White House Issues Executive Order on CyberSecurity

by Dechert LLP
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The Obama Administration has long expressed concerns about the vulnerability of America’s critical infrastructure to cyber-attack. On February 12, 2012, the day of the President’s State of the Union address, the Administration issued an Executive Order on “Improving Critical Infrastructure Cybersecurity.” The Order seeks to further a variety of important cybersecurity objectives, including the formation of a system that would allow the government to disseminate information about cyber attacks more quickly to suspected infrastructure targets, and the development of a “Framework” for reducing risks from cyber-attacks on the nation’s critical infrastructure. Through measures intended to build a partnership between government and the private and quasi-private entities responsible for maintaining the nation’s critical infrastructure, the Executive Order seeks to foster a cyber environment that “encourages efficiency, innovation, and economic prosperity while promoting safety, security, business confidentiality, privacy, and civil liberties.” This OnPoint outlines the Executive Order’s key provisions.

Policy Objectives

The Executive Order essentially seeks to encourage owners and/or operators of businesses and other entities that are part of the nation’s “critical infrastructure” into doing a better job of protecting themselves from the risks of cyber attacks and computer espionage. It attempts to further this policy objective primarily by: 1) establishing a system for sharing the information government agencies acquire about impending cyber attacks with the intended targets of such attacks; and 2) developing a “Framework” for managing cyber risks to critical infrastructure entities, and encouraging these entities to utilize the Framework’s security measures, technologies and practices. Under the Order’s scheme, the Government will develop incentives to encourage infrastructure entities to adopt effective cybersecurity policies and practices.

The Administration is not claiming that its Executive Order is a substitute for actual cybersecurity legislation. Indeed, President Obama called on Congress to enact such legislation in his State of the Union address, and the Order itself states that it is not intended to enlarge the power of any executive agency currently charged with infrastructure security obligations.Instead, members of Administration have described the Executive Order as “a way to continue the conversation on cyber-security policy.”2 By providing information on threats and potential responses to those threats, the government hopes to be a catalyst for the adoption of more robust protections and a resource for organizations seeking to upgrade their security programs. The Executive Order is meant to provide a mechanism for facilitating exchanges between infrastructure operators, the government, and other interested parties about potential and actual threats and the relative effectiveness of security measures.

Key Provisions

Entities Within the Executive Order’s Scope

President Obama’s Executive Order is directed towards covering the largest possible number of infrastructure entities that are potentially vulnerable to cyber attacks. The Order is meant to protect “critical infrastructure,” which is defined broadly as “systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters.”3 This definition is broad enough to encompass a wide array of industries, from utility and transportation companies, to defense contractors and manufacturers whose products are necessary to the continued operation of key industries, to health-related and educational institutions, to banks and other financial services companies.

The Executive Order also assumes that damage to the networks of some infrastructure entities can pose graver threats to the nation’s interests if incapacitated or otherwise harmed by cyber attack, and directs that these especially critical entities be identified. Within 150 days of the Order’s issuance, the Department of Homeland Security is required to identify “critical infrastructure where a cybersecurity incident could reasonably result in catastrophic regional or national effects on public health or safety, economic security or national security.”4 (Expressly excluded from this definition are “commercial information technology products” and “consumer information technology services.”5) A list of the entities that fall within this definition is to be provided to the President annually.6

Signaling that these designations might in the future subject entities so identified to increased scrutiny, the Executive Order requires that the owners and operators of entities considered especially critical will be notified, confidentially, that their businesses have been so designated, and provided with the reasons for the government’s designation. Homeland Security is charged with developing a process that will allow companies named to this list to seek reconsideration of the designations.7

Information Sharing

In one of its two most important provisions, the Executive Order directs the Attorney General, the Secretary of Homeland Security and the Director of National Intelligence to “each issue instructions . . . to ensure the timely production of unclassified reports of cyber threats” against “targeted” entities in the United States within 120 days of the Order’s signing.8 In addition, the Order directs the Department of Homeland Security in coordination with the Attorney General and the Director of National Intelligence to create a process for “rapidly” disseminating both unclassified reports to threatened entities and classified reports to entities authorized to receive them.9 The Order also directs the Departments of Homeland Security and Defense to expand a pre-existing voluntary information-sharing program to allow for the exchange of classified cyber threat and technical information with a greater number of critical infrastructure entities.10

Establishment of a Cyber Risk “Framework” for Critical Infrastructure Companies           

The second of the Executive Order’s most important provisions directs the Commerce Department through the National Institute of Standards and Technology (“NIST”) “to lead the development of a Framework to reduce cyber risks to critical infrastructure.”11 Through a “set of standards, methodologies, procedures, and processes that align policy, business, and technological approaches,” the Framework would be intended to help the owners and operators of critical infrastructure to “identify, assess, and manage cyber risk.”12 The Executive Order’s intent is to provide a blueprint that critical infrastructure entities can use to protect themselves from network intrusions, to make that blueprint as accessible as possible to the entities the government believes should have it, and to assure infrastructure owners and operators that the Framework’s design will take their individual interests into account.

The risk management measures adopted as part of the proposed Framework are intended to be best practices: “prioritized, flexible, repeatable, performance-based and cost-effective,” as well as “technology neutral,” which is meant to enable entities affected by the Order to adapt protective measures to their individual systems and to benefit from competition and innovation among cybersecurity vendors.13 As the Administration has explained, “Organizations who want to upgrade their cybersecurity will have the flexibility to decide how best to do so using a wide range of innovative products and services available in the marketplace.”14

The Commerce Department is required to publish a preliminary version of the Framework within 240 days of the Executive Order’s signing, and a final version within a year.15 The Framework would be subject to a public review and comment process and a consultative process involving a number of governmental agencies.16 The Order instructs the Commerce Department to update the Framework and any related guidelines “as necessary.”17

Consistent with these short deadlines, NIST already has published preliminary information on its intentions going forward. NIST intends to issue a Request for Information (“RFI”) through the Federal Register to gather the information it will need to develop its Framework. According to its initial statement describing the RFI process, NIST’s goals for the Framework development process will be:

  • Identifying existing cybersecurity standards/guidelines, Frameworks and best practices that are applicable to increase the security of critical infrastructure sectors and other interested entities;
  • Specifying high-priority gaps for which new or revised standards are needed; and
  • Collaboratively developing action plans by which these gaps can be addressed.18

In this preliminary outline, NIST says that it anticipates a “voluntary consensus-based”19 process that will have “requisite stages to allow for continuing engagement with the owners and operators of critical infrastructure and other industry, academic and government stakeholders.”20 Their hope is, ultimately, to develop, “a living document that allows for ongoing consultation in order to address constantly evolving risks to critical infrastructure cybersecurity.” To assist in the creation of this document, NIST has provided initial thoughts on the characteristics it believes an effective Framework should possess,21 and a long list of questions designed to determine how well current security practices measure up to these ideals.22

Encouraging Voluntary Compliance

The development of specific measures to encourage voluntary adoption of the completed cybersecurity Framework is also a key component of the Executive Order’s scheme. The Order directs the Department of Homeland Security to establish a “voluntary program” to encourage and support the adoption of the Framework by the owners and operators of critical infrastructures and other interested parties. Various government agencies are tasked with developing “incentives” to encourage the entities that are potentially affected by the Order’s provisions, including critical infrastructure owners and operators.23

The Executive Order also seeks to encourage voluntary compliance by anticipating concerns from infrastructure entities about the burdens potentially associated with adapting their systems to a new, and presumably, constantly evolving cybersecurity Framework. It requires that the Framework “include methodologies to identify and mitigate impacts of the Cybersecurity Framework and associated information security measures or controls on business confidentiality, and to protect individual privacy and civil liberties.”24 In addition, within two years after adoption of the final cybersecurity Framework, the agencies responsible for regulating the security of critical infrastructure must report to the Office of Management and Budget (“OMB”) on any critical infrastructure “subject to ineffective, conflicting or excessively burdensome cybersecurity requirements.”25 These reports also would be required to describe efforts made by agencies to “minimize or eliminate” over-burdensome requirements, and to make recommendations as to other means of preventing owners or operators of critical infrastructure from being overburdened by regulation.26

Review of Existing Regulations

The Executive Order’s provisions require the government to assess whether it has the authority necessary under its current regulations to implement this new scheme. Agencies “with responsibility for regulating the security of critical infrastructure” are required to engage in a consultative process with, among other departments, Homeland Security, “to review the preliminary Cybersecurity Framework and to determine if current cybersecurity regulatory requirements are sufficient given current and projected risks.”27 Within 90 days of the Preliminary Framework’s issuance, these agencies must report to the President on whether they have sufficient regulatory authority to address the critical infrastructure issues identified in the Preliminary Framework, and to identify any additional authority they might need to address those issues.28

Within 120 days of the Order’s signing, other federal agencies are instructed to consider the feasibility and “relative merits of incorporating” the Framework’s security standards into the government’s acquisition planning and contract administration.29 This measure is significant, as it could serve as a mechanism for incentivizing compliance with the Framework among government contractors.

Protection of Privacy and Civil Liberties

Importantly, the Executive Order requires that its provisions be implemented in a manner that preserves and protects the privacy and civil liberties of citizens and business entities affected by the Order’s provisions. These protections are meant to incorporate, among other applicable authorities and guidelines, the Fair Information Practice Principles.30 The Order directs Homeland Security officials charged with privacy responsibilities to assess the privacy risks associated with the adoption of programs required by the Order, and to make recommendations on how to minimize or mitigate any risks identified. The Homeland Security Department must complete a report that is to be made available to the public within a year after the Order’s signing, and is required to consult with other affected agencies in identifying and assessing the privacy risks associated with the Order.31

Conclusion

Considering the totality of its provisions, President Obama’s Executive Order is most accurately understood as an attempt to engage national critical infrastructure sectors in a continuing dialog on how best to meet the cyber threats they now face and will continue to face in the future. Stymied by Congressional gridlock on cybersecurity and faced with network intrusions that have increased in terms of numbers and sophistication from a variety of sources in the US and abroad, the Administration seeks to draw the organizations that make up our critical infrastructure out of what it sees as complacency and into addressing these threats more decisively by providing affected entities with information, support and resources.

There are good reasons for organizations to monitor and participate in this dialog and the process it envisions, especially if they fall within the Executive Order’s “critical infrastructure” definition. The adoption of an effective information-sharing regime would give the government an opportunity to meet attacks or intrusions on critical private industry sectors on a real-time basis by giving businesses access to information in a timely manner. At the very least, a system for disseminating information about risks can better educate infrastructure entities on what these risks actually are. The creation of a cybersecurity “Framework” and the requirement that it be updated regularly could encourage increased innovation and more effective cybersecurity measures and products for all companies, not just infrastructure entities.

The Administration’s decision to develop a “Cybersecurity Framework” presents both challenges and opportunities to critical infrastructure entities, and perhaps all companies with networks containing large amounts of data. NIST believes that, “[T]he diversity of business and mission needs notwithstanding, there are core cybersecurity practices that can be identified and that will be applicable to a diversity of sectors and a spectrum of quickly evolving threats.” Thus, NIST has stated that identifying “core practices will be a focus” of its Framework development process and its RFI will seek information intended to help the agency identify them.32

NIST’s belief that there are core measures to be developed that are potentially applicable to a wide variety of industries suggests that, not only should companies that fall within the universe of “critical infrastructure” covered by the Executive Order be prepared to monitor and comment on the Framework as it is developed, but also that companies that are not necessarily part of our critical infrastructure should be interested in the Framework’s development. Concepts incorporated into the Framework appear likely to play some role in future cybersecurity regulation and, if plans proceed as the government intends, will in all likelihood inform the future development of industry standards.

All of this assumes, however, that critical infrastructure entities and their businesses will be receptive to the Administration’s overtures. In the end, the Executive Order’s effectiveness as a security measure and catalyst will depend on the willingness of infrastructure entities to become more vigilant about their vulnerability to cyber attacks. Without legislation, the Administration has only its ability to persuade infrastructure owners and operators to upgrade their systems voluntarily, leaving these entities to decide for themselves what security measures to adopt and when. Both privacy advocates and the businesses to be affected by strengthened cybersecurity measures have issues with increased government involvement in this area that the Executive Order does not address. (For example, the Executive Order provides no immunity from litigation for infrastructure entities that voluntarily share information about attacks on their networks with the government, a protection businesses have sought from Congress.)

In the end, the resistance of many organizations to cybersecurity legislation in the past suggests that the various federal agencies charged with developing a national strategy for infrastructure protection have their work cut out for them. This Executive Order may be a constructive start on a comprehensive cybersecurity strategy for government and industry. But there is much to be done before a truly effective solution to protecting the nation's most critical networks from intrusions can be implemented.

Footnotes

1. Exec. Order No. 13636, at § 12(a), 78 Fed. Reg. 11739, 2013 WL596302 (hereinafter “Exec. Order”).

2. Jennifer Martinez, “Highly Anticipated Executive Order on Cybersecurity Signed,” The Hill, February 13, 2013.

3. Exec. Order, at § 2.

4. Id. at § 9(a).

5. Id.

6. Id.

7. Id. at § 9(c).

8. Id. at § 4(a).

9. Id. at § 4(b)

10. Id. at § 4(c).

11. Id. at § 7(a).

12. Id. at § 7(a).

13. Id. at § 7(b).

14. Michael Daniel, “Improving the Security of the Nation’s Critical Infrastructure,” February 13, 2013.

15. Exec. Order at § 7(e).

16. Id. at § 7(d).

17. Id. at § 7(f).

18. Framework for Reducing Cyber Risks to Critical Infrastructure, at 1 (hereinafter “NIST RFI Document”).

19. Id. at 3.

20. Id. at 1.

21. Id. at 2-3.

22. Id. at 4-7.

23. Exec. Order at § 8(a), (d).

24. Id. at § 7(c).

25. Id. at § 10(c).

26. Id. at § 10(c).

27. Id. at § 10(a).

28. Id. at § 10(a).

29. Id. at § 8(e).

30. Id. at § 5(a).

31. Id. at § 5(b).

32. NIST RFI Document, at 2.

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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