SACRAMENTO, Calif. -- In a move which some credit unionsupporters expected but hoped would not happen, California GovernorArnold Schwarzenegger has vetoed a landmark piece of legislationthat would have given credit unions recourse in the courts whendamaged by a merchant's card security breach.

The bill would have brought the industry's data securitystandards into state law and would have provide a way for creditunions to recoup the costs of reissuing cards and other expensestied to these breaches. But in his veto statement, the Governoralluded to the tie between industry standards and state law as aweakness in the legislation.

"This bill attempts to legislate in an area where themarketplace has already assigned responsibilities and liabilitiesthat provide for the protection of consumers," Schwarzeneggerwrote. "In addition, the Payment Card Industry has alreadyestablished minimum data security standards when storing,processing, or transmitting credit or debit cardholder information.This industry has the contractual ability to mandate the use ofthese standards, and is in a superior position to ensure that thesestandards keep up with changes in technology and the marketplace.This measure creates the potential for California law to be inconflict with private sector data security standards."