Privacy: Key Challenges Facing Federal Agencies
Released: 2006-05-17T00:00:00

Letter

Background: Federal Laws and Guidance Govern Use of Personal Information in Federal Agencies

A core function of privacy officers is to ensure that their agencies are in compliance with federal laws. The major requirements for th protection of personal privacy by federal agencies come from two laws, the Privacy Act of 1974 and the E-Government Act of 2002. The Federal Information Security Management Act of 2002 (FISM A) also addresses the protection of personal information in the context of securing federal agency information and information systems.

The Privacy Act places limitations on agencies’ collection, disclosure, and use of personal information maintained in s ystems of records. The act describes a “record” as any item, collection, or grouping of information about an individual that is maintained by a agency and contains his or her name or another personal identifier. It also defines “system of records” as a group of records under the control of any agency from which information is retrieved by the n name of the individual or by an individual identifier. The Privacy A requires that when agencies establish or make changes to a system of records, they must notify the public by a “system-of-records notice”: that is, a notice in the Federal Register identifying, amo other things, the type of data collected, the types of individuals about whom information is collected, the intended “routine” use data, and procedures that individuals can use to review and correct personal information. Among other provisions, the act also requires agencies to define and limit themselves to specific predefined purposes. For example, the act requires that to the greatest ext ent practicable, personal information should be collected directly from the subject individual when it may affect an individual’s rights or benefits under a federal program.

The provisions of the Privacy Act are largely based on a set of principles for protecting the privacy and security of personal information, known as the Fair Information Practices, which w first proposed in 1973 by a U.S. government advisory committee; these principles were intended to address what the committee termed a poor level of protection afforded to privacy under contemporary law. Since that time, the Fair Information Pra ctices have been widely adopted as a standard benchmark for evaluating the adequacy of privacy protections. Attachment 2 contains a summary of the widely used version of the Fair Information Practices adopted by the Organization for Economic Coopera and Development in 1980.

The E-Government Act of 2002 strives to enhance protection for personal information in government information systems or information collections by requiring that agencies conduct pr impact assessments (PIA). A PIA is an analysis of how personal information is collected, stored, shared, and managed in a federa l system. More specifically, according to Office of Management and Budget (OMB) guidance, a PIA is an analysis of how information ishandled. Specifically, a PIA is to (1) ensure that handling conforms to applicable legal, regulatory, and policy requirements regarding privacy; (2) determine the risks and effects of collecting, maintaining, and disseminating information in identifiable an electronic information system; and (3) examine and evaluate protections and alternative processes for handling information to mitigate potential privacy risks.

Agencies must conduct PIAs (1) before developing or procuring information technology that collects, maintains, or disseminates information that is in a personally identifiable form; or (2) before initiating any new data collections involving personal information that will be collected, maintained, or disseminated using information technology if the same questions are asked of 10 or more people. To the extent that PIAs are made publicly available they provide explanations to the public about such things as the information that will be collected, why it is being collected, how to be used, and how the system and data will be maintained and protected.

FISMA also addresses the protection of personal information. FISMA defines federal requirements for securing information a information systems that support federal agency operations and assets; it requires agencies to develop agencywide information security programs that extend to contractors and other provider federal data and systems. Under FISMA, information security means protecting information and information systems from unauthorized access, use, disclosure, disruption, modification destruction, including controls necessary to preserve authorized , or restrictions on access and disclosure to protect personal privacy, among other things.

OMB is tasked with providing guidance to agencies on how to implement the provisions of the Privacy Act and the E-Government Act and has done so, beginning with guidance on the Privacy Act, issued in 1975. The guidance provides explanations for the various provisions of the law as well as detailed instructions for how to comply. OMB’s guidance on implementing the privacy provisions of the E-Government Act of 2002 identifies circumstances under which agencies must conduct PIAs and explains how to conduct them. OMB has also issued guidance on implementing the provisions of FISMA.

Privacy Officers Have Gained Prominence at Several Federal Agencies

While many agencies have had officials designated as focal points for privacy-related matters for some time, these positions have recently gained greater prominence at a number of agencies. A long- standing requirement has been in place for agency chief information officers to be responsible for implementing and enforcing privacy policies, procedures, standards, and guidelines, and for compliance with the Privacy Act. In 2004, we reported that of the 27 major agency chief information officers, 17 were responsible for privacy and 10 were not. In those 10 agencies, privacy was most often the responsibility of the Office of General Counsel and/or various offices focusing on compliance with the Freedom of Information Act and the Privacy Act.

Steps have been taken recently to highlight the importance of privacy officers in federal agencies. For example, the Transportation, Treasury, Independent Agencies, and General Government Appropriations Act of 2005 required each agency covered by the act to have a chief privacy officer responsible for, among other things, “assuring that the use of technologies sustain, and do not erode, privacy protections relating to the use, collection, and disclosure of information in identifiable form.” Subsequently, in February 2005, OMB issued a memorandum to federal agencies requiring them to designate a senior official with overall agencywide responsibility for information privacy issues. This senior official was to have overall responsibility and accountability for ensuring the agency’s implementation of information privacy protections and play a central policy-making role in the agency’s development and evaluation of policy proposals relating to the agency’s collection, use, sharing, and disclosure of personal information.

Prior to the OMB guidance, several agencies had already designated privacy officials at higher levels. The Internal Revenue Service had been one of the first, establishing its privacy advocate in 1993. In 2001, the Postal Service established a Chief Privacy Officer. More recently, as you know, Section 222 of the Homeland Security Act of 2002 had created the first statutorily required senior privacy official at any federal agency. This law mandated the appointment of a senior official at DHS to assume primary responsibility for privacy policy, including, among other things, assuring that the use of technologies sustains, and does not erode, privacy protections relating to the use, collection, and disclosure of personal information. Since being established, the DHS Privacy Office created a Data Privacy and Integrity Advisory Committee, made up of experts from the private and non-profit sectors and the academic community, to advise it on issues within DHS that affect individual privacy, as well as data integrity, interoperability, and other privacy- related issues.

Through the Intelligence Reform Act in 2004, Congress expressed more broadly the sense that agencies with law enforcement or anti- terrorism functions should have a privacy and civil liberties officer. In keeping with that, Justice recently announced the appointment of a Chief Privacy and Civil Liberties Officer responsible for reviewing and overseeing the department’s privacy operations and complying with privacy laws. Justice has also announced plans to establish an internal Privacy and Civil Liberties Board made up of senior Justice officials to assist in ensuring that the department’s activities are carried out in a way that fully protects the privacy and civil liberties of Americans.

Agency Privacy Officers Face a Number of Challenges

The elevation of privacy officers at federal agencies reflects the growing demands that these individuals face in addressing privacy challenges on a day-to-day basis. Among these challenges, several that are prominent include (1) complying with the Privacy Act and the E-Government Act of 2002, (2) ensuring that data mining efforts do not compromise privacy protections, (3) controlling the collection and use of personal information obtained from commercial sources, and (4) addressing concerns about radio frequency identification technology.

Complying with the Privacy Act and the E-Government Act of 2002

Although it has been on the books for more than 30 years, the Privacy Act of 1974 continues to pose challenges for federal agencies. In 2003, we reported that agencies generally did well with certain aspects of the Privacy Act’s requirements—such as issuing system-of-records notices when required—but did less well at other requirements, such as ensuring that information is complete, accurate, relevant, and timely before it is disclosed to a nonfederal organization. In discussing this uneven compliance, agency officials reported the need for additional OMB leadership and guidance to assist in difficult implementation issues in a rapidly changing environment. For example, officials had questions about the act’s applicability to electronic records. Additional issues included the low agency priority given to implementing the act and insufficient employee training on the act.

These are all issues that chief privacy officers could be in a position to address. For example, working in concert with officials from OMB and other agencies, they are in a position to identify ambiguities in guidance and provide clarifications about the applicability of the Privacy Act. Further, the establishment of a chief privacy officer position and its relative seniority within an agency’s organizational structure could indicate that an agency places priority on implementing the act. Finally, a chief privacy officer could also serve as a champion for privacy awareness and education across an agency.

The E-Government Act’s requirement that agencies conduct PIAs is relatively recent, and we have not yet made a comprehensive assessment of agencies’ implementation of this important provision. However, our previous work has highlighted challenges with respect to conduct of these assessments for certain applications. For example, in our work on federal agency use of information resellers, we found that few agency components reported developing PIAs for their systems or programs that make use of information reseller data. These agencies often did not conduct PIAs because officials did not believe they were required. Current OMB guidance on conducting PIAs is not always clear about when they should be conducted. We concluded that until PIAs are conducted more thoroughly and consistently, the public is likely to remain incompletely informed about the purposes and uses for the information agencies obtain from resellers. We recommended that OMB revise its guidance to clarify the applicability of the E-Gov Act’s PIA requirement (as well as Privacy Act requirements) to the use of personal information from resellers.

Compliance with OMB’s PIA guidance was also an issue in our review of selected data mining efforts at federal agencies. In that review, although three of the five data mining efforts we assessed had conducted PIAs, none of these assessments fully complied with OMB guidance. Complete assessments are an important tool for agencies to identify areas of noncompliance with federal privacy laws, evaluate risks arising from electronic collection and maintenance of information about individuals, and evaluate protections or alternative processes needed to mitigate the risks identified. Agencies that do not take all the steps required to protect the privacy of personal information limit the ability of individuals to participate in decisions that affect them, as required by law, and risk the improper exposure or alteration of personal information. We recommended that the agencies responsible for the data mining efforts complete or revise PIAs as needed and make them available to the public.

The DHS Privacy Office recently issued detailed guidance on conducting PIAs that may be helpful to departmental components as they develop and implement systems that involved personal information. The guidance notes that PIAs can be one of the most important instruments in establishing trust between the department and the public. As agencies develop or make changes to existing systems that collect personally identifiable information, it will continue to be critical for privacy officers to monitor agency activities and help ensure that PIAs are properly conducted so that their benefits can be realized.

Ensuring that Data Mining Efforts Do Not Compromise Privacy Protections

Many concerns have been raised about the potential for data mining programs at federal agencies to compromise personal privacy. In our May 2004 report on federal data mining efforts, we defined data mining as the application of database technology and techniques— such as statistical analysis and modeling—to uncover hidden patterns and subtle relationships in data and to infer rules that allow for the prediction of future results. We based this definition on the most commonly used terms found in a survey of the technical literature. As we noted in our report, mining government and private databases containing personal information raises a range of privacy concerns.

In the government, data mining was initially used to detect financial fraud and abuse. However, its use has greatly expanded. Among other purposes, data mining has been used increasingly as a tool to help detect terrorist threats through the collection and analysis of public and private sector data. Through data mining, agencies can quickly and efficiently obtain information on individuals or groups by exploiting large databases containing personal information aggregated from public and private records. Information can be developed about a specific individual or a group of individuals whose behavior or characteristics fit a specific pattern. The ease with which organizations can use automated systems to gather and analyze large amounts of previously isolated information raises concerns about the impact on personal privacy. Before data aggregation and data mining came into use, personal information contained in paper records stored at widely dispersed locations, such as courthouses or other government offices, was relatively difficult to gather and analyze.

In August 2005, we reported on five different data mining efforts at selected federal agencies, noting that although the agencies responsible for these data mining efforts took many of the steps needed to protect the privacy and security of personal information used in the efforts, none followed all key procedures. Most of the agencies provided a general public notice about the collection and use of the personal information used in their data mining efforts. However, fewer followed other required steps, such as notifying individuals about the intended uses of their personal information when it was collected or ensuring the security and accuracy of the information used in their data mining efforts. In addition, as I previously mentioned, although three of the five agencies completed privacy impact assessments of their data mining efforts, none fully complied with OMB guidance. We made recommendations to the agencies responsible for the five data mining efforts to ensure that their efforts included adequate privacy and security protections.

In March 2004, an advisory committee chartered by the Department of Defense issued a comprehensive report on privacy concerns regarding data mining in the fight against terrorism. The report made numerous recommendations to better ensure that privacy requirements are clear and stressed that proper oversight be in place when agencies engage in data mining that could include personal information. Agency privacy offices can provide a degree of internal oversight to help ensure that privacy is fully addressed in agency data mining activities.

Controlling the Collection and Use of Personal Information Obtained from Commercial Sources

Recent security breaches at large information resellers, such as ChoicePoint and LexisNexis, have highlighted the extent to which such companies collect and disseminate personal information. Information resellers are companies that collect information, including personal information about consumers, from a wide variety of sources for the purpose of reselling such information to their customers, which include both private-sector businesses and government agencies. Before advanced computerized techniques made aggregating and disseminating such information relatively easy, much personal information was less accessible, being stored in paper-based public records at courthouses and other government offices or in the files of nonpublic businesses. However, information resellers have now amassed extensive amounts of personal information about large numbers of Americans, and federal agencies access this information for a variety of reasons.

A major task confronting federal agencies, especially those engaged in antiterrorism tasks, has been to ensure that information obtained from resellers is being appropriately used and protected. To this end, in September 2005, the DHS Privacy Office held a public workshop to examine the policy, legal, and technology issues associated with the government’s use of reseller data for homeland security. Participants provided suggestions on how the government can ensure that privacy is protected while enabling the agencies to analyze reseller data.

We recently testified before this subcommittee on critical issues surrounding the federal government’s acquisition and use of personal information from information resellers. In our review of the acquisition of personal information from resellers by DHS, Justice, the Department of State, and the Social Security Administration, agency practices for handling this information did not always reflect the Fair Information Practices. For example, although agencies issued public notices on information collections, these did not always notify the public that information resellers were among the sources to be used, a practice inconsistent with the principle that individuals should be informed about privacy policies and the collection of information. And again, a contributing factor was ambiguities in guidance from OMB regarding the applicability of privacy requirements in this situation. As I mentioned previously, we recommended that OMB revise its guidance to clarify the applicability of governing laws—both the Privacy Act and the E-Gov Act—to the use of personal information from resellers.

In July 2005, we reported on shortcomings at DHS’s Transportation Security Administration (TSA) in connection with its test of the use of reseller data for the Secure Flight airline passenger screening program. TSA did not fully disclose to the public its use of personal information in its fall 2004 privacy notices, as required by the Privacy Act. In particular, the public was not made fully aware of, nor had the opportunity to comment on, TSA’s use of personal information drawn from commercial sources to test aspects of the Secure Flight program. In September 2004 and November 2004, TSA issued privacy notices in the Federal Register that included descriptions of how such information would be used. However, these notices did not fully inform the public before testing began about the procedures that TSA and its contractors would follow for collecting, using, and storing commercial data. In addition, the scope of the data used during commercial data testing was not fully disclosed in the notices. Specifically, a TSA contractor, acting on behalf of the agency, collected more than 100 million commercial data records containing personal information such as name, date of birth, and telephone number without informing the public. As a result of TSA’s actions, the public did not receive the full protections of the Privacy Act. In its comments on our findings, DHS stated that it recognized the merits of the issues we raised, and that TSA acted immediately to address them.

In our report on information resellers, we recommended that the Director, OMB, revise privacy guidance to clarify the applicability of requirements for public notices and privacy impact assessments to agency use of personal information from resellers and direct agencies to review their uses of such information to ensure it is explicitly referenced in privacy notices and assessments. Further, we recommended that agencies develop specific policies for the use of personal information from resellers. Until privacy requirements are better defined and broadly understood, agency privacy officers are likely to continue to face challenges in helping ensure that their agencies are providing appropriate privacy protections.

Addressing Concerns about Radio Frequency Identification Technology

Specific issues about the design and content of identity cards also raise broader privacy concerns associated with the adoption of new technologies such as radio frequency identification (RFID). RFID is an automated data-capture technology that can be used to electronically identify, track, and store information contained on a tag. The tag can be attached to or embedded in the object to be identified, such as a product, case, or pallet. RFID technology provides identification and tracking capabilities by using wireless communication to transmit data. In May 2005, we reported that major initiatives at federal agencies that use or propose to use the technology included physical access controls and tracking assets, documents, or materials. For example, DHS was using RFID to track and identify assets, weapons, and baggage on flights. The Department of Defense was also using it to track shipments.

In our May 2005 report we identified several privacy issues related to both commercial and federal use of RFID technology. Among these privacy issues are notifying individuals of the existence or use of the technology; tracking an individual’s movements; profiling an individual’s habits, tastes, or predilections; and allowing for secondary uses of information. The extent and nature of the privacy issues depends on the specific proposed use. For example, using the technology for generic inventory control would not likely generate substantial privacy concerns. However, the use of RFIDs by the federal government to track the movement of individuals traveling within the United States could generate concern by the affected parties.

A number of specific privacy issues can arise from RFID use. For example, individuals may not be aware that the technology is being used and that it could be embedded in items they are carrying and thus used to track them. Three agencies indicated to us that employing the technology would allow for the tracking of employees’ movements. Tracking is real-time or near-real-time surveillance in which a person’s movements are followed through RFID scanning. Media reports have described concerns about ways in which anonymity is likely to be undermined by surveillance. Further, public surveys have identified a distinct unease with the potential ability of the federal government to monitor individuals’ movements and transactions. Like tracking, profiling—the reconstruction of a person’s movements or transactions over a specific period of time, usually to ascertain something about the individual’s habits, tastes, or predilections—could also be undertaken through the use of RFID technology. Because tags can contain unique identifiers, once a tagged item is associated with a particular individual, personally identifiable information can be obtained and then aggregated to develop a profile of the individual. Both tracking and profiling can compromise an individual’s privacy and anonymity.

Concerns also have been raised that organizations could develop secondary uses for the information gleaned through RFID technology; this has been referred to as “mission-” or “function- creep.” The history of the Social Security number, for example, gives ample evidence of how an identifier developed for one specific use has become a mainstay of identification for many other purposes, governmental and nongovernmental. Secondary uses of the Social Security number have been a matter not of technical controls but rather of changing policy and administrative priorities.

As agencies take advantage of the benefits of RFID technology and implement it more widely, it will be critical for privacy officers to help ensure that a full consideration is made of potential privacy issues, both short-term and long-term, as the technology is implemented.

In summary, privacy officers at federal agencies face a range of challenges in working to ensure that individual privacy is protected, and today I have discussed several of them. It is clear that advances in technology can present both opportunities for greater agency efficiency and effectiveness as well as the danger, if unaddressed, of eroding important privacy protections. Technological advances also mean there is a need to keep governmentwide privacy guidance up- to-date, and agency privacy officers will depend on OMB for leadership in this area. Even without a consideration of technological evolution, privacy officers need to be vigilant to ensure that agency officials are continually mindful of their privacy responsibilities. Fortunately, tools are available—including the requirements for PIAs and Privacy Act public notices—that can help ensure that the right operational decisions are made about the acquisition, use, and storage of personal information. By using these tools effectively, agencies have the opportunity to gain greater public confidence that their actions are in the best interests of all Americans.

Mr. Chairman, this concludes my testimony today. I would happy to answer any questions you or other members of the subcommittee may have.

Contacts and Acknowledgements

If you have any questions concerning this testimony, please contact Linda Koontz, Director, Information Management, at (202) 512-6240, or koontzl@gao.gov. Other individuals who made key contributions include Barbara Collier, John de Ferrari, David Plocher, and Jamie Pressman.

Attachment I: Selected GAO Products Related to Privacy Issues

Personal Information: Agencies and Resellers Vary in Providing Privacy Protections. GAO-06-609T. Washington, D.C.: April 4, 2006.

Personal Information: Agency and Reseller Adherence to Key Privacy Principles. GAO-06-421. Washington, D.C.: April 4, 2006.

Data Mining: Agencies Have Taken Key Steps to Protect Privacy in Selected Efforts, but Significant Compliance Issues Remain. GAO- 05-866. Washington, D.C.: August 15, 2005.

Aviation Security: Transportation Security Administration Did Not Fully Disclose Uses of Personal Information during Secure Flight Program Testing in Initial Privacy Notices, but Has Recently Taken Steps to More Fully Inform the Public. GAO-05- 864R. Washington, D.C.: July 22, 2005.

Identity Theft: Some Outreach Efforts to Promote Awareness of New Consumer Rights are Under Way. GAO-05-710. Washington, D.C.: June 30, 2005.

Information Security: Radio Frequency Identification Technology in the Federal Government. GAO-05-551. Washington, D.C.: May 27, 2005.

Aviation Security: Secure Flight Development and Testing Under Way, but Risks Should Be Managed as System is Further Developed. GAO-05-356. Washington, D.C.: March 28, 2005.

Electronic Government: Federal Agencies Have Made Progress Implementing the E-Government Act of 2002. GAO-05-12. Washington, D.C.: December 10, 2004.

Social Security Numbers: Governments Could Do More to Reduce Display in Public Records and on Identity Cards. GAO-05-59. Washington, D.C.: November 9, 2004.

Federal Chief Information Officers: Responsibilities, Reporting Relationships, Tenure, and Challenges, GAO-04-823. Washington, D.C.: July 21, 2004.

Data Mining: Federal Efforts Cover a Wide Range of Uses, GAO-04- 548. Washington, D.C.: May 4, 2004.

Aviation Security: Computer-Assisted Passenger Prescreening System Faces Significant Implementation Challenges. GAO-04-385. Washington, D.C.: February 12, 2004.

Privacy Act: OMB Leadership Needed to Improve Agency Compliance. GAO-03-304. Washington, D.C.: June 30, 2003.

Data Mining: Results and Challenges for Government Programs, Audits, and Investigations. GAO-03-591T. Washington, D.C.: March 25, 2003.

Technology Assessment: Using Biometrics for Border Security. GAO-03-174. Washington, D.C.: November 15, 2002.

Information Management: Selected Agencies’ Handling of Personal Information. GAO-02-1058. Washington, D.C.: September 30, 2002.

Identity Theft: Greater Awareness and Use of Existing Data Are Needed. GAO-02-766. Washington, D.C.: June 28, 2002.

Social Security Numbers: Government Benefits from SSN Use but Could Provide Better Safeguards. GAO-02-352. Washington, D.C.: May 31, 2002.

Attachment 2: The Fair Information Practices

The Fair Information Practices are not precise legal requirements. Rather, they provide a framework of principles for balancing the need for privacy with other public policy interests, such as national security, law enforcement, and administrative efficiency. Ways to strike that balance vary among countries and according to the type of information under consideration. The version of the Fair Information Practices shown in table 1 was issued by the Organization for Economic Cooperation and Development (OECD) in 1980 and has been widely adopted.