Information Security and Privacy in

Network Environments

September 1994

OTA-TCT-606

NTIS order #PB95-109203

GPO stock #052-003-01387-8
Recommended Citation: U.S. Congress, Office of Technology Assessment, Information

Security and Privacy in Network Environments, OTA-TCT-606 (Washington, DC: U.S.

Government Printing Office, September 1994).

For Wk by the U.S. Government Prlnflng Office

Superintendent of Document\, MiIIl Stop: SSOP, Wti\hlngton, DC 204)2-932/!

ISBN O- 16-04!; 188-4
Foreword

I

nformation networks are changing the way we do business, educate

our children, deliver government services, and dispense health

care. Information technologies are intruding in our lives in both

positive and negative ways. On the positive side, they provide windows to rich information resources throughout the world. They provide

instantaneous communication of information that can be shared with all

who are connected to the network. As businesses and government become more dependent on networked computer information, the more

vulnerable we are to having private and confidential information fall into

the hands of the unintended or unauthorized person. Thus appropriate

institutional and technological safeguards are required for a broad range

of personal, copyrighted, sensitive, or proprietary information. Otherwise, concerns for the security and privacy of networked information

may limit the usefulness and acceptance of the global information infrastructure.

This report was prepared in response to a request by the Senate Committee on Governmental Affairs and the House Subcommittee on Telecommunications and Finance. The report focuses on policy issues in

three areas: 1 ) national cryptography policy, including federal information processing standards and export controls; 2) guidance on safeguarding unclassified information in federal agencies; and 3) legal issues and

information security, including electronic commerce, privacy, and intellectual property.

OTA appreciates the participation of the many individuals without

whose help this report would not have been possible. OTA received valuable assistance from members of the study’s advisory panel and participants at four workshops, as well as a broad range of individuals from

government, academia, and industry. OTA also appreciates the cooperation of the General Accounting Office and the Congressional Research

Service during the course of this assessment. The report itself, however,

is the sole responsibility of OTA.

ROGER C. HERDMAN

Director

. . .

Ill
Advisory Panel

Nancy M. Cline

Chairperson

Dean of University Libraries

The Pennsylvania State University

James M. Anderson

Director of Security

Mead Data Central, Inc.

Alexander Cavalli

Director, Research and

Development

Enterprise Integration Division

Microelectronics and Computer

Technology Corp.

Dorothy E. Denning

Chair, Computer Science

Department

Georgetown University

L. Dain Gary

Manager, Coordination Center

CERT

Richard F. Graveman

Member of Technical Staff,

Information Systems Security

Bellcore

Lee A. Hollaar

Professor of Computer Science

The University of Utah

Burton S. Kaliski, Jr.

Chief Scientist

RSA Laboratories

Stephen T. Kent

Chief Scientist

Security Technology

Bolt Beranek and Newman, Inc.

Clifford A. Lynch

Director

Division of Library Automation

Office of the President University

of California

Simona Nass

President

The Society for Electronic Access

Jeffrey D. Neuburger

Attorney

Brown Raysman & Millstein

Susan Nycum

Attorney

Baker & McKenzie

Raymond L. Ocampo, Jr.

Sr. Vice President, General

Counsel and Secretary

Oracle Corp.

David Alan Pensak

Principal Consultant

Computing Technology

E.I. DuPont de Nemours, Inc.

Richard M. Peters, Jr.

Senior VP for Corporate

Development

Oceana Health Care Systems

Joel R. Reidenberg

Professor

School of Law

Fordham University

Thomas B. Seipert

Detective Sergeant

Portland Police Bureau

Willis H. Ware

Consultant

The RAND Corp.

Note: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the advisory panel members.

The panel does not, however, necessarily approve, disapprove. or endorse this report. OTA assumes full responsibility for the report

and the accuracy of its contents.

iv
Peter Blair

Assistant Director

OTA Industry, Commerce, and

International Security Division

James W. Curlin

Program Director

OTA Telecommunication and

Computing Technologies

Program

ADMINISTRATIVE STAFF

Liz Emanuel

Office Administrator

Project Staff

JOAN WINSTON

Project Director

Paula Bruening

Senior Analyst

Tom Hausken

Analyst

Beth Valinoti

Research Assistant

Karolyn St. Clair

PC Specialist
contents

1 Introduction and Policy Summary 1

Overview 1

Safeguarding Networked Information 6

Policy Issues and Options 8

2 Safeguarding Networked Information 25

Safeguards for Networked Information 26

Institutions That Facilitate Safeguards for Networked

Information 40

Government’s Role in Providing Direction 63

3 Legal Issues and Information Security 69

Electronic Commerce 70

Protection of Information Privacy and the Problem of

Transborder Data Flow 78

Digital Libraries 96

4 Government Policies and Cryptographic

Safeguards 111

Importance of Cryptography 115

Government Concerns and Information

Safeguards 128

Guidance on Safeguarding Information in Federal

Agencies 132

U. S. Export Controls on Cryptography 150

Safeguards, Standards, and the Roles of NIST and

NSA 160

Strategic and Tactical Congressional Roles 174

vii
A Congressional Letters of Request 185

B Computer Security Act and Related

Documents 189

C Evolution of the Digital Signature

Standard 215

D Workshop Participants 223

E Reviewers and Other Contributors 226

INDEX 229

. . . Vlll
Introduction

and

Policy

Summary 1

T

he technology used in daily life is changing. Information

technologies are transforming the ways we create, gather,

process, and share information. Computer networking is

driving many of these changes; electronic transactions

and records are becoming central to everything from commerce to

health care. The explosive growth of the Internet exemplifies this

transition to a networked society. According to the Internet Society, the number of Internet users has doubled each year; this rapid

rate of growth increased more during the first half of 1994. By

July 1994, the Internet linked over 3 million host computers

worldwide; 2 million of these Internet hosts are in the United

States. ] Including users who connect to the Internet via public and

private messaging services, some 20 to 30 million people worldwide can exchange messages over the Internet.

OVERVIEW

The use of information networks for business is expanding enormously. 2 The average number of electronic point-of-sale transactions in the United States went from 38 per day in 1985 to 1.2

] Data (m Internet S]ZC and gr~~wth from the Internet Stwicty, press release, Aug. 4,

1994. The lntemct (mginated m the Department of Defense’s ARPANET in the early

1970s, By 1982, the TCPIP pr(}t(}ct)ls developed for ARPANET were a military standard

and there were atx]ut 100 computers on [he ARPANET. Twelve years later, the Internet

IInhs host c{~mputers in rm~re than 75 countries via a netw(~rk of separately administered

netwtrks.

2 See U.S. C(mgress, office of Techn[)logy Assessment, Elcctron[( Enferpr(fes:

LOdIn<q fo [he Fufw-e, OTA-TC”l%OO (Washington, DC U.S. Gtwemnwnt Printing Office, May I 99-$).

II
2 I Information Security and Privacy in Network Environments

million per day in 1993.3 An average $800 billion

is transferred among partners in international currency markets every day; about $1 trillion is transferred daily among U.S. banks; and an average

$2 trillion worth of securities are traded daily in

New York markets.4 Nearly all of these financial

transactions pass over information networks.

Government use of networks features prominently in plans to make government more efficient, effective, and responsive. 5 Securing the

financial and other resources necessary to successfully deploy information safeguards can be

difficult for agencies, however. Facing pressures

to cut costs and protect information assets, some

federal-agency managers have been reluctant to

connect their computer systems and networks

with other agencies, let alone with networks outside government. 6 Worse, if agencies were to

“rush headlong” onto networks such as the Internet, without careful planning, understanding security concerns, and adequate personnel training,

the prospect of plagiarism, fraud, corruption or

loss of data, and improper use of networked information could affect the privacy, well-being,

and livelihoods of millions of people.7

In its agency audits and evaluations, the General Accounting Office (GAO) identified several recent instances of information-security and privacy

problems:

- In November 1988, a virus caused thousands of

computers on the Internet to shut down. The virus’s primary impact was lost processing time

●

●

on infected computers and lost staff time in

putting the computers back on line. Related

dollar losses are estimated to be between

$100,000 and $10 million. The virus took advantage of UNIX’s trusted-host features to

propagate among accounts on trusted machines. (U.S. General Accounting Office,

Computer Security: Virus Highlights Need for

Improved Internet Management, GAO/l MTEC-89-57 (Washington, DC: U.S. Government Printing Office, June 1989).)

Between April 1990 and May 1991, hackers

penetrated computer systems at 34 Department

of Defense sites by weaving their way through

university, government, and commercial systems on the Internet. The hackers exploited a

security hole in the Trivial File Transfer Protocol, which allowed users on the Internet to access a file containing encrypted passwords

without logging onto the system. (U.S. General

Accounting Office, Computer Security: Hackers Penetrate DOD Computer Systems, GAO/

IMTEC-92-5 (Washington, DC: U.S. Government Printing Office, November 1991 ).)

Authorized users of the Federal Bureau of Investigation’s National Crime Information Center misused the network’s information. Such

misuse included using the information to, for

example, determine whether friends, neighbors, or relatives had criminal records, or inquire about backgrounds for political purposes.

(U.S. General Accounting Office, National

3 Electronic Funds Transfer Association, Hemdon, VA. Based on data supplied by Bunk Network News and POS News.

4 Joel Kurtzman, The Deafh o~Money (New York, NY: Simon & Schuster, 1993).

5 See The National lnjimnation lnfiastruclure: Agenda jbr Acfion, Information Infrastructure Task Force, Sept. 15, 1993; and Reengineering Through /njbrmafion Technology, Accompanying Report of the National Performance Review (Washington, DC: Ofice of the Vice Presi -

dent, 1994). See also U.S. Congress, Office of Technology Assessment, Making Go\ermnenf Work: E/ecfronic Deli}’ery oj’Fedend Ser}’ices,

OTA-TCT-578 (Washington, DC: U.S. Government Printing OffIce, September 1993).

fJ This was one finding from a series Of agency visits made by the OffIce of Management and Budget (OMB), the National Institute of Standards and Technology (NIST), and the National Security Agency (NSA) in 1991 and 1992. The visits were made as part of the implementation

of the Computer Security Act of 1987 and the revision of the security sections of OMB Circular A-130 (see ch. 4). See Office of Management

and Budget, “Observations of Agency Computer Security Practices and implementation of OMB Bulletin No. 90-08,” February 1993.

7 See F. Lynn McNuhy, Associate Director for Computer Security, National Institute of Standards and Technology, “Security on the Internet,” testimony presented before the Subcommittee on Science, Committee on Science, Space, and Technology, U.S. House of Representatives,

Mar. 22, 1994, p. 8.
Chapter 1 Introduction and Policy Summary 13

Crime Information Center: Legislation

Needed To Deter Misuse of Criminal Justice Information, GAO/T-GGD-93-41 (Washington,

DC: U.S. Government Printing Office, July

1993).)

= In October 1992, the Internal Revenue Service’s (IRS’s) internal auditors identified 368

employees who had used the IRS’s Integrated

Data Retrieval System without management

knowledge, for non-business purposes. Some

of these employees had used the system to issue

fraudulent refunds or browse taxpayer accounts

that were unrelated to their work, including

those of friends, neighbors, relatives, and celebrities. (U.S. General Accounting Office, IRS

Information Systems: Weaknesses Increase

Risk of Fraud and Impair Reliability of Management Information, GAO/AIMD-93-34

(Washington, DC: U.S. Government Printing

Office, September 1993).)8

More recent events have continued to spur government and private-sector interest in information

security:

~ A series of hacker attacks on military computers connected to the Internet has prompted

the Defense Information Systems Agency to

tighten security policies and procedures in the

defense information infrastructure. The hackers, operating within the United States and

abroad, have reportedly penetrated hundreds of

sensitive, but unclassified, military and government computer systems. The break-ins have

increased significantly since February 1994,

when the Computer Emergency Response

Team first warned that unknown intruders were

gathering Internet passwords by using what are

called sniffer programs. The sniffer programs

operate surreptitiously, capturing authorized

users’ logins and passwords for later use by

intruders. The number of captured passwords

in this series of attacks has been estimated at a

million or more, potentially threatening all the

host computers on the Internet--and their users.9

1 The Networked Society

The transformation being brought about by networking brings with it new concerns for the security and privacy of networked information. If

these concerns are not properly resolved, they

threaten to limit networking’s full potential, in

terms of both participation and usefulness. Thus,

information safeguards are achieving new prominence.

10 Whether for use in government or the private sector, appropriate information safeguards,

must account for—and anticipate—technical,

institutional, and social developments that increasingly shift responsibility for safeguarding information to the end users.

Key developments include the following:

■ There has been an overall movement to distributed computing. Computing power used to be

concentrated in a mainframe with ‘*dumb”

desktop terminals. Mainframes, computer

workstations, and personal computers are increasingly connected to other computers

through direct connections such as local- or

wide-area networks, or through modem connections via telephone lines. Distributed computing is relatively informal and bottom up;

8 E~amples provided by Hazel Edwards, Director, General Govemrnen{ Information Systems, U.S. General Acctwnting office, W>rs(mal

c(mmmnicatmn, May 5, 1994.

9 See Elizabeth Siktm)vsky, “’Ronw Lab Hacker Arrested After Lengthy Invasion,” Federal Computer Week, July 18, 1994, p. 22; Peter H.

Lewis, ‘“Hackers (m Internet Posing Security Risks, Experts Say,” The Netv York Times, July21, 1994, pp. 1, B 10; Bob Brewin, “DODTO Brief

White H(wse (m Hacker Attacks,” Federa/ Cornpu[er Week, July 25, 1994, pp. 1, 4.

)() ]n this reF)fl OTA ~)ften uses the tem “safeguard,” as in ;nform~f;on ,ruje~uards or 10 safe~li~rd information. This is to av~~id misunderstamhngs regarding use of the teml “’secunt y,”’ which s(mle readers may interpret in terms of classified infomlati(m, or as excluding measures to

protect pers~mai privacy. In its discussi(m of infom~ation safeguards, this report focuses on technical and institutional measures to ensure the

(’onjidertf~al~ty and [nfegrify of the inft)m]ation and the aufhenflc[ty of its origin.
4 I Information Security and Privacy in Network Environments

■

●

●

✘

systems administration may be less rigorous as

it is decentralized.

Open systems allow interoperability among

products from different vendors. Open systems

shift more of the responsibility for information

security from individual vendors to the market

as a whole.

Boundaries between types of information are

blurring. As the number of interconnected

computers and users expands, telephone conversations, video segments, and computer data

are merging to become simply digital information, at the disposal of the user.

The number and variety of service providers

has increased. A decade after the divestiture of

AT&T, the market is now divided among many

local-exchange and long-distance carriers, cellular carriers, satellite service providers, value-

-added carriers, and others. Traditional

providers are also entering new businesses:

telephone companies are testing video services; some cable television companies are providing telephone and Internet services; Internet

providers can deliver facsimile and video information; electric utilities are seeking to enter

the communications business.

Lower costs have moved computing from the

hands of experts. Diverse users operate personal computers and can also have access to modems, encryption tools, and information stored

in remote computers. This can empower individuals who might otherwise be isolated by disabilities, distance, or time. Lower cost

computing also means that businesses rely

more on electronic information and information transfer, But, lower cost computing also

empowers those who might intrude into personal information, or criminals who might seek

to profit from exploiting the technology. Potential intruders can operate from anywhere in the

●

●

■

■

world if they can find a vulnerability in the network.

Computer networks allow more interactivity.

Online newspapers and magazines allow readers to send back comments and questions to reporters; online discussion groups allow widely

dispersed individuals to discuss diverse issues;

pay-per-view television allows viewers to

select what they want to see. Consequently,

providers must consider new responsibilities—

such as protecting customer privacy11—resulting from interactivity.

Information technology has done more than

make it possible to do things faster or easier—

electronic commerce has transformed and

created industries. Successful companies depend on the ability to identify and contact potential customers; customer buying habits and

market trends are increasingly valuable as businesses try to maximize their returns. Manufacturing is becoming increasingly dependent on

receiving and making shipments “just in time”

and no earlier or later to reduce inventories.

Documents critical to business transactions—

including electronic funds—are increasingly

stored and transferred over computer net works.

Electronic information has opened new questions about copyright, ownership, and responsibility for information. Rights in paper-based

and oral information have been developed

through centuries of adaptation and legal precedents. Information in electronic form can be

created, distributed, and used very differently

than its paper-based counterparts, however.

Measures to streamline operations through use

of information technology and networks require careful attention to technical and institutional safeguards. For example, combining

personal records into a central database, in orI I In ~ls reP)fl OTA uses he tem conjjdenfja~ify t{l refer t{) disclosure of information only to authorized individuals, entities, ~d so fofih.

Pri}’acy refers to the social balance between an individual right to keep information confidential and the societal benefit derived from sharing

information, and how this balance is codified to give individuals the means to control personal information. The tem]s are not mutually exclusive: safeguards that help ensure confidentiality of information can be used to protect personal privacy.
Chapter 1 Introduction and Policy Summary 15

der to improve data processing efficiency, can

put privacy at risk if adequate safeguards are

not also implemented. In addition, many types

of information safeguards are still relatively

new, and methods to balance risks and the costs

of protecting information are not fully developed.

Distributed computing and open systems can

make every user essentially an “insider.” This

means that responsibility for safeguarding information becomes distributed as well, potentially putting the system at greater risk. With the rapid

changes in the industry, the responsibilities of

each network provider to other providers and to

customers may not be as clear as in the past. Even

though each player may be highly trusted, the

overall level of trust in the network necessarily decreases, unless the accountability of each of the

many intermediaries is very strict. Thus, users

must take responsibility for safeguarding information, rather than relying on intermediaries to

provide adequate protection.

D Background of the OTA Assessment

In May 1993, Senator William V. Roth, Jr., Ranking Minority Member of the Senate Committee on

Governmental Affairs, requested that the Office of

Technology Assessment (OTA) study the changing needs for protecting (unclassified) information and for protecting the privacy of individuals,

given the increased connectivity of information

systems within and outside government and the

growth in federal support for large-scale networks. Senator Roth requested that OTA assess

the need for new or updated federal computer-security guidelines and federal computer-security

and encryption standards. Senator John Glenn,

Chairman of the Senate Committee on Governmental Affairs, joined in the request, noting that

it is incumbent for Congress to be informed and

ready to develop any needed legislative solutions

for these emerging information-security and privacy issues. Congressman Edward J. Markey,

Chairman of the House Subcommittee on Telecommunications and Finance, also joined in endorsing the study (see request letters in appendix

-.

The Clipper chip.

A). After consultation with requesting staff, OTA

prepared a proposal for an expedited study; the

proposal was approved by the Technology Assessment Board in June 1993.

This report focuses on safeguarding unclassified information in networks, not on the security

or survivability of networks themselves, or on the

reliability of network services to ensure information access. The report also does not focus on

“computer crime” per se (a forthcoming OTA

study, Information Technologies for Control of

Money Laundering, focuses on financial crimes).

This study was done at the unclassified level.

Project staff did not receive or use any classified

information during the course of the study.

The widespread attention to and the significance of the Clinton Administration’s escrowedencryption initiative resulted in an increased focus

on the processes that the government uses to regulate cryptography and to develop federal information processing standards (the FIPS) based

on cryptography. Cryptography is a fundamental

technology for protecting the confidentiality of information, as well as for checking its integrity and

authenticating its origin.

Cryptography was originally used to protect

the confidentiality of communications, through
6 I Information Security and Privacy in Network Environments

encryption; it is now also used to protect the confidentiality of information stored in electronic form

and to protect the integrity and authenticity of

both transmitted and stored information. With the

advent of what are called public-key techniques,

cryptography came into use for digital signatures

that are of widespread interest as a means for electronically authenticating and signing commercial

transactions like purchase orders, tax returns, and

funds transfers, as well as for ensuring that unauthorized changes or errors are detected. These

functions are critical for electronic commerce.

Techniques based on cryptography can also help

manage copyrighted material and ensure its proper use.

This study builds on the previous OTA study of

computer and communications security, Defending Secrets, Sharing Data: New, Locks and Keys

for Electronic Information, OTA-CIT-310 (Washington, DC: U.S. Government Printing Office,

October 1987). The 1987 study focused on security for unclassified information within relatively

closed networks. Since then, new information security and privacy issues have resulted from advances in networking, such as the widespread use

of the Internet and development of the information infrastructure, and from the prospect of networking as a critical component of private and

public-sector functions. These advances require

appropriate institutional and technological safeguards for handling a broad range of personal,

copyrighted, sensitive, and proprietary information. This study also builds on intellectual-property work in Finding a Balance: Computer

Software, Intellectual Property, and the Challenge of Technological Change, OTA-TCT-527

(Washington, DC: U.S. Government Printing Office, May 1992); the analysis of issues related to

digital libraries and other networked information

resources in Accessibility and Integrity of Networked Information Collections, BP-TCT-109

(Washington, DC: OTA, August 1993); and the

analysis of privacy issues in Protecting Privacy in

Computerized Medical Information, OTATCT-576 (Washington, DC: U.S. Government

Printing Office, September 1993).

In addition to meetings and interviews with experts and stakeholders in government, the private

sector, and academia, OTA broadened participation through the study’s advisory panel and

through four project workshops (see list of workshop participants in appendix D). The advisory

panel met in April 1994 to discuss a draft of the report and advise the project staff on revisions and

additions. To gather expertise and perspectives

from throughout OTA, a “shadow panel” of 11

OTA colleagues met with project staff as needed

to discuss the scope and subject matter of the report.

At several points during the study, OTA staff

met formally and informally with officials and

staff of the National Institute of Standards and

Technology (NIST) and the National Security

Agency (NSA). Individuals from these agencies,

as well as from the Office of Management and

Budget (OMB), the Office of Science and

Technology Policy, the Department of Justice, the

Federal Bureau of Investigation, the General

Services Administration, the Patent and Trademark Office, the Copyright Office, the General

Accounting Office, and several mission agencies,

were among the workshop participants and were

invited to review a draft of the report (see list of reviewers who provided comments in appendix E).

SAFEGUARDING NETWORKED

INFORMATION

The information infrastructure is already international: networks like the Internet seamlessly cross

national borders. Networked information is similarly borderless. Achieving consensus regarding

information safeguards among the diverse stakeholders worldwide is more difficult than solving

many technical problems that might arise. The

federal government can help resolve many of

these interrelated issues. But they must be solved

systematically, not piecemeal, in order to attain an

overall solution.

This report focuses on policy issues and options regarding cryptography policy, guidance on

safeguarding information in federal agencies, and
Chapter 1 Introduction and Policy Summary 17

legal issues of electronic commerce, personal privacy, and copyright. These policy issues and options are summarized in the next section of this

chapter. The remainder of this section summarizes

other findings regarding the development and deployment of safeguard technologies (for a detailed

discussion, see chapter 2).

The fast-changing and competitive marketplace that produced the Internet and a strong networking and software industry in the United

States has not consistently produced products

equipped with affordable, easily used safeguards.

In general, many individual products and techniques are currently available to adequately safeguard specific information networks—provided

the user knows what to purchase, and can afford

and correctly use the product. Nevertheless, better

and more affordable products are needed. In particular, there is a need for products that integrate

security features with other functions for use in

electronic commerce, electronic mail, or other applications.

More study is needed to fully understand vendors’ responsibilities with respect to software and

hardware product quality and liability. More study

is also needed to understand the effects of export

controls on the domestic and global markets for

information safeguards and on the ability of safeguard developers and vendors to produce more affordable products. Broader efforts to safeguard

networked information will be frustrated unless

cryptography-policy issues are resolved (see

chapter 4).

A public-key infrastructure (PKI) is a critical

underpinning for electronic commerce and transactions. The establishment of a system of certification authorities and legal standards, in turn, is

essential to the development of a public-key infrastructure and to safeguarding business and personal transactions. Current PKI proposals need

further development and review, however, before

they can be deployed successfully.

Ideally, the safeguards an organization implements to protect networked information should reflect the organization’s overall objectives. In

practice, this is often not the case. Network designers must continuously struggle to balance

utility, cost, and security. Information can never

be absolutely secured, so safeguarding information is not so much an issue of how to secure information as one of how much security a

government agency or business can justify.

There is a great need for federal agencies, as

well as other organizations, to develop more robust security policies that match the reality of

modem information networks. These policies

should support the specific agency objectives and

interests, including but not limited to policies regarding private information. The policies must

also anticipate a future where more information

may be shared among agencies. Finally, these policies should be mandated from the highest level.

The single most important step toward implementing proper safeguards for networked

information in a federal agency or other organization is for its top management to define the organization’s overall objectives and a security policy

to reflect those objectives. Only top management

can consolidate the consensus and apply the resources necessary to effectively protect networked information. For the federal government,

this means guidance from OMB, commitment

from top agency management, and oversight by

Congress.

Both risk analysis and principles of due care

need further development. Neither approach is

necessarily always appropriate and therefore neither is always sufficient to provide a strong defense against liability in the case of a monetary

loss related to loss, theft, or exposure of networked information. A combination of the two

approaches will likely provide improved protection. Before formal models can be successful for

safeguarding the exchange of information among

government agencies or other organizations, the

entities must first review and coordinate their information-security policies. These policies can

then be implemented according to new or existing

formal models as needed. OTA found in its interviews, however, that while exploration into new

types of formal models maybe warranted, there is

considerable doubt about the utility of formal

models for safeguarding networked information,
8 I Information Security and Privacy in Network Environments

particularly to protect the integrity and availability of information.

The federal government trusted product evaluation process is not, and will not soon be, effective for delivering products that adequately

protect unclassified information in network environments. Alternatives to that approach appear

promising, however, including (but not limited to)

NIST’s Trusted Technology Assessment Program. Generally Accepted System Security Principles (GSSP) also have strategic importance for

establishing due care guidelines for cost-justifying safeguards, as targets for training and professional programs, and as targets for insurance

coverage. The current federal effort in GSSP will

not produce immediate results, but the effort is

overdue and OTA found wide support for its mission. Efforts to “professionalize” the information

security field are important, but will not produce

significant results for some time. Success depends

significantly upon the success of Generally Accepted System Security Principles and their adoption in industry and government.

Emergency response efforts are vital to safeguarding networked information, due to the relative lack of shared information about vulnerabilities on information networks. Expanding current efforts could further improve the coordination

of system administrators and managers charged

with protecting networked information.

Criminal and civil sanctions constitute only

one aspect of safeguarding networked information. Further study is needed to determine the effectiveness of such sanctions, as opposed to

improving the effectiveness of law enforcement to

act on existing laws. With the rapid expansion of

the networked society, there is a great need to support reevaluation of fundamental ethical principles-—work that is currently receiving too little

attention. More resources also could be applied to

study and improve the methods and materials used

in education of ethical use of networked information, so that more effective packages are available

to schools and organizations that train users. Finally, more resources could also be directly applied to educate users (including federal

employees, students, and the public at large) about

ethical behavior.

POLICY ISSUES AND OPTIONS

This report focuses on policy issues in three areas:

1 ) national cryptography policy, including federal

information processing standards and export controls; 2) guidance on safeguarding unclassified information in federal agencies; and 3) legal issues

and information security, including electronic

commerce, privacy, and intellectual property.

Chapter 4 discusses cryptography policy and

guidance on safeguarding information in federal

agencies. It examines the current public controversies regarding the Clinton Administration’s escrowed-encryption initiative and the development

of new federal information processing standards

based on cryptography. Because the Computer Security Act of 1987 (Public Law 100-235) is significant for both development of the FIPS and

agency guidance on safeguarding information,

chapter 4 also examines the act in some depth, including the continuing controversies concerning

its implementation and the working relationship

between NIST and NSA.

Chapter 3 examines legal issues including: discussion of nonrepudiation services and digital signatures for electronic commerce; the Privacy Act

of 1974 and the implications for the United States

of privacy initiatives in the European Union; and

copyright for networked information and multimedia works.

D National Cryptography Policy

The federal government faces a fundamental tension between two important policy objectives: 1 )

fostering the development and widespread use of

cost-effective information safeguards, and 2) controlling the proliferation of safeguard technologies that can impair U.S. signals-intelligence and

law-enforcement capabilities. This tension runs

throughout the government activities as a developer, user, and regulator of safeguard technologies. This tension is manifested in concerns over

the proliferation of cryptography that could im-
Chapter 1 Introduction and Policy Summary 19

pair U.S. signals intelligence and law enforcement, and in the resulting struggle to control

cryptography through use of federal standards and

export controls.

Despite the growth in nongovernmental cryptographic research and safeguard development

over the past 20 years, the federal government still

has the most expertise in cryptography.12 Therefore, the federal information processing standards

developed by NIST substantially influence the development and use of safeguards based on cryptography in the private sector as well as in

government.

13 The nongovernmental market for

cryptography-based products has grown in the last

20 years or so, but is still developing, Export controls also have substantial significance for the development and use of these technologies.

Therefore, Congress’s choices in setting national

cryptography policies (including standards and

export controls) affect information security and

privacy in society as a whole.

Cryptography has become a technology of

broad application; thus, decisions about cryptography policy have increasingly broad effects on

society. The effects of policies about cryptography are not limited to technological developments

in cryptography, or even to the health and vitality

of companies that produce or use products incorporating cryptography. Instead, these policies will

increasingly affect the everyday lives of most

Americans: cryptography will be used to help ensure the confidentiality and integrity of health records and tax returns; it will help speed the way to

electronic commerce; and it will help manage

copyrighted material in electronic form.

Policy debate over cryptography used to be as

arcane as the technology itself. Most people didn't

regard government decisions about cryptography

as directly affecting their lives. However, as the

communications technologies used in daily life

have changed, concern over the implications of

privacy and security policies dominated by national security objectives has grown dramatically y,

particularly in business and academic communities that produce or use information safeguards,

but among the general public as well. This concern is reflected in the ongoing debates over keyescrow encryption and the government’s

Escrowed Encryption Standard (EES).14

Previously, control of the availability and use

of cryptography was presented as a national-security issue focused outward, with the intention of

maintaining a U.S. technological lead over other

countries. Now, with an increasing policy focus

on domestic crime and terrorism, the availability

and use of cryptography has also come into prominence as a domestic-security, law-enforcement

issue. More widespread foreign use of cryptography—including use by terrorists and developing

countries-makes U.S. signals intelligence more

difficult. Within the United States, cryptography

is increasingly portrayed as a threat to domestic

security (public safety) and a barrier to law enforcement if it is readily available for use by terrorists or criminals. There is also growing

‘ 2 -I-k gok c~ à mrmntal rmmopoly on cryptography has been eroding. Over the past three decades, the gm’cmment siruggle for c(mtr{~l has

been exacerbated by technological advances m computing and microelectronics that have made inexpensl~ e cryp[t~graph) potentially ublqul -

t(ms, and by mcreasmg private-sector capabilities m cryptography (as evidenced by independent devch~pment of c(mmlcrcial. publlc-hq tmcv ptl(m systems). These de}eh)prnents have made p)ssible the Increasing rel]ance on digital c(mm~unicati~ms and tnft)m~atl(m prtwess]ng ftw

c(m~nwrctal transactifms and (jperatitms in [he public and pn~ate sectors. Together, they have enabled and supp}rtcd a grt~u Ing tnclu~t~ scgnwrrt ~)ffcmng a variety of hardware- and software-based in fomlation safeguards based on c~ ptography.

I \ With re$p.ct t. ~nf{)mlatl{)n safegutids based on Cryptography, nati(mal-security concerns shape the safeguard standards (I.e. the F]pS)

a~atlable to agcncws for safeguarding unclassified in f(mnati(m. Theref(we, these c(mcems also affect civilian agencies that arc usual]) m~t

(h(~ught of [n c(~njuncti(m with nati(mal security.

I ~ ~c EES is intended for use in safeguarding voice, facsimile, (jr c(m]puter data ctmmmnicated in a telephone SJ stem. me Cllpper chip ls

des]gned for use in teleph(me systems; it c(mtains the EES encryption algorithm, called SKIPJACK. The Clipper-chip IS being used in the AT&T

Surlty Telephtme Dewce 3600, which has a retail price ~}f ahmt $1,100.
10 I Information Security and Privacy in Network Environments

recognition of the potential misuses of cryptography, such as by disgruntled employees as a means

to sabotage an employer’s databases. Thus, export

controls, intended to restrict the international

availability of U.S. cryptography technology and

products, are now being joined with domestic

cryptography initiatives intended to preserve U.S.

law-enforcement and signals-intelligence capabilities.

Federal Information Processing Standards

Based on Cryptography

The Escrowed Encryption Standard has been promulgated by the Clinton Administration as a voluntary alternative to the original federal

encryption standard used to safeguard unclassified information, the Data Encryption Standard

(DES). A key-escrowing scheme is built in to ensure lawfully authorized electronic surveillance

when key-escrow encryption is used (see box 2-7

and box 4-2). The federal Digital Signature Standard (DSS) uses a public-key signature technique

but does not offer public-key encryption or keymanagement functions (see box 4-4). Therefore,

it cannot support secure exchange of cryptographic keys for use with the DES or other encryption

algorithms.

In OTA’s view, both the EES and the DSS are

federal standards that are part of a long-term control strategy intended to retard the general availability of “unbreakable” or “hard to break”

cryptography within the United States, for reasons

of national security and law enforcement. It appears that the EES is intended to complement the

DSS in this overall encryption-control strategy, by

discouraging future development and use of encryption without built-in law enforcement access,

in favor of key-escrow encryption and related

technologies. Wide use of the EES and related

technologies could ultimately reduce the variety

of other cryptography products through market

dominance that makes the other products more

scarce or more costly.

Concerns over the proliferation of encryption

that have shaped and/or retarded federal standards

development have complicated federal agencies’

technological choices. For example, as appendix

C explains, national security concerns regarding

the increasingly widespread availability of robust

encryption-and, more recently, patent problems-contributed to the extraordinarily lengthy

development of a federal standard for digital signatures: NIST first published a solicitation for

public-key cryptographic algorithms in 1982, and

the DSS was finally approved in May 1994.

Public-key cryptography can be used for digital

signatures, for encryption, and for secure distribution or exchange of cryptographic keys. The DSS

is intended to supplant, at least in part, the demand

for other public-key cryptography by providing a

method for generating and verifying digital signatures. However, while the DSS algorithm is a public-key signature algorithm, it is not a public-key

encryption algorithm (see box 4-4). That means,

for example, that it cannot be used to securely distribute “secret” encryption keys, such as those

used with the DES algorithm (see figure 2-4).

Some sort of interoperable (i.e., standardized)

method for secure key exchange is still needed. ] 5

As this report was completed, the DSS had been

IS One pub]ic.key a]gori~m Mat can be used for key distribution is the “RSA” algorithm; the RSA algorithm Cm encrypt. ne llSA SWem

was proposed in 1978 by Ronald Rivest, Adi Shamir, and Leonard Adleman. The Diffle-Hellman technique is another method for key generation and exchange; it does not encrypt (see figure 2-5).
Chapter 1 Introduction and Policy Summary I 11

issued, but there was no FIPS for public-key key

exchange. 16

The lengthy evolution of the DSS meant that

federal agencies had begun to look to commercial

products (e.g., based on the Rivest-Shamir-Adleman, or RSA, system) to meet immediate needs for

digital signature technology. The introduction of

the EES additionally complicates agencies’ technological choices, in that the EES and related government key-escrowing techniques (e.g., for data

communication or file encryption) for may not become popular in the private sector for some time,

if at all. As this report was finalized, the EES has

not yet been embraced within government and is

largely unpopular outside of government. Therefore, agencies may need to support multiple encryption technologies both for transactions (i.e.,

signatures) and for communications (i.e., encryption, key exchange) with each other, with the public, and with the private sector.

In July 1994, Vice President Al Gore indicated

the Clinton Administration’s willingness to explore industry alternatives for key-escrow encryption, including techniques based on unclassified

algorithms or implemented in software.17 These

alternatives would be used to safeguard information in computer networks and video networks;

the EES and Clipper chip would be retained for

telephony. Whether the fruits of this exploration

result in increased acceptance of key-escrow encryption within the United States and abroad will

not be evident for some time.

U.S. Export Controls on Cryptography

The United States has two regulatory regimes for

exports, depending on whether the item to be exported is military in nature, or is “dual- use,” having both civilian and military uses. These regimes

are administered by the State Department and the

Commerce Department, respectively. Both regimes provide export controls on selected goods

or technologies for reasons of national security or

foreign policy. Licenses are required to export

products, services, or scientific and technical data

originating in the United States, or to re-export

these from another country. Licensing requirements vary according to the nature of the item to

be exported, the end use, the end user, and, in some

cases, the intended destination. For many items,

no specific approval is required and a ‘*general license” applies (e.g., when the item in question is

not military or dual-use and/or is wide] y available

from foreign sources). In other cases, an export

license must be applied for from either the State

Department or the Commerce Department, depending on the nature of the item. In general, the

State Department’s licensing requirements are

more stringent and broader in scope. 18

Software and hardware for robust, user-controlled encryption are under State Department

control. unless State grants jurisdiction to Commerce. This has become increasingly controversial, especial] y for the information technology and

software industries. The impact of export controls

10 Tw,() inlplen)en[at[{)ns ~)( [he E~s ~ncgptl(}~ ~lgor[[hr,] [hat a~~ us~(j In ~~t~ ~or]lrllunl~~[lons-t}lc” (“(//) fl{)nc 01//) ;llld the T~-.\.\fi-//z\

carddo contain a publ]c-lwy Key Exchange Alg(mthrn ( KEA ). Hmve\ cr, at this ritlng, the Kc) Exch:inge Algtmthm 1~ m~t part (~fany FIPS.

Therefore, (Jrganizatltms that do not use Capstone f~r TESSERA still need to select a secure and hmmqwrablc f(mm t~f l+ di\trlbuti(m. Ilc

Capsttme chip is used for data comrnimications and c(mtalns the EES algorithm (callc(’ SKIPJACK), as well as dtgltid-signature and he) -c\-

change functi(ms. However, at th]s writing, the Key E\change Algorithm is not part of any FIPS. Therefore, (~rgimizall[ms that do m)t usc Capsume (w TESSERA slill need to select a secure and intm(~perable foml of Key dlstrlbutl(m. TESS ERA IS a PCMC’I A ~id [hiit ct~n(il[ns ii Cilp\ton~

chip.

~ 7 Vice ~e51~en[ Al @re, letter (() Reprcstm[atiw Maria Cantwcll, July 20, 1994. SW also Nell Munro, ‘“The Key tt~ Clipper Available t{) the

W(mld,” Washington Tcchrrolog], July 28.1994, pp. 1, 18.

18 F{)r a C(,mparlson ,Jf the tw,() ~KV)~.controj” ~cglnlc~, sec U,S, ~,cn~ral A~c(Iuntlng of fiC.C, fi”~p[lr] [’~jr?]r<>/,$: /.$ $uc.$ ~n Rcm{)) ;/,,: ,\f///larYtYt

.%n.f~flte IIem.fjiwn the MImIII~m.$ I.1$1, GAO NSIAD-93-67 (Washlngt(m, DC tJ.S. Gt)\cmnwnt Printing Oflke. March 1993), ~sp>~iiill]r pp.

10- I 3.
12 I Information Security and Privacy in Network Environments

on the overall cost and availability of safeguards is

especially troublesome to business and industry at

a time when U.S. high-technology firms find

themselves as targets for sophisticated foreign-intelligence attacks and thus have urgent need for

sophisticated safeguards that can be used in operations worldwide. 19 Moreover, software producers

assert that several other countries do have more relaxed export controls on cryptography.

On the other hand, U.S. export controls may

have substantially slowed the proliferation of

cryptography to foreign adversaries over the

years. Unfortunately, there is little public explanation regarding the degree of success of these export controls and the necessity for maintaining

strict controls on strong cryptography in the face

of foreign supply and networks like the Internet

that seamlessly cross national boundaries. (See

the OTA report Export Controls and Nonproliferation Policy, OTA-ISS-596, May 1994, for a general discussion of the costs and benefits of export

controls on dual-use goods.)

New licensing procedures were expected to appear in the Federal Register in summer 1994; they

had not appeared by the time this report was completed. Changes were expected to include license

reform measures to reduce the need to obtain individual licenses for each end user, rapid review of

export license applications, personal-use exemptions for U.S. citizens temporarily taking encryption products abroad for their own use, and special

licensing arrangements allowing export of key-escrow encryption products (e.g., EES products) to

most end users.20 The Secretary of State has asked

encryption-product manufacturers to evaluate the

impact of these reforms over the next year and provide feedback on how well they have worked, as

well as recommendations for additional procedural reforms.

In the 103d Congress, legislation intended to

streamline export controls and ease restrictions on

mass-market computer software, hardware, and

technology, including certain encryption software, was introduced by Representative Maria

Cantwell (H.R. 3627) and Senator Patty Murray

(S. 1846). In considering the Omnibus Export Administration Act (H.R. 3937), the House Committee on Foreign Affairs reported a version of the bill

in which most computer software (including software with encryption capabilities) was under

Commerce Department controls and in which export restrictions for mass-market software with

encryption were eased.21 In its report, the House

Permanent Select Committee on Intelligence

struck out this portion of the bill and replaced it

with a new section calling for the President to report to Congress within 150days of enactment, regarding the current and future international

market for software with encryption and the economic impact of U.S. export controls on the U.S.

computer software industry.22

At this writing, the omnibus export administration legislation was still pending. Both the House

and Senate bills contained language calling for the

Clinton Administration to conduct comprehensive studies on the international market and availability of encryption technologies and the

economic effects of U.S. export controls. In his

July 20, 1994 letter to Representative Cantwell,

19 The Threa/ @Foreign EcWWT)Ic Esplo~ge to U.S. Corporations, Hearings Before the Subwmmittee on Economic and cOTTUWCld

Law, House Committee on the Judiciary, Serial No. 65, 102d Cong., 2d sess., Apr. 29 and May 7, 1992.

20 Rose Biancaniello, Office of Defense Trade Controls, Bureau of Political-Military Affairs, U.S. Department of State, personal comnwnicati(m, May 24, 1994.

2

1 U.S. Congress, House of Representatives, Omnibus E.vporf Administration Act of f994, H. Rept. 103-531, 103d Cong., 2d sess., Parts I

(Committee on Foreign Affairs, May 25, 1994),2 (Permanent Select Committee on Intelligence, June 16, 1994), 3 (Committee on Ways and

Means, June 7, 1994), and 4 (Committee on Armed Services, June 17, 1994) (Washington, DC, U.S. Government Printing Office, 1994); and

H.R. 4663 (Omnibus Export Administration Act of 1994, June 28. 1994). Forthe cryptography provisions, see Omnibus E.xporr Adminisfrafion

Acf of )994, Part 1, pp. 57-58 (H.R. 3937, sec. 1 I 7(c)(l )-(4)).

22 Omn;bils E.~p~rf Adminis[rafion Act of)994, PaII 2, pp. 1-5 (H.R. 393_I’, sec. 11 7(c) ( I )-(~)).
Chapter 1 Introduction and Policy Summary 113

Vice President Gore assured her that the “best

available resources of the federal government”

would be used in conducting these studies and that

the Clinton Administration will “reassess our existing export controls based on the results of these

studies.”23

Implementation of the Computer

Security Act of 1987

The Computer Security Act of 1987 is fundamental to development of federal standards for safeguarding unclassified information, balancing

national-security and other objectives in implementing security and privacy policies within the

federal government, and issues concerning government control of cryptography. Moreover, review of the controversies and debate surrounding

the act—and subsequent controversies over its

implementation—provides background for understanding current issues concerning the EES

and the DSS.

The Computer Security Act of 1987 (see text in

appendix B) was a legislative response to overlapping responsibilities for computer security among

several federal agencies, heightened awareness of

computer security issues, and concern over how

best to control information in computerized or

networked form. The act established a federal

government computer-security program that

would protect all sensitive, but unclassified, information in federal government computer systems and would develop standards and guidelines

to facilitate such protection. Specifically, the

Computer Security Act assigned responsibility

for developing government-wide, computer-system security standards and guidelines and security-training programs to the National Bureau of

Standards (now the National Institute of Standards and Technology, or NIST). The act also established a Computer System Security and

Privacy Advisory Board within the Department of

Commerce, and required Commerce to promulgate regulations based on NIST guidelines. Additionally, the act required federal agencies to

identify computer systems containing sensitive

information, to develop security plans for identified systems, and to provide periodic training in

computer security for all federal employees and

contractors who manage, use, or operate federal

computer systems.

In its workshops and discussions with federal

employees and knowledgeable outside observers,

OTA found that these provisions of the Computer

Security Act are viewed as generally adequate as

written, but that their implementation can be problematic. OTA found strong sentiment that agencies follow the rules set forth by the Computer

Security Act, but not necessarily the full intent of

the act (also see discussion of OMB Circular

A-130 below).

The Computer Security Act gave final authority for developing government-wide standards

and guidelines for unclassified, but sensitive, information and for developing government-wide

training programs to NIST (then the National Bureau of Standards). In carrying out these responsibilities, NIST can draw on the substantial

expertise of NSA and other relevant agencies.

Implementation of the Computer Security Act

has been especially controversial regarding the

roles of NIST and NSA in standards development.

A 1989 memorandum of understanding (MOU)

between the Director of NIST and the Director of

NSA established the mechanisms of the working

relationship between the two agencies in implementing the act.24 This memorandum of understanding has been controversial. Observers—

including OTA-consider that it appears to cede

~~ VICC President Al G(we, f)p, ctt., ft~(~tnote 17.

‘q Memorandum of L’nderstandlng Betw ccn the Director of the National Institute of Standards and Technology and the Director of [he Natt(mal Sccurtty Agency C(mccming the Implementati(m of Public Law 100-235, Mar. 23, 1989. (See text of MOU in appendix B.)
14 I Information Security and Privacy in Network Environments

to NSA much more authority than the act itself

had granted or envisioned, especially considering

the House report accompanying the legislation.25

The joint NIST/NSA Technical Working

Group (TWG) established by the memorandum of

understanding merits particular attention. The

MOU authorizes NIST and NSA to establish the

working group to “review and analyze issues of

mutual interest pertinent to protection of systems

that process sensitive or other unclassified information.” Where the act had envisioned NIST

calling on NSA’s expertise at its discretion, the

MOU’s working-group mechanism involves NSA

in all NIST activities related to information-security standards and technical guidelines, as well as

proposed research programs that would support

them.

For example, the standards-appeal mechanism

set forth in the Computer Security Act allowed the

President to disapprove or modify standards or

guidelines developed by NIST and promulgated

by the Secretary of Commerce, if he or she determined such an action to be in the public interest.

Should the President disapprove or modify a standard or guideline that he or she determines will not

serve the public interest, notice must be submitted

to the House Committee on Government Operations and the Senate Committee on Governmental

Affairs, and must be published promptly in the

Federal Register. 26 By contrast, interagency discussions and negotiations by agency staffs under

the MOU can result in delay, modification, or

abandonment of proposed NIST standards activities, without notice or the benefit of oversight that

is required by the appeals mechanism set forth in

the Computer Security Act.

Thus, the provisions of the memorandum of

understanding give NSA power to delay and/or

appeal any NIST research programs involving

“technical system security techniques” (such as

encryption), or other technical activities that

would support (or could lead to) proposed standards or guidelines that NSA would ultimately

object to.27

NIST and NSA disagree with these conclusions. According to NIST and NSA officials who

reviewed a draft of this report, NIST has retained

its full authority in issuing federal information

processing standards and NSA’s role is merely advisory. In discussions with OTA, officials from

both agencies maintained that no part of the MOU

is contrary to the Computer Security Act of 1987,

and that the controversy and concerns are due to

“misperceptions.” 28

When OTA inquired about the MOU/TWG appeals process in particular, officials in both agencies maintained that the appeals process does not

conflict with the Computer Security Act of 1987

because it concerns proposed research and development projects that could lead to future NIST

standards, not fully developed NIST standards

submitted to the Secretary of Commerce or the

President. 29 In discussions with OTA, senior

NIST and NSA staff stated that the appeals mechanism specified in the Computer Security Act has

never been used, and pointed to this as evidence of

how well the NIST/NSA relationship is working

in implementing the act.30 In discussions with

OTA staff regarding a draft of this OTA report,

Clinton Brooks, Special Assistant to the Director

of NSA, stated that cryptography presents special

‘f U.S. House of Representatives, Computer Securi/yAct of 1987-Report to AccompanyH.R. /45, H. Rept. No. 100-153, Part 1 (Committee

on Science, Space, and Technology) and Pd. t 11 (Committee on Government Operations), 100th Cong., I st sess., June 11, 1987.

26 Public Law 100-235, sec. 4. The President cannot delegate authority to disapprove or modify proposed NIST standards

27 M(XJ, op. cit., footnote 24, sees. 111(5)-(7).

‘g OTA staff interviews with NIST and NSA officials in October 1993 and January 1994.

29 OTA staff interviews, ibid.

30 OTA staff intenlew wl~ M. Rubin (Wputy Chief t3mnsel, NIST) on Jan. 13, 1994 and with four NSA representatives on Jan. lg~ ~ 99’$,
Chapter 1 Introduction and Policy Summary 115

problems with respect to the Computer Security

Act, and that if NSA waited until NIST announced

a proposed standard to voice national security

concerns, the technology would already be “out”

via NIST’s public standards process.31

However, even if implementation of the Computer Security Act of 1987, as specified in the

MOU, is satisfactory to both NIST and NSA, this

is not proof that it meets Congress’s expectations

in enacting that legislation. Moreover, chronic

public suspicions of and concerns with federal

safeguard standards and processes are counterproductive to federal leadership in promoting responsible use of safeguards and to public confidence in

government.

It may be the case that using two executive

branch agencies as the means to effect a satisfactory balance between national security and other

public interests in setting safeguard standards will

inevitably be limited, due to intrabranch coordination mechanisms in the National Security Council

and other bodies. These natural coordination

mechanisms will determine the balance between

national-security interests, law-enforcement interests, and other aspects of the public interest.

The process by which the executive branch

chooses this balancing point may inevitably be

obscure outside the executive branch. (For example, the Clinton Administration’s recent cryptography policy study is classified, with no public

summary.)

Public visibility into the decision process is

only through its manifestations in a FIPS, in export policies and procedures, and so forth. When

the consequences of these decisions are viewed by

many of the public as not meeting important

needs, or when the government preferred technical “solution” is not considered acceptable, a lack

of visibility, credible explanation, and/or useful

alternatives fosters mistrust and frustration.

Technological variety—having a number of alternatives to choose from—is important in meeting the needs of a diversity of individuals and

communities. Sometimes federal safeguard standards are accepted as having broad applicability.

But it is not clear that the government can--or

should--develop all-purpose technical safeguard

standards, or that the safeguard technologies being issued as FIPS can be made to meet the range

of user needs. More open processes for determining how safeguard technologies are to be developed and/or deployed throughout society can

better ensure that a variety of user needs are met

equitably. If it is in the public interest to provide a

wider range of technical choices than those provided by government-specified technologies (i.e.,

the FIPS), then vigorous academic and privatesector capabilities in safeguard technologies are

required.

More open policies and processes can be used

to increase equity and acceptance in implementing cryptography and other technologies. The current controversies over cryptography can be

characterized in terms of tensions between the

government and individuals. They center on the

issue of trust in government. Trust is a particular

issue in cases like cryptography, when nationalsecurity concerns restrict the equal sharing of information between the government and the

public. Government initiatives of broad public application, formulated in secret and executed without legislation, naturally give rise to concerns

over their intent and application. The process by

which the EES was selected and approved was

closed to those outside the executive branch. Furthermore, the institutional and procedural means

by which key-escrow encryption is being

deployed (such as the escrow-management procedures) continue to be developed in a closed forum.

The Clinton Administration made a start at

working more closely and more openly with industry through a “Key Escrow Encryption Workshop” held at NIST on June 10, 1994. The

workshop was attended by representatives of

many of the leading computer hardware and software companies, as well as attendees from gov-

~ I C]ln[on Br(x)ks, s~cia] Assistant to the Director, NSA, personal communication, May’ 2$ 1994.
16 I Information Security and Privacy in Network Environments

ernment and academia. The proposed action plan

subsequent to the NIST workshop called for the

establishment of joint industry-government

working groups (with NIST leadership) to: evaluate all known key-escrowing proposals according to criteria jointly developed by government

and industry, hold a public seminar/workshop to

discuss and document the results of this analysis,

and prepare a report to be used as the basis for subsequent discussions between government officials and the private sector. Based on the

discussion and industry presentations at the meeting, there was increasing interest in exploring

“other” approaches to key-escrow encryption that

can be implemented in software, rather than just in

hardware.

On July 20, 1994, acknowledging industry’s

concerns regarding encryption and export policy,

Vice President Gore sent a letter to Representative

Cantwell that announced a "new phase” of cooperation among government, industry, and privacy

advocates. This will include working with industry to explore alternative types of key-escrow encryption, such as those based on unclassified

algorithms or implemented in software; escrowsystem safeguards, use of nongovernmental keyescrow agents, and liability issues will also be

explored. This is in the context of computer and

video networks, not telephony; the present EES

(e.g., in the Clipper chip) would still be used for

telephone systems.

Congressional Review of

Cryptography Policy

Congress has vital, strategic roles in cryptography

policy and, more generally, in safeguarding information and protecting personal privacy in a

networked society. Recognizing the importance

of the technology and the policies that govern its

development, dissemination, and use, Congress

has asked the National Research Council (NRC)

to conduct a major study that would support a

broad review of cryptography.

The results of the NRC study are expected to be

available in 1996. But, given the speed with which

the Clinton Administration is acting, information

to support a congressional policy review of cryptography is out of phase with the government’s

implementation of key-escrow encryption. Therefore:

OPTION: Congress could consider placing a hold on

further deployment of key-escrow encryption, pending

a congressional policy review.

An important outcome of a broad review of national cryptography policy would be the development of more open processes to determine how

cryptography will be deployed throughout society. This deployment includes development of the

public-key infrastructures and certification authorities that will support electronic delivery of

government services, copyright management, and

digital commerce.

More open processes would build trust and

confidence in government operations and leadership. More openness would allow diverse stakeholders to understand how their views and

concerns were being balanced with those of others, in establishing an equitable deployment of

these technologies, even when some of the specifics of the technology remain classified. (See also

the policy section below on safeguarding information in federal agencies.) More open processes

would also allow for public consensus-building,

providing better information for use in congressional oversight of agency activities. Toward

these ends:

OPTION: Congress could address the extent to which

the current working relationship between NIST and NSA

will be a satisfactory part of this open process, or the extent to which the current arrangements should be reevaluated and revised.

Another important outcome of a broad policy

review would be a clarification of national information-policy principles in the face of technological change:
Chapter 1 Introduction and Policy Summary I 17

OPTION: Congress could state its policy as to when the

impacts of a technology (like cryptography) are so

powerful and pervasive that legislation is needed to

provide sufficient pubic visibility and accountability for

government actions.

For example, many of the concerns surrounding the Escrowed Encryption Standard and the

Clinton Administration’s escrowed-encryption

initiative, in general, focus on whether key-escrow encryption will become mandatory for government agencies or the private sector, if

nonescrowed encryption will be banned, and/or if

these actions could be taken without legislation.

Other concerns focus on whether or not alternative

forms of encryption would be available that would

allow private individuals and organizations the

option of depositing keys (or not) with one or

more third-party trustees—at their discretion.32

The National Research Council study should

be valuable in helping Congress to understand the

broad range of technical and institutional alternatives available for various types of trusteeships for

cryptographic keys, “digital powers of attorney,”

and the like. However, if implementation of the

EES and related technologies continues at the current pace, key-escrow encryption may already be

embedded in information systems before Congress can act on the NRC report.

As part of a broad national cryptography

policy, Congress may wish to periodically examine export controls on cryptography, to ensure

that these continue to reflect an appropriate balance between the needs of signals intelligence and

law enforcement and the needs of the public and

business communities. This examination would

take into account changes in foreign capabilities

and foreign availability of cryptographic technologies. Information from industry on the results of

licensing reforms and the executive branch study

of the encryption market and export controls that

was included in the 1994 export-administration

legislation should provide some near-term information.

However, the scope and methodology of the export-control studies that Congress might wish to

use in the future may differ from these. Therefore:

OPTION: Congress might wish to assess the validity

and effectiveness of the Clinton Administration's studies of export controls on cryptography by conducting

oversight hearings, by undertaking a staff analysis, or

by requesting a study from the Congressional/ Budget

Office.

Congressional Responses to

Escrowed-Encryption Initiatives

Congress also has a more near-term role to play in

determining the extent to which—and how—the

EES and other escrowed-encryption systems will

be deployed in the United States. These actions

can be taken within a long-term, strategic framework. Congressional oversight of the effectiveness of policy measures and controls can allow

Congress to revisit these issues as needed, or as

the consequences of previous decisions become

more apparent.

The Escrowed Encryption Standard (Clipper)

was issued as a voluntary FIPS; use of the EES by

the private sector is also voluntary. The Clinton

Administration has stated that it has no plans to

make escrowed encryption mandatory, or to ban

other forms of encryption. But, absent legislation,

these intentions are not binding for future administrations and also leave open the question of what

will happen if the EES and related technologies do

not prove acceptable to the private sector. Moreover, the executive branch may soon be using the

EES and/or related escrowed-encryption technologies to safeguard—among other things—large

~Z ~ere ~e ~ea~on~ ~hy ~)rganlzallons and indlviduals might want the op[ion {Jf placing c(~pks of cryptographic keYs “ith th’r~-PW’

trustees (m custodians offheu- oun choosing. For example, there is growing recogniti(m of the problems that could occur if cryptography is used

m corp)rati(ms w ith(mt adequate key management and without override capabilities by responsible corporate officers. These problems could

include data being rendered inaccessible after having been encrypted by employees who subsequently leave the c(m~pany ((w die).
18 I Information Security and Privacy in Network Environments

volumes of private information about individuals

(e.g., taxpayer data, health-care information, and

SO forth).

For these reasons, the EES and other key-escrowing initiatives are by no means only an executive branch concern. The EES and any subsequent

escrowed-encryption standards also warrant congressional attention because of the public funds

that will be spent in deploying them. Moreover,

negative public perceptions of the EES and the

processes by which encryption standards are developed and deployed may erode public confidence and trust in government and, consequently,

the effectiveness of federal leadership in promoting responsible safeguard use.

In responding to current escrowed-encryption

initiatives like the EES, and in determining the extent to which appropriated funds should be used in

implementing key-escrow encryption and related

technologies:

OPTION: Congress could address the appropriate

locations of the key-escrow agents, particularly for federal agencies, before additional investments are made

in staff and facilities for them. Public acceptance of keyescrow encryption might be improved-but not assured—by an escrowing system that used separation

of powers to reduce perceptions of the potential for misuse.

With respect to current escrowed-encryption

initiatives like the EES, as well as any subsequent

key-escrow encryption initiatives, and in determining the extent to which appropriated funds

should be used in implementing key-escrow encryption and related technologies:

OPTION: Congress could address the issue of criminal

penalties for misuse and unauthorized disclosure of escrowed key components.

OPTION: Congress could consider allowing damages

to be awarded for individuals or organizations who were

harmed by misuse or unauthorized disclosure of escrowed key components.

1 Safeguarding Information

in Federal Agencies

Congress has an even more direct role in establishing the policy guidance within which federal

agencies safeguard information, and in oversight

of agency and OMB measures to implement information security and privacy requirements. The

Office of Management and Budget is responsible

for developing and implementing governmentwide policies for information resource management; for overseeing the development and

promoting the use of government informationmanagement principles, standards, and guidelines; and for evaluating the adequacy and

efficiency of agency information-management

practices. Information-security managers in federal agencies must compete for resources and support to properly implement needed safeguards. In

order for their efforts to succeed, both OMB and

top agency management must fully support investments in cost-effective safeguards. Given the

expected increase in interagency sharing of data,

interagency coordination of privacy and security

policies is also necessary to ensure uniformly adequate protection.

The forthcoming revision of Appendix 111

(“Agency Security Plans”) of OMB Circular

A-1 30 is central to improved federal information

security practices. The revision of Appendix 111

will take into account the provisions and intent of

the Computer Security Act, as well as observations

tices

regarding agency security plans and practhat resulted from a series of agency visits
Chapter 1 Introduction and Policy Summary 119

made by OMB, NIST, and NSA in 1992.33 In

practice, there are both insufficient incentives for

compliance and insufficient sanctions for noncompliance with the spirit of the Computer Security Act. (For example, agencies do develop the

required security plans; however, the act does not

require agencies to review them periodically or

update them as technologies or circumstances

change. One result of this is that, “[security of

systems tends to atrophy over time unless there is

a stimulus to remind agencies of its importance.” 34 Another result is that agencies may not

treat security as an integral component when new

systems are being designed and developed.)

The forthcoming revision of Appendix III of

OMB Circular A-130 should lead to improved

federal information-security practices. According

to OMB, the revision of Appendix 111 will take

into account the provisions and intent of the Computer Security Act of 1987, as well as observations

regarding agency security plans and practices

from agency visits. To the extent that the revised

Appendix III facilitates more uniform treatment

across agencies, it can also make fulfillment of

Computer Security Act and Privacy Act requirements more effective with respect to data sharing

and secondary uses.

The revised Appendix 111 had not been issued

by the time this report was completed. Although

the Office of Technology Assessment discussed

information security and privacy issues with

OMB staff during interviews and a December

1993 OTA workshop, OTA did not have access to

a draft of the revised security appendix. Therefore,

OTA was unable to assess the revision’s potential

for improving information security in federal

agencies, for holding agency managers accountable for security, or for ensuring uniform protection in light of data sharing and secondary uses.

After the revised Appendix III of OMB Circular A-130 is issued:

OPT/O/V: Congress could assess the effectiveness of

the OMB's revised guide/ines, including improvements

in implementing the Computer Security Acts provisions

regarding agency security plans and training, in order

to determine whether additional statutory requirements

or oversight measures are needed.

This might be accomplished by conducting

oversight hearings, undertaking a staff analysis,

and/or requesting a study from the General Accounting Office. However, the effects of OMB’s

revised guidance may not be apparent for some

time after the revised Appendix 111 is issued.

Therefore, a few years may pass before GAO is

able to report government-wide findings that

would be the basis for determining the need for

further revision or legislation. In the interim:

OPTION: Congress could gain additional insight

through hearings to gauge the reaction of agencies, as

we// as privacy and security experts from outside government, to OMB's revised guidelines.

Oversight of this sort might be especially valuable for agencies, such as the Internal Revenue

Service, that are developing major new information systems.

In the course of its oversight and when considering the direction of any new legislation:

OPT/ON: Congress could ensure that agencies include

explicit provisions for safeguarding information assets

in any information-technology planning documents.

~~ OffIce of Managemcn( ~d Budget (in ct~njuncti{~n with N]sT and NSA), observations of Agency Computer Security practices and 1~1-

plcmcntatl(m of OMB Bulletin No. 90-08: “Guidance for Preparation of Security Plans for Federal Computer Sy stems That Contain Sensitive

Inf{)m]ati{m,” February 1993.

34 Ibid., p. I I.
20 I Information Security and Privacy in Network Environments

OPTION: Congress could ensure that agencies budget

sufficient resources to safeguard information assets,

whether as a percentage of information-technology

modernization and/or operating budgets, or otherwise.

OPTION: Congress could ensure that the Department

of Commerce assigns sufficient resources to N/ST to

support its Computer Security Act responsibilities, as

we// as NIST's other activities related to safeguarding information and protecting privacy in networks.

Regarding NIST's computer-security budget,

OTA has not determined the extent to which additional funding is needed, or the extent to which

additional funding would improve the overall effectiveness of NIST’s information-security activities. However, in staff discussions and workshops,

individuals from outside and within government

repeatedly noted that NIST’s security activities

were not proactive and that NIST often lagged in

providing useful and needed standards (the FIPS)

and guidelines. Many individuals from the private

sector felt that NIST’s limited resources for security activities precluded NIST from doing work

that would also be useful to industry. Additional

resources, whether from overall increases in

NIST’s budget and/or from formation of a new Information Technology Laboratory, could enhance

NIST’s technical capabilities, enable it to be more

proactive, and hence be more useful to federal

agencies and to industry.

NIST activities with respect to standards and

guidelines related to cryptography are a special

case, however. Increased funding alone will not be

sufficient to ensure NIST’s technological leadership or its fulfillment of the “balancing” role as envisioned by the Computer Security Act of 1987.

With respect to cryptography, national-security

constraints set forth in executive branch policy directives appear to be binding, implemented

through executive branch coordinating mechanisms including those set forth in the NIST/NSA

memorandum of understanding. These

constraints have resulted, for example, in the

closed processes by which the FIPS known as the

Escrowed Encryption Standard (Clipper) was developed and implemented. Increased funding

could enable NIST to become a more equal partner to NSA, at least in deploying (if not developing) cryptographic standards. But, if NIST/NSA

processes and outcomes are to reflect a different

balance of national security and other public interests, or more openness, than has been evidenced

over the past five years, clear policy guidance and

oversight will be needed.

1 Legal Issues and Information Security

Laws evolve in the context of the mores of the

culture, business practices, and technologies of

the time. The laws currently governing commercial transactions, data privacy, and intellectual

property were largely developed for a time when

telegraphs, typewriters, and mimeographs were

the commonly used office technologies and business was conducted with paper documents sent by

mail. Technologies and business practices have

dramatically changed, but the law has been slower

to adapt. Computers, electronic networks, and information systems are now used to routinely process, store, and transmit digital data in most

commercial fields. Changes in communication

and information technologies are particularly significant in three areas: electronic commerce, privacy and transborder data flow, and digital

libraries.

Electronic Commerce

As businesses replace conventional paper documents with standardized computer forms, the

need arises to secure the transactions and establish

means to authenticate and provide nonrepudiation

services for electronic transactions, that is, a

means to establish authenticity y and certify that the

transaction was made. Absent a signed paper document on which any nonauthorized changes could

be detected, a digital signature to prevent, avoid,

or minimize the chance that the electronic document has been altered must be developed. In contrast to the courts’ treatment of conventional,

paper-based transactions and records, little guidance is offered as to whether a particular safeguard
Chapter 1 Introduction and Policy Summary 121

technique, procedure, or practice will provide the

requisite assurance of enforceability in electronic

form. This lack of guidance concerning security

and enforceability is reflected in the diversity of

security and authentication practices used by

those involved in electronic commerce.

Legal standards for electronic commercial

transactions and digital signatures have not been

fully developed, and these issues have undergone

little review in the courts. Therefore, action by

Congress may not be warranted now. However:

OPTION: Congress could monitor the issue of legal

standards for electronic transactions and digital signatures, so that these are considered in future policy decisions about information security

Protection of Privacy in Data

Since the 1970s, the United States has concentrated its efforts to protect the privacy of personal

data collected and archived by the federal government. Rapid development of networks and information processing by computer now makes it

possible for large quantities of personal information to be acquired, exchanged, stored, and

matched very quickly. As a result, a market for

computer-matched personal data has expanded

rapidly, and a private-sector information industry

has grown around the demand for such data.

Increased computerization and linkage of information maintained by the federal government

is arguably not addressed by the Privacy Act,

which approaches privacy issues on an agencyby-agency basis. To address these developments:

OPT/ON: Congress could allow each agency to address privacy concerns indivldually through its present

system of review boards.

OPTION: Congress could require agencies to improve

the existing data integrity boards, with a charter to make

clearer policy decisions about sharing information and

maintaining its Integrity

OPTION: Congress could amend the existing law to include previsions addressing the sharing and matching

of data, or restructure the law overall to track the flow of

information between institutions.

OPT/ON: Congress could provide for public access for

individuals to information about themselves, and protocols for amendment and correction of personal information. It could also consider providing for online

publication of the Federal Register to improve public

notice about information collection and practices.

In deciding between courses of actions, Congress

could exercise its responsibility for oversight

through hearings and/or investigations, gathering

information from agency officials involved in privacy issues, as well as citizens, in order to gain a

better understanding of what kinds of actions are

required to implement better custodianship, a

minimum standard of quality for privacy protection, and notice to individuals about use and handling of information.

Although the United States does not comprehensively regulate the creation and use of such

data in the private sector, foreign governments

(particularly the European Union) do impose controls. The Organization for Economic Cooperation and Development (OECD) adopted

guidelines in 1980 to protect the privacy and

transborder flows of personal data. The difference

between the level of personal privacy protection in

the United States and that of its trading partners,

who in general more rigorously protect privacy,

could inhibit the exchange of data with these

countries. U.S. business has some serious concerns about the EU proposal, as it relates to the

data subject’s consent and the transfer of data to

non-EU countries.

In addressing the sufficiency of existing U.S.

legal standards for privacy and security in a networked environment for the private sector:

OPTION: Congress could Iegislate to set standards

similar to the OECD guidelines;
22 I Information Security and Privacy in Network Environments

or,

OPTION: Congress could allow individual interests,

such as the business community to advise the international community on its own of its interests in data

protection policy However, because the EU's protection scheme could affect U.S. trade in services and

could impact upon individuals, Congress may also

wish to monitor and consider the requirements of foreign data protection rules as they shape U.S. security

and privacy policy to assure that all interests are reflected.

A diversity of interests must be reflected in addressing the problem of maintaining privacy in

computerized information-whether in the public

or private sector:

OPTION: Congress could establish a Federal Privacy

Commission.

Proposals for such a commission or board were

discussed by the Office of Technology Assessment in its 1986 study of Electronic Record Systems and Individual Privacy. OTA cited the lack

of a federal forum in which the conflicting values

at stake in the development of federal electronic

systems could be fully debated and resolved. As

privacy questions will arise in the domestic arena,

as well as internationally, a commission could

deal with these as well. Data protection boards

have been instituted in several foreign countries,

including Sweden, Germany, Luxembourg,

France, Norway, Israel, Austria, Iceland, United

Kingdom, Finland, Ireland, the Netherlands, Canada, and Australia.

The responsibilities and functions suggested

for a privacy commission or data protection board

are:

1. to identify privacy concerns, that is to function

essentially as an alarm system for the protection of personal privacy;

2.

3.

4.

5.

6.

to carry out oversight to protect the privacy interests of individuals in information-handling

activities;

to develop and monitor the implementation of

appropriate security guidelines and practices

for the protection of health care information;

to advise and develop regulations appropriate

for specific types of information systems:

to monitor and evaluate developments in information technology with respect to their implications for personal privacy in information;

and

to perform a research and reporting function

with respect to information privacy issues in

the United States.

Debate continues as to whether such a body

should serve in a regulatory or advisory capacity.

In the 103d Congress, legislation (S. 1735, the

Privacy Protection Act) that would establish a Privacy Protection Commission has been

introduced.

Protection of Intellectual Property in

the Administration of Digital Libraries

The availability of protected intellectual property in networked information collections, such as

digital libraries and other digital information

banks, is placing a strain on the traditional methods of protection and payment for use of intellectual property. Technologies developed for

securing information might hold promise for

monitoring the use of protected information, and

provide a means for collecting and compensating

the owners of intellectual property as well. The

application of intellectual-property law to protect

works maintained in digital libraries continues to

be problematic; traditional copyright concepts

such as fair use are not clearly defined as they apply to these works; and the means to monitor compliance with copyright law and to distribute

royalties is not yet resolved.

OTA addressed these issues in Finding a Balance: Computer Software, Intellectual Property,

and the Challenge of Technological Change,

OTA-TCT-527 (Washington, DC: U.S. Govern-
Chapter 1 Introduction and Policy Summary 123

ment Printing Office, May 1992). The 1992 report

included the following options to deal with the issue of fair use of works in electronic form:

● Congress could clarify the Copyright Act

fair-use guidelines with regard to lending, resource sharing, interlibrary loan, archival

and preservation copying, and copying for

patron use.

= Congress could establish legislative guidance

regarding fair use of works in electronic form

and what constitutes copying, reading, and

using;

or,

■ Congress could direct the Copyright Office,

with assistance from producers and users of

electronic information, to develop and disseminate practical guidelines regarding these

35 issues. -

With respect to questions raised concerning multimedia works, the 1992 OTA report suggested that:

= Congress could clarify the status of mixedmedia works, with regard to their protection

under copyright.36

During this assessment, OTA found that the

widespread development of multimedia authoring

tools—integrating film clips, images, music,

sound, and other content—raises additional issues

pertaining to copyright and royalties.

With respect to copyright for multimedia

works:

OPTION: Congress could allow the courts to continue

to define the law of copyright as it is applied in the world

of electronic information;

or,

OPT/ON: Congress could take specific legislative action to clarify and further define the copyright law in the

world of electronic information.

Instead of waiting for legal precedents to be established or developing new legislation, Congress

might try a third approach. This approach would

allow producer and user communities to establish

common guidelines for use of copyrighted, multimedia works:

OPT/ON: Congress could allow information providers

and purchasers to enter into agreements that would establish community guidelines without having the force

of law. In so doing, Congress could decide at some

point in the future to review the success of such an approach.

With respect to rights and royalties for copyrighted works:

OPT/ON: Congress could encourage private efforts to

form rights-c/earing and royalty-collection agencies for

groups of copyright owners

Alternatively,

OPTION: Congress might allow private-sector development of network tracking and monitoring capabilities to

support a fee-for-use basis for copyrighted works in

electronic form.

In the latter case, Congress might wish to review

whether a fee-for-use basis for copyrighted works

in electronic form is workable, from the standpoint of both copyright law and technological capabilities (e.g., Does it serve the fair-use

exception? Can network technologies effectively

address this question?). This might be accomplished by conducting oversight hearings, undertaking a staff analysis, and/or requesting a study

from the Copyright Office.

35 U.S. Congress, office of Technology Assessment, Finding a Balance: Computer Software, lnlelie~’luai property, atithe challenge ?f

Techno/ogica/ Change, OTA-TCT-527 (Washington, DC: U.S. Government Printing Office, May 1992), p. 35 (options 3.1, 3.2, and 3.3).

M Ibid,, p, 36 (option 3.4).
—— —

Safeguarding

Networked

Information

N

etworked information is constantly exposed to threats—

events or agents that have the potential to cause harm to a

system or information assets. These threats have the potential to exploit a network’s many vulnerabilities--

weaknesses, or points susceptible to attack. New vulnerabilities

emerge as systems are built or changed. If these are exploited,

substantial financial losses and an overall failure to achieve the

original objectives of the network can result. The true incidence

rates and losses arising from these threats are unknown, however,

since the y are often not detected, not reported, or require placing a

monetary value on a relatively intangible loss. Financial institutions, in particular, are reluctant to report losses to avoid negative

publicity that might cause more losses or loss of business. Also,

the probability that particular threats will exploit particular vulnerabilities in a network—the amount of risk—varies from network to network.

Although multiple threats often combine to expose a vulnerability, threats to networked information can be loosely grouped

into the following categories:

2

B Human errors and design faults. The largest source of losses

is due to unintentional human actions during operations. Some

experts estimate that over one-half of the total financial and

productivity losses in information systems is the result of

125
26 I Information Security and Privacy in Network Environments

●

■

human errors, as opposed to intentional and

malicious acts. ] These acts include improperly

installing and managing equipment or software, accidentally erasing files, updating the

wrong file, transposing numbers, entering incorrect information in files, neglecting to

change a password or back up a hard disk, and

other acts that cause loss of information, interruptions, and so forth.

Many of these and other circumstances are

arguably due to faults in design that do not prevent many common human errors (or other

threats) from resulting in losses. An unusual

but legitimate sequence of events also can reveal a vulnerability in system design. Such design errors may come with off-the-shelf

software or hardware, or may be built into the

system by the network managers.

Insiders. Many violations of information safeguards are performed by trusted personnel who

engage in unauthorized activities or activities

that exceed their authority. These insiders may

copy, steal, or sabotage information, yet their

actions may remain undetected.2 These individuals can hold clearances or other authorizations, or may be able to disable network

operations or otherwise violate safeguards

through actions that require no special authorization.

Natural disasters and environmental damage. Wide-area disasters such as floods, earthquakes, fires, and power failures can destroy

both the main information facilities as well as

their backup systems. Broken water lines. uneven environmental conditions, and other

localized threats also produce significant but

less sensational damage.

“Crackers” and other intruders. A small but

growing number of violations come from unauthorized “crackers”3 who may intrude for monetary gain, for industrial secrets, or for the

challenge of breaking into or sabotaging the

system. This group receives the most sensational treatment in the press and includes teenagers breaking into remote systems as well as

professional criminals, industrial spies, or foreign intelligence.

Viruses and other malicious software. Viruses, worms, and other malicious software can

enter a network through borrowed diskettes,

prepackaged software, and connections to other networks.4 These hazards could also be a result of human error (negligence), insiders, or

intruders.

SAFEGUARDS FOR

NETWORKED INFORMATION

Federal agencies and other organizations use safeguards-countermeasures-that eliminate specific vulnerabilities or otherwise render a threat

impotent, thereby protecting the organizations’

information assets. In this report, security is used

generally to describe the protection against disclo-

] This is consistent with other areas of engineering as well; notable examples include the Chernobyl nuclear disaster, the Bhopal chemical

plant disaster, and the Exxon Valdez oil spill. Charles Cresson Wood and William W. Banks, “Human Error: An Overlooked but Significant

Information Security Problem,” Compu~ersund Se(”uri~, vol. 12, No. 1, pp.51 -60. Another analysis of information systems conducted over 12

years in 2,000 organizations found human error the cause of 65 percent of total security losses. See United Nations, Advisory Committee for the

C(xmdination of Information Systems (ACCIS), /nfirmation Systems Security Guide/inesjior [he United Nations Organizations (New York,

NY: United Nations, 1992), p. 9.

z me united Nations repo~ estimated [hat 19 percent of total security losses were from dishonest ordisgruntled employees, I S percent were

from infrastructure loss or water damage, and 3 percent were from outsiders. Viruses were not listed. (Ibid.)

3 “Crackers”’ are often called “hackers,” but “hacker” also refers to a broader set of individuals who innovate legitimate solutions to computer challenges.

4 Experts differ over the actual losses and relative importance of viruses compared with other threats. See testimony by Peter S. Tlppe!t,

Symantec Corp., and material submitted for the record by Cynthia Carlson, USA Research, in hearings before the House Subcommittee on

Telecommunications and Finance, June 9, 1993. One study estimated that viruses account for roughly 2 percent of all losses. See James Lipshultz, “Scare Tactics Exaggerate Actual Threat from Computer Viruses,” Ft*deral Computer Week, Dec. 6, 1993, p. 15.
Chapter 2 Safeguarding Networked Information 127

sure, modification, or destruction of networked

information through the use of safeguards. These

safeguards include hardware, software, physical

controls, user procedures, administrative procedures, and management and personnel controls.

The degree of security, along with the safety and

reliability of a system, is reflected in the level of

confidence that the system will do what it is expected to do-that is, its trustworthiness.

This report loosely defines an information network as any set of interconnected electronic information systems (computers, magnetic drives,

telecommunications switches, etc.); therefore, a

“network” is not restricted to the Internet,5 corporate networks, the telephone network, and so

forth. In any case, today’s networks are increasingly interconnected or overlapping, and distinctions are difficult to make. In this report, a network

user may refer to a nonexpert individual, an expert

system administrator, or an entire organization,

depending on the context.

1 Expressing Organizational Objectives

To be successful, safeguards must be applied in a

coordinated fashion to contain the risks from the

above threats, while maintaining the functional

objectives of the network.6 To implement such

safeguards, professionals can use a top-down and

ongoing process that is based on the objectives

and design of each particular network. Alternatively, many managers and users attempt to protect information through more ad hoc applications

of products and services that sometimes lack even

an informal consideration of an overall process.

While such an informal approach maybe adequate

for some small networks, it can put the information in other networks at great risk.

The single most important step toward implementing proper safeguards for networked information in a federal agency or other organization is

for its top management to define the organization overall objectives, define an organizational

security policy to reflect those objectives, and implement that policy. Only top management can

consolidate the consensus and apply the resources

necessary to effectively protect networked information. For the federal government, this requires guidance from the Office of Management

and Budget (OMB ), commitment from top agency

management, and oversight by Congress. Without

understanding and support from top management,

an organization’s deployment of safeguards may

be completely ineffective.

Reflecting their organizational objectives, different types of network providers and users em–

f The Internet IS defined here as many thtmsands of inlercxmrwcted smaller nclw(whs lhat usc the lntcrrwt l% I(KX)I (1P) f(mnat t{) c~changc

data. In practice, the degree to wh]ch a nctw(wh IS part of the Internet varies, and formats other than 1P arc also sent t)~er the Internet {Jr uwl

w ithln subnctworks. The Internet is prominent because of its size and rate of m pansitm, and its ckcentral ized n]anagenwnt and tinanc mg.

6 For Inftmnati(m (m the many aspects of mf{mnation security discussed in this chapter, see William Caell i, Dennis L(mglcy, :ind Mlchacl

Shain (d.), lnjormatlon Securlr.v Iiandbook (New Ytwk, NY: Stockton press, 199 I ); Knsh Bhaskar, Compuler Scc’urlty: Threats ~Jnd ( ‘ounternieaures (Ox f(mi, England NCC Blachw cII, Ltd., 1993), Deborah Russcli and G.T. GangcmI, Sr., Conlp/i/er .%~urlty BasIt.\ (Scbastop}l, CA

()’ ReIlley & Ass(~iates, Inc., 1991): M(wric Gasscr, Bulldln,q a Secure Conipurer Sy$tcm (New York, NY. Van Nostrand Reinh(~ld CI~., 1988),

Nati(mal Research Council, Compulers ar RIsA: Saje ~“onrpurirr~ In Ihe lnjiwmalion Age (Washington, DC: Nati(mal Academy press. 1991);

U.S. Department of C(mmwrce, Natl(mal Institute of Standards and Technology,” “Worksht)p in Security procedures ft~r the Interchange t~f Elcctr(m[c tl~wnwnts: Selected Papers and Results,” Roy G. Saltman (cd.), August 199.3; and LI. S. Congress, office of Tcchm)h)gy Assessmcmt,

Dej2ndln<q Setrefs, Sharing I>atcl: New’ I.o(k.s c~nd Kejsjiv Electronic ln@n[itlon, OTA-CIT-3 10 (Wash lngt(m, DC U.S. Gt)vcmnwnt Printing

Office, October 1987). See also U.S. Dcpartrmm[ of C(m]nwrce, Na[i{mal Institute of Standards and Techn~d(>gy, An Introdu[’tl(w 10 [’[mpu[er

Sc[/4r{tj: 711c NJS7’ {Iondbook, m press.
28 I Information Security and Privacy in Network Environments

phasize different security aspects or services.7

Long-distance (interexchange) earners, local telephone companies, cable companies, satellite providers, wireless carriers, and other providers of the

telecommunications links generally place the

most emphasis on the availability of their services. Availability means that core services will be

operational despite threats of fire, flood, software

errors, undercapacity, virus attacks, and so forth.

Building on the links are value-added providers, some resellers, computer network services,

and others who use the links to transport information, but also add features of their own. Commercial Internet providers primarily emphasize

availability, while electronic data interchange

(EDI) value-added services emphasize integrity

and nonrepudiation. Integrity means that the information is only altered from its original form

and content for authorized reasons.8 (Banks, for

example, are particularly concerned about the integrity of electronic funds transfers.) Non-repudiation refers to the ability to prove that a party sent

a particular message (see discussion in chapter 3).

Subscription services, such as CompuServe,

America Online, Genie, Delphi, and Prodigy, also

emphasize access control. Access control refers to

mechanisms based on user-identification and

user-authentication procedures that restrict each

user to reading, writing, or executing only the information or functions for which he or she is authorized.

At the periphery-but no less important-are

the users: individuals, government agencies,

banks, schools, libraries, database services, corporations, citizen groups, managers of electronic

bulletin boards, and others. Users are both providers and consumers of information; they may have

little control over the overall availability of the

links, but they can control other aspects. Users can

assure the confidentiality of classified, proprietary, or private information through the use of

cryptography (see box 4-1 ) and access controls.

Confidentiality refers to the assurance that only

properly authorized persons can view particular

information. Online publishers and corporations

may use cryptography and access controls to emphasize the protection of copyrighted or proprietary information--i.e., assuring that two parties

have properly exchanged payments or permissions for services or products delivered electronically.

Confidentiality is distinguished here from privacy, which is less commonly used in the computer security profession. Briefly, confidentiality

refers to the treatment of data; confidentiality is

achieved “when designated information is not disseminated beyond a community of authorized

knowers.” Privacy refers here to a social contract:

“the balance struck by society between an individual’s right to keep information confidential and

the societal benefit derived from sharing that information. . . ."9

(See chapter 3 for discussion of

privacy.)

T computer ~ecurjty j~ often said t. have ~rm Primq as~ts (defined in the text): confidentiality, integrity, ~d availability (tie “CIA” of

security). Historically there has been greater emphasis on confidentiality and integrity, and less on availability. The international Standards

Organization (1S0) 7498-2 international standard also distinguishes nonrepudiation and access controls, but most references subsume these

and all other attributes into the first three. Dorm Parker has suggested including other aspects; see Dorm B. Parker, SRI International, Menlo

Park, CA, “Using Threats To Demonstrate the Elements of Information SQYurity,” January 1994 (obtained from the author).

8 Another definition is that “Integrity is the knowledge that a given body of data, a system, an individual, a network, a message in transit

through a network, or the like has the properties that were a priori expected of it. ” (Willis H. Ware, Rand Corporation, Santa Monica, CA,

“Policy Considerations for Data Networks,” December 1993.)

g Anj~ A]len, Unea$yAccess: PrivacyfOr women inuFree Sociery(Totowa, NJ: Rowman & Littlefield, 1988), p. 24. S~ discussion in U.S.

Congress,Office of Technology Assessment, Protecting Privacy in CompurerizedMedica/ Informurion, OTA-TCT-576 (Washington, DC: U.S.

Government Printing Office, 1993), pp. 7-9
Chapter 2 Safeguarding Networked Information 129

I Writing an Organizational

Security Policy

The security policy of an agency or other organization is intended to implement the overall objectives, express the organization’s view on risk, and

assign responsibilities, among other things .’”

Whether implicit or explicit, the policy is essential

to define the requisite safeguards: “Without a security policy, it could be argued that it isn’t possible to have a security violation. The business has

nothing defined as confidential [for example] and

no standards to meet.”11 In an organization, a successful security policy is made by the top management—a chief executive officer or agency head,

for example. In cooperative networks, the policy

may be made by representatives of its members,

standards committees, regulatory bodies, or by

law.

Organizational security policies range from

one page to several volumes in length, but should

not be overly specific. As one observer noted, “security policies are not unlike the Ten Commandments or the Bill of Rights. They must not include

the specifics of the implementations. They are far

more effective if they are brief, generic, and forceful. "1 2

As any user, the federal government must examine its own objectives, set its own security and

privacy policies, and continually review its own

information safeguards. 13 Just as different users

and providers have conflicting interests, however,

so do different federal agencies have conflicting

missions and policies. The pressure to make government more efficient, in particular, often complicates the need to protect copyrighted, private,

and proprietary information. For example, improving federal services to citizens, including

electronic delivery of those services, will require

more sharing of information and resources among

agencies and between federal agencies and state or

local agencies.14

Agencies historically have delivered their services in a “stovepipe” fashion—managing services vertically within an agency but not

horizontally across agency boundaries. This isolation between agencies provided a degree of privacy simply due to the difficulty of consolidating

such information using existing methods. Information networks make horizontal exchanges of

information between low-level agency employees

much easier, but sharing such information also

brings new risks since different agencies (and

nonfederal government users) have different objectives and policies about handling such information. Agencies and other organizations will have

to work together to assure that sensitive information is handled uniformly according to privacy

and computer matching laws (see chapter 3).

There is a great need for agencies and other organizations to develop sound security policies

that match the reality of modem information networks. These policies should be mandated from

the highest level. They should support the specific

organizational objectives and interests, including

10 ~’c(.l~r,l}, *)o/,<.v rcfer5 here 1() [he ~ta(enlenls made by organtza(ions, corporations, and agencies [o establish overall policy ~)n information

access and safeguards. Another meaning comes from the Defense community and refers to the rules relating clearances of users 10 classification

of int~ml]ati(m. In another usage, seturiry po/iclcs are used I(J refine and implement the broader, organizational security policy described here.

1 i Paul EXjrcy. “Securl[y Management and Pt)licy,” in /rrjiwma/ion .Securiry Handbook, Wlllian~Caelli, Dennis Ltmglcy, and Michael Shain

(cds. ) (New York. NY Stt)ckt(m Press, 1991), p. 32.

~ ~ R{)k.fl H, coufinc~r, ‘r’ President, RCl, Inc., Lynn Haven, FL, perwmal communication, June 2, 1994.

13 For dlscu~~l{)ll see ~,nnls M. Gilbert, A SrUdy @ Federal Agency Needsjtir Irrjurmafron 7ec/Irro/ogy S’ecurlly, NISTIR-5L$24 (GaiLhers- . ,

burg, MD Nati(mat lns(itute (If Standards and Technology, May 1994).

1 ~ US. Congress, office of TcChno]ogy” Assessment, Moking Gu\’ernmen{ Wurk: Ele(’trwric De/i\)erv of Fedcro/ .krltices, OTA-Ta-57~

(Wash ingttm, DC U.S. Government Prin[ing Office, Sep[. 1993). Vice president Al Gore, Crca/irrg a Gu\crrvnen[ 7’hat Works Be//erund Cos/s

/e\\: Report o/ fhe ,Vallorral Perjor-man(e Reilew (Washingttm DC: U.S. Government Printing Office, Sept. 7, 1993); U.S. General Services

Adnunistratt(m, Inf(mnati(m Resfmrccs Management Service, “Service to the Citizens: pro~c( Repmt,” KAP-93- 1, February 1993.
30 I Information Security and Privacy in Network Environments

but not limited to policies regarding private information. These policies must also anticipate a

future where more information may be shared

among agencies and organizations.

n Cost-Justifying Safeguards

Ideally, the actual safeguards implemented to protect networked information should represent the

overall objectives of the organization, but in practice they often do not. Network designers must

continually balance utility (including speed, capacity, flexibility, user-friendliness, and interoperability), cost, and security. In any case,

information can never be absolutely secured, and

safeguarding information is therefore not an issue

of how to secure information, but how much security an agency or business can justify. Many approaches are effective and inexpensive, but others

can be very costly, for both small and large organizations. The organization’s management, therefore, must have a method to balance the cost of a

safeguard with the potential loss that may occur if

it doesn’t use that safeguard.

Security professionals can use risk analyses to

estimate risks 15 and probable losses for information assets. These analyses can then be used to determine the appropriate safeguard expenditures. A

crude qualitative risk analysis may simply identify the obvious holes in a system but can, nevertheless, be valuable. A rigorous quantitative analysis

requires some experience with security systems

and understanding of how to determine the value

of information assets.

Management benefits from risk analyses only

insofar as an analysis provides timely, quantifiable, and credible measurements. In practice,

however, risk often can be difficult to quantify and

the analysis expensive. Quantification requires

statistics about the frequency and size of losses in

similar organizations. Such statistics may be difficult to obtain, and the frequencies of losses may

be too low to be useful or may not be applicable

to a particular organization. Incidents of loss are

widely underreported or undetected. The discipline of risk analysis also is still relatively young

and needs further development.

Therefore, a risk analysis does not necessarily

assure that a system is effectively safeguarded,

only that the organization is following a systematic approach. New developments in risk analysis

have made the process easier, however, relying on

past experience and on automated tools with extensive threat, vulnerability, and safeguard

knowledge bases, and user-friendly interfaces.

Risk analysis performs best where the nature of

losses are best understood or frequent—such as in

cases of natural disasters or credit card fraud. Its

shortcomings lie in cases where the losses are less

understood.

Alternatively, management can use a due care

(also called reasonable care) approach to determine how much security an organization can afford. A due care approach seeks an acceptable

level of safeguards relative to other businesses

and agencies, as opposed to an acceptable level

relative to an absolute measure of risk. This approach uses “baseline” controls and practices, as

well as risk analyses for vulnerabilities not addressed by the baseline. The baseline varies depending on the application or industry; for

example, the baseline for the banking industry

would be different from that of an information

publisher. The baseline is also intended to be flexible and incorporate changes in technology. The

due care approach is intended to build on the experience of others in the field and, therefore, to lower

the cost of managing networked information.

The due care approach to safeguarding information assets is not well established, however,

and has relatively little precedent or experience to

15 R;~k is [he likellht)od that a particular threat will e%ploh a particular vulnerability to cause an undesirable evenl tO @XLIr—a nleasure of

uncertainty. It is sometimes defined as the asset value multiplied by the exposure factor (fraction of the asset destroyed in an event) and the

annualized rate of occurrence. Using this definition, risk can be expressed in units of dollars per year. (Will Ozier, Ozier, Peterse, and Associates,

San Francisco, CA, personal c(mmmnica[ion, Dec. 14, 1993.)
Chapter 2 Safeguarding Networked Information 131

build on. The establishment of generally accepted

principles (explained in a later section) is integral

to providing standards for due care, but detailed

principles will take some time to develop. Critics

claim that following only the due care principles

can provide inadequate safeguards and may therefore fail as a liability defense. Even within one industry such as banking, for example, safeguard

needs vary greatly from one location to another,

and appropriate safeguards change as technology

changes. Taking a follow-the-leader approach

may cause the organization to overlook reasonably available safeguards, suffer a significant loss,

and be found negligent, even though it was following otherwise-accepted procedures.

Both risk analysis and principles of due care

need further development. Neither approach is

necessarily always appropriate and, therefore,

neither is always sufficient to provide a strong defense against liability in the case of a monetary

loss related to loss, theft, or exposure of networked information. A combination of the two

approaches will likely provide improved protection. Proponents of risk analysis suggest that risk

analysis done correctly provides better safeguards, while proponents of due care suggest that

performing only risk analyses is impractical.

1 Formal Security Models

Given a particular set of objectives and a stated organizational policy, a formal model is sometimes

developed to express or formalize a more specific

policy in a way that can be tested in a system. The

model should be written in precise, simple, and

generic terminology and, therefore, is often written in mathematical notation, particularly for systems requiring relatively strong safeguards.16 A

specification process is derived from the model

and provides a step-by-step method to assure that

the model is actually implemented. The formal

process thus provides a series of steps that can be

isolated and tested.

An example of a well-known security model is

the Bell-LaPadula model used for protecting the

confidentiality of classified information, based on

multilevel security classifications. 17 The ClarkWilson model is a less formal model aimed at financial and other unclassified transactions. The

Clark-Wilson model implements traditional accounting controls including segregation of duties,

auditing, and well-formed transactions such as

double-entry bookkeeping.18

Most of the existing work in formal security

models is oriented toward confidentiality in classified applications. This emphasis may be because

only the Department of Defense (DOD) classification hierarchy and requirements for high assurance of security seem to be amenable to formal

models. Comparable security models for unclassified information, with emphasis on integrity and

availability have not, and may never, emerge.

Some claim that the private sector can simply provide better safeguards without the need for forma]

models characteristic of the DOD approach.

Within the government sector, research in security models may be appropriate for applications

involving the exchange of sensitive or private information among federal agencies, or between

federal agencies and state or local governments.

These models then could be applied to assure conformance to security and privacy policies that

have been coordinated among those agencies that

share information. Especially needed are models

that address heterogeneous network environments and that are integrated with other systems

approaches that account for network reliability

and fault-tolerant computing.

16 ~ls mathenlatica[ no[atlon” is analogous” to the r(}le of Boolean algebra in expressing electronic ClrCUltS that @t~m~ l(~gl~al fun~ti(~ns.

17 me ~l~fl ~lode/ is ~lnll]ar t. tie Be]l. Lapa~u]a m(~e] but protects the Inlegriry of inf(wrnati(m inSt~ad of ltS cOn@~enlla/lfJ’. me rigor of

the Blba rmxiel, however, is not generally a g(wd match for real world integrity requirements and is rarely implemented.

I ~ For a dlscussl(ln of fomlal m(J&]s, see Nforne (3asser, t~p. cit., f(x)tnote 6, ch. 9. See also Dennis L(mgle), “F(~mlal M~~~ls of sc~ure

Systems,” in ln@-nwtion Securlt,v Hmrdbook, op. cit., footnote 6.
32 I Information Security and Privacy in Network Environments

Before formal models can be successful for

safeguarding the exchange and sharing of information among agencies, the agencies must first

review and coordinate their individual policies regarding the protection of sensitive or private information (see discussion of data sharing in

chapter 3). These policies could then be implemented according to new or existing formal models, as needed. The Office of Technology

Assessment (OTA) found in its interviews, however, that while exploration into new types of formal models may be warranted, there is

considerable doubt about the utility of formal

models for safeguarding networked information,

particularly to protect information integrity and

availability.

B Specific Safeguard Techniques

and Tools

The marketplace provides products and services

that range from simple devices such as a metal key

used to shut off a personal computer at night, to

elaborate methods for encryption and digital signatures. The tools and techniques alone will not

safeguard an organization’s information; they require expert personnel to apply and maintain

them. They also must be combined in a coordinated fashion to meet the organization’s objectives, whether they emphasize confidentiality,

integrity, availability, or any other attributes of security. A few classes of techniques and tools are

listed here as examples of features that are currently available.19

Challenge-Response Systems

Even small networks require users to identify

themselves through a user name and a confidential

password. These passwords are usually stored in

an encrypted file in a central computer, and few

people or perhaps no one has the key to the file that

contains the passwords. An intruder might guess a

password by trial and error, however, using typical

passwords such as names, nicknames, names of

spouses or children, and so forth (see box 2-1 ). An

intruder might also monitor and copy passwords

that are sent to the central computer as the user

logs on, or that are written on scraps of paper left

near the user’s computer.

This latter type of attack can be deterred by

“challenge-response” systems that never actually

send the password over the network. When the

user enters his or her account name at a terminal,

the central computer issues the user a random

challenge. The user sees the challenge, and transcribes it and a password into the keypad of a

handheld authenticator (the size of a credit card or

small calculator). The authenticator calculates a

unique response; the user enters that response into

the terminal and sends it to the central computer.

The central computer repeats the calculation and

compares its result with the user’s result. An intruder cannot imitate the user without access to the

identical authenticator and its associated password.

Secure tokens (see below) or a laptop computer

can also substitute for the authenticator. Also, the

user’s token can generate a response based on a

card-unique secret key and the local time (synchronized with the central computer), instead of

the challenge sent by the central computer.

19 For ~ ovewlew of info~a[ion security and related products and techniques, see Deborah Russell and G.T. Gangemi, Sr., op. cit., f~N)tnote 6. For techniques relating to only UNIX, see Simson Gart7nkel and Gene Spafford, Practical UNIX Security (Sebastopol, CA: O’Reilly &

Associates, Inc., August 1993). For an introduction to network security, see Mario Devargas, Network Securiry (Manchester, England: NCC

Blackwell Ltd., 1993). See also Teresa F. Lunt (cd.), Research Directions in Database Security (New York, NY: Springer-Verlag, 1992); and

D.W. Davies and W.L. Price, Securi/yfor Computer Nerworks: .4n Introduction to Data Security in Teleprocessin~ and Electronic Funds Transfer, 2nd Ed. (New York, NY: John Wiley & Sons, 1992).
Chapter 2 Safeguarding Networked Information 133

Perhaps the most widespread and serious vulnerability in information networks is the use of weak

password systems Systems administrators can no longer safely send unencrypted passwords over the

Internet and other networks Instead, experts recommend that network managers use challenge-response systems, electronic tokens, and sophisticated, one-time password techniques to protect their

networks Users will continue to employ traditional passwords, however, to protect “local” workstations

and files Unfortunately, passwords assigned by administrators to protect these local assets are often

“strong” but easily forgotten, while passwords chosen by users are more easily remembered but often

“weak “

For example, an eight character password has 256 (over 72,000,000,000,000,000) possible combinations (counting both uppercase and lowercase characters and symbols, and eight bits per ASCII

character, less one bit for parity) An intruder who has copied an encrypted file might need hundreds of

years to try all these possible combinations in sequence in order to decrypt the file Users who choose

words, proper names, or acronyms for passwords reduce considerably the number of possible combinations that an intruder needs to try there are less than 500,000 English words and names with eight

or fewer letters, spelled backwards or forwards Of these words, some are more frequently chosen for

users’ passwords than others An intruder who guesses a few dozen or a few hundred of the most common names, acronyms, and default passwords is often successful

Educating users to choose strong passwords to protect local workstations is perhaps the most difficult task for a network manager Programs exist that screen out weak passwords, but such programs do

not substitute for the following simple guidance to users

●

■

●

■

●

■

●

■

Treat your password Iike your toothbrush use it every day, change it often, and never share it 1

Never write your password on anything near your computer If you do write it down, do not Identify it as

a password, and hide it well Never place an unencrypted password in the text of an electronic message

or store it unencrypted in a file on the network

Never use the default password (the password assigned from the factory)

Avoid proper names, nicknames, or full words for passwords---even spelled backwards Do not repeat

a password that you have used before

Do use long, unpronounceable acronyms, such as the first letters of an unfamiliar song or phrase, or an

obscure word with vowels omitted For example, an eight-letter password could be TNPLHTOT derived

from “There’s no place like home, Toto, ” although a more personal phrase is better

Do use passwords with numbers or special characters inserted Using the last example, an eight letter

password could be TNPL9H&T

Do use nonsensical but pronounceable words, for example, SKRODRA8 (NIST has specified an algorithm that uses a random number to generate pronounceable passwords 2,

Do consider using an electronic token, a challenge-response system, a biometric device, or other technique that better identifies the user Consider using a “three strikes and you’re out” system for communications links, such as is used in automated teller machines Remove unused accounts whenever possible.

1 Altrlbuted to CllffordStoll, author of The Cuckoos Egg, Tracing a Spy Through the Maze o~Computer Espionage (New York, NY

Doubleday 1989)

2 U S Department of Commerce, National Inshtute of Standards and Technology, ‘Automated Password Generator, ” FIPS PUB

181 (Sprmgfleld VA National Techmcal Information Serwces, October 1993)

SOURCE Office of Technology Assessment, 1994
34 I Information Security and Privacy in Network Environments

From bottom to top PCMCIA card, PCMCIA card with fax

modem,PCMCIA card with hard disk.

Secure Tokens

Smart cards,20 PCMCIA cards,21 SmartDisks, 22

and other secure tokens are devices used to authenticate a user to a computer. In an access control system, the user must insert the token into a

reader connected to a computer, which may be

connected to a network. The token then obtains

access on behalf of the user (to a remote computer,

for example) by providing the necessary authorizations and confirming the user’s identity.

The token can read and verify digital signatures

from the computer so that the card will not be

fooled into giving away sensitive information to

a computer acting as an impostor. The token also

can send its own encrypted digital signature so

that the computer knows that the token is not an

imitation. No intruder can obtain access to the

computer without the token and knowledge of secret information needed to activate the token (for

example, a password).

The PCMCIA card is slightly larger than a

credit card but with a connector on one end, and

plugs directly into a standard slot in the computer.

The card has a microprocessor chip embedded inside that performs the sophisticated authentication features. Other types of PCMCIA cards can

be used to provide extra and portable memory capacity and to provide communications capability.

As new computer models include slots for

PCMCIA cards, their use as secure tokens appears

promising.

Other technologies perform similar functions

in different forms. Smart cards are plastic cards

the size of bank cards that have a microprocessor

chip embedded in the plastic, sometimes with a

magnetic stripe also on the back. The SmartDisk

is a token in the shape of a 3.5-inch diameter magnetic disk with a connectionless interface that

communicates with the disk drive head.

Firewalls

Individual workstations usually vary greatly within an organization’s network. Because of this variation and difficulties managing each workstation,

it is difficult to safeguard individual workstations

from intrusions from outside the network. A firewall provides a focus for managing network safeguards by restricting communication into and out

z~ U.S. ~P~ment of C(>mmerce, National Institute of Standards and Technology, Smart Card Technology: New’ Methods for Computer

Access Control, NIST Spec. Pub. 500-147 (Gaithersburg, MD: N] ST, September 1988). See also Jerome Svigals, “Smart Cards—A Security

Assessment,” Compulers & Securiry, vol. 13 (1994), pp. 107- I 14.

21 ~MCIA stands for persona] computer Memory Card Industry Association. The National Seeurity Agency’s TESSERA Card uses a

PCMCIA interface, with a Capstone chip inside the card. Capstone and the Escrowed Encryption Standard are discussed in box 2-6 and in chapter 4.

22 ‘+ Sm~Disk” is a trademark of SmartDiskette, Ltd.
Chapter 2 Safeguarding Networked Information 135

of the network. The firewall itself is a dedicated

computer that examines and restricts mainly incoming, but sometimes outgoing, communications.23

The form of the firewall restriction maybe simple; for example, electronic mail may be allowed

while other services are not. Or the restriction may

be more elaborate, perhaps requiring individual

user authentication as a prerequisite for communication through the firewall. Firewalls are particularly important for networks connected to the

Internet, to assure that computers on a smaller network are less vulnerable to intruders from the

much larger Internet.24

Virus Checkers

Virus checkers are software programs that automatically search a computer files for known viruses (for an explanation of viruses and other

malicious software, see box 2-2). The checker

scans files every time the computer is turned on or

when new memory disks are inserted into the

computer. The virus checker looks for patterns of

code that resemble the code used in known viruses, and alerts the user when it finds a resemblance.25 Since new viruses are discovered every

month, virus checkers must be updated often, although many viruses cause no damage or are not

relevant to most users.

Auditing and Intrusion Detection

Auditing is the act of automatically monitoring

certain transactions that occur in a network over a

period of time. Such transactions include transfers

of files, and the local time when a user accesses the

network. Auditing features on a network can

quickly generate volumes of information about

network use, however, that can overwhelm busy

security personnel. Auditing, therefore, is often a

passive activity where records are only kept for

later examination. It is also a passive deterrent to

authorized users who might fear getting caught

should an investigation arise.

Integrated, dynamic auditing systems not only

record information, but also act to restrict use or

to alert security personnel when possible safeguard violations occur—not just violations from

intruders but also from insiders. One feature

might alert security personnel if users are accessing certain files after hours or if a user (or possible intruder) repeatedly but unsuccessfully

attempts to access a certain computer. The securit y officer might then closely monitor the user actions to determine what further actions should be

taken (simply denying access might alert an intruder to use a more reliable or more covert method, confounding the security staff). Some

sophisticated systems use expert systems that

“learn” users’ behavior.26

Encryption, Electronic Mail,

and Digital Signatures

Encryption is used for a variety of applications,

including the protection of confidentiality and integrity, authentication, and nonrepudiation. Different methods are used to assure these properties,

‘s An information tirewali is in this way like an airlock that eliminates a direct connection between two environments. The label .firewa// is

misleading since firewalls used in buildings are intended to stop all fires; network firewalls monitor (mostly incoming) traffic while generally

alkwng most of it through.

24 Steven M. Bellovin and Will]am R. Cheswick, Fueu’ails and Internet Seeurity: Repelling the Wdey Hacker (Reading, MA. AddisonWesley, 1994). See also Frederick M. A\olio, “’Building lntemetwork Fireballs,’’ lousiness Communicarion$ Re\’ie}+t, January 1994, pp. 15-19.

25 S~}me viruses mutate every time they replicate, however, making programs that scan for a specific virus code less effective.

26 See Dorothy E. Denning, “An intrusion-Detection Model, ” IEEE Transa~tions on Sojiware Engineering, SE- 13, February 1987, pp.

222-232; SUSarI Ken, “’using AI [Artificial Intelligence] T(J [reprove Security, ” Daramarion, Feb. 1, 1990, pp. 57-60; and Teresa F. Lunt ct al.,

“A Real-Tinw lntrusi(m-Detection Expert System,” final technical report, SRI International, Feb. 28, 1992.
36 I Information Security and Privacy in Network Environments

The term virus is popularly used for any malicious software or so-called rogue program that can enter a computer and cause damage. ’ A true virus is a fragment of a program that replicates itself and

modifies (“infects”) other programs A worm, on the other hand, is an independent program that moves

through a system and alters its operation, but does not infect other programs, Viruses and worms can

use techniques such as “logic bombs” and “Trojan horses” to disguise their function. A logic bomb, for

example, is triggered to perform an action when a certain event or condition occurs, such as on Friday

the 13th. A Trojan horse tricks a user into using a desirable function so that it can perform some other

function, such as recording passwords,

What do viruses do that users should worry about? The possibilities for damage are only limited by

the imagination of those who create the viruses Types of virus damage include changing the data in

files, changing file attributes so that others can access confidential files, filling up computer memory

with meaningless data, changing internal addressing so that the user cannot access files, displaying

obscene messages on the screen or in printouts, slowing down the computer, and changing the initialization program for the computer so that it cannot operate, Managers must often rely on users to follow

good practices, such as the following, to keep networks clean

●

●

●

●

Do check all Incoming software and computer diskettes with an up-to-date virus checker program (even

including off-the-shelf software from reputable sources)

Do backup all files frequently so that in case of a virus attack, the original uninfected files are still accessible Do check all files with the virus checker program before reinstalling them

Do consider protecting software from Trojan horses by only allowing read-only access by all users except

the system administrator.

Do be wary of publicly available and free software, software borrowed from others, or software without

the original packaging Do not use pirated software

1 See Phlllp E Fltes, Peter Johnson, and Martin Katz, The Computer V/rus Crisis (New York, NY Van Nostrand Reinhold, 1992) See

also Lance J Hoffman (ed ), Rogue Programs Viruses Worms, and TrojanHorses (New York, NY Van Nostrand Reinhold, 1990), Peter

J Dennmg(ed ), Computers UnderAttack Intruders, Worms, and Vwses (New York, NY Addison Wesley, 1990), and John B Bowles

and Co16n E Pel/iez, “Bad Code, ” and other articles m /EEE Specm.m?, August 1992, pp 36-40, and Jeffery O Kephart et al , “Computers and Epldemtology, ” IEEE Spectrum, May 1993, pp 20-26

SOURCE Off Ice of Technology Assessment, 1994, and sources referenced below

—

and each method has its strengths and weaknesses. Historically, electronic mail has not used encrypThese different methods can be integrated to pro- tion to protect the confidentiality of the message

vide multiple safeguards (see box 2-3).27 contents. PEM--or Privacy-Enhanced Mail—is a

One widely used network application is elec- specific set of proposed standards that specifies

tronic mail (email). Large and small networks can how to encrypt the contents of electronic mail

transfer electronic mail messages from worksta- messages for the Internet.28 Unauthorized users

tion to workstation, holding the message for the cannot read a PEM encrypted message even if

addressee until he or she accesses it on a computer.

27 For a short description of better known algorithms, see Bruce Schneier, “A Taxonomy of Encryption Algorithms,” Computer Security

Journal, vol. IX, No. 1, p. 39.

28 Stephen T. Kent, +’rntemet ~vacy Enhanced Mail,” Communications ofdre ACM, vol. 36, No. 8, August 1~~. P. @59.
Chapter 2 Safeguarding

—

Carol Ted

ti

Carol encrypts Ted decrypts

her messages to messages from

Ted with their Carol with the

shared secret key same secret key

Carol

o

NOTE Security depends on the secrecy of the shared key

they were to obtain access to it. PEM can also

digitally “sign” the message to authenticate the

sender. Although PEM can protect the confidentiality of the message, it cannot protect the confidentiality of the address, since that information

must be understood by network providers in order

to send the message. Privacy-enhanced mail requires that both the sender and the receiver of the

electronic mail message have interoperable software programs that can encrypt and decrypt the

message, and sign and verify the digital signature.

Therefore, widespread adoption is still far off.

Biometric Devices

Networked Information 137

Access-control systems can use three methods to

identify a particular user: something the user

knows (e.g., a password), something the user has

in his or her possession (e.g., a secure token), or

something that physically characterizes the user.

This last method is known as biometrics. Characteristics that might be analyzed by biometric devices include retinal scans of the eye, fingerprints,

handprints, voice “prints,” signature dynamics,

and the typing of keystroke patterns.29

Biometric devices can be effective in many

cases, but are expected to be less effective for protecting networked information due to their generally higher cost. Biometric signatures also can be

intercepted and imitated, just as unchanging passwords can, unless encryption or an unpredictable

challenge is used (see the discussions above).

Separation of Duties

Safeguards need not be based in only hardware or

software. They can also include administrative

and other procedures like those used in accounting

practices. As only one example, the authority and

capacity to perform certain functions to networked information should be separated and delegated to different individuals. This principle is

often applied to split the authority to write and approve monetary transactions between two people.

It can also be applied to separate the authority to

add users to a system and other system administrator duties from the authority to assign passwords,

review audits, and perform other security administrator duties. The separation of duties principle

is related to the “least privilege” principle, that is,

that users and processes in a system should have

least number of privileges and for the minimal period of time necessary to perform their assigned

tasks.

Wiretap laws apply the separation of duties

principle by requiring the law-enforcement

agency that conducts a wiretap (in the executive

branch), to obtain permission from a court (in the

29 Benjamin Miller, ‘“Vital Signs of ldentlty,” IEEE Spectrum, vol. 31, N{). 2, February 1994, p. 22.
38 I Information Security and Privacy in Network Environments

NOTE Security depends on the secrecy of the private keys and the authenticity of the publlc keys
-. — . —

Chapter 2 Safeguarding Networked Information 139

Different cryptographic methods are used to authenticate users, protect confidentiality, and assure

Integrity of messages More than one method usually must be used to secure an overall operation, as

described here (see also boxes 4-1 and 4-4). Cryptographic algorithms are either symmetric or asymmetric, depending on whether or not the same cryptographic key is used for encryption and decry ption The key is a sequence of symbols that determines the transformation from unencrypted plaintext to

encrypted ciphertext, and vice versa.

Symmetric cryptosystems—also called secret-key or single-key systems—use the same key to encrypt and decrypt messages (see figure 2-1) The federal Data Encryption Standard (DES) uses a secret-key algorithm Both the sending and receiving parties must know the secret key that they will use to

communicate Secret-key algorithms can encrypt and decrypt relatively quickly, but systems that use

only secret keys can be difficult to manage because they require a courier, registered mail, or other

secure means for distributing keys.

Asymmetric cryptosystems--also called public-key systems—use one key to encrypt and a second,

different but mathematically related, key to decrypt messages, The Rivest-Shamir-Adleman (RSA) algorithm is a public-key algorithm. Commonly used public-key systems encrypt relatively slowly, but are

useful for digital signatures and for exchanging the session keys that are used for encryption with a

faster, symmetric cryptosystem.1 The initiator needs only to protect the confidentiality and Integrity of

his or her private key. The other (public) key can be distributed more freely, but its authenticity must be

assured (e g , guaranteed by binding the Identity of the owner to that key)

For example, if an associate sends Carol a message encrypted with Carol’s public key, in principle

only Carol can decrypt it, because she IS the only one with the correct private key (see figure 2-2) This

provides confidentiality and can be used to distribute secret keys, which can then be used to encrypt

messages using a faster, symmetric cryptosystem (see box 2-5).

For authentication, if a hypothetical user (Carol) uses her private key to sign messages, her

associates can verify her signature using her public key This method authenticates the sender, and can

be used with hashing functions (see below) for a digital signature that can also check the integrity of

the message

Most systems use a combination of the above to provide both confidentiality and authentication

One-way hash functions are used to ensure the integrity of the message-that Is, that it has not been

altered For example, Carol processes her message with a “hashing algorithm” that produces a shorter

message digest—the equivalent of a very long checksum Because the hashing method is a “one-way”

function, the message digest cannot be reversed to obtain the message Bob also processes the received text with the hashing algorithm and compares the resulting message digest with the one Carol

signed and sent along with the message If the message was altered in any way during transit, the

digests will be different, revealing the alteration (see figure 2-3)

I For example, m hardware, the DES IS between 1,000 and 10,(200 hmes as fast as the RSA pubhc key algcmthm, depending on the

Implementation In software, the DES IS generally at least 100 hmes as fast as the RSA RSA Laboratories, “Answers to Frequently

Asked ouestlons About Today’s Cryptography, ” 1993, p 9

SOURCE Off Ice of Technology Assessment, 1994

judicial branch). The Clinton Administration’s key components with two escrow agents. (The

key-escrowed encryption initiative applies the original escrow agents are both in the executive

separation of duties principle in storing escrowed branch—see discussion in chapter 4).
40 I Information Security and Privacy in Network Environments

I-Ju

8

Bob compares

the two digests.

Any difference

indicates that the

text was altered.

Bob verifies Carol’s signature

using her public key and

recovers her message digest

6

NOTE Different methods for generating and vertymg wgnatures (as m the federal Dlgltal Signature Standard) are possible Measures to protect

the signature and text may also be used

In summary, many individual safeguard products and techniques are currently available to adequately address specific vulnerabilities of

information networks—provided the user knows

what to purchase and can afford and correctly use

the product or technique. Easier-to-use, more affordable safeguards are needed. In particular,

there is a need for general-purpose products that

integrate multiple security features with other

functions, for example, electronic commerce or

electronic mail.

INSTITUTIONS THAT FACILITATE

SAFEGUARDS FOR NETWORKED

INFORMATION

The discussion above describes processes and

tools that a network manager might use to safeguard a particular network using formal or informal methods. It does not explain how networks

are collectively safeguarded through the established marketplace and institutions. Safeguarding
Chapter 2 Safeguarding Networked Information 141

networks collective y amounts essentially to safeguarding the so-called information infrastructure.

An information infrastructure--for the purposes of this discussion—is the collective set of

computer hardware and soft ware, data storage and

generating equipment, abstract information and

its applications, trained personnel, and interconnections between all of these components.3031 An

international information infrastructure already

exists; a user in one country can move data that is

stored in another country to be used in a computer

program in a third country.32 The infrastructure

includes the public-switched telephone network,

satellite and wireless networks, private networks,

and the Internet and other computer and data networks. The infrastructure is continually and rapidly evolving as technology advances and as users

find new applications.

Individuals, corporations, governments,

schools and universities, and others own components of the infrastructure, but no one owns or

controls it as a whole. Moreover, the numerous

stakeholders have diverse and often conflicting

goals. The transportation infrastructure is similar:

better freeways favor the interests of suburban living and private transportation, for example, but

conflict with the interests of inner cities and public

transportation.

In particular, very large cooperative networks

are too large and diverse to have one explicit

policy regarding safeguards; each stakeholder has

particular objectives that determine its own explicit or implicit policy. This is true for the Internet, for example; according to Vinton Cerf,

President of the Internet Society:

Among the lessons learned in the two decades of research and development on the Internet is the realization that security is not a

uniform requirement in all parts of the system. . . . These needs vary by application and

one conclusion is that no single security procedure, policy, or technology can be uniformly applied throughout the Internet environment to

meet all its needs.33 34

The information infrastructure and its

associated safeguards also cannot be built “from

the ground up.” Instead, the infrastructure must be

steered by its stakeholders—including users and

the federal government-by strengthening its

institutions and assuring that there are adequate

~~ There is n. single accepted defini[it)n of an informati(m infrastructure. See also U.S. Congress, Office of Technology Assessnlent, CrlrIcal Cmrnectlom: Communica/ion~br [he Fufwe, OTA-CIT-407 (Washingttm, DC: U.S. G(wemment Printing Office, January 1990), and institute for lnfomlatifm Studies, A Nat/onal lnff~rmatlon Ne~ork: Chan~lng Our LiIws in the 21.s1 Cent//ry (Queenstt)wn, MD: The Aspn Institute,

1992 ).

3 t me general infrastmcture discussed In [his chapter is distinguished from the Cllnttm Administration’s “National [nf(~rmation InfraSt~cture” (N]]) irrjf~a~]}’e, which seeks m “prorw~te and support full development of each component [of the infrastructure].” See lnfom~atwn infrastructure Task Force, The NuIIwa/ lnjornuuion Injraslruclure: Agenda jtir Action (Washington, DC: National Telecommunications and lnf(n-nlat[(m Adrninistrati(m, Sept. 15, 1993).

3Z me Euro Fan Union faces slml]ar issues and has, therefore, called for the “development of Strategies to enable the free nloven~en[ ‘)f

in f(mnati(m w]thln the single market while ensuring the security of the use of inf(mnati(m systems throughout [he Community.’” See Commis -

smn of the European C(mlmunlties, Dmctorate General X111: Telecommunications, lnfomlatt(m Market and Exploitation of Research, “Green

Book on the Security of lnfomla[mn Systems: Draft 4.0,” Oct. 18, 1993.

33 Vln[on G, Cerf Wesldent ]ntemet society, testimony, Hearing on ]nlernel Security, Subc(mlmittee on SCien~e, Conlnlittee on SCience,

Space, and Technology,” U.S. H(wse of Representatives, Mar. 22, 1994.

M ~e Natl{,na] 1nstltute ~) fstmdards and Technology” (NIST) pr(qx)sed a security policy for the National Research ~d Education Network

(NREN), however, where the NREN program was viewed as a steppingstone to deveh)pment of the broader information infrastructure. The

prop)sed ~)l]cy was approved by the Federal Networking Council. See Dennis K. Branstad, “NREN Security Issues: Policies and Technok)-

gies,”’ L’ompu[er Secw/fy.Journal, vol. IX, No. 1, pp. 61-71. See also Arthur E. Oldehoeft, lowa State University, ‘foundations of a Secur]ty

Pf)licy for Use of the Natifmal Research and Educational Nc[w[wk,” repro prepared for the Natmnal Institute {~f Standards and Technology

(Springfield, \’A Nati(mal Technical lnfomlati[m Service, February 1992).

The NREN is part of the High Perf{)mlance C(mlputing and Communicati(ms program. See U.S. C(mgress, Office of Techn{A)gy Assessment, Ad\wnced Netwark Technology, OTA- BP-TCT- 10 I (Washingt(m, DC: U.S. Government Prtntlng Office, June 1993).
42 I Information Security and Privacy in Network Environments

products and services available to users. By

strengthening the roles of each of these interdependent institutions, the overall marketplace

gains by more than the sum of the parts.

Finally, the overall information infrastructure

is not a well-defined or closed system and cannot

be strengthened through technical solutions

alone. Rather, the infrastructure is changing and

growing, and its vulnerabilities are not well understood. The federal government must work together with the many stakeholders to assure robust

solutions that will automatically accommodate

changes in technology and that can provide feedback for steadily strengthening safeguards overall.

The information infrastructure is already international. Networks like the Internet seamlessly

cross national borders. Networked information is

also borderless and affects many different stakeholders worldwide. Achieving consensus regarding safeguards among these diverse, international

stakeholders is more difficult than achieving technical breakthroughs. Nevertheless, the federal

government has the capacity for resolving many

of the issues that inhibit or facilitate the use of

quality safeguards by diverse communities. These

issues are interrelated, however, so solving them

piecemeal may not provide an overall solution.

OTA found the following inhibitors and facilitators of safeguards for networked information:

management issues (including assigning responsibility, managing risk, and making cost decisions); availability of insurance; vendor and

developer issues (including liability and export restrictions); product standards, evaluations, and

system certifications and accreditations; professionalism and generally-accepted principles; establishment of public key infrastructure(s);

emergency response teams; user education and

ethical studies; sanctions and enforcement against

violators; regulatory bodies; and research and development. These are discussed below.

S Management

Information has become as much of an asset to a

business or government agency as buildings,

equipment, and people. The information in a corporate database is as crucial to one business, for

example, as manufacturing equipment is crucial

to another. Once the value of information is recognized, it follows that an organization’s management should protect it in the same manner as other

corporate or government assets; for example, using risk analyses, contingency plans, and insurance to cover possible losses.

Managers and accountants often do not recognize electronic information as an asset, however,

because of its less tangible nature, its relatively recent prominence, and the lack of documentation

of monetary losses arising from loss or theft of information. Paper-based information and money

can be protected in a safe inside a secured building. Destruction of the building in a fire is a very

tangible and easily documented event. In contrast,

loss or duplication of electronic information may

not even be noticed, much less reported publicly.

The losses that are reported or that reach the

public consciousness also do not necessarily represent the overall losses. Until now, most losses in

corporate networks arise from human errors and

authorized users. Media attention, however, most

often highlights virus attacks or teenage and adult

“crackers”-- important, but often unrepresentative, sources of lost information, time, and money.

Management may perceive that the corporate or

agency network is safe from these sensational

threats, while ignoring other important threats.

Management may also be reluctant to make

changes to the network that can cause disruptions

in productivity.
Chapter 2 Safeguarding Networked Information 143

Accounting practices and Institutions exist to protect traditional assets as information safeguards

and institutions protect information assets Modern accounting practices grew out of the catastrophic

stock market crash of 1929 and subsequent efforts to avoid government intervention by the Securities

and Exchange Commission In the late 1930s, the American Institute of Certified Public Accountants

moved to set accounting standards Changes in the financial markets in the 1960s led to the establishment of the Generally Accepted Accounting Principles and other standards

Several parallels exist with the safeguarding of information assets, and also many differences The

parallels are summarized below

Comparison of Information Assets With Traditional Assets

Information assets —.— Traditional assets — —

Typical threats Human error, insiders, natural disasters Human error, insiders, natural

disasters

Management Chief Information Officer and Chief Executive Chief Financial Officer and

responsibility Officer Chief Executive Officer

Education Computer Science departments Business schools

Principles Generally Accepted System Security Principles Generally Accepted Accounting

Principles

Certification International Information Systems Security Certified Public Accountants

Certification Consortium and Institute for

Certification of Computer Professionals

certifications (in development)

SOURCE Office of Technology Assessment, 1994, and National Research Council, Compu(ers at fi.sk Safe Compulmg m (he lnforrnatIorI Age (Washington, DC Nat[onal Academy Press, 1991), p 280

Experts note that information is never ade- ket) or Congress (in the federal government). Unquately safeguarded unless the responsibility for fortunately, by that time it is too late to apply

information assets is placed directly on top management, which can then assign the necessary resources and achieve consensus among diverse

participants within the organization. Information

security then becomes a financial control feature

subject to audit in the same manner as other control functions (see box 2-4).35 Responsibility

often may never be assigned in a particular corporation or agency, however, unless a catastrophe

occurs that gains the attention of, for example,

stockholders (in a corporation or in the stock marsafeguards to protect any information that was

lost, copied, or damaged.

9 Insurers and Disaster Recovery

Services

Insurance helps spread and manage risk and therefore, in principle, protect an organization’s information assets from losses. Insurance policies

exist to protect against the loss of availability of

networks in a disaster, threats from computer viJ5 For a description of how information” syst~ms are audi[ed and “[() assist management in evaluating c(M/txmefit consideration s,” see institute of Internal Auditors Research Ffmndation, S}sfem.y AwiJfatilJfy and Control Report (Orlando, FL: Institute of Internal Auditors, 1991).
44 I information Security and Privacy in Network Environments

ruses, toll fraud, or claims made by a third party as

a result of an error made by the organization. Users can also purchase computer disaster recovery

services that can restore services in the event that

the main computer center is incapacitated. Insurance for information losses does not cover the

great majority of security threats, however, including losses arising from human or software

errors from within the organization. 36 Organizations must continue to self-insure against monetary losses due to loss, theft, or exposure of

networked information, using appropriate safeguards. 37

To justify a market for broader insurance coverage, risks must be assessable, the losses must be

detectable and quantifiable, and the insurer must

have confidence that the insured is acting in good

faith to report all relevant information and is exercising reasonable care to avoid and mitigate

losses. Network security is a dynamic field, however; losses are not necessarily detectable or quantifiable. The standards for due care and concepts

of risk analysis for protecting networked information also are not necessarily adequately developed

or dependable to allow insurance companies to

make underwriting decisions (see earlier discussion). 38 Moreover, insurance companies may seek

to protect themselves and price their policies too

high, reflecting their uncertainty about the magnitude of losses, as well as their inability to verify

the safeguards undertaken.

Insurance companies are most likely to accommodate risks to networked information into policies by modifying traditional coverage, but these

risks are not always comparable with traditional

risks such as the loss of availability from a natural

disaster. Information can be “stolen” without removing it from the premises, for example.

36 see Natlt)nal Resemch Ct)unci], op. cit., f(~otnole” 6 pp. 174176.

Ideally, broader insurance coverage for information assets may help stabilize the marketplace by forcing policyowners to meet minimum

standards of due care or generally accepted principles and to perform risk analyses. The underwriters could audit the policy owners to ensure that

they are following such methods. As more companies buy insurance, the standards could become

better developed, helping to improve the level of

safeguards overall. On the other hand, insurance

can also lead policyholders to become less vigilant and accept a level of risk that they would not

accept without insurance (the problem of moral

hazard). Insurance can also be expensive; investing in personnel and technology may be a better

investment for many organizations.

1 Vendors and Developers

Critics argue that vendors and others who develop

information products are primarily responsible

for many faults that appear in software or hardware executing in the user’s network. With great

market pressure to continuously produce new and

higher performance software, designing in safeguards and extensive quality testing take a lower

priority and may negatively impact functionality,

development cost, or compatibility with other

products. Software developers sell new software

packages with few or no guarantees that the programs are secure or free of undesirable characteristics—some of which are intentionally built-in

for various reasons, and some of which are

unintentional (“bugs”). Moreover, the customer

or client generally must pay for upgraded versions

that repair the “bugs” in original versions or add

new features such as security. Products are also

not necessarily shipped with security features al37 In ~)~er ~ea~, Self.lnsumce Schems ~n tie gamut, from the elaborate mechanism of a multinatk)nal c(~wration t*ing on tie role ofa

health insurer for its employees (thereby avoiding a conventional insurer’s profit margin and administrative costs), to a destitute driver “self-insuring” by simply not buying auto insurance and throwing risks onto the general public and him- or herself.

38 peter Sommer, “]nsurmce and Contingency Planning: Making the Mix,” Computer Fraud and Security Bulletin, July 1993, p. 5.
Chapter 2 Safeguarding Networked Information 145

ready switched “on.” If products are not userfriendly or fully secure, users have no other choice

except to write their own software, go without the

safeguards, or make do with what is available. The

buyers cannot necessarily articulate what features

they want, and the developers are ultimately responsible for designing new and useful products.

Given society’s growing dependence on networked information, the question of the developers’ responsibilities for secure and safe products

will be increasingly important in coming years.

This complex issue needs further attention, but is

outside the scope of this report.39

Vendors and product developers often claim

that buyers do not strongly demand safeguards. In

a very competitive market for software, safeguards often add development cost and may require tradeoffs in functionality, compatibility, or

capacity for which users are not willing to sacrifice. Indeed, buyers are often accustomed to thinking of computers as isolated machines, and that

security violations “won’t happen to me. ” Users,

therefore, often make computer operation simpler

by disabling the safeguards that are provided with

the product. Users may not perceive that threats

are real, may lack the expertise to use the products,

or may simply be willing to assume the associated

risk. For whatever reason, the majority of safeguard failures in information networks is attributable to human errors in implementation and

management of existing systems.40

Vendors are currently restricted from exporting certain encryption products without a license

granted by the State Department. The controlled

products are those that that the National Security

Agency (NSA) deems “strong’ ’-impractically

difficult to decrypt should they be widely distributed internationally. At one time, NSA was the

source of almost all encryption technology in the

United States, because of its role in signals intelligence and securing classified information. However, encryption technology has moved beyond

the national-security market into the commercial

market. Today, therefore, U.S. intelligence and

law-enforcement agencies are concerned about

strong encryption incorporated into integrated

hardware and software products (including commercial, public-domain, and shareware products).

Much of the controlled encryption is already

available outside of the United States as standalone products developed legally overseas (sometimes based on articles or books 41 legally

exported overseas), or pirated, transported, or

developed overseas illegally (e.g., infringing

patents; see discussion of export controls in chapter 4).

Vendors argue that foreign companies can now

produce and export many such products and will

capture more of the market for safeguards.42

Moreover, since security features are usually embedded inside of other hardware and software

M National Re~carch council, op. cit., footnote 6, Pp. 165-173.

W Ross Anders(m, “why Cryptosysterns Fail,” Pnxeedings from the First ACM Conference on Computer and Communications Security,

N(w. 5, 1993, Fairfax, VA, pp. 215-227.

~1 In one instance, [he author of a txN}k (m cryptography received permission tn export the book—including a printed appendix of source

c(xlc 1 ]stings t{) implement the algorithms and techniques described in the book-but was denied a license to export the same source code in

mach]ne-rcadahlc fore]. Bruce Schncier’s Ix)ok, App/ied CrJIptogr@ry (New York, NY: John Wiley & Sons, 1994) explains what cryptography

can cI(J, In mmmathematlcal language; describes how to build cryptography into products; illustrates cryptographic techniques; evaluates algorithms, and makes rcc(mmxndations on their quality. According to Schneier, the State Department granted export approval for the book (as a

publlca[ltm, pro[ected as free speech by the Constitution), but denied export approval for the source code disk. According k) Schneicr, this disk

cfmtalntxi, “line for line, the exact same source code listed in the hmk.”’ (Bruce Schneier, Counterpane S ysterns, Oak Park, IL, personal c(m]muntcati(m, July 1, 1994. )

~z u s House ~,f Repre~entatlves, Subconlnlittee (ln Ec(mt~mic Policy, Trade, and Environment, he~ing on encV’Pti~Jn e~po~ Contro[s*” ‘t”

I 2, 1993.
46 I Information Security and Privacy in Network Environments

“Clipper” Telephone Security Device (AT&T Surity 3600),

products, foreign companies could capture more

of the overall information technology market. On

the other hand, buyers may not be demanding as

much encryption protection for confidentiality as

vendors claim. Further study into this issue is

needed to determine more fully the effects of export controls on the ability of vendors and developers to supply affordable and user-friendly

safeguards (see chapter 4).

A number of important intellectual-property issues also have marked the industry, particularly

pertaining to cryptography and software (see the

1992 OTA report Finding a Balance: Computer

Software, Intellectual Property, and the Challenge of Technological Change for discussion of

copyright and patent issues pertaining to software

and computer algorithms). Selected intellectual

property issues are discussed further in chapter 3.

In summary, the dynamic technologies and

markets that produced the Internet and a strong

networking and software industry in the United

States have not consistently yielded products free

from defects or equipped with affordable, user-

-friendly safeguards. More study of software and

product quality and liability is needed to fully understand vendors’ responsibilities. More study is

also needed to understand the effect of export controls on the ability of vendors and developers to

provide affordable safeguards.

1 Standards-Setting Bodies

Standards used in this context are specifications

written or understood by formal or informal agreements or consequences. Standards allow different

products to work together, making products and

services easier to use and less expensive and the

market more predictable for buyers. Standards are

particularly important in networks, since many

parties on the network must store and communicate information using compatible formats and

procedures---called protocols. In small or closed

networks, all the users can employ the same proprietary equipment and protocols, but in large and

open networks this is impractical.

An important area of standards-setting is in the

protocols used to send messages between computers. The Internet largely uses formats built upon

the Transmission Control Protocol/Internet Protocol (TCP/IP). Other protocols include the Open

Systems Interconnection (OSI) set.43 The protocol of one system does not necessarily work with

another system, and there is an effort to standardize or translate the various protocols so that computers can all talk easily with one another. To

make this possible, some protocols may have to be

abandoned, while others may be modified or

translated when necessary. Without appropriate

“placeholders” in currently developing protocol

standards, it may be impossible in the future to set

up and maintain desired network safeguards.

Safeguards can be weakened as well as

strengthened through the standards-setting process. Designers must often make compromises so

that different protocols can work together. Maintaining the safeguarding features is only one aspect of these modifications; other important

4J See ISO/IEC 441nfomlat10n” ~(xessing Systems4Wn Systems Interconnection Reference Model—Part 2: Security Architecture,” IS(D

7498-2, 1988, and ~elated standards. See also the report of the Federal lntemetworking Requirements Panel (FIRP) established by NIST to

address short- and long-term issues of intemetworking and convergence of networking protocols. including the TCP/IP and 0S1 pmtoeol suites.
Chapter 2 Safeguarding Networked Information 147

features include user-friendliness, flexibility,

speed or capacity, and cost.

The lack of any standards or too many standards, however, significantly limits the effectiveness of many safeguards. In particular, safeguards

that require each user of either end of a communication to have compatible schemes—for sending messages, for example, or encrypting and

decrypting telephone calls—benefit from the widest possible distribution of that product so that the

users can communicate with more people. Even

market-driven de facto standards, in such a case,

are better than well-protected users who cannot

communicate with but a few other users because

of a wide variety of incompatible standards.

Standards are set through bodies such as the Internet Engineering Task Force and the Internet Architecture Board, the International Organization

for Standardization (ISO)44 and the American National Standards Institute (ANSI), the former

Comité Consultatif Internationale de Télégraphique et Téléphonique (CCITT),45 the European

Computer Manufacturers Association (ECMA),

the European Telecommunications Standards

Institute (ETSI), the American Bankers Association (ABA), and the Institute of Electrical and

Electronics Engineers (IEEE).%

In general, vendors in countries with markets

and bodies that develop standards quickly can

gain an advantage over vendors in other countries

lacking quality standards.47 Achieving the necessary consensus for quality standards is particularly difficult in the rapidly changing information

industry, however, including the area of information safeguards. Standards are most effective

when applied to relatively narrow, well-defined

areas where there is a clear need for them. Policymakers and others must therefore consider carefully the balance between setting de jure standards

versus allowing the market to diversify or drift to

its own de facto standards.

The National Institute of Standards and

Technology (NIST) in the Department of Commerce has a prominent role to work with these

standards-setting bodies and also to develop Federal Information Processing Standards (FIPS) for

use by the federal government and its contractors.

In particular, the Department of Commerce has recently issued two controversial FIPS that involve

much larger debates over fundamental issues involving export controls, national-security and

law-enforcement interests, and privacy—the Digital Signature Standard (DSS) and the Escrowed

Encryption Standard (EES). Broader efforts to

protect networked information will be frustrated

by cryptography-standards issues unless the process for establishing cryptography policy is clarified and improved (see chapter 4).

I Product Evaluations

Product evaluations in general are intended to

help assure buyers that off-the-shelf computer and

network equipment and soft ware meet contract requirements and include certain acceptable safeguards free of defects. Even relatively simple

systems require that all but experts place a significant amount of trust in products and their vendors.

44 Al~() kn{)wn ~~ he @gmlsa[lon ]ntemationale de Normalisation, and the Intematit)nal Standards ~ganizatit)n.

4S l-he cc]~ (also ~a]led the [ntematlonal Televaph ~d Tele@[~ne c[~nsu]tative committee) has been reorganized in the [ntemational

Telecommunications Union (lTU) in its new Telecommunication Standardization Sector.

~ For fuflher infomatlon,” see wborah Russell and G.T. Gangemi, op. cit., footnote 6, chapter 2 and appendix D. For further information on

encryption standards, see Burt Kaliski, “A Survey of Encryption Standards,” IEEE Micro, Deeember 1993, pp. 74-81.

47 F(lr ~ ~)vemlew of ~enem] standards. setting Pmesses and options for improvement, see U.S. Congress, Office of Techn(~logy Assessment, Global Standards; Building B/ocksfor theFuwre,OTA-TCT-512 (Washington, DC: U.S. Government Printing Office, March 1992). See

also David Landsbergen, “Establishing Telecommunications Standards: A Problem of Pmeedures and Values,” Informatiza[ion and the Pri\’ate

Sector, vol. 2, No. 4, pp. 329-346. See also Carl F. Cargill, information Technology Standardization: Theory. Process, and Organizations (Bedford. MA: Digital Press, 1989).
48 I Information Security and Privacy in Network Environments

Independent experts can evaluate these products

against minimum qualifications and screen for defects, saving buyers the cost of errors that might

result from making their own evaluations or from

relying on the vendors.

Large user organizations are often capable of

running benchmarks and other tests of functional

specifications for their constituents. Within the

federal government, the Department of the Treasury evaluates products used for message authentication for federal government financial

transactions, with input and testing services provided by NSA and NIST. NIST validates products

that incorporate the Data Encryption Standard

(DES) and other FIPS. NSA provides several services: endorsements of cryptographic products for

use by government agencies only; approvals of

“protected network services” from telecommunications providers; a list of preferred and endorsed products and test services for TEMPEST

48 

equipment; a list of degaussers (tools that demagnetize magnetic media) that meet government

specifications; and the assignment of trust levels

to “computer systems, software, and components” 49 (through the National Computer Security Center or NCSC50).

In the last case, the NCSC evaluates products

against the Trusted Computer Security Evaluation

Criteria (TCSEC—the “Orange Book”) and its related “Rainbow Series” books.51 An evacuation

refers here to the “assessment for conformance

with a pre-established metric, criteria, or standard,” whereas an endorsement is an approval for

use.

52 The NCSC makes these evaluations at no

direct cost to vendors, but vendors must pay for

considerable preparation and the process is often

slow. This process in turn adds delays for buyers,

who must pay for the overall development cost.

Critics claim that the process produces obsolete

products by the time the products are evaluated.

The Orange Book also emphasizes access control and confidentiality, and not other features

such as integrity or availability more relevant to

industry, civilian agencies, or individuals. This

emphasis is a direct result of the Orange Book’s

Department of Defense history; applications involving classified information and national security require trusted systems that emphasize

confidentiality. Critics claim that this emphasis is

too slow to change and perpetuates an obsolete approach. Some also claim that the rating of the evaluated product should pertain to its condition “out

of the box,” not after the security features have

been switched on by a security professional.

To attempt to meet the needs of other buyers,

NIST is developing a complementary process that

would delegate evaluations of lower level security

~ The U.S. government established the TEMPEST program in the 1950s to eliminate compromising electromagnetic emanations fr~)m

electronic equipment, including computers. Without such protection, an adversary may detect faint emanations (including noise) from outside

the room or building in which the user is operating the computer, and use the emanations to rcconstmct information. TEMPEST products are

used almost exclusively to protect classified information.

49 National Secufity Agency, lnfo~ation Systems Security organization, /nformafion ~ysfenls ~ecurify ~dUCIS dd ~er~’i(’es cafai~~

(Washington, DC: U.S. Government Printing Office, 1994), p. vii. The word systems often appears in this context but is misleading; the trust

levels are actually assigned to products. See the discussion below on certification and accreditation.

some National Computer Securiv Center was established from the Department of Defense Computer Security Initiative, which in turn was

a response to identified security weaknesses in computers sold to the Department of Defense.

5 I S() called ~ause each &X)k is named after the color of its cover. The first in the series is the Orange Book. See U.S. Department of Defense, DOD Trusted Computer System Evaluation Criteria (TCSEC), DOD 5200.28-STD (Washington, DC: U.S. Government Printing Office,

December 1985). The Orange Book is interpreted for networked applications in the “Red Bfx}k.” See National Computer Security Center,

NCSC 7’rus/ed Netw’ork In/erpre/ation, NCSC-TG-005 (Washington, DC: U.S. Government Printing Office, July 1987). See also the “Yellow

Book”: National Computer Security Center, Technical Rationale Behind CSC-STD-003-85: Computer Security Requirements-Guidance for

Applying the Department of Defense Trusted Computer System Evaluation Criteria in Specific Environments, CSC-STD-004-8 (Washington,

DC: U.S. Government Printing Oflice, June 25, 1985).

5’2 Nationa] Security Agency, op. cit., footnote 49, pp. 4-28,4-29.
Chapter 2 Safeguarding Networked Information 149

products to third parties certified by the U.S. government. This program, the Trusted Technology

Assessment Program (TTAP), is under development and would be managed by NIST. The evaluators could charge for the evaluations, but would

compete to provide timely and inexpensive service. The overall cost might be lower, and products may be brought to market more quickly. This

process resembles the Commercially-Licensed

Evaluation Facilities (CLEF) program currently

in use in the United Kingdom.

Another alternative suggested by NIST is to allow the vendors to validate claims on their own

products for low-level security applications. This

strategy could exist on its own or coexist with the

TTAP described above. The vendors would be

guided by using criteria and quality control tests

built into the development process. While this alternative may be acceptable in many cases, an independent evaluation using personnel not

employed by the vendor may be preferable.53

In these or other alternatives, evaluators could

work on their own to develop new criteria. If too

many differing criteria are developed for evaluating products, however, the market could be fragmented and vendors may be forced to develop and

market many different products. Such fragmentation adds to cost, delays, and confusion for the

buyer, defeating the purpose of the evaluations. In

practice, relatively few sets of criteria may be

widely used.

Meanwhile, the European Community follows

its own product evaluation standard called the Information Technology Security Evaluation Criteria (ITSEC) or Europe’s “White Book.” These

criteria are based in part on the U.S. Rainbow Series as well as earlier European standards. The ITSEC is less hierarchical and defines different

categories of requirements depending on the application. The ITSEC was developed by France,

Germany, the Netherlands, and the United Kingdom and was published in 1991.54

The differing European and U.S. criteria split

the market for vendors, making products more expensive to develop and test, and possibly driving

out some vendors. NIST and NSA, therefore, proposed anew set of criteria to promote international

harmonization of criteria as well as improve the

existing Rainbow Series criteria, and to address

better commercial requirements. A draft of these

proposed “Federal Criteria” was published in December 1992 and received comment throughout

1993.55

NIST and NSA have since subsumed this project to work with the European Community and

Canada toward an international standard—the

Common Information Technology Security Criteria, or draft “Common Criteria’ ’-expected in

1994. The Common Criteria would incorporate

the experience gained from the existing U.S.

Rainbow Series (and the comments received on

the draft Federal Criteria), the European ITSEC,

and the Canadian Trusted Computer Product

Evaluation Criteria.

However, the resolution of an international

agreement is not final. The proposal has met criticism for not incorporating foreign participation

from Japan, Australia, and other countries. Critics

also claim there is not enough participation from

the private sector and that the intelligence sector,

therefore, will drive any agreement too much toward protecting confidentiality rather than emphasizing other important features of safeguards.

Even if agreement were completed, products that

meet the Common Criteria will not be evaluated

immediately as vendors must first interpret the

53 Na~,,)na] Rc~earch coun~l], op. Cit., fOOtn(Ne 6, ~. 128.

$4 CO1lln)l~~lon” ~)f the Econonllc” Conlnlunlty, /@-maI;on Techna/ogy .Secun[y E\wluatmn Crileria, Pro~’lsional Harnl{~n/:ed Cri/eria. versl(m 1.2, June 1991.

5 ~ us, ~pa~nlenl (lf Conlnlercc, Na[i(~nal [nstitute of Standards and Techn(~iogy, “Federal Criteria for Infornlati(m Technology Security. ”

Decemher 1992.
50 I Information Security and Privacy in Network Environments

new criteria and then evaluate existing products or

develop new ones.

The trusted product evaluation process is not

and will not soon be effective for delivering products that adequately protect networked information. Alternatives to the current approach appear

promising, however, including (but not limited to)

NIST’s proposed Trusted Technology Assessment Program.

9 System Certifications and

Accreditations

The evaluations described above evaluate products but not systems. A product can be defined as

an off-the-shelf hardware or software product that

can be used in a variety of operating environments. A system, on the other hand, is designed for

a specific user and operating environment. “The

system has a real world environment and is subject to real world threats. In the case of a product,

only general assumptions can be made about its

operating environment and it is up to the user,

when incorporating the product into a real world

system, to make sure that these assumptions are

consistent with the environment of that system.” 56 Product evaluations alone can overestimate the level of security for some applications, or

if the product is not implemented correctly in the

system.

Increasingly, computers are becoming connected via networks and are being organized

into distributed systems, In such environments a

much more thorough system security analysis is

required, and the product rating associated with

each of the individual computers is in no way a

sufficient basis for evaluating the security of the

system as a whole. This suggests that it will become increasingly important to develop methodologies for ascertaining the security of

networked systems, not just evaluations for individual computers. Product evaluations are not

applicable to whole systems in general, and as

“open systems” that can be interconnected relatively easily become more the rule, the need for

system security evaluation, as distinct from

product evaluation, will become even more critical. 5 7

DOD examines systems—a process called certification--to technically assess the appropriateness of a particular system to process information

of a specific sensitivity in its real-world environment.58 A DOD certification is thus an analysis related to the system requirements. 59 T h e

subsequent step of accreditation refers to the formal approval by a designated authority to use the

system in that particular environment. The accreditation should take account of the results of the

certification, but may not necessarily reflect it; the

accreditation also takes account of nontechnical

(business and political) considerations and is the

ultimate decision regarding the system.

Certification attempts to encompass a systems

approach to security and is a much more complex

process than product evaluation. The National Research Council noted that

. . . Unfortunately, the certification process

tends to be more subjective and less technically

rigorous than the product evaluation process,

Certification of systems historically preceded

Orange Book-style product evaluation, and certification criteria are typically less uniform, that

is, varying from agency to agency. . 60

The report goes on to recommend that a set of

generally accepted principles include guidelines

56 Kn5h Bh&~, op. cit., foornote 6, p. 298.

57 National Resemch Council, op. cit., footm>te 6, pp. 138-139.

58 National computer secu~ty center, jnfr~ut.fton 10 Cerfificafion and ,4c.credtfafion, NCSC-TG-029 (FotI George G. Meade, MD: National Computer Security Center, January 1994).

59 The ~y~(em ce~lfication concept here i5 distinct fi-~rn the user examination and certification, ~d the key cctiification concepts discussed

in other sections.

60 Natl{)nal Resewch (huncil, Op. cit., foomOte 6, P. 1 ~70
Chapter 2 Safeguarding Networked Information 151

● *to institute more objective, uniform, rigorous

standards for system certification.” These principles are currently under development (see the

following section).

1 Generally Accepted Practices and

Principles

Generally accepted practices can be documented

and adopted to help guide information security

professionals and vendors. These practices would

act much as Generally Accepted Accounting Principles standardize practices for accountants (see

box 2-4). Such practices could help advance professional examinations; provide standards of due

care to guide users, managers, and insurance companies; and give vendors design targets. To be

comprehensive, however, the generally accepted

practices must be defined at several levels of detail, and different sets of standards would apply to

different users and applications. The establishment of generally accepted principles was suggested by the National Research Council in

1991.61 

The Institute of Internal Auditors has a document "intended to assist management in evaluating cost/benefit considerations” as well as to

“[p]rovide internal audit and information systems

practitioners with specific guidelines and technical reference material to facilitate the implementation and verification of appropriate controls.”62

The Organization for Economic Cooperation and

Development (OECD) has developed general

guidelines to help member countries in information-security issues. The guidelines were adopted

in 1992 by the OECD Council and the 24 member

nations. These guidelines list nine general principles and several measures to implement them.

The guidelines are intended to serve as a framework for both the private and public sectors.63 64

The Information Systems Security Association

(ISSA) is in the process of developing a comprehensive set of Generally Accepted System Security Principles (GSSPs) for professionals and

information-technology product developers to

follow. The ISSA effort includes members from

the federal government (through NIST), and representatives from Canada, Mexico, Japan, the European Community, and industry. The Clinton

Administration has also supported NIST’s efforts

in GSSPs in its National Performance Review.65

The success of these principles, when completed,

will depend on their speedy adoption by government, industry, and educational institutions.

The ISSA has divided the principles into two

sets. The first-the Information Security Professional GSSPs—is aimed at professionals, including managers, developers, users, and auditors and

certifiers of users. The second group--the GSSPs

for Hardware and Software Information Products—is aimed at products and the auditors and

certifiers of products. Each of these sets of GSSPs

has a three-tier hierarchy of pervasive principles,

broad operating/functional principles, and detailed security principles.

The pervasive principles adapt and expand on

the OECD principles described above. The broad

operating/functional principles are more specific

and are based on many documents such as the

NSA Rainbow Series, FIPS, Electronic Data

Processing Auditor’s Association Control Principles, and the United Kingdom’s Code of Practice for Information Security Management.66 The

6’ ltd.

‘z See lnstltutc of lntcmal Auchtc)rs Research Ftmndati(m, op. cit., fmmmtc 35, pp. 1-4 U) I -6.

~? (Irgmlza(ion for Econ{)nllc C()()Fratl()n and ~vel(~pment, lnfm-rnation, C~~mputer, and Cmmnunicati(ms p(~l icy con~mltlec, ‘“Guld~-

a

llncs for the Security of lnf(mnati(m Systems,” Paris, November 1992.

ti me United Nations has re]atlve]y sP>clfic guidelines for its organizations. See United Nati(ms, op. ~lt., f(M~tn~)t~ 1.

~~ of fIce of the Vice ~~sldent, Accon~panylng RcpJti of the Nati(mal Perfommnce Review’, Rccngirrccrln,? ~’hrollgh /~fOrmdlO~ Tc(~IwIoRI (Washingt(m, DC U.S. Government Printing Office, September 1993).

M Dcpaflnlent of Trade and ]ndus[~. A <’odP o~prac[lcp]i)r ]nfornlafion .!i’c’l~rit>’ Mmroxcnwnl, 1993.
52 I Information Security and Privacy in Network Environments

detailed principles address the practical application of the other principles, and are expected to

change frequently to stay current with evolving

threats. The detailed principles will include stepby-step procedures of common security tasks,

prevalent practices, and so forth.67

Generally accepted principles have strategic

importance to other aspects of networked information, such as for establishing due care guidelines for cost-justifying safeguards, as targets for

training and professional certification programs,

and as targets for insurance coverage. The current

effort in GSSP will not produce immediate results, but the effort is overdue and OTA found

wide support for its mission.

I Professional Organizations and

Examinations

The educational and career paths for informationsecurity practitioners and managers are not so mature as in other fields, such as accounting or law.

The field could benefit from the professional development of security practitioners and managers.

Security professionals enter the field from widely

diverse disciplines, and managers cannot necessarily compare the expertise of applicants seeking

positions as security professionals. Professional

recognition credits individuals who show initiative and perform well against a known standard.

University computer science departments lack

programs specializing in information safeguards;

but professional examinations provide a target for

institutions that graduate computer scientists or

provide continuing education in safeguards.

Certifications 68 in other fields of computing include the Certified Systems Professional, the Certified Computer Programmer, and the Certified

Data Processor (all from the Institute for Certification of Computer Professionals, or ICCP), and the

Certified Information Systems Auditor (from the

Electronic Data Processing Auditors Association). The Systems Security Examination of the

ICCP allows professionals with diverse responsibilities to have a certification that includes information safeguards.69 These organizations have

extended or have proposed extending existing certifications to include information security, but

none focus directly on it.

The International Information Systems Security Certification Consortium (ISC2) is developing

an information security certification in cooperation with the federal government (through NIST

and NSA), the Canadian government, Idaho State

University, the Data Processing Management

Association, Electronic Data Processing Auditors

Association, the Information Systems Security

Association, the International Federation for Information Processing, the Canadian Information

Processing Society, the Computer Security Institute, and others. The consortium expects to examine about 1,500 professionals per year up to an

ongoing pool of about 15,000 certified professionals. 70

Efforts to “professionalize” the information security field are important steps, but will not produce significant results for some time. Their

success is also related to the success of Generally

Accepted System Security Principles and their

adoption in industry and government. It is unclear

whether professional examinations and certifications will ever have a strong impact in an industry

that is as dynamic and evolutionary as information

67 1nfomatlon” Sys[enls Security Association, Inc., GSSP Committee, “First Draft of the Generail y Accepted System Secunt y Principles,”

Sept. 22, 1993.

@me ~~er ce~ification concept here is distinct from the sysfem certification and accreditation, and the key certification concepts discussed

in other sections.

69 Corey D. Sch{)u, WI. Vlc$ Mac~nachy, F. Lynn McNulty, and Anhur C’hantker, “lnforrnation security Professtona]lsnl for the 1 ~’s,”

Compuler Security Journa/, vol. 1X, No. 1, p. 27. See also Institute for Certification of Computer Rofessionals, ‘The Systems Security Examination of the Institute for Certification of Computer Professionals (ICCP),” Computer Security Journal, vol. VI, No. 2, p. 79.

To phllip E. Fites, “computer Security Rofessional Cefilficatkln,” Computer Security Journal, wI. V, No, 2, p. 75.
Chapter 2 Safeguarding Networked Information 153

networking. Engineers in the information industry, for example, have not widely adopted the licensing of professional engineers. Engineering

examinations and licenses are more effective in

relatively stable fields, such as the construction

and oil industries. Examinations and certifications are also effective, however, where liability

and the protection of assets is involved, as in accounting and construction.

1 Public-Key Infrastructure

Information networks must include important

clearinghouse and assurance functions if electronic commerce and other transactions are to be more

widespread and efficient (see chapter 3).71 These

functions include the exchange of cryptographic

keys between interested parties to authenticate

each party, protect the confidentiality and/or the

integrity of the information, and control a copyright (see box 2-3).72 In all cases, the two communicating parties must share at least one key before

any other transactions can proceed—if only to

transmit other keys for various purposes. A means

to do this efficiently is called a public-key infrastructure.

Each party could generate its own key pair and

exchange public keys between themselves, or

publish its public keys in a directory.73 A key-distribution center can also distribute public keys

electronically over a network, or physically transport them. While manual techniques are acceptable for small networks, they are unwieldy for

large networks and electronic commerce where

keys must be changed often over long distances

and between parties that have never met.

Instead, experts envision broader use of electronic commerce and other transactions by developing trusted electronic systems for distributing

and managing keys electronically. In order for the

users to trust the keys they receive, some party

must take responsibility for their accuracy. One

way to do this is to embed each user’s key in a digitally signed message (certificate) signed by a

trusted third party. The two parties then authenticate each other with the public keys and proceed

with their communications (see box 2-5).

The trusted third party is often referred to as a

certification authority (CA), and plays an important role in these electronic commerce transactions.74 The CA confirms the identity of each

party at the beginning of the process, and presents

the user with a certificate (signed by a digital signature) with the user’s public key.75 The CA also

keeps a record of invalidated certificates; a user

can check another user’s certificate to see if it expired or was otherwise invalidated. The CA could

also act as a notary public to certify that an action

occurred on a certain date,76 act as an archive to

store a secure version of a document, or may be

associated with key distribution, although other

entities could also manage such functions.

T I 1mP)~an[ c]earinght)use functions include matching buyers to sellers, exchanging electronic mail, clearing payments, and so fofih. See

Michael S. Baum and Henry H. Perritt, .Jr., Elecu-onic Conh-acling, Publishing, and EDl Law (New York, NY: Wiley Law publications, 1991 ).

See also U.S. Congress, Office of Technology Assessment, Electronic Enterprise: Looking to Ihe Future, OTA-TCT-600 (Washington, DC: U.S.

Government Printing Office, May 1994).

Z? see t he Jol,rno[ ~fthc /nterac.tlLte Ml(litmedla Association [nlel[eetual Property prOJeCt, vol. 1, N(). 1 (Anna@ i s

medla Association, January 1994).

73 M~)me GassCr, op. Cl[., footnote 6, pp. 258-260. See also Walter Funly ~d peter J-andr~~k) “Principles of Key Management,” /EEE./ournal on Selected Areas in Comrnunlcations, vol. 1 I, No. 5, June 1993, pp. 785-793.

74 me ~e) ~efil~catlon concept here is distinc[ from [he system certification and accreditation, and the user exanlinati(m and ceflificati(~n

c[mcepts discussed m other sections.

7S see the explmatlon in Stephen T. Kent, “In(emet ~vacy Enhanced Mail,” Comnl~~niCa(j~n$ ~j’[he ACM, vOI. 36, N(). 8, AUgUSt 1993, pp.

4859.

76 Barry Cipra, “Electr(mic Time-Stamping: The N(xary pub] ic Goes Digi(al”’ and “All the Hash That Fit T(J print,” Science, vol. 261, July

9, 1993, pp. 162- 16~.
54 I Information Security and Privacy in Network Environments

Whenever messages are encrypted in a network, there must be a method to safely exchange cryptographic keys between any two parties on a regular basis Two public-key methods described here

allow frequent electronic key exchanges without allowing an eavesdropper to intercept the key.

In the “key transport” or “key distribution” method, a user (Carol) generates a session key, and encrypts it with the other user’s (Ted’s) public key (see figure 2-4) Carol then sends the encrypted session

key to Ted, and Ted decrypts it with his private key to reveal the session key

To protect against fake or Invalid public keys, a party can send his or her public key in a certificate

digitally signed by a certification authority (CA) according to its standard policy. If the other party

doubts the certificate’s validity, it could use the CA’s public key to confirm the certificate’s validity It also

could check the certificate against a “hot list” of revoked certificates and contact the CA for an updated

list.

In the Diffie-Hellman method, i each party (Alice and Bob) first generates his or her own private key

(see figure 2-5) From the private key, each calculates a related public key The calculation is oneway—the private key cannot be deduced from the public key 2 Alice and Bob then exchange the public

keys, perhaps through a clearinghouse that facilitates the operation

Alice then can generate a whole new key—the session key—by combining Bob's public key with

Alice’s own private key Interestingly, due to the mathematical nature of this system, Bob obtains the

same session key when he combines Alice’s public key with his private key 3 An eavesdropper cannot

obtain the session key, since he or she has no access to either of Alice or Bob’s private keys

t W Dlffle and M E Hellman, “New Dlrectlons m Cryptography, ” /EEE Trarwactlons on /rr~orrnat/on Theory, VOI 22, 1976, pp

644-654

2 [n the Dlffle. Hellman technique, the publlc I:ey (y) IS based on the exponentlatlon of a parameter with x, where x IS the random

prwate key The exponentlatlon of even a large number IS a relatwelyeasycalculahon compared with the reverse operatlonof fmdmg

the logarithm of y

3 Uslng the Dlffle-Hellman technique, onepartyexponentiates the other’s publlc key (Y) with hls or her Pwate key (x) The result Is

the same for both parties duetothe properhes of exponents The reverse operatlonoffmdmg the Ioganthmusmgonlythe pubhckeys

and other publlcly available parameters appears to be computatlonally retractable

SOURCE Off Ice of Technology Assessment, 1994

The two parties in a transaction might have dif- Net prototype, for example, will use public keys

--

ferent CAs depending on their location, function,

and so forth. Each CA would then have to assure

itself its underlying security policy assumptions

are not violated when handing off from one intermediary to another. To do this, each CA would

confirm that each other CA was authentic, and that

the other CAs’ policies for user authentication

were adequate.

Certification authorities have been established

for use with Internet Privacy-Enhanced Mail and

other functions. The recently formed Commercecertified through existing and future authorities .77

“Value-added” telecommunication providers already perform several electronic data interchange

(EDI) services such as archiving, postmarking,

acknowledging receipt, and assuring interoperability with other value-added carriers. Such carriers typically concentrate in one business sector

but could, in principle, expand to provide services

to a larger and more diverse market. Banks also

have experience with storing valuable documents

77 For ~ descrlp[lon of ConlnlerceNet, SeC John W. Verity, “’Truck Lanes for’ the Info Highway,” Business Week, Apr. I g, 1 ~Q, PP. I I z- I I Q.
Chapter 2 Safeguarding Networked Information 155

Carol generates a session I

key to-be shared with Ted Ted has a

public key and

a private key

Ted uses the session

key to encrypt and decrypt

communication with Carol

I I - L I

NOTE Securty depends on the secrecy of the session key and private keys, as well as the authentlclfy of the public keys

(e.g., in safe deposit boxes), selling checks backed themselves at a Post Office in the same manner

by their own funds, fulfilling conditions under that identification for passports is accomplished

trust agreements, and employing individuals who today. The certificates would be available online

act as notaries public. Such experience could also through existing networks such as the Internet and

be extended to electronic commerce to act as CAs would be authenticated with a Postal Service pubor to perform other functions. lic key. Additional transaction services would be

The U.S. Postal Service has proposed that it provided for time and date stamping and archivalso become a certification authority.78 Those de- ing, all authenticated with the Postal Service

siring distribution of public keys would identify

78 Mitre Corp., “Public Key Infrastructure Study,” contractor report prepared for the National Institute of Standards and Technology, April

1994.
56 I Information Security and Privacy in Network Environments

Alice Bob

I J L J

I

I

i

NOTE An authentication scheme tor the publtc keys may be used

public key.79 Proponents point out that the Postal development of a public-key infrastructure,

Service is already trusted with important docu- Which, in turn, is strategic to electronic commerce

ments and is widely located. Critics note that al- and to networked information in general (see

though it provides certified mail services, the chapter 3). Current proposals for a public-key inPostal Service has no real experience in electronic frastructure need further pilot testing, developcommerce; important details remain to be re- ment, and review, however, before successful

solved regarding liability and accountability. results can be expected.

The establishment of a system of certification

authorities and legal standards is essential for the

79 Richard R(J~~el], Technology” Applications, U.S. Postal ServiCe, ~rSOna] communication, June 1 j, 1994.
Chapter 2 Safeguarding Networked Information 157

9 Emergency Response Teams

Any network benefits from having a central clearinghouse for information regarding threats to the

network. In small networks, the “clearinghouse”

may be simply the system administrator who

manages the net work. Larger net works often have

a team of individuals who collect and distribute

information for the benefit of system administrators for its member networks. Such clearinghouses-called “emergency response teams” or

“incident response teams"--are vital to large networks of networks such as the Internet.

The most prominent of these is the Computer

Emergency Response Team (CERT), sponsored

since 1988 by the Software Engineering Institute

at Carnegie Mellon University and the Department of Defense’s Advanced Research Projects

Agency (ARPA). CERT provides a 24-hour point

of contact available by telephone, facsimile, or

electronic mail. CERT collects information about

vulnerabilities; works with vendors and developers, universities, law-enforcement agencies,

NIST, and NSA to eliminate the vulnerabilities

and threats; and disseminates information to systems administrators and users to eliminate vulnerabilities where possible. According to its policy,

CERT does not disseminate information about

vulnerabilities without an associated solution

(called a “patch”) since malicious users could exploit the vulnerability before the majority of users

had time to develop their own repairs. Some

claim, however, that CERT could be more effective by readily disseminating information about

vulnerabilities so that users can design their own

patches, or perhaps if no solutions are found after

a fixed period of time.

CERT is not the only emergency response

team. The Defense Data Network (DDN) Security

Coordination Center, sponsored by the Defense

Communications Agency and SRI International,

is a clearinghouse for vulnerabilities and patches

on the MILNET.80 The Computer Incident Advisory Capability was established at Lawrence Livermore Laboratory to provide a clearinghouse for

classified and unclassified information vulnerabilities within the Department of Energy, including

those relating to the Energy Science Network (ESnet). 81

These and other emergency response teams

form the Forum of Incident Response and Security Teams (FIRST), created by ARPA and NIST.

The forum is intended to improve the effectiveness of individual and overall response efforts. Its

members include groups from industry, academia,

and government, both domestic and international.

82

The Administration has proposed that NIST, in

coordination with the Office of Management and

Budget and NSA, develop a governmentwide crisis response clearinghouse. This clearinghouse

would serve existing or newly created agency response teams to improve the security of agency

networks.83 

Emergency response efforts are vital to safeguarding networked information, due to the relative lack of shared information about

vulnerabilities in information networks. Expanding current efforts could further improve the coordination of system administrators and managers

charged with protecting networked information.

80 In ] ~x~ the nlllltav Conlnlunlcatlons” pan of tie original ARPANET (sponstmd by the Ad\ anced Research pr~~~’cts Agcnc>f in the ~’-

partnwnt of Defense) was spl I( off [(l f(mn the MI LNET. The remaining part of the ARPANET was dec(mlmissi(med in 1990, but Its functitma] it}

c(mtinuwl under the Natl{mal Science Ftwndation’s NSFNET, which in turn became a prominent backhme of what is called t(day the tn(emet.

~ I ~e ~.pa~rllent of Energy ‘S Energy science Netwt~rk (13net) includes a bachb(me and many smaller networks that are ail c(mnected tc~

the Internet. slrnilar to the operati~m of the National Science F(~undatitm’s NSFNET, and the Nati(mal Aer(mautics and Space Adrninlstratl{m’s

Science Internet (NS[).

~~ L Daln Gary, Manager, Computer Emergency Resp~nsc Team C()(mllnati(m Center, testirmmy before the Htmse Subc(~mmittce tm Science, Mar. 22, 1994.

8 I ~f~ce ,)f the Vice ~eslden[, (Ip. cit., f(mtnote 65.
58 I Information Security and Privacy in Network Environments

1 Users, Ethics, and Education

Unauthorized use of computers by authorized users is estimated to be the second largest source of

losses (after human error), but users nevertheless

must be trusted not to wrongly copy, modify, or

delete files. Auditing and other security features

do not always catch violations by trusted personnel, or may not act as a deterrent. The security of

any system will always require that its users act in

an ethical and legal manner, much as traffic safety

requires that drivers obey traffic laws, although in

practice they often do not (see box 2-6).

Ethical and legal use of computers and information is not clearly defined, however. Computer networks are entirely new media that

challenge traditional views of ownership of information, liability, and privacy (see chapter 3).

Who is or who should be liable if a computer system fails, or if an “expert” computer program

makes a poor decision? When can or when should

employers or the government be able to monitor

employees and citizens? When is or when should

the copying of computer software be illegal? For

these and other issues, it is not always clear when

society should extend traditional (paper-based)

models to networks, and when society should devise new rules for net works where they seem necessary.

84 Should ethics--and the laws based on

ethics—be rule-based or character-based, or based

otherwise?

Ethical questions also extend to what constitutes proper behavior or acceptable use on publicly available networks. As the Internet reaches

more people, commercial enterprises are exploring it for uses other than education and research.

Using the Internet for unsolicited commercial

promotions has historically met great opposition

I

The Office of Technology Assessment asked

the advisory panel for this study why it is so difficult to safeguard networked information, There

are many reasons; many of them are discussed

in detail in this report, Here is a sample of the

panelists’ responses:

■

■

■

m

●

Safeguards involve a tradeoff with cost and utility (However, the alternative-not using safeguards-can have catastrophic consequences

and cost much more than the safeguards!)

Successes in safeguarding information rarely

produce measurable results, and successful

managers are poorly rewarded, Failures can

produce sensational results and managers are

put on the defensive.

Information is abstract, its value is only now becoming understood, Information cannot be

seen, and losses or disclosures can go undetected.

The user is often trusted to protect information

that does he or she does not “own,”

Information safeguards are relatively new and

must evolve with the rapidly changing information industry.

SOURCE Office of Technology Assessment, 1994

from users, but recent events indicate a desire on

the part of some to change this tradition. Now that

more commercial enterprises are attaching to the

Internet and the “backbones” for the large part are

removed from the oversight of the National Science Foundation, the old rules for acceptable use

of the Internet could change.85 Who defines ac8Lt Tom Fore~ter and peq MiJrn~Jn, Computer Ethics: Cautionary Tales andEthicalDiiemmas in cbrnpuliq? (Cambridge, MAI MIT ~ess?

1990).

85 Users are expected to use the federally subsidized portions of the Internet-such as the NSFNET backbone+mly for nonprofit resealch

or education purposes. This policy is called the Acceptable Use Policy, analogous to acceptable practices used in amateur radio. Those portions

not subsidized by the federal government have no such restrictions, but a user culture exists that discourages use of the Internet for unsolicited

electronic mail and other uses. The Coalition for Networked Information is expected to adopt guidelines to acceptable advertising practices on

the Internet. Ethical principles endorsed by the Internet Activities Board are listed in Vint Cerf, “Ethics and the Internet,” Communications ofrhe

ACM, vol. 32, No. 6, June 1989, p. 710.
——

Chapter 2 Safeguarding Networked Information 159

ceptable use and proper etiquette? What is the balance between threatening or misleading behavior

and free speech? What new practices might be

necessary to control fraud?

Experts note that users generally want to know

where the line is drawn regarding ethical use of information, and may only need some simple but

memorable guidelines. For example, relatively

few users probably know what constitutes fair use

of copyrighted information, but would appreciate

knowing what they can legally copy and what they

cannot. Children are taught early on that writing

in library books is an unethical practice; straightforward, ethical computer practices can also be

taught to children at an early age. Training in the

workplace also can help users to understand ethical principles, but such programs are only effective if they are well-developed, do not appear

superficial or insincere, and are repeated.86

Group behavior is particularly important since

groups of users do not necessarily behave in the

same manner as individuals. Even relatively secure networks rely on the cooperation of users to

alert system managers to problems or threats. A

strategic employee who never takes a vacation, for

example, may be a worker who cannot leave work

for a single day without risk of becoming discovered in a security violation. An unannounced

change in a program’s operation may indicate that

it has been altered. Fellow users can note this and

other unusual net work behavior that may signal an

intruder in the system, a virus that is taxing network resources, or a design fault. “Just as depersonalized ‘renewed’ cities of high-rises and

doormen sacrifice the safety provided by observant neighbors in earlier, apparently chaotic, gossip-ridden, ethnic neighborhoods,” group

behavior determines whether users work positively to protect the network, or whether they act as

bystanders who lack the motivation, capability, or

responsibility to work cooperatively.87

User education, therefore, requires progressive

approaches to steer the group behavior to be sup-

 Such approaches in- portive and participatory.88

elude using realistic examples and clearly written

policies and procedures, and emphasizing improvements rather than failures. Management

should seek to inspire a commitment on the part

of employees rather than simply describing policies, and it should conduct open and constructive

discussions of safeguards rather than one-sided

diatribes. Security managers should build on oneto-one discussions before presenting issues at a

meeting, and monitor more close] y the acceptance

of policies and practices by “outliers’’--employees who are the most or least popular in the

group-since they are less likely to comply with

the group behavior.

The Computer Ethics Institute was created in

1985 to advance the identification and education

of ethical principles in computing, and sponsors

conferences and publications on the subject.

Groups such as the Federal Information Systems

Security Educators’ Association and NSA are also

working to produce curricula and training materials. The National Conference of Lawyers and Scientists (NCLS) is convening a series of two

conferences on legal, ethical, and technological

aspects of computer and network use and abuse

and the kinds of ethical, legal, and administrative

frameworks that should be constructed for the

global information infrastructure.89 A consortium

of private- and public-sector groups recently announced a National Computer Ethics and Responsibilities Campaign to raise public awareness of

86 see ~1~() Na[i(,na] R~~~ar~h Ctmncil, op. cit., f~NJtno[~ c, P. 7 ] ~.

87 lb[(i., p. 164.

88 M E 

. . Kahay “S(xlal psych(~](~g~ and Inft)sec psych(~-s(~ial Factors in the ]n]p]ell]cntath)n of !nf(~mlallf~n s~tllrlt>’ pt)liCy,”’ f’ro~”cedln,~~

oj”the 16!h Notional Computer .Securlry Conjcrence (Baltlm(m, MD: Sept. 20-23, 1993), p. 274.

89 Na(ional conference of Lawyers and sCl~ntlStS, “Pr(Npcctus: NCLS C~mfmtmces (m Legal, Ethical, and Tcchnt~lt~glcal Aspects t~f C’(m~-

puter and Network Use and Abuse,” Irvine, CA, December 1993.
60 I Information Security and Privacy in Network Environments

the social and economic costs of computer-related

crimes and unethical behaviors and to promote responsible computer and network usage.

The promulgation of ethical principles in computer networks has heretofore received relatively

little attention, and would benefit from broader

support from schools, industry, government, and

the media. With the rapid expansion of the networked society, there is a great need to support

reevaluation of fundamental ethical principles—

work that is current] y receiving too little attention.

More resources also could be applied to study and

improve the methods and materials used in teaching ethical use of networked information, so that

more effective packages are available to schools

and organizations that train users. Finally, more

resources could be devoted to ethical education

for all types of users—including federal employees, students, and the public at large.

1 Legal Sanctions and Law Enforcement

The rapid pace of technological change challenges

criminal and liability laws and regulations that

were conceived in a paper-based society (see also

chapter 3).90 An error, an insider violation, or an

attack from outside can debilitate an organization

in many cases, as can the obstruction of regular

business from an improperly executed law-enforcement action. Computer cracking and other

malicious behavior is likely to increase, and the

perpetrators are likely to become more professional as the Internet and other components of the infrastructure mature. Safeguards may become

more widespread, but the payoffs will also increase for those who seek to exploit the infrastructure’s weaknesses.

However, misconduct or criminal behavior

may arise most from opportunities presented to

otherwise loyal employees who do not necessarily

have significant expertise, rather than from the

stereotypical anti-establishment and expert

“cracker.” Violators may perceive that detection is

rare, that they are acting within the law (if not ethically), and that they are safely far from the scene

of the crime. Also, some crackers who were

caught intruding into systems have sold their

skills as security experts, reinforcing the image

that violators of security are not punished. Many

of these insiders might be deterred from exploiting certain opportunities if penalties were enforced or made more severe.

It is not clear, however, that increasing criminal

penalties necessarily results in less computer

crime or in more prosecutions. Considerable legislation exists to penalize computer crimes. but

criminals are difficult to identify and prosecute.

Law-enforcement agencies lack the resources to

investigate all the reported cases of misconduct,

and their expertise generally lags that of the more

expert users. In some cases where alleged violators were arrested, the evidence was insufficient or

improperly obtained, leading to an impression

that convictions for many computer crimes are

difficult to obtain. Better training of law-enforcement officers at the federal, state, and local levels,

and more rigorous criminal investigations and enforcement of existing laws maybe more effective

than new laws to strengthen sanctions against violators.91

Organizations for their part can also clarify internal rules regarding use of networked information, based on the organization’s security policy.

The organization can use intrusion detection and

other tools to identify misconduct and apply its

own sanctions in cases where sufficient evidence

is discovered. The monitoring of employees raises

questions of privacy, however, with some employers preferring to warn employees when they

are monitoring them or obtaining written permission beforehand. Some security professionals

claim the need for an escrowed key in the hands

of the organization’s security officers (in place of

w see Ian Walden, ~~]nfomlatlon” securl~ and he Law,”’ in Irijiirma(ion Security Handbook, William Caelli, ~nnis LOngiey, ~d Michael

Shain (eds.) (New York, NY: Stockton Press, 1991), ch. 5.

91 F{~~ a review of s~cific examples, see Bruce Sterling, The Hacker Crackdown (New York, NY: Bantam Bt~ks, 1992).
Chapter 2 Safeguarding Networked Information 161

or in addition to safekeeping by law-enforcement

officials). In case of an investigation, the security

officers could use the escrowed key, but all other

employees would be exempt from random monitoring. 92

Criminal and civil sanctions constitute only

one aspect of safeguarding networked information. Further study is needed to determine the effectiveness of such sanctions, as opposed to

improving the effectiveness of federal, state, and

local law-enforcement agencies to act on existing

laws.

i Regulatory Bodies

Given the fragmentation of the telecommunications industry and other developments in the last

decade, existing federal oversight over telecommunications is less comprehensive than in the

past. Many modem telecommunications providers such as value-added carriers and Internet providers are not reviewed by the traditional entities,

although such providers are increasingly important to businesses and government.

Existing federal agencies that already review

different aspects of the security and reliability of

the public-switched telephone networks include

the National Security Telecommunications Advisory Council (NSTAC), the National Communications System (NCS), and the Federal

Communications Commission (FCC).93 NCS

was established in 1963 to coordinate the planning

of national-security and emergency-preparedness

communications for the federal government. NCS

receives policy direction directly from the President and the National Security Council, but is

managed through the Department of Defense and

includes member organizations from many other

federal agencies. NSTAC was established during

the Reagan Administration to advise the President

on national-security and emergency-preparedness

issues, and is composed of presidents and chief

executive officers of major telecommunications and defense-information-systems companies. NSTAC works closely with NCS.

The FCC plays a strong role in reliability and

privacy issues regarding the public-switched telephone network. The Network Reliability Council

was established in 1992 by the FCC to provide it

advice that will help prevent and minimize the impact of public telephone outages. 94 It is composed

of chief executive officers from telephone companies, representatives from state regulatory agencies, equipment suppliers, and federal, corporate,

and consumer users.

The federal government can also issue policies

and requirements regarding the security of information stored in and exchanged between financial institutions, for example, for physical

security, or contingency planning in the event of

a natural disaster. Finally, the federal government

regulates vendors through export controls.

In other industrial sectors (e.g., transportation),

the federal government uses safety regulations to

protect consumers. Some have suggested that this

function could be extended to critical hardware

and software products for information systems, in

92 Dtmn B. Parker, SRI, Jnc., “Crypto and Avoidance of Business Information Anarchy,” Menlo Park, CA, September 1993.

‘)3 The avallablllt y, reliabil ity, and survivability of the public-switched telephone network have been the subject of other studies and therefore is not the ft~us t~f this repro. See, e. g., National Research Council, Growing Vulner~bi/i(y of(he Public S}~i/ched Nerwurks: /nrp/icalions

jor Nollonu/ .%cwwy Emer~en(y Preparedness (Washington, DC: National Academy Press, 1989). See also Office of the Manager, Natitmal

C{]mmunicatl(ms System, ‘The Electri~nic Intrusitm Threat to National Seeurity and Emergency Preparedness (N!YEP) Telecommunicatt(mAn Awareness Document,’” Arlingt(m, VA, Sept. 30, 1993; Richard Kuhn, Patricia Edfors, Victoria Howard, Chuck Capuu), and Ted S. Phillips,

.’lmprf}~ Ing Publlc Switched Netwimk Security in an Open Environment,” IEEE Cumpu[er. August 1993, pp. 32-.35; and U.S. C(mgress, Office

of Technology” Assessment, Cri(~ca/ Connections: Communicationsfor lhe Future, OTA-CIT- 407 (Washingt~m, DC: U.S. G(wemment Printing

Office, January 1990), ch. IO,

~~ The ~ouncll itself recently requested tha[ the FCC disband the council, but the FCC rejected the request, offering instead that senk~r ~~fficers fr(m~ the orgamzations c(wld attend in place of the chief executive officers. The FCC also proposed” a revised charter for the c(mncil, to

temlinate In January 1996.
62 I Information Security and Privacy in Network Environments

order to provide safe and secure systems and a safer infrastructure overall, and to strengthen the

market for “secure” products that are currently too

risky for individual vendors to produce. Vendors,

on the other hand, argue that regulation makes

products more expensive and slows their development. 95

These issues are beyond the scope of this report, but further study is warranted. Further study

is also needed on product quality and liability issues, including guidelines or requirements for

contingency plans, adoption of standards or generally accepted practices, establishment of liability for hardware and software products and

services, and restrictions on the use of personal,

proprietary, and copyrighted information that

travels over networks. Such oversight could come

from existing bodies as well as new bodies such

as a privacy board (see chapter 3).

1 Research and Development

Much of existing knowledge in information safeguards—and in networking technology, including

the Internet itself—arose from research by the federal government through the Advanced Research

Projects Agency (ARPA), NIST, NSA, and other

agencies, as well as from the private sector. While

some of the work is applicable to civilian applications, most of the work has been oriented toward

defense. 96 The National Science Foundation also

has supported many research activities related to

information networks through its management of

the NSFNET, but security has not been a major activity. NSF has essential] y commercialized the operation of the NSFNET, but considerable work

remains to safeguard the Internet and other networks.

The National Performance Review has called

for NIST to coordinate development of a government-wide plan for security research and development including a baseline assessment of current

research and development investment.97 Such research and development would address many of

the other areas discussed in this chapter, such as

risk analysis, formal models, new products, solutions to existing vulnerabilities, standards, product evaluations, system certifications, generally

accepted principles, training and certification of

information security professionals, the public-key

infrastructure, emergency response, and ethical

principles and education.

The National Research Council has also called

for research by ARPA, NSF, and others in problems concerning secure firewalls, certification authorities, and other areas. 98 The National

Research Council also found that “there is a pressing need for a stronger program of universitybased research in computer security. Such a

program should have two explicit goals: addressing important technical problems and increasing

the number of qualified people in the field. This

program should be strongly interconnected with

other fields of computer science and cognizant of

trends in both theory and uses of computer systems.” 99 The report further suggested that attention be given to cost-benefit models, new

techniques, assurance techniques, computer safety, and other areas with a practical, systems approach as opposed to viewing the topics overly

theoretically or in isolation.

With the Clinton Administration’s effort in the

National Information Infrastructure program, research and development in safeguards for networked information could take a new direction

95 Na[](lna] R~sear~h Council, op. cit., f(wtnote 6, pp. 165-173.

% ~c Internet it~elfgrew ~)ut of ARpA’s effo~s in the ARpANETgt~ing back to the 1970s. The ARPANET research Was intended to Pr(~vitie

a distributed infornlation system able to survive an attack that could eliminate a central information system.

~T office of the Vice President, op. cit., f(mtn(~te 65.

98 Na~lOnal Re~carch C{)uncl], ~ea/lzlng f~e /nformfion ~lifll~e (Washington, Dc: National Academy press, 1994), pp. 78-84, 101-102.

99 Nati{)na] Research C(mncil, t)p. cit., ft)(~tn(~te 6, Pp. ~~-215.
Chapter 2 Safeguarding Networked Information 163

both in the private sector and in government.

Additional resources could be applied to develop

and implement many of the efforts discussed in

this chapter.

GOVERNMENT’S ROLE IN

PROVIDING DIRECTION

The Clinton Administration is promoting the National Information Infrastructure (NII) initiative

to accelerate the development of the existing infrastructure and to facilitate, for example, electronic commerce and the transfer of materials for

research and education.100 The Administration

specifically calls for, among other things: review

and clarification of the standards process to speed

NII applications; review of privacy concerns; review of encryption technology; working with industry to increase network reliability; examining

the adequacy of copyright laws; exploring ways to

identify and reimburse copyright owners; opening

up overseas markets; and eliminating trade barriers caused by incompatible standards.

In a separate effort to “make government work

better,” the Clinton Administration also is promoting its National Performance Review (NPR),

which includes other actions that impact the safeguarding of networked information such as development of standard encryption capabilities and

digital signatures for sensitive, unclassified data,

and emphasizing the need for information security

in sensitive, unclassified systems.101 However,

the specific efforts to achieve these actions mayor

may not align with the NH or other efforts within

the Administration, or with the wishes of the Nation at large as represented by Congress.

The National Research Council recently produced a report at the request of the National Science Foundation on information networking and

the Administration’s National Information Infrastructure program.

102 The report supports work

by ARPA, NSF, and other groups on problems

such as developing secure firewalls, promoting

certification authorities and the public-key infrastructure, providing for availability of the networks, and placing stronger emphasis on security

requirements in network protocol standards. The

report notes that progress in security does not depend on technology alone but also on development of an overall architecture or plan, education

and public attitudes, and associated regulatory

policy. The report recommends a broader consideration of ethics in the information age, perhaps

housed in NSF or a national commission.

An earlier report by the National Research

Council on computer security called for, among

other things, promulgation of generally accepted

system security principles, formation of emergency response teams by users, education and training

1~ ~~ Nil Provam has nine principles and objectives: ] ) promote private-sector investment; 2) extend the “unlVersa] serVICe” c{)nccpl;

3) pr(~mo[e inm~vatifm and applications; 4) promote seamless, interactive, user-driven operation; 5) ensure lnf(~mlati{m security and netw(mk

reliability; 6) improve management of the radio frequency spectrum; 7) protect intellectual property rights; 8) c(xmiinatc with {Jther levels t~f

government and other nations; and 9) provide access to government information and improve government procurement. See lnfom~ati(m infrastructure Task Force, The National Infomlation Infrastructure: Agenda for Action,” National Telec(mmmnicati(ms and lnf(mnatl{m Administration, Washington, DC, Sept. 15, i 993. More generally, one White House official proposes that the Nll initiative ‘“will provide Americans the

inf(mnati(m they need, when they want it and where they want it—at an affordable price.” (Mike Nelson, Office of Science and Technolt)gy

Policy, speaking at the MIT Washington Seminar Series, Washington DC, Mar. 8, 1994.) Vice President Gore has noted that this does not mean

the federal government will construct, own, or operate a nationwide fiber (or other) network, however. He notes that mm.t of the fiber needed for

the backbones is already in place, but other components need support such as switches, software, and standards. See Graemc Brtw+nlng,

“Search for Tom~mow,” Na~iunul Journal, vol. 25, No. 12, Mar. 20, 1993, p. 67.

101 Other privacy and security actl{)ns promoted” are: establish a Privacy Protection Board; establish UnlfO~ privacy pr~~tection Practices:

develop general] y accepted principles and practices for information security; develop a national crisis response clearinghouse for federtil agencies; reevaluate security practices for national security data; foster the industry-government partnership for impr(wing services and security in

publlc telec(~mmunications; implement the National Industrial Security Pn)gram; develop a comprehensive lntemct security plan and co(miinate security research and development. (Office of the Vice President, op. cit., footnote 65. )

102 National Research Councl[, (Jp. cit., footnote 98, pp. 78-84, lo] - 1°2~ 1‘- “i “
64 I Information Security and Privacy in Network Environments

SKIPJACK is a classified, symmetric-key, encryption algorithm that was developed by the National

Security Agency to provide secure voice and data communications while allowing lawful access to

those communications by law-enforcement.1 According to the Clinton Administration, one reason the

algorithm IS classified is to prevent someone from implementing it in software or hardware with the

strong algorithm, but without the feature that provides law enforcement access 2 SKIPJACK is specified

in the federal Escrowed Encryption Standard (EES—see chapter 4),

Like the Data Encryption Standard (DES—see box 4-3), SKIPJACK transforms a 64-bit input block

into a 64-bit output block, and can be used in the same four modes of operation specified for the DES

The secret-key length for SKIPJACK is 80 bits, however, as opposed to 56 bits for the DES, thereby

allowing over 16,000,000 times more keys than the DES 3 SKIPJACK also scrambles the data in 32

rounds per single encrypt/decrypt operation, compared with 16 rounds for the DES,

Mykotronx currently manufactures an escrowed-encryption chip-the MYK78, commonly known as

the Clipper chip-that implements the SKIPJACK algorithm to encrypt communications between telephones, modems, or facsimile equipment The chip is intended to be resistant to reverse engineering,

so that any attempt to examine the chip will destroy its circuitry The chip can encrypt and decrypt with

another synchronized chip at the rate of 5 to 30 million bits per second depending on the mode of

operation, clock rate, and chip version,

The chip is initially programmed with specialized software, an 80-bit family key (as of June 1994

there was only one family of chips), a unique 32-bit serial number (the chip identifier), and an 80-bit key

specific to the chip (called the chip unique key) The chip unique key is the “exclusive or” combination

of two 80-bit chip unique key components, one component is assigned (with the chip identifier) to each

of the escrow agents chosen by the Attorney General 4

The Clipper chip is currently implemented in the AT&T Surity Telephone Device 3600 When a user

(Alice) wishes to secure her conversation with another user (Bob) using their Model 3600 devices, she

pushes a button and the two devices first generate an 80-bit session key using a proprietary, enhanced

version of the Diffie-Hellman public-key technique In this way, each device can calculate the session

key without actually sending a complete key over the network where it could be intercepted

1 See Dorothy E Dennmg, “The Clipper EncryptIon System, ” Arr?efican Sc/entM, VOI 81, July-August 1993, pp 319-322, and

Dorothy E Dennmg, Georgetown Umversty, “Cryptography and Esc:rowed Encryption, ” Nov 7, 1993

2“Addltlonally, the SKIPJACK algorlttlrn IS classified Secret-Not Releasable to Foreign Nationals This classlflcatlon reflects the

high quahty of the algorithm, I e , It incorporates design techniques that are representatwe of algorithms used to protect classified

InformationDrsclosureof the algorhhm would permit analysls that could result m drscovery of these classlfted design techmques, and

this would be detrimental to national securtty ” Ernest F Bnckell et al , “Skipjack Rewew Interim Report The Skipjack Algorithm,” July

28, 1993, p 7

3The “exhaustlvesearch” technlqueuses various keyson an input toproducea known output, until a match Is found or all possible

keys are exhausted The DES’s56-btkey length yleldsover 72trllllon posslblekeys, while SKIPJACK’ s80-blt keylengthylelds over 16

mllllonmore times as many keys as DES According to the SKIPJACK rewewpanel, If the cost of processing power IS halved every 1 5

years, it WIII take 36 years before the cost of breaking SKIPJACK through the exhaushvesearch techmque WIII equal the cost of breaking DES today Ibid

4 The creation of the chip umque key components IS a very Important step, If an adversary can guess or deduce these components with relatwe ease then the enhre system IS at nsk These key components are created and the chips are programmed mslde a

secure fachty with representatwes of each escrow agent The speclflc process IS classlfled, and an unclassified descrlptlonwas not

available as of this wrtmg

(continued)
Chapter 2 Safeguarding Networked Information 165

The devices then exchange the Law Enforcement Access Field (LEAF) and an “initialization vector”

The LEAF contains the session key (encrypted with the chip unique key), the chip identifier, and a 16-bit

authentication pattern, which are all encrypted with the family key Each device then decrypts the LEAF,

confirms the authentication data, and establishes an active Iink. The session key is then used to encrypt

and decrypt all messages exchanged in both directions

Each device also displays a character string. If the characters displayed on Alice and Bob’s devices

are different, this reveals an interception and retransmission of their communication by an eavesdropper, in what is called a “man-in-the-middle” attack

Law-enforcement agents are required to obtain a court order to monitor a suspected transmission If

they begin monitoring and ascertain that the transmission IS encrypted using the Model 3600, agents

first must extract and decrypt the LEAF (using the family key) from one of the devices The decrypted

LEAF reveals the chip Identifier With the chip identifier, they can request the chip unique key component from each of the two escrow agents With both components, they can decrypt session keys as

they are intercepted, and therefore decrypt the conversations 5

The Capstone chip also Implements the SKIPJACK algorithm, but Includes as well the Digital Signature Algorithm (used in the federal Digital Signature Standard—see chapter 4), the Secure Hash Standard, the classified Key Exchange Algorithm, circuitry for efficient exponentiation of large numbers, and

a random number generator using a pure noise source Mykotronx currently manufactures the Capstone chip under the name MYK80, and the chip is also resistant to reverse engineering Capstone is

designed for computer and communications security, and its first implementation is in PCMCIA cards

for securing electronic mail on workstations and personal computers

s The lnltlal phases of the system rely on manual procedures for preventing law enforcement frOm using escrowed keys affer the

courl order expires or on communications recorded prewous to the court order For example, the officer must manually enter the explratlondate mto fhe decrypt processor, manually delete the key when the court order exptres, and manually complete an audtt statement to present to the escrow agents The target system alms to enforce the court order by mcludmg with the escrowed keys an electronic certificate that IS valld only for the period of the court order The decrypt processor IS Intended to block the decryption when the

certlhcateexplres, andautomat!cally send anaudftstatemenl electrorwcallyto theescrowagents Asof June 1994, thedeslgnwas not

complete (Miles Smld Manager, Security Technology, NIST, presentation at NIST Key Escrow EncryptIon Workshop, June 10, 1994 )

SOURCE Office of Technology Assessment, 1994, and sources cted below

1

programs to promote public awareness, review for In this environment, the federal government

possible relaxation of export controls on imple- has several important roles that affect the safementations of the Data Encryption Standard, and guarding of networked information. Even though

funding for a comprehensive program of re- these roles are all intended to promote the needs

search.103 of the nation’s individuals and organizations,

1~~ Nati(;na] Research council, op. cit., f(~(Xnote 6.
66 I Information Security and Privacy in Network Environments

sometimes there are conflicts.104 These conflicts

are sometimes so polarizing or so important that

attempts to resolve them at an administrative level

can lead to poor decisions, or endless legal and operational problems from implementing a policy

that has only weak support from stakeholders.

While many of the details involve technology, the

fundamental debates about national values and

the role of government in society can only be resolved at the highest levels (see boxes 2-7 and

2-8) .

1 0 5

Thus, networked information poses a particularly difficult dilemma for government policymakers: good security is needed to protect U.S.

personal, business, and government communications from domestic and foreign eavesdroppers.

However, that same security then may hinder U.S.

intelligence and law-enforcement operations. Aspects of this dilemma are manifested in specific issues as the technology develops, such as the

following examples:

m

●

■

Cryptography policy is the focus of several debates, including export controls on cryptography and development of federal cryptographic

standards (see chapter 4).

Digital Telephony legislation

106 has been proposed that would require telecommunications

carriers “to ensure that the government ability

to lawfully intercept communications is not

curtailed or prevented entirely by the introduction of advanced technology.’’107 (A discussion

of digital telephony is outside the scope of this

report.)

Anonymous transactions. Many privacy advocates argue that certain monetary or other transactions (such as request of library materials) be

lw These roles are as follows:” First, government can provide a demfxratic framework for resolving debates and writing law to reglllate

activities. Second, it is a buyer and user of products and services; because of its size it can sometimes move the market in ways no other single

buyer can, and it must also safeguard its own agency networks. Third, it is a supplier of products and services, such as census and other information. Fourth, it is at times a catalyst that can enter the marketplace to stimulate research and development or establish new institutions and standards that eventually operate on their own. Finally, it intercepts communications for law-enforcement purposes and intelligence gathering.

lo5 See a]sc) L~ce J. Hoffman ~d pau] C. Clark, “Jmminent Policy Considerations in the Design and Management Of National ~d International Computer Networks,” IEEE Communications Magazine, February 1991, pp. 68-74; James E. Katz and Richard F. Graveman, “Pri\acy

Issues of a National Research and Education Network,” Te/emarics andlnformatics, vol. 8, No. 1/2, 1991; Marc Rotenberg, “Communications

Privacy: Implications for Network Design,” Communications of the ACM, vol. 36, No. 8, August 1993, pp. 61 -68; and Electronic Privacy 1nforrnation Center, /994 Crypqgruphy and Privacy Sourcebook, David Banisar (cd.) (Upland, PA: Diane Publishing, 1994).

106 me proP)sed Digital Telephony and Communications” privacy Act of 1994 was in draft at this writing. Nhkrn digital switches are

actually very fast computers that arrange and bill calls using complex software and pack thousands of calls together into optical fibers. The

Clinton Administration claims that not all such technology has been designed or equipped to meet the intercept requirements of law enforcement. It claims that law enforcement should be able to intercept those communications in certain circumstances, provided that a court order is

obtained and oflicia]s use appropriate measures. Critics charge that legislation is unnecessary or costly at best, and undesirable at worst; many

argue that individuals and corporations should have the right to absolutely secure their conversations if they choose.

107 See Dorothy E. ~nning, “T(> Tap t)r Nt)t To Tap,” and related articles in Communications of fhe ACM, w)]. 36, No. ~, March 1993, pp.

24-44.
Chapter 2 Safeguarding Networked Information 167

The Clinton Administration’s key-escrow encryption initiative (e.g., Clipper and the Escrowed Encryption Standard) is the most publicized escrowed-encryption scheme to date Other schemes for

third-party “trusteeship” of keys are possible, however One so-called fair cryptosystem scheme claims

to resolve many of the objections to the Administration’s proposal.1

Fair cryptosystems allow the user to split a secret key into any number of key components that can

be assigned to trusted entitles The user (e g , a corporation) might spilt the key and assign one piece

to a federal government agency and the other to a trusted third party, such as a bank Each trustee

would receive a signed message from the user, with the key component and its “shadows “The shadows demonstrate to the trustee that the key component is indeed associated with the corresponding

components assigned to the other trustees—without revealing the other components The certificate

would also indicate where the other key components are held In a criminal Investigation, following due

process, a law-enforcement agency could obtain the key components from the two trustees

Other combinations are possible, for example, the user could design a system such that any three of

four key components might be sufficient to decrypt its communications For each secure telephone, the

user might also keep a complete secret key for internal investigations, or in case of loss or sabotage of

data

The algorithms used to Implement fair cryptosystems could Include a time variable so that the deposited key components change periodically Or, the key components could be made to calculate a set

of session keys (which could change periodically) that would be valid for only the prescribed time. The

user would choose the actual algorithm, which could be one of many that are subject to public review.

Fair cryptosystems also could be Implemented in software to reduce cost In a software implementation of a fair public-key cryptosystem, the user would be motivated to assign the key components to

trustees in order to obtain permission to post his or her “public keys” in a key distribution or certification

system The public keys are used to initiate communications and to perform electronic transactions

among parties who have not agreed in advance on common secret keys Thus, the user has a great

incentive to have his or her public keys made available Without such permission from certification authorities, the user would have to distribute his or her public keys in a less efficient fashion In a hardware

Implementation, chips can be programmed to require proof that deposit of key components with trustees has taken place 2

This and other related schemes3 claim to address both corporate4 and law-enforcement needs The

Escrowed Encryption Standard proponents note that the fair cryptography schemes require an action

on the part of the user to submit the key components to trustees, while the EES does not—users cannot

keep the escrowed keys from its escrow agents. Critics of the EES proposal note, however, that criminals and adversaries can, nevertheless, superencrypt over EES encryption (or any other scheme) Foreign companies and governments, and many others, also may find key-escrowed encryption objectionable if the U S government keeps the escrowed keys

] SIIVIO Mlcall, Laboratory for Computer Science, Massachusetts lnst@_de of Technology, “Fair Cryptosystems, ” MIT Technical

Report MIT/LCSflR-579 b, November 1993 See also SIIVIO Mlcall, “Fair Cryptosystems vs Cllpper Chip A Brief Comparison, ” Nov

11, 1993, SIIVIO Mlcall, “Fair Cryptosystems and Methods of Use, ” U S Patent No 5,276,737 (Jan 4, 1994), and U S Patent No

5,315 658( May24, 1994) NISTannounced anon-excluswe hcensmgagreement mprmclplewlth Sllvlo Mlcall Thellcenseforthe 737

and 658 patents would cover everyone “using a key escrow encryption system developed for authorized government law enforcement pur~ses “(NIST press release, July 11, 1994)

2 Frank W Sudla, Bankers Trust Company, personal communlcatlon, Apr 22, 1994

s M J B Robshaw, RSA Laboratories, “Recent Proposals To Implement Fair Cryptography, ” NO TR-301, Oct 19 1993

4 Dorm B parker, SRI International Menlo Park, CA, “Crypto and Avoidance of Business information Anarchy, ‘September 1993

SOURCE Otflce of Technology Assessment, 1994, and cited sources
68 I Information Security and Privacy in Network Environments

kept anonymous.

108 On the other hand, some

businesses and law enforcement have an interest in maintaining the electronic trail for billing, marketing, or investigative purposes. In

one example, a debate could arise over the privacy or anonymity of electronic monetary

transactions over information networks. Such

"electronic cash” or other transactions would

need strong safeguards to assure that the cash

was exchanged without tampering or monitoring and could be made anonymous to protect

individual privacy. 109 These safeguards might

also eliminate the paper trail that exists in many

current transactions, facilitating money laundering and extortion.

110 In such an event, lawenforcement authorities may seek to

implement provisions that allow such transactions to be monitored in certain cases. (See

OTA, Information Technologies for Control of

Money Laundering, forthcoming 1995.)

= Electronic commerce. Digital signatures and

other cryptographic techniques can be used to

protect electronic documents and enforce electronic contracts. The development of a publickey infrastructure is strategic to further

expansion of electronic commerce. Cryptographic techniques and other safeguards may

be used to secure or track copyrighted documents, bill users, collect fees, and so forth. (See

chapter 3.)

1~ l~sue~ relating t. ~onymlty and “digita] libraries” are discussed in U.S. Congress, Office Of Technology Assessment, Accessibility (1~

Integrity of Nemwrked Informurion Collections, background paper prepared for OTA by Clifford A. Lynch, BP-TCT- 109 (Washington, DC:

Office of Technology Assessment, July 1993).

1~ See David Chaum, “AChleVing El@rOniC Privacy,” Scientific American, August 1992, pp. 96-1o1.

110 Sebastiam Von S{)lms and David Naccache, “on Blind Signatures and perfect crimes,” Computers and Security, vol. 1 I, N{). 6,1992, p.

581.
L

aws develop in response to society’s needs. They evolve

in the context of the mores of the culture, business practices, and technologies of the time. The laws currently

governing commercial transactions, data privacy, and intellectual property were largely developed for a time when telegraphs, typewriters, and mimeographs were the commonly used

office technologies and business was conducted with paper documents sent by mail. Technologies and business practices have

dramatically changed, but the law has been slower to adapt. Computers, electronic networks, and information systems are now

used to routinely process, store, and transmit digital data in most

commercial fields. As the spread and use of information technologies in the business world have quickened, the failure of current

laws to meet the needs of a digital, information-based society has

become apparent.

This chapter spotlights three areas where changes in communication and information technologies are particularly significant:

1. Electronic commerce. As businesses replace conventional

paper documents with standardized computer forms, the need

arises to secure the transactions and establish means to authenticate and provide nonrepudiation services for electronic

transactions, that is, a means to establish authenticity and certify that the transaction was made. Absent a signed paper document on which any nonauthorized changes could be detected,

a substitute for the signature and a means to prevent, avoid, or

minimize the chance that the electronic document has been altered must be developed.

Legal

Issues and

Information

Security 3

169
70 I Information Security and Privacy in Network Environments

Protection of privacy in data and the international effect of efforts on the part of the

European Union (EU) to protect personal information. Since the 1970s, the

United States has concentrated its efforts to

protect the privacy of personal data on those

data collected and archived by the federal government. Rapid development of networks and

information processing by computer now

makes it possible for large quantities of personal information to be acquired, exchanged,

stored, and matched very quickly. As a result,

a market for computer-matched personal data

has expanded rapidly, and a private-sector information industry has grown around the demand for such data. Although the United States

does not comprehensively regulate the creation

and use of such data in the private sector, foreign governments (particularly the European

Union) do impose controls. The difference between the level of personal privacy protection

in the United States and that of its trading partners, who in general more rigorously protect

privacy, could inhibit the exchange of data with

these countries. ’

Protection of intellectual property in the administration of digital libraries. The availability of protected intellectual property in

networked information collections, such as

digital libraries and other digital information

banks, is straining the traditional methods of

protection and payment for use of intellectual

property. Technologies developed for securing

information hold promise for monitoring the

use of protected information, and provide a

means for collecting and compensating the

owners of intellectual property.

19th-century “cipher wheel” believed to be the oldest extant

encryption/decryption device.

ELECTRONIC COMMERCE

Businesses are increasingly using electronic messaging, networked computers, and information

systems for conducting business that was once

transacted solely on paper or by telephone. Electronic commerce is rapid and accurate and can reduce the cost of doing business. Electronic mail,

facsimiles, and standardized electronic business

forms are transforming the marketplace, changing

the way that business is transacted, and causing

firms to restructure operations.2 Distance is no

longer a significant barrier. Business can be conducted as quickly and easily halfway around the

world as it once was up and down Main Street,

USA. For example, automated electronic business

1 Some commentators suggest that there maybe a subtext in some of the EW activities in this area, including the desire on the part of some to

create a “Fro-tress Europe” m to negotiate certain national concerns into law for the entire EU. (Susan Nycum, attorney, Baker & McKenzie,

personal communication, June 1994.) Others question whether it is possible to fairly evaluate the motivations for the EU approach to deterrmne

whether they are due to cultural differences or economic competition. (Richad Graveman, Member of Technical Staff, Bellcore, personal communication, April 1994.)

2 U.S. Congress, OffIce of Technology Assessment, Elecwnic Enterprises: Lwking w Ihe Fufure, OTA-TCT-600 (Washington, DC: US.

Government Printing Office, May 1994).
—

Chapter 3 Legal Issues and Information Security 171

transactions, such as Electronic Data Interchange

(EDI), enable businesses to contract for sale of

goods electronically, process purchase orders, invoice for the transaction, and issue shipping notices in a one-step process. EDI is available to

businesses that can access a network with the requisite hardware and software for generating messages and forms with a standard EDI format. EDI

has existed since the 1970s; though its use continues to grow, it is only an evolutionary step in the

development of the electronic marketplace in the

global economy. In the future, data and information will flow freely among international trading

partners and firms as electronic commerce displaces the traditional forms of business transactions. However, the universal acceptance of

networks for transacting business requires securit y measures to ensure the privacy needed for commercial transactions in a global competitive

environment. Security measures that provide assurance that the authenticity and integrity of a

communication have not been compromised will

tend to support the enforceability of agreements

by the legal system.

While electronic computer messaging technology allows many business transactions to be handled in a paperless fashion, the law of contract and

commerce is still based on a paper system paradigm. As a result, businesses confront new legal

issues as they implement electronic trading systems. Among these are questions regarding contractual writing requirements, legally binding

signatures, and use of electronic communications

as evidence of a contract. Government and industry can only make use of these capabilities if electronic transactions are secure and enforceable.

The security issues that must be dealt with are:

1) requirements for authentication of the source of

a transaction, 2) assurance that the message content is unaltered, 3) prevention of disclosure of the

transaction to unauthorized persons, and 4) verification of receipt of the transaction by the intended

trading partner.

Statute of Frauds and Electronic

Commerce: The Writing and

Signature Requirement

The Statute of Frauds was developed primarily to

discourage fraud and perjury in proving the existence and content of a contract. Its essential function is to bar proof of certain contracts unless a

sufficient writing exists for certain transactions. s

The Statute of Frauds demands at least some evidence of a contract; a party may not claim that an

oral contract or modification was made without

submitting some proof. One method of proof is

that the contract be memorialized, i.e., set forth

with certainty, in a signed writing.

Section 2-201 of the Uniform Commercial

Code (U.C.C.) (for discussion of the U.C.C. and

security requirements, see box 3-1 ), which is the

U.C.C.’s Statute of Frauds, requires that all contracts for the sale of goods over $500 be in a writing sufficient to indicate that a contract for sale has

been made and signed by the party, or the party’s

3 However, oral c(mtracts are binding in many situations.
72 I Information Security and Privacy in Network Environments

Article 4A of the Uniform Commercial Code, which regulates electronic funds transfers, is an example of a provision that creates an incentive for parties to implement commercially reasonable security

procedure, to detect fraud.1 Section 4A-201 defines a security procedure as follows.

[A] procedure established by agreement of a customer and a receiving bank for the purpose of (t) verifying

that a payment order or communication amending or canceling a payment order is that of the customer, or (ii)

detecting error in the transmission or the content of the payment order is that of the customer, or (iii) detecting

error in the transmission or the content of the payment order or communication. A security procedure may require

the use of algorithms or other codes, identifylng words or numbers, encryption, callback procedures, or similar

security devices. 2

Security procedures are specifically referred to in section 4A-205, which governs erroneous payment

orders, and sections 4A-202 and 4A-203, which govern the authorization and verification of payment

orders. 3 Although the decisions of whether and to what extent security procedures will be used are left

to the parties,4 these sections are drafted to provide incentive to both parties to the transaction to implement security procedures

Section 4A-205 provides the party sending an order electronically with incentive to bargain for the

implementation of security procedures Under section 4A-303, the sender of an erroneous or incorrect

order Is, generally, Iiable 5 Section 4A-205, however, allows the sender to shift the risk of loss to the

receiving bank if 1 ) the sender and receiver have Implemented security procedures, 2) the sender can

prove that the sender or the person acting on the sender’s behalf compiled with the security procedures, and, (3) had the receiving bank also complied, the errors would have been detected.6 Section

4A-205 does not apply unless both parties agree to the Implementation of security procedures 7 Security measures are not effective unless both the sender and the receiver comply with the procedure 8

‘ WWam Lawrence, “Expansion of the Uniform Commercial Code Kansas Enacts Art[cle 4A, ” VOI 59, Kansas Bar Assoclat(on

Journa/, at 2733, (September 1990)

2 Umform Commercial Code Section 4A-201 (1992)

3 lbld , sec 4A-201 comment

4 Ibid , sec 4A-205 commenl 1

5 Ibid , sec 4A-303

6 Ibid , sec 4A-205(a)(l) and comment 2 to 4A.205

7 U C C sec 4A-205 comment 1

8 Ibid , sec 4A-2t)5 comment 2

—

authorized agent or broker, against whom enforce- quirements: the writing must evidence a contract

ment is sought. 4 The comment to section 2-201 for the sale of goods, must be signed, which instates that a writing sufficient to satisfy the section eludes any authentication identifying the party to

must meet only three “definite and invariable” re- be charged, and must specify the quantity.5

4 An increasingly important area of inquiry in the discussion of electronic commerce pertains to electronic transacti(ms when the subject

matter of the transfer is information. An example of such a question is: what type of contracting will occur when, through use of electron~c

search t(x)ls (e.g., ‘“gophers”) infomlation databases can be sought out, entered. and data extracted (for a fee), with(mt any direct human inv(~lvcment in accepting m rejecting a contract. For further analysis of such issues, see R. Nimmer and P. Krauthaus, “information as Property Databases and Commercial property,” Inrernationul .lomral ofl.aw) and Information Technology, vol. 1, No. 1, 1993, p. 3; and R. Nimmer and

P. Krauthaus, “Infomlation as Commodity: New imperatives of Commercial Law,” ]-a’ and Conlemporury Problems, vol. 55, No. 3, summer

1992, p. 3.

s U.C.C. section 2-201, comment 1 (1 992).
Chapter 3 Legal Issues and Information Security 173

Similarly, section 4A-202 provides the receiving bank with an Incentive to use security procedures

Under subsection b, the receiving bank can shift the risk of loss to the customer if an unauthorized

payment order is accepted by the receiving bank in compliance with commercially reasonable security

procedures 9

Under Article 4A, what constitutes “commercially reasonable” security measures IS a question of

law. 10 Factors important in this analysis include the type of customer, the frequency and size of the

customer’s payment orders, and the security procedures used by similar banks and customers.11 The

purpose of subsection b is not to make banks ensure against fraud, but rather to encourage them to

use commercially reasonable safeguards against fraud. 12

Article 4A also provides parties with an incentive to keep codes and procedures confidential and

computer access guarded A person who fraudulently breaches a commercially reasonable security

procedure must have knowledge of how the procedure works as well as the codes and identifying devices.13 Such a person must also have access to the transmitting facilities, either through open computer terminals or other software.14 If the customer can prove that the person committing the fraud did not

receive such confidential Information from the customer or the source controlled by the customer, the

loss shifts to the bank.15

A receiving bank needs objective criteria in order to determine whether it should act on a payment

order. 16 A comment to section 4A-203 suggests types of security measures parties may use.1 7 Bank

employees may be trained to “test” a payment order, or customers may designate guidelines for the

bank’s acceptance of payments, such as Iimiting payments to authorized accounts, amounts or beneficiaries. 18

9 Ibfd , Sec 4A..2O3 comment 5 and sec 4A-202(b)

10 [bld sec 4A.202(c) and 4A-203 COmment 4

11 Ibid , sec 4A-202(c)

12 Ibid sec 4A-203 comment 4

13 Ibid SeC 4A-203 comment 5

14 Ibid

15 Ibid sec 4A-203(a)(2) & comment 5

16 Ibid , sec 4A-2r)3 comment 3

1

7 Ibid

‘a Ibid

In evaluating electronic communications, the One of the primary goals of electronic messagquestion arises whether there is a writing and a ing is the elimination of paper transactions, which

signature as required by U.C.C. section 2-201. ultimately means the elimination of conventional

Section 1-201 (39) defines signed as including any writings. Maintaining a paper trail to guard

symbol executed or adopted by a party with pres- against possible problems with the Statute of

ent intention to authenticate a writing. Section Frauds diminishes the objectives of computer

1-201 (46) defines written as including printing, contracting. No judicial decision answers the

typewriting, or any other intentional reduction to question of whether electronic communication

tangible form.6

b Elec[rf~nic Messaging Semices Task Force, Committee (m the Unif(mm Ctmmlercial Code, ‘The Ctmnercial Llse of Electronic Dan interchange-A Report, ” 45 Bus(ness [,a\$yer 1645, at 1682 (June 1990).
74 I Information Security and Privacy in Network Environments

satisfies the Statute of Frauds writing and signing

requirements. 7

In addition, no clear conventions or rules control the formation of contracts via electronic messaging. Statutes and regulation governing the

enforceability and recording of business transactions generally refer to documents, writings, and

signatures—not electronic messages, data logs,

and authorization codes.8 To eliminate any question about writing requirements and the legality of

signatures, parties can enter into a trading partner

agreement. With respect to writing requirements,

such an agreement may adopt one or more of several different provisions. The agreement may:

1) redefine the term writing; 2) provide that the

parties not challenge the validity of electronic

messages merely on the basis that they are in electronic form; and 3) provide that the parties accord

electronic messages the same status as paper messages. Trading partner agreements can also eliminate questions about the legality of electronic signatures, by providing that specified electronic

codes serve as effective signatures.9 (One means

by which this can be accomplished involves what

are called digital signatures. See below and chapter 4).

In the absence of trading partner agreements,

contracting parties must await court decisions of

changes in laws to assure trading partners that

electronic contracts would not be rendered unenforceable. Legislative modifications have been

proposed.

10 Among these are:

change the U.C.C. ’s definition of a writing to

include properly communicated electronic

communications as reduced to tangible form;

change the definition of signed to include proper, nonreputable electronic signatures;

define electronic signatures;

delete the use of the word authenticate from the

definition of signed or define it; and

define identify in the definition of signed.11 

The National Conference of Commissioners on

Uniform State Laws is currently undertaking a revision of U.C.C. Article 2. Among the current

draft proposals is to eliminate the Statute of

Frauds entirely for sales of goods. The basis for

this proposition includes the conclusion that the

Statute of Frauds does not protect the important

interests in the modem contractor commercial environment, but does prevent assertion of some

otherwise valid claims.

B Electronic Commerce and the Rules

of Evidence: Data Integrity and

Nonrepudiation

For an electronic message to survive a challenge

to its authenticity, a party must prove the message

originated from the sender and was not altered after dispatch from the sender. Evidence of adequate

safeguards enhance the reliability of records, the

ability to prove substantive terms of the commercial transaction, and the likelihood that the computer record will be admitted into evidence to

‘ D.L. Wilkerson, “Electronic Commerce Under the U.C.C. Section 2-201 Statute of Frauds: Are Electronic Messages Enforceable?” 41

Kansas Law Review 407-408 (1992).

8 Ibid.

9 An United Nations Commission on International Trade Law (UNCITRAL) Working Group on Electronic Data Interchange is currently

drafting a set of Uniform Drafi Rules on these issues (see A/CN.9/WG.lV/WP.60, Jan. 24, 1994) for adoption by national legislators when reviewing legislation. The American Bar Association Section of Science and Technology, Information Security Committee is also drafting rules

of practice and commentary on certification authorities for a global public key infrastructure.

1 ~ ~ile ~)me wou]d suggest wholesale elimination of the statute, doing so would affect more than electronic contracts ~d would constitute a significant change in the U.C.C. It would also require support form the legal community. Modifying the statute to address a subset of

electronic communications is believed by some to be a more pragmatic approach.

I I M< Baum, “E]ectr(~nic contracting in tie U. S.: The Legal and Control Context,” EDI and Ihe Luw, 1. Walden (cd. ) (London: Blenheim

Online, 1989), p. 135.

12 Raymond T. Nlmmer, Unlvenity of Ht~uston Law Center, persona] COllNIWliCatiOIl, JUIY Iwo.
Chapter 3 Legal Issues and Information Security 175

show a writing in accordance with U.C.C. section

2-201. If a party fails to show that it has reasonably

protected its business records and data, its credibility would be damaged should it assert its records to be superior to the records of another party

that properly guarded its records. Without proper

controls, a recipient or other third party can alter

electronic mail messages, which renders the computer printout unreliable as evidence. However,

the burden of proof of establishing that messages

have been properly handled may be imposed on

different parties in different circumstances,

whether sender, recipient, or third-party challenger. The characteristics associated with the evidentiary value of electronic documents are often

asserted to be essentially the same as those

associated with maintaining the security of the information. This need to show adequate controls is

similar in the field of trade secret law. ] 3

Case law concerning the admissibility of computer printouts supports the proposition that computer data can be sufficiently reliable to provide

trustworthy evidence of the existence of a contract. For instance, courts rarely have excluded reliable computer evidence under the best evidence

rule, which generally requires that only the original writing be admitted into evidence. Rule

1001 (3) of the Federal Rules of Evidence states:

“If data are stored in a computer or similar device,

any printout or other output readable by sight,

shown to reflect the data accurately, is an ‘original.'" 

Computer data compilations are admissible as

business records under rule 803(6) if a party establishes the proper foundation for the reliability of

the records. Business records must be kept in the

course of regularly conducted business activity. In

addition, records are reliable only to the extent

they are compiled conscientious] y and consistently.14 Rule 803(6) requires that an opposing party

has an opportunity to inquire about production,

maintenance, and accuracy of the records, to ensure that records admitted into evidence are trustworthy.

Electronically filed federal records are often offered as business records prepared in the ordinary

15 The proponent offering the course of business.

evidence seeks to demonstrate the authenticity

and reliability of the information, and the opponent tries to challenge those assertions:

[T]he foundation for admission of (computer

records) consists of showing the input procedures used, the tests for accuracy and reliability

and the fact that an established business relies on

the computerized records in the ordinary course

of carrying on its activities. The (opposing)

party then has the opportunity to cross-examine

concerning company practices with respect to

the input and as to the accuracy of the computer

as a memory bank and retriever of information

. . . [T]he court (must) ● ’be satisfied with all reasonable certainty that both the machine and

those who supply its information have performed their functions with utmost accuracy . . .

[T]he trustworthiness of the particular records

should be ascertained before they are admitted

and . . . the burden of presenting an adequate

foundation for receiving the evidence should be

on the parties seeking to introduce it rather than

upon the party opposing its introduction.”16

Thus, the law of evidence in this context requires the following:

I ~ Assefllon of a trade secret “often entails establishing that affirmative and elaborate steps were taken tt~ insure that the secret clainled

would remain so.” Amoco Production Company v. Lindley, 609 P. 2d 733 (Okla. 1980)

14 me defendant in Uni/ed S/a/eJ V. /Jr/3(oe, 896 F.2nd 1476 (7th Cir. 1990) argued that, as shown in L’nifcd stales v. Weathers/~oon. 58 I

F.2nd 595 (7th Cir. 1978) computers must be tested for internal programming errors on a monthly basis. The Bnscoe court held that, although

such evidence was presented in Wea/hcrspoon, the admission of computer records does not require such a showing.

Is p.N Weiss, “Securl[y Requirements and Evidentiary Issues in the Interchange of Electnmic Documents: Steps Towwd ~veloping a Security Pollcy,’” Worid~tde Electronic (’ontntcr(e<onjirence Pro(eedirr~s (New York, NY: Jan. 16-18, 1994), p. 220.

lb Unlled sra~es V. RUSSO, 480 F. 2d 1228 (6th Cir. 1973).
76 I Information Security and Privacy in Network Environments

1.

2.

3.

4.

proof that an electronic communication actually came from the party that it purports to come

from;

proof of the content of the transaction, namely,

the communications that actually occurred between the parties during the contract formation

process;

reducing the possibility of deliberate alteration

of the contents of the electronic record of the

transactions; and

reducing the possibility of inadvertent alteration of the contents of the electronic record of

the transactions. 17

These concerns about the authenticity of the

identification of the originator, with the integrity

of the content of the communication, and reducing

the likelihood of alteration, which are at the heart

of the law of evidence, are the same concerns that

must be addressed in the context of electronic

commerce. Security measures that provide assurance that the authenticity and integrity of a communication have not been compromised will also

provide a high degree of confidence that the contents of the communication will be admissible as

evidence. 8

Nonrepudiation

A paper contract typically provides identification

of the parties executing the contract, incorporating

their wet signature, thus verifying their identity

and intent to be bound to particular terms. The

document is typically dated, and each party receives a copy of the document with both his or her

signature and that of the other party. 19 In the world

of electronic commerce, authenticity and integrity

services generally do not provide all of the guarantees to both parties that they normally receive in

the world of paper transactions. Most electronic

messaging mechanisms for integrity and authenticity provide identification of the parties only in

a fashion suitable for verification by the other contractual party, not by an independent third party

such as a court.20

Nonrepudiation is an attempt to match the assurances provided by a well-executed, paperbased contract,21 prevent a document’s originator

from denying the document’s origin, and provide

proof of authenticity.22

Nonrepudiation maybe provided in whole or in

part through the use of one or more of mechanisms

such as digital signatures, data integrity, and certifying authorities, with support from other system

services such as time stamping. The nonrepudiation can be achieved by using a combination of

these mechanisms and services to satisfy the security requirements of the application in question.

The goal is to collect, maintain, make available,

and validate nondeniable proofs regarding data

transfers between the originator and recipient,

thus establishing legal obligations that serve electronic practices.

Time-Stamping

The time a transaction is initiated or is submitted

to an electronic messaging system, as well as the

I T M. Baum and H. pemltt, E/ec(r~ni{, conlra(.~ing, Publishing & ED/ Luw’ (New York, NY: John Wiley & !hns, Inc., 1991), section 6.23.

18 p.N. Weiss, t~p. cit., footrmte 15, p. 221.

19 Steven Kent, Chief Scientist, Security Technology, Bolt Beranek and Newman, Inc., personal communication, May 1994.

.20 Some express tie c~)ncem that more demands will be placed on the electronic media than is expected of non-electronic media, since in

modem commerce the idea of a well-executed paper transaction is often not met, irrespective of the influence of electronics. For example, the

current Statute of Frauds is not applicable to cases where gtxxls contracted for have been delivered. Similarly, in the absence of a “writ ing,”

entirely oral evidence is admissible about the tenor and terms of a contract. Finally, in many modem cases, even if a writing claims to bc the

integrated statement of the agreement and is signed and available, the ptiies are often allowed to enter evidence outside the writing to reflect the

meaning of the contract. (Raymond T. Nimmer, University of Houston Law Center, personal communication, July 1994.)

21 Ibid.

22 M. Baum, ‘“Linking Security and the Law,” Worldwide E/eclronic (;ommerce-C’onjirence Proceedings (New York, NY: Jan. 16-18,

1994), p. 295.
Chapter 3 Legal Issues and Information Security 177

time when a message is received by a third party

or acted upon by a recipient, may be critical in

some instances. Examples of such cases include

electronic submission of bids or cases where the

first to file a response wins. Some contend that

there is little need for a trusted third party in such

instances, since the recipient would be the trusted

entity and the time would be determined by the recipient (e.g., the moment the message entered the

recipient electronic mailbox), others believe that

the audit trail maintained may not be sufficiently

trustworthy, since internal clocks in the system are

subject to inaccuracies, failures, or tampering.

For example, two parties to a contract could use

the Data Encryption Standard Message Authentication Code (DES MAC)23 function and suitable

key management to achieve authenticity and integrity for their EDI messages, but each could

change his or her local record of the transaction

and neither could, on purely technical grounds,

prove who tampered with the transaction (also see

discussion in box 4-4). 24 Moreover, some argue

that because digital signatures are created using

secret keys that can be disclosed, either accidentally or maliciously, a time context must be

associated with any digital signature if it is to be

treated as authentic and comparable to a paperbased signature. Time context is not an added feature relevant only to time-sensitive transactions,

they contend, but an essential aspect of all digital

signatures used for nonrepudiation.25 However,

others contend that certification authorities can

provide this assurance of authenticity.26

The inherent limitation of the use of digital signatures is their inability to provide time-related

nonrepudiation. While a digital signature attached

to a message will have a time-stamped audit trail

through the network, digital signatures cannot, in

the absence of a trusted entity, provide an unforgeable, trusted time stamp. To achieve full nonrepudiation, certification must be undertaken by a

disinterested party beyond the control of the parties to a transaction or record. Such a third party

is called a trusted entity.27

The key attributes of a trusted entity are that it

is a disinterested third party trusted by the parties

to the transaction and subject to the dispute resolution mechanisms relevant to a transaction or record. A trusted entity’s administrative, legal,

operational, and technical infrastructure must be

beyond question. A trusted entity can perform any

of a variety of functions to facilitate electronic

contracts. Among these functions are: 1 ) producing a document audit trail, 2) storing a record copy

of electronic documents,28 3) providing time and

date stamps, or 4) generating authentication certificates to ensure the identity of the communicating

23 The Data Encrypti(m Standard (DES) is a published, federal infom~ati(m processing standard (FIPS) for use in protecting unclassified

computer data and ctmlmunicati(ms. It has also been incorporated in numerous industry and intemati(mal standards. The encryption algorithm

specified by the DES is called the Data Encrypticm Algorithm (DEA ). This alg(mithm is what is called a symmetric, private-key algorithm, also

referred to as a .$e{rel key alg(withm (see box 4-3). The DES (FIPS PUB 46-2) can be used in message authentication (o create a message authen -

ri~at~on (ode (MAC) that is appended to the message before it is sent. Use of DES in what is called the Data Authentication Alg~withm is specified in FIPS PUB 113 (“Computer Da[a Authentication,” 1985). Message authentication (e.g., of electronic funds transfers) using the DEA is

standard in banking and the financial c(~mmunity.

24 Steven Kent, Chief Scientist, Security Technology, Bolt Beranek and Newman, Inc., personal communication, May 1994.

25 Ibid. S(m~c commentators disagree with this approach, contending that what is important is to know when a message is made, so that the

time of its making can be compared t(} a list of revoked keys. However, if that rew~atitm list is automatically queried upon receipt of the message, actual time w(mld not matter, only relative time (rev(~a(ion I isting versus message receipt). (Charles Miller, attt~mey, San Francisco, CA,

Pers(mal c(mmlunicati(m, June 1994.)

26 Charles Miller, attf)mey, San Francisco, CA, personal communication, June 1994.

27 M. Baurn, op. cit., footnote 22, p. 296

28 !hne commentators argue that storage of record copies of electronic documents is not necessarily a good idea; some might not faww

allowing a third party to hold documents independently and subject (t) subpoena. (Charles Miller, attorney, San Francisco, CA, Pers(mal con~-

municati(m, June 1994. )
78 I Information Security and Privacy in Network Environments

parties.29 These functions maybe provided by different entities, some of whom are trusted by all

parties, and some trusted by only some parties.30

Some suggest that the functions ascribed to the

trusted third party can be provided by the value-

-added network providers;31 however, the extent to

which these responsibilities and the attendant liability will be assumed by such enterprises is unclear. Other entities that might take on these

responsibilities include the U.S. Postal Service

and the banking industry. In contrast to the courts’

treatment of conventional, paper-based transactions and records, little guidance is offered as to

whether a particular safeguard technique, procedure, or practice will provide the requisite assurance of enforceability in electronic form. This

lack of guidance concerning security and enforceability is reflected in the diversity of security and

authentication practices used by those involved in

electronic commerce.

Legal standards for electronic commercial

transactions have not been fully developed and

these issues have undergone little review in the

courts. Therefore, action by Congress may not be

warranted now. However, Congress may wish to

monitor this issue, so that these concerns are considered in future policy decisions about information security.

PROTECTION OF INFORMATION PRIVACY

AND THE PROBLEM OF TRANSBORDER

DATA FLOW

9 Development of a Right to Information

Privacy in the United States

Although a right to privacy is not set forth in the

Bill of Rights, the U.S. Supreme Court has protected various privacy interests. The Court found

sources for a right to privacy in the First,32

Third,

33 Fourth,34 Fifth,35 Ninth,36 and 14th

29 M. Baum, op. cit., f(X)bNJte I ] , p. ]

 35”

30 F{)rexamp]e, time.~tamp not~zatlon” ~quims a Wide]y trusted entity. However, that entity need not archive tie d(~uments it time-starnPs

and it is often held that the time-stamper should not even have access to the original documents for any purpose beyond hashing values of the

documents. In the paper world, under U.S. law, copies of contracts are retained by the parties to the contract, but not by mutually trusted third

parties. The Latin Notarairc approach to contracts is different and would have the third party hold the documents, but this is not a universal

approach. Similarly the generation of (public-key) certificates can be undertaken by a set of entities completely separate from those who support

the time-stamping function.

3 I Im Wa]den, Tar]() Lyons Information” ‘T’echno]ogy Law Research Fellow, Centre for Commercial Law studies, Queen MWY and wes[field

College, University of London, personal communication, April 1994.

32 me First Amend~nt provides: “congress shall make no law respecting an establishment of religion, or prohibiting the free exercise

thereof; or abridging the freedom of speech, or of the press, or the right of the pmple peaceably to assemble, and to petition the Government for a

redress of grievances. ”

33 The Thld Amendment provides: “NO Soldier sha]], in time of peace be quartered in any house, without the consent Of the Owner, nor in

time of war, but in a manner to be prescribed by law.”

34 The Foufi A~nd~nt provides: “me right Of the people to be secure in their persons, houses, papers, and effects, against unreasonable

searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

35 The Fifih Amendment pr~~vldes: “N() ~rson Shall be held to answer for a capita!, or otherwise lnfamOuS CrirW, Un]eSS On a p~sent~nl l~r

indictment of a Grand Ju~, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public

danger; nor shall any person be sub~ct forthe same offence to be twice put in jeopardy of life or limb, nor shall be compelled in any criminal case

to be a wimess against himself, nor be deprived of life, liberty, or property; without due process of law; nor shall private property be taken for

public use without just compensation.”

JbThe Ninth A~nd~nt provides: “me enurnerat]on in the Constitution ofcertain rights shall not be construed to deny ordisparage Mhe13

retained by the people.”
Chapter 3 Legal Issues and Information Security 179

Amendments. 37 The concept of privacy as a legal

interest deserving an independent remedy was

first enunciated in an article coauthored by Samuel Warren and Louis Brandeis in 1890, which describes it as “the right to be let alone.”38 Since the

late 1950s, the Supreme Court has upheld a series

of privacy interests under the First Amendment

and due process clause, for example “associational privacy,"

39 “political privacy, ’’wand the “right

to anonymity in public expression.”41 The Fourth

Amendment protection against “unreasonable

searches and seizures” also has a privacy component. In Katz v. United States, the Court recognized the privacy interest that protected an

individual against electronic surveillance. But the

Court cautioned that:

. . . the Fourth Amendment cannot be translated

into a general constitutional “right to privacy.”

That Amendment protects individual privacy

against certain kinds of governmental intrusion,

but its protections go further and often have

nothing to do with privacy at all. Other provisions of the constitution protect personal privacy form other forms of government invasion. 42

The Fifth Amendment protection against self-incrimination involves a right to privacy against unreasonable surveillance by the government or

compulsory disclosure to the government.43

Until Griswold v. Connecticut, 381 U.S. 479

(1965), any protection of privacy was simply

viewed as essential to the protection of other more

well-established rights. In Griswold, the Court

struck down a Connecticut statute that prohibited

the prescription or use of contraceptives as an infringement on marital privacy. Justice William O.

Douglas, in writing the majority opinion, viewed

the case as concerning “a relationship lying within

the zone of privacy created by several fundamental constitutional guarantees,” that is, the First,

Third, Fourth, Fifth and Ninth Amendments, each

of which creates “zones” or “penumbras” of privacy. The majority supported the notion of an independent right of privacy inherent in the marriage

relationship. Not all agreed with Justice William

O. Douglas as to its source; Justices Arthur Goldberg, Earl Warren, and William Brennan preferred

to locate the right under the Ninth Amendment.

In Eisenstadt v. Baird, 405 U.S. 438 (1972),44

the Court extended the right to privacy beyond the

marriage relationship to lodge in the individual:

If the right of the individual means anything,

it is the right of the individual, married or single,

to be free from unwarranted governmental intrusion into matters so fundamentally affecting a

person as the decision whether to bear or beget a

child.

Roe v. Wade, 410 U.S. 113 (1973),45 further extended the right of privacy “to encompass a

woman’s decision whether or not to terminate her

pregnancy.” The Court argued that the right of privacy was “founded in the Fourteenth Amendment’s concept of personal liberty and restrictions

on State action.” The District Court had argued

that the source of the right was the Ninth Amendment’s reservation of the right to the people.

37 me I Xth AmendRn( ~rovlde~ in ~~lnen[ ~~, “N() state ~ha]l deprive ant person Of life, libefly, or pro~fly, without due process Of laW;

nor deny to any person within its jurisdiction the equal protection of the laws.”

38 Wmen & Brandeis, “me Right to Privacy,” 4 Han’ard f.UW Re~’iew 193 (1890).

w NAACp v, A/abama, 357 U.S. 449 (1958),

-w wa,kln~ v. (,lni[ed S/ate5, 354 U.S. 178 (1957); and .W’eezy v. New Hampshire, 354 U.S. 2S4 (1957).

41 Ta//eY “ California, 362 U.S. 60 (1960).

42 ~alz v Unlled Srares, 389 U.S. 347. ~50 (1967).

43 see E~C.obedo v, l//lnol~, 378 U.S. 478 ( ] 964); Mlra~a v. Ari~o~, 384 U.S. 4J6 ( ]966); and Scherber V. California, 384 U.S. 757

( 1%6).

44 In Which the c(lu~ stmc~ down a Massachusetts law hat made it a felony to prescfibe or distribute c[)ll~aceptlves r(~ Slllgk pYSOTIS.

45 In Which the COufl struck down the Texas abortion NahIte.
80 I Information Security and Privacy in Network Environments

To this point, the Supreme Court addressed the

question of privacy only as it applied to very specific kinds of human conduct. In the earliest case

that raised the issue of the legitimate uses of computerized personal information systems, the Supreme Court avoided the central question of

whether the Army’s maintenance of such a system

for domestic surveillance purposes “chilled” the

first amendment rights of those whose names

were contained in the system.46 In two cases decided in 1976, the Court did not recognize either

a constitutional right to privacy that protected erroneous information in a flyer listing active shoplifters 47 or one that protected the individual’s

interests with respect to bank records. In Paul v.

Davis, the Court specified areas of personal privacy considered “fundamental”:

. . . matters relating to marriage, procreation,

contraception, family relationships, and child

rearing and education.

Respondent Davis’ claim of constitutional protection against disclosure of his arrest on a shoplifting charge was “far afield from this line of

decision” and the Court stated that it “declined to

enlarge them in this manner.”48 In United States

v. Miller,49 the Court rejected respondent Miller

claim that he had a Fourth Amendment reasonable

expectation of privacy in the records kept by

banks “because they are merely copies of personal

records that were made available to the banks for

a limited purpose,” and ruled instead that checks

are not confidential communications but negotiable instruments to be used in commercial transactions.” In response to United States v. Miller,

Congress enacted the Financial Privacy Act of

197850 (Public Law 95-630), providing bank cus-

~ ~lrd v. TdIu~, 408 U.S. I (1972).

47 Pau/ v. Da\,is, 424 U.S. 693 (1 976).

4 Ibid., p. 713.

49 (Jnlled slates V. Miller, 425 U.S. 435 ( 1976).

tomers with some privacy regarding records held

by banks and other financial institutions and providing procedures whereby federal agencies can

gain access to such documents. Congress effectively overruled the Miller holding by requiring

the government to obtain a subpoena in order to

access bank records. Because the focus of the

constitutional right to privacy has traditionally not

been on privacy of information, statutory provisions have been enacted to protect specific kinds

of information, including the Family Educational

Rights and Privacy Act of 1974 (popularly known

as the Buckley Amendment)51 to protect the privacy of records maintained by schools and colleges; the Fair Credit Reporting Act, to protect the

privacy of consumers in the reporting of credit information;52 and the Federal Videotape Privacy

protection Act.53

I The Privacy Act

Congress enacted the Privacy Act of 1974 (Public

Law 93-579) to provide legal protection for and

safeguards on the use of personally identifiable information maintained in federal government record systems. (See box 3-2 for discussion of

privacy and confidentiality.) The Privacy Act established a framework of rights for individuals

whose personal information is recorded and the

responsibilities of federal agencies that collect

and maintain such information in Privacy Act record systems. The Privacy Act embodies principles of fair information practices set forth in

Computers and the Rights of Citizens, a report

published in 1973 by the former U.S. Department

of Health, Education, and Welfare. These principles are as follows:

50 ~b]ic bW 95.630, title XI, 92 Stat, 3697, Nov. 10, 1978, et seq.

s] ~b]ic ~W 93-380, title V, XC. 513,88 StiW 571, Aug. 21, 1974.

52 ~b]ic IAW 91-508, title VI, sec. 601, 84 Stat. 1128, Oct. 26, 1970, et seq.

53 ~b]ic Law ] (30.6 18, sec. 2(a)( 1 ),(2), 102 Stat. 3195, NOV. 5, 1988, et seq.
Chapter 3 Legal Issues and Information Security { 81

1. There must be no secret personal data recordkeeping system.

2. There must be a way for individuals to discover

what personal information is recorded and how

it is used.

3. There must be a way for individuals to prevent

information about themselves, obtained for one

purpose, from being used or made available for

other purposes without their consent.

4. There must be a way for individuals to correct

or amend a record of information about themselves.

5. An organization creating, maintaining, using,

or disseminating records of identifiable personal data must assure the reliability of the data for

its intended use and must take reasonable precautions to prevent misuses of the data.

The Privacy Act gives individuals the right to

access much of the personal information about

them kept by federal agencies. It places limits on

the disclosure of such information to third persons

and other agencies. It requires agencies to keep

logs of all disclosures, unless systems of records

are exempt from the Privacy Act.54

The Privacy Act also gives an individual the

right to request an amendment of most records

pertaining to him or her if he or she believes them

to be inaccurate, irrelevant, untimely, or incomplete. The agency must acknowledge the request

in writing within 10 days of its receipt. It must

promptly (though no time limit is specified) make

the requested amendment or inform the individual

of its refusal to amend, the reasons for the refusal,

and the individual’s right to request a review by

the agency head. If the individual requests such a

review, the agency head has 30 days to render a decision. Should the agency head refuse to amend

the information, the individual can file a concise

statement of his or her disagreement with the

agency decision. Thereafter, the agency must note

the dispute in the record and disclose this fact,

along with the individual’s statement, whenever

the record is disclosed.

The Privacy Act further provides that the individual can pursue his disagreement, and indeed

any noncompliance by an agency, with a civil suit

in Federal District Court. He or she can obtain an

injunction against a noncomplying agency, collect actual damages for an agency’s willful or

intentional noncompliance, and also be awarded

attorney’s fees and costs if he or she “substantially

prevails” in any such action. Agency personnel

are criminally liable for willful noncompliance;

the penalty is a misdemeanor and a fine of up to

$5,000. There have been few cases in which a

complainant has recovered damages.

The federal agencies also have a responsibility

to collect only relevant information on individuals, to get the information directly from the individual whenever possible, and to notify the

individual of several facts at the time the information is requested. Willful failure to comply with

the notification requirement may result in civil

and criminal liability.

The Privacy Act also covers agencies’ “system

of records” and requires an annual, nine-point report to be published in the Federal Register. The

report must contain information such as categories of records maintained; their routine use; policies on their storage and retrieval; and other

agency procedures relating to the use, disclosure,

and amendment of records. Agencies also have

extensive rulemaking duties to implement each

component of the law.

The Privacy Act is limited, however, in several

significant ways. Some believe that a system of

notification through the Federal Register is

cumbersome and burdensome to the individual

who, practically speaking, does not regularly review the publication, so that notification is not effective. The act also places the burden of

monitoring privacy in information and redressing

$4 ~e ~lkacy Act ~xenlpts fronl this Pr(lvisl(>n rcctlrds pertaining to law enf(wcernent. The PrlVaCy Ac( of 1974 (~blic La~f 93-579, sec.

552a(A)(2)).
82 I Information Security and Privacy in Network Environments

In discussions about privacy and information policy, the terms privacy and confidentiality are often

used interchangeably Neither term possesses a single clear definition, and theorists argue variously

that privacy and confidentiality (and the counterpart to confidentiality, secrecy) may be concepts that

are the same, completely distinct, or in some cases overlapping,

While definitions of privacy and confidentiality and distinctions between the two cannot be tightly

drawn (as indeed, the two terms are not necessarily exclusive of one another) for purposes of this report, the Off Ice of Technology Assessment will attempt to use the terms in the following ways, largely

mirroring approaches to the subject matter taken by Alan Westin and Charles Fried, Confidentiality will

refer to how data collected for approved purposes will be maintained and used by the organization that

collected it, what further uses will be made of it, and when individuals will be required to consent to

such uses It will be achieved, as Anita Allen states, when designated information is not disseminated

beyond a community of authorized knowers. 1 According to Allen, confidentiality is distinguished from

secrecy, which results from the intentional concealment or withholding of information Privacy will refer

to the balance struck by society between an individual’s right to keep information confidential and the

societal benefit derived from sharing the Information, and how that balance IS codified into legislation

giving individuals the means to control information about themselves.

Privacy can be viewed as a term with referential meaning, it typically is used to refer to or denote

something But privacy has been used to denote many quite different things and has varied connotations As Edward Shils observed 20 years ago:

Numerous meanings crowd in the mind that tries to analyze privacy the privacy of private property, privacy

as a proprietary interest in name and image; privacy as the keeping of one’s atfairs to oneself, the privacy of the

internal affairs of a voluntary association or of a business, privacy as the physical absence of others who are

unqualified by kinship, affection or other attributes to be present, respect for privacy as the respect for the desire

of another person not to disclose or to have disclosed information about what he IS doing or has done; the privacy

of sexual and familial affairs, the desire for privacy as the desire not to be observed by another person or persons,

the privacy of the private citizen as opposed to the public official, and these are only a few

Definitions of privacy may be narrow or extremely broad One of the best known definitions of privacy is that set forth by Samuel Warren and Louis Brandels in a 1890 article that first enunciated the concept of privacy as a legal interest deserving an independent remedy Privacy was described as “the

right to be let alone 2 “In spite of its breadth, this view has been influential for nearly a century 3 In the

1960s, 1970s and 1980s, the proliferation of information technology (and concurrent developments in

the law of reproductive and sexual Iiberties) has inspired further and more sophisticated inquiry into the

meaning of privacy. 4

In his work, Privacy and Freedom,5 Alan Westin conceived of privacy as “an Instrument for achieving

individual goals of self realization, ” and defined it as “the claim of individuals, groups or institutions to

determine for themselves when, how and to what extent information about them is communicated to

1 A L Allen, Uneasy Access Prwacy for Women m a Free Soc/e(y (Totowa, NJ Rowman & Lttlefteld, 1988), p 24

2 The term “the right 10 be let alone” was borrowed from the 19th century legal scholar and JU@ Thomas COOley See T c~ley,

Law of Torts (2nd Ed , 1888)

3 Allen argues that If privacy simply meant “being let alone, ” any form of ottenswe or harmtul conduct directed toward another

person could be characterized as a wolatlon of personal privacy

4 Allen, op clt footnote 1, p 7

5 A F Westtn, %wacyanci Freedom (New York, NY Ateneum, 1967)
Chapter 3 Legal Issues and Information Security 183

others, ” approaching the concept in terms of informational privacy WA Parent defined privacy in terms

of information as “a condition of not having undocumented personal information about oneself known

by others"6

In contrast, Ruth Gavison defines privacy broadly as “limited access in the senses of solitude, secrecy, and anonymity” In her view, privacy is a measure of the extent to which an individual IS known,

the extent to which an individual IS the subject of attention, and the extent to which others are in physical proximity to an individual Her definition of privacy was to include

such “typical” invasions of privacy as the collection, storage, and computerization of information, the dissemination of information about individuals, peeping, following, watching, and photographing individuals intruding or entering ‘(private” places, eavesdropping, wiretapping, reading of letters, drawing attention to individuals, required testing of individuals, and forced disclosure of information. 7

In Computers, Health Records and Citizens Rights, Westin draws a clear distinction between the

concepts of privacy and confidentiality in the context of personal information

Privacy is the question of what personal information should be collected or stored at all for a given social

function It Involves issues concerning the Iegitimacy and Iegality of organizational demands for disclosure from

individuals and groups, and setting of balances between the individual’s control over the disclosure of personal

information and the needs of society for the data on which to base decisions about individual situations and formulate public policies Confidentiality is the question of how personal data IS collected for approved social purposes shall be held and used by the organization that originally collected it, what other secondary or further uses

may be made of it, and when consent by the individual will be required for such uses It IS to further the patient’s

willing disclosure of confidential information to doctors that the law of privileged communications developed In

this perspective, security of data Involves an organization’s ability to keep its promises of confidentiality.

Allen notes the unsettled relationship between secrecy and privacy in the privacy literature In her

view, secrecy is a form of privacy entailing the Intentional concealment of facts She claims that it does

not always involve concealment of negative facts, as is asserted by other privacy scholars 8 She points

to the work of Sissela Bok, who defines secrecy as the result of intentional concealment and privacy as

the result of “unwanted access “g Since privacy need not involve Intentional concealment, privacy and

secrecy are distinct concepts Privacy and secrecy are often equated because “privacy IS such a central part of what secrecy protects “ Bok viewed secrecy as a device for protecting privacy.10

Charles Fried also discusses the relationship between privacy and secrecy He states that at first

glance privacy seems to be related to secrecy, to limiting the knowledge of others about oneself He

argues for refinement of this notion, stating that it IS not true that the less that iS known about us the

more privacy we have He believes, rather, that privacy iS not simply an absence of Information about

us in the minds of others, it is the control we have over Information about ourselves It iS not simply

control over the quantity of Information abroad, it IS the ability to modulate the quality of the knowledge

as well We may not mind that a person knows a generaI fact about us, and yet we feel our privacy

invaded if he or she knows the details.11

G W A parent “Recent Work on the ConceptIon of Prwacy ” Arnencan Ph//o5oph/ca/ (kafler/y, VOI 20, 1983. p 341

7 

R Gawson, ‘Prwacy and the Llmlts of the Law, ” Ya/e Law Journa/, VOI 89 1980, p 421

8 Ibid

9 S Bok Secrets On the Ethics of Corrcealmenl and Reve/at/on (New York, NY Oxford Unwerslty Press, 1984) p 10

10 Ibid

11 C Fried, “Prwacy,” Ya/e Law Journa/, VOI 77.1968, pP 474 782

SOURCE Off Ice ot Technology Assessment, 1994
84 I Information Security and Privacy in Network Environments

wrongs entirely with the individual, providing no

government oversight mechanism for the system.

In addition, the act itself is limited in its application to “routine use” of the record, which refers to

disclosure of records, not how the collecting

agency uses those records internally.55 Many

commentators have noted that the penalties prescribed in the act are inadequate, and others comment that the act contains no specific measures

that must be in place to protect privacy so that it

cannot be used to describe what technical measures must be taken to achieve compliance.

Other criticism arises from technological challenges to the act’s effectiveness and workability.

When the act was debated and enacted, federal

agency record systems were still based largely on

paper documents and stand-alone computer systems that were not 1 inked together. Computers and

telecommunication capabilities have expanded

the opportunities for federal agencies to use, manipulate, and peruse information. There has already been a substantial increase in the matching

of information stored in different databases as a

way of detecting fraud, waste, and abuse. Networked systems will further enhance this ability.

The Computer Matching Act requires that every

agency conducting or participating in matching

programs establish a Data Integrity Board.

Among the responsibilities of these Boards is to

oversee matching programs in which the agency

has participated during the year and to determine

compliance with applicable laws, regulations, and

guidelines. The are also to serve as a clearinghouse for receiving and providing information on

the accuracy, completeness, and reliability of records used in matching programs.56

More recent use of federal agency information,

in such programs as the Credit Alert Interactive

Voice Response System, involve more cooperative interconnection of information across agencies (see box 3-3). The ability to share databases

and access systems between federal and state governments is also being developed. All 50 states

can electronically access Social Security Administration (SSA) data.57 While the Internal Revenue Service (IRS) currently sends magnetic tapes

to the states in order to share federal tax data, electronic access is expected by 1997 or 1998.58 (’See

box 3-4 for discussion of privacy concerns at the

Internal Revenue Service.)

Because of these uses and the ease with which

they can be accomplished through networked

computers, the Privacy Act has come under additional criticism for its agency-by-agency approach to addressing privacy protections. The act

places responsibility for data protection separately on each federal agency. Given the increased

sharing of data, if privacy protection fails, it is difficult under this approach to determine who must

bear responsibility and who is liable when abuses

of information occur. Some commentators suggest that the act be overhauled to reflect the technological changes that have occurred since the

1970s and the new uses of information enabled by

those changes. (See below for a discussion of the

development and capabilities of computer and

network technology.) Others believe that clearer

ss For a discussion of the government’s “routine use” of personal information, see R Schwartz, “The Computer in German and American

Constitutional Law: Towards an American Right of Information Self Determination,” The American Journal of Compararit’e Lan’, vol. 37, No.

4, fall 1989, pp. 694-698.

565 U.S.C. 552a(u).

57 Among the major SSA data exchanges with (k states is the Beneficiary Earnings and Data Exchange (BENDEX), which extracts lnforrnation from the Master Beneficiary Record earnings information for the entire nation. Most states check BENDEX before sending a payment to a surviving spouse claiming retirement benefits. Another common exchange is the Supplemental Security Income/State Data Exchange

(SDX ). This exchange is an extract of the Supplemental Security Record, the database that stores a person’s history on public assistance. Case

workers use SDX to verify eligibility for public assistance.

5826 u s c 6 10S enumemtes 28 instances in which the IRS can disclose taxpayer lnfOrmatlOn.

. . .
Chapter 3 Legal Issues and Information Security 185

policy decisions must be made regarding when the

sharing of information between agencies is appropriate, and stronger partitions between agency

data must be established. To facilitate these

changes, it is suggested that a better forum for privacy policy decisions be established to replace the

data integrity boards already existing in agencies

that participate in computer matching programs.

Increased computerization and linkage of information maintained by the federal government is arguably not addressed by the Privacy

Act, which approaches privacy issues on an

agency-by-agency basis.

●

m

●

9

To address these developments:

Congress could and allow each agency to address privacy concerns individually, through

its present system of review boards.

Congress could require agencies to improve

the existing data integrity boards, with a charter to make clearer policy decisions about

sharing information and maintaining its integrity.

Congress could amend the existing law to include provisions addressing the sharing and

matching of data, or restructure the law overall to track the flow of information between

institutions.

Congress could provide for public access for

individuals to information about themselves,

and protocols for amendment and correction

of personal information. It would also consider providing for online publication of the Federal Register to improve public notice about

information collection and practices.

In deciding between courses of actions, Congress could to exercise its responsibility for oversight through hearings and/or investigations,

gathering information from agency officials involved in privacy issues, as well as citizens, in order to gain a better understanding of what kinds

of actions are required to implement better custodianship, a minimum standard of quality for priThe Credit Alert lnteractive Voice Response

System (CAIVRS) is a screening program aimed

at preventing people who do not repay federal

loans from obtaining new loans CAIVRS includes delinquent debtor data from the departments of Agriculture, Education, Housing and Urban Development (HUD) and Veterans Affairs

(VA) and the Small Business Administration Begun by HUD in 1987, it contains information on

home, property, and mobile home loans, and is

now used by the VA for screening loan applications in its housing program CAIVRS allows

lenders such as mortgage bankers to phone in

to the database The lenders enter a password,

then punch in the Social Security number of the

person seeking credit The system reviews its

data and responds

The system is comparable to a credit-card

check before a buyer makes a credit purchase in

a store If the lender gets a “hit, ” he or she cannot grant a new loan and must ask HUD to review the loan application In the first 10 months

of 1993, CAIVRS handled 23 million inquiries

and recorded 30,000 “hits” on applicants with

problem credit histories.

SOURCE Off Ice of Technology Assessment, 1994

vacy protection, and notice to individuals about

use and handling of information.

I Privacy and Computerization

American legal scholars first considered the impact of computerization on privacy more than 20

years ago. Soon after, the U.S. Privacy Protection

Study Commission, under a congressional charter, extensively studied privacy rights in the

emerging information society. The commission

focused on eight sets of recordkeeping relationships and found that privacy was not protected satisfactorily from either government or industry

intrusions. While the commission noted privacy
86 I Information Security and Privacy in Network Environments

The Internal Revenue Service’s (IRS’S) long-term project to modernize its computer system, the Tax

Systems Modernization (TSM) Program, began in 1988 and is projected to require a net capital investment of over $8 billion by 2008 Information security has been a major issue in this process; the IRS has

been faulted for privacy violations in its existing system and has been charged with showing little progress in addressing privacy concerns about the confidentiality of taxpayer records as it proceeds with

TSM The IRS counters that it is aggressively addressing these but additional safeguards could potentially make the system more cumbersome to operate. ’

In a recent review of general controls over IRS computer systems, the General Accounting Office

found that the IRS did not adequately restrict access to computer programs and data files or monitor

the use of these resources by staff As a result, IRS employees who did not need taxpayer data could

access and/or use it, and unauthorized changes to the taxpayer data could be made inadvertently or

deliberately. In addition to confidentiality and integrity problems, these actions could result in fraud.2 

The National Research Council (NRC) has also been studying the IRS and its progress in implementing the TSM initiative In its report of a two-year study requested by the IRS, NRC found that the IRS

needed a more integrated, comprehensive, and internally consistent security architecture and that it

should investigate the use of modern cryptographic techniques such as public-key cryptography and

digital signatures in electronic filings NRC also found that the IRS privacy policy development should

include a stronger and more effective integration of privacy principles and techniques in TSM system

designs 3 In a follow-on letter report to the IRS in 1993, NRC found, “The IRS has increased its awareness of privacy issues and has tackled several security issues over the last three years However, serious concerns remain about the privacy and security issues engendered by TSM. In particular, rapid

development of a comprehensive privacy and security policy is needed."4 According to the NRC committee, the new technologies being provided through TSM can lead to a wide range of potentially disastrous privacy and security problems for the IRS unless the IRS develops effective, integrated privacy

and security policies. 5

1 Stephen Barr, “IRS Computer Revamp Faulted by Study Panel, ” Washv?gfon Post, Aug 20, 1993, p A21

Z u s GeneralACCOuntlng Office, IRS in forma[ton Systems Weaknesses lncreasethe RlskofFraudand/mpalrRe/iabMty of Management /n/ormatlon, GAO/AlMD-93-34, September 1994

3 Computer Science and Telecommunlcatlons Board, National Research Council, Review Of the T= SY.Stem.S Modernlzatlon of

/he k?tema/ Revenue Serwce (Washington, DC Nahonal Academy Press 1992)

4 Letter remd from Robert p Clagett (Chair, Committee on Review ot the Tax Systems Modernization Of the Internal Revenue Serwce, Nahonal Research Council) to Margaret Richardson (Commissioner, IRS), July 30, 1993

5 Ibid

SOURCE. Office of Technology Assessment, 1994

problems in the private sector, it believed that the Since the 1970s, however, computer and comreal threat existed with government collection and munications technology has enabled the growth of

use of information, which is the concern that the an information industry within the private sector.

Privacy Act of 1974 addresses.59 The dramatic advances in telecommunications

59 J R. .Relden~rg, “~lvacy in the ]nfomat]on” Econonly:” A Fortress or Frontier for Individual Rights?” Federal C~mmUn;cUt;ons ~w

Jourrud, vol. 44, No. 2, March 1992, pp. 1%- 197.
Chapter 3 Legal Issues and Information Security 187

and information technology changed the relationship between individuals and corporations with

respect to the circulation of personal information.60 Information technology, networking, and

proliferation of computers have encouraged extensive gathering and dissemination of personal

information through sophisticated data collection

techniques, corporate outsourcing of data processing, and the establishment of information service providers and clearinghouses.61 Vast quantities of personal information containing greater

detail than ever before about an individual financial status, health status, activities, and personal

associations became readily available through

commercial information services and list brokers.

Information that once had to be laboriously assembled by hand or using punched-card methods

could be bought in machine-manipulable form.62

These new capabilities and the increased circulation of personal information to private-sector,

resale companies raise significant privacy concerns. A joint Lou Harris/Equifax survey conducted in 1992 indicated that 79 percent of

Americans feel their personal privacy is threatened. Most Americans acknowledge the danger to

privacy from present computer uses.63 Privacy

and information processing have also generated

substantial interest overseas: in many European

countries, statutes provide a broad set of privacy

rights applicable to both the public and private

sectors.

9 International Privacy Concerns:

Transborder Data Flow

Development of sophisticated telecommunications systems, coupled with the increased use of

computing technologies, has resulted in a growing, international market in information and

associated services. Computer and telecommunications technology delivers news, science,

education, industry, manufacturing, medical, and

national defense information. These technologies

and their ability to transmit information and services over distances are not constrained by national borders .64

Transborder data flow is the transfer of data

across national borders. The media may be ordinary text on microfilm, punched cards, or computer listings transmitted by ordinary mail. Data may

also be transmitted electronically via telephone

lines, cables, specific data networks, or satellite.

Such data may be transmitted from a terminal to

a computer system as part of an international network. They are then processed in the system and

sent back to the terminal. The data alternatively

may be accessed and processed online in a network by anyone who is able to enter the system.

Foreign countries, particularly European nations, have taken steps to address the problem of

data flows to destinations perceived to lack sufficient privacy protection. In the mid- 1970s, European lawmakers recognized that data technology

w c(~ncem~ ~al~ed by & ~[)mpu[eriza[ion t)f hea][h care information, cited by the Krever Commission of C~ada, reflect those raised by

cmnputenzation generally. The commission stated that: 1 ) computer technology makes the creati(m of new databases and data entry easy, s()

that da~abases can be created and maintained readily; 2) computerization allows for storage of large amounts of data in a very small physical

medium. An intruder into a database can retrieve large amounts of data once access is gained; 3) computers provide for the possibility of “invisible theft’ ’—stealing data without taking anything physical—so that persons are unaware that data has been altered, stolen or abused, and 4)

computers allow for the possibility of “invisible” modification, deletion, or addition of data. Ontario C(wnmission of Inquiry into the Confidential ity of Health lnfw-mati(m, “Rep)rt of the Commission,” 1980, vol. l], Pp. 160-166.

61 j.R Rei&n~rg, op. cit., flX)hlOte 59, Pp. 201‘2W.

62 ~ Wwe, ,,The New Faces of ~~’acY! “ The information Sociefy, vol. 10, 1993, pp. 195, 200.

63 Hamls-~ulfax Consunler ~l~,acy Suwey 1992, conducted for Equifax by Louis Harris and Associates in a$s(~iati(m with Alan F. WeStin, Columbia University.

64] Wa]den and N, Savage, “Transb)rder Data F]ow$,” lnjiormafion Technology& fhe lmi, 2nd Ed., 1. Walden (cd. ) (Great Britain: MacMll -

Ian Publisher, Ltd., 1990), p. 121.
88 I Information Security and Privacy in Network Environments

could lead to invasions of privacy and that this

should not be regarded as simply a national concern. They realized that the economic and social

relationships of many countries were closer than

before, and that the emergence of a global market

led to an increased movement of information

across borders. Since information is often of a personal nature, and based on the premise that the

needs of the market should not undermine the

legal protection for citizens, it was deemed necessary to regulate the use of personal data similarly

in all countries.

65 A number of countries prohibit

the transmission of personal information to countries with little or no computer privacy protection.66 Data protection and security requirements

established by countries outside the United States

may have a significant impact on transborder data

flow because of the limited legal standards in the

United States.

While the Privacy Act of 1974 addresses the

protection of data maintained by the federal government through principles of fair information

practices (for enumeration and discussion of fair

information practices, see page 81), American law

does not contain a comprehensive set of privacy

rights or principles that adequately address the acquisition, storage, transmission, use, and disclosure of personal information within the private

sector. Legal protection is accorded through privacy rights created by federal or state legislation

or state common laws. In addition, self-regulatory

schemes have been adopted by some industries

and various companies. Although these schemes

may offer privacy protect ion, the y are not enforceable by law. Europe is sensitive to a need to protect

privacy, particularly the threat of technology that

may easily transmit data to a country where corresponding legal protections may not be afforded

i t .

6 7

The European approach to addressing privacy

concerns is a comprehensive one; most European

countries have adopted omnibus legislation governing private-sector data processing. Among

these broad national laws are a number of important differences relating to the scope of coverage

and the regulatory enforcement mechanisms. The

European Union believes that the effect of these

differences is likely to impede the development of

the single European market and has proposed a directive to harmonize these laws and establish a

community standard of privacy protection.68

Two sets of international norms have traditionally established standards for data protection: the

Organization for Economic Cooperation and Development’s (OECD’s) voluntary Guidelines

Governing the Protection of Privacy and Transborder Flows of Personal Data , and the Convention of the Council of Europe for the Protection of

Individuals with Regard to Automatic Processing

of Personal Data (No. 108/1981).69 Each attempted to assure that transborder data could flow

across borders in an acceptable way and to provide

the data with a certain level of protection. Later,

in July 1990, the European Economic Community

Commission proposed a draft directive ‘“concerning the protection of individuals in relation to the

processing of personal data.”

The Organization for Economic Cooperation

and Development Guidelines

The OECD guidelines were drafted in 1979 and

adopted in September 1980 as the Guidelines on

the Protection of Privacy and Transborder Flows

65 p B]unle “An EEC policy for Data ~otection,”” Computerlbw’ Journal, vf~l, 1 I, 1992.

66 j.R. Reldenberg, op. cit. f(x~tno[e 59, p. ~3~.

67 Ibid.

68 Ibid.

69 OECD is ~ Uni[ed Natlon~ intergt)vemnlen[a] in5tltut10n, e5tab] ished in ] $)6 ] Wl(h the stated objectives of effective use of ec(mornic resources of member states, development of scientific and technical research, training of personnel, maintenance of stable finances in external

and internal tumo~er, I iberalization of commodity exchange and flow of cap[tal, and technical assistance to developing c(mntries.
of Personal Data.

sponse to growing

They were developed in renational movements to reguChapter 3 Legal issues and Information Security

late transborder data flows and the discussion

about the Council of Europe proposal. The specific mandate was:

. . . to develop guidelines on basic rules governing the transborder flow and the protection of

personal data and privacy, in order to facilitate

the harmonization of national legislation, without this precluding at a later date the establishment of an international convention.

The OECD guidelines are based on principles

of data protection to govern the protection of personal data in transborder data flows. These principles are:

■

m

m

■

m

■

■

m

Data should be obtained lawfully and fairly.

Data should be relevant to their purposes, accurate, complete, and current.

The purpose for which data will be used must

be identified and data must be destroyed if it is

no longer necessary to serve that purpose.

Use of data for purposes other than those specified is authorized only with the consent of the

data subject or by authority of law.

Procedures must be established to guard against

loss, destruction, corruption, or misuse of data.

Information about collection. storage, and use

of personal data and personal data systems

should be available.

The data subject has a right of access to his or

her data and the right to challenge the accuracy

of that data.

A data controller should be designed and accountable for complying with measures established to implement these principles.70

These principles mirror the elements of fair information practices that form the basis of much of

U.S. law related to government information. In

the private sector, however, these principles

not consistently applied.71 Since 1980 over

189

are

177

U.S. corporations and trade associations publicly

endorsed the OECD guidelines and issued policy

letters on privacy and data security in recognition

of the importance of this subject, though few U.S.

companies have publicly implemented the guidelines.

The guidelines balance the requirements for the

free flow of data with the need to provide basic

data protection. They also specifically require that

data flow be secured. Part 3 of the guidelines deals

specifically with transborder data flow:

m

■

■

m

Member countries should take into consideration the implications for other member countries of domestic processing and re-export of

personal data.

Member countries should take all reasonable

and appropriate steps to ensure that transborder

flows of personal data, including transit

through a member country, are uninterrupted

and secure.

A member country should refrain from restricting transborder flows of personal data between

itself and another member country, except

where the latter does not yet substantially observe these guidelines or where export of such

data would circumvent its domestic privacy

legislation. A member country may also impose restrictions in respect of certain categories

of personal data for which its domestic privacy

legislation includes specific regulations in

view of the nature of those data, and for which

the other member country provides an equivalent protection.

Member countries should avoid developing

laws, policies, and practices in the name of the

protection of privacy and individual liberties,

70 OE~.D D(K. N(). C(80)58 ‘in~l.

7 I s,),,,c ~irguc that the ~lscuSSlon about Prlyacy rlgh[s should focus on prt)pcrty-rights issues. at kast m part. ~e}’ contend thal info~~ation”

IS “property’” and that lnf{~n~~atl(jn-c(~ntr(~l issues should be viwut as all(xating (creating, den) ing, (jr c(mdlti~ming) property rights in in fwrnatl~m. (R. Nlmmcr and P. Krauthaus, op. cit., fw}tm)tc 11. )
90 I Information Security and Privacy in Network

that would create obstacles to transborder flows

of personal data that would exceed requirements for such protection.72

While the OECD guidelines are voluntary and

are not a legally binding instrument, they have

been endorsed by all 24 member countries.

The Council of Europe has interpreted the convention on data protection for specific kinds of

data processing. The principles at the foundation

of this convention are virtually identical to those

of the OECD guidelines. The Council of Europe

has also defined fair information practices under

other circumstances and issued recommendations

for areas such as direct marketing and employment records.73 The U.S. business community

views these initiatives as reflecting an appropriate

balance between privacy protection and free flows

of information .74

European Community Council Directive

In July 1990 the Commission of the European

Economic Community published a draft Council

Directive on the Protection of Individuals with

Regard to the Processing of Personal Data and on

the Free Movement of Such Data (*’The Council

Directive’ ’).75 The Council Directive is part of the

European Union’s (EU’S)

76 program to create a

“common market and an economic and monetary

union, and. . . the implementation of certain common policies . . . “77 (For discussion of the European Union’s analysis of information security

systems, see box 3-5.)

On March 11, 1992, the European Communities Parliament advised amending the commission’s proposal to eliminate the distinction

between public and private-sector data protection,

and then amended and approved the draft Council

Directive. On October 15, 1992, the commission

issued its amended proposal, which is being considered by the Council of Ministers.

Under the Council Directive, each of the EU

member states must enact laws governing the

“processing of personal data.”78 Processing is defined broadly as “any operation or set of operations,” whether or not automated, including but

not limited to “collection, recording, organization, storage, adaptation or alteration, retrieval,

consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure or

destruction.”79 Personal data is defined equally

broadly as “any information relating to an identified or identifiable natural person.”80 The only

“processing of personal data” not covered by the

Council Directive is that performed by a “natural

72 OECD DOC. No. C(80) 58 final.

73 see council of Europe Ct)mmlttee of Ministers, Recommendation R985(920) on the Protection of Personal Data for PI.KpWX Of Direct

Marketing ( 1985); and Council of Europe Committee of Ministers, Recommendation R989(2) on the protection of Personal Data Used for Employment Purposes (1989).

74 M N DiTc)sto, M~ager, Te]~c)rnrnunicati(~ nQfi[>n(~rnic and Financial Policy, U.S. council for International Business, 1ntemationa] . .

Data Protection Landscape, remarks to the State of Virginia’s Committee (m lnfmmation Policy, July 23, 1993.

75 Analysis of the Provisions” of tie council Dir~tive was assisted by personal communication with and material provided by F~d H. Cate,

Senior Fellow, The Annenberg Washington Program.

76 me Eur{)wan community officially became the European Union in November 1993.

77 Eur(,wm Ec(}nc)mlc Comnlunlty Treaty of 1957, ~. 2 (as amended by the Sing]e Eurfjpean Act of ] 986 and the Treaty on European

Unity (Maastricht, 1992)).

78 Ct)uncl] Directive, Com(92)422 Final SYN 287 (October 15, 1992).

79 Ibid.

so ]bid., ~. 2(a). “[A]n iden{ifiab]e person is one who can be identified, directly or indirectly, in particular by reference to an identification

number or to one or more factors specific (o his physical, physiological, mtmtal, economic, cultural or social identity.”
Chapter 3 Legal Issues and Information Security 191

The Commission of the European Communities’ Green Book on the Security of information Systems

(“Green Book”)1 IS the result of a European Council decision adopted in May 1992 establishing a Senior

Official’s Group to advise the commission on action to be undertaken, and to develop strategies for the

security of Information systems or “Action Plan “ As a step toward this Action Plan, the Green Book

examines the issues involved, the range of options resulting from an analysis of the issues, and requirements for action The Green Book attempts to outline the background to the development of a consistent approach to information security in Europe 2

The intention of the Commission in preparing the Green Book was to set out and promote a better

understanding of information security issues and to develop a consensus on information system security strategies to be considered on an EC-wide basis. The Green Book represents an intermediate step

toward the formulation of an Action Plan foreseen in the Council Decision. 3

The Green Book, m its section on Proposed Positions and Actions, identifies areas where initiatives

are needed EC-wide These require a concerted approach within Europe and where possible, internationally. The general position taken by the document is that societies engaged in the global economy

need to provide for adequate levels of Information security With the growing diversity of services and

applications of telematics, the security of information systems must evolve with the growing demand

and reduce the risks to security and safety while avoiding obstruction of renovation or economic and

social developments 4 The document examines and sets forth a proposed position and action for three

major areas trust services, International developments, and technical harmonization 5

The Green Book addresses issues surrounding trust services, Including electronic alternates to

traditional techniques of securing Information, such as signatures, envelopes, registration, sealing, depositing and special delivery. It raises the issue of information crime and rules governing the use of

electronic evidence in civil and criminal court proceedings including the need to harmonize these wlthin

the EC The absence of such harmonization could create, it asserts, “safe havens” for illegal activities. It

addresses the need to cater to the needs for seamless information security for business, the general

public, video and multimedia communications, and telecommuting in nonclassified Information The report suggests that trust services be established, including digital signature, nonrepudiation, claim of

I Commwslon of the European Commun}ttes, Directorate General X111, Telecommumcatlons, Information Market and Exploltatlon

of Research, Green Book on fhe Security of lnformat~on Systems, Drafl 40, Oct 18, 1993

2 Ibid

3 Ibid p 1

4 Ibid at p 2

5 Ibid at 3-6

(continued)

person in the course of a purely private and per- date, relevant, not excessive, used only for the lesonal activity.”81 gitimate purposes for which it was collected, and

Individual national laws enacted in compliance kept in a form that permits identification of indiwith the Council Directive must guarantee that viduals no longer than is necessary, for that pur-

“processing of personal data” is accurate, up-to81 Ibid., art. 3(2).
92 I Information Security and Privacy in Network Environments

origin, claim of ownership in negotiable documents, fair exchange of values, intractability, and time

stamping It suggests establishment of Europe-wide confidentiality services for nonclassified information, establishment of a network of Trusted Third Parties for the administration of the service provisions

such as for name assignment, key management, certifications and directories, and liability principles

for network providers, intermediates, and value-added service providers, It suggests establishment of

common principles for legislation covering communication crime and for electronic evidence, development of generic codes of practice for handling nonclassified information, including rules for security

labeling, and development of sector-specific codes of practice and base line controls. 6

The Green Book discusses rapidly developing international/ communication and security concerns,

and recognizes that security needs of European organizations and individuals must be safeguarded

and the competitiveness of the European industry maintained. It points out the need to avoid creation of

barriers to trade and services based on the control over security mechanisms and digital signature

schemes. It proposes that if acceptable international solutions cannot be agreed to, a European option

should be considered In response to these positions it suggests efforts toward international solutions

for information security, strengthened support for international standardization, and consideration of a

European security option offering confidentiality and digital signature services internationally 7

On the subject of technical harmonization, the paper points out that electronic products, systems,

services, and applications must be secure and safe, and must operate to generally recognized levels of

trust The International character of service and product supply requires the establishment of mutual

recognition of testing, validation, auditing, and liability assessment To accomplish this, the Green Book

suggests establishment of an international scheme for evaluation, certification, and mutual recognition

that provides for security, safety, and quality evaluations for applications, services, systems, and products. It also proposes establishment of principles for incident reporting obligations, incident containment, schemes for service provider and vendor self-evaluations and declarations, and communitywide

quality criteria for safety of systems, including methodologies for the assessment of threats, vulnerabilities, and hazards for safety critical systems 8

6 Ibid at p 3-4

7 lb[d , at p 5

8 Ibid , at p 5-6

SOURCE Off Ice of Technology Assessment, 1994

—

pose.

82 personal data maybe processed only with ligious beliefs, philosophical or ethical persuathe consent of the data subject when legally re- sion . . . [or] concerning health or sexual life” is

quired or to protect “the public interest” or the “le- severely restricted and in most cases forbidden

gitimate interests” of a private party, except where without the written permission of the data sub-

(hose interests are trumped by the “interests of the ject.” 84

data subject.”83 The processing of data revealing

“racial or ethnic origin, political opinions, re82 Ibid., art. 6(I).

83 Ibid., aI-I. 7.

84 Ibid., art. 8.
Chapter 3 Legal lssues and Information Security 193

Persons from whom data is to be collected must

be informed of the purposes of the intended processing; the obligatory or voluntary nature of any

reply; the consequences of failing to reply; the

recipients of the data; the data subject right of access to, and opportunity to correct, data concerning her or him; and the name and address of the

"controller.” 85 This same disclosure, except for

that concerning the obligatory or voluntary nature

of any response and the consequences of failing to

reply, must be provided to anyone about whom

data is collected without their consent.86

The Council Directive requires member states

to enact laws guaranteeing each individual access

to, and the opportunity to correct, processed information about her or him. This right of access

may be limited only to protect national security,

defense, criminal proceedings, public safety, a

“duly established paramount economic and financial interest of a member state or of the [European]

Community . . .“ or a similar interest.

National laws under the Council Directive

must also permit data subjects to correct, erase, or

block the transfer of “inaccurate or incomplete

data,”87 and the opportunity to object to the processing of personal data.88 The Council Directive

requires that data subjects be offered the opportunity to have personal data erased without cost before they are disclosed to third parties, or used on

their behalf, for direct mail marketing.89

The Council Directive establishes basic requirements for protecting personal data from “accidental or unlawful destruction or accidental loss

and against unauthorized alteration or disclosure

or any other unauthorized form of processing."90

In keeping with most European data protection

legal regimes, the Council Directive requires that

controllers’ notify the applicable national ● ’supervisory authority” before beginning any data processing.91 At minimum, member States’ national

laws must require that the notification include: the

name and address of the controller, the purpose for

the processing, the categories of data subjects, a

description of the data or categories of data to be

processed, the third parties or categories of third

parties to whom the data might be disclosed, any

proposed transfers of data to other countries, and

a description of measures taken to assure the security of the processing.92

Each supervisory authority is required to investigate data processing that “poses specific risks to

the rights and freedoms of individuals.”93 For certain routine processing that does not pose significant threat to individuals rights (e.g., the

production of correspondence, consultation of

documents available to the public, etc.), the Council Directive permits members states to simplify

or even eliminate the notification requirements.94

Each supervisory authority is required to keep and

make available to the public a ‘*register of notified

processing operations."95

Under the Council Directive, each member

state must establish an independent public author85 Ibid., art. I I ( l).

86 [bId., art.8.

87 Ibid., art. 14(3).

8* Ibid., art. 15(1 ).

‘9 Ibid., art. 15(3).

90 Ibid., art. 17( 1 ).

91 Ibd., art. 18(I).

92 lbd., art. 18(2).

93 Ibid., art. 18(4).

94 Ibid., art. 19.

95 Ibid., art. 21.
94 I Information Security and Privacy in Network Environments

ity to supervise the protection of personal data,96

which has the power to investigate data processing activities, to intervene and order the destruction of data that has infringed on personal rights,

to order that processing cease, and to block transfer of data to third parties. The supervisory authority must also have the power to deal with

complaints from data subjects and is required to

issue a publicly available report at least annually.97

Each member state’s law must provide for civil

liability against those that control data for unlawful processing activities,98 and impose penalties

for noncompliance with the national laws adopted

pursuant to the Council Directive.99 National laws

must provide both for enforcement by a supervisory authority and for remedies for breach of

rights. 100 

Finally, although forbidden to restrict the flow

of personal data among themselves because of national data protection or privacy concerns, member states will be required to enact laws

prohibiting the transfer of personal data to nonmember states that fail to ensure an “adequate level of protection.’’lO1 The prohibition is of

particular concern to U.S. business interests. The

basis for determining the adequacy of the protection offered by the transferee country “shall be

assessed in the light of all circumstances surrounding a data transfer,“ including the nature of

the data, the purpose and duration of the proposed

processing, the “legislative provisions, both general and sectoral,” in the transferee country, and

the “professional rules which are complied with”

in that country.

102 However, the Council Directive does not spell out standards for making evaluations.

Because the United States lacks comprehensive laws on fair information practice, the Council

Directive prompts increased scrutiny of U.S. private-sector activity in the area of data protection.

U.S. business has some serious concerns about the

EU proposal, as it relates to the data subject’s consent and the transfer of data to non-EU countries.

With respect to issues surrounding transborder

data flows, the initial version of the proposed

Council Directive required all member states to

prevent the transfer of personal data to a non-European Union country unless that country ensured

an “adequate level of protection,” where adequacy

appeared to be determined by an EU evaluation of

the third countries’ national data protection laws.

The first draft of the proposed Council Directive

allowed EU level coordinating committees to establish a blacklist of countries, but did not require

it. There was great concern about how the United

States would be treated.

Business was especially concerned with this

provision because of its potential to erect barriers

to the free flow of information. This was also perceived as indirectly imposing EU standards on

third-party countries, including the United States,

where the approach to privacy protection is different. The business community prefers to rely on the

existing structure of federal, state, and industryspecific laws in this area and on self-regulation

rather than broad legislation. The business community sees the revised Council Directive as placing more emphasis on the importance of the free

flow of information. It now states that the adequa96 Ibid., art. 30(1).

97 Ibid., art. 30(3).

98 Ibid., art. 23.

99 Ibid., art. 25.

‘m Ibid., art. 22.

lo] [bld ~ 26(I)< me pr(~hibltlon is subject to exempti(ms where the transfer is necess~ 1 ) to the performance Of a Contract In Which the ., .

data sub~ct has consented to the transfer; 2) to serve an “important public Interest”; or 3) to protect “the vital interest of the data sub~ct.”

102 Ibid., art. 26(2).
—

Chapter 3 Legal Issues and lnformation Security 195

cy of protection in a non-EU country “shall be assessed in the light of all the circumstances

surrounding the data transfer operation,” including nature of the data, purpose and duration of

processing, laws, and professional rules, but believes it should go further and recognize self-regu1atory practices, such as a company’s internal code

of conduct.103 The EC has commissioned an extensive study of U.S. law and practice in connection with an interest in better understanding the

scope of information practices in the United

States. 104

In addressing the sufficiency of existing U.S.

legal standards for privacy and security in a networked environment for the private sector:

●

●

Congress could legislate to set standards similar to the OECD guidelines; or, alternatively,

Congress could allow individual interests,

such as the business community, to advise the

international community on its own of its interests in data protection policy. However, because the EU’s protection scheme could affect

U.S. trade in services and could impact upon

individuals, Congress may also wish to monitor and consider the requirements of foreign

data protection rules as they shape U.S. security and privacy policy to assure that all interests

are reflected.

One means of assuring that a diversity of interests is reflected in addressing the problem of

maintaining privacy in computerized information—whether in the public or private sector—

would be for Congress to establish a Federal

Privacy Commission. Proposals for such a committee or board were discussed by the Office of

Technology Assessment (OTA) in its 1986 study

of Electronic Record Systems and Individual Privacy. OTA cited the lack of a federal forum in

which the conflicting values at stake in the development of federal electronic systems could be fully debated and resolved. As privacy questions will

arise in the domestic arena, as well as internationally, a commission could deal with these as well.

Data protection boards have been instituted in

several foreign countries, including Sweden, Germany, Luxembourg, France, Norway, Israel, Austria, Iceland, United Kingdom, Finland, Ireland,

the Netherlands, Canada, and Australia.

The responsibilities and functions suggested

for a privacy commission or data protection board

are:

1.

2.

3.

4.

5.

6.

to identify privacy concerns, that is to function

essentially as an alarm system for the protection of personal privacy;

to carry out oversight to protect the privacy interests of individuals in information handling

activities;

to develop and monitor the implementation of

appropriate security guidelines and practices

for the protection of health care information;

to advise and develop regulations appropriate

for specific types of information systems;

to monitor and evaluate developments in information technology with respect to their implications for personal privacy in information;

and

to perform a research and reporting function

with respect to information privacy issues in

the United States.

Debate continues as to whether such a body

should serve in a regulatory or advisory capacity.

In the 103d Congress, legislation has been

introduced that would establish a Privacy Protection Commission. 105

l~J M N Di T{)st{), M~ager, Te]ecomn]unica( i(~n#Ec(Jnomic” and Financial po]icy, United StaleS council fOr ]ntematl(~na] Business, “lntema[i~mal Data Pn,[ection Landscape,” remarks to the State of Virginia’s Committee on tnforrnation Policy, July 23, 1993.

104 me Studv directed by ~[)fesst)r Splros Slnll[ls, W()]fgang Goethe C()]lege of the University of Frankfurt ~d ctmducted by pr~)fess[ms .*

Paul Schwartz, University of Arhansas School” of Law and Joel R. Reidenberg, Fordham University Schtx)l {~f Law, is expected to bc released in

1994.

IOS s. 1735, [he ~Y,acy ~otec[i(jn Ac(, was intr(xiuced by Senator Paul Simon on N(Jv. 20. 1993.
96 I Information Security and Privacy in Network Environments

DIGITAL LIBRARIES

Digital libraries, or networked information collections, allow online access to books, journals, music, images, databases, and multimedia works.

Digital libraries rely upon technological advances

in net working—ranging from advanced data storage technologies and processes to widespread use

of interoperable devices and development of a National Information Infrastructure. Digital libraries

would integrate networked information resources

of all kinds into new collaborative environments. 106

Digital libraries make available to institutions

online versions of journals and magazines, text

and graphics from books, and other print resources. Digital libraries might also include resources such as linked libraries for software,

collections of human genome data sequences, and

global climate data.107 Others envision the digital

library as a network of publishers, vendors, libraries, other organizations, and individuals (public, commercial and private), any of which can

offer an item or collection of items. 108 These libraries will affect the way that library users obtain

and report research information, and promise to

provide researchers with easy access to a wide

array of information resources.109 

One example of ways in which these libraries

bring together texts from a variety of sources is the

Electronic Text Center, an online collection at the

University of Virginia in Charlottesville. The humanities collection held at the center contains the

Oxford English Dictionary, a wide range of Old

English writings, several versions of Shakespeare’s works, the complete works of 1,350 English poets, and hundreds of other literary, social,

historical, philosophical, and political materials

in various languages.110 These data are stored on

large-capacity magnetic disk drives, while computers in the library and elsewhere on campus can

search and view all materials, including color

images of manuscript pages. A text-only version

of the database can be viewed over a network using desktop computers. Access to the system,

which has been used increasingly since its implementation in August 1992, is limited to university

students, faculty, and staff.111

In the area of science, an analogous system is

disseminated over Cornell University’s local area

network called Chemistry On-line Retrieval Experiment, a prototype electronic library of 20

American Chemical Society journals. Four participants collaborate in the project: the American

Chemical Society and its Chemical Abstracts Service division; Bell Communications Research

(Bellcore) of Morristown, New Jersey; Cornell

University’s Mann Library; and the Online Computer Library Center, a database resource service

1~ The Cop)ration” for Nall~>nal Research Initiatives (CNRI) outlines one proposal for components of a digital system, which c(~uld include: 1 ) personal library systems for the users; 2) organizational library systems forserving groups of individuals oractivities; 3) new as well as

existing local or distant databases; 4) database servers to handle remote requests, and 5) a variety of system functions to coordinate and manage

the entry and retrieval of data. The system components are assumed to be Ilnked by means of one or more interconnected computer networks.

They assume use of active intelligent computer programs such as “knowbot” programs, that act as agents traveling within a network and accessing network resources on behalf of end users. The programs would be capable of exchanging messages with other such programs and rmwing

from one system to another carrying out the wishes of the users.

I ~7 R()&~ A iken, Network Research %ogmnl Director, U.S. Department of Energy, Livernmre National Laboratories, ~’rSOna] commlJnication, May 1994.

l~s u s. .~pa~nlen[ of Conlnlerce, Technology” Administration, fuffitr~’ [he Infiwmution Infiustrucrure to Work: Repot-l Oj /he Informanon

/n@rtructure 7ti.rk Force Commif/ee on Applications and Technology, NIST Special Publication 857 (Gaithersburg, MD: National Institu[e of

Standards and Technology, May 1994) , p. 95.

1~ Stu Berman, “Advmces in 13ectronk Publishing Herald Changes for Scientists,” Chemical & En~ineering Netis, vol. 71, N(). 24, J une

14, 1993, pp. ](), 16.

110 [bid.

1‘ Ibid.
Chapter 3 Legal lssues and information Security 197

for libraries, based in Dublin, Ohio. This system

enables student and faculty access to a database

that will eventually include more than 10 years’

worth of 20 chemical journals and information

from scientific reference texts. Users can electronically retrieve articles, complete with illustrations, tables, mathematical formulas, and

chemical structures. They can also switch to articles on related topics, or to reference articles, using hypertext-type links. 112

Ways in which digital information differs from

information in more traditional forms include the

following:

1.

2.

3.

4.

5.

6.

Digital works are easily copied, with no loss of

quality.

They can be transmitted easily to other users or

be accessed by multiple users.

They can be manipulated and modified easily

and changed beyond recognition.

Works treated very differently under current

copyright law are essentially equivalent: text,

video, or music are all reduced to a series of bits

and stored in the same medium.

Works are inaccessible to the user without hardware and software tools for retrieval, decoding,

and navigation.

Software allows for new kinds of search and

linking activities that can produce works that

can be experienced in new ways, e.g., interactive media.113

The nature of digital works changes how authors

create, the kinds of works they create, and the

ways that readers or users read or use the works.

These changes in the nature of creative works affect the operation of copyright law. (For a discussion of copyright law and the related issue of fair

use, see boxes 3-6 and 3-7.) In an earlier work,

OTA suggested several options for dealing with

these issues. Among these were to clarify the status of mixed-media works with respect to their

copyright protection and to create or encourage

private efforts to form rights clearing and royalty

collection agencies for groups of copyright owners.

114 However, the application of intellectual

property law to protect works maintained in digital libraries continues to be uncertain; concepts

such as fair use are not clearly defined as they apply to these works, and the means to monitor compliance with copyright law and to distribute

royalties are not yet resolved.

I Findings from OTA’s 1992 Study of

Software and Intellectual Property

In an earlier work, Finding a Balance: Computer

Software, Intellectual Property and the Challenge

of Technological Change, 115 OTA examined fundamental copyright issues raised by collections of

digital information. OTA’s findings still apply,

and bear mentioning here.

I I J us. congress, office of Techn&Jgy Assessment, Finding a Balance: Computer Software, ]nte]/ectuai prOpertY Und the challenge u!’

Technological Change, OTA-TCT-527 (Washington, DC: U.S. Government Printing Office, May 1992). These differences were also cited in

Pufrlng the lnjormatlon lrrfrastructure to Work: Report of [he lnfornuuion [nfiastructure Task Force Committee on Applications and Technology, op. cit., footrmte 108, p. 96. The report stated that “[t]he advanced information infrastructure presents three significant and qualitatively new

challenges u) prt)tecting intellectual property, First, digitization offers an unprecedented, easy, and inexpensive method to produce an indefinite

number of perfect copies. Second, inf(mnation in disparate media can be converted into a single digital stream and can be easily manipulated to

create a variety of new works. Third, digitized information can be instantaneously distributed to and downloaded by thousands of users of the

netw(~rk.”

I I q Ibid, 

,.

p 36 . However, s(~m comnlentat(~rs believe that an approach more appropriate to present technological capabilities would alh~w

for direct paymen[s. (Oliver Smoot, Executive Vice-President, Computer and Business Equipment Manufacturers Association, personal communica[i(m, May 1994. ) At the same time, efforts to arrive at a standard licensing contract for online information have confronted problems.

(Laurie Rhoades, Attorney Advis~m, U.S. Copyright Office, personal communication , May 1994.)

I I $ ~“lndlng fj &J/a~(.e, op. Cit., fOOtnOte 1 I ~.
98 I Information Security and Privacy in Network Environments

What Is a “Work"

Copyright protection attaches to an “original work

of authorship” when it is “fixed in any tangible

medium of expression.” Thus, when an author

writes a novel on a computer or word processor,

it is clear that a printout is fixed and tangible and

protected by copyright. It is also fairly clear that

the words on the cathode-ray tube disappear when

it is turned off and therefore are unprotectable.

The electronic mail message is a new type of

“work” that usually exists only in digital form until it is printed out. Most messages are of a temporary nature and their authors may or may not care

whether their rights under copyright are protected.

Other users of electronic mail use this medium to

contact and collaborate with colleagues, to express ideas, and to exchange drafts of works in

progress. In these cases, people would likely wish

to retain the rights to their writings.

The technology of electronic messages also

raises questions about the definition of publishing

for purposes of copyright. A person can forward

an electronic message received from someone else

very easily to any number of other people. Is this

kind of distribution the same as publishing, a right

that copyright law grants exclusively to the author? A message can also be modified before forwarding: does this create a derivative work, for

which permission from the author should be

gained? Whether or when an infringement of copyright occurs in these cases has not yet been tested.

A further complication in the definition of a

work arises because computers make collaboration and multiple authorship easy. Many electronic mail messages are generated as a part of

computer conferences, whereby people communicate about topics of mutual interest, even though

they are geographically separated. Conferencing

software on the host computer records and reorganizes incoming messages so that each participant

can read what has been written by others and then

add his or her own responses.

Are the proceedings of a computer conference

a joint or collective work, or many separate

works? If it is a collective work with many contributors, the individual contributors can claim authorship in their respective contributions, but who

can claim authorship in the collection as a whole?

If it is not a joint work, does each individual message constitute a separate work, or do all the contributions of one author constitute a work? The

question of what constitutes the work, and the

identity of the author or authors, will determine

the rights that pertain thereto.

The question of the size of a work might be important in determining if infringement has taken

place and if a fair-use defense against infringement is appropriate. Fair use is determined by four

criteria (discussed in box 3-7), one of which is the

amount and substantiality of material used with

respect to the whole.

Special Concerns of Libraries

Many of the rules under the copyright law regarding lending and sharing library materials or making preservation copies or replacement copies of

damaged works were developed with printed

books and journals in mind.

Some provisions in the copyright law also deal

with copying and other use of “computer programs,” but do not specifically extend to digital

information. The copyright law gives the owner of

a computer program the right to make an archival

copy under certain conditions. The library may

not be the owner of the computer program. Vendors often say that programs are licensed, not sold.

The library, as a licensee rather than an owner,

does not have the rights described in the copyright

law; these are abrogated by the terms of the license. There is considerable controversy over the

enforceability of many of these contracts in which

the vendor has enough bargaining power to force

terms on the user. At present, there is a wide variety in the terms and conditions of software and database licenses. An institutional user like a library

or university computer center often uses hundreds

of different program and data packages, and ensuring compliance with all of the packages different requirements is difficult.

The copyright law also currently refers only to

computer programs and not to data or digital

information. Since computer data is stored in the
-— — ..—

Chapter 3 Legal Issues and Information Security 199

Copyright law in the United States protects the rights of an author to control the reproduction,

adaptation, public distribution, public display, and public performance of original works of authorship of

every kind, ranging from books to sound recordings.

A fundamental goal of U.S. copyright law is to promote the public interest and knowledge—the

“Progress of Science and useful Arts."1 Although copyright is a property Interest, its primary purpose

was not conceived of as the collection of royalties or the protection of property, rather, copyright was

developed primarily for the promotion of intellectual pursuits and public knowledge As the Supreme

Court has stated

The economic philosophy behind the clause empowering the Congress to grant patents and copyrights IS

the conviction that encouragement of individual efforts by personal gain is the best way to advance public welfare through the talents of authors and inventors in Science and the useful Arts 2

Much of the structure and basis for American law is derived from its British legal antecedents After

the Introduction of the printing press in England in the late 1400s, the Crown’s first response was to

control what writings were printed or copied The earliest British copyright laws were enacted in the

1500s to promote censorship by the government to cooperation with a monopolistic group of printers

known as the Stationer’s Guild This system collapsed when the company failed to exercise discretion

as a censor, but used its monopoly power to set high prices. Parliament’s response in 1695 was to allow

the Stationer’s copyrights to expire, but this resulted in a period of anarchical publication. In 1709 Parliament responded to the situation by enacting legislation known as the Statute of Anne This statute

granted a copyright to authors, as opposed to printers, for a period of 14 years The copyright was

renewable for an additional 14 years if the author was still alive After the expiration of the copyright, the

writing became part of the public domain available for use by anyone This first modern copyright law

became the model for subsequent copyright laws in English-speaking countries 3

After severing ties with Great Britain, the former American colonies sought means to secure copyright laws in 1783, the Continental Congress passed a resolution encouraging the various states to

enact copyright Iegislation All of the states except Delaware enacted some form of copyright statute,

although the various State laws differed greatly 4 Because of the differences in the State copyright laws

and the ensuing difficulties, the Framers of the Constitution, notably James Madison, asserted that the

copyright power should be conferred upon the legislative branch 5 This concept was ultimately

adopted, and Congress was granted the right to regulate copyright (art 1, sec. 8, cl 8). 6

1 The Constitution prowdes that “Congress shall have power to Promote the Progress of Science and useful Arts, by securing

form Ilmlted Times to Authors and Inventors the excluswe Right to their respectwe Wrltmgs and Dlscoverles “

2 &fa~er v Stein, 347 U S 201 219 (1954 )

3 See U S Congress, Off Ice of Technology Assessment, Intellectual Properly R\ghts m an Age of Electrcmcs and Information,

OTA-CIT-302 (Washington, DC U S Government Pnntmg Office, April 1986)

4 R P Lyman, Copyright m F/lstorlca/ Perspectwe (Nashwlle TN Vanderbilt Unwerslty Press 1968), p 183

5 Ibid

6 Congress’s constitutional grant of copyright regulation IS more restricted than Its Engllsh antecedents
100 I Information Security and Privacy in Network Environments

The First Congress in 1790 enacted the first federal copyright act This legislation provided for the

protection of author’s rights 7 Commentators have written that the central concept of this statute is that

copyright is a grant made by a government and a statutory privilege, not a right. The statute was substantially revised in 18318 to add copyright coverage to musical compositions and to extend the term

and scope of copyright. A second general revision of copyright law in 18709 designated the Library of

Congress as the location for administration of the copyright law, including the deposit and registration

requirements. This legislation extended copyright protection to artistic works The third general revision

of American copyright law in 190910 permitted copyright registration of certain types of unpublished

works The 1909 legislation also changed the duration of copyright and extended copyright renewal

from 14 to 28 years A 1971 amendment extended copyright protection to certain sound recordings.11

The fourth and most recent overhaul of American copyright law occurred in 1976, after years of study

and legislative activity The 1976 legislation modified the term of copyright and, more significantly, codified the common law fair-use concept as a limitation on the exclusive rights of the copyright holder

In 1980, following recommendations made by the National Commission on New Technological Uses of

Copyrighted Works, legislation explicitly extended copyright to computer programs.12

ic,

The copyright statute interprets the constitutional term “writings” broadly, defining it as:

works of authorship fixed in any tangible medium of expression now known or later developed, from

which they can be perceived, reproduced or otherwise communicated, either directly or with the aid of a machine or device.13

Copyright protection is expressly provided for eight categories of a works literary; musical, dramatpantomimes and choreographic, pictorial, graphic and sculptural; motion picture and other audiovisual works, sound recording, and architectural, however, the legislative history indicates that these

categories are not meant to be exhaustive Computer programs are copyrightable as “literary works”

as defined in 17 U.S.C 101.14

The term computer program IS also defined in section 101 as “a set of statements or instructions

used directly or indirectly in a computer in order to bring about a certain result. ”

Copyright protection subsists from the time work of authorship is created in a fixed form. The copyright in the work becomes the property of the author immediately upon creation. Only the author or one

deriving rights through the author, can rightfully claim copyright.

7 Ch 15, Sec 1, 1 Stat 12 See, OTA- CIT-302, op. clt footnote ,p64

84 Stat 436

9 Act of July 8, 1879, c 230, 16 Slat 198

10 Act of March 9, 1909 c 320, 35 Slat 1075

11 publlc law 92-14 r), OCI 15, 1971 I ~ Stat ’91

1217 u s c 107, 1 f 7

1317 U S C 102(a)

1417 us c I 01 prowdes m perment Part “Literary works” are works, other than audiovisual works, expressed In words, numbers, or other verbal or numerical symbols or mdic~a, regardless of the nature of the material ob]ects, such as books, pertodlcals,

manuscnpts, phonorecords, film, tapes, disks or cards, m which they are embodied

(contwrued)
Chapter 3 Legal Issues and lnformation Security 1101

In the case of works made for hire, the employer rather than the employee is presumptively considered the author A work made for hire is define as

1 a work prepared by an employee within the scope of his other employment, or

2 a work specially ordered or commissioned for use in a variety of circumstances enumerated by

the statute

Copyright does not protect ideas, but rather the expression of ideas Copyright protection does not

extend to any

procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in

which it IS described, explained, Illustrated, or embodied 1

5

Copyright protects the writings of an author against unauthorized copying, distribution, and so forth,

and protects the form of expression rather than the subject matter of the writing Unlike patents, it does

not protect against independent creation Copyright grants the owner the exclusive right to do and to

authorize others to do the following:16

■ reproduce copies of the copyrighted work,

s prepare derivative works based on the copyrighted work;

■ distribute copies of the copyrighted work to the public by sale or other transfer of ownership, or by

rental, lease or lending,

“ perform the copyrighted work publicly, and

■ display the copyrighted work publicly.17

The statute does, however, specify certain Imitations to the copyright owner’s exclusive rights that

are noninfringing uses of the copyrighted works These limitations Include the “fair use” of the work (17

U S C 107(1988)), certain kinds of reproduction by libraries and archives (17 U S C 108 (1988)), certain educational performances and displays (17 U S C 110 (1988)), and certain other uses (17 U S C

117 (1980))

It is an Infringement of the copyright for anyone to engage in any of the activities enumerated above

without the authorization of the copyright owner The copyright statute provides that the copyright owner

may institute an action for Infringement against the copyright infringer to prevent further infringement of

the copyright (17 U S C 502 (1988)) An Infringer of a copyright may be subject to the payment of actual damages and profits to the copyright owner (17 U S C 504 (b)(1988)), or in certain circumstances

the copyright owner may elect specified statutory damages within specified ranges in Iieu of actual

damages and profits (17 U S C 504 (c)(1988)) In addition, in certain cases the court may permit the

recovery of legal fees and related expenses involved in bringing the action (17 U S C 505 (1988))

Criminal sanctions may also be imposed for copyright infringement in certain cases (17 U S C 506

(1988))

1517 U S C 102(b)

16 Not all ~orks, however, enjoy all rights For example, sound recordings have no public Performance right 17 U S C 106(4)

1717 u s c 106

SOURCE U S Congress, Off Ice of Technology Assessment, Copyrlghtand Home Copying Technology Cha//enges the Law OTACIT-422 (Washmgfon, DC U S Government Prmhng Off Ice, October 1989).
102 I Information Security and Privacy in Network Environments

The tension between the stimulation of intellectual pursuits and the property interests of the copyright owner has been a central issue in the development, implementation, and interpretation of American copyright laws Moreover, the concept of copyright presents a seeming paradox or contradiction

when considered within the context of the first amendment freedom of speech guarantees while the

first amendment guarantees freedom of expression, it can be argued that copyright seems to restrict

the use or dissemination of Information. It can be argued, however, that copyright, to the degree that it

stimulates expression and encourages writing and other efforts, furthers first amendment expression

values by encouraging the quantity of “speech” that is created. 1 In attempting to resolve these conflicting interests, the courts have adopted a test that weights the interests of freedom of expression and the

property interests of the copyrightholder to arrive at an acceptable balance 2 An extensive body of

case law has been developed that weighs and counterbalances first amendment concerns and the

rights of the copyright holder 3

Hence, the American copyright system is based on dual interests intellectual promotion and property rights Combined with these factors is the first amendment freedom of expression concern, Courts

have balanced and assessed these seemingly conflicting elements, and Congress has considered

them in enacting copyright legislation

Much of the historical balancing has occurred in the context of the fair-use doctrine The doctrine of

fair use as codified in the Copyright Act of 1976 has antecedents in British law of the 18th and 19th

centuries and in 19th century U S case law Various approaches have been adopted to interpret the

fair-use doctrine It has been said that the doctrine of “fair use” allows the court to bypass an inflexible

application of copyright law, when under certain circumstances it would impede the creative activity

that the copyright law was supposed to stimulate Indeed, some commentators have viewed the flexibility of the doctrine as the “safety valve” of copyright law, especially in times of rapid technological

change Others have considered the uncertainties of the fair-use doctrine the source of unresolved ambiguities.

In codifying the fair-use exception in the Copyright Act of 1976, Congress did not formulate a specific test for determining whether a particular use was to be construed as a fair use Rather, Congress

created statutory recognition of a Iist of factors that courts should consider in making their fair-use determinations The four factors set out in the statute are

1

2

3

4

the purpose and character of the use, including whether such use is of a commercial nature or is

for nonprofit educational purposes;

the nature of the copyrighted work;

the amount and substantiality of the portion used in relation to the copyrighted work as a whole,

and

The effect of the use on the potential market and value of the copyrighted work (17 U.S.C. 107)

1 HIS also argued that freedom of speech guarantees the speaker the right to speak hls or her own expression, and that It does not

gwe hlm the right to speak) or copy someone elses expression Nor does It prevent a speaker from using the Ideas or Informahon m

someone else’s Ideas, facts, or mformahon Copyright requires the speaker to arrwe at hrs own expression from the Ideas he wishes to

express The resulting conflict or balance between these interests IS part of copyright Itself —llmtted protection, with the hmltations

spectflcally designed to encourage publication and access to mformahon The remammgconfhct, it IS argued, maybe resolved by

fatr use Mary Jensen, Unwerstty of South Dakota School of Law, personal commumcatlon, Sept 29, 1991

2 Melwlle Nlmmer, N/mmer on Copyright (New York, NY Bender, 1991), VOI 1, sec 1 10

3 See Harper& Row Pubhshers,Inc v Nat(on Enterprises, 471 U S 539 (1985)

(continued)
Chapter 3 Legal Issues and Information Security 1103

Congress realized that these factors were “in no case definitive or determinative” but rather "(provided some gauge [SIC] for balancing equities “ It appears that Congress developed a flexible set of

criteria for analyzing the circumstances surrounding each fair-use case, and that each case would be

judicially analyzed on an ad hoc basis Therefore, courts seem to have considerable Iatitude in applying and evaluating fair-use factors 4 Courts have given different weight and interpretation to the fair use

factors in different judicial determinations The following Illustrations demonstrate how some courts have

interpreted certain fair-use factors

In evaluating the first factor, the purpose and character of the use, courts have not always held that

the use ‘(of a commercial nature” precludes a fair-use finding, nor does a “nonprofit educational” purpose mandate a finding of fair use A defense of fair use on the basis of the first criterion will more often

be recognized, however, when a defendant uses the work for educational, scientific, or historical purposes

Consideration of the second factor, the nature of the copyrighted work, must be based on the facts

and circumstances of each particular case For instance, courts have Interpreted the scope of the fair

use doctrine narrowly for unpublished works held confidential by their authors

In examining the third factor, the amount and substantiality of the portion of the work used, courts

have looked at both the quantitative aspect—how much of the work is used—and the qualitative factor—whether the “heart” or essence of the work is used The fair-use doctrine is usually not considered

to be applicable when the copying IS nearly a complete copy of the copyrighted work, or almost verbatim. Before the Court of Claims decision in Williams & Wilkins Co v United States, 5 courts as a rule did

not allow fair use for copying of entire works or substantial portions of a work However, the issue of

copying entire works was the topic of significant debate prior to passage of the 1976 act The result of

this debate, which allows for this kind of copying under limited circumstances, is found in section 108,

which sets out guidelines for classroom copying, and in interpretation of fair use in the Iegislative reports. 6

In assessing the fourth factor, courts have examined the defendant’s alleged conduct to see whether

it poses a substantially adverse effect on the potential market for, or value of, the plaintiff present work

These considerations are used with great care by the courts in applying the fair-use doctrine on a caseby-case basis

Congress looked to the issue of copyright fair use at some length in 1991, examining whether the fair

use doctrine and the First Amendment permit biographers to make unauthorized use of their subject’s

unpublished letters and manuscripts The courts have decided this issue on the basis of the specific

facts of each case, but emphasizing the unpublished nature of the work in denying fair use

In 1991 the Senate passed S 1035 to clarify that the unpublished nature of a copyrighted work does

not per se preclude applicability of the fair use defense to infringement A similar measure was deleted

from H R 2372 when a district court ruled in favor of a biographer in Wright v Warner Books 7

4 For a historical analysts of the talr use factors, see Willlam Palry, The Fav Use Pmdege m Copyright Law (Washington, DC The

Bureau of National Affairs 1985) ch 17

5 W1//lams & wlf~lns co “ (Jnlted S1ates, 172 IJ S p Q 670 (cl c1 1972), 487 F 2d 1345, 180 U S P Q 49 (Ct Cl 1973), aff’dbyan

equa//ydwded coufl, 420 U S 376 184 U S PO 705 (1975)

6 patV op CIf footnote 4. PP 449-450

7 Wright v Warner Books, 748 F Supp 105 (DC SNY 1990) The Second Crcult affirmed

SOURCE U S Congress, Off Ice of Technology Assessment, Copyfightandtfome Copying Technology Challenges the Law, OTACIT-422 (Washington, DC U S Government Prlntmg Off Ice, October 1989) and cited sources
104 I Information Security and Privacy in Network Environments

same medium as computer programs, it would

seem logical to treat them in the same way. However, the argument remains that digital data does

not fit the definitions currently set out in section

101 of the Copyright Act so owners have no right

to make archival copies. The two points raised

here become even more complicated for libraries

in the case of mixed-media works in which printed

material, digital data, computer programs, microfiche, and other forms might be packaged and

used together.

Libraries have long participated in resource

sharing whereby several libraries cooperatively

purchase material, and some libraries don’t make

certain purchases in the knowledge that the material can be obtained through interlibrary loan. Resource sharing practices have long been viewed as

prudent use of both funds and storage space, especially for low-demand items. Interlibrary loans of

collections among libraries is institutionalized by

tradition and acceptable under the provisions of

the Copyright Act (section 108). Interlibrary loan

exchanges have increased dramatically in recent

years. However, sharing of other information resources has recently come under fire from some

publishers, who see them as depriving information providers of sales. Publishers protect their interests by leasing, instead of selling materials,

thus denying libraries the rights that ownership

(e.g., of printed works) permits under the firstsale doctrine. Contracts with electronic information providers sometimes limit or forbid sharing

or lending of materials. Libraries, particularly

public ones, have an obligation to balance the interests of users and publishers—a balance that the

Copyright Act is intended to maintain. The growing use of electronic information, and the tendency of information providers to control the uses of

this material through contracts, may lead to distinctions between for-profit and not-for-profit libraries, in terms of their operations, cost

differentials, and access.

Other issues to be resolved are policies about

the use of material obtained by library patrons.

Some libraries offer online information and other

services such as access to electronic bulletin

boards to their patrons. These libraries become an

additional link in a complex of transactions. To

what extent are libraries responsible if users make

unauthorized copies, post copyrighted material on

electronic bulletin boards, send obscene messages, or otherwise infringe copyrights, violate

contracts, or break laws? These problems are not

new. The photocopier eventually caused libraries

to adopt a policy of providing copiers, posting a

notice about the copyright law, and then leaving

users unsupervised to follow their own consciences. Policies regarding digital information—

what can be downloaded, number of printouts

allowed, etc.—will also be developed. The development of policies for digital information may be

more complex since contracts with information

vendors will also be involved.

Authorship and Compilations

Copyright attaches to “original works of authorship.. . .“ Original in this case means that the work

was independently created by the author and not

copied from another work. The U.S. Supreme

Court has defined author as “he to whom anything

owes its origin; originator; maker.” Because much

of digital information is in the form of compilations of facts, which are not original, how much of

the publisher’s contribution to selection, arrangement, and organization of facts should be protected by copyright is sometimes controversial. 116 

I lb me U.S. Suprem COUII addressed this issue in Feist Publications v. Rural Telephone Ser~lice Co., Feisr V. Rural TWphww, 499 U.S.

34) ( 1991), finding that telephone White Pages are not copyrightable, and that copying them into another compilation was not an infringement.

The Court held that the proper test for copyrightability of a compilation is originality-not “sweat of the brow>’ or “industrious collection” as

courts had previously held.
—

Chapter 3 Legal Issues and Information Security 1105

Use of Digital Information

Like print publishing, electronic publishing is

about delivering works to readers and returning

royalties to copyright holders. Several characteristics of digital information make the delivery system different and lead copyright owners and their

publishers to want more control over the readers’

uses of the information.

In using an online information service, a reader

buys access to the electronic information. Once

that access is permitted, the information is out of

the control of the copyright owner and the publisher. For the most part, publishers have no way

of knowing how the material is finally used or disposed of. For this reason, publishers consider information as used as soon as it reaches the reader

and, as a result, generally require that it be paid for

in advance. Schemes for digital libraries usually

postulate charging for use of documents based on

how much information a user has retrieved.

This means that some amount of useless information is paid for by the user. A partial remedy

for this is to improve search and retrieval software

and to offer means to browse through information

before a reader commits to requesting a whole

document. Users generally have to agree to certain

limitations on their use of the information, in order to gain access to the database. Copies of a

work can be purchased on CD-ROM (Compact

disc-read only memory) or disc, but in many

instances, the work is leased or licensed in this

form, not purchased. The first-sale doctrine does

not apply in these instances; the use of the material

is subject to the terms of the license agreement.

Contracts may also govern the rights and responsibilities at each link of the distribution chain

through which digital information comes to the

end user.

Traditionally, copyright law does not give

copyright owners rights to control the access that

readers have to information. Copyright owners in

the electronic world use contracts to impose restrictions to ensure that they are paid for every

instance of access or use. Still, as a practical matter, these restrictions do not prevent unauthorized

copying. Once a user has paid for one legitimate

copy of something, little can be done to prevent

him or her from making other copies. Digital information is easily copied and easily transmitted

to many locations. These characteristics make

electronic distribution an attractive publishing

medium, but there is a potential for any reader to

become a “publisher” of unauthorized copies.

Unauthorized Copying

Unauthorized copying is not a problem unique to

digital information, yet digital copies are unique

in that, unlike photocopies and facsimiles, each

copy is of the same quality as the original. Distribution is easy; the copy can be posted on a computer bulletin board or distributed to a list of users

on a computer network. Scanning technology allows one to turn information on paper into digital

information so that it can be changed or manipulated, and if one wants to disguise the origins or

authorship of the document, format changes can

be made with a few keystrokes.

Technological proposals for limiting unauthorized copying generally seem to work only within

a closed system. Once a user moves an authorized

copy out of the system, there seems to be no way

to prevent further copying. Some writers suggest

that there is no solution to the problem of unauthorized copying and that the problem is sufficiently

grave that electronic publishing will never thrive

as an industry because authors and publishers will

not release works in digital form. However, it is

possible that, as in the case of the photocopying of

books or home taping of musical recordings, a viable market will persist despite the presence of unauthorized copies.

OTA Options from the 1992 Study

In Finding a Balance, OTA offered several options to Congress to address these issues. As Congress has not revisited these fundamental

copyright questions, it is worthwhile to bear these

in mind when examining computer security issues

surrounding networked information collections.

To deal with the issues of fair use of works in

electronic form, OTA suggested that:
106 I Information Security and Privacy in Network Environments

●

●

Congress might clarify the fair-use guidelines

in the Copyright Act with regard to lending, resource sharing, interlibrary loan, archival and

preservation copying, and copying for patron

use.

OTA further suggested that Congress might establish legislative guidance regarding fair use

of works in electronic form and what constitutes copying, reading, and using. Another option would be to direct the Copyright Office,

with assistance from producers and users of

electronic information, to develop and disseminate practical guidelines regarding these issues.

With respect to question raised concerning multimedia works,

● OTA suggested that Congress

of mixed-media works with

protection under copyright.

clarify the status

regard to their

9 Multimedia Works and

Performances over Networks

Networked information systems will contain an

increasing amount of electronic information in

multimedia format, causing concern in the library

community with respect to copyright protection.

The fact that digital storage makes all works essentially equivalent complicates the definition

and treatment of digital work under the law of

copyright. Current copyright law allocates particular rights according to the category to which the

work belongs, including literary works, dramatic

works, pictorial, graphic and sculptural works, audiovisual work, motion pictures, musical compositions, computer programs, and sound

recordings. These different categories sometimes

have different implications for uses and protections of the work. There is no category for a

mixed-media work that combines examples from

each of these categories.117 

One approach suggests that a mixed-media

work should be considered to be a series of different works, with each type of work treated according to its class. However, enforcement of

intellectual property rights in such a system would

be complex. Another approach would be to consider the whole package as if all the works were of

the same category.118 This approach would potentially produce what could be argued to be inequitable distribution of intellectual property royalties.

Copyright protects the writings of an author

against unauthorized copying, distribution, and so

forth, and protects the form of expression rather

than the subject matter of the writing. It does not

protect against independent creation. Copyright

grants the owner the exclusive right to do the following: (and to authorize others to):

m

8

m

●

●

reproduce copies of the copyrighted work;

prepare derivative works based on the copyrighted work;

distribute copies of the copyrighted work to the

public by sale or other transfer of ownership, or

by rental, lease or lending;

in the case of certain works (literary, musical,

dramatic and choreographic works, pantomimes, and motion pictures and audiovisual

works), perform the copyrighted works publicly; and

in the case of the certain works, display the

copyrighted work publicly.119 - -

The statute (17 U. S. C.) does, however, specify

certain limitations to the copyright owner’s exclusive rights. It grants to others the noninfringing

use of the copyrighted works. These limitations

include the fair use of the work (section 107), cer117 C(>mmental(}rs ~)lnt out that [)n]y 10 ~rcent of all copyrighted works are affected by multimedia and networking, and that while some

review of the law may be necessary, what is really needed is a confluence of business and licensing practices. (Oliver Sm(x~t, Executive VicePresident, Computer and Business Equipment Manufacturers Association, personal communication, May 1994.)

I I 8 American Ass(~ia[ion Of Law Libraries, “Copyright Consideration for the Use of Mixed Media in Libraries,” discussion draft, appeared

as an appendix to A-V Micrographics S1S Newsletter, vol. 10, No. 2, May 1990, and Automation, vol. 9, No. 2, winter 1990, pp. 12-23.

I 1917 U. S. C., sec. 106.
Chapter 3 Legal Issues and Information Security 1107

tain kinds of reproduction by libraries and archives (section 108), certain educational

performances and displays (section 110), and certain other uses (section 117).

The copyright law also provides a first-sale

doctrine that upholds the copyright of the copyright owner during the first sale or commercial

transaction of the work, but extinguishes the

copyright owner’s rights in subsequent sales or

transactions of the purchased copy. The House

Report accompanying the original (1976) legislation provided an example of the application of the

first-sale doctrine:

Thus, for example, the outright sale of an authorized copy of a book frees it from any copyright control over its resale price or other

conditions of its future disposition. A library

that has acquired ownership of a copy is entitled

to lend it under any conditions it chooses to impose. 

120

Exceptions to this provision include computer

programs embodied in a machine or product that

cannot be copied during ordinary operation or use,

or computer programs embodied in or used in conjunction with a limited-purpose computer, those

designed particularly for playing video games.

The unifying issue surrounding all copyrighted

works is the right to make copies for various purposes. Once a copy is sold, the loaning of physical

objects, such as books or serials, is not at issue, nor

is the ability of a library patron to view a book

owned by a library. But when copyright law is applied beyond the realm of printed material (e.g.,

recordings, videotapes, and disks), it addresses

not only the right to copy, but also the right to publicly display and perform works.

The issues related to traditional audiovisual

materials have already been a source of problems

for libraries. Early experiences with the lending of

software also has raised numerous issues.121

More important, however, may be determining to

what extent the rights of public performance and

display will be attributed to the viewing of electronic information of all types, ranging from the

library user’s browsing of bitmapped images of

print pages through interaction with a digital movie driven by a program, 22

Widespread development of multimedia authoring tools will raise other issues as well. Multimedia integrates film clips, visual images, music,

and sound along with other content, and most developers of multimedia are not simultaneous y artists, composers, and musical performers. There

may well be a demand for copyright-free (public

domain) materials that can be included in multimedia works. There are a large number of ambiguous copyright questions in this regard, with

limited consensus and certainty. These questions

include:

m

m

m

Who owns the rights to digitize an image, including photographs, images of classic paintings, and other materials?

If an image or other kind of data is digitized and

subsequently enhanced, is the second-generation image protected under copyright?

To what extent is the linkage of a series of media

(e.g., images and a sound tract) copyrightable

I ZO See U.S. congress, House of Represen(a[ives, Committee on the Judiciary, Report 10 Accompany .$. 22, H. Rpt. 94-1476 (Washingtm

DC: U.S. Government printing Office, September 1976), p. 79.

J 2 ] LlbrW lending ~) fc{)mpu(er softwme was the subject Of a recen( Copyright Office study and re~)fi to C(mgress, The c~~nll~((fcr ‘$(!~ht’are

Rental Amendments Ac! Of 1990: The Nonpro$t Library Lending Exemption to the Renlol Ri~h:, A Report of the Acting Register of Copyrights,

March 1994. Some commentators note tha[ these issues are even more complicated with respect to multimedia works. They assert that it is

unclear whether the Software Rental Act applies to multimedia. (Jeffrey Neuberger, Associate, Brown, Raysman & Millstein, personal ctmmlunicati[m, May 1994. )

122 us congress, office of Technology” Assessn~ent, A(.[,e,~~lbl/l~l~n~ )n/egrl/}, ~)fNcnt[)r~ed ]n({~rn~~fl{jn c[jllct”tion.~~a{k~rc~ljnd P~-

per, background paper prepared for OTA by Clifford A. Lynch, BP-TCT- 109 (Wash’ingttm, DC Office ~~fTechnt)logy Assessment, July 1993).

Some commentators believe that these rights would be best determined fr(m~ a license agremncnt. (Oliver SnNmt, Executl\e Vice-President,

Computer and Business Equipment Manufacturers Association, personal communicati[m, April 1994. )
108 I Information Security and Privacy in Network Environments

8

●

■

separately from the images themselves and the

soundtrack itself?

To what extent are libraries (or other networked

information providers) liable for contributing

to copyright infringement in an electronic information environment? 123

Does the rightholder in a work hold all necessary rights to that work’s components? What

rights have been conveyed through already existing agreements? How are necessary rights

acquired?

Depending on what works are incorporated, and

the method by which the product is to be exploited (including manufacture, sale, and distribution), what rights are necessary to each

item included in the product? 124

While these questions may be decided through

the courts, most libraries do not wish to serve as

test cases, and some are concerned that this attempt to limit the potential legal liability of the

current uncertain copyright framework may contribute to the destruction of the interlibrary loan

system by turning to a contract or licensing approach to acquiring material.125

●

●

—

With respect to these types of works:

Congress could allow the courts to continue to

define the law of copyright as it is applied in

the world of electronic information; alternatively,

Congress could take specific legislative action

to clarify and further define the law in the

world of electronic information. 126

. Congress could also allow information providers and purchasers to enter into agreements that would establish community

guidelines without having the force of law.127

In so doing, Congress could decide at some

point in the future to review the success of such

an approach.

1 Copyright Collectives

Collectives are a way to share the profits within an

industry when tracking the user of individual elements of intellectual property is not feasible. The

music industry, represented in organizations such

as the American Society of Composers, Authors

and Publishers (ASCAP) and Broadcast Music,

Inc. (BMI), adopted such an approach to manage

the copyright in musical works and share the revenue from those rights based on statistical estimates of the amount of use of the artist’s work.

ASCAP assigns each performance a value depending on the type, for example, a feature or

background performance. Each performance is

then weighted according to the size and importance of the logged station, time of day of program, and so forth, to determine the total number

of performance credits. Quarterly, the total performance credits for writers as a group and for publishers as a group are divided into the respective

dollars of distributable revenue to yield the dollar

value of a performance credit for each group. On

payment, ASCAP issues a detailed statement

showing the title of the work surveyed, the num123 Lynch (lbId.), ~p. 26.27. Digitization Of information and creation of digital libraries raises questions Centrld to tie law Of copyright ‘tse]f.

For example, what constitutes a copy? How much must a work be changed when it is no longer a copy? When a work has been digitally manipulated, how does one prove that is or is not a copy? What constitutes fair use in a digital environment? These questions, however, are beyond the

scope of this inquiry, but are discussed in depth in an earlier OTA report, Finding u Balance, op. cit., footnote 113. Recent work on the appropriateness of the copyright paradigm for the information highway includes: R. Nimmer and P. Krauthaus, ‘copyright in the Information Superhighway: Requiem for a Middleweight,” Sranford Journul ofhw and Po/Icy (in press).

124 Jeffrey Neuberger, Associate, BNJwn, Raysman & Millstein, pem(~na] COmnlUnlCatlOn, May 1994.

125 C.A. Lynch, op. cit., foornote 122, pp. 19-28.

126 S(}m Commntatt)rs suggest hat it is inappropriate to make potentially radical changes to the copyright law to address the concerns of

libraries. (Oliver Smoot, Executive Vice-President, Compuater and Business Equipment Manufacturers Association, personal communication,

April 1994.)

127 Some commentators” express the concern that such an approach would potentially violate the antitrust laws. (Ibid.)
Chapter 3 Legal Issues and Information Security 1109

ber of performance credits earned, and the media

on which the performance appeared.

ASCAP has two systems of payments for its

writers: the current performance plan distributes

the writer’s share of the money on the basis of his

or her performance over the past four quarters.

New writer members are initially paid on the current performance plan, with the option of switching to the four-find basis after three full survey

years. The four-fund system is a deferred payment

plan based partly on current performance, but

mostly on an average of performances over a period of five or 10 years.

Distribution of royalties to publishers is determined on a current performance basis only, in

which the publisher is paid on account for the first

three quarters, with adjustments made in the

fourth quarter.

BMI affiliates are paid according to a published

royalty payment schedule, which distinguishes

between radio and television performances and

between feature, theme, and background musical

performances. A performance index is calculated

for each performance, based on the number of

times it is played on the radio and television stations and the total revenue earned paid to the affiliates. BMI’s royalty payment schedule allows for

bonus credits based on the number of times a work

is played on the radio or television. Bonus credits

are calculated on a song-by-song basis.

Management and protection of copyright in the

context of digital libraries and the National Information Infrastructure face similar challenges to

those confronted by the music industry. OTA suggests that private efforts to form clearing and royalty collection agencies for groups of copyright

owners be encouraged or that Congress create

such groups. Collectives similar to ASCAP and

BMI are contemplated by some for administering

copyright in digital information; private-sector information providers are particularly concerned

that these collectives remain a private-sector initiative.

The Copyright Clearance Center, Inc. (CCC)

has attempted to resolve some of these issues with

respect to electronic conversion, storage, and distribution of full-text copyrighted material. The

CCC is an organization of publishers, authors, and

users formed at the suggestion of Congress to facilitate compliance with reprographic rights as defined in the 1976 Copyright Act. Since 1988, CCC

has instituted pilot electronic licensing studies in,

among others, the areas of telecommunications.

CCC recognizes the need to address the possibilities for altering the integrity of the information or

disseminating it widely without authority, and is

investigating the role of encryption, validation,

access and manipulation restrictions, and usage

monitoring.

Several services already provided by CCC

might serve as models or guides for treatment of

copyright in electronic texts. The Transactional

Reporting Service provides users-document suppliers, academic institutions, government agencies, law firms, medical centers, small corporations, and individual—with the immediate

authorization to make photocopies from 1.5 million publications from more than 8,500 publishers

worldwide A record of photocopying activity is

reported to CCC, which provides a printed or CDROM catalog of all CCC-registered titles and their

individual royalty fees. Copies are reported

monthly, and CCC collects royalties and distributes fees to the rightholders.

CCC also provides the Annual Authorization

Service, a mechanism for facilitating copyright

compliance. By paying a single annual fee, licensees are authorized to photocopy excerpts (for internal distribution) from 1.5 million journals,

books, magazines, and newsletters from 8,500 domestic and foreign publishers. Licensees eliminate the need to seek individual permissions from

publishers, as well as the need for tracking, reporting, and paying fees for individual copying acts.

The annual fee is determined by a statistical process that combines fees set by the rightholder with

data derived from surveys of actual copying behavior by categorized employee populations.

In contrast to these licensing approaches to administering copyright, others believe that the

tracking and monitoring capabilities of the computers and networks comprising the digital library
110 I Information Security and Privacy in Network Environments

allow creation of an environment that operates

strictly on a fee-for-use basis.128 The Corporation

for National Research Initiatives (CNRI) has proposed a test bed for an electronic copyright management system. The proposed system would

include four major elements: automated copyright

recording and registration, automated online

clearance of rights, private electronic mail, and

digital signatures to provide security. It would include three subsystems: a registration and recording system (RRS), a digital library system, and a

rights management system (RMS). The RRS

would provide the functions enumerated above

and would be operated by the Library of Congress.

It would provide “change of title” information.

The RMS would be an interactive distributed system capable of granting rights online and permitting the use of copyrighted material in the digital

library system. The test-bed architecture would

involve computers connected to the Internet performing the RRS and RMS functions. Digital signatures would link an electronic bibliographic

record (EBR) with the contents of the work, ensuring against alteration after deposit. Multiple RMS

servers would be attached to the Internet. A user

wishing to obtain rights to an electronically published work would interact electronically with the

appropriate RMS. When copyright ownership is

transferred, a message could be sent from the

RMS to the RRS, creating an electronic marketplace for copyrighted material. The EBR submitted with a new work would identify the rightholder and any terms and conditions on the use of

the document or a pointer to a designated contact

for rights and permission. The CNRI test-bed proposal envisions the use of public key encryption

to ensure the integrity of digital signatures and to

ensure the authenticity of information.129 The

Copyright Clearance Center is attempting to develop a scheme for determining rights and permission for use online. Other private-sector groups

have also been involved in this effort. 130

■

●

With respect to rights and royalties:

Congress may wish to encourage private efforts to form clearing and royalty collection

agencies for groups of copyright owners; alternatively,

Congress might allow private-sector development of network tracking and monitoring capabilities to support a fee-for-use basis of

copyrighted works in electronic form. Congress could also choose to review whether such

an approach is a workable one, both from the

standpoint of technological capabilities and

copyright protection (e.g., Does such an approach serve the fair-use exception? Can network technologies effectively address this

question?). This might be accomplished by

conducting oversight hearings, undertaking a

staff analysis, and/or requesting a study from

the Copyright Office.

128 One set ofmqulrements fc}r protective services for dissemination of copyrighted materials that has been proposed includes a mechanism

for authentication, implementation of means to limit redistribution, protection against plagiarism and change, storage and exchange of information in standardized but device-independent forms, and means for appropriate remuneration. R.J. Lim, “Copyright and Information Services in

the Context of the National Research and Education Network,” IIUA lnlel/ecrual Properfy Protection Proceedings, vol. 1, Issue 1, p. 9.

’29 H. Perritt, “Permissions Headers and Contract Law,” IMA intellectual Property Pro(ect Proceedings, vol. 1, Issue 1, p. 29-32.

1 Jo Among ~ese inltlatlves we effo~s on he pm of the Corporation for National Research Initiatives ~d the Interactive Multimed~a

Association, Project Xanadu, Coalition for Networked Information, and TULIP (The University Licensing Program).
Government

Policies and

Cryptographic

Safeguards 4

T

he federal government faces fundamental tension between two important policy objectives: 1 ) fostering the

development and widespread use of cost-effective information safeguards, and 2) controlling the proliferation

of safeguard technologies that can impair U.S. signals-intelligence and law-enforcement capabilities. This tension runs

throughout the government’s activities as a developer, user, and

regulator of safeguard technologies. The first section of this chapter introduces this tension as it concerns the proliferation of cryptography that could impair U.S. signals intelligence and law

enforcement, and the resulting struggle to control cryptography

through federal standards and export controls (see box 4-1 ).

The chapter then discusses the effects of governmental concerns about cryptography on the availability and use of safeguards in the private and public sectors. Government agencies

differ from most of the private sector in that the impact of national-security concerns on agencies’ operational choices is more direct. 1 Agencies must operate according to information-security

statutes, executive orders, regulations, policies, guidelines, and

) Federal policy for communication security has traditionally been dominated by national security interests, With the convergence of computer and communication technologws, national security concerns have continued to play a maj~r role in information security and the Department of Defense (DOD) and the National Security Agency (NSA) have

continued [o play the major rote in technology and policy development. For an overview

of previ(ws federal policy attempts to balance national-security and other interests (em-

&died in the respective roles of the Departments of Defense and Commerce in developing safeguard standards for civilian agencies), see U.S. Congress, Office of Technology

Assessment, Defendin8 Secrets, Sharing Dala: New Locks and Keys for Electronic lnformatlon, OTA-CIT-310 (Washington, DC: U.S. Government Printing Office, October

1987), especially ch. 4 and ch. 6.

I 111
112 I Information Security and Privacy in Network Environments

During the long history of paper-based “information systems” for commerce and communication, a

number of safeguards were developed to ensure the confidentiality (i e , secrecy of the contents), integrity1 (i e , without transmission errors or unauthorized changes) and authenticity (i e , coming from the

stated source and not forged) of documents and messages These traditional safeguards included secret codebooks and passwords, physical “seals” to authenticate signatures, and auditable bookkeeping procedures Mathematical analogues of these are implemented in the electronic environment. The

most powerful of these are based on cryptography. (See “A Note on Terminology, ” below. )

The recorded history of cryptography is more than 4,000 years old Manual encryption methods using codebooks, letter and number substitutions, and transpositions have been used for hundreds of

years—for example, the Library of Congress has letters from Thomas Jefferson to James Madison containing encrypted passages. Modern, computer-based cryptography and cryptanalysts began in the

World War II era, with the successful Allied computational efforts to break the ciphers generated by the

German Enigma machines, and with the British Colossus computing machines used to analyze a crucial cipher used in the most sensitive German teletype messages 2

In the post-WWll era, the premiere locus of U S. cryptographic research and (especially) research in

cryptanalysts has been the Department of Defense’s National Security Agency (NSA). 3 NSA’s preeminent position results from its extensive role in U.S. signals Intelligence and in securing classified communications, and the resulting need to understand cryptography as a tool to protect information and as

a tool used by adversaries

Cryptography provides confidentiality through encoding, in which an arbitrary table is used to translate the text or message into its coded form, or through encipherment, in which an encryption algorithm

and key are used to transform the original plaintext into the encrypted ciphertext. The original text or

message is recovered from the encrypted message through the inverse operation of decryption—i e ,

decoding or deciphering the encrypted message. Cryptanalysis is the study and development of various “codebreaking” methods to deduce the contents of the original plaintext message The strength of

an encryption algorithm IS a function of the number of steps, storage, and time required to break the

cipher and read any encrypted message, without prior knowledge of the key Mathematical advances,

advances in cryptanalysts, and advances in computing, all can reduce the security afforded by a cryptosystem that was previously considered “unbreakable” in practice

t Robert Courtney and WIIIIS Ware have proposed a somewhat dtferent definition of mtegrlty, m terms of “having quahty meet a

pnort expectations “ (Willis Ware, personal communication, Apr 29, 1994, Computers& Securi~ forthcoming, 1994)

2 See Glenn Zorpette, “Breakmg the Enemy’s Code, ” /EEE Spectrum, September 1987, pp 47-51 More generally, see Dawd

Kahn, The Codebmakers (New York, NY MacMillan, 1987)

3 Fornatlonal-securlfy reasons, NSA has a history of efforts to control independent cryptographic research and publlcahon Academic and commercial reslstanceto NSA’S controls mcreasedthroughthe 1970s and 1980s, and sophtstlcated cryptography of nongovernmental orlgm began to beofferedcommercially mthe 1980s Notable among these are publlc-key cryptosystemsthat can be

used for conftdentlahfy,authentlcatlon, and dlgltal signatures.

(continued)

standards that have been established within the formation. Therefore, these concerns also affect

framework of national-security concerns. Regard- civilian agencies that are usually not thought of in

ing safeguards based on cryptography, national- conjunction with “national security.” The ability

security concerns shape the standards available to of corporations-as well as government agenagencies for use in safeguarding unclassified in- cies—to appropriately safeguard their infor-
Chapter 4 Government Policies and Cryptographic Safeguards 1113

The strength of a modern encryption scheme is determined by the algorithm itself and the length of

the key For a given algorithm, strength Increases with key size. However, key size alone is a not a valid

means of comparing the strength of two different encryption systems. Differences in the properties of

the algorithms may mean that a system using a shorter key is stronger overall than one using a longer

key

Applications of cryptography have evolved along with cryptographic techniques Cryptography was

originally used to protect the confidentiality of communications, encryption is now also used to protect

the confidentiality of Information stored in electronic form and to protect the Integrity and authenticity of

both transmitted and stored information 4 With the advent of “public-key” techniques, cryptography

came into use for “digital signatures” that are of widespread Interest as a means for electronically authenticating and signing commercial transactions Iike purchase orders, tax returns, and funds transfers,

as well as ensuring that unauthorized changes or errors are detected (See below and also discussion

of electronic commerce in chapter 3 ) Thus, cryptography in its modem setting is a technology of broad

application.

Key management is fundamental and crucial to the security afforded by any cryptography-based

safeguard Key management Includes generation of the encryption key or keys, as well as their storage,

distribution, cataloging, and eventual destruction If secret keys are not closely held, the result is the

same as if a physical key IS left "lying around” to be stolen or duplicated without the owner’s knowledge

Similarly, poorly chosen keys may offer no more security than a lock that can be opened with a hairpin

Changing keys frequently can limit the amount of information or the number of transactions compromised due to unauthorized access to a given key Thus, a well-thought-out and secure key-management Infrastructure is necessary for effective use of encryption-based safeguards in network environments (See discussion of key infrastructures in chapter 2 )

A Note on Terminology

Cryptography, a field of applied mathematics/computer science, is the technique of concealing the

contents of a message by a code or a cipher A code uses an arbitrary table (codebook) to translate

from the message to its coded form, a cipher applies an algorithm to the message

Cryptographic algorithms—specific techniques for transforming the original input into a form that IS

unintelligible without special knowledge of some secret (closely held) information—are used to encrypt

and decrypt messages, data, or other text The encrypted text IS often referred to as ciphertext, the

original or decrypted text is often referred to as plaintext or cleartext. In modern cryptography, the secret information is the cryptographic key that “unlocks” the ciphertext and reveals the plaintext

The encryption algorithms and key or keys are Implemented in a cryptosystem The key used to

decrypt can be the same as the one used to encrypt the original plaintext, or the encryption and decryption keys can be different (but mathematically related) One key is used for both encryption and

decryption in symmetric, or "conventional” cryptosystems; in asymmetric, or “public-key” cryptosystems, the encryption and decryption keys are different and one of them can be made public

4 lntegr[ty and authentIclty are both aspects of a cryptographic safeguard technique called “authentlcatlon” or “message authenIlcatlon (See box 4-4 on dlgltal signatures )

5 For a glossary see D w Davies and W L Price, Securl~ for CornPuter Nehvorks, 2nd Ed (New York, Ny John Wiley ~ Sons.

1992)

SOURCE Off Ice of Technology Assessment, 1994, and cited sources
114 I Information Security and Privacy in Network Environments

German Enigma cipher machines used during World War II

mation also furthers national security,2 but

(except for government contractors) corporations’

technology choices are usually less directly related to the national-security objectives of the

governments

Next, the chapter reviews the policy framework

within which federal agencies carry out their information security and privacy activities. (Privacy

issues and the Privacy Act of 1974 were discussed

in chapter 3.) Special attention is given to the

Computer Security Act of 1987 (Public Law

100-235) and the responsibilities of the National

Institute of Standards and Technology (NIST) and

the National Security Agency (NSA) according to

the Computer Security Act. These are important

in understanding issues related to the developZ SCC, e.g., U.S. Ctmgress, H(wse t~f Representatives, Subcommittee on Ec(momic and Commercial Law, Committee (m the Judiciary, The

T}lrc{l:l~th’(jrt’i,~n h’[t>n(~ut[<’k ’.~]~lt~nog(’ 10 U.S. C-orporatiorrs, hearings, 102d C(xrg., 2d sess., Apr. 29and May 7, 1992, Serial No. 65 (Washingt(m, DC (J.S. Gt)vemmen[ Printing Office, 1992).

\Fcdcra] ]nfonll;itlon” ~ocesslng S[andards (FIPS) usually apply m agencies and their contractors. sometimes they are lncor~~rated in[(~

~(~luntary industry and (w intemati(mal standards, in which case they do help shape technology choices in the private sect(>r,
Chapter 4 Government Policies and Cryptographic Safeguards [ 115

ment and use of federal safeguard standards and

guidelines. Some of these Federal Information

Processing Standards (FIPS) have been incorporated in industry and international standards.

The chapter looks at two major mechanisms the

government uses to control cryptography: export

controls and standards setting. The current activities of NIST and NSA regarding information safeguards and standards are reviewed. Two recent

FIPS, the Digital Signature Standard (DSS) and

the Escrowed Encryption Standard (EES), are examined in terms of a long-term government strategy to control the availability and use of

information safeguards based on cryptography.

The final section of this chapter presents policy

options for congressional consideration. These include near-term options related to cryptography

policy (including export controls and federal standards based on cryptography), as well as strategic

options for a broad congressional review of national cryptography policy.

IMPORTANCE OF CRYPTOGRAPHY

The tension between promoting and controlling

the widespread use of safeguards has existed for

decades, but changes in the international arena, in

technology, and in the needs of user communities

(e.g., as in the Internet) are bringing it to the forefront of public attention.4 This tension is manifested in export controls on a fundamental technology for safeguarding information--cryptography--and in the federal government’s process for

developing and promulgating cryptographybased standards for use in safeguarding unclassified information.

From the end of World War I through the

mid- 1970s, the federal government was almost

the sole source of technology and know-how for

safeguards that used cryptography to ensure information confidentiality. This monopoly has

been eroding, however. Good encryption technology is available commercially in the United States

and abroad, and cryptography research is international. These developments have raised questions-especially from software developers—as

to whether existing policies concerning the sale

and export of encryption products are outdated

and should be modified, or whether continued restrictions are still required to meet national- security and signals-intelligence objectives.5 These

topics are discussed later in this chapter, with a focus on government operations and attempts to balance national-security and other objectives, like

personal rights, open government, and market

competitiveness; their impact on the safeguards

marketplace in general is discussed in chapter 2.

Policy debate in this area used to be almost as

arcane as the technology itself. Most people didn’t

regard government decisions about cryptography

as having direct effect on their lives. However, the

technology of daily life is changing, making electronic transactions and records central to everything from commerce to health care. Thus,

concern over the implications of privacy and security policies dominated by national-security objectives has grown dramatically in business and

academic communities that produce or use information safeguards, as well as among the general public (see chapter 3).6 This concern is

evidenced in the debates over the government’s

4 For example, good safeguards are needed to protect U.S. information from foreign intelligence, but the same safeguards might be used

to protect foreign communications from U.S. intelligence. A similar argument can be made from a law-enforcement perspective.

5 Commercial security products containing robust cryptography that can be used for confidentiality --i.e., that can do strong encryption—

are subject to strict export controls and usually cannot be exported, except for limited applications like banking. Thus, when international interoperability is desired, export controls form a barrier to use of many U.S.-origin encryption products (including software products) in security

systems. However, the same technologies are often readily available outside the United States. See discussion of export controls later in this

chapter.

6 See Susan Landau et al., Codes, Keys, and Conj7ic/s: Issues in U.S. Cryptu Policy, report of a special panel of the ACM U.S. Public Policy

Committee (New York, NY: Association for Computing Machinery, June 1994).
116 I Information Security and Privacy in Network

Escrowed Encryption Standard, colloquially referred to as Clipper or the Clipper chip. The EES

is intended for use in safeguarding voice, facsimile, or computer data communicated in a telephone

system7 (see box 4-2).

Previously, control of the availability and use

of cryptography was presented as a national-security issue focused outward, with the intention of

maintaining a U.S. technological lead, compared

with other countries. Now, with an increasing domestic policy focus on crime and terrorism, the

availability and use of cryptography has also

come into prominence as a domestic-security,

law-enforcement issue. More widespread foreign

use of cryptography-including use by terrorists

and developing countries—makes U.S. signals

intelligence more difficult. Within the United

States, cryptography is increasingly being portrayed as a threat to domestic security (public safety) and a barrier to law enforcement if it is readily

available for use by terrorists or criminals.8 There

is also growing recognition of the potential misuses of cryptography, such as by disgruntled employees as a means to sabotage an employer’s

databases. 9

In May 1994 testimony before the Subcommittee on Technology, Environment, and Aviation of

the House Committee on Science, Space, and

Technology, James Kallstrom of the Federal Bureau of Investigation (FBI) noted:

[The Omnibus Crime Control and Safe

Streets Act of 1968] permits electronic surveillance only for serious felony offenses and only

when other investigative techniques will not

work or are too dangerous. Since 1968, law enforcement has used this crime-solving and

crime-preventing technique very effectively

and judiciously to protect our people. In a tenyear period ending in 1992, more than 22,000

convictions have resulted from court-authorized

surveillances .’”

. . . the use of excellent cryptographic products by the myriad array of criminals and terrorists poses an extremely serious threat to the

public safety and national security.

7 The Clipper chip is designed for use in telephone systems; it contains the EES encryption algorithm, called SKIPJACK. The Capstone

chip and TESSERA PCMCIA card also contain the SKIPJACK algorithm; these implementations are for use in data communications. (Clinton

Brooks, Special Assistant to the Director, NSA, personal communication, May 25, 1994.)

The Clipper chip is being used in the AT&T Surity Telephone Devtce 3600, which has a retail price of about $1,100. It has been appro~ed

for government use for unclassified voice encryption. The Department of Justice purchased 9,000 of them. AT&T sells another verskm of (he

Surity 3600, using a proprietary AT&T encryption algorithm, for about the same price. (Brad Bass, “AT&T Unveils First Clipper Device on

GSA Schedule,” Federal Compuler Week, May 9, 1994, pp. 24,29.)

8 For examp]e, high. qua]lty, ]ow.c(}5t voice enc~pto~ are becoming available at reasonable cost. For recent exposition of law-enforcemc’nt

and national-security concerns with respect to cryptography and the rationale for the EES, see Jo Ann Hams, Assistant Attorney General, Criminal Division, U.S. Department of Justice, testimony presented before the Subcommittee on Technology and the Law, Committee on the Judiciary, U.S. Senate, May 3, 1994; Vice Adm. J.M. McConnell, Director, National Security Agency, testimony presented before the Subcommittee

on Technology and the Law, Committee on the Judiciary, U.S. Senate, May 3, 1994; and James K. Kallstrom, Special Agent in Charge, Special

Operations Division, New York Field Division, Federal Bureau of Investigation, testimony presented before the Subcommittee on Technology,

Environment and Aviation, Committee on Science, Space and Technology, IJ.S. House of Representatives, May 3, 1994.

See also Landau et al., op. cit., footnote 6; and Dorothy E. Denning, “The U.S. Key Escrow Encryption Technology,” in Compuler Communications (Oxford, UK: Butterworth-Heinemann Ltd., in press). But see David Banisar, “Roadblocks on the Infmmatkm Superhighway:

Govemmenlal Intrusions on Privacy and Security,” Federa/ Bar News and Journal, in press.

9 See Dorm B. Parker, Senior Management Consultant, SRI lntemational, “’Crypto and Avoidance of Business Information Anarchy,” September 1993 (obtained from the author). Parker describes problems that could occur in organizations if cryptography is used without adequale

key management and ovemde capabilities by responsible corporate officers. These problems include keys being held for ransom by disgruntled

employees, data being rendered inaccessible after being encrypted by employees who then leave to start their own company, and so forth.

10 Ka]]strom testimony, ~p, cit., f(x)mote 8, p. 3. Kallstrorn noted that in 1992 the total number of criminal wiretap orders obtained by all

federal, state, and local law-enforcement agencies was 919; about two-thirds of these were for serious state and local felonies.
Chapter 4 Government Policies and Cryptographic Safeguards I 117

The federal Escrowed Encryption Standard (EES) was approved by the Department of Commerce

as a Federal Information Processing Standard (FIPS) in February 1994.1 According to the standard

(see FIPS Publication 185), the EES IS intended for voluntary use by all federal departments and agencies and their contractors to protect unclassified Information. Implementations of the EES are subject to

State Department export controls However, encryption products based on EES may be exported to

most end users, and these products will qualify for special licensing arrangements 2

The EES is Intended to encrypt voice, facsimile, and computer data communicated in a telephone

system It may, on a voluntary basis, be used to replace DES encryption devices now in use by federal

agencies and contractors Other use by the private sector IS voluntary The EES specifies a symmetric

encryption algorithm, called SKIPJACK. The SKIPJACK algorithm is a classified algorithm, developed

by NSA in the 1980s 3 An early Implementation was called Clipper, hence the colloquial use of Clipper

or Clipper chip to describe the EES technology 4

The EES also specifies a method to create a Law Enforcement Access Field (LEAF), in order to provide for easy decryption when the equivalent of a wiretap has been authorized 5 The SKIPJACK algorithm and LEAF creation method are Implemented only in electronic devices (i e , very-large-scale-integration chips) The chips are “highly resistant” to reverse engineering and will be embedded in tamper-resistant cryptographic modules that approved manufacturers can incorporate in telecommunications or computer equipment The chips are manufactured by VLSI Logic and are programmed with the

algorithms and keys by Mykotronx. The programming is done under the supervision of the two “escrow

agents” (see below)

After electronic surveillance has been authorized, the EES facilitates law enforcement access to encrypted communications This IS accomplished through what is called a “key escrowing” scheme

Each EES chip has a chip-specific key that IS split into two parts after being programmed into the

chips These parts can be recombined to gain access to encrypted communications. One part is held

1 See Federa/RegLsler,VOI 59, Feb 9, 1994, pp 5997-6005 FIPS Pubhcahon 185 (“Escrowed EncryptIon Standard, ” 1994) descnbesthe appl!cabhty Implementation, and maintenance of the standard, as well as speclhcatlons for Its use Unllke the DES algorithm, the EES algorithm IS classlffed and not pubhcty available for fnspecllon

2 Martha Harris Deputy Assistant Secretary of State for Polltlcal-Mllltary Affairs, “Statement on EncryptIon-Export Control Reform, Feb 4, 1994

3 The NSA Swclflcatlon for SKIPJACK IS contained m “SKIPJACK, R21 -TECH-044-01 ,“ May 21, 1991, this technical rePort IS

classified at the Secret level The NSA speclflcatlons for the LEAF creation method are contained m “Law Enforcement Access Field

for the Key Escrow Mlcroctrcult, ” also classified at the Secret level Orgamzatlons holding an appropriate security clearance and

entering mto a Memorandum of Agreement with NSA regarding Implementation of the standard can have access to these (OTA prolect staff d!d not access these, or any other classtfled mformahon m the course of this study)

4 Thecllpper Chp Irnplernentallonof SKIPJACK IS for use In securetelephone commurucations Anenhancedescrowed-encryPtlon chip with more functions, called Capstone, IS used m data commumcahons

5 See Jo Ann Harris, Assistant Attorney General, Crlfnlnal Dlvlston, Department of Justice, testimony before the Subcommittee Ofl

Technology and the Law, Committee on the Judlclary, U S Senate, May 3, 1994, and James K Kallstrom, Special Agent m Charge,

Special Operations Demon, Federal Bureau of Inveshgatlon, testimony before the Subcommittee on Technology, Enwronment, and

Awatlon, Committee on Science, Space, and Technology, U S House of Representatwes, May 3, 1994 For a dtscusslon of law enforcementconcerns and the ratlonalefor government key escrowmg, see also Dorothy E Dennmg, “TheCllpperEncryptlonSystem, ”

American Sclen(lst VOI 81, July-August 1993, pp 319-322, and “Encryption and Law Enforcement,” Feb 21, 1994, available from

denmngltics georgetown edu

(corrfmued)
118 I Information Security and Privacy in Network Environments

by each of two designated government keyholders, or “escrow agents, ” When surveillance has been

authorized and the intercepted communications are found to be encrypted using the EES, law enforcement agencies can obtain the two parts of the escrowed key from the escrow agents, These parts can

then be used to obtain the individual keys used to encrypt (and, thus, to decrypt) the telecommunications sessions of interest. 6 The LEAF is transmitted along with the encrypted message; it contains a

device identifier that indicates which escrowed keys are needed. (A more technical description of how

the EES IS said to work is in chapter 2.)

The National Security Council, Justice Department, Commerce Department, and other federal agencies were involved in the decision to propose the EES according to a White House press release and

information packet dated April 16, 1993, the day the EES initiative was announced. The EES algorithm

is said to be stronger than the Data Encryption Standard (DES) algorithm, but able to meet the legitimate needs of law enforcement agencies to protect against terrorists, drug dealers, and organized

crime 7

Attorney General Reno designated the National Institute of Standards and Technology and the Treasury Department’s Automated Systems Division as the original escrow agents NIST’s first estimate of

the costs of establishing the escrow system was about $14 million, with estimated annual operating

costs of $16 million. Cost figures and escrowing procedures are being refined by the Clinton Administration NIST did not provide the OTA with more precise estimates of the resources, including staff, required to implement and manage key escrowing.

The proposed FIPS was announced in the Federal Register on July 30, 1993 and was also sent to

federal agencies for review. The EES was promulgated after a comment period that generated almost

universally negative comments According to NIST, comments were received from 22 government organizations. in the United States, 22 industry organizations, and 276 individuals Concerns and questions

reported by NIST include the algorithm itself and lack of public inspection and testing, the role of NSA

in promulgating the standard, use of key escrowing, possible infringement of individual rights, effects of

the standard on U S firms’ competitiveness in foreign markets, cost of establishing the escrowing system, and cost-effectiveness of the new standard 8

During the review period, the SKIPJACK algorithm was evaluated by outside experts, pursuant to

President Clinton’s direction that “respected experts from outside the government will be offered access

to the confidential details of the algorithm to assess its capabilities and publicly report their findings “

Five reviewers accepted NIST’s invitation to participate in a classified review of SKIPJACK and publicly

report their findings Ernest Brickell (Sandia National Laboratories), Dorothy Denning (Georgetown University), Stephen Kent (Bolt Beranek and Newman, Inc. ), David Maher (AT&T), and Walter Tuchman

6 Requirements for federal and state law-enforcement agents to certify that electromc SufVedlanCe has been authorized, and for

what period of time, as well as requuements for authorized use of escrowed key components are explained m Department of Jushce,

‘(Authorlzatlon Procedures for Release of EncryptIon Key Components In Conlunchon with Intercepts Pursuant to Title Ill,” “Authorization Procedures for Release of Encryption Key Components m Conjunction with Intercepts Pursuant to Slate Statutes,’” and “Authorlzatlon Procedures for Release of Encryption Key Components m ConjunctIon with Intercepts Pursuant to FISA, ” Feb 4, 1994

7 Because the EES algorlthm IS classdied, the overall strength of the EIES cannot be exammed except under security clearance

(see note 9 below) Thus, unclasslfled, pubhc analyses of Its strengths and weaknesses are not possible

The only publlc statements made by the Admmwtratlon concerning the strength of the EES relatwe to the DES refer to the secret

key size 80 btts for the EES versus 56 btts for the DES Longer keys offer more protection from exhaustwe-search attacks (see box

4-3), but the overall strength of a cryptosystem IS a function of both key $lze and the algorthm Itself

8Federa/ Reglsfer ( Feb 9, 1994), op Clt fOOtnOte 1, PP 5998-~2

(continued)
—. — . .

Chapter 4 Government Policies and Cryptographic Safeguards [ 119

g E Brlckell (Sandla National Laboratories) et al “SKIPJACK Review Intenm Report—The SKIPJACK Algorithm, ” JUIY 28.1993

See also “Fact Sheet—NIST Cryptography Actlwtles, ” Feb 4, 1994

10 lbld and Federal Ftegis[er ( Feb 9, 1994), Op Clt , footnote 1

11 Ibid

12 White House press release and enclosures, Feb 4, 1994, “Working Group on EncryptIon and Teiecommunlcatlons “

SOURCE Off Ice of Technology Assessment, 1994 and references cited below

—

The essence of the cryptographic threat is Expressing support for the EES and key-escrowthat high-grade and user-friendly encryption

products can seriously hinder law enforcement

and counterintelligence agencies in their ability

to conduct electronic surveillance that is often

necessary to carrying out their statutorily-based

missions and responsibilities. In particular,

some encryption products put at risk efforts by

federal, state and local law enforcement agencies to obtain to [sic] contents of intercepted

communications by precluding real-time decryption. Real-time decryption is often essential

so that law enforcement can rapidly respond to

criminal activity and, in many instances, prevent serious and life-threatening criminal

ing initiatives, Kallstrom stated that:

We fully support the Vice President’s initiative to create a national information superhighway to share information, educate Americans,

and increase productivity. However, it would be

wrong for us as public servants to knowingly allow this information superhighway to jeopardize the safety and economic well-being of

law-abiding Americans by becoming an expressway and safe haven for terrorists, spies,

drug dealers, and murderers.12

Thus, export controls, intended to restrict the

international availability of U.S. cryptography

technology and products, are now being joined by

11 Ibid., p. 12.

12 Ibid., p. 14.
120 I Information Security and Privacy in Network

domestic initiatives that offer alternative cryptography-based technologies for safeguarding unclassified information. These initiatives are

intended to preserve U.S. law-enforcement and

signals-intelligence capabilities. According to

NIST Deputy Director Raymond Kammer:

In developing cryptographic standards, one

can not avoid two often competing interests. On

the one hand are the needs of users-corporate,

government, and individual—in protecting telecommunications transmissions of sensitive information. . . On the other hand are the interests

of the national security and law enforcement

communities in being able to monitor electronic

communications. In particular, I am focusing

upon their need for continued ability to keep our

society safe and our nation secure.

Rapid advances in digital telecommunications have brought this issue to a head. Some experts have stated that, within ten years, most

digital telecommunications will be encrypted.

Unless we address this issue expeditiously, law

Environments

enforcement will lose an important tool in fighting crime—the ability to wiretap-and the mission of our Intelligence Community will be

made more difficult. 13

The EES has been promulgated by the Clinton

Administration as a voluntary alternative to the

current federal encryption standard used to safeguard unclassified information, the Data Encryption Standard (DES). 14 The symmetric encryption

algorithm used in the DES is now over 20 years

old; this standard allows users to generate their

own encryption keys and does not require the keys

to be deposited with any third party. ] 5 The DES algorithm has been made public (i.e., it has been

published) and can be freely implemented in hardware or software (see box 4-3).

The algorithm specified in the Escrowed Encryption Standard has not been published. It is

classified and the

plemented only

algorithm is intended

in tamper-resistant,

to be imhardware

13 Raymond G. Kammer, NIST ~puty Director, testimony presented before the Subcommittee on Technology ~d the Law, Comm)ttee

on the Judiciary, U.S. Senate, May 3, 1994, p. 2. NIST is responsible fordeveloping the FIPS for protecting information in unclassified computer

systems.

14 NIST, “Da~ Encryption s~dard (L)EsJ,” FIPS PUB 46-2 (Gaithersburg, MD: U.S. Department of Commerce, Dec. 30, 199S).

An alternative successor to the DES is rrip/e-encryption DES, where the algorithm is used sequentially with three different keys, to encrypt,

decrypt, then re-encrypt. There is, however, no FIPS for triple-encryption DEIS. Triple encryption with the DES offers more security than having

a 112-bit key and, therefore, appears inviolate against all adversaries for the foreseeable future. (Martin I-lellman, Professor of Electrical Engineering, Stanford University, personal communication, May 24, 1994; also see box 4-3.)

15 AS wl~ ~)~er encVptlon techniques, sound key m~agernent (i.e., key generation ~d protection, key distribution ~d destmction) is

vital to the overall security of the system. See NIST, “Guidelines for Implenlenting and Using the NBS Data Encryption Standard,” FIPS PUB

74 (Gaithersburg, MD: U.S. Department of Commerce, Apr. 1, 1981); and “Key Management Using ANSI X9.1 7,” FIPS PUB 171 (Gaithmsburg, MD: U.S. Department of Commerce, Apr. 27, 1992).
Chapter 4 Government Policies and Cryptographic Safeguards 1121

1 See box 4-4 for discussion of dlgltal signatures Ralph Merkles “tree signature techniques” made the use of symmetric (secret

key) ciphers hkethe DES more usable fordlgltal s~gnatures However, asymme!ncc ryptography IS still preferred fordlgltal signatures

(Marlln Hellman Professorof Electrical Engmeermg, Stanford Unwerslty personal commumcatlon, Apr 24, 1994, and Burton Kallskl

Jr Chief Sclentlst, RSA Laboratories personal communlcatlon, Apr 20,1994 )

2 The Commercial Communlcatlons Securlw Endorsement Program (CCEP) was an NSA-mdustry Pro9ram to develop the

embeddable cryptographic modules host products for the modules were developed under an NSA-industry program called the Development Center for Embedded COMSEC Products (DCECP)

(confmued,)
122 I Information Security and Privacy in Network Environments

Controversy surrounded NSA’s role in the selection and refinement of the encryption algorithm that

was promulgated as the DES In 1973, the National Bureau of Standards (now NIST) had issued a solicitation for candidate algorithms for a federal encryption standard, but received no suitable candidates

A year later, IBM responded to a second NBS solicitation with what eventually became the DES, The

original algorithm developed by IBM, using a longer key, had been submitted to NSA for classification

review as part of the patenting process NSA chose not to classify the algorithm and suggested that

IBM submit it—but with some modification—to NBS for consideration as the standard, NBS eventually

promulgated the modified IBM algorithm as the DES algorithm.3

The modifications suggested by NSA and made by IBM gave rise to concerns that NSA had deliberately weakened or “tampered with” IBM’s algorithm in order to maintain U.S. signals-intelligence capabilities. Although the algorithm was made public, the design criteria used by IBM and the results of

NSA’s testing and evaluation were not, nor were the design criteria used by NSA that led to shortening

the key length and modifying a feature of the algorithm called the substitution boxes, or S-boxes. After

much public debate, an inquiry by Representative Jack Brooks led the Senate Select Committee o n

intelligence to conduct a classified investigation This investigation concluded that

In the development of the DES, NSA convinced IBM that a reduced key size was sufficient, indirectly assisted

in the development of the S box structures, and certified that the final DES algorithm was, to the best of their

knowledge, free of any statistical or mathematical weaknesses. NSA did not tamper with the design of the algorithm in any way. IBM invented it and designed the algorithm, made all pertinent decisions regarding it, and concurred that the agreed on key size was more than adequate for all commercial applications for which the DES

was intended 4

The reason for attention to the key size was that a longer key would have made it much harder to

find a particular secret key through an “exhaustive search” cryptanalysts, in which all possible keys are

tried in order to find the one being used Because the secret key is 56 bits long, an exhaustive search

would, in principle, require 256 operations Doubling the key size does far more than double the strength

against exhaustive attacks—if the key were 112 bits long, exhaustive search would, in principle, require

2

112 Operations, which is roughly 100,000 million million times as much work.5

For a given key size, “multiple encryption” can increase the security of the final ciphertext. The increase depends on the characteristics of the encryption algorithm, with the DES the gain is less than

would be achieved through an increase in key size, but can still be adequate That is, encrypting twice

with the DES, using two different keys, is nowhere near as secure as having a true 112-bit key The

preferred method to strengthen the DES is through triple encryption. In this technique, the original plaintext is encrypted using one key; the resulting ciphertext is decrypted using a different second key, the

3 For more on the history of the DES and controversy surrounding Its 1988 reaf’hrmatlon, see U S Congress, Off Ice of Technology

Assessment, DeiendmgSecrets, Sharing Data NewLocksand Keys :orE/ectronlc /n/ormatlon, OTA-CIT-310 (Washington, DC U S

Government Prmtmg Office, 1987), especlalty chapter 4 and appendix C

4 U S Senate, Select Committee on Intelhgence, Unc/asslf/edSummary Involvement o/NSA m the Development ot[he Data Encryp(lon Standard (Stafl Repwt), 95th Cong 2d sess (VVashmgton, DC U S Government Prmtmg Off Ice, Aprd 1978), p 4 See also

OTA, op cd , footnote 3, pp 169-171

s Martin Hellman, op clt , footnote 1

6 See Ralph C Merkle and Martin I+ellman, “on the Security of Multlple Encryption, ” COmmunlCafiOnS oftbe ACM, Vol 24 NO 1!

July 1982, pp 465-467

(continued)

—
Chapter 4 Government Policies and Cryptographic Safeguards 1123

result IS encrypted again, with a third key6 (The plaintext is recovered by reversing the operations, using all 3 keys) Triple encryption with the DES offers more security than having a 112-bit key and therefore, appears Inviolate against all adversaries for the foreseeable future.7

Interestingly, it now appears that the NSA-suggested modifications to the S-boxes were intended to

strengthen the algorithm against another, particularly powerful type of attack called differential cryptanalysis Eli Biham and Adi Shamir published the first paper on differential cryptanalysts, which they discovered in 1990 After this announcement, a member of the IBM design team stated that the IBM designers—and presumably NSA—knew about it no later than 19748

7 M“ltlp\e encvptlon With the DES offers less of an Increase m security Ihan multiplying the key length by the same factor because

of Ihe way the mdwldual bits of the key are “mixed’” during encryption Triple encryption with DES offers much less of an Increase m

strength than using a 168-bit (3 X 56 blls) key, but IS much stronger than double encryphon and IS better than using a 1 12-bit key

(Martin Hellman, Professor of Electrical Engmeermg, Stanford Umverstty, personal communication, May 10 1994 )

B Don Coppersmith of IBM as quoted m Bruce Schneter, “A Taxonomy of Encryphon Algorithms, ” Computer Secuf/ty Journa/, VOI

IX, No 1, pp 39-59 (quote at p 42) See also E Blham and A Shamir, “Dtfferentlal Cryptanalysts of DES-llke Cryptosystems “ Advances m Crypto/ogX CRYPTO “90 Proceecfmgs (New York, NY Sprmger-Verlag, 1991), pp 2-21, and E Blham and A Shamir, “Dlfferenhal Cryptanalysts of DES-llke Cryptosystems, ” Journa/ ot Cryplo/ogy, VOI 4, No 1, 1991, pp 3-72

SOURCE OTA, 1994, and sources cited below

modules. 16 This approach makes the confidentiality function of the classified encryption algorithm

available in a controlled fashion that does not increase users’ abilities to employ cryptographic

principles. A key-escrowing scheme is built in to

ensure “lawfully authorized” electronic surveillance. 17 One of the reasons stated for specifying a

classified, rather than published, encryption algorithm in the EES is to prevent its independent implementation without the law-enforcement access

features.

Unlike the EES algorithm, the algorithm in the

federal Digital Signature Standard has been published. 18 The public-key algorithm specified in

the DSS uses a private key in signature generation,

and a corresponding public key for signature verification. (See box 4-4.) However, the DSS technique was chosen so that public-key encryption

functions would not be available to users. 19 This

is significant because public-key encryption is extremely useful for key management.20

16 see Federa/ Regl~[er, vol. 59, Feb, $), ] 994, ~p. 5997-@05 (“Approva] ~~f Federa] [nf~)m~ati~)n ~ocess)ng st~~~~s ~bllcallon 18S,

Escrowed Encryption Standard (EES)”).

17 Ibid., p. 6003.

18 SW a]so appemiix c

)9 Acc[)rding tO F. Lynn McNulty, NIST As~Kiate Director for Computer Security, the rationale for adopting the technique used in DSS

was that, “We wanted a technology [hat did signatures-and nothing else—very well. ” (Response to a question from Chairman Rick Boucher

in testimony before the Subcommittee on Science of the House Committee on Science, Space, and Technology,” Mar. 22, 1994. Sce also f~mtnote

1 05.)

2~ ~blic-key Cncwptlon can k used for confidentiality and for secure key exchange. See ~)x ~ 1.
124 I Information Security and Privacy in Network Environments

Cryptography can be used to accomplish more than one safeguard objective Encryption techniques can be used to safeguard the confidentiality of the contents of a message (or a stored file),

Message authentication techniques based on cryptography can be used to ensure the integrity of the

message (that it has been received exactly as it was sent) and the authenticity of its origin (that it

comes from the stated source) The oldest and simplest forms of message authentication use “secret”

authentication parameters known only to the sender and intended recipient to generate “message authentication codes. ” So long as the secret authentication parameter is kept secret from all other parties,

these techniques protect the sender and the receiver from alteration or forgery of a message by all

such third parties Because the same secret information is used by the sender to generate the message

authentication code and by the receiver to validate it, these techniques cannot settle “disputes” between the sender and receiver as to what message, if any, was sent. For example, message authentication codes could not settle a dispute between a stockbroker and client in which the broker claims the

client issued an order to purchase stock and the client claims he never did so

Digital signatures provide a higher degree of authentication by allowing resolution of disputes Although it is possible to generate digital signatures from a symmetric cipher like the federal Data Encryption Standard (DES), most interest centers on systems based on asymmetric ciphers, also known

as public-key cryptosysterns. 2 These asymmetric ciphers use a pair of keys--one to encrypt, another to

decrypt—in contrast to symmetric ciphers in which the same key is used for both operations. Each user

has a unique pair of keys, one of which is kept private (secret) and the other is made public (e.g., by

publishing in the electronic equivalent of a telephone book). The security of public-key systems rests on

the authenticity of the public key and the secrecy of the private key, much as the security of symmetric

ciphers rests on the secrecy of the single key (see discussion of key certification and management in

chapter 2 and of digital signatures and nonrepudiation in chapter 3).

in principle, to sign a message using a public-key encryption system, a user could transform it with

his private key, and send both the original message and the transformed version to the intended receiver The receiver would validate the message by acting on the transformed message with the sender’s

public key (obtained from the “electronic phone book”) and seeing that the result exactly matched the

original message. Because the signing operation depends on the sender’s private key (known only to

him or her), it is impossible for anyone else to sign messages in the sender’s name But everyone can

validate such signed messages, since the validation depends only on the sender’s “public” key.

In practice, digital signatures sign shorter “message digests” rather than the whole messages, For

digital signatures based on public-key systems, the sender first uses a cryptographic “hashing” algorithm to create a condensed “message digest” from the message 3 With the commercial RArest-Sharn/f1 For details about the technology and applicahons for encryption, message authentlcatlon, and dlgrtal signatures, see D W Dawes and W L Price, Security for Computer Networks “An Intmductlon to Data .%curdy m Telepmcessingand Electronic Funds Transfer, 2nd Ed (New York, NY John Wiley& Sons, 1992) See also U S Congress, Office of Technology Assessment, DefendmgSecreLs,

Sharing Dafa NewLocksandKeys forE/ecfronlc/nt_ormatlon, OTA-CIT-.31O (Washington, DC U S Government Prmtmg Office, October 1987), especially appendices C and D

2 Merkle’s “tree Signature Iechnlques” made use of symmetric (secret-key) c{phers like the DES more usable ford@alS19natUreS

However, there IS currently more Interest m asymmetric cryptography for signatures (Martin Hellman, Professor of Electrical Englneermg, Stanford Unwersity, personal commumcahon, Apr 24, 1994, ald Burton Kallskl, Jr, Chief Sc}entlst, RSA Laboratories, personal commurucatlon, Apr 20,1994 )

3The RSA method IS Ihebest known pubhc-key signature scheme, but others are possible, see T EIGamal, “A Publc-KeYCryPtosystem and a Signature Scheme Based on Discrete Logarithms, ” LEEE TransactIons on /formation Theory, VOI IT-31, 1985, pp

469-472, and C P Schnorr, “Efflclent ldenttflcatlonand Signatures for Smart Cards, ” PmceedingsofCrypto 89, Advancesm Cryp/o/O

gy (New York, NY Sprmger-Verlag, 1990), pp 239-251

(continued)
Chapter 4 Government Policies and Cryptographic Safeguards 1125

Adleman (RSA) system, the signature is created by encrypting the message digest, using the sender’s

private key Because in the RSA system each key is the inverse of the other, the recipient can use the

sender’s public key to decrypt the signature, thereby recovering the original message digest The recipient compares this with the one he or she has calculated using the same hashing function—if they are

identical } then the message has been received exactly as sent and, furthermore, the message did

come from the supposed sender (otherwise his or her public key would not have yielded the correct

message digest) 4

The federal Digital Signature Standard (DSS) defines a somewhat different kind of public-key cryptographic standard for generating and verifying digital signatures 5 The DSS is to be used in conjunction

with the federal “Secure Hash Standard” (FIPS Publication 180), which creates a short message digest,

as described above. 6 The message digest is then used, in conjunction with the sender’s private key

and the algorithm specified in the DSS, to produce a message-specific signature Verifying the DSS

signature involves a mathematical operation on the signature and message digest, using the sender’s

public key and the hash standard 7

The DSS differs from the RSA digital signature method in that the DSS signature operation is not

reversible, and hence can only be used for generating digital signatures. DSS signature verification is

different than decryption. 8

In contrast, the RSA system can encrypt, as well as do signatures Therefore, the RSA system can

also be used to securely exchange cryptographic keys that are to be used for confidentiality (e g , “secret” keys for use with a symmetric encryption algorithm like the DES) This lack of encryption capability

for secure key exchange was one reason why the government selected the DSS technique for the standard 9

4 See Dawes and Price, op CII , ch 9 or app D of Office of Technology Assessment, op clt , footnote 1 The overall security of

these schemes depends on mamtammg secrecy of the private keys and on the authenhctty of the pubhc keys

5 U S Department of Commerce, National Inshtute of Standards and Technology, “Digital Signature Standard (DSS), ” FIPS Publlcatlon 186, May 19, 1994 The standard IS effechve Dec 1, 1994

6 u s Department of Commerce, National Institute of Standards and Technology, “Secure Hash standard” FIF’S f’lJf3 180. MaY

11, 1993 NIST recently announced atechnlcal correction tothe Secure Hash Standard Accordmgto NIST, NSAanalysts discovered

a “mmor flaw” m the algorlthm The algorithm was developed by NSA (NIST media adwsory, Apr 22, 1994 ) According to NIST, the

hash standard, “while still very strong, was not as robust as we had orlgmally intended” and was being corrected (Raymond Kammer,

Deputy Dmector, NIST, testtmonybefore the Subcommittee on Technology and the Law, Commltteeon the Judlclary, U S Senate, May

3, 1994, p 11 )

7 See Nahonal institute of Standards and Technology, CSL Bu//ehn, January 1993, or NIST, op cit , footnote 5

e Burton Kallskl, Jr, Chief Sclentlst RSA Laboratories, personal communlcatlon, May 4, 1994

9 see chapter 4, and ~edera/Reglsler,VOI 59, May 19, 1994, p 26209 (“The DSA does not provide for secret key dlstrlbutlon since

It was not Intended for that purpose “ Ibid )

SOURCE Off Ice of Technology Assessment, 1994, Martin Hellman (Stanford Unfverslty), 1994, and references cited m notes

While other means of exchanging electronic sen for the DSS, the technique used in the most

keys are possible,21 none is so mature as public- widely used commercial digital signature system

key technology. In contrast to the technique cho- (based on the Rivest-Shamir-Adleman, or RSA,

21 See e.g,, Tom Leighton, ~pa~nlent of Mathernat]cs, Massachusetts Institute of Technology (MIT) and Silvio Micah MIT ~~)ratory

for Computer Science, “Secret-Key Agreement Without Public-Key Cryptography (Extended Abstract),” obtained from S. MicaIi, 1993.
126 I Information Security and Privacy in Network Environments

algorithm) can also encrypt. Therefore, the RSA

techniques can be used for secure key exchange

(i.e., exchange of “secret” keys, such as those used

with the DES), as well as for signatures. Another

public-key technique, devised by Whitfield Diffie

and Martin Hellman, can also be used for key exchange.

22 The Diffie-Hellman technique does not

encrypt.

In OTA’s view, both the EES and the DSS are

federal standards that are part of a long-term control strategy intended to retard the general availability of ‘*unbreakable” or “hard to break”

cryptography within the United States, for reasons

of national security and law enforcement. As

stated by NIST Deputy Director Raymond Kammer:

Government standards should not harm law

enforcement/national security.

This is fairly straightforward, but can be difficult to achieve. In setting standards, the interests of all the components of the government

should be taken into account. In the case of encryption, this means not only the user community, but also the law enforcement and national

security communities, particularly since standards setting activities can have long-term impacts (which, unfortunately, can sometimes be

hard to forecast) .23

It appears that the EES is intended to complement the DSS in this overall encryption-control

strategy, by discouraging future development and

use of encryption without built-in law enforcement access, in favor of key-escrowed and related

encryption technologies. If the EES and/or other

key-escrow encryption standards (e.g., for use in

computer networks) become widely used, this

could ultimately reduce the variety of alternative

cryptography products through market dominance that makes alternatives more scarce or more

costly. In May 1994 testimony before the Senate

Subcommittee on Technology and the Law, Whitfield Diffie (Sun Microsystems, Inc.) referred to

the EES and related key-escrow initiatives, as well

as the DSS and the digital telephony proposals, as:

. . . a unified whole whose objective is to maintain and expand electronic interception for both

law enforcement and national security purposes.

24

In testimony in support of the EES and related

technology before the House Subcommittee on

Technology, Environment, and Aviation, Dorothy

Denning (Georgetown University) stated that:

As we move into an era of even greater electronic communications, we can and must design

our telecommunications infrastructure and encryption systems to support our needs as a nation

for secure communications, individual privacy,

economic strength, effective law enforcement,

and national security. The Clipper Chip is an important step towards meeting all our national

needs, and the government should continue to

move forward with the program.

The government needs an encryption standard to succeed DES. If in lieu of Clipper, the

government were to adopt and promote a standard that provides strong encryption without

government access, society could suffer severe

economic and human losses resulting from a diminished capability of law enforcement to investigate and prosecute organized crime and

terrorism, and from a diminished capability for

foreign intelligence. . . . [T]he government

rightly concluded that it would be irresponsible

to promote a standard that foils law enforcement

when technology is at hand to accommodate law

enforcement needs without jeopardizing security and privacy. Moreover, through the Adminis22 The public-key concept was first published by Whitfield Diffle and hlartin Hellman in “New Directions in Cryptography,” Theory, vol.

IT-22, No. 6, IEEE Transactions on lnformalion, November 1976, pp. 644-654. Diffie and Hellman described how such a system could be used

for key distributi(m and to “sign” individual messages.

23 Kammer testimony, May 3, 1994, op. cit., footnote 13, pp. IO-11.

24 Whitfield Diffle, Distinguished Engineer, Sun Microsystems, Inc., [estimony before the Subcommittee on Technology and the Law,

Committee on the Judiciary, U.S. Senate, May 3, 1994, p. 2. (Diftle was also referring to the Capstone and TESSERA implementations of the

EES encryption algorithm.)
Chapter 4 Government Policies and Cryptographic Safeguards I 127

tration’s commitment to Clipper or some other

form of key escrow, escrowed encryption may

dominate in the market, mitigating the effect of

unescrowed encryption on law enforcement.25

Concerns over the proliferation of encryption

that have shaped and/or retarded federal standards

development have complicated federal agencies’

technological choices. For example, as appendix

C explains, national-security concerns regarding

the increasingly widespread availability of robust

encryption-and, more recently, patent problems-contributed to the extraordinarily lengthy

development of a federal standard for digital signatures: NIST first published a solicitation for

public-key cryptographic algorithms in 1982, and

the DSS was finalized in FIPS Publication 186 in

May 1994.26 (At this writing, the question of

whether the DSS would be the subject of patent

litigation was still open-see appendix C).

Public-key cryptography can be used for digital

signatures, for encryption. and for secure key distribution/exchange. The DSS is intended to supplant, at least in part, the demand for other

public-key cryptography by providing a method

for generating and verifying digital signatures.

However, while the DSS algorithm is a public-key

signature algorithm, it is not a public-key encryption algorithm.27 That means, for example, that it

cannot be used to securely distribute “secret” encryption keys for use with symmetric encryption

like the DES or EES algorithms. Some sort of interoperable (i.e., standardized) method for secure

key exchange is still needed.28

As of June 1994, the DSS had been finalized,

but there was no FIPS for public-key key exchange. Two implementations of the EES encryption algorithm that are used for data

communications in computer networks-the

Capstone chip and the TESSERA card-contain a

public-key Key Exchange Algorithm (KEA).29

However, as of June 1994, this KEA is not part of

any FIPS .30 Therefore, organizations that do not

use Capstone or TESSERA still need to select a

secure and interoperable form of key distribution.

The lengthy evolution of the DSS meant that

federal agencies had begun to look to commercial

products (e.g., based on the RSA system) to meet

immediate needs for digital signature technology.

31 The introduction of the EES additionally

complicates agencies’ technological choices, in

that the EES and related government key-escrow

encryption techniques (e. g.. for data communications in computer networks, or for file encryption)

may not become popular in the private sector for

some time, if at all. As of this writing, the EES has

2~ Dtm~thy E. Denning, Pn)fcsst)r and Chair, Department [~f computer Science, Gw~rgct(lwn Uni\ erslty, tcstln~(~n} hcf~~rc the SuhctJn~n~ltIee {m Technology,” En$ Ir(mrncnt, and Aviatt(m, C{~rnn~ittee {m Science, Space and Techn{)h~g}’, LJ.S. House of” Rcprcwm[atl\ c’~, Nfa} 3. 1994.

pp. 6-7. Dennlng was ~mc i)f the fi~ ~ n(mg{wemnlcntal experts who tn alu:ited lhc EES alg(u-ithrn under sccurl[y clcarancc, ( SCC dlscll~jl,~n I:llcr

in chapter.)

26 SW “’Appr~)\ al {~f Federal Inft)mlat](m Prt)cessing Standards Publicatl(m 186, Digital Sigrmturc St:indard (DSS ),’” }’cdcra/ Rc<ql\[cr, \ t~l.

59, May 19, 1994, pp. 26208-1 I, atd NIST. “Dlgltal S[gnaturc Standard (DSS ),’” FIPS PUB 186 (G;ilthershurg. MD U.S. Dep;ir[nwnt of C{Jnmerce, Ma} ! 9, 1994).

27 see &lx 4-4.

‘s Ore publlc-kc> alg(mthm that can bc used for ky distributi(m ]s the RSA alg(mthm, the RSA algorithm can cncr> pt. The RSA S! i[cn~

was propmd in 1978 by R I \ est. Shamir, and Adlunan. The Di ffle-Hcllnlan a!gt)rithn~ is am)thcr meth(xl, [111s can lx UVXJ for kc] gcncr;i[ 1{ In

and e~change and does not encrypt. See alst~ ch. 2.

2’) The Capst(mc chip is an Implcmcntati{m of the Escrtwed Enc~ ptl{m Standard algorithm. It i~ used ft~r data ct~r]]r~lt]n]c;it]ons and c~~nlaln~

the EES alg(mthm (called SKIPJACK), as well as digital-signature and hey-exchange functl(ms. (The Clipper chip is uxd [n tclcph(mcs) SIcn)j

and has ju~t the EES algorithm. ) TESSERA is a PCMCIA card that c(m[ains a Capsttmc chip. It includes add]tl(mal features and IS king used

]n the Defense Message Sy s[cm. (Cl mttm Br~xAs, Spcc ial Assistant to the Director, NS A, perstma[ c(~nln~unlcatit m, M:iy 2S, 1994. )

30 Miles Sr,lld Manaoer security T~~hno](}gy Group, NIST, Pcrs(mal C(MWWnlCatl(m, Ma)’ Z(). 1994 b,

3 I For exanlp]e, at this ~ntlng, the IRS was c(JnsidCring using both the DSS and RSA signature tcchnlquci. (Tlnl Mlnahan. “IRS Digital

Signature Scheme Calls ft~r Both DSS and RSA Vcrit_icatlt~n,’” [;o~crnnlcrr[ (’,m]puter ,NrIi f, July 18, 1994, pp. 1,6S. )
128 I Information Security and Privacy in Network Environments

not yet been embraced within government and is

largely unpopular outside of government.32

Therefore, agencies may need to support multiple

encryption technologies both for transactions

(i.e., signatures) and for communications (i.e., encryption, key exchange) with each other, with the

public, and with private-sector organizations.

GOVERNMENT CONCERNS AND

INFORMATION SAFEGUARDS

As the previous section indicated, the federal government faces a fundamental tension between the

desire to foster the development and deployment

of effective (and cost-effective) technologies for

use in safeguarding unclassified information, so

that these can be widely used by civilian agencies

and the private sector, and the desire to control the

proliferation of technologies that can adversely affect government’s signals-intelligence and lawenforcement capabilities. This tension runs

throughout the government’s own activities as a

developer, user, and regulator of safeguard

technologies. Although the relative balance between national-security and other objectives (e.g.,

open government, market competitiveness, privacy) has shifted from time to time, national-security objectives have always been preeminent in

establishing federal policies regarding information security (or computer and communications

security).

In a networked society, where communications, information, and commerce are digital, the

struggle to control cryptography is at the heart of

this tension. Control of cryptography encompasses: 1) control of research in cryptography and

especially in cryptanalysts (code-breaking), 2)

control of publication in cryptography and related

fields, 3) control of patenting of cryptographic inventions (new techniques for encryption and/or

new ways of implementing these in useful products), and 4) export controls on the proliferation of

cryptography-based products and expertise.33

Over the past three decades, this struggle for

control has been exacerbated by:

1. technological advances in computing and microelectronics that have made inexpensive,

software-based, PC-based, smart-card-based,

32 see, ~.g., Beau Brend]er, ‘&Thls Ship’s Going N~whem: Why clinton’s Clipper Policy Makes NO Sense,” Washiw?ron TeC’hn@w. Feb.

10, 1994, pp. 1,6; John Markoff, “Cyberspace Under Lock and Key,” The New’ York Times, Feb. 13, 1994, p. E3; Philip Elmer-Dewitt, “who

Should Keeptbe Keys,” 7ime Magazine, Mar. 14, 1994, pp. 90-91; and John Markoff, “An Administration Reversal on Wiretapping Technology,” The New York 71mes, July 21, 1994, pp. D1,D7.

The Committee on Communications and Information Policy of the IEEE United States Activities Board has taken the position that current

cryptographic policies reflect the dominance of law-enforcement and national-security concerns and do not adequately reflect the needs of

electronics manufacturers, service providers, or network users. The committee advocates development of public, exportable, secure algorithms

and the implementation of such algorithms as national standards. (Bob Carlson, “U.S. Government Reaffirms Stand on Clipper Chip Proposal,”

IEEE Computec April 1994, p. 63.)

33 The cvpto~aphic-rese~ch community has grown over the last decade, but it is still relatively small compared with other fields in computer science, electrical engineering, and mathematics. In the 1970s and 1980s, there were serious controversies concerning attempts by NSA

to control federal research funding in cryptography and to control publicati(m and patenting by researchers in academia and industry. For historical development of cryptography and the repeated controversies concerning government attempts (through NSA) to control cryptography

through research funding, prepublication review, and patent secrecy orders, see Susan Landau, ‘Zero Knowledge and the Department of Defense,’’Norices ofthe American Mathematics/ Sociery, vol. 35, No. 1, January 1988, pp. 5- 12; U.S. Congress, House of Representatives, Committee on Government Operations, Computer Security Act of 1987-Reporr to Accompany H.R. /45, H. Rept. NW 100-153, Part 11, 10Oth C(mg.,

1st sess., June 11, 1987 (Washington, DC: U.S. Government Printing Office, 1987), pp. 19-25; James Bamford, The Pux/e Pa/ace (New Y“ork,

NY: Penguin Books, 1983); Tom Ferguson, “Private Locks, Public Keys and State Secrets: New Problems in Guarding Inforrnati(m with Cryptography,” Harvard University Centerfm Information Policy Research, Prograrnon Infomnation Resources Policy, April 1982; Public Cryptography Study Group, American Council on Education, ‘6Report of the Public Cryptography Study Group” and “The Case Against Restraints on

Nongovernmental Research in Cryptography: A Minority Report by Prof. (;eorge I. Davida,” Acaderne, vol. 67, December 1981, pp. 372-.382;

U.S. Congress, House of Representatives, Committee on Government Operations, The Government’s Cla.r.r~icarion of Pri}ate Ideas, H. Rept.

No. 96-1540, %th Congress, 2d sess. (Washington, DC: U.S. Government Printing Office, Dec. 22, 1980); and David Kahn, The Codebreakers:

The SIory of Secret Wriling (New York, NY: MacMillan, 1%7). See also OTA, op. cit., footnote 1, especially pp. 55-59 and 168-172.
Chapter 4 Government Policies and Cryptographic Safeguards 1129

2.

and token-based (e.g., using PCMCIA cards)

cryptography potentially ubiquitous; and

increasing private-sector capabilities in cryptography, as evidenced by independent development of commercial, public-key encryption

systems.

These have made possible the:

3. increasing reliance on digital communications

and information processing for commercial

transactions and operations in the public and

private sectors.

Together, these developments have enabled and

supported a growing industry segment offering a

variety of hardware- and software-based information safeguards based on cryptography. Recent encryption initiatives like the EES and DSS seem

orchestrated to increase control by reducing commercial variety and availability over the long run,

so as to retard the development and spread of other

encryption technologies that could impair signals

intelligence and law enforcement.

A historical review of the policy issues, debates, and developments during the 1970s and

1980s that led to the current environment is beyond the scope of this report, which focuses on

their current manifestations in private and publicsector activities.sA This chapter examines these in

light of the ongoing debates over the activities of

NIST and NSA, particularly regarding export controls and standards development. These are important because the government uses them to

control cryptography.

Federal standards (i.e., the FIPS) influence the

technologies used by federal agencies and provide

a basis for interoperability, thus creating a large

and stable, “target market” for safeguard vendors.

If the attributes of the standard technology are also

applicable to the private sector and the standard

has wide appeal, an even larger but still relatively

stable market should result. The technological stability means that firms compete less in terms of

the attributes of the fundamental technology and

more in terms of cost, ease of use, and so forth.

Therefore, firms need to invest less in research and

development (especially risky for a complex

technology like cryptography) and in convincing

potential customers of product quality. (See discussion of standards and certification in chapter

2). This can result in higher profits for producers,

even in the long run, and in increased availability

and use of safeguards based on the standard.

Promulgation of the DES as a stable and certified technology—at a time when the commercial

market for cryptography-based safeguards for unclassified information was emerging—stimulated

supply and demand. Although the choice of the algorithm was originally controversial due to concerns over NSA’s involvement, the DES gained

wide acceptance and has been the basis for several

industry standards, in large part because it was a

public 35 standard that could be freely evaluated

and implemented. Although DES products are

subject to U.S. export controls, DES technology is

also widely available around the world and the algorithm has been adopted in several international

standards. The process by which the DES was de-

{LI For ~ \hofl ~c~,lcw ~)f the hl~[{)nca] tension between na[i(>nal security and other natlOnal objectives and the stmggle to c~)ntr~)l cryptography>, see OTA, op. cit., ftwtnote 1. For a hmger review of the developments of federal computer security and communication security policies

and programs after Wt)rid War 11, including discussion of challenges to the government’s cryptographic monw)ly over tie last two decades.

see George F, Jelcn, ‘“lnfornlation Security: An Elusive Goal,” Harvard University Center for Information Policy Research, Program on lnfomml(m Resources P(dicy, June 1985. Jelen also examines the power struggle between NSA and the Commerce Department’s National Telecornmunlcati(ms and lnftmnation Administration during the late 1970s and early 1980s and the motivations for and effects of national-security

directives In the 1980s that gave the Department of Defense the leadership role in communication security (COMSEC) and computer security

(COMPUSEC).

~~ /~lib/l[. in this sense refers to the fact that the DES algorithm was published.
130 I Information Security and Privacy in Network Environments

veloped and evaluated also stimulated privatesector interest in cryptographic research,

ultimately increasing the variety of commercial

safeguard technologies.

By 1993, 40 manufacturers were producing

about 50 implementations of the DES in hardware

or firmware that had been validated for federal use

(as meeting the FIPS) by NIST. Another 60 companies were estimated to be producing software

implementations of the DES. A 1993 industry estimate of U.S. sales of DES hardware and software

products was between $75 million and $125 million annually.36 As of April 1994, a survey of

products using cryptography in the United States

and abroad, conducted by the Software Publishers

Association (SPA) had identified 245 domestic

encryption products (hardware and software) that

used the DES.37

Now, however, introduction of an incompatible

new federal standard-e. g., the EES—may be

destabilizing. If the EES and related technologies

ultimately manage to gain wide appeal, they may

succeed in “crowding out” safeguards based upon

38 

other cryptographic techniques. This may be a

long-term objective of the key-escrow encryption

initiative, in order to stem the supply of alternative

cryptography products by ensuring vendors a

large and lucrative federal market and by encouraging private-sector demand to eventually switch

to key-escrowing technology.

39 In the long term, a

loss of technological variety is significant to private-sector cryptography, because more diverse

research and development efforts tend to increase

the overall pace of technological advance. In the

near term, technological uncertainty may delay

widespread investments in any new safeguard, as

users wait to see which technology prevails.40

In May 1994 testimony before the Subcommittee on Technology and the Law of the Senate Judiciary Committee, Assistant Attorney General Jo

Ann Harris stated that:

The Clinton Administration has been farsighted in seeing the advent of high-quality,

user-friendly encryption products and the implications of such products. It has also been prepared to act early, when markets are still

developing and when both consumers and

manufacturers are seeking strong, reliable cryptography for use in mass-market products.

We believe, therefore, Mr. Chairman [Patrick

J. Leahy], that, as one major equipment

manufacturer has already done, others will respond to their customers’ needs for extremely

strong encryption by marketing key escrowJ61ndu~~ estimates cited in: Charlotte Adams, “Data Encryption Standard Software Now Headed for Widespread Government uSe,” I’edera/ Computer Week, July 26, 1993, p. 35. The reaffirmation of the DES in FIPS Publication 46-2 (NIST, op. cit., footnote 14) makes software

implementations of the DES also eligible for validation.

37 stephen T. walker, Resident, T~Stect Information Systems, Inc., testimony presented before the Subcommittee on Technology and tie

Law, Committee on the Judiciary, U.S. Senate, May 3, 1994, p. 15 and enclosure. See also Lance Hoffman, “SPA Study of Foreign Availability

of Cryptography,” SPA News, March 1994. SPA began its study of foreign availability in 1993.

38 At Pmwnt, the EES is not king well ~ceived by tie private sector, in part because there is a growing installed base of ~~er technologies

(e.g., the DES and the RSA system) and in part because of the classified algorithm and key escrowing. In establishing the EES, the government

is acting in its roles as a producer and regulator of safeguard technologies. Ilis contrasts with the government’s role (with industry) as a user

in other, voluntary standards development. (See, e.g., John Perry Barlow, “A Plain Text on Crypto Policy,” Communications of~he ACM, vol.

36, No. 11, November 1993, pp. 21-26; and Lance J, Hoffman, “Clipping Clipper,” Communications of~he ACM, vol. 36, No. 9, September

1993, pp. 15-17.) The role of the U.S. government in developing the algorithm, as well as the key escrowing provisions, also make the EES

unattractive to the international business community. (Nanette DiTosto, United States Council for International Business, yrsonal communication, Apr. 28, 1994.)

JgIn early 1994, tie ~pnt of Justice had reportedly purchased 8,000 EES devices and was considering purchasing another 2,aM,

in a procurement totaling $8 million. (Executive-branch procurements announced by Raymond Kammer, NIST Deputy Director, as quoted

in: Brad Bass, “Clipper Gets Stamp of Approval,” Federal Computer Week, Feb. 7, 1994, pp. 1,4.)

40 This happened wi~ Vide(xassette reco~em (VCRS). When technological uncertainty decmsed (afler the rivalry ~tw=n VHS and Betamax was resolved), VCR penetration began to increase dramatically,
.—

Chapter 4 Government Policies and Cryptographic Safeguards [ 131

equipped products. And as that occurs, we look

for a gravitation of the market to key-escrow encryption, based on both a need for interoperability and a recognition of its inherent quality. Even

many of those who may desire encryption to

mask illicit activities will choose key-escrow

encryption because of its availability, its ease of

use, and its interoperability with equipment

used by legitimate enterprises. 41

However, others question the need to act now:

If allowing or even encouraging wide dissemination of high-grade cryptography proves

to be a mistake, it will be a correctable mistake.

Generations of electronic equipment follow one

another very quickly. If cryptography comes to

present such a problem that there is popular consensus for regulating it, this will be just as possible in a decade as it is today. If on the other

hand, we set the precedent of building government surveillance capabilities into our security

equipment we risk entrenching a bureaucracy

that will not easily surrender the power this

gives. 42

At this writing, the success of this strategy to

control cryptography is still questionable—in the

near term, at least. One reason the outcome will

take some time to materialize is that although it

was issued as a FIPS, use of the EES is voluntary

(even within the government) and many federal

agencies have not yet taken positions regarding its

implementation, or announced plans to implement the EES in their operations.43 For example,

the Federal Reserve System encrypts its funds

transfer operation, using DES-based technology,

and is an active participant in the American National Standards Institute (ANSI) banking stan41 J~J Ann H~iS te$tirntmy, op. cit., fo(~m{)te 8, pp. 3-4.

42 Diffie [estim(~ny, op. cit., footnote 24, p. 10.

dards process. Although the Federal Reserve

monitors advances in security technologies, as of

spring 1994 it remained committed to “cryptographic implementations which are based on DES

and are ANSI compliant.”44

In July 1994, Vice President Gore indicated the

Clinton Administration’s willingness to explore

industry alternatives for key-escrow encryption,

including techniques based on unclassified algorithms or implemented in software. These alternatives would be used to safeguard information in

computer networks and video networks; the EES

and Clipper chip would be retained for telephony.

Whether the fruits of this exploration result in increased acceptance of key-escrow encryption will

not be evident for some time.

Moreover, not all government attempts at influencing the marketplace through procurement

policies (and the FIPS) are successful. The FIPS

that prove to be unpopular with industry and users

can have little influence on the private sector.45

For example, the government made an early commitment to the Open Systems Interconnection

(OSI) protocols for networking, but it is the ubiquitous Transmission Control Protocol/Internet

Protocol (TCP/IP) protocols that have enjoyed

wide use throughout the world in the Internet and

other networks. Although the Government Open

Systems Interconnection Profile (GOSIP) was

mandated for agencies, it did not become popular

in the commercial market, so there was a lack of

GOSIP products, relative to TCP/IP products. As

a result, the government had to reassess open

systems network requirements and federal use of

networking standards, through the Federal InterL$3 succes~fu] adop[ers of ()~er technology” (e.g., the DES) may resist switching to the new technology, not w~ting II) “waste” or duplicate

earlier investments. Also, some federal standards choices have been regarded as “picking failures,” such as the choice of 0S1 rather than TCPiIP.

Thus, adopters are wary of investing heavily in federal standards that ultimately may riot even be widely used within g(wemmen[.

44 ~tter from John pelick (Chairman, Federal Reserve System Security Steering Group) to M. Garrett (Federal Reserve Bmk of Minneapolis), Feb. 17, 1994; and Marianne Emerson (Assistant Director, Division of Information Resources Management, Board of Governors of the

Federal Reserve System), personal communications, Apr. 17, 1994 and June 23, 1994.

45 See CtiI F. Carglll, ln~ormal~on Te[’hW/ogy Sfandardi:arion: Theory, process, and Organizations (Bedford, MA: Digital Ress, 1989).
132 I Information Security and Privacy in Network Environments

networking Requirements Panel. For the future,

agencies will be able to adopt both sets of protocols according to the relative advantages and disadvantages of each.46

Some of the resistance to the DSS and EES can

be understood in terms of users’ unwillingness to

invest in multiple technologies and/or to make obsolete prior investments in other technologies,

such as the RSA and DES algorithms. Additionally, the evolution of cryptographic standards may

be different from other information-technology

standards, in that the private sector historically

has been less capable than NSA in developing and

evaluating the security of cryptographic technologies.

Other government policies can also raise costs,

delay adoption, or reduce variety. In the case of

cryptography-based safeguards, export controls

segment domestic and export markets. This

creates additional disincentives to invest in the development-or use--of robust but nonexportable

safeguards (see discussion below). As Stephen

Walker (Trusted Information Systems, Inc.) testified in May 1994:

When U.S. industry foregoes the opportunity

to produce products that integrate good security

practices, such as cryptography, into their products because they cannot export those products

to their overseas markets, U.S. users (individuals, companies, and government agencies) are

denied access to the basic tools they need to protect their own sensitive information.

The U.S. government does not have the authority to regulate the use of cryptography within this country. But if through strict control of

exports they can deter industry from building

products that effectively employ cryptography,

then they have achieved a very effective form of

internal use control.47

The remainder of this chapter examines:

■

●

●

The policy framework within which federal

agencies formulate and implement their information-security and privacy policies and

guidelines. This establishes computer-security

and information-security standards-setting authority through the Brooks Act of 1965 and the

Computer Security Act of 1987. Special attention is given to the history and implementation

of the Computer Security Act, because these

are fundamental to understanding current issues related to federal cryptographic standards

used to safeguard unclassified information.

The export control regime that seeks to control

proliferation of cryptography. This regime affects the competitiveness of U.S. companies

that seek to create or incorporate safeguards

based on cryptography and, therefore, affects

the supply and use of these safeguards.

The ongoing information-security research

and federal standards activities of NIST and

NSA. The Computer Security Act of 1987 was

designed to balance national security and other

national objectives, giving NIST the lead in

setting security standards and guidelines for

unclassified information and defining NSA’s

role as technical advisor to NIST. However,

events subsequent to the act have not convincingly demonstrated NIST’s leadership in this

area.

48

GUIDANCE ON SAFEGUARDING

INFORMATION IN FEDERAL AGENCIES

Statutory guidance on safeguarding information provides a policy framework—in terms of

technical and institutional requirements and managerial responsibilities—for government information and information-system security.

46 Ariel]e Emmett, “App]ica[ions Drive Federal TCP/lP Use,” Federa/ Computer Week, May 9, 1994, PP. 22-23.

w Walker testimony, op. cit., footnote 37, P. 26.

~ see ~]s{) U.S. General Accounting office, Commun;c,afions prilacy: Federa/ Po/icy andAcfions, GAOIOSI-94-2 (Washington, ~: us.

Government Printing OffIce, November 1993).
—

Chapter 4 Government Policies and Cryptographic Safeguards 1133

Overlaid on this are statutory privacy requirements that set forth policies concerning the dissemination and use of certain types of information

about individuals. Within this framework, and

subject to their own specific statutory requirements, federal agencies and departments develop

their policies and guidelines, in order to meet individual and government-wide security and privacy

objectives (see box 4-5).

Information security in the broadest sense is

fundamental to privacy protection, because conscientious use of appropriate technical and institutional information safeguards can help achieve

privacy goals. The Privacy Act of 1974 set forth

data collection, confidentiality, procedural, and

accountability requirements federal agencies

must meet to prevent unlawful invasions of personal privacy, and provides remedies for noncompliance. It does not mandate use of specific

technological measures to accomplish these requirements. Other statutes set forth information

confidentiality y and integrity requirements for specific agencies, such as the Internal Revenue Service, Bureau of the Census, and so forth. (Issues

related to the Privacy Act, and other, international

privacy issues are discussed in chapter 3.)

This section spotlights three key developments

in the evolution of the overall statutory and regulatory framework within which federal agencies

formulate their information-security and privacy

policies and guidelines, and then select and deploy safeguard technologies to implement them:

1. The Brooks Act of 1965 made the Commerce

Department the focal point for promulgation of

government “automatic data processing” (i.e.,

computer and information-system) standards

and authorized Commerce to conduct a

research program to support standards development and assist federal agencies in implementing these standards. These responsibilities

were carried out by the National Bureau of

Standards (NBS, now NIST).

2. The Paperwork Reduction Act of 1980 assigned the Office of Management and Budget

(OMB) responsibilities for maintaining a comprehensive set of information resources management policies and for promoting the use of

information technology to improve the use and

dissemination of information by federal agencies. OMB Circular A-130 (Management of

Federal Information Resources) was originally

issued in 1985 to fulfill these and other statutory requirements (including the Privacy Act).

3. The Computer Security Act of 1987 affirmed

and expanded the computer-security research

and standards responsibilities of NBS and gave

it the responsibility for developing computer

system security training programs and for commenting on agency computer system security

plans. The U.S. General Accounting Office

(GAO) has audited agencies’ progress in implementing the security controls mandated by

the Computer Security Act of 1987.49

Special emphasis is given to the Computer Security Act in this chapter, because it is fundamental to

the development of federal standards for safeguarding unclassified information, to the balance

between national-security and other objectives in

implementing security and privacy policies

within the federal government, and to issues concerning government control of cryptography.

Moreover, review of the controversies and debate

surrounding the Computer Security Act—and

@ See the f(~[lowing GAO reP~~s: Computer Securiry: Go~’ernmentwide Planning Process Had Limifed Impat”r. GAO/IM~c-90-@

(Washingt(m, IX: U.S. Government Printing Office, May 10, 1990); Cornpufer SecuriQ’: Compliance )~’i~h Security P/an Requirements oj~he

Computer Security Act, GAOIIMTEC-89-55, June 21, 1989; Compliance with Trainin~ Requirements of (he Computer Security Act of 1987,

GAO/lMIEC-89- i6BR, Feb. 22, 1989); and Compuler Security: Sratus oj’Compliance wi(h the Computer Seeurity Act of /987, GAO/lMTEC-88-6113R, Sept. 22, 1988.
134 I Information Security and Privacy in Network Environments

As part of this study, the Office of Technology Assessment held workshops on federal-agency issues

related to information security and privacy in network environments. Participants came from a variety of

agencies and had a variety of responsibilities and interests with respect to information privacy and security. Their concerns, comments, and topics of interest included the following

Network Environments Require Changes

● The decentralized nature of Internet development has advantages and disadvantages, We aren’t fixing

on a technology too soon, and it’s flexible, but having “no one in charge” means that responsibility for

safeguards is decentralized, too Unfortunately, sometimes responsibility is more decentralized than authority, and agency managers don’t have the authority they need to ensure good technology and practices.

~ Going from the Internet to the prospect of truly global networks, how could we ever have centralized control? How do we develop appropriate safeguards, legal sanctions, penalties when information flows

across borders, jurisdictions?

■ At the agency level, the move away from mainframes into the distributed environment distributes responsibility for security and privacy to all users. This can be a problem without attention to policies, procedures, and training

● There is a distinction between appropriate security for the network itself (“essential services” to ensure

continuityof service, protection of passwords, etc. ) and appropriate user choices of security “at the ends”

for applications, data storage, etc. The latter are the responsibility of the “reasonable user” who must decide what security investments to make based on cost, value of information resources, etc. Nevertheless,

it often hard to cost-justify security, especially in times of tight budgets and/or no direct experience with

security problems.

● Safeguard choices must be based on standards of due diligence and due care for information providers,

custodians, users Maintaining accountability and determining responsibilities of secondary users in distributed environments are crucial—we have to deal with a continuum of ownership, confidentiality requirements, etc.

= Federal standards development often lags agency needs, so agencies wind up having to support several

technologies in order to operate and communicate with the private sector and each other. What is needed

is proactive, rather than reactive, standards and guidance

● Export controls on cryptographic products cause complications for federal agencies that need to network with industry partners in cooperative research and development agreements when these partners

are global organizations, or need to communicate with private-sector organizations, vendors, suppliers,

etc. Cryptographic safeguards can also introduce other complications in networking-they are designed

to prevent “workarounds, ” so interoperability problems are harder to fix,

■ The lack of a government-wide security classification scheme will make it harder to determine appropriate levels of security when Information is shared and used on an interagency basis,

(continued)

subsequent controversies over its implementa- 1 The Brooks Act

tion—provide background for understanding the The Brooks Act of 1965 (Public Law 89-306) was

current issues concerning Federal Information enacted to *’provide for the economic and efficient

Processing Standards, such as the EES and DSS.
—

Chapter 4 Government Policies and Cryptographic Safeguards 1135

Users Make Safeguards Work-or Not Work

● We need to make training and awareness continuing and more effective-how can we better motivate

users to understand and comply with privacy and security requirements?

9 Do we need to make security “transparent and easy” for users in order to encourage compliance? Are

rewards better incentives than punishments?

9 In decentralized environments, can fostering personal ethics and responsibility as bases for effective security and proper treatment of personal Information be more effective than relying on sanctions or waiting

for technology to “do it all”?

Multiple Objectives Must Be Balanced

■

■

■

■

Measures to ensure confidentiality and control access (including copyright mechanisms) must be balanced with the right of the public to have unfettered access to certain types of Information

We have to develop an equitable way of compensating copyrightholders while preserving what we have

now in terms of fair use, acceptable Iibrary practices, etc. What is the business process that develops

public access with fair compensation and preservation of fair use, particularly when products are being

licensed, not sold?

We need way to develop a “public voice” in privacy and security policy development Who is being included in the policy debate, and how can we build advocates for the citizen into the process?

With respect to privacy--should there be a right to see files about yourself held in the private sector or

by government? to correct them (e g , Fair Credit Reporting Act)? Going to the courts is costly—are administrative sanctions more equitable for the ‘(little guy”?

SOURCE Off Ice of Technology Assessment workshops, October and December 1994

purchase, lease, maintenance, operation, and utilization of automatic data processing [ADP]

equipment by federal departments and agencies.”

The Brooks Act gives the General Services Administration (GSA) central purchasing and oversight authority over federal ADP and

telecommunications equipment. The GSA Administrator may delegate purchasing authority to

individual agencies for reasons of economy or operational efficiency, or when delegation is essential to national defense or national security.50

Delegations of procurement authority for agency

information systems and/or large purchases of

particular computers have become increasingly

common over the years, and GSA schedules have

been established for commodity purchases of microcomputers, peripherals, packaged software

and the like. GSA, however, always retains central

authority under the act and does centralized procurements, as in establishing the Federal Telephone System contract. Section 11 l(c) of the act

requires agencies to report annually to Congress

and to the Office of Management and Budget (formerly the Bureau of the Budget) on ADP equipment inventories, acquisitions, and utilization, as

well as ADP expenditures.

A provision of the Brooks Act that is fundamental to unclassified information-system security is the authorization of the Secretary of

Commerce:

1. to provide GSA and other agencies with scientific and technological advisory services relating to automatic data processing and related

systems, and

50 me Warner Amendment (~b]ic Law 97-g6) exempted certain types of Department of ~fense pr(xurements from tie Br~)t~ks ‘ct.
136 I Information Security and Privacy in Network Environments

2. to make appropriate recommendations to the

President relating to the establishment of uniform federal automated data processing standards.5

1

This section also authorizes the Secretary of Commerce to “undertake the necessary research in the

sciences and technologies of automatic data processing and related systems, as maybe required under the provisions of this subsection.”

Thus, the Brooks Act established the computersystems research programs and standards development conducted by the National Bureau of

Standards, now the National Institute of Standards

and Technology. NBS established its program in

computer and communications security in 1973,

under authority of the Brooks Act; the agency was

already developing performance standards for

government computers. This security program led

to the adoption of the Data Encryption Standard as

a Federal Information Processing Standard for use

in safeguarding unclassified information.52

The security responsibilities of what is now

NIST’s Computer Systems Laboratory (CSL)

were affirmed and extended by the Computer Security Act of 1987. CSL has been responsible for

developing standards, providing technical assistance, and conducting research for computers and

related systems; it also provides technical support

to civil agencies and industry. CSL and its predecessors have published dozens of FIPS and guidelines 53 on information-systems operations and

security, most recently the controversial Escrowed Encryption Standard (FIPS Publication

185, 1994) and Digital Signature Standard (FIPS

Publication 186, 1994).

Under authority of the Brooks Act as amended,

NIST participates in the activities of voluntary

standards organizations such as the American National Standards Institute and the International Organization for Standardization. For a more

detailed history of the National Institute for Standards and Technology’s computer security program and the evolution of the DES, including the

role of the National Security Agency, see the

OTA’s 1987 report, Defending Secrets, Sharing

Data: New Locks and Keys for Electronic Information. 54 The Computer Security Act of 1987

and NIST’s responsibilities under the act are discussed later in this chapter.

The NIST director has indicated an intention of

creating a new Information Technology Laboratory,

based on the current Computer Systems Laboratory and the NIST Computing and Applied Mathematics Laboratory. The rationale for this would be

to improve NIST’s capabilities in the underlying

technologies and enable NIST to be more responsive to the needs of industry and government with

respect to the information infrastructure.55

51 ~b]lc Law 89-306, WC. I ] 1 (f).

5Z Fol]{)wing ~on)e debate ~{)nceming its robustness against attack, given current technologies, tie DES was recenllY recefiified (until 1998)

in hardware and—for the first time—in software implementations. The DES uses a symmetric encryption algorithm. It has been the basis of

numerous other federal, natitmal, and intemati{mal standards and is in wide use to ensure infom~ation confidentiality via encrypti(m (e.g., N] ST,

op. cit., ft){)mo(e 14) and integrity via message authent]cati(m (e.g., N] ST, “Con~puter Data Authentication, ” FIPS PUB I 13 (Gaithersburg, MD:

U.S. Department of Commerce, May 30, 1985)).

53 In addltlon t. the DES, fiese standmds inc]ude, for exanlple NIST, ‘iGuidelines for Automatic Data pWXSSkIg Physical security ~d

Risk Management,” FIPS PUB31, June 1974; “Guideline for Automatic Data Processing Risk Analysis,” FIPS PUB 65, Aug. 1, 1979; “Guidelines ft)r Security of C(mlputer Applicati(ms,” FIPS PUB 73, June 30, 1980; “DES Modes of Operati(m,” FIPS PUB81, Dec. 2, 1980; “C(m~puter

Data Authentication,” op. cit., footm~te 52; ‘“Key Management Using ANSI X9. 17,” op. cit., foomote 15; “Secure Hash Standard,” FIPS PUE\

180, May 11, 1993; “Aut(mlated Passw(mi Generator.’” FJPS PUB 181, Oct. 5, 1993; and “Security Requirements forCryptographic” Modules,”

FIPS PUB 140-1. Jan. 1 I, 1994. All the FIPS publications are published by the Department of Commerce, Gaithersburg, MD.

~~ OTA ~)p Clt footnote 1. chapter 4 ~~ apP~ndlx c of the 1987 repn-t describe the DES; appendix D discusses use Of the DES algorithnl

, . .,

and (xhers f(w message authcnticatmn and digital signatures. (Note: As of 1994, software implementations of the DES comply with the federal

standard. )

5s Aratl ~abh~ar, Director, N] ST, Perst)nal c(mmlunicati(m, May 12, 1994; NIST public affairs division, June 6, 1994.
Chapter 4 Government Policies and Cryptographic Safeguards 1137

~ The Paperwork Reduction Act and

OMB Circular A-130

The Paperwork Reduction Act of 1980 (Public

Law 96-511) gave agencies a broad mandate to

perform their information-management activities

in an efficient, effective, and economical manner.

The Office of Management and Budget was given

authority for:

1. developing and implementing uniform and

consistent information resource management

policies;

2. overseeing the development of and promoting

the use of government information management principles, standards, and guidelines;

3. evaluating the adequacy and efficiency of

agency information management practices; and

4. determining whether these practices comply

with the policies, principles, standards, and

guidelines promulgated by the director of

OMB.

The original OMB Circular A- 130, The Management of Federal Information Resources,56 was

issued in 1985 to fulfill these and other statutory

responsibilities, including requirements of the

Privacy Act (see chapter 3). It revised and consolidated policies and procedures from several other

OMB directives, which were rescinded. Appendix 111 of the circular addressed the “Security of

Federal Automated Information Systems,” Its

purpose was to establish a minimal set of controls

to be included in federal information systems security programs, assign responsibilities for the security of agency information systems, and clarify

the relationship between these agency controls

and security programs and the requirements of

OMB Circular A-123 (internal Control Systems).57 The appendix also incorporated responsibilities from applicable national security

directives. Federal agencies can obtain services

from GSA on a reimbursable basis, in support of

the risk analysis and security audit requirements

of Circular A- 130; GSA also provides a number of

information-system security documents.

The security appendix of OMB Circular A-130

assigned the Commerce Department responsibility for developing and issuing standards and

guidelines for the security of federal information

systems, for establishing standards “approved in

accordance with applicable national security directives,” for systems used to process information

that was national -security sensitive (but not classified), and for providing technical support to agencies in implementing these standards and

guidelines. The Defense Department was to act as

the executive agent of the government for the security of telecommunications and information

systems that process information, “the loss of

which could adversely affect the national security

interest” (i.e., including information that was unclassified but was considered “sensitive”), and

was to provide technical material and ass i stance to

federal agencies concerning the security of telecommunications and information systems. These

responsibilities later shifted (see below) in accordance with the Computer Security Act of 1987

and National Security Directive 42, with the leadership responsibilities of the Commerce and De-

‘~ F~tr appllcatl{ms security. agcnclcs were required t{) establlsh management ctm[rt)l pr(wcsses t{) ensure apprt~priatc sccunt] measures

were implemented: agency officials were required tt~ test security safeguards and certif) they met all applicable federal requlrenwnts and standards, and :igmwies were required to de~elop and assign responsihil i ties for contingency plans. In the area tif Pers(mnel security. agencies were

rcqumxt I() establ i$h screen ing procedures commensurate with the nature of the lnfom)ati(m t[) he handled and the potential ri shs and damages.

Rcgardlng installatitm security. agencies were required to assign rcsp(msibillty for security and tt~ c{mduct periodic risk analyses and es(abl~sh

dlsastcr rcct)vmy and c(mtinulty plans. Agenclcs were also required to include all appropriate security rcqulrenwnts in prt~urcnvmt speciticati(ms for mftmnatltm technology” equipment, software, and SCWICCS. Final l), agencws Mere required m cstabllsh a security av arcmess and tramIng program.
138 I Information Security and Privacy in Network Environments

fense Departments set according to whether the

information domain was outside or within the area

of “national security.” 58

OMB Circular A-130 was revised in 1993, but

the revised version of the security appendix was

not available as this report went to press. Appendix III (“Security of Federal Automated Information Systems”) was being revised to incorporate

requirements of the Computer Security Act of

1987 requirements for security plans described in

OMB Bulletin 90-08. According to OMB, these

revisions will incorporate changes based on the

experience gained in visits to major agencies, and

OMB will work with NIST to incorporate recommendations regarding better coordination between the Circular A-130-Revised and OMB

Circular A-123.59 With respect to safeguarding

information, Circular A-130-Revised (1993)

generally provides that agencies shall:

1.

2.

ensure that information is protected commensurate with the risk and magnitude of the harm

that would result from the loss, misuse, or unauthorized access to or modification of such information;

limit the collection of information that identifies individuals only to that which is legally au3.

4.

9

thorized and necessary for the proper

performance of agency functions;

limit the sharing of information that identifies

individuals or contains proprietary information

to that which is legally authorized, and impose

appropriate conditions on use where a continuing obligation to ensure the confidentiality of

the information exists; and

provide individuals, upon request, access to records maintained about them in Privacy Act

systems of records, and permit them to amend

those records that are in error, consistent with

the provisions of the Privacy Act.60

The Computer Security Act of 1987

The Computer Security Act of 1987 (Public Law

100-235)61 was a legislative response to overlapping responsibilities for computer security among

several federal agencies, heightened awareness of

computer-security issues, and concern over how

best to control information in computerized or

networked form. The act established a federal

government computer security program that

would protect all sensitive, but unclassified information in federal government computer systems, as well as establish standards and guidelines

58 me computer secufi~ Act of 1987 gave corn~rce responsibl]ity in information domains that contained information lhal Was “sensitive” but not classified for national-security purposes. National Security Directive 42 (“National Policy for the Security of National Security

[emphasis added] Telecommunications and Information Systems,” July 5, 1990) established a National Security Telecommunications and 1nfm-mation Systems Security Committee (NSTISSC), made the Secretary of Defense the Executive Agent of the Government for National Security Telecommunications and Information Systems, and designated the Director of NSA as the National Manager for National Security Telecommunications and lnfmnation Systems.

59 of fIce of Management and Budget, “ReviSion Of OMB circular No. A- 130” (Plans for Development of Other Topics), Fede~u/ R@S@r,

V()]. 58, Ju]y 2, ] 993.

~ Office of Management and Budget, Management of Federal Information Resourees, Circular A-130-Revised, June 25, 1993, sec.

8-a(9). The Secretary of Commerce is charged with developing and issuing FIPS and guidelines necessary to ensure the efficient and effective

acquisition, management, and security of information technology. The Secretary of Defense is charged with developing, in consultation with

the Administrator of General Services, uniform federal telecommunications standards and guidelines to ensure national security, emergency

preparedness, and continuity of government (ibid., sec. 9-c,d).

b] IO I Stat. 1724. See legislative history in box 4-6.
Chapter 4 Government Policies and Cryptographic Safeguards 1139

to facilitate such protection.

62 (For legislative history of the Computer Security Act of 1987, see

box 4-6.)

Specifically, the Computer Security Act assigns NBS (now NIST) responsibility for the development of government-wide computer-system

security standards and guidelines, and training

programs. The act also establishes a Computer

System Security and Privacy Advisory Board

within the Department of Commerce, and requires

Commerce to promulgate regulations based on

NIST guidelines. Additionally, the act requires

federal agencies to identify computer systems

containing sensitive information, to develop security plans for identified systems, and to provide

computer security training for all employees using

or managing federal computer systems. (The

Computer Security Act, as well as a memorandum

of understanding (MOU) between NIST and NSA

and subsequent letters of clarification, is contained in appendix B of this report.)

Congressional concerns and public awareness

created a climate conducive to passage of the

Computer Security Act of 1987. Highly publicized incidents of unauthorized users, or “hackers,”

gaining access to computer systems and a growing

realization of the government dependence on information technologies renewed national interest

in computer security in the early 1980s.63

Disputes over how to control unclassified information also prompted passage of the act. The

Reagan Administration had sought to give the National Security Agency much control over “sensitive, but unclassified” information, while the

public-especially the academic, banking, and

business communities—viewed NSA as an inappropriate agency for such responsibility. The Reagan Administration favored an expanded concept

of national security. 64 This expanded concept was

embodied in subsequent presidential policy directives (see below), which in turn expanded NSA’s

control over computer security. Questions regarding the role of NSA in security for unclassified information, the types of information requiring

protection, and the general amount of security

needed, all divided the Reagan Administration

and the scientific community in the 1980s.65

Agency Responsibilities Before the Act

Some level of federal computer-security responsibility rests with the Office of Management and

Budget, the General Services Administration, and

the Commerce Department (specifically NIST

and the National Telecommunications and In62 me act ~a~ ..[tlo ~rovlde for a computer st~dards prowam within the Nati(mal Bureau t)f Standards, It) provide for g(~vemnlent-wide

computer security, and to provide for the training in security matters of persons who are involved in the management, (~pcr:iti(m, and use of

federal computer systems, and for other purposes” (ibid.). The National Bureau of Standards is now the Natitmal Institute of Standards and

Technology.

63 u s c(,ngre$s, Omce of Technology” ASSeSS~nt, Federal Gm,ernrnent Injimnation Technology: Mana~enlent. .~ecuritY and COnXreS-

. .

siorwl O\ers{gh/, OTA-CIT-297 (Washington, DC: U.S. Government Printing Office, February 1986), pp. 64-65.

64 see e.g,, Huold Relyea, S1/cn{.lnR &lence: Na[i~~/ sec.wi~ controls and Scientific Communication (Norwo(d,” NJ: Ahl~~, 1994); and

OTA, op. cit., f(wtnote 1, ch. 6 and ch. 7.

65 see ~.g,, John T. soma and Elizabeth J. Bedien(, “C(~mpUter Security and the $%~tecthm of Sensitive but Not Classified Data: The Computer Security Act of 1987,” 30 Air Force Law Rei’[ew 135 (1989).
140 I Information Security and Privacy in Network Environments

In 1985, Representative Dan Glickman introduced the Computer Security and Training Act of 1985

(H.R. 2889) H.R. 2889 included provisions to establish a computer security research program within

the National Bureau of Standards (now the National Institute of Standards and Technology) and to require federal agencies to train their employees and contractor personnel in computer security techniques, with the intent of establishing NBS as the developer of training guidelines for federal employees

who manage, operate, or use automated information processing systems that do not include classified

information. 1 Congressional hearings were held on the bill, and at the end of the 99th Congress it

reached the House floor and was brought up under a suspension of the rules, but failed to obtain the

two-thirds vote required and went no further.2 In 1987, Representative Glickman, on behalf of himself

and seven cosponsors, introduced H.R. 145, the Computer Security Act of 1987, based on the earlier

H.R. 2889 The bill eventually had 11 cosponsors in the House,

Witnesses at hearings on H.R. 145 raised concerns over the implications of National Telecommunications and Information Systems Security Policy Directive No. 2, which proposed a new definition of

“sensitive, but unclassified reformation." 3 This directive defined sensitive, but unclassified information

as “information the disclosure, loss, misuse, alteration, or destruction of which could adversely affect

national security or other federal government interests.”4 (The National Security Adviser rescinded this

directive in 1987, in response to H.R. 1455, Witnesses at hearings on H.R. 145 warned that the National

Security Agency could apply the “sensitive but unclassified” categorization to commercial databanks

providing Information on federal government laws and policies.6 Opponents to NSA’s role in computer

security also expressed concern that NSA was the agency responsible for determining federal computer systems security policy, even for systems that did not contain classified information 7 Witnesses reminded Congress that current statutes already protected proprietary and classified information and

trade secrets, NSA’s role in this area, therefore, was unnecessary and could lead to restrictions on access to information 8

Congress’s primary objective in enacting the Computer Security Act of 1987 was to protect information in federal computer systems from unauthorized use 9 The act set forth a clear definition of sensitive

1 H R 2889, 99th Cong (1985) See also U S Congress, House of Representatives, Compiler SecuntyAct of 1987—Report to

Accompany R 145, H Rpt 10-153, IOOfh Cong , 1 stSess , Parts I and II (Washington, DC U S Government Printing Office, 1987),

Part 1, p 8.

2 H Ffpt 100-1” 53, Op CII , fOOtnOfe 1, part 1, p 8,

3 “NaIlonal POIICY on protection of Sensltlve, but Unclassified Informahon m Federal Government Telecommunlcatlons andAutOmated Information Systems, ” NaOorta/ Telecornmumcahons ancf/nformat~on Systems Secur@Po/Icy Dmcfwe No 2, Oct 29, 1986

This dwectwe was usually referred to as NTISSP No 2

4 Ibid , p 2

5 H Rpt No 1OQ-1 53, op Clt , fOOtnOte 1, part 1, p 8

6computerSecurl~ Act of Ig87 HeanngsonH R. 145 Be forethe Subcommittee on Leg\slatlonandNationalSecurtyofthe House

Commttee on Government Operations, 100th Cong , Ist Sess , Feb 25, 26 and Mar 17, 1987

7 l+earlngs, Committee on Government Operations, op. clt , footnote 6, P 1

8See ComputerSecurl~ Actof 1987 Hear/ngson/-f R, 145Beforet~esu~omml~ee cm Science, Research, and li?chnol~yand

the Subcommittee on Transporiatlon,Awatlon, and Materials of the House Comm\ttee on Sclerrce, Space and Technology IOOth

Cong , 1st Sess , Feb 26 and May 19, 1987

9 H Rpt 100-153, op CII , footnote 1, Part 1, P 23

(continued)
Chapter 4 Government Policies and Cryptographic Safeguards 1141

reformation to ease some of the concern that led to the act’s passage 10 The legislative history assures

that the definition of sensitive information was set forth in the Computer Security Act to guide NBS in

determining what kinds of information should be addressed in its standards development process, the

definition was not provided to authorize the establishment of a new quasi-classification of Information.11

The act’s legislative history clearly Indicates that it was passed with the purpose of rejecting the federal computer security plan of National Security Decision Directive 145 (NSDD-145).12 As expressed by

Senator Patrick Leahy during consideration of the Act, “[NSDD-145] signaled a dramatic shift in the

management of government information protection from civilian authority to military authority It has set

the government on a course that has served neither the needs of national security nor the interests of

the American people."13 The Computer Security Act was intended to change the direction of this course

and delegate control of unclassified Information security to the appropriate civilian agency, NBS

While Congress clearly Intended NSA to have an advisory role in all federal computer security, NBS

was to have the primary role in security for unclassified information “The bill appropriately divides responsibility for developing computer security standards between the National Bureau of Standards

[now NIST] and the National Security Agency NSA will provide guidelines for computer systems which

handle classified information and NBS will provide guidelines for those which handle unclassified but

sensitive information."14

Off Ice of Management and Budget Director Jim Miller stated that “it is the [Reagan] Administration’s

position that NBS, in developing Federal standards for the security of computers, shall draw upon technical security guidelines developed by NSA in so far as they are available and consistent with the requirements of civil departments and agencies to protect data processed in their systems When developing technical security guidelines, NSA will consult with NBS to determine how its efforts can best

support such requirements In this regard the technical security guidelines provided by NSA to NBS

will be treated as advisory and subject to appropriate NBS review."15 During consideration of the act

Senator Leahy said he believed that Miller’s assertion continued to be the [Reagan] Administration’s

position and that the act would appropriately Iegislate such a relationship.16 (See discussion of implementation of the Computer Security Act of 1987 and the NIST/NSA Memorandum of Understanding later

in this chapter)

Congressional Reports

● House Report 99-753 on H R 2889, “Computer Security Act of 1986, ” Aug. 6, 1986

● House Report 100-153 on H R 145, “Computer Security Act of 1987, ” June 11, 1987

10 Computer Security Act of I g87 (publlc law 100-235) sec 3 Sensdwe mforrnallon was detmed as “any Information the loss

misuse, or unauthorized access to or modlflcahon of which could adversely affect the national Interest or the conduct of Federal programs or the pr(vacy to which mdwtduals are entitled under (the Prwacy Act), but which has not been speclftcally authorized

under cr(terla established by an Executive order or an Act of Congress to be kept secret m the interest of nallonal defense or foreign

pOllCy (Ibid )

I 1 H Rpt 1()().153 Op Cl! fOOk70te 1 part I p 

4

12 congreSSlona/ Record Dec 21 1987. P 37679

‘ 3 Ibid

14 Ibid p 37680 (remarks of Senator Wllllam V Roth Jr)

Ib H Rpt 100-153 Op Clt footnote 1, part I p 41 (letter to Chairman Roe), Ibid part 11, P 37 (letter to Chairman Brooks)

16 Congresslona/ Record, Dec 21.1987 PP 37679-

80

(confinuecf)
142 I Information Security and Privacy in Network Environments

Hearings

■

m

m

■

■

●

■

●

●

House of Representatives, Committee on Science, Space, and Technology, Subcommittee on Transportation, Aviation, and Materials, Computerland Communications Security and Privacy, hearing, Sept.

24, 1984

House of Representatives, Committee on Science, Space, and Technology, Subcommittee on Transportation, Aviation, and Materials, Computer Security Policies, hearing, June 27, 1985.

House of Representatives, Committee on Government Operations, Subcommittee on Legislation and National Security, Computer Security Research and Training Act of 1985, hearing, Sept. 18, 1985.

House of Representatives, Committee on Government Operations, Subcommittee on Government information, Justice, and Agriculture, Electronic Collection and Dissemination of Information by Federal

Agencies, hearings, Apr. 29, June 26, and Oct. 18, 1985

House of Representatives, Committee on Science, Space, and Technology, Subcommittee on Transportation, Aviation, and Materials, Federal Government Computer Security, hearings, Oct. 29,30, 1985

House Report 96-1540, “Government’s Classification of Private Ideas, ” Dec. 22, 1980.

House of Representatives, Committee on Government Operations, Subcommittee on Legislation and National Security, Computer Security Act of 1987, hearings, Feb. 25, 26, Mar. 17, 1987

House of Representatives, Committee on Science, Space, and Technology, Subcommittee on Science,

Research, and Technology and Subcommittee on Transportation, Aviation, and Materials, Computer Security Act of 1987, hearing, Feb. 26, 1987

House of Representatives, Committee on Science, Space, and Technology, Subcommittee on Transportation, Aviation, and Materials, GAO Survey “Federal Government Computer Security,” hearing, May

19, 1987

SOURCE Off Ice of Technology Assessment, 1994 and cited sources

—

formation Administration (NTIA)). OMB main- Brooks Act, the Department of Commerce develtains overall responsibility for computer security

policy.66 GSA issues regulations for physical security of computer facilities and oversees technological and fiscal specifications for security

hardware and software.

67 In addition to its other

responsibilities, NSA traditionally has been responsible for security of information that is classified for national-security purposes, including

Department of Defense information.68 Under the

ops the Federal Information Processing Standards

that provide specific codes, languages, procedures, and techniques for use by federal information systems managers.69 NTIA serves as the

Executive Branch developer of federal telecommunications policy.70

These overlapping agency responsibilities hindered the development of one uniform federal

66 U.S. Ct)ngress, House of Representatives, Committee on Science, Space, and Technology, Compuwr Securify ACI @ i9fl--ReP0rt (o

Accompany}{.R. /45, H. Rept. 100-153, Part I, lt)oth Cong., 1 st sess., June 11, l!~87 (Washington, DC: U.S. Government Printing Office, 1987),

p. 7.

67 Ibid.

m Ibid.

69 Ibid -l-he Flps ~pply ~)nly t. federa] agencies, but some, like the DES, have been adopted in voluntary standards and are used in the Private

sector. T%e FIPS are developed by NIST and approved by the Secretary of Commerce.

70 Ibid.
Chapter 4 Government Policies and Cryptographic Safeguards 1143

policy regarding the security of unclassified information, particularly because computer security

and communications security historically have

developed separately.

71 In 1978, OMB had issued

Transmittal Memorandum No. 1 (TM-1) to its

Circular A-7 1, which addressed the management

of federal information technology.72 TM-1 required federal agencies to implement computer

security programs, but a 1982 GAO report concluded that Circular A-71 (and its TM-1 ) had

failed to:

1. provide clear guidance to agencies on minimum safeguard requirements,

2. clarify the relationship between national-security information security and other types of information security, and

3. provide guidance on general telecommunications security.73

Executive orders in the 1980s, specifically the

September 1984 National Security Decision Directive 145, National Policy on Telecommunications and Automated Information Systems

Security (NSDD-145), 74 created significant shifts

and overlaps in agency responsibilities. Resolving these was an important objective of the Computer Security Act. NSDD-145 addressed

safeguards for federal systems that process or

communicate unclassified, but “sensitive,” information. NSDD-145 established a Systems Security Steering Group to oversee the directive and

its implementation, and an interagency National

Telecommunications and Information Systems

Security Committee (NTISSC) to guide implementation under the direction of the steering

group.

75

Expanded NSA Responsibilities

Under NSDD-145

In 1980, Executive Order 12333 had designated

the Secretary of Defense as Executive Agent of the

Government for Communications Security.

NSDD-145 expanded this role to encompass telecommunications and information systems security and responsibility for implementing policies

developed by NTISSC. The Director of NSA was

designated National Manager for Telecommunications and Automated Information Systems

Security. The national manager was to implement

the Secretary of Defense’s responsibilities under

NSDD-145. As a result, NSA was charged with

examining government information and telecommunications systems to evaluate their vulnerabilities, as well as with reviewing and approving all

standards, techniques, systems, and equipment

for telecommunications and information systems

security.

In 1985, the Office of Management and Budget

(OMB) issued another circular concerning computer security. This OMB Circular A- 130, Management of Federal Information Resources, revised

and superseded Circular A-71 (see previous section). OMB Circular A-130 defined security, encouraged agencies to consider information

security essential to internal control reviews, and

clarified the definition of “sensitive” information

to include information “whose improper use or

7 I Jelen ~)p, ~lt., footnote 34, pp. I.&_ I-I 7. Jelen explains that computer security and communications security are interde~nden[ ~d

inseparable because computers and telecommunications themselves converged (ibid., p. 1-7).

72 office of Management and Budge(, Tranwnitta] Memorandum No. I tO OMB Circulw A-71 T ] 978

73 u s Genera] Accoun[lng office, Federal ]nformrlon SY5femS Remain Highly Vulnerable [O Fraudulent, wasteful, Abusi~’e, ond ]//egfl/

. .

Prac~ices (Washington, DC: U.S. Government Printing Ofice, 1982).

74NSDD- 145 is C]asslfied. An Unc]asslfied version was used as tie basis f[)r his discussion.

75 ~lsis now tie Natlona] Security Te]ecommunicati[>ns ~d ]nfomatlon” Systems Security committee, or N!jTISSC. See footnote 58.
144 I Information Security and Privacy in Network Environments

disclosure could adversely affect the ability of an

agency to accomplish its mission . . . . "76

In 1986, presidential National Security Adviser

John Poindexter77 issued National Telecommunications and Information Systems Security

Policy Directive No. 2 (NTISSP No. 2). NTISSP

No. 2 proposed a new definition of “sensitive but

unclassified information.” It potentially could

have restricted access to information that previously had been available to the public. Specifically, “sensitive but unclassified information,”

within the meaning set forth in the directive, included not only information which, if revealed,

could adversely affect national security, but also

information that could adversely affect “other federal government interests” if released. Other federal government interests included economic,

financial, technological, industrial, agricultural,

and law enforcement interests.

Such an inclusive directive sparked enormous,

negative public response. As the Deputy Director

of NBS stated during 1987 hearings on the Computer Security Act, the NTISSP No. 2 definition

of sensitive information was a ● ’totally inclusionary definition. . . [t]here is no data that anyone

would spend money on that is not covered by that

definition.” 78 Opponents of NSDD-145 and

NTISSP No. 2 argued that NSA should not have

control over federal computer security systems

that did not contain classified information.79 The .

business community, in particular, expressed concern about NSA’s ability and suitability to meet

the private sector’s needs and hesitated to adopt

NSA’s encryption technology in lieu of the DES.

At the time, the DES was up for recertification.80

In the House Report accompanying H.R. 145, the

Committee on Science, Space and Technology

noted that:

NSDD-145 can be interpreted to give the national security community too great a role in setting computer security standards for civil

agencies. Although the [Reagan] Administration has indicated its intention to address this issue, the Committee felt it is important to pursue

a legislative remedy to establish a civilian authority to develop standards relating to sensitive, but unclassified data.81

In its explanation of the bill, the committee also

noted that:

One reason for the assignment of responsibility to NBS for developing federal computer system security standards and guidelines for

sensitive information derives from the committee’s concern about the implementation of National Security Decision Directive- 145.

. . . While supporting the need for a focal point

to deal with the government computer security

problem, the Committee is concerned about the

perception that the NTISSC favors military and

intelligence agencies. It is also concerned about

how broadly NTISSC might interpret its authority over “other sensitive national security information.” For this reason, H.R. 145 creates a

civilian counterpart, within NBS, for setting

7fJ Office of Managen~nt ~d Budget, OMB Circu]ar A- 130 ( 1985). As this report went to press, the computer security sections Of A- 130

were still being revised but were expected h) issue in 1994. The other secti(ms of A- 130 have been revised and were issued in 1993.

77 Adm. Poindexter wa5 also chairman of the NSDD- 145 Systems Security Steering Group (NSDD- 145. sec. 4).

78 Raym[)nd Kammer, ~pu(y Direc[or, National Bureau of Standards, testimony, Compuler ~WUritY A~/ of/gs7: He~wv off HR. 145

Before the Subcommittee on Legislation and National Security of the Houst’ Committee on Got’ernmen[ Operations, IOOth Cong., I st Sess.,

Feb. 26, 1987. See also H. Rept. 100-153, Part I, op. cit., footnote 66, p. 18.

79 See U.S. Congress, H(~use Of Representatives, Committee on Science, Space and Technology, Compufer Security Acr Of 1987: Hearings

on H.R. 145 Before the Subcomrnirree on Science, Research, and Technology and/he Subcommiffee on Transportation, At’ia/ion, and Ma/erials

uj”rhe lfouse Commiftee on Science, Space, and Technology, 10Oth Cong., 1 st sess. (Washington, DC: U.S. Government Printing Office, 198 7),

pp. 146-191.

go For history, see C)TA, op. cit., f(x)tnote 1, pp. 102-108. Despite NSA’S desire to replace the DES with a family of cryptographic mOdules

using classified algorithms, it was reaffirmed in 1988.

81 H. Rept. ]00-1 53, Part ], op. cit., footnote 66, p. 22.
Chapter 4 Government Policies and Cryptographic Safeguards 1145

policy with regard to unclassified information. . . NBS is required to work closely with

other agencies and institutions such as NSA,

both to avoid duplication and to assure that its

standards and guidelines are consistent and

compatible with standards and guidelines developed for classified systems; but the final authority for developing the standards and guidelines

for sensitive information rests with the NBS.82

In its report on H.R. 145, the Committee on

Government Operations explicitly noted that the

bill was ● ’neutral” with respect to public disclosure

of information and was not to be used by agencies

to exercise control over privately owned information, public domain information, or information

disc losable under the Freedom of Information Act

or other laws.83 Furthermore, the committee

noted that H.R. 145 was developed in large part to

ensure the delicate balance between “the need to

protect national security and the need to pursue the

promise that the intellectual genius of America offers us.” 84 The committee also noted that:

Since it is a natural tendency of DOD to restrict access to information through the classification process, it would be almost impossible

for the Department to strike an objective balance between the need to safeguard information

and the need to maintain the free exchange of information.85

Subsequent to the Computer Security Act of

1987, DOD’s responsibilities under NSDD-145

were aligned by National Security Directive 42

(NSD 42) to cover “national security” telecommunications and information systems.86 NSD 42

established the National Security Telecommunications and Information Systems Security

Committee (NSTISSC), made the Secretary of

Defense the Executive Agent of the Government

for National Security Telecommunications and

Information Systems, and designated the Director

of NSA the National Manager for National Security Telecommunications and Information Systems.87 As such, the NSA director is to coordinate

with NIST in accordance with the Computer Security Act of 1987. NSD 42 does not rescind programs, such as those begun under NSDD-145, that

pertain to national-security systems, but these are

not construed as applying to systems within the

purview of the Computer Security Act of 1987.88

Agency Information-System Security

Responsibilities Under the Act

Under the Computer Security Act of 1987, all federal agencies are required to identify computer

systems containing sensitive information, and to

develop security plans for identified systems.89

The act also requires mandatory periodic training

in computer security for all federal employees and

contractors who manage or use federal computer

systems. The Computer Security Act gives final

authority to NIST [then NBS] for developing

government-wide standards and guidelines for

unclassified, sensitive information, and for developing government-wide training programs.

In carrying out these responsibilities, NIST can

draw upon the substantial expertise of NSA and

other relevant agencies. Specifically, NIST is

‘z Ibid., p. 26.

83 H Rept, 100.1 S3, Par-t 11, op. cit., footnote ~~, p. 30.

‘4 Ibid., p. 29.

*$ Ibid., p. 29.

M Nat){)nal security Dlrec[lve 42, Op. ~ll., f(x)~()[e 58. The National Security Council released an unclassified, Pafilal (~xt of NSD 42 to

the Computer l%) fessi(mals for Social Responsibility on Apr. 1, 1992, in response to Freedom of Infomlation Act (FOIA) requests made in

i 990.

UT NSD 42 (unclassified partial text), sees. I -7

88 Ibid,, sec. 10.

89 ~h]lc Law 100-235, sec. 6.
146 I Information Security and Privacy in Network Environments

The National Cryptologic Museum at Ft. George G Meade, Maryland

authorized to “coordinate closely with other agencies and offices” including NSA, OTA, DOD, the

Department of Energy, GAO, and OMB.90 This

coordination is aimed at “assur[ing] maximum

use of all existing and planned programs, materials, studies, and reports relating to computer systems security and privacy” and assuring that

NIST’s computer security standards are "consistent and compatible with standards and procedures developed for the protection of information

in federal computer systems which is authorized

under criteria established by Executive order or an

Act of Congress to be kept secret in the interest of

national defense or foreign policy.”91 Additionally, the Computer Security Act authorizes NIST to

“draw upon computer system technical security

guidelines developed by [NSA] to the extent that

[NIST] determines that such guidelines are consistent with the requirements for protecting sensitive information in federal computer systems.’’92

The act expected that "[t]he method for promulgating federal computer system security standards

and guidelines is the same as for non-security

90 I bid., W C. 3(b)(6). NIST ct~tmiinatitm wi[h OTA in this regard generally consists of including OTA staff in external review of selected

NIST rcpwts.

‘)1 ibid.

‘)2 Ibid.
Chapter 4 Government Policies and Cryptographic Safeguards ] 147

standards and guidelines.” 93 The intent of the act

was that NSA not have the dominant role and to

recognize the potential market impact of federal

security standards:

. . . [I]n carrying out its responsibilities to develop standards and guidelines for protecting sensitive information in federal computer systems

and to perform research, NBS [now NIST] is required to draw upon technical security guidelines developed by the NSA to the extent that

NBS determines that NSA’s guidelines are consistent with the requirements of civil agencies.

The purpose of this language is to prevent unnecessary duplication and promote the highest

degree of cooperation between these two agencies. NBS will treat NSA technical security

guidelines as advisory, however, and, in cases

where civil agency needs will best be served by

standards that are not consistent with NSA

guidelines, NBS may develop standards that

best satisfy the agencies’ needs.

It is important to note the computer security

standards and guidelines developed pursuant to

H.R. 145 are intended to protect sensitive information in Federal computer systems. Nevertheless, these standards and guidelines will

strongly influence security measures implemented in the private sector. For this reason,

NBS should consider the effect of its standards

on the ability of U.S. computer system manufacturers to remain competitive in the international

marketplace. 94

In its report accompanying H.R. 145, the Committee on Government Operations noted that:

While the Committee was considering H.R.

145, proposals were made to modify the bill to

give NSA effective control over the computer

standards program. The proposals would have

charged NSA with the task of developing “technical guidelines,” and forced NBS to use these

guidelines in issuing standards.

Since work on technical security standards

represents virtually all of the research effort being done today, NSA would take over virtually

the entire computer standards from the National

Bureau of Standards. By putting NSA in charge

of developing technical security guidelines

(software, hardware, communications), NBS

would be left with the responsibility for only administrative and physical security measures--

which have generally been done years ago.

NBS, in effect, would on the surface be given the

responsibility for the computer standards program with little to say about most of the program—the technical guidelines developed by

NSA.

This would jeopardize the entire Federal

standards program. The development of standards requires interaction with many segments

of our society, i.e., government agencies, computer and communications industry, international organizations, etc. NBS has performed this

kind of activity very well over the last 22 years

[since enactment of the Brooks Act of 1965].

NSA, on the other hand, is unfamiliar with it.

Further, NSA’s products may not be useful to civilian agencies and, in that case, NBS would

have no alternative but to issue standards based

on these products or issue no standards at all.95

The Committee on Government Operations also

noted the concerns of industry and the research

community regarding the effects of export controls and NSA involvement in private-sector activities, including restraint of innovation in

cryptography resulting from reduced incentives

for the private sector to invest in independent regl H Rept, 100. I S3, Part 1, f~p. cit., footnote 66, p. 26.

94 Ibid., p. 27.

9$ H Rep[ 100. I s3, part 11, op. cit., footnote 33, pp. 25-26.
148 I Information Security and Privacy in Network Environments

search, development, and production of products

incorporating cryptography.96

The Computer Security Act of 1987 established a Computer System Security and Privacy

Advisory Board (CSSPAB) within the Department of Commerce:

The chief purpose of the Board is to assure

that NBS receives qualified input from those

likely to be affected by its standards and guidelines, both in government and the private sector.

Specifically, the duties of the Board are to identify emerging managerial, technical, administrative and physical safeguard issues relative to

computer systems security and privacy and to

advise the NBS and the Secretary of Commerce

on security and privacy issues pertaining to federal computer systems.97

The Chair of the CSSPAB is appointed by the Secretary of Commerce. The board is required to report its findings relating to computer systems

security and privacy to the Secretary of Commerce, the OMB Director, the NSA Director, the

House Committee on Government Operations,

and the Senate Committee on Governmental Affairs.98

Implementation of the Computer Security Act

has been controversial, particularly with respect to

the roles of NIST and NSA in standards development. The two agencies developed a memorandum of understanding to clarify the working

relationship, but this MOU has been controversial

as well, because of concerns in Congress and elsewhere that its provisions cede NSA much more

authority than the act had granted or envisioned.99

The last section in this chapter examines implementation issues related to the MOU and the roles

of NIST and NSA. (Chapter 2 examined additional implementation issues concerning the federal

role in safeguarding information in the information infrastructure.)

~ Future Directions in Safeguarding

Information In Federal Agencies

Information resource management in the federal

government is in need of general reform. Information technologies—properly used—have the potential not only to improve government

information resource management, but also to improve the overall effectiveness and efficiency of

government.

100 This requires that top management is informed and interested—information

technology has all too often been viewed as a tool

to make incremental improvements, rather than an

integral part of operations. Compared with traditional mainframe or paper-based methods, modern databases and networking services provide

opportunities to actually change the way that fed-

% Ibid., pp. 22.25 and 30.35. in I %6, N!34 had announced a program 10 develop cryptographic modules that qualified COMMUnlCallOnS

manufacturers could embed in their products. NSA’S development of these cmbeddable modules was part of NSA’S Development Cemer for

Embedded COMSEC Products. (NSA Press release fm Development Center for Embedded COMSEC products, Jan. 10, 1986.)

97 H. Rept. IO(I- 153, Part 1, op. cit., fOOtnOte 66, pp. 27-28.

98 ~b]ic Law ] 00-235, sec. ~.

99 me m~ner in Which NIST and NSA planned to execute tlwir functions under the Computer Security Act of 1987, as evidenced by the

MOU, was the subject of hearings in 1989. See U.S. Congress, House of Representatives, Subcommittee on Legislation and National Security,

Committee on Government Operations, Military and Cit’ilian Control of Computer Securifylmues, 101 st Cong., 1 st sess., May 4, 1989 (Washington, DC: U.S. Government Printing OffIce, 1989). The NIST-NSA working relationshiphas subsequently been raised as an issue, with regard

to the EES and the DSS.

1~ see Commlttw on Applications and T&hn{~l(~gy, National lnfmrnation Infrastmcture Task Force, fu~~in~ the Injbrmution /nfrastrucwre 10 Work, NIST Special Publication 857 (Washington, DC: U.S. Government Printing Office, May 1994).
Chapter 4 Government Policies and Cryptographic Safeguards { 149

eral agencies (as well as corporations and other organizations) do business. 101

Clear, strong leadership is vital to effective use

102 

of information technology. Leadership and

management commitment are also crucial in safe103 Unfortunately, respon- guarding information.

sibility for information safeguards has often been

disconnected from the rest of information management, and from top management. Information

safeguards have all too often been viewed as expensive overhead, rather than a valuable form of

insurance. Higher level agency managers are not

necessarily unconcerned about protecting the organization’s assets, but are under constant pressure to trim budgets and personnel. Responsibility y

for information safeguards too often lies with

computer security professionals who do not have

the authority and resources they need.

This disconnected responsibility is not limited

to the federal government. Information safeguards generally tend not to be addressed with the

levels of attention they deserve, even in the private

sector, One reason may be that the field of information safeguards is relatively new and lacks

the historical development and popular attention

that exist in older fields, such as airplane or bridge

safety. 104 Problems due to an absence or breakdown of information safeguards can be underreported, or even kept completely secret.

Information-security “disasters,” “near misses,”

and compromises, like the 1988 Internet Worm

and the 1994 ’’password sniffer” network monitoring incidents and intrusions into civilian and military computer systems, have only recently begun

to receive popular attention.105

The Computer Security Act of 1987 requires all

federal agencies to identify computer systems

containing sensitive information, and to develop

security plans for these systems.106 The act also

requires mandatory periodic training in computer

security for all federal employees and contractors

who manage, use, or operate federal computer

systems. In its workshops and discussions with

federal employees and knowledgeable outside observers, OTA found that these provisions of the

Computer Security Act are viewed as generally

1~1 Rcfom~ing infonatl(~n resource managenlent in the federal government tt~ improve electronic delivery of services is discussed in U.S.

C[mgress, Office of Technology Assessment, Making Go>’ernment Work: Electronic De/i\ery ofFederal Ser\’/ces, OTA-TCT-578 ( Washingt(m,

DC: U.S. Gtwemment Printing Office, September 1993). See also Office of the Vice President, Reerrg[neering 77wough /nforma(ion Teclmology

(Accompanying Report Oj’the Natwnul Pe@mance Re)vie~), September 1993 (released May 1994).

10? see us Genera] Accounting Office, Exe(.141i\,e G[lide: lrnpro~ing Mission performanl-e Throwh s~r~le~i(’ [n~~rmati~n ‘an~Rnlenf

and Technology, GAO~AIMD-94-115 (Washington, DC: U.S. Government Printing OffIce, May 1994). See also Reengineering Through /nfi~rma[~on Technology), op. cit., footnote 101, ch. ITOI.

‘“~ Ibid., ch. IT I 0.

1~ C[)nlputer m(~e]s tt) slmu]ate and test bridge and ai~]ane designs have been used for decades. A sensational airplane or bridge disaster

IS also {~bvi(ws, and ascertaining accountability is generally more straightforward. In contrast, networks are changing constantly. No good

meth[}d(d{~gy exists to prove that a network is secure, or to simulate its operation under worst-case conditions.

10S see peter H. ~wls, ,

+ Hackers on 1ntemet posing Secufity Risks, Expe~s Say,” The Ne~ york ~mes, JIIly 21, 1994, pp. I , B 10. See also

L. Daln Gary, Manager, C(wnputer Emergency Response Team Operations, Carnegie Mellon University, testimony, Hearing on Inferne{ SecurlIY, Subcommittee on Science, Committee on Science, Space, and Technology, U.S. House of Representatives, Mar. 22, 1994; and F. Lynn

McNulty, NIST Associate Director for Computer Security, testimony, Hearln,g on In]ernet Security, Subc(mm~ittee on Science, Committee on

Science, Space, and Techntdogy, U.S. H(mse of Representatives, Mar. 22, 1994.

I(M ~bllc Law ]00.~35, SeC. 6.
150 I Information Security and Privacy in Network Environments

adequate as written, but that their implementation

can be problematic.107 

During the course of this project, OTA found

strong sentiment that agencies follow the rules set

forth by the Computer Security Act, but not necessarily the full intent of the act. In practice, there are

both insufficient incentives for compliance and

insufficient sanctions for noncompliance with the

spirit of the act—for example, agencies do develop the required security plans. However, the act

does not require agencies to review them periodically or update them as technologies or circumstances change. One result of this is that

“[security of systems tends to atrophy over time

unless there is a stimulus to remind agencies of its

importance."

108 Another result is that agencies

may not treat security as an integral component

when new systems are being designed and developed.

OMB is responsible for developing and implementing government-wide policies for information resource management; for overseeing the

development and promoting the use of government information-management principles, standards, and guidelines; and for evaluating the

adequacy and efficiency of agency informationmanagement practices. Information-security

managers in federal agencies must compete for resources and support to properly implement

needed safeguards. In order for their efforts to

succeed, both OMB and top agency management

must fully support investments in cost-effective

safeguards. Given the expected increase in interagency sharing of data, interagency coordination

of privacy and security policies is also necessary

to ensure uniformly adequate protection.

The forthcoming revision of Appendix III

(“Agency Security Plans”) of OMB Circular

A-130 will be central to improved federal information security practices. The revision of Appendix 111 will take into account the provisions

and intent of the Computer Security Act, as well as

observations regarding agency security plans and

practices that resulted from series of agency visits

made by OMB, NIST, and NSA in 1992. ’W Because the revised Appendix III had not been issued

at the time this report was written, OTA was unable to gauge its potential for improving information security in federal agencies or its potential for

making implementation of the Computer Security

Act more effective. To the extent that the revised

Appendix 111 facilitates more uniform treatment

across federal agencies, it can also make fulfillment of Computer Security Act and Privacy Act

requirements more effective when agencies share

data (see chapter 3).

U.S. EXPORT CONTROLS

ON CRYPTOGRAPHY

The United States has two regulatory regimes for

exports, depending on whether the item to be exported is military in nature, or is “dual-use,” having both civilian and military uses. These regimes

are administered by the State Department and the

Commerce Department, respectively. Both rc107 Son)e of the ~)551b]e ~1ea5uRs [() improve Implementation that were suggested during these discussions Were: increasing res[~urces f~)r

OMB to coordinate and oversee agency security plans and training; increasing resources for NIST and/or other agencies to advise and review

agency security plans and training; setting aside pan of agency budgets for information security (to be used for risk assessment, training, development, and so forth); and/or rating agencies according to the adequacy and effectiveness of their information-security policies and plans and

withholding funds until perf{mnance meets predetem~ined accepted levels. (Discussions in OTA workshops and interviews, 1993 -94.)

log Office of Managenlent and Budget (in conjunction with NIST and NSA), Obsert’utions oj’Agency Compurer ~ecuri~ pracli~’es Umi

lmplementatiorr oj’OMB Bulletin No. 90-08: Guidancejbr Preparation of Security Plans for Federal Computer Systems That Contain Sensiti\w

injbrmaliorr, February 1993, p. 11.

IW lbld, According to OMB, NI!jT, and NSA, these visits were successful in raising agency managers’ awareness of Computer security ~d

of its importance. The three agencies found that periodically focusing senior management attention on the value of computer security to agency

(ywrati(ms and service delivery improves the effectiveness of agency computer security programs and can also result in increased resources

and updated security policy directives (pp. 1 I - 12).
Chapter 4 Government Policies and Cryptographic Safeguards 1151

gimes provide export controls on selected goods

or technologies for reasons of national security or

foreign policy. Licenses are required to export

products, services, or scientific and technical

data110 originating in the United States, or to reexport these from another country.

Licensing requirements vary according to the

nature of the item to be exported, the end use, the

end user, and, in some cases, the intended destination. For many items, no specific approval is required and a “general license” applies (e.g., when

the item in question is not military or dual-use

and/or is widely available from foreign sources).

In other cases, an export license must be applied

for from either the State Department or the Commerce Department, depending on the nature of the

item. In general, the State Department’s licensing

requirements are more stringent and broader in

scope. 111 Licensing terms differ between the

agencies, as do time frames and procedures for licensing review, revocation, and appeal.

I State Department Export Controls

on Cryptography

The Arms Export Control Act and International

Traffic in Arms Regulations(ITAR)112 are administered by the State Department and control export

of items (including hardware, software, and technical data) that are “inherently military in character” and, therefore, placed on the Munitions

List. 113 Items on the Munitions List are controlled

to all destinations, meaning that “validated” licenses—requiring case-by-case review—are required for any exports (except to Canada, in some

cases). The Munitions List is established by the

State Department, in concurrence with the Department of Defense; the State Department Office of

Defense Trade Controls administers the ITAR and

issues licenses for approved exports. DOD provides technical advice to the State Department

when there are questions concerning license applications or commodity jurisdiction (i.e., whether State or Commerce regulations apply—see

below).

With certain exceptions, cryptography falls in

‘*Category XIII—Auxiliary Military Equipment”

of the Munitions List. Category XIII(b) covers

“Information Security Systems and equipment,

cryptographic devices, software and components

specifically designed or modified therefore,” generally including:

1. cryptographic and key-management systems

and associated equipment, subcomponents,

and software capable of maintaining information or information-system secrecy/confidentiality;

I lo Both the Ex~)fi Administration Act (50 U.S.C. App. 2401 -2420) and the Arms Export Control Act (22 U.S.C. 275 I -2794) provide aUthorily u) c(mtrd the disseminati(m to foreign nationals (export) of scientific and technical data related to items requiring export licenses under

the regulati(ms implementing these acts. “Scientific and technical data” can include the plans, design specifications, m other infmmation that

describes how to produce an item.

For history and discussion of national-security controls (m scientific and technical data, see H. Relyea, op. cit., footnote 64; and Kenneth

Kallwtia, “’The Export Administration Act’s Technical Data Regulations: Do They Violate the First Amendment?’” GeorgM Journal of /ntcrnatlorrdand Comparatl\’e Ixw, vol. 1 I, fall 1981, pp. 563-587. Other statutory authorities fornational-security contr(ds on scientific and technical

data are found in the Restricted Data or “born classified” provisions of the Atomic Energy Act of 1946 (60 Stat. 755) and the At(mlic Energy

Act of 1954 (68 Stat. 919, 42 U.S.C. 2011 -2296) and the Invention Secrecy Act of 1951 (35 U.S.C. 181- 188), which allows for patent secrecy

(mlers and withholding of patents (m nati(mal-security grounds. NSA has obtained patent secrecy orders on patent applications for cryptographic equipment and algorithms under authority of the Invention Secrecy Act.

I I I For a Conlpanson” Of the two ex~~rl-control” regimes, see U.S. General Accounting Office, Export COntrO/.f: /.~sUt’.f In Renlf~~’in/! M1/l~ar~/Y

.\err.rt/Ile /[ern.!frorn Ihe Munr’/iorrs L.ISI, GAO/NSIAD-93-67 (Washington, DC: U.S. Government printing Office, March 1993), especially pp.

10-13.

I IZ 22 C.FR. 120-130.

I I ~ See supplement 2 [() pan 77o of the EXp(MI Administratitm Regulati(ms. The Muniti(ms List has 21 categ(wies of items and related

technologies,” such as artillery and projectiles (Category 11) or toxicological” and radiological agents and equipment (Category XIV). Category

Xl II(b) consists of ‘“lnfom~atl(m Security Systems and equipment, cryptographic devices, software, and c(~mpments specifically m~xhfied

thereftm.”
152 I Information Security and Privacy in Network Environments

2.

3.

4.

5.

6.

cryptographic and key-management systems

and associated equipment, subcomponents,

and software capable of generating spreading

or hopping codes for spread-spectrum systems

or equipment;

cryptanalytic systems and associated equipment, subcomponents, and software;

systems, equipment, subcomponents and software capable of providing multilevel security

that exceeds class B2 of the NSA’s Trusted

Computer System Evaluation Criteria, as well

as software used for certification;

ancillary equipment specifically designed or

modified for these functions; and

technical data and defense services related to

the above. ’

Several exceptions apply to the first item above.

These include the following subcategories of

cryptographic hardware and software:

a.

b,

c.

d.

those used to decrypt copy-protected software,

provided that the decryption functions are not

user-accessible;

those used only in banking or money transactions (e.g., in ATM machines and point-of-sale

terminals, or for encrypting interbanking transactions);

those that use analog (not digital) techniques

for cryptographic processing in certain applications, including facsimile equipment, restricted-audience broadcast equipment, and

civil television equipment;

those used in personalized smart cards when

e.

f.

g.

h.

the cryptography is of a type restricted for use

only in applications exempted from Munitions

List controls (e.g., in banking applications);

those limited to access-control functions (e.g.,

for ATM machines, point-of-sale terminals,

etc.) in order to protect passwords, personal

identification numbers, and the like provided

that they do not provide for encryption of other

files or text;

those limited to data authentication (e.g., calculating a message authentication code) but not

allowing general file encryption;

those limited to receiving radio broadcast, pay

television, or other consumer-type restricted

audience broadcasts, where digital decryption

is limited to the video, audio, or management

functions and there are no digital encryption capabilities; and

those for soft ware designed or modified to protect against malicious computer damage from

viruses, and so forth. 115

Cryptographic hardware and software in these

subcategories are excluded from the ITAR regime

and fall under Commerce’s jurisdiction. Note,

however, that these exclusions do not include

hardware-based products for encrypting data or

other files prior to transmission or storage, or useraccessible, digital encryption software for ensuring email confidentiality or read-protecting stored

data or text files. These remain under State Department control.

I l-$ ]bld. See ca[egoV Xl]](b)(( I ).(5)) and xl]](k). For a review of c(mm)versy during the 1970s and early 1980s conCemlng c(mtr(d of

cryptographic publication, see F. Weingarten, “Controlling Cryptographic Publicati(m,” Contp14ters & .Ye(i4rily, w~l. 2, 1983, pp. 41-48,

I I $ Ibid. see Xl If(b) ( I ) (i)-(ix).
Chapter 4 Government Policies and Cryptographic Safeguards 1153

1 Commerce Department Export Controls

on Cryptography

The Export Administration Act (EAA)116 and Export Administration Regulations (EAR) 117 are administered by the Commerce Department and are

designed to control exports of “sensitive” or dualuse items, also including software and scientific

and technical data. The Bureau of Export Administration administers controls on dual-use items;

the Office of Export Licensing makes licensing

determinations (coordinating with other agencies

as necessary), and the Office of Technology and

Policy Analysis develops licensing policies and

provides technical support in maintaining the

Commerce Control List (CCL). Some items on

the CCL are controlled for national-security purposes, to prevent them from reaching “proscribed” countries (usually in the former Soviet

bloc); others are controlled for various foreign

policy objectives.118 

Cryptography falls under Section 11 (“Information Security") of the CCL.119 This category

includes information-security “equipment, assemblies and components” that:

1.

2.

.,3

are designed or modified to use digital cryptography for information security;

are designed or modified to use cryptanalytic

functions;

are designed or modified to use analog cryptography, except for some low-speed, fixed band

scrambling or frequency inversion, or in facsimile equipment, restricted audience broad4.

5.

6.

7.

cast equipment or civil television equipment

(see item c above);

are designed to suppress compromising emanations of information-bearing signals, except for

suppression of emanations for health or safety

reasons;

are designed or modified to use cryptography

to generate the spreading code for spread-spectrum systems or the hopping code for frequency

agility systems; or

are designed or modified to exceed class B2 of

the Trusted Computer System Evaluation Criteria (see item 4 in the State Department list

above); plus

communications cable systems with intrusiondetection capabilities.

Equipment for the test, inspection, and production (including evaluation and validation equipment) of equipment or functions in this category

are included, as are related software and technology.

The “overlap” between the State Department

and Commerce Department export-control regimes is particularly complex for cryptography

(note the overlap between the Munitions List

items and the CCL items, even with the exceptions). Basically, the Commerce Department licenses only those Section II items that are either

excepted from State Department control, are not

controlled, or are eligible for licensing under an

advisory note, plus anti-virus software (see h

I I ~ In the 103d Congress, leglsla[lon lnt~nd~d [t) streanlllne c(mtr~~ls and ease restricti(ms tm mass-marhcl computer si~ft~ are, hardware.

and technology,” Including certain enc~ ptlon software, was introduced. Provisions In H.R. 3627 and S. 1846 placed mass-marhet sotiw arc w Ith

encryp(itm under C’(mmwrcc c(mtrtds. At this writing, the 1994 onmlbus ex~~rt administration bills (H. R. 3937 and S. 1902) were aw altmg

congre$sltmal acll(m. Scc 11. S. Ctmgress, House of Representatives, OnwrIbm Elporl Adminlslranon Acr (~’ 1994, H. Rcpt. 103-531, 103d

Cong.. M sc~~., Parts 1 (C(mmllttee (m Foreign Affairs, May 25, 1994),2 (Pemlancnt Select Committee on Intelligence, June 16, 1994),3 (C(m)-

n~lttce (m Ways and Means, June 7, 1994), and 4 (C(mlmit[ee (m Amwd .%rvices, June 17, 1994) (Wash ingt(m, DC, U.S. G(~vcmnwnt Pnntlng

[)tficc, 1994), and H.R, 4663, “omnibus Exp)rt Administratit)n Act t)f 1994,” June 28, 1994.

1 I 7 ~~ (-’,s.~, 2751-2794,

I IS see GA(), op. cit., ft)otnote” ! 1 I, pp. 10-12.

I I 9 see Supplen)enl ] t. p~fl 799 I of the Ex~)~ Adnl]nis~ation Regulati(ms. secti(ms A (equipment. ass~n~hll~s and ~(~n~~~n~nts), B (test?

Inspectl(m, and pr~tiuctit~n equlpnwnt), D ( st)ftwarc), and E (techm~logy).
154 I Information Security and Privacy in Network Environments

above). 120 The cryptographic items excepted

from control under advisory note 1 are: personalized smart cards as described in item d above;

equipment for fixed data compression or coding

techniques, or for use in applications described in

item g above; portable, commercial civil cellular

phones containing encryption, when accompanying their users; and software as described in item a

above. 121 Other items, such as cellular phone systems for which message traffic encryption is not

possible, or items for civilian use in banking, access control, and authentication as described under items b, e, or f above, are covered by advisory

notes 3 through 5. These advisory notes state that

these items are likely to be licensed by Commerce,

as administrative exceptions, for export to acceptable end users. 122

At present, however, software and hardware

for robust, user-controlled encryption remains on

the Munitions List under State Department control, unless State grants jurisdiction to Commerce.

123 This has become increasingly

controversial, especially for the information

technology and software industries. According to

GAO’s 1993 report:

NSA performs the technical review that determines, for national security reasons, (1) if a

product with encryption capabilities is a munitions item or a Commerce List item and (2)

which munitions items with encryption capabilities may be exported. The Department of State

examines the NSA determination for consistency with prior NSA determinations and may add

export restrictions for foreign policy reasons—

e.g., all exports to certain countries may be

banned for a time period.

. . . [T]he detailed criteria for these decisions are

generally classified. However, vendors exporting these items can learn some of the general criteria through prior export approvals or denials

they have received. NSA representatives also

advise companies regarding whether products

they are planning would likely be munitions

items and whether they would be exportable, according to State Department representatives. 124

Export Controls and Market

Competitiveness

The United States was a member of the Coordinating Committee for Multilateral Export Controls

(COCOM), which was dissolved on March 31,

1994, The COCOM regime had an “East-West”

focus on controlling exports to communist countries. Within COCOM, member nations agreed on

controls for munitions, nuclear, and dual-use

items. However, when U.S. export controls were

more stringent than COCOM controls, U.S. firms

were at a disadvantage in competing for markets

abroad, relative to competitors in other COCOM

countries.

After COCOM ended, the United States and its

former partners set about establishing a new, multilateral regime designed to address new security

threats in the post-Cold War world. ’25 Major

goals for the new regime will be to deny trade in

dangerous arms and sensitive technologies to particular regions of the world and to “rogue countries” such as Iran, Libya, Iraq, and North

Korea.126 The target goal for the establishment of

the new multilateral regime is October 1994. Until

the new regime is established, the United States

120 ibid,, p. CCL 123 (notes). The advisory notes specify items that can be licensed by Commerce under one or more administrative exceptions.

121 Ibid Pp CCL 123.126. Software required for or providing these functions is also excepted.

., .

IZ2 Ibid., Advis(~ry Notes 1‘5”

12J GAO, Op. cit., footnote 48, pp. 24-28.

124 Ibid., p. 25.

12S Lynn Davis, (Jndersecre[w for International security Affairs, U.S. Depmrnent of state, pmSS briefing, Apr. 7, 1994. (As this report

went to press, this was the most current public information available to the OTA project staff regarding post-COCOM export regimes. )

126 Ibid.
Chapter 4 Government Policies and Cryptographic Safeguards 1155

and other partners in the discussions have agreed

to continue “controls or licensing on the most sensitive items in arms” but on a global basis, rather

than in an East-West context.127 These continued

controls are being implemented on a “national

discretion” basis, where each nation retains the

right to do as it wishes. This contrasts with the

“consensus” rule under which COCOM had operated, where any state (e.g., the United States)

could unilaterally block exports proposed by any

other state. 128

At the end of COCOM, the Clinton Administration liberalized the policy for some exports of

computer and telecommunications products to

Russia, Eastern Europe, and China. However,

controls were maintained on cryptography because:

The President has determined that vital U.S.

national security and law enforcement interests

compel maintaining appropriate control of encryption.129

The end of the Cold War and opening up of the

former Soviet bloc have led to new market opportunities for U.S. firms and their competitors.

Many countries—including former COCOM

countries like Japan and members of the European

Community, as well as others—have less restrictive export controls on encryption technology

than the United States. ’30 (However, some of

these have import controls on encryption, which

the United States does not.131) As a result, U.S.

firms (including software companies) are pressing

for a fundamental rethinking of the system of export controls. Some progress was previously

made in this area, including transfer of some dualuse items formerly on the Munitions List to Commerce Department control. This “rationalization”

was accomplished through a 1991-92 interagency

review of items on the U.S. Munitions List to determine which of those also on COCOM’s Industrial List (IL) of dual-use technologies could be

removed from the ITAR regime without jeopardizing significant national-security interests. 132

The rationalization process led to removal of

over two dozen items, ranging from armored

coaxial cable to several types of explosives, from

the Munitions List. Some other items, however,

were “contentious.” These contentious items,

which State and Defense identified for retention

on the Munitions List, included some commercial

software with encryption capability. According to

GAO:

State and Defense wanted to retain software

with encryption capability on the USML [Munitions List] so the National Security Agency

(NSA) can continue its current arrangement

127 Ibid ..we IVe ~]S() ~gree~ ~() ~xerclSe exmenle Vigilance (MI a global basis for all trade in the most SeflSlti Ve of these items. so that we will

be continuing m control these most sensitive items not (rely to the fomlerly proscribed countries of Russia and China but alst) mm ar(mnd the

world to include countries such as Iran.” (Undersecretary Davis, ibid. )

128 See U,S. Congress, office of Techn(~l(~gy Assessment, E.rport Controls and Nonpro/~2ration Policy, OTA-I SS-596 (Washington, Dc

U.S. Government Prin[ing Ofice, May 1994), especially table 5-2, p. 44.

129 Maflha Ha~is, Deputy Assis[~t Secre[w for Political-Military Affairs, U.S. Depaftnleflt Of State, “Encryption-Export C’(mmd Refom~,” statement, Feb. 4, 1994.

130 see James p. Chmdler et a]. (Na[l(~na] ]n[ellec[ual pro~fly Law Instimte, The George Washing[c)n University), “identification ~d Analysis of Foreign Laws and Regulations Pertaining to the Use of Commercial Encryption Products for’ Voice and Data C(mwnunications,” c(mtractor repwt [o the U.S. Department of Energy Under Contract No. DE-AC05-840R2 1400, January 1994.

131 Frmce, for exanlp]e, requires a Ilcense for [he inlP)~ of encryption and DES-baSe~ m~ufacturers and users must de~}si[ a key with

the French government. China restricts both the importation and exportation of voice-encoding devices (ibid.).

132 GAO ,,p Cit., f{x)tnote 48 pp. 9. I o and I ~- 15. According to the U.S. General Accounting office, some iten~s on the IL aPP’ar~d “n

,.

both the CCL and the Munitions List, when the State Department and DOD wanted to keep an item on the Muniti(ms List after COCOM moved

it to the IL. This would occur when State and DOD wanted to maintain the rmwe restrictive lntemational Traffic in Amls Regulations controls

on militarily sensitive items for which the United States has a technological lead. Generally, th(wgh, when items were added to the IL, they wrcre

added to the CCL (ibid., p. 13).
156 [ Information Security and Privacy in Network Environments

with industry to review all new software with

encryption capability coming to market to determine if the new product should be controlled on

the USML or the CCL. One reason for maintaining this item on the munitions list is concern

over future encryption development by software

firms being placed on commercial software programs. Additional reasons are classified. The

software industry is concerned that it is losing its

competitive advantage because software with

encryption capability is controlled under the

USML. 133

Some other contentious items, namely nonmilitary image intensifiers and technical data

associated with inertial navigation systems, were

eventually transferred to the Commerce Control

List by interagency agreements, with Commerce

agreeing to impose additional foreign-policy controls to alleviate DOD’s concerns. However, GAO

found that:

State later proposed to transfer mass-market

software, including software with encryption

capabilities, to Commerce’s jurisdiction because it believed that it would be impossible to

control such software. Defense, led by the National Security Agency, refused to include this

item in any compromise with Commerce, citing

the inadequacy of Commerce’s control system

even with added foreign policy controls. The

National Security Agency was also concerned

that foreign policy controls may lead to decontrol. Further, Defense cited administration opposition to a provision in a bill to reauthorize and

amend the Export Administration Act as another

reason that jurisdiction over software should not

be transferred. The provision, if passed, would

have moved all mass-market software from the

USML to the CCL, including software with encryption capability. On February 3, 1992, the

Acting Secretary of Commerce notified the

Congress that including this provision would

lead senior advisors to recommend that the President [Bush] veto the bill. Defense’s argument

prevailed, and the item was retained on the

USML. 134

Thus, as this report went to press, U.S. software

producers still faced the ITAR restrictions for exports of software with strong encryption.135 Software (or hardware) products using the DES for

message encryption (as opposed to message authentication) are on the Munitions List and are

generally nonexportable to foreign commercial

users, except foreign subsidiaries of U.S. firms

and some financial institutions (for use in electronic funds transfers). This means that individual, validated licenses—requiring a case-by-case

review of the transaction—must be obtained for

products and programs that have strong data, text,

or file encryption capabilities. 136 Products that

use the DES and other algorithms for purposes

other than message encryption (e.g., for authentication) are exported on the Commerce Control

List, however. 137

In 1992, there had been limited relaxation of

export controls for mass-marketed software with

133 Ibid p. 21. GAO exanlined ~D’s classified national-security justifications for retaining several other items (e.g., technical data for

.,

nonmilitary inertial navigation systems) and found them to be “sound.” Ho~ever, due to the level of classification involved, GAO did not examine the justification for retaining cryptographic software on the Munitions List (ibid., p. 19).

134 Ibid., pp. 21-22.

] M ..strong~, encwption in ~ls context ~fers t. sys[ems on a par with the DES or with the RSA system with a I @24-bit m(~ulus.

In 1992, some mass-market software with encryption (but not the DES) was moved to Commerce control, given an expedited NSA review.

According to NSA, requests to move mass-market software products to Commerce have usually been granted, except for those that include

the DES for data encryption. (Roger Callahan, NSA, personal communicatilm, June 8, 1994, point 7.)

136 under ~e= ~]es, he exp)~lng firm has to apply for a separate Iicen.se for each customer (e.g., overseas subsidiary, independent software distributor, foreign computer manufacturer); a license is valid for one product. The exporter must tile annual reports listing the number

of copies sold to the customer, to whom they were sold, and the sale price. (Business Software Alliance, Unrealistic U.S. Government Export

Controls Limit the Ability of American Companies To Meet the Demand for Encryption,” 1994. )

137 GAO, Op. cit., footnote 48, p. 26.
Chapter 4 Government Policies and Cryptographic Safeguards 1157

encryption capabilities. NSA and the State Department relaxed and streamlined export controls

for mass-market software with moderate encryption capabilities, but not including software implementing the DES or computer hardware

containing encryption algorithms.138 Also, since

July 1992, there has been expedited review of

software using one of two algorithms developed

by RSA Data Security, Inc. These algorithms,

called RC2 and RC4, are said to be significantly

stronger than those previously allowed for export,

but are limited to a 40-bit key length and are said

to be weaker’ 39 than the “DES-strength” programs that can be marketed in the United States

and that are available overseas.140 

As a result of U.S. export controls, some firms

have produced “U.S.-only” and “export” versions

of their products; others report that overseas markets have been foreclosed to them, even as worldwide demand for data encryption is dramatically

increasing.

141 Companies with offices in the

United States and overseas have faced operational

complications from export requirements, including a lack of integrated (as opposed to add-on) encryption products.

142 Business travelers also

potentially violated ITAR by traveling abroad

without licenses for mass-market software containing encryption algorithms loaded in their laptop or notebook computers. (At this writing,

provisions were being put in place to allow business travelers to carry domestic encryption products overseas for personal use—see discussion of

licensing reforms below.) Companies that employ

foreign nationals face additional complications in

licensing and end-use regulations. 143

According to the Business Software Alliance

(BSA), the net result is a “virtual embargo” to foreign commercial users of U.S. products with

strong encryption (e.g., the DES). 144 Under current rules, obtaining a license to export encryption

products to financial institutions can take several

weeks; qualifying subsidiaries must have at least

50 percent U.S. ownership.

145 One way through

these strict controls is to disable any file- or textencryption capabilities in the “export” version.

At a May 1994 hearing before the Senate Subcommittee on Technology and the Law, Stephen

Walker (Trusted Information Systems, Inc.) presented the results of SPA’s study of the foreign

availability of encryption products. As of April

1994, SPA reported having identified 423 U. S.-

‘~8 [bId.

I ~~ See walker [es[lnlony, op. cit., footnote 37, p. 9.

I.W Software ~b]lshers A~~{)~lation, “SpA News,” March 1994, p. 94. See also Walker [estim(my, 0p. Cit., f(x~mo[e 37, P. 28. According

ttt a 1992 presenta[itm by Jim B idzos (President, RSA Data Security, Inc. ) to the Computer System Security and Privacy Ad\ ISAMY Board

(CSSPAB ), RC2 and RC4 were developed by RSA Data Security, Inc. in the mid- 1980s and are not public-key based. They have been inc(qx)-

rated Into Lotus Notes. (Minutes of the September 15-17, 1992 meeting of the CSSPAB, obtained from N]ST. )

I ~1 See Business software Alliance (BSA), op. cit., f(wtnote 136. According to BSA, its member companies aCCOUIIt fOr 7 ! percent of prepackaged PC software sales by U.S. companies. See also software-producer testimonies before the Subcommittee on Economic Policy. Trade

and Envlr(mment, H(mse Committee on Foreign Affairs, Oct. 12, 1993 and GAO, op. cit., f(x}mote 48, pp. 26-28.

I ~Z see~lscl]la A Wa]ter and LouisK. Ebling, “Taming the Jungle of ExP~fi RegulatlOns~ “ The International Computer [xmyer, vol. 1,

N(). 11, oct{hw 1993, pp. 14-16.

143 Ibid,, p, 16. However, acc{)r~lng t. NSA, it is not difficult t. {~btain licensing for m employed foreign national. (Roger Callahan, NSA,

pers(mal conln~unlcatl(m, June 8, 1994, point 1 2.)

I-M BSA ~)p. Clt, f(~)mote 136, pp. I -2, citing statement by Bob Rarog, Digital Equipment Corp., before the CSSF’AB, June s, 1993.

I AS Ellen MeSSm~r “EnC~ptlon Restriction policy HUIIS USerS, Vendors,” Neh$wk World, Aug. 23, 1993, pp. 34,43. Semaphore Corp..

a U.S. manufacturer of encryption products, estimated that U.S. vendors are not eligible to ship encryption products to 403 of the so-called

Global 1000 multinati(mal c(~rporati(ms named by For/une magazine. Because many foreign-based procurements include security in the specification ft~r the total pr(xurement, U.S. fim]s t~ften lose out to foreign fimls (e.g., in the United Kingd(~n] or Switzerland) that do not face the

same restnctitms ( lbld. ).
158 I Information Security and Privacy in Network Environments

origin products containing encryption implemented in hardware, soft ware, and

hardware/software combinations. According to

SPA, 245 of these products use the DES and,

therefore, are subject to ITAR controls and cannot

be exported except in very limited circumstances. 146 In total, SPA identified 763 cryptographic products, developed or distributed by a

total of 366 companies (211 foreign, 155 domestic) in at least 33 countries. ’47 In addition, software implementations of the DES and other

encryption algorithms are routinely available on

Internet sites worldwide. ’48

At the hearing, Walker showed examples of

DES-based products that SPA had taken delivery

on from vendors in Denmark, the United Kingdom, Germany, and Russia. Walker also demonstrated how laptop computers (with internal

speakers and microphones) could be transformed

into encrypting telephones, using a DES-based

software program purchased in the United States

to encrypt/decrypt digital speech.149

Based on experiences like this, many in industry consider that the foreign-dissemination control objectives of the current export regime serve

mainly to hinder domestic firms that either seek to

sell or use cryptography:

Foreign customers who need data security

now turn to foreign rather than U.S. sources to

fulfill that need. As a result, the U.S. government is succeeding only in crippling a vital

American industry’s exporting ability. 150

The impact of export controls on the overall cost

and availability of safeguards is especially

troublesome to business and industry at a time

when U.S. high-technology firms find themselves

as targets for sophisticated foreign-intelligence attacks 15] and thus have urgent need for sophisticated safeguards that can be used in operations

worldwide. 152 Moreover, software producers assert that several other countries do have more relaxed export controls on cryptography:

Our experience. . . has demonstrated conclusively that U.S. business is at a severe disadvantage in attempting to sell products to the world

market. If our competitors overseas can routinely ship to most places in the world within days

and we must go through time-consuming and

onerous procedures with the most likely outcome being denial of the export request, we

might as well not even try. And that is exactly

what many U.S. companies have decided.

1~ Wa]ker [estimony, op. cit., f(X)hlO1e 37, p. 15.

147 Ibid.

148 Software ~b]ishers Association, “SPA Study of Foreign Availability of Cryptographic Products, ” updated Jan. 1, 1994, and Walker

testim(my, op. cit., footnote 37. In one case, the author of POP (Pretty Good Privacy), a public-key encryption software package for email

protection, was investigated by the U.S. Customs Service. In April 1994, a federal grand jury was examining whether the author broke laws

against exporting encryption software. POP was published in the United States as “freeware” in June 1991 and has since spread throughout

the world via networks, RSA Data Security, Inc. says that the POP versions available via the Internet violate the RSA patent in the United States.

(See William M. Bulkeley, “Popularity Overseas of Encryption Code Has the U.S. Worried,” The Wall Srree[Journa/, Apr. 28, 1994, pp. 1, A8;

and John Markoff, “Federal Inquiry on Software Examines Privacy Programs,” The New York Times, Sept. 21, 1993, pp. D1 ,D7.).

149 walker testlnlony, op. cit., f(x)tn~)te 37, pp. 14-20 and attachment. According to Walker, SPA had also received encryption products from

Australia, Finland, and Israel.

150 Wa]ker testimony, 0p. cit., f(xnnote 37, pp. 15-26 (quote at 15). See also SPA and BSA, op. cit., f(xmwtes 148 and 136.

15 I The Threat of F~rej~n Ec~n~mi[. Espionage 10 U.S. COrpOratiOnS, hearings, op. cit., fw)mote 2.

152 Sm GAO, ~)p. Cit., fw~mote 4.8, p. 4 (citing the Director, Central Intelligence Agency); and U.S. General Accounting Ofice, EcOnOmlc

Espionage: The Threa[ w U.S. Indusrry, GAO/OSI-92-6 (Washington, DC: U.S. Government Printing OtTice, 1992). (Statement of Milton J.

!Wcolar, testimony before the Subcommittee on Economic and Commercial Law, Committee on the Judiciary, U.S. House of Representatives,

Apr. 29, 1992.)
Chapter 4

And please be certain to understand that

are not talking about a few isolated products

Government Policies and Cryptographic Safeguards 1159

w e

involving encryption. More and more we are talking about major information processing

applications like word processors, databases,

electronic mail packages, and integrated software systems that must usc cryptography to provide even the most basic level of security being

demanded by multinational companies.153 

On the other hand, U.S. export controls may

have substantially slowed the proliferation of

cryptography to foreign adversaries over the

years. Unfortunately, there is little explanation (at

least at the unclassified level) regarding the degree

of success of these export controls and the necessity for maintaining strict controls on strong cryptography in the face of foreign supply and

networks like the Internet that seamlessly cross

national boundaries. (For a general discussion of

the costs and benefits of export controls on dualuse goods see OTA’s recent report Export Controls

and Nonproliferation Policy, OTA-ISS-596, May

1 994.)

Some of the most recent public justifications

for continued strict controls were made in May

1994 testimonies by Vice Admiral J.M. McConnell (NSA Director) and Clinton Brooks (Special

Assistant to the Director, NSA):

Clearly, the success of NSA’s intelligence

mission depends on our continued ability to collect and understand foreign communications

. . . Controls on encryption exports arc important to maintaining our capabilities.

. . . At the direction of the President in April,

1993, the Administration spent ten months carefully reviewing its encryption policies, with particular attention to those issues related to export

controls on encryption products. The Administration consulted with many industry and private

sector representatives and sought their opinions

and suggestions on the entire encryption export

control policy and process. As a result of this review, the Administration concluded that the current encryption export controls are in the best

interest of the nation and must be maintained,

but that some changes should be made to the export licensing process in order to maximize the

exportability of encryption products and to reduce the regulatory burden on exporters. These

changes will greatly case the licensing process

and allow exporters to more rapidly and easily

export their products.

In addition, the Administration agreed at the

urging of industry that key escrow encryption

products would be exportable. Our announcement regarding the exportability of key escrow

encryption products has caused some to assert

that the Administration is permitting the export

of key escrow products while controlling competing products in order to force manufacturers

to adopt key escrow technology. These arguments arc without foundation. . .we are not using or intending to use export controls to force

vendors to adopt key escrow technology. ] 54

Clinton Brooks also noted that:

The U. S., with its key escrow concept, is

presently the only country proposing a technique that provides its citizens very good privacy protection while maintaining the current

ability of law enforcement agencies to conduct

lawful electronic surveillance. Other countries

arc using government licensing or other means

to restrict the usc of encryption. 155 

In February 1994, the Clinton Administration

announced its intention to reform the export control procedures that apply to products incorporating encryption technology:

These reforms are part of the Administration’s effort to eliminate unnecessary controls

and ensure efficient implementation. The reforms will simplify encryption product export
160 I Information Security and Privacy in Network Environments

licensing and speed the review of encryption

product exports, thus helping U.S. manufacturers to compete more effectively in the global

market. While there will be no changes in the

types of equipment controlled by the Munitions

List, we are announcing measures to expedite licensing. 156

The new licensing procedures were expected to

appear in the Federal Register in June 1994.157

According to the State Department, the reforms

“should have the effect of minimizing the impact

of export controls on U.S. industry. ’’158 These

were expected to include:

●

m

m

●

license reform measures that will enable

manufacturers to ship their products directly to

customers within approved regions, without

obtaining individual licenses for each end user;

rapid review of export license applications (a

“significant” number of applications will have

a turnaround goal of 10 working days);

personal use exemptions for U.S. citizens temporarily taking encryption products abroad for

their own use (previously, an export license

was required); and

allowing exports of key-escrow encryption

products to most end users (key-escrow products will qualify for special licensing arrangements). 159

The Secretary of State has asked encryption product manufacturers to evaluate the impact of these

reforms over the next year and provide feedback

on how well they have worked, as well as recommendations for additional procedural reforms. 160

In the 103d Congress, legislation intended to

streamline export controls and ease restrictions on

mass-market computer software, hardware, and

technology, including certain encryption software, was introduced by Representative Maria

Cantwell (H.R. 3627) and Senator Patty Murray

(S. 1846). In considering the Omnibus Export Administration Act (H.R. 3937), the Committee on

Foreign Affairs reported a version of the bill in

which most computer software, including software with encryption capabilities, was under

Commerce Department controls and in which export restrictions for mass-market software with

encryption were eased.161 The Report of the Permanent Select Committee on Intelligence struck

out this portion of the bill and replaced it with a

new section calling for the President to report to

Congress within 150days of enactment, regarding

the current and future international market for

software with encryption and the economic impact of U.S. export controls on the U.S. computer

software industry. 162

At this writing, the omnibus export administration legislation was still pending. Both the House

and Senate bills contained language calling for the

Administration to conduct comprehensive studies

on the international market and availability of encryption technologies and the economic effects of

U.S. export controls.

SAFEGUARDS, STANDARDS, AND

THE ROLES OF NIST AND NSA

This section summarizes current NIST and NSA

activities related to safeguards for unclassified information, as well as joint activities by the two

156 Martha Harris, op. cit., footnote 129.

157 ROSe Biancanie]](), office of ~fense Trade Ct)ntrf)]s, Bureau of Po]il ical-Military Affairs, U.S. ~paftment of State, personal comnlunication, May 24, 1994.

158 Martha Hams, op. cit., footnote 129.

159 Ibid.

la Ibid.

161 see omnlbu~ EXporl Admini~lration A’( of 1994, ~Jp. cit., footnote I I b, Pm 1, pp. 57-58 (H.R. 3937, sec. ] ] T(c)( ] )-(4)).

162 OmnibuS Erporf AdminiS/ralion A(,1 of ]994, op. cit., fOOtnOte 1 I 6, Part 2, pp. 1‘5 (H.R. 3937, sec. ] ] 7(c) ( 1 )-(3)).
Chapter 4 Government Policies and Cryptographic Safeguards [ 161

agencies. It also discusses the current, controversial interagency agreement describing the agencies’ implementation of the Computer Security

Act.

1 NIST Activities in Support of

Information Security and Privacy

Ongoing NIST activities in support of information security and privacy in the High Performance

Computing and Communications/National Information Infrastructure (HPCC/NII) Programs

are conducted by NIST’s Computer Systems Laboratory. 163 The overall objectives of the HPCC/

NII Programs are to accelerate the development

and deployment of high-performance computing

and net working technologies required for the NII;

to apply and test these technologies in a manufacturing environment; and to serve as coordinating

agency for the manufacturing component of the

federal HPCC Program. NIST contributes to the

following components of the federal HPCC Program:

= high performance computing systems,

m

m

●

advanced software technology and algorithms,

National Research and Education Network,

and

information infrastructure technology and application s

1 6 4

According to NIST’s interpretation of policy

guidance received from OMB, no agency has the

lead with respect to security and privacy in

support of the NH; accordingly, NIST and other

agencies support OMB initiatives. 165 NIST’s

summary of NII-related security projects is reproduced in box 4-7.

NIST has also announced two opportunities to

join cooperative research consortia in support of

key-escrow encryption. In August 1993, NIST announced an ● ’Opportunity to Join a Cooperative

Research and Development Consortium to Develop Software Encryption with Integrated Cryptographic Key Escrowing Techniques.” According

to the announcement, this research would be done

in furtherance of the key-escrowing initiative announced by President Clinton on April 16,

i ~ < As [hls ~ew)n ~,:i~ ~ ~l[tcn, NIST ~ as in the Pr(wess of reorganizing to create a new Information Technology La~)mt(~ry; [he CSL activitic~ are expected I() h’ ln~ludd In the functions of the lnfmmatim Technology Laboratory. See also Dennis M. Gilbert, A Smdy oj” Federtd

,l,~cn( I ,VFFd\ for in/orma(Ion 72thno/og.Y Securlfy, NISTIR-5424 (Gaithersburg, MD: NIST, May 1994) for the results of a NIST study to be

uwl for plannlng future hll ST In f(mnation technology security standards, guidance, and related activities.

I {A .’~op{)scd HpCC NII ~ogram at N]ST,” May 1993. Included in attachment 2 of a letter from F. Lynn McNultY, Associate Director for

C’tmlputcr Security, NIST, lo Jt)an D. Winst(m, OTA, Apr. 13, 1994. OTA had requested inf(~m~ati(m about current NIST activities in support

of the lnf~~m~atl~~n Infrastructure and ab(mt securlt} fpri~ acy related inf(mnatitm in letters to NIST dated Feb. 28, 1994 and Mar. 11, 1994.

165 F L McNuItY, lbld. SM also Gilbert. op. cit., ftx~tnt)te 163.

. .
162 I Information Security and Privacy in Network Environments

The Office of Technology Assessment asked the National Institute of Standards and Technology for a

summary of activities related to computer and information security The information provided by NIST in

April 1994 is reproduced below:

Issue Area: Information Security

Objective Areas: All

Information security is an important issue in all the objective areas. In addition, information security

is a cross-cutting issue for three other areas: privacy, protecting intellectual property, and controlling

access to information since the ability to ensure privacy, protection of intellectual property, and controlled access to information will require that information security controls are in place and operating

correctly.

Project: Digital Signature Standard and Supporting Infrastructure

This project provides the technology to electronically sign multi-media information, to ensure non-repudiation of the originator and receiver of the information, and to detect modifications to the information It also focuses on establishing the supporting infrastructure needed to distribute certificates to users in government and commercial interactions. Certificates are necessary since they contain unforgeable information about the identity of the individual presenting the certificate and contain other components required for the digital signature function.

Project: Cryptographic Standards

This project area includes basic cryptographic-based standards that are needed throughout the

[National Information Infrastructure] Nll “electronic highway” and within applications in most, if not all

objective areas. In addition, it includes a standard (metric) for the level of security of cryptographic

mechanisms used throughout the Nll.

Project: Advanced Authentication Technology

The vast majority of current [information technology] IT systems continue to rely on passwords as the

primary means of authenticating legitimate users of such systems Unfortunately, vulnerabilities

associated with the use of passwords have resulted in numerous intrusions, disruptions, and other unauthorized activity to both government and commercial IT systems. NIST activities in this area have

focused on moving federal agencies away from reliance on passwords to the use of token based and

other technologies for authenticating users. Specifically, the [Computer Security Division] CSD has

been working directly with federal agencies to incorporate advanced authentication technology (as well

as other security technologies) into their applications to provide better cost effective security Such applications are/will be included as components of the Nll (e g , IRS tax filing applications).

Project: Security Criteria and Evaluation

The goal of this project area is to develop an internationally accepted security which can be used to

specify the security functionality and assurance requirements of IT systems and products and to establish a U.S. government capability to verity that the developer of the product/system has met both sets of

requirements. The long term goal of this project is a plentiful supply of secure commercial off-the-shelf

products that will be used in Nll applications and other part of the Nil.

Project: Secure the Internet and Network Connectivity

This project focuses on providing near term assistance and solutions for organizations that must

connect to the Internet and other networks.

(continued)
Chapter 4 Government Policies and Cryptographic Safeguards 1163

Project: Open Systems Security

This project area focuses on longer term activities that will result in enhanced security for government applications on the Nll. These include the extension of security labels to other IT areas and extensions of the DOD Goal Security Architecture to other government systems Security labels are necessary for specifying the type and sensitivity of information stored m a host system or being communicated from one party to another

Project: Computer Security Management

The best technical solutions will not be effective unless there IS a managed combination of technology Pollees procedures and people All applications within the Nll will require security management if

they are to provide cost effective security to users of the Nll. This project focus on management activities such as traming/education, risk management, and accepted security practices that ensure use of

security technology

SOURCE NaflonalInshtute of Standards and Technology, April 1994

1993. 166 A February 1994 NIST press release167

announced partnership opportunities in research

directed at developing computer hardware with

integrated cryptographic key-escrowing techniques. 168 The cooperative research involves technical assistance from NSA. As of June 1994,

NIST reported that several individuals and organizations were participating in a Key Escrow Encryption Working Group seeking to “specify

requirements and acceptability criteria for key-escrow encryption systems and then design and/or

evaluate candidate systems.’’169

In early 1994, OTA asked the National Institute

of Standards and Technology for more information on the resources that would be required—

staff, funds, equipment, and facilities—to set up

NIST as a key-escrow agent. NIST had originally

estimated that startup costs for both escrowing facilities would be about $14 million, with total

annual operating costs of about $16 million. 170 In

April 1994, NIST told OTA that the Clinton Administration was still working on cost estimates

for the escrow system and was not able to release

additional cost information.171 By June 1994,

17,000 Clipper chip keys had been escrowed at

NIST.172 OTA has not received any additional information regarding costs, staffing, and other resource requirements for the escrow system.

Funding for NIST’s computer-security activities is shown in table 4-1. According to the figures

in table 4-1, appropriated funds for computer security show an almost fourfold increase from levels prior to the Computer Security Act of 1987.

This does not represent steady growth, however;

there was a large increase from $1.0 million in FY

166 F“edera/ Re~lSrer, Aug. 24, 1993, pp. 44662-63. (This announcement was written before the EES was finalized. )

167 “NIST Ca]ls for pa~ers in Developing Key Escrowing Hardware,” Feb. 4, 1994. (The EES was finalized. )

168 This matefia] Wm attachment I of McNulty, Apr. 13, 1994, op. cit., ft~otnote” 164.

169 Miles Smld, N]ST, “me U,S. Gove~nlent Key Escr[)w System,” presentation at NIST Key Escrow Encryption Workshop,” June 10,

1993. These activities support the Administration’s exploration of alternative key-escrow encryption techniques, as anmmnced in a July 20,

1994, letter from Vice President Al Gore to Representative Maria Cantwell.

17~ Federai Regisler, Feb. 9, 1994, p. ~.

17 I F. Lynn McNu](y, NIST Ass(~iate Director fm Computer Security, letter to Joan ~~plc(~ wlnsl(~n, OTA, ~ pr. 1 ~, 1994.

172 Miles Smld M~ager, security T~hno]L)gy Group, N] ST, personal communicati(~n, May 25, 1994.
164 I Information Security and Privacy in Network Environments

Fiscal

year

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

Obligations

Appropriation Full-time

funds Reimbursable equivalents

12 05 16

1.1 0.4 16

1.1 04 16

1,0 0.7 17

2.7 0.8 33

2,7 0 8 33

3.3 1.6 37

3 4 2.3 35

3.9 2.1 35

4.4 2.0 38 est.

4.5 20 38 est.

1988 to $2.7 million in FY 1989 and FY 1990, and

slower growth thereafter. Staffing levels also rose,

from 17 full-time equivalents (FTEs) in FY 1988

to an average of 36 or 37 FTEs thereafter. Since

1990, “reimbursable” funds received from other

agencies (mainly DOD) have been substantial

compared with appropriated funds for security-related activities, representing some 30 to 40 percent of the total funding for computer-security

activities and staff at CSL. This is a large fraction

of what has been a relatively small budget, given

NIST’s responsibilities under the Computer Security Act.

I Joint NIST/NSA Activities

In January 1994, OTA asked NSA for a summary

of the activities NSA reported that it conducted

jointly with NIST under the Computer Security

Act of 1987. According to NSA, these include the

National Computer Security Conference, development of common criteria for computer security

(see chapter 2), product evaluations, standards development, and research and development. OTA

received this information in April 1994; it is reproduced in box 4-8.

I NIST/NSA Implementation of the

Computer Security Act of 1987

A 1989 Memorandum of Understanding between

the NIST Director and the NSA Director established the mechanisms of the working relationship between NIST and NSA in implementing the

Computer Security Act of 1987.173 The MOU has

been controversial. Observers-including OTA

—consider that the MOU appears to cede to NSA

much more authority than the act itself had

granted or envisioned, particularly through the

joint NIST/NSA Technical Working Group established by the MOU.174 In May 1989, Milton J. Socolar, Special Assistant to the Comptroller

General, noted:

. . . as one reviews the [MOU] itself against the

background of the [Computer Security A]ct, one

cannot help but be struck by the extent of influence NSA appears to retain over the processes

~ 73 Memora~um of U~ersla~inR Ilefu,eerr the Director of the Na[ionai Insliture of Standards and Technology and the Director of the

National Security A~ency Concerning the Implementation ofPublic Luw 100-235, Mar. 23, 1989. (See appendix 0.)

174 The Technical working @JUp may identify issues fordiscussion, or these may be referred to it by the NSA Deputy Director fOr InfOmlation Security or the NIST Deputy Director (ibid., sec. 111(5)).
—

Chapter 4 Government Policies and Cryptographic Safeguards 1165

The Office of Technology Assessment asked NSA for a summary of joint NIST-NSA activities, The

material provided by NSA in April 1994 is reproduced below:

NSA provides technical advice and assistance to NIST in accordance with Public Law 100-235 An

overview of NIST-NSA activities follows

National Conference. NIST and NSA jointly sponsor, organize, and chair the prestigious National

Computer Security Conference, held yearly for the past 16 years The conference IS attended by over

2,000 people from government and private Industry

Common Criteria NSA is providing technical assistance to NIST for the development of computer

security criteria that would be used by both the civilian and defense sides of the government Representatives from Canada and Europe are joining the United States in the criteria’s development

Product Evaluations. NIST and NSA are working together to perform evaluations of computer security products In the Trusted Technology Assessment Program, evaluations of some computer security

products will be performed by NIST and their labs, while others will be performed by NSA. NIST and

NSA engineers routinely exchange Information and experiences to ensure uniformity of evaluations

Standards Development. NSA supports NIST in the development of standards that promote interpretability among security products Sample standards include security protocol standards, digital signature standards, key management standards, and encryption algorithm standards (e g , the DES,

SKIPJACK)

Research and Development Under the Joint R&D Technology Exchange Program, NIST and NSA

hold periodic technical exchanges to share Information on new and ongoing programs Research and

development IS performed in areas such as security architectures, Iabeling standards, privilege management, and identification and authentication Test-bed activities are conducted in areas related to

electronic mail, certificate exchange/management, protocol conformity, and encryption technologies

SOURCE National Security Agency, April 1994

involved in certain areas-an influence the act 1989, letter was intended to assuage concerns. 176

was designed to diminish. 175 However, concerns that neither the MOU or the

In response to concerns and questions raised in letter of clarification accurately reflected the inthe May 1989 hearings, NIST and NSA prepared a tent of the Computer Security Act continued. ’77 A

letter of clarification for the House Committee on February 1990 letter to the committee from the

Government Operations. This December 22, Secretary of Commerce and subsequent staff dis175 Ml]ton J. NXOIM, SFcla] Assis[anl to [he Ctmlptrf)ller General, “National Institute of Standards and Technology and the Nati(mal Security Agency’s Memorandum of Understanding on Implementing the Computer Security Act of 1987,” in Hearing on Military and Ci\’i/ian Control of Compiler ,$ecur~ry Issues, May 4, 1989, op. cit., footnote 99, pp. 39-47, quote at p. 47. Soeolar also noted t~ther c(mcems, such as the

MOU appeal process in sec. III(7), the NSA evaluation of security programs, NSA research and development activities, NIST rec(~gnition t~f

NSA-certified ratings of trusted systems, and other matlers.

176 ~tter t. Rep John Conyers, Jr., and Rep. Frank Horton from Raymond Kammer (NIST) and W. O. Studemann (NSA), Dec. 22, 1989.

(See appendix B.)

ITT See Richard A. Danca and R~)bcfl Snlithmidford, “NSA, NIST Caught in Security Policy Debate,” Federal Computer Week, Feb. 12,

1990, p. 1,
166 I Information Security and Privacy in Network Environments

cussions continued to explore these concerns. ’78

(See appendix B of this report for the MOU, the

December 1989 NIST/NSA letter of clarification,

and the February 1990 letter from the Secretary of

Commerce.)

Implementation of the Computer Security Act

remains controversial; the MOU has not—to the

best of OTA’s knowledge—been modified. A recent GAO study found that:

The Computer Security Act of 1987 reaffirmed NIST as the responsible federal agency

for developing federal cryptographic information-processing standards for the security of sensitive, unclassified information. However, NIST

has followed NSA’s lead when developing certain cryptographic standards for communications privacy. 179

The MOU authorizes NIST and NSA to establish a Technical Working Group (TWG) to “review and analyze issues of mutual interest

pertinent to protection of systems that process

sensitive or other unclassified information.” The

TWG has six members; these are federal employees, with three selected by NIST and three selected by NSA. The working group membership

may be augmented as necessary by representatives of other federal agencies.

Where the act had envisioned NIST calling on

NSA’s expertise at its discretion, the MOU’s TWG

mechanism involves NSA in all NIST activities

related to information-security standards and

technical guidelines, as well as proposed research

programs that would support them. The implementation mechanisms defined by the MOU include mandatory review by the TWG, prior to

public disclosure, of “all matters regarding technical systems security techniques to be developed

for use in protecting sensitive information in federal computer systems to ensure they are consistent with the national security of the United

States.” 180 If NIST and NSA cannot resolve such

an issue within 60 days, either agency can elect to

raise it to the Secretary of Defense and Secretary

of Commerce, or to the President through the National Security Council. No action can be taken on

an issue until it is resolved. Thus, the MOU provisions give NSA power to delay and/or appeal any

NIST research programs involving “technical system security techniques” (such as encryption), or

other technical activities that would support (or

could lead to) proposed standards or guidelines

that NSA would ultimately object to. 181

NSA reviewers who commented on a draft of

this OTA report disagreed with this interpretation.

According to these reviewers, the Computer Security Act did not take into account that the techniques NIST would consider in developing

standards for information systems that process unclassified information:

. . . have the potential to thwart law enforcement

and national intelligence activities. NIST recognized that they needed a mechanism to obtain

NSA’s expertise and to understand the risk that

certain security techniques could pose for these

activities. Moreover, they needed to understand

these risks before the proposed standards were

promulgated and the damage was done. The

MOU between NIST and NSA provided this

mechanism. Rather than delay NIST standards,

the MOU process provides NIST critical information it needs in formulating the standards. 182

In subsequent discussions with OTA staff, NSA

officials reiterated this point and explained that

178 utter It) Chaimlan John Conyem, committee (m Government Operations, from Robert A. Mosbacher, Secretary of Commerce, Feb.

28, ] 990. An ~nclosure t. this letter eIa&)ra[es on matters raised by the committee staff in a meeting on Jan. 3, 1990. (The MOU and both the

December 1989 and February 1990 letters are f(nmd in appendix B of this report.)

I w GAO, Op. cit., fof)[note” 48, p. 5, using the DSS as evidence.

1~~ MOU, (~p, cit., fo{~tnote ! 73, sec. 111(7).

I ~ I ibid., sees. 111(5)-(7). See also M.J. Soco]ar, op. Cit., ftM)mWe 175, pp. 45-46.

IW Roger M Ca[ldan, NSA, letter t~~ Joan D. Winston, OTA, May 6! 1gw4, P“ 4“
Chapter 4 Government Policies and Cryptographic Safeguards 1167

the appeals process specified in the Computer Security Act (see below) would come too late in the

standards process to avoid harming national-security and law-enforcement interests.183 

NIST’s most recent efforts to develop a publickey standard and a digital signature standard have

focused concerns on the MOU and the working

relationship between NIST and NSA. NIST standards activities related to public-key cryptography and digital signatures have proceeded

intermittently for over 12 years. Much of the original delay (i.e., 1982-89) appears to have been due

to national-security, nonproliferation concerns

voiced by NSA.184 (The most recent delay resulted from patent-licensing problems—see appendix C.)

NBS (now, NIST) originally published a “Solicitation for Public Key Cryptographic Algorithms” in the Federal Register on June 30, 1982.

According to the results of a classified investigation by GAO, NBS abandoned this standards activity at the request of NSA.185 In 1989, after the

Computer Security Act, NIST again began discussions with NSA about promulgating a public-key

standard that could be used for signatures. These

discussions were conducted through the Technical

Working Group mechanism established in the

MOU, which had been signed earlier that year.

According to GAO, at the start of these discussions, the NIST members of the Technical Working Group had preferred the RSA algorithm

because it could be used for signatures and also

could encrypt for confidentiality (and, therefore,

be used for cryptographic key management/exchange). 186 According to GAO, the plan to select

a public-key algorithm that could do both signatures and key exchange was terminated in favor of

a technique, developed under NSA funding, that

only did signatures. 187 Another motive for selecting a different algorithm was that the RSA method

was patented, and NIST wanted to develop a royalty-free standard.

NSA’s algorithm is the basis for the DSS. It performs the signature function but does not encrypt

for purposes of confidentiality or secure key distribution. The Capstone and TESSERA implementations of the EES encryption algorithm also

include digital signature and key-exchange algorithms, but as of June 1994 this key-exchange algorithm was not part of a FIPS.

As originally proposed in 1991, the DSS met

with several types of criticism. Some criticisms

were on technical grounds, including the strength

of the algorithm. In response, NIST and NSA revised the proposed standard, increasing the maximum size of the modulus from 512 to 1,024

1~~ C]lnton Br(x)ks, Specia] Assistant t{) the Director, NSA, personal communication, May 25, 1994.

184 ~bl ic.key Cwptoflaphy cm ~ used fi~r data encrypti(m, digital signatures, and in cryptographic key managemen~exchange (to securel y distribute secret keys). Current federal standards initiatives take the approach of devising ways to do signatures (i.e., the DSS) and key

distributicm without also providing data encryption capabilities.

185 GAO, OP. cit., footnote 48, p. 20.

lsb ibid. GAO based this conclusion on NIST memoranda.

I ST Ibid pp. 20.21. GAO based [his c(mc]usion on NIST memoranda. See also the series of NIST/NSA Technical working Group minutes .,

from May [989 to August 1991, published in “Selected NIST/NSA Documents Concerning the Development of the Digital Signature Standard

Released In Computer Professionals for Social Responsibdity v. National Instilure oj’Standards and Technology, Civil Action No. 92-0972,”

C(m~puter Pmfessmnals for Social Responsibility, The Th~rd Cryptography and Pri\acy Conjirence Source Book, June 1993. (Note: According

to NSA, the mattmals obtained through the Freedom of Information Act are not a true picture of all the different levels of discussion that to{~k

place during this period, when NIST management and NSA were in agreement regarding the development of a signature standard. Clint{m

Brooks. Special Assistant to the Director, NSA, personal communication, May 25, 1994.)

See also D.K. Branstad and M.E. Smid, “Integrity and Security Standards Based on Cryptography,” Compufers & Securiry, vol. I ( 1982),

pp. 255-2@; Richard A. Danca, “T(micelli Charges NIST with F(x)t-llragging on Security,” Federa/ Compufer Week, Oct. 8, 1990, p. 9; and

Michael Alexander, “Data Security Plan Bashed,” Computerw’or/d, July 1, 1991, p. 1
168 I Information Security and Privacy in Network Environments

bits.188 (Increasing the number of bits in the modulus increases strength, analogous to increasing

the length of a key.) Other criticisms focused on

possible patent infringement and licensing issues

(see appendix C). The DSS was finished and issued by the Commerce Department in May 1994,

to take effect on December 1, 1994, with the statements that:

NIST has addressed the possible patent infringement claims, and has concluded that there

are no valid claims. 189

The Department of Commerce is not aware

of any patents that would be infringed by this

standard. 190 

As this report went to press, the possibility of infringement litigation was still open (see appendix

c).

The Computer Security Act envisioned a different standards-appeal mechanism. According to

the act, the President could disapprove or modify

standards or guidelines developed by NIST and

promulgated by the Secretary of Commerce, if he

or she determined such an action to be in the public interest. The President cannot delegate authority to disapprove or modify proposed NIST

standards. 191 Should the President disapprove or

modify a standard or guideline that he or she determines will not serve the public interest, notice of

such action must be submitted to the House Committee on Government Operations and the Senate

Committee on Governmental Affairs, and must be

published promptly in the Federal Register.192By .

contrast, interagency discussions and negotiations by agency staffs under the MOU can result

in delay, modification, or abandonment of proposed NIST standards activities, without notice or

the benefit of oversight that is required by law.

NIST and NSA disagree with this conclusion.

According to NIST and NSA officials, NIST has

retained its full authority in issuing the FIPS and

NSA’s role is merely advisory. In May 1994 testimony before the House and Senate, the NIST

Deputy Director stated that:

The Act, as you are aware, authorizes NIST

to draw upon computer security guidelines developed by NSA to the extent that NIST determines they are consistent with the requirements

for protecting sensitive information in federal

computer systems. In the area of cryptography,

we believe that federal agencies have valid requirements for access to strong encryption (and

other cryptographic-related standards) for the

protection of their information. We were also

aware of other requirements of the law enforcement and national security community. Since

NSA is considered to have the world’s foremost

cryptographic capabilities, it only makes sense

(from both a technological and economic point

of view) to draw upon their guidelines and skills

as useful inputs to the development of standards.

The use of NSA-designed and -tested algorithms

iS fully consistent with the Act. We also work

Jointly with NSA in many other areas, including

the development of criteria for the security evaluation of computer systems. They have had

more experience than anyone else in such evaluations. As in the case of cryptography, this is an

area in which NIST can benefit from NSA’s expertise. 193

According to the NSA Director:

Our role in support of [the Clinton Administration’s key escrow initiative] can be summed

l~g “Dl~l(al signature stan~ard (DSS)--Draft,” FIPS PUB XX, Natitmal Institute of Standards and Technology, Feb. 1, 1993.

189 fi-ederu/ Regj~ter, May 19, 1994, op. cit., footnote 16, p. 26209.

In ibid., p. 262 10; also NIST, op. cit., footnote 26, p. 3.

191 ct~n}puter Security Act of 1987, sec. 4.

’

92 lbld.

193 Kanlnler (es.lnlt)ny, May ~, 1994, op. Cit., footnote 13, pp. ] 2. 1‘3. (The same written testimony was ~resented [o the subcommittee on

Technology and Law, Committee on the Judiciary, U.S. Senate, in the morning and to the Subcommittee on Technology, Environment and Aviation, Committee (m Science, Space, and Techn(dogy, U.S. House of Representatives, in the aftem(xm. )
.

Chapter 4 Government Policies and Cryptographic Safeguards 1169

up as “technical advisors” to [NIST] and the

FBI.

As the nation’s signals intelligence (SIGINT)

authority and cryptographic experts, NSA has

long had a role to advise other government organizations on issues that relate to the conduct of

electronic surveillance or matters affecting the

security of communications systems. Our function in the latter category became more active

with the passage of the Computer Security Act

of 1987. The act states that the National Bureau

of Standards (now NIST) may, where appropriate, draw upon the technical advice and assistance of NSA. It also provides that NIST must

draw upon computer system technical security

guidelines developed by NSA to the extent that

NIST determines that such guidelines are consistent with the requirements for protecting sensitive information in federal computer systems.

These statutory guidelines have formed the basis for NSA’s involvement with the key escrow

program.

Subsequent to the passage of the Computer

Security Act, NIST and NSA formally executed

a memorandum of understanding (MOU) that

created a Technical Working Group to facilitate

our interactions. The FBI, though not a signatory to the MOU, was a frequent participant in our

meetings. . . In the ensuing discussions, the FBI

and NIST sought our technical advice and expertise in cryptography to develop a technical

means to allow for the proliferation of top quality encryption technology while affording law

enforcement the capability to access encrypted

communications under lawfully authorized

conditions. 194

In discussions with OTA, officials from both

agencies maintained that no part of the MOU is

contrary to the Computer Security Act of 1987,

and that the controversy and concerns are due to

misperceptions. 195 When OTA inquired about the

MOU/TWG appeals process in particular, officials in both agencies maintained that it does not

conflict with the Computer Security Act of 1987

because the MOU process concerns proposed research and development projects that could lead to

future NIST standards, not fully-developed NIST

standards submitted to the Secretary of Commerce or the President.196 GAO has previously

noted that NIST considered the process appropriate because:

. . . NSA presented compelling national security

concerns which warranted early review and discussion of NIST’s planned computer security related research and development. If concerns

arise, NSA wanted a mechanism to resolve

problems before projects were initiated. 197

In discussions with OTA, senior NIST and NSA

staff stated that the appeals mechanism specified

in the Computer Security Act has never been used,

and pointed to this as evidence of how well the

NIST/NSA relationship is working in implementing the act. 198 These agency officials also told

OTA that the working interactions between the

agency staffs have improved over the past few

years. In discussions with OTA staff regarding a

draft of this OTA report, Clinton Brooks, Special

Assistant to the Director of NSA, stated that cryptography presents special problems with respect

to the Computer Security Act, and that if NSA

waited until NIST announced a proposed standard

to voice national security concerns, the technology would already be "out” via NIST’s public standards process. 199

However, even if implementation of the Computer Security Act of 1987, as specified in the

lq~ M~Conne]l ICstinlony, op. cit., f(~f)tno[e 8, pp. 1-2. Similar passage in Clinton Brooks t~stlnl{)n}, op. cit., foo~f~te” 154, pp. 1-2.

lg~ OTA s[aff intem,lews with N[ST ~d NSA officials in Octt~ber 1993 and January ] 994. See also SOCtJ[ar, op. Cit.. fo(~tn~)te 153, p. 45.

196 OTA staff interviews, ibd.

197 s(~~~lar, op. cit., f(~mmte I 53, p. 45.

19~ OTA staff intewlew ~,l[h M, Rubln (~.puty Chief counsel, NIST) on Jan. ] 3, ] 994 and with four NSA staff (m Jan. ] 9, 1994.

199 C]ln[on Br(~~ks, Specla] Assistant [(} the Director, NSA, Perstmal communicatl(m, May 25, 1994.
170 I Information Security and Privacy in Network Environments

MOU, is satisfactory to both NIST and NSA, this

is not proof that it meets Congress’ expectations in

enacting that legislation. Moreover, chronic public suspicions of and concerns with federal safeguard standards and processes are

counterproductive to federal leadership in promoting responsible use of safeguards and to public confidence in government.

With respect to the EES, many public concerns

stem from the secrecy of the underlying SKIPJACK algorithm, and from the closed processes

by which the the EES was promulgated and is being deployed. Some of these secrecy-related concerns on the part of industry and the public have

focused on the quality of the algorithm and hesitation to use federal endorsement alone (rather than

consensus and widespread inspection) as a quality

guarantee. 200 Others have focused on another

consequence of the use of a classified algorithm—

the need to make it only available in tamper-resistant modules, rather than in software. Still other

concerns related to secrecy focus on a situation

where:

. . . authority over the secret technology underlying the standard [FIPS 185] and the documents

embodying this technology, continues to reside

with NSA. We thus have a curious arrangement

in which a Department of Commerce standard

seems to be under the effective control of a Department of Defense agency. This appears to

violate at least the spirit of the Computer Security Act and strain beyond credibility its provisions for NIST’s making use of NSA’s

expertise. 201

To remedy this, Whitfield Diffie, among others,

has suggested that:

Congress should press the National Institute

of Standards and Technology, with the cooperation of the National Security Agency, to declassify the SKIPJACK algorithm and issue a

revised version of FIPS 185 that specifies the algorithm and omits the key escrow provisions.

This would be a proper replacement for FIPS 46,

the Data Encryption Standard, and would serve

the needs of the U.S. Government, U.S. industry,

and U.S. citizens for years to come.202

It may be the case that using two executive

branch agencies as the means to effect a satisfactory balance between national security and other

public interests in setting safeguard standards will

inevitably be limited, due to intrabranch coordination mechanisms in the National Security Council

and other bodies. These natural coordination

mechanisms will determine the balance between

national-security interests, law-enforcement interests, and other aspects of the public interest.

The process by which the executive branch

chooses this balancing point may inevitably be

obscure outside the executive branch. (For example, the Clinton Administration’s recent cryptography policy study is classified, with no public

summary.) Public “visibility” of the decision

process is through its manifestations—in a FIPS,

in export policies and procedures, and so forth.

When the consequences of these decisions are

viewed by some (or many) of the public as not

meeting important needs, or when the government’s preferred technical “solution” is not considered useful, a lack of visibility, variety, and/or

credible explanation fosters mistrust and frustration.

Technological variety is important in meeting

the needs of a diversity of individuals and communities. Sometimes federal safeguard standards are

eventually embraced as having broad applicability. But it is not clear that the government can-or

zoo A more own ins~ctlon pr~ess pfior to issuance of the EES would have allowed issues like the possible protocol failures in implementing the law-enforcement access field to be dealt with before they became sensationalized in the press, See John Markoff, “Flaw Discovered

in Federal Plan for Wiretapping,” The New York 7irnes, June 2, 1994, p. I and p. D 17; and “At AT&T, NO Joy in Clipper Ftaw,” The New York

fimes, June 3, 1994, pp. DI,D2.

ZOI Dlffle testimony, op. cit., footnote 24, p. 6.

202 Ibid., pp. IO-1 1.
Chapter 4 Government Policies and Cryptographic Safeguards 1171

should--develop all-purpose technical safeguard

standards, or that the safeguard technologies being issued as the FIPS can be made to meet the full

spectrum of user needs. More open processes for

determining how safeguard technologies are to be

developed and/or deployed throughout society

can better ensure that a variety of user needs are

met equitably.

If it is in the public interest to provide a wider

range of technical choices than those provided by

government-certified technologies (i.e., the

FIPS), then vigorous academic and private-sector

capabilities in safeguard technologies are required. For example, private users and corporations might want the option of using third-party

deposit or trusteeship services for cryptographic

keys, in order to guard against accidental loss or

destruction of keys, in order to provide for “digital

powers of attorney,” and so forth.203 But, although private-sector use of the EES is voluntary,

if the EES is used, key escrowing is not “optional.” Private-sector users that don’t want the escrowing arrangements the government has

associated with the EES must look elsewhere.204

As another example, private-sector users who

want to increase the security provided by DESbased technologies can look to “triple-encryption

DES,” but not to any

FIPS) in implementing

t Executive Branch

federal guidance

it.

Implementation

(i.e., a

of

Cryptography Policy

In early 1994, the Clinton Administration announced that it had established an interagency

Working Group on Encryption and Telecommunications to implement its encryption policy and

review changes as development warrant. The

working group is chaired by the Office of Science

and Technology Policy (OSTP) and the National

Security Council (NSC) and includes representatives of the agencies that participated in the tenmonth Presidential review of the impact of

encryption technology and advanced digital telecommunications. 205 According to the announcement, the working group will develop

recommendations on encryption policies and will

● ’attempt to reconcile the need of privacy and the

needs of law enforcement.”206 The group will

work with industry to evaluate possible alternatives to the EES. It will work closely with the Information Policy Committee of the Information

Infrastructure Task Force and will seek privatesector input both informally and through groups

~~~ See parker, op. cit., footnote 9. parker describes problems that ctwld (~cur in (wganizatlons if cryptography is used ~ ith(mt adequate

key management and override capabilities by responsible c(mporatc officers. These prtdiems include keys being held f(}r rans(ml by chsgruntki

employees and data being rendered inaccessible after being encrypted by cmployees who then leave I() start their tn+ n company.

‘M Use of the technique specified in the EES is not the only means by which a variety of he} h(ddcr arrangements can be designed and

implemented. See, e.g., David J. Farber, Professor of Telecommunicati(ms Systems, Unlversit y of Pennsylvania, testimony beftm the Subc(mlmlttee on Technology, Envmmment, and Aviation, Committee on Science, Space, and Technology, U.S. H(mse (}f Rcprcscntatl\cs, May 3,

1994, Frank W. Sudla, Bankers Trust Co., “Bankers Trust Company Intemati(mal Corporate” Key Escrow, ‘- February i994, Sllvi[~ Mlcali. MiT

Lab(wat(my for Computer Science, “Fair Cryptosystems,” MIT/LCS/TR-579.b, Novcmbcr 1993; and Silvi(~ Micah, MIT Lahwat(]ry ft)r CtJnputer Science, “Fair Cryptosystems vs. Cllpper Chip: A Brief Comparison,” NcJ*. 11, 1993.

The Bankers Trust approach is an alternative key-escrow encryption technique based on general-purp~se trusted dm ices and public-key

certificates. According to Bankers Trust, it 1s designed for worldwide business use without requiring govcmmcnt escrtnv agents.

Mlcall describes how any public-key cryptosystcm can be transftmned into a,la~r onc that presenes the secun~y and efficiency of the

original, while allow lng users to select tbe algorithm they prefer, select all their [nvn secre[ keys, and usc software implementatmns If dcsmd.

Fa(r cr?pro~.v.~tem.~ Incorporate a decentralized process for distributing keys to trustees and ensure tha[ c(wrt-auth(wized u irc-tapping ends at

the prescribed tlrne. See Sllvio MicaIi, U.S. Patent 5,276,737 (issued Jan. 4, 1994, appllca[ion filed Apr. 20. 1992) and U.S. Pattmt 5, .? 15,658

(Issued May 24, 1994, applicati[m filed Apr. 19, 1993). The federal government plans t{) liccnsc these patcms fr(ml Mwal] (NIST press release.

July I 1, 1 994)..

20S White H(mse press release, “Working Group on Encryption and Telecommunicatio ns,” Feb. 4, 1994. These agcnclcs w ill include the

State Department, Justice Department, C(mmlerce Department (including NIST), DOD, the Treasug Department. OMB, NSA, the Federal Bureau of ]nvest)gati(m, and the Nati(mal Ec(momic C(wncil (ibid.).

‘w lbld.
172 I Information Security and Privacy in Network Environments

like the National Security Telecommunications

Advisory Committee, CSSPAB, and the Advisory

Council on the National Information Infrastructure.

The Clinton Administration made a start at

working more closely and more openly with industry through a Key Escrow Encryption Workshop held at NIST on June 10, 1994. The

workshop was attended by representatives of

many of the leading computer hardware and software companies, as well as attendees from government (including OTA) and academia. One of

the assumptions stated as the basis for subsequent

action was that, “the results of the deliberations

between the government and private sector shall

be public] y disclosed, consistent with the national

security interests of the country. ’’207 The “proposed action plan” subsequent to the NIST workshop called for:

attendees to prepare corporate positions on

working with the government to seek “other”

approaches to key-escrow encryption. Papers

were to be submitted to NIST by July 1, 1994.

establishment of joint industry-government

working groups (with NIST leadership) to:

evaluate all known key-escrowing proposals

according to criteria jointly developed by government and industry; hold a public seminar/

workshop to discuss and document the results

of this analysis; and prepare a report that will be

used as the basis of subsequent discussions between “senior government officials and members of the private sector.”

Other activities, including examination of existing vehicles for collaborative governmentindustry research and development, development of criteria for determining the suitability

of encryption algorithms to be used in conjunction with key escrowing, examination of intellectual-property and royalty issues related to

alternative key-escrowing techniques, and creation of a government key-escrowing task force

to manage and expedite the search for key-escrow alternatives. The task force would be run

by NIST under policy guidance of the interagency working group led by OSTP and

NSC.

208

Based on the discussion and industry presentations at the meeting, there was increasing interest

in exploring “other” approaches to key-escrow encryption that can be implemented in software,

rather than just in hardware.

On July 20, 1994, acknowledging industry’s

concerns regarding encryption and export policy,

Vice President Al Gore sent a letter to Representative Maria Cantwell that announced a “new

phase” of cooperation among government, industry, and privacy advocates. This will include undertaking presidential studies of the effects of

U.S. export controls and working with industry to

explore alternative types of key-escrow encryption for use in computer networks. Key-escrow

encryption based on unclassified algorithms or

implemented in software will be among the alternatives to be explored. Escrow-system safeguards, use of nongovernmental key-escrow

agents, and liability issues will also be explored.

However, this exploration is in the context of computer and video networks, not telephony; the present EES (Clipper chip) would still be used for

telephone systems.

Additionally, the Advisory Council on the National Information Infrastructure has initiated a

“Mega-Project” on privacy, security, and intellectual property will address applications of cryptography as it sets about “defining and setting

guidelines for personal privacy and intellectual

property protection, outlining methods for protecting First Amendment rights, and for addres207 “proposed Post Meeting Action Plan,” presented at Key Escrow Encryption Workshop, NIST, June IO, 1994 (assumptions).

zos “~{) P)sed post Meeting ACtl~~n Plan,” presented at Key Escrow Encryption Workshop, NIST, Jun. 10, 1994 (action plan items I -S).

The NIST contact is Lynn McNulty, NIST Associate Director for Computer Security.
Chapter 4 Government Policies and Cryptographic Safeguards 1173

sing national security and emergency

preparedness.” 209 The Advisory Council and the

NII Security Issues Forum held a public meeting

on July 15, 1994, to gather input from various user

communities regarding their needs and concerns

with respect to NII security.

Key Escrowing for the EES

In the meantime, however, the Clinton Administration is investing in implementing key escrowing and the EES. In early 1994, NIST estimated it

would take $14 million to establish the escrow

system and $16 million in annual operating costs

for the two agents.

210 Justice Department purchases of EES equipment were estimated at $12.5

million. 211

NIST is the program manager for key escrowing; the Department of Justice and the Federal Bureau of Investigation are family-key agents (the

EES family key is used to encrypt the law enforcement access field).2

2 In February 1994, Attorney

General Reno designated NIST and Treasury’s

Automated Systems Division as the escrow

agents for the EES (Clipper) chip-specific keys

needed to gain access to encrypted communications. The Vice President reportedly deemed this

an “interim solution,” recognizing that having

both escrow agents within the executive branch

does little to quell concerns over the potential for

misuse of the escrowing system. The Clinton Administration reportedly has been considering using private organizations or an office in the court

system as agents.

213 By June 1994, NIST had escrowed 17,000 Clipper chip keys and was preparing for escrowing of Capstone chip keys.214

The Administration is developing auditing and

accountability controls to prevent misuse of keys

(during programming of the chips or in the escrow

agencies) and to increase public confidence. According to NIST, these physical-security and institutional controls include:

m

■

■

m

m

m

m

●

■

m

m

m

magnetically “wiping” computer memories;

locking computers in secure facilities;

using cleared staff;

using shrink-wrapped software;

using safes and secure areas to store programmed EES chips and key components;

packaging key components in tamper-evident

security packaging, with serial numbers;

logging when key components are placed in

and removed from safes;

using ● ’dual controls” for two-person security,

requiring two individuals to get at an escrowed

key component;

using split knowledge—two escrow agents

each have one of the two key components;

using redundancy in storage and transportation

of key components;

encrypting stored key components at each site;

and

ensuring that key components never appear in

the clear outside of a computer—the escrow

agents never see them.215

~i~ Na\l(Jna] ]nfomatlon” Infrastmcture Advis(wy Ctwncil announcement, Apr. 25, 1994.

z If) ~’ederfl/ Reglyfer, V(JI S9, Feb. 9, 1994, pp. 1 I -12. OTA asked for, but did not receive, any subsequent cost figures.

211 Roger Callahan, op. clt , f(~mmte i 82, poin[ 52.

‘i 2 Miles Smld, N] ST, “’The U.S. G(wemment Key Escrow System,” presentation at NIST Key Escrwv Encgp(ion Workshop, June 10,

1993.

2‘3 See Brad Bass, “’White House To Prck Third Party To Htdd One Set of Decryption Keys,” Federal Compurcr Nkck, Mar. 28, 1994, p.

3; and Kevin Power, “Exactly WIN) Will Guard Those Data Encrypti(m Keys’?” Go~errrrncnl Compurer NCMS, Apr. 18, 1994, p. IO.

214 Miles Smid, Manager, Security Techm)logy Group, N] ST, personal communication, May 25, 1994; and Miles Smid, op. cit., footrwte

z 12, June 10, 1994. see also D(m~thy E. Dennmg and Miles Srmd, ‘“Key Escrowing Today,” /EEE (’c)nrnr((rr(c’alluns, in press (September 1994).

21$ Ib]d.
174 I Information Security and Privacy in Network Environments

A June 1994 NIST summary of key-escrow

program activities included: preparation for programming of Capstone chips, modification of the

Secure Hash Algorithm to include the technical

correction announced in April 1994, search for a

possible new escrow agent, and review of “target

system” requirements for the key-escrowing system. As of June 1994, according to NIST, the interim key-escrowing system was using prototype

components, research and development software,

and a combination of manual and automated operations.

The “target” key-escrowing system will have

an upgraded chip programming facility, use cryptographic functions to automate key transportation, develop a trusted escrow agent workstation,

and complete a trusted decryption processor.216

According to NIST, the key-escrow program is in

the second of four phases of development. Phase 1

(September 1993 through March 1994) saw establishment of a prototype chip programming facility

and manual procedures for handling and storage

of escrow components; there was no decryption

processor. In phase 2 (April 1994— ), there is a

prototype decryption processor, a simple keycomponent extraction program, and manual keycomponent release procedures. Phase 3 will see

the first release of a target chip programming facility and an escrow-agent workstation; phase 4 will

see deployment of the final operating capability

for all escrowing subsystems.217

Although these facilities, procedures, and security measures have been developed specifically

for the EES and other implementations of the

SKIPJACK key-escrow encryption algorithm,

they could be made applicable to other forms of

escrowed encryption, including software-based

key-escrow approaches. Some of the established

procedures and security measures would have to

be modified and/or augmented for software-based

escrowed encryption. For encryption (of any type)

implemented in software, the integrity and reliability of the software program and code is of paramount importance.

STRATEGIC AND TACTICAL

CONGRESSIONAL ROLES

Congress has vital strategic roles in cryptography

policy and, more generally, in safeguarding information and protecting personal privacy in a

networked society. This chapter has examined

these issues as they relate to federal safeguard

standards and to agency roles in safeguarding information. Other controversies--current ones like

digital telephony and future ones regarding electronic cash and commerce—will involve similar

issues and can be dealt with within a sufficiently

broad strategic framework.

Cryptography is a fundamental tool for safeguarding information and, therefore, it has become a technology of broad application. Despite

the growth in nongovernmental cryptographic research and safeguard development over the past

20 years, the federal government still has the most

expertise in cryptography and cryptanalysts.

Thus, federal standards (the FIPS) have substantial significance for the development and use of

these technologies. The nongovernmental market

for cryptography products has grown in the last 20

years or so, but is still developing. Export controls

also have substantial significance for the development and use of these technologies.

Therefore, Congress’s choices in setting national cryptography policies (including standards

and export controls) affect information security

and privacy in society as a whole. Congress has an

even more direct role in establishing the policy

guidance within which federal agencies safeguard

information, and in oversight of agency and OMB

measures to implement information security and

privacy requirements. This section presents options for congressional consideration with respect

to safeguarding information in federal agencies

2]6 Miles Smid, op. cit., footnote 212, June 10, 1994.

217 Ibid.
Chapter 4 Government PoIicies and Cryptographic Safeguards 1175

and to national cryptography policy. Congress has

both strategic and tactical options in dealing with

cryptography.

1 The Need for More Open Processes

More open policies and processes can be used

to increase equity and acceptance in implementing cryptography and other technologies. The current controversies over cryptography can be

characterized in terms of tensions between the

government and individuals. They center on the

issue of trust in government. Trust is a particular

issue in cases like cryptography, when nationalsecurity concerns require an asymmetry of information between the government and the

public. Government initiatives of broad public application, formulated in secret and executed without legislation, naturally give rise to concerns

over their intent and application. There is a history

of concern over use of presidential national-security directives-often classified and not publicly

released218—to make and execute policy:

Implementation of policy decisions through

the issuance of undisclosed directives poses a

significant threat to Congress’ ability to discharge its legislative and oversight responsibilities under the Constitution. Operational

activities undertaken beyond the purview of the

Congress foster a grave risk of the creation of an

unaccountable shadow government-a development that would be inconsistent with the principles underlying our republic.219

The process by which the EES was selected and

approved was closed to those outside the executive branch. Furthermore, the institutional and

procedural means by which the EES is being

deployed (such as the escrow management procedures) continue to be developed in a closed forum.

In May 1994 testimony before the House Subcommittee on Technology, Environment, and

Aviation, David Farber (University of Pennsylvania) stated that “open technical processes are best

for solving hard problems,” such as the need for

technology and public policy that:

. . . assure[s] privacy and security, enables law

enforcement to continue to do its job, and, at the

same time, respects fundamental civil liberties

which are at the heart of our constitutional system of government.220

Farber called for a more open process for evolving

proposals like the EES:

While I recognize that a small part of cryptography will always be classified, most of the

development of the proposed escrow system has

been taking place in those room[s] (not smokefilled any more). This process must be brought

out into the sunshine of the technical and policy

community. Proposals like Clipper must be

evolved, if they are to have any chance of success, with the co-operation and understanding of

the industrial and academic community and

their enthusiastic cooperation rather than their

mistrust. This penchant for openness must not

be seen as a power struggle between industry

and government, or as an excuse for revisiting a

decision that technologists dislike for political

reasons. Rather it is a reflection of a deep faith in

open design processes and a recognition that

closed processes invariably lead to solutions

which are too narrow and don’t last.221

In calling for congressional action to ensure

that overall cryptography policy is developed in a

broader context, Jerry Berman of the Electronic

Frontier Foundation (EFF) testified that Congress

should seek the implementation of a set of public

z 1 g H, Rep~, ] 00. ] 53, Pan ][, Op. Cit., ftx)mt~(e 33, pp. 3 I -33. Forexample, the Congressional Research Service (CRS) reported tO the House

Committee on Government Operations that, between 1981 and 1987, over 200 National Security Decision Directives (NSDDS) had been issued

by the Reagan Administration, and only five had been publicly disclosed. According to CRS, the NSDDS comprised an ongoing system of

declared (but usually secret ) U.S. policy statements that, even when available to the public, had to be requested in writing and were not published in the Federa/ Regisrer (ibid.). NSDD-I 45 was one of the directives issued during this period.

219 H. Rept. I ~-] 53, pan 11, op. cit., f{xXnote 33, p. 33.

ZZO Farber testimony, op. cit., ftx)mote 204, p. 4.

22[ Ibid., p. 5.
176 I Information Security and Privacy in Network Environments

policies that would promote the widespread availability of cryptographic systems that seek “reasonable” cooperation with law enforcement and

national security needs; promote constitutional

rights of privacy and adhere to traditional, Fourth

Amendment search and seizure rules; and maintain civilian control over public computer and

communications security, in accordance with the

Computer Security Act of 1987.222

The CSSPAB’s Call for a Broad

Review of Cryptography

In early 1992, prompted by controversies over the

proposed DSS, the Computer System Security

and Privacy Advisory Board advised NIST to

delay a decision on adopting a signature standard

pending a broad national review on the uses of

cryptography.

223 Noting the significant public

policy issues raised during review of the proposed

signature standard, the CSSPAB unanimously approved a resolution to the effect that “a national

level public review of the positive and negative

implications of the widespread use of public and

secret key cryptography is required” in order to

produce a “national policy concerning the use of

cryptography in unclassified/sensitive government and the private sector. ’’224

After the escrowed-encryption initiative was

announced by President Clinton in April 1993—a

complete surprise to the CSSPAB—the Board

was asked by the Deputy Director of NIST to devote its June 1993 meeting to hearing public views

on what was being called the Clipper program,225

The Board then unanimously resolved to gather

additional public and government input. The

Board recommended that the interagency cryptography policy review that was part of the President’s April 1993 announcement take note of the

“serious concerns and problems” the CSSPAB

had identified.226 The CSSPAB subsequently

held four more days of public hearings and resolved (not unanimously) that the preliminary

concerns identified in the June hearings had been

“confirmed as serious concerns which need to be

resolved.” 227 The Board strengthened its views

on the importance of a broad national cryptography policy review, including Congress, before any

new or additional cryptographic “solution” is approved as a U.S. government standard, in order to

resolve the following issues:

1. the protection of law-enforcement and national-security interests;

222 Jerry J. Berman, Executive Director, Electronic Frontier Foundation, testimony before the Subcommittee on Technology, Environment,

and Aviation, Committee on Science, Space, and Technology, U.S. House of Representatives, May 3, 1994, pp. 13-14.

223 Minutes[)f the Mtich ]7. ] 8, 1992 meeting of the CSSpAB (aval]ab]e l’r~)m N]ST). See also David K. Black, op. cit., pp. Ll~g-440; Darryl

K. Taft, “Board Finds NIST’S DSS Unacceptable,” Go}’ernnrent Computer Ne~s, Dec. 23, 1991, pp. 1, 56; and Kevin Power, “Security Board

Calls for Delay on Digital Signature,” Government Computer News, Mar. 30, ‘ 992, p. 114. In the public comments, negative resp{mses twtnunlbered endorsements of the DSS by 90 to 13 (Power, ibid.).

224 csspAB Re501u11{)n N() I of Mar 1.8 1,992. See discussion ofthls resoluti(m and other CSSPAB activities In: Willis H. ware, Chalrnlam

CSSPAB, testimony before the Subcommittee on Technology, Environment, and Awation, Committee on Science, Space, and Technology, U.S.

House of Representatives, May 3, 1994.

225 See wwe teStlmony, ibld$, pp. G-7. see als{} “cvptographlc ]Ssue statements,” submitted {() the C{)mputer system Security and privacy

Advisory Board, revised June 25, 1993 (available from NIST) and “Summary of Comments Received by the Computer System Security and

Privacy Advisory Board (in conjunction with its June 2-4, 1993 public meeting),” also available from N] ST. A full transcript is also available

from NIST.

226 CSSPAB Resolution No. 1 of June 4, 1993 and attachment. The Board noted that Congress should also play a r~~le in the conduct and

approval of the results of the review.

227 CSSpAB Resolution 93-5 of Sept. 1-2, 1993.
Chapter 4 Government Policies and Cryptographic Safeguards 1177

2. the protection of U.S. computer and telecommunications interests in the international marketplace; and

3. the protection of U.S. persons’ interests, both

domestically and internationally.228

This resolution stated that, “. ., the Congress of

the U.S. must be involved in the establishment of

cryptographic policy.’’229

In May 1994 testimony, CSSPAB Chairman

Willis Ware of the RAND Corp. noted that, from

March 1992 to present, based on its publicly available record, the board has:

●

●

●

●

●

focused attention of government agencies on

the cryptographic issue;

focused attention of the public and various

private-sector organizations on the cryptographic issues;

provided a forum in which public views as

well as government views could be heard;

assembled the only public record of ongoing

activities and progress in the Clipper initiative; and

created a public record for national cryptography policy, and its many dimensions—

Clipper, Capstone [OTA note: these refer to

implementations of the EES encryption algorithm], the DSS, public concerns, constitutional concerns.230

The National Research Council Study

The Committees on Armed Services, Commerce,

Intelligence, and Judiciary have asked the National Research Council (NRC) to undertake a twoyear study of national policy with respect to the

use and regulation of cryptography. 23] The study

is intended to address how technology affects the

policy options for various national interests (e.g.,

economic competitiveness with respect to export

controls, national security, law enforcement, and

individual privacy rights) and the process by

which national cryptography policy has been formulated. It will also address the current and future

capabilities of cryptographic technologies suitable for commercial use. In its Resolution 93-7,

the CSSPAB endorsed the NRC study of national

cryptography as the study that ● ’best accomplishes” the Board’s “repeated calls” for a national

review.232 

In June 1994, the NRC was still forming the

study committee; the chair and vice-chair had

been selected. According to the study staff, once

the committee process is fully under way, the

committee will be soliciting the views of and input from as wide a constituency as possible; the

committee hopes that those with interests in the

topic will respond to calls for input ‘*with thought

and deliberation.’’233 A subpanel of the committee

will receive security clearance; the role of this

subpanel will be to ensure that the findings of the

study committee are ● ’consistent with what is

known in the classified world. ’’234

1 National Cryptography Policy

Congress has a major role in establishing the nation’s cryptography policy. Just as cryptography

has become a technology of broad application, so

will decisions about cryptography policy have in228 CSSPAB Rcs{)lu[i(m 93-6 of Sept. 1-2, 1993.

~~9 [bId. See also Ware wstirmmy, op. ci[., fmmme 224.

ZNJ Ware ICsflm[my, i bid., p. I I,

“‘ As part t)f the Defense Authorizatitm Bill for FY 1994 (Public Law 103- 160). the Committees tm Armed Services, Intelligence, Cmnmerce, and Judiciary of the Senate and House of Representatives have asked the National Research C(mncil to undertake a classified, two-year

study of natwnal policy with respect to the use and regulati(m of cryptography. Announcement frt~m the Computer Science and Telecommunlcatlims Board, Nati(mal Research Council, Dec. 7, 1993.

23P CSSPAB Resolutitm 93-7 (Dec. 8-9, 1993).

‘~~ Herb Lln, Senmr Staff Officer, Nati(mal Research Council, Pers(ma] c(m~munlcati(ms, May 1 I and June 1, 1994.

214 Ibid.
178 I Information Security and Privacy in Network Environments

creasingly broad effects on society. The effects of

policies about cryptography are not limited to

technological developments in cryptography, or

even to the health and vitality of companies that

produce or use products incorporating cryptography. Instead, these policies will increasingly affect the everyday lives of most Americans.

Cryptography will be used to help ensure the confidentiality and integrity of health records and tax

returns. It will help speed the way to electronic

commerce, and it will help manage copyrighted

material in electronic form.

Recognizing the importance of the technology

and the policies that govern its development, dissemination, and use, Congress asked the NRC to

conduct a major study that would support a broad

review of cryptography (see above). The results of

the study are expected to be available in 1996.

Given the speed with which the Administration

is acting, information to support a Congressional policy review of cryptography is out of phase

with the implementation of key-escrow encryption. Therefore, Congress may wish to consider

placing a hold on further deployment of key-escrow encryption, pending a congressional policy

review.

An important outcome of a broad review of national cryptography policy would be development

of more open processes to determine how cryptography will be deployed throughout society. This

deployment includes development of the publickey infrastructures and certification authorities

that will support electronic delivery of government services, copyright management, and digital

commerce (see chapters 2 and 3). More open processes would build trust and confidence in government operations and leadership. More openness

would also allow diverse stakeholders to understand how their views and concerns were being

balanced with those of others, in establishing an

equitable deployment of these technologies, even

when some of the specifics of the technology remain classified. More open processes will also allow for public consensus-building, providing

better information for use in congressional oversight of agency activities. Toward this end, Congress may wish to consider the extent to which

the current working relationship between NIST

and NSA will be a satisfactory part of this open

process, or the extent to which the current arrangements should be reevaluated and revised.

Another important outcome would be a sense

of Congress with regard to information policy

and technology and to when the impact of certain technologies is so pervasive and powerful

that legislation is needed to provide public visibility and accountability. For example, many of

the concerns surrounding the EES (and the key-escrowing initiative in general) focus on whether

key-escrow encryption will be made mandatory

for government agencies or the private sector, or if

nonescrowed encryption will be banned, and/or if

these actions could be taken without legislation,

Other concerns focus on whether or not alternative forms of encryption would be available that

would allow private individuals and organizations

the option of depositing keys with one or more

third-party trustees, or not—at their discretion.

These trustees might be within government, or in

the private sector, depending on the nature of the

information to be safeguarded and the identity of

its custodians. (For example, federal policy might

require agencies to deposit cryptographic keys

used to maintain confidentiality of taxpayer data

only with government trustees. Companies and

individuals might be free not to use trustees, or if

they did, could choose third-party trustees in the

private sector or use the services of a government

trustee.) The NRC study should be valuable in

helping Congress to understand the broad range of

technical and institutional alternatives available

for various types of trusteeships for cryptographic

keys, “digital powers of attorney,” and the like.

However, if implementation of the EES and related technologies continues at the current pace,

key-escrow encryption may already be embedded

in information systems.

As part of a broad national cryptography

policy, Congress may wish to periodically examine export controls on cryptography, to ensure that these continue to reflect an appropriate

balance between the needs of signals intelligence and law enforcement and the needs of the

public and business communities. This ex-
Chapter 4 Government Policies and Cryptographic Safeguards 1179

amination would take into account changes in

foreign capabilities and foreign availability of

cryptographic technologies. Information from

industry on the results of licensing reforms and the

executive branch study of the encryption market

and export controls that is included in the 1994 export administration legislation (see discussion

above on export controls and competitiveness)

should provide some near-term information.

However, the scope and methodology of the studies that Congress might wish to use in the future

may differ from these. Congress might wish to

assess the validity and effectiveness of the Administration’s studies by conducting oversight

hearings, by undertaking a staff analysis, or by

requesting a study from the Congressional

Budget Office.

Congressional Responses to

Escrowed-Encryption lnitiatives

Congress also has a more near-term role to play in

determining the extent to which—and how—the

EES and other escrowed-encryption systems will

be deployed in the United States. These actions

can be taken within a long-term, strategic framework. Congressional oversight of the effectiveness of policy measures and controls can allow

Congress to revisit these issues as needed, or as

the consequences of previous decisions become

more apparent.

The EES was issued as a voluntary federal standard; use of the EES by the private sector is also

voluntary. The Clinton Administration has stated

that it has no plans to make escrowed encryption

mandatory, or to ban other forms of encryption:

As the [Clinton] Administration has made

clear on a number of occasions, the key-escrow

encryption initiative is a voluntary one; we have

absolutely no intention of mandating private use

of a particular kind of cryptography, nor of criminalizing the private use of certain kinds of

cryptography. We are confident, however, of the

quality and strength of key-escrow encryption

as embodied in this chip [i.e., the Clipper chip

implementation of EES], and we believe it will

become increasingly attractive to the private

sector as an excellent, easy-to-use method of

protecting sensitive personal and business information. 235

But, absent legislation, these intentions are not

binding for future administrations and also leave

open the question of what will happen if EES and

related technologies do not prove attractive to the

private sector. Moreover, the executive branch

may soon be using the EES and/or related escrowed-encryption technologies to safeguard—

among other things—large volumes of private

information about individuals (e.g., taxpayer

data, healthcare information, and so forth).

For these reasons, the EES and other key-escrowing initiatives are by no means only an executive branch concern. The EES and any subsequent

escrowed-encryption standards also warrant congressional attention because of the public funds

that will be spent in deploying them. Moreover,

negative public perceptions of the EES and the

processes by which encryption standards are developed and deployed may erode public confidence and trust in government and, consequently,

the effectiveness of federal leadership in promoting responsible safeguard use.

In his May 1994 testimony before the Senate

Subcommittee on Technology and the Law, Whitfield Diffie observed that:

In my experience, the people who support the

key escrow initiative are inclined to express substantial trust in the government. I find it ironic

therefore that in its conduct of this program, the

[Clinton] Administration has followed a course

that could hardly have been better designed to

provoke distrust. The introduction of mechanisms designed to assure the government’s ability to conduct electronic surveillance on its

citizens and limit the ability of citizens to protect themselves against such surveillance is a

major policy decision of the information age. It

has been presented, however, as a technicality,

buried in an obscure series of regulations. In so

‘~f Jo Ann Hams testimony, op. cit., fm)tm)te 8, p. 3.
180 I Information Security and Privacy in Network Environments

doing, it has avoided congressional consideration of either its objectives or its budget. The

underlying secrecy of the technology has been

used as a tool for doling out information piecemeal and making a timely understanding of the

issues difficult to achieve.236

In responding to the Clinton Administration’s escrowed-encryption initiatives, and in determining the extent to which appropriated

funds should be used in implementing EES and

related technologies, Congress might wish toaddress the appropriate locations of the key-escrow

agents, particularly for federal agencies, before

additional investments are made in staff and facilities for them. Public acceptance of key-escrow encryption might be improved-but not

assured--by an escrowing system that used separation of powers to reduce perceptions of the

potential for misuse.

In response to an OTA inquiry in late 1993, the

Congressional Research Service examined any

constitutional problems that might arise in placing

an escrow agent elsewhere in government. According to CRS, placing custody of one set of keys

in a federal court or an agency of the judicial

branch would almost certainly pass constitutional

challenge:

First, as we discussed, it is a foregone conclusion that custody of one key could not be vested

in Congress, a congressional agency, or a congressional agent. Using strict separation-ofpowers standards, the Supreme Court has held

that no legislator or agency or agent of the Legislative Branch may be given a role in execution

of the laws. . . Custody of one of the keys and

the attendant duties flowing from that possession is certainly execution of the laws.

Second, placing custody of one of the keys in

a federal court or in an agency of the Judicial

Branch almost certainly pass constitutional

challenge. . .

Under the Fourth Amendment, it is the responsibility of judges to issue warrants for

searches and seizures, including warrants for

wiretapping and other electronic surveillance.

Courts will authorize interceptions of the telecommunications at issue here. Under those circumstances, it is difficult to see a successful

argument that custody of one of the keys [is]

constitutionally inappropriately placed in a judicial agency.

Alternatively, it would seem equally valid to

place custody in a court itself. . . If a court is to

issue a warrant authorizing seizure and decryption of certain telecommunications, effectuation

of such a warrant through the partial agency of

one of two encryption keys hardly seems to stray

beyond the bounds of judicial cognizance.237

With respect to current and subsequent escrowed-encryption initiatives, and in determining the extent to which appropriated funds

should be used in implementing EES and related technologies, Congress may wish to address the issue of criminal penalties for misuse

and unauthorized disclosure of escrowed key

components. Congress may also wish to consider allowing damages to be awarded for individuals or organizations who were harmed by misuse

or unauthorized disclosure of escrowed key components.

Acceptance in the United States, at least, might

be improved if criminal penalties were associated

with misuse of escrowed keys238 and if damages

could be awarded to individuals or organizations

harmed by misuse of escrowed keys. In May 1994

testimony before the House Subcommittee on

Technology, Environment, and Aviation, Jerry

Berman of the Electronic Frontier Foundation

236 Diffle testimony, op. cit., footnote 24, p. 10.

237 Johnny H. Kil]i~, Senior Specialist, AmefiCan Constitutional Law, CRS, “Options for Deposit of Encryption Key Used in certain Electronic Interceptions Outside Executive Bmnch,” memorandum to Joan D. Winston, OTA, Mar. 3, 1994,

238 The Cumnt sta~tes ~gafiing c~rnputer fraud and abuse, counterfeit iiccess devices, and trafficking in passwords (i.e., 18 USC 1029,

1030) might conceivably be stretched to cover some misuses by escrow agents, but are not sufficient.
Chapter 4 Government Policies and Cryptographic Safeguards 1181

noted that the lack of legal rights for those whose

keys were escrowed and lack of stability in escrow

rules served to reduce trust in the system:

As currently written, the escrow procedures

insulate the government escrow agents from any

legal liability for unauthorized or negligent release of an individual’s key. This is contrary to

the very notion of a escrow system, which ordinarily would provide a legal remedy for the depositor whose deposit is released without

authorization. If anything, escrow agents should

be subject to strict liability for unauthorized disclosure of keys.

The Administration has specifically stated

that it will not seek to have the escrow procedures incorporated into legislation or official

regulations. Without formalization of rules, users have no guaranty that subsequent administrations will follow the same rules or offer users

the same degree of protection. This will greatly

reduce trust in the system.239

However, while measures addressing the location of the escrow agents, sanctions, and liability

for key-escrow encryption could increase acceptance of escrowed encryption in the United States,

these measures would not be sufficient to ensure

acceptance in the international business community.

240 Other aspects of key-escrow encryption,

such as use of a classified encryption algorithm,

implementation in hardware only, and key management, could still be troublesome to the international business community (see below).

The International Chamber of Commerce’s

(ICC) ICC Position Paper on International Encryption Policy notes the growing importance of

cryptography in securing business information

and transactions on an international basis and,

therefore, the significance of restrictions and controls on encryption methods:

While the ICC recognises that governments

have a national security responsibility, it cannot

239 Berman testmmny, op. cit, footnote 222, p. 5.

over-emphasise the importance of avoiding artificial obstacles to trade through restrictions and

controls on Encryption Methods. Many countries have or may use a variety of restrictions

which inhibit businesses from employing secure

communications. These restrictions include export and import control laws, usage restrictions,

restrictive licensing arrangements, etc. These

diverse, restrictive measures create an international environment which does not permit businesses to acquire, use, store, or sell Encryption

Methods uniformly to secure their worldwide

communications.

. . .What is needed is an international policy

which minimises unnecessary barriers between

countries and which creates a broader international awareness of the sensitive nature of information

. . . . Furthermore, the ICC believes that restriction in the use of encryption for [crime prevention] would be questionable given that those

engaged in criminal activities would most certainly not feel compelled to comply with the regulations applied to the general business

community. The ICC would urge governments

not to adopt a restrictive approach which would

place a particularly onerous burden on business

and society as a whole.241

ICC’s position paper calls on governments to:

1 ) remove unnecessary export and import controls, usage restrictions, restrictive licensing arrangements and the like on encryption methods

used in commercial applications; 2) enable network interoperability by encouraging global standardization; 3) maximize users’ freedom of

choice; and 4) work together with industry to resolve barriers by jointly developing a comprehensive international policy on encryption.

ICC recommends that global encryption policy

be based on the following broad principles:

2W Nanette DITosto, Manager, TelecommunicationdEc(momic and Financial Policy, U.S. Council for lntemational Business, personal

communicatl(m, Apr. 28, 1994. Among its other activities, the Council is the U.S. affiliate of the lntemational Chamher of Commerce.

241 International Chamber of Commerce, ICC Positron Paper on lnternaiond Encryption Policy (Paris: ICC, 1994), pp. 2,3.
182 I Information Security and Privacy in Network Environments

. Different encryption methods will be needed

to fulfill a variety of user needs. Users should

be free to use and implement the already existing framework of generally available and

generally accepted encryption methods and

to choose keys and key management without

restrictions. Cryptographic algorithms and

key-management schemes must be open to

public scrutiny for the commercial sector to

gain the necessary level of confidence in

them.

● Commercial users, vendors, and governments should work together in an open international forum in preparing and approving

global standards.

. Both hardware and software implementations of encryption methods should be allowed. Vendors and users should be free to

make technical and economic choices about

modes of implementation and operation.

. Owners, providers, and users of encryption

methods should agree on the responsibility,

accountability, and liability for such methods.

. With the exception of encryption methods

specifically developed for military or diplomatic uses, encryption methods should not be

subject to export or import controls, usage restrictions, restrictive licensing arrangements,

or other restrictions.242

In June 1994, the U.S. Public Policy Committee of the Association for Computing Machinery

(USACM) issued its position on the EES and released a special panel report on issues in U.S.

cryptography policy.

243 The USACM recommended, among other things, that the process of

developing the FIPS be placed under the Administrative Procedures Act, reflecting their impact on

nonfederal organizations and the public at

large .

244

9 Safeguarding Information in

Federal Agencies

The forthcoming revision of Appendix 111

("Agency Security Plans”) of OMB Circular

A-130 should lead to improved federal information-security practices. According to OMB, the

revision of Appendix III will take into account the

provisions and intent of the Computer Security

Act of 1987, as well as observations regarding

agency security plans and practices from agency

visits. To the extent that the revised Appendix III

facilitates more uniform treatment across agencies, it can also make fulfillment of Computer Security Act and Privacy Act requirements more

effective with respect to data sharing and secondary uses (see discussion in chapter 3).

The revised Appendix 111 had not been issued

by the time this report was completed. Although

OTA discussed information security and privacy

issues with OMB staff during interviews and a December 1993 OTA workshop, OTA did not have

access to a draft of the revised security appendix.

Therefore, OTA was unable to assess the revision’s potential for improving information security in federal agencies, for holding agency

managers accountable for security, or for ensuring

uniform protection in light of data sharing and

secondary uses.

After the revised Appendix III of OMB Circu -

lar A-130 is issued, Congress may wish to assess

the effectiveness of the OMB'S revised guidelines, including improvements in implementing

the Computer Security Act's provisions regarding agency security plans and training, in order

to determine whether additional statutory requirements or oversight measures are needed.

This might be accomplished by conducting oversight hearings, undertaking a staff analysis,

ana/or requesting a study from the General Ac242 Ibid., pp. 3-4.

’43 Landau et al., op. cit., footnote 6.

‘a USACM position on the Escrowed Encryption Standard, June 30, 1994.
Chapter 4 Government Policies and Cryptographic Safeguards 1183

counting Office. However, the effects of OMB’s

revised guidance may not be apparent for some

time after the revised Appendix III is issued.

Therefore, a few years may pass before GAO is

able to report government-wide findings that

would be the basis for determining the need for

further revision or legislation.

In the interim, Congress might wish to gain

additional insight through hearings to gauge

the reaction of agencies, as well as privacy and

security experts from outside government, to

OMB9

S revised guidelines. Oversight of this sort

might be especially valuable for agencies, such

as the Internal Revenue Service, that are developing major new information systems.

In the course of its oversight and when considering the direction of any new legislation,

Congress might wish to consider measures to:

“ ensure that agencies include explicit provisions for safeguarding information assets in

any information-technology planning documents;

8 ensure that agencies budget sufficient resources to safeguard information assets,

whether as a percentage of informationtechnology modernization and/or operating

budgets, or otherwise; and/or

“ ensure that the Department of Commerce assigns sufficient resources to NIST to support

its Computer Security Act responsibilities, as

well as NIST'S other activities related to safeguarding information and protecting privacy

in networks.

Regarding NIST’s computer-security budget

(see table 4-1 ), OTA has not determined the extent

to which additional funding is needed, or the extent to which additional funding would improve

the overall effectiveness of NIST’s informationsecurity activities. However, in staff discussions

and workshops, individuals from outside and

within government repeatedly noted that NIST’s

security activities were not proactive and that

NIST often lagged in providing useful and needed

standards and guidelines.

245 Many individuals

from the private sector felt that NIST’s limited resources for security activities precluded NIST

from doing work that would also be useful to industry. Additional resources, whether from overall increases in NIST’s budget and/or from

formation of a new Information Technology Laboratory, could enhance NIST’s technical capabilities, enable it to be more proactive, and hence, be

more useful to federal agencies and to industry.

NIST activities with respect to standards and

guidelines related to cryptography are a special

case, however. Increased funding alone will not be

sufficient to ensure NIST’s technological leadership or its fulfillment of the “balancing” role as envisioned by the Computer Security Act of 1987.

With respect to cryptography, national-security

constraints set forth in executive branch policy directives appear to be binding, implemented

through executive branch coordinating mechanisms including those set forth in the NIST/NSA

memorandum of understanding. These

constraints have resulted, for example, in the

closed processes by which the Administration’s

key-escrow encryption initiatives, including the

EES, have been developed and implemented. Increased funding could enable NIST to become a

more equal partner to NSA, at least in deploying

(if not developing) cryptographic standards. But,

if NIST/NSA processes and outcomes are to reflect a different balance of national security and

other public interests, or more openness, than has

been evidenced over the past five years, clear

policy guidance and oversight will be needed.

24S For ~ Samp]e of fedeml.agen~- ‘&Wan[~ ~d id~~” ~gardlng NIST’s role, see Gi]~~, op. cit., f(~~~(~le lb~, ap~ndix M, espeeia]ly pp.

appendix-85 and appendix-86.
Appendix A:

Congressional

Letters of

Request A

WASHINGTON, DC 20510-6250

May 27, 1993

The technological advances which have led to

increased access to network information resources such as

“ digital libraries” and shared databases present serious new

security and privacy challenges that need to be addressed.

These new challenges are clearly the most pressing computer–

security issues that have emerged since enactment of P . L. 100-

235 in 1987 . And the importance of these issues i s

intensified by industry and government trends that are moving

toward a highly integrated, interactive network for use by

both the private and public sectors.

Security and privacy issues in a network environment

are also being brought to the forefront by legislative

initiatives to spur development of high-speed networking, as

well as by elements of the Administration’s technology plan

addressing more widespread use of Internet and development of

1185
186 I Information Security and Privacy in Network Environments

the National Research and Education Network. Members of the

government, research, educational, and business communities,

as well as the general public, are beginning to use network

information resources and will, increasingly, come to rely

upon them.

I am concerned about vulnerabilities from increased

connectivity of information systems within and outside

government. Without timely attention to security issues for

such large scale computer networks, the prospect of

plagiarism, corruption of databases, and improper use of

copyrighted or sensitive corporate data could affect the

privacy and livelihood of millions of Americans.

In order to address these problems, I request that

OTA study the changing needs for protecting privacy and

proprietary information. I would like your review to consider

the technological and institutional. privacy and security

measures that can be used to ensure the integrity,

availability, and proper use of digital libraries and other

network information resources.

To the extent necessary, OTA’s study should assess the need

for new or updated federal computer security guidelines and

federal computer-security and encryption standards. This

study should build upon OTA’s 1987 report on computer security

(Defending Secrets, Sharing Data: New Locks and Keys for

Electronic Information), but should focus on security and

privacy concerns for networked information given the growth in

federal support for large scale networks.

I appreciate your prompt consideration of this

request. To be of most use, OTA’s report should be available

for the Committee’s use not later than Spring 1994.

Should you have any questions, feel free to call me

or Mr. Mark Forman or Mr. Michael Fleming of my staff at 224-

2441.

William V. Roth, J r .

U. S. Senate

WVRlmaf
Appendix A Congressional Letters of Request I 187

WASHINGTON, DC 20510-6250

July 1, 1993

Dr. Roger Herdman

Director

Off ice o f Technology Assessment

600 Pennsylvania Avenue, S . E .

Washington, D . C . 20510-8025

Dear Dr. Herdman:

By this letter, I would like to request to be a

co –sponsor, with Senator William Roth, of the planned OTA

study on I n formation Security and Privacy in Network

Environments .

As Senator Roth said in his May 27, 1993, letter to you,

technological advances are leading to a new world of

networked information in which privacy and security concerns

are critical. It is incumbent upon Congress to be informed

and ready to develop any needed legislative solutions for

these emerging issues.

While these are matters of national importance, they are

also pressing issues within the context of government

operations and the jurisdiction of the Committee on

Governmental Affairs, which I chair, and in which Senator

Roth is Ranking Republican Member. For this same reason, I

requested OTA to undertake its current Electronic Service

Delivery study. And thus, I would like to co-sponsor the

very complementary study on information privacy and security.

Thank YOU very much. If you should have any questions,

please call David Plocher on the Committee staff (224-4751) .

Best regards.

Y John Glenn

Chairman

cc : Senator Roth

JG/dp
188 I Information Security and Privacy in Network Environments

August 10, 1993

Dr. Roger Herdman

Director

Off ice of Technology Assessment

600 Pennsylvania Avenue, S. E .

Washington, D. C. 20510-8025

Dear Dr. Herdman:

As this country moves forward with implementation of

advanced communications networks, we must maintain security and

privacy for all involved. Your planned study on Information

Security and Privacy in Network Environments will enable Congress

to determine how best to ensure security and privacy in these

increasingly complex technological times.

As Chairman of the House Subcommittee on Telecommunications

and Finance, I am committed to supporting communications that

will both enhance education, health care, business, and

individuals, and protect the users of such communications.

Accordingly, I request to be a co-sponsor, along with Senators

Roth and Glenn, of your timely study on network security and

privacy.

Thank you for your work in this area. Please do not

hesitate to contact me, or Gerry Waldron or Colin Crowell of my

Subcommittee staff, at 226-2424 should you have any questions or

concerns as you proceed.

Sincerely,

L~_.

Edward J. Markey

Chairman

cc: Senator Roth

Senator Glenn
Appendix B:

Computer

Security Act

and Related

Documents
190 I Information Security and Privacy in Network Environments

101 STAT. 1724 PUBLIC LAW 1OO-235–JAN. 8, 1988

Jan 8, 1988

[H R 145]

15 Usc 272.

15 USC 2?8h

15 Usc 27&z-3

Public Law 100-235

100th Congress

An Act

To provide for a computer standards program within the National Bureau of Standards, to provide for Government-wide computer security, and to provide for the

training in security matters of persons who are involved in the management,

operation, and use of Federal computer systems, and for other purposes.

Be it enacted by the Senate and House of Representatives of the

United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the “Computer Security Act of 1987”.

SEC. 2. PURPOSE.

(a) IN GENERAL.--The Congress declares that improving the security and privacy of sensitive information in Federal computer systems is in the public interest, and hereby creates a means for

establishing minimum acceptable security practices for such systems, without limiting the scope of security measures already

planned or in use.

b) SPECIFIC PURPOSES--The purposes of this Act are-

(1) by amending the Act of March 3, 1901, to assign to the

National Bureau of Standards responsibility for developing

standards and guidelines for Federal computer systems, including responsibility for developing standards and guidelines

needed to assure the cost-effective security and privacy of sensitive information in Federal computer systems, drawing on the

technical advice and assistance (including work products) of the

National Security Agency, where appropriate;

(2) to provide for promulgation of such standards and guidelines by amending section ill(d) of the Federal Property and

Administrative Services Act of 1949;

(3) to require establishment of security plans by all operators

of Federal computer systems that contain sensitive information;

and

(4) to require mandatory periodic training for all persons

involved in management, use, or operation of Federal computer

systems that contain sensitive information.

SEC. 3. ESTABLISHMENT OF COMPUTER STANDARDS PROGRAM.

The Act of March 3, 1901 (15 U.S.C. 271-278 h), is amended—

(1) in section 2(f), by striking out “and” at the end of paragraph (18), by striking out the period at the end of paragraph

(19) and inserting in lieu thereof: “; and”, and by inserting after

such paragraph the following:

“(20) the study of computer systems (as that term is defined in

section 20(d) of this Act) and their use to control machinery and

processes.”;

(2) by redesignating section 20 as section 22, and by inserting

after section 19 the following new sections:

“SEC. 20. (a) The National Bureau of Standards shall–
Appendix B Computer Security Act and Related Documents

“(l) have the mission of developing standards, guidelines, and

associated methods and techniques for computer systems;

"

((2) except as described in paragraph (3) of this subsection

(relating to security standards), develop uniform standards and

guidelines for Federal computer systems, except those systems

excluded by section 2315 of title 10, United States Code, or

section 3502(2) of title 44, United States Code;

"(3) have responsibility within the Federal Government for

developing technical, management, physical, and administrative standards and guidelines for the cost-effective security and

privacy of sensitive information in Federal computer systems

except—

“(A) those systems excluded by section 2315 of title 10,

United States Code, or section 3502(2) of title 44, United

States Code; and

“(B) those systems Which are protected at all times by

procedures established for information which has been

specifically authorized under criteria established by an

Executive order or an Act of Congress to be kept secret in

the interest of national defense or foreign policy,

the primary purpose of which standards and guidelines shall be

to control loss and unauthorized modification or disclosure of

sensitive information in such systems and to prevent computerrelated fraud and misuse;

“(4) submit standards and guidelines developed pursuant to

paragraphs (2) and (3) of this subsection, along with recommendations as to the extent to which these should be made

compulsory and binding, to the Secretary of Commerce for

promulgation under section 111(d) of the Federal Property and

Administrative Services Act of 1949;

“(5) develop guidelines for use by operators of Federal computer systems that contain sensitive information in training

their employees in security. awareness and accepted security

practice, as required by section 5 of the Computer Security Act

of 1987; and

“(6) develop validation procedures for, and evaluate the

effectiveness of, standards and guidelines developed pursuant to

paragraphs (l), (2), and (3) of this subsection through research

and liaison with other government and private agencies.

“(%) In fulfilling subsection (a) of this section, the National Bureau

of Standards is authorized—

“(1) to assist the private sector, upon request, in using and

applying the results of the programs and activities under this

section;

“(2) to make recommendations, as appropriate, to the

Administrator of General Services on policies and regulations

proposed pursuant to section ill(d) of the Federal Property and

Administrative Services Act of 1949;

“(3) as requested, to provide to operators of Federal computer

systems technical assistance in implementing the standards and

guidelines promulgated pursuant to section 111(d) of the Federal Property and Administrative Services Act of 1949;

“(4) to assist, as appropriate, the Office of Personnel Manage- Regulations.

ment in developing regulations pertaining to training, as required by section 5 of the Computer Security Act of 1987;

“(5) to perform research and to conduct studies, as needed, to

determine the nature and extent of the vulnerabilities of, and to
192 I Information Security and Privacy in Network Environments

101 STAT. 1726 PUBLIC LAW 1OO-235–JAN. 8, 1988

devise techniques for the cost-effective security and privacy of

sensitive information in Federal computer systems; and

“(6) to coordinate closely with other agencies and offices

(including, but not limited to, the Departments of Defense and

Energy, the National Security Agency, the General Accounting

Office, the Office of Technology Assessment, and the Office of

Management and Budget)-

“(A) to assure maximum use of all existing and planned

programs, materials, studies, and reports relating to computer systems security and privacy, in order to avoid unnecessary and costly duplication of effort; and

“(B) to assure, to the maximum extent feasible, that

standards developed pursuant to subsection (a) (3) and (5)

are consistent and compatible with standards and procedures developed for the protection of information in Federal

computer systems which is authorized under criteria established by Executive order or an Act of Congress to be kept

secret in the interest of national defense or foreign policy.

“(c) For the purposes of—

“(1) developing standards and guidelines for the protection of

sensitive information in Federal computer systems under

subsections (a)(l) and (a)(3), and

“(2) performing research and conducting studies under

subsection (b)(5),

the National Bureau of Standards shall draw upon computer system

technical security guidelines developed by the National Security

Agency to the extent that the National Bureau of Standards determines that such guidelines are consistent with the requirements for

protecting sensitive information in Federal computer systems.

“(d) As used in this section—

(1) the term ‘computer system’—

“(A) means any equipment or interconnected system or

subsystems of equipment that is used in the automatic

acquisition, storage, manipulation, management, movement, control, display, switching, interchange, transmission, or reception, of data or information; and

“(B) includes—

“(i) computers;

“(ii) ancillary equipment;

“(iii) software, firmware, and similar procedures;

“(iv) services, including support services; and

“(v) related resources as defined by regulations

issued by the Administrator for General Services

pursuant to section 111 of the Federal Property and

Administrative Services Act of 1949;

“(2) the term ‘Federal computer system’—

“(A) means a computer system o rated by a Federal

agency or by a contractor of a Federal agency or other

organization that processes information (using a computer

system) on behalf of the Federal Government to accomplish

a Federal function; and

“(B) includes automatic data processing equipment as

that term is defined in section ill(a)(2) of the Federal

Property and Administrative Services Act of 1949;

“(3) the term ‘operator of a Federal computer system’ means a

Federal agency, contractor of a Federal agency, or other

organization that processes information using a computer
Appendix B Computer Security Act and Related Documents ] 193

PUBLIC LAW 1OO-235—JAN. 8, 1988 101 STAT. 1727

system on behalf of the Federal Government to accomplish a

Federal function;

“(4) the term ‘sensitive information’ means any information,

the loss, misuse, or unauthorized access to or modification of

which could adversely affect the national interest or the conduct of Federal programs, or the privacy to which individuals

are entitled under section 552a of title 5, United States Code

(the Privacy Act), but which has not been specifically authorized

under criteria established by an Executive order or an Act of

Congress to be kept secret in the interest of national defense or

foreign policy; and

“(5) the term ‘Federal agency’ has the meaning given such

term by section 3(b) of the Federal Property and Administrative

Services Act of 1949.

“SEC. 21. (a) There is hereby established a Computer System IS usc xgg-~

Security and Privacy Advisory Board within the Department of

Commerce. The Secretary of Commerce shall appoint the chairman

of the Board. The Board shall be composed of twelve additional

members appointed by the Secretary of Commerce as follows:

“(l) four members from outside the Federal Government who

are eminent in the computer or telecommunications industry,

at least one of whom is representative of small or medium sized

companies in such industries;

“(2) four members from outside the Federal Government who

are eminent in the fields of computer or telecommunications

technology, or related disciplines, but who are not employed by

or representative of a producer of computer or telecommunications equipment; and

“(3) four members from the Federal Government who have

computer systems management experience, including experience in computer systems security and privacy, at least one of

whom shall be from the National Security Agency.

“(b) The duties of the Board shall be-

“(l) to identify emerging managerial, technical, administrative, and physical safeguard issues relative to computer systems

security and privacy;

“(2) to advise the Bureau of Standards and the Secretary of

Commerce on security and privacy issues pertaining to Federal

computer systems; and

“(3) to report its findings to the Secretary of Commerce, the Reports.

Director of the Office of Management and Budget, the Director

of the National Security Agency, and the appropriate committees of the Congress.

“(c) The term of office of each member of the Board shall be four

years, except that—

“(1) of the initial members, three shall be appointed for terms

of one ear, three shall be appointed for terms of two years,

three shall be appointed for terms of three years, and three

shall be appointed for terms of four years; and

“(2) any member appointed to fill a vacancy in the Board shall

serve for the remainder of the term for which his predecessor

was appointed.

“(d) The Board shall not act in the absence of a quorum, which

shall consist of seven members.

“(e) Members of the Board, other than full-time employees of the

Federal Government, while attending meetings of such committees

or while otherwise performing duties at the request of the Board
194 I Information Security and Privacy in Network Environments

101 STAT. 1728 PUBLIC LAW 1OO-235-JAN. 8, 1988

hlational Bureau

of Standards Act.

15 USC 271 note.

President of U.S.

Federal

Register,

publication.

Federal

Register,

publication,

Chairman while away from their homes or a regular place of

business, may be allowed travel expenses in accordance with sub

chapter I of chapter 57 of title 5, United States Code.

“(f) TO provide the staff services necessary to assist the Board in

carrying out its functions, the Board may utilize personnel from the

National Bureau of Standards or any other agency of the Federal

Government with the consent of the head of the agency.

“(g) AS used in this section, the terms ‘computer system’ and

‘Federal computer system’ have the meanings given in section 20(d)

of this Act.”; and

(3) by adding at the end thereof the following new section:

“Sec. 23. This Act may be cited as the National Bureau of

Standards Act.”.

SEC. 4. AMENDMENT TO BROOKS ACT.

Section Ill(d) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 759(d)) is amended to read as follows:

“(d)(l) The Secretary of Commerce shall, on the basis of standards

and guidelines developed by the National Bureau of Standards

pursuant to section 20(a) (2) and (3) of the National Bureau of

Standards Act, promulgate standards and guidelines pertaining to

Federal computer systems, making such standards compulsory and

binding to the extent to which the Secretary determines necessary

to improve the efficiency of operation or security and privacy of

Federal computer systems. The President may disapprove or modify

such standards and guidelines if he determines such action to be in

the public interest. The President’s authority to disapprove o r

modify such standards and guidelines may not be delegated. Notice

of such disapproval or modification shall be submitted promptly to

the Committee on Government Operations of the House of Rep

resentatives and the Committee on Governmental Affairs of the

Senate and shall be published promptly in the Federal Register.

Upon receiving notice of such disapproval or modification, the Secretary of Commerce shall immediately rescind or modify such standards or guidelines as directed by the President.

“(2) The head of a Federal agency may employ standards for the

cost-effective security and privacy of sensitive information in a

Federal computer system within or under the supervision of that

agency that are more stringent than the standards promulgated by

the Secretary of Commerce, if such standards contain, at a minimum, the provisions of those applicable standards made compulsory

and binding by the Secretary of Commerce.

“(3) The standards determined to be compulsory and binding may

be waived by the Secretary of Commerce in writing upon a determination that compliance would adversely affect the accomplishment of the mission of an operator of a Federal computer system, or

cause a major adverse financial impact on the operator which is not

offset by Government-wide savings. The Secretary may delegate to

the head of one or more Federal agencies authority to waive such

standards to the extent to which the Secretary determines such

action to be necessary and desirable to allow for time] and effective

implementation of Federal computer systems standards . The head of

such agency may redelegate such authority only to a senior official

designated pursuant to section 3506(b) of title 44, United States

Code. Notice of each such waiver and delegation shall be transmitted promptly to the Committee on Government Operations of the

House of Representatives and the Committee on Governmental
Appendix B Computer Security Act and Related Documents 1195

PUBLIC LAW 1OO-235–JAN. 8, 1988 101 STAT. 1729

Affairs of the Senate and shall be published promptly in the Federal

Register.

“(4) The Administrator shall revise the Federal information re- Regulations

sources management regulations (41 CFR ch. 201) to be consistent

with the standards and guidelines promulgated by the Secretary of

Commerce under this subsection.

“(5) As used in this subsection, the terms ‘Federal computer

system’ and ‘operator of a Federal computer system’ have the

meanings given in section 20(d) of the National Bureau of Standards

Act.”.

SEC. 5. FEDERAL COMPUTER SYSTEM SECURITY- TRAINING. 40 USC 759 not-e,

(a) IN GENERAL.—Each Federal agency shall provide for the

mandatory periodic training in computer security awareness and

accepted computer security practice of all employees who are involved with the management, use, or operation of each Federal

computer system within or under the supervision of that agency.

Such training shall be—

(1) provided in accordance with the guidelines developed

pursuant to section 20(a)(5) of the National Bureau of Standards

Act (as added by section 3 of this Act), and in accordance with

the regulations issued under subsection (c) of this section for

Federal civilian employees; or

(2) provided by an alternative training program approved by

the head of that agency on the basis of a determination that the

alternative training program is at least as effective in accomplishing the objectives of such guidelines and regulations.

(b) TRAINING OBJECTIVES. —Training under this section shall be

started within 60 days after the issuance of the regulations described in subsection (c). Such training shall be designed—

(1) to enhance employees’ awareness of the threats to and

vulnerability of computer systems; and

(2) to encourage the use of improved computer security

practices.

(c) REGULATIONS . —Within six months after the date of the enactment of this Act, the Director of the Office of Personnel Management shall issue regulations prescribing the procedures and scope of

the training to be provided Federal civilian employees under subsection (a) and the manner in which such training is to be carried out.

SEC. 6. ADDITIONAL RESPONSIBILITIES FOR COMPUTER SYSTEMS 40 USC 759 note.

SECURITY AND PRIVACY.

(a) IDENTIFICATION OF SYSTEMS THAT CONTAIN SENSITIVE INFORMATION.—Within 6 months after the date of enactment of this Act,

each Federal agency shall identify each Federal computer system,

and system under development, which is within or under the supervision of that agency and which contains sensitive information.

(b) SECURITY Plan.—Within one year after the date of enactment

of this Act, each such agency shall, consistent with the standards,

guidelines, policies, and regulations prescribed pursuant to section

111(d) of the Federal Property and Administrative Services Act of

1949, establish a plan for the security and privacy of each Federal

computer system identified by that agency pursuant to subsection

(a) that is commensurate with the risk and magnitude of the harm

resulting from the loss, misuse, or unauthorized access to or modification of the information contained in such system. Copies of each

such plan shall be transmitted to the National Bureau of Standards
196 I Information Security and Privacy in Network Environments

101 STAT. 1730 PUBLIC LAW 1OO-235-JAN. 8, 1988

40 USC 759 note

40 USC ’759 note

Public

information.

and the National Security Agency for advice and comment. A

summary of such plan shall be included in the agency’s five-year

plan required by section 3505 of title 44, United States Code. Such

plan shall be subject to disapproval by the Director of the Office of

Management and Budget. Such plan shall be revised annually as

necessary.

SEC. 7. DEFINITIONS.

As used in this Act, the terms “computer system”, “Federal

computer system”, “operator of a Federal computer system”,

“sensitive information”, and “Federal agency” have the meanings

given in section 20(d) of the National Bureau of Standards Act (as

added by section 3 of this Act).

SEC. 8. RULES OF CONSTRUCTION OF ACT.

Nothing in this Act, or in any amendment made by this Act, shall

be construed—

(1) to constitute authority to withhold information sought

pursuant to section 552 of title 5, United States Code; or

(2) to authorize any Federal agency to limit, restrict, regulate,

or control the collection, maintenance, disclosure, use, transfer,

or sale of any information (regardless of the medium in which

the information may be maintained) that is—

(A) privately-owned information;

(B) disclosable under section 552 of title 5, United States

Code, or other law requiring or authorizing the public

disclosure of information; or

(C) public domain information.

Approved January 8, 1988.

LEGISLATIVE HISTORY--H.R. 145:

HOUSE REPORTS: No. 100-153, Pt. 1 (Comm. on Science, Space, and Technology) and

Pt. 2 (Comm. on Government Operations).

CONGRESSIONAL RECORD, vol. 133 (1987):

June 22, considered and passed House.

Dec. 21, considered and passed Senate.

WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 24 (1988):

Jan. 8, Presidential statement.
Appendix B Computer Security Act and Related Documents 1197

MEMORANDUM OF UNDERSTANDING

BETWEEN

THE DIRECTOR OF THE NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY

AND

THE DIRECTOR OF THE NATIONAL SECURITY AGENCY

CONCERNING

THE IMPLEMENTATION OF PUBLIC LAW 100-235

Recognizing that:

Under Section 2 of the Computer Security Act of 1987

(Public Law 100-235), (the Act), the National Institute o f

Standards and Technology (NIST) has the responsibility within the

Federal Government for:

1. Developing technical, management, physical, an d

administrative standards and guidelines for the cost-effectiv e

security and privacy of sensitive information in Federal compute r

systems as defined in the Act; and,

2. Drawing on the computer system technical security

guidelines of the National Security Agency (NSA) in this regard

where appropriate.

B. Under Section 3 of the Act, the NIST is to coordinat e

closely with other agencies and offices, including the NSA, t o

assure :

1. Maximum use of all existing and planned programs,

materials, studies , and reports relating to computer system s

security and privacy , in order to avoid unnecessary and costl y

duplication of effort; and ,

2. To the maximum extent feasible, that standards developed

by the NIST under the Act are consistent and compatible with

standards and procedures developed for the protection of

classified information in Federal computer systems.

c. Under the Act, the Secretary of Commerce has the

responsibility, which he has delegated to the Director of NIST,

for appointing the members of the Computer System Security and

Privacy Advisory Board, at least one of whom shall be from the NSA.

Therefore, in furtherance of the purposes of this MOU, the

Director of the NIST and the Director of the NSA hereby agree as

follows:
198 I Information Security and Privacy in Network Environments

I . The NIST will :

1. Appoint to the Computer Security and Privacy Advisor y

Board at least one representative nominated by the Director of th e

NSA.

2. Draw upon computer system technical security guidelines

developed by the NSA to the extent that the NIST determines that

such guidelines are consistent with the requirements for

protecting sensitive information in Federal computer systems.

3 . Recognize the NSA-certified rating of evaluated truste d

systems under the Trusted Computer Security Evaluation Criteri a

Program without requiring additional evaluation .

4. Develop telecommunications security standards for

protecting sensitive unclassified computer data, drawing upon the

expertise and products of the National Security Agency, to the

greatest extent possible, in meeting these responsibilities in a

timely and cost effective manner.

5 . Avoid duplication where possible in entering into

mutually agreeable arrangements with the NSA for the NSA support.

6 . Request the NSA’s assistance on all matters related t o

cryptographic algorithms and cryptographic techniques including

but not limited to research, development, evaluation, or

endorsement.

II. The NSA will:

1. Provide the NIST with technical guidelines in trusted

technology, telecommunications security, and personal

identification that may be used in cost-effective systems for

protecting sensitive computer data.

2. Conduct or initiate research and development programs in

trusted technology , telecommunications security, cryptographi c

techniques and personal identification methods.

3. Be responsive to the NIST’s requests for assistance in

respect to all matters related to cryptographic algorithms an d

cryptographic techniques including but not limited to research ,

development, evaluation, or endorsement.

4. Establish the standards and endorse products for

application to secure systems covered in 10 USC Section 2315 (the

Warner Amendment) .
Appendix B Computer Security Act and Related Documents 1199

5. Upon request by Federal agencies, their contractors and

other government–sponsored entities, conduct assessments of the

hostile intelligence threat to federal information systems, and

provide technical assistance and recommend endorsed products for

application to secure systems against that threat.

III. The NIST and the NSA shall:

1. Jointly review agency plans for the security and privacy

of computer systems submitted to NIST and NSA pursuant to section

6(b) of the Act.

2. Exchange technical standards and guidelines as necessary

to achieve the purposes of the Act.

3. Work together to achieve the purposes of this memorandum

with the greatest efficiency possible, avoiding unnecessary

duplication of effort.

4. Maintain an ongoing, open dialogue to ensure that each

organization remains abreast of emerging technologies and issues

effecting automated information system security in computer-based

systems.

5. Establish a Technical Working Group to review and analyze

issues of mutual interest pertinent to protection of systems that

process sensitive or other unclassified information. The Group

shall be composed of six federal employees, three each selected by

NIST and NSA and to be augmented as necessary by representatives

of other agencies. Issues may be referred to the group by either

the NSA Deputy Director for Information Security or the NIST

Deputy Director or may be generated and addressed by the group,

upon approval by the NSA DDI or NIST Deputy Director. Within 14

days of the referral of an issue to the Group by either the NSA

Deputy Director for Information Security or the NIST Deputy

Director, the Group will respond with a progress report and plan

for further analysis, if any.

6. Exchange work plans on an annual basis on all research

and development projects pertinent to protection of systems that

process sensitive or other unclassified information, including

trusted technology, technology for protecting the integrity and

availability of data, telecommunications security and personal

identification methods. Project updates will be exchanged

quarterly, and project reviews will be provided by either party

upon request of the other party.

7. Ensure the Technical Working Group reviews prior to

public disclosure all matters regarding technical systems security

techniques to be developed for use in protecting sensitive

information in federal computer systems to ensure they are
200 I Information Security and Privacy in Network Environments

consistent With the national security of the United States. If

NIST and NSA are unable to resolve such an issue within 60 days,

either agency may elect to raise the issue to the Secretary o f

Defense and the Secretary of Commerce . It is recognized that suc h

an issue may be referred to the President through the NSC fo r

resolution . No action shall be taken on such an issue until it is

resolved.

8. Specify additional operational agreements in annexes to

this MOU as they are agreed to by NSA and NIST.

Iv. Either party may elect to terminate this MOU upon si x

months written notice .

This MOU is effective upon approval of both signatories.

/?~q’

RA~OND G. KAMMER w. o.

LJ4L

STUDEMAN

Acting Director Vice Admiral, U.S. Navy

National Institute of Director

Standards and Technology National Security Agency
Appendix B Computer Security Act and Related Documents 1201

22 December 1989

Dear Mr. Chairman and Mr. Horton:
202 I Information Security and Privacy in Network Environments

Both NIST and NSA are keenly aware of the significant changes in

the administration of NIST'S program that were mandated by the

Computer Security Act, and fully support the Act and its intent .

The Act has strengthened the authority of the Secretary of Com -

merce in the preparation and promulgation of Federal Informatio n

Processing Standards (FIPS) and guidelines for the protection o f

unclassified information stored in federal computer systems.

Before the Act was passed, the basic authority for promulgatin g

FIPS rested with the President under the Brooks Act, with the

role of the Secretary of Commerce being delegated through Executive Order 11717 . Delegated authority is inherently susceptibl e

of weakening or re-definition by the delegating official.

The Act not only placed the government computer security program

for systems that process sensitive unclassified information

explicitly and directly into the hands of the Secretary of

Commerce, but suppressed any erosion of the Secretary’s authority

that might have been threatened by the 1985 promulgation of

National Security Decision Directive (NSDD) - 145, “National

Policy on Telecommunications and Automated Information Systems

Security." NSDD-145 obliged Commerce to submit to an interagency

review of FIPS just before they were to be issued by the Secretary -- a step viewed by many as undermining Commerce authority

to issue FIPS and as an intrusion of military-related agencies ,

particularly NSA , into civilian matters . Finally, NSDD-145, an d

more particularly certain policy documents issued pursuant to it,

had been interpreted by some to give the Department of Defense

and NSA authority to make determinations regarding what information in computers required protection. Since passage of the Act,

it has been recognized that such policies have no applicability

to systems within the purview of the Act. This recognition is

reflected in the letter to Chairman Conyers from the Assistant to

the President for National Security Affairs, dated June 26, 1989.

Just as important as the direct authority the Act lodged with th e

Secretary of Commerce was the Act’s careful, narrow definition of

that authority, which implies strict limits on the scope of th e

NIST Computer Security Program. The power of the Secretary is

limited to promulgating standards and guidelines for hardware and

software to protect the unclassified but sensitive informatio n

contained in federal computer systems. The Act confers no power

to issue any standard regulating the types of information suc h

systems may contain or who may be given access to such information . These matters are entirely the responsibility of indivi -

dual agencies.

In drafting the MOU, both agencies considered the intent of the

Computer Security Act to be both paramount and plain. We accepted as a given that NIST, not NSA, has the responsibility and

authority to set security standards applicable to Federal Government computer systems that contain sensitive but unclassified
Appendix B Computer Security Act and Related Documents 1203

information . Similarly clear in our minds was that NSA’s role

vis-a-vis the security of these systems is solely to provide the

benefits of relevant NSA technical expertise for NIST to use as

it sees fit. Having no confusion regarding the two agencies’

basic roles under the Act, we saw no need to recite them in the

MOU. Nor, as we mentioned above, did we see a need to detail the

many specific activities or programs NIST may undertake in implementing the Act. Our purpose was simply to express positively

(1) the interrelationship between NIST and NSA to implement the

purposes of the Act , and (2) our understandings regarding NSA

programs or activities which overlap with or are affected by NIS T

activities under the Act.

The concerns of GAO focused on four areas in the MOU. In particular, GAO viewed the ‘scope of activities for the Technical

Working Group it establishes to be unclear and to raise uncertainties about the extent of NSA involvement in NIST functions.

In three other areas, GAO considered the MOU "not clear about the

respective roles of NSA and NIST. ” All four areas of concern ar e

outlined below , and clarification is provided. The areas primarily involving no more than an apparent imbalance in the statement

of agency roles are discussed first.

a . The inclusion of research and development activities

for NSA but not for NIST.

Clarification : As we explained earlier, the MOU was intended to

outline only areas of helpful agency interaction in support o f

the NIST Computer Security Program. We did not undertake to

recite NIST’s program direction or its many independent compute r

security-related activities . Such a recitation would have bee n

particularly unnecessary in the R&D area because the Act clearly

gives NIST the authority and duty to conduct research and development. Indeed, NIST does significant computer security R&D and

expects to continue this work. The provision of the MOU relating

to R&D was intended: (i) to acknowledge by implication that NSA’s

R&D aimed at securing systems handling classified information may

apply to the systems whose protection is NIST'S responsibility;

and (ii) to acknowledge that NSA will continue these R&D efforts

and affirm that NSA will make their results available to NIST as

appropriate.

b. The automatic acceptance of NSA evaluations of Trusted

Systems as sufficient for NIST program purposes.

Clarification: This provision reflects the understanding and

intent of Congress in passing the Act that NIST (then NBS) would

not require computer system developers to put their systems

through a certification process by NIST after they had passed the

stringent requirements NSA imposes upon systems handling classified materials. Section 4 of the Act mandates the essence of

this policy by amending section Ill(f) of the Federal Property
204 I Information Security and Privacy in Network Environments

and Administrative Services Act to include a subsection (2)

reading:

(2) The head of a Federal agency may employ standards

for the cost effective security and privacy of sensitive information in a Federal computer system within or

under the supervision of that agency that are more

stringent than the standards promulgated by the Secretary of Commerce, if such standards contain, at a

minimum, the provisions of those applicable standards

made compulsory and binding by the Secretary of

Commerce.

As Senator Roth explained:

. . . The process of testing and validating [computer

security] systems for use by the Federal Government,

particularly our defense and intelligence agencies, is

very rigorous and can take a long time. Some [private

firms which are in the business of developing such

systems] . . . were concerned that they might be forced

to run the gauntlet twice: once through NSA's National

Computer Security Center and then again through the

National Bureau of Standards. I have been assured by

NBS that, once a system has passed muster at NSA'S

Computer Security Center, it would not have to go

through the NBS process for use by agencies with

unclassified systems. If the system provides the

additional safeguarding required for classified

systems, it would clearly be sufficient for use by

agencies with unclassified systems. (Cong. Rec.

S18637, Dec. 21, 1987.)

The Committee may wonder why our two agencies decided to recite

in the MOU a policy that primarily benefits third parties --

i.e., federal "user” agencies and developers of NSA-certified

systems. The purpose was to assure NSA that NIST will accept NSA

trusted system evaluations and burden neither agency with consultations on superfluous additional protections. Finally, we note

that although this provision of the MOU indicates that NIST will

‘recognize the NSA-certified ratings . . . without requiring additional evaluation," it is not meant to suggest an identity

between NIST's criteria and those of NSA. Nor does it require

that NSA trusted systems criteria be met by systems subject to

NIST standards.
Appendix B Computer Security Act and Related Documents 1205

c. Mention in the MOU of NSA’s threat

assessments of information systems without

corresponding mention of the NIST role in

assessing information system vulnerability.

Clarification: GAO indicated a concern that by mentioning only

the NSA role in conducting assessments of the hostile intelligence threat to federal information systems, the MOU “suggests a

diminution of NIST responsibilities for assessing computer

system vulnerability. As we will explain, your Committee can be

assured that it was not our intent in this or any other part of

the MOU to diminish NIST’s leadership or operating

responsibilities under the Act.

Once again we note that the MOU was intended to outline only

areas of agency interactio n -- not to recite NIST's independen t

computer security-related activities. As with R&D, this provision of the MOU relates to an area in which both agencies have

ongoing activities. The NIST responsibility to assess compute r

system vulnerabilities is clear in the Act and its legislativ e

history . As then-Chairman Brooks said, the Act "sets up an

important research program within [NIST] to assess the

vulnerability of government computers and programs.” (Cong. Rec .

H6017, Aug. 12, 1986.) NIST is pursuing these activities

diligently and will continue to do so .

NSA has a program that draws upon its unique expertise in assess–

ing hostile intelligence threats. As an adjunct of this program,

NSA evaluates the vulnerability of computer systems to such

threats. NSA conducts its hostile intelligence threat and vulnerability assessments upon request of the individual agencies

that operate computer systems. By noting in the MOU that NSA

will continue to conduct such assessments upon the request of

‘federal agencies, their contractors and other governmentsponsored entities, "we simply meant to make clear to all concerned that in cases involving NSA’s unique expertise, NIST will

not, and should not be expected to, duplicate NSA'S special role

of evaluating hostile intelligence threats. The phrase ‘hostile

intelligence threats” is understood by both agencies as a reference to the threat of foreign exploitation.

d . The scope of activities of the Technical Working Group.

This concern of GAO, shared by Committee staff, is more complex.

As Mr. Socolar explained it in his testimony:

Section 111.5 of the MOU establishes a Technical

Working Group to review and analyze issues of mutual

interest pertinent to protection of systems that

process sensitive, unclassified information. The group
206 I Information Security and Privacy in Network Environments

will consist of six federal employees, three each

selected by NIST and NSA. Under section 111.7, the

group will review, prior to public disclosure, all

matters regarding technical security systems techniques

to be developed for use in protecting sensitive information to ensure they are consistent with the national

security. If NIST and NSA are unable to resolve an

issue within 60 days, either agency may raise the issue

to the Secretary of Defense and the Secretary of

Commerce. Such an issue may be referred to the

President through the National Security Council (NSC)

for resolution. The MOU specifies that no action is to

be taken on such an issue until it is resolved.

These provisions appear to give NSA more than the

consultative role contemplated under the Act. They

seem to give NSA an appeal process -- through the

National Security Council -- leading directly to the

President should it disagree with a proposed NIST

standard or guideline. The Act provides that the

President may disapprove any such guidelines or standards promulgated by the Secretary of Commerce, that

this disapproval authority cannot be delegated, and

that notice of any such disapproval or modification

must be submitted to the House Committee on Government

Operations and the Senate Committee on Governmental

Affairs. Under section 111.7 of the MOU, it appears

that an avenue has been opened which would invite

presidential disapproval or modification of standards

and guidelines in advance of promulgation by the Secretary without proper notification to the Congress.

Here Mr. Socolar correctly noted that in NIST'S view (which is

shared by NSA) the provision defining the Working Group's

function as being to “review matters . . . to be developed” limits

the scope of the ‘appeal process" to proposed research and development projects in new areas. However, he responded to this

point by saying:

If this provision pertains only to research and development, it still gives NSA a significant role in what

were to be NIST functions under the Act. NSA could

cause significant delay of a project NIST deems warranted, and it would appear that in matters of disagreement, Commerce has placed itself in a position of

having to appeal to the President regardless of its own

position.

Clarification: The Technical Working Group provides the essential structure within which NIST and NSA can conduct the techni-
Appendix B Computer Security Act and Related Documents 1207

cal discussions and exchange contemplated by the Act. As we

explain below:

(i) its balanced membership reflects the balanced, two-way

nature of technical consultations required by the Act: and

(ii) t h e “appeal mechanism” in the MOU is consistent with

normal NIST procedures which the Act contemplates will be

used in implementing the Computer Security Program, and in

any case is a prudent exercise of Commerce Department discretion to carry out the purposes of the Act.

With this explanation, we hope the Committee will understand that

neither the Working Group provisions of the MOU nor its “appeals

procedure ” are intended to dilute NIST control over its Compute r

Security Program or are likely to have that effect.

The Working Group is established within the framework of Section

III of the MOU, which addresses a number of technical areas of

mutual NIST and NSA interest and responsibility under the Act.

Such areas within the Act include, for example, section 6 which

requires operators of federal computer systems containing sensitive but unclassified information to forward their system

security plans "for advice and comment" not only to NIST, but

directly to NSA as well. Even more importantly, the Act

contemplates two-way interagency communication of technical

computer security information and ideas -- not just from NSA to

NIST or vice versa, and not just about NIST'S program.

While the Act puts NIST in full charge of the Computer Security

Program, it wisely avoids requiring interagency technical consultations on computer security matters to be exclusively one-way

communications. In addition to NSA’s consultative role to NIST,

the Act not only contemplates, but requires, that each agency

consult with the other in developing its programs. As former OMB

Director James Miller assured Congress: "When developing technical security guidelines, NSA will consult with [NIST] to determine how its efforts can best support [NIST'S program] requirements." (Cong. Rec. S18636, Dec. 21, 1987.)

If the Act had adopted a one-way approach, we would likely soon

find ourselves with unrelated and possibly incompatible sets of

computer security standards, or at least with considerable overlapping and duplication of effort in this area. As Senator Leahy

explained at the time of Senate consideration of the bill:

This legislation does not mandate or even urge the

establishment of two sets of data security standards or

systems. Instead, it provides a framework for recognizing and reconciling the sometimes differing security

needs of these distinct communities. (Id.)
208 I Information Security and Privacy in Network Environments

Apart from the need to establish a process for consultation o n

technical systems security matters,

the parties recognized tha t

the public development or promulgation of technical securit y

standards of specific types, particularly regarding cryptography ,

could present a serious possibility of harm to the nationa l

security . Such problems need to be identified and resolved

before the public becomes involved in the standards development

process.

Issues in this narrow class are the only matters to which the

‘appeals process" of section 111.7 applies. These problems are

outside the category of "sensitive but unclassified”" matters ‘f

sole concern to NIST and well within the national security framework of concern to NSA, other Executive Branch agencies and the

President. GAO, your Committee staff and others with whom we

have spoken in connection with the MOU readily acknowledge the

potential national security impact of premature or inappropriate

agency action in the computer security area.

The NIST procedures allow complete public involvement at a very

early stage in the standards research and development process --

usually years before a standard is promulgated as a result of a

particular effort. By and large, when NIST and NSA first discuss

a possible new standard or technique from a technical standpoint,

its actual promulgation is a very distant potential. Indeed, it

is at this stage that Commerce normally consults with OMB, and

potentially with the President, about funding for significan t

research efforts. The appeals procedure is hardly distinguish -

able from those consultation s -- since either procedure ca n

result in dropping or modifying a proposed course of action .

Although we fully understand GAO’s and your Committee's concern

and careful oversight of this matter in light of the purposes o f

the Act, the appeals procedure will not in practice "invit e

Presidential disapproval or modification of standards and guide -

lines . . . without proper notification to the Congress. "

Nor has Commerce, by agreeing to such a procedure, bound itself

to anything "regardless of its position." Under no circumstances

would Commerce consider taking an action in the computer security

area which, due to an unresolved issue involving technical

methods, might harm the national security. Thus, only to the

most trivial and theoretical degree can it be said that Commerce,

by agreeing to resolve such issues before acting in this area,

has diluted its responsibility for the promulgation of standards

and guidelines.

We wish to emphasize to the Committee that the ‘national security” nexus that must be present under paragraph 111.7 completely

precludes appeals of issues of any other type. Finally, the

mention of the National Security Council in paragraph 111.7 of

the MOU does not imply any role for the NSC staff in considering
.

Appendix B Computer Security Act and Related Documents 1209

such issues and, most emphatically, not in the computer security

standard setting process. This reference to the NSC was made

only to suggest that it is likely that this statutory body consisting of the President, Vice President, Secretary of State, and

Secretary of Defense would be the appropriate body to advise the

president on the national security matters that may arise in this

context. Moreover, for consideration of such issues, the

National Security Council would undoubtedly be augmented by th e

Secretary of Commerce .

With this background, it should be clear that the MOU does not,

as some have suggested, give NSA a "veto" over NIST activities or

over its promulgation of standards and guidelines. The appeals

procedure simply ensures that certain issues can be resolved in a

timely fashion so that the Program can proceed smoothly.

Our conversations with private sector witnesses have revealed

that many of their concerns coincided with or were similar to

those identified by the GAO, and thus are addressed above.

One additional area of concern they raised, which was echoed by

some of the staff of your Committee, was that the MOU might in

some way undercut existing legal controls on NSA’s abilities to

conduct electronic surveillance, or otherwise empower NSA to use

the NIST Computer Security Program for purposes outside the scope

of that Program. We can assure everyone concerned that such

misuse is simply not possible -- because NIST, which has no

intelligence or military functions, is in charge of this Program,

and the Program does nothing more than develop standards for

protecting certain information systems. Moreover, the Program

has been, and will continue to be, implemented in full compliance

with all applicable laws, including the Privacy Act and the

Freedom of Information Act.

To ensure that our successors and others can read the MOU in

light of our intent and the clarification we provide in this

letter, we are appending this letter to the MOU. We hope this

has fully answered the questions raised by your Committee and the

others who have indicated similar concerns. We are confident

that the NIST/NSA implementation of the MOU over the coming

months and years will lay to rest concerns that NIST and NSA may

not adhere to their respective roles under the Act.
210 I Information Security and Privacy in Network Environments

Honorable John Conyers

Chairman, Committee on

Government Operations

House of Representatives

Washington, D.C. 20515

Dear Mr. Chairman:

This letter responds to your inquiry about the Memorandum of

Understanding (MOU) between the National Institute of Standards

and Technology (NIST) and the National Security Agency (NSA)

relating to the Computer Security Act.

We have worked diligently to address the concerns that you have

expressed about the MOU. In a letter to you from NIST and NSA dated

December 22, 1989, we responded to each specific concern and explained

why we believe the MOU is consistent with the principles of the

Computer Security Act. We have also fully considered additional

points that were raised orally by the Committee staff after our

submission of the joint NIST/NSA letter to the Committee. For reasons

explained in the enclosed paper, the concerns expressed by the staff

have not changed our opinion that the MOU, particularly when read in

conjunction with our subsequent letter, properly carries out both the

letter of the law and the intent of the Congress.

I hope that the enclosed paper will allay your remaining concerns

about specific provisions of the MOU. But in any event, because of

the importance of this issue, I have asked Deputy Secretary Thomas

Murrin to act on my behalf in this matter and to meet with you and

Congressman Horton to discuss the issues regarding this Department’s

commitment to the principles of the Computer Security Act.

Your letter also requests copies of all documents relating to

topics addressed by the Technical Working Group established by the

MOU. I suggest that we await the outcome of your meeting with Deputy

Secretary Murrin before we address our response to your request.

I have asked my Assistant Secretary for Legislative and Intergovernmental Affairs, William Fr”

-ing=

to get in touch with your office

shortly to set up a time for t

1- “IY

I

Robert A. Mosbacher

Enclosure

cc: Honorable Frank Horton
Appendix B Computer Security Act and Related Documents j 211

COMPUTER SECURITY -- NIST/NSA MEMORANDUM OF UNDERSTANDING

Matters Raised by House Government Operations Committee Staff

at Meetinq on Januany 3, 1990

On January 3, 1990, Commerce staff met with staff of the Government Operations Committee, at their request, to discuss the joint

letter signed December 22, 1989, by NIST and NSA. The Committee

staff expressed dissatisfaction with the joint NIST/NSA letter

and said they believed there were still substantive problems in

the MOU. The Committee staff’s concerns were:

o that the MOU sets up a Technical Working Group which

they believe serves only to delay NIST's computer

security work, and which inappropriately has taken up

matters that are not limited to national security

issues.

o that the MOU inappropriately "invites" NSA to initiate

R&D applicable solely to the NIST program.

o that the MOU should provide for NIST's oversight of the

"cost effectiveness " of agency decisions to Use Systems

NSA has certified for handling classified materials

before accepting these highly-protected systems as

automatically meeting NIST standards.

o that the MOU should provide that NSA cannot respond to

agency requests to assess hostile intelligence threats

to computer systems without going "through" NIST.

This paper addresses each in turn.

TECHNICAL WORKING GROUP

The Committee staff indicated that they believe the Technical

Working Group (TWG) set up by the MOU serves only to delay NIST

in developing standards and noted that the TWG has not entertained only matters which (in the words of the joint NIST/NSA

letter) "could present a serious possibility of harm to the

national security."

Comment. Rather than being a source of delay, the TWG is a

critical aid to the NIST program. As explained in the
212 I Information Security and Privacy in Network Environments

December 22 letter, the TWG ‘provides the essential structure

within which NIST and NSA can conduct the technical discussions

and exchange contemplated by the [Computer Security] Act.” We

cited legislative history of the Act showing that Congress

recognized the need for technical consultations between NIST and

NSA to reconcile the differing security needs of the distinct

communities these agencies serve, while avoiding duplication of

effort or the development of unrelated and possibly incompatible

sets of standards. For these reasons we believe it clear that

the TWG -- or something like it -- was not only contemplated by

the Computer Security Act, but is indispensable to fulfilling the

Act’s mandate.

Also, the TWG does not consider only matters having special

national security implications. The December 22 letter explained

that the TWG considers all technical computer security matters of

mutual interest to NIST and NSA, while the national security

restriction serves only to limit the scope of matters subject to

the ‘appeals process." The TWG has considered several issues,

but the appeals process has not been used to date.

WHETHER THE MOU INVITES NSA R&D

WITH APPLICABILITY SOLELY TO NIST’s PROGRAM

The staff re-affirmed its belief that the provision of the MOU

relating to NSA computer security research invites NSA to selfinitiate R&D solely to provide security measures for computer

systems under NIST'S jurisdiction.

Comment. As we noted in the joint NIST\NSA letter, this provision was intended simply to acknowledge that NSA research may

have applicability to systems whose protection is NIST’s responsibility -- and to affirm that NSA will continue its research

efforts and make their results available to NIST as appropriate.

Since the provision does not speak to the issue of NSA selfinitiation of R&D solely for NIST program use, and since both

agencies have disclaimed such a meaning in an official letter of

clarification of the MOU, we see no remaining basis for this

interpretation.

Furthermore, research with applicability solely to computers

handling sensitive but unclassified materials would be rare.

Most computer security research deals with technical problems,

hardware, or methods whose applicability to a particular system

would not depend on the type of information the system contains.

Thus, almost all research NSA might undertake would have at least

potential applicability to both agencies’ programs.
Appendix B Computer Security Act and Related Documents 1213

ACCEPTANCE OF NSA-CERTIFIED SYSTEMS

AS MEETING NIST STANDARDS

The staff argued that instead of automatically accepting NSAcertified systems as meeting our standards, NIST has a duty to

determine (or set criteria for determining) whether the NSAcertified system is "cost-effective" for the agency involved.

The words "cost effective” in section 4 of the Computer Security

Act were cited as supporting the existence of this duty.

Section 4 amended section 111(d) of the Federal Property and

Administrative Services Act to include a section reading:

(2) The head of a Federal agency may employ standards

for the cost effective security and privacy of sensitive information in a Federal computer system . . . that

are more stringent than the standards promulgated by

the Secretary of Commerce, if such standards contain,

at a minimum, the provisions of those applicable

standards made compulsory and binding by the Secretary

of Commerce. (Emphasis added; currently codified at 40

U.S.C. ill(d).)

Comment. At the hearing last May, the GAO witness questioned the

general policy stated in the MOU concerning NIST'S automatic

acceptance of NSA-certified systems. Our letter responded by

showing that this was a positive legal requirement. The Committee staff did not challenge that demonstration, but implied that

the cost effectiveness of an agency’s decision to use the more

stringent NSA safeguard is an exception to this requirement and

something NIST should oversee.

First, we note that this issue really does not involve the MOU,

which deals only with matters between NIST and NSA. If NIST were

to set cost-effectiveness criteria, it would do so through

rulemaking rather than by amending the MOU.

Second , Congress clearly withheld from NIST the authority to

determine for other agencies the "cost effectiveness” of their

decisions to use NSA-certified systems. The relevant portion of

section 4 of the Computer Security Act confers power on the heads

of agencies generally, and is not directed toward NIST. The Ac t

does allow NIST to waive its standards to avoid major adverse

financial impact on agencies. However, the Act wisely avoids

conferring upon NIST any general authority, much less a duty, to

police other agencies' spending decisions. NIST, as a scienceoriented agency, is not well suited for such a role. Also, the

Act could not require centralized policymaking that has implications about which agencies may use which types of computer

systems without undermining its overall intent to keep such
214 I Information Security and Privacy in Network Environments

potentially sensitive decisions in the hands of individual

agencies.

NIST is concerned with cost-effectiveness, but its responsibility

for this element is centered on its own standards and guidelines.

This is reflected in the wording of section 2 of the Act which

charges NIST with setting “standards and guidelines needed to

assure the cost-effective security and privacy of sensitive

information in Federal computer systems."

NSA ASSESSMENTS OF HOSTILE INTELLIGENCE THREATS

The MOU recites that upon the request of agencies or their

contractors, NSA will evaluate the susceptibility of computer

systems to hostile intelligence threats. The staff did not

question that this is an NSA function. However; ’they argued that

NSA should not do this upon direct agency request, but only

throuqh NIST, because a theme of the Act was to divorce NSA from

direct involvement with computer systems handling solely nonclassified materials.

Comment. To evaluate this suggestion, it is important to not e

the fundamentally different nature of (a) assessments of th e

vulnerability of computer systems as such, and (b) assessments of

hostile intelligence threats to such systems. The MOU provision

on this issue emphasizes that hostile intelligence threat assessment is uniquely an NSA capability which NIST cannot and shoul d

not be expected to duplicate .

The Committee staff suggestion would inject a NIST referral into

the process of agency requests for hostile intelligence threa t

assessments by NSA. There would be no point in creating such a

step unless NIST had some basis for evaluating the need for this

NSA service. NIST has no expertise in this area and thus no

basis for judging whether an agency reasonably needs an assessment of possible hostile intelligence threats to its system.
Appendix C:

Evolution of

the Digital

Signature

INTRODUCTION

A digital signature (see box 4-4, “What Are Digital Signatures?”) is used to authenticate the origin

of a message or other information (i.e., establish

the identity of the signer) and to check the integrity of the information (i.e., confirm that it has not

been altered after it has been signed). Digital signatures are important to electronic commerce because of their role in substantiating electronic

contracts, purchase orders, and the like. (See

chapter 3 for discussion of electronic contracts

and signatures, nonrepudiation services, and so

forth.) The most efficient digital signature systems are based on public-key cryptography.

On May 19, 1994, the National Institute of

Standards and Technology (NIST) announced that

the Digital Signature Standard (DSS) was finalStandard c

ized as Federal Information Processing Standard

(FIPS) 186.1 Federal standards activities related

to public-key cryptography and digital signatures

had been proceeding intermittently at NIST for

over 12 years. Some of the delay was due to national security concerns regarding the uncontrolled spreading of cryptographic capabilities,

both domestically and internationally. The most

recent delay has been due to patent-licensing complications and the government’s desire to provide

a royalty-free FIPS.

The algorithm specified in the DSS is called the

Digital Signature Algorithm (DSA). The DSA

uses a private key to form the digital signature and

the corresponding public key to verify the signature. However, unlike encryption, the signature

operation is not reversible. The DSA does not do

1 NIST, “Digital Signature Standard (DSS),” FIPS PUB 186 (Gaithersburg, MD: U.S. Department of Commerce, May 19, 1994 (advance

copy)). See also Federal Registec vol. 59, May 19, 1994, pp. 26208-11 for the Department of Commerce announcement “Approval of Federal

information Processing Standard (FIPS) 186, Digital Signature Standard (DSS).”

NIST proposed the revised draft DSS in February 1993; NIST had announced the original version of the proposed DSS in August 1991. The

finalized DSS has a larger maximum modulus size (up to 1,024bits). The 1991 version of the proposed standard had a fixed modulus of 512 bits.

Increasing the number of bits in the modulus increases strength, analogous m increasing the key size.

1215
216 I Information Security and Privacy in Network Environments

public-key encryption,2 and the DSS does not provide capabilities for key distribution or key exchange. 3

There is at present no progress toward a federal

standard for public-key encryption, per se, and it

appears unlikely that one will be promulgated.4

Work had been proposed for a new key-management standard, but as of June 1994, NIST was not

pursuing a new FIPS for key management or key

exchanges The combination of the DSS and a

key-management standard would meet user needs

for digital signatures and secure key exchange,

without providing a public-key encryption standard, per se.6 The implementation of the Escrowed Encryption Standard (EES) algorithm that

is used in data communications—in the Capstone

chip-also contains a public-key Key Exchange

Algorithm (KEA).7 However, this KEA is not part

of any FIPS.8 Therefore, individuals and organizations that do not use the Capstone chip (or the

TESSERA card, which contains a Capstone chip)

will still need to select a secure form of key distribution. 9

The National Bureau of Standards (NBS, now

NIST) published a “Solicitation for Public Key

Cryptographic Algorithms” in the Federal Register on June 30, 1982. According to the results of

a classified investigation by the General Accounting Office (GAO), NIST abandoned this standards

activity at the request of the National Security

Agency (NSA). According to GAO:

RSA Data Security, Inc., was willing to negotiate the rights to use RSA [named for the inventors of the algorithm, Drs. Ronald Rivest,

Adi Shamir, and Leonard Adleman]—the most

widely accepted public-key algorithm-as a

federal standard, according to a NIST representative. NSA and NIST met several times to discuss NSA concerns regarding the 1982

solicitation. However, NIST terminated the

public-key cryptographic project because of an

NSA request, according to a 1987 NIST memoZ me DSS dc~s not Splfy an encryption dgor-lttun; encryption is a “two-way” function that is reversible, via decryption. The DSS specifies

a “one-way” function. The DSS signature is generated from a shorter, “digest” of the message using a private key, but the operation is not reversible. Instead, the DSS signature is verified using the corresponding public key and mathematical operations on the signature and message digest

that are different from decryption. Burton Kaliski, Jr., Chief Scientist, RSA Data Security, Inc., personal communication, May 4, 1994.

3 According to F. Lynn McNulty, Associate Director for Computer Security, NIST, the rationale for adopting the technique used in the DSS

was that, “We wanted a technology that did signatures-and nothing else-very well.” (Response to a question from Chairman Rick Boucher in

testimony before the Subcommittee on Science, Committee on Science, Space, and Technology, U.S. House of Representatives, Mar. 22, 1994.)

q See us. Genera] Accounting Office, Communicaficms fri~wcy: Federal Po/icyand Acrions, GAO/OS l-94-2 ( Washington, DC: U.S. @vemment Printing Office, November 1993), pp. 19-20.

5 F. Lynn McNulty, Associate Director for Computer Security, NIST, personal communication, May 25, 1994.

There is a 1992 FIPS on key management that uses the Data Encryption Slandard (DES) in point-to-point environments where the parties

share a key-encrypting key that is used to distribute other keys. NIST, “Key Management Using ANSI X9. 17,” FIPS PUB 17 I (Gaithersburg,

MD: U.S. Department of Commerce, Apr. 27, 1992). This FIPS specifies a particular selection of options for federal agency use from the ANSI

X9. 17-1985 standard for “Financial lrrstitution Key Management (Wholesale).”

6 But the EIGamal algorithm upon which the DSS is based does provide for public-key encryption. Stephen T. Kent, Chief Scientist, Bolt

Beranek and Newman, Inc., personal communication, May 9, 1994.

7 The Capstone chip is used for data communications and contains the EES algorithm (called SKIPJACK), as well as digital signature and

key exchange functions. (The Clipper chip is used in telephone systems and has just the EES algorithm.) TESSERA is a PCMCIA card with ii

Capstone chip inside. It includes additional features and is being used in the Defense Message System. Clinton Brooks, Special Assistant to the

Director, National Security Agency, personal communication, May 25, 1994.

8 Miles Smid, Manager, Security Technology Group, NIST, personal communication, May 20, 1994.

9 One public-key algofi~m ~a[ canbe used for key distribution is the “RSA” algorithm; the RSA algorithm can encrypt. (The RSA systenl

was proposed in 1978 by Rivest, Shamir, and Adleman. ) The Diffle-Hellman algoridm is another method that can be used for key generation

and exchange, but does not encrypt. The public-key concept was first published by Whitfield Diflle and Martin Hellman in “New Directions in

Cryptography,” IEEE Transaction on Infornrulion Theory, vol. IT-22, No. 6, Nlwember 1976, pp. 644-654. Ditlle and Hell man also described

how such a system could be used for key distribution and to “sign” individual messages.
——

Appendix C Evolution of the Digital Signature Standard 1217

randum. The 1982 NIST solicitation was the last

formal opportunity provided for industry, academia, and others to offer public-key algorithms

for a federal standard and to participate in

the development of a federal public-key standard that could support key management/exchange. 10

CHOICE OF A SIGNATURE TECHNIQUE

FOR THE STANDARD

In May 1989, NIST again initiated discussions

with NSA about promulgating a public-key standard that could be used for both signatures and key

exchange. These NIST/NSA discussions were

conducted through the Technical Working Group

(TWG) mechanism specified in the memorandum

of understanding between the agencies, which had

been signed several weeks earlier (see chapter 4).

According to NIST memoranda, the NIST members of the TWG had planned to select a publickey algorithm that could do both signatures and

key exchange. This plan was terminated in favor

of a technique developed by NSA that only did

signatures. 11 A patent application for the DSS

technique was filed in July 1991; patent number

5,231,668 was awarded to David Kravitz in July

1993. The patent specification describes the signature method as a variant of the ElGamal signature scheme based on discrete logarithms.12 The

invention, developed under NSA funding, was assigned to the United States of America, as represented by the Secretary of Commerce.

According to GAO, the NIST members of the

working group had wanted an unclassified algorithm that could be made public, could be implemented in hardware and software, and could be

used for both digital signatures and key management.13 NIST and NSA members of the Technical

Working Group met frequently to discuss candidate algorithms; according to GAO, the NIST

members preferred the RSA algorithm because it

could perform both functions (i.e., sign and encrypt), but NSA preferred its own algorithm that

could sign but not encrypt.

At the time these Technical Working Group

discussions were taking place, many in the private

sector expected that NIST would release a publickey standard—probably based on the RSA algorithm—as early as 1990. Major computer and

software vendors were reportedly hoping for a

federal public-key and signature standard based

on the RSA technique because it was already in10 Genera] Actolm[irlg Office, op. Cit., f(X)tnOte 4, p. 20.

I I General Accounting Office, op. cit., footnote 4, pp. 20-2 I; and the series of NIST/NSA Technical Winking Group minutes from May 1989

to August 1991, published in “Selected NIST/NSA Documents Concerning the Development of the Digital Signature Standard Released in

Compu[er Professionals for Social Responsibility v. National Institute of Standards and Technolo~y, Civil Action No. 92-0972,” Computer

Professionals for Social Responsibility, The Third Cryptography and Pri~’acy Conference Source Book, June 1993 (see Note in footm~te 14

below). See also D.K. Branstad and M.E. Smid, “Integrityand Security Standards Based on Cryptography, ’’Cornpurers & Secur(ry, vol. 1, 1982,

pp. 255-260; Richard A. Danca, “Torncelli Charges NIST with Foot-Dragging on Security,” Federal Computer Week, Oct. 8, 1990, p. 9; and

Michael Alexander, “Data Security Plan Bashed,” Compu(erwor/d, July 1, 1991, p. 1

I z see. U,S patent 5,23 1,j68 (Dlgita] SIWamre A]gori~m; David W. Kravitz), “Background of the lnventim.” See al$(~ Taher EIGanlaI! “A

Public Key Cryptw,ystem and a Signature Scheme Based on Discrete Logarithms,” /EEE Transactions on Information Theory, vol. IT-31, No. 4,

July 1985.

I J See Genera] Accounting Office, 0p. cit., fOOtnOte 4, pp. 20-21.

14 Ibid (_jA(J based [hls conclusion” on NIST memoranda. see a]s~ N]ST memoranda Obtained ~r~ugh Free&)rn of Infm-mati(m Act (FOIA)

litigation and published as “Selected NIST/NSA Documents,” op. cit., f(xmwte 11. (Note: According to NSA officials, the FOIA’d materials are

not a true picture of all the different levels of discussion that took place during this period, when NIST management and NSA were in agreement

regarding the development of a signature standard. Clinton Brooks, Special Assistant to the Director, NSA, personal communication, May 25,

1994.)
218 I Information Security and Privacy in Network Environments

eluded in their products, and they hoped they

would not have to support both a federal standard

and a de facto industry standard (RSA).15 NIST’s

announcement that it would instead propose a different technology as the standard was greeted with

severe industry criticisms and industry announcements of plans to jointly affirm RSA as the de facto industry signature standard. 16

NIST proposed the original version of the DSS

(with the NSA algorithm anda512-bit modulus)

in the Federal Register in August 1991.17 NIST’s

August 1991 request for comments generated a

number of severe criticisms during the initial

comment period and afterward. Criticisms focused on both the choice of signature method18 itself and the process by which it was selected,

especially NSA’s role. Countering allegations that

NSA had dictated the choice of standard, F. Lynn

McNulty (Associate Director for Computer Security, NIST) stated that:

NIST made the final choice. We obtained

technical assistance from NSA, and we received

technical inputs from others as well, but [NIST]

made the final choice.19

McNulty also pointed to the fact that NSA had approved the DSS for use with some classified data

as proof of its soundness.

In early 1992, the Computer System Security

and Privacy Advisory Board (CSSPAB) advised

NIST to delay a decision on adopting a signature

standard pending a broad national review on the

uses of cryptography.

20 Noting the significant

public policy issues raised during review of the

proposed signature standard, the CSSPAB unanimously approved a resolution to the effect that: “a

national level public review of the positive and

negative implications of the widespread use of

public and secret key cryptography is required” in

order to produce a “national policy concerning the

use of cryptography in unclassified/sensitive government [sic] and the private sector” by June

1993. 21 The CSSPAB also approved (but not

unanimously) a resolution that the Secretary of

Is Indu~tV ~upP)ners ~)fa federa] signature standard based on RSA included Digital Equipment CW-P., ~tus Development COW.> Motorola, Inc., N(well, Inc., and, of course, RSA Data Security, Inc. Ellen Messmer. “NIST To Announce Public Key Encryption Standard,” Network

World, July 23, 1990, p. 7; and G. Pascal Zachary, “U.S. Agency Stands in Way of Computer-Security Tool,” The Wall Street Journul, July 9,

1990.

I b c~tlcs c]alnled the technique Wm t(M) SIOW for commercial use and did not offer adequate protection. At least six major computer vendors

(Novell, Inc., Lotus Development Cm-p., Digital Equipment Corp., Sun Microsystems, Inc., Apple Computer, Inc., and Microsoft Corp.) had

endt~rsed or were expected to endorse RSA’S signature system. Michael Alexander, “Encryption Pact in Works,” Computerwor/d, Apr. 15,

1991; and Michael Alexander, ‘“Data Security Plan Bashed,” Computeru’orld, July 1, 1991, p. 1. (Note: The original technique was refined to

offer more security by increasing the maximum size of the modulus.)

17 Federa/Regisfer, Aug. 30, 1991, pp. 42980-82, NIST’S announcement of the proposed standard stated the intention Of making he DSS

technique available worldwide on a royalty-free basis in the public interest. N] ST stated the opinion that no other patents would apply to the DSS

technique.

I g The final DSS technique specified in the standard is stronger than the one originally proposed; in response to public comment, the maXirnum modulus size was increased.

19 Richard A. Danca, “N]ST Signature Standard Whips Up Storm of Controversy from Industry,” Federal computer Week, Sept. 2, I w].

p. 3.

z~ Minutes of~e Mar. 17-18, 1992 meeting Of the CSSPAB (available from NIST). See also Darryl K. Taft, “Bo~d Finds N1sT’s Dss Unacceptable,” Go}’ernment Computer News, Dec. 23, 1991, pp. 1,56; and Kevin Power, “Security Board Calls for Delay on Digital Signature,”

Government Computer News, Mar. 30, 1992, p. 114. In the public comments, negative responses outnumbered endorsementsof the DSS by 90

to 13 (Power, ibid.).

‘1 CSSPAB Resolution No. 1 of Mar. 18, 1992. The CSSPAB endorsed the National Research Council’s study of national cryptography

policy that was chartered in Public Law 103- I 60 as the study that “best acc(lmplishes” the board’s “repeated calls” (in Resolution NW I and

subsequently) for a national review. CSSPAB Resolution 93-7, Dec. 8-9, 1993.
Appendix C Evolution of the Digital Signature Standard 1219

Commerce should only consider approval of the

proposed DSS upon conclusion of the national

review,22 and unanimously approved another resolution that the board defer making a recommendation on approval of the proposed DSS pending

progress on the national review.23

Criticism of the 1991 version of the proposed

DSS—targeted at technology and process-continued to mount. At hearings held by the House

Subcommittee on Economic and Commercial

Law in May 1992, GAO testified that the DSS (at

that time, with a 512-bit modulus) offered such

weak protection that it raised questions as to

whether “any practical purpose would be served”

by requiring federal agencies to use it, especially

since the private sector would continue to use the

more effective commercial products on the market. Other questions and concerns were targeted

more generally at U.S. cryptography policies and

the extent to which NIST “had the clout” to resist

pressure from NSA and the Federal Bureau of

Investigation, or “had the upper hand” in negotiations and standards-setting procedures. The

Computer Professionals for Social Responsibility

(CPSR) noted that NIST was required by the

Computer Security Act to develop “cost-effective” methods to safeguard information. Because

the chosen DSS technique did not provide confidentiality, CPSR questioned the extent to which

NSA’s interest in signals intelligence dictated the

choice of technology.24

During this period, NIST continued to work on

a revised version of the DSS, strengthening it by

increasing the maximum size of the modulus (up

to 1,024 bits). Ways were found to implement the

algorithm more efficiently.

25 A companion hashing (i.e., condensing) standard was issued; hashing is used to create the condensed message digest

that is signed.26 NIST also formed an interagency

group to study how to implement DSS, and contracted with MITRE27 to study alternatives for automated management of public keys used for

signatures. 28 The revised draft DSS was issued in

February 1993 as FIPS Publication XX.

While NIST pursued the Digital Signature

Standard, Computer Professionals for Social Responsibility sought to obtain NIST memoranda

documenting the NIST/NSA Technical Working

Group discussions related to the DSS and the

aborted federal public-key standard. CPSR

charged that the DSS was purposely designed to

minimize privacy protection (i.e., encryption capabilities) and that the actions of NIST and NSA’s

had contravened the Computer Security Act of

1987. CPSR based these charges on documents reZZ CsspAB RewlUllon No. 2 of Mar. 18, 1992.

23 CSSPAB Resolution No. 3 of Mar. 18, 1992.

24 see Kevin power, “INS security Weak, GAO Oftlcial Testifies,” Goi’ernmenl Computer News, May 1 I, 1992, pp. 1, 80. The hearings

were held on Mzy 8, 1992. (Note: Discussion of strength and eftlciency is in the context of the original ( 1991 ) proposal, witha512-bit modulus.)

25 See E.F. Brickell et al., “Fast Exponentiation with Precomputation” Adt’ances in Crypto/og@urocrypf ’92, R.A. Rueppel (cd.) (New

York, NY: Springer-Verlag, 1992), pp. 200-207.

26 NIST, *’Secure Hash Standard,” FIPS PUB 180, (Gaithersburg, MD: U.S. Department of Commerce, May 11, 1993). The Secure Hash

Alg(withm specified in the hash standard may tx implemented in hardware, software, andlor firmware. It is subject to Department of Commerce

export controls. (See also Ellen Messmer, “NIST Stumbles on Proposal for Public-Key Encryption,” Nemtwk Wor/d, July 27, 1992, pp.

1,42 -43.)

In April 1994, NIST announced a technical correction to the Secure Hash Standard. NSA had developed the mathematical formula (hat

underlies the hash standard; NSA researchers subsequent y discovered a “minor flaw” during their continuing evaluati(m process. (NIST media

advisory, Apr. 22, 1994. ) According to NIST, the hash standard, “while still very strong, was not as robust as we had originally intended” and

was king corrected. Raymond Kammer, Deputy Director, NIST, Testimony Before the Senate Committee on the Judiciary, May 3, 1994, p. 1 I.

27 MITRE Corp., “public Key Infrastructure Study (Final Repro),” April 1994. (Available from NIST.)

28 me final DSS notes hat: **A means of ass(wiating public and private key pairs to the corresponding users is re@red...[Al CeflifYing

authority could sign credentials containing a user’s public key and identity to form a certificate. Systems for certifying credentials and distributing certificates are beyond the scope of this standard. NIST intends to publish separate document(s) on certifying credentials and distributing

certificates.”’ NIST, FIPS PUB 186, op. cit., footnote 1, p. 6.
220 I Information Security and Privacy in Network Environments

ceived from NIST after litigation under the Freedom of Information Act,29 and asked the House

Judiciary Committee to investigate.30

As part of the Defense Authorization Bill for

FY 1994, the Committees on Armed Services, Intelligence, Commerce, and the Judiciary have

asked the National Research Council to undertake

a classified, two-year study of national policy

with respect to the use and regulation of cryptography. 31 The study is expected to be completed in

summer 1996 and has been endorsed by the

CSSPAB as best accomplishing its repeated calls

for a broad national review of cryptography.32

PATENT PROBLEMS FOR THE DSS

Patents had always been a concern in developing

any federal public-key or signature standard. One

reason NIST gave for not selecting the RSA system as a standard was the desire to issue a royaltyfree FIPS. A royalty-free standard would also be

attractive to commercial users and the international business community. An approach using RSA

technology would have required patent licenses.

When the inventors of the RSA, Ronald Rivest,

Adi Shamir, and Leonard Adleman, formed RSA

Data Security, Inc. in 1982, they obtained an ex33 from the Mas- clusive license for their invention

sachusetts Institute of Technology (MIT), which

had been assigned rights to the invention.

Other patents potentially applied to signature

systems in general. In the early 1980s, several pioneer patents in public-key cryptography had been

issued to Whitfield Diffie, Martin Hellman, Stephen Pohlig, and Ralph Merkle, all then at Stanford University. Although the government has

rights in these inventions and in RSA, because

they had been developed with federal funding,

royalties for commercial users would have to be

negotiated if a federal standard infringed these

patents.34 Another patent that was claimed by the

grantee to apply to the DSS technique had been issued to Claus Schnorr in 1991, and the government did not have rights in this invention .35

Stanford and MIT granted Public Key Partners

(PKP) exclusive sublicensing rights to the four

Stanford patents and the RSA patent. PKP also

holds exclusive sublicensing rights to the Schnorr

patent. 36 It is a private partnership of organizations (including RSA Data Security, Inc.) that develops and markets public-key technology, In an

attempt to minimize certain royalties from use of

the DSS, NIST proposed to grant PKP an exclusive license to the government’s patent on the

technique used in the DSS. What was proposed

was a cross-license that would resolve patent disputes with PKP, without lengthy and costly litigation to determine which patents (if any) were

infringed by DSS. PKP would make practice of

the DSS technique royalty-free for personal, noncommercial, and U.S. federal, state, and local

government uses. Only parties that enjoyed commercial benefit from making or selling products

29 NIST mem(~r~da published as. “Selected NIST/NSA Documents,” op. cit., footnote 1 I. (See Note in footnote 14 above.)

10 Richard A. Danca, “CPSR ch~ges N] ST, NSA with Violating Security Act,” Federal Computer Week, Aug. 24, 1992, pp. 20, 34.

1 I Ann(~uncenlen[ fronl (he Compu[er science and Telecommunication Board, National Research Council, Dec. 7, 1993.

32 CSSpAB Rest~lu[ion 93-7, Dec. 8-9, 1993.

33 u,s. patent 4,45,829 (Cvp{ographlc Conlnlunlcatl{)n system and Method; Ronald Rlves[, Adl Shamir, and Lenard Adleman, 1983 ).

34 U.S. patents 4,2~,770 (Cgptoflaphic Appara~s ~d Me~(~; Mafi]n He]]man, W%l[fie]d Diffie, and Ralph Merkle, 1980); 4,218,582

(Public Key Cryptographic Apparatus and Melhod; Martin Hellman and Ralph Merkle, 1980); 4,424,414 (Exp(mcntiati(m Cryptographic Apparatus and Method; Helhnan and Pohlig, 1984); and 4,309,569 (Method of Providing Digital Signatures; Merkle, 1982) are all assigned to

Stanford University.

Stanford considers that the -582 patent covers any public key system in any implementation (including RSA); variations of the -582 patent

have been issued in I I other countries. Robert B. Fougner, Direct(w of Licensing, Public Key Partners, letter to OTA, Nov. 4, 1993.

35 patent 4995,082 (C]aus p. schn~~~; Me~{~ ft)r Identifying Subscribers iind for Generating and Verlfylng Electronic signatures in a Data

Exchange System, 1991 ). The patent was applied for in February 1990.

36 Fougner, op, cit., foomo[e 34.
Appendix C Evolution of the Digital Signature Standard 1221

incorporating the DSS technique, or from providing certification services, would be required to

pay royalties according to a set schedule of fees.37

The government announced that it had waived

notice of availability of the DSS invention for licensing because expeditious granting of the license to PKP would “best serve the interest of the

federal government and the public.”38 The arrangement would allow PKP to collect royalties

on the DSS for the remainder of the government

17-year patent term (i.e., until 2010); most of the

patents administered by PKP would expire long

before that. However, the Schnorr patent had an

almost equivalent term remaining (until 2008); so

the arrangement was seen as an equitable tradeoff

that would avoid Litigation.39

Some saw the PKP licensing arrangement as

lowering the final barrier to adoption of DSS.40

However, others-including the CSSPAB—

questioned the true cost

41 of the DSS to privatesector users under this arrangement:

The board is concerned that:

1. the original goal that the Digital Signature

Standard would be available to the public on

a royalty-free basis has been lost; and

2. the economic consequences for the country

have not been addressed in arriving at the

Digital Signature Algorithm exclusive licensing arrangement with Public Key Partners, Inc.42

Ultimately, patent discussions had to be reopened, after a majority of potential users objected to the original terms and the Clinton

Administration concluded that a royalty-free digital signature technique was necessary to promote

its widespread use. NIST resumed discussions in

early 1994, with the goal of issuing a federal signature standard "that is free of patent impediments

and provides for an interoperability and a uniform

level of security.”43

ISSUANCE OF THE DIGITAL

SIGNATURE STANDARD

In May 1994, the Secretary of Commerce approved the DSS as FIPS 186, effective December

1, 1994. It will be reviewed every five years in order to assess its adequacy. According to FIPS Publication 186, the DSS technique is intended for use

in electronic mail, electronic funds transfer, electronic data interchange, software distribution,

data storage, and other applications that require

data integrity assurance and origin authentication.

The DSS can be implemented in hardware, software, and/or firmware and is to be subject to Commerce Department export controls. NIST is

developing a validation program to test implementations of DSS for conformance to the standard. The DSS technique is available for voluntary

private or commercial use. 44

37 ~-r~era/RegJ.,,(er June II 1993, pp. 32105-06, “NtJticc of Prospective Grant of Excluslve F%mmt Licm=. This includes an appendix ” fr(~nl

R(k-t F(mgner stating PKP’s Intentl(ms m Ilccnslng the DSS technt~l{~gy. The PKP licenses w(mld Include key management for the EES at m)

addl[l(mal ftx. Als{), PKP w(mld all(m a three-year rm)ratonurn (m collecting fees fr(ml c(mmwrcial signature certiflcatlfm services. Thereafter,

all c(mmwrclal sem ices that “ccmfy a signatures authenticity for a fee” would pay a royalty to PKP (ibd., p. 32106).

‘x Ibid.

39 OTA staff Intcnlew with Michael Rubin, Deputy Chief C(wnscl, NIST, Jan. I ~. 1994.

w Sce Kevin Power, “With Patent Dispu[e Finally over, Feds Can Use Digital Signatures,” Go\crnn~cnt Comput~rNc\~.~, June 21, 1993, pp.

1,86.

‘1 SW Kevin Power, ‘“Board Questj(mi True Cost of DSS Standard,” Goternmcn/ ~-omplfter ,Vtw.r, Aug. 16, 1993, pp. 1, 107. Digital signatures (hence, the DSS) WII1 be wdely used in health care, electrcmic c(~mmerce, and t)ther applicati(ms (see chapter 3).

42 CSSpAB Res(llutl(]n N(), 93.4, .luly 30, 199.3. This was not unanirmmsly adopted.

J3 ~“c(/cra/ Rexl ~fer, Ma} 19, 1994, (~p. cit., footnote 1, p. 2~~09.

# N[ST FIpS puB 1 ~c, ~)p Clt, f(x)[note 1, pp. 2.3, The D.SS app]les to all federal departments and agencies for use in prf~tecting uncl~sified Inf{)mlati(m that IS m)t subject to the Warner Amendment (i.e., 10 USC sec.2315 and 44 USC sec. 3502(2)). It “shall he used in designing or

Inlplernentlng public-key based signature systems which federal departments and agencies t)pcrate or which are (~perated for them under contract.” (I bid., p. 2).
222 I Information Security and Privacy in Network Environments

The Federal Register announcement stated that

NIST had “considered all the issues raised in the

public comments and believes that it has addressed them.”45 Among the criticisms and NIST

responses noted were:

● criticisms that the Digital Signature Algorithm

specified in the DSS does not provide for secret

key distributions. NIST’s response is that the

DSA is not intended for that purpose.

● criticisms that the DSA is incomplete because

no hash algorithm is specified. NIST’s response is that, since the proposed DSS was announced, a Secure Hash Standard has been

approved as FIPS 180.

● criticisms that the DSA is not compatible with

international standards. NIST’s response is that

is has proposed that the DSA be an alternative

signature standard within the appropriate international standard (IS 9796).

● criticisms that DSA is not secure. NIST’s response is that no cryptographic shortcuts have

been discovered, and that the proposed standard has been revised to provide a larger modulus size.

~ criticisms that DSA is not efficient. NIST’s response is that it believes the efficiency of the

DSA is adequate for most applications.

● criticisms that the DSA may infringe on other

patents. NIST’s response is that it has addressed the possible patent infringement claims

and has concluded that there are no valid

claims. 46

According to FIPS Publication 186, the Digital

Signature Algorithm specified in the standard provides the capability to generate and verify signatures. A private key is used to generate a digital

signature. A hash function (see FIPS Publication

180) is used in the signature generation process to

obtain a condensed version, called a message digest, of the data that are to be signed. The message

digest is input to the DSA to generate the digital

signature. Signature verification makes use of the

same hash function and a public key that corresponds to, but is different than, the private key

used to generate the signature. Similar procedures

may be used to generate and verify signatures for

stored as well as transmitted data. The security of

the DSS system depends on maintaining the secrecy of users’ private keys.47

In practice, a digital signature system requires

a means for associating pairs of public and private

keys with the corresponding users. There must

also be a way to bind a user’s identity and his or

her public key. This binding could be done by a

mutually trusted third party, such as a certifying

authority. The certifying authority could form a

“certificate” by signing credentials containing a

user’s identity and public key. According to FIPS

Publication 186, systems for certifying credentials and distributing certificates are beyond the

scope of the DSS, but NIST intends to publish

separate documents on certifying credentials and

distributing certificates.48

Although the DSS has been approved as a Federal Information Processing Standard, issues concerning the DSS have not all been resolved,

particularly with respect to patent-infringement

claims (see above) and the possibility of litigation.49 As this report was completed, whether or

not Public Key Partners would file suit was “still a

pending question.” 50

45 Federa/ Register, May 19, 1994, op. cit., footnote 1, p. 262@.

M Ibid.

47 NIST, F]pS puB 186, op. cit., footnote 1, pp. 1-3.

4 Ibid., p. 6.

49 sm J[)hn M~k(Jff, ~*u.s. Adopts a Disputed Coding Standard,” The New York ~mes, May 23, 19% PP. D] ~ D8.

50 Ro&fi B. Fougner, Director of Licensing, Public Key Partners, inc., personal COmmUniCatlon, June 24, 1994.
Appendix D:

Workshop

Participants D

Robert J. Aiken

Department of Energy

Bruce Ii. Barnes

National Science Foundation

Brian Boesch

Advanced Research Projects

Agency

Patricia N. Edfors

Department of Justice

Marianne Emerson

Board of Governors

Federal Reserve System

Martin Ferris

Department of the Treasury

Jane Bortnick Griffith

Congressional Research Service

Library of Congress

Sonja D. Martin

Department of Veterans Affairs

Gregory L. Parham

Department of Agriculture

David Rejeski

Environmental Protection Agency

Lawrence P. Shomo

National Aeronautics and Space

Administration

William F. Wadsworth

Department of State

Scott David Williams

Bureau of the Census

NOTE: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the workshop participants. The w orkshop participants do not. however, necessarily approve, disapprove, or endorse this report. OTA assumes full responsibility for the report and

the accuracy of its c(mtents.

1223
224 I Information Security and Privacy in Network Environments

David A. Banisar

Computer Professionals for Social

Responsibility

Joseph Burniece

ISAT, inc.

Alexander Cavalli

Microelectronics and Computer

Technology Corp.

Steven D. Crocker

Trusted Information Systems, Inc.

Whitfield Diffie Dan Schutzer

Sun Microsystems, Inc. Citibank

Richard Graveman Fran D. Smythe

Bellcore Bear Stearns

Lee A. Hollaar

The University of Utah

Dorm B. Parker

SRI International

Richard Rubin

Kent State University

Daniel Weitzner

Electronic Frontier Foundation

Prue S. Adler

Association of Research Libraries

Dorothy E. Denning

Georgetown University

Lance J. Hoffman

The George Washington

University

Kathleen Horoszewski

AT&T Bell Labs

James E. Katz

Bellcore

Stephen T. Kent

Bolt Beranek and Newman, Inc.

Teresa F. Lunt

SRI International

Richard M. Peters, Jr.

Oceana Healthcare Systems

Roger Pience

National Cable Television

Association

Marilyn Schaff

California Department of Motor

Vehicles

James F. Snyder

MCI Communications

Corporation

George B. Trubow

John Marshall Law School

Maria Zemankova

MITRE Corp.
Appendix D Workshop Participants 225

Dennis Branstad

National Institute of Standards

and Technology

Roger M. Callahan

National Security Agency

Scott Charney

Department of Justice

Hazel Edwards

General Accounting Office

Harold M. Hendershot

Federal Bureau of Investigation

Bruce Holmes

General Accounting Office

Michael S. Keplinger

Patent and Trademark Office

R. J. Linn

National Institute of Standards

and Technology

David Lytel

Executive Office of the President

Office of Science and Technology

Policy

Alan R. McDonald

Federal Bureau of Investigation

Marybeth Peters

Copyright Office

Ed Springer

Office of Management and

Budget

Margaret Truntich

General Services Administration

Robert Veeder

Office of Management and

Budget
Reviewers

and Other

E Contributors

Robert J. Aiken

Department of Energy

Milton Anderson

Bellcore

Dennis Branstad

National Institute of Standards

and Technology

Roger M. Callahan

National Security Agency

Carl Cargill

Sun Microsystems

Eliot Christian

U.S. Geological Survey

Robert H. Courtney, Jr.

RCI, Inc.

Steven D. Crocker

Trusted Information Systems, Inc.

Whitfield Diffie

Sun Microsystems, Inc.

Nanette DiTosto

Council for International Business

Hazel Edwards

General Accounting Office

Marianne Emerson

Board of Governors

Federal Reserve System

Martin Hellman

Stanford University

Lance J. Hoffman

The George Washington

University

Johnny Killian

Congressional Research Service

Library of Congress

Paul Lengi

Consultant

Stuart Levi

Weil, Gotschal & Manges

Glenn McLaughlin

Congressional Research Service

Library of Congress

Lynn McNulty

National Institute of Standards

and Technology

Silvio Micali

MIT Laboratory for Computer

Science

Charles Miller

Attorney

Michael Nelson

Executive Office of the President

Office of Science and Technology

Policy

Raymond Nimmer

University of Houston Law Center

Will Ozier

Ozier, Peterse, and Associates

NOTE: OTA acnmciates . . and is grateful for the valuable assistance and thoughtful critiques provided by the reviewers and contributors. The

reviewers and contributors do not, however, necessarily approve, disapprove, or endorse this report. OTA assumes full responsibility for the

report and the accuracy of its contents.

226 I
Appendix E Reviewers and Other Contributors 1227

Dorm B. Parker

SRI International

Richard M. Peters, Jr.

Oceana Health Care Systems

Harold Relyea

Congressional Research Service

Library of Congress

Laurie Rhodes

U.S. Copyright Office

Richard Rothwell

U.S. Postal Service

Michael Rubin

National Institute of Standards

and Technology

Steven Bonorris

Telecommunication and

Computing Technologies Program

Sylvester Boyd

Telecommunication and

Information Systems

Alan Buzacott

Telecommunication and

Computing Technologies Program

Michael Callaham

International Security and Space

Program

Martha Dexter

Information

Management/Building Services

Gerald Epstein

International Security and Space

Program

Miles Smid

National Institute of Standards

and Technology

Oliver Smoot

Computer Business Equipment

Manufacturers Association

Ed Springer

Office of Management and

Budget

Frank Sudia

Bankers Trust Co.

William F. Wadsworth

Department of State

OTA Reviewers and Contributors

Kathleen Fulton

Education and Human Resources

Program

Emilia Govan

Energy, Transportation, and

Infrastructure Program

David Jensen

Energy, Transportation and

Infrastructure Program

Tom Karas

International Security and Space

Program

Bill Keller

Industry, Technology and

Employment Program

Ian Walden

Tarlo Lyons

Jack Walton

Board of Governors

Federal Reserve System

Bill Whitehurst

IBM

Maria Zemankova

MITRE Corp.

Staff of NSA and its

Information Systems Security

Organization

Brian McCue

International Security and Space

Program

Robyn Nishimi

Education and Human Resources

Program

Kevin O’Connor

Education and Human Resources

Program

Jean Smith

Telecommunication and

Computing Technologies Program

Fred Wood

Telecommunication and

Computing Technologies Program
I ndex

A

ABA. See American Bankers Association

Access control

confidentiality and, 28

copyrighted or proprietary information, 28

definition, 28

Orange Book and, 48

subscription services and, 28

Accessibility and Integrity of Networked Information

Collections, 6

Accreditation of systems, 50-51

Adleman, Leonard, 220

Administrative Procedures Act, 182

Advanced Research Projects Agency, 57,62,63

Advisory Council on the National Information

Infrastructure

input on national encryption policy, 172

b’Mega-Project” on privacy, security, and

intellectual property, 172-173

Allen, Anita, 82,83

American Bankers Association, 47

American National Standards Institute, 47, 131, 136

American Society of Composers, Authors and

Publishers, 108-109

Annual Authorization Service, 109

ANSI. See American National Standards Institute

Appendix 111 to OMB Circular A-130. See OMB

Circular A-130

Arms Export Control Act, 151

ARPA. See Advanced Research Projects Agency

ASCAP. See American Society of Composers,

Authors and Publishers

Association for Computing Machinery, 182

Asymmetric cryptosystems. See Public-key

cryptography

AT&T Surity Telephone Device 3600,64-65

Auditing

to prevent key misuse, 173

of safeguard violations, 35

Australia

data protection board, 22,95

not included in work toward international product

evaluation standard, 49

Austria

data protection board, 22,95

Authentication, 20. See also Nonrepudiation

authenticator, 32

in banking, 121

certificates, 77-78

cryptographic keys for, 53

cryptography and, 5-6, 35-37, 39, 53, 113, 124

need for in electronic commerce, 20, 69, 76

NIST activities relating to, 162

product evaluations by Treasury Department, 48

trusted entity role, 77-78

U.C.C. requirements, 72-74

using the DEA, 121

Authenticator, 32

Authorship and copyright, 104

Availability of services

emphasis on by network providers, 28

formal security models and, 31,32

B

Banking industry

authentication using DEA, 121

banks as certification authorities, 54-55,78

emphasis on integrity and nonrepudiation, 28

trusted third-party functions, 54-55,78

U.C.C. and electronic funds transfers, 73

use of DES-based encryption technology, 121,

131

Bell-LaPadula security model, 31

Berman, Jerg, 175-176, 180-181

Biham, Eli, 123

Biometric devices, 37

BMI. See Broadcast Music Inc.

Bok, Sissela, 83

Brandeis, Louis, 79,82

Brennan, William, 79

Brickell, Ernest, 118

Broadcast Music Inc., 108, 109

Brooks, Clinton, 14-15, 159, 169

Brooks, Rep, Jack, 122

Brooks Act of 1965, 121, 132, 133, 134-136

BSA. See Business Software Alliance I 229
230 I Information Security and Privacy in Network Environments

Buckley Amendment, 80

Bureau of Export Administration, 153

Bureau of the Census, 133

Business Software Alliance, 157

c

Cable companies

emphasis on availability of services, 28

telephone and Internet services, 4

CAIVRS. See Credit Alert Interactive Voice

Response System

Canada

data protection board, 22,95

role in developing an international product

evaluation standard, 49

role in developing Generally Accepted System

Security Principles, 51

role in developing information security

certification, 52

Canadian Information Processing Society

role in developing information security

certification, 52

Canadian Trusted Computer Product Evaluation

Criteria, 49

Cantwell, Rep. Maria, 12, 16, 160, 172

Capstone chip, 65, 127, 167, 173, 174,216

Carnegie Mellon University, 57

CAS. See Certification authorities

CCC. See Copyright Clearance Center

CC1l_l’. See Comit& Consultatif 1ntemationale de

T614graphique et T616phonique

CCL. See Commerce Control List

Cellular phones, 154

Cerf, Vinton, 41

CERT. See Computer Emergency Response Team

Certificates

authentication, 77-78, 162

in electronic key exchange, 53, 54

Certification

of security professionals, 52

of systems, 50-51

Certification authorities, 16,53-54,55-56,77, 162,

178. See also Trusted entity

Challenge-response systems, 32

Chemistry On-1ine Retrieval Experiment, 96-97

China

export controls, 155

Ciphertext

definition, 113

Clark-Wilson security model, 31

Clearinghouses for c~sis response. See Emergency

response

Cleartext

definition, 113

CLEF program. See Commercially-Licensed

Evaluation Facilities program

Clinton Administration

adoption of EES as voluntary standard, 10, 15,

17-18, 117-119, 173-174, 179

cost estimates for escrow system, 118, 163

encryption policy review, 119

escrowed-encryption initiative, 5, 17, 39,67,

161-163, 173-174, 176-177, 179-182

implementation of cryptography policy, 171-174

“Key Escrow Encryption Workshop,” 15-16, 172

liberalization of export controls, 155, 159-160

National Information Infrastructure program,

62-63

National Performance Review, 51,62,63

supports NIST’S efforts in GSSPS, 51

willingness to explore alternatives to key-escrow

encryption, 11, 131, 172

Working Group on Encryption and

Telecommunications, 171-172

Clipper chip. See Escrowed Encryption Standard

CNRI. See Corporation for National Research

Initiatives

COCOM. See Coordinating Committee for

Multilateral Export Controls

Code of Practice for Information Security

Management, 51

Colossus computing machines, 112

ComitL Consultatif Intemationale de T61&graphique

et T61t$phonique, 47

Commerce Control List

Commerce Department controls compared with

State Department controls, 153-154

cryptography on, 153-154, 156

purpose, 153

Commerce Department. See Department of

Commerce

Commerce-Net prototype, 54

Commercially-Licensed Evaluation Facilities

program, 49

“Commercially reasonable” security measures, 73

Committee on Government Operations, 147-148

Common Information Technology Security Criteria,

49

Competitiveness

EIES standard and, 118, 181-182

export controls and, 154-160, 181

Green Book on, 92

tension between national security and

competitiveness, 128

Cornpuseme, 28

Computer conferences, 98

Computer Emergency Response Team, 3,57

Computer Ethics Institute, 59
Index 1231

Computer Incident Advisory Capability, 57

Computer Matching Act, 84

Computer Professionals for Social Responsibility,

219-220

Computer programs copyright, 100

Computer records admissibility, 74-76

Computer Security Act of 1987

background, 139-145

cost-effectiveness requirement, 219

federal agency responsibilities under, 145-150

implementation of, 8, 13-16, 20, 114, 132,

133-134, 149-150, 164-171

legislative history, 140-142

purpose, 8, 138-139

significance of, 8, 133, 138-139

text of, 190-196

Computer Security Division. See also National

Institute of Standards and Technology

activities related to computer and information

security, 162-163

authentication-related activities, 162

Computer Security Institute

role in developing information security

certification, 52

Computer System Security and Privacy Advisory

Board

call for a broad review of cryptography policy,

176-177,218-219

endorses NRC study of national cryptography

policy, 177,218,220

establishment of, 13, 139, 148

purpose of, 148

questions cost of DSS under PKP licensing

arrangement, 221

role in encryption policy review, 172

Computer Systems Laboratory, 136, 161, 164

Computers, Health Records and Citizens Rights, 83

Computers and the Rights of Citizens, 80-81

Confidentiality

cryptography and, 5-6, 35-37, 39, 113

definition, 28,82-83

distinguished from privacy, 28,82-83

Orange Book and, 48

Congress

policy issues and options, 18-23,85,95, 105-106,

108, 110; 174-183

response to escrowed-encryption initiatives,

17-18, 179-182

review of cryptography policy, 16-17, 177-179

role in defining objectives and organizational

security policy, 27

strategic and tactical roles, 174-183

Congressional Budget Office, 179

Congressional Research Service, 180

Contracts, 71-74. See afso Electronic commerce

Convention of the Council of Europe for the

Protection of Individuals with Regard to

Automatic Processing of Personal Data, 88

Coordinating Committee for Multilateral Export

Controls, 154, 155

Copyright. See aiso Royalties

authorship and compilations, 104

computer programs, 100

copyright collectives, 108-110

cryptography and access controls for protection,

28

defining a work, 98

digital libraries and, 22-23,98-104, 105

electronic information, 4, 6, 23

fair use, 102-103, 105-106

first-sale doctrine, 104, 105, 107

history of U.S. copyright law, 99-100

multimedia works, 23, 97, 106-108

OTA’s 1992 study of software and intellectual

property, 97-106

policy options, 23,97, 105-106, 108, 110

purpose of, 99

rights under U.S. law, 99-101

unauthorized copying, 105

Copyright Act, 106

Copyright Act of 1976, 100-101, 102, 103, 104, 109

Copyright Clearance Center, 109, 110

Copyright collectives

legal issues, 108-110

Cornell University, 96-97

Corporation for National Research Initiatives

proposed electronic copyright management

system, 110

Corporations

cryptography and access controls, 28

Cost-justifying safeguards, 30-31,52, 134

costs

effects of lower costs on computing, 4

Council Directive on the Protection of Individuals

with Regard to the Processing of Personal Data

and on the Free Movement of Such Data, 90-95

CPSR. See Computer Professionals for Social

Responsibility

“Crackers,” See aho Hackers

exaggeration of threats from, 42, 60

threats to networked information, 26

Credit Alert Interactive Voice Response System, 84,

85

Criminal and civil penalties, 8, 18,60-61, 180-181

CRS. See Congressional Research Service

Cryptanalysts

definition, 112

differential cryptanalysts, 123

Cryptographic algorithms. See afso specific

algorithms
232 I Information Security and Privacy in Network Environments

classified 181

definition, 113

export controls, 157

symmetric or asymmetric, 39

Cryptography

congressional policy review, 16-17

description, 112-113

history of, 112

how it protects information, 39

importance of, 115-128

policy issues and options, 8-23, 174-183

terminology, 113

Cryptosystem

definition, 113

CSL. See Computer Systems Laboratory

CSSPAB. See Computer System Security and

Privacy Advisory Board

D

Damages, 18, 180-181

Data Encryption Algorithm, 39, 120, 121

Data Encryption Standard

compared with EES, 118, 120

description, 10,39, 121-123

export controls on products using, 156, 157, 158

history of, 120, 121, 129-130, 136

NIST evaluation of products using, 48, 121

RSA for key exchange, 126

technological stability and, 129-130

triple encryption, 121, 122-123, 171

U.S. sales figures for DES hardware and software

products, 130

Data Encryption Standard Message Authentication

Code, 77

Data integrity boards, 84,85

Data processing

notification requirement of Council Directive, 93

Data Processing Management Association, 52

Data protection boards

foreign countries, 95

proposed responsibilities and functions, 95

DDN. See Defense Data Network

DEA. See Data Encryption Algorithm

Decryption

definition, 113

real-time decryption, 119

Defending Secrets, Sharing Data: New Locks and

Keys for Electronic Information, 6, 136

Defense Authorization Bill for FY 1994,220

Defense Communications Agency, 57

Defense Data Network Security Coordination

Center, 57

Defense Information Systems Agency, 3

Degaussers

NSA list of, 48

Delphi, 28

Denmark

availability of DES-based products, 158

Deming, Dorothy, 118, 126-127

Department of Agriculture, 85

Department of Commerce. See also National

Institute of Standards and Technology

assigning of resources to NIST, 20, 183

Brooks Act requirements, 133, 135-136, 142

Computer Security Act requirements, 20,

137-138, 139, 148, 166, 168, 183

Computer System Security and Privacy Advisory

Board, 13, 139

congressional policy option, 20, 183

DES issued as a FIPS, 121

DSS issued as a FIPS, 47, 168,218-219,221-222

EES issued as a FIPS, 47, 117, 118

export controls, 11-12, 150, 151, 153-154

Department of Defense. See aZso National Security

,4gency

Advanced Research Projects Agency, 57,62,63

certification and accreditation of systems, 50

formal security models and, 31

Orange Book and, 48

role in establishing Munitions List, 151, 155-156

role in federal information systems safeguards,

137-138, 143, 145, 146

role in NCS management, 61

role in standards appeal process, 166

security breaches, 2, 3

Department of Education, 85

Department of Energy, 57, 146

Department of Health, Education, and Welfare, 80

Department of Housing and Urban Development, 8.5

Department of Justice, 118, 173

Department of State

export controls, 11-12,45, 117, 150-152,

155-156, 157, 160

export controls compared with Commerce

Department controls, 153-154

Department of the Treasury

Automated Systems Division as EES escrow

agent, 118, 173

evaluation of authentication products for

financial transactions, 48

Department of Veterans Affairs, 85

DES. See Data Encryption Standard

DES MAC. See Data Encryption Standard Message

Authentication Code

Differential cryptanalysts, 123

Diffie, Whitfield, 126, 170, 179-180,220

Diffie-Hellman public-key technique, 54,64
Index 1233

Digital information. See also Information;

Networked information

copyright and, 98-104, 105

differences from information in traditional forms,

97

trend toward, 4

Digital libraries

description, 96-97

intellectual property protection, 22-23, 97-110

legal issues, 22-23,70,96-110

privacy, 66-68

Digital powers of attorney, 171, 178

Digital Signature Algorithm, 65,215-216,222

Digital Signature Standard

criticisms and NIST response, 167-168,222

effect on technology control, 126, 129

evolution of, 11, 215-222

issuance of, 11, 47, 221-222

NIST activities relating to, 162

not a public key encryption algorithm, 10, 127

patent problems, 220-221

public-key algorithm in, 123

resistance to, 131, 132, 176

Digital signatures. See also Digital Signature

Standard

DES and, 121, 124

description, 124-125

Green Book proposals, 91,92

limitation of, 77

public-key cryptography and, 6, 10,39, 113, 127

purpose of, 6,20,21,35-37,39,74, 76, 113,215

RSA system-based products, 11, 124-125, 139

Digital Telephony and Communications Privacy Act

of 1994, 66

Disaster recovery services, 43-44

Distributed computing, 3-4,5, 134

DOD. See Department of Defense

Douglas, William O., 79

DSA. See Digital Signature Algorithm

DSS. See Digital Signature Standard

Dual-use items export controls, 150, 151, 153, 155

Due care approach to safeguarding information, 7,

8,30-31,44,52

E

E-mail. see Electronic mail

EAA. see Export Administration Act

Eastern Europe

export control policy, 155

EC MA. See European Computer Manufacturers

Association

ED1. see Electronic Data interchange

Education/training

computer security management training, 145, 163

ethical principles, 59

professional development, 52-53

EES. See Escrowed Encryption Standard

EFF. See Electronic Frontier Foundation

Efficiency, 4-5,29

Eisenstadt v. Baird, 79

Electric utilities

information services, 4

Electronic commerce

legal issues, 20-21,69,70-78

networked society and, 4, 6

public-key infrastructure and, 68

rules of evidence: data integrity and

nonrepudiation, 74-78

Statute of Frauds writing and signature

requirement, 71-74

Electronic Data Interchange, 71

Electronic Data Interchange value-added services

emphasis on integrity and nonrepudiation, 28

Electronic Data Processing Auditors Association

Control Principles, 51

role in developing information security

certification, 52

Electronic Frontier Foundation, 175, 180

Electronic mail

copyright issues, 98

description, 36

Privacy-Enhanced Mail, 36-37

Electronic Record Systems and Individual Privacy,

95

Electronic surveillance

cryptography and, 116, 117-118, 119, 123, 159,

179-180

EES and, 117-118, 179-180

separation of duties principle, 37-39

Electronic Text Center, 96

EIGamal signature scheme, 217

Emergency response, 8, 57

Employee misuse of information, 3,26,60

Employee monitoring, 60-61

Encryption. See Cryptography

Encryption algorithms. See Cryptographic

algorithms

End-use regulations, 157

Energy Science Network, 57

Enigma cipher machines, 112

ES-net. See Energy Science Network

Escrow agents, 118, 173, 180, 181

Escrowed-encryption initiative, 5, 17,39,67,

161-163, 173-174, 176-177, 179-182

Escrowed Encryption Standard

classified encryption algorithm, 120-123

Clinton Administration policy, 11, 131, 172

compared with fair cryptosystems, 67
234 I Information Security and Privacy in Network Environments

CSSPAB hearings cm, 176, 177

debate over, 9,47, 116

description, 117-119

development process, 18, 175

effect on technology control, 126, 129, 130

effects of introduction as new federal standard,

127-128

future of, 131

key escrowing for, 118, 171, 173-174, 180, 181

policy options, 17, 179-182

public-key Key Exchange Algorithm and, 127,

216

resistance to, 11, 131, 132

telephone systems security, 11, 16, 172

Escrowed keys, 60-61

Ethics, 8,58-60, 135

ETSI. See European Telecommunications Standards

Institute

European Community

cryptography export controls, 155

Information Technology Security Evaluation

Criteria, 49

role in development of Generally Accepted

System Security Principles, 51

working toward international product evaluation

standard, 49

European Computer Manufacturers Association, 47

European Economic Community Commission

Council Directive on the Protection of

Individuals with Regard to the Processing of

Personal Data and on the Free Movement of

Such Data, 90-95

draft directive for protection of personal data, 88

Green Book on the Security of Information

Systems, 91-92

European Telecommunications Standards Institute,

47

European Union

protection of personal data, 21,70,88,90-95

Executive Agent of the Government for National

Security Telecommunications and Information

Systems, 143, 145

Executive branch implementation of cryptography

policy, 171-174

Executive Order 12333, 143

Export Administration Act, 153, 156

Export controls

Commerce Department controls, 153-154

competitiveness and, 45-46, 154-160, 181

contentious items, 155-156

cryptographic items excepted from control, 154

on cryptography, 7,9, 10, 11-13, 17,61, 115,

128, 132, 150-160, 181, 182

DES, 129

DSS, 221

effects on development of safeguards, 132

federal agency concerns, 134

policy options, 178-179

regulatory regimes, 150-151

State Department controls, 151-152

Export Controls and Nonprol~eration Policy, 159

F

Fair Credit Reporting Act, 80

Fair cryptosystems, 67

Fair use

concept of, 102-103

criteria, 100, 101, 102-102

digital libraries and, 22,97

and fee-for-use copyright protection, 110

policy options, 23, 105-106

size of the work and, 98

Family Educational Rights and Privacy Act of 1974,

80

Farber, David, 175

FB [. See Federal Bureau of Investigation

FCC. See Federal Communications Commission

Federal agencies. See also Government; specific

agencies

developing an organizational security policy,

29-30

formal security models, 31-32

future directions in safeguarding information,

148-150

guidance on safeguarding information, 132-150

int”ormation security and privacy concerns,

134-135

interagency linkages and privacy, 21-22, 29, 84,

85

national security and, 111-114

]~nvacy Act requirements,81 -85

responsibilities prior to Computer Security Act,

139-143

responsibilities under the Computer Security Act,

145-148

safeguarding information, 18-20, 182-183

security plans, 19

Federal Bureau of Investigation, 2-3, 116, 169, 173

Federal Communications Commission, 61

“Federal Criteria” for product evaluation, 49

Federal Information Processing Standards. See also

specific standards

based on cryptography, 10-11

Commerce Department role, 142

development of, 5,47, 142

NIST role, 47, 168

significance of, 9, 129, 174

and technological stability, 129
Index 1235

Federal Information Systems Security Educators’

Association, 59

Federal Intemetworking Requirements Panel,

131-132

Federal Privacy Commission

proposed creation of, 22,95

suggested responsibilities and functions, 22, 95

Federal Register

online publication, 21, 85

Federal Reserve System

use of DES-based encryption technology, 131

Federal Telephone System, 135

Federal Videotape Privacy Protection Act, 80

Financial Privacy Act of 1978,80

Financial transactions. See also Banking industry;

Electronic commerce

authentication product evaluation by Treasury

Department, 48

authentication using DES, 121, 131

need for safeguards, 68

via information networks, 1-2

Finding a Balance: Computer Sojm~are, Intellectual

Property and the Challenge of Technological

Change, 6,97-106

Finland

data protection board, 22,95

FIPS. See Federal Information Processing Standards

Firewalls, 34-35

FIRST. See Forum of Incident Response and

Security Teams

First-sale doctrine, 104, 105, 107

Formal security models, 7-8,31-32

Forum of Incident Response and Security Teams, 57

France

data protection board, 22,95

Information Technology Security Evaluation

Criteria, 49

Fried, Charles, 82,83

G

GAO. See General Accounting Office

Gavison, Ruth, 83

General Accounting Office, 2, 19,86, 133, 146,

156, 166, 167, 182-183,217,219

General Services Administration

information security services and documents, 137

procurement, 135

role in computer security, 139, 142

Generally accepted principles, 31,44,51-52

Generally Accepted System Security Principles, 8,

51,52

Georgetown University, 118

Germany

availability of DES-based products, 158

data protection board, 22,95

Enigma machines, 112

Information Technology Security Evaluation

Criteria, 49

Glenn, Sen. John

letter of request to OTA, 5, 187

Glickman, Rep. Dan, 140

Goal Security Architecture, 163

Goldberg, Arthur, 79

Gore, Al, 11, 13, 16, 131, 172, 173

GOSIP. See Government Open Systems

Interconnection Profile

Government. See also Congress; Federal agencies

congressional role, 174-183

export controls, 150-160

importance of cryptography policy, 115-128

management role, 7

need for more open processes, 15, 16, 18, 170,

175-177, 178, 179, 182, 183

NIST/NSA role, 160-174

procurement policies effects, 131-132, 135

public visibility and accountability for

technology impacts, 17

role in providing direction for information

safeguards, 63-68, 179

security problem examples, 2-3

statutory guidance of safeguarding information,

132-150

tension between promoting and controlling

information safeguards, 8-9, 111, 115-128

trusted product evaluation process, 8

use of networks, 2-3

Government Open Systems Interconnection Profile,

131

Green Book, 91-92

Griswold v. Connecticut, 79

GSA. See General Services Administration

GSSPS. See Generally Accepted System Security

Principles

Guidelines Governing the Protection of Privacy and

Transborder Flows of Personal Data, 88-90

H

Hackers. See also “Crackers”

DOD penetration, 2,3

publicized incidents, 139

threats to networked information, 26

Hardware and Software Information Products

GSSPS, 51

Harris, Jo Ann, 130-131

Hashing

algorithms, 39, 124-125, 174, 222

functions, 39

standard, 65, 125, 174,219, 222
236 I Information Security and Privacy in Network Environments

Hellman, Martin, 126,220

High Performance Computing and

Communications/National Information

Infrastmcture Programs, 161

HPCC/NII. See High Performance Computing and

Communications/National Information

Infrastructure Programs

Human error and design faults, 25-26

I

IBM, 122, 123

ICC. See International Chamber of Commerce

ICC Position Paper on International Encryption

Policy, 181

ICCP. See Institute of Computer Professionals

Iceland

data protection board, 22,95

Idaho State University

role in developing information security

certification, 52

IEEE. See Institute of Electrical and Electronics

Engineers

Incident reporting

Green Book proposals, 92

Industrial List, 155

Industry-government working groups, 172

Information. See also Digital information;

Networked information

as an asset, 42, 43

boundaries blurring, 4

integrity of, 28, 31, 32, 35-37, 76

ownership rights, 4

responsibility for, 4, 5, 182

Information infrastructure

definition, 41

institutions that facilitate safeguards for, 40-63

Information Infrastructure Task Force, 171

Information network

definition, 27

Information Policy Committee, 171

Information Security Professional GSSPS, 51

Information Systems Security Association

role in developing Generally Accepted System

Security Principles, 51

role in developing information security

certification, 52

Information Technology Laboratory, 20, 136, 183

Information Technology Security Evaluation

Criteria, 49

Insiders

auditing systems, 35

monitoring employees, 60-61

threat to networked information, 26

Institute of Computer Professionals, 52

Institute of Electrical and Electronics Engineers, 47

Institute of Internal Auditors,51

Insurance, 43-44

Integrated Data Retrieval System, 3

Integrity of information

contracts, 76

cryptography and, 35-37, 113

definition, 28

emphasis on by value-added services, 28

formal models and, 31,32

Intellectual property, 4, 22-23, 46,70,97. See afso

Copyright; Patent issues

Intelligence activities. See Electronic surveillance;

National security; Signals intelligence

Interactivity, 4

Internal Revenue Service

electronic access to data, 84

information protection, 86, 133, 178, 179

misuse of data, 3

Tax Systems Modernization Program, 86

International Chamber of Commerce, 181-182

International data flow

DES and, 129-130

European Council Directive effects on U. S.,

94-95

Green Book proposals, 92

ICC recommendations on international

encryption, 181-182

personal information protections and, 21,22,70,

87-88,90-95

policy, 95, 181-182

privacy concerns, 87-95

International Federation for Information Processing

role in developing information security

certification, 52

International Information Systems Security

Certification Consortium, 52

International Organization for Standardization, 47,

136

International Traffic in Arms Regulations, 151, 152,

155, 156, 157, 158

Internet

acceptable use, 58-59

advertising on, 58

decentralized nature of, 134

differing user objectives, 41

firewalls and, 35

growth of, 1

information network, 27

information services, 4

NIST activities relating to, 162

number of users, 1

as part of information infrastructure, 42

Privacy-Enhanced Mail, 36-37,54
Index 1237

providers’ emphasis on availability of services,

28

security problems, 2

Transmission Control Protocol/lntemet Protocol,

46, 131

viruses, 2

worm, 149

1ntemet Architecture Board, 47

1ntemet Engineering Task Force, 47

1ntemet Society, 1,41

1nteroperability

open systems and, 4

standards development, 165, 181

1ran

export controls, 154

Iraq

export controls, 154

Ireland

data protection board, 22,95

IRS. See 1ntemal Revenue Service

1SC2. See International Infom~ation Systems

Security Certification Consortium

1S0. See 1ntcmational Organization for

Standard ization

1sracl

data protection board, 22,95

ISSA. See information Systems Security

Assoc iat ion

ITAR. See 1ntemational Traffic in Arms Regulations

ITSEC. See 1nfom~ation Technology Security

Evaluation Criteria

J

Japan

cryptography export controls, 155

not included in work toward international product

evaluation standard, 49

role in development of Generally Accepted

System Security Principles, 51

Joint R&D Technology Exchange Program, 165

K

Kallstrom, James, 116, 119

Kammer, Raymond G.

comments on cryptographic standards, 120, 126

letter of clarification of NIST/NSA memorandum

of understanding, 201-209

NIST/NSA memorandum of understanding,

197.200

Katz v. United States, 79

KEA. See Key Exchange Algorithm

Kent, Stephen, 1 I 8

Key

definition, 39, 113

size and encryption scheme strength, 113,

122-123

Key-escrow agents

policy options, 17, 18, 173

Key-escrow encryption. See also

Escrowed-Encryption Standard; Public-key

cryptography

Clinton Administration will ingness to explore

industry alternatives for key-escrow encryption,

11, 131, 172

congressional policy review, 16-17

for the EES, 173-174

escrowed-encryption initiative, 5, 17, 39, 67,

161-163, 173-174, 176-177, 179-182

export controls, 159

law enforcement and, 9, 10,65, 117-118

policy options, 16, 178

separation of powers and, 18, 180

Key Escrow Encryption Working Group, 163

Key Escrow Encryption Workshop, 15-16, 172

Key exchange

Diffie-Hellman technique, 126

public-key, 10, 11,39,53,54, 125-126, 127

RSA techniques, 125-126

Key Exchange Algorithm, 65, 127,216

Key management

auditing and accountability controls, 173

deposit with trusted entity, 17, 171

exchanging keys, 10, 11, 38, 53, 54, 125-126,

127,216

functions, 113

Green Book proposals, 92

key-escrow agents, 17, 18, 173

MITRE study on, 219

public-key infrastructure, 53-56

Kravitz, David, 217

L

Laptop computers, 157, 158

Law enforcement. See also Electronic surveillance

cryptography and, 8-9, 17, 111, 116-120, 126,

128, 129

monitoring financial transactions, 68

safeguarding networked infom~ation, 60

Law Enforcement Access Field, 65, 117, 118, 173

Lawrence Livermore Laboratory, 57

LEAF. See Law Enforcement Access Field

Leahy, Sen. Patrick, 141

“Least privilege” principle, 37

Legal issues

digital libraries, 22-23,70,96-110

electronic commerce, 20-21, 69, 70-78

legal sanctions, 8, 18,60-61, 180-181

privacy protection, 21-22,70,78-95
238 I Information Security and Privacy in Network Environments

Letter of request to OTA from Rep. Edward J.

Markey, 188

Letter of request to OTA from Sen. John Glenn, 187

Letter of request to OTA from Sen. William V.

Roth, Jr., 185-186

Letters of clarification of NIST/NSA memorandum

of understanding, 201-209,210-214

Libraries. See aZso Digital libraries

digital information copyright issues, 98-104

Libya

export controls, 154

Licensing. See Export controls

Logic bombs, 36

Lou Harris/Equifax survey on privacy, 87

Luxembourg

data protection board, 22,95

M

Maher, David, 118

Malicious software. See aho Viruses; Worms

threats to networked information, 26

Management

cost-justifying safeguards, 30-31,52, 134

NIST activities related to, 163

role in developing organizational security policy,

7, 18,27,29

role in establishing or inhibiting safeguards,

42-43, 148, 149, 150

Management of Federal Information Resources. See

OMB Circular A-130

Markey, Rep. Edward J.

letter of request to OTA, 5, 188

Massachusetts Institute of Technology, 220

McComell, J. M., 159

McNulty, F. Lynn, 218

Memorandum of Understanding, 13-14,20, 148,

164-171, 183, 197-200,201-209

Merkle, Ralph, 220

Merkle’s “tree-signature” technique, 121

Message digest, 39, 124-125,219,222

Mexico

role in development of Generally Accepted

System Security Principles, 51

Miller, Jim, 141

MILNET, 57

MIT. See Massachusetts Institute of Technology

MITRE Corp., 219

Money laundering, 68

Mosbacher, Robert A.

letter of clarification of NIST/NSA memorandum

of understanding, 210-214

Multimedia works

copyright issues, 23,97, 106-108

policy options, 23, 106, 108

Multiple encryption, 122-123

Munitions List

Commerce Department export controls compared

with State Department controls, 153-154

cryptography on, 151-152, 155, 156

establishment of, 151

robust encryption, 154

Murray, Sen. Patty, 12, 160

MYK78. See Clipper chip

MYK80. See Capstone chip

Mykotronx, 64,65, 117

N

National Communications System, 61

National Computer Ethics and Responsibilities

Campaign, 59-60

National Computer Security Center, 48

National Computer Security Conference, 164, 165

National Conference of Commissioners on Uniform

State Laws, 74

National Crime Information Network, 2-3

National Information Infrastructure program

NIST activities relating to, 162, 163

NRC report on, 63

research and development, 62-63

royalty collection agencies, 109

National Institute of Standards and Technology

activities in support of security and privacy,

161-164

Computer Security Division, 162-163

emergency response, 57

funding for computer-security activities, 20,

163-164, 183

as key-escrow agent, 118, 163, 173

Key Escrow Encryption Workshop, 172

laboratories, 136

letter of clarification of NIST/NSA memorandum

of understanding, 210-214

NIST/NSA memorandum of understanding,

13-14,20, 148, 164-171, 183, 197-200,201-209

overview of joint NIST/NSA activities, 165

policy option, 16, 178

product evaluation, 48, 121

proposed “Federal Criteria” for product

evaluation, 49

research and development, 62

role in developing information safeguards,

160-174

role in developing information security

certification, 52

role in developing standards, 9, 10,47, 121, 122,

132, 139, 145-145, 147, 148, 160-174,215,

216-217

role in standards-setting, 47
Index 1239

Trusted Technology Assessment Program, 48-49,

50

National Manager for Telecommunications and

Automated Information Systems Security, 143, 145

National Performance Review, 51,62,63

National Policy on Telecommunications and

Automated Information Systems Security

(NSDD-145), 141, 143-145

National Research Council

comments on system certification, 50-51,62

report on computer security, 63-65

report on information networking and the

National Information Infrastructure program, 63

study of IRS implementation of TSM initiative,

86

study of national cryptography policy, 16, 17,

177, 178,220

suggests areas for research, 62

suggests establishment of generally accepted

principles, 51

National Science Foundation, 58,62,63

National security. See also National Security

Agency; Signals intelligence

cryptography control and, 115-116, 126, 127,

128, 137, 166-167, 170, 176, 177, 183

export controls and, 12, 45, 115

federal agencies and, 111-114

terrorism, 9, 116, 118

National Security Agency

development of SKIPJACK, 117

education on ethical computer use, 59

emergency response, 57

expanded responsibilities under NSDD- 145,

143-145

export controls, 45, 154, 155-156, 157

joint NIST/NSA activities, 164

letter of clarification of NIST/NSA memorandum

of understanding, 210-214

NIST/NSA memorandum of understanding,

13-14,20, 148, 164-171, 183, 197-200,201-209

overview of joint NIST/NSA activities, 165

policy option, 16, 178

product evaluation, 48, 121

proposed “Federal Criteria” for product

evaluation, 49

research and development, 62

role in computer security, 140

role in developing infomlation safeguards,

160-174

role in developing infomlation security

certification, 52

role in developing standards, 121, 122, 123, 132,

139, 141, 145, 146, 147-148, 148, 160-174,

216-217

SKIPJACK, 64

working toward international product evaluation

standard, 49

National Security Council, 15,61, 118, 119, 166,

170, 171

National Security Decision Directive 145, 141,

143-145

National Security Directive 42, 137-138

National Security Telecommunications Advisory

Committee, 172

National Security Telecommunications Advisory

Council, 61

National Security Telecommunications and

Infomlation Systems Security Committee, 145

National Telecommunications and Infomlation

Administration, 139-142

National Telccomrnunications and Infomlation

Systems Security Committee, 143

National Telecommunications and Inf~)rntation

Systems Security Policy Dirccti\’c No. 2, 140,

144-145

Natural disasters and environmental damage

threats to networked infom}ation, 26

NCS. See National Communications System

NCSC. See National Computer Security Center

Netherlands

data protection board, 22,95

lnfomlation Technology Security Evaluation

Criteria, 49

Network

definition, 27

Network Reliability Council, 61

Networked infomlation. See also Infomm(ion

government’s role, 63-68

institutions that facilitate safeguards for, 40-63

organizational objectives and security policy, 7

policy issues and options, 8-23

safeguards for, 6-8, 26-40

system certification and accreditation, 50-51

threats to networked infomlation, 25-26

trends affecting information security, 3-5

NH Security Issues Forum, 173

N] ST. See National Institute of Standards and

Technology

Nonrcpudiation

definition, 28

emphasis on by value-added services, 28

encryption and, 35-37

Green Book proposals, 91

need for, 69, 76

services, 20-21, 76

North Korea

export controls, 154

Norway

data protection board, 22,95

NRC. See National Research Council
240 I Information Security and Privacy in Network Environments

NSA. See National Security Agency

NSDD- 145. See National Security Decision

Directive 145

NSFNET, 62

NSTAC. See National Security Telecommunications

Advisory Council

NSTISSC. See National Security

Telecommunications and Information Systems

Security Committee

NTIA. See National Telecommunications and

Information Administration

NTISSC. See National Telecommunications and

Information Systems Security Committee

o

Objectives

differing objectives in large networks, 41

federal agencies, 27, 135

organizational objectives and information

safeguards, 7, 27-28, 32

OECD. See Organization for Economic Cooperation

and Development

Office of Export Licensing, 153

Office of Management and Budget

responsibility for computer security policy, 43,

39, 142, 143, 146, 161, 182

responsibility for information resource

management, 18, 133, 150

role in defining objectives and organizational

security policy, 7, 27

role in emergency response, 57

Office of Science and Technology Policy, 119, 171

Office of Technology and Policy Analysis, 153

Office of Technology Assessment

letters of request, 185-188

scope and background of OTA report, 5-6

OMB. See Office of Management and Budget

OMB Bulletin 90-08, 138

OMB Circular A-71, 143

OMB Circular A-123, 137

OMB Circular A-130, 18-19, 133, 137-138,

143-144, 150, 182-183

OMB Transmittal Memorandum No. 1, 143

Omnibus Export Administration Act, 12, 160

Online Computer Library Center, 96-97

Online publishers

cryptography and access controls, 28

Open systems, 4,5

Open Systems Interconnection protocols, 46, 131

Open Systems Security

NIST activities relating to, 163

“Opportunity to Join a Cooperative Research and

Development Consortium to Develop Software

Encryption with Integrated Cryptographic Key

Escrowing Techniques,” 161-163

Orange Book, 48

Organization for Economic Cooperation and

Development

Guidelines Governing the Protection of Privacy

and Transborder Flows of Personal Data, 88-90

information-security guidelines, 51

personal data controls, 21

Organizational security policy

cost-justifying safeguards, 30-31

developing, 29-30

formal models, 31-32

organizational objectives and, 27-28

0S1. See Open Systems Interconnection

OSTP. See Office of Science and Technology Policy

Ownership of electronic information, 4,6

P

Paperwork Reduction Act of 1980, 133, 137-138

Parent, W. A., 83

Passwords

challenge-response systems, 32

guidance for users, 33

sniffer network monitoring incidents, 3, 149

weak vs. strong, 33

weaknesses of, 32, 33

Patent issues, 127, 128, 167, 168,217,220-221

Paul v. Davis, 80

PC:MCIA cards, 34,65, 129

PEM. See Privacy-Enhanced Mail

Penalties, 8, 18,60-61, 180-181

Personal data

access to, 21, 81, 85, 93, 130, 135

amendment right under Council Directive, 93

amendment right under OMB Circular A-130,

138

amendment right under Privacy Act, 81

collection of, 138

European Community protection of, 21,22,

87-88,90-95

policy options, 21-22,85,95, 182-183

Privacy Act rights, 80-87

privacy issues, 21-22,85,87, 135

protection of, 20-21,70,87, 138

Plaintext

definition, 113

Pohlig, Stephen, 220

Poindexter, John, 144

Policy issues and options, 8-23,85,95, 105-106,

108, 110, 174-183

President

role in standards appeal-mechanism, 166, 168
Index 1241

Privacy. See also Privacy Act of 1974

computerization and, 85-87

constitutional right to, 78-80

definition, 82-83

distinguished from confidentiality, 28,82-83

federal agency concerns, 134, 135

interactivity and, 4

international data flow, 87-95

legal issues, 21-22,70,78-95

“Mega-Project” on privacy, security, and

intellectual property, 172-173

NIST activities in support of, 161-164

policy options, 21-22,85,95, 182-183

problem examples, 2-3

statutory requirements, 80-85, 133

streamlined operations and, 4-5, 29

Privacy Act of 1974, 19,21,80-85,88, 133, 182

Privacy and Freedom, 82-83

Privacy-Enhanced Mail, 36-37,54

Privacy Protection Act

proposes establishment of Privacy Protection

Commission, 22,95

Privacy Protection Commission

proposed creation of, 22,95

suggested responsibilities and functions, 22, 95

Procurement, 131-132, 135

Prodigy, 28

Product

definition, 50

Product evaluation

delegation to third parties certified by the U.S.

government, 49

in the European Community, 49

Green Book proposals, 92

international standard proposal, 49-50

joint NIST/NSA activities relating to, 49, 165

purpose of, 47-48

trusted product evaluation process, 8

in the U. S., 48-50

Professional development, 52-53

Professional organizations and examinations, 52-53

Protecting Privacy in Computerized Medical

Information, 6

Protocols

definition, 46

Public access

need for more open processes, 15, 16, 18, 170,

175-177, 178, 179, 182, 183

to personal data, 21, 81,93, 135, 138

Public-key cryptography. See also Digital Signature

Standard

choice of a signature technique for the standard,

10,217-220

CNRI-proposed electronic copyright

management system, 110

definition, 113

description, 39

for digital signatures, 6, 10,39, 113, 124-125,

215,216,217-220

electronic commerce and, 6,7, 16, 53-56, 68, 1

infrastructure, 7, 16, 53-56, 68, 216

key exchange, 10, 11,39,53,54, 125-126, 127

royalty issue, 220

standard development efforts, 167, 216

uses of, 10, 127

Public Key Partners, 220-221,222

Publishing under copyright law, 98

R

Rainbow Series books, 48,49,51

Reagan Administration, 139, 141

Regulatory bodies, 61-62

Reno, Janet, 118, 173

Research and development

joint NIST/NSA activities relating to, 165

National Information Infrastructure Program,

62-63

Responsibility for information, 4,5, 182

Risk analysis, 7,30,31,44

Rivest, Ronald, 220

Rivest-Shamir-Adleman system, 11,39, 124-126,

217,220

Robust encryption, 10, 127, 132, ]54

Roe v. Wade, 79

“Rogue countries” export controls, 154

Roth, Sen. William V., Jr.

letter of request to OTA, 5, 185-186

Royalties

copyright collectives, 108-110

current performance plan, 109

for electronic information, 23,68,97, 105

fee-for-use plan, 110

four-fund system, 109

policy options, 23, 110

RSA Data Security, Inc., 157,216,220

RSA system. See Rivest-Shamir-Adleman system

Rules of evidence

electronic commerce and, 74-78

Russia

availability of DES-based products, 158

export control policy, 155

s

Safeguarding networked information

government’s role, 63-68

institutions facilitating safeguards, 40-63

organizational objectives and policy, 27-32

techniques and tools, 32-40

threats to networked information, 25-26

13
242 I Information Security and Privacy in Network Environments

Sandia National Laboratories, 118

Satellite networks

emphasis on availability of services, 28

information infrastructure, 41

Schnorr, Claus, 220

Secret-key systems. See Symmetric cryptosystems

Secure Hash Standard, 65, 125, 174,219,222

Secure tokens, 34, 129

Security. See also Safeguarding networked

information

definition, 26-27

problem examples, 2-3

Security Coordination Center, 57

Security practitioners

professional development, 52-53

Sensitive information

definition in Computer Security Act of 1987,

140-141, 143-144

Sensitive items

export controls, 153, 154-155

Separation of duties principle, 37-39

Separation of powers and key escrow, 18, 180

Service providers

Green Book self-evaluation proposal, 92

organizational objectives and security aspect

emphasis, 27-28

trends, 4

Shamir, Adi, 123,220

Shils, Edward, 82

Signals intelligence. See also Electronic

surveillance; National security

cryptography and, 8-9, 17, 111, 116-120, 128,

129, 166

NSA role, 112, 122, 169,219

Signature. See also Digital signatures

requirement of U. C. C., 73,74

Signature standard. See Digital signature standard

SKIPJACK, 64,65, 117, 118-119, 170, 174

Small Business Administration, 85

Smart cards, 34, 128-129, 154

SmartDisks, 34

Sniffer programs, 3

Social Security Administration

electronic data access, 84

Socolar, Milton J., ]64-165

Software

developer responsibilities for safeguards, 44-46

export controls, 11-12, 154, 155, 156-157

implementation of cryptography, 67, 182

Software Engineering Institute, 57

Software Publishers Association

study identifying encryption products using DES,

130

study of foreign availability of encryption

products, 157-158

“Solicitation for Public Key Cryptographic

Algorithms,” 167, 216

SPA. See Software Publishers Association

SRI International, 57

SSA. See Social Security Administration

Standards. See also specijic standards

appeal mechanism, 166, 168-170

definition, 46

development of, 46-47, 115, 134

effects on information safeguards, 46-47, 147

international, 181, 182

joint NIST/NSA activities relating to, 148,

164-171

NIST activities relating to, 136, 145, 147, 162,

164-171

standards-setting bodies, 46-47

and technological stability, 129

Stanford University, 220

Statute of Frauds, 71-74

Studeman, W.O.

letter of clarification of NIST/NSA memorandum

of understanding, 201-209

NIST/NSA memorandum of understanding,

197-200

Subscription services

emphasis on access control, 28

Sweden

data protection board, 22,95

Symmetric cryptosystems, 39, 113

System

certifications and accreditations, 50-51

definition, 50

Systems Security Examination, 52

Systems Steering Group, 143

T

Ti~)( Systems Modernization Program, 86

Taxpayer data

misuse by IRS employees, 3

protection of, 86, 133, 178, 179

TCP/IP. See Transmission Control Protocol/Internet

Protocol

TCSEC. See Trusted Computer Security Evaluation

Criteria

Technical harmonization

Green Book proposals, 92

Technical Working Group (NIST/NSA), 14, 166,

167, ]69, 217,219

Telephone systems

EES and, 11, 16,64, 172

emphasis on availability of services, 28

Federal Telephone System, 135

information infrastructure, 41

information services, 4

regulatory bodies, 61
Index 1243

TEMPEST equipment, 48

Terrorism, 9, 116, 118

TESSERA card, 127, 167,216

Third-party trustees. See Trusted entity

Threats to networked information

“crackers” and other intruders, 26

human errors and design faults, 25-26

insiders, 26

natural disasters and environmental damage, 26

vruses and other malicious software, 26

Time stamping

in electronic commerce, 76-78

Green Book proposals, 92

Tokens, 34, 129

Trading partner agreements, 74

Training. See Education/training

Transactional Reporting Service, 109

Transmission Control Protocol/Internet Protocol, 46,

131

Treasury Department. See Department of the

Treasury

Trivial File Transfer Protocol, 2

Trojan horses, 36

Trust level assignment, 48

Trusted Computer Security Evaluation Criteria, 48

Trusted entity. See also Certification authorities

attributes of, 77

functions, 77-78

Green Book proposals, 91-92

key management, 67, 171, 178

Postal Service as, 55-56,78

time stamping, 77

Trusted product evaluation process, 8

Trusted Technology Assessment Program, 8,49,50,

165

Trustees. See Trusted entity

TSM. See Tax Systems Modernization Program

~AP. See Trusted Technology Assessment Program

Tuchman, Walter, 118

u

U.C.C. See Uniform Commercial Code

Unauthorized copying, 105

Unauthorized use, 58-60

Uniform Commercial Code

electronic funds transfers security procedures,

72-73

proposed legislative modifications, 74

Statue of Frauds, 71-74

United Kingdom

availability of DES-based products, 158

Code of Practice for Information Security

Management, 51

Commercially-Licensed Evaluation Facilities

program, 49

data protection board, 22,95

United States v. Miller, 80

University of Virginia, 96

UNIX trusted-host feature, 2

U.S. Postal Service

as certification authority, 55-56

trusted third-party functions, 78

U.S. Privacy Protection Study Commission, 85-86

U.S. Public Policy Committee of the Association for

Computing Machinery, 182

USACM. See Association for Computing Machinery

Users

definition, 27

emphasis on confidentiality, 28

ethics, 8, 58-60, 135

responsibility for security, 134,

v

Value-added network providers

as certification authorities, 54

135

emphasis on integrity and nonrepudiation, 28

trusted entity functions, 78

Vendors

government regulation, 61,62

Green Book self-evaluation proposal, 92

licensing vs. selling, 98

responsibilities for safeguards, 44-46

self-validation of product claims, 49

Virus checkers, 35, 36

Viruses

affecting Internet, 2

protection practices, 36

threats to networked information, 26

VLSI Logic, 117

Vulnerabilities. See also Threats to networked

information

shared information policies, 57

w

Walker, Stephen, 132, 157-158

Warren, Earl, 79

Warren, Samuel, 79,82

Westin, Alan, 82-83

White Book, 49

Williams & Wilkins Co. v. United States, 103

Wireless networks

emphasis on availability of services, 28

information infrastructures, 41

Wiretapping. See Electronic surveillance

Working Group on Encryption and

Telecommunications, 171-172
244 I Information Security and Privacy in Network Environments

Worms. See also Viruses

definition, 36

protection practices, 36

Wright v. Warner Books, 103

Writing

copyright law, 100

U.C.C. requirement,71 -74

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