Cybersecurity

Earlier this week, the Securities and Exchange Commission (“SEC”) published an update to its rulemaking agenda indicating that it does not plan to approve two proposed cyber rules until at least October 2023 (the agenda’s timeframe is an estimate).  The proposed rules in question address disclosure requirements regarding cybersecurity governance and cybersecurity incidents at publicly

This is the twenty-fourth in a series of Covington blogs on implementation of Executive Order 14028, “Improving the Nation’s Cybersecurity,” issued by President Biden on May 12, 2021 (the “Cyber EO”).  The first blog summarized the Cyber EO’s key provisions and timelines, and the subsequent blogs described the actions taken by various government agencies to implement the Cyber EO from June 2021 through March 2023.  This blog describes key actions taken to implement the Cyber EO, as well as the U.S. National Cybersecurity Strategy, during April 2023. 

CISA Requests Comment on Secure Software Self-Attestation Common Form

On April 27, 2023, the U.S. Cybersecurity and Infrastructure Security Agency (“CISA”) released a 60-day Request for Comment on a draft secure software self-attestation common form.  Comments will be accepted through June 26, 2023 and may be submitted through Regulations.gov.  The draft common form, developed in close consultation with the U.S. Office of Management and Budget (“OMB”), is a key step in implementation of OMB Memorandum M-22-18, which was issued pursuant to Section 4 of the Cyber EO and directs agencies to only use software that complies with Government-specified secure software development practices (the “OMB Memorandum”).  Specifically, and among other requirements, the OMB Memorandum directs that software providers self-attest that the software developer follows the secure development processes described by NIST Secure Software Development Framework (SP 800-218) and the NIST Software Supply Chain Security Guidance.  The key provisions of the OMB Memorandum are discussed in more detail in our prior blog

Scope.  The OMB Memorandum applies to all software (other than agency-developed software) developed or experiencing major version changes to be operated “on the agency’s information systems or otherwise affecting the agency’s information.”  CISA’s draft common form further specifies that the “following software requires self-attestation:

  1. Software developed after September 14, 2022;
  2. Existing software that is modified by major version changes […] after September 14, 2022; and
  3. Software to which the producer delivers continuous changes to the software code (such as software-as-a-service products or other products using continuous delivery/continuous deployment).”

Continue Reading April 2023 Developments Under President Biden’s Cybersecurity Executive Order and National Cybersecurity Strategy

On April 11, 2023, the Cyberspace Administration of China (“CAC”) released draft Administrative Measures for Generative Artificial Intelligence Services (《生成式人工智能服务管理办法(征求意见稿)》) (“draft Measures”) (official Chinese version available here) for public consultation.  The deadline for submitting comments is May 10, 2023.

The draft Measures would regulate generative Artificial Intelligence (“AI”) services that are “provided to the public in mainland China.”  These requirements cover a wide range of issues that are frequently debated in relation to the governance of generative AI globally, such as data protection, non-discrimination, bias and the quality of training data.  The draft Measures also highlight issues arising from the use of generative AI that are of particular concern to the Chinese government, such as content moderation, the completion of a security assessment for new technologies, and algorithmic transparency.  The draft Measures thus reflect the Chinese government’s objective to craft its own governance model for new technologies such as generative AI.

Further, and notwithstanding the requirements introduced by the draft Measures (as described in greater detail below), the text states that the government encourages the (indigenous) development of (and international cooperation in relation to) generative AI technology, and encourages companies to adopt “secure and trustworthy software, tools, computing and data resources” to that end. 

Notably, the draft Measures do not make a distinction between generative AI services offered to individual consumers or enterprise customers, although certain requirements appear to be more directed to consumer-facing services than enterprise services.Continue Reading China Proposes Draft Measures to Regulate Generative AI

On March 7, 2023, during the annual National People’s Congress (“NPC”) sessions, China’s State Council revealed its plan to establish a National Data Bureau (NDB) as part of a broader reorganization of government agencies. The plan is being deliberated by the NPC and is expected to be finalized soon. 

According to the draft plan, the new National Data Bureau will be a deputy ministry-level agency under the National Development and Reform Commission (“NDRC”), China’s main economic planning agency that is in charge of industrial policies.  The new bureau will be responsible for, among other areas, “coordinating the integration, sharing, development, and utilization of data resources,” and “pushing forward the planning and building of a Digital China, a digital economy, and a digital society.” 

The plan specifies the new agency will take over certain portfolios currently managed by the Communist Party’s Central Cyberspace Affairs Commission (the party organ that supervises the Cyberspace Administration of China, “CAC”) and the NDRC. Specifically, the NDB will assume responsibility for “coordinating the development, utilization, and sharing of important national data resources, and promoting the exchange of data resources across industries and across departments,” a function currently performed by CAC.  The NDB will also absorb the NDRC teams responsible for promoting the development of the digital economy and implementing the national “big data” strategy.Continue Reading China Reveals Plan to Establish a National Data Bureau

This is the twenty-first in a series of Covington blogs on implementation of Executive Order 14028, “Improving the Nation’s Cybersecurity,” issued by President Biden on May 12, 2021 (the “Cyber EO”).  The first blog summarized the Cyber EO’s key provisions and timelines, and the subsequent blogs described the actions taken by various Government agencies to implement the Cyber EO from June 2021 through December 2022.  This blog describes key actions taken to implement the Cyber EO during January 2023.

GSA Announces That It Will Require Software Vendors to Submit Letters of Attestation Beginning in June 2023.

            On January 11, 2023, the General Services Administration (“GSA”) Senior Procurement Executive and Chief Information Officer jointly issued Acquisition letter MV-23-02, “Ensuring Only Approved Software Is Acquired and Used at GSA” (the “GSA letter”).  The GSA letter establishes a June 12, 2023 effective date for implementing the secure software acquisition requirements of Office of Management and Budget (“OMB”) Memorandum M-22-18, issued pursuant to Section 4 of the Cyber EO.  That OMB memorandum directs that agencies must only use software that complies with Government-specified secure software development practices.  These practices include obtaining self-attestations of conformity with secure software development practices and in certain cases as determined by agencies, artifacts such as Software Bills of Materials (SBOMs) from software vendors to verify that the acquired software[1] was developed and produced according to NIST security guidelines and best practices.

            The GSA letter directs GSA’s IT officials to update GSA’s policies by June 12, 2023 to reflect the process for collecting, renewing, retaining, and monitoring the self-attestation information mandated by OMB M-22-18.  For existing contracts that include the use of software, the GSA letter directs GSA IT to provide an internally accessible list of the software used for each contract and to collect vendor attestations by June 12, 2023.  For new contracts that include the use of software, the GSA letter directs the relevant acquisition teams to modify the acquisition planning process to ensure that performance of such contracts begins only after the requisite attestations have been collected and considered.  Finally, with respect to GSA-administered Government-wide indefinite delivery vehicles (e.g., Federal Supply Schedule contracts, Government-Wide Acquisition Contracts, and Multi-Agency Contracts), the GSA letter directs GSA contracting activities to allow, but not require, contractors to provide attestations at the base contract level rather than the task or delivery order level, and to make those attestations available to ordering activities to the extent possible.  With this said, the GSA letter specifies that ordering agencies will ultimately be responsible for complying with OMB M-22-18.Continue Reading January 2023 Developments Under President Biden’s Cybersecurity Executive Order

The Federal Energy Regulatory Commission (“FERC”) issued a final rule (Order No. 887) directing the North American Electric Reliability Corporation (“NERC”) to develop new or modified Reliability Standards that require internal network security monitoring (“INSM”) within Critical Infrastructure Protection (“CIP”) networked environments.  This Order may be of interest to entities that develop, implement, or maintain hardware or software for operational technologies associated with bulk electric systems (“BES”).

The forthcoming standards will only apply to certain high- and medium-impact BES Cyber Systems.  The final rule also requires NERC to conduct a feasibility study for implementing similar standards across all other types of BES Cyber Systems.  NERC must propose the new or modified standards within 15 months of the effective date of the final rule, which is 60 days after the date of publication in the Federal Register.  

Background

According to the FERC news release, the 2020 global supply chain attack involving the SolarWinds Orion software demonstrated how attackers can “bypass all network perimeter-based security controls traditionally used to identify malicious activity and compromise the networks of public and private organizations.”  Thus, FERC determined that current CIP Reliability Standards focus on prevention of unauthorized access at the electronic security perimeter and that CIP-networked environments are thus vulnerable to attacks that bypass perimeter-based security controls.  The new or modified Reliability Standards (“INSM Standards”) are intended to address this gap by requiring responsible entities to employ INSM in certain BES Cyber Systems.  INSM is a subset of network security monitoring that enables continuing visibility over communications between networked devices that are in the so-called “trust zone,” a term which generally describes a discrete and secure computing environment.  For purposes of the rule, the trust zone is any CIP-networked environment.  In addition to continuous visibility, INSM facilitates the detection of malicious and anomalous network activity to identify and prevent attacks in progress.  Examples provided by FERC of tools that may support INSM include anti-malware, intrusion detection systems, intrusion prevention systems, and firewalls.   Continue Reading FERC Orders Development of New Internal Network Security Monitoring Standards

At the beginning of a new year, we are looking ahead to five key technology trends in the EMEA region that are likely to impact businesses in 2023.

1. Technology Regulations across EMEA

European Union

If 2022 was the year that the EU reached political agreement on a series of landmark legislation regulating the technology sector, 2023 will be the year that some of this legislation starts to bite:

  • The Digital Services Act (DSA): By 17 February 2023, online platforms and online search engines need to publish the number of monthly average users in the EU. Providers that are designated as “very large online platforms” and “very large search engines” will need to start complying with the DSA in 2023, and we may start to see Commission investigations kicking off later in the year too.
  • The Digital Markets Act (DMA): The DMA starts applying from 2 May 2023. By 3 July 2023, gatekeepers need to notify their “core platform services” to the Commission.
  • The Data Governance Act (DGA): The DGA becomes applicable from 24 September 2023.

Also this year, proposals published under the European Data Strategy—such as the Data Act and European Health Data Space—and EU legislation targeting artificial intelligence (AI) systems—including the AI ActAI Liability Directive and revised Product Liability Directive—will continue making their way through the EU’s legislative process. These legislative developments will have a significant impact on the way that businesses ingest, use and share data and develop and deploy AI systems. In addition, the new liability rules will create potentially significant new litigation exposure for software and AI innovators.Continue Reading Top Five EMEA Technology Trends to Watch in 2023

This quarterly update summarizes key legislative and regulatory developments in the fourth quarter of 2022 related to Artificial Intelligence (“AI”), the Internet of Things (“IoT”), connected and autonomous vehicles (“CAVs”), and data privacy and cybersecurity.

Artificial Intelligence

In the last quarter of 2022, the annual National Defense Authorization Act (“NDAA”), which contained AI-related provisions, was enacted into law.  The NDAA creates a pilot program to demonstrate use cases for AI in government. Specifically, the Director of the Office of Management and Budget (“Director of OMB”) must identify four new use cases for the application of AI-enabled systems to support modernization initiatives that require “linking multiple siloed internal and external data sources.” The pilot program is also meant to enable agencies to demonstrate the circumstances under which AI can be used to modernize agency operations and “leverage commercially available artificial intelligence technologies that (i) operate in secure cloud environments that can deploy rapidly without the need to replace operating systems; and (ii) do not require extensive staff or training to build.” Finally, the pilot program prioritizes use cases where AI can drive “agency productivity in predictive supply chain and logistics,” such as predictive food demand and optimized supply, predictive medical supplies and equipment demand, predictive logistics for disaster recovery, preparedness and response.

At the state level, in late 2022, there were also efforts to advance requirements for AI used to make certain types of decisions under comprehensive privacy frameworks.  The Colorado Privacy Act draft rules were updated to clarify the circumstances that require controllers to provide an opt-out right for the use of automated decision-making and requirements for assessments of profiling decisions.  In California, although the California Consumer Privacy Act draft regulations do not yet cover automated decision-making, the California Privacy Protection Agency rules subcommittee provided a sample list of related questions concerning this during its December 16, 2022 board meeting.Continue Reading U.S. AI, IoT, CAV, and Privacy Legislative Update – Fourth Quarter 2022

In a new post on the Inside Tech Media blog, our colleagues discuss the “Quantum Computing Cybersecurity Preparedness Act,” which President Biden signed into law in the final days of 2022.  The Act recognizes that current encryption protocols used by the federal government might one day be vulnerable to compromise as a result of

This is the nineteenth in a series of Covington blogs on implementation of Executive Order 14028, “Improving the Nation’s Cybersecurity,” issued by President Biden on May 12, 2021 (the “Cyber EO”).  The first blog summarized the Cyber EO’s key provisions and timelines, and the subsequent blogs described the actions taken by various Government agencies to implement the Cyber EO from June 2021 through October 2022.  This blog describes key actions taken to implement the Cyber EO during November 2022.

I. CISA, NSA, and ODNI Release Software Supply Chain Security Guide for Customers 

On November 17, 2022, the Cybersecurity and Infrastructure Security Agency (CISA), the National Security Agency (NSA), and the Office of the Director of National Intelligence (ODNI) released the third in a series of recommended practice guides for securing the software supply chain (the “Customer Guide”).  The first practice guide in this series – published in September 2022 – was for software developers, and the second – published in October 2022 – was for software suppliers.  Each of the three guides is intended to supplement the Secure Software Development Framework (SSDF) published by the National Institute of Standards and Technology (NIST) pursuant to Section 4 of the Cyber EO.

The Customer Guide identifies key supply chain security objectives for software customers (acquirers) and recommends several broad categories of practices to achieve those objectives including security requirements planning, secure software architecture, and maintaining the security of software and the underlying infrastructure (e.g., environment, source code review, test).  For each of these practice categories, the guide identifies examples of scenarios that could be exploited (threat scenarios) and examples of controls that could be implemented to mitigate those threat scenarios. Continue Reading November 2022 Developments Under President Biden’s Cybersecurity Executive Order