Section 702 Renewal Could Have Huge Negative Impact on Business

As I said in an earlier post, after 9-11 Congress passed some major new surveillance laws.  The idea was to increase surveillance in a move to try and find more terrorists.  Congress also wasn’t completely sold on the idea, so the law sunsets every few years and Congress has to renew it.  This is one of those renewal years.

But there is a wrinkle.  Congress is still not sold on the idea.  The law was set to expire at the end of December and rather than allowing it to lapse while they were on vacation, Congress renewed the law prior to leaving town.  Renewed that is, for four weeks.  The law is set to expire, again, next week.

There are several bills in various stages of approval that range from a permanent renewal with no restrictions to a limited renewal with restrictions.

Apparently one of the sticking points is something called “About” collection.  This was abandoned last year, but some of the bills in Congress now reincarnate it.  About collection, some say, is a back door to allow the FBI via the NSA to collect information ABOUT Americans without a warrant, using some slight of hand saying the information was collected incidental to someone or some thing they were interested ABOUT.

Congress has 9 days to either figure it out or kick the can down the road.  Again.

But here is the negative business impact.

For U.S. companies that do business in Europe, many of them, especially smaller ones, need to be able to bring that data back to the United States.  Due to Europe’s much stricter privacy laws, they can’t do this unless the agree to offer E.U. citizens the same protections that they would get in Europe.  Enter Privacy Shield, son of Safe Harbor.  Privacy shield is an agreement between the U.S. government and the E.U. government regarding what we will and will not do with respect to protecting E.U. citizen’s privacy.  About 2.400 U.S. companies currently follow the Privacy Shield agreement and more are in process.

But the E.U. lawmakers are not very fond of Section 702.  In fact, they have said so publicly.  In fact, they have threatened to go to E.U. court to have Privacy Shield declared null and void.

And that is exactly what will likely happen (and did happen to Safe Harbor) if the U.S. extends Section 702 as is.

I am not clear that some U.S. Senators and Congresspeople understand that;  they would much rather deal in crisis.

So here is one possible outcome.  Congress renews Section 702 with no reforms, the E.U. goes to court and gets Privacy Shield declared unconstitutional and American businesses get to scramble to figure out how to continue to do business in Europe.  This is worth billions to U.S. businesses.

It probably won’t be that bad.  The court will probably give the U.S. 6-12 months to figure out a solution.  Then bureaucrats in the U.S. and E.U. will need to try and figure out how to deal with it and Congress may have to amend Section 702.

Alternatively, Congress could be proactive.  Not. Counting. On, That.

If you sell into Europe, you might want to contact your Congress-critters.

Otherwise, get some popcorn and watch the fun.

Information for this post came from The Hill.

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