OKLA. DIST. COURT BLOCKS NATIONAL DO-NOT-CALL LIST

“An administrative agency’s power to regulate in the public interest must always be grounded in a valid grant of authority from Congress,” Judge Lee West said in the ruling released publicly Wed.: “Absent such a grant of authority in this case, the court finds the do-not-call provision to be invalid.” West admitted that “the elimination of telemarketing fraud and the prohibition against deceptive and abusive telemarketing acts or practices are significant public concerns,” but said the main and “dispositive” issue was “whether the FTC had the authority to promulgate a national do-not-call. The court finds it did not.” West clarified that although Congress had authorized creation of the registry, it gave that authority “expressly” to the FCC, while it authorized the FTC to perform other tasks in preventing abusive telemarketing calls.

House Commerce Committee Chmn. Tauzin (R-La.) and Commerce Committee ranking Democrat Dingell (Mich.), who sponsored HR-395, the proposed Do-Not-Call Implementation Act, objected to the ruling. “Contrary to the court’s decision, we firmly believe Congress gave the FTC authority to implement the national do-not-call list,” they said in a joint statement. Sen. McCain (R-Ariz.), chmn. of the Senate Commerce Committee, agreed: “I strongly believe the recent District Court decision in Oklahoma incorrectly concludes that the FTC lacks authority to establish a national do-not- call registry. Earlier this year, Congress made clear its intent to protect consumers by ratifying the FTC’s authority to create such a registry.” He said “to the extent the authority granted to the FTC by Congress needs any further clarification, I will work with my colleagues to provide this.”

The Do-Not-Call Implementation Act, which was passed by Congress in Feb. and signed into law by President Bush in March (CD March 12 p6), gave the FTC authority to collect fees from telemarketers to “implement and enforce the provisions relating to the ‘do-not-call’ registry.” It also required that the FTC and the FCC report to Congress annually on the effectiveness of the registry. In Feb., Bush also signed the Omnibus Appropriations Act, which authorized the FTC to “implement and enforce the do-not-call provisions of the Telemarketing Sales Rule.” Tauzin and Dingell said they would “continue to monitor the situation and [would] take whatever legislative action is necessary to ensure consumers can stop intrusive calls from unwanted telemarketers.” Rep. Markey (Mass.), ranking Democrat on the House Telecom Subcommittee, said he believed “this court decision will ultimately be reversed.”

Robert Jackson, attorney with Reed Smith, said it was not clear how the court decision would affect the FCC’s telemarketing rules. He said the FCC would “probably take a position that their rules are still in effect,” but he said he expected that position would be challenged: “We'll see some battles in court.” Jackson said it was possible that the ruling would affect the Oct. 1 implementation deadline, unless the FCC would move forward to enforce their rules. “Technically, the ruling covers only the district where it was made but practically, it will have broader effect,” he said.

FTC Chmn. Timothy Muris called the decision “clearly incorrect” and said his Commission would “seek every resource to give American consumers a choice to stop unwanted telemarketing calls.” With 29% (48.4 million) of the total U.S. residential numbers on the list, the FTC has projected 60 million would be signed up by Oct. 1, affecting more than 150,000 telemarketing companies. Currently, 42 states have DNC regulations in place and the remaining 8 have such legislation pending.

The Center for Democracy & Technology (CDT) said it believed “this is only a temporary setback in the creation of popular list… Either a higher court will overturn this case or Congress will heed the overwhelming support for the list and make it very clear to the FTC that it has the authority to move forward.” CDT Assoc. Dir. Ari Schwartz said the FTC would probably suspend the program until the issue was cleared up, but he said the Commission would “want to keep the names on the list as they have them now. Consumers would be very upset if they had to re-register because of the tactics taken to stall the implementation of the list.”

The Direct Mktg. Assn. (DMA) applauded the decision, saying the court had “understood and upheld industry’s belief that the [FTC] does not have authority to implement and enforce a national do-not-call list.” However, it said it believed “in the efficacy of a national list for consumers to express their preference not to receive telephone solicitations. In fact, the DMA has offered American consumers a free, national no-call system -- the Telephone Preference Service (TPS) -- since 1985.”

Consumers Union Policy Analyst Adam Goldberg said “whatever real or perceived problems this court has with the registry doesn’t change [the] fact” that “consumers are sick and tired of having their lives interrupted by constant telemarketing calls… Whatever happens with the court decision, Congress could pass a law overnight to correct any deficiencies the court believes it may have found, and we expect them to do so.”