Interview: Franceska Schroeder

July 9, 2008 at 8:48 am | Posted in Interview | 1 Comment

Franceska O. Schroeder is a Principal in the Washington, D.C. office of Fish & Richardson P.C. She is a member of the firm’s Regulatory and Government Affairs Group. Her practice emphasizes regulatory, administrative, commercial and government contracts, risk management, insurance, legislative, and policy matters in the areas of space, defense, security and satellite communications. Ms. Schroeder’s clients include space and defense contractors, satellite manufacturers and operators, launch services providers, systems engineering firms, and investors in satellite communications and other high-technology projects. She also is Legal Counsel to the American Astronautical Society and has served as a Private Sector Advisor to the U.S. Delegation to the Legal Subcommittee of the United Nations Committee on the Peaceful Uses of Outer Space.

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Res Communis: Tell us about your practice. Do you consider yourself a space lawyer?

Schroeder: I consider myself a regulatory and transactional lawyer who serves the space industry.

Res Communis: What is a typical day in your practice? If there is such a thing as a typical day.

Schroeder: Well, there really isn’t. However, almost every day includes addressing trade compliance issues. This work includes helping clients identify whether the activities in which they want to engage trigger requirements of the U.S. export control regimes, namely the Export Administration Regulations (EAR) administered by the Commerce Department’s Bureau of Industry and Security or the International Traffic and Arms Regulations (ITAR) administered by the State Department’s Directorate of Defense Trade Controls. It also involves the economic sanctions or trade embargo programs administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). A typical day also could include reviewing a commercial or government contract involving a satellite, launch vehicle or some other space system and advising on the regulations of the FAA’s Office of Commercial Space Transportation. I also help clients with liability and risk management issues, such as satellite launch and in-orbit insurance and understanding the scope of government-based indemnification programs.

Res Communis: Are they the same issues every day or does it vary depending on whom your client is?

Schroeder: My work varies because clients’ needs vary. For example, and staying in the export control world for a minute, a client that is a large company may be engaged in multiple international activities. That client could have issues under the EAR, ITAR and one or more of the OFAC programs, or it could have multiple issues under only one of the regimes. Also, a client that is engaged in both commercial and government activities, might ask me to review a satellite purchase or launch services agreement with a commercial customer one day, and a contract with the U.S. government on another day – or sometimes both in the same day.

Res Communis: If you have a client that comes to you for the first time wanting to deal with ITAR issues, what do you typically have to tell them? What is the education process you have to engage in for your client?

Schroeder: Often, the first thing I do is explain that just because they are called the International Traffic in Arms Regulations, the term “arms” is construed broadly. An item might not be something that one immediately would consider “arms” or “munitions”, but if it is listed on the United States Munitions List (USML), it is controlled by the ITAR. I then explain that technical data and “defense services” (for example, training on the system or troubleshooting) related to the item that is on the USML also are controlled by the ITAR. The example that I often use is the commercial communication satellite. Even though the satellite is going to be functioning exclusively for commercial purposes — let’s say it’s a satellite that is going to be providing digital audio radio or direct broadcast television – satellites are on Category XV of the USML. Therefore, the satellite and technical data and “defense services” related to the satellite are ITAR-controlled.

Res Communis: Do you get some surprised clients?

Schroeder: Yes.

Res Communis: Do they come to you after they find out something they are trying to sell is on the list, or do they come in before?

Schroeder: Usually before, which is very good. The types of clients that I am privileged to serve range from highly sophisticated multinational defense contractors who are extremely knowledgeable in this area—and I serve in a support capacity and help with the trickier issues—to very small start up companies for whom this is a brand new area. That is where the need for education comes up the most. The good news is, at least in my experience, that clients in the space and defense industries are extremely receptive. They want to know how to do things right.

Res Communis: The way you describe it makes it sound like you have been involved as a preventive measure. Whereas, most people only go to lawyers after they are already in crisis and something is already wrong. You sound like what your practice is about is trying to prepare the client to go through a process to avoid those crises in the first place.

Schroeder: That is definitely true, but there is a mix. A lot of what I do is to help clients identify the potential problem before it might arise and then completely avoid the problem by being compliant. In other cases there might be a situation where a client inadvertently failed to comply, and I help manage that process as well. Another very important aspect of my work in this area is helping clients to establish, administer and maintain an internal trade compliance program. This includes drafting a manual and specific work procedures and helping to train employees — that includes everyone from the chief level officers to the people shipping the goods.

Res Communis: Very interesting. You were talking about small versus large companies. The big defense contractors have a lot of in-house expertise. Is it more difficult for small companies to comply?

Schroeder: I wouldn’t say more difficult to comply, but perhaps it’s more burdensome because a smaller company might not have the same level of in-house resources as a large company. But, if you are engaged in international trade you must comply with these rules, regardless of whether you’re a large or small company. So, some of your resources, no matter how limited they may be, must be dedicated to trade compliance. It tends to be a little more manageable for the larger companies who have or who are able to hire extra resources to apply to these issues.

Res Communis: The ITAR is a big issue in space law right now, at least at the national level. There has been a lot of discussion recently about changing them. From your experience what, if anything, would you recommend be done with the regulations to be more client friendly. What is your view on this debate?

Schroeder: To the extent change is possible, I think a positive change would be for the regulations to be clearer. By that I mean, the way the ITAR is promulgated now, many of the provisions are drafted in such a way that results in multiple interpretations. If there were a way to narrow or tighten definitions or provide additional guidance on other provisions – like brokering –I think that would be a big help.

Res Communis: One of the viewpoints that is often expressed is that it is not the regulations themselves but the implementation of the regulations that need to be improved, would you make a comment on that?

Schroeder: Regarding implementation, I would say one of the issues is resources. The regulatory agencies that are tasked with implementing these complex rules have limited resources. The people in these agencies are tasked with answering day-to-day questions, processing license applications, dealing with compliance issues, speaking at industry events, responding to the Congress. There is only so much a limited number of people can do.

Res Communis: At the Center’s Galloway event last December you spoke about an ITAR agreement between Great Britain and the United States. Can you tell us about that? What is its current status?

Schroeder: There are actually two bilateral agreements. They are called Defense Trade Cooperation agreements. One is between the United States and the United Kingdom and the other is between the United States and Australia. Both of those agreements would focus on defense projects, not commercial projects. The agreements have been signed by the governments of the involved countries but in the United States, the Senate has not yet ratified them.

Res Communis: So they have to go through a formal treaty ratification process.

Schroeder: Yes.

Res Communis: What benefit would they provide to the parties?

Schroeder: The goal would be the streamlining of trade compliance requirements for eligible U.S.-U.K. and U.S.-Australia defense projects.

Res Communis: Would that mean less work for you?

Schroeder: No, because most of the work I do in the export control area is on the commercial side. So, I don’t expect it would have a significant impact on my practice.

Res Communis: In addition to export control issues, what other kinds of things come across your desk?

Schroeder: There is a lot of work on contracts, both on the government and commercial sides. These include contracts for the purchase of satellites and launch services and satellite transponder sales and leases. On the government side, the contracts involve planetary missions and other civil space projects. I also work on non-export control regulatory issues that affect the space industry. This includes FAA launch licensing and range safety, as well as NOAA licensing of privately-owned commercial remote sensing satellite systems.

Res Communis: When somebody comes to you as a launch provider do you think in different terms than if somebody comes to you as a satellite operator?

Schroeder: Yes, there are unique issues to satellite purchase agreements and to launch service agreements. Very often the kinds of contracts I work on are called “delivery in orbit” (DIO) contracts where the customer will purchase the spacecraft delivered in orbit. The contract will include the manufacture of the spacecraft and the launch of the spacecraft. I often think about satellite-unique issues and launch-unique issues simultaneously because if it is a DIO contract, I want to make sure that all the issues are covered from the moment the manufacturer starts manufacturing the satellite to the moment the satellite is delivered into the designated orbit.

Res Communis: What would you tell a law student who wants to do what you are doing? How should they prepare themselves? What advice would you give them?

Schroeder: I think it is very important, first and foremost, to be truly passionate about the industry. Much of what I do involves working with engineers, scientists, and businesspeople who have been in the space industry for a long time and who are very dedicated to the field. Sharing that passion makes the working relationship really terrific. As a practical matter, I would advise taking courses in contracts, administrative law, international trade and negotiations. I also think it is extremely important that young lawyers understand the relationship between law and policy.

Res Communis: Can you say something about that? That is very interesting.

Schroeder: The law often is informed by policy objectives that Congress wants to make sure are carried out. Understanding the logic or policy behind the rules makes it easier to understand how to follow them.

For example, law governing commercial space transportation came about because the U.S. government wanted to encourage development of the industry in the U.S. A law needed to be passed to authorize the licensing and regulation of commercial space transportation activities. The legal regime established a means to limit the liability of the private party launch participants and to protect the public. It also provides a means for the U.S. government to fulfill its international treaty obligations.

It’s also easier to understand U.S. export control laws and regulations when you keep in mind that the intent behind these controls is to achieve U.S. foreign policy and national security objectives.

Res Communis: How did you find your way into this kind of practice?

Schroeder: I started my career working on space issues in the government. I was fascinated by them. I took a course that the government offered on various space issues, one of which was space law. I thought if I could go to law school and work in the space industry as a lawyer, I needed to do that. So I went to law school with being a space lawyer in mind.

Res Communis: You weren’t a lawyer in the government?

Schroeder: That’s right.

Res Communis: You went to school with the intention of becoming a space lawyer?

Schroeder: Correct. I feel very fortunate that things worked out this way. I had some great mentors. And I was driven, or as I said earlier – I was passionate about it.

Res Communis: Did you go immediately into private practice or did you go back to the government?

Schroeder: I stayed in the government as a summer associate and then had an opportunity to move into the private sector as a law clerk in my third year of law school. Then I accepted an associate position in that law firm.

Res Communis: What would you say are some of the most important issues today in space law, either national or international?

Schroeder: Export control is certainly a top-tier issue. Another issue that likely will need to be addressed as the “space tourism” industry matures is the licensing and regulation of on-orbit activities. Currently, there is no statutory authority for the licensing and regulations of on-orbit activities.

Res Communis: Do you ever get involved with a client who either sells or purchases a satellite that is already on orbit?

Schroeder: Yes. And that’s a transaction that could trigger U.S. export control issues. For example, if the satellite is U.S.-origin and the owner wants to sell it to a non U.S. entity, the transfer cannot occur until the ITAR license has been issued.

Res Communis: Is there anything you would like to raise that hasn’t been raised or addressed?

Schroeder: Yes. It also would be very important for any law student or new lawyer in this field to have a solid understanding of the five multilateral treaties that govern outer space activities. These are the Outer Space Treaty, the Liability Convention, the Registration Convention, the Rescue and Return Agreement, and the Moon Treaty. I also would recommend becoming familiar with the work of the Legal Subcommittee of the United Nations Committee on the Peaceful Uses of Outer Space (COPUOS). The Legal Subcommittee is responsible for addressing international legal issues arising from the use of outer space.

Res Communis: Thank you.

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