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The Privacy Advisor | Pelosi opposes proposed American Data Privacy and Protection Act, seeks new preemption compromise Related reading: FTC officially launches privacy rulemaking endeavor

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Prospects for a landmark vote in the U.S. House on the proposed American Data Privacy and Protection Act boil down to House Speaker Nancy Pelosi, D-Calif., who decides when or if the comprehensive privacy bill's number will be considered on the House floor. Pelosi did not take a side upon the ADPPA becoming available for a floor vote just ahead of U.S. Congress' summer recess, leaving many wondering where the chips would fall when federal lawmakers returned to work Sept. 6.

Following weeks of urgings both for and against a vote, Pelosi released a statement prior to Congress' restart stating she would not hold a vote on the ADPPA in its current form. Pelosi said while the House Committee on Energy and Commerce should be "commended for its work," the impacts of the bill's current preemption provisions need to be addressed further, particularly as it relates to the California Consumer Privacy Act and the California Privacy Rights Act.

Pelosi said the ADPPA "does not guarantee the same essential consumer protections as California’s existing privacy laws," citing warnings from California federal and state lawmakers along with the California Privacy Protection Agency.

"Proudly, California leads the nation not only in innovation, but also in consumer protection. With so much innovation happening in our state, it is imperative that California continues offering and enforcing the nation’s strongest privacy rights," Pelosi said. "California's landmark privacy laws and the new kids age-appropriate design bill, both of which received unanimous and bipartisan support in both chambers, must continue to protect Californians — and states must be allowed to address rapid changes in technology." 

Pelosi indicated talks with Committee on Energy and Commerce Chair Frank Pallone, D-N.J., on a path forward would occur "in the days ahead" once the House was back in session. Pallone issued a public statement echoing Pelosi's promise for continued dialogue, adding he's "laser focused on building support for final legislation" that will "put people back in control of their online data and create a strong national privacy standard."

As Californian members of the House argued against preemption during the Energy and Commerce Committee markup in July, Pallone said dismantling "carefully crafted" preemption provisions would "reject all the efforts to come to a compromise." The willingness to negotiate with Pelosi suggests a softened stance on addressing preemption, which likely won't sit well with House Republicans.

"California — the home of Big Tech and the societal ills it has brought — should not be dictating privacy and data security rules for the rest of the country," House Committee on Energy and Commerce Ranking Member Cathy McMorris Rodgers, R-Wash., said in a public statement. "I have been clear for years now that federal preemption is essential in order to protect all Americans no matter where they live. Creating one national standard is necessary to achieving that goal."

Reps. Fred Upton, R-Mich., and Billy Long, R-Mo., made clear during the July committee markup that they would need to reconsider their support for the ADPPA if the current preemption model was altered.

Bump in the road or hard stop?

The level to which Pelosi's stance affects the ADPPA's chances will depend on what kind of agreement can be reached, if any, to soften preemption. The fact there is dialogue at all gives stakeholders some hope that Congress won't lose six-plus months of momentum on the closest it has ever been to establishing a federal privacy law.

"This statement is a signal that the Speaker wants to ensure that the ADPPA builds on the standards set by California and does not impede the ability of California and other states to address rapid changes in technology in the future," Electronic Privacy Information Center Executive Director and President Alan Butler said. "I think both of those issues are addressable, first through substantive tweaks to address issues of differences raised by the CPPA and others in California and possibly by modifications to the preemption provisions that would allow states to continue to be the laboratories of democracy in the future as technology evolves."

Pelosi's reluctance to move forward serves as a boost to continued arguments from California that the California Consumer Privacy Act and California Privacy Rights Act carry more strength than the proposed ADPPA. CPPA Executive Director Ashkan Soltani released a statement saying the regulator stands ready to contribute to talks between Pelosi and Pallone toward ensuring "federal privacy legislation sets a true floor for privacy protections and preserves the key role of the states to innovate, particularly in response to rapidly evolving threats to privacy."

Wilmer Hale Partner Kirk Nahra, CIPP/US, opined that while Pelosi's choice doesn't spell the bill's ultimate demise it may prove to be "a realistic end to a possibility of passing that law this year in general." Nahra spoke of the "uphill struggle" the bill was facing regardless of a seamless House passage, pointing to the obstacle of opposition and dissatisfaction from U.S. Senate Committee on Commerce, Science and Transportation Chair Maria Cantwell, D-Wash.

But IAPP Westin Emeritus Fellow and Goodwin Procter Partner Omer Tene said getting to the crux of Senate opposition and realizing what the proposed ADPPA could do for individuals in all 50 states requires Pelosi to call a vote.

"The Speaker stated that 'Democrats won the right for consumers for the first time to be able to seek damages in court for violations of their privacy rights.' Yet that right has not been won until ADPPA passes and it is currently held up because the Speaker won't bring it to a floor vote," Tene said. "While the Speaker is from California, consumers in 49 other states would benefit from the unprecedented protections in ADPPA. In fact, ADPPA provides stronger protections than those existing in California too."

Preemption dilemma

Addressing preemption hasn't been and won't be easy. When the initial discussion draft for the ADPPA was released, Pallone was clear there would need to be a degree of fluidity around preemption and the private right of action. But underlying factors that make the California laws so popular weren't accounted for in the initial preemption calculus, according to Information Accountability Foundation Chief Policy Innovation Officer Martin Abrams.

"The California initiatives are much harder to set aside because they include citizen action and are examples of the law responding to new risks of adverse consequences," Abrams said. "Neither the California law nor the federal legislation are perfect. … It would be great if global and federal standards existed, but digital technologies and methodologies are not static either and must be subject to enforceable controls."

The initial calculus also bears the question of how the legislative process got this far with existing preemption provisions when there could've been interjection in months prior. Nahra pointed out the limitations around input after the discussion draft was released, noting how there was "a consensus among people participating in the consensus, but it wasn’t everyone who is relevant."

Butler, whose organization along with other advocacy groups has engaged in any stakeholder opportunities that have been allowed under the legislative process, said the ever-changing political landscape also played a role in the developments that have led to a new stalemate.

"I don’t think it was possible at the outset to know if the ultimate deal would be able to run the legislative gauntlet," Butler said. "And the politics have shifted dramatically since June given the results of special elections and the generic ballot measurements. So I think that has weighed in favor of giving close consideration to the bill, not trying to get everything done immediately."

As for what a compromise looks like at this point, Abrams deemed the potential balancing act as "a political task" that will involve "a mostly preemptive standard that recognizes citizens’ interests, flexibility in a digital economy, and a means to enforce and oversee adverse consequences." On the other hand, Nahra laid out the possibility that eventual preemption could still limit states once a deeper analysis of the current issues is conducted.

"I suspect there will be some real effort by all involved to answer a question that lots of people have been debating: What exactly is there about CCPA and CPRA that wouldn’t be addressed by ADPPA?" Nahra said. "The gap seems much smaller than what Pelosi’s comments would indicate. There is room for some creativity here. The option of a standstill period — five or 10 years — is a possibility, letting ADPPA some time to work itself out and then let states go above and beyond after that initial period."

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