Supported by large tech companies and vilified by many civil and privacy rights organizations, the Clarifying Lawful Overseas Use of Data, or “CLOUD,” Act became law amidst the more than 2,000 pages of the Omnibus Budget Bill without the benefit of hearings, testimony or much public discussion. This law not only resolves the issue before the Supreme Court in the United States v. Microsoft case – whether the government can require a communications provider based in the United States to access and produce data stored offshore – but also allows foreign governments to more easily access information in the control of U.S. communication providers and without recourse to the existing and typically time-consuming “MLAT” (mutual legal assistance treaties) route.
In answer to the Microsoft question, the CLOUD Act amends Title II of the Electronic Communications Privacy Act of 1986 by making it clear that providers that fall within the scope of the Act must preserve and disclose their subscribers’ records “within such provider’s possession, custody, or control, regardless of whether such communication, record, or other information is located within or outside of the United States.” 18 U.S.C. § 2713. Therefore, as long as a provider located in the U.S. has control over a communication stored outside of the U.S., the provider must preserve and, when requested pursuant to lawful process, disclose the existence of that communication to the government.
This does not come as a surprise. Given that most if not all U.S. communication providers have the ability to access from the United States data which it has stored elsewhere around the world, it seemed logical that the Congress would support giving U.S. law enforcement the tool to reach such offshore data. The CLOUD Act does provide, however, that a motion to quash a subpoena for such information stored outside the United States may be modified or quashed if the required disclosure would cause the provider to violate the laws of what it calls a “qualified foreign government”, that is, a foreign government that has entered into an executive agreement with the United States, and if the laws of that government provide certain rights to electronic communications service providers. A “qualified foreign government” is defined as a country that has entered into “an executive agreement that the Attorney General has determined and certified to Congress satisfies section 2523.” Section 2523 sets up a process by which the Attorney General, with the concurrence of the Secretary of State and then the tacit approval of the Congress, has to ability to enter into executive agreements with certain countries that meets the standards set out in the CLOUD Act. These standards include that the foreign government’s law “affords robust substantive and procedural protections for privacy and civil liberties”, especially as it relates to data collection and cybersecurity, and that the foreign government has established minimization procedures.
Moreover, the executive agreement itself must provide the following (among others):
- prevention of targeting of U.S. persons wherever located and no person located within the U.S.;
- that the foreign government may not ask for information at the request of the U.S. government or any other third party;
- that the purpose is for prevention, investigation etc. of serious crime, including terrorism; and
- that other safeguards are observed including that it be subject to some kind of judicial overview and that it be issued in accordance with the foreign country’s laws.
Under the CLOUD Act, such “qualified foreign governments” may issue orders seeking disclosure of information about non-U.S. persons, even if that information is in the United States, and providers must supply that information even though the request for it is not subject to warrant or review by U.S. courts. The first such agreement might well be a resurrected form of the agreement that was originally entered in 2016 between the U.S. and U.K. governments to create a mechanism by which U.K. officials might be able to compel production of U.S.-held data in the investigation of serious crime involving investigative targets located outside the U.S., but which could not be implemented due to provisions in the Electronic Communications Privacy Act.
Privacy rights organizations criticize this law as allowing foreign governments to snoop on people they do not like – and using U.S. legal process to do so. More generally, the CLOUD Act has faced and continues to face substantial criticism as undermining basic civil freedoms by circumventing data protection and privacy laws, particularly those in Europe. And it is not difficult to see why just by considering the facts in the Microsoft case. Under the CLOUD Act, Microsoft will now be required to hand over to criminal prosecutors in New York emails held on Microsoft servers hosted in Ireland, regardless of the stringent E.U. data protection requirements applicable in Ireland. However, there is no avoiding the fact that the law in this area has needed to evolve for some time simply to reflect the increasing globalization of data and address the realities of cross-border crime. Indeed, the E.U. justice commissioner, Věra Jourová, is due to publish a similar proposal regarding electronic evidence next month. Her criticism of the CLOUD Act is not one of principle, but rather for jumping the gun, saying in a statement that it “narrows the room for the potential compatible solution between the E.U. and the U.S.”. We nonetheless expect the E.U. to continue with their plans.
On the other hand, the high-tech providers around the world generally have advocated passage of this legislation because it sets forth an identifiable process for such requests and allows them to respond within a set framework, while immunizing the providers from any legal liability for doing so. It even provides a mechanism for them to move to quash such requests for information.
It remains to be seen exactly how much this new law will be used in practice. Although there is no requirement for a report to be filed, both the House and Senate Intelligence and Judiciary Committees will have continuing oversight responsibilities and we may learn more from such oversight.