Sponsors of ‘Kids Code’ bill confident it will withstand court challenge

Sponsors of a bill meant to protect Maryland children from privacy and other concerns related to social media said Thursday they believe the new law will survive what they expect will be a likely challenge in federal court.

House Bill 603 and the identical Senate Bill 571, which were signed into law Thursday, require default privacy settings and safety measures for children, including how social media and other companies collect or sell data of users who are minors. The bill also requires companies to complete assessments that specifically look at how a new feature might affect children before the feature is rolled out to the public.

Companies would be subject to fines of $2,500 per child for each negligent violation and $7,500 per child for an intentional violation.

“With this bill, we are now only the second state in the country and we hope that we will be the first state in the country to withstand what we think will probably be a likely court challenge and we’ve done a lot of work to make that happen,” said Del. Jared Solomon (D-Montgomery), sponsor of the House Bill.

California enacted a similar law in 2022. NetChoice, an association of tech companies, successfully blocked the law in U.S. District Court on the basis that the law violated the First Amendment.

The lower court decision is being appealed in the United States Court of Appeals for the Ninth Circuit.

“The bill authors and indeed the entire Maryland legislature have heard those concerns, and they’ve optimized the framework to make sure there is no confusion about its intent, or its approach, which is to put the onus squarely on tech companies to comply with the privacy by default and safety by design approach to protecting kids,” said Meetali Jain, executive director of the Tech Justice Law Project. “The Maryland Kids Code uses a constitutional scalpel, not a blunt axe, to create a legally sound and effective piece of regulation.”

House Economic Matters Committee Chair C.T. Wilson (D-Charles) said tech companies are tracking children and “treating them as a commodity.” The intent of the bill is to make children safer from both the negative effects of some social media platforms as well as tracking that can put them at risk of falling victim to crimes.

“This was done more for the parents,” said Wilson. “We just hope that the tech industry joins in. That’s the problem. When you see the tech industry just push back, sometimes I feel like we’re dealing with children who just don’t want to be told what to do, even if it’s the right thing.”

NetChoice urged Gov. Wes Moore (D) to veto the bill.

“We share lawmakers’ desire to better protect young people online, but this goal can be achieved in ways that don’t violate the Constitution and leave a litany of serious, unintended consequences in their wake. Unfortunately, the law Governor Moore signed today will fail to accomplish its goal of creating a safer online environment for young Marylanders,” said Carl Szabo, NetChoice vice president and general counsel. “An unconstitutional law will not keep anyone safe. By discounting the rights and privacy of their citizens, Maryland lawmakers have unfortunately signed onto a path that will make everyone worse off, especially children.”

The bill takes effect Oct. 1.

The bill was one of 275 signed by Moore in his third bill-signing ceremony following the 2024 session. The vast majority were signed in public.

The governor also signed 21 bills without a public ceremony. It’s the second time this year Moore has signed certain bills without the pomp of a public event.

The governor has one more scheduled bill signing this month, on May 16.

In addition to the Maryland Kids Code, Moore signed several other measures meant to offer additional online or consumer protections.

“As more and more Marylanders are online every day. Everyone is vulnerable,” said House Speaker Adrienne A. Jones (D-Baltimore County).

“These bills were ambitious and complicated. Because of our collaborative effort approach, we have set some of the highest standards in the country on these issues,” Jones said.

Moore also signed SB 539, legislation meant to curb ticket scalping and speculative sales. The bill was introduced this year as part of what was described as “a year of the consumer” legislative package.

The bill does not cap reseller fees but requires companies to be transparent throughout the sales process. It also requires refunds in the case of show cancellations.

It also prohibits the practice of speculative ticket sales — a reseller who often will offer tickets for sale before they are actually available to the public. Frequently such online sites attempt to trick the consumer into believing the tickets are already scarce in order to drive up prices. The sellers then buy tickets at face value, pocketing the difference between that and what was charged to the ticket buyer. Some of those sites sell fake tickets.

Violators are subject to fines of $10,000 for the first violation. Those fines increase to $25,000 for additional violations.

“Nearly 17,000 letters were sent by Marylanders to their state legislators, letting those in Annapolis know they want protection from the rampant deception and abuse that’s taking place now,” said Audrey Fix Schaefer, a spokesperson for Merriweather Post Pavilion and I.M.P. “We applaud the entire state legislature for this groundbreaking legislation, and we look forward to working with the Attorney General’s office to help ensure enforcement.”

The governor also signed HB 567 and SB 541, the Maryland Online Data Privacy Act of 2024.

The bill will require companies to disclose what information is being collected from Maryland residents. The bill also requires companies to allow consumers to have that information corrected or deleted. Additionally, Maryland residents will be able to opt out of allowing third parties to sell information on them that has been collected.

Environmental bills

While environmentalists cheered several bills that Moore signed Thursday, he also signed a measure that was anathema to most environmental groups, setting up an expedited regulatory process to attract large data center developments to the state.

That bill was one of the governor’s top economic development priorities for the session.

“This bill is going to supercharge the data center industry in our state so we can unleash more economic potential and create more good paying union jobs in our state,” Moore said.

Environmental groups did win a concession during the debate over the legislation that 15% of all taxes that data center operators pay in Maryland would go to one of the state’s clean energy funds.

On the electric utility front, Moore signed SB 1, a bill that puts some guardrails on companies selling retail electricity in the state’s 25-year-old deregulated marketplace. Several large energy companies, including NRG and Constellation, argued that the proposal would decimate the state’s competitive marketplace, but advocates cast it as a consumer protection bill.

“Today marks a tremendous victory for Maryland ratepayers,” said Hank Greenberg, state director for Maryland AARP, one of the groups that advocated most heavily for the legislation. “The passage of Senate Bill 1 turns the tide against the deceptive practices that have plagued our energy market for far too long.

“For years, we’ve heard stories about the struggles of our neighbors who were unfairly overcharged by retail energy suppliers. But that will soon end. The signing of SB1 by Governor Moore heralds a new era of accountability and consumer protection, with an immediate impact of delivering $200 million annually back into the pockets of Marylanders.”

Senate President Bill Ferguson (D-Baltimore City) said the bill “is going to protect Marylanders and their consumers’ rights and make sure that when we have a retail, a capitalistic market, we’re protecting them (consumers) from losing money.”

Moore on Thursday also signed some bills that environmentalists had worked to pass during the recent legislative session.

They include:

• The Distributed Renewable Integration and Vehicle Electrification (DRIVE) Act, which among other things, will make it easier for electric vehicle charging stations to connect with the electric grid.

• The Brighter Tomorrow Act, which will make it easier to install solar energy systems in the state.

• A measure that will update the state’s EmPOWER program, so that housing improvements will emphasize greenhouse gas emissions reductions in addition to energy savings.

• A bill requiring the state’s manufacturing sector to meet certain carbon reduction benchmarks.

Treasurer fundraising ban, ENOUGH Act

Other bills of note signed Thursday by Moore include:

A measure making Maryland’s treasurer subject to the same prohibitions on fundraising during legislative session as the General Assembly, Moore and other statewide constitutional officers after the governor signed HB1503.

The bill was introduced late in the 2024 session after campaign finance reports showed that Treasurer Dereck Davis was continuing to raise money — though not during session. Davis said he is doing so to keep his political options open but enthusiastically supported the change in the law.

The governor also signed into law another of his legislative priorities, the ENOUGH Grant Program. The Moore administration has described the measure as part of the governor’s ambitions to end childhood poverty.

“The fact is that for so many children their destiny is written before they even get a chance to have a say because poverty drives violence,” Moore said. “Poverty drives despair. Poverty hides the vast potential in all of our children. Poverty hinders economic competitiveness. And poverty is not about a single zip code.”

The bill pumps more than $30 million over the next two years into “place based” job, education, and housing assistance.

The bill is a continuation of what Moore calls a “frontal assault on child poverty.”

The grants will be administered through the Governor’s Office for Children.

“Today marks a monumental step forward in our collective journey towards dismantling intergenerational poverty. With the ENOUGH Act becoming law, Maryland is making history with this comprehensive neighborhood-based effort to end concentrated child poverty at the state level,” said Geoffery Canada, founder of the William Julius Institute and president of the Harlem Children’s Zone.

Judicial safety, Pimlico legislation

Maryland judges will now have the ability to shield more of their personal information after Moore signed HB 664 and the identical SB 472.

The legislation was introduced this year following the murder of Washington County Circuit Court Judge Andrew F. Wilkinson in October. The judge was shot and killed in front of his home following a divorce proceeding. The killer began a search for Wilkinson’s address three months earlier.

The bill also creates a task force that will make recommendations on minimum security standards at courthouses around the state.

Moore also signed HB 1524, the latest effort to revitalize Pimlico Racetrack, keep the historic Preakness in Maryland and bolster the horse industry in the state. The bill creates an authority that will take over the track from its current owner, the Stronach Group. The authority will also lease the Preakness from the Stronach Group. The race, the second leg of racing’s Triple Crown, will temporarily move to the Laurel Park race track while Pimlico is razed and rebuilt. The bill also provides for community enhancements.

“Because of this bill, we have a path forward to continue running the Preakness in Maryland and renovate the historic Pimlico race course,” Jones said. “This bill will create lasting economic benefits to the state and the Baltimore region.”

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