Home rule varies from state to state, with some states authorizing significant autonomy to all cities, specific cities, or no cities at all. Although the strength of home rule in cities with the largest economies in the U.S. is debatable, home rule offers cities an opportunity to enact laws and promulgate regulations tailored to their constituents’ specific needs and concerns, like data privacy and consumer protection, that are overlooked by state or federal law. A recent example of this is New York City’s Local Law 144, aimed at regulating specific types of artificial intelligence and requiring employers to audit automatic employment decision tools (AEDTs) for bias and discrimination. This local law has consequences for employers hiring New Yorkers, regardless of where the employers are based even if they outsource the AEDTs from third-party vendors. New York City could implement a similar law to regulate companies relying on third-party data brokers to obtain the personal data of New Yorkers, who make up one of the largest consumer bases worldwide.

City regulatory power through home rule is not to be confused with the prerogatives of State Attorneys General, who possess within their jurisdictions significant regulatory power over businesses nearly akin to that of federal agencies. Indeed, home rule is limited by state constitutions, which, as previously mentioned, often gives rise to state-local tensions. Nevertheless, legal frameworks exist where cities are allowed to regulate beyond that scope of but not in conflict with their state constitutions.

Solutions Beyond Regulation

Thank you, I've incorporated edits to reflect your feedback.

I think this is a very useful start on good ideas. You might want to add a comment or two on the differences between municipal legal staffs and state AGs office when it comes to business regulation of these kinds, and therefore why you might want to think about home rule and state representation issues.

Pioneering Data Broker Regulation: The Need for City Laws in the Absence of State and Federal Legislation

-- By RubiRodriguez - 01 Mar 2024

Introduction

Surveillance capitalism is the commodification of personal data through extensive monitoring and analysis of consumers’ online activities. In our ever-growing digital economy, data brokers play a significant role in fueling surveillance capitalism by collecting, organizing, and selling large amounts of personal data to advertisers, marketers, and other third parties, including law enforcement agencies. Despite consumer protection and privacy ramifications, data brokers go largely underregulated. According to reports by the Brennan Center for Justice, this underregulating heightens the risk of data breaches; discrimination in housing, employment, and credit assessments; and warrantless surveillance by government entities. The ease with which large quantities of personal data can be obtained without due legal process underscores the urgent need for enhanced oversight and regulatory measures. With privacy protections lagging at the state and federal levels, cities, which generally have regulatory autonomy over business within their jurisdictions, have the potential of playing a critical role in spearheading data broker regulation.

Bipartisanship in Data Broker Regulation

The federal government and states have failed to pass legislation keep up with the rate at which consumer surveillance business practices have grown. Amidst these challenges, however, there is a silver lining: bipartisan concern has emerged regarding inadequate regulation of technology companies that rely on opaque data collection practices. Furthermore, President Biden recently issued an executive order aimed at restricting the sale of Americans’ personal data to adversarial countries like China and Russia. This reflects concerns about providing hostile economies with Americans’ sensitive information but also about the broader practices of data brokers. While the exact motivation behind bipartisan support remains a bit unclear—whether rooted in apprehension towards competing economies or broader concern about data privacy—it is evident that the sale of American’s data is a complex issue often misunderstood by both the public and policymakers. This presents an opportunity to increase public awareness and foster informed discourse on the matter.

The Case for Localism

Cities were historically viewed as entities with limited authority, acting solely as agents of their states. During the Progressive Era in American history, localism grew with the home rule movement in response to state corruption and inefficiency. But conflict in state-local relationships has persisted and, in modern times, the pandemic has highlighted these conflicts. The principles of local governance vary from state to state, with some states granting significant autonomy to certain cities or counties over others.

While the strength of home rule in American cities with the largest economies is debatable, cities with home rule autonomy possess unique regulatory advantages like enacting laws tailored to the specific needs and concerns of their constituents. This enables cities to address nuanced issues surrounding date privacy and consumer rights that may be overlooked at the state of federal level. A recent example of this related to the regulation of artificial intelligence is New York City’s Local Law 144, requiring employers to audit automatic employment decision tools for bias and discrimination. This local law has consequences for employers hiring New Yorkers, even if they outsource the AEDTs from third-party vendors. New York could implement a similar law aimed at regulating companies that rely on third-party data brokers to obtain the personal data of New Yorkers, one of the largest consumer bases.

Challenges

Promulgating data broker regulations at the municipal level poses several challenges, particularly with the growing trend towards creating “smart cities,” characterized by the integration of digital information into urban infrastructure and governance systems. Based on an AI Time Journal [[https://www.aitimejournal.com/smart-cities-surveillance-capitalisms-new-home/], proponents of smart cities point to the potential of sustainable growth and urban development, failing to account for the commodification of behavioral data. The rapid pace at which data-driven technologies are evolving creates an imbalance between weighing the potential benefits of these technologies with the importance of protecting privacy, civil liberties, and consumers, which requires careful consideration and expertise that is lacking within government offices. To create data broker regulations requires a nuanced understanding of the intersection between technology, governance, and public policy, as well as robust mechanisms for stake holder engagement and oversight, which includes the very people whose information is collected.

Suggested Initiatives Beyond Regulation

To address the challenges posed by data brokers and the growing trend of "smart cities," a couple potential solutions can be considered. First, cities can implement public awareness campaigns aimed at educating residents about the risks associated with data brokerage and the importance of data privacy protections. By raising awareness about individual rights, privacy best practices, and avenues for recourse in cases of data misuse, these campaigns empower residents with the knowledge needed to navigate the digital landscape confidently. Second, cities can establish specialized commissions or task forces dedicated to addressing data privacy issues. These commissions can conduct research, hold public hearings, and propose policy recommendations related to data brokerage regulation. By convening stakeholders from government, industry, academia, and civil society, cities can foster collaborative approaches to data privacy governance, ensuring that regulatory responses are comprehensive, informed, and reflective of diverse perspectives. Through these initiatives, cities can proactively address the challenges posed by the proliferation of data-driven technologies and promote a culture of responsible data stewardship and digital citizenship among residents

Conclusion

Cities serve as incubators for experimenting with and learning from novel regulatory approaches, which can be tested and refined. Cities also embody the principles of democracy, where bottom-up policy initiatives can flourish. Through community-driven engagement and participatory decision-making, cities can lead the charge in addressing challenges in a growing digital ecosystem, while promoting transparency, accountability, and ethical data practices that benefit all.

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