[Congressional Record Volume 153, Number 5 (Wednesday, January 10, 2007)]
[Senate]
[Pages S378-S381]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN:
  S. 239. A bill to require Federal agencies, and persons engaged in 
interstate commerce, in possession of data containing sensitive 
personally identifiable information, to disclose any breach of such 
information; to the Committee on the Judiciary.
  Mrs. FEINSTEIN. Mr. President, I rise to introduce the Notification 
of Risk to Personal Data Act.
  It is vitally important that Congress take immediate action to ensure 
that individuals are notified when companies, Federal agencies, and 
other institutions suffer security breaches that could jeopardize their 
personal information.
  The Notification of Risk to Personal Data Act is a simple, 
straightforward bill that would require that notice be sent to 
individuals in the event of a data breach which compromises their 
personal information.
  Providing individuals with knowledge that their personal information 
has been accessed by a hacker will allow them to take action to prevent 
or limit the damage caused by these security breaches.
  The need for such legislation is, unfortunately, self-evident given 
the spate of data breaches we have all read and heard about. 
Unfortunately, almost every week we learn of a new breach.
  For example, there have been major data breaches in just the last few 
months at Boeing, UCLA, the Colorado Department of Human Services, 
Starbucks, the Chicago Voters' Database, and Akron Children's Hospital.
  Given this ongoing problem, it is not surprising that Americans have 
made it clear that they want Congress to act. A September 2005 CBS 
News/New York Times national poll on privacy and identity theft found 
that 89 percent of Americans are ``concerned'' about the theft of their 
personal identity information and 68 percent of Americans feel that 
Congress should do more to regulate personal data and its collection.
  According to the Federal Trade Commission identity theft affects 
approximately 10 million Americans each year. In 2004, there were 
635,173 identity theft and fraud complaints made to the Federal Trade 
Commission's Consumer Sentinel. In 2004, identity fraud cost Americans 
$52.6 billion dollars. Over the past 2 years, approximately 18 million 
individuals in this country have been exposed or affected by identity 
theft.
  Data breaches threaten individual's economic and emotional well 
being. A person whose identity is stolen can lose thousands of dollars 
and it can take months or even years for a person to regain their good 
name and credit. So when a data breach occurs, people have a right to 
find out as soon as possible.

[[Page S379]]

  That is why I have introduced and tried to pass legislation that 
would: require that the Federal Government and business entities notify 
individuals when there has been a security breach involving their 
personal data; ensure that the notice is provided without unreasonable 
delay; create very limited exceptions to notification for national 
security and law enforcement purposes, as well as instances in which 
law enforcement certifies that there is no threat of harm to the 
individual; provide civil remedies against those who do not notify 
individuals and the provisions of the bill would be enforced by State 
attorney generals; and pre-empt all state laws so that there is a 
single, nationwide notification requirement.
  I strongly believe that individuals have a right to be notified when 
their most sensitive information is compromised--because it is truly 
their information.
  The instant legislation will give all Americans more control and 
confidence about the safety of their sensitive personal information. 
They will know when their data has been compromised so that they take 
the appropriate steps to protect themselves.
  In November 2005, the Judiciary Committee approved the Personal Data 
Privacy and Security Act. That bill included similar notification 
legislation. Unfortunately, the Senate took no further action and the 
bill expired at the end of the 109th Congress.
  Since then, the problem of identity theft has worsened--there have 
been numerous large scale data security breaches involving companies, 
federal agencies, and universities.
  We cannot afford to keep waiting to act. I urge the Senate to pass 
the Notification of Risk to Personal Data Act to give Americans the 
information they need to protect themselves from identity theft.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 239

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Notification of Risk to 
     Personal Data Act of 2007''.

     SEC. 2. NOTICE TO INDIVIDUALS.

       (a) In General.--Any agency, or business entity engaged in 
     interstate commerce, that uses, accesses, transmits, stores, 
     disposes of or collects sensitive personally identifiable 
     information shall, following the discovery of a security 
     breach of such information notify any resident of the United 
     States whose sensitive personally identifiable information 
     has been, or is reasonably believed to have been, accessed, 
     or acquired.
       (b) Obligation of Owner or Licensee.--
       (1) Notice to owner or licensee.--Any agency, or business 
     entity engaged in interstate commerce, that uses, accesses, 
     transmits, stores, disposes of, or collects sensitive 
     personally identifiable information that the agency or 
     business entity does not own or license shall notify the 
     owner or licensee of the information following the discovery 
     of a security breach involving such information.
       (2) Notice by owner, licensee or other designated third 
     party.--Nothing in this Act shall prevent or abrogate an 
     agreement between an agency or business entity required to 
     give notice under this section and a designated third party, 
     including an owner or licensee of the sensitive personally 
     identifiable information subject to the security breach, to 
     provide the notifications required under subsection (a).
       (3) Business entity relieved from giving notice.--A 
     business entity obligated to give notice under subsection (a) 
     shall be relieved of such obligation if an owner or licensee 
     of the sensitive personally identifiable information subject 
     to the security breach, or other designated third party, 
     provides such notification.
       (c) Timeliness of Notification.--
       (1) In general.--All notifications required under this 
     section shall be made without unreasonable delay following 
     the discovery by the agency or business entity of a security 
     breach.
       (2) Reasonable delay.--Reasonable delay under this 
     subsection may include any time necessary to determine the 
     scope of the security breach, prevent further disclosures, 
     and restore the reasonable integrity of the data system and 
     provide notice to law enforcement when required.
       (3) Burden of proof.--The agency, business entity, owner, 
     or licensee required to provide notification under this 
     section shall have the burden of demonstrating that all 
     notifications were made as required under this Act, including 
     evidence demonstrating the necessity of any delay.
       (d) Delay of Notification Authorized for Law Enforcement 
     Purposes.--
       (1) In general.--If a Federal law enforcement agency 
     determines that the notification required under this section 
     would impede a criminal investigation, such notification 
     shall be delayed upon written notice from such Federal law 
     enforcement agency to the agency or business entity that 
     experienced the breach.
       (2) Extended delay of notification.--If the notification 
     required under subsection (a) is delayed pursuant to 
     paragraph (1), an agency or business entity shall give notice 
     30 days after the day such law enforcement delay was invoked 
     unless a Federal law enforcement agency provides written 
     notification that further delay is necessary.
       (3) Law enforcement immunity.--No cause of action shall lie 
     in any court against any law enforcement agency for acts 
     relating to the delay of notification for law enforcement 
     purposes under this Act.

     SEC. 3. EXEMPTIONS.

       (a) Exemption for National Security and Law Enforcement.--
       (1) In general.--Section 2 shall not apply to an agency if 
     the agency certifies, in writing, that notification of the 
     security breach as required by section 2 reasonably could be 
     expected to--
       (A) cause damage to the national security; or
       (B) hinder a law enforcement investigation or the ability 
     of the agency to conduct law enforcement investigations.
       (2) Limits on certifications.--An agency may not execute a 
     certification under paragraph (1) to--
       (A) conceal violations of law, inefficiency, or 
     administrative error;
       (B) prevent embarrassment to a business entity, 
     organization, or agency; or
       (C) restrain competition.
       (3) Notice.--In every case in which an agency issues a 
     certification under paragraph (1), the certification, 
     accompanied by a description of the factual basis for the 
     certification, shall be immediately provided to the United 
     States Secret Service.
       (b) Safe Harbor.--An agency or business entity will be 
     exempt from the notice requirements under section 2, if--
       (1) a risk assessment concludes that there is no 
     significant risk that the security breach has resulted in, or 
     will result in, harm to the individuals whose sensitive 
     personally identifiable information was subject to the 
     security breach;
       (2) without unreasonable delay, but not later than 45 days 
     after the discovery of a security breach, unless extended by 
     the United States Secret Service, the agency or business 
     entity notifies the United States Secret Service, in writing, 
     of--
       (A) the results of the risk assessment; and
       (B) its decision to invoke the risk assessment exemption; 
     and
       (3) the United States Secret Service does not indicate, in 
     writing, within 10 days from receipt of the decision, that 
     notice should be given.
       (c) Financial Fraud Prevention Exemption.--
       (1) In general.--A business entity will be exempt from the 
     notice requirement under section 2 if the business entity 
     utilizes or participates in a security program that--
       (A) is designed to block the use of the sensitive 
     personally identifiable information to initiate unauthorized 
     financial transactions before they are charged to the account 
     of the individual; and
       (B) provides for notice to affected individuals after a 
     security breach that has resulted in fraud or unauthorized 
     transactions.
       (2) Limitation.--The exemption by this subsection does not 
     apply if the information subject to the security breach 
     includes sensitive personally identifiable information in 
     addition to the sensitive personally identifiable information 
     identified in section 13.

     SEC. 4. METHODS OF NOTICE.

       An agency, or business entity shall be in compliance with 
     section 2 if it provides both:
       (1) Individual notice.--
       (A) Written notification to the last known home mailing 
     address of the individual in the records of the agency or 
     business entity;
       (B) Telephone notice to the individual personally; or
       (C) E-mail notice, if the individual has consented to 
     receive such notice and the notice is consistent with the 
     provisions permitting electronic transmission of notices 
     under section 101 of the Electronic Signatures in Global and 
     National Commerce Act (15 U.S.C. 7001).
       (2) Media notice.--Notice to major media outlets serving a 
     State or jurisdiction, if the number of residents of such 
     State whose sensitive personally identifiable information 
     was, or is reasonably believed to have been, acquired by an 
     unauthorized person exceeds 5,000.

     SEC. 5. CONTENT OF NOTIFICATION.

       (a) In General.--Regardless of the method by which notice 
     is provided to individuals under section 4, such notice shall 
     include, to the extent possible--
       (1) a description of the categories of sensitive personally 
     identifiable information that was, or is reasonably believed 
     to have been, acquired by an unauthorized person;
       (2) a toll-free number--
       (A) that the individual may use to contact the agency or 
     business entity, or the agent of the agency or business 
     entity; and
       (B) from which the individual may learn what types of 
     sensitive personally identifiable information the agency or 
     business entity maintained about that individual; and

[[Page S380]]

       (3) the toll-free contact telephone numbers and addresses 
     for the major credit reporting agencies.
       (b) Additional Content.--Notwithstanding section 10, a 
     State may require that a notice under subsection (a) shall 
     also include information regarding victim protection 
     assistance provided for by that State.

     SEC. 6. COORDINATION OF NOTIFICATION WITH CREDIT REPORTING 
                   AGENCIES.

       If an agency or business entity is required to provide 
     notification to more than 1,000 individuals under section 
     2(a), the agency or business entity shall also notify, 
     without unreasonable delay, all consumer reporting agencies 
     that compile and maintain files on consumers on a nationwide 
     basis (as defined in section 603(p) of the Fair Credit 
     Reporting Act (15 U.S.C. 1681a(p)) of the timing and 
     distribution of the notices.

     SEC. 7. NOTICE TO LAW ENFORCEMENT.

       (a) Secret Service.--Any business entity or agency shall 
     give notice of a security breach to the United States Secret 
     Service if--
       (1) the number of individuals whose sensitive personally 
     identifying information was, or is reasonably believed to 
     have been acquired by an unauthorized person exceeds 10,000;
       (2) the security breach involves a database, networked or 
     integrated databases, or other data system containing the 
     sensitive personally identifiable information of more than 
     1,000,000 individuals nationwide;
       (3) the security breach involves databases owned by the 
     Federal Government; or
       (4) the security breach involves primarily sensitive 
     personally identifiable information of employees and 
     contractors of the Federal Government involved in national 
     security or law enforcement.
       (b) Notice to Other Law Enforcement Agencies.--The United 
     States Secret Service shall be responsible for notifying--
       (1) the Federal Bureau of Investigation, if the security 
     breach involves espionage, foreign counterintelligence, 
     information protected against unauthorized disclosure for 
     reasons of national defense or foreign relations, or 
     Restricted Data (as that term is defined in section 11y of 
     the Atomic Energy Act of 1954 (42 U.S.C. 2014(y)), except for 
     offenses affecting the duties of the United States Secret 
     Service under section 3056(a) of title 18, United States 
     Code;
       (2) the United States Postal Inspection Service, if the 
     security breach involves mail fraud; and
       (3) the attorney general of each State affected by the 
     security breach.
       (c) 14-Day Rule.--The notices to Federal law enforcement 
     and the attorney general of each State affected by a security 
     breach required under this section shall be delivered as 
     promptly as possible, but not later than 14 days after 
     discovery of the events requiring notice.

     SEC. 8. ENFORCEMENT.

       (a) Civil Actions by the Attorney General.--The Attorney 
     General may bring a civil action in the appropriate United 
     States district court against any business entity that 
     engages in conduct constituting a violation of this Act and, 
     upon proof of such conduct by a preponderance of the 
     evidence, such business entity shall be subject to a civil 
     penalty of not more than $1,000 per day per individual whose 
     sensitive personally identifiable information was, or is 
     reasonably believed to have been, accessed or acquired by an 
     unauthorized person, up to a maximum of $50,000 per person.
       (b) Injunctive Actions by the Attorney General.--
       (1) In general.--If it appears that a business entity has 
     engaged, or is engaged, in any act or practice constituting a 
     violation of this Act, the Attorney General may petition an 
     appropriate district court of the United States for an 
     order--
       (A) enjoining such act or practice; or
       (B) enforcing compliance with this Act.
       (2) Issuance of order.--A court may issue an order under 
     paragraph (1), if the court finds that the conduct in 
     question constitutes a violation of this Act.
       (c) Other Rights and Remedies.--The rights and remedies 
     available under this Act are cumulative and shall not affect 
     any other rights and remedies available under law.
       (d) Fraud Alert.--Section 605A(b)(1) of the Fair Credit 
     Reporting Act (15 U.S.C. 1681c-1(b)(1)) is amended by 
     inserting ``, or evidence that the consumer has received 
     notice that the consumer's financial information has or may 
     have been compromised,'' after ``identity theft report''.

     SEC. 9. ENFORCEMENT BY STATE ATTORNEYS GENERAL.

       (a) In General.--
       (1) Civil actions.--In any case in which the attorney 
     general of a State or any State or local law enforcement 
     agency authorized by the State attorney general or by State 
     statute to prosecute violations of consumer protection law, 
     has reason to believe that an interest of the residents of 
     that State has been or is threatened or adversely affected by 
     the engagement of a business entity in a practice that is 
     prohibited under this Act, the State or the State or local 
     law enforcement agency on behalf of the residents of the 
     agency's jurisdiction, may bring a civil action on behalf of 
     the residents of the State or jurisdiction in a district 
     court of the United States of appropriate jurisdiction or any 
     other court of competent jurisdiction, including a State 
     court, to--
       (A) enjoin that practice;
       (B) enforce compliance with this Act; or
       (C) civil penalties of not more than $1,000 per day per 
     individual whose sensitive personally identifiable 
     information was, or is reasonably believed to have been, 
     accessed or acquired by an unauthorized person, up to a 
     maximum of $50,000 per day.
       (2) Notice.--
       (A) In general.--Before filing an action under paragraph 
     (1), the attorney general of the State involved shall provide 
     to the Attorney General of the United States--
       (i) written notice of the action; and
       (ii) a copy of the complaint for the action.
       (B) Exemption.--
       (i) In general.--Subparagraph (A) shall not apply with 
     respect to the filing of an action by an attorney general of 
     a State under this Act, if the State attorney general 
     determines that it is not feasible to provide the notice 
     described in such subparagraph before the filing of the 
     action.
       (ii) Notification.--In an action described in clause (i), 
     the attorney general of a State shall provide notice and a 
     copy of the complaint to the Attorney General at the time the 
     State attorney general files the action.
       (b) Federal Proceedings.--Upon receiving notice under 
     subsection (a)(2), the Attorney General shall have the right 
     to--
       (1) move to stay the action, pending the final disposition 
     of a pending Federal proceeding or action;
       (2) initiate an action in the appropriate United States 
     district court under section 8 and move to consolidate all 
     pending actions, including State actions, in such court;
       (3) intervene in an action brought under subsection (a)(2); 
     and
       (4) file petitions for appeal.
       (c) Pending Proceedings.--If the Attorney General has 
     instituted a proceeding or action for a violation of this Act 
     or any regulations thereunder, no attorney general of a State 
     may, during the pendency of such proceeding or action, bring 
     an action under this Act against any defendant named in such 
     criminal proceeding or civil action for any violation that is 
     alleged in that proceeding or action.
       (d) Rule of Construction.--For purposes of bringing any 
     civil action under subsection (a), nothing in this Act 
     regarding notification shall be construed to prevent an 
     attorney general of a State from exercising the powers 
     conferred on such attorney general by the laws of that State 
     to--
       (1) conduct investigations;
       (2) administer oaths or affirmations; or
       (3) compel the attendance of witnesses or the production of 
     documentary and other evidence.
       (e) Venue; Service of Process.--
       (1) Venue.--Any action brought under subsection (a) may be 
     brought in--
       (A) the district court of the United States that meets 
     applicable requirements relating to venue under section 1391 
     of title 28, United States Code; or
       (B) another court of competent jurisdiction.
       (2) Service of process.--In an action brought under 
     subsection (a), process may be served in any district in 
     which the defendant--
       (A) is an inhabitant; or
       (B) may be found.
       (f) No Private Cause of Action.--Nothing in this Act 
     establishes a private cause of action against a business 
     entity for violation of any provision of this Act.

     SEC. 10. EFFECT ON FEDERAL AND STATE LAW.

       The provisions of this Act shall supersede any other 
     provision of Federal law or any provision of law of any State 
     relating to notification of a security breach, except as 
     provided in section 5(b).

     SEC. 11. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such sums as may be 
     necessary to cover the costs incurred by the United States 
     Secret Service to carry out investigations and risk 
     assessments of security breaches as required under this Act.

     SEC. 12. REPORTING ON RISK ASSESSMENT EXEMPTIONS.

       The United States Secret Service shall report to Congress 
     not later than 18 months after the date of enactment of this 
     Act, and upon the request by Congress thereafter, on--
       (1) the number and nature of the security breaches 
     described in the notices filed by those business entities 
     invoking the risk assessment exemption under section 3(b) of 
     this Act and the response of the United States Secret Service 
     to such notices; and
       (2) the number and nature of security breaches subject to 
     the national security and law enforcement exemptions under 
     section 3(a) of this Act.

     SEC. 13. DEFINITIONS.

       In this Act, the following definitions shall apply:
       (1) Agency.--The term ``agency'' has the same meaning given 
     such term in section 551 of title 5, United States Code.
       (2) Affiliate.--The term ``affiliate'' means persons 
     related by common ownership or by corporate control.
       (3) Business entity.--The term ``business entity'' means 
     any organization, corporation, trust, partnership, sole 
     proprietorship, unincorporated association, venture 
     established to make a profit, or nonprofit, and any 
     contractor, subcontractor, affiliate, or licensee thereof 
     engaged in interstate commerce.

[[Page S381]]

       (4) Personally identifiable information.--The term 
     ``personally identifiable information'' means any 
     information, or compilation of information, in electronic or 
     digital form serving as a means of identification, as defined 
     by section 1028(d)(7) of title 18, United State Code.
       (5) Security breach.--
       (A) In general.--The term ``security breach'' means 
     compromise of the security, confidentiality, or integrity of 
     computerized data through misrepresentation or actions that 
     result in, or there is a reasonable basis to conclude has 
     resulted in, acquisition of or access to sensitive personally 
     identifiable information that is unauthorized or in excess of 
     authorization.
       (B) Exclusion.--The term ``security breach'' does not 
     include--
       (i) a good faith acquisition of sensitive personally 
     identifiable information by a business entity or agency, or 
     an employee or agent of a business entity or agency, if the 
     sensitive personally identifiable information is not subject 
     to further unauthorized disclosure; or
       (ii) the release of a public record not otherwise subject 
     to confidentiality or nondisclosure requirements.
       (6) Sensitive personally identifiable information.--The 
     term ``sensitive personally identifiable information'' means 
     any information or compilation of information, in electronic 
     or digital form that includes--
       (A) an individual's first and last name or first initial 
     and last name in combination with any 1 of the following data 
     elements:
       (i) A non-truncated social security number, driver's 
     license number, passport number, or alien registration 
     number.
       (ii) Any 2 of the following:

       (I) Home address or telephone number.
       (II) Mother's maiden name, if identified as such.
       (III) Month, day, and year of birth.

       (iii) Unique biometric data such as a finger print, voice 
     print, a retina or iris image, or any other unique physical 
     representation.
       (iv) A unique account identifier, electronic identification 
     number, user name, or routing code in combination with any 
     associated security code, access code, or password that is 
     required for an individual to obtain money, goods, services 
     or any other thing of value; or
       (B) a financial account number or credit or debit card 
     number in combination with any security code, access code or 
     password that is required for an individual to obtain money, 
     goods, services or any other thing of value.

     SEC. 14. EFFECTIVE DATE.

       This Act shall take effect on the expiration of the date 
     which is 90 days after the date of enactment of this Act.
                                 ______