[Federal Register Volume 69, Number 19 (Thursday, January 29, 2004)]
[Proposed Rules]
[Pages 4263-4267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-1916]


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FEDERAL TRADE COMMISSION

16 CFR Part 316

RIN 3084-AA96


Label For E-mail Messages Containing Sexually Oriented Material

AGENCY: Federal Trade Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this document, the Federal Trade Commission (``FTC'' or 
``Commission'') seeks comment on the proposed rule setting forth the 
mark that is to be included in commercial electronic mail (``e-mail'') 
that includes sexually oriented material. Section 5(d) of the 
Controlling the Assault of Non-Solicited Pornography and Marketing Act 
of 2003, Public Law 108-187 (Dec. 16, 2003) (``CAN-SPAM Act'' or ``the 
Act'') directs the Commission to prescribe, within 120 days of 
enactment of that law, clearly identifiable marks or notices to be 
included in or associated with commercial e-mail that contains sexually 
oriented material. Pursuant to this mandate and its authority under 
section 13(a) of the Act, the Commission issues this Notice of Proposed 
Rulemaking and requests public comment on the proposed rule requiring 
that the prescribed mark be placed on certain commercial e-mail.

DATES: Written comments will be accepted until February 17, 2003. Due 
to the time constraints of this rulemaking procedure, the Commission 
does not contemplate any extensions of this comment period or any 
additional periods for written comments or rebuttal comment. Comments 
that are not timely submitted and directly responsive to the specific 
questions set forth in Section G of this document may not be 
considered.

ADDRESSES: Comments should refer to ``Proposed Mark for Sexually 
Oriented Spam, Project No. P044405.'' Comments filed in paper form 
should also include this reference on their envelopes, and should be 
mailed or delivered, as prescribed in Section C of the Supplementary 
Information section, to the following address: Federal Trade 
Commission/Office of the Secretary, Room 159-H, 600 Pennsylvania 
Avenue, NW., Washington, DC 20580. Comments filed in electronic form 
(except comments containing any confidential material) should be sent, 
as prescribed in Section C of the Supplementary Information section, to 
the following email box: [email protected]. All federal government 
agency rulemaking initiatives are also available online at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Jonathan Kraden, (202) 326-2614 (e-
mail: [email protected]), Division of Marketing Practices, Bureau of 
Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue, 
NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

Section A. The CAN-SPAM Act of 2003

    On December 16, 2003, the President signed into law the CAN-SPAM 
Act. In enacting this legislation, Congress found, inter alia, as set 
forth in section 2 of the Act, that ``some commercial e-mail contains 
material that many recipients may consider vulgar or pornographic in 
nature.'' \1\
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    \1\ CAN-SPAM Act at section 2(a)(5).
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    Indeed, citizens across the country have expressed concern over the 
increasing amount of unsolicited commercial e-mail that they receive 
and, most notably, the sexually explicit images that are often included 
in these e-mails.\2\ This concern has prompted eighteen (18) states to 
enact legislation in recent years requiring a label to be attached to 
unsolicited commercial e-mails that include sexually explicit or

[[Page 4264]]

obscene materials. While all of these state labeling requirements 
contain some variation on the words ``ADULT'' and ``ADVERTISEMENT,'' 
the requirements often differ on the placement and spelling of these 
words.\3\ The CAN-SPAM Act creates a federal labeling requirement for 
such e-mail messages, and section 5(d) of the Act directs the 
Commission to prescribe clearly identifiable marks or notices to be 
included in or associated with commercial e-mail that contains sexually 
oriented material.
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    \2\ A study done by FTC staff found that 17% of pornographic 
offers sent in a sampling of unsolicited commercial e-mail contained 
images of nudity that appeared automatically when a consumer opened 
the e-mail message. Over 40% of these sampled e-mails contained 
false statements in their ``From'' or ``Subject'' lines, making it 
more likely that recipients would open the messages without knowing 
that pornographic images would appear. False Claims In Spam, April 
30, 2003, available at http://www.ftc.gov/opa/2003/04/spamrpt.htm.
    \3\ The different state labels are ``ADV:ADLT'' (Alaska, 
Illinois, Indiana, Kansas, Maine, Missouri, New Mexico, South 
Dakota, and Tennessee); ``ADV:ADULT'' (Arkansas and Utah); ``ADV-
ADULT'' (Louisiana, Minnesota, North Dakota, Oklahoma, and 
Pennsylvania); ``ADV: ADULT ADVERTISEMENT'' (Texas); and ``ADULT 
ADVERTISEMENT'' (Wisconsin).
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Section B. Proposed Mark For E-mail Messages Including Sexually 
Oriented Material

    Pursuant to its mandate under section 5(d) of the Act and its 
authority under section 13(a) of the Act, and after consulting with the 
Department of Justice, the Commission hereby proposes that the phrase 
``SEXUALLY-EXPLICIT-CONTENT:'' (hereinafter ``Proposed Mark'') be 
required to be displayed in capital letters as the first twenty-seven 
(27) characters in the subject line of any commercial e-mail message 
that includes sexually oriented material.\4\ The Commission believes 
that this phrase, which is derived from the definition of sexually 
oriented materials in section 5(d)(4) of the CAN-SPAM Act, will provide 
the most accurate description of the images included in a commercial e-
mail that includes sexually oriented materials.\5\ For that reason, the 
Commission believes that the Proposed Mark will most clearly, 
conspicuously and effectively alert the recipient to the fact that an 
e-mail includes sexually oriented material that he or she may find 
objectionable.
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    \4\ The phrase ``SEXUALLY-EXPLICIT-CONTENT'' comprises 25 
characters, including the dashes between the three words. The colon 
(:) and the space following the phrase are the 26th and 27th 
characters and are included to set off the Proposed Mark and help 
make it more prominent.
    \5\ See Sec. 5(d)(4) of the Act. Although the definition of 
``sexually oriented material'' refers to ``sexually explicit 
conduct,'' the Commission proposes substituting the word ``content'' 
for the word ``conduct'' in the Proposed Mark because the substance 
of an e-mail message is more accurately defined by use of the word 
``content.''
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    In addition, the Commission added hyphens between the words in 
order to facilitate appropriate filtering. Specifically, the Commission 
is concerned that a filter set to block a simple English phrase like 
``sexually explicit content'' could prevent delivery of an e-mail from 
an anti-pornography group that used the phrase within the content of 
their message. Use of hyphens creates a unique mark calculated to avoid 
this problem. In addition, the Commission believes that the addition of 
dashes between the three words and a colon and a space after the phrase 
``SEXUALLY EXPLICIT CONTENT'' will serve to set off the Proposed Mark 
and help to make it more unique and prominent.
    The Commission also considered proposing use of the mark ``adult 
advertisement.'' While many states across the country have labeling 
requirements that use abbreviated variations of the words ``adult'' and 
``advertisement,'' the Commission believes that use of the word 
``adult'' in the proposed mark would not necessarily provide a 
recipient with the most effective notice of what that e-mail contains. 
There are many products or services (such as tobacco, alcohol, and 
gambling) that could be considered ``adult'' in nature. For this 
reason, the Commission believes that any proposed mark or notice must 
include some mention of the ``sexual'' images that a recipient can 
expect to see should he or she decide to open a labeled e-mail.
    In addition to establishing the required mark, the proposed rule 
tracks the elements of section 5(d)(1) of the Act, requiring that an e-
mail message that contains sexually oriented material include: Clear 
and conspicuous identification that the message is an advertisement or 
solicitation; a clear and conspicuous opt-out notice; a functioning 
return e-mail address or other Internet-based mechanism for opt-outs; a 
valid physical postal address of the sender; and a clear and 
conspicuous statement that to avoid viewing the sexually oriented 
material, a recipient should delete the email message without following 
a sender's provided instructions on how to access, or activate a 
mechanism to access, the sexually oriented material.
    The proposed rule also tracks section 5(d)(2) of CAN-SPAM by 
exempting situations where a recipient has given his or her prior 
consent to receipt of a message. In addition, the proposed rule 
clarifies that certain terms taken from the Act and appearing in the 
proposed rule have the definitions prescribed by particular referenced 
sections of the Act.\6\ Finally, Sec. 316.1(d) is a severability 
provision that provides that if any portion of the rule is found 
invalid, remaining portions will survive.
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    \6\ Most of the terms listed in Sec. 316.1(c) occur in the text 
of the proposed rule; several of them are not in the rule text, but 
are listed there because CAN-SPAM incorporates and defines them 
within the definition of another term. For example, the term 
``procure'' is listed in the proposed rule's definitions [at Sec. 
316.1(c)(7)] because the Act defines and includes that term in 
another defined term, ``initiate,'' defined in the rule at Sec. 
316.1(c)(5).
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Section C. Invitation To Comment

    All members of the public are hereby given notice of the 
opportunity to submit written data, views, facts, and arguments 
concerning the Proposed Mark and the proposed rule. The Commission 
invites written comments to assist it in ascertaining the feasibility 
and effectiveness of the Commission's Proposed Mark and proposed rule. 
Comments may be filed with the Commission in either paper or electronic 
form, and must be filed on or before February 17, 2003.
    1. A public comment filed in paper form should be mailed or 
delivered to the following address: Federal Trade Commission/Office of 
the Secretary, Room 159-H, 600 Pennsylvania Avenue, NW., Washington, DC 
20580. The FTC is requesting that any comment filed in paper form be 
sent by courier or overnight service because U.S. postal mail in the 
Washington area and at the Commission is subject to delay due to 
heightened security precautions. If the comment contains any material 
for which confidential treatment is requested, it must be filed in 
paper (rather than electronic) form, and the first page of the document 
must be clearly labeled ``Confidential.''\7\
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    \7\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be 
accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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    2. A public comment that does not contain any material for which 
confidential treatment is requested may instead be filed in electronic 
form (in ASCII format, WordPerfect, or Microsoft Word), as part of or 
as an attachment to an email message sent to the following email box: 
[email protected]
    3. Regardless of the form in which they are filed, all timely and 
responsive comments will be considered by the Commission, and will be 
available (with confidential material redacted) for public inspection 
and copying on the Commission Web site at www.ftc.gov and at its 
principal office. As a matter of discretion, the Commission makes every 
effort to remove home contact information for individuals from the 
public comments it receives before placing those comments on the FTC 
web site.

[[Page 4265]]

Section D. Communications by Outside Parties to Commissioners or Their 
Advisors

    Written communications and summaries or transcripts of oral 
communications respecting the merits of this proceeding from any 
outside party to any Commissioner or Commissioner's advisor will be 
placed on the public record. See 16 CFR 1.26(b)(5).

Section E. Paperwork Reduction Act

    The Commission has determined that the proposed rule does not 
include a collection of information subject to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3506; 5 CFR 1320). The Proposed Mark that the 
proposed rule requires to be displayed in the subject line ``is 
information originally supplied by the federal government.'' See 5 CFR 
1320.3(c)(2).

Section F. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-612, 
requires an agency to provide an Initial Regulatory Flexibility 
Analysis (``IRFA'') with a proposed rule and a Final Regulatory 
Flexibility Analysis (``FRFA'') with the final rule, if any, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. See 5 U.S.C. 603-605. 
The FTC does not expect that the Proposed Mark will have a significant 
economic impact on a substantial number of small entities. This 
document serves as notice to the Small Business Administration of the 
agency's certification of no effect. Nonetheless, the Commission has 
determined that it is appropriate to publish an IRFA in order to 
inquire into the impact of the proposed rule on small entities. 
Therefore, the Commission has prepared the following analysis.
    1. Reasons for the proposed rule.
    Section 5(d) of the CAN-SPAM Act directs the Commission to 
prescribe, within 120 days of enactment of that law, clearly 
identifiable marks or notices to be included in or associated with 
commercial e-mail that contains sexually oriented material. The 
proposed rule is intended to fulfill the obligations imposed by section 
5(d).
    2. Statement of objectives and legal basis.
    The objectives of the proposed rule are discussed above. The legal 
basis for the proposed rule is Sec. 5(d) of the CAN-SPAM Act.
    3. Description of and, where feasible, an estimate of the number of 
small entities to which the proposed rule will apply.
    In general the proposed rule will apply to any person or entity who 
initiates, originates or transmits a commercial e-mail message that 
contains sexually oriented material. Determining a precise estimate of 
the number of small entities subject to the proposed rule, or 
describing those entities, is not readily feasible because the 
assessment of whether an e-mail message contains sexually oriented 
material turns on a number of factors that will require factual 
analysis on a case-by-case basis. The Commission invites comment and 
information on this issue.
    4. Description of the projected reporting, recordkeeping, and other 
compliance requirements of the proposed rule, including an estimate of 
the classes of small entities that will be subject to the requirement 
of including the Proposed Mark and the type of professional skills that 
will be necessary for inclusion of the Proposed Mark.
    The proposed rule does not impose any reporting or any specific 
recordkeeping requirements within the meaning of the Paperwork 
Reduction Act. The Proposed Mark would be included as the first twenty-
seven (27) characters of the subject line of any commercial e-mail 
message that contains sexually oriented material. The Commission does 
not believe that the insertion of additional characters into the 
subject line of an e-mail will create a significant burden on persons 
or entities who initiate a commercial e-mail message that includes 
sexually oriented material. However, the Commission, as noted below, 
seeks further comment on the professional skills that will be needed to 
implement the proposed rule, the actual costs or expenditures, if any, 
of including the Proposed Mark in the subject line of commercial e-mail 
that contains sexually oriented material, and the extent to which these 
costs may differ or vary for small entities.
    5. Identification of other duplicative, overlapping, or conflicting 
federal rules.
    The FTC has not identified any other federal statutes, rules or 
policies that would conflict with the requirement that the Proposed 
Mark be included as the first twenty-seven (27) characters of the 
subject line of any commercial e-mail message that contains sexually 
oriented material. However, the Commission is requesting comment and 
information about any statutes or rules that may duplicate or conflict 
with the proposed rule, as well as any state, local, or industry rules 
or policies that require labeling on commercial e-mail messages that 
include sexually oriented material.
    6. Discussion of significant alternatives to the proposed rule that 
would accomplish the stated objectives of the CAN-SPAM Act and that 
would minimize any significant economic impact of the proposed rule on 
small entities.
    Section 5(d) of the CAN-SPAM Act directs the Commission to 
prescribe clearly identifiable marks or notices to be included in or 
associated with commercial e-mail that includes sexually oriented 
material. The proposed rule is intended to fulfill the obligations 
imposed by Sec. 5(d). However, the Commission recognizes that there are 
a number of variations and alternatives to the wording contained in the 
Proposed Mark and also considered the phrases ``adult advertisement'' 
and ``sexually oriented material'' before ultimately deciding on the 
Proposed Mark. The FTC welcomes comment on any significant 
alternatives, consistent with the purposes of the CAN-SPAM Act, that 
would minimize the economic impact of the proposed rule on small 
entities.

Section G. Specific Issues for Comment

    The Commission seeks comment on the proposed rule as set forth in 
this Notice. The Commission is particularly interested in receiving 
comments on the questions that follow. In responding to these 
questions, include detailed and factual supporting information whenever 
possible.
    1. Are there any technical reasons why the Proposed Mark cannot be 
included in the subject line of e-mails that include sexually oriented 
materials?
    2. Are there any technical reasons why the proposed rule will not 
be effective?
    3. Are there any technical ways to make the proposed rule more 
effective?
    4. Are there other notices or marks that would be more effective in 
achieving the objective of the statute, including, but not limited to, 
``ADULT ADVERTISEMENT'' and ``SEXUALLY ORIENTED MATERIAL''? Why?
    5. Is the proposed rule adequate to inform a recipient that an e-
mail may include content that is objectionable or offensive due to its 
sexual nature?
    6. Is there additional information that a mark or notice should 
include to ensure that a recipient is made aware that an e-mail 
includes sexually oriented material?
    7. Will the inclusion of the Proposed Mark aid a filtering program 
in blocking or filtering e-mail messages that include sexually oriented 
material?
    8. Is there additional information that a mark or notice should 
include to

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ensure that a filtering program can effectively and efficiently filter 
such an e-mail?
    9. Does the inclusion of punctuation (such as a colon or a dash) in 
the Proposed Mark in any way affect the ability of a filtering program 
to filter such an e-mail?
    10. Would the proposed rule unduly burden either entities selling 
sexually oriented material through e-mail messages or those consumers 
who were interested in purchasing sexually oriented material offered to 
them through e-mail messages? How? Is this burden justified by 
offsetting benefits to consumers?
    11. How can the Commission measure the effectiveness of the 
proposed rule in protecting consumers from unwanted sexually oriented 
e-mail messages?
    12. Please describe what effect the proposed rule will have on 
small entities that initiate commercial e-mail messages that include 
sexually oriented material.
    13. Please describe what costs will be incurred by small entities 
to ``implement and comply'' with the rule, including expenditures of 
time and money for: any employee training; acquiring additional 
professional skills; attorney, computer programmer, or other 
professional time; and preparing and processing relevant materials.
    14. Are there ways the proposed rule could be modified to reduce 
the costs or burdens for small entities while still being consistent 
with the requirements of the CAN-SPAM Act?
    15. Please identify any relevant federal, state, or local rules 
that may duplicate, overlap or conflict with the proposed rule. In 
addition, please identify any industry rules or policies that require 
small entities or other regulated entities to include clearly 
identifiable marks or notices with commercial e-mail that contains 
sexually oriented material.
    16. Are the definitions set forth referencing the CAN-SPAM Act 
acceptable or would commenters prefer that the legal definitions 
themselves be imported into the proposed rule from the CAN-SPAM Act?

List of Subjects in 16 CFR Part 316

    Advertising, Business and industry, Computer technology, Consumer 
protection, Labeling

    Accordingly, the Commission proposes to add a new part 316 of title 
16 of the Code of Federal Regulations as follows:

PART 316--RULES IMPLEMENTING THE CAN-SPAM ACT OF 2003

    Sec. 316.1 Requirement to place warning labels on commercial 
electronic mail that contains sexually oriented material.

    Authority: Pub. L. 108-187.


Sec. 316.1  Requirement to place warning labels on commercial 
electronic mail that contains sexually oriented material.

    (a) Any person who initiates, to a protected computer, the 
transmission of a commercial electronic mail message that includes 
sexually oriented material must:

    (1) Include in the subject heading for the electronic mail message 
the phrase ``SEXUALLY-EXPLICIT-CONTENT:'' in capital letters as the 
first twenty-seven (27) characters at the beginning of the subject 
line;\1\ and
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    \1\ The phrase ``SEXUALLY-EXPLICIT-CONTENT'' comprises 25 
characters, including the dashes between the three words. The colon 
(:) and the space following the phrase are the 26th and 27th 
characters.
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    (2) Provide that the matter in the message that is initially 
viewable by the recipient, when the message is opened by any recipient 
and absent any further actions by the recipient, include only the 
following information:

    (i) The phrase ``SEXUALLY-EXPLICIT-CONTENT:'' in a clear and 
conspicuous manner; \2\
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    \2\ This phrase consists of twenty-seven (27) characters and is 
identical to the phrase required in Sec. 316.1(a)(1).
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    (ii) Clear and conspicuous identification that the message is an 
advertisement or solicitation;
    (iii) Clear and conspicuous notice of the opportunity of a 
recipient to decline to receive further commercial electronic mail 
messages from the sender;
    (iv) A functioning return electronic mail address or other 
Internet-based mechanism, clearly and conspicuously displayed, that--
    (A) A recipient may use to submit, in a manner specified in the 
message, a reply electronic mail message or other form of Internet-
based communication requesting not to receive future commercial 
electronic mail messages from that sender at the electronic mail 
address where the message was received; and
    (B) Remains capable of receiving such messages or communications 
for no less than 30 days after the transmission of the original 
message;
    (v) A valid physical postal address of the sender; and
    (vi) Any needed instructions on how to access, or activate a 
mechanism to access, the sexually oriented material, preceded by a 
clear and conspicuous statement that to avoid viewing the sexually 
oriented material, a recipient should delete the email message without 
following such instructions.
    (b) Prior Affirmative Consent. Paragraph (a) of this section does 
not apply to the transmission of an electronic mail message if the 
recipient has given prior affirmative consent to receipt of the 
message.
    (c) Definitions:
    (1) The definition of the term ``affirmative consent'' is the same 
as the definition of that term in section 3(1) of the CAN-SPAM Act of 
2003, Public Law 108-187 (Dec. 16, 2003).
    (2) The definition of the term ``commercial electronic mail 
message'' is the same as the definition of that term in section 3(2) of 
the CAN-SPAM Act of 2003, Public Law 108-187 (Dec. 16, 2003).
    (3) The definition of the term ``electronic mail address'' is the 
same as the definition of that term in section 3(5) of the CAN-SPAM Act 
of 2003, Public Law 108-187 (Dec. 16, 2003).
    (4) The definition of the term ``electronic mail message'' is the 
same as the definition of that term in section 3(6) of the CAN-SPAM Act 
of 2003, Public Law 108-187 (Dec. 16, 2003).
    (5) The definition of the term ``initiate'' is the same as the 
definition of that term in section 3(9) of the CAN-SPAM Act of 2003, 
Public Law 108-187 (Dec. 16, 2003).
    (6) The definition of the term ``Internet'' is the same as the 
definition of that term in section 3(10) of the CAN-SPAM Act of 2003, 
Public Law 108-187 (Dec. 16, 2003).
    (7) The definition of the term ``procure'' is the same as the 
definition of that term in section 3(12) of the CAN-SPAM Act of 2003, 
Public Law 108-187 (Dec. 16, 2003).
    (8) The definition of the term ``protected computer'' is the same 
as the definition of that term in section 3(13) of the CAN-SPAM Act of 
2003, Public Law 108-187 (Dec. 16, 2003).
    (9) The definition of the term ``recipient'' is the same as the 
definition of that term in section 3(14) of the CAN-SPAM Act of 2003, 
Public Law 108-187 (Dec. 16, 2003).
    (10) The definition of the term ``routine conveyance'' is the same 
as the definition of that term in section 3(15) of the CAN-SPAM Act of 
2003, Public Law 108-187 (Dec. 16, 2003).
    (11) The definition of the term ``sender'' is the same as the 
definition of that term in section 3(16) of the CAN-SPAM Act of 2003, 
Public Law 108-187 (Dec. 16, 2003).
    (12) The definition of the term ``transactional or relationship 
messages''

[[Page 4267]]

is the same as the definition of that term in section 3(17) of the CAN-
SPAM Act of 2003, Public Law 108-187 (Dec. 16, 2003).
    (13) The definition of the term ``sexually oriented material'' is 
the same as the definition of that term in section 5(d)(4) of the CAN-
SPAM Act of 2003, Public Law 108-187 (Dec. 16, 2003).
    (d) Severability--The provisions of this part are separate and 
severable from one another. If any provision is stayed or determined to 
be invalid, it is the Commission's intention that the remaining 
provisions shall continue in effect.

    By direction of the Commission.
Donald S. Clark,
 Secretary.
[FR Doc. 04-1916 Filed 1-28-04; 8:45 am]
BILLING CODE 6750-01-P