TO:	Legislative Liaison Officer - See Distribution below
FROM:	Richard E. Green (for) Assistant Director for Legislative Reference
OMB CONTACT:	Jeffrey A. Weinberg
PHONE:	(202) 395-3457 FAX: (202) 395-3109
SUBJECT:	JUSTICE REVISED Draft Bill on Cyberspace Electronic Security Act
DEADLINE:	Noon Friday, August 13, 1999

In accordance with OMB Circular A-19, OMB requests the views of your agency on the above subject before advising on its relationship to the program of the President. Please advise us if this item will affect direct spending or receipts for purposes of the "Pay-As-You-Go" provisions of Title XIII of the Omnibus Budget Reconciliation Act of 3-990,

COMENTS: This is a revised version of the draft bill that was circulated on June 29, 1999, with LRM JAW121. Justice has included a memo addressing the agency comments on the earlier draft bill. Please provide only policy level objections, if any, to the revised draft bill. If necessary, a meeting w1ll be scheduled to resolve any of the policy objections that are raised.

DISTRIBUTION LIST

AGENCIES:
21 -Central Intelligence Agency
25 - COMMERCE
Council Of Economic Advisers
29 - DEFENSE
51 - General Services Administration
76 - National Economic Council
83 - National Security Council
Office of National Drug Control Policy
92 - Office of Personnel Management
95 - Office of Science and Technology Policy
114 - STATE
118 -TREASURY
128 - US Trade Representative

Attached please find revised copies of the proposed Cyberspace Electronic Security Act (CESA), the accompanying section-by-section analysis, and letters of transmittal to the President of the Senate and Speaker of the House. Copies of each document are provided in both clean and redline/strikeout form, showing the changes made in response to agency comments that were made when CESA was circulated earlier.

We believe we have addressed in substance the comments raised by the agencies. In particular, we have the following specific responses to the comments made:

Department of Commerce. After reviewing the comments of the Department of Commerce, DOJ representatives met with Commerce representatives. During that meeting we explained in more detail the purposes and mechanisms of CESA. Most of the points raised by Commerce related to presentation rather than to substance, and, to address them, we have added a number of "whereas" clauses to the start of CESA, added additional text in the introduction to the section-by-section analysis, and completely rewritten the transmittal letters. In addition, at the suggestion of Commerce, we have: eliminated references to the use of encryption keys to authenticate or validate data, and to export controls on encryption, except to add exclusionary language where requested; added explanatory text to the section-by-section analysis to explain points of confusion where appropriate; limited the language in the bill concerning "trade secrets"; and deleted the limitation of liability for persons who report that decryption keys have been improperly disclosed.

Department of Treasury. FinCEN raised three concerns about how CESA might be interpreted. We believe, however, that the language of CESA already addresses the concerns raised by FinCEN. That said, to address FinCEN's concerns and make the appropriate interpretations clear, we have added text to the section-by-section analysis on each of the points raised by FinCEN.

ONDCP. We reviewed ONDCP's comments, but did not make the suggested changes, after consultation with DOD. ONDCP's comments focused on the application of CESA to military bases. And although ONDCP's concerns are valid, DOD preferred not to make the suggested changes. Because the concerns raised fall particularly within the expertise of DOD, we deferred to that agency.

Privacy Counselor. We met several times with Peter Swire, and made most of the changes he suggested, including adding a provision protecting the privacy of customer information held by recovery agents. Mr. Swire is aware of the changes that were made and the few that were not made, and the reasons for each.

Thank you for your assistance in this matter. We stand ready to assist you in whatever way may be needed in order to obtain clearance of this important draft legislative proposal.

cc: Phil Reitinger, CRM/CCIPS
Michael Oleary, OLA

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