Also Returning to Washington: The Threat of a Cybersecurity Executive Order

by Reed Smith

Cybersecurity may seem like a bipartisan issue, but partisan rancor in an election year doomed early efforts to pass cybersecurity legislation. The re-election of President Obama, and the continuation of a divided Congress, make it more likely that cybersecurity policy will be accomplished through executive order. Such an executive order had been drafted prior to the election, and seems likely to gain speed. Prudence dictates that technology, compliance, and legal executives, as well as the boards of directors of large public companies, begin a reappraisal of their cybersecurity practices even if they are currently in a highly regulated industry, as the "voluntary" standards contemplated in a draft executive order are really anything but.

The prospect of a cybersecurity executive order arises from the failure of proposed legislation. The Cybersecurity Act of 2012 was introduced by Sens. Lieberman and Collins (Homeland Security and Government Affairs Committee), Rockefeller (Commerce) and Feinstein (Intelligence). The legislation sought to foster the exchange of threat or event information between the government and the private sector, including by limiting the liability of companies who participated. But opponents of the bill felt it imposed too great a burden on industry, and it failed to gain momentum.

Subsequently, the sponsors of that legislation publically urged President Obama to implement an executive order to address the growing threat to the national infrastructure of cyber attacks. Such draft orders did circulate among departments and agencies prior to the election. One of the earlier versions was not limited to cyber threats, but focused on all hazards to the national infrastructure and the protection and resilience of physical and cyber assets. That draft identified the Energy Sector and Communications Sector as "uniquely critical" and laid out three "strategic imperatives": revise the government framework for addressing these concerns; develop and implement an effective information-exchange capability for public/private information-sharing; and create an integration and analysis function to provide a national common operating picture for critical infrastructure.

More recently, a draft was circulated among the Deputies Committee that contains some elements consistent with prior proposals – and some new twists. The draft order leverages many existing structures, such as the National Institute of Standards and Technology (NIST) within the Department of Commerce. NIST, recognized within both the government and private sector for its ability to identify and define information security standards, will develop a framework for reducing cyber risks to critical infrastructure. Also, the Sector-Specific Agencies that have been functioning as part of the critical infrastructure process will work with DHS to establish a voluntary program to promote the adoption of this NIST framework among the "owners and operators of the critical infrastructure." This last phrase suggests that sectors such as water, energy, transportation (including oil and gas pipelines), chemical and communications will be getting increased attention.

Other elements of this draft of the order include the establishment of a near real-time information sharing system by which unclassified versions of threat or target information can be made available to private sector operators. The Protected Critical Infrastructure Information (PCII) process that was created in the Homeland Security Act of 2002 (6 USC 133) will be used to protect cyber information that is voluntarily shared with the government by private sector entities. Information designated PCII is exempt from disclosure under the Freedom of Information Act and will not be used for regulatory oversight purposes. Notwithstanding this PCII protection, an executive order cannot confer the sort of liability protection contained in the 2012 legislation.

Another limitation of an executive order is that it cannot create new regulatory authority. The draft order addresses this by directing each agency to submit a report that describes existing authority under which it could regulate the cybersecurity of critical infrastructure under its purview. For the Energy sector, this authority exists in section 215 of the Federal Power Act (contained in the Energy Policy Act of 2005). Industrial control systems used in the energy industry are also present in oil and gas pipelines, which are subject to regulation by the Transportation Security Agency. Another existing process that may be rejuvenated by the executive order is the prioritized critical infrastructure list maintained by DHS under section 210E of the Homeland Security Act. Specifically, the order directs DHS to "…identify critical infrastructure where a cybersecurity incident could reasonably result in a debilitating impact on national security, national economic security, or national public health and safety." This appears to lower the threshold for inclusion on the list depending on how expansively the term "debilitating" is interpreted. Any company of reasonable size that offers a service to the general public could conceivably be brought under the ambit of this direction. In a nod to privacy interests, the order does require the DHS Chief Privacy Officer and Officer for Civil Rights and Civil Liberties to assess the privacy and civil rights risks of the functions and programs contained in the order against the Fair Information Practice Principles.

As a final note, three provisions merit special attention. The NIST Cybersecurity Framework discussed above shall include "…metrics for measuring the performance of an entity in implementing…" the Framework. A logical succession of steps after performance metrics is mandatory assessments, minimum industry standards, regulatory supervision and sanction, and litigation. The final section of the order is titled "Implementation." It contains direction to the Secretary of Defense and Administrator of General Services to make recommendations "…on the feasibility, security benefits, and relative merits of establishing procurement preferences for vendors who meet cybersecurity standards. [emphasis added]" All government contractors should pay close attention to this, as well as to possible changes to the GSA schedule and any future requests for proposal. Another eye catcher is the direction to the Sector Specific Agencies to make annual reports on the participation of "owners and operators" identified in the section 210E list in the program. Does the term "report card" suggest itself? Finally, the Secretaries of the Treasury and Commerce are directed to assess the ability under existing law "…to provide incentives to owners and operators of critical infrastructure that participate in the Program."

If implemented, the draft executive order may change the balance between public and private sector, and may influence any future discussions on cybersecurity legislation. Even if this draft order is not signed, it is clear that policymakers remain committed to finding some path to change when it comes to national cybersecurity issues.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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