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Bill C-26: New Canadian Critical Infrastructure Cyber Security Law – Security

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Canada has introduced a new cyber security law that will
impose obligations on organizations acting in industries of
national importance. The obligations will include mandatory cyber
security programs and cyber incident reporting, and will be backed
by administrative monetary penalties for non-compliance.

Overview

On June 14, the House of Commons introduced Bill C-26, which
includes the newly drafted Critical Cyber Systems Protection Act
(CCSPA) or in French, the Loi sur la protection des cybersystèmes
essentiels
(LPCSE). The CCSPA has been designed to
“address longstanding gaps”1 in the federal
government’s ability to protect systems and services of
national importance and establishes a broad regulatory framework
enabling the federal government to:

  • define and strengthen baseline cyber security for systems and
    services of critical national importance;

  • require certain organizations to develop and implement certain
    cyber security programs (CSPs);

  • ensure that cyber incidents impacting vital systems and
    services are reported;

  • issue binding Cyber Security Directions (CSDs); and

  • encourage compliance through the introduction of administrative
    monetary penalties (AMPs).

We discuss each of these in greater detail below.

Impacted sectors

The CCSPA will impose duties on “designated operators”
– operators that the government will designate by class and that
are “persons, partnerships or unincorporated organizations
that operate a work or carry on an undertaking or business [that is
within the legislative authority of Parliament] in respect of a
vital service or vital system”.

Schedule 1 of the CCSPA identifies the specific vital services
and systems that will be the basis of the
designations:2

  • telecommunications services;

  • interprovincial or international pipelines and power line
    systems;

  • nuclear energy systems;

  • transportation systems within the legislative authority of
    Parliament;

  • banking systems; and

  • clearing and settlement systems.

Government will have the ability to add additional services and
systems to the Schedule.3 In other words, other
federally regulated industries could be added to the Schedule, and
consequently become subject to the CCSPA’s requirements.

Each class of designated operators will be assigned a
corresponding regulator – either the Minister of Industry, Minister
of Transport, the Superintendent of Financial Institutions, the
Bank of Canada, the Canadian Energy Regulator or the Canadian
Nuclear Safety Commission.

Cyber security programs (CSPs)

Designated operators will be required to establish a cyber
security program in respect of the critical cyber security systems
they manage. A CSP must set out “reasonable steps”
to:4

  • identify and manage organizational cyber security risks,
    including risks relating to the operator’s supply chain and use
    of third-party products and services;

  • protect critical cyber systems from being compromised;

  • detect cyber security incidents affecting critical systems;
    and

  • minimize the impact of any cyber security incidents.

Designated operators will have an express duty to take
reasonable steps to mitigate identified risks relating to their
supply chains and use of third-party products and
services.5

CSP filing and material change notification

Designated operators will be required to file CSPs with their
regulator, to annually review their CSPs and to notify their
regulator whether or not any amendments arose from
review.6

They will also be required to notify their regulators of certain
material changes, including (i) any material change in the
designated operator’s ownership or control and (ii) any
material change in the designated operator’s supply chain or in
its use of third-party products and services.

Cyber Security Directions (CSDs)

The CCSPA provides for the issuance of CSDs – orders requiring
operators or classes of operators to comply with measures to
protect the cyber security of critical cyber systems. These
directions may require designated operators to take specific
actions in response to emerging cyber threats and other
developments. The CCSPA also authorizes information sharing between
government, regulators and law enforcement for any purpose related
to the making, amending or revoking of a cyber security direction
in respect of a designated operator7.

Mandatory incident reporting

A key objective of the CCSPA is to preserve the continuity of
vital services and systems by ensuring systems are not compromised,
and to the extent that they are, that the compromise is detected
and its impact minimized.8

As a result, the CCSPA requires designated operators to
“immediately report a cyber security incident in respect of
its critical systems” in accordance with the
regulations9. The operator must report the incident to
the Communications Security Establishment,10 and must
also immediately report the incident to their
regulator.11

A “cyber security incident” is any incident which
interferes or may
interfere with (a) the continuity or security of a vital service or
system, or (b) the confidentiality, integrity or availability of
the critical cyber system.12

For those familiar with privacy breach reporting, cyber incident
reporting under the CCSPA will be very different. Reporting is
based on interference with critical systems or services, not to the
information contained in systems or records. Reporting is also
required based on the mere potential for interference, a matter of
risk and probability that (under the current terms of the CCSPA)
will be left to the interpretation of regulators and courts.

Record keeping

Designated operators will be required to keep records respecting
cyber security incidents and other documents. The information that
must be retained under the CCSPA will include:13

  • any steps taken to implement the designated operator’s
    cyber security program;

  • every cyber security incident that the designated operator
    reported under section 17;

  • any steps taken by the designated operator under section 15 to
    mitigate any supply-chain or third-party risks;

  • any measures taken by the designated operator to implement a
    cyber security direction; and

  • any other matter prescribed by the regulations.

Designated operators will be required to keep records in Canada
at a place prescribed by regulation or, if no place is prescribed,
at their place of business. They will also be required to keep
records in the manner and for the period determined by the
appropriate regulator unless another manner or period is prescribed
by regulation.

Administrative monetary penalties (AMPs)

The CCSPA will allow each regulator to issue AMPs, with maximum
penalties to be established by regulation at amounts of up to
$15,000,000. An AMP may be issued for any violation of the CCSPA,
including failing to report a cyber security incident and failing
to comply with a CSD.14

Regulators will also have the authority to initiate regulatory
proceedings leading to fines and possible imprisonment for
non-compliance with the provisions of the CCSPA.

Conclusion

The CCSPA is a major development in Canadian cyber security law.
Organizations who provide and operate the vital services and
systems to which the CCSPA will apply may already have mature cyber
security programs, but if the CCSPA passes they will face new
requirements along with filing and reporting obligations. Filing
and reporting is itself key component of the new Act, and is
aligned with the type of government policy that many say is
essential to combatting cyber crime. In this sense the CCSPA could
benefit all organizations and citizens alike.

For more information on the CCSPA or any other assistance
related to cyber security governance and response, please contact a
member of our cyber security team.

Footnotes

1 Protecting Critical Cyber Systems -
Canada.ca

2 CCSPA at Schedule 1.

3 CCSPA at Section 6.

4 CCSPA at Section 9(1).

5 CCSPA at Section 15.

6 CCSPA at Section 13.

7 CCSPA at Section 23.

8 CCSPA at Section 5.

9 CCSPA at Section 17.

10 Ibid and supra note 1.

11 CCSPA at Section 18.

12 CCSPA at Section 2.

13 CCSPA at Section 30.

14 See the sections on regulatory powers, beginning at
CCSPA Section 32.


About BLG

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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