Lame Duck Congress Acts on Privacy Bills, Mostly With an Eye Toward 2013

by BakerHostetler

While continuing congressional inaction on the fiscal cliff is getting most of the ink/pixels in news headlines over the last couple weeks, several privacy bills have advanced in the House and Senate. Though only one is likely to become law before the 112th Congress ends in a few days, they embody what will be the starting point for action on these issues next year.

GLBA Privacy Notices

The Eliminate Privacy Notice Confusion Act, H.R. 5817 passed the House by voice vote on December 12. As amended, the bill would remove the Gramm-Leach-Bliley annual privacy notice requirement of a financial institution if it has not, in any way, changed its privacy notice or procedures. After Rep. Ed Markey (D-MA) and others opposed a provision in the original bill that exempted State-licensed financial institutions subject to consumer privacy laws. The amended bill is substantially the same as the legislation that passed the House by voice vote in April 2010 and is supported by the Independent Community Bankers of America, the Credit Union National Association, the American Bankers Association, the National Association of Federal Credit Unions, and the Consumer Bankers Association, among others. As with its predecessor, however, the Senate is unlikely to take up H.R. 5817 in the little time remaining before year-end.

Location Privacy

The Senate Judiciary Committee approved the Location Privacy Protection Act of 2012, S. 1223, on December 13. Sponsored by Sen. Al Franken (D-MN), the bill would require mobile device (phones, tablets, car GPS) service providers to get prior consent from customers before collecting their geolocation information or sharing it with third parties. It also includes provisions designed to prevent so-called “cyberstalking”: Service providers that fall into one of the bill’s exceptions (to help a parent locate a child, provide emergency services, protect customers from fraud, etc.) must nonetheless notify the individual about the tracking and how to revoke consent. Further, the bill makes it a crime to intentionally operate a stalking application and provides for a study of the use of geolocation data in violence against women. The bill is enforceable by DOJ, state AGs, and a private right of action via a minimum of $2,500 in damages, plus punitives, and preempts only contrary, not stronger, state laws.

Despite passing committee with minimal opposition and having the support of “nearly every national domestic violence and consumer group in the country," Ranking Member Chuck Grassley (R-IA) and senior Democrat Chuck Schumer (NY) both expressed reservations about the bill’s potential negative impact on hi-tech, signaling further changes are likely before the bill would advance in the Senate. Grassley, citing a letter from the Interactive Advertising Bureau, also asked for a future hearing on technical aspects of the bill’s notice and consent requirements. Franken acknowledged the bill would not advance further this year, but expressed hope that the bill could make it through the Senate in 2013.

Of interest to the broader legal community, during committee consideration of the bill, Sen. Grassley offered an amendment to require state attorneys general pursuing ANY court action under federal law, including enforcement of S. 1223, to notify the court if they hired private counsel to represent the state, cite their authority to do so, and reveal the terms of any such agreement. Grassley said he’s troubled by firms hired on a contingent fee basis to enforce federal law. The amendment failed 8-9 on a party-line vote.

Video Privacy Protection Act

On December 18, by voice vote, the House passed a bill, H.R. 6671 “to clarify that a video tape service provider may obtain a consumer's informed, written consent on an ongoing basis and that consent may be obtained through the Internet.” In other words, the House passed the so-called “Netflix bill” to modernize the 1988 Video Privacy Protection Act to facilitate sharing one’s viewing information online. The bill included the enhanced video privacy protections from Senate Judiciary Committee Chairman Patrick Leahy’s (D-VT) version of the legislation (H.R. 2471), approved by the Committee in November, but excluded his provisions strengthening the Electronic Communications Privacy Act dealing with government access to communications. The former provision requires renewing consent to share video-viewing information every two years and a "clear and conspicuous" option to withdraw consent at any time. The latter would require the government to obtain a search warrant anytime it seeks individuals’ electronic communications such as email, regardless of how old they are, though notice to the individual could be delayed almost indefinitely in consecutive six month increments if it would jeopardize an investigation, endanger someone’s life, etc. Late yesterday, the Senate passed the House bill by unanimous consent and the President is expected to sign it into law. Judge Robert Bork, whose circumstances inspired the VPPA when a weekly newspaper in Washington, DC published his video rental history, passed away on December 19.

Identity Theft

Yesterday, the House considered the Medicare Identity Theft Prevention Act, H.R. 1509, which would simply eliminate the display (or coding or embedding) of Social Security numbers on Medicare cards within the next two years. It is expected to pass the House any day now with overwhelming bipartisan support. The Senate, however, has yet to act on similar legislation introduced by Richard Durbin (D-IL).

CFPB & Privileged Documents

Last but not least, the President is expected to sign into law any day now H.R. 4014, which clarifies that sharing attorney-client privileged information with the Consumer Financial Protection Bureau does not waive the privilege and potentially open up financial institutions to third-party subpoenas. Current law already preserves the confidentiality of information that financial institutions provide to most regulators, but Congress failed to make that explicit in the Dodd-Frank Wall Street Reform and Consumer Protection Act that created the CFPB.

Data Breach Reporting for DOD Contractors

Today, the Senate is expected to approve the Conference Report on the FY 2013 NDAA, one of the most important annual bills considered in Congress and the culmination of several months’ work. The Conference Report reflects a compromise between the House and Senate versions of the legislation and contains an entire Subtitle IX.D on “Cyberspace-Related Matters.” In addition to authorizing funds and setting policy parameters for cybersecurity planning and system development, the bill contains a provision directing DOD to establish a breach reporting mechanism for contractors. Section 941 of the legislation directs the Secretary of Defense to establish, within 90 days of enactment, procedures for “cleared defense contractors” to “rapidly” report successful penetrations of certain “networks and information systems” that meet criteria to be developed by the Secretary and other senior DOD officials. The procedures must include a mechanism for limited DOD access to contractor equipment and information for forensic analysis and must prohibit disclosure of non-DOD information outside the Department. The language is reportedly less onerous than provisions opposed by some business groups in the original Senate-passed bill. The House passed the Conference Report yesterday 315-107, so Senate passage will clear the legislation for the President’s signature. A broad overview of the NDAA is available on Armed Services Committee Chairman Levin’s website.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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