[Federal Register Volume 66, Number 194 (Friday, October 5, 2001)]
[Proposed Rules]
[Pages 50931-50952]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-24942]


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DEPARTMENT OF JUSTICE

Federal Bureau of Investigation

28 CFR Part 100

[FBI 100P]
RIN 1110-AA00


Implementation of Section 109 of the Communications Assistance 
for Law Enforcement Act: Definitions of ``Replaced'' and 
``Significantly Upgraded or Otherwise Undergoes Major Modification''

AGENCY: Federal Bureau of Investigation, DOJ.

ACTION: Supplemental notice of proposed rulemaking.

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SUMMARY: The Federal Bureau of Investigation (FBI) proposes to make 
three amendments to the Communications Assistance for Law Enforcement 
Act (CALEA) Cost Recovery Regulations. First, the FBI proposes to amend 
regulations by making a minor technical change to harmonize the rule's 
language with CALEA's statutory language. Second, the FBI proposes to 
amend regulations by adding a definition and examples for the term 
``replaced.'' Third, the FBI proposes to amend regulations by adding a 
definition and examples for the term ``significantly upgraded or 
otherwise undergoes major modification.'' This supplemental notice of 
proposed rulemaking (SNPRM) provides the text and rationale for the 
minor technical change, the two proposed definitions, and the proposed 
examples following the definitions. These amendments will clarify the 
applicability of the CALEA Cost Recovery Regulations and should assist 
the telecommunications industry in assessing its responsibilities under 
CALEA.

DATES: Comments must be received on or before December 4, 2001.

ADDRESSES: Comments should be submitted to the Telecommunications 
Contracts and Audit Unit, Federal Bureau of Investigation, P.O. Box 
230040, Chantilly, VA 20153-0450, Attention: CALEA FR Representative.

FOR FURTHER INFORMATION CONTACT: Walter V. Meslar, Unit Chief, 
Telecommunications Contracts and Audit Unit, Federal Bureau of 
Investigation, P.O. Box 221286, Chantilly, VA 20153-0450, telephone 
number (703) 814-4900.

SUPPLEMENTARY INFORMATION:

[[Page 50932]]

Supplementary Information Table of Contents

A. Request for Comments
B. Background and Purpose
C. Regulatory History
D. Amendment to Section 100.11(a)(1)
E. Definition Development
    1. Significantly Upgraded or Otherwise Undergoes Major 
Modification
    a. Background
    b. The SNPRM Proposed Definition
    c. Example Summaries
    d. Conclusion
    2. Replaced
    a. Background
    b. The SNPRM Proposed Definition
    c. Example Summaries
    d. Conclusion
F. Discussion of Comments Received in Response to Notice of Proposed 
Rulemaking
    1. Definition of ``Installed or Deployed''
    2. Definition of ``Replaced''
    3. Federal and State Mandates
    4. Status of ``Significantly Upgraded'' Preexistent Equipment
    5. Prohibition on the Development and Deployment of Advanced 
Technologies
    6. Public Safety Approach is Inconsistent With CALEA
    7. Meaning of ``Impedes''
    8. Unintended Impediments
    9. October 25, 1998, is an Arbitrary Date
    10. Availability of CALEA-Complaint Technology
    11. Change From Analog to Digital Switching
    12. Just Compensation
G. Regulatory Evaluation
    1. Executive Order 12630 (Takings)
    2. Executive Order 12866 (Regulatory Planning and Review)
    3. Executive Order 12875 (Enhancing the Intergovernmental 
Partnership)
    4. Executive Order 12988 (Civil Justice Reform)
    5. Executive Order 13132 (Federalism)
    6. Regulatory Flexibility Act
    7. Small Business Regulatory Enforcement Fairness Act of 1996
    8. Paperwork Reduction Act
    9. Unfunded Mandates Reform Act
    10. National Technology Transfer and Advancement Act
H. Further Regulatory Flexibility Analysis
    1. Need for, and Objectives of, the Proposed Rules
    2. Legal Basis
    3. Description and Estimate of the Number of Small Entities to 
Which the Proposed Rules Will Apply
    a. Total Number of Telephone Companies Affected
    b. Wireline Carriers and Service Providers
    c. Local Exchange Carriers
    d. Interexchange Carriers
    e. Competitive Access Providers
    f. Operator Service Providers
    g. Resellers
    h. Fixed Satellite Transmit/Receive Earth Stations
    i. Fixed Satellite Small Transmit/Receive Earth Stations
    j. Fixed Satellite Very Small Aperture Terminal (VSAT) Systems
    k. Mobile Satellite Earth Stations
l. Radio Determination Satellite Earth Stations
m. Space Stations (Geostationary)
n. Space Stations (Non-Geostationary)
o. Cellular Licensees
p. 220 MHZ Radio Service--Phase I Licensees
q. 220 MHZ Radio Service--BPhase II Licensees
r. Private and Common Carrier Paging
s. Mobile Service Carriers
t. Broadband Personal Communications Service (PCS)
u. Narrowband PCS
v. Rural Radiotelephone Service
w. Air-Ground Radiotelephone Service
x. Specialized Mobile Radio (SMR)
y. Fixed Microwave Services
z. Offshore Radiotelephone Service
aa. Wireless Communications Services
ab. Cable Services or Systems
4. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements
5. Steps Taken to Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
6. Federal Rules that may Duplicate, Overlap, or Conflict With the 
Proposed Rules

A. Request for Comments

    The FBI encourages you to participate in this rulemaking by 
submitting comments and related material. If you do so, please 
include your name and address; identify the regulation identifier 
number for this rulemaking (1110-AA00, FBI 100P); indicate the 
specific section of this document to which each comment applies; and 
give the reason for each comment. You may submit your comments and 
material by mail, hand delivery, fax, or electronic means to the 
Telecommunications Contracts and Audit Unit at the address under 
ADDRESSES; but please submit your comments and material by only one 
means. If you submit them by mail or hand delivery, submit them in 
an unbound format, no larger than 8.5 by 11 inches, suitable for 
copying and electronic filing. If you submit them by mail and would 
like to know when they were received, please enclose a stamped, 
self-addressed postcard or envelope. We will consider all comments 
and material received during the comment period. We may change this 
proposed rule in view of the comments.

B. Background and Purpose

    In 1994, Congress passed the Communications Assistance for Law 
Enforcement Act (CALEA), 47 U.S.C. 1001-1010, to preserve law 
enforcement's ability to carry out lawfully authorized electronic 
surveillance without impeding the development of new communications 
services and technologies. Under the act, telecommunications 
carriers are required to facilitate the unobtrusive delivery of 
intercepted communications and reasonably available call-identifying 
information to law enforcement. 47 U.S.C. 1002. Telecommunications 
carriers are also required to ensure that their systems are capable 
of accommodating simultaneously the number of interceptions, pen 
registers, and trap and trace devices specified in the government's 
capacity notices. 47 U.S.C. 1003(b). Conversely, law enforcement is 
prohibited from dictating system design features and cannot bar the 
adoption of new features and technologies. 47 U.S.C. 1002(b)(1).
    CALEA also contains a number of reimbursement provisions that 
were designed to ease the transition to full compliance with the 
assistance capability and capacity requirements. First, to the 
extent that telecommunications carriers must install additional 
capacity to meet law enforcement's needs, the act provides that the 
Attorney General may agree to reimburse a telecommunications carrier 
for the reasonable costs directly associated with modifications made 
to attain the capacity requirements. 47 U.S.C. 1003(e). Second, if 
the Federal Communications Commission (FCC) determines that 
compliance with the assistance capability requirements is not 
reasonably achievable with respect to a telecommunications carrier's 
equipment, facilities, or services installed or deployed after 
January 1, 1995 (post-equipment), the Attorney General may agree to 
pay the telecommunications carrier for the additional reasonable 
costs of making compliance with the assistance capability 
requirements reasonably achievable. 47 U.S.C. 1008(b). Finally, the 
Attorney General may agree to pay a telecommunications carrier for 
all reasonable costs directly associated with making modifications 
to its equipment, facilities, or services installed or deployed on 
or before January 1, 1995 (preexistent equipment) necessary to bring 
such preexistent equipment into compliance with the assistance 
capability requirements. 47 U.S.C. 1008(a) & (d). This rulemaking 
proceeding is primarily concerned with the last reimbursement 
provision.
    CALEA entrusts the Attorney General with a number of 
implementation responsibilities. The Attorney General has delegated 
many of these implementation responsibilities to the Director of the 
FBI. 28 CFR 0.85(o). One of these delegated responsibilities was the 
establishment of regulations necessary to effectuate timely and 
cost-efficient payment to telecommunications carriers. 47 U.S.C. 
1008(e). The Director assigned the task of establishing the CALEA 
Cost Recovery Regulations to the Telecommunications Contracts and 
Audit Unit (TCAU) of the Finance Division. On May 10, 1996, TCAU 
published a Notice of Proposed Rulemaking (NPRM) for the purpose of 
establishing the CALEA Cost Recovery Regulations.\1\ 61 FR 21396. 
TCAU published its final rule on the CALEA Cost Recovery Regulations 
on March 20, 1997. 62 FR 13307.
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    \1\ On November 19, 1996, the FBI initiated this separate 
rulemaking proceeding by publishing an Advanced Notice of Proposed 
Rulemaking in the Federal Register. 61 FR 58799. This rulemaking 
proceeding was originally limited to defining the term ``significant 
upgrade or major modification.'' The purpose of using a separate 
proceeding was to avoid delaying the publication of the final rule 
regarding the CALEA Cost Recovery Regulations.

    Section 100.11(a) of the CALEA Cost Recovery Regulations states:
    Costs that are eligible for reimbursement under section 109(e) 
CALEA are:

[[Page 50933]]

    (1) All reasonable plant costs directly associated with the 
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, until the equipment, facility, or service is 
replaced or significantly upgraded or otherwise undergoes major 
modifications * * *.

(emphasis added). This provision is based upon CALEA Section 109(d), 
which places certain limitations on the reimbursement eligibility of 
preexistent equipment. Section 109(d) states, in part:
    If a carrier has requested payment in accordance with [the CALEA 
Cost Recovery Regulations], and the Attorney General has not agreed 
to pay the telecommunications carrier for all reasonable costs 
directly associated with modifications necessary to bring any 
equipment, facility or service deployed on or before January 1, 
1995, into compliance with the assistance capability requirements of 
section 103, such equipment, facility, or service shall be 
considered in compliance with the assistance capability requirements 
of section 103 until the equipment, facility, or service is replaced 
or significantly upgraded or otherwise undergoes major modification.

(emphasis added). Essentially, under both the statute and the CALEA 
Cost Recovery Regulations, preexistent equipment loses its 
reimbursement eligibility if it is ``replaced or significantly upgraded 
or otherwise undergoes major modification.'' Under Section 109(d), 
preexistent equipment also loses its ``considered in compliance'' 
status once such equipment is ``replaced or significantly upgraded or 
otherwise undergoes major modification.''
    The terms ``replaced'' and ``significantly upgraded or otherwise 
undergoes major modification'' appear in only one other location in the 
act. CALEA precludes enforcement against a telecommunications carrier 
with preexistent equipment unless the Attorney General has agreed to 
reimburse the reasonable costs necessary to bring the equipment into 
compliance with the assistance capability requirements or the 
preexistent equipment ``has been replaced or significantly upgraded or 
otherwise undergoes major modification.'' 47 U.S.C. 1007(c)(3).
    These terms play a very important role in the determination of 
reimbursement eligibility. Neither the statute nor the CALEA Cost 
Recovery Regulations define these important terms. This rulemaking 
proceeding was initiated to remedy this situation.

C. Regulatory History

    The FBI initiated this rulemaking with an Advanced Notice of 
Proposed Rulemaking (ANPRM), published in the Federal Register on 
November 19, 1996. 61 FR 58799. The ANPRM solicited comments from 
interested parties on defining the term ``significant upgrade or major 
modification'' in the CALEA Cost Recovery Regulations. On April 28, 
1998, the FBI published a Notice of Proposed Rulemaking (NPRM) in the 
Federal Register. 63 FR 23231. In the NPRM, the FBI proposed a 
definition of the term ``significant upgrade or major modification'' 
based on the comments it received in the ANPRM. In this SNPRM, the FBI 
is publishing a new version of the term ``significantly upgraded or 
otherwise undergoes major modification.'' The FBI has also decided to 
use this SNPRM to define the term ``replaced'' and to make a minor 
technical amendment to Section 110.11(a)(1).

D. Amendment to Section 110.11(a)(1)

    The proposed amendment to Section 110.11(a)(1) is very minor and 
intended to correct a typographical error that appears at the end of 
the subsection. The word ``modifications'' appears in two places in the 
subsection. This proposed amendment substitutes the second appearance 
of the word ``modifications'' with the word ``modification.'' The 
proposed subsection reads as follows:


Sec. 100.11  Allowable costs.

    (a) * * *
    (1) All reasonable plant costs directly associated with the 
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, until the equipment, facility, or service is 
replaced or significantly upgraded or otherwise undergoes major 
modification;

    (2) * * *
    This change is being made so that the term ``significantly upgraded 
or otherwise undergoes major modification'' contained in the rule is 
identical to the language contained in the CALEA statute. See 47 U.S.C. 
1007(c)(3)(B) & 1008(d).

E. Definition Development

1. Significantly Upgraded or Otherwise Undergoes Major Modification

    The term ``significantly upgraded or otherwise undergoes major 
modification'' can be found in the proposed amendment to Section 
100.11(a)(1) of the CALEA Cost Recovery Regulations. In the NPRM, the 
FBI proposed to define the term ``significant upgrade or major 
modification'' by creating a new section in the CALEA Cost Recovery 
Regulations. 63 FR 23231. Rather than create a new section entitled 
``significant upgrade or major modification,'' the FBI now proposes to 
amend Section 100.10 of the CALEA Cost Recovery Regulations by adding a 
definition for the term ``significantly upgraded or otherwise undergoes 
major modification'' followed by 15 examples of the definition's 
operation.
    The definition proposed in this SNPRM is a substantial departure 
from the NPRM proposed definition. It was developed after careful 
analysis of the CALEA statutory language, the NPRM definition, and the 
comments submitted by the telecommunications industry in response to 
the ANPRM and the NPRM. The proposed definition was developed with the 
goal of preserving law enforcement's ability to conduct electronic 
surveillance without impeding the introduction of new technologies, 
features, or services. It strikes an appropriate balance between the 
needs of law enforcement and the needs of the telecommunications 
industry. Most importantly, it is entirely consistent with the CALEA 
statutory scheme.
a. Background
    Since the SNPRM proposed definition was based, at least in part, 
upon the NPRM definition of ``significant upgrade or major 
modification,'' a brief review of that definition's development is 
appropriate. The FBI began the process of developing the NPRM proposed 
definition of ``significant upgrade or major modification'' by 
considering three different definitional approaches: Accounting, 
technical, and public safety. The FBI rejected the accounting approach 
mainly because it triggered a ``significant upgrade or major 
modification'' whenever the cost of a modification exceeded a set 
percentage of the equipment's value, regardless of whether the 
modification had any detrimental impact on law enforcement's ability to 
conduct lawfully authorized electronic surveillance. 63 FR 23233. The 
FBI also considered and rejected a number of technical approaches to 
defining the term ``significant upgrade or major modification.'' The 
FBI discovered that while some technical approaches worked well for 
some types of equipment, facilities, or services, they did not 
necessarily work well for all types of equipment, facilities, or 
services. Each technical definition considered by the FBI left 
ambiguities

[[Page 50934]]

and called for constant definition of the terms used. Id. The FBI 
concluded that the public safety approach to the definition was the 
most consistent with the statutory intent of CALEA. Under the public 
safety approach, a key consideration is whether a given modification 
has created an impediment to lawfully authorized electronic 
surveillance. 63 FR 23233.
    In accordance with the public safety approach, the FBI proposed in 
the NPRM to define the term ``significant upgrade or major 
modification'' as follows:

     100.22 Definition of ``significant upgrade or major 
modification.''
    (a) For equipment, facilities or services for which an upgrade 
or modification has been completed after January 1, 1995 and on or 
before October 25, 1998, the term ``significant upgrade or major 
modification'' means any fundamental or substantial change in the 
network architecture or any change that fundamentally alters the 
nature or type of the existing telecommunications equipment, 
facility or service, that impedes law enforcement's ability to 
conduct lawfully authorized electronic surveillance, unless such 
change is mandated by a Federal or State statute;
    (b) For equipment, facilities or services for which an upgrade 
or modification is completed after October 25, 1998, the term 
``significant upgrade or major modification'' means any change, 
whether through addition or other modification, to any equipment, 
facility or service that impedes law enforcement's ability to 
conduct lawfully authorized electronic surveillance, unless such 
change is mandated by a Federal statute.


63 FR 23230. The comments received by the telecommunications industry 
in response to this definition were very useful in developing the SNPRM 
proposed definition. Many of the features contained in the SNPRM 
proposed definition are the result of the industry comments.
b. The SNPRM Proposed Definition
    The FBI's primary goal in developing the proposed definition for 
the term ``significantly upgraded or otherwise undergoes major 
modification'' was to create a self-explanatory definition consistent 
with CALEA's statutory language. The FBI began this process by 
reexamining the dictionary definitions of the words ``significantly,'' 
``upgrade,'' ``major,'' and ``modification.'' \2\ The adverb 
``significantly'' is defined to mean ``in a significant manner.'' The 
adjective ``significant'' is defined as ``having or likely to have 
influence or effect.'' The verb ``upgrade'' means ``to raise or improve 
the grade of.'' The adjective ``major'' means ``notable or conspicuous 
in effect or scope.'' The noun ``modification'' means ``the making of a 
limited change in something.'' Thus, according to the dictionary, the 
concept of ``significantly upgraded'' would mean ``to have improved the 
grade of [something] in a manner that has or is likely to have 
influence or effect'' and the concept ``major modification'' means 
``the making of a limited change in something that is notable or 
conspicuous in effect or scope.'' In essence, the terms ``significant 
upgrade'' and ``major modification'' are synonyms that do not need 
separate definitions.
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    \2\ All definitions in this SNPRM, with the exceptions of the 
terms ``preexistent equipment,'' ``replaced,'' ``replacement 
equipment,'' and ``significantly upgraded or otherwise undergoes 
major modification'' were taken from the Merriam Webster's 
Collegiate Dictionary, Tenth Edition.
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    The next step in the definitional process was to determine what 
components could be derived from the CALEA statutory language and 
incorporated into these simple dictionary definitions. The search for 
these components began with the definitions suggested by the 
telecommunications industry. Four commenters, Ameritech Corporation, 
the Personal Communications Industry Association, the United States 
Telephone Association (USTA),\3\ and 
U S WEST, submitted suggested definitions in response to the FBI's 
NPRM. These four definitions built upon earlier definitions suggested 
by the industry in response to the ANPRM.
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    \3\ USTA is now known as the United States Telecom Association.
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    The FBI ultimately concluded that none of the NPRM suggested 
definitions could be adopted verbatim as the SNPRM proposed definition 
because each contained a shortcoming that defeated the goal of making 
the definition self-explanatory. This shortcoming is also found in the 
NPRM proposed definition which describes the term ``significant upgrade 
or major modification'' in terms of ``fundamental or substantial 
changes in network architecture'' or changes that ``fundamentally alter 
the nature or type of existing telecommunications equipment, facility, 
or service.'' This shortcoming has the serious disadvantage of 
substituting two undefined phrases (``fundamental or substantial 
changes'' or ``fundamentally alter'') in place of another 
(``significantly upgraded''). Although the FBI did not adopt any of the 
suggested definitions verbatim, it did incorporate key concepts of 
these definitions into the SNPRM proposed definition. For example, the 
fourth, fifth, and sixth components discussed below were all developed 
from concepts contained in the suggested definitions.
    After reexamining the statutory language of CALEA and the NPRM 
suggested definitions, the FBI determined that there are at least seven 
components that need to be incorporated into the SNPRM proposed 
definition of the term ``significantly upgraded or otherwise undergoes 
major modification.'' \4\ The first component is the determination of 
what can be ``significantly upgraded.'' According to CALEA, the only 
item capable of being ``significantly upgraded'' is preexistent 
equipment, that is, equipment, facilities, or services that a 
telecommunications carrier can use to provide its customers or 
subscribers with the ability to originate, terminate, or direct 
communications and was installed or deployed within the carrier's 
network on or before January 1, 1995. See 47 U.S.C. 1002(a), 
1007(c)(3), 1008(a) & (d). This explanation of preexistent equipment is 
included within the SNPRM proposed definition.
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    \4\ Hereafter, the terms ``significantly upgraded'' or 
``significant upgraded'' will be used in place of the more lengthy 
term ``significantly upgraded or otherwise undergoes major 
modification.''
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    The second component is the determination of who is responsible for 
an improvement that amounts to a ``significant upgrade.'' The statutory 
language is fairly clear that a ``significant upgrade'' can only be 
performed on preexistent equipment that belongs to a telecommunications 
carrier. See 47 U.S.C. 1007(c)(3) & 1008(d). For the purposes of the 
proposed definition, the telecommunications carrier bears the ultimate 
responsibility for an improvement amounting to a ``significant 
upgrade'' of its preexistent equipment, regardless of whether the 
carrier or some other party, for example, a telecommunications 
equipment manufacturer, actually installed or deployed the improvement 
in the carrier's network.
    The third component is the determination of what sort of action by 
a telecommunications carrier will amount to a ``significant upgrade'' 
of preexistent equipment. The FBI decided to move away from the 
terminology of ``any change'' or ``any fundamental or substantial 
change'' contained in the NPRM definition and specify the sorts of 
actions that might amount to a ``significant upgrade.'' The first step 
toward specificity was determining what aspects of preexistent 
equipment are most likely to be changed. The FBI concluded that these 
aspects are the capabilities, features, or services of the

[[Page 50935]]

preexistent equipment. The next step was to determine the manner in 
which the capabilities, features, or services of preexistent equipment 
might be ``significantly upgraded.'' The FBI concluded that a carrier 
could activate, add, or improve a capability, feature or service of its 
preexistent equipment in a manner that might amount to a ``significant 
upgrade.'' The main advantage of this third component is that it is 
self-explanatory. Unlike the terminology in the NPRM definition, it 
does not create additional questions such as ``what action is 
considered to be a change'' or ``what is a fundamental or substantial 
change?'' Another benefit of the actions specified in this component is 
that they are easily observable and measurable.
    The fourth component is really the crux of the proposed definition. 
It is one of the key narrowing factors that makes a particular upgrade 
``significant.'' This component is based upon the public safety 
approach contained in the NPRM and adhered to in this SNPRM. The FBI 
has refined the NPRM language to make it more consistent with the CALEA 
statutory language and to address certain industry comments.
    The NPRM proposed definition contained a key factor in determining 
whether a particular upgrade was ``significant'' for the purposes of 
the CALEA Cost Recovery Regulations. This factor limited ``significant 
upgrades'' to only those changes that impede ``law enforcement's 
ability to conduct lawfully authorized electronic surveillance.'' The 
proposed definition retains this factor, but changes the focus 
slightly. According to CALEA Section 103, the focus is not on law 
enforcement's ability to conduct lawfully authorized electronic 
surveillance, but rather on a telecommunications carrier's duty to 
unobtrusively deliver lawfully authorized intercepted communications 
and reasonably available call-identifying information to law 
enforcement in accordance with the assistance capability requirements. 
See 47 U.S.C. 1002(a). This shift in focus has the added advantage of 
specifying exactly what must be delivered.
    Some commenters have suggested that any final definition of 
``significant upgrade'' should be limited to those modifications that 
block or prevent electronic surveillance. The FBI believes that the 
assistance capability requirements require a telecommunications carrier 
to deliver intercepted communications and reasonably available call-
identifying information in their entirety. Modifications that garble or 
only allow for the intermittent delivery of lawfully authorized 
intercepted communications or reasonably available call-identifying 
information can be just as devastating to a law enforcement 
investigation as when electronic surveillance is blocked or prevented.
    The NPRM definition addressed this concern by concluding that 
changes which ``impede'' law enforcement's ability to conduct lawfully 
authorized electronic surveillance would amount to a ``significant 
upgrade.'' The definition proposed in this SNPRM substitutes the word 
``hampers'' in place of ``impedes.'' The verb ``hamper'' means ``to 
interfere with the operation of'' and includes the concepts of 
``hindering'' and ``impeding.'' Thus, the threshold for this component 
is quite low. If a carrier makes a modification to its preexistent 
equipment that in any way hampers the unobtrusive delivery of lawfully 
authorized intercepted communications or reasonably available call-
identifying information, the fourth component will be satisfied.
    The FBI has incorporated one exception into this component based 
upon industry comments. In response to the NPRM proposed definition, 
some commenters suggested that the FBI include an intent element in the 
final definition. They suggested that a ``significant upgrade'' should 
only occur when a carrier ``knowingly'' makes a change that impedes law 
enforcement's ability to conduct lawfully authorized electronic 
surveillance. The FBI believes that the insertion of a subjective 
intent element into the definition would essentially render it useless. 
However, the FBI has concluded that an objective notice standard could 
be inserted into this component which would have nearly the same 
effect. There are basically three ways that a carrier can ``learn'' 
that a modification made to its preexistent equipment is hampering the 
unobtrusive delivery of lawfully authorized intercepted communications 
or reasonably available call-identifying information to law 
enforcement. First, the carrier could discover the problem on its own; 
second, law enforcement could notify the carrier during its attempt to 
initiate a lawfully authorized electronic surveillance; or third, law 
enforcement could notify the carrier during the course of conducting 
lawfully authorized electronic surveillance. Once the carrier learns of 
the problem, it can either choose to correct the problem at its own 
expense in a reasonable period of time, or it can choose to do nothing. 
If the carrier chooses the first option, it has removed the hindrance 
and a ``significant upgrade'' has not occurred. Otherwise, there is the 
possibility that the modification may amount to a ``significant 
upgrade'' provided that all the other conditions of the proposed 
definition are met.
    The SNPRM proposed definition does not attempt to define the term 
``reasonable period of time.'' One example following the proposed 
definition indicates that 24 hours is a reasonable period of time when 
a law enforcement agency that is attempting to initiate a lawfully 
authorized electronic surveillance brings the problem to the carrier's 
attention. Another example indicates that 72 hours is a reasonable 
period of time when the carrier detects the problem on its own. These 
examples are not intended to set minimum or maximum thresholds. The FBI 
understands that the actual reasonable period of time will have to be 
negotiated between the carrier and the law enforcement agency. In the 
case of a pending lawfully authorized electronic surveillance, a court 
may have to determine what period of time is reasonable if the parties 
cannot agree.
    The fifth component is the determination of ``when'' a 
``significant upgrade'' has occurred. The NPRM definition proposed 
using the October 25, 1998, assistance capability requirements 
compliance deadline \5\ for determining whether a ``significant 
upgrade'' has occurred. Upon further review, the FBI has decided to 
abandon any use of the compliance deadline in the SNPRM proposed 
definition. The FBI made this decision for three reasons.
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    \5\ The FCC extended the assistance capability requirements 
deadline for J-STD-025 until June 30, 2000.
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    First, the use of the assistance capability compliance deadline in 
conjunction with the ``significant upgrade'' concept is somewhat 
inconsistent with CALEA's statutory scheme. The compliance deadline is 
an event that only applies to post-equipment, that is equipment, 
facilities, or services installed or deployed within a carrier's 
network after January 1, 1995.\6\ Compare 47 U.S.C. 1002(a) & 1001(b) 
note with 47 U.S.C. 1007(c)(3) & 1008(d). As discussed previously, the 
concept of ``significant upgrade'' only applies to preexistent 
equipment. Thus, it would be inappropriate to use the compliance 
deadline for determining

[[Page 50936]]

when a ``significant upgrade'' has occurred.
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    \6\ The only post-equipment not subject to the compliance 
deadline is that post-equipment for which the FCC has made a 
determination that compliance is not reasonably achievable and the 
Attorney General has not agreed to pay the additional reasonable 
costs of making such equipment compliant with the assistance 
capability requirements. 47 U.S.C. 1008(b)(2).
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    Second, the compliance deadline is subject to extension under CALEA 
Section 107(c), which makes it a moving target. The FBI has designed a 
flexible deployment plan to assist telecommunications carriers in 
obtaining Section 107(c) extensions from the FCC in exchange for making 
modifications to their deployment schedules to account for law 
enforcement electronic surveillance priorities. Rather than one 
compliance deadline, the flexible deployment plan will result in 
numerous, equipment-specific compliance deadlines, which would make the 
tracking of ``significantly upgraded'' equipment too burdensome for 
carriers and the FBI.
    Third, a careful review of the CALEA statutory language and the 
industry comments to the NPRM has revealed a much better alternative to 
using the compliance deadline as the ``when'' component for determining 
when a ``significant upgrade'' has occurred. This alternative is that 
preexistent equipment will not be considered to be ``significantly 
upgraded'' unless the improvement occurred after technology compliant 
with the assistance capability requirements was reasonably available, 
or should have been reasonably available, at the time the improvement 
was made. This component is derived directly from CALEA's statutory 
language and is another key narrowing factor in the proposed definition 
that makes a particular upgrade ``significant.''
    The term ``significantly upgraded'' appears only twice in the CALEA 
statute. The first mention of the term appears in Section 108(c)(3) 
which provides that an enforcement order cannot be issued against a 
carrier unless: (1) The Attorney General has agreed to pay the 
reasonable costs directly associated with bringing the carrier's 
preexistent equipment into compliance with the assistance capability 
requirements; or (2) the carrier's preexistent equipment is replaced or 
``significantly upgraded.'' The second place that the term 
``significantly upgraded'' appears in CALEA is Section 109(d), which 
provides that preexistent equipment will be ``considered in 
compliance'' with the assistance capability requirements if the carrier 
submits a request for payment in accordance with the Cost Recovery 
Regulations and the Attorney General does not agree to pay the 
reasonable costs of making the modifications necessary to bring the 
preexistent equipment into compliance. Such preexistent equipment loses 
its ``considered to be in compliance'' status if it is replaced or 
``significantly upgraded.'' 47 U.S.C. 1008(d).
    One feature that Section 108(c)(3) and Section 109(d) share is that 
before either provision can take effect, technology compliant with the 
assistance capability requirements must have been reasonably available, 
or should have been reasonably available, for installation or 
deployment by a carrier. This feature is explicitly stated in Section 
108 and assumed in Section 109.
    Section 108 specifically requires that before an enforcement order 
can be issued, the court must make a finding that compliance with the 
requirements of CALEA would have been reasonably achievable through the 
application of available technology if timely action had been taken. 47 
U.S.C. 1007(a)(2). The language ``if timely action had been taken'' is 
the statutory support for the inclusion of the ``or should have been 
reasonably available'' language contained in the proposed definition.
    Section 109(d) is a reimbursement provision that permits the 
Attorney General to reimburse a carrier for preexistent equipment if 
the carrier has submitted a request for payment in accordance with the 
CALEA Cost Recovery Regulations. 47 U.S.C. 1008(d). The assumption that 
equipment compliant with the assistance capability requirements is 
available for installation or deployment within a carrier's network is 
implied within the context of this subsection. If such equipment was 
not reasonably available to the carrier, it would be difficult for a 
carrier to estimate the costs necessary to make the appropriate 
modifications. Consequently, the carrier might not be able to submit a 
cost estimate submission to the FBI in accordance with the Cost 
Recovery Regulations.
    If the reasonable availability of CALEA-compliant technology is a 
prerequisite to either Section 108(c)(3) or Section 109(d), common 
sense would seem to dictate that it must also be a prerequisite to 
preexistent equipment being ``significantly upgraded.'' Thus, the 
``when'' component of the SNPRM definition must be that preexistent 
equipment will not be considered to be ``significantly upgraded'' 
unless the improvement occurred after technology compliant with the 
assistance capability requirements was reasonably available, or should 
have been reasonably available, at the time the improvement was made.
    The last thing that needs to be explained regarding this component 
is the meaning of the phrase, ``should have been reasonably 
available.'' As stated previously, this language is based on the 
statutory language in Section 108(a)(2) which requires a court to 
determine whether compliance with the requirements of CALEA is 
reasonably achievable through the application of available technology 
or would have been reasonably achievable if timely action had been 
taken. The FCC determined in its Memorandum Opinion and Order, adopted 
on September 10, 1998, that manufacturers should be able to produce 
equipment that will be generally available for carriers to meet the 
assistance capability requirements by December 31, 1999. The FBI 
considers this determination to be very reasonable since it established 
a deadline that was more than five years from the date of CALEA's 
enactment. In general, the FBI intends to use the December 31, 1999, 
date as the cutoff for determining whether compliant technology should 
have been reasonably available for the purposes of the proposed 
definition, unless a carrier can present a very compelling case that 
certain technology could not have been reasonably available by that 
date. For this reason, the FBI chose to use the ``should have been 
reasonably available'' language of the proposed definition rather than 
inserting the December 31, 1999, cutoff date directly into the text of 
the definition. The FBI feels that this will allow carriers and law 
enforcement some degree of flexibility in resolving those rare 
circumstances where compliant technology could not have been available 
by the December 31, 1999, cutoff date.
    The sixth component of the SNPRM proposed definition consists of 
the determination of when a particular modification will not be 
considered a ``significant upgrade.'' The NPRM definition contained an 
exclusion for modifications made as the result of a federal or state 
statutory mandate.\7\ Based upon comments from the industry and for the 
sake of completeness, this exclusion has been extended to modifications 
mandated by federal or state statute, rule, regulation, or 
administrative order.
---------------------------------------------------------------------------

    \7\ Subsection (b) of the NPRM proposed definition inadvertently 
omitted the word ``state'' when referring to statutory mandates. See 
63 FR 23230.
---------------------------------------------------------------------------

    The seventh and final component of the SNPRM proposed definition 
explains the status of preexistent equipment after it has been 
``significantly upgraded.'' Several commenters asked for the definition 
to clarify this point. Consequently, the SNPRM proposed definition 
explains

[[Page 50937]]

that preexistent equipment which has been ``significantly upgraded'' is 
the equivalent of equipment, facilities, or services installed or 
deployed within a carrier's network after January 1, 1995. Essentially, 
once preexistent equipment has been ``significantly upgraded,'' it 
becomes post-equipment.
    This conclusion is supported by CALEA's statutory language. CALEA 
divides the universe of telecommunications equipment, facilities, and 
services into two subsets: preexistent equipment and post-equipment. 
There are a couple of major distinctions between the two subsets. A 
carrier's preexistent equipment is eligible for full reimbursement of 
the reasonable costs necessary to make the preexistent equipment 
compliant with the assistance capability requirements. 47 U.S.C. 
1008(a). A carrier's post-equipment is only eligible for partial 
reimbursement if the FCC determines that compliance with the assistance 
capability requirements is not reasonably achievable for that 
particular post-equipment. 47 U.S.C. 1008(b). Another important 
distinction between the two subsets is that post-equipment is generally 
subject to the compliance deadline for the assistance capability 
requirements,\8\ while preexistent equipment does not need to comply 
with the deadline. Compare 47 U.S.C. 1002(a) & 1001(b) note with 47 
U.S.C. 1007(c)(3) & 1008(d). CALEA makes it clear that once preexistent 
equipment has been ``significantly upgraded'' it loses the protection 
and reimbursement status afforded to preexistent equipment. 47 U.S.C. 
1007(c)(3) & 1008(d). Since ``significantly upgraded'' equipment no 
longer belongs to the preexistent equipment subset, it can only belong 
to the remaining post-equipment subset.
---------------------------------------------------------------------------

    \8\ The only post-equipment not subject to the compliance 
deadline is that post-equipment for which the FCC has made a 
determination that compliance is not reasonably achievable and the 
Attorney General has not agreed to pay the additional reasonable 
costs of making such equipment compliant with the assistance 
capability requirements. 47 U.S.C. 1008(b)(2).
---------------------------------------------------------------------------

    The third step in the developmental process is the combination of 
these seven components in a manner consistent with the ordinary 
dictionary meaning of the term ``significantly upgraded or otherwise 
undergoes major modification.'' The following proposed definition is 
the result of that effort:

    Significantly upgraded or otherwise undergoes major modification 
means a telecommunications carrier has activated, added, or improved 
a capability, feature, or service of its preexistent equipment that:
    (1) hampers the carrier's ability to unobtrusively deliver 
lawfully authorized intercepted communications and/or reasonably 
available call-identifying information to law enforcement in 
accordance with the assistance capability requirements of 47 U.S.C. 
`` 1002 (assistance capability requirements), in a manner that the 
carrier does not correct at its own expense within a reasonable 
period of time; and
    (2) occurs after technology compliant with the assistance 
capability requirements was reasonably available, or should have 
been reasonably available for installation or deployment by a 
carrier at the time the improvement was made; and
    (3) was not mandated by a federal or state statute, rule, 
regulation, or administrative order.
    Preexistent equipment is equipment, facilities, or services that 
a telecommunications carrier can use to provide its customers or 
subscribers with the ability to originate, terminate, or direct 
communications and was installed or deployed within the carrier's 
network on or before January 1, 1995. Preexistent equipment that has 
been ``significantly upgraded or otherwise undergoes major 
modification'' is the equivalent of equipment, facilities, or 
services installed or deployed within a carrier's network after 
January 1, 1995.
c. Example Summaries
    The last step in the developmental process was the creation of 
examples to help illustrate the practical operation of the definition. 
The FBI proposes to add 15 examples following the text of the SNPRM 
proposed definition of ``significantly upgraded or otherwise undergoes 
major modification.'' The actual language of the examples is provided 
in the regulatory text section of this SNPRM. This section summarizes 
the examples.
    The first example explains that preexistent equipment is not 
``significantly upgraded'' when a carrier makes a modification that 
affects capacity, because the ``significantly upgraded'' definition is 
tied to the assistance capability requirements, and has no bearing on 
capacity requirements.
    The second example illustrates the requirement that preexistent 
equipment must be used by a carrier to provide its customers with the 
ability to originate, terminate, or direct communications.
    The third and fourth examples demonstrate situations where a 
carrier modifies a portion of its network architecture from circuit-
mode to packet-mode switching technology.
    The fifth example involves a carrier modifying its preexistent 
equipment to improve network efficiencies and make existing services 
easier for customers to use in a manner that did not amount to a 
``significant upgrade.''
    The sixth example involves a carrier making an improvement to 
correct Y2K deficiencies that did not amount to a ``significant 
upgrade.''
    The seventh example explains that a modification causing law 
enforcement to relocate its point of intercept from the local loop to 
the carrier's central office was not a ``significant upgrade.''
    The eighth example illustrates the circumstances under which the 
activation of a dormant call forwarding feature by a telecommunications 
carrier amounts to a ``significant upgrade.''
    The ninth example illustrates how a generic software upgrade can 
amount to a ``significant upgrade.''
    The tenth example demonstrates a situation where an improvement had 
no adverse effect on the delivery of intercepted communications to law 
enforcement, but did result in the intermittent garbling of reasonably 
available call-identifying information. This hindrance amounted to a 
``significant upgrade'' in the absence of the carrier taking action to 
correct the problem.
    The eleventh example illustrates a carrier detecting and then 
correcting a problem caused by a modification made to its preexistent 
equipment.
    The twelfth example illustrates a carrier correcting a problem 
caused by a modification made to its preexistent equipment after being 
notified by law enforcement.
    The thirteenth example demonstrates the consequences of a carrier 
deciding not to correct a problem caused by an earlier modification to 
its preexistent equipment.
    The fourteenth example demonstrates the effect of modifications 
mandated by federal statutes and regulations.
    The final example explains the effect of a ``significant upgrade'' 
on preexistent equipment.
d. Conclusion
    The proposed definition of ``significantly upgraded or otherwise 
undergoes major modification'' and the 15 examples are consistent with 
the language and intent of both the statute and the CALEA Cost Recovery 
Regulations. The proposed definition strikes an appropriate balance 
between the telecommunications industry's need to introduce new 
technologies, features, and services, and its obligation under CALEA to 
unobtrusively deliver intercepted communications and reasonably 
available call-identifying information to law enforcement.

2. Replaced

    The term ``replaced'' can be found in Section 100.11(a)(1) of the 
CALEA Cost

[[Page 50938]]

Recovery Regulations. Commenters responding to the ANPRM and the NPRM 
have urged the FBI to define the term ``replaced'' in addition to the 
term ``significant upgrade.'' Given the importance of this term in 
determining reimbursement eligibility for equipment, facilities, or 
services installed or deployed on or before January 1, 1995, the FBI 
has decided to define the term ``replaced'' in this rulemaking 
proceeding. This SNPRM proposes to amend Section 100.10 of the CALEA 
Cost Recovery Regulations by adding a definition for the term 
``replaced'' and twelve examples of the definition's operation.
a. Background
    The FBI's decision to define the term ``replaced'' is a reversal of 
the position that it took in the NPRM. In the NPRM, the FBI stated that 
it did not intend to define the term ``replaced,'' because its meaning 
is both clear and common. 63 FR 23234. As the FBI revised its 
definition of the term ``significantly upgraded,'' it became clear that 
several components of the revised definition could be incorporated into 
a definition for the term ``replaced.'' After conducting a preliminary 
analysis, the FBI concluded that defining the term ``replaced'' was in 
the best interests of the law enforcement community and the 
telecommunications industry.
    In developing the definition of the term ``replaced'' the FBI 
considered all comments on the subject submitted in response to the 
ANPRM and NPRM. Since the FBI stated categorically in the NPRM that it 
had no intention of defining the term, most NPRM commenters did not 
address the issue, other than to request the FBI reconsider its 
position.
    Four commenters, AirTouch Communications, AT&T Wireless Services, 
Inc., the Cellular Telephone Industry Association, and the 
Telecommunications Industry Association, submitted suggested 
definitions in response to the FBI's ANPRM. Three of the commenters 
supported language that defined the term ``replaced'' as meaning the 
installation of equipment, facilities, or services which became 
commercially available after January 1, 1995, and which are not 
upgrades or modifications of previously deployed equipment, facilities, 
or services.\9\ The FBI declined to adopt this definition because it 
does not address all the elements needed to make a determination of 
whether a telecommunications carrier replaced its preexistent 
equipment.
---------------------------------------------------------------------------

    \9\ One of these three commenter's definitions contained a 
typographical error, mistakenly substituting the word ``before'' 
where the other commenters had used the word ``after.'' This minor 
error does not affect the analysis of the suggested definition.
---------------------------------------------------------------------------

    The fourth commenter suggested defining ``replaced'' as meaning the 
total removal and replacement of equipment by an all new system at that 
location serving the same customers. One problem with this suggested 
definition is that a replacement occurs only when preexistent equipment 
is replaced by ``an all new system.'' Since a carrier might choose to 
substitute new or used equipment in place of its preexistent equipment, 
this limitation is inappropriate. Otherwise, the FBI believes that the 
spirit of this suggested definition has been incorporated into the 
SNPRM proposed definition.
    In many respects, the industry comments responding to the ANPRM and 
NPRM regarding the ``significantly upgraded'' definition were also very 
useful in developing the ``replaced'' definition. The FBI relied upon 
these comments and the analytical approach used in the development of 
the ``significantly upgraded'' definition to create a definition for 
the term ``replaced'' that is consistent with CALEA's statutory 
language. The next section describes the process that the FBI used to 
develop the SNPRM proposed definition.
b. The SNPRM Proposed Definition
    The FBI's primary goal in developing the proposed definition for 
the term ``replaced'' was identical to that for the proposed definition 
of ``significantly upgraded,'' that is, to create a self-explanatory 
definition consistent with CALEA's statutory language. The definitional 
development of the term ``replaced'' followed a route similar to that 
used for the ``significantly upgraded'' proposed definition. The FBI 
began the process of developing the proposed definition of the term 
``replaced'' by examining its dictionary definition. The verb 
``replace'' means ``to take the place of [especially] as a substitute 
or successor.'' The next step in the definitional process was the 
determination of what components could be derived from the CALEA 
statutory language and incorporated into this simple dictionary 
definition.
    The FBI has determined that there are at least seven components 
that need to be incorporated into the SNPRM proposed definition of the 
term ``replaced.'' The first component is the determination of what can 
be ``replaced.'' According to CALEA, the only item capable of being 
``replaced'' is preexistent equipment, that is equipment, facilities, 
or services that a telecommunications carrier can use to provide its 
customers or subscribers with the ability to originate, terminate, or 
direct communications and was installed or deployed within a carrier's 
network on or before January 1, 1995. See 47 U.S.C. 1002(a), 
1007(c)(3), and 1008(a) & (d). This explanation of preexistent 
equipment is included within the SNPRM proposed definition.
    The second component is the determination of what is replacing the 
preexistent equipment. The FBI has elected to identify this component 
as ``replacement equipment.'' Like preexistent equipment, replacement 
equipment must also be used by a telecommunications carrier to provide 
its customers or subscribers with the ability to originate, terminate, 
or direct communications. See 47 U.S.C. 1002(a). Unlike preexistent 
equipment, there is no requirement that the equipment, facilities, or 
services that make up replacement equipment be installed or deployed in 
a carrier's network on or before January 1, 1995. Replacement equipment 
can be either new or used. It is also possible that, in some instances, 
the replacement equipment might itself be preexistent equipment. 
Putting these ideas together, the FBI proposes that replacement 
equipment is equipment, facilities, or services, whether new or used, 
that a telecommunications carrier can use to provide its customers or 
subscribers with the ability to originate, terminate, or direct 
communications and is installed or deployed within the carrier's 
network. This explanation of replacement equipment is included within 
the SNPRM proposed definition.
    The third component is the determination of what sort of action 
will amount to a replacement of preexistent equipment. For this 
determination, the FBI simply relied upon the dictionary definition of 
the verb ``replaced.'' Thus, the action needed for a replacement occurs 
when replacement equipment is substituted in place of preexistent 
equipment.
    The fourth component is the determination of who is responsible for 
the consequences of substituting replacement equipment in place of 
preexistent equipment. The statutory language is clear that a 
replacement can only be performed on a telecommunications carrier's 
preexistent equipment. See 47 U.S.C. 1007(c)(3) & 1008(d). For the 
purposes of the proposed definition, the telecommunications carrier 
bears the ultimate responsibility for a substitution amounting to a 
replacement of its preexistent equipment, regardless of whether the 
carrier or some other party, for example, a telecommunications

[[Page 50939]]

equipment manufacturer, actually installed or deployed the replacement 
equipment into the carrier's network.
    The fifth component is the determination of ``when'' a replacement 
has occurred. Learning from its analysis of the ``significantly 
upgraded'' definition, the FBI has determined that preexistent 
equipment will be considered ``replaced'' only when the substitution 
occurred after technology compliant with the assistance capability 
requirements was reasonably available, or should have been reasonably 
available, for installation or deployment by the telecommunications 
carrier at the time the substitution was made. As discussed previously 
during the detailed analysis of the ``significantly upgraded'' fifth 
component, this component is required by the statutory language of 
CALEA. See 47 U.S.C. 1007(c)(3) & 1008(d). Also, the ``should have been 
reasonably available'' language is based on the statutory language of 
Section 108(a)(2) which requires a court to determine whether 
compliance with the requirements of CALEA is reasonably achievable 
through the application of available technology or would have been 
reasonably achievable if timely action had been taken.
    The last aspect of this component is the FBI's interpretation of 
the phrase, ``should have been reasonably available.'' As discussed 
previously, the FCC determined that manufacturers should be able to 
produce equipment that will be generally available for carriers to meet 
the assistance capability requirements by December 31, 1999. In 
general, the FBI intends to use this December 31, 1999, date as the 
cutoff for determining whether compliant technology should have been 
reasonably available for the purposes of the proposed definition of 
``replaced,'' unless a carrier can present a very compelling case that 
certain technology could not have been reasonably available by that 
date. For this reason, the FBI chose to use the ``should have been 
reasonably available'' language of the proposed definition rather than 
inserting the December 31, 1999, cutoff date directly into the text of 
the definition. The FBI feels that this will allow carriers and law 
enforcement some degree of flexibility in resolving those rare 
circumstances where compliant technology could not have been available 
by the December 31, 1999, cutoff date.
    The sixth component of the SNPRM proposed definition explains the 
status of preexistent equipment after it has been ``replaced.'' This 
component is identical to the seventh component of the ``significantly 
upgraded'' SNPRM proposed definition, and is based upon the reasoning 
discussed above. Once preexistent equipment has been ``replaced,'' it 
is the equivalent of equipment, facilities, or services installed or 
deployed within a carrier's network after January 1, 1995.
    The seventh and final component of the SNPRM proposed definition 
explains the status of replacement equipment after it is substituted in 
place of preexistent equipment. The status is dependent upon whether 
the replacement equipment is itself preexistent equipment that has not 
been ``replaced,'' or simply new or used equipment, facilities, or 
services installed or deployed in a carrier's network after January 1, 
1995. If the replacement equipment is itself preexistent equipment that 
has not been ``replaced,'' and is substituted in place of other 
preexistent equipment, the replacement equipment retains its 
reimbursement eligibility as preexistent equipment. The FBI has 
included this explanation only for the sake of completeness and 
recognizes that this provision would rarely, if ever, be triggered by a 
carrier's actions in the ordinary course of business. This is the only 
exception to the general rule that replacement equipment is the 
equivalent of equipment, facilities, or services installed or deployed 
within a carrier's network after January 1, 1995.
    The third step in the developmental process was to combine these 
seven components in a manner consistent with the ordinary dictionary 
meaning of the term ``replaced.'' The following proposed definition is 
the result of that effort:

    Replaced means that a telecommunications carrier substituted 
replacement equipment in place of preexistent equipment after 
technology compliant with the assistance capability requirements of 
47 U.S.C. 1002 (assistance capability requirements) was reasonably 
available, or should have been reasonably available, for 
installation or deployment by a carrier at the time the substitution 
was made. Replacement equipment is equipment, facilities, or 
services, whether new or used, that a telecommunications carrier can 
use to provide its customers or subscribers with the ability to 
originate, terminate, or direct communications and is installed or 
deployed within the carrier's network. Preexistent equipment is 
equipment, facilities, or services that a telecommunications carrier 
can use to provide its customers or subscribers with the ability to 
originate, terminate, or direct communications and was installed or 
deployed within the carrier's network on or before January 1, 1995. 
Preexistent equipment that has been ``replaced'' is the equivalent 
of equipment, facilities, or services installed or deployed within a 
carrier's network after January 1, 1995. When replacement equipment 
is itself preexistent equipment that has not been ``replaced,'' and 
is substituted in place of other preexistent equipment, the 
replacement equipment retains its reimbursement eligibility as 
preexistent equipment. Otherwise, replacement equipment is the 
equivalent of equipment, facilities, or services installed or 
deployed within a carrier's network after January 1, 1995.
c. Example Summaries
    The final step in the developmental process was the creation of 
examples to help illustrate the practical operation of the ``replaced'' 
definition. The FBI proposes to add twelve examples following the text 
of the SNPRM proposed definition of ``replaced.'' The actual language 
of the examples is provided in the regulatory text section of this 
SNPRM. This section summarizes the examples.
    The first example explains that repairs made to preexistent 
equipment do not amount to a ``replacement'' so long as the preexistent 
equipment remains in place within the carrier's network.
    The second example illustrates the requirement that the preexistent 
equipment or replacement equipment must be used by a carrier to provide 
its customers or subscribers with the ability to originate, terminate, 
or direct communications.
    The third example addresses a situation when new equipment is added 
to a central office, but there is no substitution of replacement 
equipment in place of preexistent equipment.
    The fourth example explains the effect of replacing damaged 
preexistent equipment.
    The fifth and sixth examples explain how the movement of equipment 
within a carrier's network can affect whether preexistent equipment is 
considered to be ``replaced.''
    The seventh and eighth examples explain the effect of replacing 
preexistent equipment with other preexistent equipment.
    The ninth example explains the effect of a sale of preexistent 
equipment when the preexistent equipment remains in place.
    The tenth example explains the effect of a sale of preexistent 
equipment when the preexistent equipment is removed and installed in 
another carrier's network.
    The eleventh example illustrates the replacement of analog 
equipment with digital equipment.
    The final example illustrates the replacement of circuit-mode 
equipment with packet-mode equipment.

[[Page 50940]]

d. Conclusion
    The proposed definition of ``replaced'' is consistent with the 
language and intent of both the statute and the CALEA Cost Recovery 
Regulations. It ensures that the amount of preexistent equipment 
remains relatively static until technology compliant with the 
assistance capability requirements is reasonably available, or should 
have been reasonably available, for installation or deployment by a 
carrier at the time a substitution is made. The proposed definition 
strikes an appropriate balance between the telecommunications 
industry's need to introduce new technologies, features, and services, 
and its obligation under CALEA to unobtrusively deliver intercepted 
communications and reasonably available call-identifying information to 
law enforcement.

F. Discussion of Comments Received in Response to Notice of 
Proposed Rulemaking

    In response to the NPRM, the FBI received comments from ten 
representatives of the telecommunications industry. All comments have 
been considered in preparing this SNPRM. In developing the definitions 
contained in this SNPRM, the FBI has also relied on the input of other 
governmental agencies and telecommunications industry experts. 
Significant comments received in response to the NPRM and any 
significant changes are discussed below.

1. Definition of ``Installed or Deployed''

    Several commenters criticized the definition of the term 
``installed or deployed'' contained in Section 100.10 of the CALEA Cost 
Recovery Regulations and asked for a revision of the term. These 
criticisms have no bearing on this particular rulemaking proceeding. 
Moreover, the term ``installed or deployed'' as defined by the FBI in 
the CALEA Cost Recovery Regulations was recently upheld by the United 
States District Court for the District of Columbia. USTA v. FBI, No. 
98-2010 (D.D.C. August 28, 2000).

2. Definition of ``Replaced''

    Some of the commenters who responded to the ANPRM requested that 
the FBI define the term ``replaced.'' In the NPRM, the FBI indicated 
that it did not intend to define ``replaced.'' In their comments on the 
NPRM, some commenters restated that the term ``replaced'' should be 
defined. Upon further consideration, the FBI has decided to publish a 
proposed definition of the term in this SNPRM.

3. Federal and State Mandates

    Several commenters pointed out that the text of subsections 
100.22(a) and (b) of the NPRM proposed definition published in the 
Federal Register was inconsistent with regard to federal and state 
mandates. See 63 FR 23231 at 23239. Those commenters posited, 
correctly, that this inconsistency was the result of an editorial 
oversight. When a telecommunications carrier makes an improvement to 
its preexistent equipment mandated by a federal or state statute, rule, 
regulation, or administrative order, the SNPRM proposed definition 
provides that equipment undergoing such an improvement will not be 
considered to have been ``significantly upgraded.''

4. Status of ``Significantly Upgraded'' Preexistent Equipment

    A couple of commenters stated that the CALEA Cost Recovery 
Regulations should clarify that preexistent equipment which is 
``significantly upgraded'' is still eligible for reimbursement under 
the ``reasonable achievability'' provisions of Section 109(b). The FBI 
incorporated this suggestion into the SNPRM proposed definitions of 
``replaced'' and ``significantly upgraded.'' If preexistent equipment 
is replaced or ``significantly upgraded,'' it is the equivalent of 
post-equipment, that is, equipment, facilities, or services installed 
or deployed within a carrier's network after January 1, 1995. This 
means that once preexistent equipment has been replaced or 
``significantly upgraded'' it is eligible for the same procedural 
protections afforded to post-equipment, including the possibility of 
obtaining limited reimbursement under Section 109(b). On the other 
hand, such preexistent equipment must also comply with all of the 
requirements that CALEA imposes upon post-equipment.

5. Prohibition on the Development and Deployment of Advanced 
Technologies

    Section 103(b)(1)(B) states that no law enforcement agency may 
prohibit the adoption of any equipment, facility, service, or feature 
by any provider of a wire or electronic communications service, any 
manufacturer of telecommunications equipment, or any provider of 
telecommunications support services. Some commenters have asserted that 
the NPRM proposed definition is inconsistent with this statutory 
requirement and may impede the development and deployment of new 
technologies contrary to the intent of CALEA. The FBI disagrees with 
this assertion.
    Nothing in either the NPRM proposed definition or the SNPRM 
proposed definition of ``significantly upgraded'' prohibits the 
development or deployment of advanced technologies. The decision to 
develop new technologies is a matter within the sound business 
discretion of telecommunications equipment manufacturers. Similarly, a 
carrier's decisions to deploy new technologies or upgrade preexistent 
equipment with advanced technologies are matters within its sound 
business discretion. CALEA envisions that manufacturers will 
incorporate the assistance capability requirements into their newly 
developed equipment, regardless of whether that new technology will 
eventually be used by a carrier to modify or upgrade its preexistent 
equipment. The purpose of the ``replaced or significantly upgraded, or 
otherwise undergoes major modification'' language in Section 109(d) is 
to encourage carriers to incorporate the assistance capability 
requirements into business decisions regarding new or preexistent 
equipment.

6. Public Safety Approach Is Inconsistent With CALEA

    One commenter asserted that the FBI's public safety approach to 
defining the term ``significantly upgraded'' is inconsistent with 
CALEA. Contrary to this assertion, the FBI believes that CALEA is, 
first and foremost, a public safety statute. The FBI bases this 
conclusion on the statutory language of the statute and its legislative 
history. The term ``public safety'' actually appears in the text of 
CALEA. In fact, the first factor that the FCC must consider in making a 
reasonably achievable determination is ``the effect on public safety 
and national security.'' 47 U.S.C. 1008(b)(1)(A). Perhaps the clearest 
statement that CALEA is a public safety statute can be found in its 
legislative history which states that the purpose of the law ``is to 
preserve the government's ability, pursuant to court order or other 
lawful authorization, to intercept communications involving advanced 
technologies * * * while protecting the privacy of communications and 
without impeding the introduction of new technologies, features or 
services.'' H.R. Rep. No. 103-827, pt. 1, at 9 (1994). The legislative 
history notes that ``the question of whether companies have any 
obligation to design their systems such that they do not impede law 
enforcement interception has never been adjudicated'' and goes on to 
state that ``the purpose of the legislation is to further define the 
industry duty to

[[Page 50941]]

cooperate and to establish procedures based on public accountability 
and industry standards-setting.'' Id. at 13-14. Given this language, 
the FBI believes that defining the term ``significantly upgraded'' in 
terms of pubic safety is entirely consistent with the intent of CALEA.

7. Meaning of ``Impedes''

    Several commenters expressed their concern that the NPRM proposed 
definition did not adequately explain the meaning of the term 
``impedes.'' Some commenters stated that the focus of the term should 
be on the assistance capability requirements rather than on law 
enforcement's ability to conduct electronic surveillance. One commenter 
asserted that the term should only include modifications that ``block'' 
or ``prevent'' electronic surveillance. Another commenter requested the 
FBI to provide examples of how electronic surveillance could be 
impeded. The FBI has addressed these concerns in the SNPRM proposed 
definition.
    The NPRM proposed definition focused on modifications that impede 
law enforcement's ability to conduct lawfully authorized electronic 
surveillance. Some commenters stated that the focus of the term 
``impedes'' should instead be on how a particular modification affects 
the assistance capability requirements. The FBI agrees with this 
statement and has incorporated the concept into the SNPRM proposed 
definition. The focus of CALEA Section 103 is not so much on law 
enforcement's ability to conduct lawfully authorized electronic 
surveillance, but rather on a telecommunications carrier's duty to 
unobtrusively deliver lawfully authorized intercepted communications 
and reasonably available call-identifying information to law 
enforcement in accordance with the assistance capability requirements. 
See 47 U.S.C. 1002(a). This subtle shift in focus has the added 
advantage of providing better guidance to carriers about the kinds of 
hindrances that might amount to a ``significant upgrade.''
    The FBI disagrees with the assertion that the word ``impedes'' is 
limited to those modifications that ``block'' or ``prevent'' electronic 
surveillance. The verb ``impede'' means ``to interfere with or slow the 
progress of.'' There are actions short of blocking or preventing that 
can also interfere with or slow the delivery of intercepted 
communications or reasonably available call-identifying information to 
law enforcement. For example, modifications that garble or only allow 
for the intermittent delivery of intercepted communications or 
reasonably available call-identifying information to law enforcement 
can be just as devastating to an investigation as when electronic 
surveillance is blocked or prevented.
    To ensure that the SNPRM proposed definition of ``significantly 
upgraded'' is not limited to modifications that block or prevent 
electronic surveillance, the FBI has decided to use the term 
``hampers'' in lieu of the word ``impedes.'' The verb ``hamper'' means 
``to interfere with the operation of'' and includes the concepts of 
``impeding'' and ``hindering.'' In this respect, the term ``hampers'' 
is broader and slightly more precise than the term ``impedes.'' The 
term ``hampers'' appropriately establishes a fairly low threshold for 
improvements or modifications that interfere with the carrier's ability 
to deliver intercepted communications and reasonably available call-
identifying information to law enforcement.
    In response to this last concern, six of the 15 examples following 
the SNPRM proposed definition of ``significantly upgraded or otherwise 
undergoes major modification'' illustrate hampering and non-hampering 
modifications. See Examples 5-10.

8. Unintended Impediments

    A couple of NPRM commenters suggested that the definition of 
``significant upgrade'' should contain a specific intent element. 
Specifically, one commenter suggested that the word ``knowingly'' be 
added before the phrase ``impedes law enforcement's ability to conduct 
lawfully authorized electronic surveillance.'' The FBI recognized the 
merit of this suggestion, but was wary of injecting a subjective intent 
element into the definition out of concern that it would make 
``significant upgrade'' determinations very difficult. As noted 
previously, the FBI has included an objective notice standard into the 
SNPRM proposed definition that allows a telecommunications carrier to 
correct an unintended impediment at its own expense within a reasonable 
period of time once the carrier learned that its improvement was 
hampering the unobtrusive delivery of lawfully authorized intercepted 
communications and/or reasonably available call-identifying information 
to law enforcement in accordance with the assistance capability 
requirements.

9. October 25, 1998, Is an Arbitrary Date

    Several commenters argued that the October 25, 1998 date at which 
the NPRM proposed definition was bifurcated was arbitrary in that 
CALEA-compliant solutions would not be available by that date, thereby 
obviating the government's rationale for bifurcating the definition in 
the first place. The FBI disagrees that the October compliance date was 
an arbitrary date. The purpose of using the October compliance date was 
to protect carriers by making sure that CALEA-compliant solutions were 
available prior to making modifications that would amount to a 
``significant upgrade.''
    The FBI considered improving the NPRM proposed definition by 
substituting the words ``capability compliance date'' in place of the 
date ``October 25, 1998'' to address possible extensions granted by the 
FCC. However, upon further examination of the CALEA statutory language, 
the FBI determined that the capability compliance date was really a 
concept that applied to post-equipment. For the reasons stated earlier, 
the compliance date concept was dropped from the SNPRM proposed 
definition. In its place, the FBI inserted a requirement into the 
proposed definition that a ``significant upgrade'' could not occur 
unless technology compliant with the assistance capability requirements 
was reasonably available, or should have been reasonably available for 
installation or deployment at the time a carrier made an improvement to 
its preexistent equipment. Thus, any industry concerns regarding the 
capability compliance date have been rendered moot.

10. Availability of CALEA-Complaint Technology

    Nearly every commenter asserted that a pre-condition for the 
occurrence of a ``significant upgrade'' was the availability of CALEA-
compliant technology. These commenters argued persuasively that 
carriers could not be expected to include the CALEA solution along with 
any ``significant upgrade'' if such a solution did not exist.
    In response to these comments and careful review of the CALEA 
statutory language, the FBI decided to incorporate a requirement into 
the proposed definition that a ``significant upgrade'' could not occur 
unless technology compliant with the assistance capability requirements 
was reasonably available, or should have been reasonably available for 
installation or deployment by a carrier at the time it made an 
improvement to its preexistent equipment. As discussed above, the FBI 
intends to rely on the FCC's determination that December 31, 1999, was 
the date by which manufacturers should have been able to provide 
telecommunications carriers with CALEA-compliant equipment. The FBI 
recognizes that there may be some

[[Page 50942]]

limited circumstances where a carrier can make a compelling case that 
certain technology was not reasonably available by the December 31, 
1999, date. The language of the SNPRM proposed definition allows 
carriers and law enforcement some degree of flexibility in resolving 
these sorts of issues.

11. Change From Analog to Digital Switching

    In the NPRM the FBI provided an example of a modification ``about 
which no argument can be made'' regarding its significance, i.e., a 
change from analog to digital switching. 63 FR 23234. As it turns out, 
this example was a poor choice for illustrating a change that 
``fundamentally alters the nature or type of the existing 
telecommunications equipment,'' because the FBI is not aware of any 
instance where a carrier has made modifications to an analog switch 
that converted it into a digital switch. Rather, carriers typically 
``replace'' analog switches with digital switches. Thus, a change from 
analog to digital switching cannot typically be a ``significant 
upgrade'' because it does not involve activation, addition, or 
improvement to preexistent equipment's capabilities, features, or 
services.

12. Just Compensation

    One commenter claims that the CALEA Cost Recovery Regulations are 
unfairly restrictive, requiring carriers to incur costs for the benefit 
of society as a whole without just compensation. As such, this 
commenter broadly asserts that the Just Compensation Clause of the 
Fifth Amendment governs the payment of such ``reasonable costs'' and 
that the final decision on reimbursement should be judicial. The FBI 
disagrees and asserts that the CALEA Cost Recovery Regulations do not 
implicate the protections of the Fifth Amendment.
    The Fifth Amendment provides that no ``private property shall be 
taken for public use without just compensation.'' Takings claims can 
fall into two separate categories: (1) Physical takings which result 
from physical invasions of a property owner's land; and (2) regulatory 
takings ``where regulation denies all economically beneficial or 
productive use of land.'' Lucas v. South Carolina Coastal Council, 505 
U.S. 1003, 1015 (1992). Since the CALEA Cost Recovery Regulations do 
not authorize a physical intrusion upon private property or authorize 
others to do so, a physical taking analysis is unnecessary. See Hall v. 
City of Santa Barbara, 833 F.2d 1270, 1275 (9th Cir. 1986).
    An examination of the CALEA Cost Recovery Regulations under a 
regulatory taking analysis reveals that the operation of the 
``significantly upgraded'' definition does not amount to a taking for 
the purposes of the Fifth Amendment. Regulatory taking cases arise when 
the value or usefulness of private property is diminished by regulatory 
action not involving a physical occupation of the property. Hall, 833 
F.2d at 1275. In Penn Central Transportation Co. v. New York City, 438 
U.S. 104, 124 (1978), the Supreme Court articulated three factors to 
consider in determining whether there has been a regulatory taking. 
These factors are: (1) The character of the government action, (2) the 
economic impact of the action upon the property owner; and (3) the 
extent to which the regulation has interfered with the property owner's 
distinct investment-backed expectations. In Penn Central the Supreme 
Court applied these factors and held that there was no regulatory 
taking when New York City prohibited Penn Central from building a 55-
story office tower over its Grand Central Terminal, despite the drastic 
diminution in the value and usefulness of Penn Central's property.
    The FBI previously analyzed the Penn Central factors and concluded 
that the NPRM proposed definition did not amount to a regulatory 
taking.\10\ Reapplying these factors to the SNPRM proposed definition 
of ``significantly upgraded'' yields the same conclusion. First, the 
FBI's proposed definition of this term in its CALEA Cost Recovery 
Regulations is an appropriate exercise of its authority under the 
statute. See 47 U.S.C. 1008(e). The proposed definition does not deny 
any telecommunications carrier access to its property, nor does it 
prevent a carrier from using its equipment as it sees fit. The proposed 
definition merely allows law enforcement and telecommunications 
carriers the ability to determine when, if ever, certain preexistent 
equipment becomes post equipment by virtue of having been 
``significantly upgraded.''
---------------------------------------------------------------------------

    \10\ Implementation of Section 109 of the Communications 
Assistance for Law Enforcement Act: Proposed Definition of 
``Significant Upgrade or Major Modification'' 63 FR at 23234-23235.
---------------------------------------------------------------------------

    Second, the economic impact of the proposed definition does not 
amount to a regulatory taking. Preexistent equipment that has been 
``significantly upgraded'' has the same status as post-equipment and 
may still be eligible for some limited reimbursement should the FCC 
determine that compliance is not reasonably achievable for that 
particular preexistent equipment. 47 U.S.C. 1008(b). The decision to 
upgrade preexistent equipment is a matter within the sound business 
discretion of a telecommunications carrier. Such a decision will 
typically require an assessment of the economic impact on the carrier. 
The decision to proceed with an upgrade would seem to indicate that the 
carrier determined that the benefits of upgrading outweighed the 
possible costs, e.g., the loss of preexistent equipment reimbursement 
eligibility.
    Third, the SNPRM proposed definition does not meaningfully 
interfere with a telecommunications carrier's ``reasonable investment-
backed expectations.'' The proposed definition will not deprive a 
carrier of a reasonable return on its preexistent equipment. A 
telecommunications carrier is not deprived of the use of its 
preexistent equipment once it has been ``significantly upgraded.'' 
Furthermore, a carrier can seek an extension of the capability 
compliance deadline from the FCC for any of its ``significantly 
upgraded'' preexistent equipment. 47 U.S.C. 1006(c).

G. Regulatory Evaluation

1. Executive Order 12630 (Takings)

    The amendments proposed in the SNPRM will not effect a taking of 
private property or otherwise have taking implications under Executive 
Order 12630, ``Governmental Actions and Interference with 
Constitutionally Protected Property Rights.'' 53 FR 8859, March 15, 
1988.

2. Executive Order 12866 (Regulatory Planning and Review)

    The FBI examined these proposed rules in light of Executive Order 
12866, ``Regulatory Planning and Review'' (58 FR 51735, September 30, 
1993), and has found that it constitutes a significant regulatory 
action only under section 3(f)(4). The FBI has met all the requirements 
of Executive Order 12866, Section 6, and this SNPRM has been reviewed 
by the Office of Information and Regulatory Affairs, Office of 
Management and Budget (OMB).

3. Executive Order 12875 (Enhancing the Intergovernmental Partnership)

    This rulemaking proceeding does not create an unfunded mandate upon 
a state, local, or tribal government and involves amendments to the 
statutorily required CALEA Cost Recovery Regulations. Accordingly, the 
requirements of Section 1(a) of Executive Order 12875 do not apply to 
this rulemaking proceeding.

[[Page 50943]]

4. Executive Order 12988 (Civil Justice Reform)

    This proposed rulemaking proceeding meets applicable standards in 
Sections 3(a) and 3(b)(2) of Executive Order 12988, ``Civil Justice 
Reform'' (61 FR 4729, February 5, 1996), to minimize litigation, 
eliminate ambiguity, and reduce burden.

5. Executive Order 13132 (Federalism)

    Executive Order 13132, ``Federalism'' (64 FR 43255, August 4, 
1999), imposes certain requirements on agencies formulating and 
implementing policies or regulations that preempt state law or that 
have federalism implications. Agencies are required to examine the 
constitutional and statutory authority supporting any action that would 
limit the policymaking discretion of the states and carefully assess 
the need for such actions. The FBI has examined this SNPRM and 
determined that it does not preempt state law and does not have a 
substantial direct effect on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government. No further 
action is required by Executive Order 13132.

6. Regulatory Flexibility Act

    As discussed in greater detail above, on April 28, 1998, at 63 FR 
23231, the FBI published the NPRM on this subject proposing a 
definition of ``significant upgrade.'' At that time, the FBI determined 
that the rule ``may have a significant economic impact upon a 
substantial number of small telephone companies identified by the 
SBA.'' Pursuant to the Regulatory Flexibility Act, 5 U.S.C. 603 et 
seq., the NPRM contained an Initial Regulatory Flexibility Analysis 
(Initial RFA) on the expected significant economic impact on small 
entities of the proposed definition. The Initial RFA considered all 
reasonable regulatory alternatives that would minimize the rule's 
economic burdens for the affected small entities, while achieving the 
objectives of the statue. See 63 FR 23236-38. The FBI did not receive 
any comments regarding the Initial RFA.
    This SNPRM contains a Further Regulatory Flexibility Analysis 
(Further RFA) on the expected economic impact on small entities 
resulting from the proposed minor technical change, and the addition of 
definitions and examples for the terms ``replaced'' and ``significantly 
upgraded.'' The topics that are considered by the Further RFA parallel 
those that were considered in the Initial RFA. The FBI concludes in 
this Further RFA that these proposed amendments will not have a 
significant economic impact on a substantial number of small entities.
    If you believe that your business, organization, or governmental 
jurisdiction qualifies as a small entity and that these proposed 
amendments would have a significant economic impact on it, please 
submit your comments explaining why you believe it qualifies and how 
and to what degree these proposed amendments would economically affect 
it. The comments must be sent to the Telecommunications Contracts and 
Audit Unit at the address listed in the ADDRESSES section.

7. Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule as defined by Section 804 of the 
Small Business Regulatory Enforcement Fairness Act of 1996. This rule 
will not result in an annual effect on the economy of $100,000,000 or 
more; a major increase in costs or prices; or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of the United States-based companies to 
compete with foreign-based companies in domestic and export markets.
    Also, pursuant to Section 213(a) of the Small Business Regulatory 
Enforcement Fairness Act of 1996 (Pub. L. 104-121), the FBI wants to 
assist small entities in understanding these proposed amendments so 
that they can better evaluate their effects on them and participate in 
this rulemaking proceeding. If these amendments would affect your small 
business, organization, or governmental jurisdiction and you have 
questions concerning its provisions or options for compliance, please 
contact the person listed in the FOR FURTHER INFORMATION CONTACT 
section.

8. Paperwork Reduction Act

    This SNPRM proposes to amend the CALEA Cost Recovery Regulations. 
The reporting and record keeping requirements of the CALEA Cost 
Recovery Regulations have been assigned OMB Control Number 1110-0022, 
which expires on April 30, 2003.

9. Unfunded Mandates Reform Act

    The FBI has examined these proposed rules in light of the Unfunded 
Mandates Reform Act and has tentatively concluded that these proposed 
rules will not result in the expenditure by state, local, and tribal 
governments, in the aggregate, or by the private sector, of 
$100,000,000 or more (adjusted annually for inflation) in any one year. 
Therefore, no actions are required under the Unfunded Mandates Reform 
Act.

10. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, 15 U.S.C. 272 note, directs 
the FBI to use voluntary consensus standards in its regulatory 
activities unless to do so would be inconsistent with applicable law or 
otherwise impractical. Voluntary consensus standards are technical 
standards, (e.g., materials specifications, test methods, sampling 
procedures, and business practices) that are developed or adopted by 
voluntary consensus standards bodies. The NTTAA directs the FBI to 
provide Congress, through OMB, explanations when it decides not to use 
available and applicable voluntary consensus standards. This proposed 
rulemaking does not involve technical standards. Therefore, the FBI is 
not considering the use of any voluntary consensus standards.

H. Further Regulatory Flexibility Analysis

    Pursuant to the Regulatory Flexibility Act (RFA), 5 U.S.C. 603, the 
FBI has prepared this Further Regulatory Flexibility Analysis (Further 
RFA) on the possible significant economic impact on small entities by 
the rules proposed in this supplemental notice of proposed rulemaking 
(SNPRM). The FBI concludes that these proposed amendments will not have 
a significant economic impact on a substantial number of small 
entities. Written public comments are requested on this Further RFA. 
Comments must be identified as responses to the Further RFA and must be 
filed by the deadlines for comments on the SNPRM provided in the DATES 
section. The FBI will send a copy of this SNPRM, including the Further 
RFA, to the Chief Counsel for Advocacy of the Small Business 
Administration (SBA) in accordance with Section 603(a). In addition, 
this SNPRM and the Further RFA will be published in the Federal 
Register.

1. Need for, and Objectives of, the Proposed Rules

    This rulemaking proceeding was initiated to obtain comments 
concerning the FBI's proposed amendments to the CALEA Cost Recovery 
Regulations. 28 CFR Part 100. Specifically, these amendments would: (1) 
Make a minor technical change to harmonize the rule's language with 
CALEA's statutory language; (2) add a definition and examples for the 
term ``replaced''; and

[[Page 50944]]

(3) add a definition and examples for the term ``significantly upgraded 
or otherwise undergoes major modification.'' These definitions are 
needed to determine whether a telecommunications carrier's preexistent 
equipment remains eligible for CALEA Section 109(a) reimbursement under 
the CALEA Cost Recovery Regulations. The objective of this SNPRM is to 
define these terms in a manner that strikes an appropriate balance 
between the telecommunications industry's need to introduce new 
technologies, features, and services with a telecommunications 
carrier's obligation under CALEA to unobtrusively deliver intercepted 
communications and reasonably available call-identifying information to 
law enforcement.

2. Legal Basis

    The proposed action is authorized under the Communications 
Assistance for Law Enforcement Act, Public Law 103-414, 108 Stat. 4279 
(1994), 47 U.S.C. 1008(e).

3. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply \11\
---------------------------------------------------------------------------

    \11\ All of the estimates contained in this section of the 
Further RFA are based upon estimates made by the FCC in its Initial 
RFA regarding its final rule on assessment and collection of 
regulatory fees for fiscal year 2000, which was published in the 
Federal Register on July 18, 2000. See 65 FR 44576.
---------------------------------------------------------------------------

    The most reliable source of information regarding the total numbers 
of certain common carrier and related providers nationwide, as well as 
the number of commercial wireless entities, appears to be data 
published by the FCC in its Trends in Telephone Service report.\12\ In 
this report, the FCC indicated that there are 4,144 interstate 
carriers.\13\ These carriers include local exchange carriers, wireline 
carriers and service providers, interexchange carriers, competitive 
access providers, operator service providers, pay telephone operators, 
providers of telephone service, providers of telephone exchange 
service, and resellers.
---------------------------------------------------------------------------

    \12\ FCC, Common Carrier Bureau, Industry Analysis Division, 
Trends in Telephone Service, Table 19.3 (March 2000).
    \13\ Id.
---------------------------------------------------------------------------

    The SBA has defined establishments engaged in providing 
``Radiotelephone Communications'' and ``Telephone Communications, 
Except Radiotelephone'' to be small businesses when they have no more 
than 1,500 employees.\14\ Below, we discuss the total estimated number 
of telephone companies falling within the two categories and the number 
of small businesses in each, and we then attempt to refine further 
those estimates to correspond with the categories of telephone 
companies that are subject to CALEA. We have included small incumbent 
Local Exchange Carriers (LECs) in this present RFA analysis. As noted 
above, a ``small business'' under the RFA is one that meets the 
pertinent small business size standard (e.g., a telephone 
communications business having 1,500 or fewer employees), and ``is not 
dominant in its field of operation.'' The SBA's Office of Advocacy 
contends that, for RFA purposes, small incumbent LECs are not dominant 
in their field of operation because any such dominance is not 
``national'' in scope.\15\
---------------------------------------------------------------------------

    \14\ 13 CFR 121.201, Standard Industrial Classification (SIC) 
code 4812.
    \15\ Letter from Jere W. Glover, Chief Counsel for Advocacy, 
SBA, to William E. Kennard, Chairman, FCC (May 27, 1999). The Small 
Business Act contains a definition of ``small business concern,'' 
which the RFA incorporates into its own definition of ``small 
business.'' See 15 U.S.C. 632(a) (Small Business Act); 5 U.S.C. 
601(3) (RFA). SBA regulations interpret ``small business concern'' 
to include the concept of dominance on a national basis. 13 CFR 
121.102(b). In an abundance of caution, the FBI will include small 
incumbent LECs in this Further RFA.
---------------------------------------------------------------------------

a. Total Number of Telephone Companies Affected
    The Census Bureau reports that, at the end of 1992, there were 
3,497 firms engaged in providing telephone services, as defined 
therein, for at least one year.\16\ This number contains a variety of 
different categories of carriers, including local exchange carriers, 
interexchange carriers, competitive access providers, cellular 
carriers, mobile service carriers, operator service providers, pay 
telephone operators, covered specialized mobile radio providers, and 
resellers. It seems certain that some of these 3,497 telephone service 
firms may not qualify as small entities or small Incumbent Local 
Exchange Carriers (ILECs) because they are not ``independently owned 
and operated.'' For example, a PCS provider that is affiliated with an 
interexchange carrier having more than 1,500 employees would not meet 
the definition of a small business. It is reasonable to conclude that 
fewer than 3,497 telephone service firms are small entity telephone 
service firms or small ILECs that may be affected by the proposed 
rules, if adopted.
---------------------------------------------------------------------------

    \16\ U.S. Department of Commerce, Bureau of the Census, 1992 
Census of Transportation, Communications, and Utilities: 
Establishment and Firm Size, at Firm Size 1-123 (1995) (1992 
Census).
---------------------------------------------------------------------------

b. Wireline Carriers and Service Providers
    The SBA has developed a definition of small entities for telephone 
communications companies except radiotelephone (wireless) companies. 
The Census Bureau reports that there were 2,321 such telephone 
companies in operation for at least one year at the end of 1992.\17\ 
According to the SBA's definition, a small business telephone company 
other than a radiotelephone company is one employing no more than 1,500 
persons.\18\ All but 26 of the 2,321 non-radiotelephone companies 
listed by the Census Bureau were reported to have fewer than 1,000 
employees. Thus, even if all 26 of those companies had more than 1,500 
employees, there would still be 2,295 non-radiotelephone companies that 
might qualify as small entities or small ILECs. We do not have data 
specifying the number of these carriers that are not independently 
owned and operated, and thus are unable at this time to estimate with 
greater precision the number of wireline carriers and service providers 
that would qualify as small business concerns under the SBA's 
definition. Consequently, we estimate that fewer than 2,295 small 
telephone communications companies other than radiotelephone companies 
are small entities or small ILECs that may be affected by the proposed 
rules, if adopted.
---------------------------------------------------------------------------

    \17\ 1992 Economic Census, U.S. Bureau of the Census, at Firm 
Size 1-123.
    \18\ 13 CFR 121.201, SIC code 4812.
---------------------------------------------------------------------------

c. Local Exchange Carriers
    Neither the FCC nor the SBA has developed a definition for small 
providers of local exchange services (LECs). The closest applicable 
definition under the SBA rules is for telephone communications 
companies other than radiotelephone (wireless) companies.\19\ According 
to the most recent Telecommunications Industry Revenue data, 1,348 
incumbent carriers reported that they were engaged in the provision of 
local exchange services.\20\ We do not have data specifying the number 
of these carriers that are either dominant in their field of 
operations, are not independently owned and operated, or have more than 
1,500 employees, and thus are unable at this time to estimate with 
greater precision the number of LECs that would qualify as small 
business concerns under the SBA's definition. Consequently, we estimate

[[Page 50945]]

that fewer than 1,348 providers of local exchange service are small 
entities or small ILECs that may be affected by the proposed rules, if 
adopted.
---------------------------------------------------------------------------

    \19\ 13 CFR 121.201, SIC code 4812.
    \20\ FCC, Common Carrier Bureau, Industry Analysis Division, 
Trends in Telephone Service, Table 19.3 (March 2000).
---------------------------------------------------------------------------

d. Interexchange Carriers
    Neither the FCC nor the SBA has developed a definition of small 
entities specifically applicable to providers of interexchange services 
(IXCs). The closest applicable definition under the SBA rules is for 
telephone communications companies other than radiotelephone (wireless) 
companies.\21\ According to the most recent Trends in Telephone Service 
data, 171 carriers reported that they were engaged in the provision of 
interexchange services.\22\ We do not have data specifying the number 
of these carriers that are not independently owned and operated or have 
more than 1,500 employees, and thus are unable at this time to estimate 
with greater precision the number of IXCs that would qualify as small 
business concerns under the SBA's definition. Consequently, we estimate 
that there are fewer than 171 small entity IXCs that may be affected by 
the proposed rules, if adopted.
---------------------------------------------------------------------------

    \21\ 13 CFR 121.201, SIC code 4812.
    \22\ FCC, Common Carrier Bureau, Industry Analysis Division, 
Trends in Telephone Service, Table 19.3 (March 2000).
---------------------------------------------------------------------------

e. Competitive Access Providers
    Neither the FCC nor the SBA has developed a definition of small 
entities specifically applicable to competitive access providers 
(CAPs). The closest applicable definition under the SBA rules is for 
telephone communications companies other than radiotelephone (wireless) 
companies.\23\ According to the most recent Trends in Telephone Service 
data, 212 CAP/Competitive Local Exchange Carriers (CLECs) and 10 other 
LECs reported that they were engaged in the provision of competitive 
local exchange services.\24\ We do not have data specifying the number 
of these carriers that are not independently owned and operated, or 
have more than 1,500 employees, and thus are unable at this time to 
estimate with greater precision the number of CAPs that would qualify 
as small business concerns under the SBA's definition. Consequently, we 
estimate that there are fewer than 212 small entity CAPs/CLECs and 10 
other LECs that may be affected by the proposed rules, if adopted.
---------------------------------------------------------------------------

    \23\ 13 CFR 121.201, SIC code 4812.
    \24\ FCC, Common Carrier Bureau, Industry Analysis Division, 
Trends in Telephone Service, Table 19.3 (March 2000).
---------------------------------------------------------------------------

f. Operator Service Providers
    Neither the FCC nor the SBA has developed a definition of small 
entities specifically applicable to providers of operator services. The 
closest applicable definition under the SBA rules is for telephone 
communications companies other than radiotelephone (wireless) 
companies.\25\ According to the most recent Trends in Telephone Service 
data, 24 carriers reported that they were engaged in the provision of 
operator services.\26\ We do not have data specifying the number of 
these carriers that are not independently owned and operated or have 
more than 1,500 employees, and thus are unable at this time to estimate 
with greater precision the number of operator service providers that 
would qualify as small business concerns under the SBA's definition. 
Consequently, we estimate that there are fewer than 24 small entity 
operator service providers that may be affected by the proposed rules, 
if adopted.
---------------------------------------------------------------------------

    \25\ 13 CFR 121.201, SIC code 4812.
    \26\ FCC, Common Carrier Bureau, Industry Analysis Division, 
Trends in Telephone Service, Table 19.3 (March 2000).
---------------------------------------------------------------------------

g. Resellers
    Neither the FCC nor the SBA has developed a definition of small 
entities specifically applicable to resellers. The closest applicable 
SBA definition for a reseller is a telephone communications company 
other than radiotelephone (wireless) companies.\27\ According to the 
most recent Trends in Telephone Service data, 388 toll and 54 local 
entities reported that they were engaged in the resale of telephone 
service.\28\ We do not have data specifying that the number of these 
carriers that are not independently owned and operated or have more 
than 1,500 employees, and thus are unable at this time to estimate with 
greater precision the number of resellers that would qualify as small 
business concerns under the SBA's definition. Consequently, we estimate 
that there are fewer than 388 small toll resellers and 54 small local 
resellers that may be affected by the proposed rules, if adopted.
---------------------------------------------------------------------------

    \27\ 13 CFR 121.201, SIC code 4812.
    \28\ FCC, Common Carrier Bureau, Industry Analysis Division, 
Trends in Telephone Service, Table 19.3 (March 2000).
---------------------------------------------------------------------------

h. Fixed Satellite Transmit/Receive Earth Stations
    The FCC estimates that there are approximately 2,679 earth station 
authorizations, a portion of which are Fixed Satellite Transmit/Receive 
Earth Stations. Since the FCC does not request nor collect annual 
revenue information, we are unable to estimate the number of the earth 
stations that would constitute a small business under the SBA 
definition.
i. Fixed Satellite Small Transmit/Receive Earth Stations
    The FCC estimates that there are approximately 2,679 earth station 
authorizations, a portion of which are Fixed Satellite Small Transmit/
Receive Earth Stations. Since the FCC does not request nor collect 
annual revenue information, we are unable to estimate the number of 
fixed satellite small transmit/receive earth stations that would 
constitute a small business under the SBA definition.
j. Fixed Satellite Very Small Aperture Terminal (VSAT) Systems
    These stations operate on a primary basis, and frequency 
coordination with terrestrial microwave systems is not required. Thus, 
a single ``blanket'' application may be filed for a specified number of 
small antennas and one or more hub stations. The FCC has processed 377 
applications. Since the FCC does not request nor collect annual revenue 
information, we are unable to estimate the number of VSAT systems that 
would constitute a small business under the SBA definition.
k. Mobile Satellite Earth Stations
    According to the FCC, there are 11 mobile satellite earth station 
licensees. Since the FCC does not request nor collect annual revenue 
information, we are unable to estimate the number of mobile satellite 
earth stations that would constitute a small business under the SBA 
definition.
l. Radio Determination Satellite Earth Stations
    According to the FCC, there are four radio determination satellite 
earth station licensees. Since the FCC does not request nor collect 
annual revenue information, we are unable to estimate the number of 
radio determination satellite earth stations that would constitute a 
small business under the SBA definition.
m. Space Stations (Geostationary)
    The FCC's records reveal that there are 64 geostationary space 
station licensees. Since the FCC does not request nor collect annual 
revenue information, we are unable to estimate the number of 
geostationary space stations that would constitute a small business 
under the SBA definition.

[[Page 50946]]

n. Space Stations (Non-Geostationary)
    According to the FCC, there are 12 non-geostationary space station 
licensees, of which only three systems are operational. Since the FCC 
does not request or collect annual revenue information, we are unable 
to estimate the number of non-geostationary space stations that would 
constitute a small business under the SBA definition.
o. Cellular Licensees
    Neither the FCC nor the SBA has developed a definition of small 
entities applicable to cellular licensees. Therefore, the applicable 
definition of small entity is the definition under the SBA rules 
applicable to radiotelephone (wireless) companies. This provides that a 
small entity is a radiotelephone company employing no more than 1,500 
persons.\29\; According to the Census Bureau, only twelve 
radiotelephone firms from a total of 1,178 such firms which operated 
during 1992 had 1,000 or more employees.\30\ Therefore, even if all 
twelve of these firms were cellular telephone companies, nearly all 
cellular carriers were small businesses under the SBA's definition. We 
note that there are 1,758 cellular licenses; however, a cellular 
licensee may own several licenses. Also, according to the most recent 
Telecommunications Industry Revenue data, 808 carriers reported that 
they were engaged in the provision of either cellular service or 
Personal Communications Service (PCS) services, which are placed 
together in the data.\31\ We do not have data specifying the number of 
these carriers that are not independently owned and operated or have 
more than 1,500 employees, and thus are unable at this time to estimate 
with greater precision the number of cellular service carriers that 
would qualify as small business concerns under the SBA's definition. 
Consequently, we estimate that there are fewer than 808 small cellular 
service carriers that may be affected by the proposed rules, if 
adopted.
---------------------------------------------------------------------------

    \29\ 13 CFR 121.201, SIC code 4812.
    \30\ 1992 Census, Series UC92-S-1, at Table 5.
    \31\ FCC, Common Carrier Burerau, Industry Analysis Division, 
Trends in Telephone Service, Table 19.3 (March 2000).
---------------------------------------------------------------------------

p. 220 MHZ Radio Service--Phase I Licensees
    The 220 MHZ service has both Phase I and Phase II licenses. Phase I 
licensing was conducted by lotteries in 1992 and 1993. According to the 
FCC, there are approximately 1,515 such non-nationwide licensees and 
four nationwide licensees currently authorized to operate in the 220 
MHZ band. The FCC has not developed a definition of small entities 
specifically applicable to such incumbent 220 MHZ Phase I licensees. To 
estimate the number of such licensees that are small businesses, we 
apply the definition under the SBA rules applicable to Radiotelephone 
Communications companies. This definition provides that a small entity 
is a radiotelephone company employing no more than 1,500 persons.\32\ 
According to the Census Bureau, only 12 radiotelephone firms out of a 
total of 1,178 such firms which operated during 1992 had 1,000 or more 
employees.\33\ Therefore, if this general ratio continues in 1999 in 
the context of Phase I 220 MHZ licensees, we estimate that nearly all 
such licensees are small businesses under the SBA's definition.
---------------------------------------------------------------------------

    \32\ 13 CFR 121.201, SIC code 4812.
    \33\ U.S. Bureau of the Census, U.S. Department of Commerce, 
1992 Census of Transportation, Communications, and Utilities, UC92-
S-1, Subject Series, Establishment and Firm Size, Table 5, 
Employment Size of Firms; 1992
---------------------------------------------------------------------------

q. 220 MHZ Radio Service--Phase II Licensees
    The Phase II 220 MHZ service is a new service, and is subject to 
spectrum auctions. In its 220 MHZ Third Report and Order, the FCC 
adopted criteria for defining small businesses and very small 
businesses for purposes of determining their eligibility for special 
provisions such as bidding credits and installment payments.\34\ The 
FCC has defined a ``small business'' as an entity that, together with 
its affiliates and controlling principals, has average gross revenues 
not exceeding $15 million for the preceding three years. Additionally, 
the FCC has defined a ``very small business'' as an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues that are not more than $3 million for the preceding 
three years.\35 \The SBA has approved these definitions.\36\ An auction 
of Phase II licenses commenced on September 15, 1998, and closed on 
October 22, 1998.\37\ Nine hundred and eight (908) licenses were 
auctioned in three different-sized geographic areas: three Nationwide 
licenses, 30 Regional Economic Area Group licenses, and 875 Economic 
Area (EA) licenses. Of the 908 licenses auctioned, 693 were sold. 
Companies claiming small business status won: one of the Nationwide 
licenses, 67% of the Regional licenses, and 54% of the EA licenses. As 
of January 22, 1999, the FCC announced that it was prepared to grant 
654 of the Phase II licenses won at auction.\38\
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    \34\ 220 MHz Third Report and Order, 12 FCC Rcd 10943, 11068-70, 
at paras. 291-295 (1997).
    \35\ 220 MHz Third Report and Order, 12 FCC Rcd 11068-69, para. 
291.
    \36\ See Letter from A. Alvarez, Administrator, SBA, to D. 
Phythyon, Chief, Wireless Telecommunications Bureau, FCC (Jan. 6, 
1998).
    \37\ See generally Public Notice ``220 MHz Service Auction 
Closes,'' Report No. WT 98-36 (Wireless Telecom. Bur. Oct. 23, 
1998).
    \38\ Public Notice, ``FCC Announces It is Prepared to Grant 654 
Phase II 220 MHz Licenses After Final Payment is Made,'' Report No. 
AUC-18-H, DA No. 99-229 (Wireless Telecom. Bur. Jan. 22, 1999).
---------------------------------------------------------------------------

r. Private and Common Carrier Paging
    The FCC has proposed a two-tier definition of small businesses in 
the context of auctioning licenses in the Common Carrier Paging and 
exclusive Private Carrier Paging services. Under the proposal, a small 
business will be defined as either: (1) An entity that, together with 
its affiliates and controlling principals, has average gross revenues 
for the three preceding years of not more than $3 million; or (2) an 
entity that, together with affiliates and controlling principals, has 
average gross revenues for the three preceding calendar years of not 
more than $15 million. Because the SBA has not yet approved this 
definition for paging services, we will utilize the SBA's definition 
applicable to radiotelephone companies, i.e., an entity employing no 
more than 1,500 persons.\39\ At present, there are approximately 24,000 
Private Paging licenses and 74,000 Common Carrier Paging licenses. 
According to the most recent Telecommunications Industry Revenue data, 
172 carriers reported that they were engaged in the provision of either 
paging or ``other mobile'' services, which are placed together in the 
data.\40\ We do not have data specifying the number of these carriers 
that are not independently owned and operated or have more than 1,500 
employees, and thus are unable at this time to estimate with greater 
precision the number of paging carriers that would qualify as small 
business concerns under the SBA's definition. Consequently, we estimate 
that there are fewer than 172 small paging carriers that may be 
affected by the proposed rules, if adopted. We estimate that the 
majority of private and common carrier paging providers would qualify 
as small entities under the SBA definition.
s. Mobile Service Carriers
---------------------------------------------------------------------------

    \39\ 13 CFR 121.201, SIC code 4812.
    \40\ Trends in Telephone Service, Table 19.3 (February 19, 
1999).
---------------------------------------------------------------------------

    Neither the FCC nor the SBA has developed a definition of small 
entities specifically applicable to mobile service carriers, such as 
paging companies. As noted above in the section concerning paging 
service carriers, the closest applicable definition under the SBA

[[Page 50947]]

rules is that for radiotelephone (wireless) companies, and the most 
recent Telecommunications Industry Revenue data shows that 172 carriers 
reported that they were engaged in the provision of either paging or 
``other mobile'' services.\41\ Consequently, we estimate that there are 
fewer than 172 small mobile service carriers that may be affected by 
the proposed rules, if adopted.
---------------------------------------------------------------------------

    \41\ 13 CFR 121.201, SIC code 4812; Trends in Telephone Service, 
Table 19.3 (February 19, 1999).
---------------------------------------------------------------------------

t. Broadband Personal Communications Service (PCS)
    The broadband PCS spectrum is divided into six frequency blocks 
designated A through F, and the FCC has held auctions for each block. 
The FCC defined ``small entity'' for Blocks C and F as an entity that 
has average gross revenues of less than $40 million in the three 
previous calendar years.\42\ For Block F, an additional classification 
for ``very small business'' was added and is defined as an entity that, 
together with their affiliates, has average gross revenues of not more 
than $15 million for the preceding three calendar years.\43\ These 
regulations defining ``small entity'' in the context of broadband PCS 
auctions have been approved by the SBA.\44\ No small businesses within 
the SBA-approved definition bid successfully for licenses in Blocks A 
and B. There were 90 winning bidders that qualified as small entities 
in the Block C auctions. A total of 93 small and very small business 
bidders won approximately 40% of the 1,479 licenses for Blocks D, E, 
and F.\45\ Based on this information, we conclude that the number of 
small broadband PCS licensees will include the 90 winning C Block 
bidders and the 93 qualifying bidders in the D, E, and F blocks, for a 
total of 183 small entity PCS providers as defined by the SBA and the 
FCC's auction rules.
---------------------------------------------------------------------------

    \42\ See Amendment of Parts 20 and 24 of the FCC's Rules--
Broadband PCS Competitive Bidding and the Commercial Mobile Radio 
Service Spectrum Cap, Report and Order, FCC 96-278, WT Docket No. 
96-59, paras. 57-60 (released Jun. 24, 1996), 61 FR 33859 (Jul. 1, 
1996); see also 47 CFR 24.720(b).
    \43\ See Amendment of Parts 20 and 24 of the FCC's Rules--
Broadband PCS Competitive Bidding and the Commercial Mobile Radio 
Service Spectrum Cap, Report and Order, FCC 96-278, WT Docket No. 
96-59, para. 60 (1996), 61 FR 33859 (Jul. 1, 1996).
    \44\ See, e.g., Implementation of Section 309(j) of the 
Communications Act--Competitive Bidding, PP Docket No. 93-253, Fifth 
Report and Order, 9 FCC Rcd 5532, 5581-84(1994).
    \45\ FCC News, Broadband PCS, D, E and F Block Auction Closes, 
No. 71744 (released Jan. 14 1997).
---------------------------------------------------------------------------

u. Narrowband PCS
    The FCC has auctioned nationwide and regional licenses for 
narrowband PCS. There are 11 nationwide and 30 regional licensees for 
narrowband PCS. The FBI does not have sufficient information to 
determine whether any of these licensees are small businesses within 
the SBA-approved definition for radiotelephone companies. At present, 
there have been no auctions held for the major trading area (MTA) and 
basic trading area (BTA) narrowband PCS licenses. The FCC anticipates a 
total of 561 MTA licenses and 2,958 BTA licenses will be awarded by 
auction; however, such auctions have not yet been scheduled. Given that 
nearly all radiotelephone companies have no more than 1,500 employees 
and that no reliable estimate of the number of prospective MTA and BTA 
narrowband licensees can be made, we assume, for purposes of this 
Further RFA, that all of the licenses will be awarded to small 
entities, as that term is defined by the SBA.
v. Rural Radiotelephone Service
    The FCC has not adopted a definition of small entity specific to 
the Rural Radiotelephone Service.\46\ A significant subset of the Rural 
Radiotelephone Service is the Basic Exchange Telephone Radio Systems 
(BETRS).\47\ We will use the SBA's definition applicable to 
radiotelephone companies, i.e., an entity employing no more than 1,500 
persons.\48\ The FCC estimates that there are approximately 1,000 
licensees in the Rural Radiotelephone Service. We estimate that almost 
all of them qualify as small entities under the SBA's definition.
---------------------------------------------------------------------------

    \46\ The service is defined in Sec. 22.99 of the FCC's Rules, 47 
CFR 22.99.
    \47\ BETRS is defined in the FCC's Rules. See 47 CFR 22.757 adn 
22.759.
    \48\ 13 CFR 121.201, SIC code 4812.
---------------------------------------------------------------------------

w. Air-Ground Radiotelephone Service
    The FCC has not adopted a definition of small entity specific to 
the Air-Ground Radiotelephone Service.\49\ Accordingly, we will use the 
SBA's definition applicable to radiotelephone companies, i.e., an 
entity employing no more than 1,500 persons.\50\ According to the FCC, 
there are approximately 100 licensees in the Air-Ground Radiotelephone 
Service. We estimate that almost all of them qualify as small under the 
SBA definition.
---------------------------------------------------------------------------

    \49\ The service is defined in the FCC's Rules. See 47 CFR 
22.99.
    \50\ 13 CFR 121.201, SIC code 4812.
---------------------------------------------------------------------------

x. Specialized Mobile Radio (SMR)
    The FCC awards bidding credits in auctions for geographic area 800 
MHZ and 900 MHZ SMR licenses to firms that had revenues of no more than 
$15 million in each of the three previous calendar years.\51\ In the 
context of 900 MHZ SMR, this regulation defining ``small entity'' has 
been approved by the SBA; the FCC is seeking similar approval for 800 
MHZ SMR. We do not know how many firms provide 800 MHZ or 900 MHZ 
geographic area SMR service pursuant to extended implementation 
authorizations, nor how many of these providers have annual revenues of 
no more than $15 million. One firm has over $15 million in revenues. We 
assume, for purposes of this Further RFA, that all of the remaining 
existing extended implementation authorizations are held by small 
entities, as that term is defined by the SBA. According to the FCC, 
there are 60 small entities that qualified for geographic area licenses 
in the 900 MHZ SMR band. The FCC estimates that there are 38 small or 
very small entities that qualified for the 800 MHZ SMR's.
---------------------------------------------------------------------------

    \51\ 47 CFR 90.814(b)(1)
---------------------------------------------------------------------------

y. Fixed Microwave Services
    Microwave services include common carrier,\52\ private-operational 
fixed,\53\ and broadcast auxiliary radio services.\54\ At present, the 
FCC estimates that there are approximately 22,015 common carrier fixed 
licensees and 61,670 private operational-fixed licensees and broadcast 
auxiliary radio licensees in the microwave services. The FCC has not 
yet defined a small business with respect to microwave services. For 
purposes of this Further RFA, we will utilize the SBA's definition 
applicable to radiotelephone companies, i.e., an entity employing no 
more than 1,500 persons.\55\ We estimate, for this purpose, that all of 
the Fixed Microwave licensees (excluding broadcast auxiliary licensees) 
would qualify as small entities under the SBA definition for 
radiotelephone companies.
---------------------------------------------------------------------------

    \52\ 47 CFR 101 et seq. (formerly, part 21 of the FCC's Rules).
    \53\ Persons eligible under parts 80 and 90 of the FCC's rules 
can use Private Operational-Fixed Microwave services. See 47 CFR 
parts 80 and 90. stations in this service are called operational-
fixed to distinguish them from common carrier and public fixed 
stations. Only the licensee may use the operational-fixed station, 
and only for communications related to the licensee's commercial, 
industrial, or safety operations.
    \54\ Auxiliary Microwave Service is governed by part 74 of Title 
47 of the FCC's Rules. See 47 CFR 74 et seq. Available to licensees 
of broadcast stations and to broadcast and cable network entities, 
broadcast auxiliary microwave stations are used for relaying 
broadcast television signals from the studio to the transmitter, or 
between two points such as a main studio and an auxiliary studio. 
The service also includes mobile TV pickups, which relay signals 
from a remote location back to the studio.
    \55\ 13 CFR 121.201, SIC code 4812.

---------------------------------------------------------------------------

[[Page 50948]]

z. Offshore Radiotelephone Service
    This service operates on several Ultra High Frequency TV broadcast 
channels that are not used for TV broadcasting in the coastal area of 
the states bordering the Gulf of Mexico.\56\ The FCC estimates that 
there approximately 55 licensees in this service. We are unable at this 
time to estimate the number of licensees that would qualify as small 
under the SBA's definition for radiotelephone communications.
---------------------------------------------------------------------------

    \56\ This service is governed by subpart I of part 22 of the 
FCC's Rules. See 47 CFR 22.1001 through 22.1037.
---------------------------------------------------------------------------

aa. Wireless Communications Services
    This service can be used for fixed, mobile, radiolocation, and 
digital audio broadcasting satellite uses. The FCC defined ``small 
business'' for the wireless communications services (WCS) auction as an 
entity with average gross revenues of $40 million for each of the three 
preceding years, and a ``very small business'' as an entity with 
average gross revenues of $15 million for each of the three preceding 
years. The FCC auctioned geographic area licenses in the WCS service. 
In the auction, there were seven winning bidders that qualified as very 
small business entities, and one that qualified as a small business 
entity. We conclude that the number of geographic area WCS licensees 
affected includes these eight entities.
ab. Cable Services or Systems
    The SBA has developed a definition of small entities for cable and 
other pay television services, which includes all such companies 
generating $11 million or less in revenue annually.\57\ This definition 
includes cable systems operators, closed circuit television services, 
direct broadcast satellite services, multipoint distribution systems, 
satellite master antenna systems and subscription television services. 
According to the Census Bureau data from 1992, there were 1,788 total 
cable and other pay television services and 1,423 had less than $11 
million in revenue.\58\
    The FCC has developed its own definition of a small cable system 
operator for purposes of rate regulation. Under the FCC's rules, a 
``small cable company'' is one serving fewer than 400,000 subscribers 
nationwide.\59\ Based on the FCC's most recent information, we estimate 
that there were 1,439 cable operators that qualified as small cable 
system operators at the end of 1995.\60\ Since then, some of those 
companies may have grown to serve over 400,000 subscribers, and others 
may have been involved in transactions that caused them to be combined 
with other cable operators. Consequently, we estimate that there are 
fewer than 1,439 small entity cable system operators.
---------------------------------------------------------------------------

    \57\ 13 CFR 121.201, SIC code 4812.
    \58\ 1992 Economic Census Industry and Enterprise Receipts Size 
Report, Table 2D, SIC code 4841 (U.S. Bureau of the Census data 
under contract to the Office of Advocacy of the U.S. Small Business 
Administration).
    \59\ 47 CFR 76.901(e). The Fcc developed this definition based 
on its determination that a small cable system operator is one with 
annual revenues of $100 million or less. Implementation of Sections 
of the 1992 Cable Act: Rate Regulation, Sixth Report and Order and 
Eleventh Order on Reconsideration, 10 FCC Rcd 7393 (1995), 60 FR 
10534 (Feb. 27, 1995).
    \60\ Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 
1996 (based on figures for Dec. 30, 1995).
---------------------------------------------------------------------------

    The Communications Act also contains a definition of a small cable 
system operator, which is ``a cable operator that, directly or through 
an affiliate, serves in the aggregate fewer than one percent of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' \61\ The FCC has determined that there are 66,690,000 
subscribers in the United States. Therefore, the FCC found that an 
operator serving fewer than 666,900 subscribers shall be deemed a small 
operator, if its annual revenues, when combined with the total annual 
revenues of all of its affiliates, do not exceed $250 million in the 
aggregate.\62\ Based on available data,\63\ the FCC found that the 
number of cable operators serving 669,900 subscribers or less totals 
1,450. The FCC does not request or collect information concerning 
whether cable system operators are affiliated with entities whose gross 
annual revenues exceed $250,000,000. The FBI is unable at this time to 
estimate with greater precision the number of cable system operators 
that would qualify as small cable operators under the definition in the 
Communications Act.
---------------------------------------------------------------------------

    \61\ 47 U.S.C. 543(m)(2).
    \62\ 47 CFR 76.1403(b).
    \63\ Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 
1996 (based on figures for Dec. 30, 1995).
---------------------------------------------------------------------------

4. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements

    These proposed amendments impose no formal reporting or 
recordkeeping requirements on small entities. Additionally, these 
amendments do not impose any other direct compliance requirements on 
small entities. Carriers seeking reimbursement under the CALEA Cost 
Recovery Regulations for their preexistent equipment will need to 
demonstrate that such equipment was not ``replaced'' or ``significantly 
upgraded.'' \64\ Carriers can establish reimbursement eligibility with 
the records they maintain in the ordinary course of business.
---------------------------------------------------------------------------

    \64\ 28 CFR 100.16.
---------------------------------------------------------------------------

5. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    The development of the proposed definitions of ``replaced'' and 
``significantly upgraded'' is discussed at length in Section E, 
Definition Development, of this SNPRM, supra. The FBI considered and 
rejected as impractical both technical and accounting definitions. 
Having determined that CALEA's intent was best served by a definition 
focusing on public safety, the FBI then modified its definition to 
incorporate industry's suggestions submitted in response to the ANPRM 
and NPRM.
    The FBI has concluded that these proposed amendments will not have 
a significant economic impact on a substantial number of small 
entities. These amendments are size-neutral because they involve 
definitions affecting telecommunications equipment, facilities, and 
services that are used by all carriers, regardless of their size. These 
definitions will benefit all telecommunications carriers because they 
allow carriers to make informed business decisions regarding their 
equipment, facilities, and services. Moreover, CALEA itself makes ample 
provisions for the protection of small entities which either 
``replace'' or ``significantly upgrade'' their preexistent equipment by 
allowing these carriers to petition the FCC for relief under CALEA 
Section 109(b).
    The FBI welcomes and encourages comments from concerned small 
entities on this issue.

6. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    The FBI is not aware of any federal rules that overlap, duplicate, 
or conflict with the amendments proposed in this SNPRM.

List of Subjects in 28 CFR Part 100

    Accounting, Law enforcement, Reporting and record keeping 
requirements, Telecommunications, Wiretapping and electronic 
surveillance.

    For the reasons set out in the preamble, 28 CFR part 100 is 
proposed to be amended as set forth below:

[[Page 50949]]

PART 100--COST RECOVERY REGULATIONS, COMMUNICATIONS ASSISTANCE FOR 
LAW ENFORCEMENT ACT OF 1994

    1. The authority citation for 28 CFR part 100 continues to read as 
follows:

    Authority: 47 U. S. C. 1001-1010; 28 CFR 0.85(o).

    2. Section 100.11(a)(1) is revised to read as follows:


Sec. 100.11  Allowable costs.

    (a) * * *
    (1) All reasonable plant costs directly associated with the 
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, until the equipment, facility, or service is replaced or 
significantly upgraded or otherwise undergoes major modification;
* * * * *
    3. Amend Sec. 100.10 to:
    a. Add a definition and examples for the term ``Replaced''; and
    b. Add a definition and examples for the term ``Significantly 
upgraded or otherwise undergoes major modification'' as follows:


Sec. 100.10  Definitions.

* * * * *
    Replaced means that a telecommunications carrier substituted 
replacement equipment in place of preexistent equipment after 
technology compliant with the assistance capability requirements of 47 
U.S.C. 1002 (assistance capability requirements) was reasonably 
available, or should have been reasonably available, for installation 
and deployment by a carrier at the time the substitution was made. 
Replacement equipment is equipment, facilities, or services, whether 
new or used, that a telecommunications carrier can use to provide its 
customers or subscribers with the ability to originate, terminate, or 
direct communications and is installed or deployed within the carrier's 
network. Preexistent equipment is equipment, facilities, or services 
that a telecommunications carrier can use to provide its customers or 
subscribers with the ability to originate, terminate, or direct 
communications and was installed or deployed within the carrier's 
network on or before January 1, 1995. Preexistent equipment that has 
been ``replaced'' is the equivalent of equipment, facilities, or 
services installed or deployed within a carrier's network after January 
1, 1995. When replacement equipment is itself preexistent equipment 
that has not been ``replaced,'' and is substituted in place of other 
preexistent equipment, the replacement equipment retains its 
reimbursement eligibility as preexistent equipment. Otherwise, 
replacement equipment is the equivalent of equipment, facilities, or 
services installed or deployed within a carrier's network after January 
1, 1995.

    Example 1 (Repair of Preexistent Equipment): On January 2, 1999, 
a carrier repaired a switch installed or deployed within its network 
on or before January 1, 1995 (preexistent equipment), by replacing a 
worn part with a new part of identical make and functionality. The 
preexistent equipment remained in place and continued to provide the 
carrier's customers and subscribers with the ability to originate, 
terminate, or direct communications. The preexistent equipment was 
not ``replaced'' because it remained in place within the carrier's 
network. The preexistent equipment retained its reimbursement 
eligibility as equipment, facilities, or services installed or 
deployed within the carrier's network on or before January 1, 1995.
    Example 2 (Impertinent Equipment): On January 2, 1995, a carrier 
substituted a backup power generator (new impertinent equipment) in 
place of an older, less efficient backup power generator which had 
been installed or deployed within the carrier's network on or before 
January 1, 1995 (old impertinent equipment). Since neither the new 
impertinent equipment nor the old impertinent equipment was used by 
the carrier to provide its customers or subscribers with the ability 
to originate, terminate, or direct communications, the ``replaced'' 
definition does not apply to this particular substitution.
    Example 3 (Augmentation of Preexistent Equipment): On January 2, 
1995, a carrier deployed a switch (new equipment) in a central 
office that housed a switch installed or deployed within the 
carrier's network on or before January 1, 1995 (preexistent 
equipment). Both switches had identical capabilities. The switches 
were used in tandem to evenly distribute the call load of the 
carrier's customers. The preexistent equipment was not ``replaced'' 
because there was no substitution of equipment. The preexistent 
equipment retained its reimbursement eligibility as equipment 
installed or deployed on or before January 1, 1995. The new 
equipment is equipment, facilities, or services installed or 
deployed within the carrier's network after January 1, 1995.
    Example 4 (Damaged Equipment): On January 2, 1995, a carrier 
took a switch from its storage facility (replacement equipment) and 
substituted it in place of a switch that had been damaged by an 
electrical fire and was installed or deployed within the carrier's 
network on or before January 1, 1995 (preexistent equipment). The 
carrier decided to scrap the preexistent equipment because it was 
damaged beyond repair. Since the preexistent equipment is no longer 
installed or deployed within the carrier's network, it is no longer 
eligible for reimbursement under these cost recovery regulations. 
The replacement equipment is the equivalent of equipment, 
facilities, or services installed or deployed within the carrier's 
network after January 1, 1995.
    Example 5 (Movement of Equipment): On January 2, 1995, a carrier 
took a switch from its storage facility (replacement equipment) and 
substituted it in place of a switch that had been installed or 
deployed within the carrier's network on or before January 1, 1995 
(preexistent equipment). The carrier then installed or deployed the 
preexistent equipment at a different central office to efficiently 
meet customer and capacity needs. The Federal Communications 
Commission determined in its Memorandum Opinion and Order, adopted 
on September 10, 1998, that manufacturers should be able to produce 
equipment that will be generally available for carriers to meet the 
assistance capability requirements of 47 U.S.C. 1002 by December 31, 
1999. The preexistent equipment was not ``replaced.'' The 
preexistent equipment retains its reimbursement eligibility because 
the substitution occurred before technology compliant with the 
assistance capability requirements was reasonably available, or 
should have been reasonably available, for installation or 
deployment by the carrier, and it remained within the original 
carrier's network. The replacement equipment is the equivalent of 
equipment, facilities, or services installed or deployed within the 
carrier's network after January 1, 1995.
    Example 6 (Movement of Equipment): On January 2, 2000, a carrier 
accepted delivery and installation of a switch from a manufacturer 
(replacement equipment) and substituted it in place of a switch that 
had been installed or deployed within the carrier's network on or 
before January 1, 1995 (preexistent equipment). The carrier then 
installed or deployed the preexistent equipment at a different 
central office to efficiently meet customer and capacity needs. The 
Federal Communications Commission determined in its Memorandum 
Opinion and Order, adopted on September 10, 1998, that manufacturers 
should be able to produce equipment that will be generally available 
for carriers to meet the assistance capability requirements of 47 
U.S.C. 1002 by December 31, 1999. The preexistent equipment was 
``replaced'' because the substitution occurred after technology 
compliant with the assistance capability requirements should have 
been reasonably available for installation or deployment by the 
carrier. The preexistent equipment has the same status as equipment 
installed or deployed within the carrier's network after January 1, 
1995. The replacement equipment is the equivalent of equipment, 
facilities, or services installed or deployed within the carrier's 
network after January 1, 1995.
    Example 7 (Replacement with Preexistent Equipment): On January 
2, 2000, a carrier removed a ``blue type'' switch that had been 
installed or deployed in its network on or before January 1, 1995 
(preexistent equipment). The carrier then substituted the ``blue 
type'' switch (now replacement equipment) in place of a ``green 
type'' switch that had been installed or deployed on or before 
January 1, 1995 (preexistent

[[Page 50950]]

equipment). The Federal Communications Commission determined in its 
Memorandum Opinion and Order, adopted on September 10, 1998, that 
manufacturers should be able to produce equipment that will be 
generally available for carriers to meet the assistance capability 
requirements of 47 U.S.C. 1002 by December 31, 1999. The ``blue 
type'' switch was not ``replaced,'' because there was no 
substitution of replacement equipment in place of the ``blue type'' 
switch. Since the ``blue type'' switch was preexistent equipment 
that was not ``replaced,'' but was substituted in place of other 
preexistent equipment, the ``blue type'' switch retained its 
reimbursement eligibility as preexistent equipment. The ``green 
type'' switch was ``replaced'' because the substitution occurred 
after technology compliant with the assistance capability 
requirements should have been reasonably available for installation 
or deployment by the carrier.
    Example 8 (Replacement with Preexistent Equipment): On December 
30, 1999, a carrier accepted delivery and installation of a ``red 
type'' switch from a manufacturer (replacement equipment) and 
substituted it in place of a ``blue type'' switch that had been 
installed or deployed within the carrier's network on or before 
January 1, 1995 (preexistent equipment). On January 2, 2000, the 
carrier substituted the ``blue type'' switch (now replacement 
equipment) to replace a ``green type'' switch that had been 
installed or deployed within the carrier's network on or before 
January 1, 1995 (preexistent equipment). The Federal Communications 
Commission determined in its Memorandum Opinion and Order, adopted 
on September 10, 1998, that manufacturers should be able to produce 
equipment that will be generally available for carriers to meet the 
assistance capability requirements of 47 U.S.C. 1002 by December 31, 
1999. The ``blue type'' switch was not ``replaced.'' The ``blue 
type'' switch retains its reimbursement eligibility because the 
substitution occurred before technology compliant with the 
assistance capability requirements was reasonably available, or 
should have been reasonably available, for installation or 
deployment by the carrier, and it remained within the original 
carrier's network. The ``green type'' switch was ``replaced'' 
because the substitution occurred after technology compliant with 
the assistance capability requirements should have been reasonably 
available for installation or deployment by the carrier. The ``red 
type'' switch is the equivalent of equipment, facilities, or 
services installed or deployed within the carrier's network after 
January 1, 1995.
    Example 9 (Sale of Equipment): On January 2, 2000, Carrier One 
sold a portion of its network to Carrier Two. Some of the equipment, 
facilities, or services sold to Carrier Two had been installed or 
deployed within Carrier One's network on or before January 1, 1995 
(preexistent equipment). After the sale, the preexistent equipment 
remained in place and continued to serve the same customer areas. 
The preexistent equipment was not ``replaced'' because there was no 
substitution of replacement equipment in place of the preexistent 
equipment. The preexistent equipment, now in Carrier Two's network, 
retains its reimbursement eligibility as equipment, facilities, or 
services installed or deployed within the carrier's network on or 
before January 1, 1995.
    Example 10 (Sale of Equipment): On January 2, 1995, Carrier One 
took a switch from its storage facility (replacement equipment) and 
substituted it in place of a switch installed or deployed within its 
network on or before January 1, 1995 (preexistent equipment). 
Carrier One then sold the preexistent equipment to Carrier Two who 
installed or deployed the preexistent equipment elsewhere within its 
own network. Since the preexistent equipment did not remain within 
Carrier One's network, there is no need to determine whether it was 
``replaced.'' Carrier One's replacement equipment is the equivalent 
of equipment, facilities, or services installed or deployed within 
the carrier's network after January 1, 1995. The preexistent 
equipment installed or deployed in Carrier Two's network is the 
equivalent of equipment installed or deployed within its network 
after January 1, 1995.
    Example 11 (Replacement of Analog Equipment with Digital 
Equipment): On January 2, 1999, a carrier substituted a digital 
switch (replacement equipment) in place of an analog switch that had 
been installed or deployed within the carrier's network on or before 
January 1, 1995 (preexistent equipment). The carrier then installed 
or deployed the preexistent equipment at a different central office 
to efficiently meet customer and capacity needs. The Federal 
Communications Commission determined in its Memorandum Opinion and 
Order, adopted on September 10, 1998, that manufacturers should be 
able to produce equipment that will be generally available for 
carriers to meet the assistance capability requirements of 47 U.S.C. 
1002 by December 31, 1999. The preexistent equipment was not 
``replaced.'' The preexistent equipment retains its reimbursement 
eligibility because the substitution occurred before technology 
compliant with the assistance capability requirements was reasonably 
available, or should have been reasonably available, for 
installation or deployment by the carrier, and it remained within 
the original carrier's network. The replacement equipment is the 
equivalent of equipment, facilities, or services installed or 
deployed within the carrier's network after January 1, 1995.
    Example 12 (Replacement of Circuit-Mode Equipment with Packet-
Mode Equipment): On January 2, 2000, a carrier substituted a packet-
mode switch (replacement equipment) in place of a circuit-mode 
switch that had been installed or deployed within the carrier's 
network on or before January 1, 1995 (preexistent equipment). The 
carrier then installed or deployed the preexistent equipment at a 
different central office to efficiently meet customer and capacity 
needs. The Federal Communications Commission determined in its 
Memorandum Opinion and Order, adopted on September 10, 1998, that 
manufacturers should be able to produce equipment that will be 
generally available for carriers to meet the assistance capability 
requirements of 47 U.S.C. 1002 by December 31, 1999. The preexistent 
equipment was ``replaced'' because the substitution occurred after 
technology compliant with the assistance capability requirements 
should have been reasonably available for installation or deployment 
by the carrier. The replacement equipment is the equivalent of 
equipment, facilities, or services installed or deployed within the 
carrier's network after January 1, 1995.

    Significantly upgraded or otherwise undergoes major modification 
means:
    (1) A telecommunications carrier has activated, added, or improved 
a capability, feature, or service of its preexistent equipment that:
    (i) Hampers the carrier's ability to unobtrusively deliver lawfully 
authorized intercepted communications and/or reasonably available call-
identifying information to law enforcement in accordance with the 
assistance capability requirements of 47 U.S.C. 1002 (assistance 
capability requirements), in a manner that the carrier does not correct 
at its own expense within a reasonable period of time; and
    (ii) Occurs after technology compliant with the assistance 
capability requirements was reasonably available, or should have been 
reasonably available for installation or deployment by a carrier at the 
time the improvement was made; and
    (iii) Was not mandated by a federal or state statute, rule, 
regulation, or administrative order.
    (2) Preexistent equipment is equipment, facilities, or services 
that a telecommunications carrier can use to provide its customers or 
subscribers with the ability to originate, terminate, or direct 
communications and was installed or deployed within the carrier's 
network on or before January 1, 1995. Preexistent equipment that has 
been ``significantly upgraded or otherwise undergoes major 
modification'' is the equivalent of equipment, facilities, or services 
installed or deployed within a carrier's network after January 1, 1995.

    Example 1 (Capacity Modifications): On January 2, 2000, a 
carrier added hardware and software to some of its preexistent 
equipment. The additions only improved the preexistent equipment's 
capacity to handle more calls from its customers and subscribers. 
The preexistent equipment was not ``significantly upgraded'' because 
the additions were related to subscriber capacity improvements and 
did not affect the assistance capability requirements of 47 U.S.C. 
1002.
    Example 2 (Modifications to Impertinent Equipment): On January 
2, 2000, a carrier made modifications to a backup power generator 
installed or deployed in its network on or before January 1, 1995 
(impertinent equipment). These modifications improved

[[Page 50951]]

the impertinent equipment's overall efficiency. The impertinent 
equipment is incapable of providing the carrier's customers or 
subscribers with the ability to originate, terminate, or direct 
communications. Thus, the impertinent equipment cannot be 
``significantly upgraded.''
    Example 3 (Packet-mode Technology Upgrade): On January 2, 1999, 
a carrier upgraded a portion of its network architecture from 
circuit-mode to packet-mode switching technology. Some of the 
upgraded equipment was preexistent equipment. The modifications 
hampered the carrier's unobtrusive delivery of intercepted 
communications and reasonably available call-identifying information 
to law enforcement. The Federal Communications Commission determined 
in its Memorandum Opinion and Order, adopted on September 10, 1998, 
that manufacturers should be able to produce equipment that will be 
generally available for carriers to meet the assistance capability 
requirements by December 31, 1999. The preexistent equipment was not 
``significantly upgraded'' because the changes were made before 
technology compliant with the assistance capability requirements was 
reasonably available, or should have been reasonably available, for 
installation or deployment by the carrier.
    Example 4 (Packet-mode Technology Upgrade): On January 2, 2000, 
a carrier upgraded a portion of its network architecture from 
circuit-mode to packet-mode switching technology. Some of the 
upgraded equipment was preexistent equipment. The modifications 
hampered the carrier's unobtrusive delivery of intercepted 
communications and reasonably available call-identifying information 
to law enforcement. The carrier failed to correct the problem at its 
own expense in a reasonable period of time. The Federal 
Communications Commission determined in its Memorandum Opinion and 
Order, adopted on September 10, 1998, that manufacturers should be 
able to produce equipment that will be generally available for 
carriers to meet the assistance capability requirements by December 
31, 1999. The preexistent equipment was ``significantly upgraded'' 
because the changes added capabilities that hampered the delivery of 
intercepted communications and call-identifying information to law 
enforcement after technology compliant with the assistance 
capability requirements should have been reasonably available for 
installation or deployment by the carrier.
    Example 5 (Non-Hampering Modifications): On January 2, 2000, a 
carrier installed a new generic software upgrade to some of its 
preexistent equipment. The software upgrade improved network 
efficiencies and made existing services easier for customers to use. 
The modifications did not add a hindrance to law enforcement's 
ability to receive intercepted communications and/or reasonably 
available call-identifying information. The preexistent equipment 
was not ``significantly upgraded'' because the upgrade did not 
hamper the unobtrusive delivery of intercepted communications and/or 
reasonably available call-identifying information to law 
enforcement.
    Example 6 (Non-Hampering Modifications): On January 2, 2000, a 
carrier made changes to its equipment, facilities, or services in 
order to correct Y2K deficiencies. Some of the changes affected the 
carrier's preexistent equipment. There is no indication that the Y2K 
modifications had any impact on law enforcement surveillance 
activities. The preexistent equipment was not ``significantly 
upgraded'' because the change did not hamper the delivery of 
intercepted communications and/or call-identifying information to 
law enforcement.
    Example 7 (Non-Hampering Modifications): On January 2, 2000, a 
carrier made changes to its preexistent equipment that required law 
enforcement authorities to relocate their point of intercept from 
the local loop to the carrier's central office. The carrier was 
still able to unobtrusively deliver intercepted communications and/
or reasonably available call-identifying information to law 
enforcement in accordance with the assistance capability 
requirements. The preexistent equipment was not ``significantly 
upgraded'' because the change did not hamper the delivery of 
intercepted communications and/or call-identifying information to 
law enforcement.
    Example 8 (Hampering Modifications): On January 2, 1995, a 
carrier activated the dormant call forwarding feature which was 
resident on some of its preexistent equipment. The call forwarding 
feature added a hindrance to law enforcement's ability to obtain 
intercepted communications and reasonably available call-identifying 
information. The Federal Communications Commission determined in its 
Memorandum Opinion and Order, adopted on September 10, 1998, that 
manufacturers should be able to produce equipment that will be 
generally available for carriers to meet the assistance capability 
requirements by December 31, 1999. The preexistent equipment was not 
``significantly upgraded'' because the feature was activated before 
technology compliant with the assistance capability requirements was 
reasonably available, or should have been reasonably available, for 
installation or deployment by the carrier.
    Example 9 (Hampering Modifications): On January 2, 2000, a 
carrier installed a new generic software upgrade on some of its 
preexistent equipment. The generic software upgrade added a 
hindrance to law enforcement's ability to obtain intercepted 
communications and reasonably available call-identifying 
information. The carrier failed to correct the additional hindrance 
caused by the generic software upgrade at its own expense within a 
reasonable period of time. The Federal Communications Commission 
determined in its Memorandum Opinion and Order, adopted on September 
10, 1998, that manufacturers should be able to produce equipment 
that will be generally available for carriers to meet the assistance 
capability requirements by December 31, 1999. The preexistent 
equipment was ``significantly upgraded'' because the carrier 
installed a generic software upgrade that hampered the delivery of 
intercepted communications and call-identifying information to law 
enforcement after technology compliant with the assistance 
capability requirements should have been available for installation 
or deployment.
    Example 10 (Hampering Modifications): On January 2, 2000, a 
carrier added a modification to its some of its preexistent 
equipment. Although the modification did not affect the unobtrusive 
delivery of intercepted communications to law enforcement, it did 
intermittently garble the reasonably available call-identifying 
information which was being delivered to law enforcement. The 
carrier did not correct the problem at its own expense within a 
reasonable period of time. The Federal Communications Commission 
determined in its Memorandum Opinion and Order, adopted on September 
10, 1998, that manufacturers should be able to produce equipment 
that will be generally available for carriers to meet the assistance 
capability requirements by December 31, 1999. The preexistent 
equipment was ``significantly upgraded'' because the modifications 
hampered the delivery of call-identifying information to law 
enforcement after technology compliant with the assistance 
capability requirements should have been available for installation 
and deployment by the carrier and the carrier did not correct the 
problem at its own expense within a reasonable period of time.
    Example 11 (Correction of Hampering Modifications): On January 
2, 2000, a carrier added a call forwarding feature to its 
preexistent equipment. The carrier determined that the changes 
hampered the delivery of intercepted communications and reasonably 
available call-identifying information to law enforcement. The 
carrier corrected the additional hindrance caused by the call 
forwarding feature at its own expense within 72 hours of noticing 
the problem. The Federal Communications Commission determined in its 
Memorandum Opinion and Order, adopted on September 10, 1998, that 
manufacturers should be able to produce equipment that will be 
generally available for carriers to meet the assistance capability 
requirements by December 31, 1999. The preexistent equipment was not 
``significantly upgraded'' because the carrier corrected the problem 
at its own expense within a reasonable time.
    Example 12 (Correction of Hampering Modifications): On January 
2, 2000, a carrier added a call forwarding feature to its 
preexistent equipment. One month later, a local law enforcement 
agency attempted to activate a lawfully authorized electronic 
surveillance on the preexistent equipment. The carrier determined 
that the changes it made to the preexistent equipment hampered the 
delivery of intercepted communications and reasonably available 
call-identifying information to law enforcement. The carrier 
corrected the additional hindrance caused by the call forwarding 
feature at its own expense within 24 hours of being notified of the 
problem. The Federal Communications Commission determined in its 
Memorandum Opinion and Order, adopted on September 10, 1998, that 
manufacturers should be able to produce equipment that will be 
generally available for carriers to meet the assistance capability 
requirements by December 31, 1999. The preexistent equipment was not

[[Page 50952]]

``significantly upgraded'' because the carrier corrected the problem 
at its own expense within a reasonable period of time.
    Example 13 (Failure to Correct Hampering Modifications): On 
January 2, 2000, a carrier installed a software upgrade on some of 
its preexistent equipment which improved the functionality of the 
call forwarding feature. The improved call forwarding feature added 
a hindrance to law enforcement's ability to obtain intercepted 
communications and reasonably available call-identifying 
information. One month later, a local law enforcement agency 
attempted to activate a lawfully authorized electronic surveillance 
on the preexistent equipment. The carrier determined that the 
changes it made to the preexistent equipment hampered the delivery 
of intercepted communications and reasonably available call-
identifying information to law enforcement. The carrier failed to 
correct the additional hindrance caused by the improved call 
forwarding feature at its own expense within a reasonable period of 
time. The Federal Communications Commission determined in its 
Memorandum Opinion and Order, adopted on September 10, 1998, that 
manufacturers should be able to produce equipment that will be 
generally available for carriers to meet the assistance capability 
requirements by December 31, 1999. The preexistent equipment was 
``significantly upgraded'' because the carrier failed to correct the 
problem at its own expense within a reasonable period of time.
    Example 14 (Modifications Mandated by Federal or State Statute 
or Regulation): On January 2, 2000, a carrier made changes to its 
preexistent equipment that provided local number portability to its 
network and were mandated by federal statute and regulations. The 
preexistent equipment was not ``significantly upgraded'' because the 
changes were mandated by federal statute and regulations regardless 
of their effect on law enforcement's ability to intercept 
communications and reasonably available call-identifying 
information.
    Example 15 (Effect of ``Significant Upgrade'' on Preexistent 
Equipment): On January 2, 2000, a carrier ``significantly upgraded'' 
some of its preexistent equipment. The preexistent equipment now has 
the same status as equipment, facilities, or services installed 
after January 1, 1995.
* * * * *

    Dated: September 26, 2001.
Thomas J. Pickard,
Deputy Director, Federal Bureau of Investigation, Department of 
Justice.
[FR Doc. 01-24942 Filed 10-4-01; 8:45 am]
BILLING CODE 4410-02-U