Before the
                Federal Communications Commission
                     Washington, D.C.  20554



In the Matter of                        )
                                        )
Rules and Regulations Implementing the  )    CG Dkt No. 02-278
Telephone Consumer Protection Act of 1991)
                                        )
                                        )



                  Petition for Reconsideration
  of the Office of Advocacy, U.S. Small Business Administration
                                

     The Office of Advocacy ("Advocacy") of the U.S. Small

Business Administration ("SBA") respectfully submits this

Petition for Reconsideration, requesting that the Federal

Communications Commission ("FCC" or "Commission") modify its

recent decision to regulate unsolicited commercial fax

communications in the above-captioned proceeding.(1) The Office

of Advocacy is an independent office within the SBA, so the views

expressed by the Office of Advocacy do not necessarily reflect

the views of the SBA or the Administration.

     On July 3, 2003, the FCC released the Report and Order

("Order") in the "do-not-call" proceeding, which the FCC

initiated to curb intrusive telemarketing and promote consumer

privacy.  The FCC intended the Order to maximize consistency with

the recent amendments made by the Federal Trade Commission

("FTC") to its Telemarketing Sales Rule.(2) As part of the "do-

not-call" rules, the FCC adopted a "do-not-fax" provision, which

required any person to obtain prior express permission in

writing, with a signature from the recipient, before sending an

unsolicited fax advertisement.(3) Unlike the general "do-not-

call" provisions of the Order, the Commission removed the

"Established Business Relationship" exemption and did not grant

an exception to trade associations or non-profit organizations

when communicating through a facsimile device to their members.

     This rule will have an enormous impact on small businesses,

small trade associations, and small non-profit organizations.(4)

Advocacy requests that the FCC revisit this decision in light of

the economic impact on these small entities and the fact that the

Commission did not conduct an adequate Regulatory Flexibility

Analysis ("RFA") of the impact.  Specifically, Advocacy requests

that the Commission reinstate the Established Business

Relationship exemption and the non-profit exemption, create a

presumption that membership in a trade association acts as

consent, and clarify the definition of an unsolicited commercial

advertisement.

I.   Advocacy Background.

     Congress established the Office of Advocacy in 1976 by Pub.

L. No. 94-305(5) to represent the views and interests of small

business within the Federal government.  Advocacy's statutory

duties include serving as a focal point for the receipt of

complaints concerning the government's policies as they affect

small business, developing proposals for changes in Federal

agencies' policies, and communicating these proposals to the

agencies.(6) Advocacy also has a statutory duty to monitor and

report to Congress on the Commission's compliance with the

RFA.(7)

     Congress designed the RFA to ensure that, while

accomplishing their intended purposes, regulations did not unduly

inhibit the ability of small entities to compete, innovate, or to

comply with the regulation.(8) An objective of the RFA is for

agencies to be aware of the economic structure of the entities

they regulate and the effect their regulations may have on small

entities.  To this end, the RFA requires agencies to analyze the

economic impact of proposed regulations when there is likely to

be a significant economic impact on a substantial number of small

entities, and to consider regulatory alternatives that will

achieve the agency's goal while minimizing the burden on small

businesses.(9) The RFA does not seek preferential treatment for

small businesses.  Rather, it establishes an analytical

requirement for determining how public issues can best be

resolved without erecting barriers to competition.  To this end,

the RFA requires the agencies to analyze the economic impact of

proposed regulations on different-sized entities, estimate each

rule's effectiveness in addressing the agency's purpose for the

rule, and consider alternatives that will achieve the rule's

objectives while minimizing burdens on small entities.(10)

     On August 13, 2002, President George W. Bush signed

Executive Order 13272 that requires federal agencies to implement

policies protecting small entities when writing new rules and

regulations.(11) This Executive Order highlights the President's

goal of giving "small business owners a voice in the complex and

confusing federal regulatory process"(12) by directing agencies

to work closely with the Office of Advocacy and properly consider

the impact of their regulations on small entities.

II.  The FCC's Report and Order Does Not Comply with the RFA.

     Advocacy believes that the "do-not-fax" portion of the

rulemaking does not comply with the RFA.  Both the initial

regulatory flexibility analysis ("IRFA") and the final regulatory

flexibility analysis ("FRFA") do not satisfy the requirements of

the RFA as they failed to adequately address the costs that the

rule would impose on small business, small trade associations,

membership organizations, and small non-profit organizations.

Further, the FCC did not adequately consider alternatives that

would minimize the impact on small entities while still advancing

the Commission's objectives.  The FCC should reconsider the "do-

not-fax" provision in light of the impact on small entities and

the availability of alternatives.

A.   The IRFA Does Not Meet the Requirements of the RFA.

     As Advocacy stated in its letter in support of the requests

for stay,(13) the IRFA does not meet the requirements set forth

in the RFA.(14) The Commission did not adequately describe the

requirement to obtain signed written permission from all fax

recipients and it did not adequately estimate the costs on small

businesses or small organizations.(15)

     Furthermore, the FCC did not consider adequately

alternatives in the IRFA to minimize the impact on small

businesses or organizations as required by the RFA.(16) Instead,

the Commission asked commenters to propose alternatives, which

shifts the burden off the FCC and onto small entity commenters.

Asking for proposed alternatives from small businesses does not

satisfy the RFA, as the law requires the agency to describe,

consider, and discuss any significant alternatives.

B.   The FRFA Does Not Meet the Requirements of the RFA.

     The FRFA does not meet the requirements of the RFA, as it

does not contain an adequate analysis of the compliance costs of

"do-not-fax" provision of the Order nor does it consider

alternatives that would legitimately minimize the economic impact

of the "do-not-fax" provision on small businesses, membership

organizations, and non-profit associations.(17)

1.   The Compliance Requirements of the "Do-Not-Fax" Provision

Will Be Substantial.

     In the FRFA, the Commission mentions that small businesses

and small organizations will be required to maintain records of

permission forms from each of the recipients of unsolicited fax

advertising, (18)but the Commission does not estimate the costs,

time required, or professional skills necessary to comply with

the Order.

     To comply with this requirement, the small business must:

(1) develop a policy on how to handle unsolicited fax

advertising; (2) draft a permission form (which will require

legal expertise) that satisfies the requirements of the Order;

(3) send the permission form to all customers, potential

customers, and business partners; (4) receive the permission

forms; (5) file and store the permission forms; and (6) update

and maintain the file of permission forms as needed.

     The costs to comply will be substantial.  As the FCC stated

in its FRFA, this rule could potentially regulate all 22.4

million small business in the country.(19) The fax machines are

an affordable means of communications for almost every small

business and small organization.  Advocacy does not have data on

the time required for each of these small businesses to comply

with the rule, but judging from the list of actions necessary to

comply as described above, it is likely to be substantial.  The

small entities must get in touch with each of their clients,

potential clients, and business partners - a task that could take

from days to months.  Also, the small business must store and

file each of these permission forms, which could require from

several hours per week by one employee with a single file drawer

to multiple employees maintaining an entire room of file

cabinets.

     Advocacy encourages the FCC to look at its own data and

information submitted by other commenters and petitioners to

gauge an accurate assessment of the costs on small entities.  If

the Commission still needs further information on the cost to

small entities, Advocacy urges the Commission to contact small

business groups and membership organizations through the ex parte

process to help identify and analyze impacts of this rule and of

the alternatives described below and in other petitions for

reconsideration.  Advocacy stands ready to assist the Commission

in collecting this information as needed.

2.   The FCC Should Consider the Alternatives to Minimize Impacts
on Small Business

     The FRFA's treatment of alternatives is also insufficient.

The FCC described how the "do-not-fax" portion of the rule would

benefit small businesses who were receiving unsolicited

commercial faxes, but the Commission did not discuss any of the

alternatives to lessen the burden on small businesses and small

organizations that use fax communications for commercial

purposes.(20) As part of the FCC's reconsideration, Advocacy

recommends that the Commission consider the following

alternatives to minimize the burden on small businesses and

organizations, while still helping reduce the number of

unsolicited faxes to small businesses and other recipients.

     First, the FCC should reinstate the "Established Business

Relationship" ("EBR") exemption.  Many small businesses use faxes

to communicate with customers, potential customers, and business

partners.  These parties expect to receive fax communications as

part of their business dealings and the permission form is an

unnecessary legal hoop that slows down commerce and adds

regulatory costs to every transaction.  If the FCC reinstates the

EBR, small businesses can more readily communicate with their

customers and business partners who desire this information.

Additionally, by reinstating the EBR, the FCC will make the "do-

not-fax" provision consistent with larger "do-not-call" rule,

which simplifies and streamlines the rule, making it easier for

small businesses to comply with the rule.

     Second, the FCC should create a presumption that joining a

membership organization acts as consent to receive unsolicited

commercial faxes from the organization.  Membership organizations

rely upon faxes to communicate with members, donors, and other

interested parties.  Requiring these entities to gather

permission forms from all of their members is a time-consuming

and expensive proposition, especially for groups that serve small

businesses because they often have many members.  In addition,

members of a membership organization expect to receive fax

communications from the organization as part of their association

with the group.  The company-specific "do-not-call" rule would

still apply to membership organizations.  If a member wishes to

stop receiving faxes, they can let the organization know and have

their name removed from the distribution list.  Advocacy believes

that a presumption of consent in this narrow case is fair and

consistent with the intent of the rule.

     Third, the FCC should reinstate the exemption for non-profit

organizations.  Similar to membership organizations, non-profit

groups rely upon faxes to communicate with members, donors, and

other interested parties.  The "do-not-fax" provision has the

potential of muzzling the voice of small businesses and other non-

profit groups.  Many organizations have gone on the record with

the FCC and stated that the provision will prevent quick

communications they need to make sure that all of their small

business members are aware of new laws, regulations, and other

developments both in Washington and in state capitols across the

country.  Similarly, contributors and associates of non-profit

organizations expect to receive faxes from these entities.  As

with reinstating the EBR, reinstating the exemption for non-

profit organizations will make the "do-not-fax" provision

consistent with larger "do-not-call" rule.

     Finally, the FCC should clarify what is an unsolicited

advertisement.  The current definition of "any material

advertising the commercial availability or quality of any

property, goods, or services"(21) is a good general guideline,

but it leaves many details open to interpretation.  Does a

trademark or name of a business constitute an advertisement?

What if it includes a motto such as "Buy and Save!" or "Join

Today"?  Does the advertisement have to be for a specific good or

service or does it include general good will advertising for the

business?  Does a notice of an upcoming conference count as an

advertisement?  It is important that small entities know exactly

what is permitted and what is not so that they are able to comply

with the rules.  Therefore, Advocacy requests that the FCC

clarify what is a commercial advertisement on reconsideration.

IV.  Conclusion.

     Advocacy requests that the FCC reconsider the "do-not-fax"

provision in the Order because small businesses are

disproportionately burdened by the requirements of this

provision, and the Commission did not comply with the RFA as it

did not adequately describe the impact of these compliance

requirements.  Nor did the Commission adequately consider

alternatives to minimize the impact.  Advocacy asks that the

Commission reinstate the "Established Business Relationship"

exemption and the non-profit exemption, create a presumption that

membership in a trade association acts as consent, and clarify

what is an unsolicited advertisement.

     Thank you for your consideration of these matters, and

please do not hesitate to contact me or Eric Menge of my staff at

(202) 205-6533 or eric.menge@sba.gov if you have questions,

comments, or concerns.


Respectfully Submitted

Thomas M. Sullivan
Chief Counsel for Advocacy


Eric E. Menge
Assistant Chief Counsel for Telecommunications

Office of Advocacy
U.S. Small Business Administration
409 Third St., S.W.
Washington, DC  20416

August 25, 2003

                     Certificate of Service

I, Eric E. Menge, an attorney with the Office of Advocacy, U.S.

Small Business Administration, certify that I have, on this

August 25, 2003, caused to be mailed, first-class, postage

prepaid, a copy of the foregoing  Petition for Reconsideration to

the following:

___________________________
Eric E. Menge

Honorable Michael K. Powell
Chairman
Federal Communications Commission
445 12th Street, S.W.
Room 8-B201
Washington, DC  20554

Honorable Kathleen Q. Abernathy
Commissioner
Federal Communications Commission
445 12th Street, S.W.
Room 8-B115
Washington, DC  20554

Honorable Michael J. Copps
Commissioner
Federal Communications Commission
445 12th Street, S.W.
Room 8-A302
Washington, DC  20554

Honorable Kevin J. Martin
Commissioner
Federal Communications Commission
445 12th Street, S.W.
Room 8-A204
Washington, DC  20554

Honorable Jonathan S. Adelstein
Commissioner
Federal Communications Commission
445 12th Street, S.W.
Room 8-C302
Washington, DC  20554
Marlene H. Dortch
Secretary
Federal Communications Commission
445 12th Street, S.W.
Room TW-A325
Washington, DC  20554

Richard Lee
Acting Director
Office of Communications Business Opportunities
Federal Communications Commission445 12th Street, S.W.
Room 7-C250
Washington, DC  20554

K. Dane Snowden
Chief
Consumer & Governmental Bureau
Federal Communications Commission
445 12th St., S.W.
Room 5-C755
Washington, DC  20554

Dr. John D. Graham
Administrator
Office of Information and Regulatory Affairs
Office of Management and Budget
725 17th Street, N.W.
Washington, DC  20503

ENDNOTES

1.   In the Matter of Rules and Regulations Implementing the
Telephone Consumer Protection Act of 1991, Report and Order, CG
Dkt. No. 02-278,  FCC 03-153 (rel. July 3, 2003).
2.   FTC Telemarketing Sales Rule, 68 Fed. Reg. 4500 (Jan. 29,
2003) (to be codified at 16 CFR Pt. 310).
3.   Order at paras. 185-93.
4.   Small non-profit organizations, small trade associations,
and small governmental entities are also covered by the RFA as
per 601(3)-(6).
5.   Pub. L. No. 96-354, 94 Stat. 1164 (1980) (codified at 5
U.S.C.  601 et seq.) amended by Subtitle II of the Contract with
America Advancement Act, Pub. L. No. 104-121, 110 Stat. 857
(1996).
6.   15 U.S.C.  634(c)(1)-(4) (1996).
7.   5 U.S.C.  612 (1996).
8.   5 U.S.C.  601(4)-(5) (1996).
9.   See generally, Office of Advocacy, U.S. Small Business
Administration, A Guide for Federal Agencies:  How to Comply with
the Regulatory Flexibility Act (2003).
10. 5 U.S.C.  604 (1996).
11. Exec. Order. No. 13272  1, 67 Fed. Reg. 53,461 (2002).
12. White House Home Page, President Bush's Small Business
Agenda, (announced March 19, 2002) (last viewed August 22, 2003)
<http://www.whitehouse.gov/infocus/smallbusiness/regulatory.html>
13. Letter from Thomas M. Sullivan, Chief Counsel for Advocacy,
to Michael J. Powell, Chairman, FCC, CG Dkt. No. 02-278 (August
14, 2003).
14. In the Matter of Rules and Regulations Implementing the
Telephone Consumer Protection Act of 1991, Notice of Proposed
Rulemaking, CG Dkt. No. 02-278,  FCC 02-2503, Paras 70-80 (rel.
Sept. 18, 2003) ("NPRM").
15. S.C. 603(b)(4) (1996).
16.  at paras. 77-79.
17 Order, Appendix B, paras. 1-39.
18. Order, Appendix B at para. 26.
19. Order, Appendix B, paras. 20-1.
20. Order, Appendix B at para. 37.
21Order at para. 185.