Privacy and the States

  The states have been leaders on privacy and must continue

Thank you Governor Hodges. I'm very honored by your invitation to talk today with so many leaders of so many states, especially because the history of this nation shows that the states have so often led the way in the protection of privacy. Let me start with some recent examples.

In the late 1980's, California banned junk faxes and gave its citizens legal rights against intrusive telemarketers well before Congress passed a similar national statute in 1991. Unfortunately the Federal Communications Commission, in issuing the federal regulations, disregarded the intent of Congress for a national do-not-call list. Accordingly, many states have stepped in and established state-wide registries of people who do not want to be interrupted at dinnertime with junk calls. Experience with state laws against junk email such as Virginia's has also helped Congress craft a good anti-spam law, which it sadly has not yet passed. The Lieutenant-Governor of Massachusetts is one of many state officials who has assisted policymakers at the Federal Trade Commission, which only recently called for new laws on Internet privacy. Congress has not passed the comprehensive privacy law introduced this year by your colleague Senator Hollings, even though polls now routinely show extremely strong public support for such law. By contrast, South Carolina has recently moved to create a privacy commission--a much-needed institution in any state and any nation--whereas similar efforts in Washington have been thwarted for years. The powerful lobbying of marketing companies inside the Washington Beltway has for decades deprived the American people of the privacy they want and deserve, but the States are a vital force for protecting it.

  Technological change often necessitates new privacy protections

Throughout history, technology has constantly been creating new opportunities for the violation of privacy, which lawmakers have rightly acted to limit.

Before Eastman Kodak introduced their "Snap Camera" in 1888, it was practically impossible for anyone's photograph to be taken without their consent: slow film made it necessary to sit still for so long that no shutterbug could ever take anyone by surprise. But technology changed that in a snap. A photograph taken of a teenage girl from Rochester without her consent became the subject of a lawsuit in 1901 against a company that printed thousands of copies of her likeness on a flyer. The arguments in court made clear the inadequacy of existing law, and in 1903 the New York state legislature created for the first time the right to sue for invasions of privacy. Many other states followed.

We now take for granted the right to control the commercial exploitation of one's likeness, but at the time it was hotly debated, with critics claiming that the girl had suffered no real harm, that such a right would flood the courts with frivolous lawsuits, and might even destroy New York's burgeoning publishing industry. (This did not happen.) Here a question of human rights was entwined with economic and technological development: before lithography, there was little need for laws giving people rights to their own images, just as before the Internet there was the need for laws covering clickstream data and browser cookies because there were no web sites to click on.

In the 1960's and 70's the technology of mainframe computers enabled the creation of government databases that could store and retrieve with unprecedented speed detailed records about millions of people. Unfortunately this speed was not matched by the accuracy of the information; in fact the FBI declared that it was under no obligation to ensure the accuracy of information it stored and transferred between various law enforcement agencies. District Courts would later reject the FBI's position; a federal judge had already called their systems ``out of effective control.'' In 1973 Governor Francis Sargent of Massachusetts provoked this case by ordering a halt to the flow of this information from his state to the federal bureau. The FBI sued the Governor, but his popularity rose with the move, and the FBI backed down. Around this time, policymakers realized that with the handling of personal information comes an obligation to treat it fairly: to keep it secure, and accurate, to limit its uses to specific purposes, and to give the individuals the right to see the information about them. This concept of fair information |practices is an American invention, not a European one. In 1974 Minnesota passed the first such law, followed by Virginia and many other states, and several months later by Congress.

These laws applied only to information held by government agencies. But credit bureaus, which were also able to afford mainframe computers, were behaving in a similarly unfair manner, and it was obvious to policymakers that the solution was similar: require security, accuracy, access, and limit use to authorized purposes. In 1974 Congress passed the Fair Credit Reporting Act, but the credit bureaus managed to include two dazzling examples of unfairness. First, the Act removed the right of individuals to sue the companies on any other basis than that specified in the Act. Second, it preempted state law, so that States became powerless to protect their citizens from the many deficiencies of that law. And you still are. This was a shameful affront to states' ability to protect their citizens. Congress has not repeated this hubris since, but I fear it may do so soon, in the area of online privacy. And that would be an even greater calamity.

  The states must remain free to experiment with privacy protection measures

Louis Brandeis, whose 1890 article on privacy was perhaps the most influential law journal paper in history, later articulated the idea that the states should serve as "laboratories of democracy." Brandeis wrote from the Supreme Court bench in 1932: ``There must be power in the States and the Nation to remould, through experimentation, our economic practices and institutions to meet changing social and economic needs... Denial of the right to experiment may be fraught with serious consequences to the Nation.''

Since then, the speed of technological and social change has made Brandeis's warning even more urgent. In order to enjoy the great benefits flowing from the nation's technology laboratories while containing technology's dangers, the states must keep pace in their own laboratories of democracy.

In the twenty-first century, it is not just credit bureaus but almost every business that can afford a computer. Companies can now collect and exchange personal information via the Internet easily and inexpensively. What is plainly needed is for the law to require all organizations to handle personal information fairly. But despite overwhelming popular support for such law, Washington has passed only a few fragmented protections.

The trade associations in DC think they can continue to stop people from getting the privacy rights they need. Not only from Congress, but even from the states. I was recently shocked to hear one prominent lobbyist at say cheerfully in public that ``if the states pass online privacy laws, then we'll just get a weak federal law to preempt them.'' So the same pack of lobbyists that brought you a taxation moratorium depriving the states of the ability to raise revenue on online transactions, may soon deprive the states of the ability to protect their citizens' privacy. This is not just an attack on your economy, but on a fundamental human right of your constituents.

  The DoC's Safe Harbor plan protects companies and European citizens, not Americans

There is another effort that you should know about in Washington. For the past two years, the U.S. Department of Commerce has worked hard to develop a privacy standard that American companies say they can live with. It's not a particularly high standard, but if it were given some legal backing, it would be a great improvement over the status quo. But shamefully, this federal project will not protect any of the people of South Carolina. Nor will it improve the privacy of South Dakotans. Nor the citizens of Rhode Island. Nobody in Kansas, nor Kentucky, nor Colorado will have any better privacy rights as a result of this initiative of Federal government. The list of states whose citizens would benefit includes the following: Denmark, Belgium, Greece, Portugal, and the other eleven member states of the European Union. Many of these states have fewer people than your own. Some are more populous. But do any of them deserve better privacy than your own constituents? Why, you may ask, has the Administration in Washington worked so hard on a standard for multinational companies to protect the personal information they hold in the U.S. about the citizens of Sweden, while at the same time maintaining a policy of "self-regulation" -- allowing companies to do almost anything they wish with the private information of the people of Wyoming? Whose interests are being defended here, the companies or the citizens? Does the Federal government think that the privacy of the inhabitants of Sweden is more deserving of respect than Wyoming's? If these multinational companies can take the trouble to show to an engineer from Dublin, Ireland, the profile that they have assembled about her, why shouldn't a librarian in Hartford, Connecticut be able to see his? Put simply the question is this: Why is the government of the United States supporting privacy rights for foreigners and opposing those same privacy rights for its own people?

That is a question that some of you might want to put to the President this afternoon. But the answer is of course is very simple, and the answer may guide you in your dealings with Washington. The answer is that the elected representatives of the European states insisted that the privacy rights of their constituents be respected. And if you, the elected representatives of the American states, insist that the privacy rights of your constituents be respected, you will surely prevail. If this matter is left to the Beltway, the nation will likely lose one of its most important liberties. But I don't believe that you governors will sit timidly and let that happen. Surely some of you, or maybe even just one of you, will lead this country into the twenty-first century and prove your laboratories of democracy a match for the laboratories of technology, just as New York did with photography at the beginning of the twentieth century, or Minnesota and Massachusetts did with government databases in the seventies, or California did with junk faxes and telemarketers in the eighties. Surely one of you here today will refuse to let your people's privacy be eroded by technology, refuse to let Washington preempt your power to create the privacy rights your citizens need, and refuse to let companies abuse the personal information of your constituents. And surely, when you stand up for privacy, the most endangered human right in America, the entire nation will owe you their gratitude.

References: Robert Ellis Smith: Ben Franklin's Web site

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