S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 115TH CONGRESS 1ST SESSION S. ll To protect consumers by requiring reasonable security policies and procedures to protect data containing personal information, and to provide for nationwide notice in the event of a breach of security. IN THE SENATE OF THE UNITED STATES llllllllll Mr. NELSON (for himself, Mr. BLUMENTHAL, and Ms. BALDWIN) introduced the following bill; which was read twice and referred to the Committee on llllllllll A BILL To protect consumers by requiring reasonable security policies and procedures to protect data containing personal information, and to provide for nationwide notice in the event of a breach of security. 1 Be it enacted by the Senate and House of Representa- 2 tives of the United States of America in Congress assembled, 3 SECTION 1. SHORT TITLE. 4 This Act may be cited as the ‘‘Data Security and 5 Breach Notification Act’’. 6 SEC. 2. REQUIREMENTS FOR INFORMATION SECURITY. 7 8 (a) GENERAL SECURITY POLICIES DURES.— November 29, 2017 (2:00 p.m.) AND PROCE- S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 2 1 (1) REGULATIONS.—Not later than 1 year after 2 the date of enactment of this Act, the Commission 3 shall promulgate regulations under section 553 of 4 title 5, United States Code, to require each covered 5 entity that owns or possesses data containing per- 6 sonal information, or contracts to have any third- 7 party entity maintain or process such data for such 8 covered entity, to establish and implement policies 9 and procedures regarding information security prac- 10 tices for the treatment and protection of personal in- 11 formation taking into consideration— 12 (A) the size of, and the nature, scope, and 13 complexity of the activities engaged in by such 14 covered entity; 15 (B) the current state of the art in adminis- 16 trative, technical, and physical safeguards for 17 protecting such information; 18 19 (C) the cost of implementing the safeguards under subparagraph (B); and 20 (D) the impact on small businesses and 21 nonprofits. 22 (2) REQUIREMENTS.—The regulations shall re- 23 quire the policies and procedures to include the fol- 24 lowing: November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 3 1 (A) A security policy with respect to the 2 collection, use, sale, other dissemination, and 3 maintenance of personal information. 4 (B) The identification of an officer or 5 other individual as the point of contact with re- 6 sponsibility for the management of information 7 security. 8 (C) A process for identifying and assessing 9 any reasonably foreseeable vulnerabilities in 10 each system maintained by the covered entity 11 that contains such personal information, includ- 12 ing regular monitoring for a breach of security 13 of each such system. 14 (D) A process for taking preventive and 15 corrective action to mitigate any vulnerabilities 16 identified in the process required by subpara- 17 graph (C), that may include implementing any 18 changes to information security practices and 19 the architecture, installation, or implementation 20 of network or operating software. 21 (E) A process for disposing of data in elec- 22 tronic form containing personal information by 23 destroying, permanently erasing, or otherwise 24 modifying the personal information contained in November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 4 1 such data to make such personal information 2 permanently unreadable or indecipherable. 3 (F) A standard method or methods for the 4 destruction of paper documents and other non- 5 electronic data containing personal information. 6 (b) LIMITATIONS.— 7 (1) COVERED ENTITIES SUBJECT TO THE 8 GRAMM-LEACH-BLILEY ACT.—A 9 that is subject to title V of the Gramm-Leach-Bliley 10 Act (15 U.S.C. 6801 et seq.) and is in compliance 11 with information security requirements under that 12 Act shall be deemed in compliance with this section. 13 (2) APPLICABILITY financial institution OF OTHER INFORMATION 14 SECURITY REQUIREMENTS.—A 15 to, and in compliance with, the information security 16 requirements of section 13401 of the Health Infor- 17 mation Technology for Economic and Clinical 18 Health Act (42 U.S.C. 17931) or of section 1173(d) 19 of title XI, part C of the Social Security Act (42 20 U.S.C. 1320d–2(d)) shall be deemed in compliance 21 with this section with respect to any data governed 22 by section 13401 of the Health Information Tech- 23 nology for Economic and Clinical Health Act (42 24 U.S.C. 17931) or by the Health Insurance Port- November 29, 2017 (2:00 p.m.) person who is subject S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 5 1 ability and Accountability Act of 1996 Security Rule 2 (45 C.F.R. 160.103 and part 164). 3 SEC. 3. NOTIFICATION OF BREACH OF SECURITY. 4 (a) NATIONWIDE NOTIFICATION.—A covered entity 5 that owns or possesses data in electronic form containing 6 personal information, following the discovery of a breach 7 of security of the system maintained by the covered entity 8 that contains such data, shall notify— 9 (1) each individual who is a citizen or resident 10 of the United States and whose personal information 11 was or is reasonably believed to have been acquired 12 or accessed from the covered entity as a result of the 13 breach of security; and 14 (2) the Commission, unless the covered entity 15 has notified the designated entity under section 4. 16 (b) SPECIAL NOTIFICATION REQUIREMENTS.— 17 (1) THIRD-PARTY ENTITIES.—In the event of a 18 breach of security of a system maintained by a 19 third-party entity that has been contracted to main- 20 tain or process data in electronic form containing 21 personal information on behalf of any other covered 22 entity who owns or possesses such data, the third- 23 party entity shall notify the covered entity of the 24 breach of security. Upon receiving notification from November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 6 1 the third party entity, such covered entity shall pro- 2 vide the notification required under subsection (a). 3 (2) COORDINATION OF NOTIFICATION WITH 4 CREDIT REPORTING AGENCIES.—If 5 is required to provide notification to more than 6 5,000 individuals under subsection (a)(1), the cov- 7 ered entity also shall notify each major credit report- 8 ing agency of the timing and distribution of the no- 9 tices, except when the only personal information that 10 is the subject of the breach of security is the individ- 11 ual’s first name or initial and last name, or address, 12 or phone number, in combination with a credit or 13 debit card number, and any required security code. 14 Such notice shall be given to each credit reporting 15 agency without unreasonable delay and, if it will not 16 delay notice to the affected individuals, prior to the 17 distribution of notices to the affected individuals. 18 (c) TIMELINESS OF a covered entity NOTIFICATION.—Notification 19 under subsection (a) shall be made— 20 21 (1) not later than 30 days after the date of discovery of a breach of security; or 22 (2) as promptly as possible if the covered entity 23 providing notice can show that providing notice with- 24 in the timeframe under paragraph (1) is not feasible 25 due to circumstances necessary— November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 7 1 2 (A) to accurately identify affected consumers; 3 4 (B) to prevent further breach or unauthorized disclosures; or 5 6 7 8 (C) to reasonably restore the integrity of the data system. (d) METHOD AND CONTENT OF NOTIFICATION.— (1) DIRECT 9 NOTIFICATION.— (A) METHOD OF DIRECT NOTIFICATION.— 10 A covered entity shall be in compliance with the 11 notification requirement under subsection (a)(1) 12 if— 13 (i) the covered entity provides con- 14 spicuous and clearly identified notifica- 15 tion— 16 (I) in writing; or 17 (II) by e-mail or other electronic 18 means if— 19 (aa) the covered entity’s pri- 20 mary method of communication 21 with the individual is by e-mail or 22 such other electronic means; or 23 (bb) the individual has con- 24 sented to receive notification by 25 e-mail or such other electronic November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 8 1 means and such notification is 2 provided in a manner that is con- 3 sistent with the provisions per- 4 mitting electronic transmission of 5 notices under section 101 of the 6 Electronic Signatures in Global 7 and National Commerce Act (15 8 U.S.C. 7001); and 9 (ii) the method of notification selected 10 under clause (i) can reasonably be expected 11 to reach the intended individual. 12 (B) 13 TION.—Each 14 under subparagraph (A) shall include— CONTENT OF DIRECT NOTIFICA- method of direct notification 15 (i) the date, estimated date, or esti- 16 mated date range of the breach of security; 17 (ii) a description of each type of per- 18 sonal information that was or is reasonably 19 believed to have been acquired or accessed 20 as a result of the breach of security; 21 (iii) a telephone number that an indi- 22 vidual can use at no cost to the individual 23 to contact the covered entity to inquire 24 about the breach of security or the infor- November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 9 1 mation the covered entity maintained or 2 possessed about that individual; 3 (iv) notice that the individual may be 4 entitled to consumer credit reports under 5 subsection (e)(1); 6 (v) instructions how an individual can 7 request consumer credit reports under sub- 8 section (e)(1); 9 (vi) a telephone number, that an indi- 10 vidual can use at no cost to the individual, 11 and an address to contact each major cred- 12 it reporting agency; and 13 (vii) a telephone number, that an indi- 14 vidual can use at no cost to the individual, 15 and an Internet Web site address to obtain 16 information regarding identity theft from 17 the Commission. 18 19 (2) SUBSTITUTE NOTIFICATION.— (A) CIRCUMSTANCES GIVING RISE TO SUB- 20 STITUTE NOTIFICATION.—A 21 quired to provide notification under subsection 22 (a)(1) may provide substitute notification in- 23 stead of direct notification under paragraph 24 (1)— November 29, 2017 (2:00 p.m.) covered entity re- S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 10 1 (i) if direct notification is not feasible 2 due to a lack of sufficient contact informa- 3 tion for the individual required to be noti- 4 fied; or 5 (ii) if the covered entity owns or pos- 6 sesses data in electronic form containing 7 personal information of fewer than 10,000 8 individuals and direct notification is not 9 feasible due to excessive cost to the covered 10 entity required to provide such notification 11 relative to the resources of such covered 12 entity, as determined in accordance with 13 the regulations issued by the Commission 14 under paragraph (3)(A). 15 (B) METHOD OF SUBSTITUTE NOTIFICA- 16 TION.—Substitute 17 graph shall include— notification under this para- 18 (i) conspicuous and clearly identified 19 notification by e-mail to the extent the cov- 20 ered entity has an e-mail address for an in- 21 dividual who is entitled to notification 22 under subsection (a)(1); 23 (ii) conspicuous and clearly identified 24 notification on the Internet Web site of the November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 11 1 covered entity if the covered entity main- 2 tains an Internet Web site; and 3 (iii) notification to print and to broad- 4 cast media, including major media in met- 5 ropolitan and rural areas where the indi- 6 viduals whose personal information was ac- 7 quired reside. 8 (C) CONTENT 9 10 TION.—Each OF SUBSTITUTE NOTIFICA- method of substitute notification under this paragraph shall include— 11 (i) the date, estimated date, or esti- 12 mated date range of the breach of security; 13 (ii) a description of each type of per- 14 sonal information that was or is reasonably 15 believed to have been acquired or accessed 16 as a result of the breach of security; 17 (iii) notice that an individual may be 18 entitled to consumer credit reports under 19 subsection (e)(1); 20 (iv) instructions how an individual can 21 request consumer credit reports under sub- 22 section (e)(1); 23 (v) a telephone number that an indi- 24 vidual can use at no cost to the individual 25 to contact the covered entity to inquire November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 12 1 about the breach of security or the infor- 2 mation the covered entity maintained or 3 possessed about that individual; 4 (vi) a telephone number, that an indi- 5 vidual can use at no cost to the individual, 6 and an address to contact each major cred- 7 it reporting agency; and 8 (vii) a telephone number, that an indi- 9 vidual can use at no cost to the individual, 10 and an Internet Web site address to obtain 11 information regarding identity theft from 12 the Commission. 13 (3) REGULATIONS AND GUIDANCE.— 14 (A) REGULATIONS.—Not later than 1 year 15 after the date of enactment of this Act, the 16 Commission, by regulation under section 553 of 17 title 5, United States Code, shall establish cri- 18 teria for determining circumstances under 19 which substitute notification may be provided 20 under paragraph (2), including criteria for de- 21 termining if direct notification under paragraph 22 (1) is not feasible due to excessive costs to the 23 covered entity required to provide such notifica- 24 tion relative to the resources of such covered 25 entity. The regulations may also identify other November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 13 1 circumstances 2 would be appropriate, including circumstances 3 under which the cost of providing direct notifi- 4 cation exceeds the benefits to consumers. where substitute notification 5 (B) GUIDANCE.—In addition, the Commis- 6 sion, in consultation with the Small Business 7 Administration, shall provide and publish gen- 8 eral guidance with respect to compliance with 9 this subsection. The guidance shall include— 10 (i) a description of written or e-mail 11 notification that complies with paragraph 12 (1); and 13 (ii) guidance on the content of sub- 14 stitute notification under paragraph (2), 15 including the extent of notification to print 16 and broadcast media that complies with 17 paragraph (2)(B)(iii). 18 19 (e) OTHER OBLIGATIONS FOLLOWING BREACH.— (1) IN GENERAL.—Not later than 60 days after 20 the date of request by an individual who received no- 21 tification under subsection (a)(1) and quarterly 22 thereafter for 2 years, a covered entity required to 23 provide notification under subsection (a)(1) shall 24 provide, or arrange for the provision of, to the indi- November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 14 1 vidual at no cost, consumer credit reports from at 2 least 1 major credit reporting agency. 3 (2) LIMITATION.—This subsection shall not 4 apply if the only personal information that is the 5 subject of the breach of security is the individual’s 6 first name or initial and last name, or address, or 7 phone number, in combination with a credit or debit 8 card number, and any required security code. 9 10 (3) RULEMAKING.—The Commission’s rulemaking under subsection (d)(3) shall include— 11 (A) determination of the circumstances 12 under which a covered entity required to pro- 13 vide notification under subsection (a)(1) must 14 provide or arrange for the provision of free con- 15 sumer credit reports; and 16 (B) establishment of a simple process 17 under which a covered entity that is a small 18 business or small nonprofit organization may 19 request a full or a partial waiver or a modified 20 or an alternative means of complying with this 21 subsection if providing free consumer credit re- 22 ports is not feasible due to excessive costs rel- 23 ative to the resources of such covered entity 24 and relative to the level of harm, to affected in- 25 dividuals, caused by the breach of security. November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 15 1 (f) DELAY 2 TIONAL 3 POSES.— 4 OF NOTIFICATION AUTHORIZED SECURITY (1) IN AND FOR NA - LAW ENFORCEMENT PUR- GENERAL.—If the United States Secret 5 Service or the Federal Bureau of Investigation de- 6 termines that notification under this section would 7 impede a criminal investigation or a national secu- 8 rity activity, notification shall be delayed upon writ- 9 ten notice from the United States Secret Service or 10 the Federal Bureau of Investigation to the covered 11 entity that experienced the breach of security. Writ- 12 ten notice from the United States Secret Service or 13 the Federal Bureau of Investigation shall specify the 14 period of delay requested for national security or law 15 enforcement purposes. 16 (2) SUBSEQUENT 17 (A) IN DELAY OF NOTIFICATION.— GENERAL.—A covered entity shall 18 provide notification under this section not later 19 than 30 days after the day that the delay was 20 invoked unless a Federal law enforcement or in- 21 telligence agency provides subsequent written 22 notice to the covered entity that further delay 23 is necessary. 24 25 November 29, 2017 (2:00 p.m.) (B) WRITTEN MENTS.— JUSTIFICATION REQUIRE- S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 16 1 (i) UNITED STATES SECRET SERV- 2 ICE.—If 3 instructs a covered entity to delay notifica- 4 tion under this section beyond the 30-day 5 period under subparagraph (A) (referred 6 to in this clause as ‘‘subsequent delay’’), 7 the United States Secret Service shall sub- 8 mit written justification for the subsequent 9 delay to the Secretary of Homeland Secu- 10 the United States Secret Service rity before the subsequent delay begins. 11 (ii) FEDERAL BUREAU OF INVESTIGA- 12 TION.—If 13 tion instructs a covered entity to delay no- 14 tification under this section beyond the 30- 15 day period under subparagraph (A) (re- 16 ferred to in this clause as ‘‘subsequent 17 delay’’), the Federal Bureau of Investiga- 18 tion shall submit written justification for 19 the subsequent delay to the Attorney Gen- 20 eral before the subsequent delay begins. 21 (3) LAW the Federal Bureau of Investiga- ENFORCEMENT IMMUNITY.—No cause 22 of action shall lie in any court against any Federal 23 agency for acts relating to the delay of notification 24 for national security or law enforcement purposes 25 under this Act. November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 17 1 2 (g) GENERAL EXEMPTION.— (1) IN GENERAL.—A covered entity shall be ex- 3 empt from the requirements under this section if, 4 following a breach of security, the covered entity 5 reasonably concludes that there is no reasonable risk 6 of identity theft, fraud, or other unlawful conduct. 7 8 (2) PRESUMPTION.— (A) IN GENERAL.—There shall be a pre- 9 sumption that no reasonable risk of identity 10 theft, fraud, or other unlawful conduct exists 11 following a breach of security if— 12 (i) the data is rendered unusable, 13 unreadable, or indecipherable through a se- 14 curity technology or methodology; and 15 (ii) the security technology or method- 16 ology under clause (i) is generally accepted 17 by experts in the information security field. 18 (B) REBUTTAL.—The presumption under 19 subparagraph (A) may be rebutted by facts 20 demonstrating that the security technology or 21 methodology in a specific case has been or is 22 reasonably likely to be compromised. 23 (3) TECHNOLOGIES OR METHODOLOGIES.—Not 24 later than 1 year after the date of enactment of this 25 Act, and biennially thereafter, the Commission, after November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 18 1 consultation with the National Institute of Stand- 2 ards and Technology, shall issue rules (pursuant to 3 section 553 of title 5, United States Code) or guid- 4 ance to identify each security technology and meth- 5 odology under paragraph (2). In identifying each 6 such security technology and methodology, the Com- 7 mission and the National Institute of Standards and 8 Technology shall— 9 (A) consult with relevant industries, con- 10 sumer organizations, data security and identity 11 theft prevention experts, and established stand- 12 ards setting bodies; and 13 (B) consider whether and in what cir- 14 cumstances a security technology or method- 15 ology currently in use, such as encryption, com- 16 plies with the standards under paragraph (2). 17 (4) COMMISSION GUIDANCE.—Not later than 1 18 year after the date of enactment of this Act, the 19 Commission, after consultation with the National In- 20 stitute of Standards and Technology, shall issue 21 guidance regarding the application of the exemption 22 under paragraph (1). 23 (h) EXEMPTIONS FOR NATIONAL SECURITY 24 LAW ENFORCEMENT PURPOSES.— November 29, 2017 (2:00 p.m.) AND S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 19 1 2 3 (1) IN GENERAL.—A covered entity shall be ex- empt from the requirements under this section if— (A) a determination is made— 4 (i) by the United States Secret Serv- 5 ice or the Federal Bureau of Investigation 6 that notification of the breach of security 7 could be reasonably expected to reveal sen- 8 sitive sources and methods or similarly im- 9 pede the ability of the Government to con- 10 duct law enforcement or intelligence inves- 11 tigations; or 12 (ii) by the Federal Bureau of Inves- 13 tigation that notification of the breach of 14 security could be reasonably expected to 15 cause damage to the national security; and 16 (B) the United States Secret Service or the 17 Federal Bureau of Investigation, as the case 18 may be, provides written notice of its deter- 19 mination under subparagraph (A) to the cov- 20 ered entity. 21 (2) UNITED STATES SECRET SERVICE.—If the 22 United States Secret Service invokes an exemption 23 under paragraph (1), the United States Secret Serv- 24 ice shall submit written justification for invoking the November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 20 1 exemption to the Secretary of Homeland Security 2 before the exemption is invoked. 3 (3) FEDERAL BUREAU OF INVESTIGATION.—If 4 the Federal Bureau of Investigation invokes an ex- 5 emption under paragraph (1), the Federal Bureau of 6 Investigation shall submit written justification for 7 invoking the exemption to the Attorney General be- 8 fore the exemption is invoked. 9 (4) IMMUNITY.—No cause of action shall lie in 10 any court against any Federal agency for acts relat- 11 ing to the exemption from notification for national 12 security or law enforcement purposes under this Act. 13 (5) REPORTS.—Not later than 18 months after 14 the date of enactment of this Act, and upon request 15 by Congress thereafter, the United States Secret 16 Service and Federal Bureau of Investigation shall 17 submit to Congress a report on the number and na- 18 ture of breaches of security subject to the exemp- 19 tions for national security and law enforcement pur- 20 poses under this subsection. 21 (i) FINANCIAL FRAUD PREVENTION EXEMPTION.— 22 (1) IN GENERAL.—A covered entity shall be ex- 23 empt from the requirements under this section if the 24 covered entity utilizes or participates in a security 25 program that— November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 21 1 (A) effectively blocks the use of the per- 2 sonal information to initiate an unauthorized fi- 3 nancial transaction before it is charged to the 4 account of the individual; and 5 (B) provides notice to each affected indi- 6 vidual after a breach of security that resulted in 7 attempted fraud or an attempted unauthorized 8 transaction. 9 (2) LIMITATIONS.—An exemption under para- 10 graph (1) shall not apply if— 11 (A) the breach of security includes per- 12 sonal information, other than a credit card 13 number or credit card security code, of any 14 type; or 15 (B) the breach of security includes both 16 the individual’s credit card number and the in- 17 dividual’s first and last name. 18 19 (j) FINANCIAL INSTITUTIONS REGULATED ERAL BY FED- FUNCTIONAL REGULATORS.— 20 (1) IN GENERAL.—A covered financial institu- 21 tion shall be deemed in compliance with this section 22 if— 23 (A) the Federal functional regulator with 24 jurisdiction over the covered financial institu- 25 tion has issued a standard by regulation or November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 22 1 guideline under title V of the Gramm-Leach- 2 Bliley Act (15 U.S.C. 6801 et seq.) that— 3 (i) requires financial institutions with- 4 in its jurisdiction to provide notification to 5 individuals following a breach of security; 6 and 7 (ii) provides protections substantially 8 similar to, or greater than, those required 9 under this Act; and 10 (B) the covered financial institution is in 11 compliance with the standard under subpara- 12 graph (A). 13 (2) DEFINITIONS.—In this subsection— 14 (A) the term ‘‘covered financial institu- 15 tion’’ means a financial institution that is sub- 16 ject to— 17 (i) the data security requirements of 18 the Gramm-Leach-Bliley Act (15 U.S.C. 19 6801 et seq.); 20 (ii) any implementing standard issued 21 by regulation or guideline issued under 22 that Act; and 23 24 November 29, 2017 (2:00 p.m.) (iii) the jurisdiction of a Federal functional regulator under that Act; S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 23 1 (B) the term ‘‘Federal functional regu- 2 lator’’ has the meaning given the term in sec- 3 tion 509 of the Gramm-Leach-Bliley Act (15 4 U.S.C. 6809); and 5 (C) the term ‘‘financial institution’’ has 6 the meaning given the term in section 509 of 7 the Gramm-Leach-Bliley Act (15 U.S.C. 6809). 8 9 (k) EXEMPTION; HEALTH PRIVACY.— (1) COVERED ENTITY OR BUSINESS ASSOCIATE 10 UNDER HITECH ACT.—To 11 entity under this Act acts as a covered entity or a 12 business associate under section 13402 of the 13 Health Information Technology for Economic and 14 Clinical Health Act (42 U.S.C. 17932), has the obli- 15 gation to provide notification to individuals following 16 a breach of security under that Act or its imple- 17 menting regulations, and is in compliance with that 18 obligation, the covered entity shall be deemed in 19 compliance with this section. 20 (2) ENTITY the extent that a covered SUBJECT TO HITECH ACT.—To the 21 extent that a covered entity under this Act acts as 22 a vendor of personal health records, a third party 23 service provider, or other entity subject to section 24 13407 of the Health Information Technology for Ec- 25 onomical and Clinical Health Act (42 U.S.C. November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 24 1 17937), has the obligation to provide notification to 2 individuals following a breach of security under that 3 Act or its implementing regulations, and is in com- 4 pliance with that obligation, the covered entity shall 5 be deemed in compliance with this section. 6 (3) LIMITATION OF STATUTORY CONSTRUC- 7 TION.—Nothing 8 way to give effect to the sunset provision under sec- 9 tion 13407(g)(2) of the Health Information Tech- 10 nology for Economic and Clinical Health Act (42 11 U.S.C. 17937(g)(2)) or to otherwise limit or affect 12 the applicability, under section 13407 of that Act, of 13 the requirement to provide notification to individuals 14 following a breach of security for vendors of personal 15 health records and each entity described in clause 16 (ii), (iii), or (iv) of section 13424(b)(1)(A) of that 17 Act (42 U.S.C. 17953(b)(1)(A)). 18 (l) WEB SITE NOTICE 19 SION.—If in this Act may be construed in any OF FEDERAL TRADE COMMIS- the Commission, upon receiving notification of 20 any breach of security that is reported to the Commission, 21 finds that notification of the breach of security via the 22 Commission’s Internet Web site would be in the public in23 terest or for the protection of consumers, the Commission 24 shall place such a notice in a clear and conspicuous loca25 tion on its Internet Web site. November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 25 1 2 (m) FTC STUDY IN ADDITION TO ON NOTIFICATION IN LANGUAGES ENGLISH.—Not later than 1 year after 3 the date of enactment of this Act, the Commission shall 4 conduct a study on the practicality and cost effectiveness 5 of requiring the direct notification required by subsection 6 (d)(1) to be provided in a language in addition to English 7 to individuals known to speak only such other language. 8 (n) GENERAL RULEMAKING AUTHORITY.—The Com- 9 mission may promulgate regulations necessary under sec10 tion 553 of title 5, United States Code, to effectively en11 force the requirements of this section. 12 SEC. 4. NOTICE TO LAW ENFORCEMENT. 13 14 (a) DESIGNATION CEIVE OF GOVERNMENT ENTITY TO RE - NOTICE.—Not later than 60 days after the date 15 of enactment of this Act, the Secretary of the Department 16 of Homeland Security shall designate a Federal Govern17 ment entity to receive notice under this section. 18 (b) NOTICE.—A covered entity shall notify the des- 19 ignated entity of a breach of security if— 20 (1) the number of individuals whose personal 21 information was, or is reasonably believed to have 22 been, acquired or assessed as a result of the breach 23 of security exceeds 10,000; 24 (2) the breach of security involves a database, 25 networked or integrated databases, or other data November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 26 1 system containing the personal information of more 2 than 1,000,000 individuals; 3 4 (3) the breach of security involves databases owned by the Federal Government; or 5 (4) the breach of security involves primarily 6 personal information of individuals known to the 7 covered entity to be employees or contractors of the 8 Federal Government involved in national security or 9 law enforcement. 10 11 12 13 14 15 16 (c) CONTENT OF NOTICES.— (1) IN GENERAL.—Each notice under sub- section (b) shall contain— (A) the date, estimated date, or estimated date range of the breach of security; (B) a description of the nature of the breach of security; 17 (C) a description of each type of personal 18 information that was or is reasonably believed 19 to have been acquired or accessed as a result of 20 the breach of security; and 21 (D) a statement of each paragraph under 22 subsection (b) that applies to the breach of se- 23 curity. 24 (2) CONSTRUCTION.—Nothing in this section 25 shall be construed to require a covered entity to re- November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 27 1 veal specific or identifying information about an in- 2 dividual as part of the notice under paragraph (1). 3 (d) RESPONSIBILITIES 4 TY.—The OF THE DESIGNATED ENTI- designated entity shall promptly provide each 5 notice it receives under subsection (b) to— 6 (1) the United States Secret Service; 7 (2) the Federal Bureau of Investigation; 8 (3) the Federal Trade Commission; 9 (4) the United States Postal Inspection Service, 10 11 12 if the breach of security involves mail fraud; (5) the attorney general of each State affected by the breach of security; and 13 (6) as appropriate, other Federal agencies for 14 law enforcement, national security, or data security 15 purposes. 16 (e) TIMING OF NOTICES.—Notice under this section 17 shall be delivered as follows: 18 19 (1) Notice under subsection (b) shall be delivered as promptly as possible, but— 20 (A) not less than 3 business days before 21 notification to an individual under section 3; 22 and 23 24 November 29, 2017 (2:00 p.m.) (B) not later than 10 days after the date of discovery of the events requiring notice. S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 28 1 (2) Notice under subsection (d) shall be deliv- 2 ered as promptly as possible, but not later than 1 3 business day after the date that the designated enti- 4 ty receives notice of a breach of security from a cov- 5 ered entity. 6 SEC. 5. APPLICATION AND ENFORCEMENT. 7 (a) GENERAL APPLICATION.—The requirements of 8 sections 2 and 3 shall apply to— 9 (1) those persons, partnerships, or corporations 10 over which the Commission has authority under sec- 11 tion 5(a)(2) of the Federal Trade Commission Act 12 (15 U.S.C. 45(a)(2)); and 13 (2) notwithstanding sections 4 and 5(a)(2) of 14 the Federal Trade Commission Act (15 U.S.C. 44 15 and 45(a)(2)), any nonprofit organization, including 16 any organization described in section 501(c) of the 17 Internal Revenue Code of 1986 that is exempt from 18 taxation under section 501(a) of the Internal Rev- 19 enue Code of 1986. 20 (b) OPT-IN FOR CERTAIN OTHER ENTITIES.— 21 (1) IN GENERAL.—Notwithstanding sections 4 22 and 5(a)(2) of the Federal Trade Commission Act 23 (15 U.S.C. 44 and 45(a)(2)), the requirements of 24 section 3 shall apply to any other covered entity not 25 included under subsection (a) that enters into an November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 29 1 agreement with the Commission under which that 2 covered entity would be subject to section 3 with re- 3 spect to any acts or omissions that occur while the 4 agreement is in effect and that may constitute a vio- 5 lation of section 3, if— 6 (A) not less than 30 days prior to entering 7 into the agreement with the covered entity, the 8 Commission publishes notice in the Federal 9 Register of the Commission’s intent to enter 10 into the agreement; and 11 (B) not later than 14 business days after 12 entering into the agreement with the covered 13 entity, the Commission publishes in the Federal 14 Register— 15 (i) notice of the agreement; 16 (ii) the identity of each person covered 17 18 19 by the agreement; and (iii) the effective date of the agreement. 20 (2) CONSTRUCTION.— 21 (A) OTHER FEDERAL LAW.—An agreement 22 under paragraph (1) shall not effect a covered 23 entity’s obligation to provide notice of a breach 24 of security or similar event under any other 25 Federal law. November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 30 1 (B) NO PREEMPTION PRIOR TO VALID 2 AGREEMENT.—Subsections 3 section 7 shall not apply to a breach of security 4 that occurs before a valid agreement under 5 paragraph (1) is in effect. 6 7 (c) ENFORCEMENT BY THE (a)(2) and (b) of FEDERAL TRADE COM- MISSION.— 8 9 (1) UNFAIR TICES.—A OR DECEPTIVE ACTS OR PRAC- violation of section 2 or 3 of this Act 10 shall be treated as an unfair and deceptive act or 11 practice in violation of a regulation under section 12 18(a)(1)(B) of the Federal Trade Commission Act 13 (15 U.S.C. 57a(a)(1)(B)) regarding unfair or decep- 14 tive acts or practices. 15 (2) VIOLATION 16 LEACH-BLILEY ACT.—A 17 prescribed by the Commission under title V of the 18 Gramm-Leach-Bliley Act for the financial institu- 19 tions subject to the Commission’s jurisdiction (15 20 U.S.C. 6801 et seq.) shall be treated as an unfair 21 and deceptive act or practice in violation of a regula- 22 tion under section 18(a)(1)(B) of the Federal Trade 23 Commission Act (15 U.S.C. 57a(a)(1)(B)) regarding 24 unfair or deceptive acts or practices. November 29, 2017 (2:00 p.m.) OF TITLE V OF THE GRAMM- violation of a regulation S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 31 1 (3) POWERS OF COMMISSION.—The Commis- 2 sion shall enforce this Act in the same manner, by 3 the same means, with the same jurisdiction, except 4 as provided in subsections (a)(2) and (b) of this sec- 5 tion, and with the same powers and duties as though 6 all applicable terms and provisions of the Federal 7 Trade Commission Act (15 U.S.C. 41 et seq.) were 8 incorporated into and made a part of this Act. Any 9 covered entity who violates such regulations shall be 10 subject to the penalties and entitled to the privileges 11 and immunities provided in that Act. 12 (4) LIMITATION.—In promulgating rules under 13 this Act, the Commission shall not require the de- 14 ployment or use of any specific products or tech- 15 nologies, including any specific computer software or 16 hardware. 17 (d) ENFORCEMENT 18 BY STATE ATTORNEYS GEN- ERAL.— 19 (1) CIVIL ACTION.—In any case in which the 20 attorney general of a State, or an official or agency 21 of a State, has reason to believe that an interest of 22 the residents of that State has been or is threatened 23 or adversely affected by any covered entity who vio- 24 lates section 2 or section 3 of this Act, the attorney 25 general, official, or agency of the State, as parens November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 32 1 patriae, may bring a civil action on behalf of the 2 residents of the State in a district court of the 3 United States of appropriate jurisdiction— 4 5 6 7 8 9 10 (A) to enjoin further violation of such section by the defendant; (B) to compel compliance with such section; or (C) to obtain civil penalties in the amount determined under paragraph (2). (2) CIVIL PENALTIES.— 11 (A) CALCULATION.— 12 (i) TREATMENT OF VIOLATIONS OF 13 SECTION 2.—For 14 (1)(C) with regard to a violation of section 15 2, the amount determined under this para- 16 graph is the amount calculated by multi- 17 plying the number of days that a covered 18 entity is not in compliance with such sec- 19 tion by an amount not greater than 20 $11,000. 21 purposes of paragraph (ii) TREATMENT OF VIOLATIONS OF 22 SECTION 3.—For 23 (1)(C) with regard to a violation of section 24 3, the amount determined under this para- 25 graph is the amount calculated by multi- November 29, 2017 (2:00 p.m.) purposes of paragraph S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 33 1 plying the number of violations of such 2 section by an amount not greater than 3 $11,000. Each failure to send notification 4 as required under section 3 to a resident of 5 the State shall be treated as a separate 6 violation. 7 (B) ADJUSTMENT FOR INFLATION.—Be- 8 ginning on the date that the Consumer Price 9 Index is first published by the Bureau of Labor 10 Statistics that is after 1 year after the date of 11 enactment of this Act, and each year thereafter, 12 the amounts specified in clauses (i) and (ii) of 13 subparagraph (A) and in clauses (i) and (ii) of 14 subparagraph (C) shall be increased by the per- 15 centage increase in the Consumer Price Index 16 published on that date from the Consumer 17 Price Index published the previous year. 18 (C) MAXIMUM TOTAL LIABILITY.—Not- 19 withstanding the number of actions which may 20 be brought against a covered entity under this 21 subsection, the maximum civil penalty for which 22 any covered entity may be liable under this sub- 23 section shall not exceed— 24 25 November 29, 2017 (2:00 p.m.) (i) $5,000,000 for each violation of section 2; and S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 34 1 (ii) $5,000,000 for all violations of 2 section 3 resulting from a single breach of 3 security. 4 (3) INTERVENTION 5 (A) NOTICE BY THE FTC.— AND INTERVENTION.—The 6 State shall provide prior written notice of any 7 action under paragraph (1) to the Commission 8 and provide the Commission with a copy of its 9 complaint, except in any case in which such 10 prior notice is not feasible, in which case the 11 State shall serve such notice immediately upon 12 commencing such action. The Commission shall 13 have the right— 14 (i) to intervene in the action; 15 (ii) upon so intervening, to be heard 16 17 18 on all matters arising therein; and (iii) to file petitions for appeal. (B) LIMITATION ON STATE ACTION WHILE 19 FEDERAL ACTION IS PENDING.—If 20 sion has instituted a civil action for violation of 21 this Act, no State attorney general, or official 22 or agency of a State, may bring an action under 23 this subsection during the pendency of that ac- 24 tion against any defendant named in the com- November 29, 2017 (2:00 p.m.) the Commis- S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 35 1 plaint of the Commission for any violation of 2 this Act alleged in the complaint. 3 (4) CONSTRUCTION.—For purposes of bringing 4 any civil action under paragraph (1), nothing in this 5 Act shall be construed to prevent an attorney gen- 6 eral of a State from exercising the powers conferred 7 on the attorney general by the laws of that State— 8 (A) to conduct investigations; 9 (B) to administer oaths or affirmations; or 10 (C) to compel the attendance of witnesses 11 or the production of documentary and other evi- 12 dence. 13 14 (e) NOTICE FORCEMENT BY 15 TO LAW ENFORCEMENT; CIVIL EN- ATTORNEY GENERAL.— (1) IN GENERAL.—The Attorney General may 16 bring a civil action in the appropriate United States 17 district court against any covered entity that en- 18 gages in conduct constituting a violation of section 19 4. 20 (2) PENALTIES.— 21 (A) IN GENERAL.—Upon proof of such 22 conduct by a preponderance of the evidence, a 23 covered entity shall be subject to a civil penalty 24 of not more than $1,000 per individual whose 25 personal information was or is reasonably be- November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 36 1 lieved to have been accessed or acquired as a 2 result of the breach of security that is the basis 3 of the violation, up to a maximum of $100,000 4 per day while such violation persists. 5 (B) LIMITATIONS.—The total amount of 6 the civil penalty assessed under this subsection 7 against a covered entity for acts or omissions 8 relating to a single breach of security shall not 9 exceed $1,000,000, unless the conduct consti- 10 tuting a violation of section 4 was willful or in- 11 tentional, in which case an additional civil pen- 12 alty of up to $1,000,000 may be imposed. 13 (C) ADJUSTMENT FOR INFLATION.—Be- 14 ginning on the date that the Consumer Price 15 Index is first published by the Bureau of Labor 16 Statistics that is after 1 year after the date of 17 enactment of this Act, and each year thereafter, 18 the amounts specified in subparagraphs (A) and 19 (B) shall be increased by the percentage in- 20 crease in the Consumer Price Index published 21 on that date from the Consumer Price Index 22 published the previous year. 23 (3) INJUNCTIVE ACTIONS.—If it appears that a 24 covered entity has engaged, or is engaged, in any act 25 or practice that constitutes a violation of section 4, November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 37 1 the Attorney General may petition an appropriate 2 United States district court for an order enjoining 3 such practice or enforcing compliance with section 4. 4 (4) ISSUANCE OF ORDER.—A court may issue 5 such an order under paragraph (3) if it finds that 6 the conduct in question constitutes a violation of 7 section 4. 8 (f) CONCEALMENT OF BREACHES OF SECURITY.— 9 (1) IN GENERAL.—Chapter 47 of title 18, 10 United States Code, is amended by adding at the 11 end the following: 12 ‘‘§ 1041. Concealment of breaches of security involv13 14 ing personal information ‘‘(a) IN GENERAL.—Any person who, having knowl- 15 edge of a breach of security and of the fact that notifica16 tion of the breach of security is required under the Data 17 Security and Breach Notification Act, intentionally and 18 willfully conceals the fact of the breach of security, shall, 19 in the event that the breach of security results in economic 20 harm to any individual in the amount of $1,000 or more, 21 be fined under this title, imprisoned for not more than 22 5 years, or both. 23 ‘‘(b) PERSON DEFINED.—For purposes of subsection 24 (a), the term ‘person’ has the same meaning as in section 25 1030(e)(12) of this title. November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 38 1 ‘‘(c) ENFORCEMENT AUTHORITY.— 2 ‘‘(1) IN GENERAL.—The United States Secret 3 Service and the Federal Bureau of Investigation 4 shall have the authority to investigate offenses under 5 this section. 6 ‘‘(2) CONSTRUCTION.—The authority granted 7 in paragraph (1) shall not be exclusive of any exist- 8 ing authority held by any other Federal agency.’’. 9 (2) CONFORMING AND TECHNICAL AMEND- 10 MENTS.—The 11 18, United States Code, is amended by adding at 12 the end the following: table of sections for chapter 47 of title ‘‘1041. Concealment of breaches of security involving personal information.’’. 13 SEC. 6. DEFINITIONS. 14 In this Act: 15 (1) BREACH OF SECURITY.— 16 (A) IN GENERAL.—The term ‘‘breach of 17 security’’ means compromise of the security, 18 confidentiality, or integrity of, or loss of, data 19 in electronic form that results in, or there is a 20 reasonable basis to conclude has resulted in, 21 unauthorized access to or acquisition of per- 22 sonal information from a covered entity. 23 24 November 29, 2017 (2:00 p.m.) (B) EXCLUSIONS.—The term ‘‘breach of security’’ does not include— S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 39 1 (i) a good faith acquisition of personal 2 information by a covered entity, or an em- 3 ployee or agent of a covered entity, if the 4 personal information is not subject to fur- 5 ther use or unauthorized disclosure; 6 (ii) any lawfully authorized investiga- 7 tive, protective, or intelligence activity of a 8 law enforcement or an intelligence agency 9 of the United States, a State, or a political 10 subdivision of a State; or 11 (iii) the release of a public record not 12 otherwise subject to confidentiality or non- 13 disclosure requirements. 14 15 16 (2) COMMISSION.—The term ‘‘Commission’’ means the Federal Trade Commission. (3) COVERED ENTITY.—The term ‘‘covered en- 17 tity’’ means a sole proprietorship, partnership, cor- 18 poration, trust, estate, cooperative, association, or 19 other commercial entity, and any charitable, edu- 20 cational, or nonprofit organization, that acquires, 21 maintains, or utilizes personal information. 22 (4) DATA IN ELECTRONIC FORM.—The term 23 ‘‘data in electronic form’’ means any data stored 24 electronically or digitally on any computer system or November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 40 1 other database, including recordable tapes and other 2 mass storage devices. 3 (5) DESIGNATED ENTITY.—The term ‘‘des- 4 ignated entity’’ means the Federal Government enti- 5 ty designated by the Secretary of Homeland Security 6 under section 4. 7 (6) ENCRYPTION.—The term ‘‘encryption’’ 8 means the protection of data in electronic form in 9 storage or in transit using an encryption technology 10 that has been adopted by an established standards 11 setting body which renders such data indecipherable 12 in the absence of associated cryptographic keys nec- 13 essary to enable decryption of such data. Such 14 encryption must include appropriate management 15 and safeguards of such keys to protect the integrity 16 of the encryption. 17 (7) IDENTITY THEFT.—The term ‘‘identity 18 theft’’ means the unauthorized use of another per- 19 son’s personal information for the purpose of engag- 20 ing in commercial transactions under the identity of 21 such other person, including any contact that vio- 22 lates section 1028A of title 18, United States Code. 23 (8) MAJOR CREDIT REPORTING AGENCY.—The 24 term ‘‘major credit reporting agency’’ means a con- 25 sumer reporting agency that compiles and maintains November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 41 1 files on consumers on a nationwide basis within the 2 meaning of section 603(p) of the Fair Credit Re- 3 porting Act (15 U.S.C. 1681a(p)). 4 (9) PERSONAL INFORMATION.— 5 (A) DEFINITION.—The term ‘‘personal in- 6 formation’’ means any information or compila- 7 tion of information that includes— 8 9 (i) a non-truncated social security number; 10 (ii) a financial account number or 11 credit or debit card number in combination 12 with any security code, access code, or 13 password that is required for an individual 14 to obtain credit, withdraw funds, or engage 15 in a financial transaction; or 16 (iii) an individual’s first and last 17 name or first initial and last name in com- 18 bination with— 19 (I) a driver’s license number, a 20 passport number, or an alien registra- 21 tion number, or other similar number 22 issued on a government document 23 used to verify identity; 24 (II) unique biometric data such 25 as a finger print, voice print, retina or November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 42 1 iris image, or any other unique phys- 2 ical representation; 3 (III) a unique account identifier, 4 electronic identification number, user 5 name, or routing code in combination 6 with any associated security code, ac- 7 cess code, or password that is re- 8 quired for an individual to obtain 9 money, goods, services, or any other 10 thing of value; or 11 (IV) 2 of the following: 12 (aa) Home address or tele- 13 phone number. 14 (bb) Mother’s maiden name, 15 if identified as such. 16 (cc) Month, day, and year of 17 18 birth. (B) MODIFIED DEFINITION BY RULE- 19 MAKING.—If 20 the definition under subparagraph (A) is not 21 reasonably sufficient to protect individuals from 22 identity theft, fraud, or other unlawful conduct, 23 the Commission by rule promulgated under sec- 24 tion 553 of title 5, United States Code, may 25 modify the definition of ‘‘personal information’’ November 29, 2017 (2:00 p.m.) the Commission determines that S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 43 1 under subparagraph (A) to the extent the modi- 2 fication will not unreasonably impede interstate 3 commerce. 4 SEC. 7. EFFECT ON OTHER LAWS. 5 (a) PREEMPTION OF STATE INFORMATION SECURITY 6 LAWS.— 7 (1) COVERED ENTITIES UNDER SECTION 8 5(a).—With respect to a covered entity subject to 9 the Act under section 5(a), this Act supersedes any 10 provision of a statute, regulation, or rule of a State 11 or political subdivision of a State that expressly— 12 (A) requires information security practices 13 and treatment of data containing personal in- 14 formation, as defined in section 6, similar to 15 any of those required under section 2; or 16 (B) requires notification to individuals of a 17 breach of security of personal information as 18 defined in section 6. 19 (2) COVERED ENTITIES UNDER SECTION 20 5(b).—With respect to a covered entity subject to 21 the Act under section 5(b), this Act supersedes any 22 provision of a statute, regulation, or rule of a State 23 or political subdivision of a State that expressly re- 24 quires notification to individuals of a breach of secu- 25 rity of personal information as defined in section 6. November 29, 2017 (2:00 p.m.) S:\LEGCNSL\LEXA\DOR17\DEM\CN\BILL\DATA17.2S.xml 44 1 (b) ADDITIONAL PREEMPTION.— 2 (1) IN GENERAL.—No person other than a per- 3 son specified in section 5(d) may bring a civil action 4 under the laws of any State if such action is pre- 5 mised in whole or in part upon the defendant vio- 6 lating any provision of this Act. 7 (2) PROTECTION OF CONSUMER PROTECTION 8 LAWS.—Except 9 section, this subsection shall not be construed to 10 limit the enforcement of any State consumer protec- 11 tion law by an attorney general of a State. 12 (c) PROTECTION as provided in subsection (a) of this OF CERTAIN STATE LAWS.—This 13 Act shall not be construed to preempt the applicability 14 of— 15 (1) State trespass, contract, or tort law; or 16 (2) any other State laws to the extent that 17 those laws relate to acts of fraud. 18 (d) PRESERVATION OF FTC AUTHORITY.—Nothing 19 in this Act may be construed in any way to limit or affect 20 the Commission’s authority under any other provision of 21 law. 22 SEC. 8. EFFECTIVE DATE. 23 This Act and the amendments made by this Act shall 24 take effect 1 year after the date of enactment of this Act. November 29, 2017 (2:00 p.m.)