[Congressional Record (Bound Edition), Volume 155 (2009), Part 22]
[House]
[Pages 29880-29885]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              {time}  1445
                   DATA ACCOUNTABILITY AND TRUST ACT

  Mr. RUSH. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 2221) to protect consumers by requiring reasonable security 
policies and procedures to protect computerized data containing 
personal information, and to provide for nationwide notice in the event 
of a security breach, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 2221

       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 ``Data Accountability and 
     Trust Act''.

     SEC. 2. REQUIREMENTS FOR INFORMATION SECURITY.

       (a) General Security Policies and Procedures.--
       (1) Regulations.--Not later than 1 year after the date of 
     enactment of this Act, the Commission shall promulgate 
     regulations under section 553 of title 5, United States Code, 
     to require each person engaged in interstate commerce that 
     owns or possesses data containing personal information, or 
     contracts to have any third party entity maintain such data 
     for such person, to establish and implement policies and 
     procedures regarding information security practices for the 
     treatment and protection of personal information taking into 
     consideration--
       (A) the size of, and the nature, scope, and complexity of 
     the activities engaged in by, such person;
       (B) the current state of the art in administrative, 
     technical, and physical safeguards for protecting such 
     information; and
       (C) the cost of implementing such safeguards.
       (2) Requirements.--Such regulations shall require the 
     policies and procedures to include the following:
       (A) A security policy with respect to the collection, use, 
     sale, other dissemination, and maintenance of such personal 
     information.
       (B) The identification of an officer or other individual as 
     the point of contact with responsibility for the management 
     of information security.
       (C) A process for identifying and assessing any reasonably 
     foreseeable vulnerabilities in the system or systems 
     maintained by such person that contains such data, which 
     shall include regular monitoring for a breach of security of 
     such system or systems.
       (D) A process for taking preventive and corrective action 
     to mitigate against any vulnerabilities identified in the 
     process required by subparagraph (C), which may include 
     implementing any changes to security practices and the 
     architecture, installation, or implementation of network or 
     operating software.
       (E) A process for disposing of data in electronic form 
     containing personal information by shredding, permanently 
     erasing, or otherwise modifying the personal information 
     contained in such data to make such personal information 
     permanently unreadable or undecipherable.
       (F) A standard method or methods for the destruction of 
     paper documents and other non-electronic data containing 
     personal information.
       (3) Treatment of entities governed by other law.--Any 
     person who is in compliance with any other Federal law that 
     requires such person to maintain standards and safeguards for 
     information security and protection of personal information 
     that, taken as a whole and as the Commission shall determine 
     in the rulemaking required under paragraph (1), provide 
     protections substantially similar to, or greater than, those 
     required under this subsection, shall be deemed to be in 
     compliance with this subsection.
       (b) Special Requirements for Information Brokers.--
       (1) Submission of policies to the ftc.--The regulations 
     promulgated under subsection (a) shall require each 
     information broker to submit its security policies to the 
     Commission in conjunction with a notification of a breach of 
     security under section 3 or upon request of the Commission.
       (2) Post-breach audit.--For any information broker required 
     to provide notification under section 3, the Commission may 
     conduct audits of the information security practices of such 
     information broker, or require the information broker to 
     conduct independent audits of such practices (by an 
     independent auditor who has not audited such information 
     broker's security practices during the preceding 5 years).
       (3) Accuracy of and individual access to personal 
     information.--
       (A) Accuracy.--
       (i) In general.--Each information broker shall establish 
     reasonable procedures to assure the maximum possible accuracy 
     of the personal information it collects, assembles, or 
     maintains, and any other information it collects, assembles, 
     or maintains that specifically identifies an individual, 
     other than information which merely identifies an 
     individual's name or address.
       (ii) Limited exception for fraud databases.--The 
     requirement in clause (i) shall not prevent the collection or 
     maintenance of information that may be inaccurate with 
     respect to a particular individual when that information is 
     being collected or maintained solely--

       (I) for the purpose of indicating whether there may be a 
     discrepancy or irregularity in the personal information that 
     is associated with an individual; and
       (II) to help identify, or authenticate the identity of, an 
     individual, or to protect against or investigate fraud or 
     other unlawful conduct.

       (B) Consumer access to information.--
       (i) Access.--Each information broker shall--

       (I) provide to each individual whose personal information 
     it maintains, at the individual's request at least 1 time per 
     year and at no cost to the individual, and after verifying 
     the identity of such individual, a means for the individual 
     to review any personal information regarding such individual 
     maintained by the information broker and any other 
     information maintained by the information broker that 
     specifically identifies such individual, other than 
     information which merely identifies an individual's name or 
     address; and
       (II) place a conspicuous notice on its Internet website (if 
     the information broker maintains such a website) instructing 
     individuals how to request access to the information required 
     to be provided under subclause (I), and, as applicable, how 
     to express a preference with respect to the use of personal 
     information for marketing purposes under clause (iii).

       (ii) Disputed information.--Whenever an individual whose 
     information the information broker maintains makes a written 
     request disputing the accuracy of any such information, the 
     information broker, after verifying the identity of the 
     individual making such request and unless there are 
     reasonable grounds to believe such request is frivolous or 
     irrelevant, shall--

       (I) correct any inaccuracy; or
       (II)(aa) in the case of information that is public record 
     information, inform the individual of the source of the 
     information, and, if reasonably available, where a request 
     for correction may be directed and, if the individual 
     provides proof that the public record has been corrected or 
     that the information broker was reporting the information 
     incorrectly, correct the inaccuracy in the information 
     broker's records; or
       (bb) in the case of information that is non-public 
     information, note the information that is disputed, including 
     the individual's statement disputing such information, and 
     take reasonable steps to independently verify such 
     information under the procedures outlined in subparagraph (A) 
     if such information can be independently verified.

       (iii) Alternative procedure for certain marketing 
     information.--In accordance with regulations issued under 
     clause (v), an information broker that maintains any 
     information described in clause (i) which is used, shared, or 
     sold by such information broker for marketing purposes, may, 
     in lieu of complying with the access and dispute requirements 
     set forth in clauses (i) and (ii), provide each individual 
     whose information it maintains with a reasonable means of 
     expressing a preference not to have his or her information 
     used for such purposes. If the individual expresses such a 
     preference, the information broker may not use, share, or 
     sell the individual's information for marketing purposes.
       (iv) Limitations.--An information broker may limit the 
     access to information required under subparagraph (B)(i)(I) 
     and is not required to provide notice to individuals as 
     required under subparagraph (B)(i)(II) in the following 
     circumstances:

       (I) If access of the individual to the information is 
     limited by law or legally recognized privilege.
       (II) If the information is used for a legitimate 
     governmental or fraud prevention purpose that would be 
     compromised by such access.
       (III) If the information consists of a published media 
     record, unless that record has been included in a report 
     about an individual shared with a third party.

[[Page 29881]]

       (v) Rulemaking.--Not later than 1 year after the date of 
     the enactment of this Act, the Commission shall promulgate 
     regulations under section 553 of title 5, United States Code, 
     to carry out this paragraph and to facilitate the purposes of 
     this Act. In addition, the Commission shall issue 
     regulations, as necessary, under section 553 of title 5, 
     United States Code, on the scope of the application of the 
     limitations in clause (iv), including any additional 
     circumstances in which an information broker may limit access 
     to information under such clause that the Commission 
     determines to be appropriate.
       (C) FCRA regulated persons.--Any information broker who is 
     engaged in activities subject to the Fair Credit Reporting 
     Act and who is in compliance with sections 609, 610, and 611 
     of such Act with respect to information subject to such Act, 
     shall be deemed to be in compliance with this paragraph with 
     respect to such information.
       (4) Requirement of audit log of accessed and transmitted 
     information.--Not later than 1 year after the date of the 
     enactment of this Act, the Commission shall promulgate 
     regulations under section 553 of title 5, United States Code, 
     to require information brokers to establish measures which 
     facilitate the auditing or retracing of any internal or 
     external access to, or transmissions of, any data containing 
     personal information collected, assembled, or maintained by 
     such information broker.
       (5) Prohibition on pretexting by information brokers.--
       (A) Prohibition on obtaining personal information by false 
     pretenses.--It shall be unlawful for an information broker to 
     obtain or attempt to obtain, or cause to be disclosed or 
     attempt to cause to be disclosed to any person, personal 
     information or any other information relating to any person 
     by--
       (i) making a false, fictitious, or fraudulent statement or 
     representation to any person; or
       (ii) providing any document or other information to any 
     person that the information broker knows or should know to be 
     forged, counterfeit, lost, stolen, or fraudulently obtained, 
     or to contain a false, fictitious, or fraudulent statement or 
     representation.
       (B) Prohibition on solicitation to obtain personal 
     information under false pretenses.--It shall be unlawful for 
     an information broker to request a person to obtain personal 
     information or any other information relating to any other 
     person, if the information broker knew or should have known 
     that the person to whom such a request is made will obtain or 
     attempt to obtain such information in the manner described in 
     subparagraph (A).
       (c) Exemption for Certain Service Providers.--Nothing in 
     this section shall apply to a service provider for any 
     electronic communication by a third party that is 
     transmitted, routed, or stored in intermediate or transient 
     storage by such service provider.

     SEC. 3. NOTIFICATION OF INFORMATION SECURITY BREACH.

       (a) Nationwide Notification.--Any person engaged in 
     interstate commerce that owns or possesses data in electronic 
     form containing personal information shall, following the 
     discovery of a breach of security of the system maintained by 
     such person that contains such data--
       (1) notify each individual who is a citizen or resident of 
     the United States whose personal information was acquired or 
     accessed as a result of such a breach of security; and
       (2) notify the Commission.
       (b) Special Notification Requirements.--
       (1) Third party agents.--In the event of a breach of 
     security by any third party entity that has been contracted 
     to maintain or process data in electronic form containing 
     personal information on behalf of any other person who owns 
     or possesses such data, such third party entity shall be 
     required to notify such person of the breach of security. 
     Upon receiving such notification from such third party, such 
     person shall provide the notification required under 
     subsection (a).
       (2) Service providers.--If a service provider becomes aware 
     of a breach of security of data in electronic form containing 
     personal information that is owned or possessed by another 
     person that connects to or uses a system or network provided 
     by the service provider for the purpose of transmitting, 
     routing, or providing intermediate or transient storage of 
     such data, such service provider shall be required to notify 
     of such a breach of security only the person who initiated 
     such connection, transmission, routing, or storage if such 
     person can be reasonably identified. Upon receiving such 
     notification from a service provider, such person shall 
     provide the notification required under subsection (a).
       (3) Coordination of notification with credit reporting 
     agencies.--If a person is required to provide notification to 
     more than 5,000 individuals under subsection (a)(1), the 
     person shall also notify the major credit reporting agencies 
     that compile and maintain files on consumers on a nationwide 
     basis, of the timing and distribution of the notices. Such 
     notice shall be given to the credit reporting agencies 
     without unreasonable delay and, if it will not delay notice 
     to the affected individuals, prior to the distribution of 
     notices to the affected individuals.
       (c) Timeliness of Notification.--
       (1) In general.--Unless subject to a delay authorized under 
     paragraph (2), a notification required under subsection (a) 
     shall be made not later than 60 days following the discovery 
     of a breach of security, unless the person providing notice 
     can show that providing notice within such a time frame is 
     not feasible due to extraordinary circumstances necessary to 
     prevent further breach or unauthorized disclosures, and 
     reasonably restore the integrity of the data system, in which 
     case such notification shall be made as promptly as possible.
       (2) Delay of notification authorized for law enforcement or 
     national security purposes.--
       (A) Law enforcement.--If a Federal, State, or local law 
     enforcement agency determines that the notification required 
     under this section would impede a civil or criminal 
     investigation, such notification shall be delayed upon the 
     written request of the law enforcement agency for 30 days or 
     such lesser period of time which the law enforcement agency 
     determines is reasonably necessary and requests in writing. A 
     law enforcement agency may, by a subsequent written request, 
     revoke such delay or extend the period of time set forth in 
     the original request made under this paragraph if further 
     delay is necessary.
       (B) National security.--If a Federal national security 
     agency or homeland security agency determines that the 
     notification required under this section would threaten 
     national or homeland security, such notification may be 
     delayed for a period of time which the national security 
     agency or homeland security agency determines is reasonably 
     necessary and requests in writing. A Federal national 
     security agency or homeland security agency may revoke such 
     delay or extend the period of time set forth in the original 
     request made under this paragraph by a subsequent written 
     request if further delay is necessary.
       (d) Method and Content of Notification.--
       (1) Direct notification.--
       (A) Method of notification.--A person required to provide 
     notification to individuals under subsection (a)(1) shall be 
     in compliance with such requirement if the person provides 
     conspicuous and clearly identified notification by one of the 
     following methods (provided the selected method can 
     reasonably be expected to reach the intended individual):
       (i) Written notification.
       (ii) Notification by email or other electronic means, if--

       (I) the person's primary method of communication with the 
     individual is by email or such other electronic means; or
       (II) the individual has consented to receive such 
     notification and the notification is provided in a manner 
     that is consistent with the provisions permitting electronic 
     transmission of notices under section 101 of the Electronic 
     Signatures in Global Commerce Act (15 U.S.C. 7001).

       (B) Content of notification.--Regardless of the method by 
     which notification is provided to an individual under 
     subparagraph (A), such notification shall include--
       (i) a description of the personal information that was 
     acquired or accessed by an unauthorized person;
       (ii) a telephone number that the individual may use, at no 
     cost to such individual, to contact the person to inquire 
     about the breach of security or the information the person 
     maintained about that individual;
       (iii) notice that the individual is entitled to receive, at 
     no cost to such individual, consumer credit reports on a 
     quarterly basis for a period of 2 years, or credit monitoring 
     or other service that enables consumers to detect the misuse 
     of their personal information for a period of 2 years, and 
     instructions to the individual on requesting such reports or 
     service from the person, except when the only information 
     which has been the subject of the security breach is the 
     individual's first name or initial and last name, or address, 
     or phone number, in combination with a credit or debit card 
     number, and any required security code;
       (iv) the toll-free contact telephone numbers and addresses 
     for the major credit reporting agencies; and
       (v) a toll-free telephone number and Internet website 
     address for the Commission whereby the individual may obtain 
     information regarding identity theft.
       (2) Substitute notification.--
       (A) Circumstances giving rise to substitute notification.--
     A person required to provide notification to individuals 
     under subsection (a)(1) may provide substitute notification 
     in lieu of the direct notification required by paragraph (1) 
     if the person owns or possesses data in electronic form 
     containing personal information of fewer than 1,000 
     individuals and such direct notification is not feasible due 
     to--
       (i) excessive cost to the person required to provide such 
     notification relative to the resources of such person, as 
     determined in accordance with the regulations issued by the 
     Commission under paragraph (3)(A); or
       (ii) lack of sufficient contact information for the 
     individual required to be notified.
       (B) Form of substitute notification.--Such substitute 
     notification shall include--

[[Page 29882]]

       (i) email notification to the extent that the person has 
     email addresses of individuals to whom it is required to 
     provide notification under subsection (a)(1);
       (ii) a conspicuous notice on the Internet website of the 
     person (if such person maintains such a website); and
       (iii) notification in print and to broadcast media, 
     including major media in metropolitan and rural areas where 
     the individuals whose personal information was acquired 
     reside.
       (C) Content of substitute notice.--Each form of substitute 
     notice under this paragraph shall include--
       (i) notice that individuals whose personal information is 
     included in the breach of security are entitled to receive, 
     at no cost to the individuals, consumer credit reports on a 
     quarterly basis for a period of 2 years, or credit monitoring 
     or other service that enables consumers to detect the misuse 
     of their personal information for a period of 2 years, and 
     instructions on requesting such reports or service from the 
     person, except when the only information which has been the 
     subject of the security breach is the individual's first name 
     or initial and last name, or address, or phone number, in 
     combination with a credit or debit card number, and any 
     required security code; and
       (ii) a telephone number by which an individual can, at no 
     cost to such individual, learn whether that individual's 
     personal information is included in the breach of security.
       (3) Regulations and guidance.--
       (A) Regulations.--Not later than 1 year after the date of 
     enactment of this Act, the Commission shall, by regulation 
     under section 553 of title 5, United States Code, establish 
     criteria for determining circumstances under which substitute 
     notification may be provided under paragraph (2), including 
     criteria for determining if notification under paragraph (1) 
     is not feasible due to excessive costs to the person required 
     to provided such notification relative to the resources of 
     such person. Such regulations may also identify other 
     circumstances where substitute notification would be 
     appropriate for any person, including circumstances under 
     which the cost of providing notification exceeds the benefits 
     to consumers.
       (B) Guidance.--In addition, the Commission shall provide 
     and publish general guidance with respect to compliance with 
     this subsection. Such guidance shall include--
       (i) a description of written or email notification that 
     complies with the requirements of paragraph (1); and
       (ii) guidance on the content of substitute notification 
     under paragraph (2), including the extent of notification to 
     print and broadcast media that complies with the requirements 
     of such paragraph.
       (e) Other Obligations Following Breach.--
       (1) In general.--A person required to provide notification 
     under subsection (a) shall, upon request of an individual 
     whose personal information was included in the breach of 
     security, provide or arrange for the provision of, to each 
     such individual and at no cost to such individual--
       (A) consumer credit reports from at least one of the major 
     credit reporting agencies beginning not later than 60 days 
     following the individual's request and continuing on a 
     quarterly basis for a period of 2 years thereafter; or
       (B) a credit monitoring or other service that enables 
     consumers to detect the misuse of their personal information, 
     beginning not later than 60 days following the individual's 
     request and continuing for a period of 2 years.
       (2) Limitation.--This subsection shall not apply if the 
     only personal information which has been the subject of the 
     security breach is the individual's first name or initial and 
     last name, or address, or phone number, in combination with a 
     credit or debit card number, and any required security code.
       (3) Rulemaking.--As part of the Commission's rulemaking 
     described in subsection (d)(3), the Commission shall 
     determine the circumstances under which a person required to 
     provide notification under subsection (a)(1) shall provide or 
     arrange for the provision of free consumer credit reports or 
     credit monitoring or other service to affected individuals.
       (f) Exemption.--
       (1) General exemption.--A person shall be exempt from the 
     requirements under this section if, following a breach of 
     security, such person determines that there is no reasonable 
     risk of identity theft, fraud, or other unlawful conduct.
       (2) Presumption.--
       (A) In general.--If the data in electronic form containing 
     personal information is rendered unusable, unreadable, or 
     indecipherable through encryption or other security 
     technology or methodology (if the method of encryption or 
     such other technology or methodology is generally accepted by 
     experts in the information security field), there shall be a 
     presumption that no reasonable risk of identity theft, fraud, 
     or other unlawful conduct exists following a breach of 
     security of such data. Any such presumption may be rebutted 
     by facts demonstrating that the encryption or other security 
     technologies or methodologies in a specific case, have been 
     or are reasonably likely to be compromised.
       (B) Methodologies or technologies.--Not later than 1 year 
     after the date of the enactment of this Act and biannually 
     thereafter, the Commission shall issue rules (pursuant to 
     section 553 of title 5, United States Code) or guidance to 
     identify security methodologies or technologies which render 
     data in electronic form unusable, unreadable, or 
     indecipherable, that shall, if applied to such data, 
     establish a presumption that no reasonable risk of identity 
     theft, fraud, or other unlawful conduct exists following a 
     breach of security of such data. Any such presumption may be 
     rebutted by facts demonstrating that any such methodology or 
     technology in a specific case has been or is reasonably 
     likely to be compromised. In issuing such rules or guidance, 
     the Commission shall consult with relevant industries, 
     consumer organizations, and data security and identity theft 
     prevention experts and established standards setting bodies.
       (3) FTC guidance.--Not later than 1 year after the date of 
     the enactment of this Act the Commission shall issue guidance 
     regarding the application of the exemption in paragraph (1).
       (g) Website Notice of Federal Trade Commission.--If the 
     Commission, upon receiving notification of any breach of 
     security that is reported to the Commission under subsection 
     (a)(2), finds that notification of such a breach of security 
     via the Commission's Internet website would be in the public 
     interest or for the protection of consumers, the Commission 
     shall place such a notice in a clear and conspicuous location 
     on its Internet website.
       (h) FTC Study on Notification in Languages in Addition to 
     English.--Not later than 1 year after the date of enactment 
     of this Act, the Commission shall conduct a study on the 
     practicality and cost effectiveness of requiring the 
     notification required by subsection (d)(1) to be provided in 
     a language in addition to English to individuals known to 
     speak only such other language.
       (i) General Rulemaking Authority.--The Commission may 
     promulgate regulations necessary under section 553 of title 
     5, United States Code, to effectively enforce the 
     requirements of this section.
       (j) Treatment of Persons Governed by Other Law.--A person 
     who is in compliance with any other Federal law that requires 
     such person to provide notification to individuals following 
     a breach of security, and that, taken as a whole, provides 
     protections substantially similar to, or greater than, those 
     required under this section, as the Commission shall 
     determine by rule (under section 553 of title 5, United 
     States Code), shall be deemed to be in compliance with this 
     section.

     SEC. 4. APPLICATION AND ENFORCEMENT.

       (a) General Application.--The requirements of sections 2 
     and 3 shall only apply to those persons, partnerships, or 
     corporations over which the Commission has authority pursuant 
     to section 5(a)(2) of the Federal Trade Commission Act.
       (b) Enforcement by the Federal Trade Commission.--
       (1) Unfair or deceptive acts or practices.--A violation of 
     section 2 or 3 shall be treated as an unfair and deceptive 
     act or practice in violation of a regulation under section 
     18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 
     57a(a)(1)(B)) regarding unfair or deceptive acts or 
     practices.
       (2) Powers of commission.--The Commission shall enforce 
     this Act in the same manner, by the same means, and with the 
     same jurisdiction, powers, and duties as though all 
     applicable terms and provisions of the Federal Trade 
     Commission Act (15 U.S.C. 41 et seq.) were incorporated into 
     and made a part of this Act. Any person who violates such 
     regulations shall be subject to the penalties and entitled to 
     the privileges and immunities provided in that Act.
       (3) Limitation.--In promulgating rules under this Act, the 
     Commission shall not require the deployment or use of any 
     specific products or technologies, including any specific 
     computer software or hardware.
       (c) Enforcement by State Attorneys General.--
       (1) Civil action.--In any case in which the attorney 
     general of a State, or an official or agency of a State, has 
     reason to believe that an interest of the residents of that 
     State has been or is threatened or adversely affected by any 
     person who violates section 2 or 3 of this Act, the attorney 
     general, official, or agency of the State, as parens patriae, 
     may bring a civil action on behalf of the residents of the 
     State in a district court of the United States of appropriate 
     jurisdiction--
       (A) to enjoin further violation of such section by the 
     defendant;
       (B) to compel compliance with such section; or
       (C) to obtain civil penalties in the amount determined 
     under paragraph (2).
       (2) Civil penalties.--
       (A) Calculation.--
       (i) Treatment of violations of section 2.--For purposes of 
     paragraph (1)(C) with regard to a violation of section 2, the 
     amount determined under this paragraph is the amount 
     calculated by multiplying the number of days that a person is 
     not in compliance with such section by an amount not greater 
     than $11,000.

[[Page 29883]]

       (ii) Treatment of violations of section 3.--For purposes of 
     paragraph (1)(C) with regard to a violation of section 3, the 
     amount determined under this paragraph is the amount 
     calculated by multiplying the number of violations of such 
     section by an amount not greater than $11,000. Each failure 
     to send notification as required under section 3 to a 
     resident of the State shall be treated as a separate 
     violation.
       (B) Adjustment for inflation.--Beginning on the date that 
     the Consumer Price Index is first published by the Bureau of 
     Labor Statistics that is after 1 year after the date of 
     enactment of this Act, and each year thereafter, the amounts 
     specified in clauses (i) and (ii) of subparagraph (A) shall 
     be increased by the percentage increase in the Consumer Price 
     Index published on that date from the Consumer Price Index 
     published the previous year.
       (C) Maximum total liability.--Notwithstanding the number of 
     actions which may be brought against a person under this 
     subsection the maximum civil penalty for which any person may 
     be liable under this subsection shall not exceed--
       (i) $5,000,000 for each violation of section 2; and
       (ii) $5,000,000 for all violations of section 3 resulting 
     from a single breach of security.
       (3) Intervention by the ftc.--
       (A) Notice and intervention.--The State shall provide prior 
     written notice of any action under paragraph (1) to the 
     Commission and provide the Commission with a copy of its 
     complaint, except in any case in which such prior notice is 
     not feasible, in which case the State shall serve such notice 
     immediately upon instituting such action. The Commission 
     shall have the right--
       (i) to intervene in the action;
       (ii) upon so intervening, to be heard on all matters 
     arising therein; and
       (iii) to file petitions for appeal.
       (B) Limitation on state action while federal action is 
     pending.--If the Commission has instituted a civil action for 
     violation of this Act, no State attorney general, or official 
     or agency of a State, may bring an action under this 
     subsection during the pendency of that action against any 
     defendant named in the complaint of the Commission for any 
     violation of this Act alleged in the complaint.
       (4) Construction.--For purposes of bringing any civil 
     action under paragraph (1), nothing in this Act shall be 
     construed to prevent an attorney general of a State from 
     exercising the powers conferred on the attorney general by 
     the laws of that State to--
       (A) conduct investigations;
       (B) administer oaths or affirmations; or
       (C) compel the attendance of witnesses or the production of 
     documentary and other evidence.
       (d) Affirmative Defense for a Violation of Section 3.--
       (1) In general.--It shall be an affirmative defense to an 
     enforcement action brought under subsection (b), or a civil 
     action brought under subsection (c), based on a violation of 
     section 3, that all of the personal information contained in 
     the data in electronic form that was acquired or accessed as 
     a result of a breach of security of the defendant is public 
     record information that is lawfully made available to the 
     general public from Federal, State, or local government 
     records and was acquired by the defendant from such records.
       (2) No effect on other requirements.--Nothing in this 
     subsection shall be construed to exempt any person from the 
     requirement to notify the Commission of a breach of security 
     as required under section 3(a).

     SEC. 5. DEFINITIONS.

       In this Act the following definitions apply:
       (1) Breach of security.--The term ``breach of security'' 
     means unauthorized access to or acquisition of data in 
     electronic form containing personal information.
       (2) Commission.--The term ``Commission'' means the Federal 
     Trade Commission.
       (3) Data in electronic form.--The term ``data in electronic 
     form'' means any data stored electronically or digitally on 
     any computer system or other database and includes recordable 
     tapes and other mass storage devices.
       (4) Encryption.--The term ``encryption'' means the 
     protection of data in electronic form in storage or in 
     transit using an encryption technology that has been adopted 
     by an established standards setting body which renders such 
     data indecipherable in the absence of associated 
     cryptographic keys necessary to enable decryption of such 
     data. Such encryption must include appropriate management and 
     safeguards of such keys to protect the integrity of the 
     encryption.
       (5) Identity theft.--The term ``identity theft'' means the 
     unauthorized use of another person's personal information for 
     the purpose of engaging in commercial transactions under the 
     name of such other person.
       (6) Information broker.--The term ``information broker''--
       (A) means a commercial entity whose business is to collect, 
     assemble, or maintain personal information concerning 
     individuals who are not current or former customers of such 
     entity in order to sell such information or provide access to 
     such information to any nonaffiliated third party in exchange 
     for consideration, whether such collection, assembly, or 
     maintenance of personal information is performed by the 
     information broker directly, or by contract or subcontract 
     with any other entity; and
       (B) does not include a commercial entity to the extent that 
     such entity processes information collected by or on behalf 
     of and received from or on behalf of a nonaffiliated third 
     party concerning individuals who are current or former 
     customers or employees of such third party to enable such 
     third party directly or through parties acting on its behalf 
     to (1) provide benefits for its employees or (2) directly 
     transact business with its customers.
       (7) Personal information.--
       (A) Definition.--The term ``personal information'' means an 
     individual's first name or initial and last name, or address, 
     or phone number, in combination with any 1 or more of the 
     following data elements for that individual:
       (i) Social Security number.
       (ii) Driver's license number, passport number, military 
     identification number, or other similar number issued on a 
     government document used to verify identity.
       (iii) Financial account number, or credit or debit card 
     number, and any required security code, access code, or 
     password that is necessary to permit access to an 
     individual's financial account.
       (B) Modified definition by rulemaking.--The Commission may, 
     by rule promulgated under section 553 of title 5, United 
     States Code, modify the definition of ``personal 
     information'' under subparagraph (A)--
       (i) for the purpose of section 2 to the extent that such 
     modification will not unreasonably impede interstate 
     commerce, and will accomplish the purposes of this Act; or
       (ii) for the purpose of section 3, to the extent that such 
     modification is necessary to accommodate changes in 
     technology or practices, will not unreasonably impede 
     interstate commerce, and will accomplish the purposes of this 
     Act.
       (8) Public record information.--The term ``public record 
     information'' means information about an individual which has 
     been obtained originally from records of a Federal, State, or 
     local government entity that are available for public 
     inspection.
       (9) Non-public information.--The term ``non-public 
     information'' means information about an individual that is 
     of a private nature and neither available to the general 
     public nor obtained from a public record.
       (10) Service provider.--The term ``service provider'' means 
     a person that provides electronic data transmission, routing, 
     intermediate and transient storage, or connections to its 
     system or network, where the person providing such services 
     does not select or modify the content of the electronic data, 
     is not the sender or the intended recipient of the data, and 
     such person transmits, routes, stores, or provides 
     connections for personal information in a manner that 
     personal information is undifferentiated from other types of 
     data that such person transmits, routes, stores, or provides 
     connections. Any such person shall be treated as a service 
     provider under this Act only to the extent that it is engaged 
     in the provision of such transmission, routing, intermediate 
     and transient storage or connections.

     SEC. 6. EFFECT ON OTHER LAWS.

       (a) Preemption of State Information Security Laws.--This 
     Act supersedes any provision of a statute, regulation, or 
     rule of a State or political subdivision of a State, with 
     respect to those entities covered by the regulations issued 
     pursuant to this Act, that expressly--
       (1) requires information security practices and treatment 
     of data containing personal information similar to any of 
     those required under section 2; and
       (2) requires notification to individuals of a breach of 
     security resulting in unauthorized access to or acquisition 
     of data in electronic form containing personal information.
       (b) Additional Preemption.--
       (1) In general.--No person other than a person specified in 
     section 4(c) may bring a civil action under the laws of any 
     State if such action is premised in whole or in part upon the 
     defendant violating any provision of this Act.
       (2) Protection of consumer protection laws.--This 
     subsection shall not be construed to limit the enforcement of 
     any State consumer protection law by an Attorney General of a 
     State.
       (c) Protection of Certain State Laws.--This Act shall not 
     be construed to preempt the applicability of--
       (1) State trespass, contract, or tort law; or
       (2) other State laws to the extent that those laws relate 
     to acts of fraud.
       (d) Preservation of FTC Authority.--Nothing in this Act may 
     be construed in any way to limit or affect the Commission's 
     authority under any other provision of law.

     SEC. 7. EFFECTIVE DATE.

       This Act shall take effect 1 year after the date of 
     enactment of this Act.

     SEC. 8. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated to the Commission 
     $1,000,000 for each of fiscal years 2010 through 2015 to 
     carry out this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Illinois (Mr. Rush) and the gentleman

[[Page 29884]]

from Florida (Mr. Stearns) each will control 20 minutes.
  The Chair recognizes the gentleman from Illinois.


                             General Leave

  Mr. RUSH. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days in which to revise and extend their remarks and 
include extraneous material in the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Illinois?
  There was no objection.
  Mr. RUSH. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the first bill that I am urging adoption of is H.R. 
2221, the Data Accountability and Trust Act, known as the DATA Act.
  H.R. 2221 addresses data breaches by requiring for-profit entities 
holding data containing people's personal information to have 
reasonable and appropriate security measures in place to protect that 
data. H.R. 2221 would also require them to notify consumers who are 
U.S. citizens or residents and the Federal Trade Commission when a 
breach occurs.
  For the past 5 years, the Privacy Rights Clearinghouse contends that 
nearly 340 million records ``containing sensitive personal 
information'' have been involved in security breaches. High-profile 
data breaches have plagued financial institutions, nationwide 
retailers, online merchants, information brokers, credit card 
processors, health care institutions, high-tech companies, research 
facilities, and government agencies.
  Currently, several laws address data security requirements for narrow 
categories of information or specific sectors of the marketplace. These 
laws include the Gramm-Leach-Bliley Act Safeguards Rule, which contains 
data security requirements for financial institutions and the Fair 
Credit Reporting Act Disposal Rule, which imposes safe disposal 
obligations on entities that maintain consumer report information.
  In addition, FTC has used its enforcement authority under the FTC Act 
to bring actions against companies that have made misleading claims 
about data security procedures or who have failed to employ reasonable 
security measures in circumstances causing substantial injury.
  However, there is no comprehensive Federal law that requires all 
companies that hold consumers' personal information to implement 
reasonable measures to protect that data. Also, there is no Federal law 
that requires companies that experience a data breach to provide notice 
to those consumers whose personal information was compromised. Those 
entities who determine that there is no reasonable risk of identity 
theft, fraud, or other unlawful conduct would be exempt from providing 
nationwide notice to affected persons under H.R. 2221.
  The DATA Act establishes a rebuttal presumption in the law that 
encryption-based technologies and methodologies adequately meet the 
determination standard in section 3, subsection (f)(2)(A) of the bill. 
More narrow exemptions are provided for a defined category of personal 
information holders known as ``service providers'' in addition to 
information brokers who handle protective data but only for the limited 
purposes of preventing fraud.
  In promulgating the regulations under this subsection, the FTC may 
determine to be in compliance any person who is required under any 
other Federal law to maintain standards and safeguards for information 
security and protection of personal information that provide equal or 
greater protection than H.R. 2221.
  Mr. Speaker, I reserve the balance of my time.
  Mr. STEARNS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of H.R. 2221, the Data Accountability 
and Trust Act, and I am very pleased and gratified that we're 
considering this bill today. I've taken an active part and interest in 
data privacy, and I am happy that the House Members will now finally 
have an opportunity to vote on this important legislation which, 
frankly, I introduced in its original form in the 109th Congress.
  As former chairman of the Subcommittee on Commerce, Trade, and 
Consumer Protection, CTCP, of the Energy and Commerce Committee, I held 
two hearings in 2005 on identity theft and security breaches involving 
personal information. These hearings led me to introduce the Data 
Accountability and Trust Act, which would require any entity that 
experiences a simple breach of security, such as a business, to notify 
all those folks in the United States whose information was acquired by 
an unauthorized person as a result of this breach. My bill was reported 
out of the Energy and Commerce Committee by a unanimous vote, but, 
unfortunately, it never made its way to the House floor for a final 
vote.
  But today we're considering legislation that is almost identical to 
the bill I sponsored when I was chairman of the CTCP Subcommittee. So I 
would like to commend Chairman Bobby Rush for his leadership in 
introducing this bill, and I'm proud to be the original cosponsor of 
the bill.
  My colleagues, importantly, this bill requires an audit of a data 
broker's security practices following a breach of security. The 
legislation also directs the Federal Trade Commission to create rules 
requiring persons in interstate commerce that own or possess data to 
simply establish and implement security policies and procedures that 
protect this data from unauthorized use and requires data brokers to 
establish reasonable procedures to verify the accuracy of their data 
and also to allow consumers access to such information while also 
including important protections to prevent fraudsters from accessing 
this same information.
  The DATA bill also directs the Federal Trade Commission, the FTC, to 
post data breaches on its Web site, making important data breach 
information readily available to the public.
  The CTCP Subcommittee worked in a bipartisan manner to address a few 
concerns that were raised about the broad scope of this bill, such as 
worries about duplicative regulations; but our staff committee worked 
in a bipartisan manner to solve these problems. So they have been 
mitigated.
  Importantly, H.R. 2221 does not impose duplicative, inconsistent, or 
overlapping regulations. The bill ensures that any person who is in 
compliance with a similar data security law will then be deemed to be 
in compliance with H.R. 2221. Additionally, with respect to concerns 
that were raised about the access and dispute resolution requirements 
for information brokers, the DATA bill provides that if an information 
broker is in compliance with similar relevant laws, then the 
information broker will also be deemed to be in compliance with respect 
to that information.
  Members should also note that the Data Accountability and Trust Act 
only applies to those entities that are subject to Federal Trade 
Commission jurisdiction. Banks, savings and loan institutions, thrifts, 
and the business of insurance are not subject to the requirements of 
this bill.
  Consideration of this bill today is timely, as data security, data 
privacy problems continue to affect countless Americans each year. In 
fact, according to Privacy Rights Clearinghouse, almost 340 million 
records containing ``sensitive personal information'' have been 
``involved in security breaches since 2005.''
  One of the largest known breaches in our country actually occurred in 
January of this year at Heartland Payment Systems. In this case over 
180 million personal records were compromised. Furthermore, 
universities across this Nation have had names, photos, phone numbers, 
and addresses of their students and their staff compromised or stolen. 
Sensitive technology companies such as SAIC, Science Application 
International Corporation, and large financial institutions such as 
Bank of America have also experienced these breaches. Hundreds of 
hospitals have had the personal information of their patients in their 
hospitals compromised.

[[Page 29885]]

  Earlier this year, hackers broke into a Virginia State Web site used 
by pharmacists to track prescription drug abuse. They successfully 
deleted records of more than 8 million patients and replaced the site's 
home page with a ransom note demanding $10 million for the return of 
these records.
  Breaches have also occurred in the Department of Motor Vehicles; the 
IRS; the Federal Trade Commission itself; the FDIC, which is the 
Federal Deposit Insurance Corporation; the State Department; the 
Department of Veterans Affairs; the Department of Justice. Of course, 
the list goes on and on.

                              {time}  1500

  Oftentimes, these data security breaches can lead to credit card 
fraud and even identity theft, which can require time and a whole lot 
of money and energy from consumers to simply repair their good name and 
to restore their credit history.
  Consideration of this bill, the Data Accountability and Trust Act, is 
timely and necessary to give the record number of data breaches that 
are occurring across this country their due and protection. So I urge 
my colleagues at this time to support the bill.
  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  Mr. RUSH. Mr. Speaker, as has been noted, and as is obvious here, 
H.R. 2221 is a bipartisan bill that is the result of a cooperative 
process. This bill was first introduced in the 109th Congress by 
Representative Stearns as the lead sponsor when the Republicans were in 
the majority. It was voted out of full committee by a unanimous 
recorded vote. This year, it was introduced by myself as lead sponsor, 
and after making further improvements to the bill, it was voted out of 
full committee by voice vote. Compromises were made on all sides to 
produce an effective piece of legislation.
  I would like to thank both Members and staff from both sides of the 
aisle for their work on this bill. I want to thank Mr. Stearns, Mr. 
Barton, Mr. Radanovich, Ms. Schakowsky, and the chairman of the full 
committee, Mr. Waxman, for working in a bipartisan fashion to move this 
important legislation forward.
  Mr. Speaker, it is, again, unacceptable that in 2009 there is no 
comprehensive Federal law that requires all companies that hold 
consumers' personal information to protect that data. It is equally 
unacceptable that there is no Federal law requiring companies that 
experience a data breach to provide notice to those consumers whose 
personal information was compromised. This bill creates uniform, 
nationwide standards for breach notification. That's not only good for 
consumers, but uniform standards are also good for business, good for 
Americans, and good for our constituents. We need this law, and I urge 
my colleagues to support and pass H.R. 2221.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Illinois (Mr. Rush) that the House suspend the rules and 
pass the bill, H.R. 2221, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  The title was amended so as to read: ``A bill to protect consumers by 
requiring reasonable security policies and procedures to protect data 
containing personal information, and to provide for nationwide notice 
in the event of a security breach.''.
  A motion to reconsider was laid on the table.

                          ____________________