The government has the keys.
Here's a link to the bill [1]. It's not long, and not very complicated. You should read it.
[1] http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?...
Section 7908 : http://www.leginfo.ca.gov/cgi-bin/displaycode?section=puc&gr...
It doesn't give them the keys, it just gives them yet another avenue to disrupt service if :
(A) That probable cause exists that the service is being or will be used for an unlawful purpose or to assist in a violation of the law. (B) That absent immediate and summary action to interrupt communications service, serious, direct, and immediate danger to public safety, health, or welfare will result. (C) That the interruption of communications service is narrowly tailored to prevent unlawful infringement of speech that is protected by the First Amendment to the United States Constitution or Section 2 of Article I of the California Constitution, or a violation of any other rights under federal or state law.
That's probably easier than trying to use a kill switch, since the phone carrier is the one actually providing phone service.
Also, note that nothing in the law requires the phone maker to implement the kill switch in a way that makes it possible for the government to use it. As far as I can see, they are free to implement it in a secure (for the owner) way if they want.