Reed Smith Client Alert

Type: Client Alerts

A November 8, 2012 blog post entitled “Post-Election Cybersecurity” analyzed a draft Executive Order on critical infrastructure cybersecurity. A newer version, dated November 21, 2012, is similar to the prior version with some interesting revisions. The ultimate goals remain: using existing regulatory authority, improving information sharing, developing a “voluntary” framework of standards, incentivizing (or punishing?) owners and operators of critical infrastructure, and protecting privacy and civil liberties. Notwithstanding the known and potential changes to the Obama cabinet, there does not appear to be any decrease in the focus on cybersecurity and critical infrastructure that would indicate an Executive Order is not imminent.

The most recent version has a different organization and tone as reflected in the deletion of the term “practices” from the title. The information-sharing section has been moved forward in the document and directs the Director of National Intelligence and the Attorney General to issue instructions to their respective agencies “to ensure the timely production of unclassified versions of all reports of cyber threats to the U.S. homeland that identify a specific targeted entity [emphasis added].” The Secretary of Homeland Security is also directed to produce similar reports. DHS will establish a process for rapid dissemination of these reports to the U.S. targeted entity, and all agencies making notifications are responsible for reporting such notifications. Also, the section opens up the Enhanced Cybersecurity Services initiative to voluntary participation by owners and operators of critical infrastructure in all sectors. This is the former Defense Industrial Base pilot that was only open to select companies. Of note, some of those participants have since withdrawn from the project.

The language in the earlier version under which DHS would request owners and operators of critical infrastructure to report cybersecurity incidents or threats is gone, although any such information submitted voluntarily would still be protected as “voluntarily shared critical infrastructure information” under 6 U.S.C. 133. Rather, the draft executive order takes the new approach that information will be provided to owners and operators who are “targeted entities,” and the delivery of the information will be documented. Two inferences could be drawn: (1) there has been or will be threat information of such urgency, validity, and significance that alerting the potential target is of the utmost importance; and (2) if you do receive such information, you may be asked about the action you took as a result, regardless of whether an actual event occurred.

Prudent companies will have a process for receiving, disseminating and evaluating such information. This is especially true for those companies that have a role in critical infrastructure “at greatest risk.” This determination will result from a “risk-based approach 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.” This process differs from the prior draft in several ways: the previous standard was “identify critical infrastructure where a cybersecurity incident could reasonably result in a debilitating impact on national security, national economic security, or national public health or safety.” The new language moves the threshold up from “debilitating,” which, arguably, results from any event, to “catastrophic.” It adds regional impacts to the consideration, which implicitly acknowledges the role of state and regional crisis response entities. And, it gives primacy to “public health or safety” over economic or national security. This shift should not be lost on owners and operators of water, waste treatment, power distribution or medical facilities.

The second change is the use of a consultative process involving the Critical Infrastructure Partnership Advisory Council and sector-specific agencies to inform the identification of critical infrastructure at greatest risk. The previous draft did not include participation by owners and operators. The third difference is that DHS will “confidentially notify” the owners and operators who are identified and ensure they are provided with relevant threat information. Those entities that are notified may request reconsideration through a process to be established. This opportunity to challenge must reflect the recognition that being so notified is significant, and imposes substantial obligations on the owner and operator of critical infrastructure. By this notification, do they become “too critical to lose”?

Other aspects of the recent draft executive order that are similar to, but differ from, the previous version are the Cybersecurity Framework, which will now “provide a prioritized, flexible, repeatable, performance-based and cost-effective approach,” and will “focus on identifying cross-sector security standards and guidelines applicable to critical infrastructure.” The use of incentives remains, as does the potential for revision of the procurement process to include new direction to consider ways to “harmonize and make consistent existing procurement requirements related to cybersecurity.” The Fiscal Year 2013 National Defense Authorization Act, which was recently signed by President Obama, includes a similar use of the procurement system to require specific cybersecurity actions by defense contractors. Please see our related blog posting discussing this legislation. Finally, the draft order contains similar direction to the heads of federal agencies to review existing regulations against the Cybersecurity Framework for consistency, sufficiency and redundancy. These agencies shall consult with private sector owners and operators of critical infrastructure within two years after publication of the final Framework, and report to the Office of Management and Budget regarding any “duplicative, conflicting, or excessively burdensome cybersecurity requirements.”

The most recent draft executive order retains the elements of its predecessor, but appears to focus more on what agencies can and will do with less reliance on private sector “partnership.” Threat information will be delivered and otherwise made available, a framework will be erected, critical infrastructure entities will be designated and notified, and opportunities for private sector participation will continue. Permeating this new draft is a tone indicating that threats to the critical infrastructure are real and need to be addressed by private sector owners and operators. No company that is or may be considered a part of the critical infrastructure should ignore the probability that this document, or a similar version, will be driving compliance and business decisions soon.