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Federal Internet Law & Policy
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ECPA :: Reimbursement Dont be a FOOL; The Law is Not DIY

Cost Recovery

Service providers are eligible to receive “reimbursement for such costs as are reasonably necessary and which have been directly incurred in searching for, assembling, reproducing, or otherwise providing such information.” 18 U.S.C. § 2706 (stored communications and transactional records). See also 18 U.S.C. § 3124(c) (pen register / trap and trace). For stored communications and transactional records, the service provider and the law enforcement official get to come to mutual agreement as to what that reasonable amount should be. If they can’t, the court issuing the order shall facilitate their coming to mutual agreement.

This provision for cost recover does not apply to common carriers who basically must comply with CALEA.

Derived From: Searching and Seizing Computers and Obtaining Electronic Evidence in Criminal InvestigationsPDF Computer Crime and Intellectual Property Section, Criminal Division, DOJ p 142 (2009) (Remember: This is a rendition of the state of the law from law enforcement and reflects their views)

In general, persons and entities are not entitled to reimbursement for complying with federal legal process unless there is specific federal statutory authorization. See Blair v. United States, 250 U.S. 273, 281 (1919) (discussing possibility of reimbursement for grand jury testimony). "It is beyond dispute that there is in fact a public obligation to provide evidence . . . and that this obligation persists no matter how financially burdensome it may be." Hurtado v. United States, 410 U.S. 578, 589 (1973) (stating that the Fifth Amendment does not require compensation for the performance of a public duty). However, in many (but not all) circumstances, the SCA requires government entities obtaining the contents of communications, records, or other information pursuant to the SCA to reimburse the disclosing person or entity. See 18 U.S.C. 2706.

Section 2706 generally obligates government entities "obtaining the contents of communications, records, or other information under section 2702, 2703, or 2704" to pay the service provider "a fee for reimbursement for such costs as are reasonably necessary and which have been directly incurred in searching for, assembling, reproducing, or otherwise providing such information." 18 U.S.C. 2706(a). Significantly, this section only requires reimbursement when the government actually obtains communication content, records, or other information. Thus, the government is not required to pay for costs incurred by a provider in responding to a 2703(f ) preservation letter unless the government later obtains the preserved records.

The amount of the fee required under 2706(a) "shall be as mutually agreed by the governmental entity and the person or entity providing the information, or, in the absence of agreement, shall be as determined by the court." 18 U.S.C. 2706(b). In practice, if the service provider seeks what appears to be unreasonably high reimbursement costs, the government should demand a detailed accounting of costs incurred by activity. A cost accounting will help ensure that the provider is not seeking reimbursement for indirect costs or activities that were not reasonably necessary to the production.

In addition, the SCA contains a reimbursement exception that precludes reimbursement in specific circumstances. The reimbursement requirement "does not apply with respect to records or other information maintained by a communications common carrier that relate to telephone toll records and telephone listings obtained under section 2703," unless a court determines that the information sought by the government is "unusually voluminous" or "caused an undue burden on the provider." 18 U.S.C. 2706(c).

The reimbursement exception of 2706(c) applies only to records and other information "maintained by" a communications common carrier. In Ameritech Corp. v. McCann, 403 F.3d 908, 912 (7th Cir. 2005), the Seventh Circuit held that reports of who placed calls to a specified customer were not "maintained by" Ameritech. Ameritech's computer system recorded calls made by a customer, but it did not automatically keep or generate a list of the calls made to a customer. Compiling such a list required substantial computation time. According to the court, Ameritech "maintains" bills and equivalent statements, and the government can therefore get such "raw information" for free. However, when the government requires Ameritech to create a report, the government must provide compensation. Prosecutors outside the Seventh Circuit are not bound by Ameritech, and there is a reasonably strong argument that its interpretation of 2706(c) is flawed. Under this alternative interpretation, any information stored by a carrier is "maintained by" the carrier, and questions regarding the difficulty of producing information can be evaluated under the "undue burden" standard of 2706(c).