The way I see it there are two possible reasons:

1. incompetence: The statement in question was said by ESA’s vice president for state government affairs, in other words a professional lobbyist. Video games are her day job, not her hobby. I don’t know how much she actually plays herself. It may therefore be the case that she wasn’t briefed properly or she got confused. The ESA is currently persuing legal action against certain private servers after all. The article contains specifics on those but in short: Those servers enable piracy, the Minecraft ones don’t.
2. they are lying: the whole thing was part of a hearing on Stop Killing Games. Private servers are one of the ways to fulfill their demands. It us the industry’s position that implementing those is too complicated. Each instance of private servers existing weakens the argument. So better pretend that those don’t exist. After all gamers won’t even learn about this statement. It’s a random California state senate hearing. They don’t watch those!