UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


US TELECOM ASSN

v.

FCC


99-1442a

D.C. Cir. 2000


*	*	*


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 proceed-


ing, 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. Accord- ing 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 require- ments 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 rele- vant portions of the
Order, and remand for further proceed- ings. We deny the petitions for
review with respect to  antenna tower location information and


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 war- rant 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 danger- ous"; and (2) there
is probable cause for believing "that an  individual is committing,
has committed, or is about to com- mit" 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


s 2518(3). The Electronic Communications Privacy Act of  1986 ("ECPA"),
id. s 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. s 3127(3);  trap and trace devices record telephone
numbers from which  incoming calls originate, much like common
caller-ID sys- tems, see id. s 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 informa- tion likely to be obtained is relevant to an ongoing
criminal  investigation." 18 U.S.C. s 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 in- creasingly difficult. In congressional
hearings, the FBI iden- tified 183 "specific instances in which law
enforcement agen- cies were precluded due to technological impediments
from  fully implementing authorized electronic surveillance (wire-
taps, 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 accom- modate large numbers of
simultaneous intercepts as well as  from the growing use of custom
calling features such as call  forwarding, call waiting, and speed


Finding that "new and emerging telecommunications tech- nologies pose
problems for law enforcement," id., Congress  enacted the
Communications Assistance for Law Enforce- ment 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


ference calling, while protecting the privacy of communica- tions and
without impeding the introduction of new technolo- gies, features, and
services," id. at 9. Known as CALEA, the  Act requires
telecommunications carriers and equipment  manufacturers to build into
their networks technical capabili- ties to assist law enforcement with
authorized interception of  communications and "call-identifying
information." See 47  U.S.C. s 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 carri- er." Id. s
1001(2). CALEA requires each carrier to


ensure that its equipment, facilities, or services ... are  capable


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


(2) expeditiously isolating and enabling the govern- ment, pursuant to
a court order or other lawful authori- zation, to access
call-identifying information that is rea- sonably available to the


Id. s 1002(a)(1)-(2). Carriers must also "facilitat[e] autho- rized
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.  s 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
autho- rization, "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.  ss
1001(8)(C)(i), 1002(b)(2)(A).


To ensure efficient and uniform implementation of the Act's 
surveillance assistance requirements without stifling techno- logical
innovation, CALEA permits the telecommunications  industry, in
consultation with law enforcement agencies, regu- lators, and
consumers, to develop its own technical standards  for meeting the
required surveillance capabilities. See id.  s 1006. The Act "does not
authorize any law enforcement  agency or officer" to dictate the
specific design of communica- tions equipment, services, or features.
Id. s 1002(b)(1). Al- though carriers failing to meet CALEA's
requirements may  incur civil fines of up to $10,000 a day, see 18
U.S.C.  s 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.  s 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 stan- dards...." Id. s 1006(b). Such Commission rules must:


(1) meet the assistance capability requirements of sec- tion 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 negotia- tions with
the FBI, the Telecommunications Industry Associ-


ation ("TIA"), an accredited standard-setting body, adopted  technical
standards pursuant to CALEA's safe harbor, pub- lishing 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 informa- tion 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 enforce- ment 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 enforce- ment 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


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 capabili- ties. 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 Pro- posed 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 Commis- sion 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 uncertain- ty 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 peti- tion in part,
adding four of the nine punch list capabilities to  the J-Standard,
adding two more in part (neither is chal- lenged here), and declining
to add three others (also unchal- lenged). See id. at 16852 p 138. The
four additions are:


(1) "Post-cut-through dialed digit extraction": This re- quires
carriers to use tone-detection equipment to gener- ate 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 auto- mated 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 informa- tion": This
includes signals generated by activating fea- tures 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 indica- tors, special dial tones,
and busy signals, see id. at 16830- 33 pp 83-89.


Two industry associations--the United States Telecom As- sociation and
the Cellular Telecommunications Industry Asso- ciation--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 con- solidated. 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 telecommuni- cations
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 capabili- ties:
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 con- tend that the Commission: (1) exceeded
its authority under  CALEA because at least some of the information


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. s 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.  s 1006(b)(2); and (3)
failed both to ensure that the capability  requirements are
implemented "by cost-effective methods,"  id. s 1006(b)(1), and to
"minimize the cost of such compliance  on residential ratepayers," id.
s 1006(b)(3). In Section II, we  take up the four challenged punch
list capabilities and anten- na tower location information. We
consider packet-mode  communications in Section III.


II


Whether CALEA requires carriers to make available an- tenna 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 informa- tion that identifies the origin,
direction, destination, or termi- nation of each communication
generated or received by a  subscriber by means of any equipment,
facility, or service of a  telecommunications carrier." Id. s 1001(2).
The Commis- sion interprets this definition to require adoption of all
chal- lenged 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 num- bers, petitioners contend that
these capabilities exceed  CALEA's requirements. They argue that there
is no statuto- ry basis for location information to have been included
in the  J-Standard or for the Commission to have mandated the  punch


To resolve this challenge to the Commission's interpreta- tion of a
statute it is charged with administering, we proceed  according to
Chevron U.S.A. Inc. v. Natural Resources De-


fense Council, Inc., 467 U.S. 837 (1984). We ask first "wheth- er
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 lan- guage. See


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. s 1002(a)(2); 18 U.S.C. s
2703(c)(1)(C). "Where Con- gress 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" con- veyed 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 dis- close the
physical location of the subscriber (except to the  extent that the
location may be determined from the tele- phone number)." 47 U.S.C. s
1002(a)(2). As the Commis- sion observed, Congress would have had no
need to add this  limitation if "call-identifying information"


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 informa- tion"
unambiguously means only telephone numbers, petition- ers 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 dig- its, 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 other- wise
transmitted for the purpose of routing calls through the 
telecommunications carrier's network." Id. (emphasis add- ed).
Although another section of the Report describes  CALEA as requiring
carriers to make available "information  identifying the originating
and destination numbers of target- ed 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


Petitioners next argue that limiting "call-identifying infor- mation"
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. s 3127(3) (emphasis added), and
trap and trace de- vices record "the originating number of ... an
electronic  communication," id. s 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


This is an interesting argument, but hardly sufficient to  resolve
CALEA's ambiguity. CALEA neither cross- references nor incorporates
ECPA's definitions of pen regis- ters 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 informa- tion, 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 termi- nation 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 chal- lenged 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 rea- sonable 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 legiti- mate
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 argu- ing that section
102(2) unambiguously includes more than  telephone numbers in the
definition of "call-identifying infor- mation," and for good reason.
Although we reject petition- ers' 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. Accord- ing to the
agencies, the Commission reasonably interpreted  "call-identifying
information" to include the punch list capabil- ities and antenna
tower location information. Because we  reach different conclusions
with respect to the punch list and  location information, we discuss


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 ex- plain 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 rea- soned 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 exam-
ple, 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
tele- phone 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 ex- plained how each of these
bits of information "identifies the  ... termination of each
communication." 47 U.S.C.  s 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


rary origin, temporary termination, or re-direction of a com-
munication." (emphasis added)).


Perhaps the Commission can satisfactorily explain how  CALEA's terms
can encompass such a wide range of informa- tion. 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 particu- larly
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 Com- mission to alter those standards only
if it found them "defi- cient." 47 U.S.C. s 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
"ori- gin," "destination," "direction," and "termination," which de-
scribe "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


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 ratepay- ers." Id. s 1006(b)(1), (3). Faced with multiple
cost esti- mates ranging as high as $4 billion for all carriers to
imple- ment 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 imple- menting 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. s 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. Al- though 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 implement-
ing 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 sup- pose 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 rele- vant 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 includ- ing 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 "dis- cern" 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. s 1006(b)(2), with respect to post- cut-through dialed digit
extraction. This punch list capability  requires carriers to
electronically monitor the communica- tions 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 en- ter passwords. When
calling pagers, they dial digits that  convey actual messages. And
when calling pharmacies to  renew prescriptions, they enter


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. s 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. s 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


Several commenters, moreover, suggested ways in which  law enforcement
agencies having only pen register orders  could obtain
post-cut-through phone numbers while protect- ing 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 elec- tronic 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. s 1006(b)(1),
but also "protect the  privacy and security of communications not
authorized to be  intercepted," id. s 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, recogniz- ing 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 avail- able all
post-cut-through dialed digits--those that convey  content as well as


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 Com- mission's
refusal to remove the antenna tower location infor- mation capability
from the J-Standard. This provision re- quires 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 adop- tion 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. s 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 affirma- tive grant of
authority for law enforcement agencies to obtain 


location information. As the Commission explained, however,  if
"call-identifying information" did not include location infor- mation,
this provision would have no function. See id. at  16815 p 44 & n.95.
In reaching this conclusion, the Commis- sion was simply following the
well-accepted principle of statu- tory 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


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 capa- bilities that
law enforcement agencies had in POTS (plain old  telephone service).
"[I]n the wireline environment," the  Commission explained, law
enforcement agencies "have gen- erally 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. Ac- cordingly, 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 analy- sis. And in contrast to dialed digit extraction, the
Commis- sion'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 protec-
tion 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


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 telecom- munications, a single circuit is
opened between caller and  recipient and all electronic signals that
make up the communi- cation 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 envel-


ope, each digital packet has two components: it contains a  portion of
the communication message, and it bears an ad- dress to ensure that it
finds its way to the correct destination  and is reassembled in proper
sequence. The address infor- mation appears in the packet's "header."
The message with- in 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
communica- tions payload and makes only the relevant header
information  available for recording or decoding." Third Report &


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 informa-
tion to which it is lawfully entitled," the Commission asked  the
Telecommunications Industry Association, which devel- oped 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 con- cerns." Id. at 16819 p 55. In the meantime,
however, finding  the record insufficient to warrant modification of


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 Commis- sion'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 Commis- sion was simply mistaken. All of CALEA's required
capabili- ties are expressly premised on the condition that any infor-
mation will be obtained "pursuant to a court order or other  lawful
authorization." 47 U.S.C. s 1002(a)(1)-(3). CALEA  authorizes neither
the Commission nor the telecommunica- tions industry to modify either
the evidentiary standards or 


procedural safeguards for securing legal authorization to ob- tain
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 autho-
rized to be intercepted.' " Final Brief of Petitioners USTA,  CTIA,
and CDT at 35. We therefore deny the petition for  review with respect


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 Commis- sion for further proceedings
consistent with this opinion. In  all other respects, we deny the
petitions for review.


So ordered.