Landmark Cybersecurity Legislation Included in Omnibus Package

December 2015 (No. 2)

Cybersecurity and Data Privacy

Action Item: Congress included the Cybersecurity Act of 2015 (the “Act”) in the Consolidated Appropriations Act, 2016 (P.L. 114-113), passing comprehensive cybersecurity legislation for the first time since the major U.S. hacking incidents. The Act requires the federal government to timely share cyber threat information with the private sector. Consequently, the U.S. Secretary of Homeland Security and the Attorney General will soon issue privacy guidelines for protecting any personal information provided by private entities, and a model agreement will also be made available. Companies must follow the Act closely to receive its liability protections.

EXECUTIVE SUMMARY

The House and Senate were able, at the end of the first session of this Congress, to reach agreement on comprehensive cybersecurity legislation. The final agreement was added to the Consolidated Appropriations Act, 2016” (H.R. 2029, P.L. 114-113) as Division N, entitled the “Cybersecurity Act of 2015” (hereafter the “Act”). The Act encompasses provisions authorizing the sharing of cybersecurity threat indicators and defensive measures (defined below) between the private sector and the Department of Homeland Security (“DHS”), in exchange for which the private sector receives comprehensive liability protection in any court of the United States—as long as the private sector complies with the to-be-issued federal guidelines for protection of personal information.

The final bill limits the sharing of information with the DHS, as requested by the private sector, although the President may authorize sharing of information with other appropriate agencies that he may later designate. The Act also establishes the National Cybersecurity and Communications Integration Center (“NCCIC”) in the DHS as the main location for the information to be shared in order to receive the liability protection; provides antitrust protection for two private entities that share cybersecurity threat information; does not require any private entity to share its information with the federal government; limits the types of defensive measures that private entities can take against hackers; and prohibits the federal government, as well as state, local, and tribal governments, from using the threat information shared for regulatory or enforcement actions. Finally, the Act’s cyber threat sharing provisions (title I of the Act) sunset in 10 years, or on September 30, 2025.

As Chairman Michael McCaul (R-TX) of the House Homeland Security Committee stated upon the passage of this landmark law, “[i]t is extremely important for private companies that voluntarily share cyber threat indicators and defensive measures with DHS, or each other, [to]have liability protections to ensure they are shielded from the threat of unfounded litigation. This will better secure public and private networks.” The Ranking Member of the Committee, Congressman Bennie Thompson, also praised passage of the Act, stating that “[t]he Cybersecurity Act of 2015 has the potential to usher in a new chapter in our Nation’s effort to address cyber threats.” Congressman Thompson also remarked that, while the privacy provisions could be more prescriptive, the bill “does give significant attention to privacy concerns by solidifying DHS’ civilian role in the cyber information sharing space and tasking DHS and the Justice Department to work together to develop privacy guidelines.”

Following is a summary of the key provisions of the Act.

TITLE I: THE “CYBERSECURITY INFORMATION SHARING ACT OF 2015”

Sec. 103. Sharing of information by the Federal Government. Directs the Director of National Intelligence, the Secretary of Homeland Security, the Secretary of Defense, and the Attorney General to jointly develop and issue procedures to facilitate and promote the timely sharing of “cyber threat indicators” and “defensive measures” in the possession of the federal government with relevant federal entities and non-federal entities.

“Cyber threat indicators” include information that is necessary to describe malicious reconnaissance, a security vulnerability, malicious cyber command and control, the harm caused by an incident, or any other attribute of a cybersecurity threat, or combination thereof.

“Defensive measures” include an action, procedure, technique, or other measure applied to an information system that detects, prevents, or mitigates a known or suspected cybersecurity threat or security vulnerability. But, the term “defensive measure” does not include a measure that destroys, renders unusable, or substantially harms an information system or information not owned by the private entity operating the measure. In other words, the Act does not authorize any counter-hacking by private companies.

In developing the procedures, the agency leads are to consult with the Small Business Administration and the National Laboratories (of the Department of Energy) to ensure that the protocols for sharing information are effective, and, within 60 days from enactment of the Act, submit the procedures to Congress.

Sec. 104. Preventing cybersecurity threats. Authorizes private entities, for cybersecurity purposes, to monitor their own and other information systems upon authorization and written consent of the other entity, and to share with or receive from any other non-federal entity or the federal government a cyber threat indicator or defensive measure.

Authorizes a private entity, for cybersecurity purposes, to operate a “defensive measure,” as defined above, in order to protect the property rights of the private entity.

Removal of Personal Information. Before sharing a cyber threat indicator with the government, the private entity must remove any personal information of a specific individual or information that identifies a specific individual.

No regulatory action. Cyber threat information shared with either the federal government or any state, tribal, or local government cannot be used by such government or tribe to regulate, including an enforcement action, the lawful activity of any non-federal entity.

Antitrust Exemption. This section also provides an antitrust exemption, as follows. It shall not be considered a violation of any provision of antitrust laws for two or more private entities to exchange or provide a cyber threat indicator or defensive measure, or assistance relating to the prevention, investigation, or mitigation of a cybersecurity threat, for cybersecurity purposes.

Sec. 105. Sharing cyber threat indicators and defensive measures with the Federal Government. The Attorney General and the Secretary of Homeland Security have to develop and submit to Congress, in 60 days from the date of enactment, interim policies and procedures relating to the receipt of cyber threat indicators and defensive measures by the federal government; and final policies and procedures to be made publicly available within 180 days. The procedures must include sanctions for any federal officer or employee who knowingly and willfully conducts unauthorized activities.

Protection of Privacy and Civil Liberties. No later than 60 days from enactment, the Attorney General and the Secretary of Homeland Security must issue, and make available to the public, interim guidelines relating to privacy and civil liberties to govern the receipt, retention, use, and dissemination of cyber threat indicators by a federal agency, and final guidelines in 180 days. The guidelines must protect the confidentiality of cyber threat indicators containing personal information of specific individuals to the greatest extent practicable.

The President may designate an “appropriate federal entity,” other than the Department of Defense (including the National Security Agency), to establish a capability and process to receive cyber threat indicators or defensive measures from a non-federal entity.

Protection of Information Shared with the Federal Government. The provision of cyber threat indicators and defensive measures to the federal government shall not constitute a waiver of any applicable privilege or protection provided by law, including trade secret protection; and any such indicator or measure shall be considered the commercial, financial, and proprietary information of the providing private entity when so designated by the entity and is deemed exempt from disclosure under the Freedom of Information Act (section 552 of title 5, U.S.C.).

The information provided to the federal government is to be used solely for a cybersecurity purpose, including the identification of a cybersecurity threat or a security vulnerability, or to respond to or prevent or mitigate a specific threat of death or serious economic harm.

Sec. 106. Protection from Liability. No cause of action shall lie or be maintained in any court against any private entity for monitoring information in accordance with this Act, or from sharing or receipt of a cyber threat indicator or defensive measure conducted in accordance with this Act if the sharing or receipt occurs the earlier of (i) the submission of interim policies and procedures to Congress or (ii) 60 days after enactment of the Act.

The Act imposes no duty to share a cyber threat indicator or defensive measure or a duty to warn or act based on the receipt of an indicator or measure.

Sec. 107. Oversight of Government Activities. No later than two years after enactment and no less than every two years thereafter, the inspectors general of the appropriate federal agencies must jointly submit to Congress a report on the actions of the federal government to carry out this title.

No later than three years from enactment, the Comptroller General must submit to Congress a report on the actions taken by the federal government to remove personal information from cyber threat indicators or defensive measures.

Sec. 108. Construction and Preemption; Anti-Tasking Restriction. This section provides protection to disclosures made by whistle blowers under section 2302(b)(8) of title 5, U.S.C. This section also prohibits price-fixing and other anti-monopolistic practices; does not limit or modify an existing information sharing relationship; preserves private contractual rights and obligations; and is not to be construed to require a non-federal entity to provide information to a federal entity or another non-federal entity (the so-called anti-tasking restriction). In addition, no liability will be incurred by any entity that chooses not to engage in the voluntary activities authorized in this title.

In general, this title supersedes any statute or law of a state or political subdivision that restricts or otherwise expressly regulates an activity authorized under this title; and does not authorize or establish any new regulatory authorities.

Sec. 109. Report on Cyber Threats. The Director of National Intelligence (“DNI”) is directed, in 180 days from the date of enactment, to submit to the House and Senate Intelligence Committees a report on cybersecurity threats, including attacks, theft, and data breaches.

Sec. 111. Sunset. This title shall be effective only from the date of enactment until September 30, 2025.

TITLE II: NATIONAL CYBERSECURITY ADVANCEMENT

Subtitle A – National Cybersecurity and Communications Integration Center (“NCCIC”)

This subtitle is to be cited as the “National Cybersecurity Protection Advancement Act of 2015.” The subtitle confirms the position of the NCCIC as the lead agency in the DHS to receive from and share with the private sector cyber threat indicators and defensive measures.

Sec. 203. The NCCIC is authorized to enter into a voluntary information sharing relationship with any consenting private entity for the sharing of cyber threat indicators and defensive measures for cybersecurity purposes. The NCCIC is to make available a standard agreement for the use of a private entity and existing agreements between the NCCIC and a private entity are deemed to be in compliance.

Sec. 204. Information Sharing and Analysis Organizations. The Act recognizes the role of ISAOs and adds certain cyber risk definitions to section 212 of the Homeland Security Act of 2002 (6 U.S.C. 131).

Sec. 205. National Response Framework. The Secretary of DHS is to regularly update, maintain, and exercise the Cyber Incident Annex to the DHS National Response Framework.

Sec. 206. Report on Reducing Cybersecurity Risks in DHS Data Centers. The Secretary of DHS is to report to Congress, in one year from the date of enactment, on the feasibility of reducing cyber risks in DHS data centers.

Sec. 207. Assessment. The Comptroller General is to submit a report to Congress in two years on how the Secretary of DHS has complied with this title.

Sec. 208. Multiple Simultaneous Cyber Incidents at Critical Infrastructure. The DHS Under Secretary for Critical Infrastructure Protection and Cybersecurity is to report to Congress, in one year, on the feasibility of producing a plan to reduce the risk of multiple simultaneous cyber incidents affecting critical infrastructure.

Sec. 209. Report on Cybersecurity Vulnerabilities of U.S. Ports. The Secretary of DHS, in 180 days from the date of enactment, shall submit a report to Congress on cybersecurity vulnerabilities at the 10 U.S. ports that are at greatest risk of a cybersecurity incident and recommend measures to mitigate such vulnerabilities.

Sec. 210. Prohibition on New Regulatory Authority. No new regulatory authority is granted to the DHS as a result of this subtitle.

Sec. 211. Termination of Reporting Requirements. All reporting requirements in this subtitle terminate on a date that is seven years after the date of enactment.

Subtitle B – Federal Cybersecurity Enhancement

Sec. 221. This subtitle may be cited as the “Federal Cybersecurity Enhancement Act of 2015.” The purpose of this subtitle is to provide greater protection to the federal IT networks. It directs the Secretary of DHS, in coordination with the Director of the Office of Management and Budget (“OMB”), to develop and implement an intrusion assessment plan to proactively detect, identify, and remove intruders in agency information systems on a routine basis. The Secretary shall regularly deploy new technologies to its intrusion detection and prevention capabilities. Users of the government information systems are to be notified concerning access to communications on those systems. The Privacy Officer, in consultation with the Attorney General, shall review the policies and guidelines for carrying out these programs to ensure consistency with privacy laws. Agencies are directed to implement the intrusion detection and prevention capabilities provided by the DHS no later than one year after enactment or two months after the Secretary makes them available.

Sec. 224. Advanced Internal Defenses. The DHS shall include advanced network security tools to detect and mitigate intrusions and anomalous activity.

Sec. 225. Federal Cybersecurity Requirements. The Secretary of DHS, in consultation with the Director of OMB, shall issue binding operational directives to assist the Director in ensuring timely agency adoption of and compliance with policies and standards, under section 11331 of title 40, U.S.C., for securing agency information systems. These requirements do not apply to the Department of Defense, a national security agency or an element of the intelligence community.

Sec. 226. Assessments; Reports. The Secretary of DHS shall, no later than six months from enactment, and annually thereafter, submit a report to Congress on the status of implementation of the intrusion detection and prevention capabilities. The Director of OMB must submit a similar report no later than 18 months after enactment; and the Federal Chief Information Officer must do the same.

Sec. 227. Termination. The authority and reporting requirements in this subtitle terminate on a date seven years from enactment.

TITLE III: FEDERAL CYBERSECURITY WORKFORCE ASSESSMENT

Sec. 301. This title may be cited as the “Federal Cybersecurity Workforce Assessment Act of 2015.”

Sec. 303. National Cybersecurity Workforce Measurement Initiative. The head of each federal agency must identify all positions within the agency that require the performance of cybersecurity or cyber-related functions and assign a corresponding employment code under the National Initiative for Cybersecurity Education.

Sec. 304. Identification of Cyber-Related Work Roles of Critical Need. In two years from enactment, the Director of OMB, in consultation with the Secretary of DHS, shall identify critical needs for information technology, cybersecurity, or other cyber-related workforce across all federal agencies; and submit a progress report to Congress.

TITLE IV: OTHER CYBER MATTERS

Sec. 401. Study on Mobile Device Security. In one year from the date of enactment, the Secretary of DHS, in consultation with the Director of the National Institute of Standards and Technology (“NIST”), shall complete a study on threats relating to the security of the mobile devices of the federal government and submit an unclassified report to Congress.

Sec. 402. International Policy. The Secretary of State, in 90 days from the date of enactment, shall produce a comprehensive strategy relating to U.S. international policy with regard to cyberspace. The strategy shall be made available to the public and to the respective House and Senate Foreign Relations/Foreign Affairs Committees.

Sec. 403. Apprehension and Prosecution of International Cyber Criminals. The Secretary of State is to provide an annual report to Congress on the location of international cyber criminals and its efforts to extradite such criminals.

Sec. 404. Enhancement of Emergency Services. The Secretary of DHS is to establish a process for reporting on any cybersecurity risk or incident involving any information system used by emergency response providers; and the Director of NIST is directed to support the development of methods for reducing risks to such providers.

Sec. 405. Improving Cybersecurity in the Health Care Industry. In one year from the date of enactment, the Secretary of Health and Human Services (“HHS”) shall submit to Congress a report on the preparedness of the Department of HHS and health care industry stakeholders in responding to cybersecurity threats.

Sec. 406. Federal Computer Security. The Inspector General of each agency that maintains a national security system or a system with access to personally identifiable information shall report to Congress, in 240 days, on practices and procedures for protecting those systems.

CONCLUSIONS

This is the first comprehensive piece of cybersecurity legislation to be enacted since the hacks of the Office of Personnel Management, State Department, White House, health insurer Anthem, Sony Pictures, and Target, to name a few. One could question whether the horse has already left the barn, but the Act is clearly intended to guard against future such attacks and to create an environment for two-way sharing of cyber threat information between the government and the private sector.

The Act attempts to balance the interests of government in garnering all cyber threat data with the privacy interests of consumers and technology companies, and generally limits data sharing to the NCCIC at DHS, which most companies preferred. The Act puts in place voluntary procedures for companies to share cyber threats and defensive measures with the federal government, in exchange for which the companies are to receive liability protection in court and protection of proprietary data and information. It remains to be seen how many companies choose to share their information with the federal government. But the companies that do so may benefit by receiving more timely threat information in return and gain liability protection from customer lawsuits.

For additional information about or questions on the “Cybersecurity Act of 2015,” please contact Steven L. Caponi or Kate B. Belmont from Blank Rome LLP’s cybersecurity & data privacy group, or Joan M. Bondareff, C.J. Zane, or Stephen C. Peranich from Blank Rome Government Relations LLC.

© 2015, Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.