Chinese and Russian spy agencies are using hacked U.S. data to identify American intelligence officers and agents. “At least one clandestine network of American engineers and scientists who provide technical assistance to U.S. undercover operatives and agents overseas has been compromised as a result, according to two U.S. officials,” the Los Angeles Times reports. “Counterintelligence officials say their adversaries combine those immense data files and then employ sophisticated software to try to isolate disparate clues that can be used to identify and track — or worse, blackmail and recruit — U.S. intelligence operatives.”

UNPRECEDENTED: The Obama administration is working on a set of economic sanctions against Chinese companies and individuals who have benefited from their government’s hacking activities. As The Post reports, “The U.S. government has not yet decided whether to issue these sanctions, but a final call is expected soon — perhaps even within the next two weeks … Issuing sanctions would represent a significant expansion in the administration’s public response to the rising wave of ­cyber-economic espionage initiated by Chinese hackers, who officials say have stolen everything from nuclear power plant designs to search engine source code to confidential negotiating positions of energy companies.”

THE HILL’S NEXT CYBER BATTLE: Automakers are fighting a bill from Sens. Ed Markey (D-Mass.) and Richard Blumenthal (D-Conn.) that proposes mandatory security standards for vehicles, Politico reports.

REVERSED: A federal appeals court reversed a judge’s order to stop the National Security Agency from collecting phone records, the latest development in what is expect to be a long-running legal battle between the government and privacy advocates. “The three-judge panel’s ruling comes after Congress has already passed legislation ending the government’s collection of bulk phone records,” the Wall Street Journal reports. “Friday’s unanimous decision came in a case brought by Larry Klayman, a longtime conservative activist who sued in 2013 after former NSA contractor Edward Snowden disclosed documents showing the scope of the phone surveillance and other spy programs.”