prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.

Report 1: Implementing Telework: The Telework Enhancement Act of 2010 (the Act) establishes telework implementation requirements for agencies, including, for example, that each agency designate a Telework Managing Officer and that each agency incorporate telework into its continuity of operations plans  The Act does not mention telework specifically in the context of space planning  The Act also requires the Office of Personnel Management (OPM) to assess whether agencies have met agency- established telework outcome goals such as real estate savings  It also requires OPM to submit reports that include executive agencies’ goals for increasing telework participation to the extent practicable, assist each agency with developing qualitative- and quantitative- teleworking measures and goals, and track telework eligibility and participation rates across the government  According to OPM telework information from fiscal year 2012 through fiscal year 2015, the percentage of federal workers eligible to telework remained stable at about 45 percent, on average  However, during the same period, the percentage of eligible employees who participated in telework increased from 29 percent to 46 percent  Figure 1 shows the frequency of telework across the federal government from fiscal years 2012 through 2015 by type of telework  Reducing Space: OMB issued the National Strategy for the Efficient Use of Real Property and the Reduce the Footprint policy in 2015, which require all CFO Act agencies to improve the efficiency of real property use, control costs, and reduce holdings  These OMB initiatives also required agencies to develop Five-Year Real Property Efficiency Plans annually; develop office space standards that specify maximum square footage identify reduction targets for office space in square feet; and freeze the footprint (i e , not increase square footage of office space)  OMB’s National Strategy noted that employee telework has changed the dynamic of the federal real property portfolio and resulted in a need for less space  OMB’s Reduce the Footprint guidance memo states that agencies’ 5-year plans should include an explanation of actions the agency is taking to increase space efficiency, including cost-effective alternatives to acquisition of additional office space, such as consolidation, colocation, teleworking, and “hoteling ” Federal statute also requires that agencies consider whether space needs can be met using alternative workplace arrangements when deciding whether to acquire new space  GSA defines mobility as an overarching term describing the ability of employees, enabled by information technology (IT) and workplace policies to perform work both within and outside the agency worksite  Under this definition, mobility includes telework, desk-sharing, site work, and travel  Agencies can strategically use telework—one form of mobility—combined with desk-sharing and hoteling to reduce space needs and increase efficiency  This allows agencies to plan for fewer workstations than the number of employees  Other space efficiency strategies such as smaller workstations (e g , reduced space standards), reconfigured office space (e g , open-office plans instead of private offices), and mobile technology (e g , laptops, Wi-Fi throughout the office, and smart phones) can be combined with telework and used as planning tools to reduce office space, use space more efficiently, and potentially cut costs  GSA, in a 2010 publication, described a continuum of three different scenarios for the ways agencies may use mobility, including telework  These scenarios range from limited mobility not leveraged for space planning to extensive mobility leveraged for space planning to reduce and use office space more efficiently: (1) No space changes: Some employees telework at least 2 scheduled days per week but retain assigned workstations with no changes to the existing space configuration  (2) No space reduction but different space allocation: Most employees telework at least 2 scheduled days per week and keep assigned workstations  Workstations are smaller and more densely organized; and space freed up by smaller workstations can be used for collaborative work spaces  (3) Space reduction and different space allocation: Nearly all employees telework at least 3 scheduled days per week and participate in hoteling (i e , unassigned workstations), and workstations are also smaller and more densely organized  In this scenario, according to GSA, an agency can redesign its office and potentially reduce space by up to 30 percent  The key factors in distinguishing these scenarios illustrated in figure 2 below include the: level of employee participation in telework; changes to physical office spaces (e g , smaller and more densely organized workstations and more emphasis on collaborative workspaces); and extent to which employees have assigned workstations or participate in desk-sharing  Under federal statute, GSA has a role in promulgating rules and developing guidance promoting the efficient use of real property  For example, the GSA Administrator may provide guidance, assistance, and oversight to client agencies regarding the establishment and operation of alternative workplace arrangements, which include leveraging telework to reduce space needs  GSA also directly assists client agencies with identifying and prioritizing opportunities to improve and implement real- property efficiency measures  In reviewing planning documents, policies, and survey data, we found that the 23 civilian CFO Act agencies reported using telework to reduce or use space more efficiently  Specifically, our analysis of (1) agency-wide space-planning policies and procedures and (2) Real Property Efficiency Plans found that all of the agencies discussed telework in the context of space planning and achieving greater space efficiencies  Agencies also provided examples in survey responses of how they have used telework to increase operational effectiveness while optimizing their use of space  Fifteen agencies’ space-planning policies and procedures included provisions for using telework and other mobility strategies, such as hoteling and desk-sharing, as a strategic space-planning tool  Three of the agencies mentioned these strategies only in the context of space planning, and five agencies did not mention them at all (see table 1)  For the fifteen agencies with space planning policies that incorporated telework, the documents either expressly directed agency planners to include telework, hoteling, or desk-sharing in space planning; provided instructions and guidance for using these in space planning; or issued space allocation standards for their implementation  Several agency-wide space plans identify space reduction goals based on using telework strategically  For example, the Department of Transportation (DOT) documents identify a goal of at least a 10 percent workspace reduction in new acquisitions as a result of compressed work schedules and telework, and specifically state that employees who telework six or more days per pay period should not have a permanent workspace  Agency-wide space planning documents from three civilian CFO Act agencies mentioned telework, hoteling or desk-sharing as strategies in the context of space planning  For example, DOJ’s agency-wide policy notes that telework and hoteling could increase the efficient use of space and directs each sub-agency to maintain its own space design guidelines within agency-wide policy office space standards  The other two agencies, the Department of State and the Nuclear Regulatory Commission, either had a short provisional agency-wide space planning document that laid out space standards or mentioned telework, hoteling and desk-sharing as a tool for creating sustainable space  Five agencies’ space planning documents made no reference to telework; however, one agency, OPM, developed a maximum office space utilization rate and criteria for determining which positions require a private office  As noted above, OMB’s Reduce the Footprint policy (2015) requires agencies to establish Real Property Efficiency Plans  In our analysis of the agencies’ fiscal year 2016 or 2017 plans, we found that 19 of the 23 civilian CFO Act agencies discussed telework in the context of space planning  A few agencies’ Real Property Efficiency Plans explicitly stated that the agency reduced space as a result of telework  For example, GSA used telework to reduce space in its Heartland, Rocky Mountain, and National Capital Region offices  Some (5 of 23) Real Property Efficiency Plans discussed the telework pilot programs agencies have initiated  For example, the Department of Education’s plans reported using a pilot program to acclimate employees to teleworking and desk-sharing; as a result, the agency intends to incorporate hoteling or space-sharing opportunities into proposed space designs in future projects  The Social Security Administration (SSA) plans also reported initiating a pilot program to experiment with smaller “hoteling” workspaces  Similarly, the Nuclear Regulatory Commission’s plan reported conducting a pilot program at its headquarters offices to identify challenges, better understand telework, and evaluate the potential of shared workspaces  In response to our survey, about three-quarters of agencies reported space-planning policies that use telework to reduce office space, lower real estate costs, or reduce the size of individual workstations  Agencies reported accomplishing this by using desk-sharing and hoteling for employees who have relinquished permanent workspaces  For example, several agencies discussed strategies to reduce space in their responses to our survey  The Department of Labor reported using telework to close some small offices resulting in overall space reductions of about 16,000 square feet  OPM reported that it both reduced space and created space efficiencies by transitioning staff in its Eastern Management Development Center to full-time telework and terminating the lease, resulting in a space reduction of about 32,000 square feet  OPM’s Human Resource Solutions Program also achieved a 47 percent space reduction when it instituted desk-sharing and freed the vacated space for use by another program office  The Department of the Treasury reported that its sub-agency, the Internal Revenue Service, has aggressively used telework to help reduce its real property portfolio, while other Treasury units have leveraged telework to achieve significant space reductions  At the end of fiscal year 2016, Treasury reported agency-wide reductions of about 484,000 square feet at a cost savings of about $10 million  Two agencies––Department of Homeland Security, and the National Science Foundation––reported using telework to increase the efficiency of existing office space in sub-agencies by increasing staff without increasing the size of offices, for example: The Department of Homeland Security reported that one of its sub- agencies used telework in the planning and design of a new office, resulting in both a space reduction and more efficient use of the space  The new office is 57,573 square feet smaller than the prior office while personnel assigned to the office increased from 315 to 394  The National Science Foundation reported that it used teleworking, among other workspace strategies such as new space standards and virtual technologies, to increase staff numbers without increasing its real estate footprint  Among the agencies we reviewed in detail—GSA, OJP, CDC, and the Fiscal Service—the use of telework in office space planning varied from emerging consideration to extensive implementation  GSA and OJP have used telework extensively to both reduce space and increase space efficiency in their office spaces  CDC has leveraged telework to reduce space or use space more efficiently in more limited cases while the Fiscal Service has begun to consider telework in future space planning  Appendix II provides additional details on office spaces where these agencies reduced space or used space more efficiently, including the role of telework, if any  GSA has leveraged telework to reduce space by implementing unassigned workstations in nearly all of its regional and headquarters offices, along with other forms of “employee mobility,” complementary IT, and smaller space standards  GSA adopted telework as early as 1999 and by fiscal year 2015, more than 90 percent of all eligible GSA employees teleworked, and nearly half of all employees teleworked 3 or more days per pay period, according to OPM data  GSA’s space policy cites desk-sharing (e g , hoteling, “hot-desking,” or other arrangements) as one strategy to help meet its space standard of 136 useable square feet (USF) per person  GSA employees may telework full-time, but may be required to give up dedicated workstations if they are on site 2 or fewer days per week  GSA has gradually transitioned to unassigned workstations at headquarters and in its regional offices, allowing the agency to implement desk-sharing and calculate space needs at less than one desk per employee  The agency also assigned laptops and mobile or soft phones to employees to further maximize mobility  The three GSA sites we visited used space-planning strategies to achieve, or nearly achieve, GSA’s space standard of 136 USF per person  For example, at its Philadelphia Regional Office, GSA leveraged existing telework levels to meet reduced space standards and move to a smaller leased space by accommodating about 600 employees in fewer than 500 workstations  According to GSA, this allowed the office to achieve a utilization rate of 139 USF per person and realize a reported annual rent cost savings of about $2 million  Similarly, at its New York Regional Office, GSA also leveraged existing telework levels to meet reduced space standards and move to a smaller leased space  This step allowed the office to achieve a utilization rate of 119 USF per person and realize a reported total rent cost savings of nearly $11 million  GSA also leveraged telework as part of its headquarters consolidation  GSA reports that it was able to move approximately 1,000 additional employees to the headquarters building by implementing a hoteling system and planning for less than one workstation per employee  This allowed GSA to achieve a utilization rate of 138 USF per person at its headquarters and realize a reported annual rent-cost savings of approximately $24 million  Similar to GSA, OJP used telework, along with complementary tools, to reduce space and use space more efficiently at its consolidated office  More than 90 percent of eligible employees teleworked in fiscal year 2015, and nearly half of all employees teleworked 3 or more days per pay period, according to OPM data  More recently, OJP reported that around 70 percent of its employees teleworked in August 2017, with just less than 40 percent doing so three or more days per pay period  At the departmental level, DOJ’s plans to improve space utilization include reduced space requirements, and, in some cases, alternative workplace strategies  DOJ’s space utilization policy mentions telework with hoteling as one way to increase efficient use of space, and DOJ’s telework policy mentions the potential of telework to create cost savings by decreasing space needs  While most OJP employees are eligible to telework, a few federal staff occupying administrative positions are not eligible  OJP took the opportunity to examine and improve its space use as three of its leases approached expiration in 2013  It leased space in two adjacent buildings under three separate leases  OJP worked with GSA to analyze space-planning options, contracting a study of the office that recommended ways to improve space utilization  This study included a survey of all employees, a complete physical space survey, and interviews with leadership  The results of this study not only indicated OJP employees’ openness to more mobility but also that they had concerns such as loss of privacy and social connectedness  For example, more than 80 percent of survey respondents said they could work off-site more often with proper tools and support, and almost half said they would give up dedicated space to work remotely more often  Furthermore, interviews with the leadership of several OJP units indicated a willingness to support increased mobility but also a need to maintain privacy and improve mobile IT  According to OJP, it alleviated these concerns by encouraging participation in the planning process, highlighting opportunities for positive changes, and maintaining open communication (e g , communicating changes and expected benefits)  Based on the analysis of space-planning options, OJP retained one of the three previous leases and leveraged telework to accommodate all employees into less space overall in one building  OJP achieved this objective by targeting 25 percent employee mobility and implementing hoteling  Concurrently, OJP officials explained that they introduced smaller workstations and used tenant-improvement allowance funds to reconfigure space for more flexible use  Physical reconfigurations included changing hard-walled office spaces with dedicated workstations to a primarily open office with few walls or dedicated workstations  According to OJP, it complemented these changes with investments in mobile IT for individual employees, improved IT capabilities in conference rooms and other collaborative spaces, and an emphasis on training employees to work well in a mobile office environment  For example, OJP officials said they installed Wi-Fi throughout the space, issued laptops and smart phones to employees, upgraded video-conferencing capabilities in conference rooms and collaborative spaces, and expanded tools for informal employee communication  According to OJP officials, through the consolidation, they said they achieved a utilization rate of 190 USF per person—a decrease of 30 USF per person from the prior 220 utilization rate  This rate remained higher than DOJ’s overall target and housed the same total number of employees—about 1,000—in about 50,000 fewer USF  OJP reports that the consolidation resulted in an estimated $3 million annual lease- cost savings  OJP also estimates additional savings from reduced transit subsidies, carbon emissions, and continuity of operations  Relative to GSA and OJP, CDC has made more limited use of telework in office space-planning  CDC officials told us that they have leveraged telework as a space-planning tool in many locations, but they have only documented doing so in one case  HHS expects each sub-agency to comply with its 170 USF per-person utilization-rate policy, and this policy suggests that planned space reductions should take telework into account  As a component of HHS, CDC has its own space policy, which states that telework, desk-sharing, and hoteling can help CDC’s units meet HHS’s utilization rate policy of 170 USF per person  CDC’s telework policy requires employees who telework frequently to agree to participate in desk-sharing, but according to CDC officials, how and to what extent this portion of the broader policy is implemented is up to the discretion of management  CDC officials cited two limitations to further implementing space sharing techniques: (1) the large number of employees’ who may be unable to telework on certain days based upon their job responsibilities and (2) the voluntary nature of telework  Some CDC employees cannot work off-site at least some of the time due to confidential data or lab-based work  Approximately 60 percent of eligible CDC employees teleworked in fiscal year 2015 and about one-quarter of all employees teleworked 3 or more days per pay period, according to OPM data  CDC officials told us that telework participation ranges from 49 to 86 percent across CDC units  CDC’s National Center for Chronic Disease Prevention and Health Promotion’s office in Chamblee, GA, provides the most clearly documented case of CDC’s leveraging telework for space efficiency  According to CDC officials, this unit accommodated more than 300 additional employees within its existing space by implementing hoteling for employees who telework 4 or more days per pay period, and it continues to use hoteling as part of its space management strategy  In contrast, CDC’s National Center for Health Statistics’ (NCHS) office in Hyattsville, MD, reduced space without leveraging telework by reconfiguring the space with smaller, soft-walled workstations  CDC officials told us that NCHS reduced its office space from seven floors to three and three-quarters floors, resulting in a reported space reduction of more than 40 percent and allowing it to achieve a 170 USF per person utilization rate  CDC officials reported that this space reduction resulted in annual rent cost savings of approximately $1 million  Hoteling was not feasible at this location because work on confidential data limits the ability of employees to work off-site, and NCHS employees also prefer dedicated workstations  CDC officials said that there is limited documentation of any additional cases of CDC’s leveraging telework as a space- planning tool because, prior to our review, there had been no formal request to connect telework and space utilization data  In contrast to GSA, OJP, and CDC, telework as a space-planning tool is an emerging consideration at the Fiscal Service  At the departmental level, Treasury has space standards that aim for efficient and effective offices that use increased telework and shared workstations to minimize the number of dedicated workstations  Similarly, objectives of the Fiscal Service telework policy include cost savings from reduced office space needs  Treasury’s space standards specify a planned maximum utilization rate of 200 USF per person for facilities with general office space, and the Fiscal Service reported that its average office space-utilization rate was 183 USF per person at the time of our review  Treasury policy also recommends hoteling for employees who are out of the office 80 or more hours per month, but the Fiscal Service told us that it would like to conduct additional desk-sharing pilots to assess their impact before negotiating broader desk-sharing with the union  At the Fiscal Service, approximately 80 percent of eligible employees teleworked in fiscal year 2015, and about one-quarter of all employees teleworked 3 or more days per pay period, according to OPM data  The Fiscal Service reported that approximately 80 percent of Fiscal Service employees telework at its Washington, D C , Maryland, and West Virginia locations  At the time of our review, the Fiscal Service officials said the agency had reduced space without leveraging telework or implementing hoteling, instead relying on smaller space standards (i e , fewer square feet per workstation) to lease smaller offices  For example, the Fiscal Service reduced space by giving up several floors at its Hyattsville, MD, office starting in 2012  According to Fiscal Service officials, they accomplished these reductions by consolidating data centers to other locations, conducting targeted buyouts of employees, and, most recently, by implementing a new space standard of 183 USF per person through smaller workstations  The officials said that the most recent space reduction at this location resulted in savings in annual rent costs not attributable to telework  Looking forward, the Fiscal Service reported that it has started taking preliminary steps to promote efficient space utilization through telework  These steps have included: creating an Executive Space Management Council that discussed incorporating telework and desk-sharing into space management guidelines; implementing a voluntary, informal desk-sharing pilot in one program area for employees who already telework 50 percent or more of the time; and seeking information from GSA, including discussing and visiting GSA offices that have implemented hoteling as part of their space planning model  In addition, the Fiscal Service officials told us that the agency plans to negotiate the impact and implementation of desk-sharing and hoteling for telework employees with its union, but the Fiscal Service has not yet begun this effort  Our analysis of the survey responses from the 23 civilian CFO Act agencies identified three major planning challenges agencies face with using telework to reduce space: human capital issues such as negotiating workspace changes with collective bargaining units and managing organizational change; the suitability of telework to mission work requirements; and difficulty measuring cost savings that might result from space reductions attributable to telework  This measuring difficulty may include both gross savings as well as savings net of costs, such as for renovations or IT investments  See table 3 for examples of space-planning challenges related to telework reported by the 23 agencies  To address these challenges, nearly two thirds of the agencies we surveyed reported they would like guidance on using telework programs or other alternatives to meet the federal goals of reducing space or using space more efficiently  Our review of agency survey responses, Real Property Efficiency Plans, and other agency space-planning documents, found that human capital challenges to using telework in space planning generally fell into two categories: (1) requirements to negotiate space allocation changes with collective-bargaining units; and (2) managing department workforces in adapting to new workspace designs and altered workspace allocations  Collective-bargaining challenges: Of the 23 civilian CFO Act agencies, 7 of 23 noted that changes to telework policy or workspace arrangements required negotiation with collective bargaining units, for example, The Small Business Administration (SBA) reported its greatest challenge to incorporating telework in office space planning has been with negotiating and securing agreement from all parties, including management and its union, on establishing space standards  HUD reported that it could not implement hoteling or desk-sharing as its collective-bargaining agreements require that each employee retain an assigned workstation regardless of an employee’s type of telework agreement  SSA reported that changing floor plans required negotiation with its three collective-bargaining units, which could extend the time needed for construction and relocation  DOT reported that collective-bargaining agreements posed a challenge to incorporating workforce mobility options, including telework  In addition, the collective-bargaining agreements we reviewed from the four agencies we reviewed in detail––GSA, OJP, CDC and Fiscal Service––required negotiations or the opportunity to negotiate changes to matters relating to workspace arrangements and in some cases, to telework policy  Managing change: Using telework as a strategic space-planning tool, particularly in conjunction with complementary space-saving efforts such as desk-sharing, hoteling, or open-space designs, generally involves a cultural change  Nine of the 23 agencies we surveyed reported challenges associated with managing change  For example, three agencies reported employees’ discomfort or apprehension about desk-sharing and hoteling  In 2013, we reported that organizations may also encounter concerns from agency leaders, managers, employees, or employee organizations when introducing physical space changes associated with increased workforce mobility (telework)  More recently, we reported that management concerns remain the most frequently reported barrier to expanding telework  Two private sector experts we met with underscored the importance of management “buy-in” saying it was imperative that senior executives fully support the initiative to facilitate the necessary cultural change for agencies to use telework in space planning  One noted that management needed to make the business case to employees so that each layer of the organization could understand the importance of the initiative and its potential benefits  Another suggested a change management plan tailored to the work performed within a unit  This individual said that key components of such a plan might include studying existing work practices and program requirements, surveying employee preferences, and including employees in the planning process  Further, a GSA document circulated in response to the Telework Enhancement Act of 2010 mentions obtaining supervisory “buy-in” or support as key to facilitating change  According to survey responses, within agencies there are sub-agencies that have individual mission requirements that may or may not be suitable for telework  This makes it difficult for agencies to implement overarching telework and space planning policies that apply department-wide  Sub- agencies and units within sub-agencies must individually determine if telework is appropriate given their particular mission requirements  For example, the Veterans Administration reported that although it developed an agency-wide telework policy, each sub-agency and supervisor has the flexibility to implement telework based on operational needs  Moreover, because the agency’s core mission involves direct services to veterans, about 83 percent of agency staff positions are not suitable for telework  The Telework Enhancement Act of 2010 outlines two broad exceptions to telework participation for employees: (1) directly handling secure materials determined to be inappropriate for telework by the agency head and (2) on-site activity that cannot be handled remotely or at an alternative worksite  In cases where telework does not support an agency’s mission or where a particular mission may require increases or decreases in personnel, telework as a strategic space-planning tool may not work  About half (12 of 23) of the agencies we surveyed reported that office space reductions resulting from using telework in space planning led to real estate cost savings while the other half reported either that cost savings did not result or they did not know  GSA officials told us that calculating cost savings attributable to a particular aspect of space planning is complicated as several factors contribute to savings  In particular, in survey responses, the Departments of Education, Energy, and Agriculture reiterated this point  OMB’s National Strategy for the Efficient Use of Real Property and its Reduce the Footprint policy encourage agencies to increase and maximize efficiencies in office space by implementing cost-effective strategies such as telework  For example, the National Strategy outlines a framework that aims to measure real property costs and utilization to improve the efficient use of federal real property  The Reduce the Footprint policy requires agencies to measure cost savings that result from reducing space through disposals  However, neither document offers guidance or methodologies on how to measure the costs or savings that may result from using telework  We previously reported that GSA works with client agencies to develop tools to measure office space utilization and, in 2013, was developing an Excel-based tool to help agencies quantify the benefits and costs of using telework to achieve greater office space efficiencies  This tool—the Workplace Investment and Feasibility Tool—is aimed at helping agencies quantify the benefits and costs of increased telework participation and implementing other alternative-work arrangements  When completed, the tool will enable users to quickly develop rough estimates of cost and space impacts resulting from workplace changes, particularly relating to desk-sharing, workspace reconfiguration, and consolidation  Key features include the ability to compare up to three scenarios, which in turn may be used to inform a more detailed design program  As of January 2018, GSA had not yet completed the tool  GSA officials said mission needs, resource constraints, and developmental adjustments have contributed to delays in the time frame for completing the tool  They added that during this time, GSA has diverted resources to space calculation tools for individual agencies  For example, GSA worked with DHS on its Space Calculation Tool as a way to help determine workplace space requirements in a manner consistent with DHS space policies  In January 2018, GSA officials told us that they plan to make the Workplace Investment and Feasibility Tool available to GSA staff in March 2018 along with training on how to use it  However, GSA officials have not decided whether to make the tool available to other federal agencies to use as a space-planning tool  Instead, the officials plan to assess GSA’s use of the tool and then determine in late 2018 if and how it should be released to other agencies for independent use  Given the absence of a government-wide tool, in our review, we found that some agencies had used their own resources to purchase similar tools for their space-planning needs from the private sector  Without such a government-wide resource, agencies may not be able to determine how best to reduce space or use it more efficiently  In responses to our survey, nearly two-thirds of agencies reported that they would find it helpful to have additional information, assistance, or resources to assist them in using telework as a space-planning tool  As noted above, a key element of GSA’s mission is to provide guidance and services that enable agencies to improve space utilization, reduce costs, and better achieve their missions  Moreover, under federal statute, GSA may provide guidance to executive agencies on the implementation of alternative workplace arrangements, which includes telework  Federal standards for internal control also call for agencies to communicate necessary quality information such as guidance with external parties  In reviewing GSA’s websites, we found that GSA last developed formal guidance on alternative workplace arrangements in 2006 and maintains several separate informational websites on implementing telework and optimizing space utilization  Our review of this guidance and these websites found that they do not provide specific guidance for using telework as a strategic space-planning tool  For example, the 2006 guidance is generally limited to defining the factors agency heads must contemplate when considering alternative workplace arrangements along with the equipment and technical services agencies may provide for alternative worksites  However, this guidance does not address in detail the impact of such arrangements on agency office space and resulting planning issues  Similarly, our review of GSA’s teleworking and space- planning websites found that although they separately offered documented case studies along with information such as tips for implementing telework and managing a mobile workforce, GSA did not provide documents consolidating the concept of using telework as a strategic space-planning tool  For example, information on GSA’s Total Workplace Program website––intended to assist agencies in using workforce mobility (including telework) to increase space efficiencies––is generally limited  Although this website includes high-level information that describes the potential benefits of using telework with office space planning and design, it lacks a practical outline of the process agencies might use to achieve them  Because the information in the 2006 guidance and the telework and space-planning websites is neither specific nor detailed, it is of limited assistance for agencies that would like to use telework as a strategic space-planning tool to meet the goals of a more efficient use of space  While using telework to reduce space is not a new challenge, it has become more pressing with OMB’s requirement for federal agencies to explore alternatives to acquiring more office space  Most civilian CFO Act agencies reported having a telework program in place and some reported success with using it in space planning to reduce space or accommodate more employees without increasing space  However, many of the agencies continue to face challenges and do not believe that they have adequate information, assistance, or resources to assist them in using telework as a space-planning tool or assess its costs and benefits  Until agencies have access to detailed guidance and tools to help utilize various space-planning options, they may not be able to effectively identify opportunities to use telework toward the goal of reducing their real property footprint  We are making the following two recommendations to GSA: The Administrator of General Services should ensure that the appropriate GSA offices develop guidance including, but not limited to, how agencies can use telework as a strategic space-planning tool for reducing and optimizing office space efficiency and that the offices make the guidance readily available  (Recommendation 1) The Administrator of General Services should ensure the appropriate GSA offices complete the Workplace Investment and Feasibility Tool and make it available to federal agencies for use in assessing the benefits and costs of telework to achieve office space efficiencies  (Recommendation 2) We provided a draft of this report to GSA, the Department of Justice, the Department of Health and Human Services, and the Department of the Treasury  In its written comments, reproduced in Appendix III, GSA concurred with our recommendations and stated that it is developing a plan to address them  We received technical comments from the Department of Justice and the Department of Health and Human Services, which we incorporated where appropriate  The Department of the Treasury did not have comments on our draft report  We are sending copies of this report to the appropriate congressional committees; the Administrator of GSA; and the Secretaries of the Department of Health and Human Services and Department of the Treasury, and the Attorney General of the Department of Justice  In addition, the report will be available at no charge on the GAO website at http://www gao gov  If you or your staff has any questions concerning this report, please contact me at (202) 512-2834 or rectanusl@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff that made key contributions to this report is listed in appendix III  This report addresses: (1) how the 23 civilian Chief Financial Officer (CFO) Act agencies reported using telework in office space planning; (2) the specific ways selected agencies and GSA used telework in their office space planning; and (3) any challenges the 23 civilian CFO Act agencies faced in using telework in office space planning  To determine how the 23 civilian CFO Act agencies reported using telework in office space planning, we surveyed the agencies  The survey asked questions about agency-wide efforts to use telework in the human- capital and space-planning areas; whether agencies had achieved any cost savings as a result; the challenges agencies faced in using telework in space planning; and asked agencies to identify additional information, resources, or guidance that might be helpful  In addition to the survey questions, we asked each agency real property officer to provide copies of agency-wide space-planning documents and the Real Property Efficiency Plans agencies prepared for fiscal years 2016 and 2017 pursuant to the requirements of the Office of Management and Budget’s (OMB) Reduce the Footprint policy  We developed survey questions based on our review of the relevant literature, white papers from federal agencies and private sector entities, and past GAO reports  We pre- tested the survey instrument with three federal agencies to ascertain: (1) the clarity of survey questions; (2) the precision of language; and 3) the availability of information queried  As a result of the pre-tests we made changes to the content and format of the survey where appropriate  We received survey responses from each of the 23 civilian CFO Act agencies in addition to requested space-planning documents and Real Property Efficiency Plans, and thus achieved a 100 percent response rate  We analyzed survey results by calculating the frequency of responses to dichotomous questions (i e , questions requiring a “yes” or “no” answer)  We also conducted a content analysis on the open-ended, narrative-based questions by identifying common themes and tabulating results  We also conducted a content analysis to determine the extent to which agencies referenced telework in their agency-wide space-planning documents and in their Real Property Efficiency Plans  To accomplish these analyses, we developed separate coding schemes for each of the two types of documents  These were based on information obtained in our literature review, interviews with subject matter experts, and our professional judgment  We then identified relevant sections and common themes, and coded and tabulated the results  To validate the coding results, we used a second, independent coder  To determine the specific ways agencies include telework in their office space planning, we selected a non-generalizable sample of three CFO Act agency sub-agencies as illustrative case studies  To select sub- agencies, we analyzed data from the Office of Personnel Management’s (OPM) Public Use 2014-2015 Telework Data call  First, we applied two selection criteria: (1) agency-wide progress toward a stated goal of using telework to reduce real estate costs, and (2) agency-reported data indicating that more than 25 percent of sub-agency employees teleworked 3 or more days per pay period  Next, we considered variations in sub-agency size and percentage of employees eligible to telework  Finally, we excluded candidates that had recently been selected for related GAO work and we excluded sub-agencies related to agency administration such as Offices of Inspector General or Secretary-level offices  We assessed the reliability of the OPM’s data by interviews with knowledgeable officials and by reviewing prior assessments of the same data, and we found the data reliable for our purposes  As a result of this process, we selected (1) the Department of the Treasury’s Bureau of the Fiscal Service (Fiscal Service); (2) the Department of Health and Human Services’ (HHS) Centers for Disease Control and Prevention (CDC); and (3) the Department of Justice’s Office of Justice Programs (OJP)  For each of the selected agencies, we interviewed agency officials and reviewed their telework and space- planning documents  We also visited four sub-agency office locations to determine if and how telework played a role in any space reductions or efficiencies along with any associated cost savings  In addition to these three sub-agencies, we used the General Services Administration (GSA) as a comparative example since it is responsible for providing space- planning guidance to client agencies and has experience using telework in space planning  We interviewed GSA officials, reviewed relevant documents, and visited three GSA office locations with recent space reductions or efficiencies  In total, we conducted seven site visits including two Fiscal Service locations, one location each for CDC and OJP, and three GSA locations (National Headquarters, Region 2 Office, and Region 3 Office) in Washington, D C ; New York City; and Philadelphia, respectively  To identify any challenges the 23 civilian CFO Act agencies faced in using telework in office space planning, we analyzed results from survey questions addressed to challenges, interviewed sub-agency and GSA officials as detailed above, interviewed two private sector subject matter experts, and representatives from four private-sector entities that had reported using telework to reduce and use office space more efficiently  Statements made by knowledgeable federal officials, outside experts and private sector entities are not generalizable to the universe of civilian CFO Act agencies  We also analyzed the section of each of the 23 civilian CFO Act agencies’ Real Property Efficiency Plans devoted to challenges agency face in reducing space  We selected the two subject matter experts––representatives from Global Workplace Analytics and Fentress Facility Planning and Analytics––based on: (1) their experience working with federal agencies to incorporate telework programs into the space planning process; (2) information compiled in our literature review; (3) prior GAO reports; (4) internal GAO recommendations; and (5) industry recommendations  We selected the four private sector entities (AT&T, Deloitte, Adobe, and CapitalOne) based on our literature review, recommendations from industry experts, and reports of having achieved space efficiencies including space reduction, cost savings, or cost avoidance(s)  To identify what guidance or information on using telework as a space- planning tool GSA makes available through its website, we reviewed the contents of multiple GSA websites including Telework, Total Workplace, Alternative Work, and GSA Telework Resources  We followed links and reviewed webpage contents for information on how agencies might use telework as a strategic tool to reduce space or use space more efficiently  We compared GSA’s guidance and website information to relevant statutory requirements and federal internal controls standards related to external communication  We conducted this performance audit from January 2017 to March 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  In addition to the contact named above, David J  Wise (Director); Amelia Bates Shachoy (Assistant Director); Lindsay Bach (Analyst-in-Charge); Geoff Hamilton; Malika Rice; Kelly Rubin; Shelia Thorpe; Elise Vaughan Winfrey; and Amelia Michelle Weathers made key contributions to this report 


Report 2:  residents and non-citizens for all of their U S -based property, including investments  Estates of Puerto Rico residents are required to pay the prevailing federal estate tax— which ranges from 18 percent to 40 percent depending on the size of an estate—for any U S -based property valued over $60,000  In contrast, prior to 2017, all Puerto Rico-based property was only subject to the Puerto Rico estate tax of 10 percent  Puerto Rico’s estate tax was repealed in 2017  In addition to financing from the municipal bond markets, GDB also provided an intragovernmental source of financing  Prior to April 2016, GDB acted as a fiscal agent, trustee of funds, and intergovernmental lender for the Government of Puerto Rico  GDB issued loans to Puerto Rico’s government agencies and public corporations to support their operations  GDB provided loans to government entities valued at up to 60 percent of GDB’s total assets, as shown in Figure 11  In general, these entities did not fulfill the terms of their borrowing agreements with GDB, while they independently accessed the municipal bond market  Additionally, according to GDB’s audited financial statements, GDB did not reflect loan losses in its audited financial statements until 2014 because it presumed that Puerto Rico’s legislature would repay loans through the general fund or appropriations, as generally required by the acts that approved such loans  Facing non-repayment of public sector loans, GDB took on debt to maintain liquidity  According to GDB documents, repayment of amounts owed to GDB was a main reason for the creation of the Puerto Rico Sales Tax Financing Corporation (COFINA), an entity backed by a new sales tax, through which Puerto Rico issued some of its debt  Though initially intended as a means to repay GDB and other debt, COFINA bonds were also used to finance operations  Through our interviews and an assessment of relevant literature, we identified three potential federal actions that could help address some of the factors that contributed to unsustainable indebtedness in Puerto Rico  Consistent with the provision in PROMESA that was the statutory requirement for this work, we focused on actions that were non-fiscal in nature—that is, actions that would not increase the federal deficit  There are tradeoffs for policymakers to consider when deciding whether or how to implement any policy  For each action, we describe a specific challenge as it relates to debt accumulation in Puerto Rico, identify a possible federal response to the challenge, and describe other considerations for policymakers  To help address the factors that contributed to the high demand for Puerto Rico debt relative to other municipal debt, legislative and executive branch policymakers could further ensure that municipal securities issuers provide timely, ongoing, and complete disclosure materials to bondholders and the public  Specifically, Congress could authorize SEC to establish requirements for municipal issuers on the timing, frequency, and content of initial and continuing disclosure materials  In general, the municipal securities market is less regulated and transparent than other capital markets, such as equity markets  For example, SEC’s authority to directly establish or enforce initial and continuing disclosure requirements for issuers—including those in Puerto Rico—is limited  SEC requires that underwriters (sellers of municipal securities) reasonably determine that issuers have undertaken continuing disclosure agreements (CDA) to publicly disclose ongoing annual financial information, operating data, and notices of material events  However, federal securities laws do not provide SEC with the authority to impose penalties on municipal issuers for noncompliance with CDAs, which may limit any incentive for issuers to comply with SEC disclosure and reporting guidance  As a result, SEC has limited ability to compel issuers to provide continuing disclosure information  As previously discussed, the Puerto Rico government often issued its audited financial statements in an untimely manner, thus failing to meet its contractual obligations to provide continuing disclosures for securities it issued  SEC could not directly impose any consequences on Puerto Rico’s government for failing to adhere to the terms of, or enforce compliance with, the CDAs  Additionally, as previously discussed, municipal market analysts told us that untimely financial information made it difficult for institutional and individual investors to assess Puerto Rico’s financial condition  Timely disclosure of information would help investors make informed decisions about investing in municipal securities and help protect them against fraud involving the securities  These disclosures would be made to investors at the time of purchasing securities and throughout the term of the security, including when material changes to an issuer’s financial condition occur  According to SEC staff, enhanced authority could prompt more municipal issuers to disclose financial information, including audited financial statements, in a timelier manner  For example, SEC staff said that if the agency had required that issuers provide timely financial statements at the time of issuing a municipal security, this may have precluded Puerto Rico from issuing its $3 5 billion general obligation bond in 2014  However, any rulemaking SEC would or could take as a result of enhanced authority would depend on a number of factors, such as compliance with other SEC guidance and related laws  Since this action would apply to all U S  municipal securities issuers, it has policy and implementation implications that extend well beyond Puerto Rico  For example, establishing and enforcing initial and continuing disclosure requirements for municipal securities issuers could place additional burdens on state and local issuers, and not all municipal issuers use standardized accounting and financial reporting methods  As a result, state and local governments may need to spend resources to adjust financial reporting systems to meet standardized reporting requirements  However, in a 2012 report proposing this action, SEC said it could mitigate this burden by considering content and frequency requirements that take into account, and possibly vary by, the size and nature of the municipal issuer, the frequency of issuance of securities, the type of municipal securities offered, and the amount of outstanding securities  To help address the factors that contributed to the high demand for Puerto Rico debt relative to other municipal debt, Congress could ensure that investors residing in Puerto Rico receive the same federal investor protections as investors residing in states  Specifically, Congress could subject all investment companies in Puerto Rico to the Investment Company Act of 1940, as amended (1940 Act)  In recent years, the House and Senate separately have passed legislation that would achieve this action  Certain investment companies in Puerto Rico and other territories— specifically, those whose securities are sold solely to the residents of the territory in which they are located—are exempt from the 1940 Act’s requirements  The 1940 Act regulates investment companies, such as mutual funds that invest in securities of other issuers and issue their own securities to the investing public  It imposes several requirements on investment companies intended to protect investors  For example, it requires that investment companies register with SEC and disclose information to investors about the businesses and risks of the companies in which they invest, and the characteristics of the securities that they issue  It also restricts investment companies from engaging in certain types of transactions, such as purchasing municipal securities underwritten by affiliated companies  According to a former Puerto Rico official, some broker-dealers in Puerto Rico underwrote Puerto Rico municipal securities issuances and investment companies managed by affiliated companies of these underwriters purchased the securities, packaged them into funds, and marketed the funds to investors residing in Puerto Rico  This practice would be prohibited or restricted for investment companies subject to the 1940 Act, as it might result in investment companies not acting in the best interests of their investors  If all Puerto Rico investment companies had been subject to the 1940 Act, they would have been prohibited or restricted from investing in Puerto Rico municipal bonds underwritten by affiliated companies  Also, these investment companies may have further disclosed the risks involved in Puerto Rico municipal bonds to Puerto Rico investors  As a result, demand for Puerto Rico municipal bonds from Puerto Rico investment companies and residents may have been lower had the 1940 Act requirements applied to all Puerto Rico investment companies, and it may have been more difficult for the Puerto Rico government to issue debt to finance deficits  SEC staff told us that industry groups had raised objections to extending the 1940 Act provisions to all investment companies in Puerto Rico  These industry groups noted that, among other things, certain investment companies would have difficulty meeting the 1940 Act’s leverage and asset coverage requirements and adhering to some restrictions on affiliated transactions  However, SEC staff noted that under certain legislation that passed the House or Senate separately, as described above, Puerto Rico investment companies would have three years to come into compliance if they were newly subject to the 1940 Act  Further, under that legislation, after three years, investment companies in Puerto Rico could also request an additional three years to come into compliance  Regarding affiliated company restrictions, SEC has previously waived some requirements for investment companies if they are unable to obtain financing by selling securities to unaffiliated parties with an agreement to repurchase those securities at a higher price in the future, known as repurchase agreements  According to SEC staff, SEC would consider allowing companies in Puerto Rico to enter into reverse repurchase agreements with their affiliates if the 1940 Act applied to them  To help address the factors that contributed to the high demand for Puerto Rico debt relative to other municipal debt, Congress could remove the triple tax exemption for Puerto Rico’s municipal securities  This action would mean that interest income from Puerto Rico municipal securities earned by investors residing outside of Puerto Rico could be taxed by states and local governments, while still being exempt from federal income taxes, similar to the current tax treatment of municipal bond income in the states  As mentioned previously, former Puerto Rico officials and experts in municipal securities told us that the triple tax exemption fueled investor demand and enabled Puerto Rico to continue issuing bonds despite deteriorating financial conditions  Some of the demand for Puerto Rico municipal securities came from certain U S  municipal bond funds  These funds concentrated their investments in one state to sell to investors within that state, but also included Puerto Rico bonds in their portfolios  Puerto Rico bond yields generally were higher than state bonds yields, according to industry experts  When added to a fund, the higher yields from Puerto Rico bonds would increase the overall return on investment yield of a fund  Modifying the triple tax exemption for Puerto Rico’s municipal securities might result in reduced demand for Puerto Rico’s debt  In response to reduced demand for its debt, Puerto Rico’s government may need to address any projected operating deficits by decreasing spending, raising revenues, or both  According to U S  Treasury officials, this action could increase the proportionate share of investors in Puerto Rico debt that reside in Puerto Rico, because of reduced demand from investors in the states  In the event of a future debt crisis, this could result in a concentration of financial losses within Puerto Rico  Also, debt financing allows governments to make needed capital investments and provides liquidity to governments, and can be a more stable funding source to manage fiscal stress  Reduced market demand for Puerto Rico’s bonds could make access to debt financing difficult, as the Puerto Rico bond market may not support the Puerto Rico government’s future borrowing at reasonable interest rates, according to Treasury officials  Alternately, a variant of this action would be to retain the triple tax exemption for Puerto Rico debt only for bonds related to capital investments rather than for deficit financing, according to Treasury officials  Various provisions in PROMESA were intended to help Puerto Rico improve its fiscal condition  PROMESA requires that the Oversight Board certify fiscal plans for achieving fiscal responsibility and access to capital markets  The intent of the fiscal plans is to eliminate Puerto Rico’s structural deficits; create independent revenue estimates for the budget process; and improve Puerto Rico’s fiscal governance, accountability, and controls, among other things  From March 2017 to April 2017, the Oversight Board certified the fiscal plans the Government of Puerto Rico developed for the primary government and certain component units, such as PREPA  As a result of the effects of Hurricanes Irma and Maria, the Oversight Board requested that the Government develop updated fiscal plans  Although the Government of Puerto Rico developed and submitted updated fiscal plans, the Oversight Board did not certify them, with the exception of the plan for GDB  Instead, in April 2018, the Oversight Board certified fiscal plans it developed itself, as PROMESA allows  PROMESA also requires the Oversight Board to determine whether or not Puerto Rico’s annual budgets, developed by the Governor, comply with the fiscal plans prior to being submitted to Puerto Rico’s legislature for approval  Technical assistance is another area where the federal government has taken action to help Puerto Rico address its fiscal condition  In 2015, Congress first authorized Treasury to provide technical assistance to Puerto Rico, and has continued to reauthorize the technical assistance, most recently through September 30, 2018  For example, Treasury officials told us that they helped Puerto Rico’s Planning Board develop a more accurate macroeconomic forecast, which should enable Hacienda to develop more accurate revenue estimates and receipt forecasts  Treasury officials also told us that the agency began helping Puerto Rico improve its collection of delinquent taxes—for example, by helping Hacienda develop an office dealing with Puerto Rico’s largest and most sophisticated taxpayers, which are often multinational corporations  With Puerto Rico focused on hurricane recovery efforts, Treasury and the Puerto Rico government are reassessing the types of assistance that Treasury might provide in the future, according to Treasury officials  Current and former Puerto Rico government officials and experts on Puerto Rico’s economy also told us that the federal government could further help Puerto Rico address its persistent deficits through federal policy changes that are fiscal in nature  For example, it could change select federal program funding rules—at a cost to the federal government—such as eliminating the cap on Medicaid funding and calculating the federal matching rate similar to how the rate is calculated in the states  Likewise, the Congressional Task Force on Economic Growth in Puerto Rico (Congressional Task Force), as established by PROMESA, issued a report in December 2016 that recommended changes to federal laws and programs that would spur sustainable long- term economic growth in Puerto Rico, among other recommendations  In addition to federal actions that could address the factors that contributed to Puerto Rico’s fiscal condition and debt levels, the Puerto Rico government plans to take various actions  For example, according to current Puerto Rico officials and the Puerto Rico government’s April 2018 fiscal plan, the government is: Planning to implement an integrated new information technology system for financial management, to include modernized revenue management and accounting and payroll systems  Hacienda officials stated that they are in the process of developing a project schedule for this long-term effort  Developing a new public healthcare model in which Puerto Rico’s government pays for basic services and patients pay for premium services  The government will begin implementing the new healthcare model in fiscal year 2019 and expects to achieve annual savings of $841 million by fiscal year 2023  Collaborating with the private sector for future infrastructure and service projects, including for reconstruction efforts related to Hurricanes Irma and Maria, which it expects will stimulate Puerto Rico’s weakened economy  We also asked Puerto Rico officials about progress made toward addressing many of the factors we identified  However, they did not provide us this information  We provided a draft of this report for review to Treasury, SEC, the Federal Reserve Bank of New York, the Government of Puerto Rico, and the Oversight Board  Treasury and SEC provided technical comments, which we incorporated as appropriate  The Federal Reserve Bank of New York and the Oversight Board had no comments  We received written comments from the Government of Puerto Rico, which are reprinted in appendix II  In its comments, the Government of Puerto Rico generally agreed with the factors we identified that contributed to Puerto Rico’s financial condition and levels of debt  It also provided additional context on Puerto Rico’s accumulation of debt, such as Puerto Rico’s territorial status and its effect on federal programs in Puerto Rico and outmigration  The Government of Puerto Rico also noted that the federal actions we identified to address factors contributing to Puerto Rico’s unsustainable debt levels did not include potential actions that were fiscal in nature or that addressed Puerto Rico’s long-term economic viability  As we note in the report, we excluded fiscal actions from our scope, consistent with the provision in PROMESA that was the statutory requirement for this work  We excluded potential actions that could promote economic growth in Puerto Rico because these actions would address debt levels in Puerto Rico only indirectly and because the Congressional Task Force on Economic Growth in Puerto Rico already recommended actions for fostering economic growth in Puerto Rico in its December 2016 report  We are sending copies of the report to the appropriate congressional committees, the Government of Puerto Rico, the Secretary of the Treasury, the Chairman of the Securities and Exchange Commission, and other interested parties  In addition, this report is available at no charge on the GAO website at http://gao gov  If you or your staff have any questions about this report, please contact me at (202) 512-6806 or krauseh@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix III  Our objectives were to describe (1) the factors that contributed to Puerto Rico’s financial condition and levels of debt; and (2) federal actions that could address the factors that contributed to Puerto Rico’s financial condition and levels of debt  Consistent with the provision in the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) that was the statutory requirement for this work, we focused on actions that would not increase the federal deficit  For both objectives we interviewed current Puerto Rico officials from several agencies—the Puerto Rico Department of Treasury (Hacienda in Spanish), Government Development Bank for Puerto Rico (GDB), the Puerto Rico Office of Management and Budget (Spanish acronym OGP), Fiscal Agency and Financial Advisory Authority (FAFAA), and the Puerto Rico Electric Power Authority  We also interviewed 13 former Puerto Rico officials that held leadership positions at Hacienda, GDB, or OGP, or a combination thereof  These former officials served between 1997 and 2016 for various gubernatorial administrations associated with the two political parties in Puerto Rico that held the governorship during that period  We also interviewed officials from the U S  Department of the Treasury (Treasury), the Securities and Exchange Commission (SEC), the Federal Reserve Bank of New York, and the Financial Oversight and Management Board for Puerto Rico (created by PROMESA)  Additionally, we conducted another 13 interviews with experts on Puerto Rico’s economy, the municipal securities markets, state and territorial budgeting and debt management—including credit rating agencies—and with select industry groups in Puerto Rico  We selected the experts we interviewed based on their professional knowledge closely aligning with our engagement objectives, as demonstrated through published articles, congressional testimonies, and referrals from agency officials or other experts  To describe the factors that contributed to Puerto Rico’s financial condition and levels of debt, we reviewed our prior work related to Puerto Rico’s financial condition and levels of public debt  We also collected and analyzed additional financial data from Puerto Rico’s audited financial statements for the fiscal years 2002 to 2014, the last year for which audited financial statements were available  To determine how the Puerto Rico government used bond proceeds, we reviewed a nongeneralizable sample of Puerto Rico bonds prospectuses issued between 2000 and 2017 from the Electronic Municipal Market Access database of the Municipal Securities Rulemaking Board  We reviewed literature—including academic reports, congressional hearing transcripts, and credit rating agency reports—that described Puerto Rico’s economy and factors that contributed to Puerto Rico’s levels of debt  We also reviewed credit rating agency reports that described Puerto Rico’s municipal debt and the agencies’ methodologies for rating municipal debt  We also collected and reviewed Puerto Rico government documents related to budget formulation and execution, debt issuance, and financial management  We considered factors to include, but not be limited to, macroeconomic trends, federal policies, and actions taken by Puerto Rico government officials  Our review focused largely, though not exclusively, on conditions that contributed to the debt crisis during those years for which we collected financial data on Puerto Rico, fiscal years 2002 to 2014  Finally, we also conducted a thematic analysis of the summaries of our interviews to identify common patterns and ideas  Although these results are not generalizable to all current and former officials and experts with this subject-matter expertise, and do not necessarily represent the views of all the individuals we interviewed, the thematic analysis provided greater insight and considerations for the factors we identified  To describe federal actions that could address the factors that contributed to Puerto Rico’s financial condition and levels of debt, we reviewed our prior reports and documents from Treasury and SEC, conducted a literature review, and conducted various interviews  Specifically, we met with federal agencies with subject-matter expertise or whose scope of responsibilities related to these actions, as well as with current and former Puerto Rico officials and municipal securities experts  Consistent with PROMESA, we omitted from our scope: (1) actions that could increase the federal deficit (i e , fiscal options), (2) actions that could be taken by the Puerto Rico government, (3) actions that could infringe upon Puerto Rico’s sovereignty and constitutional parameters, and (4) actions that would imperil America’s homeland and national security  We considered actions that could promote economic growth in Puerto Rico as outside of scope, as they could address debt levels in Puerto Rico indirectly, rather than directly, and because a study issued by the Congressional Task Force on Economic Growth in Puerto Rico already identified actions that Congress and executive agencies could take to foster economic growth in Puerto Rico  We also considered actions that could address Puerto Rico’s unfunded pension liability as outside of our scope  The actions we identified may also help avert future unsustainable debt levels in other territories; however, we did not assess whether and how each action would apply to other territories  We conducted this performance audit from January 2017 to May 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  In addition to the contact named above, Jeff Arkin (Assistant Director), Amy Radovich (Analyst in Charge), Pedro Almoguera, Karen Cassidy, Daniel Mahoney, A J  Stephens, and Justin Snover made significant contributions to this report 

ground_truth: Federal agencies are exploring ways to use telework as a tool to reduce the federal footprint and use space more efficiently. GAO was asked to examine the effects of telework on agencies' space-planning efforts. In this report, GAO reviewed: (1) how the 23 civilian CFO Act agencies reported using telework in office space planning; (2) the specific ways selected agencies and GSA used telework in their office space planning; and (3) any challenges the civilian CFO Act agencies faced in using telework in office space planning. GAO surveyed all 23 civilian CFO Act agencies, analyzed each agency's space-planning documents, and Real Property Efficiency Plans . GAO reviewed four agencies in greater detail based on analysis of telework data and other factors. For those four agencies GAO conducted site visits, interviewed officials, and analyzed agency documents. GAO also identified challenges agencies faced in using telework in space planning, based on survey results, agency documents, and interviews. The 23 civilian Chief Financial Officer (CFO) Act agencies reported various ways of considering and using telework as a space-planning tool, by, for example, implementing desk-sharing for employees who telework in order to relinquish leased space, or increasing the number of staff working in an existing space without increasing its size. All of the 23 agencies discussed telework in the context of space planning and achieving greater space efficiencies in either their space-planning documents or Real Property Efficiency Plans . The agencies that used telework as a space-planning tool generally reported implementing smaller or unassigned workstations. Three of the four agencies GAO reviewed in greater detail––the General Services Administration (GSA); the Office of Justice Programs at the Department of Justice; the Centers for Disease Control at the Department of Health and Human Services; and the Bureau of the Fiscal Service at the Department of the Treasury––leveraged telework to reduce or use office space more efficiently. For example, GSA and the Office of Justice Programs used telework to accommodate more employees in a smaller office space as illustrated in figure 1 below. The Centers for Disease Control used telework to accommodate more employees in the same amount of space. The Bureau of the Fiscal Service reduced space without telework by reducing the size of individual workstations. The 23 civilian CFO Act agencies reported several challenges in using telework to reduce space including human capital issues, mission suitability, and measuring cost savings attributable to telework. About two-thirds of the agencies said they would find it helpful to have additional information, assistance, or resources in using telework as a space-planning tool. GSA provides guidance to improve space utilization. However, GAO found that GSA last developed relevant formal guidance in 2006. This information, and that on GSA's telework and space-planning websites, was neither specific nor detailed and therefore of limited assistance to agencies that would like to use telework as a space-planning tool. Additionally, GSA's space-planning tool—the Workplace Investment and Feasibility Tool, intended to help agencies quantify the benefits and costs of telework––remains under development after more than 4 years, and GSA officials have not decided whether to make the tool available to other federal agencies. As such, agencies reported that they lack adequate guidance to determine how best to reduce space or use it more efficiently, and how to assess the benefits and costs of using telework in space planning. GSA concurred with recommendations that GSA should: (1) develop guidance on how agencies can use telework as a strategic space-planning tool and make this guidance readily available and (2) complete and make the Workplace Investment and Feasibility Tool available to federal agencies for use in assessing the benefits and costs of telework.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.



Report 2: R ecent high-profile data breaches and privacy violations have raised national concerns over the legal protections that apply to Americans' electronic data  While some concern over data protection stems from how the government might utilize such data, mounting worries have centered on how the private sector controls digital information, the focus of this report  Inadequate corporate privacy practices and intentional intrusions into private computer networks have exposed the personal information of millions of Americans  At the same time, internet connectivity has increased and varied in form in recent years, expanding from personal computers and mobile phones to everyday objects such as home appliances, "smart" speakers, vehicles, and other internet-connected devices  Americans now transmit their personal data on the internet at an exponentially higher rate than the past  Along with the increased connectivity, a growing number of "consumer facing" actors (such as websites) and "behind the scenes" actors (such as data brokers and advertising companies) collect, maintain, and use consumers' information  While this data collection can benefit consumers—for instance, by allowing companies to offer them more tailored products—it also raises privacy concerns, as consumers often cannot control how these entities use their data  As a consequence, the protection of personal data has emerged as a major issue for congressional consideration  Despite the increased interest in data protection, the legal paradigms governing the security and privacy of personal data are complex and technical, and lack uniformity at the federal level  The Supreme Court has recognized that the Constitution provides various rights protecting individual privacy, but these rights generally guard only against government intrusions and do little to prevent private actors from abusing personal data online  At the federal statutory level, while there are a number of data protection statutes, they primarily regulate certain industries and subcategories of data  The Federal Trade Commission (FTC) fills in some of the statutory gaps by enforcing the federal prohibition against unfair and deceptive data protection practices  But no single federal law comprehensively regulates the collection and use of personal data  In contrast to the "patchwork" nature of federal law, some state and foreign governments have enacted more comprehensive data protection legislation  Some analysts suggest these laws, which include the European Union's (EU's) General Data Protection Regulation (GDPR) and state laws such as the California Consumer Privacy Act (CCPA), will create increasingly overlapping and uneven data protection regimes  This fragmented legal landscape coupled with concerns that existing federal laws are inadequate has led many stakeholders to argue that the federal government should assume a larger role in data protection policy  However, at present, there is no consensus as to what, if any, role the federal government should play, and any legislative efforts at data protection are likely to implicate unique legal concerns such as preemption, standing, and First Amendment rights, among other issues  This report examines the current U S  legal landscape governing data protection, contrasting the current patchwork of federal data protection laws with the more comprehensive regulatory models in the CCPA and GDPR  The report also examines potential legal considerations for the 116th Congress should it consider crafting more comprehensive federal data protection legislation  The report lastly contains an Appendix , which contains a table summarizing the federal data protection laws discussed in the report  Historically, the common law in the United States had little need to protect privacy—as one commentator has observed, "[s]olitude was readily available in colonial America " Although common law had long protected against eavesdropping and trespass, these protections said little to nothing about individual rights to privacy, per se  Over time, gradual changes in the technological and social environment caused a shift in the law  In 1890, Louis Brandeis and Samuel Warren published a groundbreaking article in the Harvard Law Review entitled The Right to Privacy   Reacting to the proliferation of the press and advancements in technology such as more advanced cameras, the article argued that the law should protect individuals' "right to privacy" and shield them from intrusion from other individuals  The authors defined this emergent right as the "right to be let alone " Scholars have argued that this article created a "revolution" in the development of the common law  In the century that followed Brandeis's and Warren's seminal article, most states recognized the so-called "privacy torts"—intrusion upon seclusion, public disclosure of private facts, false light or "publicity," and appropriation  These torts revolve around the central idea that individuals should be able to lead, "to some reasonable extent, a secluded and private life " The Supreme Court described this evolution of privacy tort law as part of a "strong tide" in the twentieth century toward the "so-called right of privacy" in the states  Despite this "strong tide," some scholars have argued that these torts, which were developed largely in the mid-twentieth century, are inadequate to face the privacy and data protection problems of today  Furthermore, some states do not accept all four of these torts or have narrowed and limited the applicability of the torts so as to reduce their effectiveness  As discussed in greater detail below, state common law provides some other remedies and protections relevant to data protection, via tort and contract law  However, while all of this state common law may have some influence on data protection, the impact of this judge-made doctrine is unlikely to be uniform, as courts' application of these laws will likely vary based on the particular facts of the cases in which they are applied and the precedents established in the various states  As reflected in the common law's limited remedies, at the time of the founding, concerns about privacy focused mainly on protecting private individuals from government intrusion rather than on protecting private individuals from intrusion by others  Accordingly, the Constitution's Bill of Rights protects individual privacy from government intrusion in a handful of ways and does little to protect from non-governmental actors  Some provisions protect privacy in a relatively narrow sphere, such as the Third Amendment's protection against the quartering of soldiers in private homes or the Fifth Amendment's protection against self-incrimination  The most general and direct protection of individual privacy is contained in the Fourth Amendment, which states that "[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated      " For more than 100 years, the Fourth Amendment was generally read to prohibit only entry into private places rather than to provide general right to privacy  However, alongside the developments in the common law, constitutional law evolved over time to place a greater emphasis on protecting an individual's personal privacy  In particular, in 1967, the Supreme Court in Katz v  United States explained that the Fourth Amendment, while not creating a general "right to privacy," nonetheless protected "people, not places," and guarded individual privacy against certain types of governmental intrusion  This principle has continued to evolve over time, and has come to protect, to some extent, individuals' interest in their digital privacy  For example, in the 2018 case of Carpenter v  United States , the Supreme Court concluded that the Fourth Amendment's protection of privacy extended to protecting some information from government intrusion even where that information was shared with a third party  In Carpenter , the Court concluded that individuals maintain an expectation of privacy, protected by the Fourth Amendment, in the record of their movements as recorded by their cellular provider  Carpenter distinguished earlier cases which had relied upon the principle that information shared with third parties was generally not subject to Fourth Amendment scrutiny, concluding that "an individual maintains a legitimate expectation of privacy in the record of his physical movements as captured through [his cellular phone] " The Court's holding means that, in the future, the government must obtain a warrant supported by probable cause to obtain this information  The Fourth Amendment thus provides a limited bulwark against government intrusion into digital privacy  In addition to the protection provided by the Fourth Amendment, in the 1960s and 1970s, the Court concluded that the Fourteenth Amendment's guarantee of "liberty" implied the existence of a more general right of privacy, protecting individuals from government intrusion even outside the "search and seizure" context  In the 1977 case Whalen v  Roe , the Supreme Court explained that this constitutional right of privacy "in fact involve[s] at least two different kinds of interests  One is the individual interest in avoiding disclosure of personal matters, and another is the interest in independence in making certain kinds of important decisions " The second of these interests relates primarily to individual rights concerning the "intimacies of [persons'] physical relationship," as well as the right to abortion, and has little connection to data protection  However, the first of the interests listed in Whalen could potentially relate to data protection  This interest, the right to avoid certain disclosures, has come to be known as the right to "informational privacy " Despite its broad expression in Whalen , every Supreme Court case to consider the informational privacy right has rejected the constitutional claim and upheld the government program alleged to have infringed on the right  In Whalen itself, physicians and patients challenged a New York law that required the recording of the names and addresses of all persons who had obtained certain drugs for which there was both a lawful and unlawful market  Although the Court acknowledged that the statute "threaten[ed] to impair       [the plaintiffs'] interest in the nondisclosure of private information," the Court observed that the disclosures were an "essential part of modern medical practice" and the New York law had protections in place against unwarranted disclosure that showed a "proper concern" for the protection of privacy  Together, the Court found these factors sufficient to uphold the law  In the wake of Whalen and Nixon v  Administrator of General Services —a case decided the same year as Whalen that also considered the right to informational privacy—courts have struggled to articulate the precise contours of the right  The most recent Supreme Court case to consider the right to informational privacy, NASA v  Nelson , went so far as to suggest that the right might not exist, "assuming without deciding" that the right existed in the course of rejecting the constitutional claim challenge to a government background check program for hiring  Despite the Supreme Court's lack of clarity about the right to informational privacy, "most federal circuit courts" recognize the right to various extents  All of the constitutional rights involving privacy, like the common law privacy torts, focus on public disclosure of private facts  This focus limits their potential influence on modern data privacy debates, which extends beyond the disclosure issue to more broadly concern how data is collected, protected, and used  Perhaps more importantly, whatever the reach of the constitutional right to privacy, the "state action doctrine" prevents it from being influential outside the realm of government action  Under this doctrine, only government action is subject to scrutiny under the Constitution, but purely private conduct is not proscribed, "no matter how unfair that conduct may be " As a result, neither the common nor constitutional law provides a complete framework for considering many of the potential threats to digital privacy and consumer data  Rather, the most important data protection standards come from statutory law  Given the inherent limitations in common law and constitutional protections, Congress has enacted a number of federal laws designed to provide statutory protections of individuals' personal information  In contrast with the scheme prevalent in Europe and some other countries, rather than a single comprehensive law, the United States has a "patchwork" of federal laws that govern companies' data protection practices  These laws vary considerably in their purpose and scope  Most impose data protection obligations on specific industry participants—such as financial institutions, health care entities, and communications common carriers—or specific types of data, such as children's data  Other laws, however, supplement the Constitution's limited privacy protections and apply similar principles to private entities  The Stored Communications Act (SCA), for instance, generally prohibits the unauthorized access or disclosure of certain electronic communications stored by internet service providers  Lastly, some laws prohibit broad categories of conduct that, while not confined to data protection, limit how companies may handle personal data  Most notably, the Federal Trade Commission Act (FTC Act) prohibits "unfair or deceptive acts or practices " As some scholars have pointed out, the FTC has used its authority under the FTC Act to develop norms and principles that effectively fill in the gaps left by other privacy statutes  These laws are organized below, beginning with those most narrowly focused on discrete industries and moving toward more generally applicable laws  In light of its gap-filling function, this section lastly discusses the FTC Act—along with the Consumer Financial Protection Act (CFPA), which covers similar types of conduct  The Appendix to this report contains a table summarizing the federal data protection laws discussed  The Gramm-Leach-Bliley Act (GLBA) imposes several data protection obligations on financial institutions  These obligations are centered on a category of data called "consumer" "nonpublic personal information" (NPI), and generally relate to: (1) sharing NPI with third parties, (2) providing privacy notices to consumers, and (3) securing NPI from unauthorized access  First, unless an exception applies, GLBA and its implementing regulations prohibit financial institutions from sharing NPI with non-affiliated third parties unless they first provide the consumers with notice and an opportunity to "opt-out " Furthermore, financial institutions are prohibited altogether from sharing account numbers or credit card numbers to third parties for use in direct marketing  Second, financial institutions must provide "clear and conspicuous" initial and annual notices to customers describing their privacy "policies and practices " These notices must include, among other things, the categories of NPI collected and disclosed, the categories of third parties with which the financial institution shares NPI, and policies and practices with respect to protecting the confidentiality and security of NPI  Third, GLBA and its implementing regulations (often referred to as the "Safeguards Rule" ) require financial institutions to maintain "administrative, technical, and physical safeguards" to "insure the security and confidentiality" of "customer" (as opposed to "consumer") NPI, and to protect against "any anticipated threats or hazards" or "unauthorized access" to such information  Financial institutions regulated by federal banking agencies are further required to implement a program for responding to the unauthorized access of customer NPI  The Consumer Financial Protection Bureau (CFPB), FTC, and federal banking agencies share civil enforcement authority for GLBA's privacy provisions  However, the CFPB has no enforcement authority over GLBA's data security provisions  Under the data security provisions, federal banking regulators have exclusive enforcement authority for depository institutions, and the FTC has exclusive enforcement authority for all non-depository institutions  GLBA does not specify any civil remedies for violations of the Act, but agencies can seek remedies based on the authorities provided in their enabling statutes, as discussed below  GLBA also imposes criminal liability on those who "knowingly and intentionally" obtain or disclose "customer information" through false or fraudulent statements or representations  Criminal liability can result in fines and up to five years' imprisonment  GLBA does not contain a private right of action that would allow affected individuals to sue violators  Under the Health Insurance Portability and Accountability Act (HIPAA), the Department of Health and Human Services (HHS) has enacted regulations protecting a category of medical information called "protected health information" (PHI)  These regulations apply to health care providers, health plans, and health care clearinghouses (covered entities), as well as certain "business associates" of such entities  The HIPAA regulations generally speak to covered entities': (1) use or sharing of PHI, (2) disclosure of information to consumers, (3) safeguards for securing PHI, and (4) notification of consumers following a breach of PHI  First, with respect to sharing, HIPAA's privacy regulations generally prohibit covered entities from using PHI or sharing it with third parties without patient consent, unless such information is being used or shared for treatment, payment, or "health care operations" purposes, or unless another exception applies  Covered entities generally may not make treatment or services conditional on an individual providing consent  Second, with respect to consumer disclosures, covered entities must provide individuals with "adequate notice of the uses and disclosures of [PHI] that may be made by the covered entity, and of the individual's rights and the covered entity's legal duties with respect to [PHI] " These notices must be provided upon consumer request, and covered entities maintaining websites discussing their services or benefits must "prominently post" the notices on their websites  Furthermore, an individual has the right to request that a covered entity provide him with a copy of his PHI that is maintained by the covered entity  In some cases, an individual may also request that the covered entity provide information regarding specific disclosures of the individual's PHI, including the dates, recipients, and purposes of the disclosures  Third, with respect to data security, covered entities must maintain safeguards to prevent threats or hazards to the security of electronic PHI  Lastly, HIPAA regulations contain a data breach notification requirement, requiring covered entities to, among other things, notify the affected individuals within 60 calendar days after discovering a breach of "unsecured" PHI  Violations of HIPAA's privacy requirements can result in criminal or civil enforcement  HHS possesses civil enforcement authority and may impose civil penalties, with the amount varying based on the level of culpability  The Department of Justice has criminal enforcement authority and may seek fines or imprisonment against a person who, in violation of HIPAA's privacy requirements, "knowingly" obtains or discloses "individually identifiable health information" or "uses or causes to be used a unique health identifier " HIPAA does not, however, contain a private right of action that would allow aggrieved individuals to sue alleged violators  The Fair Credit Reporting Act (FCRA) covers the collection and use of information bearing on a consumer's creditworthiness  FCRA and its implementing regulations govern the activities of three categories of entities: (1) credit reporting agencies (CRAs), (2) entities furnishing information to CRAs (furnishers), and (3) individuals who use credit reports issued by CRAs (users)  In contrast to HIPAA or GLBA, there are no privacy provisions in FCRA requiring entities to provide notice to a consumer or to obtain his opt-in or opt-out consent before collecting or disclosing the consumer's data to third parties  FCRA further has no data security provisions requiring entities to maintain safeguards to protect consumer information from unauthorized access  Rather, FCRA's requirements generally focus on ensuring that the consumer information reported by CRAs and furnishers is accurate and that it is used only for certain permissible purposes  With respect to accuracy, CRAs must maintain reasonable procedures to ensure the accuracy of information used in "consumer reports " CRAs must further exclude adverse information, such as "accounts placed in collection" or civil judgements, from consumer reports after a certain amount of time has elapsed  Furnishers must similarly establish reasonable policies and procedures to ensure the accuracy of the information reported to CRAs and may not furnish to a CRA any consumer information if they have reasonable cause to believe that information is inaccurate  Consumers also have the right to review the information CRAs have collected on them to ensure such information is accurate  CRAs must disclose information contained in a consumer's file upon the consumer's request, as well as the sources of the information and the identity of those who have recently procured consumer reports on the consumer  Should a consumer dispute the accuracy of any information in his file, CRAs and furnishers must reinvestigate the accuracy of the contested information  In addition to the accuracy requirements, under FCRA consumer reports may be used only for certain permissible purposes such as credit transactions  Accordingly, a CRA may generally furnish consumer reports to a user only if it "has a reason to believe" the user intends to use it for a permissible purpose  Likewise, users may "use or obtain a consumer report" only for a permissible purpose  Along with the permissible purpose requirement, users must further notify consumers of any "adverse action" taken against the consumer based on the report  Adverse actions include refusing to grant credit on substantially the terms requested, reducing insurance coverage, and denying employment  The FTC and the CFPB share civil enforcement authority over FCRA, with each agency possessing enforcement authority over entities subject to their respective jurisdictions  In addition to government enforcement, FCRA provides a private right of action for consumers injured by willful or negligent violations of the Act  Consumers bringing such actions for negligent violations of the Act may recover actual damages, attorney's fees, and other litigation costs  For willful violations, consumers may recover either actual damages or statutory damages ranging from $100 to $1,000, attorney's fees, other litigation costs, and "such amount of punitive damages as the court may allow " FCRA also imposes criminal liability on any individual who knowingly and willfully obtains consumer information from a CRA under false pretenses and on any officer or employee of a CRA who knowingly and willfully provides consumer information to a person not authorized to receive that information  The Communications Act of 1934 (Communications Act or Act), as amended, established the Federal Communications Commission (FCC) and provides a "comprehensive scheme" for the regulation of interstate communication  Most relevant to this report, the Communications Act includes data protection provisions applicable to common carriers, cable operators, and satellite carriers  The Telecommunications Act of 1996 amended the Communications Act to impose data privacy and data security requirements on entities acting as common carriers  Generally, common carrier activities include telephone and telegraph services but exclude radio broadcasting, television broadcasting, provision of cable television, and provision of broadband internet  The privacy and security requirements imposed on entities acting as common carriers are primarily centered on a category of information referred to as "customer proprietary network information (CPNI) " CPNI is defined as information relating to the "quantity, technical configuration, type, destination, location, and amount of use of a telecommunications service subscribed to by any customer of a telecommunications carrier," and is "made available to the carrier by the customer solely by virtue of the carrier-customer relationship " Section 222(c) of the Communications Act and the FCC's implementing regulations set forth carriers' obligations regarding CPNI  These provisions cover three main issues  First, carriers must comply with certain use and disclosure rules  Section 222(c) imposes a general rule that carriers may not "use, disclose, or permit access to" "individually identifiable" CPNI without customer approval, unless a particular exception applies  Before a carrier may solicit a customer for approval to use or disclose their CPNI, it must notify customers of their legal rights regarding CPNI and provide information regarding the carrier's use and disclosure of CPNI  Second, carriers must implement certain safeguards to ensure the proper use and disclosure of CPNI  These safeguards must include, among other things, a system by which the "status of a customer's CPNI approval can be clearly established" prior to its use, employee training on the authorized use of CPNI, and "reasonable measures" to discover and protect against attempts to gain unauthorized access to CPNI " Lastly, carriers must comply with data breach requirements  Following a "breach" of customers' CPNI, a carrier must disclose such a breach to law enforcement authorities no later than seven days following a "reasonable determination of the breach " After it has "completed the process of notifying law enforcement," it must notify customers whose CPNI has been breached  In addition to the CPNI requirements, the Communications Act contains three other potentially relevant data privacy and security provisions pertaining to common carriers  First, Section 222(a) of the Act states that carriers must "protect the confidentiality of proprietary information" of "customers " Second, Section 201(b) of the Act declares unlawful "any charge, practice, classification, and regulation" in connection with a carrier's communication service that is "unjust or unreasonable " Lastly, Section 202(a) provides that it shall "be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classification, regulations, facilities, or services        " In a 2016 rule, which was subsequently overturned pursuant to the Congressional Review Act, the FCC attempted to rely on these three provisions to regulate a broad category of data called "customer proprietary information" (customer PI)  While customer PI is not defined in the statute, the FCC's 2016 rule defined it broadly to include CPNI, as well as other "personally identifiable information" and the "content of communications " The FCC reasoned that Section 222(a) imposes a general duty, independent from Section 222(c), on carriers to protect the confidentiality of customer PI  It further maintained that Sections 201(b) and 202(a) provide independent "backstop authority" to ensure that no gaps are formed in commercial data privacy and security practices, similar to the FTC's authority under the FTC Act  However, given that Congress overturned the 2016 rule, the FCC may be prohibited under the CRA from relying on these three provisions to regulate data privacy and security  Under the CRA, the FCC may not reissue the rule in "substantially the same form" or issue a "new rule that is substantially the same" as the overturned rule "unless the reissued or new rule is specifically authorized by a law enacted after the date of the joint resolution disapproving the original rule " The FCC is empowered to enforce civil violations of the Communications Act's provisions, including its common carrier provisions  The FCC may impose a "forfeiture penalty" against any person who "willfully or repeatedly" violates the Act or the FCC's implementing regulations  The Communications Act further imposes criminal penalties on those who "willfully and knowingly" violate the statute or the FCC's implementing regulations  Along with its general civil and criminal provisions, the Communications Act provides a private right of action for those aggrieved by violations of its common carrier provisions; in such actions, plaintiffs may seek actual damages and reasonable attorney's fees  In addition to common carriers, the Communications Act imposes a number of data privacy and security requirements on how "cable operators" and "satellite carriers" (i e , covered entities) treat their subscribers' "personally identifiable information" (PII)  These requirements relate to: (1) data collection and disclosure; (2) subscribers' access to, and correction of, their data; (3) data destruction; (4) privacy policy notification; and (5) data security  First, covered entities must obtain the "prior written or electronic consent" of a subscriber before collecting the subscriber's PII or disclosing it to third parties  There are several exceptions to this consent requirement  Among other things, covered entities may collect a subscriber's PII in order to obtain information necessary to render service to the subscriber, and they may disclose a subscriber's PII if the disclosure is necessary to "render or conduct a legitimate business activity" related to the service they provide  Second, covered entities must provide subscribers, at "reasonable times and a convenient place," with access to all of their PII "collected and maintained," and they must further provide subscribers a reasonable opportunity to correct any error in such information  Third, covered entities are obligated to destroy PII if it is "no longer necessary for the purpose for which it is was collected" and there are "no pending requests or orders for access to such information " Fourth, covered entities must provide subscribers with a privacy policy notice at the "time of entering into an agreement" for services and "at least once a year thereafter " These notices must describe, among other things: (1) the nature of the subscriber's PII that has been, or will be, collected, (2) the nature, frequency, and purpose of any disclosure of such information and the types of persons to whom the disclosure is made, and (3) the times and place at which the subscriber may have access to such information  Lastly, the Communications Act imposes a general data security requirement on covered entities; they must "take such actions as are necessary to prevent unauthorized access to [PII] by a person other than the subscriber" or the covered entity  The Communications Act provides a private right of action for "[a]ny person aggrieved by any act" of a covered entity in violation of these requirements  In such actions, a court may award actual damages, punitive damages, and reasonable attorneys' fees and other litigation costs  Additionally, covered entities violating these provisions may be subject to FCC civil enforcement and criminal penalties that, as previously noted, are generally applicable to violations of the Communications Act  The Video Privacy Protection Act (VPPA) was enacted in 1988 in order to "preserve personal privacy with respect to the rental, purchase, or delivery of video tapes or similar audio visual materials " The VPPA does not have any data security provisions requiring entities to maintain safeguards to protect consumer information from unauthorized access  However, it does have privacy provisions restricting when covered entities can share certain consumer information  Specifically, the VPPA prohibits "video tape service providers" —a term that includes both digital video streaming services and brick-and-mortar video rental stores —from knowingly disclosing PII concerning any "consumer" without that consumer's opt-in consent  The VPPA provides several exceptions to this general rule  In particular, video tape service providers may disclose PII to "any person if the disclosure is incident to the ordinary course of business " Providers may also disclose PII if the disclosure solely includes a consumer's name and address and does not identify the "title, description, or subject matter of any video tapes or other audio visual material," and the consumer has been provided with an opportunity to opt out of such disclosure  The VPPA does not empower any federal agency to enforce violations of the Act and there are no criminal penalties for violations, but it does provide for a private right of action for persons aggrieved by the Act  In such actions, courts may award actual damages, punitive damages, preliminary and equitable relief, and reasonable attorneys' fees and other litigation costs  The Family Educational Rights and Privacy Act of 1974 (FERPA) creates privacy protections for student education records  "Education records" are defined broadly to generally include any "materials which contain information directly related to a student" and are "maintained by an educational agency or institution " FERPA defines an "educational agency or institution" to include "any public or private agency or institution which is the recipient of funds under any applicable program " FERPA generally requires that any "educational agency or institution" (i e , covered entities) give parents or, depending on their age, the student (1) control over the disclosure of the student's educational records, (2) an opportunity to review those records, and (3) an opportunity to challenge them as inaccurate  First, with respect to disclosure, covered entities must not have a "policy or practice" of permitting the release of education records or "personally identifiable information contained therein" without the consent of the parent or the adult student  This consent requirement is subject to certain exceptions  Among other things, covered entities may disclose educational records to (1) certain "authorized representatives," (2) school officials with a "legitimate educational interest," or (3) "organizations conducting studies" for covered entities "for the purpose of developing, validating, or administering predictive tests, administering student aid programs, and improving instructions " Covered entities may also disclose the information without consent if it constitutes "directory information" and the entity has given notice and a "reasonable period of time" to opt out of the disclosure  Second, in addition to the disclosure obligations, covered entities must not have a "policy of denying" or "effectively prevent[ing]" parents or an adult student from inspecting and reviewing the underlying educational records  Covered entities must further "establish appropriate procedures" to grant parents' review requests "within a reasonable period of time, but in no case more than forty-five days after the request has been made " Lastly, covered entities must provide an "opportunity for a hearing" to challenge the contents of the student's education records as "inaccurate, misleading, or otherwise in violation of the privacy rights of students " Covered entities must further "provide an opportunity for the correction or deletion of any such inaccurate, misleading or otherwise inappropriate data contained therein and to insert into such records a written explanation of the parents respecting the content of such records " Parents or adult students who believe that their rights under FERPA have been violated may file a complaint with the Department of Education  FERPA authorizes the Secretary of Education to "take appropriate actions," which may include withholding federal education funds, issuing a "cease and desist order," or terminating eligibility to receive any federal education funding  FERPA does not, however, contain any criminal provisions or a private right of action  While federal securities statutes and regulations do not explicitly address data protection, two requirements under these laws have implications for how companies prevent and respond to data breaches  First, federal securities laws may require companies to adopt controls designed to protect against data breaches  Under Section 13(b)(2)(B) of the Securities and Exchange Act of 1934 (Exchange Act), public companies and certain other companies are required to "devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances" that "transactions are executed in accordance with management's general or specific authorization," and that "access to assets is permitted only in accordance with management's general or specific authorization " In a recent report, the Securities and Exchange Commission (SEC) suggested that, in order to comply with this requirement, companies should consider "cyber-related threats" when formulating accounting controls  The report discussed the SEC's investigation of companies that wrongly transferred millions of dollars in response to fraudulent emails, generally noting that "companies should pay particular attention to the obligations imposed by Section 13(b)(2)(B)" in light of the "risks associated with today's ever expanding digital interconnectedness " Second, federal securities laws may require companies to discuss data breaches when making required disclosures under securities laws  The Exchange Act, Securities Act of 1933 (Securities Act), and their implementing regulations require certain companies to file a number of disclosures with the SEC  Specifically, the Securities Act requires companies issuing securities in a public offering to file detailed statements registering the offering (registration statements), and the Exchange Act requires public companies to file periodic reports on an annual, quarterly, and ongoing basis  These filings must contain certain categories of information, such as a description of the most significant factors that make investing in the company speculative or risky (known as "risk factors") and a description of any "events, trends, or uncertainties that are reasonably likely to have a material effect on its results of operations, liquidity, or financial condition        " Further, when making these filings, or any other statements in connection with the purchase or sale of a security, companies are required to include any "material" information necessary to make the statements made therein "not misleading " In interpretive guidance issued in February 2018, the SEC indicated that, pursuant to these obligations, companies may be required to disclose in their filings cyber incidents such as data breaches  The SEC can enforce violations of the Securities Act and the Exchange Act, including the accounting controls requirement and the disclosure requirements, through civil actions filed in court or administrative "cease and desist" proceedings  The SEC may seek civil penalties, disgorgement, and injunctive relief (in civil actions) or a cease and desist order (in administrative proceedings)  Furthermore, under both the Exchange Act and the Securities Act, individuals aggrieved by a company's misrepresentation or omission of a material fact in connection with the purchase or sale of a security may sue the company for actual damages incurred by the individual  There is not, however, a private right of action for violations of the Exchange Act's accounting controls requirement  Lastly, in addition to civil enforcement, both the Securities Act and the Exchange Act impose criminal liability; any person who "willfully" violates the acts or their implementing regulations may be subject to fines and imprisonment  The Children's Online Privacy Protection Act (COPPA) and the FTC's implementing regulations regulate the online collection and use of children's information  Specifically, COPPA's requirements apply to: (1) any "operator" of a website or online service that is "directed to children," or (2) any operator that has any "actual knowledge that it is collecting personal information from a child" (i e , covered operators)  Covered operators must comply with various requirements regarding data collection and use, privacy policy notifications, and data security  First, COPPA and the FTC's implementing regulations prohibit covered operators from collecting or using "personal information" from children under the age of thirteen without first obtaining parental consent  Such consent must be "verifiable" and must occur before the information is collected  Second, covered operators must provide parents with direct notice of their privacy policies, describing their data collection and sharing policies  Covered operators must further post a "prominent and clearly labeled link" to an online notice of its privacy policies at the home page of its website and at each area of the website in which it collects personal information from children  Lastly, covered operators that have collected information from children must establish and maintain "reasonable procedures" to protect the "confidentiality, security, and integrity" of the information, including ensuring that the information is provided only to third parties that will similarly protect the information  They must also comply with certain data retention and deletion requirements  Under COPPA's safe harbor provisions, covered operators will be deemed to have satisfied these requirements if they follow self-regulatory guidelines the FTC has approved  COPPA provides that violations of the FTC's implementing regulations will be treated as "a violation of a rule defining an unfair or deceptive act or practice" under the FTC Act  Under the FTC Act, as discussed in more detail below, the FTC has authority to enforce violations of such rules by seeking penalties or equitable relief  COPPA also authorizes state attorneys general to enforce violations affecting residents of their states  COPPA does not contain any criminal penalties or any provision expressly providing a private right of action  The Electronic Communications Privacy Act (ECPA) was enacted in 1986, and is composed of three acts: the Wiretap Act, the Stored Communications Act (SCA), and the Pen Register Act  Much of ECPA is directed at law enforcement, providing "Fourth Amendment like privacy protections" to electronic communications  However, ECPA's three acts also contain privacy obligations relevant to non-governmental actors  ECPA is perhaps the most comprehensive federal law on electronic privacy, as it is not sector-specific, and many of its provisions apply to a wide range of private and public actors  Nevertheless, its impact on online privacy practices has been limited  As some commentators have observed, ECPA "was designed to regulate wiretapping and electronic snooping rather than commercial data gathering," and litigants attempting to apply ECPA to online data collection have generally been unsuccessful  The Wiretap Act applies to the interception of a communication in transit  A person violates the Act if, among other acts, he "intentionally intercepts       any wire, oral, or electronic communication " The Wiretap Act defines an "electronic communication" broadly, and courts have held that the term includes information conveyed over the internet  Several thresholds must be met for an act to qualify as an unlawful "interception " Of particular relevance are three threshold issues  First, the communication must be acquired contemporaneously with the transmission of the communication  Consequently, there is no "interception" where the communication in question is in storage  Furthermore, the acquired information must relate to the "contents" of the communication, defined as information concerning the "substance, purport, or meaning of that communication " As a result, while the Act applies to information like the header or body of an email, the Act does not apply to non-substantive information automatically generated about the characteristics of the communication, such as IP addresses  Third, individuals do not violate the Wiretap Act if they are a "party to the communication" or received "prior consent" from one of the parties to the communication  The party-to-the-communication and consent exceptions have been subject to significant litigation; in particular, courts have often relied on the exceptions to dismiss suits alleging Wiretap Act violations due to online tracking, holding that websites or third-party advertisers who tracked users' online activity were either parties to the communication or received consent from a party to the communication  The SCA prohibits the improper access or disclosure of certain electronic communications in storage  With respect to improper access, a person violates the SCA if he obtains an "electronic communication" in "electronic storage" from "a facility through which an electronic communication service is provided" by either: (1) "intentionally access[ing] [the facility] without authorization" or (2) "intentionally exceed[ing] an authorization " Although the statute does not define the term "facility," most courts have held that the term is limited to a location where network service providers store communications  However, courts have differed over whether a personal computer is a "facility " Most courts have excluded personal computers from the reach of the SCA, but some have disagreed  With respect to improper disclosure, the SCA generally prohibits entities providing "electronic communication services" or "remote computing services" from knowingly divulging the contents of a communication while holding the communication in electronic storage  Similar to the Wiretap Act, the SCA's access and disclosure prohibitions are subject to certain exceptions  In particular, individuals do not violate the SCA if they are the sender or intended recipient of the communication or when a party to the communication consents to the access or disclosure  As with the Wiretap Act, courts have relied on these two exceptions to dismiss suits under the SCA related to online tracking  The Pen Register Act prohibits the installation of a "pen register" or "trap and trace device" without a court order  A pen register is a "device or process" that "records or decodes" outgoing "dialing, routing, addressing, or signaling information," and a trap and trace device is a "device or process" that "captures the incoming       dialing, routing, addressing, and signaling information " In contrast to the Wiretap Act, the Pen Register Act applies to the capture of non-content information, as the definitions of pen registers and trap and trace devices both exclude any device or process that captures the "contents of any communication " Furthermore, the Pen Register Act prohibits only the use of a pen register or trap and trace device and does not separately prohibit the disclosure of non-content information obtained through such use  The statute does, however, have several exceptions similar to those contained in the Wiretap Act and SCA  Among other things, providers of an electronic or wire communication service will not violate the Act when they use a pen register or trap and trace device in order to "protect their rights or property" or "where the consent of the user of that service has been obtained " The Wiretap Act and the SCA both provide for private rights of action  Persons aggrieved by violations of either act may bring a civil action for damages, equitable relief, and reasonable attorney's fees  For actions under the Wiretap Act, damages are the greater of: (1) actual damages suffered by the plaintiff, or (2) "statutory damages of whichever is the greater of $100 a day for each day of violation or $10,000 " For actions under the SCA, damages are "the sum of the actual damages suffered by the plaintiff and the profits made by the violator," provided that all successful plaintiffs are entitled to receive at least $1,000  Violations of the Wiretap Act and SCA are also subject to criminal prosecution and can result in fines and imprisonment  In contrast, the Pen Register Act does not provide for a private right of action, but knowing violations can result in criminal fines and imprisonment  The Computer Fraud and Abuse Act (CFAA) was originally intended as a computer hacking statute and is centrally concerned with prohibiting unauthorized intrusions into computers, rather than addressing other data protection issues such as the collection or use of data  Specifically, the CFAA imposes liability when a person "intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains       information from any protected computer " A "protected computer" is broadly defined as any computer used in or affecting interstate commerce or communications, functionally allowing the statute to apply to any computer that is connected to the internet  Violations of the CFAA are subject to criminal prosecution and can result in fines and imprisonment  The CFAA also allows for a private right of action, allowing aggrieved individuals to seek actual damages and equitable relief, such as an injunction against the defendant  As with ECPA, internet users have attempted to use this private right of action to sue companies tracking their online activity, arguing that companies' use of tracking devices constitutes an unauthorized access of their computers  In this vein, CFAA is theoretically a more generous statute than ECPA for such claims because it requires authorization from the owner of the computer (i e , the user), rather than allowing any party to a communication (i e , either the user or the website visited by the user) to give consent to the access  In practice, however, such claims have typically been dismissed due to plaintiffs' failure to meet CFAA's damages threshold  Specifically, as a threshold to bring a private right of action, a plaintiff must show damages in excess of $5,000 or another specific type of damages such as physical injury or impairment to medical care  The FTC Act has emerged as a critical law relevant to data privacy and security  As some commentators have noted, the FTC has used its authority under the Act to become the "go-to agency for privacy," effectively filling in gaps left by the aforementioned federal statutes  While the FTC Act was originally enacted in 1914 to strengthen competition law, the 1938 Wheeler-Lea amendment revised Section 5 of the Act to prohibit a broad range of unscrupulous or misleading practices harmful to consumers  The Act gives the FTC jurisdiction over most individuals and entities, although there are several exemptions  For instance, the FTC Act exempts common carriers, nonprofits, and financial institutions such as banks, savings and loan institutions, and federal credit unions  The key provision of the FTC Act, Section 5, declares unlawful "unfair or deceptive acts or practices" (UDAP) "in or affecting commerce " The statute provides that an act or practice is "unfair" only if it "causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition " While the statute does not define "deceptive," the FTC has clarified in guidance that an act or practice is to be considered deceptive if it involves a material "representation, omission, or practice that is likely to mislead [a] consumer" who is "acting reasonably in the circumstances " Under the FTC Act, the agency may enact rules defining specific acts or practices as UDAPs, often referred to as "trade regulation rules" (TRRs) or "Magnuson-Moss" rulemaking  However, to enact TRRs the FTC must comply with several procedures that are not required under the notice-and-comment rulemaking procedures set forth in Section 553 of the Administrative Procedure Act (APA), which are the default rulemaking procedures for federal agencies  Among other things, these additional procedures require the FTC to publish an advance notice of proposed rulemaking (ANPRM), give interested persons an opportunity for an informal hearing, and issue a statement accompanying the rule regarding the "prevalence of the acts or practices treated by the rule " Consequently, the FTC rarely uses its TRR rulemaking authority and has not enacted any TRRs regarding data protection  Rather, as discussed further below, the agency largely uses enforcement actions to signal the types of acts and practices it considers to be impermissible UDAPs  The FTC has brought hundreds of enforcement actions against companies alleging deceptive or unfair data protection practices  Most of these actions result in companies entering into consent decrees requiring the companies to take certain measures to prevent any further violations  While these consent decrees are not legally binding on those who are not a party to them, they are significant because they reflect the type of practices that the FTC views as "unfair" or "deceptive " Indeed, some scholars view the principles arising from them as a type of "common law of privacy " Given the uniquely important role FTC enforcement plays in the U S  data protection landscape, it is worth noting the types of data protection practices the FTC has viewed as "unfair" or "deceptive " Perhaps the most settled principle of the FTC's "common law of privacy" is that companies are bound by their data privacy and data security promises  The FTC has taken the position that companies act deceptively when they gather, use, or disclose personal information in a way that contradicts their posted privacy policy or other statements, or when they fail to adequately protect personal information from unauthorized access despite promises that that they would do so  In addition to broken promises, the FTC has alleged that companies act deceptively when they make false representations in order to induce disclosure of personal information  For example, in FTC v  Sun Spectrum Commc'ns Org , Inc  , the FTC alleged that several telemarketers acted "deceptively" by misrepresenting themselves as a credit card company and requesting personal information from individuals, ostensibly for the purpose of providing non-existent credit cards to the individuals  The FTC has further maintained that companies act deceptively when their privacy policies or other statements provide insufficient notice of their privacy practices  For instance, in In the Matter of Sears Holdings Management Co  , the FTC alleged that Sears acted deceptively by failing to disclose the extent to which downloadable software would monitor users' internet activity, merely telling users that it would track their "online browsing " Along with "deceptive claims," the FTC has also alleged that certain data privacy or data security practices may be "unfair " Specifically, the FTC has maintained that it is unfair for a company to retroactively apply a materially revised privacy policy to personal data that it collected under a previous policy  The FTC has also taken the position that certain default privacy settings are unfair  In the case FTC v  Frostwire , for example, the FTC alleged that a peer-to-peer file sharing application had unfair privacy settings because, immediately upon installation, the application would share the personal files stored on users' devices unless the users went through a burdensome process of unchecking many pre-checked boxes  With respect to data security, the FTC has more recently maintained that a company's failure to safeguard personal data may be "unfair," even if the company did not contradict its privacy policy or other statements  While at least one court has agreed that such conduct may be "unfair" under the FTC Act, a recent U S  Court of Appeals for the Eleventh Circuit case, LabMD v  FTC , suggests that any FTC cease and desist order based on a company's "unfair" data security measures must allege specific data failures and specific remedies  In LabMD , the court noted that the FTC's order "contain[ed] no prohibitions" but "command[ed] [the company] to overhaul and replace its data-security program to meet an indeterminable standard of reasonableness " The court concluded that such an order was unenforceable, reasoning that the order "effectually charge[d] the district court [enforcing the order] with managing the overhaul " The court further suggested that penalizing a company for failing to comply with an imprecise standard "may constitute a denial of due process" because it would not give the company fair notice of the prohibited conduct  Ultimately, while LabMD did not decide whether inadequate data security measures may be "unfair" under the FTC Act, the decision is nevertheless a potentially significant limitation on the FTC's ability to remedy such violations of the statute  LabMD is also a notable case because it adds to the relatively sparse case law on the FTC Act's "unfair or deceptive" prohibition  As mentioned, the large majority of the FTC enforcement actions are settled, with parties entering into consent decrees  To the extent FTC allegations are contested, the FTC may either commence administrative enforcement proceedings or civil litigation against alleged violators  In an administrative enforcement proceeding, an Administrative Law Judge (ALJ) hears the FTC's complaint and may issue a cease and desist order prohibiting the respondent from engaging in wrongful conduct  In civil litigation, the FTC may seek equitable relief, such as injunctions or disgorgement, when a party "is violating, or is about to violate," the FTC Act  The FTC may only seek civil penalties, however, if the party has violated a cease and desist order, consent decree, or a TRR  The FTC Act does not provide a private right of action, and it does not impose any criminal penalties for violations of Section 5  Similar to the FTC Act, the CFPA prohibits covered entities from engaging in certain unfair, deceptive, or abusive acts  Enacted in 2010 as Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPA created the Consumer Financial Protection Bureau (CFPB) as an independent agency within the Federal Reserve System  The Act gives the CFPB certain "organic" authorities, including the authority to take any action to prevent any "covered person" from "committing or engaging in an unfair, deceptive, or abusive act or practice" (UDAAP) in connection with offering or providing a "consumer financial product or service " The CFPB's UDAAP authority under the CFPA is very similar to the FTC's UDAP authority under the FTC Act; indeed, the CFPA contains the same definition of "unfair" as in the FTC Act, and the CFPB has adopted the FTC's definition of "deceptive" acts or practices  However, there are several important differences  First, the CFPA's UDAAP prohibition includes "abusive" practices, as well as unfair or deceptive ones  An act or practice is abusive if it either (1) "materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service" or (2) "takes unreasonable advantage of" a consumer's (a) lack of understanding, (b) inability to protect her own interest in selecting or using a consumer financial product or service, or (c) reasonable reliance on a covered person to act in her interest  While abusive conduct may also be unfair or deceptive, abusiveness is a separate standard that may cover additional conduct  Second, the CFPA prohibits UDAAPs only in connection with offering or providing a "consumer financial product or service " A product or service meets this standard if it is one of the specific financial product or services listed in the CFPA and is offered or provided to consumers primarily for personal, family, or household purposes  Lastly, the CFPA applies only to "covered persons" or "service providers " The statute defines "covered persons" as persons who offer or provide a consumer financial product or service, and it defines "service providers" as those who provide a "material service" to a "covered person" in connection with offering or providing a consumer financial product or service  As some commentators have noted, the CFPB could follow in the FTC's footsteps and use its UDAAP authority to regulate data protection  However, the CFPB has generally been inactive in the data privacy and security space  Indeed, to date, it has brought only one such enforcement action, which involved allegations that an online payment platform, Dwolla, Inc , made deceptive statements regarding its data security practices and the safety of its online payments system  To the extent it does use its authority, the CFPB has some powerful procedural advantages in comparison with the FTC  In particular, the CFPB can enact rules identifying and prohibiting particular UDAAP violations through the standard APA rulemaking process, whereas the FTC must follow the more burdensome Magnuson-Moss rulemaking procedures  Regarding enforcement, the CFPA authorizes the CFPB to bring civil or administrative enforcement actions against entities engaging in UDAAPs  Unlike the FTC, the CFPB can seek civil penalties in all such enforcement actions, as well as equitable relief such as disgorgement or injunctions  However, as with the FTC Act, the CFPA does not provide a private right of action that would allow adversely affected individuals to sue companies violating the Act  The statute also does not impose any criminal penalties for UDAAP violations  Adding to the complex federal patchwork of data protection statutes are the laws of the fifty states  First and foremost, major regulators of privacy and data protection in the states include the courts, via tort and contract law  With respect to tort law, in addition to the "privacy" causes of action that developed at the state level during the early 20th century (discussed above), negligence and other state tort law claims serve as a means to regulate businesses that are injured from data security issues or otherwise fail to protect their customers from foreseeable harm  Contracts, implied contracts, and other commercial causes of action can also form important bulwarks for privacy  The common law, however, is not perfect: it is subject to variability from state to state, and within states, from judge to judge and jury to jury  In addition to the common law, most states have their own statutory framework which may affect data protection and the use of data by private entities  For example, many states have a consumer protection law, sometimes prohibiting unfair or deceptive practices, often referred to as "little FTC Acts " These laws, like the FTC Act, are increasingly being used to address privacy matters  In addition, each state has passed a data breach response law, requiring some form of response or imposing liability on companies in the event of a breach of their data security  While an examination of every state data security law is beyond the scope of this report, at least one state has undertaken a general and ambitious effort to regulate data security  Specifically, the California Consumer Privacy Act (CCPA), enacted in 2018, has captured significant attention  Unlike the federal patchwork provisions, neither the method of data collection nor the industry that the business operates in limits the potential application of the CCPA  Instead, the CCPA applies to any company that collects the personal information of Californians, is for-profit, does business in California, and satisfies a basic set of thresholds  Analysts have suggested that these thresholds are low enough that the law could reach a considerable number of even "relatively small" businesses with websites accessible in California  The CCPA also does not distinguish between the sources of the data that comes within its scope  Rather, the CCPA regulates all "personal information," which, by the CCPA's definition, covers nearly any information a business would collect from a consumer  The law does not require the presence of any individual identifier, such as a name or address, for data to fall within the meaning of personal information  Rather, the CCPA broadly defines personal information as "information that identifies, relates to, describes, or is capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household " Following this definition, the CCPA provides some telling illustrations of what constitutes personal information, including any "electronic network activity [such as] browsing history, search history, and information regarding a consumer's interaction with an Internet Web site, application, or advertisement" and "inferences drawn from any of" this information  The CCPA provides consumers with three main "rights " The first of these is a " right to know " the information that businesses have collected or sold about them  This right requires that businesses must, in advance of any collection, "inform [by mail or electronically] consumers as to the categories of personal information to be collected and the purposes" to which the information will be put  Second, the CCPA provides consumers with the " right to opt out " of the sale of a consumer's information  Under the new law, businesses must inform consumers of this right, and if a consumer so affirmatively opts out, the business cannot again sell the consumer's information unless the consumer subsequently provides the business express authorization  Finally, the CCPA gives consumers the right, in certain circumstances, to request that a business delete any information collected about the consumer (i e , " right to delete ")  Under the law, a business that receives such a request must delete the information collected and direct its "service providers" to do the same  The primary means to enforce the CCPA are actions brought by the California Attorney General  According to the statute, businesses that fail to provide the protections required by the CCPA and fail to cure those violations within 30 days are liable for civil penalties of up to $7,500 per violation  Penalties or settlements collected under the CCPA are to be deposited with the newly created Consumer Privacy Fund, the funds for which are used only to offset costs incurred in connection with the administration of the CCPA  While the CCPA provides for a private cause of action, allowing for individual and class action lawsuits against businesses, this cause of action is only available in the case of a consumer whose "nonencrypted or nonredacted personal information" is subject to "unauthorized access and exfiltration, theft, or disclosure" as a result of a failure to "implement and maintain reasonable security procedures " Further, such actions can be brought only if a consumer provides a business with 30 days' written notice and provides the business with opportunity to cure the violation, unless the consumer suffered actual pecuniary damages  The statute does not specify how a business could "cure" a violation of this type  Consumers may obtain damages under this section of no less than $100 and no more than $750 "per incident," or actual damages, whichever is greater, as well as injunctive relief  Statements by some Members of Congress during Congressional hearings have already noted the CCPA's likely importance to future federal legislative efforts  Further, some outside commentators have argued explicitly that the CCPA should be preempted by a future federal law  These statements may be motivated by the likely fact that, if left intact, the California law could shape industry and consumer concerns both inside and outside California  First, the law is likely to be the "first in a long line of similar pieces of legislation," all of which may model themselves after the CCPA, or will have to respond to its impact  Second, even though the statute is the product of a single state, its broad jurisdictional reach would bring companies throughout the United States and from around the world into its sweep  These factors combined are likely to make the CCPA important to federal legislators  Furthermore, some of the provisions of the California law could form a model for future federal regulation—although along those lines, another potential model it has to compete with is Europe's GDPR  In addition to U S  states like California, some foreign nations have enacted comprehensive data protection legislation  The EU, in particular, has long applied a more wide-ranging data protection regulatory scheme  Whereas privacy principles in the U S  Constitution focus on government intrusions into private life and U S  data privacy statutes generally are sector-specific, European privacy regulations have generally concerned any entity's accumulation of large amounts of data  As a result, foundational EU treaties provide individuals with a general right to "protection of personal data" from all potential interferences  The objective of the EU's most recent data privacy legislation—the GDPR—is to safeguard this right to personal data protection, while ensuring that data moves freely within the EU  Beginning in the 1970s, individual European countries began enacting broad, omnibus national statutes concerning data protection, privacy, and information practices  Although these domestic laws shared certain features, their differing data privacy and protection standards occasionally impeded the free flow of information between European countries  As a consequence, the EU attempted to harmonize its various national privacy laws by adopting an EU-wide data privacy and protection initiative—the 1995 Directive on the Protection of Individuals with Regard to the Processing of Personal Data and on the Free Movement of Such Data (Data Protection Directive)  While the Data Protection Directive applied on an EU-wide basis, EU law authorized each member-nation to implement the directive's requirements into the country's national law  By 2012, the European Commission—the executive body of the EU —came to view differing implementations of the Data Protection Directive at the national level as problematic  The Commission concluded that a single regulation should be developed in order to eliminate the fragmentation and administrative burdens created by the directive-based system  The Commission also sought to bring EU law up to date with developments in technology and globalization that changed the way data is collected, accessed, and used  In pursuit of these goals, the EU developed and adopted the GDPR, which replaced the 1995 Data Protection Directive and went into effect on May 25, 2018  The GDPR regulates the processing of personal data that meet its territoriality requirements, discussed below  Processing includes collection, use, storage, organization, disclosure or any other operation or set of operations performed on personal data, unless an exception applies  Personal data is defined as any information relating to an identified or identifiable person, and it can include names, identification numbers, location data, IP addresses, cookies, and any other information through which an individual can be directly or indirectly identified  The GDPR applies different requirements for controllers and processors of personal data  In general, a controller determines the purposes and means of processing personal data, and a processor is responsible for processing data on behalf of a controller  From a territorial perspective, the GDPR applies to organizations that have an "establishment" in the EU and that process personal data in the context of the activities of that establishment  The GDPR does not define "establishment," but states that it "implies the effective and real exercise of activity through stable arrangements " In a pre-GDPR case, the Court of Justice of the European Union stated that the concept of establishment under the 1995 Data Protection Directive extended "to any real and effective activity—even a minimal one—exercised through stable arrangements " Entities that meet the establishment requirement are subject to the GDPR even if their data processing activities take place outside the EU  The GDPR also applies to non-EU-established entities that offer goods or services to individuals in the EU or monitor individuals' behavior in the EU  Because many businesses with an online presence offer goods and services to EU individuals, the GDPR applies to many businesses outside the EU  The GDPR lays out seven guiding principles for the processing of personal data  While these principles are not "hard and fast rules" themselves, they inform the interpretation of the GDPR and its more concrete requirements, discussed below  The GDPR requires data controllers and processors to have a lawful basis to process personal data  The regulation delineates six possible legal bases: (1) consent; (2) performance of contract; (3) compliance with a legal obligations; (4) protection of the "vital interests" (i e , the life) of the data subject or another individual; (5) tasks carried out in the public interest (e g , by a government entity); and (6) the "legitimate interests" of the controller or a third party, unless the fundamental rights and freedom of the data subject override those interests  Commentators describe the "legitimate interests" category as the most flexible and as the potential basis for a host of common activities, such as processing carried out in the normal course of business, provided that the processing is not unethical, unlawful, or otherwise illegitimate  When data processing is premised on consent, the consent must be freely given, specific, informed, and unambiguous, and it can be withdrawn at any time  Additional consent requirements and restrictions apply to especially sensitive data, such as children's information and data that reveals ethnic origins, political opinions, religious beliefs, union status, sexual orientation, health information, and criminal histories  The GDPR provides a series of rights to individuals and corresponding obligations for data controllers, unless an exception applies  The GDPR requires organizations to implement a range of measures designed to ensure and demonstrate that they are in compliance with the regulation  When proportionate in relation to the processing activities, such measures may include adopting and implementing data protection policies and taking a "data protection by design and default" approach whereby the organization implements compliance measures into all stages of data processing  Measures may also include the following: establishing GDPR-conforming contracts with data processors; maintaining records of processing activities; conducting impact assessments on personal data use that is likely to risk individual rights and freedoms; appointing a data protection officer; and adhering to relevant codes of conduct and compliance certification schemes  The GDPR also requires controllers and processors to implement technical and organizational measures to ensure a level of data security that is "appropriate to the risk" presented by the data processing  In implementing data security measures, organizations must consider the "state of the art, the costs of implementation," the nature, scope, and context, and purposes of processing, and the likelihood and potential severity of an infringement on individual rights if data security were to be violated  The GDPR does not impose a "one-size-fits-all" requirement for data security, and security measures that are "appropriate" (and therefore mandatory) will depend on the specific circumstances and risks  For example, a company with an extensive network system that holds a large amount of sensitive or confidential information presents greater risk, and therefore must install more rigorous data security protections than an entity that holds less data  When appropriate, organizations should consider encryption and pseudonymization —the processing of personal data such that the data can no longer be attributed to a specific individual  Security measures should ensure the confidentiality, integrity, and resilience of processing systems; be able to restore access to personal data in the event of an incident; and include a process for testing security effectiveness  In the event of a personal data breach, the GDPR requires controllers to notify the designated EU government authority "without undue delay" and no later than 72 hours after learning of the breach, unless the breach is "unlikely to result in a risk to the rights and freedoms of natural persons " For example, whereas a company must report the theft of a customer database that contains information that could be used for future identity fraud given the high level of risk to individuals, it may not need to report the loss of more innocuous data, such as a directory of staff office phone numbers  When notification to the government is required, the notification must describe the nature and likely consequences of the breach, identify measures to address the breach, and identify the employee responding to the incident  When data processors experience a breach, they must notify the controller without undue delay  In addition to governmental notification, controllers must notify the individuals whose data has been compromised if the breach is likely to result in a "high risk to the rights and freedoms" of individuals  The "high risk" threshold is higher than the threshold for notifying the government authority, but it could met in circumstances when individuals may need to take steps to protect themselves from the effects of a data breach  According to the United Kingdom's data protection regulatory authority, for example, a hospital that disclosed patient medical records as a result of a data breach may present a "high risk" to individuals, but a university that accidentally deleted, but was able to re-create, an alumni contact information database may not meet the mandatory individual reporting threshold  Notification to the individual must describe the breach in clear and plain language and contain at least the same information as provided in the governmental notifications  Notification to the individual is not required in the following cases: the controller implemented appropriate technical and organizational protection measures, such as encryption, that will render the data unintelligible; the controller took subsequent measures that will ensure that the high risk to individual rights and freedom are no longer likely to materialize; or individual notifications would involve disproportionate efforts, in which case the controller must provide public notice of the breach  Regardless of whether notification is required, controllers must document all data breaches so that government supervisory authorities can verify compliance at a later date  The EU has long regulated the transfer of data from EU member states to foreign countries, and the GDPR continues to restrict such international data transfers  Like the 1995 Data Protection Directive, the GDPR authorizes data transfer from within the EU to a non-EU country if the receiving country ensures an adequate level of protection for personal data  To meet this requirement, the non-EU country must offer a level of protection that is "essentially equivalent to that ensured" by the GDPR  If the European Commission previously made an adequacy decision under the Data Protection Directive's legal framework, that decision remains in force under the GDPR  U S  and EU officials previously developed a legal framework—the U S -EU Privacy Shield—for protecting transatlantic data flow into the United States  Under the Privacy Shield framework, U S -based organizations self-certify to the International Trade Administration in the Department of Commerce that they will comply with the framework's requirements for protecting personal data by complying with, among other provisions, notice requirements, data retention limits, security requirements, and data processing purpose principles  In 2016, the European Commission concluded that the Privacy Shield framework provided adequate protections under the Data Protection Directive  That adequacy determination continues to apply under the GDPR, although the European Commission annually reviews whether the Privacy Shield framework continues to provide an adequate level of protection  In the absence of an adequacy decision from the European Commission, the GDPR permits data transfers outside the EU when (1) the recipient of the data has itself established appropriate safeguards , and (2) effective legal remedies exist for individuals to enforce their data privacy and protection rights  Appropriate safeguards include: a legally binding agreement between public authorities or bodies; binding corporate rules; standard contract clauses adopted by the European Commission; and approved codes of conduct and certification mechanisms  U S  companies that do not participate in Privacy Shield often must rely on standard contract clauses to be able to receive data from the EU  The GDPR also identifies a list of circumstances in which data may be transferred outside the EU even without appropriate safeguards or an adequacy decision  These circumstances include, among other reasons, when: an individual has provided informed consent; transfer is necessary for the performance of certain contracts involving the data subject; or the transfer is necessary for important reasons of public interests  One of the most commented-upon aspects of the GDPR is its high ceiling for administrative fines  For the most serious infractions of the GDPR, regulatory bodies within individual EU countries may impose fines up to 20 million euro (approximately $22 million) or 4% of global revenue, whichever is higher, for certain violations of the GDPR  The GDPR also provides tools for individuals to enforce compliance with its terms  Individuals whose personal data is processed in a way that does not comport with the GDPR may lodge a complaint with regulatory authorities  Individuals also have the right to an "effective judicial remedy" (i e , to pursue a lawsuit) against the responsible data processor or controller, and individuals may obtain compensation for their damages from data processors or controllers  The GDPR may be relevant to the 116th Congress' consideration of data protection initiatives in several ways  Because the GDPR applies to U S  companies that offer goods and services to individuals in the EU, many U S  companies have developed new data protection practices in an effort to comply with its requirements  Other businesses reported that they withdrew from the European market rather than attempt to obtain compliance GDPR  For those companies that remained in the European market, some have stated that they will apply their GDPR-compliant practices on a company-wide basis rather than changing their model only when doing business in the EU  Consequently, the GDPR already directly impacts the data protection practices of some U S  companies  The GDPR also has served as a prototype for comprehensive data protection legislation in other governments  For example, commentators have described China's Personal Information Security Specification, which defines technical standards related to the collection, storage, use, transfer, and disclosure of personal information, as modeled on the GDPR  And the CCPA includes elements similar to the GDPR, such as an enumeration of individual rights related to data privacy  If this trend continues, GDPR-like data protection laws may become more commonplace internationally  Finally, some argue that Congress should consider enacting comprehensive federal data protection legislation similar to the GDPR  As discussed below, however, other observers and some officials in the Trump Administration have criticized the GDPR, describing the regulation as overly prescriptive and likely to result in negative unintended consequences  Regardless of the merits of these positions, the GDPR may remain a focal point of discussion in the debate over whether the United States should develop a more comprehensive data protection policy  Although some commentators argue that the federal government should supplement the current patchwork of federal data protection laws with more comprehensive legislation modeled on the CCPA or GDPR, some Trump Administration officials have criticized these legislative approaches and questioned whether they will improve data privacy outcomes  The Administration has argued that many comprehensive data privacy models have resulted in "long, legal, regulator-focused privacy policies and check boxes, which only help a very small number of users[ ]" Rather than pursuing a prescriptive model in which the government defines (or prescribes) data protection rules, the Trump Administration advocates for what it describes as an outcome-based approach whereby the government focuses on the "outcomes of organizational practices, rather than on dictating what those practices should be " In September 2018, the National Telecommunications and Information Administration (NTIA) in the Department of Commerce issued a request for public comments on the Trump Administration's efforts to develop an outcome-based approach to advancing consumer privacy that also protects prosperity and innovation  According to NTIA, changes in technology have led consumers to conclude that they are losing control over their personal information, while at the same time that foreign and state privacy laws have led to a fragmented regulatory landscape that disincentives innovation  Accordingly, NTIA is attempting to develop a set of "user-centric" privacy outcomes and goals that would underpin the protections that should be produced by any federal actions related to consumer privacy  NTIA's proposed policy focuses on a set of outcomes that the Trump Administration seeks to achieve: In addition to identifying desired outcomes, NTIA's request for public comments states that the Trump Administration is in the process of developing "high-level goals for Federal action" related to data privacy  NTIA's proposed privacy framework shares certain elements of prescriptive legal regimes like the GDPR and CCPA  Common features include a right to withdraw consent to certain uses of personal data; accountability for third-party vendors and servicers; and a right to access, amend, complete, correct, or delete personal data  But NTIA's request for public comments does not specifically describe how the Trump Administration intends to accomplish its outcomes and goals  Instead, it states that NTIA "understand[s] that there is considerable work to be done to achieve" the identified objectives  The comment period closed on November 9, 2018, and NTIA received input from more than 200 individuals and entities  The debate over whether Congress should consider federal legislation regulating data protection implicates numerous legal variables and options  "Data protection" itself is an expansive concept that melds the fields of data privacy (i e , how to control the collection, use, and dissemination of personal information) and data security (i e , how to protect personal information from unauthorized access or use and respond to such unauthorized access or use)  There is no single model for data protection legislation in existing federal, state, or foreign law  For example, some state laws focus solely on data security or address a particular security concern, such as data breach notifications  Other state laws isolate a single privacy-related issue, such as the transparency of data brokers—companies that aggregate and sell consumers' information, but that often do not have a direct commercial relationship with consumers  Recent data protection laws such as the CCPA and GDPR appear to indicate a trend toward combining data privacy and security into unified legislative initiatives  These unified data protection paradigms typically are structured on two related features: (1) an enumeration of statutory rights given to individuals related to their personal information and (2) the creation of legal duties imposed on the private entities that possess personal information  The specific list and nature of rights and duties differ depending on the legislation, and some have proposed to define new rights in federal legislation that do not have a clear analog in existing state or foreign law  Consequently, at present, there is no agreed-upon menu of data protection rights and obligations that could be included in federal legislation  Although data protection laws and proposals are constantly evolving, some frequently discussed legal rights include: the right to know what personal data is being collected, used, and disseminated, and how those activities are occurring; the right to control the use and dissemination of personal data, which may include the right to opt out or withhold consent to the collection or sharing of such data; the right to review personal data that has been collected and to delete or correct inaccurate information; the right to obtain a portable copy of personal data; the right to object to improper activities related to personal data; and the right to learn when a data breach occurs; Commonly discussed obligations for companies that collect, use, and disseminate personal data include rules defining: how data is collected from individuals; how companies use data internally; how data is disseminated or disclosed to third parties; what information companies must give individuals related to their data; how data is kept secure; when breaches of security must be reported; the accuracy of data; and reporting requirements to ensure accountability and compliance  Whether to enact federal data protection legislation that includes one or more of these rights and obligations has been the subject of a complex policy debate and multiple hearings in recent Congresses  Part of the legislative debate concerns how to enforce such rights and obligation and raises questions over the role of federal agencies, state attorneys general, and private citizen suits  In addition, some elements of the data protection proposals and models could implicate legal concerns and constitutional limitations  While the policy debate is outside the scope of this report, the following sections discuss legal considerations relevant to federal data protection proposals that the 116th Congress may choose to consider  These sections begin by analyzing legal issues related to the internal structure and definition of data protection-related rights and obligations and then move outward toward an examination of external legal constraints  A primary conceptual point of debate concerning data protection legislation is whether to utilize the so-called "prescriptive" method or an "outcome-based" approach to achieve a particular law's objectives  Under the prescriptive approach, the government defines data protection rules and requires regulated individuals and entities to comply with those rules  Both the GDPR and CCPA use a prescriptive approach, and some legislation proposed in the 116th Congress would use this method by delineating certain data protection requirements  The Trump Administration, however, has argued that a prescriptive approach can stymie innovation and result in compliance checklists without providing measurable privacy benefits  As an alternative methodology, the Administration advocated for what it described as an outcome-based approach whereby the government focuses on the outcomes of organizational practices, rather than defining the practices themselves  Some federal information technology laws, such as the Federal Information Security Management Act (FISMA), use an outcome-oriented approach to achieve federal objectives, although agency implementation of such laws may become prescriptive in nature  The Administration has not specified how it intends to achieve its desired data protection goals without prescribing data protection rules, but additional direction appears to be forthcoming, according to the NTIA's request for public comment  Another issue that may be considered in crafting federal data protection policy is how to define the contours of the data that the federal government proposes to protect or the specific entities or industries that it proposes to regulate  The patchwork of existing data protection statutes define protected information in a variety of ways, many of which depend on the context of the law  For example, HIPAA is limited to "protected health information" and GLBA governs "financial information" that is personally identifiable but not publicly available  By contrast, GDPR and CCPA regulate all "personal" information—a term defined in both laws as information that is associated with a particular individual or is capable of being associated with an individual  Some federal data proposals would apply a similar scope to those of the GDPR and CCPA  If enacted, such broad data protection laws have the potential to create multiple layers of federal data protection requirements: (1) general data protection requirements for "personal" information and (2) sector-specific requirements for data regulated by the existing "patchwork" of data protection laws  Other legislative proposals have sought to avoid dual layers of regulations by stating that the proposed data protection requirements would not apply to individuals or entities covered by certain existing federal privacy laws  Agency enforcement is another key issue to consider when crafting any future federal data protection legislation  As discussed, under the current patchwork of federal data protection laws, there are multiple federal agencies responsible for enforcing the myriad federal statutory protections, such as the FTC, CFPB, FCC, and HHS  Of these agencies, the FTC is often viewed—by industry representatives, privacy advocates, and FTC commissioners themselves —as the appropriate primary enforcer of any future national data protection legislation, given its significant privacy experience  There are, however, several relevant legal constraints on the FTC's enforcement authority  First, the FTC generally lacks the ability to issue fines for first-time offenses  In UDAP enforcement actions, the FTC may issue civil penalties only in certain limited circumstances, such as when a person violates a consent decree or a cease and desist order  Consequently, the FTC often enters into consent decrees addressing a broad range of conduct, such as a company's data security practices, seeking penalties for violations of those decrees  However, as the LabMD case discussed earlier in this report suggests, if the FTC imposes penalties based on imprecise legal standards provided in a rule or order, the Due Process Clause of the Fifth Amendment may constrain the agency's authority  Second, the plain text of the FTC Act deprives the FTC of jurisdiction over several categories of entities, including banks, common carriers, and nonprofits  Third, the FTC generally lacks authority to issue rules under the APA's notice-and-comment process that is typically used by agencies to issue regulations  Rather, the FTC must use a more burdensome—and, consequently, rarely used—process under the Magnuson-Moss Warranty Act  As some FTC Commissioners and commentators have noted, these legal limitations may be significant in determining the appropriate federal enforcement provisions in any national data security legislation  While Congress may not be able to legislate around constitutional constraints, future legislation could address some of these limitations—for instance, by allowing the FTC to seek penalties for first-time violations of rules, expanding its jurisdictions to include currently excluded entities, or providing the FTC notice-and-comment rulemaking authority under the APA  These current legal constraints on FTC authority may also be relevant in determining whether national legislation should allow private causes of action or enforcement authority for state attorneys general, as some commentators have suggested that private causes of action and enforcement by state attorneys general are essential supplements to FTC enforcement  Legislation involving privacy may propose to allow individuals to seek private remedy for violations in the courts  Congress may seek to establish a private right of action allowing a private plaintiff to bring an action against a third party based directly on that party's violation of a public statute  As it has done with many sector-specific privacy laws, Congress, in a data protection statute, could provide not only for this right, but also for specific remedies beyond compensatory damages, such as statutory damages or even treble damages for injured individuals  However, it may be very difficult to prove that someone has been harmed in a clear way by many of the violations that might occur under a hypothetical data protection and privacy regime  Victims of data breaches and other privacy violations, generally speaking, do not experience clear and immediate pecuniary or reputational harm  This obstacle might threaten not only a consumer's ability to obtain monetary relief, but also could run up against the limits of the federal courts' "judicial power" under Article III of the U S  Constitution  Article III extends the judicial power of the federal courts to only "cases" and "controversies " As part of that limitation, the Supreme Court has stated that courts may adjudicate a case only where a litigant possesses Article III standing  A party seeking relief from a federal court must establish standing  Specifically, the party must show that he has a genuine stake in the relief sought because he has personally suffered (or will suffer): (1) a concrete, particularized and actual or imminent injury; (2) that is traceable to the allegedly unlawful actions of the opposing party; and (3) that is redressable by a favorable judicial decision  These requirements, particularly the requirement of "imminence," form significant barriers for lawsuits based on data protection  Imminence, according to the Supreme Court in Clapper v  Amnesty International , requires that alleged injury be " certainly impending " to constitute injury-in-fact  Speculation and assumptions cannot be the basis of standing  This reasoning has caused courts to dismiss data breach claims where plaintiffs cannot show actual misuse of data, but can only speculate that future thieves may someday cause them direct harm  These requirements are constitutional in nature and apply regardless of whether a statute purports to give a party a right to sue  This constitutional requirement limits Congress' ability to use private rights of action as an enforcement mechanism for federal rights, as the recent Supreme Court case Spokeo, Inc  v  Robins illustrates  Spokeo involved a Federal Credit Reporting Act (FCRA) lawsuit brought by Thomas Robins against a website operator that allowed users to search for particular individuals and obtain personal information harvested from a variety of databases  Robins alleged that Spokeo's information about him was incorrect, in violation of the FCRA requirement that consumer reporting agencies "follow reasonable procedures to assure maximum possible accuracy" of consumer reports  As discussed earlier in this report, FCRA provides for a private right of action making any person who willfully fails to comply with its requirements liable to individuals for, among other remedies, statutory damages  The lower court understood that Robins did not specifically allege any actual damages he had suffered, such as the loss of money resulting from Spokeo's actions  Nonetheless, the court concluded that the plaintiff had standing to seek statutory damages because his injury was sufficiently particular to him—FCRA had created a statutory right for Robins and his personal interest was sufficient for standing  The Supreme Court disagreed with the lower court, however, explaining that the lower court had erred by eliding the difference between Article III's "concreteness" and "particularization" requirements  Specifically, the Court concluded that a plaintiff must demonstrate a concrete injury separate from a particularized injury, meaning that plaintiffs must show that their injury "actually exist[s] " While tangible injuries, like monetary loss, are typically concrete, a plaintiff with an "intangible injury" must show that it is "real" and not "abstract" in order to demonstrate concreteness  For example, the Spokeo Court suggested that the mere publication of an incorrect zip code, although it could violate FCRA, would not be a sufficiently concrete injury for standing purposes  As a result, the Court remanded the case to the lower court to determine if the injury alleged in the case was both particularized and concrete  Spokeo does not eliminate Congress' role in creating standing where it might not otherwise exist  The Supreme Court explained that the concreteness requirement is "grounded in historical practice" and, as a result, Congress' judgment on whether an intangible harm is sufficiently concrete can be "instructive " However, as Spokeo explained, Congress cannot elevate every privacy violation to the status of a concrete injury  Both before and after Spokeo , the lower courts have resolved standing disputes in lawsuits involving privacy and data protection, where parties argue about whether particular injuries are sufficiently concrete for purpose of Article III  Congress can possibly resolve some of these disputes by elevating some otherwise intangible injuries to concrete status  But Spokeo illustrates that there may be a residuum of harmless privacy violations for which Congress cannot provide a judicial remedy  Another legal issue Congress may need to consider with respect to any federal program involving data protection and privacy is how to structure the federal-state regime—that is, how to balance whatever federal program is enacted with the programs and policies in the states  Federal law, under the Supremacy Clause, has the power to preempt or displace state law  As discussed above, there are a host of different state privacy laws, and some states have begun to legislate aggressively in this area  The CCPA in particular represents a state law that is likely to have a national effect  Ultimately, unless Congress chooses to occupy the entire field of data protection law, it is likely that the state laws will end up continuing to have a role in this area  Further, given that the states are likely to continue to experiment with legislation, the CCPA being a prime example, it is likely that preemption will be a highly significant issue in the debate over future federal privacy legislation  As the Supreme Court has recently explained, preemption can take three forms: "conflict," "express," and "field " Conflict preemption requires any state laws that conflict with a valid federal law to be without effect  Conflict preemption can occur when it is impossible for a private party to simultaneously comply with both federal and state requirements, or when state law amounts to an obstacle to the accomplishment of the full purposes of Congress  Express preemption occurs when Congress expresses its intent in the text of the statute as to which state laws are displaced under the federal scheme  Finally, field preemption occurs when federal law occupies a 'field' of regulation "so comprehensively that it has left no room for supplementary state legislation " Ultimately, the preemptive scope of any federal data protection legislation will turn on the "purpose" of Congress and the specific language used to effectuate that purpose  If Congress seeks to adopt a relatively comprehensive system for data protection, perhaps the most obvious means to preempt a broad swath of state regulation would be to do so "expressly" within the text of the statute by including a specific preemption provision in the law  For example, several existing federal statutes expressly preempt all state law that "relate to" a particular subject matter  The Supreme Court has held that this "related to" language encompasses any state law with a "connection with, or reference to" the subject matter referenced  Similar language can be used to displace all state laws in the digital data privacy sphere to promote a more uniform scheme  Congress could alternatively take a more modest approach to state law  For example, Congress could enact a data protection framework that expressly preserves state laws in some ways and preempts them in others  A number of federal statutes preempt state laws that impose standards "different from" or "in addition to" federal standards, or allow the regulator in charge of the federal scheme some authority to approve certain state regulations  These approaches would generally leave intact state schemes parallel to or narrower than the federal scheme  For example, a statute could permit a state to provide for additional liability or different remedies for violation of a federal standard  Congress could do the same with federal data protection legislation, using statutory language to try to ensure the protection of the provisions of state law that it sought to preserve  Although legislation on data protection could take many forms, several approaches that would seek to regulate the collection, use, and dissemination of personal information online may have to confront possible limitations imposed by the First Amendment of the U S  Constitution  The First Amendment guarantees, among other rights, "freedom of speech " Scholars have split on how the First Amendment should be applied to proposed regulation in the data protection sphere  In one line of thinking, data constitutes speech, and regulation of this speech, even in the commercial context, should be viewed skeptically  Other scholars have argued that an expansive approach would limit the government's ability to regulate ordinary commercial activity, expanding the First Amendment beyond its proper role  This scholarly debate informs the discussion, but does not provide clear guidance on how to consider any particular proposed regulation  The Supreme Court has never interpreted the First Amendment as prohibiting all regulation of communication  Instead, when confronting a First Amendment challenge to a regulation, a court asks a series of questions in order to determine whether a particular law or rule runs afoul of the complicated thicket of case law that has developed in this area  The first question courts face when considering a First Amendment challenge is whether the challenged regulation involves speech or mere non-expressive conduct  As the Supreme Court has explained, simply because regulated activity involves "communication" does not mean that it comes within the ambit of the First Amendment  Where speech is merely a "component" of regulated activity, the government generally can regulate that activity without inviting First Amendment scrutiny  For example, "a law against treason…is violated by telling the enemy the Nation's defense secrets," but that does not bring the law within the ambit of First Amendment scrutiny  Assuming the regulation implicates speech rather than conduct, it typically must pass First Amendment scrutiny  However, not all regulations are subject to the same level of scrutiny  Rather, the Court has applied different tiers of scrutiny to different types of regulations  For example, the Court has long considered political and ideological speech at the "core" of the First Amendment—as a result, laws which implicate such speech generally are subject to strict scrutiny  Pursuant to this standard, the government must show that such laws are narrowly tailored to serve a compelling state interest  By contrast, the Court has historically applied less rigorous scrutiny to laws regulating "commercial speech " Commercial speech is subject to a lower level of scrutiny known as the Central Hudson test, which generally requires the government to show only that its interest is "substantial" and that the regulation "directly advances the governmental interest asserted" without being "more extensive than necessary to serve that interest " These principles have provided general guidance to lower courts in deciding cases that intersect with data protection, but implicit disagreements between these courts have repeatedly demonstrated the difficulty in striking the balance between First Amendment interests and data-protection regulation  For example, in 2001 in Trans Union Corp  v  FTC , the D C  Circuit upheld an FTC order that prohibited Trans Union from selling marketing lists containing the names and addresses of individuals  The court assumed that disclosing or using the marketing lists was speech, not conduct, but concluded that the FTC's restrictions on the sale of the marketing lists generally concerned "no public issue," and, as such, was subject to "reduced constitutional protection " The court derived its "no public issue" rule from the Supreme Court's case law on defamation, which generally views speech that is solely in the private interest of the speaker as being subject to lower First Amendment protection from defamation suits than speech regarding matters of a public concern  Applying this "reduced constitutional protection" to the context of Trans Union's marketing lists, the court determined that the regulations were appropriately tailored  While the Trans Union court did not cite to Central Hudson , other courts have gone on to apply similar reasoning to uphold data protection laws from constitutional challenge under the ambit of Central Hudson 's commercial speech test  In contrast with the relatively lenient approach applied to a privacy regulation in Trans Union , in U S  West v  FCC , the Tenth Circuit struck down FCC regulations on the use and disclosure of Consumer Proprietary Network Information (CPNI)  The regulations stated that telecommunications carriers could use or disclose CPNI only for the purpose of marketing products to customers if the customer opted in to this use  The court determined that these provisions regulated commercial speech because they limited the ability of carriers to engage in consumer marketing  Applying Central Hudson , the court held that although the government alleged a general interest in protecting consumer privacy, this interest was insufficient to justify the regulations  The panel ruled that the regulations did not materially advance a substantial state interest because the government failed to tie the regulations to specific and real harm, supported by evidence  The court also concluded that a narrower regulation, such as a consumer opt-out, could have served the same general purpose  After the Tenth Circuit's decision in U S  West , the FCC responded by making minor changes to its regulations, maintaining some elements of the opt-in procedure for the use of CPNI and reissuing them with a new record  After this reissuance, the D C  Circuit considered these modified-but-similar regulations in a 2009 case  In that case, the D C  Circuit upheld the regulations without attaching much significance to the FCC's changes, and apparently implicitly disagreeing with the Tenth Circuit about both the importance of the privacy interest at stake and whether the opt-in procedure was proportional to that interest  The Supreme Court's first major examination of the First Amendment in this context came in 2011  That year, the Court decided Sorrell v  IMS Health, Inc  , a case that is likely to be critical to understanding the limits of any future data protection legislation  In Sorrell , the Court considered the constitutionality of a Vermont law that restricted certain sales, disclosures, and uses of pharmacy records  Pharmaceutical manufacturers and data miners challenged this statute on the grounds that it prohibited them from using these records in marketing, thereby imposing what they viewed to be an unconstitutional restriction on their protected expression  Vermont first argued that its law should be upheld because the "sales, transfer, and use of prescriber-identifying information" was mere conduct and not speech  The Court explained that, as a general matter, "the creation and dissemination of information are speech within the meaning of the First Amendment," and thus there was "a strong argument that prescriber identifying information is speech for First Amendment purposes " Ultimately, however, the Court stopped short of fully embracing this conclusion, merely explaining that it did not matter whether the actual transfer of prescriber-identifying information was speech because the law nonetheless impermissibly sought to regulate the content of speech—the marketing that used that data, as well as the identities of speakers—by regulating an input to that speech  As the Court explained, the Vermont law was like "a law prohibiting trade magazines from purchasing or using ink " Second, Vermont argued that, even if it was regulating speech, its regulations passed the lower level of scrutiny applicable to commercial speech  The Court disagreed  The Court explained that the Vermont law enacted "content- and speaker-based restrictions on the sale, disclosure and use of prescriber identifying information" because it specifically targeted pharmaceutical manufacturers and prohibited certain types of pharmaceutical marketing  As the Court stated in a previous case, "[c]ontent-based regulations are presumptively invalid" because they "raise[] the specter that the Government may effectively drive certain ideas or viewpoints from the marketplace " Further, the Sorrell Court observed that the legislature's stated purpose was to diminish the effectiveness of marketing by certain drug manufacturers, in particular those that promoted brand-name drugs, suggesting to the Court that the Vermont law went "beyond mere content discrimination, to actual viewpoint discrimination " As a result, the Court concluded that some form of "heightened scrutiny" applied  Nevertheless, the Court reasoned that, even if Central Hudson 's less rigorous standard of scrutiny applied, the law failed to meet that standard because its justification in protecting physician privacy was not supported by the law's reach in allowing prescriber-identifying information's use "for any reason save" marketing purposes  Most of the lower courts outside the data protection and privacy context that have considered Sorrell have held that Sorrell 's reference to "heightened scrutiny" did not override the Central Hudson test in commercial speech cases, even where those cases include content- or speaker- based restrictions  Others, however, have held that content- and speaker-based restrictions must comport with something more rigorous than the traditional Central Hudson test, but it is not clear what this new standard requires or where it leads to a different outcome than Central Hudson   As a result, while Sorrell 's impact on privacy and data protection regulation has been considered by a few courts, no consensus exists on the impact it will have  However, a few commentators have observed that the case will likely have an important effect on the future of privacy regulation, if nothing else, by having all but concluded that First Amendment principles apply to the regulation of the collection, disclosure, and use of personally identifiable information as speech, not conduct  With respect to such future regulation, policymakers will likely want, at the minimum, to meet the Central Hudson requirement of ensuring that any restrictions on the creation, disclosure or use of information are justified by a substantial interest and that the regulations are no more extensive than necessary to further that interest  To illustrate, the Court in Sorrell identified HIPAA as a permissible "privacy" regulation because it allowed "the information's sale or disclosure in only a few narrow and well-justified circumstances " This dictum suggests that Congress is able to regulate in the data protection sphere as long as it avoids the pitfalls of the law in Sorrell   However, it may not always be easy to determine whether any given law involves speaker or content discrimination  In Sorrell itself, for instance, three dissenting Justices argued that the content and speaker discrimination that took place under the Vermont law was inevitable in any economic regulation  As a result, resolving these issues as data privacy legislation becomes more complex is likely to create new challenges for legislators  The current legal landscape governing data protection in the United States is complex and highly technical, but so too are the legal issues implicated by proposals to create unified federal data protection policy  Except in extreme incidents and cases of government access to personal data, the "right to privacy" that developed in the common law and constitutional doctrine provide few safeguards for the average internet user  Although Congress has enacted a number of laws designed to augment individual's data protection rights, the current patchwork of federal law generally is limited to specific industry participants, specific types of data, or data practices that are unfair or deceptive  This patchwork approach also extends to certain state laws  Seeking a more comprehensive data protection system, some governments—such as California and the EU—have enacted wide-ranging laws regulating many forms of personal data  Some argue that Congress should consider creating similar protections in federal law, but others have criticized the EU's and California's approach to data protection  Should the 116th Congress consider a comprehensive federal data protection program, its legislative proposals may involve numerous decision points and legal considerations  An initial decision point is the scope and nature of any legislative proposal  There are numerous data protection issues that could be addressed in any future legislation, and different possible approaches for addressing those issues (such as using a "prescriptive" or "outcome-based" approach)  Other decision points may include defining the scope of any protected information and determining the extent to which any future legislation should be enforced by a federal agency  Further, to the extent Congress wants to allow individuals to enforce data protection laws and seek remedies for the violations of such laws in court, it must account for Article III's standing requirements  Under the Supreme Court's 2016 Spokeo Inc  v  Robins decision, plaintiffs must experience more than a "bare procedural violation" of a federal privacy law to satisfy Article III and to sue to rectify a violation of that law  Federal preemption also raises complex legal questions—not only of whether to preempt state law, but what form of preemption Congress should employ  Finally, from a First Amendment perspective, Supreme Court jurisprudence suggests that while some "privacy" regulations are permissible, any federal law that restricts protected speech, particularly if it targets specific speakers or content, may be subject to more stringent review by a reviewing court 
Report 2:  residents and non-citizens for all of their U S -based property, including investments  Estates of Puerto Rico residents are required to pay the prevailing federal estate tax— which ranges from 18 percent to 40 percent depending on the size of an estate—for any U S -based property valued over $60,000  In contrast, prior to 2017, all Puerto Rico-based property was only subject to the Puerto Rico estate tax of 10 percent  Puerto Rico’s estate tax was repealed in 2017  In addition to financing from the municipal bond markets, GDB also provided an intragovernmental source of financing  Prior to April 2016, GDB acted as a fiscal agent, trustee of funds, and intergovernmental lender for the Government of Puerto Rico  GDB issued loans to Puerto Rico’s government agencies and public corporations to support their operations  GDB provided loans to government entities valued at up to 60 percent of GDB’s total assets, as shown in Figure 11  In general, these entities did not fulfill the terms of their borrowing agreements with GDB, while they independently accessed the municipal bond market  Additionally, according to GDB’s audited financial statements, GDB did not reflect loan losses in its audited financial statements until 2014 because it presumed that Puerto Rico’s legislature would repay loans through the general fund or appropriations, as generally required by the acts that approved such loans  Facing non-repayment of public sector loans, GDB took on debt to maintain liquidity  According to GDB documents, repayment of amounts owed to GDB was a main reason for the creation of the Puerto Rico Sales Tax Financing Corporation (COFINA), an entity backed by a new sales tax, through which Puerto Rico issued some of its debt  Though initially intended as a means to repay GDB and other debt, COFINA bonds were also used to finance operations  Through our interviews and an assessment of relevant literature, we identified three potential federal actions that could help address some of the factors that contributed to unsustainable indebtedness in Puerto Rico  Consistent with the provision in PROMESA that was the statutory requirement for this work, we focused on actions that were non-fiscal in nature—that is, actions that would not increase the federal deficit  There are tradeoffs for policymakers to consider when deciding whether or how to implement any policy  For each action, we describe a specific challenge as it relates to debt accumulation in Puerto Rico, identify a possible federal response to the challenge, and describe other considerations for policymakers  To help address the factors that contributed to the high demand for Puerto Rico debt relative to other municipal debt, legislative and executive branch policymakers could further ensure that municipal securities issuers provide timely, ongoing, and complete disclosure materials to bondholders and the public  Specifically, Congress could authorize SEC to establish requirements for municipal issuers on the timing, frequency, and content of initial and continuing disclosure materials  In general, the municipal securities market is less regulated and transparent than other capital markets, such as equity markets  For example, SEC’s authority to directly establish or enforce initial and continuing disclosure requirements for issuers—including those in Puerto Rico—is limited  SEC requires that underwriters (sellers of municipal securities) reasonably determine that issuers have undertaken continuing disclosure agreements (CDA) to publicly disclose ongoing annual financial information, operating data, and notices of material events  However, federal securities laws do not provide SEC with the authority to impose penalties on municipal issuers for noncompliance with CDAs, which may limit any incentive for issuers to comply with SEC disclosure and reporting guidance  As a result, SEC has limited ability to compel issuers to provide continuing disclosure information  As previously discussed, the Puerto Rico government often issued its audited financial statements in an untimely manner, thus failing to meet its contractual obligations to provide continuing disclosures for securities it issued  SEC could not directly impose any consequences on Puerto Rico’s government for failing to adhere to the terms of, or enforce compliance with, the CDAs  Additionally, as previously discussed, municipal market analysts told us that untimely financial information made it difficult for institutional and individual investors to assess Puerto Rico’s financial condition  Timely disclosure of information would help investors make informed decisions about investing in municipal securities and help protect them against fraud involving the securities  These disclosures would be made to investors at the time of purchasing securities and throughout the term of the security, including when material changes to an issuer’s financial condition occur  According to SEC staff, enhanced authority could prompt more municipal issuers to disclose financial information, including audited financial statements, in a timelier manner  For example, SEC staff said that if the agency had required that issuers provide timely financial statements at the time of issuing a municipal security, this may have precluded Puerto Rico from issuing its $3 5 billion general obligation bond in 2014  However, any rulemaking SEC would or could take as a result of enhanced authority would depend on a number of factors, such as compliance with other SEC guidance and related laws  Since this action would apply to all U S  municipal securities issuers, it has policy and implementation implications that extend well beyond Puerto Rico  For example, establishing and enforcing initial and continuing disclosure requirements for municipal securities issuers could place additional burdens on state and local issuers, and not all municipal issuers use standardized accounting and financial reporting methods  As a result, state and local governments may need to spend resources to adjust financial reporting systems to meet standardized reporting requirements  However, in a 2012 report proposing this action, SEC said it could mitigate this burden by considering content and frequency requirements that take into account, and possibly vary by, the size and nature of the municipal issuer, the frequency of issuance of securities, the type of municipal securities offered, and the amount of outstanding securities  To help address the factors that contributed to the high demand for Puerto Rico debt relative to other municipal debt, Congress could ensure that investors residing in Puerto Rico receive the same federal investor protections as investors residing in states  Specifically, Congress could subject all investment companies in Puerto Rico to the Investment Company Act of 1940, as amended (1940 Act)  In recent years, the House and Senate separately have passed legislation that would achieve this action  Certain investment companies in Puerto Rico and other territories— specifically, those whose securities are sold solely to the residents of the territory in which they are located—are exempt from the 1940 Act’s requirements  The 1940 Act regulates investment companies, such as mutual funds that invest in securities of other issuers and issue their own securities to the investing public  It imposes several requirements on investment companies intended to protect investors  For example, it requires that investment companies register with SEC and disclose information to investors about the businesses and risks of the companies in which they invest, and the characteristics of the securities that they issue  It also restricts investment companies from engaging in certain types of transactions, such as purchasing municipal securities underwritten by affiliated companies  According to a former Puerto Rico official, some broker-dealers in Puerto Rico underwrote Puerto Rico municipal securities issuances and investment companies managed by affiliated companies of these underwriters purchased the securities, packaged them into funds, and marketed the funds to investors residing in Puerto Rico  This practice would be prohibited or restricted for investment companies subject to the 1940 Act, as it might result in investment companies not acting in the best interests of their investors  If all Puerto Rico investment companies had been subject to the 1940 Act, they would have been prohibited or restricted from investing in Puerto Rico municipal bonds underwritten by affiliated companies  Also, these investment companies may have further disclosed the risks involved in Puerto Rico municipal bonds to Puerto Rico investors  As a result, demand for Puerto Rico municipal bonds from Puerto Rico investment companies and residents may have been lower had the 1940 Act requirements applied to all Puerto Rico investment companies, and it may have been more difficult for the Puerto Rico government to issue debt to finance deficits  SEC staff told us that industry groups had raised objections to extending the 1940 Act provisions to all investment companies in Puerto Rico  These industry groups noted that, among other things, certain investment companies would have difficulty meeting the 1940 Act’s leverage and asset coverage requirements and adhering to some restrictions on affiliated transactions  However, SEC staff noted that under certain legislation that passed the House or Senate separately, as described above, Puerto Rico investment companies would have three years to come into compliance if they were newly subject to the 1940 Act  Further, under that legislation, after three years, investment companies in Puerto Rico could also request an additional three years to come into compliance  Regarding affiliated company restrictions, SEC has previously waived some requirements for investment companies if they are unable to obtain financing by selling securities to unaffiliated parties with an agreement to repurchase those securities at a higher price in the future, known as repurchase agreements  According to SEC staff, SEC would consider allowing companies in Puerto Rico to enter into reverse repurchase agreements with their affiliates if the 1940 Act applied to them  To help address the factors that contributed to the high demand for Puerto Rico debt relative to other municipal debt, Congress could remove the triple tax exemption for Puerto Rico’s municipal securities  This action would mean that interest income from Puerto Rico municipal securities earned by investors residing outside of Puerto Rico could be taxed by states and local governments, while still being exempt from federal income taxes, similar to the current tax treatment of municipal bond income in the states  As mentioned previously, former Puerto Rico officials and experts in municipal securities told us that the triple tax exemption fueled investor demand and enabled Puerto Rico to continue issuing bonds despite deteriorating financial conditions  Some of the demand for Puerto Rico municipal securities came from certain U S  municipal bond funds  These funds concentrated their investments in one state to sell to investors within that state, but also included Puerto Rico bonds in their portfolios  Puerto Rico bond yields generally were higher than state bonds yields, according to industry experts  When added to a fund, the higher yields from Puerto Rico bonds would increase the overall return on investment yield of a fund  Modifying the triple tax exemption for Puerto Rico’s municipal securities might result in reduced demand for Puerto Rico’s debt  In response to reduced demand for its debt, Puerto Rico’s government may need to address any projected operating deficits by decreasing spending, raising revenues, or both  According to U S  Treasury officials, this action could increase the proportionate share of investors in Puerto Rico debt that reside in Puerto Rico, because of reduced demand from investors in the states  In the event of a future debt crisis, this could result in a concentration of financial losses within Puerto Rico  Also, debt financing allows governments to make needed capital investments and provides liquidity to governments, and can be a more stable funding source to manage fiscal stress  Reduced market demand for Puerto Rico’s bonds could make access to debt financing difficult, as the Puerto Rico bond market may not support the Puerto Rico government’s future borrowing at reasonable interest rates, according to Treasury officials  Alternately, a variant of this action would be to retain the triple tax exemption for Puerto Rico debt only for bonds related to capital investments rather than for deficit financing, according to Treasury officials  Various provisions in PROMESA were intended to help Puerto Rico improve its fiscal condition  PROMESA requires that the Oversight Board certify fiscal plans for achieving fiscal responsibility and access to capital markets  The intent of the fiscal plans is to eliminate Puerto Rico’s structural deficits; create independent revenue estimates for the budget process; and improve Puerto Rico’s fiscal governance, accountability, and controls, among other things  From March 2017 to April 2017, the Oversight Board certified the fiscal plans the Government of Puerto Rico developed for the primary government and certain component units, such as PREPA  As a result of the effects of Hurricanes Irma and Maria, the Oversight Board requested that the Government develop updated fiscal plans  Although the Government of Puerto Rico developed and submitted updated fiscal plans, the Oversight Board did not certify them, with the exception of the plan for GDB  Instead, in April 2018, the Oversight Board certified fiscal plans it developed itself, as PROMESA allows  PROMESA also requires the Oversight Board to determine whether or not Puerto Rico’s annual budgets, developed by the Governor, comply with the fiscal plans prior to being submitted to Puerto Rico’s legislature for approval  Technical assistance is another area where the federal government has taken action to help Puerto Rico address its fiscal condition  In 2015, Congress first authorized Treasury to provide technical assistance to Puerto Rico, and has continued to reauthorize the technical assistance, most recently through September 30, 2018  For example, Treasury officials told us that they helped Puerto Rico’s Planning Board develop a more accurate macroeconomic forecast, which should enable Hacienda to develop more accurate revenue estimates and receipt forecasts  Treasury officials also told us that the agency began helping Puerto Rico improve its collection of delinquent taxes—for example, by helping Hacienda develop an office dealing with Puerto Rico’s largest and most sophisticated taxpayers, which are often multinational corporations  With Puerto Rico focused on hurricane recovery efforts, Treasury and the Puerto Rico government are reassessing the types of assistance that Treasury might provide in the future, according to Treasury officials  Current and former Puerto Rico government officials and experts on Puerto Rico’s economy also told us that the federal government could further help Puerto Rico address its persistent deficits through federal policy changes that are fiscal in nature  For example, it could change select federal program funding rules—at a cost to the federal government—such as eliminating the cap on Medicaid funding and calculating the federal matching rate similar to how the rate is calculated in the states  Likewise, the Congressional Task Force on Economic Growth in Puerto Rico (Congressional Task Force), as established by PROMESA, issued a report in December 2016 that recommended changes to federal laws and programs that would spur sustainable long- term economic growth in Puerto Rico, among other recommendations  In addition to federal actions that could address the factors that contributed to Puerto Rico’s fiscal condition and debt levels, the Puerto Rico government plans to take various actions  For example, according to current Puerto Rico officials and the Puerto Rico government’s April 2018 fiscal plan, the government is: Planning to implement an integrated new information technology system for financial management, to include modernized revenue management and accounting and payroll systems  Hacienda officials stated that they are in the process of developing a project schedule for this long-term effort  Developing a new public healthcare model in which Puerto Rico’s government pays for basic services and patients pay for premium services  The government will begin implementing the new healthcare model in fiscal year 2019 and expects to achieve annual savings of $841 million by fiscal year 2023  Collaborating with the private sector for future infrastructure and service projects, including for reconstruction efforts related to Hurricanes Irma and Maria, which it expects will stimulate Puerto Rico’s weakened economy  We also asked Puerto Rico officials about progress made toward addressing many of the factors we identified  However, they did not provide us this information  We provided a draft of this report for review to Treasury, SEC, the Federal Reserve Bank of New York, the Government of Puerto Rico, and the Oversight Board  Treasury and SEC provided technical comments, which we incorporated as appropriate  The Federal Reserve Bank of New York and the Oversight Board had no comments  We received written comments from the Government of Puerto Rico, which are reprinted in appendix II  In its comments, the Government of Puerto Rico generally agreed with the factors we identified that contributed to Puerto Rico’s financial condition and levels of debt  It also provided additional context on Puerto Rico’s accumulation of debt, such as Puerto Rico’s territorial status and its effect on federal programs in Puerto Rico and outmigration  The Government of Puerto Rico also noted that the federal actions we identified to address factors contributing to Puerto Rico’s unsustainable debt levels did not include potential actions that were fiscal in nature or that addressed Puerto Rico’s long-term economic viability  As we note in the report, we excluded fiscal actions from our scope, consistent with the provision in PROMESA that was the statutory requirement for this work  We excluded potential actions that could promote economic growth in Puerto Rico because these actions would address debt levels in Puerto Rico only indirectly and because the Congressional Task Force on Economic Growth in Puerto Rico already recommended actions for fostering economic growth in Puerto Rico in its December 2016 report  We are sending copies of the report to the appropriate congressional committees, the Government of Puerto Rico, the Secretary of the Treasury, the Chairman of the Securities and Exchange Commission, and other interested parties  In addition, this report is available at no charge on the GAO website at http://gao gov  If you or your staff have any questions about this report, please contact me at (202) 512-6806 or krauseh@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix III  Our objectives were to describe (1) the factors that contributed to Puerto Rico’s financial condition and levels of debt; and (2) federal actions that could address the factors that contributed to Puerto Rico’s financial condition and levels of debt  Consistent with the provision in the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) that was the statutory requirement for this work, we focused on actions that would not increase the federal deficit  For both objectives we interviewed current Puerto Rico officials from several agencies—the Puerto Rico Department of Treasury (Hacienda in Spanish), Government Development Bank for Puerto Rico (GDB), the Puerto Rico Office of Management and Budget (Spanish acronym OGP), Fiscal Agency and Financial Advisory Authority (FAFAA), and the Puerto Rico Electric Power Authority  We also interviewed 13 former Puerto Rico officials that held leadership positions at Hacienda, GDB, or OGP, or a combination thereof  These former officials served between 1997 and 2016 for various gubernatorial administrations associated with the two political parties in Puerto Rico that held the governorship during that period  We also interviewed officials from the U S  Department of the Treasury (Treasury), the Securities and Exchange Commission (SEC), the Federal Reserve Bank of New York, and the Financial Oversight and Management Board for Puerto Rico (created by PROMESA)  Additionally, we conducted another 13 interviews with experts on Puerto Rico’s economy, the municipal securities markets, state and territorial budgeting and debt management—including credit rating agencies—and with select industry groups in Puerto Rico  We selected the experts we interviewed based on their professional knowledge closely aligning with our engagement objectives, as demonstrated through published articles, congressional testimonies, and referrals from agency officials or other experts  To describe the factors that contributed to Puerto Rico’s financial condition and levels of debt, we reviewed our prior work related to Puerto Rico’s financial condition and levels of public debt  We also collected and analyzed additional financial data from Puerto Rico’s audited financial statements for the fiscal years 2002 to 2014, the last year for which audited financial statements were available  To determine how the Puerto Rico government used bond proceeds, we reviewed a nongeneralizable sample of Puerto Rico bonds prospectuses issued between 2000 and 2017 from the Electronic Municipal Market Access database of the Municipal Securities Rulemaking Board  We reviewed literature—including academic reports, congressional hearing transcripts, and credit rating agency reports—that described Puerto Rico’s economy and factors that contributed to Puerto Rico’s levels of debt  We also reviewed credit rating agency reports that described Puerto Rico’s municipal debt and the agencies’ methodologies for rating municipal debt  We also collected and reviewed Puerto Rico government documents related to budget formulation and execution, debt issuance, and financial management  We considered factors to include, but not be limited to, macroeconomic trends, federal policies, and actions taken by Puerto Rico government officials  Our review focused largely, though not exclusively, on conditions that contributed to the debt crisis during those years for which we collected financial data on Puerto Rico, fiscal years 2002 to 2014  Finally, we also conducted a thematic analysis of the summaries of our interviews to identify common patterns and ideas  Although these results are not generalizable to all current and former officials and experts with this subject-matter expertise, and do not necessarily represent the views of all the individuals we interviewed, the thematic analysis provided greater insight and considerations for the factors we identified  To describe federal actions that could address the factors that contributed to Puerto Rico’s financial condition and levels of debt, we reviewed our prior reports and documents from Treasury and SEC, conducted a literature review, and conducted various interviews  Specifically, we met with federal agencies with subject-matter expertise or whose scope of responsibilities related to these actions, as well as with current and former Puerto Rico officials and municipal securities experts  Consistent with PROMESA, we omitted from our scope: (1) actions that could increase the federal deficit (i e , fiscal options), (2) actions that could be taken by the Puerto Rico government, (3) actions that could infringe upon Puerto Rico’s sovereignty and constitutional parameters, and (4) actions that would imperil America’s homeland and national security  We considered actions that could promote economic growth in Puerto Rico as outside of scope, as they could address debt levels in Puerto Rico indirectly, rather than directly, and because a study issued by the Congressional Task Force on Economic Growth in Puerto Rico already identified actions that Congress and executive agencies could take to foster economic growth in Puerto Rico  We also considered actions that could address Puerto Rico’s unfunded pension liability as outside of our scope  The actions we identified may also help avert future unsustainable debt levels in other territories; however, we did not assess whether and how each action would apply to other territories  We conducted this performance audit from January 2017 to May 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  In addition to the contact named above, Jeff Arkin (Assistant Director), Amy Radovich (Analyst in Charge), Pedro Almoguera, Karen Cassidy, Daniel Mahoney, A J  Stephens, and Justin Snover made significant contributions to this report 

ground_truth: Recent high-profile data breaches and other concerns about how third parties protect the privacy of individuals in the digital age have raised national concerns over legal protections of Americans' electronic data. Intentional intrusions into government and private computer networks and inadequate corporate privacy and cybersecurity practices have exposed the personal information of millions of Americans to unwanted recipients. At the same time, internet connectivity has increased and varied in form in recent years. Americans now transmit their personal data on the internet at an exponentially higher rate than in the past, and their data are collected, cultivated, and maintained by a growing number of both "consumer facing" and "behind the scenes" actors such as data brokers. As a consequence, the privacy, cybersecurity and protection of personal data have emerged as a major issue for congressional consideration. Despite the rise in interest in data protection, the legislative paradigms governing cybersecurity and data privacy are complex and technical, and lack uniformity at the federal level. The constitutional "right to privacy" developed over the course of the 20th century, but this right generally guards only against government intrusions and does little to shield the average internet user from private actors. At the federal statutory level, there are a number of statutes that protect individuals' personal data or concern cybersecurity, including the Gramm-Leach-Bliley Act, Health Insurance Portability and Accountability Act, Children's Online Privacy Protection Act, and others. And a number of different agencies, including the Federal Trade Commission (FTC), the Consumer Finance Protection Bureau (CFPB), and the Department of Health and Human Services (HHS), enforce these laws. But these statutes primarily regulate certain industries and subcategories of data. The FTC fills in some of the statutory gaps by enforcing a broad prohibition against unfair and deceptive data protection practices. But no single federal law comprehensively regulates the collection and use of consumers' personal data. Seeking a more fulsome data protection system, some governments—such as California and the European Union (EU)—have recently enacted privacy laws regulating nearly all forms of personal data within their jurisdictional reach. Some argue that Congress should consider creating similar protections in federal law, but others have criticized the EU and California approaches as being overly prescriptive and burdensome. Should the 116th Congress consider a comprehensive federal data protection law, its legislative proposals may involve numerous decision points and legal considerations. Points of consideration may include the conceptual framework of the law (i.e., whether it is prescriptive or outcome-based), the scope of the law and its definition of protected information, and the role of the FTC or other federal enforcement agency. Further, if Congress wants to allow individuals to enforce data protection laws and seek remedies for the violations of such laws in court, it must account for standing requirements in Article III, Section 2 of the Constitution. Federal preemption also raises complex legal questions—not only of whether to preempt state law, but what form of preemption Congress should employ. Finally, from a First Amendment perspective, Supreme Court jurisprudence suggests that while some privacy, cybersecurity, or data security regulations are permissible, any federal law that restricts protected speech, particularly if it targets specific speakers or content, may be subject to more stringent review by a reviewing court.