Texas State Representative Introduces Comprehensive State Privacy Bill Draft
On February 6, 2023, Texas State Representative Giovanni Capriglione submitted H.B. 1844, a comprehensive privacy bill modeled after the Virginia Consumer Data Protection Act (“VCDPA”). The bill could make Texas the sixth U.S. state to enact major privacy legislation, following California, Virginia, Colorado, Utah, and Connecticut. Although the bill closely follows the VCDPA, it departs from the Virginia law in several key areas, most notably in the definition of “personal data” and its applicability.
H.B. 1844 would establish a comprehensive framework for controlling and processing the personal data of Texas residents and would become effective September 1, 2023. Similar to the VCDPA, H.B. 1844 would provide Texas residents with certain rights with respect to their personal data, including rights of access, correction, deletion, portability, the right to opt out of certain processing, and the right to appeal a controller’s decision regarding a rights request. The bill also would include requirements relating to data minimization, processing limitations, data security, non-discrimination, third-party contracting and data protection assessments, as well as impose certain requirements directly on entities who process data on behalf of a controller.
H.B. 1844 would grant the Texas Attorney General exclusive jurisdiction to enforce the bill. The draft bill does not provide for a private right of action, although it would allow the Attorney General to issue a civil investigative demand following a consumer request. The Attorney General’s office would need to provide 30 days’ notice of any violation and allow an opportunity to cure. For uncured violations, the Attorney General would be able to file an action seeking $7,500 per violation.
Although the draft bill’s key provisions follow the VCDPA, it departs from the Virginia law in several areas. The Texas draft bill expands the VCDPA’s definitions of “personal data” and “pseudonymous data” to cover the typical data processing and cataloging activities of ad tech companies. Pseudonymous data layered with personal data and data that is not adequately deidentified would be considered personal data under the draft bill. The bill would not, however, require controllers to reidentify data that has been deidentified. Similarly, the draft bill broadens the VCDPA’s definition of “sale of personal data,” adding a reference to “other valuable consideration” to cover quid pro quo arrangements that do not feature a direct monetary transaction.
H.B. 1844 broadens the VCDPA’s applicability provisions dramatically. First, the draft bill replaces the requirement that a business to which the law applies must “target” the state’s residents with its products or services. Instead, H.B. 1844 would apply to persons whose products and services are “consumed” by residents of the state. Second, the draft bill removes the VCDPA’s revenue threshold, relying on a formulation that excludes small businesses that do not process or sell data instead. The bill would rely on the United States Small Business Administration’s classifications to define which entities qualify as small businesses.
The draft bill modifies the VCDPA’s exemption for the Children’s Online Privacy Protection Act (“COPPA”). The VCDPA provides that controllers and processors in compliance with COPPA automatically meet the VCDPA’s requirement to obtain parental consent before collecting data from children. The analogous section in the Texas draft bill would clarify that the COPPA exception only applies to online data in an attempt to close a possible loophole that would exclude offline children’s data from the bill’s scope. Further, the draft bill clarifies the VCDPA’s data portability provision to ensure that the consumer can access all digitally available consumer personal data. The clarification seeks to prevent an interpretation that the data portability right only applies to data that is subject to automated processing. H.B. 1844 also adapts the VCDPA’s list of methods for submitting consumer requests to the requirements of the CCPA by specifying that the controller must have two or more secure and reliable means for consumers to submit requests. Unlike the CCPA, however, H.B. 1844 does not require a toll-free number. Finally, the Texas draft bill would designate the Texas Department of Information Resources to monitor the implementation of the bill.