Capitol Building by Andrew Malone is licensed under CC BY 2.0.

The House Energy and Commerce Committee is set to markup the “American Privacy Rights Act” (APRA) on Thursday, legislation that aims to set a national data privacy standard. 

Data privacy is an important issue to all Americans. However, APRA’s broad private right of action threatens to create new avenues for greedy trial lawyers to abuse our legal system. At the same time, the bill fails to fully preempt existing state privacy laws. 

While a national privacy law remains necessary, no national privacy bill should contain an expansive private right of action or fail to completely preempt the patchwork of state privacy bills. Americans for Tax Reform opposes APRA in its current form.

APRA, sponsored by Energy and Commerce Chair Cathy McMorris Rodgers (R-Wash.) and Ranking Member Frank Pallone (D-N.J.) is the culmination of years of bipartisan negotiation toward a national data privacy framework. Last Congress, Energy and Commerce marked up the “American Data Privacy and Protection Act,” legislation that failed to pass the full House before Republicans took the majority. ATR opposed the ADPPA. 

While APRA differs from the ADPPA in several ways, the bill still contains an expansive private right of action that would allow trial lawyers to sue companies for alleged violations. Trial lawyers regularly launch frivolous lawsuits against large companies, hoping to shake them down for large settlements. Enforcement authority should lie with the Federal Trade Commission, not the unscrupulous trial lawyer lobby. 

Enacting an expansive private right of action could also thwart Republican efforts to tackle third-party litigation funding, where wealthy financiers give trial lawyers billions of dollars in undisclosed funding to launch lawsuits against targeted companies. Foreign firms and governments that have a vested interest in weakening American companies also fund these lawsuits, which could allow them to access trade secrets that are more valuable than a return on their financial investment if the targeted company settles. 

Additionally, APRA fails to fully preempt the existing patchwork of state privacy laws, creating a compliance nightmare for the business community. If all 50 states move forward with their own privacy laws, it could cost the American economy over $1 trillion in the next decade, with $200 billion of that burden falling on small businesses. 

APRA contains specific carve outs for provisions of blue state privacy laws, like California and Illinois, meaning that APRA’s preemption provision could be undermined every time a state judge makes a ruling on a case brought under the exempted state provisions. Trial lawyers would certainly exploit this dynamic to circumvent APRA’s preemption provision. Forcing businesses to play whack-a-mole with state judge-created loopholes would make compliance a nightmare. 

To be clear, lawmakers should be commended for working transparently to establish a national privacy framework. The reality is that Republicans and Democrats simply have different goals when it comes to data privacy legislation. 

Republicans want to establish a national “ceiling” that creates a singular, consistent framework for business compliance. Democrats want to establish a national “floor” that allows state governments to layer new regulations on top of the federal standard, increasing costs and complexity for businesses. That is why Democrats push hard for private rights of action and weakened preemption provisions as their cost of entry. 

Absent changes, the headwinds are blowing against APRA. Speaker Mike Johnson (R-La.) and Majority Leader Steve Scalise (R-La.) have both said that APRA will not get a floor vote without significant changes. Senate Commerce Ranking Member Ted Cruz said: “I cannot support any data privacy bill that empowers trial lawyers, strengthens Big Tech by imposing crushing new regulatory costs on upstart competitors or gives unprecedented power to the FTC to become referees of internet speech and DEI compliance.” 

While a national privacy law is important, no privacy law should create further avenues for trial lawyer abuse of our legal system or fail to fully preempt all existing state laws. ATR opposes APRA in its current form.