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On July 20, 2022, the House Committee on Energy and Commerce voted 53-2 to pass an amended version of the American Data Privacy and Protection Act (ADPPA). This marks the first time that comprehensive federal data privacy legislation has advanced out of committee – and, as such, represents an occasion worthy of note. Like the initial bill introduced in June, however, this version misses the mark on two key points: preemption of state law and the establishment of a private right of action. Certain revisions, in fact, have made an already problematic situation even worse.

In a June Perspectives from FSF Scholars, I argued that the ADPPA Discussion Draft (Discussion Draft) – a bipartisan, bicameral bill and an undeniably substantial legislative step forward – reached the wrong conclusion as to whether individuals should be allowed to sue for damages. The establishment of a private right of action, among other things, would create incentives for frivolous lawsuits, impose costs that disproportionately impact start-ups and other small businesses, and open the door to judicial interpretations that differ from jurisdiction to jurisdiction. Exclusive enforcement of privacy protections by the FTC, on the other hand, can avoid these inefficient outcomes.

I therefore expressed hope that subsequent revisions to the Discussion Draft would (1) remove the limited private right of action included therein, and (2) excise express carve-outs to its generally preemptive approach for certain state laws that provide for a private right of action. Unfortunately, the version of the ADPPA passed by the House Commerce Committee – an amendment in the nature of a substitute (AINS) – not only retains that limited private right of action, it cuts in half, from four years to two, the amount of time before it goes into effect.

The AINS also adds language (specifically, references to a "State Privacy Authority") that, as a practical matter, empowers the California Privacy Protection Agency (CPPA) to enforce the ADPPA, thereby undermining the benefits that exclusive enforcement by the FTC otherwise would generate. (The CPPA, which was established by the California Privacy Rights Act, is the first-of-its-kind state-level privacy agency. On June 28, 2022, the CPPA voted 5-0 to oppose formally the AINS based upon its otherwise applicable preemption language.)

 

As I detailed in "Bipartisan Privacy Discussion Draft: Significant, If Incomplete, Progress," the Discussion Draft established consumer rights to: access, correct, delete, and transfer personal information; opt out from third-party data transfers and targeted advertising; and prevent the collection of sensitive personal data absent "express affirmative consent." It required companies to publish clear privacy policies, minimize the data they collect, and allow consumers to exercise their privacy rights free from retaliatory discriminatory pricing. It obligated that companies begin to address privacy implications during the initial planning stages of new products and services, a concept known as "privacy by design." And it called for the creation of a new privacy bureau within the FTC.

 

In addition, and as mentioned above, the Discussion Draft misguidedly created a limited private right of action, one that would not become effective for four years and could only be exercised if, after receiving notice, neither the FTC nor the relevant state attorney general chose to take enforcement action. However, it did bar the states from adopting or enforcing laws "covered by the provisions of [the ADPPA] or a rule, regulation, or requirement promulgated" thereunder.

 

Beyond shortening the private right of action delay period from four to two years and expanding enforcement authority to the CPPA, the AINS departs from the Discussion Draft in a number of ways, including by: strengthening protections relating to children; permitting companies to use personal information for first-party advertising and non-advertising communications; expanding the lists of exempted federal and state laws; providing greater guidance to the FTC regarding future rules for unified opt-out mechanisms; requiring that "large data holders" disclose certain metrics relating to responses to consumer requests; and narrowing the definition of "de-identified data."

 

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By making it out of committee, the AINS represents the high-water mark after years of unsuccessful congressional efforts to craft a comprehensive federal data privacy law. For the reasons set forth above, I want to remain optimistic that, as it moves forward, the legislative process will address its lingering but nevertheless important shortcomings, specifically its inclusion of (1) a private right of action, and (2) exceptions that weaken its general intention to preempt state law.

 

* Andrew Long is a Senior Fellow of the Free State Foundation, an independent, nonpartisan free market-oriented think tank located in Rockville, Maryland. The views expressed in this Perspectives do not necessarily reflect the views of others on the staff of the Free State Foundation or those affiliated with it.

A PDF of this Perspectives is here.

Click HERE to watch the YouTube video of the Welcome and Introduction by Randolph May, President, The Free State Foundation, and a Fireside Chat – The View from the FCC, with Moderator: Seth Cooper, Director of Policy Studies and Senior Fellow, The Free State Foundation, and Panelists: Brendan Carr – Commissioner, Federal Communications Commission; Nathan Simington – Commissioner, Federal Communications Commission; and Mignon Clyburn – Former Commissioner and Acting Chairwoman, Federal Communications Commission.

Click HERE to watch the YouTube video of the Fireside Chat – The “Hottest Topics” in Communications and Internet Policy, with Moderator: Randolph May, President, The Free State Foundation, and Panelists: Meredith Baker – President and CEO, CTIA – The Wireless Association; Chris Lewis – President and CEO, Public Knowledge; Michael Powell – President and CEO, NCTA – The Internet & Television Association; and Jonathan Spalter – President and CEO,USTelecom – The Broadband Association.

Click HERE to watch the YouTube video of the Keynote Address by Russell Hanser, Director, Communications Policy Initiatives, National Telecommunications and Information Administration, with an Introduction by Bryan Tramont, Managing Partner, Wilkinson, Barker, Knauer, LLP, and Reactions by Robert Branson, President and CEO, Multicultural Media, Telecom and Internet Council.

Click HERE to watch the YouTube video of the Fireside Chat – The View from the FTC, with Moderator: Maureen Ohlhausen – Former Acting Chairman and Commissioner, Federal Trade Commission, and Panelists: Christine Wilson – Commissioner, Federal Trade Commission, and Noah Phillips – Commissioner, Federal Trade Commission.

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In case you missed it…please see:

Videos of the Free State Foundation's Events in 2021 on FSF's YouTube Channel

FCC Chairman Ajit Pai's Farewell Address on January 8 – Click Here

Ilya Shapiro, Director of Cato Institute's Robert A. Levy Center for Constitutional Studies on January 22 – Click Here

FCC Commissioner Nathan Simington's Maiden Address on February 16 – Click Here

Fireside Chat with FTC Commissioners Noah Phillips and Christine Wilson on March 19 – Click Here

Fireside Chat with FCC Commissioner Brendan Carr on March 23 – Click Here

"Hot Topics in Communications Policy" Panel on April 27 – Click Here

Congressman Bob Latta's Keynote Speech on May 27 – Click Here

The Free State Foundation's book, A Reader on Net Neutrality and Restoring Internet Freedom, by Randolph May and Seth Cooper, is available from Amazon here. Read more about the book here.

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