You are given two reports by the government agency.  

Report 1:
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:
A high-quality, reliable cost estimate is a key tool for budgeting, planning, and managing the 2020 Census. According to OMB, programs must maintain current and well-documented estimates of program costs, and these estimates must encompass the full life-cycle of the program. Among other things, OMB states that generating reliable program cost estimates is a critical function necessary to support OMB’s capital programming process. Without this capability, agencies are at risk of experiencing program cost overruns, missed deadlines, and performance shortfalls. A reliable cost estimate is critical to the success of any federal government program. With the information from reliable estimates, managers can: make informed investment decisions, allocate program resources, measure program progress, proactively correct course when warranted, and ensure overall accountability for results. To be considered reliable, a cost estimate must meet the criteria for each of the four characteristics outlined in our Cost Estimating and Assessment Guide. According to our analysis, a cost estimate is considered reliable if the overall assessment ratings for each of the four characteristics are substantially or fully met. If any of the characteristics are not met, minimally met, or partially met, then the cost estimate does not fully reflect the characteristics of a high-quality estimate and cannot be considered reliable. Those characteristics are: Well-documented: An estimate is thoroughly documented, including source data and significance, clearly detailed calculations and results, and explanations of why particular methods and references were chosen. Data can be traced to their source documents. Accurate: An estimate is unbiased, the work is not overly conservative or overly optimistic, and is based on an assessment of most likely costs. Few, if any, mathematical mistakes are present. Credible: Any limitations of the analysis because of uncertainty or bias surrounding data or assumptions are discussed. Major assumptions are varied, and other outcomes are recomputed, to determine how sensitive they are to changes in the assumptions. Risk and uncertainty analysis is performed to determine the level of risk associated with the estimate. The estimate’s results are cross- checked, and an independent cost estimate (ICE) is conducted to see whether other estimation methods produce similar results. Comprehensive: An estimate has enough detail to ensure that cost elements are neither omitted nor double counted. All cost-influencing ground rules and assumptions are detailed in the estimate’s documentation. Meeting best practices outlined in our Cost Estimating and Assessment Guide for a reliable cost estimate has been a long-standing challenge for the Bureau. In 2008 we reported that the 2010 Census cost estimate was not reliable because it lacked documentation and was not comprehensive, accurate, or credible. For example, in our 2008 report on the Bureau’s cost estimation process, Bureau officials were unable to provide documentation that supported the assumptions for the initial 2001 life-cycle cost estimate as well as the updates. Consequently, we recommended that the Bureau establish guidance, policies, and procedures for estimating costs that would meet best practices criteria. The Bureau agreed with the recommendation and said at the time that it already had efforts underway to improve its future cost estimation methods and systems. Moreover, weaknesses in the life-cycle cost estimate were one reason we designated the 2010 Census a GAO High- Risk Area in 2008. In 2012 we reported that, while the Bureau was taking steps to strengthen its life-cycle cost estimates, it had not yet established guidance for developing cost estimates. We recommended that the Bureau finalize its guidance, policies, and procedures for cost estimation in accordance with best practices. The Bureau agreed with the overall theme of the report but did not comment on the recommendation. During this review we found that the Bureau took steps to address this recommendation, which is discussed later in this report. Such guidance can help to institutionalize best practices and ensure consistent processes and operations for producing reliable estimates. In a 2016 report we found that the October 2015 version of the Bureau’s life-cycle cost estimate for the 2020 Census was not reliable. Overall, we reported that the 2020 Census life-cycle cost estimate partially met two of the characteristics of a reliable cost estimate (comprehensive and accurate) and minimally met the other two (well-documented and credible). We recommended that the Bureau take specific steps to ensure its cost estimate meets the characteristics of a high-quality estimate. The Bureau agreed with this recommendation, and took steps to improve the reliability of its cost estimate, which we focus on later in this report. Consequently, an unreliable life-cycle cost estimate is one of the reasons we designated the 2020 Census a GAO High-Risk Area in 2017. In October 2015, the Bureau estimated the cost of the 2020 Census to be $12.3 billion. According to the Bureau, the October 2015 version was the Bureau’s first attempt to model the life-cycle cost of its planned 2020 Census, in contrast to its earlier 2011 estimate, which the Bureau said was intended to produce an approximation of potential savings and to begin developing the methodology for producing decennial life-cycle cost estimates covering all phases of the decennial life cycle. To help control costs while maintaining accuracy, the Bureau introduced significant change to how it conducts the decennial census in 2020. Its planned innovations include reengineering how it builds its address list, improving self-response by encouraging the use of the Internet and telephone, using administrative records to reduce field work, and reengineering field operations using technology to reduce manual effort and improve productivity. In contrast to the estimated $12.3 billion in 2015, the 2020 Census would cost $17.8 billion in constant 2020 dollars if the Bureau repeated the 2010 Census design and methods, according to the Bureau’s estimates. In October 2017, Commerce announced that it had updated the October 2015 life-cycle cost estimate, projecting the life-cycle cost of the 2020 Census to be $15.6 billion, an increase of over $3 billion (27 percent) over its 2015 estimate. (See figure 1.) In developing the 2017 version of the cost estimate, Bureau cost estimators identified cost inputs, their ranges for possible outcomes, and overall cost estimating relationships (i.e., logical or mathematical formulas, or both). To identify cost inputs and the ranges of potential outcomes, the Bureau worked with subject matter experts and used historical data to support assumptions and generate inputs. The Bureau’s cost estimation team used a software tool to generate the cost estimate. Because cost estimates predict future program costs, uncertainty is always associated with them. For example, data from the past (such as fuel prices) may not always be relevant in the future. Risk and uncertainty refer to the fact that because a cost estimate is a forecast, there is always a chance that the actual cost will differ from the estimate. One way to determine whether a program is realistically budgeted is to perform an uncertainty analysis, so that the probability associated with achieving its point estimate can be determined, usually relying on simulations such as those of Monte Carlo methods. This can be particularly useful in portraying the uncertainty implications of various cost estimates. Consistent with cost estimation practices outlined in our Cost Estimating and Assessment Guide, the estimate was compared with two independent cost estimates (ICE), developed by Commerce’s Office of Acquisition Management (OAM) and the Bureau’s Office of Cost Estimation, Analysis, and Assessment. The offices producing the ICEs and the cost estimate team worked together to examine the process each used, an effort known as the reconciliation process. Through this reconciliation, the Bureau identified areas where discrepancies existed and elements that could require additional review and possible improvement. According to Bureau documentation the estimate will be updated as the program meets milestones and to reflect changes in technical or program assumptions. Figure 2 details the Bureau’s cost estimation process. OAM was involved extensively in the development of the 2017 estimate, an increased involvement compared to 2015, according to Bureau officials. OAM participated in regular review meetings throughout the development of the estimate and also developed an independent cost estimate, as shown in the figure below. End-to-end system testing activities for the 2020 Census are currently underway in Providence, Rhode Island. According to the Bureau, information collected from the test, such as overall response rates and the use of administrative records to inform census records, will inform future versions of the life-cycle cost estimate. Some updates from the test will be incorporated into the next cost estimate, which will be available in the first quarter of the coming fiscal year. Since our June 2016 report, in which we reviewed the Bureau’s 2015 version of the cost estimate, the Bureau has made significant progress. For example, the Bureau has put into place a work breakdown structure (WBS) that defines the work, products, activities, and resources necessary to accomplish the 2020 Census and is standardized for use in budget planning, operational planning, and cost estimation. However, the Bureau’s October 2017 cost estimate for the 2020 Census does not fully reflect characteristics of a high-quality estimate as described in our Cost Estimating and Assessment Guide and cannot be considered reliable. Our Cost Estimating and Assessment Guide describes best practices for developing reliable cost estimates. For our reporting needs, we collapsed these best practices into four characteristics for sound cost estimating— comprehensive, well-documented, accurate, and credible—and identified specific best practices for each characteristic. To be considered reliable, an organization must meet or substantially meet each characteristic. Our review found the Bureau met or substantially met three out of the four characteristics of a reliable cost estimate, while it partially met one characteristic: well-documented. When compared to the October 2015 estimate, the 2017 estimate shows considerable improvement. (See figure 3 below.) Cost estimates are considered valid if they are well-documented to the point they can be easily repeated or updated and can be traced to original sources through auditing, according to best practices. The Bureau only partially met the criteria for well-documented, as set forth in our Cost Estimating and Assessment Guide. A cost estimate that does not fully meet the criteria for well-documented cannot be used by management to make informed and effective implementation decisions. The well-documented characteristic comprises five best practices. The Bureau substantially met two out of five best practices (as shown in figure 4). First, the estimate describes in sufficient detail the calculations performed and the estimating methodology used to derive each element’s cost, and the cost estimate had been reviewed by management. Since cost estimates can inform key decisions and budget requests, it is vital that management review and understand how the estimate was developed, including risks associated with the underlying data and methods. The cost estimate only partially met three best practices for the characteristic of being well-documented. In general, some documentation was missing, inconsistent, or difficult to understand. First, we found that source data did not always support the information described in the basis of estimate document or could not be found in the files provided for two of the Bureau’s largest field operations: Address Canvassing and Non- Response Follow-Up (NRFU). For example, the cost estimate documentation referred to actual data from the 2010 Census and information obtained from experts as sources for address canvassing rework rates. However, the folder source documents provided as support for the basis of estimate did not include this information. Next, in several cases, we could not replicate calculations, such as for mileage costs, using the description provided. Lastly, we found that some of the cost elements did not trace clearly to supporting spreadsheets and assumption documents. Failure to document an estimate in enough detail makes it more difficult to replicate calculations, or to detect possible errors in the estimate; reduces transparency of the estimation process; and can undermine the ability to use the information to improve future cost estimates or even to reconcile the estimate with another independent cost estimate. The Bureau told us it would continue to make improvements to ensure the estimate is well- documented. For the estimate to be considered well-documented, the Bureau will need to address these issues. An accurate cost estimate supports measurement of program progress by providing unbiased and correct data, which can help management ensure accountability for scheduled results. We found the Bureau’s cost estimate substantially met the criteria for accuracy. As shown in figure 5, and in line with best practices outlined in our Cost Estimating and Assessment Guide, the estimate was not overly optimistic; appeared to be free of errors; was based on historical data or input from subject matter experts; and, according to Bureau officials, is updated regularly as information becomes available. The Bureau can enhance the accuracy of their estimate by increasing the level of detail included in the documentation, such as detail on specific inflation indices used, and by monitoring actual costs against estimates. We identified areas for improvement, which, according to Bureau officials, will be addressed as part of its ongoing efforts. For example, while the basis of estimate document describes different inflation indexes, it was not clear exactly which indexes were applied to the various cost elements in the estimate. Also, evidence of how variances between estimated costs and actual expenses would be tracked over time was not available at the time of our analysis. Tools to track variance enable management to measure progress against planned outcomes. Bureau officials stated that they already have systems in place that can be adapted for tracking estimated and actual costs. All estimates include a certain amount of informed judgment about the future. Assumptions made at the start of a program can turn out to be inaccurate. Credible cost estimates identify limitations due to uncertainty or bias surrounding data or assumptions, and control for these uncertainties by identifying and quantifying cost elements that represent the most risk. We found that the Bureau’s cost estimate substantially met the criteria for credible, as shown in figure 6 below. The Bureau’s cost estimate clearly identifies risks and uncertainties, and describes approaches taken to mitigate them. In line with best practices outlined in our Cost Estimating and Assessment Guide, the Bureau did the following: Sensitivity analysis. The Bureau conducted sensitivity analysis to identify possible changes to estimated costs for the 2020 Census based on varying major assumptions, parameters, and data inputs. For example, the Bureau calculated the likely cost implications for a range of possible response rates to identify a range of projected costs and to calculate appropriate reserves for risk. Bureau officials stated that they also identified the estimate input parameters that contributed the most to estimate uncertainty. Risk and uncertainty analysis. A cost estimate is a forecast, and as such, there is always a chance that the actual cost will differ from the estimate. Uncertainty is the indefiniteness about the outcome of a situation. Uncertainty is assessed in cost estimate models to estimate the risk (or probability) that a specific funding level will be exceeded. We found the Bureau performed an uncertainty analysis on a portion of the estimate to determine whether estimated costs were realistic and to establish the probability of achieving projections outlined in the estimate. The Bureau used a combination of modeling based on Monte Carlo analysis and allocations of funding for risks. The Monte Carlo simulation was performed on a portion of the estimate to account for uncertainty around various operational parameters for which a range of outcomes was possible, including Internet response rates and the extent to which data collection issues might be resolved using administrative records. To account for the inherent uncertainty of assumptions included within the life-cycle cost estimate, the Bureau added funding to the cost estimate totaling approximately $292 million to account for risks based on the results of the Monte Carlo analysis. For other risks, such as acquisition lead time and the possibility of delays in information technology (IT) development, contingency funding was added to the estimate to reflect the potential cost of resolving these issues, through use of a backup system or an alternative approach. These are described as “special risks” in the Bureau’s basis of estimate, and total approximately $171 million. Based on additional sensitivity analysis, the Bureau added approximately $965 million to the cost estimate to reflect discrete risks outlined in the risk register as well as those associated with (1) variability in self-response rates, (2) the effect of fluctuations in the size and wage rate of the temporary workforce on the cost of field operations, and (3) the potential need to reduce the enumerator-to- manager staffing ratio in case expected efficiencies in field operations are not realized. In addition to these provisions, the Secretary of Commerce added a contingency amount of about $1.2 billion to account for what the Bureau refers to as unknown-unknowns. Bureau documentation states that conducting a decennial census is an extremely complex, high-risk operation. In order to mitigate some of the risk, contingency funding must be available to initiate ad hoc activities necessary to overcome unforeseen issues. According to Bureau documentation these include such risks as natural disasters or cyber-attacks. The Bureau provides a description of how the general risk contingency is calculated. However, this description does not clearly link calculated amounts to the risks themselves. In our June 2016 report we reported the Bureau had not properly accounted for risk and recommended the Bureau, in part; improve control over how risk and uncertainty are accounted for. We continue to believe the prior recommendation from our June 2016 report remains valid and should be addressed: that the Bureau properly account for risk in the 2020 Census cost estimate, among other things. As such, risks need to be linked to the $1.2 billion general risk contingency fund. Independent cost estimate. According to best practices outlined in our Cost Estimating and Assessment Guide, an independent cost estimate should be performed to determine whether alternate estimate approaches produce similar results. The Bureau compared their estimate with two independent cost estimates, developed by Commerce’s Office of Acquisition Management and the Bureau’s Office of Cost Estimation and Assessment. As part of their process for finalizing the cost estimate, Bureau officials reconciled differences between the estimates in discussions with the two offices, resulting in more conservative assumptions by the Bureau around risk and uncertainty in both cases. In addition to implementing our recommendation to properly account for risk, going forward, while the Bureau substantially met the credibility characteristic it will be important for them to also integrate regular cross-checks of methodology into their cost estimation process. In our analysis we observed that no specific cross-checks of cost methodology were performed. According to the Bureau, cross- checks were not performed because the Bureau considered the independent cost estimates as overall cross-checks on the reliability of their methodology and did not conduct additional cross-checks. The main purpose of cross-checking is to determine whether alternative methods for specific cost elements within the cost estimate could produce similar results. An independent cost estimate, though important for the credibility of an estimate, does not fulfill the same function as a targeted cross-check of individual elements. Comprehensive estimates have enough detail to ensure that cost elements are neither omitted nor double-counted, all cost-influencing assumptions are detailed in the estimate’s documentation, and a work breakdown structure is defined. Our analysis of the 2017 cost estimate demonstrates improvement over the 2015 cost estimate when the Bureau’s cost estimate only partially met the criteria for comprehensive. We found the Bureau met or substantially met all four best practices for the comprehensive characteristic, as shown in figure 7. For example, all life-cycle costs are included in the estimate along with a complete description of the 2020 Census program and current schedule. We also found that the Bureau substantially met criteria for documenting cost influencing ground rules and assumptions. A standardized WBS (as detailed in table 1) with supporting dictionary outlines the major work of the program and describes the activities and deliverables at the project level where costs are tracked. In 2016, the Bureau’s WBS did not contain sufficient detail and we found significant differences in the presentation of the work between sources. In 2017, based on our review of Bureau documentation and interviews with Bureau officials, we found that the WBS is standardized and cost elements are presented in detail. The WBS is a necessary program management tool because it provides a basic framework for a variety of related tasks like estimating costs, developing schedules, identifying resources, determining where risks may occur, and providing the means for measuring program status. Although the Bureau’s updated life-cycle cost estimate reflects three of the four characteristics of a reliable cost estimate, we are not making any new recommendations to the Bureau in this report. We continue to believe the prior recommendation, made in 2016, remains relevant: that the Secretary of Commerce ensure that the Bureau finalizes the steps needed to fully meet the characteristics of a high-quality estimate, most notably in the well-documented area. The Bureau told us it has used our best practices for cost estimation to develop their cost estimate, and will focus on those best practices that require attention moving forward. Without a reliable cost estimate, the Bureau is limited in its ability to make informed decisions about program resources and to effectively measure progress against operational objectives. OMB, in its guidance for preparing and executing agency budgets, cites that credible cost estimates are vital for sound management decision making and for any program or capital project to succeed. A well- developed cost estimate serves as a tool for program development and oversight, supporting management to make informed decisions. According to the Bureau, the 2020 Census cost estimate is used as a management tool to guide decision making. Bureau officials stated the cost estimate is used to examine the cost impact of program changes. For example, the cost estimate served as the basis for the fiscal year 2019 funding request developed by the Bureau. The Bureau also said it used the 2020 Census life-cycle cost estimate to establish cost controls during budget formulation activities and to monitor spending levels for fiscal year 2019 activities. According to the Bureau, as detailed operational and implementation plans are defined, the 2020 Census life- cycle cost estimate has been and will continue to be used to support ongoing “what-if” analyses in determining the cost impacts of design decisions. Specifically, using the cost estimate to model the impact of changes on overall cost, the Bureau adjusted the scope of the Census Enterprise Data Collection and Processing (CEDCaP) operation. The processes for developing and updating estimates are designed to inform management about program progress and the use of program resources, supporting cost-driven planning efforts and well-informed decision making. Our work has identified a number of best practices for use in developing guidance related to cost estimation and analysis that are the basis of effective program cost estimating and should result in reliable and valid cost estimates that management can use for making informed decisions. In 2012 we reported that the Bureau had not yet established guidance for developing cost estimates. We recommended that the Bureau establish guidance, policies, and procedures for developing cost estimates that would meet best practice criteria. The Bureau agreed with the theme of the report but did not specifically agree with the recommendation. Moreover, in June 2016, we also reported that the cost estimation team did not record how and why it changed assumptions that were provided to it and did not document the sources of all data it used. The documentation of these changes to assumptions did not happen because the Bureau lacked written guidance and procedures for the cost estimation team to follow. During this review we found the Bureau has since established reliable guidance, processes, and policies for developing cost estimates and managing the cost estimation process. The following documents, shown in table 2, establish roles and responsibilities for oversight and approval of cost estimation processes, provide a detailed description of the steps taken to produce a high-quality cost estimate, and clarify the process for updating the cost estimate and associated documents over the life of a project. The Decennial Census Program’s Cost Estimate and Analysis Process, which provides a detailed description of the steps taken to produce a high-quality estimate, is reliable as it met the criteria for 8 steps and substantially met the criteria for 4 steps of the 12 best steps outlined in our Cost Estimating and Assessment Guide, as shown below in figure 8. To avoid cost overruns and to support high performance, it will be important for the Bureau to abide by their newly developed policies and guidance and continue to use the life-cycle cost estimate as a management tool. The 2017 life-cycle cost estimate includes significantly higher costs than those included in the 2015 estimate. In 2015, the Bureau estimated that they could conduct the operation at a cost of $12.3 billion in constant 2020 dollars. The Bureau’s latest cost estimate, announced in October 2017, reflects the same design, but at an expected cost of $15.6 billion. Figure 9 below shows the change in cost by WBS category for 2015 and 2017. The largest increases occurred in the Response, Managerial Contingency, and Census/Survey Engineering categories. Increased costs of $1.3 billion in the response category (costs related to collecting, maintaining, and processing survey response data) were in part due to reduced assumptions for self-response rates, leading to increases in the amount of data collected in the field, which is more costly to the Bureau. Contingency allocations increased overall from $1.35 billion in 2015 to $2.6 billion in 2017, as the Bureau gained a greater understanding of risks facing the 2020 Census. Increases of $838 million in the Census/Survey Engineering category were due mainly to the cost of an IT contract for integrating decennial survey systems that was not included in the 2015 cost estimate. Bureau officials attribute a decrease of $551 million in estimated costs for Program Management to changes in the categorization of costs associated with risks: In the 2017 version of the estimate, estimated costs related to program risks were allocated to their corresponding WBS element. More generally, factors that contributed to cost fluctuations between the 2015 and 2017 cost estimates include: changes in assumptions for census operations, improved ability to anticipate and quantify risk, an overall increase in IT costs, and more defined contract requirements. Several assumptions for the implementation of the 2020 Census have changed since the 2015 cost estimate. Some assumptions contributing to cost changes, mainly in the Response (related to collecting and processing response data) and Frame (the mapping and collecting addresses to frame enumeration activities) categories, include the following: Self-response rates. Changes in assumptions for expected self- response rates contributed to increases in the response category, as the assumed rate decreased from 63.5 percent in 2015 to 60.5 percent in 2017, thereby increasing the anticipated percentage and associated cost of nonresponse follow-up. When the Bureau does not receive responses by mail, phone, or Internet, census enumerators visit each nonresponding household to obtain data. Thus, reduced self-response rates lead to increases in the amount of data collected in the field, which is more costly to the Bureau. Bureau officials attributed this decrease to a forecasted reduction in Internet response due to added authentication steps at log in and the elimination of the function allowing users to save their responses and return later to complete the survey. Productivity rates. The productivity of enumerators collecting data for NRFU is another variable in the cost estimate that was updated, contributing to cost increases in the response category. Expected productivity rates for NRFU decreased from the 2015 estimate of 4 attempts per hour to 2.9. According to Bureau documentation, this more conservative estimate is based on historical data, rather than research and test data. In-office address canvassing rates. The Bureau will not go door-to- door to conduct in-field address canvassing across the country to update address and map information for every housing unit, as it has in prior decennial censuses. Rather, some areas would only need a review of their address and map information using computer imagery and third-party data sources—what the Bureau calls “in-office” address canvassing procedures. However, in March 2017, citing budget uncertainty the Bureau decided to discontinue one of the phases of in-office review address canvassing for the 2020 Census. The cancellation of that phase of in-office review is expected to increase the number of housing units canvassed in-field by 5 percent (from 25 to 30 percent of all canvassed housing units). In-field canvassing is more labor intensive compared to in office procedures. The 2017 version of the cost estimate reflects this increase in workload for in-field address canvassing, though overall changes in estimated costs for the Frame category, of which Address Canvassing is a part, were minimal. Staffing. Updated analysis resulted in changes to several staffing assumptions, which resulted in decreases across WBS categories. Changes included reduced pay rates for field data collection staff based on current labor market conditions and reductions in the length of staff engagement. In general, contingency allocations increased overall from $1.35 billion in 2015 to $2.6 billion in 2017. This increase in contingency can be attributed, in part, to the Bureau gaining a clearer understanding of risk and uncertainty in the 2020 Census as it approaches. The Bureau developed some of its contingency based on proven risk management techniques, including Monte Carlo analysis and allocated funding for known risk scenarios. The 2017 estimate includes close to $1.4 billion in estimated costs for these risks, almost three times the amount included in the 2015 estimate. The basis of estimate contains detail on the various risks and the process for calculating the associated contingency. The 2017 version also includes a contingency amount of $1.2 billion for general risks, or unknown-unknowns, such as natural disasters and cyber-attacks. Contingency amounts were reallocated within the WBS to more closely reflect the nature of the risk: Bureau officials attribute a decrease from the 2015 estimate of $551 million in estimated costs for program management to changes in the categorization of costs associated with risks. Officials stated that, in 2015, discrete program risks were previously consolidated as program management costs. In 2017, these discrete costs were reallocated to associate risks with the appropriate WBS element. For example, contingency amounts related to the likelihood of achieving a certain response rate previously included in the program management work breakdown category are now a part of the “response” work breakdown category. Increases in IT costs, totaling $1.59 billion, represented almost 50 percent of the total cost increase from 2015 to 2017. The total share of IT costs as a percentage of total census costs increased from 28 percent in 2015 to 32 percent in 2017, or from $3.41 billion to approximately $5 billion. Increases in IT costs are spread across seven cost categories. Figure 10 shows the IT and non-IT cost by WBS for the 2017 cost estimate. IT costs in infrastructure, response data, and census/survey WBSs account for the majority of the approximately $5 billion. The Bureau’s October 2015 cost estimate included IT costs for, among other things, system engineering, test and evaluation, and infrastructure, as well as for a portion of the Census Enterprise Data Collection and Processing (CEDCaP) program. The 2017 estimated IT cost increases were due, in large part, to the Bureau (1) updating the cost estimate for CEDCaP; (2) including an estimate for technical integration services that contributed to increases in the Census and Survey Engineering category; and (3) updating costs related to other major contracts (such as mobile device as a service, field IT services, and payroll systems). Bureau documents described an overall improvement in the Bureau’s ability to define and specify contract requirements. This resulted in updated estimates for several contracts, including for the Census Questionnaire Assistance (CQA) contract. Assumptions regarding call volume to the CQA were increased by 5 percent to account for expected response by phone after the elimination of the option to save Internet responses and return to complete the form later. The Bureau also cited updated cost data and the results of reconciliation with independent cost estimates as factors contributing to the increased costs of other major contracts, including for the procurement of data collection devices. The Secretary of Commerce provided comments on a draft of this report on August 2, 2018. The comments are reprinted in appendix II. The Department of Commerce generally agreed with our findings regarding the improvements the Census Bureau has made in its cost estimates. However, Commerce did not agree with our assessment that the Bureau’s 2017 lifecycle cost estimate is “not reliable.” Commerce noted that it had conducted two independent cost analyses and was satisfied that the cost estimate was reliable. The Bureau also provided technical comments that we incorporated, as appropriate. We maintain that, to be considered reliable, a cost estimate must meet or substantially meet the criteria for each of the four characteristics outlined in our Cost Estimating and Assessment Guide. These characteristics are derived from measures consistently applied by cost estimating organizations throughout the federal government and industry and are considered best practices for the development of reliable cost estimates. Without a reliable cost estimate, the Bureau is limited in its ability to make informed decisions about program resources and to effectively measure progress against operational objectives. Thus, while the Bureau has made considerable progress in all four of the characteristics, it has only partially met the criteria for the characteristic of being well-documented. Until the Bureau meets or substantially meets the criteria for this characteristic, the cost estimate cannot be considered reliable. As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of the report to the appropriate congressional committees, the Secretary of Commerce, the Under Secretary of Economic Affairs, the Acting Director of the U.S. Census Bureau, 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) 512-2757 or goldenkoffr@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. The purpose of our review was to evaluate the reliability of the Census Bureau’s (Bureau) life-cycle cost estimate using our Cost Estimating and Assessment Guide. We reviewed (1) the extent to which the Bureau’s life-cycle cost estimate and associated guidance met our best practices for cost estimation using documentation and information obtained in discussions with the Bureau related to the 2020 life-cycle cost estimate and (2) compared the 2015 and 2017 life-cycle cost estimates to describe key drivers of cost growth. For both objectives we reviewed documentation from the Bureau on the 2020 life-cycle cost estimate and interviewed Bureau and Department of Commerce officials. For the first objective, we relied on our Cost Estimating and Assessment Guide as criteria. Our cost specialists assessed measures consistently applied by cost-estimating organizations throughout the federal government and industry and considered best-practices for developing reliable cost estimates. We analyzed the cost estimating practices used by the Bureau against these best practices and evaluated them in four categories: comprehensive, well-documented, accurate, and credible. Comprehensive. The cost estimate should include both government and contractor costs of the program over its full life-cycle, from inception of the program through design, development, deployment, and operation and maintenance to retirement of the program. It should also completely define the program, reflect the current schedule, and be technically reasonable. Comprehensive cost estimates should be structured in sufficient detail to ensure that cost elements are neither omitted nor double counted. Specifically, the cost estimate should be based on a product-oriented work breakdown structure (WBS) that allows a program to track cost and schedule by defined deliverables, such as hardware or software components. Finally, where information is limited and judgments are made, the cost estimate should document all cost-influencing assumptions. Well-documented. A good cost estimate—while taking the form of a single number—is supported by detailed documentation that describes how it was derived and how the expected funding will be spent in order to achieve a given objective. Therefore, the documentation should capture in writing such things as the source data used, the calculations performed and their results, and the estimating methodology used to derive each WBS element’s cost. Moreover, this information should be captured in such a way that the data used to derive the estimate can be traced back to, and verified against, their sources so that the estimate can be easily replicated and updated. The documentation should also discuss the technical baseline description and how the data were normalized. Finally, the documentation should include evidence that the cost estimate was reviewed and accepted by management. Accurate. The cost estimate should provide for results that are unbiased, and it should not be overly conservative or optimistic. An estimate is accurate when it is based on an assessment of most likely costs; adjusted properly for inflation; and contains few, if any, minor mistakes. In addition, a cost estimate should be updated regularly to reflect significant changes in the program—such as when schedules or other assumptions change—and actual costs, so that it is always reflecting current status. During the update process, variances between planned and actual costs should be documented, explained, and reviewed. Among other things, the estimate should be grounded in a historical record of cost estimating and actual experiences on other comparable programs. Credible. The cost estimate should discuss any limitations of the analysis because of uncertainty or biases surrounding data or assumptions. Major assumptions should be varied, and other outcomes recomputed to determine how sensitive they are to changes in the assumptions. Risk and uncertainty analysis should be performed to determine the level of risk associated with the estimate. Further, the estimate’s cost drivers should be cross-checked, and an independent cost estimate conducted by a group outside the acquiring organization should be developed to determine whether other estimating methods produce similar results. If any of the characteristics are not met, minimally met, or partially met, then the cost estimate does not fully reflect the characteristics of a high- quality estimate and cannot be considered reliable. We also analyzed the Bureau’s cost estimation and analysis guidance and evaluated them against a 12-step process outlined in our Cost Estimation and Assessment Guide. A high-quality cost estimating process integrates the following: 1. Define estimate’s purpose. 2. Develop estimating plan. 3. Define program characteristics. 4. Determine estimating structure. 5. Identify ground rules and assumptions. 6. Obtain data. 7. Develop point estimate and compare it to an independent cost estimate. 8. Conduct sensitivity analysis. 9. Conduct risk and uncertainty analysis. 10. Document the estimate. 11. Present estimate to management for approval. 12. Update the estimate to reflect actual costs and changes. These 12 steps, when followed correctly, should result in reliable and valid cost estimates that management can use for making informed decisions. If any of the steps in the Bureau’s process do not meet, minimally meet, or partially meet the 12 steps, then the cost estimate guidance does not fully reflect best practices for developing a high-quality estimate and cannot be considered reliable. Lastly, to describe key drivers of cost growth, we compared cost information included in the 2015 and 2017 cost estimates. We analyzed both summary and detailed cost information to assess key changes in totals overall, by WBS category, and by information technology (IT) vs. Non-IT costs. We used this analysis in conjunction with information received from the Bureau during interviews and through document transfers to describe overall changes in the cost estimate from 2015 to 2017. We conducted this performance audit from December 2017 to August 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, Lisa Pearson (Assistant Director), Karen Cassidy (Analyst in Charge), Brian Bothwell, Jackie Chapin, Ann Czapiewski, Jason Lee, Ty Mitchell, Kayla Robinson, and Tim Wexler made significant contributions to this report.

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

Answer: 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.