Regulators implore Congress for more privacy powers

The Federal Trade Commission (FTC) urged Congress on Wednesday to pass data privacy legislation and beef up the agency’s authority to police large tech companies.

At a hearing before the House Energy and Commerce subcommittee on consumer protection, the five commissioners stressed that gaps in the FTC’s oversight and a lack of resources puts the agency at a disadvantage when going after privacy violations in Silicon Valley.

“These limitations have a critical effect on our ability to protect consumers,” said FTC Chairman Joseph Simons.{mosads}

There have been growing bipartisan calls over the past year for Congress to pass the nation’s first comprehensive consumer privacy law. A bipartisan Senate working group has been trying to hammer out a draft compromise bill since last summer, but so far lawmakers have produced little in public.

On Wednesday, members of the House subcommittee said that they would work on their own legislation.

“Energy and Commerce Democrats feel like we have an obligation to provide a solid piece of legislation that protects consumer privacy,” said Rep. Jan Schakowsky (D-Ill.), who chairs the subcommittee.

“We’ve begun conversations now with the Republicans as well,” she continued. “I am very hopeful that the legislation would be bipartisan and I am looking forward to working with all of you on the Federal Trade Commission in designing this legislation.”

“I believe it is important that we work together toward a bipartisan federal privacy bill,” added Rep. Greg Walden (Ore.), the top Republican on the full Energy and Commerce Committee. “And we are ready and willing to tackle crafting such a bill.”

But there remain sharp partisan divides to coming up with an agreement on privacy legislation.

Republicans have been adamant that any federal bill should preempt states from creating their own rules governing privacy, worried that conflicting regulations would make it harder for companies to figure out how to comply.

California has already passed a strict privacy law that is set to go into effect in 2020.

House Speaker Nancy Pelosi (D-Calif.) has come out against preempting her home state’s legislation. But some Democrats appear open to a preemption clause if Republicans agree to tough privacy protections and enforcement mechanisms.

Those divides appeared to extend to the members of the FTC. When asked by Walden about their views on preemption, the three Republican commissioners agreed that it was important to create a uniform regulatory regime across the states, while the two Democrats shared some concerns about eliminating the states’ role in regulating.

Schakowsky told reporters after the hearing that the House negotiations were still in the early stages and that any discussion of preemption would come at the end of the process.

The FTC commissioners asked Congress to update the agency’s statutory authority to give it the power to make rules and to assess fines against companies that break the law. In most cases, the agency currently only has the power to fine repeat offenders, and even then can only level those fines if the company agrees to a settlement or if the FTC wins in court.

The hearing also comes with the FTC in the spotlight as it nears the end of a yearlong investigation into Facebook over the company’s privacy practices.

The agency is currently in negotiations with Facebook on a settlement which could result in a fine as high as $5 billion. The commissioners would not comment on the case during Wednesday’s hearing.

During the hearing, not every lawmaker was convinced by the case for giving the agency more power.

Rep. Cathy McMorris Rodgers (Wash.), the top Republican on the subcommittee, said she was wary of transforming the FTC “from a law enforcement agency to a massive rulemaking regime.”

“The FTC’s jurisdiction is incredibly broad. Its authority extends beyond just big tech, touching almost every aspect of our marketplace — from loyalty programs at your local grocery store to your favorite coffee shop,” McMorris Rodgers said. “If we decide to increase FTC’s resources and authority to enforce a privacy law, then this committee must exercise its oversight of the commission to its fullest.”

Simons, a Republican, insisted that it would be best for Congress to take up the major questions of how to regulate data privacy and for the commission to be given narrow authority to create rules that would help carry out that mandate.

“Please do not give us broad rulemaking authority; give us targeted rulemaking authority,” he said at the hearing.

Simons cautioned that if the FTC were to be given too much broad authority, he worried that the agency would become “politicized.”

For now, it’s unclear when a privacy agreement could take shape. Schakowsky said she’d like to have more hearings on the issue and eventually a markup, but didn’t offer much of a timeline.

“I’m hoping by the end of this year we have a bill,” Schakowsky said to reporters.