THE STATEMENTS AT ISSUE:

The Food and Drug Administration has announced that, in response to a trend in which caffeine is being added to a growing number of products, the agency will investigate the safety of caffeine in food products, particularly its effects on children and adolescents.

U.S. Food and Drug Administration, announcement in FDA Consumer Health Information, May 2013.

Its a trend that raises real concerns, Michael Taylor, the FDAs top food safety official, said in an interview. Were not here to say that these products are inherently unsafe. Were trying to understand, what are the right questions to be asking? We have to figure out, what are the right ways to approach this?

Excerpts from comment that Michael R. Taylor, deputy FDA commissioner for foods,made to The Washington Post, for a front-page article on June 2.

The federal government has absolutely no role, none, in governing age restrictions on purchasing products. Everything from drinking ages, smoking ages, to voting ages and drivers licenses are all handled at the state level. Why suddenly investigate caffeines effects now after more than fifty years of inclusion in American food and beverage products? It never ends with the nanny state.

Nathan Mehrens, general counsel of the advocacy group Americans for Limited Government, reacting on May 11 to the FDAs announcement of its caffeine review.

With caffeine now showing up in everything from frozen pancakes to chewing gum to quick-energy soft drinks, and with federal officials growing worried about that, it may be time to take a new look at an old Supreme Court decision one that, in fact, will mark its centennial anniversary next February. That was the courts first ruling spelling out the federal governments powers to keep harmful substances out of the nations food supply.

The 1914 case of U.S. v. Lexington Mill & Elevator Co., was an otherwise unremarkable decision that provided the courts initial interpretation of the first Food and Drugs Act, passed in 1906 and signed into law by President Theodore Roosevelt. The law was designed to stop the sale of misbranded and adulterated foods, drinks, and drugs.

Before the court was a government claim that a Nebraska mill had mixed into 625 bags of flour a form of nitrogen gas that made the flour look like it was of a better quality than it really was. At issue was the kind of proof that the government had to offer to show that a food product was being sold without a proper label or sold with some poison or deleterious ingredient that might threaten human health.

The Supreme Court decided that, in order to save the 1906 law from being found unconstitutional because it was beyond Congress legislative power, it was not enough for the government to show merely that an item of food had some other potentially harmful substance added to it. What was necessary, the court said, was that the food in combination with the added substance did have the potential to injure human health. Any food, it said, might have a bit of something in it that might do harm.

As for the 625 bags of flour, the court added, it was not enough that the gas had changed the appearance of the flour. That was of no more legal consequence, the opinion indicated, than adding water to make flour into gravy, or other ingredients to make bread.

What are the lessons here for the FDA as it ponders whether it wants to issue new controls on foods and drinks that contain caffeine? It cannot simply assume that caffeine is threatening to anybodys health. Since officials seem to be thinking at this point mainly about potential harm to young children, the FDA will have to assemble age-specific health data. And such data will have to show that, if it does produce a chemical reaction that is age-specific, the reaction may negatively affect body chemistry in the young.

As the FDA said last month in announcing its review of the caffeine question, We need to better understand caffeine consumption and use patterns and determine what is a safe level for total consumption of caffeine. Importantly, we need to better understand the types of products that are appropriate for the addition of caffeine, especially considering the potential for consumption by young children and adolescents.

Already, the FDA said, it has drawn the conclusion that, for a healthy adult, 400 milligrams a day (thats about four or five cups of coffee) is not likely to have dangerous negative effects. It has not yet set a similar level for children, it noted.

Thus, the broader challenge to FDA is to decide whether and how to spell out a specific safety standard for children, before it can then turn to the question of how to enforce such a standard. The enforcement options might be no more intrusive for the food and beverage industries than to require them to post caffeine levels on the labels of foods and drinks likely to be consumed by children. But, more aggressively, the FDA might decide that it has to compel an industry to take some products completely off the market.

If the scientific evidence indicates that it is warranted, the FDA said, we are prepared to go through the regulatory process to establish clear boundaries and conditions on caffeine use.

If, at the end of the process that is just now beginning, what the FDA does looks to critics like another bad example of the nanny state, then the courts are likely to be drawn into that controversy. And that, of course, will draw the lawyers and the judges back to re-reading what the Supreme Court said almost 100 years ago.

Lyle Denniston is the National Constitution Centers adviser on constitutional literacy. He has reported on the Supreme Court for 55 years, currently covering it for SCOTUSblog, an online clearinghouse of information about the Supreme Courts work.

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SAN FRANCISCO (Reuters) - Zynga Inc announced on Monday its biggest ever round of layoffs and warned of weak bookings for the current quarter, raising doubts about the social game developer's attempt at a recovery.

Zynga said it will cut about 520 jobs, or roughly one-fifth of its work force, and close some offices in the United States.

Analysts said the latest warning on quarterly bookings, a measure of sales, boded poorly for the "FarmVille" developer, which began trimming staff late last year.

Zynga's shares slid as much as 15 percent in frantic trade before closing down 12 percent at $2.99, near its four-month low.

"I admire them for aligning costs with revenue," Wedbush analyst Michael Pachter said. But Monday's bookings forecast, following a series of downward revisions in the past year, prompted new and increasingly urgent questions about Zynga's ability to retain players, he said.

Investors "thought they were already guiding to a low number that they would sail over, but it's coming in even lighter," Pachter said. "Are they in a state of persistent revenue declines? One quarter doesn't tell the story, but we need to hear what else they're doing."

One of the first firms to seize upon Facebook as a game-publishing platform years ago, Zynga has struggled to keep hold of players as people increasingly turn to their mobile devices - and games from Zynga's rivals - for entertainment. Zynga's chief executive, Mark Pincus, has shut studios, retired more than a dozen games and laid off hundreds of employees as part of a turnaround effort that focuses resources on developing mobile games.

As the company began notifying laid-off employees on Monday afternoon, Pincus issued a company-wide memo that acknowledged Zynga's ongoing struggle to adapt to the mobile world.

"The scale that served us so well in building and delivering the leading social gaming service on the Web is now making it hard to successfully lead across mobile and multi-platform, which is where social games are going to be played," said Pincus, who founded the company in 2007 and still maintains majority control.

The series of cuts contrast starkly with Zynga in early 2012, when it paid $183 million to acquire game studio OMGPOP, which became its New York studio, and total headcount ballooned to nearly 3,000.

Zynga has lost 70 percent of its market value since its 2011 debut.

Trading was briefly suspended twice on Monday afternoon, and the stock drop marked Zynga's largest single-day loss since July 26, when it badly missed earnings expectations and shares plunged 37 percent.

The new wave of cuts will bring headcount down to around 2,300 and will see the shuttering of the New York, Los Angeles and Dallas studios, according to people with knowledge of the matter. In October, Zynga closed its Boston office while cutting staff by 5 percent.

"None of us ever expected to face a day like today, especially when so much of our culture has been about growth," Pincus said in his memo. "But I think we all know this is necessary to move forward."

The company said its second-quarter bookings are expected to be in the lower half of the outlook range it provided in April, of $180 million to $190 million. Bookings, which account for the vast majority of Zynga's revenues, are the sales of virtual goods bought by game players in order to enhance game play, such as the purchase of virtual cows used in farm games.

Zynga does not charge for playing its games. It also derives revenue from advertising.

Zynga said it now sees a second-quarter net loss of between $39 million and $28.5 million, reflecting restructuring charges due to the job cuts. It had previously projected a net loss of $36.5 million to $26.5 million. Despite the revised outlook for the second quarter, the company reaffirmed its full-year outlook.

The job cuts will save $70 million to $80 million, according to the company.

In a research note after Zynga's announcement, Macquarie analyst Ben Schachter said the company's challenges remained unchanged.

"Despite today's pullback, we see no turnaround on the horizon," he said.

(Reporting by Gerry Shih; Editing by Leslie Adler)

BOWDOINHAM, Maine (Reuters) - Maine's Democratic-controlled legislature on Thursday passed a bill to expand access to its Medicaid program as outlined by the Affordable Care Act, setting up a showdown with the state's Republican governor, who immediately began veto procedures.

At issue is lawmakers' effort to link expanded access to the health insurance program for low-income residents to a plan to pay the state's share of $484 million in debt owed to Maine's hospitals.

Governor Paul LePage, who is frequently in conflict with state legislators, has insisted the two issues remain separate and signed a letter to veto the bill within minutes of its passage.

"Democrat leadership has spent the past week forcing this bill through the legislative process," LePage said in his veto letter. "This unadulterated partisanship tied two different issues together in a quest to force welfare expansion upon the Maine people."

LePage submitted a bill that would tackle the hospital debt that does not include Medicare expansion.

The LePage administration has begun negotiation with the federal government regarding the mandates in the 2011 healthcare reform law that is President Barack Obama's signature domestic legislative achievement.

About 15 U.S. states have said they will not participate in the expansion of Medicaid, with 26 opting in and the balance not yet decided, according to the Advisory Board Company, a consulting firm that tracks the issue.

Texas lawmakers on Tuesday passed a measure, backed by Republican Governor Rick Perry, to block the state from participating in Medicaid expansion.

Maine legislators had proposed to use a portion of future revenue from a renegotiated state liquor contract to pay $484 million in debt due Maine's 39 hospitals. That proposal was initially supported by both parties, but Republicans turned against it last week after it was amended to increase Medicaid access.

Democrats said the move would expand health care coverage to an estimated 70,000 Maine citizens.

Under the Affordable Care Act, the federal government agreed to increase Medicaid eligibility and cover 100 percent of the costs for three years, after which coverage would be reduced to 90 percent. According to a previous analysis from Maine's Department of Health and Human Services, Maine taxpayers would be on the hook for an additional $75 million per year after federal reimbursement drops to 90 percent.

Mark Eves, speaker of the Maine House of Representatives and a Democrat, said the bill "pays the debt and helps fix the underlying problem that contributes to high health care costs in the first place," citing rising costs of charity care in emergency rooms of Maine hospitals.

LePage made a surprise appearance at a Sunday meeting of a legislative committee on Medicaid but lawmakers did not allow him to speak.

"The repeated attempts by Democrats to stifle debate on bills and to prevent me from speaking in front of the Appropriations Committee is a disturbing pattern of censorship that should concern all Mainers," LePage said in a statement.

(Editing by Scott Malone and Dan Grebler; Editing by David Gregorio)

Al-Shabab, the rebels linked to al-Qaida, have discouraged many parents from getting their children inoculated against polio, a disease that is an incipient problem in this Horn of Africa nation long plagued by armed conflict and disease, according to health workers who spoke to The Associated Press.

The al-Shabab extremists have been pushed out of virtually all of Somalia's cities and face continued military pressure from African Union and government troops. Health workers are gaining access to more children to give the life-saving polio vaccine. But some mothers and fathers are refusing the inoculation, apparently heeding the advice of the Islamic militants who warn that the vaccination exercise is part of a foreign conspiracy to kill or weaken Somali children.

Vaccination workers who walked door to door in the capital, Mogadishu, were turned away by some parents who often didn't state why they objected to the vaccination. One man told the workers to leave immediately because they were carrying "toxic things."

Al-Shabab militants are spreading rumors against the polio vaccine in communities where they still have some influence, alleging the vaccine can make girls barren and that it is manufactured in Christian countries, said a senior United Nations health worker in Somalia, who insisted on anonymity because he isn't authorized to speak about the vaccination program.

Al-Shabab did not respond to questions about the allegations that they are spreading rumors against the vaccination campaign.

"Al-Shabab are paranoid about potential infiltration by spy agencies disguised as humanitarian workers. That's probably a principal reason for discouraging vaccination," said Abdi Aynte, the director of the Somali-based think-tank Heritage Institute for Policy Studies.

Somali government officials say the numbers of parents who reject the immunization campaign are far fewer than those embracing it, but health workers don't want to leave any unvaccinated. They warn that it is important for every child to get the polio vaccine in order to eradicate in Somalia the disease that causes limb paralysis and can be fatal.

"It's a big challenge," said Safiyo Mohamed, a vaccination worker in Mogadishu. She said in rejecting the vaccine some families had brought up the case in Libya where foreign health workers including five Bulgarian nurses faced charges of deliberately infecting Libyan children with HIV in 1990s.

The polio vaccine, which is administered orally, is recommended for children aged 10 and under, but some parents are questioning why a 10-year-old needs protection against polio, said Biyod Yasin, a vaccination worker at Mogadishu's Hamarweyne Mother Child Centre.

At a world vaccine summit in Abu Dhabi last month, global health leaders and philanthropists presented a six-year, $5.5 billion plan that they hope will eradicate all types of polio disease.

The World Health Organization says Somalia is experiencing an outbreak of polio. WHO reported earlier this month that a 4-year-old Somali girl near the Dadaab refugee camp in Kenya and two of her contacts tested positive for polio, the first confirmed cases in Kenya since July 2011. Four polio cases have been confirmed in Somalia so far this year, including two in Mogadishu. A vaccination campaign targeting 440,000 children began here on May 14, and a second round of the campaign that started Tuesday aim to vaccinate 644,000 children under the age of 10.

Health workers say they vaccinate hundreds each week despite the resistance. That the health workers can move around at all is a stunning turnaround in Somalia, which when al-Shabab radicals ran most of the country refused western medical care and food aid to desperate Somalis. The extremists imposed a strict form of Muslim Shariah law and carried out public whippings and beheadings.

With many regions of Somalia, including the capital, Mogadishu, under the rule of the moderate Muslim government and enjoying relative peace for the first time in 20 years, health care workers are expanding vaccination programs throughout the country. Health workers can now reach 40 percent of south-central Somalia, where the influence of the hardline Islamic insurgents is highest. Three years ago, health workers could access only 15 to 20 percent of that territory.

The years of conflict in Somalia has resulted in the country having child and maternal mortality rates that are among the highest in the world. One in every five Somali children dies before their fifth birthday, according to WHO, often for reasons including parental illiteracy and negligence.

"I don't want any of my children injected with that thing which I don't know what it is made of," said Nurto Hussein, a mother of seven who lives in Mogadishu. "They make the children sick instead of curing them. I put my trust in Allah."

One top official stayed five nights in a room that regularly goes for $3,500 a night, and another who was later promoted stayed four nights in a room that regularly goes for $1,499.

A total of 132 IRS officials received room upgrades at the conference in 2010 in Anaheim, Calif., according to a report by J. Russell George, the Treasury Department inspector general for tax administration. The tax agency paid a flat daily fee of $135 per hotel room, the report said, but the upgrades were part of a package deal that added to the overall cost of the conference.

The report was made public on the same day leaders of six conservative groups testified at a congressional hearing, where they told lawmakers they had endured abuse from IRS agents as they spent years trying to qualify for tax-exempt status.

In often-emotional testimony, the conservatives described IRS demands for details about employees' and group officials' political activities and backgrounds, for comments they'd posted on websites, for videos of meetings and information on whether speakers at such sessions voiced political views. Some said it took three years to get their tax-exempt status; others said they were still waiting.

"I'm a born-free American woman," Becky Gerritson, president of the Wetumpka Tea Party of Alabama, tearfully told the lawmakers. "I'm telling my government, 'You've forgotten your place.'"

Federal regulations say that tax-exempt social welfare organizations can engage in some political activity but the activity cannot be their primary mission. It is up to the IRS to make that determination of their level of political activity, and some Democrats at Tuesday's House Ways and Means Committee hearing noted that some liberal groups also have had a hard time winning tax-exempt status from the IRS.

However, revelations about IRS agents improperly targeting tea party and other groups have led to investigations by three congressional committees and the Justice Department. One top IRS official was forced to resign, another retired and a third was placed on paid administrative leave.

Tuesday's report by the inspector general suggests the agency has struggled with management issues beyond the division that handles tax-exempt applications. According to the report, expensive employee conferences were approved with few restraints or safeguards until new rules were imposed in 2011.

In all, the IRS held 225 employee conferences from 2010 through 2012, at a total cost of $49 million, the report said. The Anaheim conference was the most expensive, but others were costly, too.

In 2010, the agency held a conference in Philadelphia that cost $2.9 million, one in San Diego that cost $1.2 million and another in Atlanta that also cost $1.2 million.

All of these conferences would violate new rules imposed by the White House budget office in 2012 that cap expenses for a single conference at $500,000. In 2010 alone, the IRS had 13 conferences that cost more than that.

By comparison, the General Services Administration was widely criticized for a 2010 conference in Las Vegas that cost $823,000.

Spending on IRS conferences dropped substantially, from $37.6 million in the 2010 budget year to $6.2 million in 2011 and then to $4.9 million last year, according to the IRS.

Acting IRS Commissioner Danny Werfel called the conferences "an unfortunate vestige from a prior era." Werfel took over the agency about two weeks ago, after President Barack Obama forced the previous acting commissioner to resign.

"Taxpayers should take comfort that a conference like this would not take place today," Werfel said in a statement.

The inspector general's report focused on the Anaheim conference, which was held for 2,609 managers in the agency's small business and self-employed division.

At the conference, the commissioner of the tax-exemption division, Christopher Wagner, stayed in a presidential suite that normally cost $3,500 a night. Wagner became chief of the IRS office of appeals in 2011 and retired this year.

His deputy, Faris Fink, stayed in a room that normally cost $1,499 a night, the report said. Fink was promoted to commissioner of the small business and self-employed division in 2011. He still holds the position, according to an IRS spokesman.

The actual room expense was far less, the report said, though the upgrades pushed the conference cost higher.

Without the upgrades, the report said the IRS could have negotiated a lower room rate, as required by agency procedures.

The IRS paid two event planners a total of $133,000 to organize the Anaheim conference. The planners were paid a percentage of the hotel room costs, which removed incentives for them to negotiate lower fees, the report said.

Fifteen outside speakers were paid a total of $135,350. One was paid $27,500 for two one-hour speeches; another was paid $17,000.

The IRS said in a statement, "Many of the issues raised in the report, such as the use of event planners, the receipt of room upgrades and the welcome reception and breakfast provided by the hotel, were complimentary and did not entail the use of any additional government resources."

However, the report said the inspector general "believes that the costs for the conference could have been reduced if the IRS had not requested the numerous concessions from the Anaheim hotels and had instead negotiated for a lower room rate."

The IRS has been under heavy criticism since last month, when a previous inspector general's report showed that agents in a Cincinnati office had singled out tea party and other conservative groups for additional scrutiny when they sought tax-exempt status during the 2010 and 2012 election campaigns.

At Tuesday's hearing, Ways and Means Committee Chairman Dave Camp, R-Mich., said such an IRS focus was creating a "culture of political intimidation and discrimination." He said the agency's targets were "Americans who did what we ask people to do every day add their voice to the dialogue that defines our country."

John Eastman of the National Organization for Marriage said that in 2012, confidential donor information that he said came from his group's tax returns was posted on the website of a political opponent, the Human Rights Campaign. Eastman's group, which is tax exempt, opposes same-sex marriage, which the Human Rights Campaign supports.

"You can imagine our shock and disgust over this," Eastman said.

Sue Martinek, president of the anti-abortion Coalition for Life of Iowa, said an IRS agent told her the group's application for tax-exempt status would be granted if it sent a letter promising not to stage protests outside the offices of Planned Parenthood.

She said the IRS relented a week after her group retained an attorney who sent the agency a letter defending its efforts.

"As Christians, we knew we needed to pray for a better solution to unplanned pregnancy than abortion. Why not at the source?" Martinek told the committee.

Rep. Earl Blumenauer, D-Ore., said many of the conservative groups have taken positions on highly charged political issues.

"Let's stop this charade of pretending to be just social welfare organizations. Admit they are political and treat them as such," Blumenauer said.

That prompted an angry response from Eastman, who said that to say "defending traditional marriage doesn't qualify for defense of the public good is beyond preposterous."

___

Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

[More from BGR: ]

In his piece, Michael Collins brings up a number of points, but two very blunt lines of questioning about Deutsche Banks store checks are pivotal.

[More from BGR: ]

Store checks have long been one of the wobbliest parts of sell-side research on Wall Street. Its interesting to see a British ex-buy side client finally give a detailed critique about the practice.

This article was

"Chesapeake Bay retrievers are like plants, they need to be watered every now and then," Haverstick said of the 9-year-old he's been taking to the beach in San Diego weekly for eight years. "We have some great dog beaches. Dogs and people both drool over them."

Dog beaches account for a tiny fraction of the thousands of miles of U.S. shoreline, but they are treasured by pet owners and their pooches.

"Off-leash dog beaches are a canine's dream come true," said Lisa Porter, owner of Pet Hotels of America, a travel website that lists thousands of beaches and parks where dogs are allowed on leash or can run free.

Every beach has its own draw. San Diego offers three off-leash options: Fiesta Island in Mission Bay is great for swimming; Ocean Beach Dog Beach is good for dogs to play together; and Coronado's Dog Beach is described as magical.

Beaches where unleashed dogs are allowed complete freedom are typically fenced, offer drinking water and showers for dogs, bags to pick up dog feces and trash cans.

Dog lovers say the biggest problem is that there aren't enough beaches for their pets and parking is often scarce.

Efforts to create more pooch-friendly beaches, such as one that died in Santa Monica two years ago, have run into resistance from California State Parks.

Critics say letting beaches go to the dogs threatens species such as shore birds, jeopardizes the safety of visitors, ruins the experience for beachgoers and can pollute water and sand with poop and urine.

Fans who frequent the beaches say they provide a great playground for their hounds and can even be therapeutic.

When Carol Kearney first adopted Buddy, an abused 70-pound, 2-year-old Staffordshire terrier mix, he was afraid of noises and terrified of water.

"When he heard traffic, it was like he was trying to get out of his skin," Kearney said.

Letting him run on the beach less than a mile from her 14th floor home in a Coronado high-rise was the only way to calm him down.

Now he digs in the sand, chases his dog pals or swims through the waves to retrieve float toys.

Other top West Coast off-leash dog beaches recommended by Porter include Huntington Dog Beach in Huntington Beach, one of the best known dog surfing beaches in the world; Rosie's Dog Beach in Long Beach; Cannon Beach in Oregon; and Double Bluff Beach on Whidbey Island in Washington.

East Coast recommendations are Duck Beach in Outer Banks, N.C.; Bonita Beach Dog Park in Bonita Springs, Fla.; and Paw Park in South Brohard Beach, Fla.

Some beaches, such as Fisherman's Cove Conservation Area in Manasquan, N.J., require a leash. That law wasn't enforced until after Superstorm Sandy did a lot of damage and the county decided to start ticketing offenders, said Monmouth County Parks Manager Drew d'Apolito.

Similarly, Live Oak Beach in Santa Cruz County was known as a "don't ask, don't tell" beach until recently, said Ingrid Wander, who let Asia, her chocolate Labrador retriever, run free.

Wander got a $160 ticket in January.

She still takes Asia there at low tide. Wander walks, collects shells, takes photos of sea life and watches out for the law as Asia fetches balls in the water.

___

http://www.pethotelsofamerica.com

Williamson, which shares directors with Kapchorua, posted a profit before tax of 1.15 billion shillings, slightly down from the previous year's 1.16 billion shillings.

It attributed the flat performance to two hailstorms in April and August that cut its crop output.

A production rebound in the last quarter due to good rainfall was not enough to counter this decline.

Kapchorua, whose revenues are much smaller than Williamson's, reported a pretax profit of 255.75 million shillings, more than double the 112.58 million shillings achieved in the previous period.

"There was rainfall throughout the year which ensured the crop levels remained high particularly in the last quarter of the year," the company said in a statement.

Both firms warned that unpredictable weather conditions, uncertain market demand, foreign exchange fluctuation and the ever increasing costs of production could curb earnings this year.

BRUSSELS (Reuters) - NATO defense ministers hold their first review of cyber defense next week in a sign the issue is making its way to the top of the alliance's agenda as fears grow that Western infrastructure and military secrets are vulnerable to hackers.

Daily reports about government and private firms' computer systems coming under attack have highlighted the importance of defending NATO computer networks, particularly systems which are used to coordinate military actions among the 28 allies.

The Pentagon accused China this month of using cyber espionage to modernize its military, which Beijing denied. The Washington Post said this week that Chinese hackers have gained access to designs of more than two dozen major U.S. weapons systems.

Electronic attacks could be used to knock out military communications and disable key infrastructure to soften a country up for a conventional military strike.

NATO systems face "regular" computer attacks, according to Secretary-General Anders Fogh Rasmussen.

"So far we have successfully protected our systems. And we will continue to develop and to strengthen our cyber-security," Rasmussen said in March.

NATO defense ministers, including U.S. Secretary Chuck Hagel, meet on the issue in Brussels on Tuesday and Wednesday.

"The challenge evolves all the time - probably more exponentially than any other type of threat that we face at the moment - and therefore we have to make certain that NATO keeps pace with that evolving threat," said a senior NATO official, speaking on condition of anonymity.

NATO was alerted to the threat of cyber attacks in 2007, when NATO member Estonia's Internet network was paralyzed by an electronic attack that Estonia blamed on Russia.

The incident prompted NATO to review its readiness to defend against cyber warfare. NATO's cyber defense centre of excellence, which offers expertise on cyber defense to allies, is based in Tallinn, the Estonian capital.

The alliance approved a revised cyber defense policy and an action plan to strengthen defenses in 2011. It is also working to bring cyber defense into NATO's normal planning process in the same way as aircraft or other military capabilities.

From this year, all NATO allies are committed to introducing a national policy on cyber defense, a national cyber defense authority and an instant response capability to cyber threats.

The main focus of the alliance itself is on protecting its own information systems. It says it is not developing offensive capabilities.

A debate is under way about how much help NATO should give to individual allies.

"While bigger allies may have a sufficient capacity to protect their own systems against cyber-attacks ... small allies maybe don't," Rasmussen said in March. "In that case, I think we should have a capacity to help allies that request our assistance," he said.

But one NATO diplomat said large allies, such as the United States, Britain, France and Germany, disagree.

NATO has also been looking at whether it needs to expand its role in protecting vital infrastructure such as ports, electricity grids or pipelines, fearing they are vulnerable to attacks from terrorists or hackers.

(Editing by Sonya Hepinstall)

(Reuters) - Sprint Nextel Corp and Japan's SoftBank Corp said on Wednesday they had reached a national security agreement with U.S. authorities, overcoming a major hurdle for the Japanese company's $20.1 billion bid to control the wireless carrier.

Even with that approval, there are still a number of regulatory, congressional and investor hurdles facing SoftBank before it can close on its plan to break into the U.S. market. One influential U.S. senator said on Wednesday he was "carefully examining" the approval to see if it eased his security concerns.

The companies said they had received notice from the Committee on Foreign Investment in the United States (CFIUS) that it had completed its national security review of the proposed deal and there were no unresolved issues.

The approval was a blow to Dish Network, which launched an unsolicited $25 billion offer for Sprint in April.

Dish has mounted an aggressive lobbying campaign, trying to convince Washington decision-makers that foreign ownership of Sprint posed threats to U.S. national security.

In a statement late on Wednesday, Dish said the CFIUS agreement failed to address the relevant national security concerns, and the company called on Congress to conduct a review of the whole process.

On paper, all that stands in SoftBank's way now is approval from the government's "Team Telecom" security panel, the Federal Communications Commission and Sprint shareholders.

Dish, however, has been drumming up worries about the deal among lawmakers, regulators and investors, and now hopes those concerns could delay the FCC vote long enough for the shareholders to vote on June 12 on SoftBank's bid.

The FCC's transactions team is still reviewing SoftBank's bid for its market impact and no draft approval has yet circulated among the three commissioners' offices, two FCC sources said on Wednesday. A non-binding 180-day deadline for completing the review expires on Wednesday but the agency routinely extends flexible timelines.

The FCC traditionally can be reluctant to act in a way that would influence shareholders, and it remained unclear whether acting Chairwoman Mignon Clyburn's office would choose to follow CFIUS and act before a shareholder vote.

The chair's office declined comment.

NATIONAL SECURITY CONCERNS

To alleviate some national security concerns, SoftBank and Sprint agreed to several conditions, including giving the Department of Defense, Department of Homeland Security and the Department of Justice the power to review and veto new equipment purchases in certain circumstances.

Sprint disclosed some of the conditions in its filing with the U.S. Securities and Exchange Commission on Wednesday. The companies would also appoint a new Sprint board member, to be approved by the U.S. government, to oversee national security compliance.

As part of the deal with CFIUS, sources previously told Reuters that SoftBank had also agreed to remove equipment made by China's Huawei Technologies Co Ltd from Sprint and Clearwire Corp's networks if the deal was completed by the end of 2016.

Last week, Clearwire's board recommended Sprint's sweetened buyout offer for the company after Sprint raised its bid.

The question remains whether CFIUS approval with such conditions will ease the concerns of Senators Charles Schumer and John McCain, both of whom have sent letters to the FCC calling for careful scrutiny of SoftBank's offer on national security grounds.

"CFIUS has agreed that there are security concerns here, and we're carefully examining the conditions they've imposed to address them," Schumer said in a statement issued by his office.

One analyst said that in the end, even with those concerns, SoftBank was likely to win the approvals it needs.

"McCain and Schumer are not your average senators, so their concerns will definitely get maximum attention at the agencies. But Japan is considered a friendly country, an ally and unless there's more to come on the national security issue, I suspect regulators will end up greenlighting the deal," said Paul Gallant, a telecom policy analyst at Guggenheim Partners.

Japanese mobile operator SoftBank agreed to buy a 70 percent stake in Sprint last October.

Sprint shares rose 0.1 percent to $7.28 on Wednesday, while Dish fell 2.2 percent to $39.25.

(Additional reporting by Sayantani Ghosh in Bangalore; Editing by Joyjeet Das, Chizu Nomiyama and Tim Dobbyn)