[Federal Register Volume 70, Number 143 (Wednesday, July 27, 2005)]
[Rules and Regulations]
[Pages 43273-43281]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-14905]


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FEDERAL TRADE COMMISSION

16 CFR Part 310

RIN 3084-0098


Telemarketing Sales Rule Fees

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: The Federal Trade Commission (the ``Commission'' or ``FTC'') 
is issuing this Final Rule to amend the FTC's Telemarketing Sales Rule 
(``TSR'') by revising the fees charged to entities accessing the 
National Do Not Call Registry (``the Registry'').

DATES: Effective date: The amendment to Sec.  310.8 (``the Fee Rule'') 
will become effective September 1, 2005.

ADDRESSES: Requests for copies of this Final Fee Rule should be sent 
to: Public Reference Branch, Federal Trade Commission, Room 130, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. The complete public 
record of this proceeding is also available at that address, and on the 
Internet at: http://www.ftc.gov/bcp/rulemaking/tsr/tsrrulemaking/index.htm.

FOR FURTHER INFORMATION CONTACT: David B. Robbins, (202) 326-3747, 
Division of Planning & Information, Bureau of Consumer Protection, 
Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 
20580.

SUPPLEMENTARY INFORMATION: The amended rule increases the annual fee 
for each area code of data to $56.00 per area code, or $28.00 per area 
code of data during the second six months of an entity's annual 
subscription period. The maximum amount that would be charged to any 
single entity for

[[Page 43274]]

accessing 280 area codes of data or more is increased to $15,400.00. In 
addition, the amended rule retains the provisions regarding free access 
by ``exempt'' organizations, as well as free access to the first five 
area codes of data by all entities.

Statement of Basis and Purpose

I. Background

    On December 18, 2002, the Commission issued final amendments to the 
TSR, which, inter alia, established the Registry, permitting consumers 
to register, via either a toll-free telephone number or the Internet, 
their preference not to receive certain telemarketing calls (``Amended 
TSR'').\1\ Under the Amended TSR, most telemarketers are required to 
refrain from calling consumers who have placed their numbers on the 
Registry.\2\ Telemarketers must periodically access the Registry to 
remove from their telemarketing lists the telephone numbers of those 
consumers who have registered.\3\
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    \1\ See 68 FR 4580 (Jan. 29, 2003) (codified at 16 CFR 310).
    \2\ 16 CFR 310.4(b)(1)(iii)(B).
    \3\ 16 CFR 310.4(b)(3)(iv). The TSR requires telemarketers to 
access the Registry at least once every thirty-one days, effective 
January 1, 2005. See 69 FR 16368 (March 29, 2004).
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    Shortly after issuance of the Amended TSR, Congress passed the Do-
Not-Call Implementation Act (``the Implementation Act'').\4\ The 
Implementation Act gave the Commission the specific authority to 
``promulgate regulations establishing fees sufficient to implement and 
enforce the provisions relating to the ``do-not-call'' registry of the 
[TSR].'' \5\ The Implementation Act also provides that ``[n]o amounts 
shall be collected as fees pursuant to this section for such fiscal 
years except to the extent provided in advance in appropriations Acts. 
Such amounts shall be available * * * to offset the costs of activities 
and services related to the implementation and enforcement of the 
[TSR], and other activities resulting from such implementation and 
enforcement.'' \6\
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    \4\ Do-Not-Call Implementation Act, Pub. L. 108-10, 117 Stat. 
557 (2003).
    \5\ Id. at section 2.
    \6\ Id.
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    On July 29, 2003, pursuant to the Implementation Act and the 
Consolidated Appropriations Resolution, 2003,\7\ the Commission issued 
a Final Rule further amending the TSR to set fee amounts for entities 
accessing the National Do Not Call Registry (``the 2003 Fee Rule'').\8\ 
Those fees were based on the FTC's best estimate of the number of 
paying entities that would access the Registry, and the need to raise 
$18.1 million in Fiscal Year 2003 to cover the costs associated with 
the implementation and enforcement of the ``do-not-call'' provisions of 
the Amended TSR. The Commission determined that the fee structure would 
be based on the number of different area codes of data that an entity 
wished to access annually. The 2003 Fee Rule established an annual fee 
of $25 for each area code of data requested from the Registry, with the 
first five area codes of data provided at no cost.\9\ The maximum 
annual fee was capped at $7,375 for entities accessing 300 area codes 
of data or more.\10\
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    \7\ Consolidated Appropriations Resolution, 2003, Pub. L. 108-7, 
117 Stat. 11 (2003).
    \8\ 68 FR 45134 (July 31, 2003).
    \9\ Once an entity requested access to area codes of data in the 
Registry, it could access those area codes as often as it deemed 
appropriate for one year (defined as its ``annual period''). If, 
during the course of its annual period, an entity needed to access 
data from more area codes than those initially selected, it would be 
required to pay for access to those additional area codes. For 
purposes of these additional payments, the annual period was divided 
into two semi-annual periods of six months each. Obtaining 
additional data from the Registry during the first semi-annual, six 
month period required a payment of $25 for each new area code. 
During the second semi-annual, six month period, the charge for 
obtaining data from each new area code requested during that six-
month period was $15. These payments for additional data would 
provide the entity access to those additional area codes of data for 
the remainder of its annual term.
    \10\ 68 FR at 45141.
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    On July 30, 2004, pursuant to the Implementation Act and the 
Consolidated Appropriations Act, 2004 (``the 2004 Appropriations 
Act''),\11\ the Commission issued a revised Final Rule further amending 
the TSR, which increased fees on entities accessing the National Do Not 
Call Registry (''the 2004 Fee Rule'').\12\ Those fees were based on the 
FTC's experience through June 1, 2004, its best estimate of the number 
of paying entities that would access the Registry, and the need to 
raise $18 million in Fiscal Year 2004 to cover the costs associated 
with the implementation and enforcement of the ``do-not-call'' 
provisions of the Amended TSR. The Commission determined that the fee 
structure would continue to be based on the number of different area 
codes of data that an entity wished to access annually. The 2004 Fee 
Rule established an annual fee of $40 for each area code of data 
requested from the Registry, with the first five area codes of data 
provided at no cost.\13\ The maximum annual fee was capped at $11,000 
for entities accessing 280 area codes of data or more.\14\
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    \11\ Consolidated Appropriations Act, 2004, Pub. L. 108-199, 118 
Stat. 3 (2004).
    \12\ 69 FR 45580 (July 30, 2004).
    \13\ Id. at 45584. The 2004 Fee Rule has the same fee structure 
as the 2003 Fee Rule; however, fees were increased from $25 to $40 
per area code, from $15 to $20 per area code for the second semi-
annual six month period, and from a maximum of $7,375 to $11,000.
    \14\ Id.
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    In the Consolidated Appropriations Act, 2005 (``the 2005 
Appropriations Act''),\15\ Congress directed the FTC to collect 
offsetting fees in the amount of $21.9 million in Fiscal Year 2005 to 
implement and enforce the TSR.\16\ Pursuant to the 2005 Appropriations 
Act and the Implementation Act, as well as the Telemarketing Fraud and 
Abuse Prevention Act (``the Telemarketing Act''),\17\ the FTC issued a 
Notice of Proposed Rulemaking to amend the fees charged to entities 
accessing the Registry (``the 2005 Fee Rule NPR'').\18\
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    \15\ Consolidated Appropriations Act, 2005, Pub. L. 108-447, 118 
Stat. 2809 (2004).
    \16\ Id. at Division B, Title V.
    \17\ 15 U.S.C. 6101-08.
    \18\ 70 FR 20848 (April 22, 2005).
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    In the 2005 Fee Rule NPR, the Commission proposed revising the fees 
for access to the Registry in order to raise $21.9 million to offset 
costs the FTC expects to incur in this Fiscal Year for purposes related 
to implementing and enforcing the ``do-not-call'' provisions of the 
Amended TSR. Based on the number of entities that had accessed the 
Registry through the end of February 2005, the Commission proposed 
revising the fees to charge $56 annually for each area code of data 
requested from the Registry, with the first five area codes of data 
provided at no cost. As a consequence of the increase in the per-area-
code charge, the maximum annual fee would increase to $15,400 for 
entities accessing 280 area codes of data or more.\19\
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    \19\ Id. at 20852.
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    In the 2005 Fee Rule NPR, the Commission sought comment on the 
following issues relating to the proposed amendment:
    (1) Whether entities accessing the Registry should continue to 
obtain the first five area codes of data for free;\20\
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    \20\ Id. at 20850. The Commission was particularly interested in 
comments addressing (a) whether there are alternatives to providing 
free access to the first five area codes of data that would better 
balance the burdens faced by small businesses with the need to raise 
appropriate fees to fund the Registry in a more equitable manner; 
(b) the propriety of changing or eliminating the number of area 
codes for which there is no charge, and the effect, if any, on 
entities that access the Registry, including small businesses; (c) 
the nature and type of entities that are accessing five or fewer 
area codes at no cost, and whether these entities are primarily the 
types of businesses that the Regulatory Flexibility Act requires the 
FTC to consider when adopting regulations, and whether such entities 
need access to one, two, three, four, or five area codes; and (d) 
whether any changes in the number of free area codes would affect an 
entity's business practices, including whether an entity would 
choose not to access an area code if it had to pay for that area 
code or whether the entity would pay to continue accessing that area 
code.

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    (2) Whether ``exempt'' organizations should continue to be provided 
with free access to the Registry; \21\
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    \21\ Id. at 20851. The 2005 Fee Rule NPR, the 2003 Fee Rule, and 
the 2004 Fee Rule stated that ``there shall be no charge to any 
person engaging in or causing others to engage in outbound telephone 
calls to consumers and who is accessing the National Do Not Call 
Registry without being required to under this Rule, 47 CFR 64.1200, 
or any other federal law.'' 16 CFR 310.8(c). Such ``exempt'' 
organizations include entities that engage in outbound telephone 
calls to consumers to induce charitable contributions, for political 
fund raising, or to conduct surveys. They also include entities 
engaged solely in calls to persons with whom they have an 
established business relationship or from whom they have obtained 
express written agreement to call, pursuant to 16 CFR 
310.4(b)(1)(iii)(B)(i) or (ii), and who do not access the Registry 
for any other purpose. See 70 FR at 20849 n. 22. See also 69 FR at 
45585-45586, and 68 FR at 45144.
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    (3) The number and type of small business entities that may be 
subject to the revised fees; \22\ and
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    \22\ See 70 FR at 20851.
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    (4) Whether there are any significant alternatives that would 
further minimize the impact of the rule on small entities, consistent 
with the objectives of the Telemarketing Act, the 2005 Appropriations 
Act, the Implementation Act, and the Regulatory Flexibility Act.\23\
    In response to the 2005 Fee Rule NPR, the Commission received nine 
comments.\24\ The amended rule, comments, and the basis for the 
Commission's decision on the various recommendations are analyzed in 
detail below.
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    \23\ Id. at 20850.
    \24\ A list of the commenters in this proceeding, and the 
acronyms used to identify each, is attached hereto as an appendix. 
Comments submitted in response to the 2005 Fee Rule NPR will be 
cited in this Notice as ``[Acronym of Commenter] at [page number].'' 
The nine comments that were submitted included a joint comment filed 
on behalf of the DMA, the ATA, and the NAA (i.e., DMA/ATA/NAA).
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II. The Amended Rule

    Based on the 2005 Appropriations Act, the Implementation Act, and 
the Telemarketing Act, as well as its review of the record in this 
proceeding, and on its law enforcement experience in this area, the 
Commission has decided to modify the fees required under the TSR Fee 
Rule. Under the amended rule provisions adopted herein, the annual fee 
for accessing the Registry will increase from $40.00 per area code to 
$56.00 per area code, and from a maximum of $11,000.00 to $15,400.00 
for access to 280 area codes of data or more. The fee for accessing 
area codes during the second six months of an entity's annual 
subscription period also will increase, from $20.00 to $28.00. Further, 
the Commission has decided to continue to provide all organizations 
with free access to the first five area codes of data, and has decided 
to continue to provide ``exempt'' organizations with free access to the 
Registry, as well.

III. Discussion of Comments

    The Commission received nine comments in response to the 2005 Fee 
Rule NPR.\25\ Of the nine comments received, one comment was from a 
consumer who favored providing free access to the entire Registry to 
all entities ``in order to promote the widest possible distribution of 
the Do Not Call Lists,'' thereby maximizing the ``positive effect of 
the legislation.'' \26\ The remaining eight comments were submitted by 
a mix of business and industry commenters, all of whom were opposed to 
the increase in fees, but who were divided on whether the Commission 
should reduce or eliminate the number of free area codes provided. In 
addition, one commenter opposed the proposal to continue providing free 
access to ``exempt'' organizations.\27\ Importantly, in addressing the 
specific issues posed by the Commission, the commenters submitted only 
limited data or information that differed from that previously 
submitted in connection with fee rulemakings. Instead, the comments 
primarily relied on information provided by the FTC as part of its 2005 
Fee Rule NPR, and/or in previous rulemaking proceedings.\28\ Similarly, 
the primary arguments submitted in response to the 2005 Fee Rule NPR's 
proposal to raise fees also have been previously considered by the 
Commission.\29\
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    \25\ See the appendix for a list of commenters.
    \26\ See DM at 1.
    \27\ See ARDA at 3.
    \28\ For example, four of the commenters noted, as did the 
Commission in the 2005 Fee Rule NPR, that 100 percent of the fees 
are paid by a small minority of the entities that access the 
Registry (e.g., only 11 percent of entities who access the Registry 
actually pay anything for such access). See comments submitted by 
FNBO, WF, WST, and ARDA. However, this same point was also made in 
the 2004 Fee Rule proceeding: ``[m]any noted that only 11 percent of 
all entities accessing the registry currently pay the entire cost of 
the registry.'' See 69 FR at 45582.
    \29\ As another example, comments also included suggestions that 
the Commission use ``revenue from enforcement proceedings to 
subsidize'' the Registry, and that the Commission should ``increase 
efforts to identify those entities that are not accessing the 
Registry,'' rather than increase the fees on those that are already 
complying with the rules. See ARDA at 2-3. However, this same point 
was also made in the 2004 Fee Rule proceeding: ``The FTC must 
investigate whether there are entities that should be paying for 
access but fail to do so'' and ``the FTC should use fines obtained 
from enforcement actions to offset some of the fee increase.'' See 
69 FR at 45581-45582. Two of the comments also question whether the 
fees that are being collected are being used for purposes other than 
to fund the Registry. See ARDA at 3, and DMA/ATA/NAA at 3. This same 
issue was also raised in the 2004 Fee Rule proceeding: ``the fees 
should be used only to cover the costs to operate the registry.'' 
See 69 FR at 45582.
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    While most of the comments submitted represented views previously 
considered, some of the comments raised new points. For example, three 
of the commenters expressed concern that fees are continuing to 
increase each year.\30\ One comment also expressed opposition to any 
increase in fees that might be attributable to the inclusion of 
wireless telephone numbers on the Registry.\31\ This same comment 
posited that the Commission should not adopt the increase in fees, 
because it is ``unjustified at this time and unnecessary for continued 
operation of the registry.'' This comment further stated that the 
Commission is ``not required to collect fees up to [the] amount, which 
was authorized by Congress,'' but rather, that the Commission should 
only collect fees up to the amount necessary to fund and operate the 
Registry, an amount this comment sets at $18.1 million.\32\
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    \30\ See FNBO at 2, ARDA at 1, and DMA/ATA/NAA at 2.
    \31\ See DMA/ATA/NAA at 4.
    \32\ Id. at 1-2.
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    The major themes that emerged from the record are summarized below.
1. Five Free Area Codes
    In the 2005 Fee Rule NPR, the Commission proposed, at least for the 
next annual period, to continue allowing all entities accessing the 
Registry to obtain the first five area codes of data for free. The 
Commission proposed to continue allowing such free access ``to limit 
the burden placed on small businesses that only require access to a 
small portion of the Registry.'' \33\ The Commission noted, as it has 
in the past, that such a fee structure was consistent with the mandate 
of the Regulatory Flexibility Act,\34\ which requires that to the 
extent, if any, a rule is expected to have a significant economic 
impact on a substantial number of small entities, agencies should 
consider regulatory alternatives to minimize such impact. As stated in 
the 2005 Fee Rule NPR and in the 2004 Fee Rule, ``the Commission 
continues to believe that providing access to five area codes of data 
for free is an appropriate compromise between the goals of equitably 
and adequately funding the national registry, on one

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hand, and providing appropriate relief for small businesses, on the 
other.'' \35\ In addition, the Commission noted again, as it has in the 
past, that requiring a large number of entities to pay a small fee for 
access to five or fewer area codes from the Registry would place a 
significant burden on the Registry, requiring the expenditure of even 
more resources to handle properly that additional traffic.\36\
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    \33\ See 70 FR at 20850. See also 68 FR at 45140, and 69 FR at 
45582.
    \34\ 5 U.S.C. 601.
    \35\ See 70 FR at 20850. See also 68 FR at 45141, and 69 FR at 
45584.
    \36\ See 70 FR at 20850.
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    While the 2005 Fee Rule NPR proposed to continue providing free 
access to five area codes of data, the Commission nevertheless noted a 
particular interest in comments regarding the propriety, impact, and 
effects of these provisions on all entities accessing the Registry. In 
this regard, the Commission specifically observed that ``the 
implementation and enforcement costs are borne by a small percentage of 
entities that access the registry,'' \37\ but ``that the cost of 
accessing the registry is relatively modest.'' \38\ As an example the 
Commission explained that, if it were to stop providing free access to 
five or fewer area codes, the cost for accessing five area codes of 
data could be as little as $185. Therefore, ``given the modest nature 
of the fees, along with the increasing burden borne by those 
organizations that do pay for access,'' \39\ the Commission noted its 
particular interest in comments addressing these issues.
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    \37\ Id.
    \38\ Id.
    \39\ Id.
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    The Commission received seven comments that addressed the issue of 
five free area codes. Four of the commenters opposed providing the 
first five area codes of data at no charge, noting that the entire cost 
of the Registry is borne by a small percentage of all entities who 
access the system.\40\ They maintained that a fee structure that 
requires so few organizations to bear such a significant portion of the 
total costs is not equitable.\41\ Commenters also reiterated the 
Commission's view that if the Commission were to stop providing free 
access to five or fewer area codes, the cost for accessing five area 
codes of data would be relatively modest.\42\ These commenters also 
suggested that any additional burden to the system caused by the need 
to collect additional payments should be factored into the fees, 
assuming that this would not increase fees beyond the amounts proposed 
in the 2005 Fee Rule NPR.\43\
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    \40\ See FNBO, WF, WST, and ARDA. These commenters relied solely 
on the data presented in the Commission's 2005 Fee Rule NPR, noting, 
for example, that only 11 percent of all entities accessing the 
Registry currently pay the entire cost of the Registry. Commenters 
also noted the complementary statistic, that approximately 89% of 
all entities who access the Registry pay nothing. See, e.g., FNBO at 
2; WST at 1 (noting that an even greater burden is borne by those 
entities who purchase all area codes); and ARDA at 2.
    \41\ See FNBO at 2; WST at 2; WF at 1; and ARDA at 1-2.
    \42\ See WF at 1, stating that the ``cost of paying for access 
to the first five area codes * * * would hardly be a significant 
burden on even the smallest of businesses.'' See also WST at 2, 
stating that ``this amount would not seem so exorbitant as to place 
an undue burden on small business.''
    \43\ See FNBO at 1, and WST at 2. FNBO stipulated, however, 
``that the Commission should only allocate fees to all required 
users if it can be done without increasing expenditures, which could 
result in increased fees for everyone.''
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    These commenters suggested that eliminating access to five free 
area codes would make the fee structure more equitable,\44\ and that 
``the cost of the Registry should be borne by all users that are 
required to access the Registry and absorbed as a cost of doing 
business.'' \45\ Another alternative suggested by one commenter was 
that the Commission continue to provide free access to five area codes, 
``provided they qualify as a small business as defined by the Small 
Business Administration.'' \46\ One commenter also suggested that the 
Commission charge ``at least a reduced fee.'' \47\
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    \44\ Id.
    \45\ See FNBO at 2.
    \46\ See WST at 2.
    \47\ See ARDA at 1-2.
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    On the other hand, three of the comments supported providing the 
first five area codes of data at no charge.\48\ One commenter stated 
that:
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    \48\ See NAR at 2, NADA at 1, and DMA/ATA/NAA at 1.

    Removing the five area code exemption would disproportionately 
impact [small] businesses as they would pay the same per area code 
fee as larger telemarketers, that place a much heavier volume of 
calls to phone numbers registered within these area codes. * * * 
Removing the exemption altogether would have a significant impact on 
our members and many other small and medium size businesses. * * * 
These businesses have already assumed significant training, systems, 
and other compliance costs associated with the National DNC rules 
and other federal and state telemarketing restrictions.\49\
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    \49\ See NADA at 1-2. Two commenters specifically questioned the 
relationship between the size of a business, and the number of area 
codes such businesses need to access. See ARDA at 2, and NAR at 1. 
ARDA and NAR suggested that some small businesses may need to place 
a low volume of calls to many area codes, while some large 
businesses may place a large volume of calls to a limited number of 
area codes. Accordingly, ARDA and NAR suggested that the 
Commission's current fee structure, based on area codes accessed, 
does not adequately address small business issues. However, ARDA and 
NAR proposed two opposing solutions to this problem: ARDA suggested 
that all entities should be charged for all area codes they access, 
thus eliminating the free access to five area codes, while NAR 
suggested that small businesses should be provided free access to 
the entire Registry, thus expanding the free access currently 
provided.

Another commenter cited information from the Small Business 
Administration's Office of Advocacy which it claimed shows that ``small 
businesses represent 99 percent of American companies'' and ``very 
small firms with fewer than 20 employees * * * spend 60 percent more 
per employee than larger firms to comply with federal regulations.'' 
\50\ This commenter also pointed out that:
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    \50\ See NAR at 2.

in today's increasingly interconnected world, a business may be 
small in size * * * but not be limited to a small geographic market 
area * * * many small businesses, including real estate agents and 
brokers, often have the need to call a limited number of consumers 
who reside in a variety of states and/or area codes beyond their 
primary five area code local calling region.\51\
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    \51\ See NAR at 1. NADA's comment echoed these concerns. NADA 
also provided an example to illustrate the impact it felt would 
occur: ``Since most major metropolitan areas cover more than one 
area code, most businesses that serve that area would be affected if 
the number of free area codes were reduced. For example, the DC 
Metropolitan area consists of the following area codes: 202, 703, 
571, 301, 240. If a small automobile dealership in this area were 
limited to one or two free area codes on the registry, they would 
have to pay to access the remaining area codes. Thus, any reduction 
in the number of free area codes would likely have a significant 
economic impact on small businesses.'' See NADA at 2.

    After considering all of the comments submitted in this proceeding, 
the Commission has determined to retain the provision allowing the free 
access of up to five area codes. Although the Commission continues to 
recognize that only a small percentage of the total number of entities 
accessing the Registry pay for that access, these figures also 
illustrate the large number of small businesses that likely would be 
adversely affected by a change in the number of area codes provided at 
no cost. In fact, over 50,000 entities have accessed five or fewer area 
codes of the Registry. As observed in the 2005 Fee Rule NPR and the 
2004 Fee Rule, the Commission continues to believe that most of these 
entities--realtors, car dealers, community-based newspapers, and other 
small businesses--are precisely the types of businesses that the 
Regulatory Flexibility Act requires the FTC to consider when adopting 
regulations.\52\ Moreover, the

[[Page 43277]]

Commission again finds significant the information submitted by 
commenters discussing the disproportionate impact compliance with the 
``do-not-call'' regulations may have on small businesses. In order to 
lessen that impact, the Commission believes that retaining the five 
free area code provision is appropriate.
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    \52\ The comments submitted in response to the 2005 Fee Rule NPR 
do not offer any information or data to contradict this assertion. 
In this regard, we note that the business and organization 
commenters who support the proposal to continue providing five free 
area codes, purport to represent more than 1.2 million members and/
or affiliates; many of whom appear to be small business entities. 
See NAR, NADA, and DMA/ATA/NAA. However, those business and 
organization commenters who oppose the proposal to continue 
providing five free area codes appear to represent a much smaller 
number of organizations, and do not purport to represent a 
significant number of small business entities. However, the 
Commission also notes that the volume of comments received does not 
conclusively indicate the number of organizations that will be 
affected by the rule change.
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    The Commission does not believe that the alternatives suggested 
instead of the five free area code provision would be as effective in 
minimizing the impact of the Do Not Call regulations on small 
businesses and that these proposed alternatives may create undue 
burdens that the current system does not impose. For example, the 
suggestion to eliminate or reduce the number of area codes provided for 
free would result in tens of thousands of entities that currently 
access the Registry for free being required to pay the same fee to 
access the Registry as much larger businesses. While, to some, such a 
fee might seem modest, it nonetheless would represent an increase in 
costs to more than 50,000 entities, most of whom are already 
disproportionately impacted by the cost of complying with the ``do-not-
call'' regulations. Alternatively, the suggestion to base the fees on 
the actual size of the entity requesting access would, as noted in the 
2004 Fee Rule, require all entities to submit sensitive data concerning 
annual income, number of employees, or other similar factors. It also 
would require the FTC to develop an entirely new system to gather that 
information, maintain it in a proper manner, and investigate those 
claims to ensure proper compliance. As the Commission has previously 
stated, such a system ``would present greater administrative, 
technical, and legal costs and complexities than the Commission's 
current exemptive proposal, which does not require any proof or 
verification of that status.'' \53\ As a result, the Commission 
continues to believe that the most appropriate and effective method to 
minimize the impact of the Rule on small businesses is to provide 
access to a certain number of area codes at no charge.
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    \53\ See 69 FR at 45583. See also 68 FR at 16243 n.53.
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    The comments also do not provide any new information to support a 
change in the number of area codes to provide at no charge. Thus, the 
Commission does not believe that any change in the current level of 
five free area codes is necessary or appropriate. The Commission 
continues to recognize that reducing the number of free area codes 
would result in slightly lower fees charged to the entities that must 
pay for access. At the same time, however, as noted previously, such a 
change also would result in increased costs to thousands of small 
businesses. On the other hand, the Commission is not persuaded that it 
should increase the number provided at no charge, although it continues 
to recognize that some small businesses located in large metropolitan 
areas may need to make calls to more than five area codes. Obviously, 
increasing the number of area codes provided at no charge would 
decrease the pool of paying entities, and further increase the fees 
that entities must pay. As a result, the Commission continues to 
believe that allowing all entities to gain access to the first five 
area codes of data from the Registry at no cost is appropriate.
2. Exempt Entity Access
    In the 2005 Fee Rule NPR, the Commission also proposed to continue 
allowing ``exempt'' organizations to obtain free access to the 
Registry.\54\ The Commission stated its belief that any exempt entity, 
voluntarily accessing the Registry to avoid calling consumers who do 
not wish to receive telemarketing calls, should not be charged for such 
access. Charging such entities access fees, when they are under no 
legal obligation to comply with the ``do-not-call'' requirements of the 
TSR, may make them less likely to obtain access to the Registry in the 
future, resulting in an increase in unwanted calls to consumers.\55\
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    \54\ See supra footnote 21, citing 70 FR at 20849 n. 22, 69 FR 
at 45585-45586, and 68 FR at 45144.
    \55\ See 70 FR at 20851.
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    Three of the comments supported continuing to allow ``exempt'' 
entities to access the Registry at no charge, for the reasons set forth 
in the 2005 Fee Rule NPR.\56\ One commenter opposed the provision, 
claiming that fees are necessary in order to make it more difficult for 
``bad actors'' \57\ to gain access to the system, as well as to help 
``fund the Registry.'' \58\
---------------------------------------------------------------------------

    \56\ See FNBO at 2, WF at 1, and WST at 2.
    \57\ The Commission has found no evidence of widespread non-
compliance with the Do Not Call provisions of the TSR. See 
discussion in section III.3.
    \58\ See ARDA at 3.
---------------------------------------------------------------------------

    The Commission continues to believe that if it charged exempt 
entities for access to the Registry, many, if not most, of those 
entities would no longer seek access.\59\ As a result, as noted in the 
2004 Fee Rule, registered consumers would receive an increase in the 
number of unwanted telephone calls. Exempt entities are, by definition, 
under no legal obligation to access the Registry. Many are outside the 
jurisdiction of the FTC. They are voluntarily accessing the Registry in 
order to avoid calling consumers whose telephone numbers are 
registered. They should be encouraged to continue doing so, rather than 
be charged a fee for their efforts. The Commission will, therefore, 
continue to allow such exempt entities to access the Registry at no 
charge, after they have completed the required certification.
---------------------------------------------------------------------------

    \59\ See also WF at 1, stating that ``it is safe to assume that 
few if any such entities would access the list at all if they were 
required to pay for such access.''
---------------------------------------------------------------------------

3. Imposition of the Fees and Use of the Funds
    While the commenters disagreed on whether access to five area codes 
of data should continue to be provided at no cost, they were unanimous 
in their opposition to the increase in fees for access to the National 
Do Not Call Registry. Generally, in addition to arguing that it would 
be unfair to continue raising fees on the small percentage of entities 
who pay for accessing the Registry, \60\ commenters also posited other 
reasons in opposition to the increase.
---------------------------------------------------------------------------

    \60\ See discussion starting in section III.1., above.
---------------------------------------------------------------------------

    One commenter disapproved of the proposed increase in fees, stating 
that ``the Commission should increase efforts to identify those 
entities that are not accessing the Registry as required.'' \61\ Since 
the opening of the Registry, the FTC has monitored industry payment for 
access. We have found no evidence of widespread noncompliance with the 
2004 Fee Rule. Moreover, no commenter has provided any concrete 
information about such alleged noncompliance. As part of our law 
enforcement activities, we continue to welcome any specific information 
that can be provided in this regard. The FTC continues to conduct non-
public investigations of violations of the fee provision as well as 
violations of the do-not-call provisions of the TSR, and will file law 
enforcement actions addressing such violations when appropriate.\62\
---------------------------------------------------------------------------

    \61\ See ARDA at 3.
    \62\ As of April 21, 2005, the FTC had initiated seven DNC 
Registry cases and obtained four settlements (two of those cases 
were filed by the Department of Justice on the FTC's behalf). In 
addition, the FTC had filed four cases against do-not-call scams.

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

[[Page 43278]]

    This same commenter suggested that the FTC should use ``revenue 
from enforcement actions'' to offset some of the fee increase.\63\ 
However, as stated in the 2004 Fee Rule, by statute, the FTC cannot 
retain any civil penalties it obtains in such law enforcement actions. 
Instead, all such civil penalties are deposited into the General Fund 
of the United States Treasury.\64\ Accordingly, by law, any monies 
obtained from enforcement actions cannot be used to offset fees.
---------------------------------------------------------------------------

    \63\ See ARDA at 2.
    \64\ See Miscellaneous Receipts Act, 31 U.S.C. 3302.
---------------------------------------------------------------------------

    Two of the commenters also questioned whether fees that are being 
collected are being used for purposes other than to fund the 
Registry.\65\ One commenter stated that ``fees * * * should only be 
used to fund enforcement and administrative costs directly associated 
with the Registry,'' \66\ and another commenter stated that they ``are 
concerned that fees are being used for telemarketing enforcement based 
on fraud or other violations of the TSR, where there may also be an 
incidental violation of the registry.'' \67\ These commenters also 
noted the Commission's statements regarding industry's high rate of 
compliance, and argued that it is unfair to continue increasing fees 
and imposing enforcement costs on the very organizations that are most 
compliant with the rules.\68\
---------------------------------------------------------------------------

    \65\ See ARDA at 3 and DMA/ATA/NAA at 3.
    \66\ See ARDA at 3.
    \67\ See DMA/ATA/NAA at 3.
    \68\ See ARDA at 2, and DMA/ATA/NAA at 3-4. DMA/ATA/NAA further 
stated their belief that ``it is inappropriate for entities that 
comply with the law to bear the enforcement costs of the FTC. If the 
do-not-call registry is as successful as the FTC indicates, the FTC 
itself or Congress should provide any additional necessary funding 
increases over the current fee structure.'' See DMA/ATA/NAA at 3-4.
---------------------------------------------------------------------------

    Consistent with the Implementation Act, and as stated in previous 
rulemaking proceedings, \69\ the Commission has limited the amount of 
fees to be collected to those needed to implement and enforce the ``do-
not-call'' provisions of the Amended TSR. The amount of fees collected 
pursuant to this revised rule is intended to offset costs in the 
following three areas: first, funds are collected to operate the 
Registry. This operation includes items such as handling consumer 
registration and complaints, telemarketer access to the Registry, state 
access to the Registry, and the management and operation of law 
enforcement access to appropriate information. Second, funds are 
collected for law enforcement and educational activities, including 
identifying targets, coordinating domestic and international 
initiatives, challenging alleged violators, and consumer and business 
education outreach. These law enforcement efforts are a significant 
component of the total costs, given the large number of ongoing 
investigations currently being conducted by the FTC, and the 
substantial effort necessary to complete such investigations. Third, 
funds are collected to cover infrastructure and administration costs 
associated with the operation and enforcement of the Registry, 
including information technology structural supports and distributed 
mission overhead support costs for staff and non-personnel expenses 
such as office space, utilities, and supplies.\70\
---------------------------------------------------------------------------

    \69\ See 69 FR at 45582. See also 68 FR at 45141.
    \70\ See 70 FR at 20850.
---------------------------------------------------------------------------

    Three of the commenters also raised concerns regarding the pattern 
of annual fee increases that the Commission has adopted.\71\ One 
commenter stated that it was ``concerned, given the sharp increases in 
the cost of the Registry over the first two years of activation, that 
this cost will continue to increase and over time become a significant 
cost that will ultimately be passed on to the consumer.'' \72\ Another 
commenter raised the concern that:
---------------------------------------------------------------------------

    \71\ See FNBO at 2, ARDA at 1, and DMA/ATA/NAA at 2.
    \72\ See FNBO at 2. Interestingly, FNBO also notes ``that the 
Registry's overall cost per year does not in and of itself 
significantly impact our company's bottom line.'' Id.

    As the user fee increases, it is inevitable that compliant 
sellers will be motivated to (1) reduce or stop outbound 
telemarketing; or (2) avoid paying the fees in violation of the 
rules. Either event will reduce the number of sellers (and/or area 
codes accessed by the sellers), which will result in lower fees, and 
in turn result in more fee increases in the future to be paid by 
only the most profitable businesses.\73\
---------------------------------------------------------------------------

    \73\ See ARDA at 1-2.

A third commenter stated that while fees have increased, the 
``Commission has not indicated in the NPRM that costs to run the 
registry have increased or that enforcement or other costs have 
increased.'' \74\ The Commission has increased the fees charged to 
telemarketers for accessing the Registry; in 2004, this was primarily 
because fewer area codes of information were purchased than were 
anticipated in the 2003 Fee Rule.\75\ As part of the 2004 Fee Rule 
proceedings, the Commission reviewed the fees that had been collected, 
along with data about the number of area codes that had been purchased, 
and revised its initial assumptions accordingly. As a result, the 
Commission increased the fees based on the latest information then 
available.\76\ Similarly, in the 2005 Fee Rule NPR, the Commission 
analyzed the current information, and issued a proposal that reflected 
both the amount that needed to be raised, \77\ along with the number of 
area codes that were projected to be purchased. As a result, the fees 
that were proposed in the 2005 Fee Rule NPR represented an increase 
over the fees adopted in the 2004 Fee Rule.
---------------------------------------------------------------------------

    \74\ See DMA/ATA/NAA at 2.
    \75\ See 68 FR at 45140. As stated in the 2003 Fee Rule, the 
fees were ``based on the best information available to the agency at 
[that] time.'' However, as the Commission noted, we ``received 
virtually no comments providing information on the validity of the 
Commission's assumptions.''
    \76\ See 69 FR at 45584.
    \77\ The Commission views the current Congressional 
authorization as an instruction regarding the fees to be collected.
---------------------------------------------------------------------------

    In this regard, one commenter stated its belief that this increase 
is unjustified and only reflects the ``increase in the annual 
congressional authorization.'' \78\ However, an increase in the amount 
of funding required to cover the administrative costs of the Registry, 
while a component of the fee increase, is not the only component. As in 
the 2004 Fee Rule, a second major factor that influenced the increase 
proposed in the 2005 Fee Rule NPR was the number of area codes that 
were purchased by entities accessing the Registry. The fees that the 
Commission proposed in the 2005 Fee Rule NPR reflect both the amount of 
funds necessary to implement and enforce the Registry, as well as the 
number of area codes that the Commission assumes will be purchased by 
entities accessing the Registry, based on the Commission's current 
experience. Importantly, the Commission believes that, through 
experience, it will continue to obtain better information about the 
number of entities accessing the Registry, their purchasing behavior, 
and the costs associated with running the Registry. The Commission 
expects this experience and improved information to result in more 
stable and predictable fee rates.
---------------------------------------------------------------------------

    \78\ See DMA/ATA/NAA at 2. The Commission also notes that DMA/
ATA/NAA stated that Congress authorized the Commission to collect 
$18.1 million in offsetting fees in 2004. However, Congress actually 
authorized the Commission to collect $23.1 million in the 2004 
Appropriations Act. However, in its rulemaking, the Commission 
stated that it was only seeking $18.1 million in offsetting fees 
during Fiscal year 2004 because of the $5.1 million from the 2003 
Fee Rule that the Commission collected in Fiscal Year 2004. See 69 
FR at 23702 n. 4.

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

[[Page 43279]]

    In addition, one commenter also expressed opposition to any 
increase in fees that might be attributable to the inclusion of 
---------------------------------------------------------------------------
wireless telephone numbers on the Registry, stating that:

    Telemarketing calls to wireless numbers without consent are 
prohibited under the FCC's rules implementing the Telephone Consumer 
Protection Act of 1991 (``TCPA''), 47 U.S.C. 227 et seq. Thus, as a 
legal matter, consumers receive no fewer telemarketing calls by 
placing their wireless numbers on the registry. Because such calls 
already are prohibited in the first instance, there is no basis for 
allowing such numbers to be placed on the registry.\79\

    \79\ See DMA/ATA/NAA at 4.

However, this commenter overstated the nature of the prohibition 
enacted by the Federal Communication Commission (``FCC''). The FCC's 
prohibitions on telemarketing calls placed to wireless telephone 
numbers, proscribe the use of an ``automatic telephone dialing system 
or an artificial or prerecorded message'' to place such calls.\80\ In 
this regard, the Commission has received no information that would 
suggest that those engaged in telemarketing activities only use the 
aforementioned technology to place calls to consumers. The TSR's 
prohibitions concerning fraudulent or abusive telemarketing acts or 
practices apply to both land line and wireless telephones, and the 
Registry has never differentiated between the two. At this point, the 
Commission sees no reason to make such a distinction.
---------------------------------------------------------------------------

    \80\ See FCC Telemarketing and Telephone Solicitation Rules, 47 
CFR 64.1200 (2005).
---------------------------------------------------------------------------

    Accordingly, the Commission concludes that an increase in fees is 
necessary.

IV. Calculation of the Revised Fees

    As previously stated, the Commission proposed in the 2005 Fee Rule 
NPR to increase the fees charged to access the National Do Not Call 
Registry to $56 annually for each area code of data requested, with the 
maximum annual fee capped at $15,400 for entities accessing 280 area 
codes of data or more. The Commission based this proposal on the total 
number of entities that accessed the Registry from March 1, 2004 
through February 28, 2005.\81\ The Commission noted, however, that it 
would adjust the final revised fee to reflect the actual number of 
entities that had accessed the Registry at the time of issuance of the 
Final Rule.\82\
---------------------------------------------------------------------------

    \81\ At that time, more than 60,800 entities had accessed all or 
part of the information in the Registry. Approximately 1,300 of 
these entities are ``'exempt''and therefore have accessed the 
Registry at no charge. An additional 52,700 entities have accessed 
five or fewer area codes of data, also at no charge. As a result, 
approximately 6,700 entities have paid for access to the Registry, 
with slightly less than 1,100 entities paying for access to the 
entire Registry. See 70 FR at 20849-20850.
    \82\ Id. at 20850 n.24.
---------------------------------------------------------------------------

    As of June 1, 2005, there have been no significant or material 
changes in the number of entities that have accessed the Registry since 
the Commission issued the 2005 Fee Rule NPR.
    Therefore, based on the figures contained in the 2005 Fee Rule NPR, 
and the need to raise $21.9 million in fees to offset costs it expects 
to incur in this Fiscal Year for implementing and enforcing the ``do-
not-call'' provisions of the Amended TSR, the Commission is revising 
the fees to be charged for access to the Registry as follows: the fee 
charged for each area code of data will be $56 per year, with the first 
five area codes provided to each entity at no charge. ``Exempt'' 
organizations, as defined by the Do Not Call regulations, will continue 
to be allowed access to the Registry at no charge. The maximum amount 
that will be charged any single entity will be $15,400, which will be 
charged to any entity accessing 280 area codes of data or more. The fee 
charged to entities requesting access to additional area codes of data 
during the second six months of their annual period will be $28.
    The Commission establishes September 1, 2005, as the effective date 
for this rule change. Thus, the revised fees will be charged to all 
entities that renew their subscription account number after their 
current subscription has expired.

V. Paperwork Reduction Act

    Pursuant to the Paperwork Reduction Act,\83\ the Office of 
Management and Budget (``OMB'') has approved the information collection 
requirements in the 2004 Fee Rule and assigned OMB Control Number 3084-
0097. The rule amendment, as discussed above, provides for an increase 
in the fees that are charged for accessing the National Do Not Call 
Registry, but creates no new recordkeeping, reporting, or third-party 
disclosure requirements that would be subject to review and approval by 
OMB pursuant to the Paperwork Reduction Act.
---------------------------------------------------------------------------

    \83\ 44 U.S.C. 3501-3520.
---------------------------------------------------------------------------

VI. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601 et seq., 
requires the FTC to provide an Initial Regulatory Flexibility Analysis 
(``IRFA'') with its proposed rule, and a Final Regulatory Flexibility 
Analysis (``FRFA'') with its final rule, unless the FTC certifies that 
the rule will not have a significant economic impact on a substantial 
number of small entities. As explained in the 2005 Fee Rule NPR and 
this Statement, the Commission hereby certifies that it does not expect 
that its Final Amended Fee Rule will have the threshold impact on small 
entities. As discussed above, this Amended Rule specifically charges no 
fee for access to data included in the Registry from one to five area 
codes. As a result, the Commission anticipates that many small 
businesses will be able to access the Registry without having to pay 
any annual fee. Thus, it is unlikely that there will be a significant 
burden on small businesses resulting from the adoption of the proposed 
revised fees. Nonetheless, the Commission published an IRFA with the 
2005 Fee Rule NPR, and is also publishing a FRFA with its Final Amended 
Fee Rule below, in the interest of further explaining its 
determination, even though the Commission believes that it is not 
required to publish such analyses.

A. Reasons for Consideration of Agency Action

    The Amended Final Fee Rule has been considered and adopted pursuant 
to the requirements of the Implementation Act and the 2005 
Appropriations Act, which authorize the Commission to collect fees 
sufficient to implement and enforce the ``do-not-call'' provisions of 
the Amended TSR.

B. Statement of Objectives and Legal Basis

    As explained above, the objective of the Amended Final Fee Rule is 
to collect sufficient fees from entities that must access the National 
Do Not Call Registry. The legal authority for this Rule is the 2005 
Appropriations Act, the Implementation Act, and the Telemarketing Act.

C. Description of Small Entities to Which the Rule Will Apply

    The Small Business Administration has determined that 
``telemarketing bureaus'' with $6 million or less in annual receipts 
qualify as small businesses.\84\ Similar standards, i.e., $6 million or 
less in annual receipts, apply for many retail businesses that may be 
``sellers'' and subject to the revised fee provisions set forth in this 
Amended Final Rule. In addition, there may be other types of 
businesses, other than retail establishments, that would be ``sellers'' 
subject to this rule.
---------------------------------------------------------------------------

    \84\ See 13 CFR 121.201.
---------------------------------------------------------------------------

    To date more than 50,000 entities have accessed five or fewer area 
codes

[[Page 43280]]

of data from the Registry at no charge.\85\ While not all of these 
entities may qualify as small businesses, and some small businesses may 
be required to purchase access to more than five area codes of data, 
the Commission believes that this is the best estimate of the number of 
small entities that will be subject to this Amended Final Rule. In any 
event, as explained elsewhere in this Statement, the Commission 
believes that, to the extent the Amended Final Fee Rule has an economic 
impact on small business, the Commission has adopted an approach that 
minimizes that impact to ensure that it is not substantial, while 
fulfilling the legal mandate of the Implementation Act and 2005 
Appropriations Act to ensure that the telemarketing industry supports 
the cost of the National Do Not Call Registry.
---------------------------------------------------------------------------

    \85\ See supra note 81.
---------------------------------------------------------------------------

D. Projected Reporting, Recordkeeping and Other Compliance Requirements

    The information collection activities at issue in this Amended 
Final Rule consist principally of the requirement that firms, 
regardless of size, that access the Registry submit minimal identifying 
and payment information, which is necessary for the FTC to collect the 
required fees. The cost impact of that requirement and the labor or 
professional expertise required for compliance with that requirement 
were discussed in Section VI of the 2005 Fee Rule NPR.\86\
---------------------------------------------------------------------------

    \86\ See 70 FR at 20851.
---------------------------------------------------------------------------

    As for compliance requirements, small and large entities subject to 
the Amended Fee Rule will pay the same fees to obtain access to the 
National Do Not Call Registry in order to reconcile their calling lists 
with the phone numbers maintained in the Registry. As noted earlier, 
however, compliance costs for small entities are not anticipated to 
have a significant impact on small entities, to the extent the 
Commission believes that compliance costs for those entities will be 
largely minimized by their ability to obtain data for up to five area 
codes at no charge.

E. Duplication With Other Federal Rules

    None.

F. Discussion of Significant Alternatives

    The Commission discussed the proposed alternatives in Section III, 
above.

List of Subjects in 16 CFR Part 310

    Telemarketing, Trade practices.

VII. Final Rule

0
Accordingly, for the reasons set forth above, the Commission hereby 
amends part 310 of title 16 of the 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. Revise Sec.  310.8(c) and (d) to read as follows:


Sec.  310.8  Fee for access to the National Do Not Call Registry.

* * * * *
    (c) The annual fee, which must be paid by any person prior to 
obtaining access to the National Do Not Call Registry, is $56 per area 
code of data accessed, up to a maximum of $15,400; provided, however, 
that there shall be no charge for the first five area codes of data 
accessed by any person, and provided further, that there shall be no 
charge to any person engaging in or causing others to engage in 
outbound telephone calls to consumers and who is accessing the National 
Do Not Call Registry without being required under this Rule, 47 CFR 
64.1200, or any other federal law. Any person accessing the National Do 
Not Call Registry may not participate in any arrangement to share the 
cost of accessing the registry, including any arrangement with any 
telemarketer or service provider to divide the costs to access the 
registry among various clients of that telemarketer or service 
provider.
    (d) After a person, either directly or through another person, pays 
the fees set forth in Sec.  310.8(c), the person will be provided a 
unique account number which will allow that person to access the 
registry data for the selected area codes at any time for twelve months 
following the first day of the month in which the person paid the fee 
(``the annual period''). To obtain access to additional area codes of 
data during the first six months of the annual period, the person must 
first pay $56 for each additional area code of data not initially 
selected. To obtain access to additional area codes of data during the 
second six months of the annual period, the person must first pay $28 
for each additional area code of data not initially selected. The 
payment of the additional fee will permit the person to access the 
additional area codes of data for the remainder of the annual period.
* * * * *

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

   Appendix--List of Acronyms for Commenters to the TSR 2005 Fee Rule
                                Proposal
------------------------------------------------------------------------
               Commenter                             Acronym
------------------------------------------------------------------------
1. American Resort Development           ARDA
 Association.
2. Darian Miller.......................  DM
3. Direct Marketing Association, Inc.    DMA/ATA/NAA
 (DMA), American Teleservices
 Association (ATA), and Newspaper
 Association of America (NAA).
4. First National Bank of Omaha........  FNBO
5. Influent, Inc.......................  INF
6. National Association of Realtors....  NAR
7. National Automobile Dealers           NADA
 Association.
8. Wells Fargo & Company...............  WF
9. West Corporation....................  WST
------------------------------------------------------------------------


[[Page 43281]]

[FR Doc. 05-14905 Filed 7-26-05; 8:45 am]
BILLING CODE 6750-01-P