[Federal Register Volume 69, Number 60 (Monday, March 29, 2004)]
[Rules and Regulations]
[Pages 16368-16374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6830]



[[Page 16367]]

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Part III





Federal Trade Commission





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16 CFR Part 310



Telemarketing Sales Rule; Final Rule

  Federal Register / Vol. 69, No. 60 / Monday, March 29, 2004 / Rules 
and Regulations  

[[Page 16368]]


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FEDERAL TRADE COMMISSION

16 CFR Part 310

RIN 3084-0098


Telemarketing Sales Rule

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Trade Commission (``FTC'' or 
``Commission''), pursuant to a directive in the Consolidated 
Appropriations Act of 2004, issues its Statement of Basis and Purpose 
(``SBP'') and final amended Telemarketing Sales Rule (``TSR'' or 
``Rule'') Section 310.4(b)(3)(iv). This amended section of the TSR now 
requires sellers and telemarketers, in complying with the do-not-call 
provisions of the TSR, to use a version of the National Do Not Call 
Registry obtained from the Commission no more than thirty-one (31) days 
prior to the date any call is made, rather than three (3) months prior 
to the date any call is made, as is allowed under the current TSR.

EFFECTIVE DATE: The amended Section 310.4(b)(3)(iv) of the TSR will 
become effective on January 1, 2005.

ADDRESSES: Requests for copies of the amended Rule and this SBP should 
be sent to: Public Reference Branch, Room 130, Federal Trade 
Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580. The 
complete record of this proceeding is also available at that address. 
Relevant portions of the proceeding, including the amended Rule and 
SBP, are available at: http://www.ftc.gov.

FOR FURTHER INFORMATION CONTACT: Catherine Harrington-McBride, (202) 
326-2452, Division of Marketing Practices, Bureau of Consumer 
Protection, Federal Trade Commission, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580.

SUPPLEMENTARY INFORMATION: The amended Rule now requires sellers and 
telemarketers, in complying with the Do Not Call provisions of the TSR, 
to use a version of the National Do Not Call Registry obtained from the 
Commission no more than thirty-one (31) days prior to the date any call 
is made.

Statement of Basis and Purpose

I. Background

    On February 13, 2004, the Commission published in the Federal 
Register a Notice of Proposed Rulemaking (``NPRM'') \1\ to amend the 
TSR's Do Not Call safe harbor provision, 16 CFR 310.4(b)(3)(iv), to 
substitute the phrase ``no more than thirty (30) days prior to the date 
any call is made'' for the phrase that originally appeared in that 
provision, ``no more than three (3) months prior to the date any call 
is made.'' The proposed amendment would have changed, from quarterly to 
every thirty (30) days, the frequency with which telemarketers and 
sellers would have to obtain and purge from their calling lists numbers 
appearing on the National Do Not Call Registry. It also would have 
reduced, from three (3) months to thirty (30) days, the amount of time 
a consumer must wait after entering his or her number on the Registry 
to assert a valid Do Not Call complaint. The proposed amendment was 
mandated by the Consolidated Appropriations Act of 2004, which, inter 
alia, directs that ``not later than 60 days after the date of enactment 
of this Act, the Federal Trade Commission shall amend the Telemarketing 
Sales Rule to require telemarketers subject to the Telemarketing Sales 
Rule to obtain from the Federal Trade Commission the list of telephone 
numbers on the `do-not-call' registry once a month.'' \2\
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    \1\ 69 FR 7329 (Feb. 13, 2004). The Commission also issued and 
posted on its Web site a press release including a copy of the text 
of the complete NPRM on February 10th, in recognition of the fact 
that the extra three days could benefit potential commenters faced 
with a necessarily short comment period (the FTC had only 60 days 
from the enactment of the Appropriations Act of 2004 to issue a 
final amended Rule). See ``FTC Seeks Public Comment on Proposed 
Amendment of Telemarketing Sales Rule,'' Feb. 10, 2004 (available 
electronically at: http://www.ftc.gov/opa/2004/02/040210tsrnpr.htm).
    \2\ Consolidated Appropriations Act of 2004, Public Law 108-199, 
188 Stat 3. The requirement is in Division B, Title V.
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    In the NPRM, the Commission sought comment on two specific issues 
relating to the proposed amendment: (1) The use of the phrase ``thirty 
(30) days,'' rather than the term used in the statute, ``once a 
month;'' and (2) the appropriate effective date for the proposed 
amendment. The Commission received 186 comments in response to its 
NPRM. Virtually all consumers and consumer groups favored both reducing 
the amount of time a consumer must wait to receive the benefits of 
inclusion on the National Do Not Call Registry, and using the phrase 
``thirty (30) days,'' rather than ``monthly'' in the amended Rule.\3\ 
On the other hand, most business and industry commenters stated that 
shortening the time interval at which they must scrub their calling 
lists was burdensome and unnecessary.\4\ Business and industry 
commenters were divided, however, about whether they endorsed the 
Commission's proposal to use a ``thirty (30) day'' standard rather than 
a ``monthly'' standard, with some agreeing that such a standard was 
clearer, while others argued that a monthly standard is preferable 
because it provides greater flexibility for businesses to determine the 
schedule on which they could most conveniently scrub their lists within 
the parameters of the new time frame set forth in the Appropriations 
Act. All commenters generally recommended an effective date of anywhere 
from three (3) months to a year or longer after adoption. The comments 
and the basis for the Commission's decision on the various 
recommendations are analyzed in detail below.
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    \3\ See, e.g., Traylor at 1 (continues to get calls from 
telemarketers and would like to see time for scrubbing shortened); 
Davis at 1; Mitchell at 1 (``Three months allows for a lot of 
unwanted calls.''); Strang at 1 (``Such action would bring the TSR 
into line with the FCC's requirement that company specific do-not-
call requests be honored no later than 30-days after the request is 
made. It would also limit consumers' potential exposure to unwanted 
calls after entry of their number into the database.''); Mey at 1 
(``Reducing this interval will clearly benefit consumers by enabling 
them to assert a valid Do-Not-Call complaint thirty (30) days after 
entering their numbers on the registry, rather than having to wait 
three months.''); Sachau at 1; Hurlburt at 1; But see Rice-Williams 
at 1 (unnecessary and not worth insignificant result).
    \4\ Advertiser at 1; Hawkins at 1; Heroy at 1; Skinner at 1; 
Sprecher at 1; Cage at 1; D&D Air at 1; Meltzer at 1; Rice at 1 
(stating monthly scrubbing would be too burdensome); Beach at 1 (too 
soon to implement any changes to a relatively new federal regulatory 
scheme); McGarry (small businesses will be particularly burdened by 
the proposed amendment); Hometown News (monthly scrubbing too 
expensive); McMullin at 1 (too expensive especially for small 
businesses); Mitchell at 1 (``cost prohibitive and unnecessarily 
time consuming''); Green Banner at 1 (will triple costs). But see 
Clapsaddle at 1; Willoughby at 1; TCIM Services at 1.
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II. The Amended Rule

    Based on the mandate of the Appropriations Act to amend the Rule, 
and on careful review of the record developed in this rulemaking 
proceeding, the Commission has determined to modify the TSR safe harbor 
provision regarding the interval at which businesses must obtain 
Registry data. Under the amended Rule provision adopted herein, a 
seller or telemarketer must obtain Registry data and purge registered 
numbers from their call lists no more than thirty-one (31) days prior 
to making a telemarketing call. Recognizing, however, that it may take 
time for all businesses to implement procedures for effecting this more 
frequent ``scrub'' schedule, the Commission has set the effective date 
for this amended provision of the Rule as January 1, 2005, allowing 
businesses more than nine (9) months to ready their systems and 
procedures. This time frame will also enable the Commission

[[Page 16369]]

and the vendor that operates the National Do Not Call Registry to 
implement modifications to Registry systems necessitated by the 
anticipated increase in usage resulting from this Rule amendment.

III. Discussion of the Issues on Which Comment Was Specifically 
Solicited

    The Commission requested comment on two specific issues relating to 
the proposed amendment. The first was whether the use of the phrase 
``thirty (30) days,'' rather than the term used in the statute, ``once 
a month,'' was appropriate. The second was what the appropriate 
effective date for the proposed amendment should be. The major themes 
that emerged from the record are summarized below.

1. Thirty (30) Days

    In the NPRM, the Commission stated that it ``believes that the term 
`thirty (30) days' achieves greater clarity and precision in 
effectuating Congress's twofold intent in the Appropriations Act--to 
shorten from quarterly to monthly the interval for telemarketers and 
sellers to purge registered telephone numbers from their calling lists, 
and to enable consumers to assert valid Do Not Call complaints thirty 
(30) days after entering their numbers on the Registry rather than 
having to wait three months.'' \5\ Further, the Commission noted that 
the term ``thirty (30) days'' provides an unambiguous standard that 
would make ``compliance easier to effectuate.''
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    \5\ 69 FR 7329, 7330 (Feb. 13, 2004).
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    Based on the record in this proceeding, the Commission has 
determined that an interval of thirty-one (31) days is preferable to 
the thirty (30) day standard, which had been proposed in the NPRM. 
Therefore, the TSR do-not-call safe harbor, Section 310.4(b)(3)(iv)--
which provides that a seller or telemarketer will not be liable for 
violating the Do Not Call Registry provisions if it meets certain 
criteria--is amended to specify the thirty-one (31) day requirement, as 
follows:

    The seller or a telemarketer uses a process to prevent 
telemarketing to any telephone number on any list established 
pursuant to Sec.  310.4(b)(3)(iii) or Sec.  310.4(b)(1)(iii)(B), 
employing a version of the ``do-not-call'' registry obtained from 
the Commission no more than thirty-one (31) days prior to the date 
any call is made, and maintains records documenting this process.

The Commission believes that such a modification fully effectuates the 
intent of the statute while not unduly constraining businesses. As 
discussed below, the record shows that many businesses were opposed to 
the ``thirty (30) day'' standard because they believed it would not 
allow sufficient flexibility for businesses, particularly small 
businesses.
    Consumers and consumer groups nearly universally supported the 
Commission's proposal to use a ``thirty (30) days'' rather than monthly 
standard, noting that such a standard not only would be less 
ambiguous,\6\ thus creating a brighter line for businesses to heed in 
complying with the Rule, but also would remove the possibility that a 
telemarketer could thwart Congressional intent that scrubbing be done 
at a monthly interval while still technically complying--for example, 
by accessing the Registry at 11 p.m. on the last day of one calendar 
month and again at 12:01 a.m. on the first day of the next, effectively 
scrubbing bi-monthly.\7\
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    \6\ AARP at 2 (noting that such a standard ``will provide 
industry, government and consumers with clearly defined parameters 
for updating''); Heinemann at 1 (agreeing ``that the wording should 
be `thirty (30) days' as opposed to `monthly.' This leaves no 
ambiguity as to how often the list should be acquired.''); Mey at 1 
(`` `[T]hirty (30) days' provides much greater clarity than the term 
`monthly.' ''); NCL at 1 (agrees that the term ``monthly'' could be 
ambiguous); NMHC/NAA at 1--(``every `thirty (30) days' more 
accurately describes the regular time period in which telemarketers 
must scrub from their call lists new additions to the National Do 
Not Call Registry. Thirty days is a precise term that will reduce 
potential confusion, * * *''). But see, NASUCA at 13 (noting that a 
thirty (30) day standard could be a problem for telemarketers who 
wish to access the registry the same day every month).
    \7\ AARP at 2 (``[The thirty (30) day standard] prevents 
telemarketers from accessing on Jan. 1 and Feb. 29, which would 
flout Congressional intent.'').
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    Business and industry groups' views varied as to whether a ``thirty 
(30) day'' standard is preferable to a ``monthly'' one.\8\ Some 
businesses supported the thirty (30) day standard as less ambiguous, 
and therefore advantageous to those that need to comply with the 
Rule.\9\ ATA stated that it ``takes no position whether a monthly or 
30-day requirement is preferable,'' but recommended that if ``the 
thirtieth day falls on a weekend or holiday, the update need not be 
implemented until the following business day.'' \10\ Still others 
critiqued the standard as unnecessarily inflexible, with many 
suggesting alternative approaches. These approaches are discussed 
below.
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    \8\ Numerous business commenters criticized generally the 
requirement to scrub more frequently; however, as the Commission 
noted in the NPRM, the mandate of the Appropriations Act of 2004 is 
clear, and the question of whether to require monthly scrubbing is 
not at issue in this proceeding. See 69 FR 7329, 7331 (Feb. 13, 
2004).
    \9\ See, e.g., MAR at 1 (``a thirty day standard is clearer'').
    \10\ ATA at 3, n.5 (noting that ``[t]his next-day business 
approach conforms to that found elsewhere in the Commission's 
rules'' (citing 16 CFR 1.14(c)), 4.3(a)). See also NRF at 3-4.). The 
Commission declines to adopt this recommendation. The thirty-one 
(31) day standard adopted in the amended Rule will provide 
businesses the maximum flexibility allowable under the 
Appropriations Act mandate.
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    Relatively few individual businesses commented on the merits of the 
Commission's proposal to substitute the phrase ``thirty (30) days'' for 
the term ``once a month,'' which was used in the statute.\11\ One such 
commenter, DialAmerica, stated that the Commission's proposed approach 
``could present confusion and allow for inadvertent mistakes by 
companies. Having a set monthly schedule is more beneficial than having 
to count days between downloads. Businesses are primarily run on a 
calendar cycle basis and not a thirty-day basis.'' Another commenter, 
NNA, stated that `` `30 days' is a more precise term than `monthly,' * 
* * but that ``the term monthly provides greater flexibility, 
especially for the smallest of its members.'' \12\ NASUCA made a 
similar point, noting that the thirty (30) day standard could be 
problematic for telemarketers who wish to access the registry the same 
day every month, and suggested that the final rule substitute the 
phrase ``on the same day each month or no more than 30 days prior to 
the date any call is made.'' \13\
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    \11\ Out of 186 comments, only about fourteen (14) individual 
businesses commented specifically on the issue of whether the 
amended provision should require telemarketers to obtain the 
Registry on a monthly basis or every 30 days.
    \12\ NNA at 1-2 (stating that it ``would be very easy for a 
small firm to lose track of a month with 31 days, and update their 
list a day late.''). See also, D&D Air at 1 (every 30 days ``would 
result in a nightmare'').
    \13\ NASUCA at 5. See also Skinner/In-Home Lenders at 1.
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    In addition to comments about the interval at which telemarketers 
must scrub their call lists, some commenters raised related concerns. 
NASUCA argued that the Appropriations Act language is mandatory, thus 
the ``scrub'' provision should be an affirmative requirement under the 
Rule, rather than an element in the do-not-call safe harbor.\14\ This 
argument is based on the statutory language that the Rule be amended 
``to require telemarketers subject to the Telemarketing Sales Rule to 
obtain from the Federal Trade Commission the list of telephone numbers 
on the ``do-not-call'' registry'' (emphasis added). ACLI took the 
argument further, asserting that because the Appropriations Act does 
not mention the safe harbor provision, this language must be read to 
require a new affirmative obligation to ``scrub.'' This argument fails 
to take into account that the obligation to ``scrub'' never has been

[[Page 16370]]

cast as an affirmative requirement; rather, it has always been framed 
in the context of a provision in the safe harbor. No commenters argued 
that the current format and structure of the Rule are unworkable or 
problematic. The Commission believes the manner in which the provision 
is incorporated in the Rule works well. Moreover, because Congress is 
presumed to know the content and structure of the regulation it 
amends,\15\ it is reasonable to believe, absent explicit guidance to 
the contrary, that lawmakers intended that their amendment to this 
specific provision in the Rule's safe harbor would remain in the safe 
harbor. Therefore, the Commission declines to adopt an affirmative 
obligation that sellers and telemarketers scrub their lists each month.
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    \14\ NASUCA at 2-3.
    \15\ See Hall v. EPA, 273 F.3d 1146, 1158 (9th Cir. 2001) 
(``[w]hen Congress incorporates the text of past interpretations, 
Congress' repetition of a well-established term carries the 
implication that Congress intended the term to be construed in 
accordance with pre-existing * * * interpretations''), citing, 
Bragdon v. Abbott, 524 U.S. 624, 631 (1998). See also Ford v. 
Schering-Plough Corp., 145 F.3d 601, 611 (3d Cir. 1998) (``Where 
Congress adopts a new law incorporating sections of prior law, 
Congress normally can be presumed to have had knowledge of 
interpretation given to incorporated law, at least insofar as it 
affects new statute.'') (citing Lorillard v. Pons, 434 U.S. 575, 581 
(1978).
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    Three alternatives to the thirty (30) day approach proposed in the 
NPRM emerged from the comments; the ``range of dates'' approach, the 
``business days'' approach, and the ``grace period'' approach. These 
alternative suggestions are discussed in the following paragraphs.
    The ``Range of Dates'' Approach. First, some commenters urged that, 
rather than requiring that a seller or telemarketer obtain information 
from the National Do Not Call Registry at an interval of a fixed number 
of days, the Rule should allow a business to obtain such information 
within a range of dates, such as between the 25th and 35th days prior 
to a call being made,\16\ between the 1st and 15th of every month,\17\ 
or ``no more frequently than every 28 calendar days, but no less 
frequently than every 31 calendar days,'' \18\ to take into 
consideration the different number of days in each month.
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    \16\ MBNA at 1-2 (noting that this approach would ``allow 
telemarketers to avoid overtime and other expenses resulting from 
having to perform downloading on weekends or holidays, and to avoid 
the possibility of having to perform more than 12 down loadings in a 
year.'')
    \17\ Dial America at 1 (recommending ``a requirement that 
companies must download and implement an updated version of the 
Registry between the first and fifteenth of every month. This will 
allow companies two weeks time to comply as well as give companies a 
consistent set schedule to incorporate as a regular business 
practice. At the same time, utilizing a 15-day window to download 
and implement the Registry will help to reduce any constraints on 
the systems since not every company will need to download on the 
same date.'')
    \18\ NRF at 3 (``Alternatively, companies could be required to 
update their lists no more frequently than every 28 calendar days, 
but no less frequently than every 31 calendar days, to take into 
consideration the different number of days in each month.'')
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    The suggestion that the Commission require scrubbing within a 
numerical range, such as between the 25th and 35th days prior to a call 
being made, would obviate the bi-monthly download problem detailed in 
the NPRM, but would not comport with Congress' mandate that 
telemarketers and sellers scrub their lists ``once a month'' (i.e., no 
month has more than 31 days). A numerical range with an upper limit of 
31 days would meet the Congressional mandate, but the lower limit would 
serve no purpose; it would only reduce flexibility for firms who have 
to comply. The suggestion that the Commission employ a date range 
(i.e., the Registry must be accessed between the 1st and 15th of each 
month) would comport with the Congressional mandate for ``once a 
month'' purging and would solve the bi-monthly download problem, but it 
would place needless strain on the Registry by crowding all access into 
a limited time period and reduce flexibility for firms whose business 
cycle would be better suited to downloads outside the prescribed time 
frame. The final range suggested--no more frequently than every 28 
calendar days, but no less frequently than every 31 calendar days--also 
would comport with the Congressional mandate and would resolve the bi-
monthly download problem. Preventing access more frequently than every 
28 days, however, would serve no discernable purpose while denying 
telemarketers and sellers the ability to keep from alienating consumers 
who have registered during the preceding 27 days. The Commission, 
therefore, declines to adopt any of the range proposals suggested by 
commenters.
    The ``Business Days'' Approach. The second alternative to the 
proposed thirty (30) day standard was advanced by NRF. Under this 
alternative, the interval at which companies would be required to scrub 
would be based on the number of business days in a month--i.e., not 
counting weekends or national holidays. ``For instance, companies could 
be required to update their lists every 22 business days (to take into 
account the average number of business days each month).'' \19\
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    \19\ NRF at 3-4.
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    The Commission believes that from a variety of perspectives such a 
``business day'' standard would be unnecessarily complicated. From the 
standpoint of compliance, businesses--particularly small businesses--
would have difficulty determining with certainty just when they would 
be required to access the Registry and purge their lists before 
undertaking a telemarketing campaign. From the standpoint of consumers 
wishing to file a Do Not Call complaint, it would be unnecessarily 
difficult to determine the point in time when a complaint would be 
accepted by the Registry system. The burden would be on consumers to 
calculate the number of business days since their registration. 
Finally, from the enforcement standpoint, it would be unnecessarily 
complicated under a ``business day'' regime to program the Registry 
systems so that they could easily identify when a violation has 
occurred. Therefore, the Commission declines to adopt this 
recommendation.
    The ``Grace Period'' Approach. Finally, some commenters argued that 
the statute mandates only that the Commission require that sellers and 
telemarketers obtain information from the National Do Not Call Registry 
every thirty (30) days (or once a month), but does not necessarily 
require that they cease calling consumers at the time they obtain the 
Registry information.\20\ One such commenter, SBC, urged that the final 
Rule include a grace period by which calls to numbers on such list must 
actually cease.\21\ The Commission believes there is no support for 
this interpretation of the Appropriations Act. Indeed, the plain 
language of the statute requires that the Commission amend the Rule to 
``require telemarketers * * * to obtain from the Federal Trade 
Commission the list of telephone numbers on the ``do-not-call'' 
registry once a month.'' \22\ No mention is made in the statute of any 
grace period for effectuating consumer's requests not to be called, nor 
is such a model

[[Page 16371]]

contemplated by the existing Rule. The legislative history also 
provides no support for this argument. In fact, the legislative history 
suggests that the sole purpose behind shortening the interval for 
purging call lists is to reduce the amount of a time consumers need to 
wait to see a reduction in unwanted telemarketing calls, and to be able 
to file a valid complaint.\23\ Without some explicit indication that 
Congress intended to provide a grace period--or at least viewed a grace 
period as consistent with the imperative to shorten the Rule's time 
frame for purging call lists and accepting complaints--the Commission 
will not incorporate a grace period into the Rule. Therefore, the 
Commission declines to adopt this recommendation.
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    \20\ DMA at 4; SBC at 2; ACLI at 2; Sterling at 1; Stonebridge 
at 2; Verizon at 2.
    \21\ See, e.g., SBC at 2 (``the statutory mandate does not 
require a seller or telemarketer to use a version of the Registry 
updated no more than thirty (30) days prior to the date a call is 
made.'') Although SBC suggested including a grace period, neither 
SBC nor any other commenter provided any factual support for the 
notion that any sort of grace period is needed by industry to be 
able to scrub effectively without undue burden.
    \22\ The exact language in the Act is: ``Provided further, That, 
not later than 60 days after the date of enactment of this Act, the 
Federal Trade Commission shall amend the Telemarketing Sales Rule to 
require telemarketers subject to the Telemarketing Sales Rule to 
obtain from the Federal Trade Commission the list of telephone 
numbers on the `do-not-call' registry once a month.'' Consolidated 
Appropriations Act of 2004, Pub. L. 108-199, 188 Stat 3. The 
language is in Division B, Title V.
    \23\ U.S. House of Representatives, 108th Cong., 1st Sess. 
Conference Report to Accompany H.R. 2673. Report No. 108-401 (Nov. 
25, 2003) p. 641 (``To improve responsiveness to an individual's 
decision to enroll in the Do-Not-Call program, the conference report 
includes bill language requiring telemarketers who are subject to 
the Telemarketing Sales Rule to obtain from the Federal Trade 
Commission the list of telephone numbers on the Do-Not-Call Registry 
once a month.'')
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IV. The Final Rule: The 31-Day Standard

    Although the recommendations of several of the commenters, 
discussed above, would require purging lists within the statutorily-
mandated ``once a month'' time period, the Commission believes that the 
best and simplest resolution is to amend the Rule to require that 
telemarketers and sellers obtain data from the National Do Not Call 
Registry and purge registered numbers from their call lists no more 
than thirty-one (31) days prior to making a telemarketing call. This 
approach retains all of the advantages of the proposals allowing a 
range of acceptable dates, yet provides a simpler, more 
straightforward, and more easily understandable standard for 
businesses, consumers, and law enforcement.
    The thirty-one (31) day interval ensures that telemarketers and 
sellers have a set interval at which they must access the data in the 
registry, avoiding the concern articulated in the NPRM that otherwise, 
a business could literally be in compliance while only obtaining data 
at roughly bi-monthly intervals. It also provides businesses the 
maximum flexibility allowable by the statute, by providing an interval 
that mirrors the length of the most frequently occurring and longest 
month, rather than that of the less frequently occurring month (i.e., 
thirty (30) days). This longer interval will enable a business to 
choose any of a number of possible options in scheduling its access to 
the Registry, including, but not limited to: accessing on the first day 
of every month,\24\ the third Friday of every month, or at thirty-one 
(31) day intervals, regardless of the day or date.
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    \24\ This option--to allow for updating on the same day each 
month--was recommended by D&D Air at 1.
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    Therefore, based on the record in this proceeding and the statutory 
mandate in the Appropriations Act, the Commission modifies Sec.  
310.4(b)(3)(iv) of the do-not-call safe harbor to read: ``The seller or 
a telemarketer uses a process to prevent telemarketing to any telephone 
number on any list established pursuant to Sec.  310.4(b)(3)(iii) or 
310.4(b)(1)(iii)(B), employing a version of the ``do-not-call'' 
registry obtained from the Commission no more than thirty-one (31) days 
prior to the date any call is made, and maintains records documenting 
this process.''

V. Effective Date

    The second issue on which the Commission sought comment in the NPRM 
is the appropriate effective date for this amendment. As the Commission 
acknowledged in the NPRM, ``[m]odifying the Commission's established 
Registry system to account for increased download traffic and logic 
changes will take some time,'' and sellers and telemarketers 
``similarly may need an extended period to make the necessary 
modifications in their systems and procedures to be able to comply with 
this amended provision.'' \25\ The Commission requested that business 
and industry commenters ``provide factual information regarding the 
amount of time it reasonably will take sellers and telemarketers to 
modify their business procedures and systems to be able to comply with 
the amended provision.'' \26\
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    \25\ 69 FR 7329 (Feb. 13, 2004).
    \26\ Id.
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    The few individuals and consumer groups that responded to this 
question suggested an effective date of three (3) to six (6) 
months,\27\ or ``as soon as is practicable so that the benefits to 
consumers who use the registry will not be unduly delayed.'' \28\ 
Industry members recommended an effective date anywhere from six (6) 
months to longer than a year.\29\ Despite the varied suggestions as to 
a specific appropriate effective date, business and industry commenters 
reasoned that an effective date should be postponed to allow 
businesses, particularly small businesses, to implement systems and 
procedures to comply with the amended Rule.
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    \27\ Heinemann at 1 (``I feel that the effective date should be 
somewhere between 3 to 6 months from the enactment of the new rules. 
I find no reason why it shold take longer than 3 months for a person 
or company to update their systems to download the list every 30 
days. In fact I believe that most people would be able to accomplish 
this task within a month. By making the effective date 3 months from 
the enactment of the rules, you would be placing no undue burden on 
businesses but you would be increasing the effectiveness of the law 
for new consumers that sign up.'').
    \28\ NCL at 2 (noting that the FTC and marketers will need time 
to retool their systems, and that NCL and other organizations will 
need time to revise their educational materials).
    \29\ See, e.g., SBC at 5 (6 months); NRF at 2-3 (10-12 months); 
Mastercard (12 months); Sterling at 2 (18 months). Although most of 
the comments received lacked detailed support for the assertion that 
additional time was necessary, many commenters noted that due to the 
necessarily short comment period, it would be impossible to provide 
more detailed and meaningful data in support of their assertions.
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    Based on its experience in establishing and maintaining the 
National Do Not Call Registry, and on a review of the record in this 
proceeding, the Commission has determined to set the effective date for 
this amended provision as January 1, 2005. This time period is 
virtually the same as that allowed to prepare for the rollout of the 
National Do Not Call Registry in 2003.\30\ In its comment, which 
recommended this effective date, ATA also noted that, ``by allowing 
substantial lead time for business to come into compliance with the new 
rule,'' the Commission could ``moderate the impact of the rule 
change.''
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    \30\ The final amended TSR was announced in December, 2002, 
(although published in the Federal Register on January 29, 2003), 
and businesses were required to begin downloading in September 
2003).
---------------------------------------------------------------------------

    Some commenters called for effective dates even further in the 
future. One, NRF, stated that an effective date of ten (10) to twelve 
(12) months following publication of the final amended Rule provision 
is desirable because of the ``problem of efficiently and quickly 
downloading a list that contains tens of millions of phone numbers each 
and every month--especially for those involved in national sales and 
ongoing campaigns.'' \31\ NRF further commented that because ``the 
current practice of many retailers involved in telemarketing campaigns 
is to `pull' the list of customers that they intend to contact several 
weeks in advance of a calling campaign that may itself last several 
weeks,'' that this amendment will require logistical change in the way 
retailers conduct their business.\32\
---------------------------------------------------------------------------

    \31\ NRF at 2-3.
    \32\ Id.
---------------------------------------------------------------------------

    Other commenters noted that an effective date of one year following 
the Rule amendment publication would be appropriate to enable 
businesses, particularly small businesses, to adjust their business 
practices to accommodate

[[Page 16372]]

the more frequent ``scrubbing'' required by the amended safe harbor 
provision.\33\ MBNA noted that ``[u]sing past effective dates as a 
guideline, and given that enactment of the new requirement was totally 
unexpected by telemarketers,'' a year is ``reasonable and 
appropriate.''\34\ MidFirst agreed, and noted that, in addition to 
allowing businesses necessary time to ``modify systems and 
procedures,'' an effective date of at least one year from the adoption 
of the amended Rule would ``ensure the FTC can handle the increased 
frequency of Web site hits and downloads and other procedural 
requirements.''\35\
---------------------------------------------------------------------------

    \33\ CAR at 1; NMHC/NAA at 1-2; ARDA at 5 (also noting the 
``burdensom regulatory schedule looming ahead'' [referencing the 
CAN-SPAM rulemakings] as a reason to allow a delayed implementation 
of this provision).
    \34\ MBNA at 3.
    \35\ Midfirst at 1; NNA at 2 (recommending an effective date of 
April 1, 2005).
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    Indeed, modifying the Commission's established Registry system to 
account for increased download traffic and logic changes will take some 
time, as noted in the NPRM. The Commission believes, however, that its 
system will be ready by January 1, 2005.\36\ Although the Commission is 
sympathetic to arguments that the amendment comes at a time when many 
businesses, particularly small businesses, are still grappling with the 
initial implementation of procedures and systems for downloading data 
from the Registry,\37\ an effective date of January 1, 2005, will 
enable most sellers and telemarketers to complete a full year of 
quarterly downloads prior to switching to downloading every thirty-one 
(31) days. Further, the Commission notes that the National Do Not Call 
Registry includes a feature whereby businesses returning to the 
Registry after an initial download may request only a list of changes 
to their previous list (newly added and newly removed numbers), rather 
than a completely new list. The Commission believes that this feature, 
designed to minimize the burden on businesses, particularly small 
businesses, should alleviate some of the burden on business of 
scrubbing their lists more frequently under the amended Rule.
---------------------------------------------------------------------------

    \36\ As noted by some commenters, the Appropriations Act 
language only directs the FTC, not the Federal Communications 
Commission (FCC), which regulates both inter- and intrastate 
telemarketing, to amend its rules. See, e.g., Countrywide at 1-2; 
NRF at 4; NASUCA at 7-8. The FCC is considering a change to bring 
their rules in line with the TSR. See ``FCC Seeks Comment on Rules 
To Eliminate Spam From Mobile Phones; Commission Also Asks for 
Comments on Possible `Safe Harbor' for Telemarketing Calls to Mobile 
Phones,'' Mar. 11, 2004 (containing reference to the FCC's impending 
NPRM on a thirty (30) day scrub interval). The January 1st effective 
date will also allow for interagency coordination necessary to 
implement the statutory mandate.
    \37\ ATA at 2 (only a few months' experience with the rules); 
Cage at 1 (forced to changed before law is six months old); NAA at 2 
(companies have only had to scrub their lists twice since the Do-
Not-Call List went into effect). See also Countywide at 5; Maine at 
1.
---------------------------------------------------------------------------

VI. Other Issues Raised in the Comments

    NADA requested that the Commission clarify that a small seller or 
telemarketer would be deemed to be in compliance if it registered and 
paid the annual fee (as may be required), even though it only obtains 
numbers by use of the single-number lookup feature in the National Do 
Not Call Registry. The Commission agrees that such sellers or 
telemarketers would be in compliance, noting that this would constitute 
no change from the existing Rule.
    Another commenter requested confirmation that ``the Commission will 
update the list at least as frequently as telemarketers must download 
the list.'' Indeed, the registration database is updated on a daily 
basis, and is always available to sellers and telemarketers, should any 
choose to purge their call lists that frequently.

VII. Paperwork Reduction Act

    The information collection requirements contained in the TSR were 
reviewed by OMB under the Paperwork Reduction Act and cleared on July 
24, 2003, under OMB Control Number 3084-0097. The rule amendment, as 
discussed above, changes the interval at which entities covered by the 
TSR must obtain data from the National Do Not Call Registry from every 
three (3) months to every thirty-one (31) days. Thus, the rule 
amendment does not impose any new, or affect any existing, record 
submission, recordkeeping, or public disclosure requirement that would 
be subject to review and approval by the Office of Management and 
Budget pursuant to the Paperwork Reduction Act, 44 U.S.C. 3501-3520.

VIII. 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.
    As discussed in the NPRM, the Appropriations Act expressly mandates 
the modification, and, therefore, any associated economic impact. 
Nonetheless, the Commission determined that it was appropriate to 
publish an IRFA in order to inquire into the impact of the proposed 
rule on small entities, and is also publishing a FRFA with its final 
amended Section 310.4(b)(3)(iv). Therefore, the Commission has prepared 
the following analysis.

1. Need for and Objectives of the Rule

    The modification of the TSR, discussed above, is pursuant to the 
directive of the Appropriations Act of 2004, which mandates that ``not 
later than 60 days after the date of enactment of th[at] Act, the 
Federal Trade Commission shall amend the Telemarketing Sales Rule to 
require telemarketers subject to the Telemarketing Sales Rule to obtain 
from the Federal Trade Commission the list of telephone numbers on the 
``do-not-call'' registry once a month.''\38\
---------------------------------------------------------------------------

    \38\ Consolidated Appropriations Act of 2004, Pub. L. 108-199, 
188 Stat 3. The requirement is in Division B, Title V.
---------------------------------------------------------------------------

2. Objectives and Legal Basis.

    The objectives of the amended rule provision are discussed above. 
The legal basis for the amended rule provision is the Appropriations 
Act of 2004, as discussed above.

3. Description and Estimate of Number of Small Entities Subject to the 
Final Rule or Explanation of Why No Estimate Is Available.

    This proposed rule will primarily impact sellers that make 
interstate telephone calls to consumers (outbound calls) in an attempt 
to sell their products or services. Also affected may be firms that 
provide telemarketing services to others on a contract basis. As noted 
in the NPRM, during the proceedings to amend the TSR to include 
National Do Not Call Registry provisions, the Commission sought public 
comment and information on the number of small business sellers and 
telemarketers that would be impacted by those amendments.\39\ In its 
requests, the Commission noted the lack of publicly available data 
regarding the number of small entities. As the Commission received no 
further information in response to the NPRM issued in this proceeding, 
the number of firms making outbound calls cannot be reliably 
estimated.\40\
---------------------------------------------------------------------------

    \39\ See 68 FR 4580, 4667 (Jan. 29, 2003); 68 FR 45134, 45143 
(July 31, 2003) (noting, in the final amended rules, that comment 
was requested, but not received, regarding the number of small 
entities subject to the National Do Not Call Registry provisions of 
the amended TSR).
    \40\ 68 FR 4580, 4667 (Jan. 29, 2003) (noting that Census data 
on small entities conducting telemarketing does not distinguish 
between those entities that conduct exempt calling, such as survey 
calling, those that receive inbound calls, and those that conduct 
outbound calling campaigns. Moreover, sellers who act as their own 
telemarketers are not accounted for in the Census data).

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

[[Page 16373]]

    Nevertheless, the Commission believes that, to the extent that this 
amendment has an economic effect on small business, the Commission has 
adopted an approach that minimizes the impact to ensure that it is not 
substantial, while fulfilling the mandate of the Appropriations Act 
that all businesses obtain data from the National Do Not Call Registry 
on a monthly basis.
    As discussed above in detail, based on the record, the Commission 
has extended the interval at which businesses must access Registry data 
and purge their calling lists of numbers contained on the Registry to 
thirty-one (31) days, the maximum allowable pursuant to the 
Appropriations Act mandate. And, in recognition of the need for 
businesses, particularly small businesses, to modify their procedures 
and systems to accommodate this amendment, the Commission has set the 
effective date for this amended Rule provision as January 1, 2005, 
allowing more than nine months time for necessary preparations.

4. Description of the Projected Reporting, Recordkeeping, and Other 
Compliance Requirements of the Final Rule, Including an Estimate of the 
Classes of Small Entities That Will Be Subject to the Requirement of 
Obtaining Data From the National Do Not Call Registry Every Thirty (30) 
Days and the Type of Professional Skills That Will Be Necessary To 
Comply.

    As discussed in the NPRM, this amendment does not impose any new, 
or affect any existing, reporting, disclosure, or specific 
recordkeeping requirements within the meaning of the Paperwork 
Reduction Act. The Commission further posited in the NPRM that it did 
not ``believe that the modification requiring sellers and telemarketers 
to obtain data from the National Registry at a more frequent interval 
will create a significant burden on sellers or telemarketers that have 
already established systems to comply with the requirement in the 
existing TSR that requires accessing the Registry database on a 
quarterly basis.'' But, the Commission recognized that ``[t]here will 
likely be additional costs* * * incurred to access the Registry every 
thirty days (effectively twelve (12) times per year) versus the current 
requirement of every three months (effectively four (4) times per 
year).\41\
---------------------------------------------------------------------------

    \41\ Based on data obtained during the TSR amendment finalized 
in 2003, the Commission estimated that ``the cost of accessing the 
National Do Not Call Registry to purge the numbers it contains from 
a company's calling list (separate from the fee paid to obtain the 
list) is around $100. Given this estimate, sellers and telemarketers 
seeking to comply with the proposed rule modification would pay 
$1200 per year ($100 per scrub x 12 scrubs per year) rather than 
$400 per year ($100 per scrub x 4 scrubs per year).''
---------------------------------------------------------------------------

    Many commenters argued that the amended Rule provision will be 
burdensome on businesses, particularly small businesses. NADA noted 
that ``dealers and other small businesses can expect a corresponding 
increase in the personnel costs necessary to download the data and 
perform the scrub. Because small businesses may lack available 
personnel to perform this additional function, they may find it 
necessary to outsource the function to a vendor,'' which would further 
increase costs associated with the more frequent scrub requirement.\42\ 
However, as described below, in response to Question 5, the Commission 
has taken steps to minimize the impact of the amended Rule provision on 
small businesses, to the extent possible while still effectuating the 
mandate of the Appropriations Act.
---------------------------------------------------------------------------

    \42\ NADA at 2 (recommending a January 1, 2005 effective date). 
See also Ziskind at 1 (noting that the more frequent scrub interval 
will ``add an additional burden to REALTORS,'' and cost ``cost us 
time and money''); NRF at 2 (``for smaller businesses, in 
particular, the extra hours they may be forced to spend each month 
in order to prepare to contact their customers is subtracted from 
the time they could spend serving those customers'').
---------------------------------------------------------------------------

5. Steps the Agency Has Taken To Minimize Any Significant Economic 
Impact on Small Entities, Consistent With the Stated Objectives of the 
Appropriations Act, Including the Factual, Policy, and Legal Reasons 
For Selecting the Alternative Finally Adopted, and Why Each of the 
Significant Alternatives Was Rejected.

    As noted in the NPRM, the Appropriations Act of 2004 provides the 
Commission no discretion in the matter of whether to amend the TSR.'' 
The Commission, however, included in the NPRM a request for factual 
information about the amount of time it will take for ``sellers and 
telemarketers, including small businesses, to modify their business 
procedures and systems to be able to comply with the amended 
provision.'' Based on the record, the Commission has determined to set 
the effective date for this amendment as January 1, 2005. This time 
frame will, as noted above, provide businesses, especially small 
businesses,\43\ adequate time to modify their systems and procedures to 
comply with the amended provision. In addition, the Commission has 
extended the interval at which businesses must access Registry data and 
purge their calling lists of numbers contained on the Registry to 
thirty-one (31) days, the maximum allowable pursuant to the 
Appropriations Act mandate.
---------------------------------------------------------------------------

    \43\ The Commission notes that the TSR applies only to 
interstate telemarketing campaigns, and thus, is likely to exempt 
numerous small business entities that only conduct their 
telemarketing within a single state. The FCC, which regulates 
intrastate calling, while not mandated by the Appropriations Act to 
modify its telemarketing rules, is considering a change to bring 
them in line with the TSR. See ``FCC Seeks Comment on Rules to 
Eliminate Spam From Mobile Phones; Commission Also Asks for Comments 
on Possible ``Safe Harbor'' for Telemarketing Calls to Mobile 
Phones,'' Mar. 11, 2004 (containing reference to the FCC's impending 
NPRM on a thirty (30) day scrub interval).
---------------------------------------------------------------------------

    Thus, while the Commission considered more burdensome alternatives 
(i.e., choosing an interval of thirty (30), rather than thirty-one (31) 
days, the Commission rejected those alternatives, as discussed above, 
in favor of a regulatory approach that was the least burdensome to all 
regulated entities, including small entities, if any.

IX. Amended Rule

0
Accordingly, the Commission amends title 16, Code of Federal 
Regulations, as follows:

PART 310--TELEMARKETING SALES RULE

0
1. The authority citation for part 310 continues to read as follows:

    Authority: 15 U.S.C. 6101-6108.


0
2. Amend Sec.  310.4 by revising paragraph (b)(3)(iv) to read as 
follows:


Sec.  310.4  Abusive telemarketing acts or practices.

    * * *
    (b) * * *
    (iv) The seller or a telemarketer uses a process to prevent 
telemarketing to any telephone number on any list established pursuant 
to Sec.  310.4(b)(3)(iii) or 310.4(b)(1)(iii)(B), employing a version 
of the ``do-not-call'' registry obtained from the Commission no more 
than thirty-one (31) days prior to the date any call is made, and 
maintains records documenting this process;
* * * * *

    By direction of the Commission.
Donald S. Clark,
Secretary.

    Note: This appendix will not appear in the Code of Federal 
Regulations.


[[Page 16374]]



Appendix A

List of Acronyms for Commenters

AARP--AARP
ACLI--American Council of Life Insurers
Adler, Jeff
Advertiser--The Advertiser of Polk County
ARDA--American Resort Development Association
ATA--American Teleservices Association
Anderson, Melissa
Aubee, Arnold
Bauder, Christine
Beach, Kerry
Bergmann, Ken
Black, Michelle
Blum, Charles
Boyer, Donna
Breen, Wynn
Bressler, Marque
Byrnes, Theresa M
Cage, Chris
CAR--California Association of Realtors
Campbell, Tricia
CapAR--Capital Area Association of Realtors
Carruba, Guy
Cartwright, Douglas
Cartwright, Iris
Castaldo, Carol
Castle, Bill
Ciesielski, Ronald
Clapsaddle, Mel
Classified--Classified Technologies
Constandinou, Sophia
Cordner, Maria
Country--Country Peddler
Countrywide--Countrywide Financial Services
Couto, Manuel
Covington--The Covington Group
Cueman, Robert
D& D--D&D Air Conditioning
Davidson, Scott
Davis, Donald R.
Davis, Richard
DeCarlo, Dennis
DePalma, Larry
DeVose II, Leon
DialAmerica
DiGiulio, James
DiSabato, Joseph
DMA--Direct Marketing Association
Dobson, Liane
Elliott, Lori
Engle, Susan
Evertsen, Karen
Farello, Marsha
Ferreira, Armando
Ferrigno, James
Ferriss, Theresa
Gale, Willian
Gatchalian, Paz
Gawel, Dorothy
Gonyea, B.
Green Banner--Green Banner Publications
Hanna, Gary
Hanson, Catherine
Hargrave, David
Hartman, Eileen
Hasselbring, David
Hawkins, Dee
Heinemann, Michael
Henderson, Cameron
Heroy, David
Hirsch, Andrew
Hometown--Hometown News
Hurlburt, Kris
Ieradi, Robert
Jackson, Dorothy
Jacobson, Kathryn
Kachar, Mehmet
Kahn, Robert
Kamel, Felicia
Kelly, Robert
Kelly, Sharon
Kidney, Alice
Kowol, Michael
Kraus, Elizabeth
Kumar, Bhupendra
Kwasniewski, Jan
Labrum, Carole
Lavin, Louis
Lee, James
Legg, Michelle
Leonardo, Rosemarie
Levandoski, Michael
Lubeck, Robert
Mack, Brendon
Madden, Mike
ME-AR--Maine Association of Realtors
Mancuso, Daniel
MD-AR--Maryland Association of Realtors
Massengill, Lisa
Mastercard
Matson, Sandra
MBNA
McGarry, Dennis
McMullin, Craig
Meany, Michael
Meltzer,
Mendoza, Jimmy
Mey, Diana
Michaud, Robert
Midfirst Bank
Mitchell, Jeffrey
Mitchell, Robert
Mogano, Louis
Mongeon, Kenneth
Morano, Valli
Mraz, Lawrence
Musser, Linda
NASUCA--National Association of State Utility Consumer Advocates
NADA--National Automobile Dealers Association
NCL--National Consumers League
NNA--National Newspaper Association
National Penn--National Penn Bank
NRF--National Retail Federation
NJ-AR--New Jersey Association of Realtors
NYCPB--New York State Consumer Protection Board
Nicholson, Walter
Nuzzo, Michael
NMHC/NAA--National Multi Housing Council/National Apartment 
Association
O'Neal, James
O'Neill (TCIM Services)
Othman, Wafa
Paraiso, Geraldine
Pattisall, Jr., Richard C.
Picardo, Kathleen
Polio, Erick
Popp, Dianne
Port, Linda
Private Citizen
Rafferty, Catherine
Rhame, Susanne
Rice, Prestelene
Rice-Williams, Lisa
Riehl, Mary
Rodriguez, Anthony
Rose-Valente, Judith
Runyon, Jennifer
Ryan, Christopher
Rzempoluch, John
Sachau, Barb
Sadlon, Carolyn
Sanderson, Harvey
SBC--SBC Communications
Schleuter, Christian
Schmidt, Mark
Schneider, Diane
Schueler, Deborah
Sciacca, Lydia
Skinner, David
SC-AR--South Carolina Association of Realtors
Sprecher, Steve
Stanley, Kenneth
Sterling Jewelers
Stonebridge--Stonebridge Life Insurance Co.
Strang, Wayne
Tekula, Joseph
Thomas, William
Titchell, Sharon
Traylor--Traylor Communications
Trentacosta, Theresa
Trimble, Robert
Van Diver, Karen
Venegas, Pedro
Verbel, Joshua
Verizon
Vosgerichian, Gary
Waite, Rachel
Walker, Marti
Wankel, Janice
Warchol, Robert
Weber, Cathy
Weisinger, Mimi
Wessel, Mary Ann
Willoughby, David
Wine, Randolph
Wojciechowicz, David
Wojciechowicz, Laura
Ziskind, Ross
[FR Doc. 04-6830 Filed 3-26-04; 8:45 am]
BILLING CODE 6750-01-P