California clout on privacy threatens to weaken at GOP House

Officials in California who oppose a federal privacy law and are used to having Speaker Nancy Pelosi’s ear will face an uphill battle to influence legislation in a Republican-controlled House.

The American Privacy Act (HR 8152) will likely be the starting point in the new Congress, where the GOP will have a narrow majority in the House of Representatives and Pelosi will likely be replaced by another Californian — Republican Kevin McCarthy — as speaker. California is the nation’s leader in privacy, being the first state to enact and build upon a comprehensive law.

Americans, increasingly concerned about being stalked by tech companies, want more control over how their data is collected and used. Tech companies are pushing for consistent, nationwide regulations as more states push ahead with privacy legislation. And in the face of Congressional inaction, the US is lagging behind other countries that have enacted national privacy laws.

Lawmakers broke decades of deadlock this year with the committee’s approval of the ADPPA, but concerns by California officials about undermining their state’s regime and opposition by key senators make final passage in the lame duck session unlikely. Hill observers say McCarthy would not show the same level of loyalty to the Democrat-led state.

“McCarthy will not be as committed to Newsom as Speaker Pelosi is,” said Greg Guice, Public Knowledge’s director of government affairs, referring to California Gov. Gavin Newsom.

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The rising sun hits the dome of the US Capitol on November 8, 2022.

Photo: Samuel Corum/Getty Images

California outcry

The outcry against the landmark law’s threat to California has come largely from Democrats.

At the state level, Newsom, Attorney General Rob Bonta and the California Data Protection Agency, which is headed by a Newsom-appointed staffer, have opposed it. Their concerns made their way to Capitol Hill via Pelosi and other California Democrats, notably Reps. Anna Eshoo and Nanette Barragán — the only two lawmakers who voted against bringing the bill from the House Energy and Commerce Committee.

McCarthy has supported the idea of ​​federal privacy legislation but has not commented on the ADPPA. In an interview with the Washington Post earlier this year, Rep. Cathy McMorris Rodgers (R-Wash.), the top Republican to chair the privacy-monitoring committee, did not say whether McCarthy is committed to implementing the ADPPA to a vote. Instead, she pointed to the Republican agenda of fighting big tech.

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This playbook, spearheaded by McCarthy, involves giving Americans better privacy protections. His support for preemptive action — or federal overriding of government measures to give companies clear guidance and certainty — aligns with many Republicans. Democrats have in the past lobbied for federal law that sets a floor, not a ceiling, on privacy expectations, allowing states to adopt more aggressive standards when approved.

The ADPPA reflects a middle ground on this issue. It preempts state laws overall, but leaves more than a dozen areas where states can continue to take stricter action, such as health care, student records, identity theft, biometrics, and wiretapping.

However, California officials say that’s not enough. In a Sept. 27 comment, CPPA Chairwoman Jennifer Urban said passage of the federal law would make California’s privacy protections “disappear.”

Video: Digital Privacy Laws: California and Beyond

Republican Concerns

No Republican member of the California delegation sits on the House panel responsible for privacy, but some with an interest in the tech industry have spoken out against a patchwork of state laws.

Rep. Darrell Issa (R-Calif.) communications director Jonathan Wilcox said lawmakers don’t support having a multitude of state laws that would burden businesses. Issa is an honorary co-chair of the Information Technology and Innovation Foundation and the founder of Directed Electronics, an automaker he no longer operates.

Rep. Jay Obernolte (R-Calif.), a computer scientist and owner of video game developer FarSight Studios, who is running for a seat at Energy and Commerce, has also spoken out against a patchwork of state laws.

As a member of the California State Assembly, Obernolte was instrumental in drafting the California Consumer Privacy Act. Obernolte said he has remaining issues with the state law and how agencies have implemented it that he hopes a preemptive national law can resolve, although he understands that the California privacy regulator doesn’t want her to be a part of theirs area of ​​responsibility is taken.

Business-friendly changes

Republicans have shared concerns with McCarthy about certain restrictions on companies’ access to data, according to Stu Ingis, co-chair of Venable’s privacy group and adviser to the Privacy for America coalition, made up of advertising industry groups.

Although no Energy and Trade Republican voted against the ADPPA on the committee, several expressed lingering concerns and signaled that their votes in the House plenary were not a guarantee.

“People were willing to shut up at the moment,” said Lartease Tiffith, executive vice president of public policy at the Interactive Advertising Bureau, which is a member of the Privacy for America coalition.

Advertising industry stakeholders have criticized the ADPPA’s restrictions on the collection and use of third-party data, which typically comes from a consumer’s social media interactions, search history or online transactions. Advertising companies use consumer data to market products and services to relevant audiences.

Chris Pedigo, senior vice president for digital content Next, said his group continues to speak to Hill offices about “common sense” changes. The trade organization represents online media companies.

Several industry groups said they believe McMorris will give Rodgers a buy-in to rehash some of those issues. “Although bipartisanship will remain, Republicans now have the pen and will be able to make the final decision,” Ingis said.

When asked if she would be open to pro-business changes to the bill if it doesn’t pass this Congress, McMorris Rodgers said she was “committed to the strongest privacy protections we can get.” Yes, we will keep working to create the best possible invoice.”

The bill’s formulation of private action rights, which would allow individuals to directly sue companies for data breaches, was a major win for Democrats, but it continues to face industry backlash that a Republican-controlled House may be more sympathetic to.

“Private prosecution is a terrible idea. I don’t think it should be part of any federal privacy law,” Obernolte said, adding that he thinks McMorris Rodgers “did an amazing job trying to find a compromise.”

The changes could result in losing some House Democrats and further alienating key Senate Democrats who believe the ADPPA’s enforcement mechanisms, including private prosecution, are not strong enough. With only a slim majority in the lower chamber, it will be a delicate balance for McCarthy and McMorris Rodgers, supporters said.

“The resumption of some of these deal-breaking but well-compromised issues could end up wiping out the bill,” Guice said. “McMorris Rodgers doesn’t want that.”