It's not the law. Unfortunately, it collects, organizes, collates, and gives all of the evidence to law enforcement, without need for a warrant, since your ISP is a business, not a government entity (think concerned citizen/confidential informant.) In 2003 they tried something similar, getting the "large" ISPs (infrastructure/backbone providers) to start monitoring and logging all "suspicious" traffic, turning the captured data over to the feds, and blacklisting people. It was rejected as a violation of the common carrier laws already established for the telephone, mail, and delivery services.
It was tried again around 2008, but died in planning. That attempt would have again blacklisted any "serial offenders," and turned the electronic evidence over to law enforcement. Copyright is actually a crime, and, because internet piracy is a wire crime the feds automatically have jurisdiction (interstate commerce.) In 2009 the feds picked up a drug case from a Minneapolis suburb. The evidence was tainted and prosecution for growing failed -- the feds used ISP records and a sarcastic comment to the original arresting officers to get a subsequent warrant, executed it on the computer, and prosecuted the grower for wire fraud, piracy, and possession of stolen property.
Simple things to do to lower your risk of getting tied up in the legal system:
1. Never break multiple laws at the same time! (don't speed while you are carrying your product to the dispensary where you'll sell it, don't have weed in plain site while you are having that party and the cops show up for a noise complaint, don't pirate movies, music, or software on your system while you are growing...)
2. Don't shit where you eat! Don't use your home computer for things like piracy or hacking if you have a grow room. Don't use your landline or cell phone to make deals that are illegal.
3. Be selective about your partnerships -- that means ISP, websites, friends and family you communicate with. There are some ISPs left that will actually defend your rights to privacy, try to find one in your area.
4. Remember RICO can add at least 10 years to your sentence. And, RICO can be triggered by something as stupid as a text asking you to download a song or roll a joint because your buddy is coming over to smoke with you. Cell phone communication, email, and web communication are all under federal jurisdiction because of the "national and international nature of the borders" with the technologies.
5. You have a right to privacy, protect it! Build a small firewall system to filter internet traffic, lock your doors, demand a warrant before opening your house, apartment or car up for law enforcement, etc.
6. Remember, once you become a blip on a department's radar, you WILL be under increased scrutiny.