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Complaint For Declaratory and Injunctive Relief
CELLULAR TELECOMMUNICATIONS INDUSTRY ASSOCIATION,
a nonprofit corporation,
1250 Connecticut Avenue, Suite 200
Washington, D.C. 20036,
and
PERSONAL COMMUNICATIONS INDUSTRY ASSOCIATION,
a nonprofit corporation,
500 Montgomery Street, Suite 700
Alexandria, Virginia 22314,
Plaintiffs,
v.
JANET RENO,
in her official capacity of Attorney General of the United States;
UNITED STATES DEPARTMENT OF JUSTICE;
LOUIS J. FREEH,
in his official capacity of Director of the Federal Bureau of Investigation;
and
FEDERAL BUREAU OF INVESTIGATION;
Defendants.
COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF
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I. INTRODUCTION
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This is an action for declaratory and injunctive relief, challenging a regulation
promulgated by the Federal Bureau of Investigation ("FBI") under the
Communications Assistance for Law Enforcement Act ("CALEA"), 47 U.S.C.
§§ 1001 et seq. (1994). CALEA was intended to preserve law
enforcement's electronic surveillance capabilities by requiring carriers
to ensure that their systems can continue to conduct surveillance despite
the development of advanced communications technologies.
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CALEA states that a telecommunications carrier's equipment, facilities or
services "installed or deployed" on or before January 1, 1995, shall be
considered to be in compliance with the assistance capability requirements
of CALEA until the Attorney General agrees to pay all reasonable costs associated
with modifications necessary to retrofit such equipment, facilities or services.
On March 20, 1997, the FBI promulgated regulations that, among other things,
defined "installed or deployed" as follows:
Installed or deployed means that, on a specific switching system, equipment,
facilities, or services are operable and available for use by the carrier's
customers. 28 C.F.R. § 100.10.
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By defining the two separate words "installed" or "deployed" to have the
same meaning, the FBI has attempted to shift the cost of CALEA compliance
to certain carriers directly contrary to the stated intent of Congress in
passing CALEA. The FBI's regulatory definition fails to acknowledge that
Congress intended that carriers be reimbursed to retrofit all existing equipment,
services and features at the time CALEA was enacted.
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Failure to give the statutory language meaning leads to anomalous results,
as the FBI itself has admitted in numerous public fora. For example, under
the FBI's definition of "installed or deployed", if a carrier installed a
certain switch in its network just one day after January 1, 1995, that switch
would have to be fully CALEA-compliant at the carrier's own expense even
though the same carrier installing the same switch type just two days earlier
would be entitled to full reimbursement from the government to retrofit it.
Of course, rather than ever pay for such an upgrade, the government merely
shifts the cost of developing the solution for post-January 1995 installation
to the carrier so that none of the cost of developing the solution for the
grandfathered switch is ever borne by the government.
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The above example poses significant anti-competitive concerns as well. A
new entrant into the market on January 2, 1995, would have to pay for the
CALEA solution for the same switch type its competitor had used in the same
market before January 1, 1995. The new entrant essentially funds the entire
cost of development of the CALEA solution, the government takes advantage
of avoiding the development costs for the grandfathered equipment, and the
incumbent carrier avoids any cost, thereby obtaining a significant competitive
advantage.
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Thus, as these examples illustrate and as set out more fully below, the FBI's
definition of "installed or deployed" is arbitrary, capricious, an abuse
of discretion, not in accordance with law, and in excess of statutory authority.
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In addition to the reimbursement and competition concerns, there is a significant
enforcement issue as well. If equipment, services or facilities "installed
or deployed" after January 1, 1995, are not CALEA-compliant by October 25,
1998, a carrier may be subject to an enforcement action under Section 108
of CALEA and civil fines up to $10,000 per day per violation. See 47 U.S.C.
§ 1007; 18 U.S.C. § 2522(c).
II. JURISDICTION AND VENUE
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This Court has jurisdiction over this action under 28 U.S.C. º 1331
(federal question jurisdiction); 5 U.S.C. § 702 (Administrative Procedures
Act); and may issue a declaratory judgment under 28 U.S.C. §§ 2201-02.
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Venue is proper under 28 U.S.C § 1391(e) because the defendants reside
in the District of Columbia.
III. PARTIES
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The Cellular Telecommunications Industry Association ("CTIA"), a nonprofit
corporation organized under the laws of the District of Columbia, is an
international organization representing the wireless communications industry.
One of its primary purposes is to promote the common interests of its members.
Membership in the association encompasses all providers of the commercial
mobile radio services -- including 48 of the 50 largest cellular providers
and personal communications services providers -- and others with an interest
in the wireless communications industry, such as the manufacturers of equipment
used to provide commercial mobile radio services.
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The Personal Communications Industry Association ("PCIA"), a nonprofit
corporation organized under the laws of Virginia, is an international trade
association also representing the wireless communications industry. Established
in 1949, the association represents providers of personal communications
services, paging, mobile data services, communications site managers, equipment
manufacturers and others providing products and services to the wireless
industry. One of its primary purposes is to promote the common interests
of its members.
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CTIA has its principal place of business in Washington, D.C. PCIA has its
principal place of business in Virginia. On behalf of their members, CTIA
and PCIA (collectively, "Plaintiffs") have participated in all aspects of
CALEA implementation.
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Plaintiffs' members include "telecommunications carriers" as defined under
CALEA to mean a person or entity engaged in the transmission of switching
of wire or electronic communications as a common carrier for hire. 47 U.S.C.
§ 1001(8)(A). As such, Plaintiffs' members are directly subject to CALEA
obligations, including the obligation to ensure that equipment, services
and facilities installed or deployed after January 1, 1995, meet the assistance
capability requirements of Section 103 by October 26, 1998. To that end,
Plaintiffs members currently are expending significant resources in an effort
to meet their compliance obligations. As telecommunications carriers and
manufacturers with CALEA obligations, Plaintiffs' members would have standing
to bring this suit in their own right.
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Each of Plaintiffs' members are affected and directly injured by the FBI's
arbitrary and capricious definition of "installed or deployed." As set forth
more fully below in paragraphs 25-28, Plaintiffs' members will have entire
classes of hardware rendered obsolete and will bear the significant cost
of retrofitting such equipment to meet CALEA standards if the FBI's attenuated
definition is allowed to stand. Plaintiffs' members who are eligible and
seek reimbursement under the FBI's cost recovery rules each will dispute
the FBI's definition of "installed or deployed" and be forced to litigate
the definition in individual lawsuits. Those that do not accept the FBI's
definition by agreeing to retrofit their equipment proceed at their peril
because the FBI has threatened that Plaintiffs' members will be subject to
enforcement actions for noncompliance after October 25, 1998, and could incur
penalties of $10,000 per day per violation until "compliance" is achieved.
Accordingly, Plaintiffs' members are immediately and directly affected by
the FBI's arbitrary rule. Plaintiffs exist just for these sorts of actions
where the individual participation of association members is not required
to assert claims or grant relief.
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Defendant Janet Reno is the Attorney General of the United States and is
being sued in her official capacity.
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The United States Congress directed defendant Department of Justice to implement
the provisions of CALEA.
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Defendant Louis J. Freeh is the Director of the FBI and is being sued in
his official capacity.
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Defendant FBI, an agency of the United States, is located in the Department
of Justice. Responsibility for the implementation of CALEA was formally delegated
from the Attorney General of the United States to the Director of the FBI
or his designee.
IV. FACTUAL BACKGROUND
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CALEA, Public Law 103-414, 108 Stat. 4279 (1994), was signed into law on
October 25, 1994. The purpose of the law was to preserve the government's
ability to conduct lawfully authorized electronic surveillance in the face
of technologically advanced communications services while protecting the
privacy of communications not authorized to be intercepted and without impeding
the introduction of new services or technologies.
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In passing CALEA, Congress recognized that some existing equipment, services
or features would have to be retrofitted to meet law enforcement needs. CALEA
therefore provided that the government would have to pay carriers for just
and reasonable costs incurred in modifying existing equipment, services or
features to comply with CALEA's capability requirements. If the Attorney
General does not pay to retrofit the equipment, services or features, Congress
explicitly stated that such equipment, services or features will be considered
to be in compliance.
21. Section 109 of CALEA authorizes the Attorney General, subject to the
availability of appropriations, to agree to pay telecommunications carriers
for all reasonable costs directly associated with modifications performed
by carriers in connection with equipment, facilities, and services "installed
or deployed" on or before January 1, 1995, to establish the capabilities
necessary to comply with section 103 of CALEA. Section 109(e) of CALEA directs
the Attorney General, after notice and comment, to establish regulations
necessary to effectuate timely and cost-efficient payment to telecommunications
carriers for, among other things, costs necessary to retrofit existing equipment,
services or facilities. On February 16, 1995, Attorney General Reno delegated
her responsibilities under CALEA to the Director of the FBI or his designees.
60 Fed. Reg. 11906 (1995) (codified as 28 C.F.R. § 0.85(o)).
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The FBI initiated a rulemaking proceeding to implement the cost reimbursement
provisions of CALEA. See 61 Fed. Reg. 21936 (May 10, 1996). After notice
and comment, the FBI promulgated a final rule on March 20, 1997, with an
effective date of April 21, 1997. See 62 Fed. Reg. 13307 (March 20, 1997)
[the "Final Rule"].
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The Final Rule defined the term "installed or deployed" as follows:
Installed or deployed means that, on a specific switching system, equipment,
facilities, or services are operable and available for use by the carrier's
customers.
28 C.F.R. § 100.10.
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Several examples illustrate the flaw in the FBI definition of "installed
or deployed." If a carrier installed a particular switching platform in its
network on January 1, 1995, there is no dispute that this particular switch
qualifies for reimbursement under the FBI definition. But if the same carrier
had two of the identical switch types but did not get the second one installed
until January 2, 1995, according to the FBI, the second switch does not qualify
for reimbursement. The same would be true, according to the FBI, if the same
carrier had the second switch in storage prior to January 1, 1995, awaiting
some future installation in the network. According to the FBI, CALEA rendered
the second switch obsolete. Further, if that carrier had the second switch
under contract for purchase from the same vendor that provided the first
switch, the carrier must cancel the contract or re-negotiate it to provide
a switch with CALEA-capabilities at the carrier's own cost.
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Further, under the FBI's definition, a new market entrant providing service
after January 1, 1995, would bear the entire cost of CALEA compliance for
the identical switch type used by an incumbent carrier in the same market
area prior to January 1, 1995. Thus, the FBI under its definition could force
the new entrant to develop the CALEA solution for a switch type that would
otherwise be grandfathered in the network of the incumbent. The incumbent
would get the benefit of the upgrade package, the government would avoid
any expense, and the new entrant would be forced to bear the entire development
cost.
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In a more concrete example, in meetings with the telecommunications industry,
the FBI has stated that carriers using GSM technology are not entitled to
any reimbursement and that GSM networks must be made compliant at the carrier's
own cost. GSM, or Global System for Mobile telecommunications, was developed
in Europe beginning in the early 1980's with commercial service first available
by mid-1991. By 1993 there were 36 GSM networks in 22 countries. By the beginning
of 1994, there were 1.3 million subscribers worldwide and now there are more
than 70 million subscribers in 109 countries. The U.S. market was opened
to GSM when, in 1994, the Federal Communications Commission, auctioned large
blocks of spectrum in the 1900MHz band. Thus, GSM was deployed around the
world well before January 1995 and, in fact, was installed by at least one
carrier in the United States prior to January 1995.
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This issue is not hypothetical or merely of academic interest. If equipment,
services or facilities installed or deployed after January 1, 1995, are not
CALEA-compliant by October 25, 1998, a carrier may be subject to an enforcement
action under Section 108 of CALEA and civil fines up to $10,000 per day per
violation. See 47 U.S.C. § 1007; 18 U.S.C. § 2522(c).
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Accordingly, the FBI's definition of "installed or deployed" puts carriers
in immediate peril. The FBI has attempted to shift the cost of compliance
to carriers for equipment, services and facilities otherwise grandfathered
under CALEA. Therefore, Plaintiffs and their respective members have suffered
and continue to suffer injury.
V. CLAIMS
COUNT I
(Declaration that the FBI definition of "installed or deployed" in its
Final Rule violates CALEA)
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Plaintiffs incorporate by reference paragraphs 1 through 28.
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CALEA requires reimbursement of costs incurred by telecommunications carriers
to modify equipment, facilities, and services "installed or deployed" on
or before January 1, 1995, to meet the capability requirements of Section
103.
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The Final Rule adopts an overly restrictive definition so that identical
equipment or services that are CALEA-compliant for one carrier are not
CALEA-compliant for another. Under the FBI's distorted definition, millions
of dollars of equipment have been rendered obsolete and the costs of retrofitting
such equipment have been shifted to carriers.
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Plaintiffs are entitled to a declaration that the Final Rule's definition
of "installed or deployed" is arbitrary, capricious, an abuse of discretion,
and not in accordance with law.
COUNT II
(Injunctive relief)
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Plaintiffs incorporate by reference paragraphs 1 through 32.
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For the reasons set forth above, the definition of "installed or deployed"
contained in the Final Rule, 28. C.F.R. § 100.10, is arbitrary, capricious,
an abuse of discretion, and not in accordance with law.
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Accordingly, Plaintiffs are entitled to an order enjoining the FBI from enforcing
the Final Rule under Section 108 of CALEA or 18 U.S.C. § 2522.
VI. PRAYER FOR RELIEF
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WHEREFORE, Plaintiffs respectfully request entry of an order --
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declaring that the Final Rule's definition of "installed or deployed" is
arbitrary, capricious, an abuse of discretion, and not in accordance with
law;
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enjoining the FBI from enforcing the Final Rule or otherwise acting contrary
to law; and
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vacating and remanding the Rule for further rulemaking consistent with the
Court's decision.
Respectfully Submitted,
Albert Gidari
Martin P. Willard (#422734)
PERKINS COIE
607 Fourteenth Street, N.W.
Washington, D.C. 20005-2011
(202) 628-6600
Attorneys for the Cellular Telecommunications
Industry Association and the Personal
Communications Industry Association
Dated: April 27, 1998
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