Privacy advocates will have to pin their hopes on Senate Banking Committee Chairman Richard Shelby, R-Ala., if they want to see national privacy standards enhanced through legislation extending provisions of the federal Fair Credit Reporting Act (FCRA) that expire at the end of this year.The House in September passed its version of FCRA legislation, via the Fair and Accurate Credit Transactions Act, using the measure more as a vehicle to provide citizens with increased protection from, and remediation for, identity theft.

And in California, legislation creating the toughest privacy standards in the nation was recently passed by the state legislature and signed by Gov. Gray Davis. But a provision in the law involving information-sharing between affiliates runs afoul of the national standards established under FCRA and would be pre-empted.

House version

During the floor debate in the House, Rep. Barbara Lee, D-Calif., along with Rep. Brad Sherman, D-Calif., proposed an amendment that would have exempted the California law and other similar laws that might be passed in other states, and pressed opponents during debate on the amendment.

Should the current House version become law, "important California protections will be basically wiped out," Lee said during the debate. "It means the will of an overwhelming majority of Californians would be wiped out."

But opponents of Lee's amendment, notably House Financial Services Committee Chairman Mike Oxley, R-Ohio, argued that allowing the exemption for California and other states would effectively shatter the national framework established by FCRA.

"We don't need at this point to get into a situation where we have states rushing to pass laws that gut our national standards," he said.

Shelby's turn

During the debate, Sherman announced that the amendment would be withdrawn, but expressed hopes that the privacy issue would be taken up in the Senate and during conference.

As such, much of the attention will turn to Shelby, who is expected to unveil his proposed FCRA legislation in the very near future. Shelby's measure is already expected to include vast differences from the House version.

Based on his questions to witnesses earlier this year, many believe that he is leaning toward only a temporary extension of the FCRA provisions, perhaps as briefly as two years, whereas the House version would make them permanent.

Additionally, since Shelby is known as a strong privacy advocate, many are hoping that, in his bill, he will do for privacy what the house did for identity theft in its version.

Privacy revolution

Shelby can expect to hear from the California measure's supporters. As the measure sped through the Golden State's legislative process, its proponents, including its author, state Sen. Jackie Speier, D-Hillsborough, spoke of it in terms of the first step in a "privacy revolution" that would move eastward from California.

"Consumers and taxpayers-and no one else-should have the right to control their own personal financial information," Speier said upon signing the bill. "We now need to export our privacy protections to the rest of the country and our fellow states."

Already, the push has begun to at least allow the Golden State to keep its law intact. One of the state's senators, Barbara Boxer, D-Calif., sent a letter to Shelby expressing concern about FCRA preemption.

"I urge you to include in any FCRA reform bill provisions that explicitly allow states to enact greater privacy protections for consumers," Boxer wrote.

"At the least, you should include a provision to ensure that California's law is not preempted by federal action so that this widely supported and popular legislation can be fully implemented," she added.

Moot point?

Boxer's plea could be a moot point, however, since Shelby may not be able to obtain the needed votes for passage from some of the more business-minded members of the Banking Committee, and may instead opt to simply accept the House version as a blueprint for the Senate.

Additionally, the insurance industry is focusing on ensuring that California's law, which was accepted as an alternative to the high cost of fighting a ballot initiative, remains a problem only in California.

"One state's mistake must not become a national blunder," says Carl Parks, senior vice president of government relations for the National Association of Independent Insurers (NAII), Des Plaines, Ill. "It is essential that the California bill does not become the example nationally as Congress debates the reauthorization of the FCRA, he says."

Matt Brady is an associate editor for Insurance Chronicle, a Thomson Media publication.

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