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Tech Law Journal |
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UNITED STATES DISTRICT COURT
COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF 1. INTRODUCTION 1. This is an action for declaratory and injunctive relief, challenging a regulation promulgated by the Federal Bureau of Investigation ("FBI") under the Communications [begin page 2] 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. 2. 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:
3. 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. 4. 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 [begin page 3] 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. 5. 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. 6. 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. 7. 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. § 1007-1; 18 U.S.C. § 2522(c). II. JURISDICTION AND VENUE 8. This Court has jurisdiction over this action under 28 U. S.C. § 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. 9. Venue is proper under 28 U. S.C § 1391(e) because the defendants reside in the District of Columbia. III. PARTIES 10. The Cellular Telecommunications Industry Association ("CTIA"), a nonprofit corporation organized under the laws of the District of Columbia, is an international [begin page 4] 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. 11. 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. 12. 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. 13. 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. [begin page 5] 14. 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 15. Defendant Janet Reno is the Attorney General of the United States and is being sued in her official capacity. 16. The United States Congress directed defendant Department of Justice to implement the provisions of CALEA. 17. Defendant Louis J. Freeh is the Director of the FBI and is being sued in his official capacity. 18. 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 19. 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 [begin page 6] 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. 20. 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)). 22. 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"]. 23. The Final Rule defined the term "installed or deployed" as follows: [begin page 7]
24. 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. 25. 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. 26. 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 [begin page 8] 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. 27. 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). 28. 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) 29. Plaintiffs incorporate by reference paragraphs I through 28. 30. 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. 31. 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. [begin page 9] 32. 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) 33. Plaintiffs incorporate by reference paragraphs 1 through 32. 34.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. 35. 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. [begin page 10] VI. PRAYER FOR RELIEF WHEREFORE, Plaintiffs respectfully request entry of an order -- (a) declaring that the Final Rule's definition of "installed or deployed" is arbitrary, capricious, an abuse of discretion, and not in accordance with law; (b) enjoining the FBI from enforcing the Final Rule or otherwise acting contrary to law; and (c) vacating and remanding the Rule for further rulemaking consistent with the Court's decision.
Dated: April 27, 1998 |
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