviors that actually work to clean up the environment versus simply, in this case, assessing costs or punishing folks. And I assume, you know, I assume that the oil companies made billions of dollars. I I assume that, and I assume that climate change is real.
Real, and I assume that that that contributes to our challenges in California. But but what what does industry do to to change what happened in 2018?
Speaker 63
So I think there's a role for both. Right? And not all bills serve all purposes. So, I mean, the state of California has a cap and invest program, that does carbon pricing. It adjusts with market factors.
Action on that today, that is to incentivize companies to act Yeah. Differently within a policy realm. Right. There's also the very real need for the survivors you heard from here today and the many others who couldn't be here to recover when the federal government is shrinking away from disaster aid and weaponizing that, politicizing it. The insurance crisis is upon us.
That's not going away. We're all bearing the shared cost of climate change. And the the massive report from the California Earthquake Authority last week basically summed up a 137 pages. There's not enough resources to cover this issue. There's a little bit of a doom loop happening.
So this is a party that hasn't won its fair share.
Speaker 1
We've heard from many stakeholders today and in in, you know, in meetings in connection with this. But we have not heard from the insurance industry. At least I haven't heard from the industry. What It would seem that they would be a stakeholder that should have a point of view here. Why do you have any sense as to why they don't have a point of view?
Speaker 63
I I won't presume to speak for the insurance industry. What I will say is that insurance is the connective tissue of the modern economy. It's interlaced through everything we do, And so they have interests on both sides of this. Obviously, they wanna run profitable businesses in terms of ensuring property, and being able to run a model that works for people. And this isn't working right now because they can't accurately forecast the risk.
And if they charge too much, people will stop paying.
Speaker 63
have 20% of or yeah. Go ahead. 20% of Californians are opting to not buy insurance at all, even the fair plan policy. You can envision a scenario when the next LA wildfire event hits where those are devastating costs that the state picks up, that all taxpayers pick up. So on the other side, they also insure the fossil fuel industry.
They make profits off of investments and so I think they're still crossed up in this.
Speaker 1
So thank thank you. And sort of on my own time, is that I share some of those concerns. I share some of the concerns and and I realize it's a different bill and it's a different structure and it's a different model to incentivize the fossil fuel industry to change their behavior. I don't I don't know and it's not necessarily the purpose of this bill. The purpose of this bill is to basically, I think, compensate the fair plan for expenses that are incurred in California as a consequence of climate change.
I sadly, I'm not gonna be able, on its current form, to be able to support the measure today. I join with my colleagues in thinking there is a there is a path forward. But and I I deeply admire the the work and the passion of senator Weiner. We've had a lot of quality time together, and the tenacity. So with that, Senator Allen.
Okay.
Speaker 10
Yeah. I just wanna ask the witness a little bit. You know, lot of comments have been made about affordability, but just if you could kind of, you know, build a little bit upon your previous comments about how much the insurance system is currently being broken by the climate risk that we have and the extent to which we're all being asked to chip in ever increasing amounts to not only the Fair Plan but also higher insurance rates. We're seeing people getting dropped. There's been a real impact here that is harming regular Californians in ways that I don't think is was adequately addressed by some of the arguments that were made earlier.
Speaker 63
Yeah. So just real quickly, then I'll turn it to Doctor. Bedsworth. So the California Earthquake Authority and the massive report last week, said that if another LA wildfire event happened and everyone in the state was assessed the costs like happened last year to all insurance policyholders, you're looking at a 300 to $600 bill from one event of the same severity. But then, functionally, people are paying higher utility prices, 20 to $30 a month at least, some more for others.
That's regressive, falls on working people harder. Land or excuse me, landlords pass it on through rent because they have to ensure their investments so that they can run a business as well. And then homeownership is put out of reach because that's a part of your initial bill when you consider whether you can afford a mortgage. And with that, I'll hand it over to Doctor. Bensworth.
Speaker 35
I think this is an area we've done a fair amount of work in, which is just to understand how is climate change affecting the day to day costs of Californians. And it is a contributor to our affordability crisis, and it's exacerbating key parts of our affordability crisis. And I didn't get to this point, so I'll quickly try to run through a few elements. But it's important to understand that climate drives up direct costs, the damage to infrastructure, but there's a lot of indirect costs, are disruptions in supply chains and other things, risk mitigation costs, and then costs that we're not capturing in the market. So last year, we did, tried to collect, do a review of all of the available studies to help us understand how do we take these giant aggregate numbers.
So when we have a disaster that comes in at billions and hundreds of billions of dollars, that's a huge number, it's hard to wrap your head around. So what does that look like for a household or a business? And there's some literature available on that. And so I think some important points that came out of that were climate is increasing the cost of living and inflation globally. There are studies that show it's contributed between zero point three two and one point one eight points to headline inflation numbers, and that share grows for food prices.
That's globally. Some of the most significant losses are due to reduced worker hours during climate induced events, such as wildfire, where we've seen from 2017 to 2021, wildfire resulted in about $60,000,000,000 of lost income in California. And just during the LA wildfires, there was almost $300,000,000 of lost wages due to that fire. The CPUC has looked at how climate change and climate costs are affecting utility bills. So the cost that is being passed on to utility bills between 7% and almost 13% of the average customers' bills in the investor owned utility regions is due to wildfire costs.
So that is doing the mitigation costs and hardening and addressing damages. I also there's also a real impact on housing costs, and this touches both on renters and homeowners. So following disasters, average rents increase 4% over 4% in the year following a disaster, and it goes up from there in the following years. And those remain in place for at least four to five years after a disaster. So it's not a one time hit.
It continues. There are steep increases in insurance costs that have influenced homeownership. So looking back into the early mostly the early 2000s, early 2010s, insurance was about 7% to 8% of your monthly cost. It is now over 20% of your monthly household sort of cost with mortgage and insurance. So these costs are real, and I think this is an area where we're continuing to work, which is to really drill down to understand how is this showing up day to day for Californians.
And I think this is just a sampling of some of information that is out there. And then I think when we look at preparing for and trying to mitigate those costs, and this is what was just mentioned, is that is a really staggering cost, and we don't currently have a plan for how to pay for it. And it far exceeds what the public, the government can take on. And so this is why sort of thinking about a broader toolbox of tools to help pay for reducing these risks, protecting Californians, which will also generate jobs. And there's great studies that have been looking at this as well.
And local economic activity is so critically important. So thank you for the opportunity to just And touch on
Speaker 10
that's, I think, one of the things that's exciting is just getting investments in some of this risk reduction work that we know is so important for the long term stability of our market. The other thing I'd say is that when the Chair asked about the insurance industry, I think part of what is at play here is that the insurance industry is able to incorporate its contributions to the fair plan that continue to rise into the rate case process, that's considered a legitimate line item as the insurance commissioner is approving rate increases. They're able to have consumers help to subsidize in a significant way these increasing contributions that they have to make to the fare plan, both indirect and direct. You'll notice on your home insurance, just saw there's a direct line item that goes to help the fare plan, and we know that our increased rates are also going to help the fare plan. There's a series of direct costs.
The other thing I will say is obviously the Senator brought this bill for something similar last year. It was a very private right of action, which, in this case, we're only giving the power to the elected to our chief law enforcement officer, the attorney general, is going to weigh all the factors, including the impacts of all the folks that we got to hear from, and make a decision as to whether this is in the best interest of the people as opposed to it being the free for all that Priority of Action might have created. It's a much more narrowly tailored bill. So I'm certainly comfortable supporting it at this stage.
Speaker 2
Yes. Thank you so much, Mr. Chair. And I want to thank everyone for the thoughtful discussion. And I've had a lot of great conversations last year and this year, and I have a lot of respect for my colleagues, including those who where we have a respectful disagreement on this bill, and I appreciate the thoughtful discussion today.
I do just want to make a few points. First of all, every time any bill that touches the oil industry in any conceivable way comes before this legislature, we get the same handipenny, the sky is falling, gas prices are going to be $10,000 a gallon or whatever it is they're saying on that particular day, and no one's going be able to afford everything. It's driving the affordability crisis and everything's going to close down. And at the same time, these same corporations are some of the I don't want to say the largest corporations in the history of planet Earth, the tech companies big tech companies hold that, but they're like one notch below that. These are corporations that have made just ungodly levels of profit, and they have done so selling a product that is burning and flooding planet Earth, and that is burning down the homes of California residents and flooding and destroying the homes of California residents and causing people to be unable to afford to have housing, including renters insurance, not just homeowners insurance.
And that as you just heard is causing all sorts of cost cost escalations in people's lives. And, when we talk about culpability, because there was talk, well, we should only hold the bad actors accountable. These oil corporations knew that this was going to happen. They knew it because they had scientists internal in their corporations doing the studies and telling them with those studies that this was going to happen. And what did they do?
This is decades ago. What did they do? They suppressed those studies, and they spent so much money lobbying congress, lobbying all 50 state legislatures including this one for decades to obstruct the transition to clean energy. We could have been so much more transition to clean energy than we are today had we not had this industry continually sabotaging that transition at a political level. And we only have to look at what's happening in Washington DC right now where the oil industry funded helped fund the presidential campaign and now is getting paid back, exponentially with the destruction of the of the inflation reduction, Inflation Reduction Act and other clean energy investments.
That's what this industry has wrought on California and on this country. And so are we dealing with bad actors here? Hell, yeah. We're dealing with bad actors, and they should be accountable, and it shouldn't just be on taxpayers and policyholders and people whose house homes burned down. It shouldn't just be on us to compensate for this and to pay it.
The oil industry should have skin in the game as well. It shouldn't just be about them profiting and then walking away. That's what this bill is about, and I respectfully ask for your I vote.
Speaker 11
This is file item number 19, SB nine eighty two. The motion is due passed to the Senate Insurance Committee. Umburg?
Speaker 11
Nilo, no. Allen? Allen, I. Ashby? Not voting.
Capayero? Duraso? McNurney?
Speaker 11
McNurney, aye. Reyes? Aye. Reyes, aye. Stern?
Aye. Stern, aye. Valadez? Wahhab? Weber Pearson?
Aye. Weber Pearson, aye. Weiner? Aye. Weiner, aye.
6 to 1.
Speaker 2
to take up next? If the chair would be okay with it, SB ten seventy four, please.
Speaker 2
Very much. Mr. Chair, colleagues, I'm here to present Senate Bill ten seventy four. This bill, the largest digital platforms in the world, specifically any digital platform with a market capitalization greater than $1,000,000,000,000 and serving more than 100,000,000 monthly users in The US from favoring their own products and services on platforms they operate and crushing competition. The bill's enforcement is, modeled on the Cartwright Act, which is California's, landmark competition law, from more than a century ago.
Right now, the largest online platforms in the world are rigging the Internet to undermine and box out their competitors. Each of us experiences the impacts of this anticompetitive behavior every day. Apple blocks competing app stores on the iPhone, forcing app developers to pay exorbitant fees to operate through their store, raising prices for all of us. Google prioritizes its own companies and products in search results and across its platform. Amazon makes it impossible for small businesses to offer discounts on their own websites and then steals products to sell on Amazon at a discount under the Amazon Basics label.
The harms that these anti competitive practices cause consumers are extremely wide ranging. They raise prices for consumers, degrade the experience for users, fuel misinformation, and stifle innovation. They also cut startups and mid sized companies out of the marketplace completely unless they play by the rules set by their competitors. But at the end of the day, all of these behaviors come down to one thing: massive, dominant corporations favoring their own products and services over their competitors, also known as self preferencing. The technology industry has provided incredible benefits to California.
It has delivered world changing products and bolstered our economy to be the fourth largest globally, and yet the benefits are seen by too few. Self preferencing has allowed for a consolidation of power and wealth within tech to a few large companies at the expense of a massive number of small to mid sized tech companies. Barring this conduct will create space for new innovations, companies, and practices to take shape. We are on the threshold of a new digital landscape, but if the same mega players are able to continue to keep the field, the public will not enjoy be able to enjoy the benefits of these amazing technologies. It will become more and more sclerotic and ossified, and that is not good for any of us.
Self preferencing completely distorts our experience on the Internet, and it blocks the public from accessing products and services that might be better or more innovative. And so, this is about competition, and various courts have ruled at different times that some of these practices are illegal, but it's time for California to be crystal clear. With me today to testify in support is Teri Olli, the Vice President of Economic Security California Action, and James Dare, the Director of Legal at Yelp.
Speaker 34
Teri Good evening, Chair Unberg. I'm Teri Olli, Vice President of Economic Security, California Action. We're a proud cosponsor of SB ten seventy four, and I want to thank the senator for his commitment to competition and consumer choice. A central tenet of free market economy is competition, where rivals vie for our business. On a fair playing field, merit matters.
If a product or service is better, it should win. But in today's tech sector, it's anything but that. Instead, we have a handful of giants that own the field, acting as gatekeepers, stifling innovation and reducing choice and increasing costs for everyone. SB ten seventy four corrects this imbalance, allowing for the robust and flourishing tech economy that California is famous for. And this isn't just an academic critique.
Here's a real life example that I think you'll appreciate about a product called Blue. As someone who drives back and forth to Sacramento all the time, as many of you do, I'd love to be able to do more with my phone. Catch up on Slack, pay a bill, order something, tick a task off my to do list. Anything my thumbs can do, but with my voice instead, because that would be way safer. A team of engineers actually built that product.
But Apple doesn't allow Blue to connect to its operating system. So it had to develop a little hardware workaround, a plastic dongle that you have to plug into your charging port instead of just having it interface naturally with the iOS. But because Apple doesn't want Blue to compete against Siri, that's not possible. That is the kind of self preferencing gatekeeping that harms innovators and consumers and that this bill addresses. Self preferencing costs consumers money as well, Whether that's an upcharge on the App Store or a search that recommends a pricier airline flight because of some opaque deal that's happening behind the scenes, these things add up to more than
Speaker 34
inconvenience. Right now, with AI vibe coding, we could be seeing a bumper crop of new ideas. But with gatekeepers firmly in place, the next great idea will get buried in the search results or cloned or cut off from data that the platform then uses against them. What needs to be done to fix this is frankly not that complicated. Owning the playing field shouldn't mean you get to throw the game.
And I wonder, why is Big Tech afraid to compete on the merits? We owe it to the next generation of builders and everyone who will benefit from their creativity to ensure that California doesn't become an innovation graveyard. Thank you.
Speaker 66
Good evening, Chair Umburg, and thank you, everyone, for sticking with us. Yelp proudly supports SB ten seventy four. It's an opportunity for California to lead and reclaim the Internet's promise to enable innovation. Yelp is headquartered in California and employs over 1,100 California residents.
Speaker 1
So could go ahead and give us your name. I know that Scott introduced it.
Speaker 44
Over our twenty two year history, we've seen marketplaces that used to be open for competition come under the control of a handful of mega corporations, degrading the experience for consumers and destroying rivals' ability to compete. Take Google, for example, an adjudicated monopolist in general search. Google used to serve as a turnstile, directing users out to the best content on the web. Over time, Google decided to capture that traffic for itself. After a failed attempt to purchase Yelp, Google scraped our content to seed its own local search service, unfairly watered by its existing dominance in general search.
Speaker 66
Now when you search coffee in Sacramento, Google's own results appear at the top even when they are low quality response to your query. Results from rivals like Yelp, even though deemed high quality by Google's own algorithm, are buried below or on other pages where consumers are less likely to find them. And Google doesn't even subject its own content to the very same algorithm it applies to everyone else. Unsurprisingly, an FTC economist found that Google's reviews are of lesser quality across several dimensions, again hurting consumers. And this is particularly concerning given the rise of AI.
Google is using its search dominance to steer users into its own LLMs instead of rivals and to its own lower quality content, directly harming other California based firms like OpenAI and Anthropic and consumers. We've already seen the benefits of government fostered competition elsewhere. In Europe, the DMA forced Google to remove barriers to switching browsers, And Reuters reported that the EU's new tech laws are working. Small browsers are gaining market share. Additionally, a study from a group of 42 independent consumer organizations in Europe Mr.
Dier.
Speaker 25
Thank you, chair and members. Kim Stone, Stone Advocacy on behalf of Consumer Watchdog in support.
Speaker 16
Good afternoon, chair and members. Connor Gessman on behalf of Teamsters California in support, I've also been asked to meet you in support, on behalf of the California Labor Federation. Thank you.
Speaker 63
Loyal Terry, proud cosponsor with Economic Security California Action and in support, with the following organizations, American Economic Liberties Project, California Low Income Consumer Coalition, Tech Equity Action, Tech Oversight California, and UDW, ASME Local three thousand nine hundred thirty. Thank you.
Speaker 48
Afternoon, Mr. Chair and members of the committee. Olivia Marat with Y Combinator in support of the measure. I've also been asked to note for the committee the support of a broad coalition of nearly 300 small and medium tech companies noted in the analysis, including Yelp and Proton. Thank you.
Speaker 9
Hi, folks. I'm George Kaldropoulos, founder and CEO of HealthSherpa. We're one of the 300 small tech companies. Just want to say we are strongly in support of this measure. Thank you.
Speaker 10
Evening, mister chair. Rusty Knutson, on behalf of DuckDuckGo, in support of the measure.
Speaker 1
Thank you. Thank you. Alright. Anyone else? If you're in support of SB ten seventy four, now's the time.
Seeing no one else approaches the microphone, let's turn to the opposition. If you're opposed to SB ten seventy four, please approach the microphone.
Speaker 56
Good evening. My name is Eric Ensign. I'm an antitrust attorney with the law firm of Kroll and Mooring. And I'm here today on behalf of the California Chamber of Commerce and really a broad coalition of businesses in strong opposition to SB ten seventy four. SB ten seventy four is California's more expansive version of the federal ICOA bill that failed in congress in 2022.
It was California's own congressional leaders, such as senator Padilla and representative Lofgren, who led the opposition, citing the bill as a serious threat to California's economy and leadership. At its core, s b ten seventy four makes a fundamental mistake. It equates harm to individual competitors with harm to consumers and competition. That gets antitrust backwards completely. Antitrust law is designed to protect competition and consumers, not individual competitors.
Speaker 33
That error is hardwired into the bill's guilty until proven innocent standard. SB ten seventy four presumes that self preferencing and other designs are unlawful unless a platform proves otherwise. Facing that kind of standard, we should expect that platforms will stop integrating features not because those things harm consumers, but because defending them is simply too costly. And that hurts the small businesses this bill claims to help. As you will hear in a minute, small businesses that sell online depend on the integrated platform tools like advertising, fulfillment options and payment processing.
Speaker 56
SB ten seventy four also threatens the innovative services that consumers have come to value. Things like free shipping, maps with direct links to businesses, product recommendations and popular default apps could all be prohibited under this bill. And then there is the litigation problem. Unlike ICOA, which could only be enforced by government prosecutors, SB ten seventy four permits private lawsuits by anyone, including class actions with severe consequences like trouble damages. We urge you to vote no on SB ten seventy four.
Speaker 64
Hello. My name is Carrie Mellon, and I'm the designer founder of EZ Hold in Calabasas, California, Los Angeles County. I designed, due to my own need, the first universal cuff for infants to seniors with disabilities to achieve independence with eating, work and play, a really simple tool. We are a small niche product, but a critical health care innovation. Now just ten years since inception, we are supplied to over 20,000 hospitals, schools and care facilities globally to over 35 countries.
Our growth has been made possible by the tools and services created by America's tech companies. They free up our man hours and provide safe and reliable deliveries. I am concerned this bill will make the digital tools I use more expensive and harder to use. I do understand the desire to create more competition, but will this bill make it impossible for my small business to have the same reach if these tools are taken away from us? We are a purposefully driven brand.
Speaker 12
We sell to special education teachers, therapists and those with disabilities affordably. As a purposefully driven brand owner and Amazon seller, I use Amazon's integrated services for warehousing, packing, labeling, payment, shipping, delivering and providing analytics I need, as well as protecting our intellectual property. This is not something my small crew of six could do on their own. It would take an extra 50 employees and a huge warehouse. We've worked hard to qualify to sell products under the prime badge, and this badge allows my small business, micro business, to compete with the Johnsons and Johnsons of the world side by side.
Speaker 64
Yes, we can compete with the largest health care companies because Amazon's integrated services are leveling the playing field. And although Amazon accounts for two thirds of my sales, I currently also sell on 35 different platforms. I'm a testament to the fact that there is robust market for sales of Thank goods and you. Thank you so Do
Speaker 1
All right. Now, let's take those who are opposed to SB ten seventy four, please come forward.
Speaker 42
Evening. Jacob Brent with the California Retailers Association in respectful opposition.
Speaker 26
Mr. Chair and members, Mike Belote, on behalf of Delta Airlines, Apple,
Speaker 24
Good evening, Chair members. Naomi Pajaran on behalf of the Computer and Communications Industry Association, respectfully in opposition. Thank you.
Speaker 27
Good evening. Annalie Augustine on behalf of the Civil Justice Association of California, respectfully opposed. Thank you.
Speaker 16
Ashanti Smith with the Silicon Valley Leadership Group, respectfully opposed.
Speaker 1
Alright. Anyone else who's opposed to s b ten seventy four, if you're in the hallway or wherever, now's the time to come forward. Seeing no one else coming forward, we'll bring it back to committee. Okay. Senator McNerney, senator Reyes, senator okay.
First, senator McNerney, then senator Reyes, then senator Allen.
Speaker 2
Well, was standing up because certain things are getting sore sitting down all day here. I'm not
Speaker 2
Thank you. So Senator, you for this. And I think there's a real core of necessity here. But you mentioned that a company has to have a $1,000,000,000,000 market valuation and 100,000,000 users, or is it or? 100,000,000,000,000 or 100,000,000?
It's both. At least a trillion dollar market cap and at least a 100,000,000 monthly users in The US. A company like Nvidia would not qualify because it doesn't have a 100,000,000 users? That's correct. So what how many about how many companies qualify for those those two things?
Five. Five. That's our that's our that is our evaluation. One of the things I've heard is that this the the fear is the private right of action. Could you respond to that?
Sure. So the bill relies on the existing Cartwright Act enforcement mechanism. That's our general pro competition law that was passed in 1907, I believe. And so we rely on the Cartwright Act, which is how historically anti competitive practices have been enforced against in California. Well, one of the claims also is that this bill would be targeted at specific companies and that it would harm them and that they would likely suffer terrific losses, etcetera, etcetera.
Could you respond to that? Yeah, I don't think that's true. These are truly massive corporations that are doing, I think, better. Twenty years ago, if anyone had ever said this is how much these companies would be bringing in, I think most people might have laughed at that and here we are. And so this is not undermining their ability to be successful profitable corporations.
We want them to succeed, all of them. It will prevent them from doing so by creating essentially a monopolistic walled garden where they crush competition. And just to be clear, for example, in Amazon, Amazon provides are plenty of positive things that Amazon does. And we heard from someone who sells a lot of products on Amazon, that won't change. But when we have so many people who have to sell on Amazon, because if you're not selling on Amazon, that's a problem for many small business owners, and we heard two thirds of products on Amazon.
And what that means is you are then forced to do whatever Amazon asks of you. And we know that Amazon for many products takes a massive cut and there are other anti competitive practices. So this is really about making sure we have true competition. Well, thank the author. I know you're willing to work with the Yeah.
Opposition to refine the bill. Mean, no bill is perfect, really, even throughout the process, but you seem to be willing, so I'll take your word on that. Yes. Absolutely. Thank you, senator.
Speaker 14
Thank you, mister chair. As a member of the California Law Revision Commission, I do wanna recognize that antitrust activity has been looked at by the commission and that the issue you are elevating is something worthy of discussion. However, I also want to acknowledge that the commission specifically recommended, and I quote, any new law should not single out individual sectors but apply to all, end quote. Moving forward, I'm I'm going to ask and I will assume that you will work with, assembly member Aguirre Curry on her a b three twenty five and also consult with the California Law Revision Commission as you move forward?
Speaker 2
Yes. Thank you for that question, Senator. The answer is, of course. And these two laws, Senator, or some of them are Aguirre Curry's bill and this bill are very complementary to each other, and her bill is a much broader restructuring of antitrust law in California. This is addressing a very specific and very real harm.
They're complementary, and you have my commitment, we will do that.
Speaker 10
This bill has a lot of challenges. I know our author here likes to come and swing for the fences, and we get to enjoy the fruits of that here in the Judiciary Committee as the Committee of First Review. And I do try to be a little more understanding because of the fact that this is the Committee of First Review. But I will say that there's a whole slew of issues that really seem to need to be addressed, and I want to get a better understanding from you. And let me also it was fun reading the analysis.
I was reading the Brandeis quote about bigness. I mean, so it was a really interesting history beyond that brings us to this moment where you bring this bill forward. But I think there's a lot of concerns about what this might do to impact a whole slew of customer experiences that we've all become pretty dependent upon. We have folks here from the airline industry who are concerned about what the impact this might have on Google Flights. I use that extensively.
I use Google Maps extensively. So we really have to make sure that whatever we do here isn't going to harm customer experiences and ease with apps. And there's a lot of deep concern about what this might do in that space. There's, of course, a broad set of concerns about what this might provide with regards to opportunities for frivolous litigation. And I think as we've had conversations, including going through the committee work, that there's concern about this being about us getting in being too permissive with regards to the initial pleading, which could lead to costly litigation with little basis, little value extracted.
There's no kind of a showing of competitive harm that you know we brought that up in conversations with you. So I certainly would want to see you tighten up to reduce that risk because we don't want to see this turn into you know, just a rabbit hole of litigation that gets no benefit to the public. And then there's also concerns about whether the bill we have to make sure the bill doesn't harm a platform's ability to enforce existing privacy and security laws. I can't imagine you have a problem with that, but that is an existing that's a continually concern with us. So I love your thoughts on this.
I mean, I do vote for this today, I'm going to vote no on the floor and give a speech about it if you don't get these issues addressed and actively work to kill the bill. But I do want opportunity to understand where you're thinking about these areas because you really are we're stepping into a major shift in a set of tools that so many of us use, and I understand your core goals to promote a more competitive marketplace and that's why I'm inclined to give you this opportunity to work on these issues.
Speaker 2
I appreciate that, Senator. We of course and I have, you know, we work with a wide array of stakeholders. As you know, have an open door and we do try to work collaboratively. In terms of between now and the floor, I can't guarantee that the industry will even want to have that conversation.
Speaker 10
It's not about even a conversation. Yeah. Mean it's more about you making it better.
Speaker 2
Yeah. I mean we I mean I think it's we are we want to make the bill as good as it can be. And so we will and we would like to sit down in further detail with you as well. I do want to say in terms of some of the concerns that you raised, we've seen where rules like these do go into effect that there are apps that consumers have access to that they previously did not. And so it expands consumer choice.
We know that when you have a competing app store instead of being limited only to the, say, the iPhone app store that prices can go down because right now Apple takes almost a 30% cut of everything from the App Store. So it can reduce it can increase choice for consumers and reduce costs. People will still be able to use Google Maps and Google Flights, but they will also have easier access to other services as well. But anyway, I appreciate all of that and we take that to heart and we're going to do the very best we can to make this bill as good as it can be. Can you give us
Speaker 10
some thoughts your thoughts about the European experience? Because one of the arguments we've been hearing is, well, let's let that play out a little longer. Yeah. And also how what is your take on how things have been going there?
Speaker 2
Sure. A couple of things. First of all, in my I am in my tenth year in this legislature. You have me by a couple of years. And in California, we tend to actually often be the first, and including on technology regulation.
So we're not the first. Europe's rules have been in effect for over two years now. Japan also adopted theirs. I believe their rules went into effect last year. And I will say that we passed our data privacy law in 2018 and we were passing it at the same time that the EU data privacy rules went into effect.
So we typically, in California as you know, we try to lead on these issues. In terms of the DMA, there have been a lot of benefits. As I mentioned, there are apps of American companies that we cannot access on the iPhone in The U. S. But Europeans can access there.
American companies that are literally blocked from being on the iPhone here and are available
Speaker 2
Have again these alternative app stores which lowers costs and increases people's access. And so there are some real benefits that people have seen from being able to do this. And so I think the DMA, nothing is perfect. There's always going to be a process to make sure we're getting everything right. But the DMA, I think, headed in the right direction.
I know there's a lot of rhetoric about Europe's economy, which has been a fifty year issue in Europe, not because of a technology regulation. But the DMA I think is a really solid law and has had a lot of benefits for consumers and for businesses.
Speaker 1
Wait a Woah. Woah. Woah. The the I get to make this decision. So right.
So alright. So senator Allen, would you like to hear
Speaker 56
On the DMA, just quickly on the DMA. I'm sure the senator is correct. There are some benefits that have been seen in Europe, with response to the the DMA. There are scores of economic studies that say that that law has been a disaster for the tech industry and innovation in Europe. It is really it is also, there are tons of studies about consumers not having access to the same products and services we have here, and that they're actually willing to pay for the services that we get here for free.
So the DMA, think, is an experience that we should learn from and it's not a positive one.
Speaker 2
May the other side also respond? I'm sorry? May the may we also have someone respond?
Speaker 1
Tell you what. Here's what I'm gonna do. Here's the question I was gonna ask, so might as well ask it right now. The question I was gonna ask is that in Europe, the DMA has been in effect for some time. Japan has just very recently introduced it.
I've heard disparate points of view on the consumer experience on the DMA. And so I I resorted to actually using large language models to ask that prompt, you know, what's been the experience of Europeans and Japanese folks considering their models. And, you know, you all can do the same thing. You'll get interesting results, mixed results. So I'm I'm happy to, at this point, ask the witnesses on both sides to give us their point of view as to, you know, what the consumer experience has been in in Europe.
I think Japan is probably too too new to really evaluate, at least that's what the various models say. So You're right.
Speaker 56
On on Japan, I don't think there's been any real robust study on that. And on the DMA, might have sort of stated the the view that at least with respect to the economic studies in terms of innovation and experience and consumer preferences, is that consumers are hungry for the type of, tech that we have here in The United States.
Speaker 2
And it might be interesting to ask who funded those studies. Sure. Yeah, that's an interesting question that we
Speaker 56
Well, there's numerous economic studies, and who funded which, I do not know. But I know that a lot of studies have been done, I've read a lot of them. I know. And that I'm gonna
Speaker 1
Senator Weiner's gonna tell us here in a second. And and those of and the others that are currently using the Google machine to figure it out.
Speaker 1
he does. Okay. So we'll go to Senator Weiner and then Senator Weiner No. No. You're then then the the proponents.
I'd like to hear from the proponents. Yeah. For some of us. So Okay.
Speaker 66
Thank you, chair. Just very briefly, you'll note that the passive voice used, there are studies. The reason is that the main study, was by an organization called the CCIA, which is funded by the very companies that would be covered platforms and covered providers under
Speaker 1
this Let's get to what you think the consumer experience has been in Europe.
Speaker 66
The answer is it's not a monolith, and it depends on the market that you're talking about. What I will observe is that in the markets where these big players have less discretion as to how to implement their remedies, the better the consumer experience. I noted in my opening, discussion the Reuters story saying, hey. We've got browsers that are actually able to compete with the big guys in Europe, and that's a good thing. They're gaining market share.
In that area, companies like Google and Apple have less discretion to operate. In other areas, like their implementation for search or for flights, they have more discretion. And what they've been doing is basically taking away products instead of opening up those products to competitors so there can be a fair competition on the merits.
Speaker 66
Japan is too early to tell. Okay. Alright. The the EMA, though, I think, is an instructive example of the benefits that can apply to this type of law.
Speaker 10
I mean, and I know yeah, the other thing, I guess, is that the DMA allows regulators to bring in any company that they want to and then fine them for whatever amount they deem appropriate. So that's not in here. So there's a kind of a set of penalties, I guess, that are in the DMA that you're being more careful about.
Speaker 1
Other questions or comments? Senator Allen, did you conclude or did you have other question or comment?
Speaker 40
So I've been really on the fence on this one. As you know, wanted to hear everybody's comments. I won't restate everything that senator Allen said. You're welcome, everyone in the room. But I do agree with those concerns.
Probably my biggest concern is just how broad the bill is. And I know you limited it in terms of the entities that are impacted, but it still feels very broad to me. I do have some questions about the privacy security components, but I think you can answer those. I also think you sent me an interesting video that I that was very informative that helped me see maybe a little slightly different perspective on that one. I think this is what I want to say out loud to you on the record and why I'm punching up is I am so torn between do I just is it is there an opportunity here or is there not?
Speaker 5
So I think in deference to you, I think my position is going to be to give you a shot to work on this. But I'm gonna stand very squarely with senator Allen in that in the next set of votes if if these concerns haven't been addressed, if it's still really broad, if it feels like chaos would ensue upon implementation, which is a little how I feel right now, then I'm not gonna support it on the floor or in any other future committee votes. Does that gives you a shot though to work on something that I think I see what you're trying to do. Let innovation drive. I get that.
Speaker 40
But I worry that all of this all at once I mean, I don't have as I have said I've heard a couple other people say and I said, I don't have people in my district complaining about Google to me. I just that's not a concern that I hear from people. And yet, I do understand trying to make sure the platforms don't control completely the market space and industry. So I'm I'm trying to find room for you to work on it, but I have deep concerns.
Speaker 27
Thank you, chair. Want to, you know, like everyone else, thank the author for, bringing this bill forward. This isn't an issue that, you know, my constituents are raising either. And I wonder if it's because we just don't understand what's happening. And until you brought this bill forward, I didn't know anything about self preferring conduct.
And, you know, I have since learned a lot about it. And it does limit consumer choice without us even knowing that our choices have been limited. I do have some concerns, many some of the other senators have raised. I also have, you know, have concerns about how low the bar appears to be for legal action. And I don't want a lot of frivolous lawsuits out there clogging up our legal system.
So I'm hoping that you'll be able to continue to work on this bill with those who are in support and in opposition. And for that reason, I will be supporting it to give you more time because I think it's a it is an issue. It's a just issue to work on. And I hope that you're able to kind of come together and craft something that's a little tighter. But thank you so much for bringing it
Speaker 1
forward. I I think that concludes the questions. We've had a lot of quality time on this bill as well. And and I have the same impression as the other members of this committee. I have not heard from anyone in my district to say that they're having challenges on the net.
In fact, I've heard other opinions. And the one thing that I think rings true from my research and even from the testimony is that, at the very least, if we implement this, there's going to be friction. At least some friction. There's gonna be some consumer irritation at the very least. Now, depends upon your point of view as to the extent of that friction or irritation.
I I think we can benefit from the European experience, which appears to be evolving, and the Japanese experience, which is clearly just evolving right now. And so, it is my point of view that that we should, in California, give those experiments more time to be refined both in Europe and in Japan. And and for those reasons, I'm not gonna be supportive today. And with that, I think there's a motion by Senator Reyes, and would you like to close?
Speaker 2
Yes, thank you, and again colleagues, thank you for the really thoughtful conversation on this. I do just want to say, I think Senator Weber Pearson started or said this, and I want to agree with her and emphasize it. In terms of why there are a lot of important laws we pass where members of the public may not even realize why something is the way it is, and so they're not talking to us about it, but it's still a real problem. And this is one of those. And I you know, when someone is paying a higher price because of a 30% cut by Apple in the App Store.
People may not even realize that, that maybe Spotify would be cheaper if they didn't have to or you'd be able if they didn't have to do that or any other number of apps on the App Store where Apple is taking a 30% cut. I'm an iPhone user, I love my iPhone, don't want pick on Apple. I'm proud that Apple is a Bay Area company, but that's where we are. Or when people do a search and they get the Google and they don't realize that maybe they can get a lower price elsewhere. But you don't know what you don't know, and also there are apps that you don't even have access to or may not exist because they've been crushed, and again, you don't know what you don't know.
So this is about this will help consumers, this will help competition, and it will help security too, frankly, because different web app designers will be able to do more. And there are times when Apple actually precludes apps or browsers from including all of their privacy protection. So this is a good pro competition, pro consumer bill. I know it's a big bill, and we're going to continue to work very, very hard on it. We want to get it right.
But I appreciate the conversation today, and I respectfully ask for your I vote.
Speaker 11
This is file item number 20, SB1074. The motion is due pass to the Senate Privacy, Digital Technologies, and Consumer Protection Committee. Unberg?
Speaker 11
Milo? Milo, no. Allen? Ashby? Ashby, I.
Caballero? Duraso? I. Duraso, I. McNerney?
McNerney, aye. Reyes? Aye. Reyes, aye. Stern?
Veladares? Wahab? Weber Pearson? Aye. Weber Pearson, aye.
Weiner? Aye. Weiner, aye. 6 to 1.
Speaker 1
61. We'll put that on call. All right. Last bill. Senator Weiner, s b eight seventy five.
Speaker 2
Thank you, Mr. Chairman and colleagues. Thank you for, your, patience through these three bills. I don't do bill referrals or bill scheduling, and we got all three on one day in the same committee. So, I'm here to present Senate Bill eight seventy five, which will allow cities within the PG and E service territory to leave and form their own municipal utility, similar to what we have here in Sacramento.
Since 2022, PG and E has raised electric rates by 40%. As a result, we now pay the second highest rates in the entire country. But here's the thing, millions of Californians have been spared those rate hikes, and those are people served by public utilities, such as in Sacramento, or Palo Alto. At a time when affordability concerns are understandably top of mind for Californians, these residents are paying on average half for residential electric service when compared to PG and E customers. At the same time, PG and been E jacking up our costs.
Its failure to maintain and upgrade its infrastructure has created serious reliability and public safety risks. As many of you know, last December in San Francisco, we experienced massive blackouts for days and days right before the holidays, a complete disaster for the city and for a massive number of small businesses and just individuals at their homes. And when I say blackouts, I want to emphasize plural because there were six within that period of time, just in a one month period. Even substations that had supposedly been upgraded were catching fire. The same ones that had caught fire a few decades before, and shutting off power for over 130,000 customer accounts, leaving somewhere between 390,520 San Franciscans without power.
In 2019, the Public Advocate's Office of the Public Utilities Commission enumerated the cumulative impact of PG and E's safety failures has caused over one hundred fatalities and has caused tens billions in direct financial harm to Californians. Californians deserve better. And once again, we know a better way is possible. Public utility customers experience fewer blackout hours than those served by IOUs, and that makes sense because these utilities that are public are accountable to the public, not to Wall Street. For decades, cities, not just San Francisco, others as well, have been trying to get out of this toxic relationship and form their own publicly owned utilities.
But PG and E has stymied these efforts every step of the way, including by, at various points in time, getting this legislature to change the law to make it progressively harder or even impossible for cities to break away. And so, the process has become so difficult and so gummed up that in San Francisco's case, San Francisco made an offer to PG and E in 2019 to purchase its assets, and it started the formal eminent domain valuation process at the CPUC in 2021, which is supposed to take one hundred and eighty days. We are now five years later and it's still not done. And that is because the law was changed to empower PG and E and other investor owned utilities to continually stymie and slow down and obstruct the process. So, colleagues, bill will unrig the process and create a fair eminent domain process for cities that want to break away, including by reverting the law to what it was for a long time before it got rigged, and I respectfully ask for your I vote.
Joining me today to testify are Dave Shukla from Reclaim Our Power and Theresa Muller, a Deputy City Attorney with the San Francisco City Attorney's Office.
Speaker 65
Good evening, chair Umburg and committee members. I'm here today on behalf of Reclaim Our Power, a coalition of over a 100 frontline and environmental justice, organizations that are all in strong support of SB eight seventy five if it's amended to include all three investor owned utilities, IOUs, that, operate in California. For decades, California's, investor owned utilities, IOUs, have prioritized shareholder returns over the welfare of their customers. The result is the highest electricity rates in the Continental US, with rates, growing four times faster than the national average. And today, we have 20% of California households, one out of every five house hold in the state, is in utility debt.
Speaker 8
Audits have found that PG and E diverted hundreds of millions of dollars intended for safety upgrades and maintenance back into increasing shareholder, profits. This diversion of resources directly contributed to the devastating fires caused by utilities and the massive outages like those in San Francisco this past winter, along with the ones that rural Californians experience as a norm. Now we already know that public utility models like SMUD or LADWP, deliver reliable and more affordable service. On average, public electricity utilities rates are 50% less than those of the IOUs. Yet modifications to state law for the benefit of the IOUs have undermined the ability of local jurisdictions to municipalize despite numerous attempts since 1992.
Speaker 65
SB eight seven five offers a responsible path forward. This bill would unrig the process for, local jurisdictions by removing unnecessary and unfair barriers that were imposed
Speaker 1
Thank you very much. You're going to urge an I vote. Please. Okay. Got it.
Thank you. All right. Others in support, SB eight seventy five?
Speaker 68
Good evening, mister chair and members. Thank you for your time. My name is Theresa Mueller. I'm a deputy city attorney for the city and county of San Francisco in the office of city attorney David Chew. I have more than thirty years of experience practicing energy and utility law, twenty seven years with San Francisco and a number of years with Tern and at the California PUC, before that.
The California constitution gives cities the right to provide electric service within their jurisdictions. Statutes give other public entities a similar right. San Francisco has been trying to do that since 1913. We have operated a publicly owned electric utility we called Hetch Hetchy Power for more than a hundred years, and we want to extend the benefits of that to the rest of San Francisco. What we operate now includes generating systems, transmission, and distribution facilities.
SB eight seventy five would help with this by removing some of the unnecessary barriers that the investor owned utilities have used. One is to reverse the change from 1992 to the eminent domain law, which the senator mentioned. That allows the investor owned utilities to substitute their judgment for what is needed locally. That's not what the eminent domain laws do in any other area. Second, SB eight seventy five clarifies public utilities code changes that were adopted in 2019.
Speaker 1
Despite clear legislative intent, PG and E continues to waste time and money, urging the CPUC to conduct extensive analysis of issues that never applied to publicly owned utilities. Two things that would not change, the CPUC would still review the impacts on utility workers of public ownership of their systems. They would still also determine the impacts on remaining customers, and they would determine whether departing customers needed to pay transition costs to ensure collection of necessary costs like wildfire costs and other non bypassable charges that state law establishes. Third, the bill would provide some time limits.
Speaker 16
Clifton Wilson on behalf of the City and County of San Francisco Board of Supervisors, as well as Stop Waste, both in support. Thank you.
Speaker 1
Thank you. Anyone else in support of SB eight seventy five, please come forward. Seeing no one else coming forward, now opposition. If you're opposed to SB eight seventy five, please come forward.
Speaker 34
Chair and members, Rachel Koss on behalf of the Coalition of California Utility Employees, which represents 19,000 workers who build, operate, and maintain PG and E's electric and gas systems. This bill would directly harm them. It would also risk grid safety and reliability, rate affordability, and our state's climate goals. The bill would allow any municipality in PG and E's territory to take over part of PG and E's system with no oversight or protections. Courts would be stripped of their ability to determine if a takeover is actually good for the public and should occur, and instead would have to rubber stamp a municipality's desire to take over.
A court could not consider evidence that workers' collective bargaining agreement protections would be lost or that workers will lose their pensions, job mobility, advancement opportunities, and earning power. The only consideration the bill gives to workers is a hand wave by the CPUC at the eleventh hour. This is too little, too late. And by the way, the support testimony was incorrect. The only thing the CPUC would look at here would be the impact on workers, not rates.
Speaker 24
A court cannot consider evidence on what would happen with respect to catastrophic wildfires, that wildfire victims would lose their access to the wildfire insurance fund that they already paid the premiums toward when they were PG and E customers. Also, they could not look at what would happen when a municipality started a wildfire. Who's going to pay for that? A court cannot consider evidence on the rate impact for PG and E's remaining customers. Cities that take over PG and E assets will be richer, urban places San Francisco, San Jose that have lower wildfire risk, leaving the less affluent rural places Butte County, home to the Camp Fire and the Dixie Fire, for example as part of PG and E, which will raise rates for these remaining customers.
Speaker 1
Thank you. Thank you. Other witnesses in opposition, SB eight seventy five.
Speaker 67
Chair Emberger and members of the committee, my name is Josh Levenberg. I'm chief counsel at Pacific Gas and Electric Company, and I'm here to testify in opposition to SB eight seventy five. The bill reacts to real problems like energy affordability, safety, reliability, but it offers the wrong solution for three main reasons. First is due process. The second is affordability.
The third is equity. SB eight seventy five doesn't just change California's eminent domain process. It changes whose interests count. Under current law, the process allows everyone a seat at the table. SB eight seventy five sets a bad precedent, though, by making it clear that only larger and wealthier cities matter and by saddling smaller rural communities and vulnerable populations with additional costs and burdens.
First, addressing due process. SB eight seventy five disregards the interests, concerns and consequences of a utility takeover as it relates to the millions of PG and E customers who are not departing and who have no say in the proposed takeover. Under eight seventy five, all that matters is the municipality's own unilateral decision to takeover the utility. In fact, other than the narrow consideration of its impact on the public utility workers, as previously discussed, nobody gets to review or challenge a municipality's decision even if there is uncontroverted evidence that the proposed takeover will increase rates for remaining customers, reduce system reliability or safety, increase wildfire risk, or derail state climate goals. The second issue is affordability and cost shifts.
A takeover by a single large city, such as San Francisco, would unfairly shift billions of dollars of state program costs that would otherwise be paid for by the departing PG and customers onto remaining PG and E customers that do not depart. Those costs associated primarily with legislative mandates don't go away when a city leaves PG and E. Instead, they're shifted onto the remaining customers or foregone, potentially leaving programs like wildfire mitigation underfunded. Third is equity. SB eight seventy five disregards the equity implications on low income and rural communities, communities that lack the resources and financial capacity of municipalities.
In other words, all but the largest cities in Northern California.
Speaker 39
Mr. And members, Scott Wetch, on behalf of the State Association of Electrical Workers, IBW Local twelve forty five, and the California State Pipe Trades Council in opposition. Good
Speaker 10
evening, Chair Umburg and members of the committee. John Kenrick from the California Chamber of Commerce. We oppose this as a cost driver. Thank you.
Speaker 16
Good evening, Chair and Members. Conor Gussman on behalf of the engineers and scientists of California and our 4,700 engineers who work at PG and E in opposition. Thank you.
Speaker 27
Hello. Laura Parr on behalf of Southern California Edison in opposition.
Speaker 42
Good evening. Peter LaRomeo Nos with the Bay Area Council, respectfully opposed.
Speaker 11
Kasia Hunt with Political Solutions on behalf of the California Water Association in opposition.
Speaker 38
Mr. Chair and members, Mike West, on behalf of the State Building and Construction Trades Council of California, also in opposition.
Speaker 6
Hello. Sarah Brennan on behalf of California Water Service. We have some concerns and are working with the author's office. We're in an in between position right now and appreciate that engagement.
Speaker 1
Let's bring it back to committee for questions. Questions or comments? Yes. Senator Zarasso.
Speaker 3
Mister chair, if I can, if it's appropriate, can I ask a question of someone who's not a witness?
Speaker 3
So this has come up about the review by the CP. You see, and especially with regards to, what would protect, employees. Is there anything you can add to you take your senator. Everything else that's
Speaker 39
been said? The the the bill specifies that the only factor that the CPUC can look at in approving or disapproving this is if it's fair and reasonable to employees. But the bill doesn't go into any detail as to what constitutes fair and reasonable. I don't know that the CPUC has any expertise in determining those sorts of workforce issues. But here is the crass thing in this bill.
Speaker 3
The amendment that was just taken that says that that evaluation on the impact of workers doesn't happen until the very end of the process. So, after San Francisco has made their decision, after the evaluation by the PUC has been completed, and after the court has already completed the entire condemnation process, then as an afterthought, the PUC gets to decide if the impact on my members is fair and reasonable. What do you think the political pressure would be if it had already gone all the way to that final point? You really think they're gonna hold up the municipalization based on the fact that it screws the workers? So we get the last we're the very last consideration.
Speaker 39
And that's the amendment that was just taken, and it's it's a problem. Thank you.
Speaker 15
My significant concern about this and the reason I can't support it is because it is drafted in order to best allow San Francisco to leave PG and E, and I don't think it's gives much concern with the rest of the state. Taking a critical mass of market like San Francisco out of PG and E will be bound to have an effect on other communities and, therefore, their costs, which I think would, only be likely to increase.
Speaker 14
I have a few questions, but the comment from mister Wach, I would like to have a response to. His comment was that the workers get the last consideration. I'm not aware of of that last amendment that was taken. Please tell us what is happening with that.
Speaker 2
Yes. And I would, if it's appropriate or okay with Senator Reyes, I would like to also ask Ms. Mueller to comment on that, if that would be okay.
Speaker 2
Yeah, sure. So, terms of impact on workers, Mr. Wetzsched criticized the language, we took that language from existing law SB ten fifty four. So, that's existing law that we simply replicated, and there is a requirement to assess impact on workers. There I think there's been a narrative that all these PG and workers are going to lose their jobs.
I don't think that's get kicked out of their pensions. I don't think that's true. When you look at the entire PG and E territory, how many PG and E workers are physically in San Francisco is a tiny percentage. And so this whole narrative that it's going to like that people are going to lose their jobs or lose their pensions, I think is false. But I would Ms.
Muller may be able to add more to that. And PG and E is hiring. They need more workers. And so the idea that there's going to be mass layoffs or pension losses, I think, is truly absolutely untrue.
Speaker 68
And thank you, Mr. Chair and members. Just in addition to what the Senator said on this issue of the timing of the worker analysis, that requirement was added the worker analysis was added in 2019 to section eight fifty one of the public utilities code. There was no specification of when it happens. So our concern about having it happen up front in a case is that you don't know anything at that point.
You don't know how much money, is being paid for the company. You don't know what surcharges the California PUC will have imposed on the departing customers because that is something that happens. Several speakers have ignored it because it's not in this bill. It's already in the law. It's already a part of the rate making that the California PUC does, that when someone takes customers and moves them out of the utility, the CPUC does an analysis to determine the effect of that on the remaining customers, and it imposes departing load charges of various kinds on the customers who leave.
For a a situation like this, where a public entity would be taking a significant amount of customers, And actually, whether it's a significant amount is a question. San Francisco is about 5% of PG and E's load. But anyways, the PUC will impose a charge called municipal departing load charge, and that is a charge that either San Francisco will pay up front or it will be charged on every bill for San Francisco's new customers. And that is how the remaining customers with PG and E will be compensated. The same is true for other charges, non bypassable charges that customers are already paying.
That includes wildfire mitigation charges and other charges that were imposed as non bypassable charges. Also, San Francisco and most others in this situation would continue to use PG and E's transmission system outside of their city and would pay all of those charges. So the story about, oh, everybody else will pay these costs, it's not true. The system is set up to avoid that.
Speaker 1
Alright. So let me just ask a quick question to the author. Should this move out of the committee, it goes to energy committee, is that right?
Speaker 1
true. And that will be the committee that will evaluate the PUC implications of the bill?
Speaker 1
Yep. Just checking. Okay. Alright. Thanks.
Yes. Senator I think we didn't finish with Senator Reyes, did
Speaker 14
I see this through the lens of of I have one of my community, Colton, has its own public utilities. And here in Sacramento, where we also live, Sacramento also has its own public utilities. The issue about the cost being shifted on to the remaining customers, I think you've addressed that. But I would like to hear from the representative from PG and E. It was one of the comments that was made that the costs are shifted on to the remaining customers.
Which costs you referring to that would be shifted to the remaining customers?
Speaker 67
The costs that would be shifted to the remaining customers are the costs that San Francisco ratepayers under PG and E currently pay. So, for example, it wouldn't be for energy costs. It's for the other costs. So, for example, payment into the wildfire fund or payment for to provide low income assistance to customers who don't have the wherewithal to pay for bills. Those types of costs are costs that are currently paid by San Francisco residents.
As a customer of an IOU, you have an obligation to pay those costs. But public utilities do not have the obligation to pay those costs. And that is, you know, as we've as I think we've all discussed, affordability is a challenge. And those costs make up almost 30% of the bill of an IOU customer. So when a customer departs PG and E, those costs have to go somewhere.
The payments must be made. The programs have to exist. And so those costs are not addressed by August. And absent a clear obligation from the city to pay those costs, they are left to a question mark. And that question mark is a big concern because it creates a lot of risk.
The customers who would be who would bear the cost of these cost shifts don't have a seat at the table. Nobody can question that. Even the CPUC can't evaluate that as part of the narrow focus of the bill, which only allows the consideration of public utility costs. It doesn't public sorry, public utility employee costs. It doesn't allow the CPUC to evaluate whether other customers who are not departing will suffer, or anything else, for that matter.
Speaker 14
I want to ask are the wildfire costs, the obligation of PG and E would be less because they have less of a territory. Would that isn't that correct?
Speaker 67
No. The wildfire costs are are a fixed the the ledge they are a fixed cost. In order to, for example, to fund the wildfire fund, a certain amount of money needs to be collected. It's divided among the IOU customers. And so when some IOU customers leave, the rest have to pick up the bill for those who leave.
Speaker 2
Thank you so much, senator. I look, that that is just not accurate. The idea they they their the opposition is making it seem like San Francisco will just like teleport out and just be extracted from the system. In addition to the fact that, as was pointed out, San Francisco is 5% of the rate base, So there's this notion I know it's the best city on the planet, don't get me wrong. But it is a relative it's a small city compared to other cities.
It's 5% of the rate base. In addition, San Francisco will still have to pay for using the transmit PG and E's transmission wires. It's still going to be part of that integrated system. In addition, as Ms. Muller indicated, there will be an exit fee placed on San Francisco, which will probably be paid by San Francisco ratepayers over time to cover these things like wildfire, etcetera.
That will be all part of that determination of what has to be paid. In addition, PG and E will no longer have to pay to maintain the San Francisco infrastructure in this dense urban environment, and there is a lot of deferred maintenance there, that's why the substation caught on fire yet again, that will now be an obligation of San Francisco, not at PG and E. And on top of all of that, PG and E will get a payout for the purchase. San Francisco offered $2,500,000,000 in 2019. PG and E declined that and that initiated the eminent domain valuation.
But it will get a very significant payment from San Francisco to purchase the lines. So again, this is it's being very, very exaggerated. The cost shift, if there is any, will be de minimis.
Speaker 14
And then going to the issues here for judiciary on rebuttable presumption. Tell us what's the problem with the current rebuttable presumption, and why does it need to be changed back to the conclusive presumption?
Speaker 2
Yes. So, and I think it's very important to keep in mind that the conclusive presumption is not something that we're making up. This was the law for many, many years until the utilities got it changed. And the reason they got it changed to the rebuttable presumption is so that they could make it impossible for cities to break away and municipalize. That was the purpose.
And I think the analysis did an excellent job in outlining that about what was said at the time that the legislature and the governor did this. It was specifically designed to shift from conclusive to rebuttable to impede and even block cities from being able to form their own utilities. And that's the effect that it has had. And so all we're asking is to go back to the longstanding existing law. It's not anything that we made up.
Speaker 2
The holdup with the PUC is that PG and E has, I think, filed more than 100 filings. It's very because of the way the law has been structured both from 'ninety two and then the change that was added in more recently, it has empowered PG and E to make it a perpetual unending process. And that's why I say it's a rigged process. It was designed to be a rigged process. And so they have extended it and with filing after filing after filing after filing and constant continuing of the process.
And that's why they designed the system to be this way. And it's supposed to take eighteen months. It's over five years now. And that is, one of the reasons why we also, among other things in the bill, try to put more guardrails to make sure that the timetable is is, adhered to.
Speaker 69
Thank you. I just wanted to highlight that, you know, I understand what you're doing, and I'm very much supportive. A lot of conversation around PG and E, PG and E, you know, we've had oversight hearings, we had meeting after meeting. And this past Christmas, San Francisco, of all cities, went without power for over twenty four hours. Literally, no stoplights, no safety concerns, no, you know, name it.
The city was kind of frozen. Alright? One of the busiest times of the year, especially for economic prosperity of the city and and the region. Here's the reality. Every single time it rains, even this last week, power goes out.
Power goes out from PG and E for PG and E customers. Not just hundreds, but literally thousands. There are developing nations that live in monsoon weather that have more reliable energy and a grid and infrastructure than we do. It is about time, considering that oversight hearing after oversight hearing, informational hearing, you name it. PG and E has a monopoly on the infrastructure.
Speaker 54
They, in my opinion, have not heavily invested in that infrastructure. We have had multiple conversations about this for years now, whether it's undergrounding lines, whether it is allowing for smaller regional grids to, even supporting solar and lower income customers being able to do anything, and yet they ask for increase over increase over increase. And this is the result. People wanna walk away. People wanna walk away because they they expect in the twenty first century, in the fourth largest economy, for PG and E to do better.
Speaker 69
That is the end all be all. Right? And so I genuinely support this bill. I think that it should be a model that we are looking at in other places because, clearly, the CEC has not been doing its job. And I think that we actually need to go a little bit harder on this, especially when we are talking about some of the whether it's disasters or or things like that.
But, with that, I'm happy to move this bill. And, again, thank you for bringing this forward.
Speaker 10
Oh gosh. Okay. I feel the need to just say, because the bill, if it gets out, come over to the energy committee. But as was mentioned, if it comes to the committee, doing we'll some work making sure that the PUC has appropriate review to make sure that this is that the process is fair to all impacted ratepayers through the region along the lines of what some of the concerns have been raised. I'll support the bill today, but that will be a real focus of the analysis at the committee if it comes over there.
Speaker 14
Because the request was made, I do want to know what is the response from PG and E as to what is the holdup with PUC.
Speaker 67
Thank you, Senator Rice. I appreciate your allowing me to respond. The response that PG and E has is that when San Francisco filed its petition in 2021, in July 2021, it filed an incomplete or deficient petition. In other words, it was requesting the CPUC to perform evaluation of the PG and E assets that it wanted to take, but it failed to identify those assets. And as senator Weiner has said, PG and E filed multiple motions, to ask San Francisco or to force the CPUC to require San Francisco to identify a complete list of the assets it wanted to take.
Speaker 32
And the main reason because the procedure and the process cannot go forward until there is a list of assets for the CPUC to value. So the motions that PG and filed were asking San Francisco to provide a complete list. One of those motions was a motion to compel San Francisco to provide the list. The ALJ in the proceeding granted the motion to compel San Francisco, but it required San Francisco to respond within thirty days to provide a complete list of the assets it wanted to take and a separation plan, and San Francisco didn't comply. Nine months later, PG and filed another motion at the commission asking the commission to force San Francisco to comply with the judge's order, and it still didn't.
Speaker 67
Only this spring did the commission order San Francisco to finally submit a complete list of the assets it wants to take, and on Monday, we hope we'll get that list. But that's five years after San Francisco filed its petition. It never has provided PG and E with a list or the CPUC with a list of the assets that it wants valued.
Speaker 14
That's I can tell I I can tell you as an attorney, I during discovery, know that, for lack of a better phrase, lots of games are played.
Speaker 67
Heard. Let me let me just add. And Which is granted. The city has never filed a com a motion to compel against PG and E. PG and E has complied with all of its discovery.
Speaker 2
I would love if it's if it's okay, I would love for miss Mueller to respond. So If we're gonna relitigate everything Singer Weiner? Yeah. Yeah.
Speaker 1
give you the time that that you wish. And if you wish someone to respond, they can respond. Although, this does seem to be a a bit far afield, but go ahead.
Speaker 2
Can just say suffice it to say, the city of San Francisco vehemently disagree. I I'm confident it vehemently disagrees. And I've spoken to folks at the city attorney's office, and there's another side to that. Right. Have to be bogged down in the details of that.
Speaker 1
That's why litigation is so much fun. Okay. So, alright. Other let's see. Senator Ashby.
Yes.
Speaker 40
Yeah. I'll be extremely brief so we can get out of here. As to the issues that are here in judiciary, I don't have a concern. Also, I'd just like to say, I feel like a hypocrite on this bill if I because I have SMUD, which is an extraordinary entity, and I know that is the step you're trying to take. And I was, you know, teasing teasing senator Stern.
I don't I I haven't had a power outage that lasted long enough for me to know the power was out that I can even remember. So I wish that for all of you. I really do, and I know you experience it when you're here. So I am going to support the bill, but I wanna say one thing to you. I'm no longer on energy.
If I was, I would have a concern there about these jobs. You have to address that piece. And if you don't address that piece, it could cause you some problems down the road with this bill, including with me. So I just wanna be really clear on that, but but it's a yes for me today, and and I hope for everyone that they have smud level service.
Speaker 1
Alright. Thank you. Anyone else? And I and I trust you, senator Weiner, that you are concerned about jobs, that you have made overtures to a number of folks to provide any additional language that can tighten it up, and here we are.
Speaker 2
So, is that accurate? I don't want anyone to lose their and I don't think anyone will lose their jobs or their pension and we want to protect jobs. We also want to make sure that we're not going to get more poison pills so that they can prolong this another five years. Okay.
Speaker 2
No. Oh, good. Good. My close is going be very brief. I think as you have seen here today, and it's all with a there are many types of relationships in the world, and some of those relationships are incredibly toxic and need to be ended.
And sometimes, no one ever wants to see a divorce, but a divorce is sometimes needed for the benefit of everyone. And PG and E in San Francisco definitely need a divorce. It's a toxic relationship that needs to end. But I also want to say that it's not just San Francisco. There is an irrigation district in San Joaquin County that has been trying to break away for, I think, fourteen years.
So I know it's you know, San Francisco is a real focus here, and obviously, it's the city I represent. It's not just San Francisco, and I respectfully ask for an I vote.
Speaker 1
Senator Wahab. That's right. Moved by Senator Wahab and committee assistant Porter. Please call the
Speaker 11
This is file item number 18, SB eight seventy five. The motion is due passed to the Senate Energy Utilities and Communications Committee. Umberg? Aye. Umberg aye.
Nilo? Nilo, no. Allen? Allen, I. Ashby?
Ashby, I. Caballero? Dourasso? McNerney? McNurney, aye.
Reyes? Aye. Reyes, aye. Stern? Valadares?
Wahhab? Aye. Wahhab, aye. Weber Pearson? Weiner?
Aye. Weiner, aye. Seven to one.
Speaker 1
Okay. We're gonna start at the top. We're gonna do it one time and one time only. Sure. We'll start with consent and then work our way through it.
So, committee assistant Porter. On
Speaker 11
the consent calendar, chair voting aye, Allen? Aye. Allen, aye. Stern? Aye.
Stern, aye. Valadez? Wahhab? Aye. Wahhab, aye.
Twelve-zero?
Speaker 11
SB twelve thirty four, the motion is due passed to the Senate Human Services Committee. Umberg? Aye. Umberg, aye. Nilo?
Aye. Nilo, aye. Allen? Allen I. Ashby?
Ashby I. Caballero? I. Caballero I. Duraso?
McNurney? I. McNurney I. Reyes? Reyes, I.
Stern? I. Stern, I. Valadez? I.
Wahab, I. Weber Pearson? I. Weber Pearson, I. Weiner?
I. Weiner, I.
Speaker 11
Okay. You don't The motion is to pass as amended to senate appropriations. Umberg? Aye. Umberg, aye.
Nilo? No. Nilo, no. Allen? Allen I, Ashby?
Aye. Ashby I, Caballero? Aye. Caballero I, Duraso? Aye.
Duraso I, McNurney? McNurney I, Reyes? Reyes, I. Stern? Aye.
Stern, I. Valadez? Aye. Wahab, I. Weber Pearson?
Aye. Weber Pearson, I. Weiner?
Speaker 4
File item number four, SB eleven seventy six, chair voting no. Allen? Ashby, Ashby, no, McNerney, Stern, no, Valadares, Wahab, Weber Pearson. Two to five.
Speaker 11
File item number five, SB eleven forty six, chair voting aye. Ashby? Ashby, aye. Stern? Aye.
Stern, aye. Valadez? Wahhab. Wahhab I. Weber Pearson.
Aye. Weber Pearson I. Weiner. Aye. Weiner I.
12 to 0.
Speaker 11
File item number 7, SB988. Chair voting aye. Nilo? Allen? Allen I?
Ashby? Ashby, I. Stern? Stern, I. Valadares?
Wahhab? Aye. Wahhab, I. Eleven-zero.
Speaker 11
File item number eight, SB1290. Chair voting aye. Nilo? Allen? Allen I.
Valadez? Wahhab? Aye. Wahhab I. Weiner?
Aye. Weiner I. 11 to zero.
Speaker 11
File item number nine, SB nine forty one, chair voting aye. Ashby? Aye. Ashby, aye. McNerney?
Aye. McNerney, aye. Stern? Stern, aye. Valadares, Wahhab?
Aye. Wahhab, aye. Twelve-zero.
Speaker 11
File item number 10, SB909. Chair voting, aye. Ashby? Ashby, I. Stern?
Aye. Stern, Valadez? Wahab? Aye. Wahab, I.
Weber Pearson?
Speaker 11
File item number 11, SB ten ninety three, chair voting aye. Ashby? Aye. Ashby, aye. Valadares?
Wahhab? Aye. Wahhab, aye. Weber Pearson? Aye.
Weber Pearson, aye. Weiner, aye.
Speaker 11
item number 12, SB ten ninety one, chair voting aye. Nilo, Allen, Allen, I. Stern? Aye. Stern, I.
Valadez? Wahhab? Aye. Wahhab, I. Weiner?
Aye. Weiner, I. 11 to zero?
Speaker 11
What? File item number 14, SB 1194. Chair voting aye. Allen? Allen, aye.
Stern? Aye. Stern, aye. Valadares? Wahhab?
Aye. Wahhab, aye. Weber Pearson? Weber Pearson,
Speaker 11
File item number 15, SB1319. Chair voting, aye. Allen? Allen, I. Ashby?
Ashby, I. Valadares, Wahhab? Wahhab, I. Twelve-zero.
Speaker 11
File item number 16, SB1288. Chair voting, I. Ashby? McNerney? I.
McNerney, I. Stern? I. Stern, I. Valadares?
Wahhab? I. Wahhab, I. 11 to zero.
Speaker 11
Sorry. Caballero, Duraso. Valadares, Wahhab. Reconsideration. Six to two.
Speaker 1
Six to two. Bill fails. Your request reconsideration. I move reconsideration. Alright.
Without objection, reconsideration granted.
Speaker 11
Allen? Allen I. Caballero? Stern? Valadez?
Wahhab? Aye. Wahhab I. Eight to one.
Speaker 1
Eight to one. That bill is out. Alright. We are adjourned until next Tuesday, and we will convene at 09:30AM on the twenty first.
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