Perspectives from FSF Scholars

September 23, 2022

Expanding Cracks Threaten the Privacy Preemption Legislative Compromise

by

Andrew Long 

[Below is the Introduction and Summary to this latest FSF Perspectives. A PDF version of the complete Perspectives is here.]

Introduction and Summary

Recent developments – the long-signaled initiation of a rulemaking by the FTC, the adoption by five states of incompatible comprehensive data privacy laws, and the enduring, undeniable need for a privacy regime that embodies uniform, technology and location neutral consumer rights and corporate responsibilities – have increased the pressure on Congress to act on data privacy. Pressure alone, however, cannot bridge deep-rooted differences, particularly those involving the preemption of rival statutes at both the state and federal levels.

The American Data Privacy and Protection Act (ADPPA), first introduced as a Discussion Draft and then passed by a near majority of the House Commerce Committee as an amendment in the nature of a substitute (AINS), reflects the intense desire of lawmakers from both political parties to drive the legislative process forward. Stepping back, though, it is impossible to ignore the potentially fatal cracks that exist below the celebrated surface-level compromise. Absent a true reconciliation of the fundamental differences that exist, a sound policy approach that addresses the interests of American consumers will remain out of reach.

As a practical matter, the Discussion Draft, introduced on June 3, 2022, by a bipartisan and bicameral group of leaders, represented a tenuous, perhaps unworkable, compromise on preemption: broad language preempting state laws offset by a laundry list of exceptions threatening to swallow the rule. Changes reflected in the AINS further heightened that tension, especially regarding the role of California's first-of-its-kind state privacy agency. Recent indications from Speaker of the House Nancy Pelosi, meanwhile, seem to suggest that any attempt to preempt state efforts in this sphere may be a cause for blocking additional forward momentum. As the rubber meets the road, it appears that there is much less substance to the ADPPA's claimed compromise on preemption than initially hoped.

Lest we forget, a primary promise of a federal comprehensive data privacy law is a regime that, via consistent and uniform application, provides consumers with the simplicity, clarity, and transparency that some argue today's "notice and consent" approach lacks. The preemption of inconsistent, rival state laws is an essential component thereof.

Another critical feature to which consumers are entitled is the even-handed treatment of their personal information solely based upon the nature of that data, without regard to legacy, siloed regulatory categorizations that lack relevance in 2022. On this point, changes wrought by the AINS improve upon the Discussion Draft by preempting the FCC's oversight of certain communications services and replacing it with uniform, bolstered FTC authority over all such offerings, no matter who provides them. Regrettably, certain commenters, chief among them Public Knowledge, instead cling to an Analog Era, telephone-grounded model that is wholly incompatible with the modern, technology neutral regime that is the appropriate foundation for federal legislation in the Digital Age.

Consumers deserve simple and easy to understand data privacy safeguards dictated exclusively by the nature and sensitivity of the personal information involved – not where they or the provider is located or how that provider may have been regulated prior to the long-awaited establishment of a revolutionary, modern approach to data privacy. Lawmakers on both sides of the aisle cannot lose sight of that fact if the ADPPA is to become an effective law grounded in today's digital marketplace realities.

* 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.

Read the complete Perspectives here.

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• This Labor Day, Remember Abraham Lincoln and the Importance of Work, by Free State Foundation President Randolph May