Reducing Over-Classification Act

Reducing Over-Classification Act - (Sec. 4) Amends the Homeland Security Act of 2002 (HSA) to direct the Secretary of Homeland Security (DHS) to designate a Classified Information Advisory Officer to develop and disseminate educational materials and to develop and administer training programs to assist state, local, and tribal governments (including law enforcement agencies) and private sector entities: (1) in developing plans and policies to respond to requests related to classified information without communicating such information to individuals who lack appropriate security clearances: (2) regarding the appropriate procedures for challenging classification designations of information received by personnel of such entities; and (3) on the means by which such personnel may apply for security clearances. Directs such Officer to inform the Under Secretary for Intelligence and Analysis on policies and procedures that could facilitate the sharing of classified information with such personnel.

(Sec. 5) Amends the National Security Act of 1947 to require the Director of National Intelligence to establish: (1) guidance to standardize formats for classified and unclassified intelligence products for purposes of promoting the sharing of such products; and (2) policies and procedures requiring the increased use, including portion markings, of the classification of portions of information within one intelligence product.

Amends HSA to: (1) include among the responsibilities of the Secretary relating to intelligence and analysis and infrastructure protection, to integrate relevant information, analysis, and vulnerability assessments in order to prepare finished intelligence and information products in both classified and unclassified formats whenever reasonably expected to be of benefit to a state, local, or tribal government or a private sector entity; and (2) require the state, local, and tribal homeland security and law enforcement officers and intelligence analysts assigned by the Interagency Threat Assessment and Coordination Group (ITACG) Detail to work in the National Counterterrorism Center to make recommendations to the Secretary for the further dissemination of intelligence products that could likely inform or improve the security of such a government or entity.

Requires the Secretary, in coordination with the Director of the National Conterterrorism Center and the ITACG Advisory Council, to: (1) compile an annual assessment of ITACG Detail's performance, including summaries of customer feedback, in preparing, disseminating, and requesting the dissemination of intelligence products intended for state, local, and tribal government and private sector entities; (2) provide such assessment to the program manager for the information sharing environment for use in the annual report on ITACG progress. Requires such report to include an assessment of whether the ITACG detailees have appropriate access to all relevant information as required.

(Sec. 6) Permits the President or the head of an agency with an officer or employee who is authorized to make original or derivative classification decisions, in making certain cash incentive awards, to consider such officer's or employee's consistent and proper classification of information. Requires the inspector general of each such agency, in consultation with the Information Security Oversight Office, to carry out at least two evaluations of that agency or components thereof to: (1) assess whether applicable classification policies, procedures, rules, and regulations have been adopted, followed, and effectively administered; and (2) identify policies, procedures, rules, regulations, or management practices that may be contributing to persistent misclassification of material. Requires each first evaluation to be completed by September 30, 2013, and each second evaluation to be completed by September 30, 2016. Requires each inspector general to: (1) submit a report on each such evaluation to specified congressional committees, the agency head, and the Director of the Information Security Oversight Office; and (2) coordinate with other inspectors general and with the Information Security Oversight Office to ensure that evaluations follow a consistent methodology that allows for cross-agency comparisons.

(Sec. 7) Directs the head of each executive agency, in accordance with Executive Order 13526, to require: (1) annual training for each employee who has original classification authority; and (2) training at least every two years for employees who perform derivative classification or are responsible for analysis, dissemination, preparation, production, receipt, publication, or otherwise communication of classified information. Requires such training to: (1) educate the employee regarding the guidance established under the National Security Act of 1947 regarding the formatting of finished intelligence products, the proper use of classification markings, and incentives and penalties related to the proper classification of intelligence information; and (2) serve as a prerequisite for obtaining and maintaining original classification authority or derivatively classifying information. Directs each agency head to ensure that the training is conducted efficiently and in conjunction with any other required security, intelligence, or other training programs to reduce the associated costs and administrative burdens.