United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 17, 2000 Decided August 15, 2000

No. 99-1442

United States Telecom Association, et al.,

Petitioners

v\.

Federal Communications Commission and

United States of America,

Respondents

AirTouch Communications, Inc., et al.,

Intervenors

Consolidated with

99-1466, 99-1475, 99-1523

On Petitions for Review of an Order of the

Federal Communications Commission

Theodore B. Olson argued the cause for petitioners United States Telecom
Association, et al. With him on the briefs were Eugene Scalia, John H.
Harwood, II, Lynn R. Charytan, Michael Altschul, Jerry Berman, James X.
Dempsey, Lawrence E. Sarjeant, Linda L. Kent, John W. Hunter and Julie
E. Rones.

Gerard J. Waldron argued the cause for petitioners Electronic Privacy
Information Center, et al. With him on the briefs were Kurt A. Wimmer,
Carlos Perez-Albuerne, Lawrence A. Friedman, Kathleen A. Burdette, David
L. Sobel and Marc Rotenberg.

Stewart A. Baker, Thomas M. Barba, Matthew L. Stennes, Mary McDermott,
Brent H. Weingardt, Todd B. Lantor, Robert A. Long Jr., Kevin C. Newsom,
Robert B. McKenna and Dan L. Poole were on the brief for intervenor
Sprint Spectrum, et al.

Philip L. Malet, William D. Wallace and William F. Adler were on the
brief for intervenors Globalstar, et al.

John E. Ingle, Deputy Associate General Counsel, Federal Communications
Commission, argued the cause for respondent Federal Communications
Commission. With him on the brief were Christopher J. Wright, General
Counsel, Laurence N. Bourne and Lisa S. Gelb, Counsel.

James M. Carr, Counsel, entered an appearance.

Scott R. McIntosh, Attorney, U.S. Department of Justice, argued the
cause for respondent United States of America. With him on the brief
were David W. Ogden, Acting Assistant Attorney General, and Douglas N.
Letter, Attorney.

Before: Ginsburg, Randolph and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Tatel.

Tatel, Circuit Judge: The Communications Assistance for Law Enforcement
Act of 1994 requires telecommunications carriers to ensure that their
systems are technically capable of enabling law enforcement agencies
operating with proper legal authority to intercept individual telephone
calls and to obtain certain \"call-identifying information.\" In this
proceeding, telecommunications industry associations and privacy rights
organizations challenge those portions of the FCC\'s implementing Order
that require carriers to make available to law enforcement agencies the
location of antenna towers used in wireless telephone calls, signaling
information from custom calling features (such as call forwarding and
call waiting), telephone numbers dialed after calls are connected, and
data pertaining to digital \"packet-mode\" communications. According to
petitioners, the Commission exceeded its statutory authority,
impermissibly expanded the types of call-identifying information that
carriers must make accessible to law enforcement agencies, and violated
the statute\'s requirements that it protect communication privacy and
minimize the cost of implementing the Order. With respect to the custom
calling features and dialed digits, we agree, vacate the relevant
portions of the Order, and remand for further proceedings. We deny the
petitions for review with respect to antenna tower location information
and packet-mode data.

I

The legal standard that law enforcement agencies (\"LEAs\") must satisfy
to obtain authorization for electronic surveillance of
telecommunications depends on whether they seek to intercept telephone
conversations or to secure a list of the telephone numbers of incoming
and outgoing calls on a surveillance subject\'s line. In order to
intercept telephone conversations, law enforcement agencies must obtain
a warrant pursuant to Title III of the Omnibus Crime Control and Safe
Streets Act of 1968. Before issuing a Title III wiretap warrant, a judge
must find that: (1) \"normal investigative procedures have been tried
and have failed or reasonably appear to be unlikely to succeed if tried
or to be too dangerous\"; and (2) there is probable cause for believing
\"that an individual is committing, has committed, or is about to
commit\" one of a list of specifically enumerated crimes, that the
wiretap will intercept particular communications about the enumerated
offense, and that the communications facilities to be tapped are either
being used in the commission of the crime or are commonly used by the
suspect. 18 U.S.C. § 2518(3). The Electronic Communications Privacy Act
of 1986 (\"ECPA\"), id. § 3121 et seq., establishes less demanding
standards for capturing telephone numbers through the use of pen
registers and trap and trace devices. Pen registers record telephone
numbers of outgoing calls, see id. § 3127(3); trap and trace devices
record telephone numbers from which incoming calls originate, much like
common caller-ID systems, see id. § 3127(4). Although telephone numbers
are not protected by the Fourth Amendment, see Smith v. Maryland, 442
U.S. 735, 742-45 (1979), ECPA requires law enforcement agencies to
obtain court orders to install and use these devices. Rather than the
strict probable cause showing necessary for wiretaps, pen register
orders require only certification from a law enforcement officer that
\"the information likely to be obtained is relevant to an ongoing
criminal investigation.\" 18 U.S.C. § 3122(b)(2).

Wiretaps, pen registers and trap and trace devices worked well as long
as calls were placed using what has come to be known as POTS or \"plain
old telephone service.\" With the development and proliferation of new
telecommunications technologies, however, electronic surveillance has
become increasingly difficult. In congressional hearings, the FBI
identified 183 \"specific instances in which law enforcement agencies
were precluded due to technological impediments from fully implementing
authorized electronic surveillance (wiretaps, pen registers and trap and
traces).\" H.R. Rep. No. 103-827, pt. 1, at 14-15 (1994). These
impediments stemmed mainly from the limited capacity of cellular systems
to accommodate large numbers of simultaneous intercepts as well as from
the growing use of custom calling features such as call forwarding, call
waiting, and speed dialing. See id. at 14.

Finding that \"new and emerging telecommunications technologies pose
problems for law enforcement,\" id., Congress enacted the Communications
Assistance for Law Enforcement Act of 1994 \"to preserve the
government\'s ability, pursuant to court order or other lawful
authorization, to intercept communications involving advanced
technologies such as digital or wireless transmission modes, or features
and services such as call forwarding, speed dialing and conference
calling, while protecting the privacy of communications and without
impeding the introduction of new technologies, features, and services,\"
id. at 9. Known as CALEA, the Act requires telecommunications carriers
and equipment manufacturers to build into their networks technical
capabilities to assist law enforcement with authorized interception of
communications and \"call-identifying information.\" See 47 U.S.C. §
1002. The Act defines \"call-identifying information\" as \"dialing or
signaling information that identifies the origin, direction,
destination, or termination of each communication generated or received
by a subscriber by means of any equipment, facility, or service of a
telecommunications carrier.\" Id. § 1001(2). CALEA requires each carrier
toensure that its equipment, facilities, or services \... are capable of

\(1\) expeditiously isolating and enabling the government, pursuant to a
court order or other lawful authorization, to intercept, to the
exclusion of any other communications, all wire and electronic
communications carried by the carrier within a service area to or from
equipment, facilities, or services of a subscriber of such carrier
concurrently with their transmission to or from the subscriber\'s
equipment, facility, or service, or at such later time as may be
acceptable to the government; \[and\]

\(2\) expeditiously isolating and enabling the government, pursuant to a
court order or other lawful authorization, to access call-identifying
information that is reasonably available to the carrier\....

Id. § 1002(a)(1)-(2). Carriers must also \"facilitat\[e\] authorized
communications interceptions and access to call-identifying information
\... in a manner that protects \... the privacy and security of
communications and call-identifying information not authorized to be
intercepted.\" Id. § 1002(a)(4)(A). Because Congress intended CALEA to
\"preserve the status quo,\" the Act does not alter the existing legal
framework for obtaining wiretap and pen register authorization,
\"provid\[ing\] law enforcement no more and no less access to
information than it had in the past.\" H.R. Rep. No. 103-827, pt. 1, at
22. CALEA does not cover \"information services\" such as e-mail and
internet access. 47 U.S.C. §§ 1001(8)(C)(i), 1002(b)(2)(A).

To ensure efficient and uniform implementation of the Act\'s
surveillance assistance requirements without stifling technological
innovation, CALEA permits the telecommunications industry, in
consultation with law enforcement agencies, regulators, and consumers,
to develop its own technical standards for meeting the required
surveillance capabilities. See id. § 1006. The Act \"does not authorize
any law enforcement agency or officer\" to dictate the specific design
of communications equipment, services, or features. Id. § 1002(b)(1).
Although carriers failing to meet CALEA\'s requirements may incur civil
fines of up to \$10,000 a day, see 18 U.S.C. § 2522(c), the Act
establishes a safe harbor under which carriers that comply with the
accepted industry standards will be deemed in compliance with the
statute, see 47 U.S.C. § 1006(a)(2). But \"if a Government agency or any
other person believes that such requirements or standards are deficient,
the agency or person may petition the Commission to establish, by rule,
technical requirements or standards\....\" Id. § 1006(b). Such
Commission rules must:

\(1\) meet the assistance capability requirements of section 1002 of
\[the statute\] by cost-effective methods;

\(2\) protect the privacy and security of communications not authorized
to be intercepted;

\(3\) minimize the cost of such compliance on residential ratepayers;

\(4\) serve the policy of the United States to encourage the provision
of new technologies and services to the public; and

\(5\) provide a reasonable time and conditions for com-pliance with and
the transition to any new standard, including defining the obligations
of telecommunications carriers under section 1002 of \[the statute\]
during any transition period.

Id.

Following two years of proceedings and extensive negotiations with the
FBI, the Telecommunications Industry Association (\"TIA\"), an
accredited standard-setting body, adopted technical standards pursuant
to CALEA\'s safe harbor, publishing them as Interim Standard/Trial Use
Standard J-STD-025. Known as the \"J-Standard,\" this document outlines
the technical features, specifications, and protocols for carriers to
make subscriber communications and call-identifying information
available to law enforcement agencies having appropriate legal
authorization.

Challenging the J-Standard as \"deficient,\" id., the Center for
Democracy and Technology petitioned the Commission for a rulemaking to
remove two provisions it claimed not only violate CALEA\'s privacy
protections but also impermissibly expand government surveillance
capabilities beyond those authorized by the statute. One of the
challenged J-Standard provisions requires carriers to make available to
law enforcement agencies the physical location of the nearest antenna
tower through which a cellular telephone communicates at the beginning
and end of a call. According to the Center, this requirement effectively
converts ordinary mobile telephones into personal location-tracking
devices, giving law enforcement agencies access to far more information
than they previously had. The Center also argued that cellular antenna
location information is not \"call-identifying information,\" as defined
in both the statute and the J-Standard. The other challenged provision
relates to what is known as \"packet-mode data,\" which we shall
describe in detail later in this opinion. See Section III infra. At this
point, suffice it to say that, according to the Center, the
J-Standard\'s inclusion of packet-mode data enables law enforcement
agencies to obtain call content with no more than a pen register order.

Both the Justice Department and the FBI also petitioned the Commission
to modify the J-Standard, arguing that it does not include all of
CALEA\'s required assistance capabilities. The Department provided a
list, known as the \"FBI punch list,\" of nine additional surveillance
capabilities that law enforcement wanted the Commission to add. The
punch list included telephone numbers of calls completed using calling
cards as well as signaling information related to custom calling
features such as call waiting and conference calling.

After soliciting public comment on the petitions, see Public Notice, 13
F.C.C.R. 13786 (1998); Further Notice of Proposed Rulemaking 13 F.C.C.R.
22632 (1998), the Commission resolved the challenges to the J-Standard
in its Third Report & Order, see In the Matter of Communications
Assistance for Law Enforcement Act, 14 F.C.C.R. 16794 (1999) (\"Third
Report & Order\"). The Commission denied the Center\'s petition to
delete cellular antenna location information and packet-mode data. The
location of cellular antenna towers used at the beginning and end of
wireless calls, the Commission ruled, falls within CALEA\'s definition
of call-identifying information because it \"identifies the \'origin\'
or \'destination\' of a communication.\" Id. at 16815 p 44. With respect
to packet-mode data, the Commission recognized the uncertainty regarding
the technical feasibility of separating call content (requiring a Title
III wiretap warrant) from call-identifying information (requiring only a
pen register order). See id. at 16819-20 pp 55-56. Although inviting
further study of the matter, the Commission declined to remove
packet-mode data from the J-Standard, explaining that CALEA makes no
distinction between packet-mode and other communications technologies.
See id.

The Commission granted the Justice Department/FBI petition in part,
adding four of the nine punch list capabilities to the J-Standard,
adding two more in part (neither is challenged here), and declining to
add three others (also unchallenged). See id. at 16852 p 138. The four
additions are:

\(1\) \"Post-cut-through dialed digit extraction\": This requires
carriers to use tone-detection equipment to generate a list of all
digits dialed after a call has been connected. Such digits include not
only the telephone numbers dialed after connecting to a dial-up
long-distance carrier (e.g., 1-800-CALL-ATT), but also, for example,
credit card or bank account numbers dialed in order to check balances or
transact business using automated telephone services, see id. at
16842-46 pp 112-23;

\(2\) \"Party hold/join/drop information\": This includes telephone
numbers of all parties to a conference call as well as signals
indicating when parties are joined to the call, put on hold, or
disconnected, see id. at 16825-28 pp 68-75;

\(3\) \"Subject-initiated dialing and signaling information\": This
includes signals generated by activating features such as call
forwarding and call waiting, see id. at 16828-30 pp 76-82; and

\(4\) \"In-band and out-of-band signaling\": This includes information
about signals sent from the carrier\'s network to a subject\'s
telephone, such as message-waiting indicators, special dial tones, and
busy signals, see id. at 16830-33 pp 83-89.

Two industry associations\--the United States Telecom Association and
the Cellular Telecommunications Industry Association\--joined by the
Center for Democracy and Technology, filed a petition for review in this
court, as did the Electronic Frontier Foundation, Electronic Privacy
Information Center, and American Civil Liberties Union. All petitions
were consolidated. The Telecommunications Industry Association, the
standard-setting organization that developed and issued the J-Standard,
joined by another trade group, the Personal Communications Industry
Association, and two telecommunications carriers, Sprint PCS and U S
West, intervened to challenge the Third Report & Order, focusing on
dialed digit extraction, the most costly of the added punch list items.
The FCC and the Justice Department filed separate briefs defending the
Commission\'s action.

The consolidated petitions for review challenge six capabilities:
antenna tower location information and packet-mode data, both of which
were included in the J-Standard; and dialed digit extraction, party
hold/join/drop, subject-initiated dialing and signaling, and in-band and
out-of-band signaling, the four punch list capabilities added by the
Commission. With respect to these challenged capabilities, petitioners
contend that the Commission: (1) exceeded its authority under CALEA
because at least some of the information required to be made available
to law enforcement is neither call content nor \"call-identifying
information that is reasonably available to the carrier,\" 47 U.S.C. §
1002(a)(2); (2) failed adequately to \"protect the privacy and security
of communications not authorized to be intercepted,\" as required by the
statute, id. § 1006(b)(2); and (3) failed both to ensure that the
capability requirements are implemented \"by cost-effective methods,\"
id. § 1006(b)(1), and to \"minimize the cost of such compliance on
residential ratepayers,\" id. § 1006(b)(3). In Section II, we take up
the four challenged punch list capabilities and antenna tower location
information. We consider packet-mode communications in Section III.

II

Whether CALEA requires carriers to make available antenna tower location
information and the four punch list capabilities turns on what the Act
means by \"call-identifying information.\" To repeat, section 102(2) of
CALEA defines \"call-identifying information\" as \"dialing or signaling
information that identifies the origin, direction, destination, or
termination of each communication generated or received by a subscriber
by means of any equipment, facility, or service of a telecommunications
carrier.\" Id. § 1001(2). The Commission interprets this definition to
require adoption of all challenged capabilities, each of which, it
claims, makes available information identifying the \"origin, direction,
destination, or termination\" of calls. Petitioners argue that the
definition limits \"call-identifying information\" to telephone numbers.
Because location information and the four punch list items require
carriers to make available more than telephone numbers, petitioners
contend that these capabilities exceed CALEA\'s requirements. They argue
that there is no statutory basis for location information to have been
included in the J-Standard or for the Commission to have mandated the
punch list capabilities.

To resolve this challenge to the Commission\'s interpretation of a
statute it is charged with administering, we proceed according to
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S.
837 (1984). We ask first \"whether Congress has directly spoken to the
precise question at issue.\" Id. at 842. If it has, \"that is the end of
the matter; for the court, as well as the agency, must give effect to
the unambiguously expressed intent of Congress.\" Id. at 842-43. If we
find the statute silent or ambiguous with respect to the precise
question at issue, we proceed to the second step of Chevron analysis,
asking \"whether the agency\'s answer is based on a permissible
construction of the statute.\" Id. at 843. At this stage of Chevron
analysis, we afford substantial deference to the agency\'s
interpretation of statutory language. See id. at 844.

Beginning with Chevron step one, we think it clear that section 102(2)
does not \"unambiguously\" answer \"the precise question at issue\": Is
\"call-identifying information\" limited to telephone numbers? To begin
with, had Congress intended to so limit \"call-identifying
information,\" it could have done so expressly by using the term
\"telephone number\" as it did in both sections 103(a)(2) and
207(a)(1)(C) of CALEA. See 47 U.S.C. § 1002(a)(2); 18 U.S.C. §
2703(c)(1)(C). \"Where Congress includes particular language in one
section of a statute but omits it in another section of the same Act, it
is generally presumed that Congress acts intentionally and purposely in
the disparate inclusion or exclusion.\" Russello v. United States, 464
U.S. 16, 23 (1983) (internal quotation marks and alteration omitted);
see also, e.g., District of Columbia Hosp. Ass\'n v. District of
Columbia, 2000 WL 946581, at \*3 (D.C. Cir.). CALEA\'s definition of
\"call-identifying information,\" moreover, refers not just to \"dialing
\... information,\" but also to \"signaling information,\" leading us to
believe that Congress may well have intended the definition to cover
something more than just the \"dialing \... information\" conveyed by
telephone numbers. Finally, section 103(a)(2) of CALEA provides that
when information is sought pursuant to a pen register or trap and trace
order, \"call-identifying information shall not include any information
that may disclose the physical location of the subscriber (except to the
extent that the location may be determined from the telephone number).\"
47 U.S.C. § 1002(a)(2). As the Commission observed, Congress would have
had no need to add this limitation if \"call-identifying information\"
referred only to telephone numbers. See Third Report & Order, 14
F.C.C.R. at 16815 p 44 n.95.

In support of their argument that \"call-identifying information\"
unambiguously means only telephone numbers, petitioners call our
attention to the House Judiciary Committee Report, which does seem to
describe such information in terms of telephone numbers. See H.R. Rep.
No. 103-827, pt. 1, at 21. Apparently addressing post-cut-through dialed
digits, the Report even says that \"other dialing tones that may be
generated by the sender that are used to signal customer premises
equipment of the recipient are not to be treated as call-identifying
information.\" Id. Yet the Report also echos CALEA\'s inherent
ambiguity, stating that call-identifying information is \"typically the
electronic pulses, audio tones, or signalling messages that identify the
numbers dialed or otherwise transmitted for the purpose of routing calls
through the telecommunications carrier\'s network.\" Id. (emphasis
added). Although another section of the Report describes CALEA as
requiring carriers to make available \"information identifying the
originating and destination numbers of targeted communications, but not
the physical location of targets,\" id. at 16, that passage, as the
Commission points out, appears to deal with an earlier version of the
statute\--before the definition of \"call-identifying information\" was
expanded by adding the terms \"direction\" and \"termination.\"

Petitioners next argue that limiting \"call-identifying information\" to
telephone numbers mirrors ECPA\'s definitions of \"pen register\" and
\"trap and trace device.\" Pen registers record \"the numbers dialed or
otherwise transmitted,\" 18 U.S.C. § 3127(3) (emphasis added), and trap
and trace devices record \"the originating number of \... an electronic
communication,\" id. § 3127(4) (emphasis added). Petitioners contend
that because CALEA\'s enforcement provisions are limited to intercept
warrants and to pen register and trap and trace device orders, the
statute\'s required capabilities must likewise be restricted to the call
content intercepted in a wiretap and the dialed telephone numbers
recorded by pen registers. \"It would have made no sense,\" say
petitioners, \"for Congress to require carriers to provide a capability
that the surveillance laws do not authorize the government to use.\"
Final Brief of Petitioners USTA, CTIA, and CDT at 16.

This is an interesting argument, but hardly sufficient to resolve
CALEA\'s ambiguity. CALEA neither cross-references nor incorporates
ECPA\'s definitions of pen registers and trap and trace devices.
Moreover, the fact that CALEA\'s definition of \"call-identifying
information\" differs from ECPA\'s description of the information
obtainable by pen registers and trap and trace devices reinforces the
statute\'s inherent ambiguity.

Petitioners also rely on the J-Standard\'s explanation of the terms used
in CALEA\'s definition of call-identifying information, pointing out
that the J-Standard limits these terms to telephone numbers:

\[D\]estination is the number of the party to which a call is being made
(e.g., called party); direction is the number to which a call is
re-directed or the number from which it came, either incoming or
outgoing (e.g., redirected-to party or redirected-from party); origin is
the number of the party initiating a call (e.g., calling party); and
termination is the number of the party ultimately receiving a call
(e.g., answering party). Interim Standard/Trial Use Standard J-STD-025,
at 5.

Because cell phone location information and the four challenged punch
list capabilities call for more than telephone numbers, petitioners
argue that they conflict with the J-Standard\'s interpretation of CALEA.
Again, this is an interesting argument, but not relevant at Chevron step
one, where our focus is on whether \"the intent of Congress is clear.\"
Chevron, 467 U.S. at 842 (emphasis added). On that issue, the authors of
the J-Standard can provide no guidance.

Finally, petitioners point out that in Smith v. Maryland the Supreme
Court held that although the Fourth Amendment protects the privacy of
information conveyed during telephone calls, i.e., the contents of
conversations, callers have no reasonable expectation of privacy in
dialed telephone numbers. See 422 U.S. at 742-45. Reading Smith\'s
exception narrowly, petitioners argue that other than call content
interceptable under a wiretap order, CALEA cannot require carriers to
provide law enforcement agencies anything more than the telephone
numbers dialed in order to complete calls. But petitioners point to
nothing in either CALEA or its legislative history to suggest that
Congress meant to follow Smith\'s protected-unprotected distinction in
defining call-identifying information. Moreover, Smith\'s reason for
finding no legitimate expectation of privacy in dialed telephone
numbers\--that callers voluntarily convey this information to the phone
company in order to complete calls\--applies as well to much of the
information provided by the challenged capabilities. See id. at 742.

Turning to the government\'s position, we understand nei-ther the
Commission nor the Justice Department to be arguing that section 102(2)
unambiguously includes more than telephone numbers in the definition of
\"call-identifying information,\" and for good reason. Although we
reject petitioners\' argument that section 102(2) is unambiguously
limited to telephone numbers, we think it equally clear that nothing
points to an \"unambiguously expressed intent of Congress\" to require
every one of the challenged assistance capabilities. Chevron, 467 U.S.
at 843. Instead, the two agencies urge us to defer to the Commission\'s
interpretation of the statute pursuant to Chevron\'s second step. See
id. at 844. According to the agencies, the Commission reasonably
interpreted \"call-identifying information\" to include the punch list
capabilities and antenna tower location information. Because we reach
different conclusions with respect to the punch list and location
information, we discuss them separately.

Punch List

Responding to the government\'s Chevron-two argument, petitioners
contend: (1) the Commission\'s interpretation of \"call-identifying
information\" to include the four added punch list capabilities is
unreasonable and thus unworthy of Chevron-two deference; and (2) the
Commission\'s decision to modify the J-Standard to include the punch
list reflects a lack of reasoned decisionmaking, see generally, Motor
Vehicle Mfrs Ass\'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29
(1983). Because we agree with the latter argument, we need not address
the Commission\'s plea for Chevron deference.

It is well-established that \" \'an agency must cogently explain why it
has exercised its discretion in a given manner\' and that explanation
must be \'sufficient to enable us to conclude that the \[agency\'s
action\] was the product of reasoned decisionmaking.\' \" A.L. Pharma,
Inc. v. Shalala, 62 F.3d 1484, 1491 (D.C. Cir. 1995) (internal citation
omitted) (quoting Motor Vehicle Mfrs., 463 U.S. at 48, 52). The
Commission\'s determination that CALEA requires carriers to implement
the four punch list items fails this test. The Commission asserted that
each of the challenged punch list capabilities is required by CALEA
because each requires carriers to make available \"call-identifying
information,\" but it never explained\--not in the Order and not in its
brief\--the basis for this conclusion. Nowhere in the record did the
Commission explain how the key statutory terms\--origin, direction,
destination, and termination\--can cover the wide variety of information
required by the punch list. For example, the Commission uses \"origin\"
of a communication to mean not only the telephone number of an incoming
call, but also a tone indicating that a new call is waiting. Adding the
waiting call to create a three-way call is yet another origin. If a
party is placed on hold and then re-joined to the call, the Commission
describes that event as \"the temporary origin \... of a
communication.\" Third Report & Order, 14 F.C.C.R. at 16827 p 74. The
Commission similarly uses \"termination\" to cover many different kinds
of information including telephone numbers of outgoing calls, signals
indicating that calls have been placed on hold or switched to waiting
calls, signals that parties have been dropped from conference calls,
busy signals, and ringing tones. Yet the Commission never explained how
each of these bits of information \"identifies the \... termination of
each communication.\" 47 U.S.C. § 1001(2) (emphasis added). Instead, it
simply concluded, with neither analysis nor explanation, that each
capability is required by CALEA. See, e.g., Third Report & Order, 14
F.C.C.R. at 16827 p 74 (\"Party join information appears to identify the
origin of a communication; party drop, the termination of a
communication; and party hold, the temporary origin, temporary
termination, or re-direction of a communication.\" (emphasis added)).

Perhaps the Commission can satisfactorily explain how CALEA\'s terms can
encompass such a wide range of information. Because it has not, we
cannot tell whether the punch list capability requirements are \"the
product of reasoned decisionmaking.\" Motor Vehicle Mfrs., 463 U.S. at
52.

The Commission\'s failure to explain its reasoning is particularly
serious in view of CALEA\'s unique structure. Rather than simply
delegating power to implement the Act to the Commission, Congress gave
the telecommunications industry the first crack at developing standards,
authorizing the Commission to alter those standards only if it found
them \"deficient.\" 47 U.S.C. § 1006(b). Although the Commission used
its rulemaking power to alter the J-Standard, it identified no
deficiencies in the Standard\'s definitions of the terms \"origin,\"
\"destination,\" \"direction,\" and \"termination,\" which describe
\"call-identifying information\" in terms of telephone numbers. Were we
to allow the Commission to modify the J-Standard without first
identifying its deficiencies, we would weaken the major role Congress
obviously expected industry to play in formulating CALEA standards.

The Commission\'s decision to include the four challenged punch list
capabilities suffers from two additional defects. The first relates to
CALEA\'s requirements that Commission rules must \"meet the assistance
capability requirements of section 1002 of this title by cost-effective
methods\" and \"minimize the cost of such compliance on residential
ratepayers.\" Id. § 1006(b)(1), (3). Faced with multiple cost estimates
ranging as high as \$4 billion for all carriers to implement the core
J-Standard capabilities, the Commission adopted an estimate submitted by
five software suppliers predicting that they would earn \$916 million in
revenues for implementing the core J-Standard and \$414 million for
implementing the punch list. Third Report & Order, 14 F.C.C.R. at 16805
p 20, 16809 p 30. The Commission acknowledged that \"these estimates
\... do not represent all carrier costs of implementing CALEA,\" id. at
16809 p 30, yet it found them to be \"a reasonable guide of the costs to
wireline, cellular, and broadband PCS carriers for CALEA compliance,\"
id.

The Commission never explained how its Order would satisfy CALEA\'s
requirements \"by cost-effective methods.\" 47 U.S.C. § 1006(b)(1). It
made no attempt to compare the cost of implementing the punch list
capabilities with the cost of obtaining the same information through
alternative means, nor did it explain how it measured
cost-effectiveness. Although it mentioned residential ratepayers, it
never explained what impact its Order would have on residential
telephone rates. Instead, pointing out that the telecommunications
industry, by ratifying the J-Standard, had agreed to its implementation
cost, the Commission compared the additional cost of each punch list
capability with the total cost of the J-Standard and then concluded that
each additional cost was \"not so exorbitant as to require automatic
exclusion of the capability.\" Third Report & Order, 14 F.C.C.R. at
16824 p 66, 16828 p 75, 16829-30 p 82, 16832 p 89. But why? The
Commission failed to explain how it decided that implementing the punch
list capabilities, which increase J-Standard costs by more than 45
percent (even by the Commission\'s conservative estimates) is \"not so
exorbitant.\" Suppose punch list costs had exceeded J-Standard costs by
90 percent. Would that have been too \"exorbitant\"? Asked this question
at oral argument, Commission counsel told us only, \"I suppose it is a
line-drawing exercise.\"

The Commission\'s response to CALEA\'s cost directives reflects a
classic case of arbitrary and capricious agency action. Fundamental
principles of administrative law require that agency action be \"based
on a consideration of the relevant factors,\" Citizens to Preserve
Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971), and rest on
reasoned decision-making in which \"the agency must examine the relevant
data and articulate a satisfactory explanation for its action including
a rational connection between the facts found and the choice made,\"
Motor Vehicle Mfrs., 463 U.S. at 43 (internal quotation marks omitted).
Of course, we do not require \"ideal clarity\"; we will \"uphold a
decision \... if the agency\'s path may reasonably be discerned.\"
Bowman Transp., Inc. v. Arkansas-Best Freight System Inc., 419 U.S. 281,
286 (1974). On the record before us, however, we cannot \"discern\" how
the Commission interpreted \"cost-effective,\" nor why it considered the
substantial costs of the punch list capabilities to be \"not so
exorbitant,\" nor finally what impact it thought the Order would have on
residential ratepayers. Missing, in other words, is \"a rational
connection between the facts found and the choice made.\" Motor Vehicle
Mfrs., 463 U.S. at 43.

The second defect in the Order relates to the Commission\'s failure to
comply with CALEA\'s requirement that it \"protect the privacy and
security of communications not authorized to be intercepted,\" 47 U.S.C.
§ 1006(b)(2), with respect to post-cut-through dialed digit extraction.
This punch list capability requires carriers to electronically monitor
the communications channel that carries audible call content in order to
decode all digits dialed after calls are connected or \"cut through.\"
Some post-cut-through dialed digits are telephone numbers, such as when
a subject places a calling card, credit card, or collect call by first
dialing a long-distance carrier access number and then, after the
initial call is \"cut through,\" dialing the telephone number of the
destination party. Post-cut-through dialed digits can also represent
call content. For example, subjects calling automated banking services
enter account numbers. When calling voicemail systems, they enter
passwords. When calling pagers, they dial digits that convey actual
messages. And when calling pharmacies to renew prescriptions, they enter
prescription numbers.

The government contends that a law enforcement agency may receive all
post-cut-through digits with a pen register order, subject to CALEA\'s
requirement that the agency uses \"technology reasonably available to
it\" to avoid processing digits that are content. 18 U.S.C. § 3121(c).
No court has yet considered that contention, however, and it may be that
a Title III warrant is required to receive all post-cut-through digits.
The Commission therefore had a statutory obligation to address how its
Order, which requires the capability to provide all dialed digits
pursuant to a pen register order, would \"protect the privacy and
security of communications not authorized to be intercepted.\" 47 U.S.C.
§ 1006(b)(2). The Commission spoke of law enforcement\'s need to obtain
post-cut-through dialed digits and of the cost of providing them, but it
never explained, as CALEA requires, how its rule will \"protect the
privacy and security of communications not authorized to be
intercepted.\"

Several commenters, moreover, suggested ways in which law enforcement
agencies having only pen register orders could obtain post-cut-through
phone numbers while protecting the privacy of call content. The
Commission rejected these alternatives, claiming not that they are
technologically infeasible, but that they \"would shift the cost burden
from the originating carrier to the LEA,\" \"could be time-consuming,\"
and might burden law enforcement\'s ability \"to conduct electronic
surveillance effectively and efficiently.\" Third Report & Order, 14
F.C.C.R. at 16845 p 121. This is an entirely unsatisfactory response to
CALEA\'s privacy provisions. The statute requires the Commission to
consider more than the burden on law enforcement\--after all, any
privacy protections burden law enforcement to some extent. The
Commission\'s rules must not only meet CALEA\'s \"assistance capability
requirements,\" 47 U.S.C. § 1006(b)(1), but also \"protect the privacy
and security of communications not authorized to be intercepted,\" id. §
1006(b)(2).

The absence of any meaningful consideration of privacy with respect to
dialed digit extraction does not seem to stem from a failure on the
Commission\'s part to understand the privacy consequences of its Order.
To the contrary, recognizing that there is no way to distinguish between
digits dialed to route calls and those dialed to communicate
information, the Commission expressed \"concern\[ \] about \... the
privacy implications of permitting LEAs to access non-call-identifying
digits (such as bank account numbers) with only a pen register
warrant.\" Third Report & Order, 14 F.C.C.R. at 16846 p 123. Yet the
Order requires carriers to make available all post-cut-through dialed
digits\--those that convey content as well as telephone numbers.

Asked at oral argument to point out how the Commission applied CALEA\'s
privacy mandate to post-cut-through dialed digits, Commission counsel
stated, \"we addressed ourselves to the privacy questions with a little
bit of hand wringing and worrying\....\" Transcript of Oral Argument at
29. Neither hand wringing nor worrying can substitute for reasoned
decisionmaking.

For the foregoing reasons, we vacate the portions of the Commission\'s
Order dealing with the four challenged punch list capabilities and
remand for further proceedings consistent with this opinion.

Location Information

We reach a different conclusion with respect to the Commission\'s
refusal to remove the antenna tower location information capability from
the J-Standard. This provision requires carriers to make available the
physical location of the antenna tower that a mobile phone uses to
connect at the beginning and end of a call. Unlike the Commission\'s
adoption of the punch list, its decision with regard to location
information is both reasoned and reasonable.

To begin with, as the Commission observed in the Third Report & Order,
defining \"call-identifying information\" to include antenna tower
location finds support in CALEA\'s text. In particular, section
103(a)(2) provides that \"with regard to information acquired solely
pursuant to the authority for pen registers and trap and trace devices
\... call-identifying information shall not include any information that
may disclose the physical location of the subscriber (except to the
extent that the location may be determined from the telephone number).\"
47 U.S.C. § 1002(a)(2). As we note above, the Commission read this
provision to imply that location information falls within the definition
of call-identifying information. Section 103(a)(2), the Commission
ruled, \"simply imposes upon law enforcement an authorization
requirement different from that minimally necessary for use of pen
registers and trap and trace devices.\" Third Report & Order, 14
F.C.C.R. at 16815 p 44. Disagreeing, petitioners argue that section
103(a)(2) narrows the definition of call-identifying information and
should not be read as an affirmative grant of authority for law
enforcement agencies to obtain location information. As the Commission
explained, however, if \"call-identifying information\" did not include
location information, this provision would have no function. See id. at
16815 p 44 & n.95. In reaching this conclusion, the Commission was
simply following the well-accepted principle of statutory construction
that requires every provision of a statute to be given effect. See
Washington Market Co. v. Hoffman, 101 U.S. 112, 115-16 (1879) (\"We are
not at liberty to construe any statute so as to deny effect to any part
of its language.\").

The Commission\'s approach to location information also finds support in
CALEA\'s use of the word \"signaling\" in the definition of
\"call-identifying information.\" As the agency explains in its brief, a
mobile phone \"sends signals to the nearest cell site at the start and
end of a call. These signals, which are necessary to achieve
communications between the caller and the party he or she is calling,
clearly are \'signaling information.\' Information about the cell sites
associated with mobile calls therefore falls squarely within the
statutory definition of call-identifying information.\" Brief for
Federal Communications Commission at 38.

Not only did the Commission elucidate the textual basis for interpreting
\"call-identifying information\" to include location information, but it
also explained how that result comports with CALEA\'s goal of preserving
the same surveillance capabilities that law enforcement agencies had in
POTS (plain old telephone service). \"\[I\]n the wireline environment,\"
the Commission explained, law enforcement agencies \"have generally been
able to obtain location information routinely from the telephone number
because the telephone number usually corresponds with location.\" Third
Report & Order, 14 F.C.C.R. at 16816 p 45. In the wireless environment,
\"the equivalent location information\" is \"the location of the cell
sites to which the mobile terminal or handset is connected at the
beginning and at the termination of the call.\" Id. Accordingly, the
Commission concluded, \"\[p\]rovision of this particular location
information does not appear to expand or diminish law enforcement\'s
surveillance authority under prior law applicable to the wireline
environment.\" Id.

The Commission\'s refusal to remove location information from the
J-Standard, moreover, does not share the other problems that led us to
vacate the punch list portion of the Third Report & Order. As to cost,
location information was included in the J-Standard adopted by industry,
so it is unaffected by the deficiencies in the Commission\'s cost
analysis. And in contrast to dialed digit extraction, the Commission\'s
analysis of the location capability did more than just pay lip service
to CALEA\'s privacy requirements. Most important, the Commission
demonstrated its understanding that antenna location information could
only be obtained with something more than a pen register order, see id.
at 16815 p 44, a point the Justice Department concedes in its brief: \"A
pen register order does not by itself provide law enforcement with
authority to obtain location information, and we have never contended
otherwise.\" Final Brief for the United States at 19. Expressly relying
on CALEA\'s privacy protection provisions, moreover, the Commission
rejected a New York Police Department proposal that would have required
triangulating signals from multiple cellular antenna towers to pinpoint
a wireless phone\'s precise location throughout a call\'s duration. See
Third Report & Order, 14 F.C.C.R. at 16816 p 46. \"\[S\]uch a
capability,\" the Commission found, \"poses difficulties that could
undermine individual privacy.\" Id.

For these reasons, we deny the petitions for review with respect to
location information.

III

This brings us to petitioners\' challenge to the Commission\'s decision
not to remove the packet-mode data requirement from the J-Standard. In
conventional circuit-mode telecommunications, a single circuit is opened
between caller and recipient and all electronic signals that make up the
communication travel along the circuit. In digital packet-switched
networks, communications do not travel along a single path. Instead, a
call is broken into a number of discrete digital data packets, each
traveling independently through the network along different routes. Data
packets are then reassembled in the proper sequence at the call\'s
destination. Like an envelope, each digital packet has two components:
it contains a portion of the communication message, and it bears an
address to ensure that it finds its way to the correct destination and
is reassembled in proper sequence. The address information appears in
the packet\'s \"header.\" The message within the packet is known as the
\"body\" or \"payload.\" The J-Standard requires that carriers make
available both header and payload.

Telecommunication carrier petitioners claim that packet headers
(call-identifying information) cannot be separated from packet bodies or
payloads (call content). Accordingly, they and the privacy petitioners
argue that any packet-mode data provided to a law enforcement agency
pursuant to a pen register order will inevitably include some call
content, thus violating CALEA\'s privacy protections. The FBI disagrees.
\"\[A\]s a technical matter,\" it argued before the Commission, \"it is
perfectly feasible for a LEA to employ equipment that distinguishes
between a packet\'s header and its communications payload and makes only
the relevant header information available for recording or decoding.\"
Third Report & Order, 14 F.C.C.R. at 16818 p 54.

The Commission considered these conflicting views about the feasibility
of separating call content from packet header data, concluding that
\"the record is not sufficiently developed to support any particular
technical requirements for packet-mode communications.\" Id. at 16817 p
48. At the same time, the Commission acknowledged that \"privacy
concerns could be implicated if carriers were to give to LEAs packets
containing both call-identifying and call content information when only
the former was authorized.\" Id. Stating that \"further efforts can be
made to find ways to better protect privacy by providing law enforcement
only with the information to which it is lawfully entitled,\" the
Commission asked the Telecommunications Industry Association, which
developed the J-Standard, \"to study CALEA solutions for packet-mode
technology and report to the Commission in one year on steps that can be
taken, including particular amendments to \[the J-Standard\], that will
better address privacy concerns.\" Id. at 16819 p 55. In the meantime,
however, finding the record insufficient to warrant modification of the
J-Standard\'s packet-mode data provision, the Commission directed that
it be implemented \"no later than September 30, 2001.\" Id. \"That
date,\" the Commission explained, \"is 15 months after the June 30, 2000
CALEA compliance deadline, and will afford manufacturers that have not
yet developed a packet-mode capability the time needed to do so.\" Id.
At the same time, the Commission emphasized that it viewed this as an
interim solution. \"We recognize that, in view of the growing importance
of packet-mode communications, a timely permanent solution is essential.
Accordingly, we expect that TIA will deliver a report to us no later
than September 30, 2000 that will detail a permanent solution\....\" Id.
at 16820 p 56.

The Commission\'s denial of the petitions to remove packet-mode data
from the J-Standard suffers from none of the shortcomings that
undermined its handling of the punch list capabilities. First, because
nobody questions that packet header information contains
\"call-identifying information,\" the ambiguity of that term\'s
definition does not affect the packet-mode requirement. Second, as with
location information, but unlike the four punch list capabilities,
because the packet-mode requirement was included in the J-Standard
adopted by industry it is unaffected by the deficiencies in the
Commission\'s cost analysis. Third, unlike the case of dialed digit
extraction, the Commission thoroughly considered the privacy
implications of packet-mode data and invited further study to \"better
address privacy concerns.\" Id. at 16819 p 55.

Finally, nothing in the Commission\'s treatment of packet-mode data
requires carriers to turn over call content to law enforcement agencies
absent lawful authorization. Although the Commission appears to have
interpreted the J-Standard as expanding the authority of law enforcement
agencies to obtain the contents of communications, see id., the
Commission was simply mistaken. All of CALEA\'s required capabilities
are expressly premised on the condition that any information will be
obtained \"pursuant to a court order or other lawful authorization.\" 47
U.S.C. § 1002(a)(1)-(3). CALEA authorizes neither the Commission nor the
telecommunications industry to modify either the evidentiary standards
or procedural safeguards for securing legal authorization to obtain
packets from which call content has not been stripped, nor may the
Commission require carriers to provide the government with information
that is \"not authorized to be intercepted.\" Id. See also Final Brief
for the United States at 4 (\"If the government lacks the requisite
legal authority to obtain particular information, nothing in Section 103
obligates a carrier to provide such information.\"). Petitioners thus
have no reason to fear that \"compliance with the Order will force
carriers to violate their duty under CALEA to \'protect the privacy and
security of communications \... not authorized to be intercepted.\' \"
Final Brief of Petitioners USTA, CTIA, and CDT at 35. We therefore deny
the petition for review with respect to packet-mode data.

IV

We grant the petitions for review in part, vacate the provisions of the
Third Report & Order dealing with the four challenged punch list
capabilities, and remand to the Commission for further proceedings
consistent with this opinion. In all other respects, we deny the
petitions for review.

> So ordered.