National Privacy Legislation Stalled in U.S.

The chances for U.S. privacy legislation are worse now than they were before the pandemic.  However, there may be some decision points approaching.     

A few weeks into the traditional August recess, Congress is no closer to enacting federal privacy legislation than before the pandemic. In fact, such legislation may be further from being sent to the White House now that more pressing, more immediate maters have eclipsed privacy such as further COVID-19 relief legislation and appropriations for the next fiscal year set to start on 30 September. There is always the chance stakeholders will dispense with their entrenched positions during a post-election session and reach agreement on a bill, but this will depend on the election results, for if Democrats take the White House and Senate, they may well conclude they will get privacy legislation more to their liking next year.

In terms of the present impasse, at present, emanates from a few different issues: a private right of action for people and state preemption. Generally speaking, Democrats favor the former and oppose the latter with Republicans’ position being the opposite. However, it is possible the two parties can agree on a limited right for people to sue companies for violating their privacy rights and some form of preemption of contrary state laws, perhaps along the lines of the preemption structure in the “Financial Services Modernization Act of 1999” (P.L. 106–102) (aka the Gramm–Leach–Bliley Act) that sets a uniform floor for privacy and data security that states may regulate above. However, industry stakeholders are likely resisting any such provisions for they would still face litigation, likely in the form of class actions, and varied, differing privacy standards across the U.S.

Otherwise, there is broad agreement that people in the U.S. would be notified of the privacy practices of entities before they can start collecting, processing, and sharing personal data and would need to explicitly agree to allow this to happen. And so, it would likely be an opt-in for most data collection, processing, and sharing. However, people would likely get a more limited set of rights to opt out of certain practices such as data transfers to third parties, but there is a great deal of variance among the leading bills on what people can choose to avoid. Likewise, people in the U.S. would generally be able to request and receive, access, correct, and delete personal data in specified situations. Most, but not all, of the bills name the Federal Trade Commission (FTC) as the regulator of a new privacy regulatory structure with varying degrees of rulemaking power. A handful of other bills seek to create out of whole cloth a new privacy regulator along the lines of Europe’s data protection authorities.

However, if the voters of California vote for the ballot initiative to enact the “California Privacy Rights Act” (CPRA), a tightening of the “California Consumer Privacy Act” (CCPA) (AB 375) that would prevent future amendments to weaken or dilute privacy protection in California, things may change in Washington. Deprived of a means of rolling back California’s new privacy regulatory structure, as many industry stakeholders tried to do in the last legislative session with the CCPA, these interests may set their sights on a national privacy bill that would ameliorate this situation. Consequently, they may pressure Republicans and Democrats in Congress to resolve the outstanding issues on federal privacy legislation.

Moreover, stakeholders in Washington are responding to what appears to be the more urgent fire: the deathblow dealt to Privacy Shield by the European Union’s highest court. Without an agreement in place to allow multinationals to transfer and process the personal data to the U.S., these entities will need to cease doing so or implement alternate means of doing so under the General Data Privacy Regulation (GDPR) such as standard contract clauses (SCC) or binding corporate rules (BCR), but even these means of transfer are not without risk. European Union (EU) data protection authorities (DPAs) may soon be reviewing these agreements to ensure they comport with the Court of Justice of the European Union’s (CJEU) ruling that the U.S. lacks controls and remedies to ensure the privacy rights of EU citizens.

It bears note that another suit has been filed in the EU to test the legality of using SCCs generally to transfer data to the U.S. Austrian privacy activist Maximillian Schrems and the organization he is working with, noyb–European Center for Digital Rights, have filed 101 complaints in all 30 EU nations and the 33 European Economic Area (EEA) nations, arguing that Google and Facebook are operating in violation of the CJEU’s ruling. Specifically, the organization is claiming:

A quick analysis of the HTML source code of major EU webpages shows that many companies still use Google Analytics or Facebook Connect one month after a major judgment by the Court of Justice of the European Union (CJEU) – despite both companies clearly falling under US surveillance laws, such as [Section 702 of the Foreign Intelligence Surveillance Act (FISA)]. Neither Facebook nor Google seem to have a legal basis for the data transfers. Google still claims to rely on the “Privacy Shield” a month after it was invalidated, while Facebook continues to use the “SCCs”, despite the Court finding that US surveillance laws violate the essence of EU fundamental rights.

Consequently, even if SCCs are used more widely as means of transferring personal data, the CJEU could find that such agreements for transfers to the U.S. do not comport with the GDPR, eliminating another means used by which U.S. multinationals. This could lead to more companies like Facebook and Google segregating EU data and processing it in the EU or another jurisdiction for which the European Commission has issued an adequacy decision. Or, this could create pressure in Washington to reform U.S. surveillance laws and practices in order that a future general data transfer agreement pass muster with the CJEU.

Still, it may serve some purpose to list the salient privacy bills and link to analysis. As mentioned, a trio of COVID-19 privacy bills were introduced a few months ago to address mainly the use of smartphones for exposure and contact tracing:

Otherwise, the major privacy bills introduced this Congress include:

© Michael Kans, Michael Kans Blog and, 2019-2020. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Michael Kans, Michael Kans Blog, and with appropriate and specific direction to the original content.

Image by S. Hermann & F. Richter from Pixabay

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