Cost Recovery

Section 109 of CALEA provides that the attorney general may, subject to the availability of appropriations, agree to pay telecommunications carriers for all reasonable 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.

The FBI published in the Federal Register on March 20, 1997, the Cost Recovery Regulations, 28 C.F.R. pt. 100 (1997), providing for the payment of costs directly associated with CALEA assistance capability and capacity requirements. The cost recovery regulations became effective on April 21, 1997.

On April 28, 1998, the FBI published a Notice of Proposed Rulemaking, 63 Fed. Reg. 23,231 (1998) proposing to amend the Cost Recovery Regulations by adding a new section which defines the term "significant upgrade or major modification."

The FBI published on December 28, 1999 and again on March 14, 2000, a Notice of Information collection under review for a reinstatement and an extension of time for the Cost Recovery Regulations. The reinstatement and the extension can be found at 64 Fed. Reg. 72689 (1999) and 65 Fed. Reg. 13792 (2000), respectively.

On October 5, 2001, a Supplemental Notice of Proposed Rulemaking, 66 Fed. Reg. 50,931 (2001) was published by the FBI. The notice addresses the implementation of CALEA section 109 regarding the definitions of "replaced" and "significantly upgraded or otherwise undergoes major modification."  

The FBI published on July 2, 2003, an information collection request 68 Fed. Reg. 39597 (2003) to the Office of Management and Budget for review and approval of the Cost Recovery Regulations in accordance with the Paperwork Reduction Act of 1995. The proposed information collection was published to obtain comments from the public and affected agencies. Then again, on October 16, 2003, the FBI published 68 Fed. Reg. 59638 (2003), a 30-day notice of information collection reply comment period.

On March 2, 2005, the FCC released Public Notice DA 05-535 Federal-State Joint Board on Jurisdictional Separations Seeks Comment on CALEA Issues. In the public notice the Commission has asked that the public refresh the record on the CALEA issues identified in the Separations NPRM, including the questions of whether costs should be allocated in a new CALEA-specific category or in previously-existing categories, whether revenues received from the attorney general should be allocated in a particular manner (and if so, how), and whether CALEA-related revenues could be allocated to the jurisdictions based on relative-use factors derived from the relative electronic surveillance requirements of federal, state, and local law enforcement agencies (leas). The commission has requested that the joint board issue its recommended decision no later than one year from the release of the notice, that is, by August 9, 2005.

Telecommunications Carrier Compliance Fund

To facilitate CALEA's implementation, Congress authorized $500 million to be appropriated to reimburse the telecommunications industry for certain eligible costs associated with modifications to their networks. On September 30, 1996, the Omnibus Consolidated Appropriations Act of 1997, Pub. L. No. 104-208, 110 Stat. 3009 (1996), amended CALEA by adding Title IV which created the Department of Justice Telecommunications Carrier Compliance Fund (TCCF), 47 U.S.C. 1021, and appropriated $60 million in initial funding. This implementation fund is available without fiscal year limitation to the attorney general for making payments to telecommunications carriers, equipment manufacturers, and providers of telecommunications support services pursuant to section 109 of CALEA. Additionally, the act authorized agencies with law enforcement and intelligence responsibilities to transfer unobligated balances into the TCCF, subject to applicable congressional reprogramming requirements.

The FBI has implemented a reimbursement strategy that allows telecommunications carriers to receive CALEA software at no charge for certain high priority switching platforms. Under nationwide Right-To-Use (RTU) license agreements, the government pays for the development of CALEA software solutions for high priority switching platforms. This allows carriers to receive CALEA software at a nominal charge for equipment, facilities, or services installed or deployed now and in the future.

To date, the FBI has signed agreements with AG communications systems, lucent technologies, Motorola, Nortel networks, and Siemens AG for technical solutions developed to meet the assistance capability requirements of CALEA. When considered in total, these agreements result in software solutions being available for the vast majority of law enforcement's priority, pre-January 1, 1995 switches.

The following table illustrates the dollar amounts and timing of congressional appropriations and fund transfers from authorized agencies with law enforcement and intelligence responsibilities.

Telecommunications Carrier Compliance Fund Activity
FY 1997 Direct Appropriation$60,000,000
FY 1997 Department of Justice Working Capital Fund$40,000,000
FY 1997 United States Customs Service Transfer$1,580,270
FY 1997 United States Postal Inspection Service Transfer$1,000,000
FY 2000 Direct Appropriation$15,000,000
FY 2001 Direct Appropriation$200,976,876
TOTAL DEPOSITS$499,557,146