US Data Privacy: The Importance of Federal Legislation

The Global Landscape of Data Protection

The globe has never been as interconnected as it is right now. With the significant development of technology over recent years, the way we process and share data between countries is seemingly easier than ever before. Data sharing and international data transfers are on the rise, so it is essential that your organization is aware of and understands various international data protection laws and adopts appropriate measures to protect your data subjects’ personal data.

The Challenge of State-Level Laws in the U.S.

The United States grapples with a unique challenge as it navigates a patchwork of state-level data protection laws, leading to the necessity for comprehensive federal legislation. The exploration extends beyond this broad notion, delving into specific state laws, such as California’s CCPA and Colorado’s CPA, offering a nuanced understanding of their implications.

The concept of data privacy has become an increasingly salient issue for the American public. The United Nations reports that 137 nations have embraced various forms of data protection. In the U.S., all 50 states have instituted at least basic breach notification laws, though not all states have comprehensive data protection guardrails. The California Privacy Protection Act (CPPA) stands as the most stringent followed by 12 other states with strong forms of data protection statutes and still others with measures in the works.

Currently, a total of thirteen states have passed comprehensive data privacy laws in the United States: California,  Colorado, Connecticut, Delaware, Florida, Iowa, Indiana, Montana, Oregon, Tennessee, Texas, Utah, and Virginia,. Of those thirteen, California, Colorado, Connecticut, and Virginia’s laws are currently effective. Of those thirteen, California, Colorado, Connecticut, Utah, and Virginia’s laws are currently effective.

• California Consumer Privacy Act (CCPA)
• California Online Privacy Protection Act (CalOPPA)
• Colorado Privacy Act (CPA)
• Connecticut Personal Data Privacy and Online Monitoring Act (CTDPA)
• Utah Consumer Privacy Act (UCPA)
• Virginia Consumer Data Protection Act (VCDPA)

California’s CCPA and CPRA: Pioneering Data Protection

California, a trailblazer in data privacy legislation, enacted the California Consumer Privacy Act (CCPA) in 2020. This groundbreaking statute granted significant rights to consumers and set stringent standards for businesses regarding the collection and sale of personal information. The subsequent California Privacy Rights Act (CPRA), effective from January 2023, further expanded these rights, ushering in a new era of data protection.

Colorado’s Privacy Act (CPA): A New Player on the Field

Meanwhile, Colorado has entered the data protection arena with the Colorado Privacy Act (CPA) in July 2023, introducing unique ‘opt-out’ mechanisms, distinguishing itself from the ‘opt-in’ model employed by the GDPR. This detailed examination offers insights into the specific provisions, rights, and obligations outlined in these state-level laws.

The Growing Need for Federal Data Privacy Legislation

If you are thinking ‘much of the problem around transfers and having universal standards and protections could be solved with a federal law’ you would be correct. In fact, this is something the EU’s Committee in Civil Liberties, Justice and Home Affairs (LIBE) pointed out in its Motion on ‘the adequacy of the protections afforded by the EU-US Data Privacy Framework’ the Committee stressed their concerns around the protection of EU residents’ personal data since there is no current federal data protection law that offers similar protections to the GDPR

The Current State of Federal Legislation

The U.S. does have some specific federal data protection legislation; such as the Healthcare Insurance Portability Accountability Act (HIPAA) which sets standards for protecting patients’ sensitive personal data and health records. However, this act is specific to healthcare and not all personal data.

The United States lacks a comprehensive privacy law on federal level. The following laws protect certain types of data in limited situations:

• COPPA: The Children’s Online Privacy Protection Act (COPPA) limits online data collection of children under 13.
• ECPA: The Electronic Communications Privacy Act protects wire, oral, and electronic communications against interception and recording, but falls short of protecting against many modern surveillance tactics.
• FCRA: The Fair Credit Reporting Act limits who can see a credit report, what kind of information credit bureaus can collect, and how that information can be collected.
• FERPA: The Family Educational Rights and Privacy Act protects student educational records.
• FTC Act: The Federal Trade Commission Act gives the FTC the power to discipline apps or websites that violate their own privacy policies.
• GLBA: The Gramm-Leach-Bliley Act regulates the collection and disclosure of consumers’ financial information and requires financial institutions to implement security programs and disclose how they share that data.
• HIPAA: The Health Insurance Portability and Accountability Act protects patient health information collected, processed, or stored by covered entities (doctors, pharmacies, hospitals, and more).
• VPPA: The Video Privacy Protection Act prevents the disclosure of VHS rental records. There are ongoing lawsuits around whether it applies to streaming companies.

Complying with US privacy laws can be confusing. That leads us into the American Data Privacy and Protection Act (ADPPA), a bipartisan bill aimed at improving data protection across the country by providing a set of rules at a federal level.

The act will cover sensitive personal information, set the standards for data controllers, service providers, and big tech companies, give the Federal Trade Commission (FTC) regulatory powers, and will create individual consumer rights for their sensitive information.

The American Data Privacy and Protection Act (ADPPA)

Amid this backdrop, the American Data Privacy and Protection Act (ADPPA), proposed in 2022, emerges as a potential solution to bridge the legislative gap.

The American Data Privacy and Protection Act, first proposed in 2022, represents the closest the U.S. has come to establishing a federal data privacy standard, reflecting a bipartisan consensus on the essential features of effective privacy legislation. The bill’s progress signals a tangible shift toward a unified approach, a necessary step to counter the fragmentation caused by the current patchwork of state privacy laws. As the nation grapples with the intricacies of AI regulation, the consolidation of data privacy laws emerges as a logical precursor, setting the stage for more comprehensive AI governance.

The Urgency for Federal Legislation in Light of Technological Advances

The concept of data privacy has become an increasingly salient issue for the American public, fueled by the rapid adoption of artificial intelligence (AI) across a growing expanse of modalities. President Joe Biden recently enacted an executive order noting that “artificial intelligence holds extraordinary potential for both promise and peril” and therefore “Americans’ privacy and civil liberties must be protected as AI continues advancing.”.

The order features eight guiding principles, including the protection of privacy rights as a running theme, compelling federal agencies to draft guidelines for AI governance within the next year.

The Biden Administration clearly reiterates its support for Congress to advance comprehensive privacy legislation. These sentiments are shared by a recent U.S. House subcommittee hearing on AI.

However, the ADPPA remains in the bill phase, awaiting approval from both the House and the Senate.

Data Privacy in the Era of Big Tech

The discourse expands to the significance of a federal data privacy law in addressing the complexities of data protection in the era of big tech. The analogy of personal information as the new oil underscores the critical need for protective measures in an environment where major tech companies wield immense power over personal data.

Tech giants like Google, Oracle, Microsoft, Amazon, Salesforce, and IBM, with their mass troves of users’ personal data, prompt the need for a federal data privacy standard. The current patchwork imposes hurdles on interstate commerce and stifles healthy competition.

Toward a Unified Approach: Learning from the GDPR

While the U.S. leads in technology development, it falls behind in the establishment and enforcement of privacy rights. The enactment of a robust federal law, potentially drawing inspiration from the EU’s General Data Protection Regulation (GDPR), would resolve ambiguities present in various state laws, empowering consumers with a clearer understanding of their personal data and its utilization.

Guiding Principles for a Federal Law

The U.S. would not be starting from zero; a blueprint for comprehensive data privacy regulations already exists in the form of the EU’s General Data Protection Regulation (GDPR), which has been governing data privacy in the EU and beyond for several years now. Whereas Americans have only an implicit right to privacy, the GDPR provides individuals with an explicit right to data privacy, unifying the EU under a single approach. 

Transparency, consent, data minimization, data subject rights, purpose limitation, and accountability emerge as essential principles, guiding the development of comprehensive legislation.

Whether the U.S. chooses to directly follow the GDPR, a robust federal data privacy law should include certain key tenants like transparency and consent, data minimization, data subject rights, purpose limitation, accountability and other key data protection principles. Industry lobbyists are expected to label some of the provisions as overly burdensome. The responsibility falls on Congress to champion the interests of consumers and curb the prevalent misuse of data, a task crucial in the face of the data explosion.

A National Interest: Bipartisan Cooperation

The call to prioritize data privacy resonates as a pressing national interest, demanding bipartisan cooperation for the enactment of federal privacy legislation.

In Summary

In summary, navigating the complexities of data protection laws—from state intricacies to potential federal initiatives—highlights the need for a comprehensive federal data privacy law. It serves not only as a response to current challenges but as a proactive commitment to fortify privacy foundations in our continually evolving digital era. The interconnected global landscape requires a unified approach that transcends borders and aligns with international norms, emphasizing the crucial role of public engagement in influencing the trajectory of these laws.

The American Data Privacy and Protection Act (ADPPA), a milestone showcasing bipartisan efforts, underscores the need for collaborative endeavors. As we stand at the crossroads of technological advancement and growing data volumes, a harmonized data protection landscape requires collective effort. Striking a balance between innovation and individual rights, the journey toward a future where data serves as a catalyst for progress requires ongoing conversations, evolving legislative frameworks, and a harmonious anthem for privacy in the digital age.

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