Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-00-05386/USCOURTS-caDC-00-05386-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 12, 2001 Decided January 18, 2002

No. 00-5386

United States Telecom Association,

Appellant

v.

Federal Bureau of Investigation, et al.,

Appellees

Appeal from the United States District Court

for the District of Columbia

(No. 98cv02010)

A. Stephen Hut Jr. argued the cause for appellant. With

him on the briefs were John H. Harwood II, Samir C. Jain,

Lawrence E. Sarjeant, Linda L. Kent and John W. Hunter.

Anne Murphy, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief were

Kenneth L. Wainstein, U.S. Attorney, and Douglas N. Letter,

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Counsel, U.S. Department of Justice. Daniel L. Kaplan,

Counsel, entered an appearance.

Before: Ginsburg, Chief Judge, Henderson, Circuit Judge,

and Williams, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

Williams.

Williams, Senior Circuit Judge: Electronic eavesdropping

has historically proceeded on a basis of cooperation between

law enforcement authorities and telephone service providers.

In 1970 Congress regularized the relationship somewhat by

providing that a court order for electronic surveillance should,

at the request of the officer applying for authority, direct the

provider to furnish the applicant with the necessary "information, facilities and technical assistance." Act of July 29, 1970,

Pub. L. No. 91-358, tit. II, s 211(b), 84 Stat. 654 (1970),

codified at 18 U.S.C. s 2518(4). Because of rapid technological development since then, Congress in 1994 added further

structure with the Communications Assistance for Law Enforcement Act ("CALEA" or the "Act"), 47 U.S.C. s 1001 et

seq. (1994). (Each of the statute's sections has a number 899

lower than that of its codified equivalent in Title 47; for

simplicity's sake we use only the latter.) The Act has requirements relating to both the "capability" of telephone

service providers to intercept communications and their "capacity" to do so. In United States Telecom Ass'n v. FCC, 227

F.3d 450 (D.C. Cir. 2000), we addressed "capability"; here we

deal only with "capacity."

In very simplified form, CALEA sets up the following

regime as to capacity, involving three key phases: (1) The

Attorney General issues "notices" of what capacity is needed.

The Attorney General in fact has delegated his duties to the

FBI, and we henceforth refer to it exclusively. (2) Each

carrier responds with a "statement" of the modifications any

of its systems or services will need to provide the required

capacity. (3) A carrier is deemed in compliance with the

FBI's capacity notices, without having made the specified

modifications, until the FBI agrees to reimburse the carrier

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for those modifications. We spell out the scheme in more

detail below.

In 1998 the FBI issued a set of rules implementing the

Act's capacity requirements. See Implementation of Section

104 [47 U.S.C. s 1003] of CALEA, 63 Fed. Reg. 12218 (March

12, 1998) ("Final Notice"). United States Telecom Association ("USTA"), a trade association of about 1400 telephone

companies, sought relief in district court against various

provisions of the rules. First, it argued that the FBI had

erroneously defined the class of "modifications" for which

carriers might be eligible for reimbursement. Second, it said

that the FBI's concept of the required "notices" misread the

statute in a variety of ways, each increasing the carriers'

burdens and their risks of being found noncompliant. In an

unpublished opinion the district court granted summary judgment in favor of the FBI on all issues.

Reviewing the grant of summary judgment de novo, see,

e.g., Shields v. Eli Lilly & Co., 895 F.2d 1463, 1466 (D.C. Cir.

1990), we affirm the district court with respect to the reimbursement scheme, finding that the FBI correctly defined the

"modifications" required to be reimbursed. On the other

hand, finding error on the part of the FBI on each of the

disputes about its notices, we reverse on those issues, with

instructions to the district court to remand the case, in one

instance vacating the challenged feature of the rules, in the

others not.

* * *

CALEA requires the FBI to issue a notice of both the

"actual number" of interceptions and devices that it expects

will be conducted and used "simultaneously" by October 25,

1998, s 1003(a)(1)(A), and the "maximum capacity" required

to accommodate the surveillance that enforcement agencies

"may conduct and simultaneously use" after that date,

s 1003(a)(1)(B). Subject to a qualification relating to reimbursement of necessary modifications, service providers are

required within three years after notice to have the capacity

specified in s 1003(a)(1)(A) and the ability "expeditiously" to

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expand to the "maximum capacity" specified in

s 1003(a)(1)(B). See ss 1003(b)(1), 1003(e). The FBI notice

under s 1003(a)(1)(A) is to state

the actual number of communication interceptions, pen

registers, and trap and trace devices, representing a

portion of the maximum capacity set forth under subparagraph (B), that the [FBI] estimates that [law enforcement authorities] may conduct and use simultaneously.

47 U.S.C. s 1003(a)(1)(A) (emphasis added). Pen registers

are devices that record the telephone numbers dialed by the

surveillance's subject; trap and trace devices record the

telephone numbers of the subject's incoming calls.

Each of the carriers is required to respond to the notice of

capacity requirements with a "statement" of "systems or

services that do not have the [necessary] capacity."

s 1003(d). The FBI reviews these statements and "may"

agree to reimburse the carrier "for costs associated directly

with modifications to attain" the capacity requirements.

s 1003(e). Until the FBI agrees to reimburse the necessary

modifications specified by a carrier, the carrier is considered

in compliance. Id.

We address first the cost allocation issue, then the character of the notices to be issued by the FBI.

* * *

Cost Allocation. We start with the key statutory provisions. Section 1003(d) sets out the duty of the carrier to

submit a statement responding to the FBI's notice, and

s 1003(e) states the relationship between a carrier's compliance and the FBI's decision on what to reimburse:

s 1003(d) Carrier statement

Within 180 days after the publication by the [FBI] of a

notice of capacity requirements pursuant to subsection (a)

or (c) of this section, a telecommunications carrier shall

submit to the [FBI] a statement identifying any of its

systems or services that do not have the capacity to accommodate simultaneously the number of interceptions, pen

registers, and trap and trace devices set forth in the notice

under such subsection.

s 1003(e) Reimbursement required for compliance

The [FBI] shall review the statements submitted under

subsection (d) of this section and may, subject to the

availability of appropriations, agree to reimburse a telecommunications carrier for costs directly associated with modifications to attain such capacity requirement that are determined to be reasonable in accordance with section 1008(e)

of this title. Until the [FBI] agrees to reimburse such

carrier for such modification, such carrier shall be considered to be in compliance with the capacity notices under

subsection (a) or (c) of this section.

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47 U.S.C. ss 1003(d), (e).

The Final Notice provided for eligibility for reimbursement

as follows:

Capacity costs associated with any equipment, facilities

or services deployed after the Carrier Statement period

of 180 days following the effective date of this Final

Notice of Capacity will not be eligible for reimbursement.

Final Notice, 63 Fed. Reg. at 12220-21. But the language is

concededly different from the thought the FBI intended to

convey. In fact, government counsel assured us at oral

argument (with the full assent of USTA's counsel), that this

sentence should really be read as if it also contained the

material added in boldface:

Capacity costs associated with any equipment, facilities

or services deployed after the Carrier Statement period

of 180 days following the effective date of this Final

Notice of Capacity will not be eligible for reimbursement,

except costs for modifications the FBI has agreed to

compensate under s 1003(e).

Thus, expenses incurred to add equipment--other than for

modifications that the carrier specified in its "statement" and

that the FBI in its discretion agreed to reimburse--are not

reimbursable.

USTA objects that under the FBI's reading of s 1003(e), a

carrier will have to pay for all capacity it adds in the future

(except for the reimbursed "modifications"), even though the

government will be able to help itself to part of the added

capacity. As was developed at oral argument, this skews a

carrier's incentives: rather than invest in capacity additions

sized to accommodate not only its customers' prospective

demand but also the government's future wishes, it will elect

smaller expansions, anticipating that after the next FBI

notice and carrier statement its equipment will require "modification" and thus government reimbursement. USTA further argues that we should not defer to the FBI's reading of

the Act under Chevron U.S.A. Inc. v. Natural Resources

Defense Council, 467 U.S. 837 (1984), because the government

has a sharp pecuniary interest in the outcome: under USTA's

reading of the statute, the government would have to pay for

its share of all new capacity that it uses.

Of course the issue of Chevron deference arises only if the

statute doesn't plainly settle the issue. Chevron, 467 U.S. at

842-43 (holding that if "Congress has directly spoken to the

precise question at issue," the court "must give effect to the

unambiguously expressed intent of Congress."). Here we

find that the Act does so, and therefore need not resolve

USTA's pecuniary-interest theory.

The only costs for which the Act provides any compensation are for "modifications" under s 1003(e). These "modifications" are necessarily to "systems or services" identified by

the carrier in its s 1003(d) statement as "not hav[ing] the

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capacity" to accommodate the needs set out in an FBI notice

under s 1003(a)(1). And those "systems and services" are

necessarily systems and services extant at the time the

carrier files its statement. In other words, eligibility for

reimbursement extends only to modifications as needed to

mend deficiencies set out in the carrier's s 1003(d) statement.

USTA claims to find support in the passage of s 1003(e)

that states: "Until the [FBI] agrees to reimburse [a] carrier

for [reasonable] modifications, such carrier shall be considered in compliance with the capacity notices." 47 U.S.C.

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s 1003(e). But the carrier's being "in compliance" appears to

refer only to the modifications identified in the s 1003(d)

statement, and says nothing with respect to the government's

uncompensated use of capacity that a provider may add, on

its own, after submitting its s 1003(d) statement.

USTA also points to CALEA's enforcement provision, prohibiting a court from issuing any enforcement orders that

"require a telecommunications carrier to meet the Government's demand for interception ... to any extent in excess of

the capacity for which the [FBI] has agreed to reimburse

such [a] carrier." 47 U.S.C. s 1007(c)(1). But USTA's literal

reading of this section is plainly unsound; even USTA does

not think the section governs available capacity antedating

the FBI's very first s 1003(a)(1) notice. The FBI's reading

of the section is that it reinforces the "safe harbor" provided

by s 1003(e)'s assurance to a carrier that it will not be out of

compliance if law enforcement authorities demand capacity

that the carrier's s 1003(d) statement has said was needed

(until the FBI funds the additional capacity). As appellant's

construction of s 1007(c)(1) is impossible on a literal basis and

would require us to twist the meaning of s 1003(e) itself, we

find it unconvincing.

USTA's remaining textual analysis contrasts the Act's language on capacity with its language on capability, which

explicitly provides for compensation for modifications of

equipment deployed before January 1, 1995 to accommodate

law enforcement, s 1008(d), and none for equipment deployed

thereafter. We fail to see how the distinction helps USTA.

The capability provisions plainly differ substantially from

those for capacity, but the contrast sheds no light on the

proper interpretation of ss 1003(d) & (e).

Finally, USTA makes reference to some legislative history

it believes is supportive of its position. See Appellant's Br. at

20-21 (citing H.R. Rep No. 103-827, pt. 1, at 17, 20 (1994)).

"But we do not resort to legislative history to cloud a

statutory text that is clear." Ratzlaf v. United States, 510

U.S. 135, 147-48 (1994). See also Burlington Northern R.R.

Co. v. Oklahoma Tax Comm'n, 481 U.S. 454, 461 (1987); In

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re Sinclair, 870 F.2d 1340, 1342-43 (7th Cir. 1989) (suggesting that legislative history should only be used to elucidate

the meaning of the statutory text). Of course, legislative

history may "shed new light on congressional intent, notwithstanding statutory language that appears superficially clear."

Natural Resources Defense Council, Inc. v. Browner, 57 F.3d

1122, 1127 (D.C. Cir. 1995) (internal quotation marks and

citation omitted). But in fact the force of appellant's claim

turns on its selective quotation. The House Committee Report said:

After the four year transition period, which may be

extended an additional two years by order of the FCC,

industry will bear the cost of ensuring that new equipment

and services meet the legislated requirements, as defined

by standards and specifications promulgated by the industry itself.

However, to the extent that industry must install additional capacity to meet law enforcement needs, the bill

requires the government to pay all capacity costs from date

of enactment, including all capacity costs incurred after the

four year transition period....

H.R. Rep No. 103-827, pt. 1, at 16-17 (emphasis added).

Appellant ignores the first sentence and quotes the second.

In fact, properly read even the second sentence does not help

appellant, for it describes the statute simply as calling on the

government to pay for "additional capacity" that "industry

must install ... to meet law enforcement needs." Just so.

Government must pay for "modifications" that it agrees to

reimburse as specified in s 1003(e), but otherwise helps itself

to capacity that is available.

Accordingly, we affirm the district court's grant of summary judgment for the government on USTA's cost recovery

claim.

* * *

The remaining issues relate to provisions dealing with how

the FBI "notices" are to specify capacity requirements.

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Again USTA argues that the FBI should not enjoy Chevron

deference because of its pecuniary interest. Again we need

not address the pecuniary-interest issue, though for a different reason from the one previously given. Even Chevron

deference requires that the agency position be reasonable,

Chevron, 467 U.S. at 843, and on none of the following issues

is that standard met.

"Expeditiously." Recall that the Act distinguishes between the "actual numbers" of interceptions and equipment

the FBI expects to be conducted and used simultaneously by

October 25, 1998, s 1003(a)(1)(A), and the "maximum capacity" required to accommodate surveillance thereafter,

s 1003(a)(1)(B). Section 1003(b) gives this distinction operational significance. Section 1003(b)(1) requires carriers by a

specified date to have the capacity [subject to s 1003(e)] to

accommodate the s 1003(a)(1)(A) demands and the ability to

"expand[ ]" to the subsection (B) "maximum capacity"; and

s 1003(b)(2) requires each carrier to "ensure that it can

accommodate expeditiously" an increase in demand up to the

"maximum capacity."

The Final Notice implements these provisions by reading

"expeditiously" to allow only five business days. Final Notice, 63 Fed. Reg. at 12219/1. The only rationale offered to

support the five-day period is transparently off point. The

FBI said the decision was "based on past practice as to the

time typically involved under existing procedures used by law

enforcement and telecommunications carriers to make technical interception arrangements." Id. This statement about

"past practice" relates only to provisioning individual wiretaps

upon request--a task quite different from that of increasing

total wiretapping capacity.

Worse, unrebutted evidence in the record suggests that it

would be impossible for carriers to install additional capacity

in such a short time period. Unsurprisingly, ordering new

hardware, securing its delivery, and then installing and testing it takes more than five days. See id. at 12235/1 (noting

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senting telecommunications equipment manufacturers, have

described this time frame as unrealistic).

In effect, then, the FBI's interpretation of "expeditiously"

de facto erases the statutory distinction between actual and

maximum capacity, even though the statute plainly intends

such a distinction and even specifies that "actual" capacity

should be "a portion of the maximum capacity set forth under

subparagraph (B)." s 1003(a)(1)(A). We therefore find unreasonable and vacate this aspect of the Final Notice. See

RCA Global Communications, Inc. v. FCC, 758 F.2d 722, 733

(D.C. Cir. 1985) (rejecting agency's reading of a statute that

"would deprive [the statutory provision] of all substantive

effect").

"Capacity"/"Number of," and "Simultaneously." Recall

that s 1003(a)(1)(A) requires the FBI to give notice of

the actual number of communication interceptions, pen

registers, and trap and trace devices, representing a

portion of the maximum capacity set forth under subparagraph (B), that the [FBI] estimates that [law enforcement authorities] may conduct and use simultaneously.

47 U.S.C. s 1003(a)(1)(A) (emphasis added). Subsection (B)

similarly requires notice of the "maximum capacity" required

to accommodate such interceptions, etc., again "simultaneously." The Final Notice insisted that these statements of

"actual number" and "capacity" were properly in terms that

drew no distinction between different types of interceptions

(e.g., communications content versus mere pen registers),

even though they differ heavily in their actual demands on

capacity. Final Notice, 63 Fed. Reg. at 12235. And it

treated interceptions as "simultaneous" if they occur on the

same day, even though they may each only take moments and

do not overlap in the least. Id. at 12225. USTA objects to

both these decisions. And rightly so.

As to "capacity," the FBI acknowledged that different

interceptions impose different demands on capacity; content

interceptions might require up to five delivery channels because of multiple participants on a call, while others, such as

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pen registers and trap and trace devices, typically use only a

single channel. See id. at 12218, 12232-33. By way of

justification it said that the only historical data it had access

to did not directly reveal the information the carriers were

after: the available average national ratio of content interceptions to pen registers and trap and trace devices was not "in

any way representative of any specific geographic region."

Id. at 12235. It also said that, in any event, "law enforcement

... does not know the type(s) of surveillance that will be

needed in the future." Id. at 12236.

As to simultaneity, the FBI insisted that its choice "was

logical from a law enforcement perspective" because court

orders approving wiretapping activities are phrased in terms

of days, and as a result such data was all that was available.

Id. at 12225/3, 12235/2.

The FBI's justifications of both decisions--ultimately

claims of defects in existing data--render them unreasonable.

See Fresno Mobile Radio, Inc. v. FCC, 165 F.3d 965, 969-70

(D.C. Cir. 1999). Such complete throwing up of hands is

inconsistent with the Bureau's extensive use of statistical

projections elsewhere in implementing CALEA. In fact, all

the interception numbers that the FBI gave are estimates.

For instance, to determine the actual and maximum capacity

requirements themselves, the FBI undertook to establish a

historic baseline, and then used statistical techniques to extrapolate the baseline into the future. Id. at 12224-25; see

also id. at 12226/3 (stating that in determining "growth

factors," which require prediction of future capacity requirements, "statistical and analytical methods were applied to the

historical interception information").

As to these portions of the Final Notice, we reverse the

judgment of the district court, with instructions to remand

the case to the agency for a more adequate explanation.

Because it is not so clear as in the case of the Bureau's

interpretation of "expeditiously" that there are no defensible

grounds for its conclusions, however, the district court should

not vacate the FBI's resolutions of the "number of/capacity"

and "simultaneously" issues. Compare Allied-Signal, Inc. v.

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U.S. Nuclear Regulatory Comm., 988 F.2d 146, 150-51 (D.C.

Cir. 1993) ("The decision whether to vacate depends on the

'seriousness of the order's deficiencies (and thus the extent of

doubt whether the agency chose correctly) and the disruptive

consequences of an interim change that may itself be

changed.' ").

* * *

The judgment of the district court is affirmed and reversed

as set forth above.

So ordered.

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