D.C. Circuit Affirms FCC CALEA Broadband Order

In American Council on Education v. FCC, issued last Friday (June 9, 2006), the United States Court of Appeals for the D.C. Circuit, in a 2-1 vote with Senior Judge Edwards dissenting, affirmed the FCC’s CALEA Broadband Order. The FCC’s order extended the reach of the Communications Assistance for Law Enforcement Act (“CALEA”) to facilities-based broadband Internet access service providers and interconnected voice over Internet protocol (“VoIP”) service providers. (The FCC’s CALEA Broadband Order was the subject of a previous CRB Update (dated Nov. 3, 2005).)

The court’s affirmance comes as a surprise to some observers. Indeed, Judge Edwards was openly hostile to the FCC’s position during oral argument in May and filed a dissenting opinion. While CALEA requires “telecommunications carriers” to build and maintain their networks in a manner that allows law enforcement agents to execute surveillance orders, CALEA is expressly inapplicable to “information service” providers. 47 U.S.C. § 1001(8)(C)(i). And in previous orders, the FCC has ruled that broadband Internet access services are “information services” and not “telecommunications services,” as those terms are defined in the Communications Act. Judge Edwards found that determinative and would have reversed.

However, the court majority agreed with the FCC that the unique statutory definition of “telecommunications carrier” in CALEA, which differs from the definition in the Communications Act, allowed that term to be extended to cover “information service” providers for purposes of CALEA. (Note: the classification of interconnected VoIP under the Communications Act is still pending). The FCC’s decision rested on the “substantial replacement provision” of CALEA, which enables the FCC to classify as telecom carriers for CALEA purposes those carriers that provide services deemed by the Commission to be a “replacement for a substantial portion of the local telephone exchange service.” The court found that the FCC’s decision was not an unreasonable interpretation of the statute and, therefore, would not be set aside.

While many have and will continue to take issue with the legal reasoning underlying the FCC’s (and the court’s) rulings, the policy considerations are obvious. We expect civil liberties organizations and possibly others to seek Supreme Court review of this ruling. It is possible that the Supreme Court will take the case, but it would not be at all surprising if the Court lets the ruling stand without comment.

In the meantime, however, absent a stay, the FCC’s ruling extending CALEA to facilities-based broadband Internet access providers is fully effective, with compliance mandatory in May 2007. To assist in implementation, the FCC released its Second Report and Order in May and gave additional information, implementation guidelines, and time frames. The implementation guidelines are summarized in CRB Update dated May 18, 2006.

As we explained in our May 18 Update, we believe that the FCC’s compliance deadlines are unrealistic. Nonetheless, in light of the DC Circuit’s decision, carriers and VoIP providers should begin taking steps now to comply with the CALEA broadband requirements—if they have not already done so—and should be documenting those efforts in case it becomes necessary to seek a waiver or extension of the implementation deadlines.

If you have any questions or would like to review the implications for your business, please contact us. We will provide additional updates on further court review, as events warrant.