EU Data Transfer Requirements and U.S. Intelligence Laws: Understanding Schrems II and Its Impact on the EU-U.S. Privacy Shield

EU Data Transfer Requirements and U.S. Intelligence Laws: Understanding Schrems II and Its Impact on the EU-U.S. Privacy Shield

EU Data Transfer Requirements and U.S.
March 17, 2021
Intelligence Laws: Understanding Schrems II
Chris D. Linebaugh
and Its Impact on the EU-U.S. Privacy Shield
Legislative Attorney

On July 16, 2020, in a decision referred to as Schrems II, the Court of Justice of the European
Edward C. Liu
Union (CJEU) invalidated the EU-U.S. Privacy Shield (Privacy Shield). Privacy Shield is a
Legislative Attorney
framework developed by the European Union (EU) and the United States to facilitate cross-

border transfers of personal data for commercial purposes. Privacy Shield requires companies
and organizations that participate in the program to abide by various data protection requirements

and, in return, assures the participants that the transfer is compliant with EU law. The CJEU,
however, found Privacy Shield inadequate in part because it does not restrain U.S. intelligence authorities’ data collection
activities. According to the CJEU, U.S. law allows intelligence agencies to collect and use the personal data transferred under
the Privacy Shield framework in a manner that is inconsistent with rights guaranteed under EU law. The CJEU focused on
Section 702 of the Foreign Intelligence Surveillance Act, Executive Order 12333, and Presidential Policy Directive 28, which
govern how the U.S. government may conduct surveillance of non-U.S. persons located outside of the United States.
The CJEU’s Schrems II ruling has significant implications for personal data transfers between the EU and the United States.
While the decision does not shut the door on all transfers between these jurisdictions, it does considerably narrow the manner
in which they may take place. For instance, companies may still use Standard Contractual Clauses (SCCs)—contractual
clauses approved by the EU that bind the companies to certain data protection standards—as an alternative to the Privacy
Shield framework. But Schrems II held that exporters using SCCs must evaluate the legal landscape of the recipient
jurisdiction and take any “supplementary measures” necessary to ensure that data is protected at the level required under EU
law.
This report examines the impact of Schrems II in further detail. It provides an overview of EU law governing international
data transfers, including the Schrems II decision, and it reviews the U.S. surveillance laws relevant to that decision. It
concludes by discussing some considerations for Congress.
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Contents
EU Law and Data Transfers ............................................................................................................ 1
European Commission’s Privacy Shield Decision and SCCs ......................................................... 3
Schrems II ........................................................................................................................................ 5
Overview ................................................................................................................................... 5
Transfers after Schrems II ......................................................................................................... 6
A Closer Look at U.S. Intelligence Law Discussed in Schrems II .................................................. 8
FISA Section 702 ...................................................................................................................... 8
Executive Order 12333 ........................................................................................................... 10
Presidential Policy Directive 28 ............................................................................................... 11
Considerations for Congress.......................................................................................................... 12

Contacts
Author Information ........................................................................................................................ 14

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n July 16, 2020, in Data Protection Commissioner v. Facebook Ireland, Ltd. and
Maximillian Schrems (Schrems II), the Court of Justice of the European Union (CJEU)
O invalidated the EU-U.S. Privacy Shield (Privacy Shield), a program developed by the
European Union (EU) and the United States to facilitate cross-border transfers of personal data
for commercial purposes.1 The CJEU determined that U.S. surveillance for foreign intelligence
purposes does not provide protections necessary under EU law for the transfer of personal data
from the EU to the United States. The CJEU focused on Section 702 of the U.S. Foreign
Intelligence Surveillance Act (FISA), Executive Order (E.O.) 12333, and Presidential Policy
Directive 28 (PPD-28). Generally, FISA 702 and E.O. 12333 authorize surveillance of non-U.S.
persons located outside of the United States, and PPD-28 prohibits certain bulk collections and
limits how long agencies can retain information on non-U.S. persons.2 The CJEU reasoned that
FISA 702 and E.O. 12333, even as limited by PPD-28, allow U.S. intelligence agencies to collect
more information than is strictly necessary to fulfill their missions and do not provide EU citizens
with sufficient avenues for judicial redress of alleged infringements of privacy.3
While the CJEU struck down Privacy Shield on the grounds that U.S. surveillance law is overly
permissive, the court did not close the door altogether on data transfers from the EU to the United
States. Rather, Schrems II preserved the validity of Standard Contractual Clauses (SCCs)—a
separate mechanism under EU law for international data transfers—provided that data exporters
take “supplementary measures” where necessary to ensure compliance with the level of
protection required under EU law.4
This Report gives an overview of EU law governing international transfers of personal data,
including the Schrems II decision, and how it interacts with U.S. surveillance laws. The Report
starts by laying out the requirements for international transfers under the EU’s principal data
protection law, the General Data Protection Regulation (GDPR). It then discusses how the
European Commission—the EU’s “executive arm”—has sought to enforce these requirements
with respect to personal data transferred to the United States through the Privacy Shield
framework and various SCCs. The Report next reviews the CJEU’s Schrems II decision and its
impact on data transfers. After taking a closer look at the U.S. surveillance laws at issue in
Schrems II—including Section 702 of FISA, E.O. 12333, and PPD-28—the Report closes by
briefly discussing some considerations for Congress.
EU Law and Data Transfers
The EU considers privacy and protection of personal data to be fundamental rights. Articles 7 and
8 of the Charter of Fundamental Rights of the EU (the Charter) provide that “everyone has the
right” to the “protection of personal data concerning him or her” and that data “must be processed
fairly for specified purposes and on the basis of the consent of the person concerned or some
other legitimate basis laid down by law.”5 Article 52 of the Charter states that any limitations on
these rights must be “[s]ubject to the principle of proportionality” and must be “necessary and

1 Case C-311/18, Data Protection Commissioner v. Facebook Ireland Ltd, Maximillian Schrems, ECLI:EU:C:2020:559
(July 16, 2020); Privacy Shield Overview, PRIVACYSHIELD.GOV, https://www.privacyshield.gov/Program-Overview
(last visited Feb. 9, 2021).
2 See the section “A Closer Look at U.S. Intelligence Law Discussed in Schrems II” for an overview of these laws.
3 See the section “Schrems II” for a further discussion of the court’s reasoning.
4 See the section “Schrems II” for a further analysis of the court’s discussion of SCCs, and see the section “Transfers
after Schrems II” for a discussion of supplemental measures.
5 Charter of Fundamental Rights of the European Union, arts. 7–8, Dec. 18, 2000, 2000 O.J. C 364/1.
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genuinely meet objectives of general interest of the Union or the need to protect the rights and
freedom of others.”6 Lastly, Article 47 of the Charter entitles anyone who has had these rights
violated to a “fair public hearing within a reasonable time by an independent and impartial
tribunal previously established by law.”7
Along with the fundamental rights provided in the Charter, the EU has enacted the GDPR, a
comprehensive, EU-wide privacy law.8 It took effect on May 25, 2018, replacing an earlier 1995
data protection directive.9 The GDPR generally regulates how personal data is processed, a broad
term encompassing any operation or set of operations performed on personal data.10 The
regulation applies to “controllers” (a person or entity who determines the “purposes and means”
of processing personal data) and “processors” (a person or entity who processes the data on
behalf of a controller) who are (1) established in the EU, (2) offer goods or services to individuals
in the EU, or (3) monitor individuals’ behavior in the EU.11
Most relevantly, the GDPR regulates the circumstances under which controllers and processors
(“exporters”) may transfer personal data from the EU to foreign countries. Under Chapter V of
the GDPR, an exporter generally may initiate foreign transfers only in the following situations:
1. Adequate level of protection. Under Article 45, the exporter may send the data
to a third country that the European Commission has, after examining the
country’s laws and practices, determined ensures an “adequate level of
protection.”12
2. Appropriate safeguards and SCCs. Under Article 46, the exporter may rely on
one of the “appropriate safeguards” laid out in that provision. For instance, if the
exporter is a multinational organization making international transfers within its
organization, it may adopt binding corporate rules that comply with certain
GDPR requirements. Alternatively, if the exporter is transferring data to an
unaffiliated entity, it may insert SCCs—which are specific contractual terms
approved by the European Commission—into its contract with the entity.13
3. Derogations. Under Article 49, the exporter may initiate transfers falling under
one of several “derogations for specific situations”; for example, these
derogations apply when the data subject gave informed consent to the transfer or

6 Id. art. 52.
7 Id. art. 47.
8 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the Protection of
Natural Persons with Regard to the Processing of Personal Data and on the Free Movement of Such Data, and
Repealing Directive 95/46/EC (General Data Protection Regulation) [hereinafter GDPR]. The GDPR is discussed in
more detail in CRS Report R45631, Data Protection Law: An Overview, by Stephen P. Mulligan and Chris D.
Linebaugh, and CRS In Focus IF10896, EU Data Protection Rules and U.S. Implications, by Rachel F. Fefer and
Kristin Archick.
9 Directive 95/46/EC of the European Parliament and of the Council on the Protection of Individuals with Regard to the
Processing of Personal Data and on the Free Movement of Such Data. 1995 O.J. 95 (L281) [hereinafter Data Protection
Directive].
10 Id. art. 4(2) (“‘processing’ means any operation or set of operations which is performed on personal data or on sets of
personal data, whether or not by automated means, such as collection, recording, organisation, structuring, storage,
adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making
available, alignment or combination, restriction, erasure or destruction”).
11 Id. art. 4(7–8).
12 Id. art. 45.
13 Id. art. 46.
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where the transfer is “necessary for the performance of a contract” that is either
“between the data subject and the controller” or was concluded “in the interest of
the data subject.”14
European Commission’s Privacy Shield Decision
and SCCs
In accordance with the GDPR’s framework for international transfers, the European Commission
(EC) has issued a number of decisions recognizing countries that provide an “adequate level of
protection” under Article 45.15 For purposes of this Report, the most relevant Commission
adequacy determination is the 2016 Privacy Shield decision that allowed the transfer of personal
data to certain U.S. companies and organizations for commercial purposes and facilitated U.S.-
EU trade of digitally-enabled services.16
In this decision, the EC determined that transfers to the United States pursuant to the Privacy
Shield framework provide an adequate level of protection to EU data subjects.17 The EU and the
United States developed Privacy Shield after the CJEU invalidated an earlier framework, the
U.S.-EU Safe Harbor framework, in 2015.18 Under Privacy Shield, organizations self-certify to
the International Trade Administration (ITA) in the Department of Commerce that they comply
with certain principles for protecting personal data, and the ITA conducts compliance reviews on
an ongoing basis to ensure participants abide by the program’s requirements.19 Privacy Shield
provides several recourse mechanisms for individuals affected by a participant’s non-compliance,
including a right to invoke binding arbitration.20 Privacy Shield participants who violate the
program’s requirements are also subject to enforcement by the Federal Trade Commission
(FTC),21 which may challenge participants’ violations as “deceptive” conduct under the Federal
Trade Commission Act and may seek an administrative cease-and-desist order or a court order.22

14 Id. art. 49.
15 See Adequacy Decisions, EUROPEAN COMM’N, https://ec.europa.eu/info/law/law-topic/data-protection/international-
dimension-data-protection/adequacy-decisions_en (last visited Dec. 15, 2020).
16 Commission Implementing Decision (EU) 2016/1250 of 12 July 2016 pursuant to Directive 95/46/EC of the
European Parliament and of the Council on the adequacy of the protection provided by the EU-U.S. Privacy Shield,
Jan. 1, 2016, O.J. L. 207, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016D1250&from=EN
[hereinafter EC Privacy Shield Decision]. For a discussion of Privacy Shield and its impact on U.S.-EU trade, see CRS
In Focus IF11613, U.S.-EU Privacy Shield, by Rachel F. Fefer and Kristin Archick.
17 Id.
18 See U.S.-EU Safe Harbor Framework, FTC.GOV, HTTPS://WWW.FTC.GOV/TIPS-ADVICE/BUSINESS-CENTER/PRIVACY-
AND-SECURITY/U.S.-EU-SAFE-HARBOR-FRAMEWORK (last visited Jan. 12, 2021) (“On October 6, 2015, the European
Court of Justice issued a judgment declaring invalid the European Commission’s July 26, 2000 decision on the legal
adequacy of the U.S.-EU Safe Harbor Framework. On July 12, 2016, the European Commission issued an adequacy
decision on the EU-U.S. Privacy Shield Framework. This new Framework, which replaces the Safe Harbor program,
provides a legal mechanism for companies to transfer personal data from the EU to the United States.”).
19 Privacy Shield Framework, PRIVACYSHIELD.GOV, https://www.privacyshield.gov/EU-US-Framework (last visited
Dec. 5, 2020).
20 Recourse, Enforcement and Liability, PRIVACYSHIELD.GOV, https://www.privacyshield.gov/article?id=7-
RECOURSE-ENFORCEMENT-AND-LIABILITY (last visited Dec. 5, 2020).
21 Enforcement of Privacy Shield, PRIVACYSHIELD.GOV, https://www.privacyshield.gov/article?id=Enforcement-of-
Privacy-Shield (last visited Dec. 5, 2020).
22 Id. See also 5 U.S.C. § 45 (FTC cease-and-desist authority). For a further discussion of the FTC’s enforcement
authority over “deceptive” practices, see CRS Legal Sidebar LSB10388, Will the FTC Need to Rethink Its Enforcement
Playbook (Part II)? Circuit Split Casts Doubt on the FTC’s Ability to Seek Restitution in Section 13(b) Suits, by Chris
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The EC determined that these principles and recourse mechanisms ensured that Privacy Shield
participants provided an adequate level of protection to data subjects.23
However, the EC’s decision did not only analyze the obligations imposed on Privacy Shield
participants. The EC also assessed the access and use of personal data by U.S. public authorities,
particularly in the intelligence context.24 The EC looked at both (1) ex-ante limitations on
intelligence collection (i.e., restrictions that apply before the collection occurs, such as laws
prohibiting certain types of collection or requiring advanced judicial approval before collection),
and (2) ex-post recourse available to individuals whose data has been collected (i.e., the ability to
sue or bring some legal action for relief after the collection occurs).25 On the first issue, it
determined that U.S. intelligence gathering from European subjects was adequately limited,
particularly because PPD-28, among other things, limited bulk collection of signals intelligence to
situations in which targeted collection is not possible for technical or operational reasons.26 It also
relied on various assurances from the U.S. government, such as assurances that the United States
would not disseminate personal information it collects “solely because the individual concerned is
a non-U.S. person.”27 As for ex-post recourse, the EC acknowledged the limited options available
to non-U.S. persons, specifically noting that “standing” requirements often restrict access to
ordinary courts.28 However, the EC concluded that the United States had provided sufficient
redress by creating a “new Ombudsperson Mechanism,” under which a Privacy Shield
Ombudsperson within the U.S. Department of State would receive complaints and work with the
Intelligence Community to ensure those complaints are investigated and resolved.29 In light of
these limitations and protections, the EC concluded that the United States “ensures effective legal
protection against interferences by the intelligence authorities” and that transfers under the
Privacy Shield provided an “adequate level of protection.”30
In addition to adequacy determinations under Article 45, such as the Privacy Shield Decision, the
EC has also issued several sets of SCCs for transfers from EU controllers to non-EU recipients.31
SCCs are template contract terms set by the EU that require the organization receiving the data to
commit to EU-equivalent standards of data protection, even where no such protection exists under
the domestic law of the receiving organization’s nation.32

D. Linebaugh.
23 EC Privacy Shield Decision, supra note 16, at paras. 61–63.
24 Id. at paras. 64–124.
25 Id.
26 Id. at para. 76.
27 Id. at paras. 87–88.
28 Id. at para. 115.
29 Id. at paras. 116–122.
30 Id. at paras. 123, 136.
31 See Standard Contractual Clauses (SCC), European Comm’n (Dec. 21, 2020), https://ec.europa.eu/info/law/law-
topic/data-protection/international-dimension-data-protection/standard-contractual-clauses-scc_en.
32 Id.
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Schrems II
Overview
In Schrems II, the CJEU invalidated the EC’s Privacy Shield decision but preserved the validity
of SCCs.33 Schrems II, in brief, involved a complaint by an Austrian privacy activist, Maximillian
Schrems, about Facebook’s transfer of his data from its Irish subsidiary to its servers located in
the United States.34 The crux of his argument was that the United States does not provide
adequate protection of his personal data, in light of its surveillance activities.35 To resolve the
action, the CJEU evaluated both the EC’s Privacy Shield decision and its adoption of SCCs.36
On the Privacy Shield issue, the CJEU rejected the EC’s conclusion that the United States ensures
an adequate level of protection.37 Its decision primarily rested on two observations about U.S.
surveillance under FISA 702 and E.O. 12333: (1) the lack of ex-ante limitations ensuring that
surveillance programs abide by the “principle of proportionality” (i.e., that the programs only
collect data that is strictly necessary); and (2) the ineffective ex-post redress for individuals
whose personal data is subject to these surveillance programs.38
On the first point, the CJEU explained that a public authority’s collection of personal data
“constitutes an interference with the fundamental rights enshrined in Articles 7 and 8 of the
Charter.”39 Consequently, such an interference must “satisfy the requirement of proportionality”
set forth of Article 52 of the Charter.40 Under this proportionality requirement, the collection must
be limited to what is “strictly necessary” and be governed by “clear and precise rules” and
“minimum safeguards” that allow data subjects to effectively protect their personal data “against
the risk of abuse.”41
Turning to the U.S. surveillance regime, the CJEU concluded that surveillance under Section 702
of FISA and E.O. 12333 failed to meet this proportionality standard.42 The CJEU reasoned that,
for intelligence gathering programs under Section 702 of FISA, there is little judicial supervision.
The CJEU observed that the U.S. Foreign Intelligence Surveillance Court (FISC) authorizes
surveillance programs based on whether they relate to the objective of acquiring foreign
intelligence information, but it does not review whether individuals are properly targeted for
surveillance.43 The CJEU also noted that, under E.O. 12333, U.S. authorities could intercept data
in transit to the United States, such as by accessing underwater cables that traverse the Atlantic,
“without that access being subject to any judicial review.”44 The CJEU acknowledged that

33 Case C-311/18, Data Protection Commissioner v. Facebook Ireland Ltd, Maximillian Schrems,
ECLI:EU:C:2020:559 (July 16, 2020) [hereinafter Schrems II].
34 Id. at paras. 50–52.
35 Id. at paras. 52, 54.
36 Id. at paras. 122–202.
37 Id. at para. 197.
38 Id. at para. 168
39 Id. at para. 171.
40 Id. at paras. 174–176.
41 Id. at para. 176.
42 Id. at para. 184.
43 Id. at para. 179.
44 Id. at para. 183.
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intelligence programs under Section 702 of FISA and E.O. 12333 are subject to PPD-28’s
restrictions on bulk collection, but it dismissed the idea that these restrictions are adequate,
explaining that PPD-28 still allows bulk collection of data in situations where “the Intelligence
Community cannot use an identifier associated with a specific target” to “focus the collection.”45
Along with the lack of ex-ante limitations on these programs, the CJEU also concluded there is
not effective ex-post legal redress for data subjects.46 According to the CJEU, Article 47 of the
Charter entitles “everyone whose rights and freedoms” are violated “to a hearing by an
independent and impartial tribunal.”47 The CJEU explained that the surveillance programs based
on Section 702 of FISA and E.O. 12333, even as limited by PPD-28, fail to meet this standard
because they do not give data subjects “rights actionable in the courts against the US
authorities.”48 It further rejected the EC’s position that the Privacy Shield Ombudsperson could
provide sufficient redress, as nothing indicated that “the ombudsperson has the power to adopt
decisions that are binding on those intelligence services.”49 Given these reasons, the CJEU
concluded that “Privacy Shield is invalid.”50
In contrast to Privacy Shield, the CJEU upheld the EC’s adoption of SCCs for the transfer of
personal data to processors outside of the EU.51 According to the CJEU, the important distinction
between the EC’s Privacy Shield decision and its SCC decision is that, under Article 46 of the
GDPR, the EC is not required to “assess the adequacy of the level of protection ensured by the
third country” before adopting SCCs.52 SCCs, the CJEU explained, are inherently of a
“contractual nature” and “cannot bind the public authorities of third countries.”53 Thus, the CJEU
concluded that, when relying on SCCs to transmit data, it is up to the data controller to “verify, on
a case-by-case basis” whether “the law of the third country of destination ensures adequate
protection, under EU law” and to adopt “supplementary measures” where necessary to ensure
compliance with the level of protection required under EU law.54
Transfers after Schrems II
While Schrems II invalidated Privacy Shield, it still left room for data transfers to the United
States based on SCCs or other mechanisms under Article 46 of the GDPR. Even when relying on
these mechanisms, the CJEU explained that data exporters must still analyze the law of the non-
EU country and adopt any “supplementary measures” necessary to ensure the adequate protection
required under EU law.55 Although Schrems II did not detail what these “supplementary
measures” might look like, on November 11, 2020, the European Data Protection Board
(“EDPB”) published recommendations (EDPB Recommendations) listing example measures.56

45 Id. at paras. 183–184.
46 Id. at paras. 186–197.
47 Id. at para. 186.
48 Id. at para. 192.
49 Id. at para. 196.
50 Id. at para. 201.
51 Id. at paras. 122–149.
52 Id. at para. 130.
53 Id. at para. 132.
54 Id. at paras. 133–135.
55 Id.
56 Recommendations 01/2020 on measures that supplement transfer tools to ensure compliance with the EU level of
protection of personal data, European Data Protection Bd. (Nov. 10, 2020), https://edpb.europa.eu/sites/edpb/files/
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These primarily include “technical measures” such as (1) pseudonym[ization] of data so that it
can “no longer be attributed to a specific subject,” (2) encrypting the data in such a way that
neither the recipient nor the relevant public authorities can decrypt it, or (3) splitting the data
between two or more independent processers in different jurisdictions such that no individual
processor can “reconstruct the personal data in whole or in part.”57
Nevertheless, according to the EDPB there are some scenarios where “no effective” supplemental
measures can be found.58 In particular, the EDPB pointed to situations where an exporter transfers
data to a “cloud service or other processor” in a third country who needs access to the data “in the
clear” (i.e., unencrypted or unaltered) “in order to execute the task assigned.”59 In such situations,
the EDPB said it is “incapable of envisioning an effective technical measure to prevent that
access from infringing on data subject rights,” given the current state of technology.60 It did not,
however, “rule out that further technological development may offer measures that achieve the
intended business purposes, without requiring access in the clear.”61
One point of debate following Schrems II is whether supplementary measures are always required
before transferring data potentially subject to U.S. surveillance. On the one hand, the EDPB
Recommendations indicate that supplemental measures are always required in such situations.62
Specifically, the EDPB read Schrems II to hold that “the level of protection of the programs
authorised [sic] by 702 FISA is not essentially equivalent to the safeguards required under EU
law.”63 Consequently, “if the data falls under 702 FISA,” then it may be transferred to the United
States only if “additional supplementary technical measures make access to the data transferred
impossible or ineffective.”64 Although the EDPB Recommendations only mention FISA 702, its
logic arguably applies to data subject to surveillance under E.O. 12333, which the CJEU also
found problematic.65 On the other hand, the U.S. government released a White Paper following
Schrems II that took a less categorical approach than the EDPB.66 The White Paper maintains that
Schrems II “was not a ruling on whether privacy protections in U.S. law per se . . . are consistent
with EU law.”67 Rather, according to the White Paper, the CJEU “ruled only on the validity” of
the Privacy Shield decision, and its “assessment of U.S. law accordingly relied primarily on the
limited findings about U.S law recorded by the EC in 2016 in [the Privacy Shield decision].”68
The White Paper then outlines additional safeguards and redress options in U.S. law not captured

consultation/edpb_recommendations_202001_supplementarymeasurestransferstools_en.pdf [hereinafter EDPB
Recommendations].
57 Id. at 22–26.
58 Id. at 26.
59 Id.
60 Id. at 27.
61 Id.
62 Id.
63 Id. at 15.
64 Id.
65 See the section “Schrems II.”
66 Information on U.S. Privacy Safegaurds Relevant to SCCs and Other EU Legal Bases for EU-U.S. Data Transfers
after Schrems II, White Paper, U.S. Department of Commerce, U.S. Department of Justice, Office of the Director of
National Intelligence (Sept. 2020), https://www.commerce.gov/sites/default/files/2020-
09/SCCsWhitePaperFORMATTEDFINAL508COMPLIANT.PDF.
67 Id. at 6.
68 Id.
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by the Schrems II decision in order to assist companies in “determining whether the law of the
United States ensures adequate protection as afforded in EU law.”69
A Closer Look at U.S. Intelligence Law Discussed in
Schrems II
As noted above, the CJEU invalidated the EC’s Privacy Shield decision because it determined
that FISA Section 702 and E.O. 12333, even as limited by PPD-28, are too permissive to meet the
GDPR’s standards of necessity and proportionality and do not provide EU data subjects with
effective judicial redress. In order to provide additional context for understanding the CJEU’s
decision, this section briefly discusses the relevant statutory and executive restrictions on foreign
intelligence surveillance.
FISA Section 702
Congress enacted FISA in 1978 to regulate electronic surveillance conducted for national security
or foreign intelligence purposes.70 As originally enacted, electronic surveillance under FISA
generally requires the government to apply for a court order with respect to each target of
surveillance.71 FISA requires the government to include information in its applications that
demonstrates that probable cause exists to believe that the target of surveillance is a foreign
power or an agent of a foreign power.72 Such applications are made to, and evaluated by, the
specialized FISC, which is comprised of sitting Article III judges who have been designated for
that role by the Chief Justice of the U.S. Supreme Court.73
Congress added Section 702 in the FISA Amendments Act (FAA) of 2008 to provide less
restrictive procedures for acquiring foreign intelligence information targeting non-U.S. persons
who are not within the United States.74 Surveillance under Section 702 is subject to supervision
by the FISC, but the provision does not require the FISC to review individual targets of
surveillance.75 Instead, under Section 702, the FISC reviews generally applicable targeting and
minimization procedures and guidelines submitted by the U.S. Attorney General and the Director
of National Intelligence to determine whether they are “reasonably designed” to: (1) ensure that
surveillance only targets persons who are reasonably believed to be outside the United States; and
(2) prevent the intentional acquisition of purely domestic communications.76 Once the FISC
approves those procedures and guidelines, the government may issue directives to electronic
communication service providers requiring them to provide the government with “all information,

69 Id. at 6–22.
70 Clapper v. Amnesty Int’l USA, 568 U.S. 398, 402 (2013); S. Rept. Nos. 95-604 (1977), 95-701 (1978).
71 50 U.S.C. §1804.
72 Id.
73 Id. § 1803, 1804(a); About the Foreign Intelligence Surveillance Court, FOREIGN INTEL. SURVEILLANCE CT.,
https://www.fisc.uscourts.gov/about-foreign-intelligence-surveillance-court (last visited Jan. 12, 2021).
74 FISA Amendments Act of 2008, Pub. L. No. 110-261, § 101 (2008) [codified at 50 U.S.C. § 1881a]; see also CRS
Report R44457, Surveillance of Foreigners Outside the United States Under Section 702 of the Foreign Intelligence
Surveillance Act (FISA), by Edward C. Liu.
75 50 U.S.C. § 1881a(j).
76 Id.
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facilities, or assistance” needed to conduct the surveillance in a manner that does not undermine
its secrecy.77
The information must also be acquired from an “electronic communication service provider,” or
with the assistance of such a provider.78 As used in Section 702, the term “electronic
communication service provider” includes communications providers (such as telephone, email,
or internet service providers (ISPs)) as well as remote computing service providers that provide
“computer storage or processing services” to the public.79 Although Section 702 requires the
target of surveillance to be outside the United States (e.g., an EU citizen in Europe), the
information may be acquired from facilities within the United States, such as data centers
operated by U.S.-based electronic communication service providers.80 If the government targets a
non-U.S. person through an acquisition that occurs outside the United States, that acquisition
would not necessarily be governed by FISA, including Section 702, but would still need to
comply with E.O. 12333, as discussed in the following section.81
For example, the government has used FISA 702 to implement downstream (previously referred
to as “PRISM”) and upstream collection programs.82 In downstream collection, the government
typically directs consumer-facing communications service providers—such as ISPs, telephone
providers, or email providers—to provide all communications “to or from” a “selector” (e.g., an
email address).83 Upstream collection similarly involves the collection of all communications “to
or from” a selector, but the requests are directed at telecommunications “backbone” providers
(i.e., companies that operate the long-distance, high-capacity internet cables that interconnect
with ISPs’ local networks) and it does not involve collection of telephone calls.84 Under the
government’s procedures, the National Security Agency (NSA) is the primary intelligence agency
that collects data through the downstream and upstream programs, although the Federal Bureau of
Investigation (FBI) and Central Intelligence Agency (CIA) also receive data from these programs
in more limited circumstances.85

77 Id. § 1881a(i).
78 50 U.S.C. §§ 1881a(h)(2)(A)(vi), 1881a(i).
79 Id. § 1881(b)(4).
80 Id. § 1881a(b) (incorporating the definition of “remote computing service” at 18 U.S.C. § 2711(2)).
81 See 50 U.S.C. § 1801(f) (defining “electronic surveillance” to primarily cover the “acquisition by an electronic,
mechanical, or other surveillance device of the contents of any wire communication to or from a person in the United
States, without the consent of any party thereto, if such acquisition occurs in the United States”); Report on the
Surveillance Program Operated Pursuant to Section 702 of the Foreign Intelligence Surveillance Act, Privacy and
CIVIL LIBERTIES OVERSIGHT BD., 107, n. 471 (July 2, 2014),
https://documents.pclob.gov/prod/Documents/OversightReport/823399ae-92ea-447a-ab60-0da28b555437/702-Report-
2.pdf (“FISA does not generally cover surveillance conducted outside the United States, except where the surveillance
intentionally targets a particular, known U.S. person, or where it acquires radio communications in which the sender
and all intended recipients are located in the United States and the acquisition would require a warrant for law
enforcement purposes.”) [hereinafter PCLOB Report].
82 See PCLOB Report, supra note 81, at 7 (“There are two types of Section 702 acquisition: what has been referred to
as ‘PRISM’ collection and ‘upstream’ collection.”); NSA Stops Certain Section 702 “Upstream” Activities, NSA (April
28, 2017), https://www.nsa.gov/news-features/press-room/Article/1618699/nsa-stops-certain-section-702-upstream-
activities/ (“Under Section 702, NSA collects internet communications in two ways: ‘downstream’ (previously referred
to as PRISM) and ‘upstream.’”) [hereinafter NSA Press Release].
83 PCLOB Report, supra note 81, at 7.
84 Id. While upstream collection used to include communications “about” the selector (e.g., the target email address is
referenced in the body or text of the email but they are not a party to the communication), the NSA announced in 2017
that it would no longer collect communications that are solely “about” the target. NSA Press Release, supra note 82.
85 PCLOB Report, supra note 81, at 7 (explaining that the CIA and FBI each receive a “select portion of PRISM
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In Schrems II, the CJEU cited Section 702’s limitations on judicial remedies for EU citizens as
falling short of the GDPR’s requirements.86 An electronic communication service provider may
challenge a government directive, in which case the FISC reviews the directive to determine
whether it complies with Section 702.87 Additionally, if the government elects to use evidence
derived from Section 702 surveillance against an individual in a criminal prosecution or other
enforcement action, the defendant must generally be given notice that such surveillance occurred,
and a court may review the legality of the surveillance in that context.88 However, absent these
circumstances, there is generally no opportunity for targets of surveillance to know whether their
communications or information have been acquired by the government under Section 702, and as
a result, fewer opportunities may exist to seek judicial review of that acquisition.
The CJEU did not appear to object to traditional FISA surveillance (i.e., FISA surveillance
outside of Section 702), even though such surveillance also has the same limits on post-hoc
judicial remedies as Section 702. However, because traditional FISA surveillance requires the
U.S. government to obtain an individualized court order to proceed, the lack of such requirements
in Section 702, combined with the lack of fulsome post-hoc judicial review under FISA generally,
may have drawn particular attention from the CJEU.
Executive Order 12333
In its Schrems II decision, the CJEU also objected to surveillance conducted under E.O. 12333,
United States Intelligence Activities, which addresses the organization and allocation of foreign
intelligence surveillance responsibilities among elements of the U.S. Intelligence Community.89
E.O. 12333 addresses all U.S. foreign intelligence surveillance activities, including those which
may fall outside of FISA’s statutory scheme, such as activities conducted overseas targeting non-
U.S. persons.90 Under E.O. 12333, the NSA may “[c]ollect (including through clandestine
means), process, analyze, produce, and disseminate signals intelligence information and data for
foreign intelligence and counterintelligence purposes to support national and departmental
missions.”91 As described in a 2014 report by the Privacy and Civil Liberties Oversight Board:
The government also conducts foreign intelligence surveillance outside of the United States
against non-U.S. persons under the authority of Executive Order 12333. In some instances,
this surveillance can capture the same communications that the government obtains within

collection” and that “upstream collection is received only by the NSA” and “neither the CIA nor the FBI has access to
unminimized upstream data.”); Foreign Intelligence Surveillance Court Memorandum Opinion and Order at 11–12
(FISA Ct. Apr. 26, 2017), available at https://assets.documentcloud.org/documents/3718776/2016-Cert-FISC-Memo-
Opin-Order-Apr-2017-1.pdf (Explaining that, “under the procedures adopted by the government, NSA is the lead
agency in making targeting decisions under Section 702” but that “FBI Targeting Procedures” come into play in certain
classified circumstances.)
86 See the section “Schrems II.”
87 50 U.S.C. § 1881a(i)(4).
88 Id. § 1806. Amendments to Section 702 made in 2018 created additional protections for querying of information
collected under Section 702 or use of such information in criminal prosecutions, but these protections primarily apply
to U.S. persons. Pub. L. No. 115-118, §§ 101, 102.
89 See Exec. Order No. 12333, 46 Fed. Reg. 59,941 (Dec. 4, 1981) (as amended).
90 See Brennan Ctr., Foreign Intelligence Surveillance (FISA Section 702, Executive Order 12333, and Section 215 of
the Patriot Act): A Resource Page (Oct. 25, 2018), https://www.brennancenter.org/our-work/research-reports/foreign-
intelligence-surveillance-fisa-section-702-executive-order-12333.
91 Exec. Order No. 12333, § 1.7(c)(1).
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the United States through Section 702. And because this collection takes place outside the
United States, it is not restricted by the detailed rules of FISA outlined above.92
E.O. 12333 also includes some privacy protections generally applicable to U.S. foreign
intelligence surveillance, but these do not appear to extend to non-U.S. persons. For example,
with respect to surveillance conducted abroad, the order requires the Attorney General to
determine that probable cause exists to believe that the target of surveillance is an agent of a
foreign power, but only if the surveillance is against a U.S. person under circumstances in which
a warrant would have been required for law enforcement purposes.93 Furthermore, the order also
expressly states that it does not create any legally enforceable right or benefit against the United
States.94 As a result, the CJEU found that EU data subjects did not have enforceable rights under
E.O. 12333, and that the order did not include sufficient protections to limit surveillance to only
what was strictly necessary.95
Presidential Policy Directive 28
In 2014, President Obama issued PPD-28 in the aftermath of allegations by Edward Snowden that
the government had been collecting intelligence data in “bulk.”96 “Bulk” collection refers to the
gathering by intelligence agencies of large quantities of intelligence data without the use of
“discriminants” such as “specific identifiers” or “selection terms.”97 While PPD-28 recognizes
that bulk collections must sometimes be used to identify threats, it limits intelligence agencies’
ability to use data gathered through bulk collections. In particular, this data may only be used to
detect and counter:
(1) espionage and other threats and activities directed by foreign powers or their
intelligence services against the United States and its interests; (2) threats to the United
States and its interests from terrorism; (3) threats to the United States and its interests from
the development, possession, proliferation, or use of weapons of mass destruction; (4)
cybersecurity threats; (5) threats to U.S. or allied Armed Forces or other U.S or allied
personnel; and (6) transnational criminal threats, including illicit finance and sanctions
evasion related to the other purposes named in this section.98
Along with bulk collection limitations, PPD-28 also contains requirements designed to safeguard
individuals’ personal information without regard to their nationality or place of residence. For
instance, PPD-28 only allows intelligence agencies to disseminate or retain personal information
if the dissemination or retention of comparable information concerning U.S. persons would be
permitted under E.O. 12333.99 PPD-28 also contains data security and access requirements,
which, among other things, limit access to personal information to “authorized personnel with a
need to know the information to perform their mission.”100

92 PCLOB Report, supra note 81, at 107.
93 Exec. Order No. 12333, § 2.5.
94 Id. § 3.6(c).
95 Supra Schrems II at paras. 184, 192.
96 Press Release, Office of the Press Sec’y, Presidential Policy Directive—Signals Intelligence Activities (PPD-28)
(Jan. 17, 2014), https://obamawhitehouse.archives.gov/the-press-office/2014/01/17/presidential-policy-directive-
signals-intelligence-activities.
97 Id. at n. 5.
98 Id.
99 Id.
100 Id.
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Like E.O. 12333, PPD-28 does not purport to provide judicially enforceable rights for private
persons who may have been subject to surveillance in violation of the directive’s provisions.
Similarly, the CJEU suggested that because PPD-28 may allow for bulk data collection and did
not provide non-U.S. citizens with actionable rights in court, it also fell short of the requirements
under the GDPR.101
Considerations for Congress
The CJEU’s Privacy Shield ruling has significant implications for data transfers between the
United States and the EU. As discussed in CRS In Focus IF11613, U.S.-EU Privacy Shield, by
Rachel F. Fefer and Kristin Archick, transatlantic data flows are an integral part of the $5.5
trillion U.S.-European economic relationship. Before Schrems II, many businesses and
organizations relied on the Privacy Shield framework to make international transfers: the program
had 5,380 participants as of July 2020.102 At the same time, the impact of Schrems II extends
beyond organizations that relied on Privacy Shield. Under Schrems II and the EDPB
Recommendations, even exporters relying on SCCs and similar transfer tools must now make
case-by-case evaluations to see if U.S. intelligence laws and practices (such as surveillance
programs under FISA Section 702) “impinge on the effectiveness” of the transfer tool.103 If they
do, these exporters must adopt any necessary “supplemental measures.”104 This standard may, in
some cases, prohibit transfers altogether. For instance, the EDPB Recommendations suggest that,
under current technology, there may not be any supplemental measures that would allow an
exporter to transfer data to a U.S.-based cloud service provider who “needs access to the data in
the clear in order to execute the task assigned.”105
Some Members of Congress have expressed interest in resolving the issues raised by Schrems II,
with the U.S. Senate Committee on Commerce, Science, and Transportation holding a hearing on
the topic in December 2020.106 The CJEU did not give a precise roadmap of what steps the United
States needs to take to provide an adequate level of protection to EU data subjects. However,
governmental solutions could come from several directions:
 Executive Action. Purely executive action could address some of the intelligence
collection concerns raised in Schrems II. For instance, the President could issue
an Executive Order that further limits bulk intelligence collections and that
provides additional redress mechanisms, such as an executive office or tribunal
with the power to adjudicate complaints and issue binding decisions on the
Intelligence Community.
 Diplomacy. U.S. and EU government officials could negotiate a diplomatic
solution. For instance, the U.S. executive branch and the EC might agree to a
new a framework that would replace Privacy Shield and result in a new adequacy
determination by the EC. The U.S. Department of Commerce and the EC have
already initiated discussions to “evaluate the potential for an enhanced EU-U.S.

101 See the section “Schrems II.”
102 CRS In Focus IF11613, U.S.-EU Privacy Shield, by Rachel F. Fefer and Kristin Archick.
103 EDPB Recommendations, supra note 62, at 3.
104 Id.
105 Id. at 26–27.
106 The Invalidation of the EU-US Privacy Shield and the Future of Transatlantic Data Flows: Hearing before the S.
Comm. on Commerce, Science, and Transp., 116th Cong. (2020) [hereinafter Privacy Shield Hearing].
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Privacy Shield framework” that would comply with Schrems II.107 However, as
happened with Privacy Shield, the CJEU could invalidate any new adequacy
decision if it determines the decision is inconsistent with the GDPR or the
Charter of Fundamental Rights. Alternatively, the United States and the EU could
enter into a treaty governing data transfers between the two jurisdictions.108
While a treaty would have superior legal force to EU regulations, such as the
GDPR, it would not prevail over primary sources of EU law, such as the Charter
of Fundamental Rights.109
 Legislation. Congress might adopt statutory requirements addressing the CJEU’s
concerns. For instance, it could amend FISA to prohibit bulk intelligence
collections and require court approval with respect to each target of surveillance.
It could further create a cause of action that would allow foreign subjects to bring
complaints before a tribunal if they believe intelligence agencies have collected
or used their data in an unlawful way. These solutions may raise complex
constitutional issues, such as separation of powers and Article III standing
concerns, both of which are beyond the scope of this Report.
While not directly addressing the issues raised in Schrems II, some commentators have also
maintained that the United States’ adoption of a comprehensive federal data protection law
applicable to commercial entities could facilitate transatlantic data transfers.110 Assuming the
surveillance concerns are also addressed, a comprehensive data protection law could result in the
EC determining that the United States provides an “adequate level of protection” under Article 45
of the GDPR. Such a determination would mean that data exporters would no longer need to rely
on international executive agreements such as Privacy Shield or on mechanisms such as SCCs in
order to transfer data to the United States.111

107 See Joint Press Statement from U.S. Secretary of Commerce Wilbur Ross and European Commissioner for Justice
Didier Reynders, U.S. DEP’T OF COMMERCE (Aug. 10, 2020), https://www.commerce.gov/news/press-
releases/2020/08/joint-press-statement-us-secretary-commerce-wilbur-ross-and-european.
108 For a discussion of the U.S treaty process, see CRS Report RL32528, International Law and Agreements: Their
Effect upon U.S. Law, by Stephen P. Mulligan. For a discussion of the EU treaty process, see Ratification Process,
EUR-LEX, https://eur-lex.europa.eu/summary/glossary/ratification_process.html (last visited Feb. 23, 2021).
109 See Sources of European Law, EUR-Lex, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM:l14534
(last visited Feb. 23, 2021).
110 See Privacy Shield Hearing, supra note 106 (written statement of Prof. Neil M. Richards) (“Comprehensive
consumer privacy reform from this Committee, coupled with federal surveillance reform could result not just in another
second-best international data transfer agreement, but in an adequacy determination by the European Commission.”)
(written statement of Peter Swire) (“I believe that enactment of comprehensive commercial privacy legislation would
greatly improve the overall atmosphere in Europe for negotiations between the EU and the U.S. about the effects of
Schrems II.”).
111 While a discussion of a comprehensive data protection law is beyond the scope of this report, data protection issues
are discussed more fully in CRS Report R45631, Data Protection Law: An Overview, by Stephen P. Mulligan and
Chris D. Linebaugh. Furthermore, CRS Legal Sidebar LSB10441, Watching the Watchers: A Comparison of Privacy
Bills in the 116th Congress, by Jonathan M. Gaffney, discusses the various data protection bills proposed in the 116th
Congress.
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Author Information

Chris D. Linebaugh
Edward C. Liu
Legislative Attorney
Legislative Attorney

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