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Data Protection Law Back on Federal Front Burner

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Two factors had virtually stalled the progress of the various comprehensive data protection bills making their way through the US Congress. Those factors were 1) other issues gained priority, including Hurricane Katrina and Iraq, and 2) there was serious opposition to the legislation from some very big interest groups, including the card payment industry, banks and data processors.

Last week, however, there was a signal from Washington that data protection is moving back to the front burner. That signal was an introduction of a manager’s amendment to the House Commerce and Energy bill known as the Data Accountability and Trust Act (DATA) that would require the FTC to conduct a study into the need for a national standard for the destruction of discarded paper materials. It is assumed that this is a precursor to introducing the measure into the bill before a vote. DATA already has a provision calling for the destruction of discarded electronic information.

DATA’s counterpart legislation currently in the Senate Commerce and Energy Committee (SB 1408) already has a document destruction requirement on discarded personal information regardless of the media it is on.

Neither DATA nor 1408 is expected to make it out of Congress as they are now. The next phase in the process will entail negotiations among the sponsors of various other data protection legislation in order to arrive at an agreement on a final bill.

Why the renewed activity? It is simple; the opposition to these measures has seen state after state passing laws requiring destruction and breach notification. The last thing they want is 50 separate laws. Even though the committee negotiations may be a bit sticky, they should proceed much more quickly with the change in motivation of the opposing interest groups.

The recent $15 million dollar fine of ChoicePoint for last summer’s privacy breach also added to the renewed interest in data protection on the Hill. It is twice the size of any other fine ever imposed by the Federal Trade Commission.