The House was the only chamber in town for session last week. They have left town and will not return until after the March 20th primary election. Fortunately they leave town with little harm to the industry. A few bills of note did pass committee this week.
Regulatory Fintech Sandbox Passes Committee
First, a new concept to state lawmakers but a rather common regulatory concept to the fintech world passed its first hurdle this week.
HB 5139
(Olsen) creates a regulatory sandbox to enable businesses to obtain limited access to the Illinois marketplace in order to test innovations in financial products or services. This proposal, initiated by the state's Department of Financial and Professional Regulation, is similar to what several other sates are doing to attract fintech companies given federal regulators reluctance to embrace this emerging technology.
The purpose of a "regulatory sandbox" is to reduce the regulatory and licensing burdens that stand in the way of its innovation. The bill was approved unanimously, despite unknown opposition from the state's attorney general. A companion in the Senate (SB 3133) is posted for committee next week.
Update: Chamber's Biometric Amendment
As referenced in previous newsletters, the Chamber is pushing
SB 3053, sponsored by Sen. Bill Cunningham(D-Chicago) and Sen. Chris Nybo (R-Elmhurst), which would amend the state's biometric law. In 2008, Illinois enacted the Biometric Information Privacy Act (BIPA), a law that was designed to regulate the collection and storage of "biometric data."
The use of biometric data has become increasingly prevalent among employers trying to solidify pay practices and maximize inventory control or facility security. BIPA went largely unnoticed after its enactment, until a series of lawsuits were brought in against private entities that allegedly collected and used biometric data in violation of BIPA. With biometric technology becoming more commonplace in the workplace, BIPA has been used as a potentially lucrative new litigation mechanism for the trial bar.
Dozens of employers have been caught off guard by the rash of class-action lawsuits recently filed in Illinois alleging violations of BIPA. The suits target many industries, including restaurants, hospitality, grocery stores, gas stations, nursing homes, logistics and building management companies. The surge in BIPA litigation results from employers' increased use of fingerprint scan technology, and the fact that BIPA is the only existing biometric privacy statute that creates a private right of action against employers for damages and attorneys' fees.
Currently Illinois is one of only three state's that have a biometric statute. However, both Texas and Washington statutes limit the scope to commercial purposes only. Ourproposal simply exempts employers from the Act for internal employment purposes (i.e. time keeping, human resources, fraud prevention, or security purposes.), as long as the employer is not selling or similarly profiting from the biometric identifiers.
Opposition is coming from the Illinois Trial Lawyers and the ACLU. We are meeting with the ACLU prior to Thursday's hearing to discuss their concerns. The ACLU suggests that the current uproar from the employer community is an education problem. They oppose the exclusion because they believe employees should be notified that biometric identifiers are being collected by their employer. We believe their suggestions are inadequate to the issue at hand.
Chamber Supports Consistent Regulation for Drones
Currently, unmanned aerial systems (UAS), also known as drones, are heavily regulated at the federal level and a proposal, deserving of our support, recognizes this authority. In Illinois, the state has passed a variety of common sense UAS laws and regulations. However, at the local level a series of ordinances have left a patchwork of inconsistent and invalid drone regulations.
SB 3291 (Clayborne) would preempt these local ordinances in order to simplify and streamline drone regulations and ensure that Illinois law complies with federal guidelines. This bill would not impact existing state law.
In 2016, a task force created by the Illinois legislature studied the regulation of unmanned aerial systems and issued a final report urging the state legislature to enact state-level preemption regarding UAS oversight in Illinois. The task force found that "a patchwork of local ordinances is not desirable and would undoubtedly lead to confusion and an increased burden on UAS operators and the UAS industry."
This is of particular concern to commercial and public operators that routinely operate UAS in multiple locations throughout the State and across municipal boundaries. The task force also noted that many local ordinances are written by those unfamiliar with the complexities of federal airspace and operational regulations. This often leads to local ordinances that conflict with federal law.
The task force concluded that local ordinances "impede commerce and unjustifiably restrict legitimate uses by companies and/or individuals desiring to use UAS in Illinois. Inconsistent or local ordinances could result in a negative economic impact to the State."
SB 3291 is posted for committee on Wednesday. The Chamber is in support of the bill.
Speaking of drones,
HB 4405
(D'Amico) passed committee this week. This bill amends the Freedom from Drone Surveillance Act to allow for law enforcement agencies to use drones to prepare for or monitor safety and security at a large-scale event. The Chamber did not take a position but figured it was worth mentioning.
SPRINGFIELD: THIS WEEK
The Senate is scheduled to be in this week, before they too, leave town for the primary election and Easter holiday break. Here are some of the issues that are posted before committee that I am keeping an eye on:
Senate Education (3/13)
- SB 3099 (JBT) amends the Student Online Personal Protection Act to allow a national assessment provider to ability to sell or rent a student's information if the provider secures written consent from the student or the parent of the student. Provides that the information must be solely used to provide access to employment, education scholarships, or financial aid, or for post-secondary education opportunities. The Chamber has no position.
- SB 3201 (Hastings) amends the Illinois School Student Records Act to require a school to notify the parents of a student who's data was compromised due to a data breach within 48 hours. While this does not impact Chamber membership and is not taking a position, this may set a precedent for future amendments to the state's data breach notification law on private entities.
Senate Judiciary (3/13)
- SB 3007 (Raoul) is posted again for committee. As previously reported in this newsletter, this bill would amend the state's data breach notification law to require private entities who maintain Illinois residents' data to notify the attorney general of a breach affecting more than 100 citizens within 14 days. Further requires the AG to issue an annual report of these data breaches to the state legislature. The Chamber is opposed. From our discussions with the sponsor, who is also running for as a Democrat candidate for AG, he has signaled this bill isn't high up on his priority list. However, we remain monitoring the bills activity.
- SB 3138 (Bennett) Amends the Higher Education Student Assistance Act. Provides that the identity and address of a scholarship, grant, or financial assistance applicant or recipient under the Act is private information and is exempt from inspection and copying under the Freedom of Information Act. The Chamber has no position.
Senate Criminal Law (3/13)
- Senate Committee Amendment 1 to SB 3411 (Raoul) adds social media to the state's stalking, no contact statute. The Chamber is neutral.
Senate Executive (3/14)
- SB 3291 (Clayborne) as mentioned above preempts local ordinances for drones. Chamber supports.
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SB 3079 (Silverstein) requires "online platforms" (websites, social media platforms, etc) to keep a record of all political ad purchased and data on those purchases for up to 4 years. The Chamber is still reviewing our position on this bill.
Senate Licensed Activities and Pensions (3/14)
- SB 3133 (McConchie) as mentioned above is the Senate's version of the regulatory sandbox.
Senate Environment and Conservation (3/15)
- SB 3550 (Althoff) amends the Consumer Electronics Recycling Act. Provides that nothing in the Act shall prevent a manufacturer from accepting, through a manufacturer e-waste program, residential CEDs collected through a drop-off collection program that is operated pursuant to an agreement between a third party and a unit of local government located within a county or municipal joint action agency that has elected to participate in a manufacturer e-waste program.
Senate Telecommunications and IT (3/15)
- SB 3053 (Cunningham) as mentioned above is the Chamber's proposed amendment to the state's biometric statute. This bill would exempt employers from the Act who are using this technology for internal purposes.
