[Senate Hearing 112-221]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-221

       PROTECTING CYBERSPACE: ASSESSING THE WHITE HOUSE PROPOSAL

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE



                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 23, 2011

                               __________

        Available via the World Wide Web: http://www.fdsys.gov/

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs








                                _____

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20402-0001







        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  JERRY MORAN, Kansas

                  Michael L. Alexander, Staff Director
                   Jeffrey E. Greene, Senior Counsel
              Matthew R. Grote, Professional Staff Member
               Nicholas A. Rossi, Minority Staff Director
   Brendan P. Shields, Minority Director of Homeland Security Policy
          Denise E. Zheng, Minority Professional Staff Member
                  Trina Driessnack Tyrer, Chief Clerk
         Patricia R. Hogan, Publications Clerk and GPO Detailee
                    Laura W. Kilbride, Hearing Clerk















                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Lieberman............................................     1
    Senator Collins..............................................     4
    Senator Carper...............................................     6
Prepared statements:
    Senator Lieberman............................................    35
    Senator Collins..............................................    38

                               WITNESSES
                          Monday, May 23, 2011

Philip R. Reitinger, Deputy Under Secretary, National Protection 
  and Programs Directorate, U.S. Department of Homeland Security.     8
Robert J. Butler, Deputy Assistant Secretary for Cyber Policy, 
  U.S. Department of Defense.....................................    10
Ari Schwatz, Senior Internet Policy Advisor, National Institute 
  of Standards and Technology, U.S. Department of Commerce.......    11
Jason C. Chipman, Senior Counsel to the Deputy Attorney General, 
  U.S. Department of Justice.....................................    13

                     Alphabetical List of Witnesses

Butler, Robert J.:
    Testimony....................................................    10
    Joint prepared statement.....................................    40
Chipman, Jason C.:
    Testimony....................................................    13
    Joint prepared statement.....................................    40
Reitinger, Philip R.:
    Testimony....................................................     8
    Joint prepared statement.....................................    40
Schwartz, Ari:
    Testimony....................................................    11
    Joint prepared statement.....................................    40

                                APPENDIX

Responses to post-hearing questions for the Record from:
    Mr. Reitinger, Mr. Butler, Mr. Schwartz, and Mr. Chipman.....    46

 
       PROTECTING CYBERSPACE: ASSESSING THE WHITE HOUSE PROPOSAL

                              ----------                              


                          MONDAY, MAY 23, 2011

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:33 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Joseph I. 
Lieberman, Chairman of the Committee, presiding.
    Present: Senators Lieberman, Carper, and Collins.

            OPENING STATEMENT OF CHAIRMAN LIEBERMAN

    Chairman Lieberman. Good morning. The hearing will come to 
order. Thanks to everyone for being here. Thanks particularly 
to the representatives of the Administration who are before us 
as witnesses.
    If there is anyone who does not believe that we urgently 
need to pass strong cybersecurity legislation, which is the 
topic of our hearing today, I would tell them to look at some 
of the high-profile computer attacks that have happened in the 
past several months, that is, the ones that we know about.
    Let us just take the Sony Corporation as an example. In two 
separate attacks, hackers stole the personal and billing 
information, including reportedly some of the credit card 
numbers, of 100 million people. And when the Sony site finally 
reopened last Thursday, the company found that they had not 
actually been able to close all the vulnerabilities that had 
been opened up in the wake of the first two attacks and that 
hackers could still use the information to hijack users' 
accounts.
    If that does not convince skeptics we have a real 
cybersecurity problem in America, then consider the breaches 
that have occurred in the cyber systems of organizations that 
specialize in cybersecurity. Take our own Oak Ridge National 
Laboratory, which has a very important role in fulfilling the 
Department of Energy's responsibility to secure our electric 
grid from cyber attack, whether by enemy nations or cyber 
terrorists. Oak Ridge National Laboratory was itself 
successfully cyber attacked just last month.
    Or one that has been widely described in the media, RSA, a 
company whose SecurID program is used by about 40 million 
entities, users, really, at 30,000 companies, including parts 
of the Federal Government. And those parts include the Social 
Security Administration, the Department of Defense (DOD), and 
the U.S. Senate. RSA had valuable security information stolen 
from its computers that could compromise these systems and 
actually be used in future attacks.
    So, bottom line--and these are just a few examples, and 
again, these are examples that are on the public record--if we 
do not do something soon, the Internet is going to become a 
digital Dodge City. Cyberspace is just too important to modern 
life for us to sit back and allow that to happen. This is a 
place that really cries out for law. It is time to say, if I 
may continue the Dodge City metaphor, that there is a new 
sheriff in town and we are going to have some law and order 
around here, and we could do that, of course, without 
compromising, in effect, alongside elevating liberty and 
privacy.
    The recent release of the White House's proposed 
cybersecurity legislation is a very important step in that 
direction. I think it represents a turning point in our efforts 
to pass the strong measures we need to protect consumers, 
businesses, critical infrastructure, and our national security 
from cyber attack by terrorists, spies, or crooks.
    I am pleased not just by the appearance of the 
Administration's cybersecurity legislation, but by its 
substance. The President's proposal is similar in many ways to 
legislation this Committee reported out earlier in this session 
of Congress, and where there are differences, I think we can 
work together to find agreement. So I am, in this regard, very 
grateful to the witnesses for appearing before us today. This 
is the first public testimony that the Administration has given 
on its cybersecurity proposal since it was released.
    One important area of agreement is the recognition that the 
Department of Homeland Security must be given the job of 
protecting the ``dot-gov'' and ``dot-com'' domains. In other 
words, the Department of Homeland Security (DHS) will be the 
new sheriff in cyber-town that we need. A crucial part of this 
job will be for DHS to identify critical cyber infrastructure, 
the systems or assets that control things like power plants, 
electric grids, and pipelines that, if commandeered by our 
enemies, could lead to havoc and, of course, death and 
destruction. DHS needs that authority and also the ability to 
evaluate the risks to those systems.
    Once the systems and risks have been identified, their 
owners and operators, under the proposal that we have made, 
will be required to develop plans to safeguard their systems. 
Those plans will be reviewed to ensure they will actually 
improve security, reviewed in our proposal by the Department of 
Homeland Security, in the White House proposal by government-
accredited third-party evaluators.
    Just last week, if I may say, in our role as oversight 
Committee of the Department of Homeland Security, that we saw 
an example of why this kind of planning is so necessary and why 
the Department of Homeland Security has raised itself to a 
quality of performance that it deserves to have the job. A 
private researcher apparently discovered a major security flaw 
in a widely-used industrial control system and planned to 
present this research at a conference. When personnel at the 
Department of Homeland Security discovered this and explained 
to the researcher how dangerous it would be to have this 
information out in public before the security flaws had been 
patched, he voluntarily canceled his talk. This is very 
important because another cybersecurity expert said of this 
particular vulnerability, ``This is different from simply 
stealing money out of someone's bank account. Things could 
explode.''
    Besides securing critical infrastructure, our bill and the 
White House bill would direct the Department of Homeland 
Security to work cooperatively and on a voluntary basis with 
the private sector and State and local governments to share 
cybersecurity risk and best practice information.
    The White House proposal also clears the way for industry 
to share cybersecurity information without having to worry 
about running afoul of various privacy statutes that impede 
information sharing now. The business and government 
communities would be free to use this advice as best suits 
their needs. There would be no one-size-fits-all mandates or 
dictates.
    Both the White House bill and our Committee bill also 
contain robust privacy oversight to ensure that our broader 
cybersecurity efforts do not impact individual privacy or civil 
liberties.
    And finally, both our proposals would also reform and 
update the Federal Information Security Management Act (FISMA) 
to require continuous monitoring and protection of our Federal 
computer networks and to do away with the current paper-based 
reporting system.
    Now, one key difference between our bill and the White 
House proposal is that our legislation creates a White House 
Office of Cyberspace Policy with a Senate-confirmed leader. We 
believe that the stakes are so high when it comes to 
cybersecurity for our country that whoever holds that position 
should be confirmed by the Senate and, therefore, accountable 
to Congress.
    Our Committee's bill would also clarify the President's 
authority to act in the event of a true cyber emergency while 
at the same time ensuring that the President cannot take any 
action that would limit free speech or shut down the Internet. 
In its original version, this section was, in our opinion, 
misconstrued, and we have tried in the language that was 
reported out of Committee to reassure everybody about the 
limitations, the very limited circumstances under which the 
President could act and the limited range of his actions.
    The Administration, on the other hand, and I will be 
interested in discussing this, believes that additional 
statutory authority in this regard is unnecessary because the 
President has the authority that we give him in this proposal 
already in existing law.
    Bottom line, the Internet is a thrilling new frontier of 
our age, with a plugged-in population of almost two billion 
now, and that number is growing every day. The Internet has 
created a revolution in commerce, communications, 
entertainment, finance, and government, really, just about 
every aspect of our lives. But what we are saying is that it 
must not be a lawless frontier. I believe that with the 
proposals we have in front of us, we can bring about the needed 
change this year to make the Internet safer and more secure.
    The Majority Leader, Senator Harry Reid, has taken a very 
active interest in this legislation. It remains a priority of 
his for this session. I have said to him that I believe it is 
the most important piece of legislation coming out of our 
Homeland Security Committee in this session. He is working, I 
am pleased to say, with the Republican leader, Senator Mitch 
McConnell, as Senator Collins and I, of course, have worked 
together here. There are five or six different committees of 
the Senate that claim some part of the jurisdiction over this 
subject matter, and I believe it is the intention of the 
bipartisan leadership of the Senate to establish a process by 
which all those Committees can, as quickly as possible, 
negotiate any remaining differences in the bills that have come 
out of committee so that we can bring it to the Senate floor as 
quickly as possible.
    We have had a very successful round of negotiations with 
the Commerce Committee, which is the other committee claiming 
major jurisdiction here, and we have resolved just about all of 
the differences, not every one, but just about every one that 
we had between us.
    Now, before I yield to Senator Collins, I want to just take 
a moment to thank Phil Reitinger, who, as Deputy Under 
Secretary of the National Protection and Programs Directorate 
has done a great job in a relatively short period of time, 
really elevating the quality of the cybersecurity operations at 
DHS and has been a real leader in crafting this White House 
proposal, including working very productively and cooperatively 
with our Committee. So we thank you for that, Mr. Reitinger.
    With the bill finalized, as I suppose most people in the 
room know, Mr. Reitinger has decided to move on to the next 
great chapter of his life. I am not going to put him under oath 
to have him declare exactly what that will be yet, but whatever 
it is, we wish you well and thank you for your public service, 
which has made a real difference to our country.
    Senator Collins.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. Thank you, Mr. Chairman.
    Let me begin by saying that I am very pleased that the 
Administration is now fully engaged on the imperative issue of 
drafting and passing cybersecurity legislation. Experts tell me 
that the cyber arena is where the biggest gap exists between 
the threat level and vulnerabilities and our level of 
preparedness.
    Virtually every week, we learn of another massive cyber 
breach. The company that authenticates users seeking to access 
Senate networks was hacked. As the Chairman has indicated, 
Sony's online gaming network was breached. This morning, we 
read in our newspapers that the repressive government of Syria 
attacked the social media sites of dissidents and protesters.
    The truth is that the number and sophistication of cyber 
attacks continue to grow each and every day. The Federal Bureau 
of Investigations (FBI) reports that small and medium-sized 
businesses in our country lost more than $11 million over the 
past year in online scams in which stolen banking credentials 
were used for fraudulent buyer transfers to Chinese companies. 
Worldwide, the annual cost of cyber crime has climbed to more 
than $1 trillion. And according to the alarming testimony last 
year from the office of the Senate Sergeant at Arms, on 
average, each month, 1.8 billion cyber attacks target the 
computer systems of Congress and the Executive Branch.
    Unfortunately, the government's overall approach to 
cybersecurity has been disjointed and uncoordinated to date. 
The threat is simply too great to allow this to continue. The 
need for Congress to pass comprehensive cybersecurity 
legislation is more urgent than ever.
    So I am pleased that the White House has now joined the 
efforts that this Committee has undertaken over the past few 
years to develop a bill to help safeguard the American people 
from a cyber September 11, 2001. I am also encouraged that the 
Administration's approach is similar in many respects to our 
framework. Both bills call for a strong public-private 
partnership to improve cybersecurity. Our bill would bolster 
sharing within the private sector and across government of 
actionable threat intelligence that would help protect the 
private sector from advanced cyber threats. It would also 
direct the Department of Homeland Security to collaborate with 
the private sector to develop and promote cybersecurity best 
practices.
    Like our bill, the White House proposal recognizes that the 
Department of Homeland Security should be the appropriate 
agency to lead the Federal effort to secure Federal civilian 
agencies, the dot-gov domain, as well as the critical 
infrastructure in the private sector and public sector against 
cyber threats.
    I believe that cybersecurity at DHS must be led by a strong 
and empowered director who can close the coordination gaps that 
now exist. This leader should report directly to the Secretary 
of Homeland Security and also serve as the principal adviser to 
the President on cybersecurity. To me, the best construct, 
which is not included in the White House proposal, is modeled 
on the National Counterterrorism Center and would apply a 
multi-agency approach to this issue that would be within DHS, 
and I look forward to exploring that issue with our witnesses 
this morning.
    On a positive note, the Administration's approach to 
securing our Nation's most critical infrastructure is very 
similar to the risk-based approach in our bill. Our bill 
differs, however, in providing liability protection as an 
incentive for companies to maintain continuous compliance with 
risk-based performance requirements.
    We should also detail the extent of the President's 
authority to deal with cyber emergencies. As the Chairman has 
pointed out, our bill has explicit provisions preventing the 
President from shutting down the Internet. It also places 
limits on the length of any emergency actions, requires 
reporting to Congress, ensures remedial actions are the least 
disruptive steps feasible, and includes privacy protections. By 
contrast, and I must say this baffles me, the Administration 
appears to be relying on outmoded yet potentially sweeping 
authorities granted in the Communications Act of 1934. I want 
to emphasize that date to point out just how outmoded those 
authorities are.
    Our bill explicitly calls for the development of a supply 
chain strategy to leverage the Federal Government's buying 
power to drive improvements in cybersecurity. This would have 
beneficial ripple effects in the larger commercial market. As a 
very large customer, the Federal Government can contract with 
companies to innovate and improve the security of their 
information technology (IT) services and products. These 
innovations could lead to new security baseline for services 
and products offered to the private sector and the general 
public without mandating specific market outcomes.
    In addition, our bill would give DHS the authority to hire 
and retain highly qualified cybersecurity professionals.
    I look forward to discussing these important issues with 
our witnesses today, but most of all, to working together to 
finally secure the passage of comprehensive cybersecurity 
legislation.
    Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks, Senator Collins. Thank you very 
much.
    Senator Carper has been a cosponsor with Senator Collins 
and me of the legislation originally introduced, particularly 
with interest over the longer haul in the FISMA part of the 
bill, but overall, and I would welcome an opening statement 
from you at this time.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. Thanks, Mr. Chairman. I am delighted to 
give one. As the clock was ticking down into this weekend and 
we were approaching the end of the world----
    Chairman Lieberman. Yes. [Laughter.]
    Senator Carper [continuing]. I was thinking, we worked so 
hard to try to develop consensus on this Committee----
    Chairman Lieberman. Right.
    Senator Carper [continuing]. With the Commerce Committee, 
and with the Administration. It would really be a shame if it 
all ended before we got this done.
    Chairman Lieberman. It could be that is why it did not end.
    Senator Carper. The good news is we are all still here. The 
bad news is, so are the hackers that are trying to get into our 
bank accounts and steal our secrets, whether military secrets 
or all kinds of trade secrets, innovation secrets. I guess if 
you had to choose between one outcome or the other, this is 
probably the better outcome, and I am pleased that we have some 
consensus that is building. I really want to thank both of you 
for helping to spearhead that.
    I am delighted that we are moving swiftly to hold this 
hearing on the Administration's proposal to improve our 
Nation's ability to defend against cyber attacks, and I ran 
into a couple of these fellows earlier this morning coming into 
the Dirksen Building. One of them actually had his father in 
tow, and we especially welcome him and thank him for sharing 
his son with us.
    It has now been nearly 10 years since September 11, 2001, 
and over that period of time, our country has done a tremendous 
amount of work to defend against the kinds of attacks that we 
saw that day. We started with our airports, launching pad of 
the destruction the September 11, 2001 terrorists inflicted 
upon us, and under your leadership, Mr. Chairman, and the 
leadership of Senator Collins, we then dramatically reorganized 
our government to better prevent attacks and prepare for the 
consequences of both natural and manmade disasters. We have 
also worked to better secure our ports, our mass transit 
systems, our chemical facilities, and other key pieces of our 
infrastructure.
    Today, the architect of September 11, 2001, is dead. And 
while we still face many threats, I think we can say that our 
country is, in a number of ways, safer, I think maybe much 
safer, than it was on September 10, 2001. That does not mean we 
sit back and take it easy. We are not going to do that. But we 
do face a new threat today that I do not think was even on our 
radar screen 10 years ago. More and more Americans live their 
lives and conduct their businesses online, and this has created 
an attractive target for hackers and criminals looking to steal 
information or money or just to cause mischief.
    At the same time, we have an increased reliance on 
sophisticated technology to keep the lights on, keep our water 
clean, run our factories, and even to fight wars and defend our 
country. Terrorists with the ability to compromise and damage 
or destroy the technology we depend on every day could cause 
serious damage, potentially even on the scale of a cyber 
September 11, 2001.
    In past congresses, I have introduced legislation that 
would begin the process of addressing our cyber vulnerabilities 
by improving the way in which Federal agencies secure their 
networks. Over the course of a series of hearings, the 
Subcommittee on Federal Financial Management, Government 
Information, Federal Services, and International Security, 
which I chair, learned that agencies were relying on an 
outdated, expensive, paperwork-heavy systems to secure the 
technology they rely on to serve the public and protect the 
important data they are entrusted with. Nobody could say for 
sure that the system worked and that our agencies were safe 
from cyber attack. My legislation aimed to hold agencies 
accountable for continuously monitoring their networks to 
ensure that they are as secure as possible at all times.
    Last year, Mr. Chairman, I was pleased to join with you and 
Senator Collins in developing comprehensive cybersecurity 
legislation that would have better secured agency networks 
while also beginning the process of working with the private 
sector to secure the critical systems that they own. We 
introduced what I think as an improved version of our bill 
again this year.
    As my colleagues are aware, it has proven difficult so far 
this year to find bipartisan consensus on many issues here in 
the Senate. I have a feeling, though, that it might just be 
possible in this instance to work across the aisle, like we did 
after September 11, 2001, to address the serious security 
challenges that we face as a country. It is my hope, however, 
that we can act this time before the damage is done.
    Thank you. It is great to be here with both of you and we 
look forward to hearing from our witnesses.
    Chairman Lieberman. Thanks, Senator Carper.
    Let me just stress something you said. A while back, 
Senator Reid and Senator McConnell called in the chairs of the 
six committees with jurisdiction over some aspect of 
cybersecurity and the Ranking Republican members. It is a sad 
fact of life around here that I cannot remember the last time 
that happened. But it also, in this regard, shows how seriously 
the bipartisan leadership of the Senate takes the cybersecurity 
challenge. And though there are differences that may, in at 
least one case, fall on partisan lines, this is not a partisan 
debate. It is a national security debate. And it is an economic 
growth and security debate. I am confident we are going to go 
at it with national interests first and partisan interests way 
behind.
    Mr. Reitinger, welcome. This could be the last time you 
come before us as a witness, so we are probably going to be 
especially brutal in our cross examination. But, truthfully, 
thanks for all you have done and we welcome your testimony now.

 TESTIMONY OF PHILIP R. REITINGER,\1\ DEPUTY UNDER SECRETARY, 
 NATIONAL PROTECTION AND PROGRAMS DIRECTORATE, U.S. DEPARTMENT 
                      OF HOMELAND SECURITY

    Mr. Reitinger. Thank you very much, Chairman Lieberman, 
Ranking Member Collins, and Senator Carper, for your leadership 
on this issue.
---------------------------------------------------------------------------
    \1\ The joint prepared statement of Mr. Reitinger, Mr. Butler, Mr. 
Schwatz, and Mr. Chipman appears in the Appendix on page 40.
---------------------------------------------------------------------------
    The bipartisan approach and the leadership this Committee 
has shown on this issue has been inspiring to me and the many 
people I work with, and I would like to thank you, as you 
thanked me for my efforts, for your efforts to keep this issue 
on the front burner and to move forward.
    Clearly, where you stand depends on where you sit, and I 
sit in cybersecurity. I would agree with all three of you that 
there is no more important issue that we need to address in the 
immediate future than that of cybersecurity. Clearly, the 
threats are real and they are growing. The hackers are getting 
better and better and better day to day, and we are depending 
more and more on the infrastructure which they are attacking 
every day. This makes our risk profile more and more 
significant.
    It is an issue of intellectual property. Our intellectual 
property is being stolen. It is an issue of identity theft and 
our personal information being stolen. But it is much more than 
that. It is a national security issue. Can we deploy our assets 
to defend our country? It is a homeland security issue. When 
you call 911, do people show up? And it is an issue of critical 
infrastructure protection, not just, again, are our assets 
taken, but is the power on? Are the phone systems working? Do 
we have the services we need to operate as a country? No other 
issue, to my mind, ties together the need for economic success, 
for economic security, for national security, and homeland 
security like this issue.
    This is a place where we must move forward and we must 
focus on outcomes. How do we ensure that government has the 
authorities and the processes and the private sector is moving 
forward in the right way to jointly advance this issue?
    So given the leadership that this Committee has shown, 
including the work that was done by it in the past Congress, 
the Administration worked long and hard to put together a 
legislative proposal which we transmitted to Congress a couple 
of weeks ago. Certainly, it is a broad issue, but one that does 
not cover all of the subjects that had been under discussion on 
the Hill, and we recognize that. So it is the Administration's 
input into the discussion and not a bill that we expect the 
Congress to pass without discussion. We look forward strongly 
to the discussions that we will have with the Members of this 
Committee and with the Senate and the House, generally, to make 
sure that we all move forward in a bipartisan way.
    And I cannot emphasize, as a number of the Senators did, 
the importance of approaching this in a bipartisan way going 
forward. Cybersecurity cuts across these issues. The 
Administration's approach over time has not been to say the 
work of the past Administration was wrong. Therefore, we are 
going to go in a different direction. Instead, we have tried to 
take the Comprehensive National Cybersecurity Initiative, which 
began in the Bush Administration, and continue to advance its 
efforts and enhance them so that we could move forward as a 
Nation.
    So this proposal does a number of things. It is divided 
into three main categories: Protecting the American people, 
protecting government systems, and protecting critical 
infrastructure. I am going to talk about some of the proposals 
in those last two categories rather briefly and then I am happy 
to explore them in the question and answer session.
    Within the protecting of the critical infrastructure, one 
of the things that the bill does, as the Senator indicated, is 
it gives DHS much clearer authority and responsibility to work 
in a voluntary way with the private sector. The government does 
not have all of the answers, but it has some of the answers and 
it can help the private sector. And so it gives DHS the mission 
and authorities to help the private sector.
    It, as the Chairman indicated, speeds information sharing 
so that we can get much better data much more rapidly from the 
private sector so we can have real situational awareness, a 
real national common operating picture of what the threats look 
like.
    And it, as was discussed in the opening statements of the 
Senators, creates a framework very similar in many ways to that 
which the Committee included in its bill that would bring 
private sector efforts to bear, provide benefits to the private 
sector companies that identify a set of risks, cybersecurity 
risks to be identified by DHS, as in the Lieberman-Collins-
Carper proposal that came up in the last Congress, with some 
differences, but a very similar approach.
    With regard to protecting the government, the bill does a 
number of things. It takes a number of the proposals, that 
Senator Carper has been in the lead in advancing, in 
modernizing FISMA, taking the ongoing work that has been moving 
forward to move policy, operational, and oversight mechanisms 
from the Office of Management and Budget (OMB) to the 
Department of Homeland Security so we could unite all of those 
things and then have the capability to observe in real time by 
continuously monitoring agency networks, as it has been called 
for, focus on outcomes, and when problems arise, respond to 
them in real time. Change policy, change oversight, change 
mechanisms, creating that center of gravity that the Chairman 
referred to, to much more aggressively protect Federal networks 
under the Federal Information Security Management Act.
    It strengthens DHS's role to deploy more rapidly intrusion 
protection, intrusion prevention, and other mechanisms for the 
Federal Government, for example, resolving some of the legal 
questions that have slowed the deployment of EINSTEIN 2 and 
EINSTEIN 3 systems. We are continuing to move forward 
aggressively to deploy them, but the more rapidly we can do 
that, the better. And it gives DHS, recognizing our similar 
role to the Department of Defense with regard to Federal 
civilian networks, similar authorities with regard to 
personnel, so we could hire people and bring them on board as 
rapidly as they can in the Department of Defense.
    In conclusion, I would simply like to say, in reference to 
your comments, Chairman, I wanted to offer my thanks to this 
Committee. I have been with the Department a little over 2 
years and it has been one of the best experiences of my life. 
It has been a real opportunity to serve my country. As I said 
at the start, I have found the work of this Committee and the 
focus that you have brought to the issue inspiring to me and 
inspiring to the entire team I have, including a number of 
people who are seated behind me, such as Assistant Secretary 
Greg Schaffer, who will be the Acting Deputy Under Secretary 
when I depart.
    Thank you very much for your leadership of this issue. I 
look forward to continuing to work with you in whatever new 
role comes to me. Thank you.
    Chairman Lieberman. Thank you very much.
    We will go now to Robert Butler, Deputy Assistant Secretary 
of Defense for Cyber Policy. Thanks for being here.

 TESTIMONY OF ROBERT J. BUTLER,\1\ DEPUTY ASSISTANT SECRETARY 
          FOR CYBER POLICY, U.S. DEPARTMENT OF DEFENSE

    Mr. Butler. Thank you, Chairman Lieberman, Senator Collins, 
and Senator Carper. It truly is a distinct honor and privilege 
to be before you today. From the Department of Defense's 
perspective, as has been discussed, we focus first and 
initially on the threat, a threat that continues to grow 
against our critical information systems that comes from nation 
states, terrorists, criminal organizations, and malicious 
hackers.
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    \1\ The joint prepared statement of Mr. Reitinger, Mr. Butler, Mr. 
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    DOD is reliant, as you know, on the Nation's critical 
infrastructure, whether we are talking about deployment or 
employment of forces. We are critically dependent on power 
generation, all modes of the transportation sector, 
telecommunications, of course, and the defense industrial base 
to perform the missions that we have been assigned as well as 
are expected to do overseas.
    Just as our reliance on critical infrastructure has grown, 
so, too, have the threats that we are facing today. Probably 
the most perplexing concern is the asymmetric threats, the 
threats that continue to advance in sophistication and in 
persistence. And so it is not just about intellectual property 
theft today, but the real possibility of a large-scale attack 
on any segment of America's critical infrastructure that would 
be disruptive to our way of life.
    I believe that fact has been recognized and encouraged 
discussion on the matter of what we are about to deal with 
today. And, in fact, as the President has stated, the status 
quo is really no longer acceptable, not when there is so much 
at stake and we can and must do better.
    The most important aspect from DOD's perspective as we look 
at the Nation's critical infrastructure and what to do about it 
is really that it is not dependent upon any particular entity 
or party. It really requires a whole of government and really a 
whole of America approach, necessitating many different Federal 
agencies, State governments, and the private sector to work 
together.
    This proposed legislation is an important step in that 
direction. It breaks down the barriers to information sharing 
so that stakeholders can really communicate effectively. It 
updates the criminal statutes, such as the Racketeering, 
Influenced, and Corrupt Organizations Act, to deter criminal 
activity. It engages the private sector as valuable 
stakeholders and really strengthens the ability of the 
Department of Homeland Security to lead the Executive Branch in 
defending the Nation against this threat. As Mr. Reitinger has 
explained, it really advances us not only in FISMA, but in 
other provisions, especially in growing the next generation 
workforce and hiring practices and exchange of personnel. 
Importantly, this legislation accomplishes all of this while 
respecting the values of freedom and ensuring the protection of 
privacy and civil liberties that we cherish so deeply in our 
country.
    The Department of Defense has an important role, as you 
know, in protecting the military networks and the national 
security systems while providing support and technical 
capabilities to help protect other critical infrastructure. DOD 
has and will continue to work hand-in-hand with the departments 
alongside of us here at this table as well as the other 
Departments within the Executive Branch and with the private 
sector, in countering cyber threats and protecting our national 
critical infrastructure. We really look forward to the 
leadership that this Committee has taken and working with 
Congress to make sure the Executive Branch has the appropriate 
authorities for cybersecurity and improving the overall 
security and safety of our Nation. Thank you.
    Chairman Lieberman. Thank you, Mr. Butler. I appreciate 
that you are here.
    Next, we will go to a familiar face at the Committee, Ari 
Schwartz, who is here before us today as the Senior Internet 
Policy Advisor at the National Institute of Standards and 
Technology (NIST) at the Department of Commerce. Thank you for 
being here.

 TESTIMONY OF ARI SCHWARTZ,\1\ SENIOR INTERNET POLICY ADVISOR, 
NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY, U.S. DEPARTMENT 
                          OF COMMERCE

    Mr. Schwartz. Thank you, Mr. Chairman. It is good to be 
back. Ranking Member Collins, Senator Carper, and Mr. Chairman, 
it is a pleasure to be here and thank you for inviting me to 
testify on behalf of the Department of Commerce and the 
National Institute of Standards and Technology on the 
Administration's cybersecurity legislative proposal.
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    \1\ The joint prepared statement of Mr. Reitinger, Mr. Butler, Mr. 
Schwatz, and Mr. Chipman appears in the Appendix on page 40.
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    The main goal of the proposal is really to maximize the 
country's effectiveness in protecting the security of key 
critical infrastructure networks and systems that rely on the 
Internet, while also minimizing the regulatory burden on the 
entities that it covers and protecting the privacy and civil 
liberties of the public--quite a tall order.
    I will be addressing five important pieces of the proposal. 
The first is creating the security plans, as Senator Collins 
discussed in detail. Second is promoting secure data centers. 
Third is protecting Federal systems. Fourth, data breach 
reporting. And fifth, privacy protections.
    An important theme of the proposal is accountability 
through disclosure. In requiring creation of security plans, 
the Administration is promoting the use of private sector 
expertise and innovation over top-down regulation. Importantly, 
the proposal only covers the core critical infrastructure as it 
relates to cybersecurity. DHS would define these sectors 
through an open public rulemaking process. The critical 
infrastructure entities will take the lead in developing 
frameworks of performance standards for mitigating identified 
cybersecurity risks and could ask the National Institute of 
Standards and Technology to work with them to help create 
cybersecurity frameworks.
    There will be strong incentive for both industry to build 
effective frameworks and for DHS to approve those created by 
industry. The entities involved will want the certainty of 
knowing that their approach has been approved, and DHS will 
benefit from knowing that it will not need to invest the 
resource-intensive approach of developing a government-mandated 
framework unless industry really fails to act. Covered critical 
infrastructure firms and their executives will have to sign off 
on the cybersecurity plans, subject them to performance 
evaluation, and disclose them in their annual reports.
    Rather than substituting the government's judgment for 
private firms, the plan holds the covered entities accountable 
to consumers in the market. This encourages innovation in 
mitigation strategies as well as improving adherence to best 
practice by facilitating greater transparency, understanding, 
and collaboration. The main goal is to create an institutional 
culture in which cybersecurity is part of everyday practice 
without creating a slow-moving regulatory structure.
    In that same spirit, the Administration also seeks to 
promote cloud services that can provide more efficient services 
and better security to government agencies and a wide range of 
businesses, particularly small business. To do so, the draft 
legislation proposes to prevent States from requiring companies 
to build data centers in that State, except where expressly 
authorized by Federal law.
    The proposal also clarifies roles and responsibilities for 
setting Federal information security standards. Importantly, 
the Secretary of Commerce will maintain the responsibility for 
promulgating standards and guidelines, which will continue to 
be developed by NIST. DHS will use these standards as a basis 
for the binding directive and memoranda issued to Federal 
agencies. A working partnership between Commerce, NIST, and DHS 
will be essential to ensure that agencies receive information 
security requirements that are developed with the appropriate 
technical, operational, and policy expertise.
    On data breach reporting, as my colleague from the 
Department of Justice (DOJ) will detail, the Administration has 
learned a good deal from the States, selecting and augmenting 
those strategies and practices we felt most effective to 
protect both security and privacy. The legislation will help 
build certainty and trust in the marketplace by making it 
easier for consumers to understand the breach notices that they 
receive and why they are receiving them. As a result, they will 
better be able to take appropriate action.
    As Secretary Gary Locke and others at the Commerce 
Department have heard from many companies in different 
industries, including in response to our Notice of Inquiry on 
the topic last year, a nationwide standard for data breach 
notification will make compliance much easier for the wide 
range of companies that must follow 47 different legal 
standards today.
    Finally, I would like to point out that many of the new and 
augmented authorities in this package are governed by a new 
privacy framework for government that we believe would enhance 
privacy protection for information collected and shared with 
government for cybersecurity purposes. This framework would be 
created by DHS in consultation with privacy and civil liberty 
experts and the Attorney General, subject to regular reports by 
the Justice Privacy Office, and overseen by the independent 
Privacy and Civil Liberties Oversight Board. Government 
violations of this framework will be subject to both criminal 
and financial penalties.
    Thank you again for holding this important hearing, and 
thank you for your leadership on this issue. I look forward to 
your questions.
    Chairman Lieberman. Thanks, Mr. Schwartz. As I bid farewell 
to Mr. Reitinger, I should have formally welcome you to 
government service.
    Mr. Schwartz. Thank you.
    Chairman Lieberman. You appeared before us many times in 
your independent advocacy role.
    The final expert on the panel will be Jason Chipman, Senior 
Counsel to the Deputy Attorney General, Department of Justice. 
We now look forward to your testimony.

TESTIMONY OF JASON C. CHIPMAN,\1\ SENIOR COUNSEL TO THE DEPUTY 
          ATTORNEY GENERAL, U.S. DEPARTMENT OF JUSTICE

    Mr. Chipman. Thank you, Chairman Lieberman, Ranking Member 
Collins, and Senator Carper. It is a real pleasure to be here 
and I appreciate the opportunity to testify on behalf of the 
Department of Justice about the Administration's cyber 
legislative proposal.
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    \1\ The joint prepared statement of Mr. Reitinger, Mr. Butler, Mr. 
Schwatz, and Mr. Chipman appears in the Appendix on page 40.
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    This Committee knows well that the United States confronts 
a serious and complex cybersecurity threat. The critical 
infrastructure of our Nation is vulnerable to cyber intrusions 
that could damage vital national resources and put lives at 
risk. Indeed, intruders have stolen confidential information, 
intellectual property, and substantial amounts of money.
    At the Department of Justice, we see cyber crime on the 
rise, with criminal syndicates operating around the globe with 
increasing sophistication to steal from innocent Americans. 
Even more alarming, these intrusions might be creating future 
access points through which criminal actors and other 
adversaries can compromise critical systems during a crisis or 
for other nefarious purposes.
    President Obama has stated publicly that cyber threats 
represent one of the great challenges to the economic and 
national security of our country. Indeed, given the scope of 
the problem, as you have heard and as you know, the President 
has made this a significant priority for the Administration.
    Over the past few years, all of the agencies before you 
have made great progress in confronting these threats. At the 
Justice Department, our criminal and national security 
investigators and prosecutors and attorneys have been working 
hard establishing new units, like the National Cyber 
Investigative Joint Task Force, to pull together the resources 
of many different agencies to investigate and address 
cybersecurity threats.
    With that said and despite good work in this area, the 
problem is far from resolved. It is clear that new legislation 
can help tremendously to improve cybersecurity in a number of 
critical respects.
    From the Justice Department's perspective, I would like to 
take a moment to highlight two parts of the Administration's 
cyber legislative package aimed at confronting identity theft 
and at improving the tools that we use to fight computer 
crimes.
    First, the Administration's proposal includes a new 
national data breach reporting requirement. Data breaches 
frequently involve the compromise of sensitive personal 
information that subject individual consumers and citizens to 
identity theft or to other crimes. Right now, as Mr. Schwartz 
mentioned, there are 47 different State laws that apply in 
different situations and require reporting through different 
mechanisms. The Administration's data breach proposal would 
replace those 47 State laws with a single national standard 
applicable to companies and institutions that meet a minimum 
threshold set forward in the draft bill. If enacted into law, 
this proposal would ensure that companies notify consumers when 
sensitive personal information is stolen or compromised, and it 
would require that they give them information about what they 
can do in response to the theft or the compromise of their 
information.
    The proposal would empower the Federal Trade Commission to 
enforce the reporting requirements and it would establish new 
requirements for what must be reported to law enforcement 
agencies when there is a significant intrusion so that 
institutions like the FBI and the U.S. Secret Service can 
quickly work to try to identify the culprits and protect others 
from being victimized. We believe that the national standard 
would also make compliance easier for industry, which currently 
has the burden of operating under a patchwork of different 
rules.
    Second, the Administration's proposal includes a handful of 
changes to the criminal laws aimed at ensuring that computer 
crimes and cyber intrusions can be investigated and punished to 
the same extent as other similar criminal activity. Of 
particular note, the Administration's proposal would clearly 
make it unlawful to damage or shut down a computer system that 
manages or controls critical infrastructure, and it would 
establish minimum sentence requirements for such activities. We 
believe this narrow, focused proposal will provide strong 
deterrence to this class of serious and sometimes potentially 
life-threatening crimes.
    Moreover, because cyber crime has become a big business for 
organized crime groups, the Administration proposal would make 
it clear that the Racketeering, Influenced, and Corrupt 
Organizations Act (RICO), applies to computer crimes.
    Also the proposal would harmonize the sentences and 
penalties for violations of the Computer Fraud and Abuse Act. 
For example, acts of wire fraud in the United States carry a 
maximum penalty of 20 years in prison, but similar violations 
of the Criminal Fraud and Abuse Act very frequently carry a 
maximum of 5 years in prison. That is a discrepancy we think 
should be corrected.
    Mr. Chairman and Members of the Committee, this is an 
important topic. The country is at risk. There is a lot of work 
to be done to protect the critical infrastructure of our 
country and to stop computer crimes from victimizing and 
threatening Americans. I look forward to answering your 
questions. Thank you very much.
    Chairman Lieberman. Thanks, Mr. Chipman.
    You know, the testimony of the four of you makes clear how 
comprehensive the President's proposal is, of course, as is the 
Committee's proposal. I think both are necessarily 
comprehensive administrative reorganizations to better deal 
with the security threat, both also involve questions of how we 
protect civil liberties, privacy, and then what the role of the 
law is here. Are there not certain kinds of behavior in 
cyberspace that ought to be officially designated as illegal, 
adjusting existing legal framework. So the testimony has been 
very helpful.
    We will do a first round of 7 minutes each.
    Mr. Butler, let me begin with you because in the discussion 
of cybersecurity, both inside Congress and outside, and various 
times, people have said, look, the expertise in this area and 
in our government is in the Department of Defense and the 
National Security Agency (NSA). Maybe DHS is not the right 
place to be given enhanced authorities, but I take it from your 
testimony and the process that was going on within the 
Administration that a decision has been made which is supported 
by the Department of Defense that when it comes to the dot-gov, 
that is, the non-Defense dot-gov and dot-com networks, that it 
is the Department of Homeland Security that should have primary 
responsibility. Is that right?
    Mr. Butler. That is correct, Mr. Chairman. If you have 
watched the Department of Defense and the Department of 
Homeland Security dialogue over the last couple of years, it 
really has grown in the areas of collaboration. Probably one of 
the hallmark events was last year's signing of a Memorandum of 
Agreement (MOA) between Secretary Janet Napolitano and 
Secretary Robert Gates which laid out a foundation for new ways 
of collaborating as we move forward in operational planning as 
well as in capability development.
    So the sharing of technical expertise from the National 
Security Agency, being an element of that, the formation of a 
joint coordination element up at Fort Meade led by a DHS senior 
as part of that, the sharing of personnel between the two 
departments in different ways that allows a better 
understanding of not only capabilities but how to best satisfy 
information requirements, while at the same time ensuring 
strong oversight of privacy and civil liberties by having DHS 
very much engaged with the Department of Defense on looking at 
those issues.
    So over the last year, especially, I think we have seen new 
ways of doing business together, certainly from Secretary 
Gates' perspective and the Department's perspective, and the 
recognition that DHS is the leader with regards to cyber 
protection for our Nation. We are now working towards a 
unifying vision for how we will protect and help enable the 
protection of not just dot-gov and dot-com, but working to 
learn from what we have experienced on the dot-mil side, as 
well.
    Chairman Lieberman. So thank you. You actually answered my 
second question before I asked it, which was what are we doing 
to make sure that the Department of Homeland Security in some 
sense leverages on the expertise that DOD and NSA have rather 
than recreating them within the Department of Homeland 
Security.
    Mr. Butler. So a key element of that was an agreement 
between the two Secretaries that we would, one, share 
personnel. Two is to actually develop a set of activities 
underneath the joint coordination element to really help us 
understand how we could better leverage what is in the 
Department of Defense today. I think a good example of that is 
the work being done to help with the National Cyber Incident 
Response Plan. And then going beyond that, looking at other 
efforts where we can share both in capability expertise as well 
as in technology what we are doing with intrusion detection and 
intrusion prevention systems as we move forward in time, so the 
EINSTEIN 3 efforts can move forward.
    Chairman Lieberman. Mr. Reitinger, from a DHS perspective, 
how would you evaluate the relationship between your Department 
and DOD? Obviously, part of what you have wanted to do is build 
up your own expertise within DHS, but also, as I said, to 
leverage on what already exists in DOD and NSA.
    Mr. Reitinger. Thank you, Chairman. That is exactly 
correct. I think we each bring unique things to the table. 
Certainly, DOD has unparalleled technical expertise and 
cybersecurity expertise build up over the course of years. In 
the Department of Homeland Security, we have built up our own 
expertise, particularly around things like control systems, how 
to work broadly across a broad distributed interagency and deal 
with the multiple barriers that one faces in that space.
    As a result, I think over the course of the last year, as 
Mr. Butler indicated--we are very good friends--we have built 
up a much stronger partnership, not only having the MOA, which 
along with that joint coordination element works to make sure 
that we can stay fully operationally synced with DOD on a very 
tight basis. We will be developing people that will be deployed 
in the NSA Technology and Acquisitions Directorate so that as 
it develops technology, it meets Homeland Security needs, as 
well. We will be deploying people in the Threat Operations 
Center at NSA so we have full knowledge of what they are seeing 
from a threat perspective. And similarly, both Cyber Command 
and the National Security Agency will deploy elements to the 
National Cybersecurity Communications and Integration Center to 
support our operations under the National Cyber Incident 
Response Plan. So from Cyber Command, there will be a cyber 
support element, a team of people at our offices on Glebe Road, 
and a cryptologic support group from NSA, to similarly support 
what we do.
    But separate and apart from the MOA, we continue to work 
together. We literally meet regularly with DOD at the deputies' 
level to make sure that we can stay fully synced at a 
leadership level, and Mr. Butler and I personally participate 
in a weekly secure video teleconference with individuals from 
NSA and other people from DOD and DHS so that we do not allow 
any delta to occur in terms of what our operational activity is 
so we can move together most effectively.
    Chairman Lieberman. That is great to hear. That is exactly 
the opposite of the kind of stovepiping that we always worry 
about, and obviously it is critically necessary.
    Mr. Butler, did you want to add anything?
    Mr. Butler. Just one additional element. Building beyond 
the National Security Agency, we have found ways to better 
collaborate with the Defense Cyber Crimes Center. So as was 
mentioned, cyber crime is a big issue. We are working with DHS 
now, looking at how we can leverage forensics expertise to help 
not only with the defense industrial base, but helping in other 
parts of the critical infrastructure that we are trying to 
protect.
    Chairman Lieberman. Mr. Schwartz, just building a little 
bit on your previous existence as an advocate for privacy, is 
it correct to assume, just to build on the record here, that if 
the Committee and the Administration came in with a proposal 
that put responsibility for the dot-com and dot-gov, 
particularly dot-com cyberspace into the Department of Defense 
and NSA, there would be real concerns in the privacy community?
    Mr. Schwartz. I think that if you were to take the core 
critical infrastructure and put that regulatory authority 
primarily at the Defense Department, there would be major 
concerns from privacy and civil liberties groups.
    Chairman Lieberman. Thank you. Mr. Reitinger, this 
Committee in its broad homeland security responsibility often 
interacts with the private sector, and when we come to a 
question of how we protect infrastructure, we have become 
accustomed to saying that 85 percent of the infrastructure of 
the United States is owned and operated by the private sector. 
What would you say that percentage is for cyberspace, if you 
can hazard a guess, and I am not going to hold you to this.
    Mr. Reitinger. Sir, I have heard everything from 75 to 95.
    Chairman Lieberman. Yes.
    Mr. Reitinger. I will freely admit to you, I have never 
seen a rigorous analysis of this.
    Chairman Lieberman. Right.
    Mr. Reitinger. I think it varies from country to country. 
Certainly, in the United States, it is the vast majority, and 
even when you talk about government critical infrastructure, in 
many cases, it is the State and local government critical 
infrastructure that is often more important on a real-time 
basis than the Federal critical infrastructure. So we 
absolutely need to work closely with our critical 
infrastructure partners, our State, local, tribal, and 
territorial partners, and our Federal Government partners to 
secure critical infrastructure.
    Chairman Lieberman. So, bottom line, whatever the exact 
percentage, it is clear from what you said that there is a 
consensus that most of cyberspace is owned or operated by the 
private sector, and that makes the parts of this legislation 
that create and authorize new ways for the Department of 
Homeland Security to interact with the private cyberspace 
infrastructure, particularly with regard to the dot-com 
networks, critically important.
    My time is up on this round, but I will come back to that 
after my colleagues have the next round. Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Mr. Reitinger, about a year ago, you testified before our 
Committee that Section 706 of the 1934 Communications Act 
already provided emergency authority to the President. That 
prompted me to actually go read Section 706 of the 1934 
Communications Act, and I am not going to read all of it out 
loud today, but let me just read parts of it, because I think 
that it will emphasize two points. One, that the President's 
authority under this law is enormously broad, and second, that 
the language shows that it was written for another era.
    The section says that when the President finds that there 
is war or a threat of war or a state of public peril or a 
disaster or any other national emergency, that the President 
may cause the closing of any station for radio communication. 
The President may remove all the equipment and apparatus from 
the station. He may authorize the use and the control of the 
station by any department of government. In other words, under 
this section of the law, the President is allowed to have the 
government actually take over any radio station in the United 
States, or close it down completely, or remove the equipment 
from it.
    Nowadays, if that were proposed, it would create a 
tremendous uproar and free speech concerns. This authority is 
far broader than the authority in our bill, since this 
authority does allow a government takeover of transmission 
equipment, and it is clearly outdated since it is tied to 
traditional communication facilities and it does not reach 
interconnected critical infrastructure entities that are not 
covered by the Communications Act.
    We spent a lot of time, and indeed, most recently revised 
our bill to carefully constrain and define exactly what 
authority the President would have. We made it very clear that 
the President could not shut down the Internet, that government 
could not take over the Internet. There was a lot of theories 
in the Internet world that perhaps we wanted that. We did not, 
but we made it explicit in our new bill. We carefully 
constrained the President's authority with reporting to 
Congress, with time limits, with privacy limitations, by saying 
it has to be the least intrusive means possible.
    So I am very curious why the Administration, in your 
approach, does not update the 1934 Communications Act, which 
clearly speaks to a different era, and carefully define exactly 
what the President's authority would be. And Mr. Chipman, just 
to put you on notice, since you are from the Justice 
Department, I am going to ask you that question, as well.
    Mr. Reitinger. So, thank you, ma'am. I will do my best. You 
are clearly correct. Let me agree with you that the statutory 
authorities that exist in this space were written long ago, as 
you said, in 1934, and were not designed with the current 
environment that we have in mind. There are authorities there.
    That said, the Administration's bill does not include any 
additional emergency authorities for the President. Instead, as 
you point out, neither the Committee nor the Administration has 
sought or seeks any form of Internet kill switch. This is, 
however, a critical issue. Clearly, if something significant 
were to happen, the American people would expect us to be able 
to respond, and respond appropriately.
    To that end, we would, if something significant happens, 
use the authorities that we bring to bear in the right way, not 
to restrict Internet freedom, but to preserve Internet freedom 
while protecting the country, and we would do so using the 
authorities that we currently have and the processes that we 
have developed, such as the National Cyber Incident Response 
Plan, which details the roles and responsibilities and how we 
would move forward to respond to an event.
    I can say, as you pointed out, Ranking Member Collins, this 
is a critical issue. This is an area where I think different 
people have different views about how the government ought to 
be empowered and what the constraints on the government 
exercise of authorities ought to be. And this is a key area 
where I would hope there would be further discussions between 
the Administration and the Congress to figure out the right set 
of mechanisms, if any, that were necessary to move forward in 
this space.
    Senator Collins. Mr. Chipman, you represent the Justice 
Department. Why did the Justice Department not recommend 
amendments to the 1934 Communications Act, which is clearly 
outmoded, and also a carefully constrained limitation, 
carefully defined, on what the President could and could not do 
if there was a cyber emergency?
    Mr. Chipman. Thank you. Senator, I think I would echo Mr. 
Reitinger's comments and say that, clearly, this is an 
important topic, and clearly, it is an issue that merits 
discussion, and I think it is fair to say the Administration 
wants to engage in that discussion with you and your 
colleagues.
    In my experience, the issue of what emergency powers are 
needed tends to be very context-driven, and so the answer to 
that question, I think, becomes fairly nuanced depending on 
what type of emergency the government is facing. I think, no 
doubt, Mr. Reitinger is quite right. The American people expect 
the government to be able to respond, and I think that the work 
DHS has done within the interagency to create a National Cyber 
Incident Response Plan is quite key. But beyond that, in terms 
of the specifics of this particular Act, I think it merits 
discussion, but it is not in the Administration's proposal 
right now.
    Senator Collins. But that perplexes me. This is an area 
where we should be thinking ahead about exactly what 
authorities we want the President to have rather than leaving 
it ambiguous, rather than relying on a 1934 law that allows the 
President to take over control of radio stations. This just 
does not make sense to me and I hope you will work further with 
us to carefully define what the authorities are and to update 
the law.
    Let me just make one other quick comment, since my time has 
expired. I cannot help but be struck by the irony that we have 
four different departments represented here today, and that is 
a very good thing because it shows that the Administration is 
working across departments. But it is ironic, because unlike 
our bill, the Administration chose not to include in its bill 
an entity similar to the National Counterterrorism Center which 
would bring together within DHS representatives of all of your 
agencies as well as the Director of National Intelligence and 
other agencies so we would institutionalize the kind of 
coordination and cooperation that you have described is 
occurring informally. So it is ironic that the Administration 
has four departments represented here, yet has rejected the 
construct that we have in our bill of institutionalizing that 
interagency cooperation.
    Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks, Senator Collins.
    For the record, I share Senator Collins' sense of irony 
about this, truly. Also, for the record, I do think the country 
would be better off if we did create some new law regarding the 
authority of the President to act in these emergencies. As 
Senator Collins and I know, this can be a very controversial 
area because people can quite easily misunderstand. There is an 
admirably ferocious interest among inhabitants of cyberspace in 
their privacy and liberty. You know, God bless them, I agree, 
and so we want to hear that voice. But in the case of a really 
catastrophic emergency, I think we want to be clear that the 
President has authority to act, and frankly, in a way that the 
1934 law does not make clear, that there are limits to what we 
want the President to do and that does require new statutes. So 
I pick you up, Mr. Reitinger, on your suggestion that this is 
an area where we should, in the best Biblical sense, reason 
together.
    Senator Carper.
    Senator Carper. Thanks very much.
    Mr. Reitinger, as you prepare to depart, any final words of 
advice? Let me just ask, first, what do you feel especially 
good about that has been accomplished during your watch, and 
what are some of the areas that you think we have some serious 
work still to do?
    Mr. Reitinger. Well, thank you, sir. It is rare to have the 
opportunity to say something like that, so let me just say a 
couple of things. I feel most happy about two things. One, the 
fact, as was just remarked by the Chairman and the Ranking 
Member, that we have four departments and agencies up here all 
speaking from the same voice. The fact that we have a cross-
government approach, and indeed, an approach with many people 
in the private sector, as well, that says, here is how we think 
we need to move forward as a Nation. One can agree or disagree 
with what that approach says, but that we are collaborating 
effectively under the leadership of Howard Schmidt at the White 
House and broadly across agencies, I think, is a very positive 
thing.
    The other thing I would say I am most happy about is the 
team that we have built at DHS. The fact that, going back into 
the prior Administration--at one point about 3 years ago, DHS 
had about 40 people working in cybersecurity. We are up to 
about 260 now and we will be growing towards 400 by the end of 
fiscal year 2012. So we have built a significant team with 
significant capabilities that brings a lot to the table, some 
significant expertise, and can leverage other sources of 
expertise in government, including DOD, the Department of 
Commerce, and the Department of Justice. So the people piece 
that we have built, both across government and with the private 
sector and within DHS, is the thing that I am most proud of 
because I believe that organizations and entities succeed or 
fail based on the people, and so that is what is most important 
to me, sir.
    Senator Carper. And maybe in the category of incomplete, 
what are some major to do's that are still out there for 
whoever succeeds you and the rest of us?
    Mr. Reitinger. Sir, there are innumerable to do's. It is an 
old saying, but a true one, to say cybersecurity is a journey 
and not a destination. As we get better and better, so will the 
bad guys. I can say that as a former prosecutor. They continue 
to share information, to develop new techniques, and so this is 
not a game that we are going to win. This is a game we are 
going to do better at and win more often, but it is not going 
to end.
    So the major thing to do that unites all of those things 
together is the need to keep focus on this issue, to make sure 
that it stays on the front burner, and to make sure that 
Congress and the Administration and the private sector work 
together to pass cybersecurity legislation as rapidly as 
possible.
    Before and after that legislation is passed, we need to 
make sure that we are doing the right things, both in 
implementation of measures, in development of strategy, and in 
hiring of people broadly across the public and private sectors 
that ensure that cybersecurity retains the level of importance 
that we have given it very broadly across the homeland security 
enterprise and the national security enterprise.
    One of the things that I like to point out is that a little 
over a year ago, on February 1 of last year, the Department of 
Defense and the Department of Homeland Security released their 
Quadrennial Strategies, on the same day, and in the Quadrennial 
Defense Review, cybersecurity received a new and increased 
level of importance for the Department of Defense.
    Similarly, in the first ever Quadrennial Homeland Security 
Review, cybersecurity rose to one of the top five mission areas 
of the entire homeland security enterprise, and that is not 
just DHS. That includes the private sector and multiple 
government agencies.
    So we have got the right focus on the issue. We have the 
right importance. It has to stay there.
    Senator Carper. Well, my guess is the media will help us 
with that, because every time there is one of these 
disclosures, we hear a lot about it, and that is probably not a 
bad thing.
    Just to follow up on the question I have asked you, how 
have things improved in recent months under the reforms that 
have been put in place under current law, and maybe give us 
some other ideas about how this proposal would further improve 
things.
    Mr. Reitinger. Certainly, sir. So we have been staffing up, 
as your question indicates, over the past year-plus a lot of 
the things that are described in the Federal Information 
Security Management Act reforms. We have been taking 
significant steps to implement under administrative processes. 
So in two memoranda, I believe M-10-15 and M-10-28--it is sad 
that I might remember this----
    Senator Carper. That is sad.
    Mr. Reitinger. It is, sir. [Laughter.]
    Senator Carper. But I am glad at least someone is 
remembering that.
    Mr. Reitinger. I am working on this. I will work to forget 
them by mid-summer.
    Senator Carper. The next time I see you, I will say, what 
were those numbers? [Laughter.]
    Mr. Reitinger. OMB, sir, has been working, one, to move 
more and more towards continuous monitoring, and two, to 
transfer a lot of the operational responsibilities for FISMA to 
DHS. So we have been building up the capabilities. We have been 
working with the Department of Justice, in particular, to 
expand and roll out CyberScope, which is an online continuous 
monitoring tool that will be used to work more directly with 
the agencies, for example, holding deeper dives on agency 
security. It is what we call the CyberStat process, with the 
collaboration and work with OMB.
    So we have been working to roll out that greater focus, and 
again, in full partnership with the Department of Commerce, who 
has the lead on the development of standards for the Federal 
Information Security Management Act, to work together to deploy 
a focus on continuous monitoring, on real-time metrics, and we 
are going to continue that process, which will, in fact, 
accelerate if an appropriate FISMA reform act is passed.
    Senator Carper. All right. Thanks. Mr. Reitinger spoke 
proudly of the Department's ability to attract and put together 
a good team and still attract more, hopefully well-qualified 
people. But the question I have of the panel, in order to have 
effective cybersecurity both in government and in the private 
sector, we are going to need to attract a significant number of 
additional qualified people with the same skills as those who 
are seeking to do us harm. Let me just ask, what kind of job do 
you think we have done to date in finding those people, not 
just in the Department, but outside of the Department, and not 
just in government, but outside of government? Do we need to 
give agencies more tools to hire the right people and retain 
them once they are here? Mr. Butler.
    Mr. Butler. Thank you, Senator Carper.
    I will speak from a DOD perspective as well as from being 
in this business for a while, both on the private sector and 
public sector side of the house. Importantly for the Department 
of Defense, it is not only about today, but it is about 
tomorrow and the next generation workforce. And so Secretary 
Gates has made it a big priority.
    As we work through a variety of what I would call pilot 
initiatives--Cyber Patriot at the high school level, State 
competitions, National Defense Cyber Competition, I mentioned 
the Defense Cyber Crimes Center and its National Digital 
Forensics Competition--we are building not only competitions, 
but mentoring and coaching programs. Those mentoring and 
coaching programs really become, I think, the heart and soul of 
what we need to recruit from both a national security base and 
a homeland security base. Whether those individuals go into the 
private or public sector, we are seeing both an aptitude and an 
attitude about cybersecurity.
    I spoke for the Deputy Secretary of Defense at the Cyber 
Patriot Competition, which was held about a month ago, the 
national competition, and we are now not just pulling from 
military institutions and high schools and colleges, but really 
now creating a base that is allowing us to go across the 
country into the inner cities to inspire kids for the next 
level.
    We are working through, I think, with limited funding, 
different ways to incentivize that and to continue those 
programs. But to me, those are the important elements that we 
need to----
    Senator Carper. Good. That is very helpful. I am out of 
time. Mr. Schwartz, just very briefly, and then Mr. Chipman, if 
we could do that.
    Chairman Lieberman. Yes.
    Senator Carper. Go ahead.
    Mr. Schwartz. I will say I have been in the government for 
9 months at NIST and I have been really impressed with the 
folks that we have in NIST. I think part of that is the great 
environment, but it is also that hiring authority that was 
mentioned. At NIST, we do have direct hire authority, and we 
have the flexible hiring. That has given us the ability to hire 
and compete with others that need those cybersecurity aims. So 
I completely understand where this Committee has come down in 
terms of DHS getting similar authorities and that is in the 
Administration's proposal, as well.
    Senator Carper. All right. Thank you. Mr. Chipman.
    Mr. Chipman. Thank you. I would add that I know that this 
is an important aspect of the Administration's focus on 
cybersecurity, indeed, the Comprehensive National Cybersecurity 
Initiative that Mr. Reitinger mentioned included cyber 
education as a very important topic, and I know that work has 
continued.
    At the DOJ, it is certainly an important topic that is 
getting a lot of attention, especially at the FBI. I know the 
FBI in recent years has created a 5- to 7-year training program 
for agents to make sure that they are equipped to confront the 
sorts of cyber threats that we have been talking about.
    Senator Carper. All right. Thanks, Mr. Chairman.
    Chairman Lieberman. Thank you, Senator Carper.
    Mr. Reitinger, let me come back to the topic I raised at 
the end of my first round of questions and pose it in this 
general sense and ask you to answer it in that way, which is 
since we agree that most of cyberspace is in the hands of the 
private sector--appropriately, rightly--and we also understand 
that attacks on privately owned cyberspace can have very 
serious effects on our economy and our national security--
obviously, we know that some of these are going on right now. 
So the question is, what is the approach in the White House 
proposal for making sure, to the best of our ability, that the 
private sector is taking steps to defend itself, particularly 
the most critical parts of it, and in that sense to defend our 
country, because an attack on our privately-owned 
infrastructure in cyberspace, electric grid, transportation 
systems, or finance systems could have, in many ways, as 
devastating an effect as a conventional military attack? So 
give us an overview of what the approach is in the White House 
legislation to the private sector.
    Mr. Reitinger. Thank you, Mr. Chairman. The approach is 
actually, I think, as I said before, very similar to that that 
was in the bill that this Committee developed last year. There 
are a couple of concerns here. One is that, clearly, cyberspace 
is not an area that is amenable to extensive top-down 
prescriptive regulation. The technology moves too quickly. 
There are innumerable differences between entities. So one 
needs to find the right way to bring the expertise of the 
private sector to bear, to continue to rely on innovation to 
address the problem, and then also to ensure that you have the 
right mechanisms to ensure that homeland and national security 
requirements are met.
    And it is that last space that, I think on occasion, we 
have not seen as much progress as we all believe that we should 
have. We need to find the right way to set requirements in a 
way that actually reward private sector companies that are 
doing the right thing, that give a benefit, and make sure that 
without unduly restricting innovation in any way, that we do 
make sure that the power stays on, that the most critical of 
critical infrastructure can continue to operate.
    The approach that the Administration took is similar to the 
one that the Committee developed.
    Chairman Lieberman. Right.
    Mr. Reitinger. In essence, the Department of Homeland 
Security, in collaboration with the partners that you see at 
this table and the private sector, would develop a set of 
criteria for determining, again, what is the most critical of 
critical infrastructure. So the notion is that this would not 
be every part of current critical infrastructure, but 
absolutely the most important pieces.
    Chairman Lieberman. So we start with priorities.
    Mr. Reitinger. Yes, sir. We prioritize what has been 
referred to in the bill as covered critical infrastructure.
    Chairman Lieberman. Right.
    Mr. Reitinger. And for those entities, DHS would identify--
I am going to say this a bunch--again in collaboration with the 
government agencies you see and in the private sector, a set of 
risks that would need to be mitigated. So this would not be a, 
``Thou shalt not use this technology,'' but here is a risk and 
you need to have a mechanism to identify it.
    And then under the Administration's approach, DHS would not 
then say, here is a set of choices you have. You have to do one 
of them. Instead, industry, the private sector, would be 
responsible for putting forward frameworks of essentially 
performance standards and/or performance measurements that 
would focus not just on particular steps that you need to do, 
but on actual effectiveness, on measurements that would 
indicate how effective the measurements were, and then industry 
would develop a plan. So any covered entity would need to 
develop a plan that aligned with that framework and was 
evaluated under that framework for addressing the risk that DHS 
identified.
    Then, industry would also be responsible for having itself 
evaluated by a set of effectively certified evaluators.
    Chairman Lieberman. Right.
    Mr. Reitinger. So it would not be DHS doing the direct 
evaluation, but there would be entities that were chosen to do 
evaluations. Industry would receive those evaluations and then 
would publish--so the biggest lever would be transparency. 
Industry would publish the high-level description of its plan 
and a high-level description of the evaluation results. And 
then we would use that transparency to drive market activity 
that would enhance security in covered critical infrastructure 
and as a standard of care is developed more broadly throughout 
critical infrastructure.
    In addition, and as an additional incentive, there could be 
procurement advantages or disadvantages based on how one did in 
the process----
    Chairman Lieberman. Explain that a little bit more. So that 
is the next point. I think that your description is excellent. 
You are right. The White House and Committee bills have a 
generally similar proposal, although as you know, we give DHS 
the authority to evaluate the plans as opposed to third-party. 
But is there a reward and punishment here? In other words, do 
industries that follow their plans get rewarded and ones that 
do not get, in some sense, punished?
    Mr. Reitinger. So, yes, sir. There are a number of 
different levers, or levels, and I might ask Mr. Schwartz to 
supplement this, because he has a particular taxonomy that I 
happen to like. But in essence, one, your evaluation results 
will be published, so there is a direct ability of the market, 
your key partners and customers to take that into account.
    Second, the activity, the process of developing these 
frameworks and plans is going to start to create a standard of 
care that entities will need to step to over time, perhaps for 
insurance purposes, perhaps for other purposes.
    Last, DHS is directed to work with the Federal Acquisition 
Council so that the results of these evaluations can 
appropriately be taken into account in Federal procurements, 
which will provide an additional incentive to private sector 
players.
    It is very much intended to be a light-touch approach, but 
one that we believe, over time, will move the private sector 
and critical infrastructure in the right way, will reward the 
companies that are doing a very good job, and will get us to a 
more secure state in the future.
    With your permission, sir, I would like to ask Mr. Schwartz 
to supplement that.
    Chairman Lieberman. The resident taxonomist.
    Mr. Schwartz. Getting to this balance of the right levers 
and incentives is really the key to answer these questions for 
covered critical infrastructure as we see it in the plan, and 
there are a number of incentives that you have identified in 
your bill that we have put forward here; most of them are 
similar. The question is getting at the right particular 
balance between them.
    The taxonomy that Mr. Reitinger is referring to breaks down 
to four different areas that are somewhat related. One is the 
effects of public disclosure for cybersecurity performance.
    Chairman Lieberman. So a kind of public incentive or shame?
    Mr. Schwartz. Well, the second, I would say, is reputation 
and risk----
    Chairman Lieberman. Right.
    Mr. Schwartz. It is more that they know that markets may 
act on it. Where the second is, really, if they do things 
completely wrong, then you are going to have brand impact, 
potentially, where markets really exist in that space.
    Chairman Lieberman. OK.
    Mr. Schwartz. And the third is access to government 
procurement, so questions about procurement, and our bill links 
it to the Federal Acquisition Regulation (FAR) and----
    Chairman Lieberman. In other words, you can make some more 
money. You will have preference in selling, or offering 
services to the government.
    Mr. Schwartz. Correct. And the fourth is perceived 
litigation risk that shareholders or others may come forward 
with, and that would have to work out over time, as well.
    But we are open, and we do not claim to have everything in 
perfect alignment or balance in terms of these levers. No one 
can know exactly what will happen in terms of getting this 
right, but we can work together with you to try and come up 
with what we think is the best solution. So we are completely 
open to having this discussion about what are the best 
incentives moving forward.
    Chairman Lieberman. Good. No, that is very helpful, because 
our bill, as you know, has a provision for limited liability 
protection as another incentive, consistent with the 
Administration approach to the private sector to take 
preventive, defensive action so that, in one case, if they did, 
they would be protected, for instance, from punitive damages 
and liability.
    In the extreme case of a President taking action in a 
catastrophic case, whether under the old law or under our 
proposal, to protect really the national interests, there would 
probably be claims, significant ones, against some elements of 
the cyberspace community, and the question there that we raise 
is whether they ought to be protected from liability overall 
because they were acting pursuant to an order of the President 
of the United States.
    Do either of you want to comment on the general subject of 
offering some liability protection to the private sector as an 
additional incentive beyond what the White House proposes to 
the private sector to cooperate?
    Mr. Reitinger. I think I would simply say two things, Mr. 
Chairman. One, as Mr. Schwartz indicated, and maybe I will call 
that the Schwartz taxonomy--the balance--there's different ways 
to tweak it, and I think we would be happy to continue to 
discuss that with you.
    Second, there is some liability protections, not under this 
particular provision dealing with the overall incentives regime 
for the private sector, but to the extent that the private 
sector shares information with government or is assisting 
government with protecting dot-gov, there is both an immunity 
and a good faith immunity that is written into that section of 
the statute.
    Chairman Lieberman. Do you want to add anything, Mr. 
Schwartz?
    Mr. Schwartz. I will just say, it is similar to my comments 
about being open to the levers----
    Chairman Lieberman. Yes.
    Mr. Schwartz [continuing]. That we are definitely 
interested in having this discussion with you to further figure 
out how we can come up with the right balance here, and this 
fits into that discussion.
    Chairman Lieberman. This could, unfortunately, end up as a 
real obstacle to the passage of the bill, the failure to do 
something about liability, and I think it would be good if we 
worked together to try to find a common ground. Thank you.
    Senator Collins.
    Senator Collins. Thank you. Let me first endorse the 
Chairman's comments on liability and encourage you to take 
another look at our bill.
    I want to follow up on the issue of how you handle critical 
infrastructure. In the statement, it says that the White House 
proposal emphasizes transparency to help market forces ensure 
that critical infrastructure operators are accountable for 
cybersecurity, and it goes on to say there would be new 
requirements for reporting to the Securities and Exchange 
Commission, that there would be publication of a summary of the 
evaluation results, and I must say, these provisions surprise 
me, and the reason that they surprise me is the list of 
critical infrastructure is now classified. Now, granted, I am 
sure that many Americans and many of those who would do us harm 
could obviously figure out what a lot of the critical 
infrastructure sites and capabilities are, but the fact is, the 
list is classified. So are you planning to change the 
classification and make the list public?
    Mr. Reitinger. Thank you, Ranking Member Collins. This 
would actually be a different list and one that is of somewhat 
lower sensitivity. The list that you are referring to 
references or includes classified or tiered systems and assets.
    Senator Collins. Yes.
    Mr. Reitinger. This would actually be a list of entities as 
opposed to specific assets. So instead of, for example, this 
generation facility, it would be this company that owns a 
number of different generation facilities, and I think that is 
of a lower level of sensitivity, and, in fact, is much more 
broadly known to the public.
    Second, if one is going to bring public transparency 
disclosure levers to bear, one needs to have that information 
open. So in this case, we drew the conclusion that the list of 
entities, of critical infrastructure entities, would need to be 
public in order to move forward in this way.
    Senator Collins. But you also go on to say that there would 
be a summary of the security plan and the evaluation of that 
plan would be publicly accessible. My concern is, we do not 
want to give those who would do us harm a roadmap to how to 
attack our critical infrastructure. If, in fact, you publicize, 
even at a broader level, what the critical infrastructure is 
and then require publication of a summary of the security plan, 
and this part is the most troubling part to me--the publication 
of the evaluation of that plan, are you not providing very 
valuable information to not only cyber criminals, but perhaps 
terrorist groups or nation-states that are constantly trying to 
probe our systems? I am really surprised that you want that to 
be public.
    Mr. Reitinger. Yes, ma'am. I understand. If you will note 
the section, it specifically requires that only a high-level 
description of the plan and only a high-level description of 
results would be published, and specifically requires that in 
the regulations to be developed by the Secretary that 
information not be reported to such a detail that it would 
impair the security of that entity.
    In point of fact, critical infrastructure entities are 
tested and probed all the time. That is simply the nature. I do 
not believe that on the level of reporting we would intend to 
require in going forward that we will increase the level of 
risk of those entities. In fact, if the publication of the 
results causes such entities to say, well, we need to do a much 
better job, then the regime is going to be having the effect we 
intend in that they will rapidly move to enhance their own 
security.
    Senator Collins. But that is a name and shame approach, 
essentially, that you are hoping that there will be public 
criticism or press scrutiny that will essentially embarrass 
these entities into doing a better job. To me, if they are not 
doing a good job, then DHS goes in and applies sanctions or 
requires a better security plan. I do not think the answer is 
to make the weakness public. And the fact is that even if, in 
your scenario, it encourages that entity to do a better job, it 
is also telling very sophisticated computer hackers that this 
is an entity that they should focus on and that has some 
security lapses.
    I really hope you will take another look at that. I 
understand what you are trying to do, but I think that you are 
also giving information to the enemy.
    Mr. Reitinger. Just a couple of comments, ma'am, and I 
appreciate that. I understand your level of concern, which is 
appropriate. What I would say is, briefly, it is not just that 
the entity would receive shame, but that the market would 
actually take that into account, that if you are a more secure 
entity as opposed to a less secure entity, then business 
partners and not just government may want to do work with the 
more secure entity because it gives them a higher level of 
assurance. So it is not just the name and shame. It is actually 
to drive market effects.
    The second thing is we would intend that any publication of 
results be at such a high level that it would not increase the 
level of security, or the level of threat that an entity would 
face, but instead would merely make the public aware of the 
overall level of security.
    Senator Collins. But if it is sufficient to cause a 
business to no longer do business with that entity, it is 
sufficient to wave a red flag at those who would do us harm. 
That is my point. I do not think you can have it both ways. If 
the vulnerability that is revealed or the poor evaluation that 
is published is sufficient to cause other commercial entities 
to refrain from doing business with this section of the 
critical infrastructure, then surely it is going to be 
sufficient to prompt a computer hacker or terrorist group or 
Russia or China to redouble its efforts. I just think we need 
to think about that issue.
    Let me just quickly switch to another issue, since my time 
is expiring rapidly. Mr. Schwartz, because of your background 
on privacy, and you have always been such a help to our 
Committee as we have wrestled with those issues, I want to talk 
to you about the idea of the national law for data breach 
reporting. My first reaction is that that is a good idea, that 
there should be more uniformity. I think it would be easier for 
consumers as well as for businesses to not have to figure out 
what an individual law in one of those 47 states that has them 
means in their particular case.
    Are you talking about just a uniform nationwide reporting 
of breaches, or are you also talking about having uniform 
remedies for what a company has to do when there is a breach? I 
ask this not looking for any particular answer, but just to 
better understand what you are proposing.
    Mr. Schwartz. The focus is really on the reporting and 
making sure that consumers get the same information as the law 
enforcement and others that work on these issues receieve. 
Also, the focus is to make sure that they are getting the right 
information about the cases so that we can go after the bad 
guys when a breach has happened and is tied to something more 
than simply a lost laptop or something like that.
    But, we need to try to figure out how to best get to that 
kind of level where consumers get the same information, and it 
is actionable. We think that what we have come up with moves us 
forward in that regard. We have had a lot of experimentation in 
the States. We have learned a lot from that. We think that it 
has been a useful avenue and that those laws have been 
successful. It is time to move forward and make sure that we 
can capitalize on that at this point.
    Senator Collins. Thank you.
    Chairman Lieberman. Thanks, Senator Collins. Senator 
Carper.
    Senator Carper. Just to follow up on the last question that 
Senator Collins was pursuing, and Mr. Chipman, feel free to 
jump in on this, as well. Former Senator Robert Bennett of Utah 
and I had worked on disclosure legislation in at least the last 
Congress, maybe the last two Congresses. We were on the Banking 
Committee, and this was an area where other committees had 
jurisdiction.
    Do either of you know in the Administration's proposal what 
legislation you drew from in order to prepare and present the 
Administration's proposal in this regard?
    Mr. Chipman. I am not sure if we drew from that particular 
proposal. I think a number of different bills and ideas in this 
area were looked at.
    Senator Carper. We could never move the legislation forward 
because we were on the Banking Committee. We had some 
jurisdiction. The Commerce Committee had some jurisdiction. The 
Judiciary Committee, had some jurisdiction. Because of 
jurisdictional grounds, we could never move anything forward. 
How have you acted this way to help us thread the needle here?
    Mr. Schwartz. Well, I think, again, coming back to this 
partnership between the different agencies involved, we had all 
of our equities lined up and tried to work together to develop 
this in a way that worked for all of the different 
jurisdictions that you would have to have issues with, where we 
could have this kind of conversation to move past some of those 
concerns.
    Senator Carper. I want to go back to another point that 
Senator Collins was making and talking a little bit about the 
name and shame. We got into a little discussion of how do we 
harness market forces to help drive good public policy 
behavior. We can have all the laws on the books, we can have 
regulations on the books, and we can have prosecutors out there 
trying to capture the bad guys and put them in jail, but to the 
extent that we can harness market forces to help us solve this 
problem or address these challenges, that is a very good thing. 
Does anybody want to talk a little bit more about that for us, 
please? Anybody at all?
    Mr. Schwartz. This comes back to how to get those 
incentives right, and we agree with the way that you framed it 
that market forces are extremely important, especially because 
we cannot expect the government to be able to go into all of 
these different areas that we are going to consider to be 
covered critical infrastructure in this space and have exact 
knowledge of how to operate in each of those areas from the 
beginning.
    What we can do is to work in a public-private partnership, 
especially on the Internet, where we have so many public-
private partnerships, and try and come up with solutions that 
work for the market. We feel as though the security plans 
process moves us much further down that line and that will help 
us build innovation in the mitigation strategies in a way that 
the government approach, the government coming in, cannot do.
    Senator Carper. All right. Thanks.
    Mr. Chipman, the Administration's testimony mentioned that 
our critical cyber infrastructure is attacked repeatedly. We 
all know that. In addition, sensitive, personal, government, 
and business information is stolen online all the time. How 
often are we able to actually catch and successfully prosecute 
the individuals or the groups who commit these crimes? How will 
the Administration's proposal help further with these efforts?
    Mr. Chipman. Thank you. You are quite right. The amount of 
cyber crime, the number of intrusions, is growing, and they are 
challenging cases to bring, for sure. There is a level of 
anonymity on the Internet at times that make these hard cases 
to bring. Many times, there are actors outside of the United 
States and it is simply hard to find out where they are or who 
they are to bring cases against them, though we have had a fair 
amount of success in recent years. In 2009, I believe, there 
were over 150 cases brought. We have had a number of recent 
successes bringing down large organized crime rings engaged in 
mainly banking fraud and other types of computer intrusions to 
steal money, credit card numbers, and things like that.
    I think the proposals in the Administration's cyber package 
will help in a number of ways. They will help harmonize laws 
relative to penalties and will add a few tools to the tool box, 
for example, making clear that computer crimes are a RICO 
predicate. I think that will help and it will add to the tools 
that we can bring to bear in these cases.
    Senator Carper. All right. I am going to be leaving. I do 
not know if you all are going to stay on for another round here 
or not, but let me just ask you as we conclude here, or at 
least as my participation concludes, would you all just take 
maybe a minute apiece and reflect on what has been said here, 
what you have said, what you have heard others say, the 
questions that have been asked, and the answers given, and 
maybe just give us some concluding thoughts, starting with you, 
Mr. Chipman, then concluding with Mr. Reitinger.
    Mr. Chipman. Sure. Thank you very much. I think I am struck 
here by how collaborative, as Mr. Reitinger and others have 
mentioned, this process has been within the Executive Branch in 
terms of trying to, as Mr. Schwartz said, trying to get the 
balance right.
    Senator Carper. It reflects this Committee, does it not?
    Mr. Chipman. That is what I was about to say. And I am 
struck by what I hope is the start here of a very collaborative 
process with all of you and others, and I think I can fairly 
speak for the Administration in that regard.
    Senator Carper. All right. A closing thought, Mr. Schwartz? 
And I understand your father is here, is that right?
    Mr. Schwartz. That is right.
    Senator Carper. If we were to line all the men up here in 
this room in a row, do you think we could pick him out?
    Mr. Schwartz. He looks a lot like me. He is in town for a 
conference, and this just happened to work out.
    Senator Carper. There is no denying who your father is. We 
welcome your dad and thank him and your mom for instilling some 
really good values in you to get you to this place today.
    Mr. Schwartz. Thank you, Senator. So, briefly, the one 
thing I would say, it is on this point that you raised before 
about public-private partnerships and getting the market moving 
in the right area. Our work over the past year from the 
Internet Policy Task Force that Secretary Locke helped put 
together at the Commerce Department, we received a lot of 
comments from the private sector on this and I think they 
really are incentivized right now to try and move forward in 
the right way, at least those that have been paying attention 
to this space, and they want to move forward in the right way. 
I think we can put together those best practices that can build 
a framework for success in these different areas, and we should 
use that to our advantage now while we have it.
    Senator Carper. All right. Thank you.
    Any closing thoughts, Mr. Butler?
    Mr. Butler. Sure, Senator Carper. My sense is that it is 
collaboration and not being complacent with where we are, to 
continue to build on the collaboration. People have mentioned 
partnerships. It is interagency. It is with the Congress. It is 
certainly with industry and focusing on not just the easy 
areas, but the hard areas that we need to work through. As the 
Administration announced last week, there is an international 
aspect that needs to be taken into account as we move forward 
in time.
    Senator Carper. All right. Thank you. Mr. Reitinger.
    Mr. Reitinger. Thank you, Senator. Just briefly, I think it 
is important to recognize that we do not have all the answers 
in government. I do not think the private sector has all the 
answers and I do not think all the answers exist on the Hill. 
This is going to take all of us working together. This is not a 
question of, for example, the government coming in and saying, 
the private sector is not doing its job, it needs to do a 
better job, and it is pounding the table, or them coming in and 
saying the same thing. We need to find the right way to bring 
the capabilities of government together with the capabilities 
of the private sector, and we very much look forward to 
continuing to work with the Members of this Committee and 
Congress generally to make sure we get the balance right as 
cybersecurity legislation moves forward.
    Senator Carper. All right. Thanks. And as you prepare to 
weigh anchor and head out into the other uncharted waters, an 
old saying we have from my days in the Navy, is fair winds and 
a following sea. We thank you for your service and wish you 
Godspeed.
    Mr. Reitinger. Thank you.
    Chairman Lieberman. Thanks, Senator Carper.
    Thanks to all of our witnesses. Since I now know your 
father is here, Mr. Schwartz, I want to say in his presence, 
Senator Collins and I were remarking that by your testimony 
over the years, you have really built up a lot of credibility 
with the Committee. You have been straight ahead and presented 
your arguments well, never contentiously. Occasionally, we have 
a contentious witness from an advocacy group here. It is a 
pleasure to be able to share that private conversation in the 
presence of your father.
    I thank all of you for the testimony. I want to come back 
and say that Senator Reid, I believe working with Senator 
McConnell, is now talking about setting up different groups to 
negotiate with the Administration on different parts of the 
bill to try to expedite it forward.
    Senator Collins, I am under the impression that one of the 
things holding up the immediate initiation of those 
negotiations is something that is another favorite of yours and 
mine, and talk about irony, these folks are going to be 
testifying before five more committees of Congress, in the next 
week and a half, and therefore, their staffs are preoccupied 
with that and not able to initiate the negotiations.
    We have had a longstanding interest pursuant to a 
recommendation of the 9/11 Commission to try to reduce the 
number of committees that people have to testify before. We 
have been pretty good at reforming the Executive Branch of 
Government, less successful at reforming the Legislative 
Branch.
    Anyway, I thank you very much. We are really going to push 
full steam ahead here, to continue the nautical metaphors of 
Senator Carper, and hope to get this to the floor as soon as we 
possibly can, hopefully with a good consensus approach. But 
thank you for everything you have done, the considerable work 
that was done. We were impatient, but when you produced the 
Administration proposal, it was not an outline, it was 
legislation. It was quite comprehensive. And, of course, we 
like it because it is very much like what we proposed in our 
Committee bill. So we look forward to taking it from here 
together to enactment.
    We are going to keep the record of the hearing open for 15 
days for any additional questions or answers. I thank Senator 
Collins, Senator Carper, and all of you.
    And with that, the hearing is adjourned.
    [Whereupon, at 12:23 p.m., the Committee was adjourned.]





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