The Departments of State and Commerce recently proposed rule amendments to ease export controls on satellite-related items.  Under existing export control rules, the vast majority of satellites, related components and technology cannot be exported and related assistance cannot be provided to foreign companies without obtaining a license pursuant to the restrictive International Traffic in Arms Regulations (“ITAR”).  As discussed in an earlier entry, Congress recently passed legislation to facilitate less restrictive approaches to exporting satellites and related technology. The proposed rules published by State and Commerce, respectively, implement this legislation.

Under the proposed rules, fewer satellite items would remain subject to the more onerous ITAR.  The ITAR typically impose rigorous licensing procedures on covered items and technologies.  Satellite-related items are currently controlled under Category XV of the ITAR’s U.S. Munitions List, which essentially covers most satellites and any parts, components and technology “specifically designed or modified” for covered satellites.  The “specially designed or modified” criterion is not defined, thereby extending the scope of the ITAR to an overly broad range of products, including many not related to space applications or otherwise of military significance.

The proposed rules would revise Category XV so that it controls only satellites and related components that have military significance.  This would be accomplished by listing only specific satellites under Category XV, such as satellites that mitigate the effects of nuclear detonations, track military hardware via infrared, radar or laser systems, perform designated logistics functions, such as refueling or signatures intelligence, or those having very specific remote sensing capabilities.  Satellite exporters should assess this proposed list to ensure only items having true military significance remain on the list.  There are also two other notable issues for exporters to review:

1.      Controls on certain GPS receiving equipment would continue to be defined by using the phrase “specifically designed” even though discontinuing use of this undefined and ambiguous term has been a priority of the export control reform effort.  Retaining this approach serves only to perpetuate the problems underlying ITAR reform.

2.      Many parts and components relating to spacecraft will remain controlled if categorized as “space qualified.”  This differs from the approach taken with respect to export control reform applicable to most other industries in that in those contexts parts and components remain controlled under the ITAR if they meet a detailed definition of being “specially designed” for the controlled application.  The definition of “space qualified” generally applies if a part or component is designed, manufactured or qualified through successful testing for operation at altitudes greater than 100km above the earth.  Limiting controls to parts and components that are “space qualified” should reduce regulatory uncertainty associated with the export of satellite-related equipment.


Many of the proposed reforms for the export of satellites and related technology likely will benefit industry, but the proposed rules should be reviewed closely to ascertain the impact on particular products and technologies.  Comments on these proposals are due on or before July 8, 2013.

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As evidenced by another congressional hearing on data security, the idea of a federal data breach notification law is something that both businesses and consumers can support.  The concept has also attracted bipartisan support in Congress.

Following the string of online data breaches that Sony experienced in April and May- what Rep. Mary Bono Mack has called the “ground zero” of cyber attacks- Sony was criticized because it took a week to investigate the initial breach affecting its PlayStation network before notifying consumers or making a public announcement.  The reality is, however, that in the absence of a federal law having preemptive effect, the inconsistent state laws that companies must navigate when they experience a breach make it a practical impossibility to provide an immediate, meaningful response to affected consumers and government agencies.

Numerous differences in the 46+ state data breach notification laws make notifying affected individuals and agencies complex, especially for companies with national operations.  Companies must perform extensive internal investigations to determine the number of individuals and states involved, the means and extent of unlawful access or acquisition, and the  nature of consumer information accessed or acquired just to initiate the notification process.  They must then examine applicable state laws to determine who (e.g., residents, state agencies, and/or consumer reporting agencies) should be notified, when, and how.  Some states even dictate what information must or cannot be disclosed.  Often, that requires separate forms of notifications to individuals depending on where they reside.

Given the current landscape, the question is not whether a comprehensive federal data breach notification law should or will be adopted, but when.

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The recent United States Supreme Court decision in AT&T Mobility LLC v. Concepcion, heralded by many as a win for business over the consumer, actually was an affirmation of  agreements to arbitrate disputes  under federal law.

The Court found that the Federal Arbitration Act preempted state law that negated an arbitration provision in this instance.  The Supreme Court noted that the “overarching purpose” of the Federal Arbitration Act was to “ensure the enforcement of arbitration agreements according to their terms . . . .”  The Court affirmed that contracts that provide for resolution of disputes by arbitration are enforceable and are supported by “a “liberal federal policy favoring arbitration.”  This liberal policy applies whether the contract is between two businesses, even if of unequal negotiating strength, or between a business and a consumer.

Thus, if a party favors dispute resolution through arbitration there is now an extremely high expectation that a properly phrased arbitration preference in an agreement will be enforced. All that is required is a clearly worded clause that establishes an agreement to arbitrate any dispute related to the contractual relationship.  Whether such an agreement is advisable and what other provisions might be included  are topics for future posts.