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	<ns0:Description>
		<ns0:Id>20250AB__140597AMD</ns0:Id>
		<ns0:VersionNum>97</ns0:VersionNum>
		<ns0:History>
			<ns0:Action>
				<ns0:ActionText>INTRODUCED</ns0:ActionText>
				<ns0:ActionDate>2025-02-21</ns0:ActionDate>
			</ns0:Action>
			<ns0:Action>
				<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
				<ns0:ActionDate>2025-04-03</ns0:ActionDate>
			</ns0:Action>
			<ns0:Action>
				<ns0:ActionText>AMENDED_SENATE</ns0:ActionText>
				<ns0:ActionDate>2025-07-09</ns0:ActionDate>
			</ns0:Action>
		</ns0:History>
		<ns0:LegislativeInfo>
			<ns0:SessionYear>2025</ns0:SessionYear>
			<ns0:SessionNum>0</ns0:SessionNum>
			<ns0:MeasureType>AB</ns0:MeasureType>
			<ns0:MeasureNum>1405</ns0:MeasureNum>
			<ns0:MeasureState>AMD</ns0:MeasureState>
		</ns0:LegislativeInfo>
		<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Bauer-Kahan</ns0:AuthorText>
		<ns0:AuthorText authorType="COAUTHOR_OPPOSITE">(Coauthor: Senator Wiener)</ns0:AuthorText>
		<ns0:Authors>
			<ns0:Legislator>
				<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
				<ns0:House>ASSEMBLY</ns0:House>
				<ns0:Name>Bauer-Kahan</ns0:Name>
			</ns0:Legislator>
			<ns0:Legislator>
				<ns0:Contribution>COAUTHOR</ns0:Contribution>
				<ns0:House>SENATE</ns0:House>
				<ns0:Name>Wiener</ns0:Name>
			</ns0:Legislator>
		</ns0:Authors>
		<ns0:Title> An act to add Chapter 5.9.5 (commencing with Section 11549.80) to Part 1 of Division 3 of Title 2 of, and to repeal Section 11549.86 of, the Government Code, relating to artificial intelligence. </ns0:Title>
		<ns0:RelatingClause>artificial intelligence</ns0:RelatingClause>
		<ns0:GeneralSubject>
			<ns0:Subject>Artificial intelligence: auditors: enrollment.</ns0:Subject>
		</ns0:GeneralSubject>
		<ns0:DigestText>
			<html:p>Existing law establishes the Department of Technology within the Government Operations Agency. Existing law requires the department to conduct, in coordination with other interagency bodies as it deems appropriate, a comprehensive inventory of all high-risk automated decision systems that have been proposed for use, development, or procurement by, or are being used, developed, or procured by, any state agency.</html:p>
			<html:p>Existing law defines “automated decision system” as a computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues simplified output, including a score, classification, or recommendation, that is used to assist or replace human discretionary decisionmaking and materially impacts natural persons. Existing law defines “artificial intelligence” as an engineered or
			 machine-based system that varies in its level of autonomy and that can, for explicit or implicit objectives, infer from the input it receives how to generate outputs that can influence physical or virtual environments.</html:p>
			<html:p>This bill would require the Government Operations Agency, by January 1, 2027, to establish a mechanism on the agency’s internet website allowing AI auditors to enroll with the agency and allowing natural persons to report misconduct by an enrolled AI auditor. The bill would require the agency, commencing January 1, 2027, to publish information provided by an enrolled AI auditor on the agency’s internet website, retain specified reports for as long as the auditor remains enrolled, plus 10 years, and share reports submitted by persons reporting misconduct with other state agencies as necessary for enforcement purposes.</html:p>
			<html:p>This bill would, commencing January 1, 2027, require an AI auditor, prior to initially
			 conducting a covered audit, as defined, to enroll with the agency. The bill would require an AI auditor that enrolls with the agency to pay an enrollment fee, to be fixed by the agency by January 1, 2027, and provide specified information. The bill would impose various requirements on an AI auditor that conducts a covered audit, including, among other things, providing the auditee with an audit report after the covered audit.</html:p>
			<html:p>This bill would prohibit the AI auditor from accepting employment with an auditee within 12 months of completing a covered audit of the auditee, conducting a covered audit if the auditee had employed the auditor during the 12-month period preceding the audit, disclosing confidential information except under certain circumstances, and preventing an employee from engaging in, or retaliating against an employee who has engaged in, specified whistleblower activity.</html:p>
			<html:p>This bill would create the AI Auditors’
			 Enrollment Fund within the State Treasury, to be administered by the agency, and would require that all moneys collected or received by the agency pursuant to the above-described provisions be deposited into the fund to be available, upon appropriation by the Legislature, to administer the above-described provisions.</html:p>
		</ns0:DigestText>
		<ns0:DigestKey>
			<ns0:VoteRequired>MAJORITY</ns0:VoteRequired>
			<ns0:Appropriation>NO</ns0:Appropriation>
			<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
			<ns0:LocalProgram>NO</ns0:LocalProgram>
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			<ns0:ImmediateEffect>NO</ns0:ImmediateEffect>
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				<ns0:Urgency>NO</ns0:Urgency>
				<ns0:TaxLevy>NO</ns0:TaxLevy>
				<ns0:Election>NO</ns0:Election>
				<ns0:UsualCurrentExpenses>NO</ns0:UsualCurrentExpenses>
				<ns0:BudgetBill>NO</ns0:BudgetBill>
				<ns0:Prop25TrailerBill>NO</ns0:Prop25TrailerBill>
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	<ns0:Bill id="bill">
		<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
		<ns0:BillSection id="id_08247276-C769-4098-B47D-F63BA2D5718C">
			<ns0:Num>SECTION 1.</ns0:Num>
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				Chapter 5.9.5 (commencing with Section 11549.80) is added to Part 1 of Division 3 of Title 2 of the 
				<ns0:DocName>Government Code</ns0:DocName>
				, to read:
			</ns0:ActionLine>
			<ns0:Fragment>
				<ns0:LawHeading id="id_6A88EEF7-A49B-48B2-BE01-ACB5F6952F08" type="CHAPTER">
					<ns0:Num>5.9.5.</ns0:Num>
					<ns0:LawHeadingVersion id="id_DAADA500-ED85-44EF-AB42-5FA161D86672">
						<ns0:LawHeadingText>Artificial Intelligence Auditors</ns0:LawHeadingText>
					</ns0:LawHeadingVersion>
					<ns0:LawSection id="id_B3CEC595-A711-4683-8965-8D19C954FA64">
						<ns0:Num>11549.80.</ns0:Num>
						<ns0:LawSectionVersion id="id_468E53EA-499D-4D9C-9BE8-B881A860445D">
							<ns0:Content>
								<html:p>For purposes of this chapter, the following definitions apply:</html:p>
								<html:p>
									(a)
									<html:span class="EnSpace"/>
									“Agency” means the Government Operations Agency.
								</html:p>
								<html:p>
									(b)
									<html:span class="EnSpace"/>
									“Artificial intelligence” or “AI” means an engineered or machine-based system that varies in its level of autonomy and that can, for explicit or implicit objectives, infer from the input it receives how to generate outputs that can influence physical or virtual environments.
								</html:p>
								<html:p>
									(c)
									<html:span class="EnSpace"/>
									“Artificial intelligence auditor” or “AI auditor” means a person, partnership, or corporation that assesses an AI system or model on behalf of a third party.
								</html:p>
								<html:p>
									(d)
									<html:span class="EnSpace"/>
									“Covered audit” means an audit conducted pursuant to any state statute that requires an audit of an AI system or model by an independent third party auditor.
								</html:p>
							</ns0:Content>
						</ns0:LawSectionVersion>
					</ns0:LawSection>
					<ns0:LawSection id="id_BF10F975-46F7-4B6E-B647-5758505237F0">
						<ns0:Num>11549.81.</ns0:Num>
						<ns0:LawSectionVersion id="id_7AD85FBB-EE9D-45EC-8C12-A3AE6B03671A">
							<ns0:Content>
								<html:p>The AI Auditors’ Enrollment Fund is hereby created within the State Treasury. The fund shall be administered by the Government Operations Agency. All moneys collected or received by the agency under this chapter shall be deposited into the AI Auditors’ Enrollment Fund to be available for expenditure by the agency, upon appropriation by the Legislature, to administer this chapter.</html:p>
							</ns0:Content>
						</ns0:LawSectionVersion>
					</ns0:LawSection>
					<ns0:LawSection id="id_EE6C8A38-5E64-494C-81F4-A738DB25170A">
						<ns0:Num>11549.82.</ns0:Num>
						<ns0:LawSectionVersion id="id_717E2F54-463F-49B5-91FD-31ABA8C83E55">
							<ns0:Content>
								<html:p>
									(a)
									<html:span class="EnSpace"/>
									By January 1, 2027, the agency shall do all of the following:
								</html:p>
								<html:p>
									(1)
									<html:span class="EnSpace"/>
									Establish a mechanism on the agency’s internet website allowing AI auditors to enroll with the agency pursuant to subdivision (a) of Section 11549.83.
								</html:p>
								<html:p>
									(2)
									<html:span class="EnSpace"/>
									Fix enrollment fees at an amount not exceeding the reasonable costs of administering this chapter.
								</html:p>
								<html:p>
									(3)
									<html:span class="EnSpace"/>
									Establish a mechanism on the agency’s internet website allowing natural persons to report misconduct by an enrolled AI auditor.
								</html:p>
								<html:p>
									(b)
									<html:span class="EnSpace"/>
									Beginning January 1, 2027, the agency shall do all of the following:
								</html:p>
								<html:p>
									(1)
									<html:span class="EnSpace"/>
									Publish any information provided by an enrolled AI auditor pursuant to subdivision (a) of Section 11549.83 in a publicly accessible format on the agency’s internet website.
								</html:p>
								<html:p>
									(2)
									<html:span class="EnSpace"/>
									Retain any report submitted using the mechanism established pursuant to paragraph (3) of subdivision (a) for as long as the enrolled AI auditor remains enrolled, plus 10 years.
								</html:p>
								<html:p>
									(3)
									<html:span class="EnSpace"/>
									Share reports submitted using the mechanism established pursuant to paragraph (3) of subdivision (a) with other state agencies as necessary for enforcement purposes.
								</html:p>
							</ns0:Content>
						</ns0:LawSectionVersion>
					</ns0:LawSection>
					<ns0:LawSection id="id_EFAF6F4F-36D5-4C01-8851-62A1AC427D88">
						<ns0:Num>11549.83.</ns0:Num>
						<ns0:LawSectionVersion id="id_702DFF4D-2B06-4CA0-93CC-CAE7796FE87B">
							<ns0:Content>
								<html:p>
									(a)
									<html:span class="EnSpace"/>
									Beginning January 1, 2027, prior to initially conducting a covered audit, an AI auditor shall do all of the following:
								</html:p>
								<html:p>
									(1)
									<html:span class="EnSpace"/>
									Enroll with the agency using the mechanism established pursuant to paragraph (1) of subdivision (a) of Section 11549.82.
								</html:p>
								<html:p>
									(2)
									<html:span class="EnSpace"/>
									Pay to the agency the enrollment fee set forth in paragraph (2) of subdivision (a) of Section 11549.82.
								</html:p>
								<html:p>
									(3)
									<html:span class="EnSpace"/>
									Provide to the agency all of the following information:
								</html:p>
								<html:p>
									(A)
									<html:span class="EnSpace"/>
									The
						  legal name of the auditor.
								</html:p>
								<html:p>
									(B)
									<html:span class="EnSpace"/>
									All of the following contact information:
								</html:p>
								<html:p>
									(i)
									<html:span class="EnSpace"/>
									The primary physical address of the auditor, if applicable.
								</html:p>
								<html:p>
									(ii)
									<html:span class="EnSpace"/>
									The primary internet website of the auditor, if applicable.
								</html:p>
								<html:p>
									(iii)
									<html:span class="EnSpace"/>
									A telephone number enabling a natural person to communicate with the auditor.
								</html:p>
								<html:p>
									(iv)
									<html:span class="EnSpace"/>
									An email address enabling a natural person to communicate with the auditor.
								</html:p>
								<html:p>
									(C)
									<html:span class="EnSpace"/>
									The types of AI systems or models that the auditor is
						  enrolling to audit.
								</html:p>
								<html:p>
									(D)
									<html:span class="EnSpace"/>
									Any relevant certifications or accreditations held by the AI auditor, and the names of the certifying or accrediting entities.
								</html:p>
								<html:p>
									(E)
									<html:span class="EnSpace"/>
									A written description of the auditor and the services they provide, not to exceed 200 words in length.
								</html:p>
								<html:p>
									(F)
									<html:span class="EnSpace"/>
									A standard operating procedure
						  that does both of the following:
								</html:p>
								<html:p>
									(i)
									<html:span class="EnSpace"/>
									Describes the auditor’s protocols in sufficient detail to enable a third party to assess whether audits are conducted according to widely recognized industry standards appropriate to the system or model being audited.
								</html:p>
								<html:p>
									(ii)
									<html:span class="EnSpace"/>
									Includes documentation substantiating any claims made by the AI auditor regarding the accuracy, reliability, or validity of its protocols.
								</html:p>
								<html:p>
									(b)
									<html:span class="EnSpace"/>
									In conducting a covered audit, an enrolled AI auditor shall abide by widely recognized industry standards appropriate to the system or model being audited.
								</html:p>
							</ns0:Content>
						</ns0:LawSectionVersion>
					</ns0:LawSection>
					<ns0:LawSection id="id_44D14F23-E03D-4422-94D8-D020E3C95865">
						<ns0:Num>11549.84.</ns0:Num>
						<ns0:LawSectionVersion id="id_392BDB32-483C-48E3-9EA8-3063DB5364AE">
							<ns0:Content>
								<html:p>
									(a)
									<html:span class="EnSpace"/>
									After conducting a covered audit, an enrolled AI auditor shall provide the auditee with an audit report that contains, but is not limited to, all of the following:
								</html:p>
								<html:p>
									(1)
									<html:span class="EnSpace"/>
									The scope and objectives of the audit. 
								</html:p>
								<html:p>
									(2)
									<html:span class="EnSpace"/>
									The results of the audit and any documentation necessary to demonstrate the basis of those results.
								</html:p>
								<html:p>
									(3)
									<html:span class="EnSpace"/>
									An explanation of any steps the auditee can take to meet
						  widely recognized industry standards appropriate to the system or model being audited.
								</html:p>
								<html:p>
									(4)
									<html:span class="EnSpace"/>
									An explanation of any steps the auditee can take to become compliant with state law.
								</html:p>
								<html:p>
									(5)
									<html:span class="EnSpace"/>
									A statement that is signed and dated by each auditor that certifies that the covered audit was completed.
								</html:p>
								<html:p>
									(b)
									<html:span class="EnSpace"/>
									An AI auditor shall not knowingly make a material misrepresentation in an audit report prepared pursuant to this
						  subdivision.
								</html:p>
								<html:p>
									(c)
									<html:span class="EnSpace"/>
									An enrolled AI auditor shall retain any documentation that is provided to an auditee pursuant to this chapter, or that is necessary to demonstrate the basis of the result of a covered audit, for at least 10 years.
								</html:p>
								<html:p>
									(d)
									<html:span class="EnSpace"/>
									An enrolled AI auditor shall not conduct a covered audit if it has a financial interest in the auditee other than
						  financial compensation for performing an audit.
								</html:p>
								<html:p>
									(e)
									<html:span class="EnSpace"/>
									(1)
									<html:span class="EnSpace"/>
									Notwithstanding Chapter 1 (commencing with Section 16600) of Part 2 of Division 7 of the Business and Professions Code, an enrolled AI auditor shall not accept employment with an auditee within 12 months of completing a covered audit of the auditee.
								</html:p>
								<html:p>
									(2)
									<html:span class="EnSpace"/>
									An enrolled AI auditor shall not conduct a covered audit if the auditee had employed the auditor during the 12-month period preceding the audit.
								</html:p>
							</ns0:Content>
						</ns0:LawSectionVersion>
					</ns0:LawSection>
					<ns0:LawSection id="id_FFDA684E-C478-4C29-A96E-7D038B28B2F4">
						<ns0:Num>11549.85.</ns0:Num>
						<ns0:LawSectionVersion id="id_45E1DBAB-B3E0-4161-90D7-C9BAA5223E2E">
							<ns0:Content>
								<html:p>
									(a)
									<html:span class="EnSpace"/>
									An enrolled AI auditor may disclose confidential information concerning an auditee only if the auditee provides written authorization or if the disclosure is any of the following:
								</html:p>
								<html:p>
									(1)
									<html:span class="EnSpace"/>
									Made in compliance with a subpoena or a summons enforceable by order of a court.
								</html:p>
								<html:p>
									(2)
									<html:span class="EnSpace"/>
									Reasonably necessary to maintain or defend the auditor in a legal proceeding initiated by the auditee.
								</html:p>
								<html:p>
									(3)
									<html:span class="EnSpace"/>
									Made in response to an official inquiry from a federal or state government regulatory agency.
								</html:p>
								<html:p>
									(4)
									<html:span class="EnSpace"/>
									Made to
						  another enrolled AI auditor or person in connection with a proposed sale or merger of the auditor’s professional practice, provided the parties enter into a written nondisclosure agreement with regard to all auditee information shared between the parties.
								</html:p>
								<html:p>
									(5)
									<html:span class="EnSpace"/>
									Made to either of the following:
								</html:p>
								<html:p>
									(A)
									<html:span class="EnSpace"/>
									Another enrolled AI auditor to the extent necessary for purposes of professional consultation.
								</html:p>
								<html:p>
									(B)
									<html:span class="EnSpace"/>
									Organizations that provide professional standards review and ethics or quality control peer review.
								</html:p>
								<html:p>
									(6)
									<html:span class="EnSpace"/>
									Specifically permitted by state or federal law.
								</html:p>
								<html:p>
									(b)
									<html:span class="EnSpace"/>
									An enrolled AI auditor shall not do either of the
						  following:
								</html:p>
								<html:p>
									(1)
									<html:span class="EnSpace"/>
									Prevent an employee from disclosing information to the Attorney General or the Labor Commissioner, or using the mechanism established pursuant to paragraph (3) of subdivision (a) of Section 11549.82, including through terms and conditions of employment or seeking to enforce terms and conditions of employment, if the employee has reasonable cause to believe the information indicates that the auditor is out of compliance with the requirements of this chapter.
								</html:p>
								<html:p>
									(2)
									<html:span class="EnSpace"/>
									Retaliate against an employee for disclosing information pursuant to paragraph (1).
								</html:p>
							</ns0:Content>
						</ns0:LawSectionVersion>
					</ns0:LawSection>
					<ns0:LawSection id="id_10A825C1-030C-4BCE-8F86-279DA8BD7223">
						<ns0:Num>11549.86.</ns0:Num>
						<ns0:LawSectionVersion id="id_6CF6DE11-03AC-4FF8-988B-BEFFCCCCEF8F">
							<ns0:Content>
								<html:p>
									(a)
									<html:span class="EnSpace"/>
									Nothing in this chapter shall be construed to impede, delay, or otherwise affect the conduct of any audit required under any other statute or regulation that becomes operative prior to the effective dates of this chapter.
								</html:p>
								<html:p>
									(b)
									<html:span class="EnSpace"/>
									This section shall remain in effect only until January 1, 2027, and as of that date is repealed.
								</html:p>
							</ns0:Content>
						</ns0:LawSectionVersion>
					</ns0:LawSection>
				</ns0:LawHeading>
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