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[Senate Report 109-76]
[From the U.S. Government Publishing Office]

109th Congress                                                   Report
                                 SENATE
 1st Session                                                     109-76
_______________________________________________________________________

                                     

                                                       Calendar No. 120

                  THE JUNK FAX PREVENTION ACT OF 2005

                               __________

                              R E P O R T

                                 OF THE

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                       S. H.R. deg. 714

DATE deg.June 7, 2005.--Ordered to be printed
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                       one hundred ninth congress
                             first session

                     TED STEVENS, Alaska, Chairman
                 DANIEL K. INOUYE, Hawaii, Co-Chairman
JOHN McCAIN, Arizona                 JOHN D. ROCKEFELLER IV, West 
CONRAD BURNS, Montana                    Virginia
TRENT LOTT, Mississippi              JOHN F. KERRY, Massachusetts
KAY BAILEY HUTCHISON, Texas          BYRON L. DORGAN, North Dakota
OLYMPIA J. SNOWE, Maine              BARBARA BOXER, California
GORDON H. SMITH, Oregon              BILL NELSON, Florida
JOHN ENSIGN, Nevada                  MARIA CANTWELL, Washington
GEORGE ALLEN, Virginia               FRANK LAUTENBERG, New Jersey
JOHN E. SUNUNU, New Hampshire        E. BENJAMIN NELSON, Nebraska
JIM DeMINT, South Carolina           MARK PRYOR, Arkansas
DAVID VITTER, Louisiana
                    Lisa Sutherland, Staff Director
             Christine Drager Kurth, Deputy Staff Director
                      David Russell, Chief Counsel
     Margaret Cummisky, Democratic Staff Director and Chief Counsel
 Samuel Whitehorn, Democratic Deputy Staff Director and General Counsel

109th Congress                                                   Report
                                 SENATE
 1st Session                                                     109-76

======================================================================

 
                  THE JUNK FAX PREVENTION ACT OF 2005

                                _______
                                

                  June 7, 2005.--Ordered to be printed

                                _______
                                

       Mr. Stevens, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                         [To accompany S. 714]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill joint resolution deg. (S. 
H.R. deg. 714) TITLE deg. to amend section 
227 of the Communications Act of 1934 (47 U.S.C. 227) relating 
to the prohibition on junk fax transmissions, having considered 
the same, reports favorably thereon without 
amendment deg. with amendments with an amendment (in 
the nature of a substitute) deg. and recommends that the bill 
joint resolution deg. (as amended) do pass.

                          Purpose of the Bill

  The purposes of this legislation are to:
           Create a limited statutory exception to the 
        current prohibition against the faxing of unsolicited 
        advertisements to individuals without their ``prior 
        express invitation or permission'' by permitting such 
        transmission by senders of commercial faxes to those 
        with whom they have an established business 
        relationship (EBR).
           Require that senders of faxes with 
        unsolicited advertisements (i.e., ``junk faxes'') 
        provide notice of a recipient's ability to opt out of 
        receiving any future faxes containing unsolicited 
        advertisements and a cost-free mechanism for recipients 
        to opt out pursuant to that notice.
           Require the Federal Communications 
        Commission (FCC) and Comptroller General of the United 
        States to provide certain reports to Congress regarding 
        the enforcement of these provisions.

                          Background and Needs

               TELEPHONE CONSUMER PROTECTION ACT OF 1991

  Congress first addressed the legality of faxing unsolicited 
advertisements to residential telephone subscribers in the 
Telephone Consumer Protection Act of 1991 (TCPA).\1\ The law, 
which is still in effect, generally prohibits anyone from 
faxing unsolicited advertisements without ``prior express 
invitation or permission'' from the recipient. The statute 
contains no other exceptions for junk faxes, and does not 
authorize the FCC to create any additional exceptions.
---------------------------------------------------------------------------
    \1\ P.L. 102-243; 47 U.S.C. 227.
---------------------------------------------------------------------------
  In October 1992, the FCC released its original order 
interpreting the TCPA and establishing the rules implementing 
the junk fax prohibition. In response to comments by Mr. Fax 
and National Faxlist urging the Commission not to ban 
unsolicited faxes, the FCC in its order noted in a footnote 
(which remains unpublished in the Code of Federal Regulations) 
that the TCPA did not give it ``discretion to create exemptions 
from or limit the effects of the prohibition.'' \2\ The 
footnote continued to say, ``We note, however, that facsimile 
transmission from persons or entities who have an established 
business relationship with the recipient can be deemed to be 
invited or permitted by the recipient.'' \3\ On this basis, 
many commercial entities considered an ``established business 
relationship'' or ``EBR'' to be a permissible exemption from 
the general prohibition of sending unsolicited faxes. 
Additionally, from 1992 through July 2003, the FCC enforced the 
TCPA junk fax provisions under this original interpretation.
---------------------------------------------------------------------------
    \2\ See Rules and Regulations Implementing the Telephone Consumer 
Protection Act of 1991, CC Docket No. 92-90, Report and Order, 7 FCC 
Rcd 8752 (rel. 1992) (hereinafter, ``1992 TCPA Order''), at 8779, para. 
54, n. 87.
    \3\ Id.
---------------------------------------------------------------------------
  The Commission continued to assess the effectiveness of the 
TCPA's provisions over the course of the decade and, in 
September, 2002, sought public comment on a number of issues, 
including whether the FCC should refine or adopt new rules 
related to ``unsolicited facsimile advertisements.'' The FCC 
explained its purpose for initiating this formal review 
proceeding as follows: ``In the last ten years, telemarketing 
practices have changed significantly. New technologies have 
emerged that allow telemarketers to target potential customers 
better and that make marketing using telephones and facsimile 
machines more cost-effective. At the same time, the new 
telemarketing techniques have increased public concern about 
the impact on consumer privacy.'' \4\
---------------------------------------------------------------------------
    \4\ FCC Press Release, September 12, 2002 (http://
hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-226183A1.doc).
---------------------------------------------------------------------------
  On March 11, 2003, the Do-Not-Call Act was signed into law. 
In addition to authorizing the Federal Trade Commission (FTC) 
to implement a national registry, it also required the FCC to 
issue a final rule in its ongoing TCPA proceeding within 180 
days. Additionally, it required the FCC to consult and 
coordinate with the FTC to ``maximize consistency'' with the 
rules promulgated by the FTC.\5\
---------------------------------------------------------------------------
    \5\ See Rules and Regulations Implementing the Telephone Consumer 
Protection Act of 1991, CG Docket No. 02-278, Report and Order, 18 FCC 
Rcd 14014 (2003) (hereinafter, ``July 2003 TCPA Order'').
---------------------------------------------------------------------------

 JULY 2003 FEDERAL COMMUNICATIONS COMMISSION TCPA ORDER: REVISED JUNK 
                               FAX RULES

  On July 3, 2003, the FCC issued its report and order 
establishing the Do-Not-Call registry and updating the 
provisions of the TCPA, including the junk fax provisions. 
After reviewing the record regarding the use and enforcement of 
junk faxes as well as the legislative history of the TCPA, the 
Commission reversed its prior conclusion that the presence of 
an EBR between a fax sender and recipient establishes the 
requisite consent necessary to permit businesses to send 
commercial faxes to their customers, effectively eliminating 
the EBR exception to the general prohibition on unsolicited fax 
advertisements.\6\ Instead, the FCC concluded that a 
recipient's express invitation or permission must be obtained 
in writing, include the recipient's signature, contain a clear 
indication that he or she consents to receiving such faxed 
advertisements, and provide the fax number to which faxes are 
permitted to be sent.\7\
---------------------------------------------------------------------------
    \6\ Id.
    \7\ Id.
---------------------------------------------------------------------------
  Reviewing the record, the FCC found that a majority of 
consumer advocates disagreed with the Commission's prior 
interpretation that an EBR constituted prior express 
permission, and they urged the Commission to eliminate the EBR 
exemption. In describing the record they had examined since 
2002, the FCC stated that consumers felt `` `besieged' by 
unsolicited faxes'' and that ``advertisers continue to send 
faxes despite [their] asking to be removed from senders' fax 
lists.'' The FCC also said consumers indicated they bore the 
burden of not only paying for the cost of paper and toner, but 
also the opportunity costs of ``time spent reading and 
disposing of faxes, the time the machine is printing an 
advertisement and is not operational for other purposes, and 
the intrusiveness of faxes transmitted at inconvenient times, 
including in the middle of the night.'' \8\
---------------------------------------------------------------------------
    \8\ Id. at para. 186.
---------------------------------------------------------------------------
  Conversely, the FCC found that the majority of industry 
commenters on the issue not only supported the Commission's 
prior interpretation permitting reliance on an EBR, but also 
urged the Commission to amend its rules implementing the TCPA 
to expressly provide for the EBR exemption. Industry comments 
maintained that ``faxing is a cost-effective way to reach 
customers'' particularly for small businesses for whom faxing 
is a cheaper way to advertise.'' They also warned that 
eliminating an EBR would ``interfere with ongoing business 
relationships, raise business costs, and limit the flow of 
valuable information to consumers.\9\
---------------------------------------------------------------------------
    \9\ Id.
---------------------------------------------------------------------------
  In addition to weighing consumer and industry comments, the 
FCC's order analyzed the legislative history of the TCPA. The 
Commission stated that Congress's primary purpose in passing 
the Act was to protect the public from bearing the costs of 
unwanted advertising, and the FCC maintained that ``certain 
practices were treated differently because they impose costs on 
consumers.'' \10\ The FCC cited other examples where the TCPA 
prohibits advertising calls without prior express consent, such 
as calls to wireless phones and other numbers where the called 
party is charged, viewing that cost-shifting onto consumers as 
identical in nature with respect to fax advertising where 
consumers must pay for paper and toner. It also pointed out 
that, unlike telemarketing, Congress provided no mechanism for 
opting out of unwanted faxes, arguing that to create such a 
system would ``require the recipient to possibly bear the cost 
of the initial facsimile and inappropriately place the burden 
on the recipient to contact the sender and request inclusion on 
a `do-not-fax' list.'' \11\ For these reasons, the FCC 
concluded that Congress had made the determination that 
entities desiring to fax unsolicited advertisements must obtain 
express permission from the recipient before they do so.
---------------------------------------------------------------------------
    \10\ Id. at para. 190.
    \11\ Id.
---------------------------------------------------------------------------
  With respect to the other new requirements imposed by the FCC 
for obtaining prior permission (e.g., written consent, 
signature, etc.), the Commission justified them on the basis 
that they believed ``the interest in protecting those who would 
otherwise be forced to bear the burdens of unwanted faxes 
outweighs the interests of companies that wish to advertise via 
fax.'' \12\
---------------------------------------------------------------------------
    \12\ Id. at para. 191.
---------------------------------------------------------------------------

AUGUST 2003 FEDERAL COMMUNICATIONS COMMISSION ORDER ON RECONSIDERATION; 
           STAY OF EFFECTIVE DATE FOR REVISED JUNK FAX RULES

  Following the FCC's release of the amended TCPA rules, 
numerous petitions for reconsideration were filed with the 
Commission requesting that the FCC maintain its earlier 
interpretation of the junk fax rules. Those businesses, 
associations, and other organizations that had relied on the 
prior interpretation for over a decade argued that to now 
require prior, written permission for every fax sent out to an 
existing customer or client was an overly burdensome regulation 
that would be expensive to implement and was ultimately 
unnecessary to protect consumers. Many companies also argued 
that it would be impossible to change their practices overnight 
and obtain the necessary consents by August 25th (30 days after 
the appearance of rules in the Federal Register) in order to 
comply with the rule's effective date, leaving them with only 
the option to immediately litigate.
  Finally, many industry petitioners challenged the FCC's 
fundamental premise that the new rules were better for 
consumers, contending instead that the revised interpretation 
would have significant, unintended consequences that harmed 
consumers. For example, restaurants pointed out that they would 
not be able to fax a menu to a customer who called and 
requested one unless the caller provided them with a written 
consent (presumably by fax) or had one on file. Additionally, 
realtors explained that, in their business, potential home 
buyers often call and request faxes when passing by homes for 
sale. They argued that the FCC's new requirement for a written 
signature would effectively prevent realtors from faxing 
potential new home buyers the listing information they 
requested when they made such calls, adding unnecessary hurdles 
and delays even when consumers clearly wanted to receive the 
faxes as quickly as possible.
  In light of these additional claims, on August 18, 2003, the 
Commission stayed until January 1, 2005, the effective date of 
both the written consent requirements as well as its July 2003 
determination that an EBR would no longer be sufficient to show 
that an individual or business has given express permission to 
receive unsolicited fax advertisements. The stay has been 
extended through June 30, 2005. At the time, the FCC justified 
it adoption of the stay because ``the public interest would 
best be served by allowing senders of such advertisements 
additional time to obtain such express permission before the 
new rules become effective.'' The order also noted that this 
extension would give the FCC itself more time to fully consider 
any more petitions for reconsideration on these or related 
issues, and that the FCC reserved the right to further extend 
the effective date if necessary.\13\
---------------------------------------------------------------------------
    \13\ See Rules and Regulations Implementing the Telephone Consumer 
Protection Act of 1991, CG Docket No. 02-278, Order on Reconsideration, 
FCC 03-208 (rel. Aug. 18, 2003) (hereinafter, ``August 2003 Order on 
Reconsideration'').
---------------------------------------------------------------------------

OCTOBER 2003 FEDERAL COMMUNICATIONS COMMISSION ORDER; STAY OF ``18/3'' 
 TIME LIMITS ON EXISTING BUSINESS RELATIONSHIP EXCEPTION FOR JUNK FAXES

  In the July 2003 TCPA Order, the FCC had also modified its 
definition of an EBR in the context of telephone solicitations 
to limit the duration that a telemarketer could rely on the 
exception to a maximum of 18 months following a purchase or 
transaction, or a maximum of three months following an inquiry 
or application (commonly referred to as the ``18/3'' time 
limits). Prior to that ruling, no limitation had been placed on 
the duration of the EBR as it applied to either telephone or 
fax solicitations, but the FCC concluded that establishing time 
limits was ``necessary to minimize confusion and frustration 
for consumers who receive calls from companies they have not 
contacted or patronized for many years.'' Because there was 
``little consensus'' among industry players who had offered 
various lengths of time, the FCC sought a duration that 
``strikes an appropriate balance between industry practices and 
consumer privacy interests,'' settling on the 18/3 time frame. 
Acknowledging that these time limits created burdens on 
industry (especially small businesses) to monitor the length of 
their customer relationships, the FCC argued that endorsing a 
rule consistent with the FTC's own 18/3 time limit would 
benefit businesses by creating a ``uniform standard with which 
businesses must comply'' regardless of which agency's 
jurisdiction the businesses fell under.\14\ This also helped 
fulfill the FCC's charge from Congress to maximize consistency 
between the agencies' telemarketing rules.
---------------------------------------------------------------------------
    \14\ See July 2003 TCPA Order at para. 34.
---------------------------------------------------------------------------
  Recognizing that the FCC's August 2003 Order on 
Reconsideration had reinstated an EBR for junk faxes, but 
potentially limited its duration to the 18/3 rule for 
telemarketing, the U.S. Chamber of Commerce and others filed a 
petition for reconsideration one week later on August 25, 2003, 
requesting, among other things, that the FCC reconsider the new 
18/3 rule.\15\ In response, the FCC issued an order on October 
3, 2003, staying until June 30, 2005, the 18/3 limitations only 
with respect to their application to unsolicited fax 
advertisements. Because the modification of the EBR duration in 
the July 2003 TCPA Order was promulgated in the context of 
telephone solicitations, the FCC held that there was good cause 
to stay application of those time limitations to the EBR in the 
context of junk faxes until it had time to consider the 
application of the 18/3 time limits in the context of junk 
faxes.\16\ The FCC concluded, however, that nothing in this new 
order would affect its August 2003 decision to stay the 
elimination of the EBR exception to the general prohibition 
against unsolicited faxes until June 30, 2005.
---------------------------------------------------------------------------
    \15\ See, e.g., Chamber of Commerce of the United States, Petition 
for Reconsideration of Facsimile Advertisements Rules, filed August 25, 
2003; National Association of Chain Drug Stores, Petition for 
Clarification and Revision, filed August 25, 2003.
    \16\ See August 2003 Order on Reconsideration.
---------------------------------------------------------------------------

           EFFECTS OF REVISED RULES AND NEED FOR LEGISLATION

  In practice, the revised junk fax rules, as ordered by the 
FCC would have significant consequences. The cost and effort of 
compliance could place significant burdens on some businesses, 
particularly those small businesses that rely heavily on the 
efficiency and effectiveness of fax machines. In particular, 
organizations such as trade associations and other non-profits 
that have hundreds of thousands of members, would be saddled 
with a huge burden to collect signatures from each member just 
to send an unsolicited fax advertisement.
  For instance, the National Association of Wholesaler-
Distributors claimed that its member companies expected to pay 
an average of $22,500 to obtain consent forms and an average of 
$20,000 for annual compliance. The National Association of 
Realtors estimated that it would have to collect over 67 
million permissions to sustain the roughly 6 million home sales 
from the previous year. Other economic impacts included the 
costs of training, making multiple contracts to obtain 
signatures providing consent, and obtaining permission for each 
fax machine when the recipients change location.
  Finally, over the past 10 years, following enactment of the 
TCPA and issuance of previous FCC orders implementing and 
interpreting the rules on junk faxes, many legitimate 
businesses and associations have appropriately relied on the 
FCC's interpretation and have sent unsolicited faxes to 
recipients with whom they have an EBR. During this time, the 
FCC has acknowledged that businesses faxing under EBRs were in 
compliance with the FCC's existing junk fax rules. If the 
revised rules go into effect, the previously legitimate 
practices will be immediately unlawful, and unsuspecting or 
uninformed businesses may be subject to unforeseen and costly 
litigation unrelated to legitimate consumer protection aims.
  The revised rules are currently set to go into effect on July 
1, 2005, following the expiration of the FCC's currently self-
imposed, and extended stay. Because the Commission may choose 
not to reverse its new rule removing the EBR exception from the 
general ban on sending unsolicited facsimile advertisements, S. 
714, the ``Junk Fax Prevention Act of 2005'' specifically 
creates a statutory exception from the general prohibition on 
sending unsolicited advertisements if the fax is sent based on 
an EBR and certain conditions are met. This legislation is 
designed to permit legitimate businesses to do business with 
their established customers and other persons with whom they 
have an established relationship without the burden of 
collecting prior written permission to send these recipients 
commercial faxes. Nonetheless, in reinstating the EBR 
exception, the Committee determined it was necessary to provide 
recipients with the ability to stop future unwanted faxes sent 
pursuant to such relationships. The Committee therefore also 
added the requirement that every unsolicited facsimile 
advertisement contain an opt-out notice that gives the 
recipient the ability to stop future unwanted fax solicitations 
and that senders of such faxes provide recipients with a cost-
free mechanism to stop future unsolicited faxes.

                         Summary of Provisions

  S. 714, the ``Junk Fax Prevention Act of 2005,'' 
reestablishes an ``established business relationship'' 
exception to allow entities to send commercial faxes to their 
customers and members without first receiving written 
permission, and establishes new opt-out safeguards to provide 
additional protections for fax recipients.

                          Legislative History

  Senator Smith, the chairman of the Trade, Tourism, and 
Economic Development Subcommittee, introduced S. 714 on April 
6, 2005, with Senators Stevens, Inouye, Snowe, Dorgan, Sununu, 
Burns, and Lautenberg as original cosponsors.
  On April 13, 2005, the Committee held an Executive Session 
chaired by Senator Stevens at which S. 714 was considered. 
Senator Boxer offered two amendments. The first amendment would 
have amended section 2(c)(3) to require that senders of 
unsolicited advertisements notify recipient consumers or 
businesses of their ability to make a request to the sender of 
the unsolicited advertisement at any time of the day, seven 
days a week, to opt out of future solicitations. The bill as 
introduced allows for such a request to be made only during 
regular business hours. The second amendment would have amended 
section 2(f) to allow the FCC to commence a proceeding to 
determine whether to limit the duration of the existence of an 
established business relationship after the expiration of the 
3-month period that begins on the date of enactment of this 
Act. The bill as introduced precludes the commencement of such 
FCC proceedings before the expiration of an 18-month period 
following the enactment of this Act. The amendments were 
adopted by voice vote. The bill, as amended, was approved 
unanimously by voice vote and ordered reported.

                            Estimated Costs

  In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 19, 2005.
Hon. Ted Stevens,
Chairman, Committee on Commerce, Science, and Transportation, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 714, the Junk Fax 
Prevention Act of 2005.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Melissa E. 
Zimmerman.
            Sincerely,
                                      Elizabeth M. Robinson
                                (For Douglas Holtz-Eakin, Director)
    Enclosure.

S. 714--Junk Fax Prevention Act of 2005

    S. 714 would amend current law and regulations relating to 
unsolicited advertisements sent via telephone facsimile 
machine. The bill would direct the Federal Communications 
Commission (FCC) to issue regulations to control such 
advertisements and would require the FCC and the Government 
Accountability Office to issue reports to the Congress on the 
effectiveness of those regulations. The FCC currently enforces 
laws relating to unsolicited advertisements, including 
assessing and collecting civil penalties for violations of such 
laws. (Civil penalties are recorded in the federal budget as 
revenues.) Based on information from the FCC, CBO estimates 
that implementing S. 714 would have an insignificant effect on 
revenues or spending subject to appropriation. Enacting the 
bill would not affect direct spending.
    S. 714 contains no intergovernmental mandates as defined in 
the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments. The bill 
would not affect the ability of states to establish stricter 
rules for the use of telephone facsimile machines or other 
electronic devices to send unsolicited advertisements.
    S. 714 would impose private-sector mandates as defined in 
UMRA on senders of unsolicited facsimile advertisements. The 
bill would require senders to include an opt-out notice that is 
clear, conspicuous, and on the first page. Such a notice would 
allow recipients to contact the sender to prevent them from 
sending unsolicited advertisements in the future. Additionally, 
the opt-out notice must include ``a domestic contact telephone 
and facsimile machine number for the recipient to transmit such 
a request to the sender; and a cost-free mechanism for a 
recipient to transmit a request.'' The cost-free mechanism 
might include either a toll-free or a local telephone number.
    Regulations passed by the Federal Communications Commission 
in July 2003 that are slated to take effect in July 2005 would 
require written permission from recipients prior to senders' 
transmission of any unsolicited fax advertisements. If this 
bill were enacted, it would eliminate the requirement to obtain 
written permission from customers but replace this requirement 
with the cost-free opt-out mechanism. Based on information from 
industry sources, CBO expects that the aggregate direct cost of 
mandates in the bill would be fully offset by savings from the 
bill and thus would fall below the annual threshold established 
by UMRA for private-sector mandates ($123 million in 2005, 
adjusted annually for inflation).
    The CBO staff contacts for this estimate are Melissa E. 
Zimmerman (for federal costs), Sarah Puro (for the state and 
local impact), and Paige Piper/Bach (for the private-sector 
impact). The estimate was approved by Peter H. Fontaine, Deputy 
Assistant Director for Budget Analysis.

                      Regulatory Impact Statement

  In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       NUMBER OF PERSONS COVERED

  S. 714 would provide all individuals with fax machines 
certain protections from unsolicited senders of unsolicited 
faxes, and an opportunity to opt out of receiving future 
unsolicited faxes from them. Additionally, the legislation 
would require all persons who send commercial faxes to meet 
certain requirements, including proper identification, and to 
provide phone numbers or another cost free mechanism for 
recipients so they may opt out of future commercial faxes sent 
by that sender. Therefore, S. 714 would cover all consumers who 
receive faxes, and all senders of commercial faxes.

                            ECONOMIC IMPACT

  The legislation would result in new or incremental costs for 
senders of commercial faxes to comply with the legislation's 
requirements, to the extent that those senders have not already 
made provisions to ensure proper identification of the sender, 
and provide cost free mechanisms that allow recipients to 
choose whether to receive future commercial faxes.

                                PRIVACY

  S. 714 would increase the personal privacy of all users of 
fax machines by providing them with the ability to decline to 
receive future unsolicited commercial faxes from the same 
sender. S. 714 also would require senders of unsolicited 
commercial faxes to identify themselves to the recipients with 
truthful facsimile and telephone numbers where a recipient can 
contact the sender, thereby better informing the recipient of 
the identity of the sender.

                               PAPERWORK

  S. 714 would require the Government Accountability Office 
(GAO) to conduct a study on junk fax enforcement and make 
recommendations to Congress on whether additional enforcement 
measures are necessary to protect consumers. S. 714 would also 
require the FCC to submit an annual report to Congress on 
enforcement of the junk fax provisions of this legislation over 
the previous year. The legislation is expected to generate 
similar amounts of administrative paperwork as other 
legislation requiring agency enforcement, recommendations for 
enhancing enforcement, and reports to Congress.

                      Section-by-Section Analysis

Section 1. Short title

  Section 1 would set forth the short title of the bill as the 
``Junk Fax Prevention Act of 2005.''

Section 2. Prohibition on fax transmissions containing unsolicited 
        advertisements

  Section 2(a) would amend section 227(b)(1)(C) of the 
Communications Act of 1934 (the ``1934 Act'') by creating an 
existing business relationship exception to the general 
prohibition against sending unsolicited commercial 
advertisements to fax machines. This section would also require 
the sender of the fax to include an opt-out notice to the 
recipient as further required in section 2(c) below. 
Additionally, in the event a recipient chooses to opt out of 
receiving future unsolicited advertisements, this section would 
make it unlawful for a sender to fax any additional unsolicited 
advertisements to such a recipient.
  Section 2(b) defines the term ``established business 
relationship'' by incorporating the definition of ``established 
business relationship'' in 47 C.F.R. 64.1200 as those 
regulations were in effect on January 1, 2003. Members should 
note that by defining this term by reference back to an earlier 
definition of ``established business relationship,'' this 
provision would specifically exclude the 18/3 time limits that 
are in the current definition of ``established business 
relationship'' in the C.F.R. (as ordered by the FCC's July 2003 
TCPA Order discussed above). Therefore, the effect would be to 
reinstate the junk fax rules back to the FCC's original 
interpretation established in 1992, which was in effect until 
the July 2003 TCPA Order. Additionally, section 2(b) would 
apply the definition to both residential and commercial 
entities, and would also allow the Commission to limit the 
duration of the established business relationship pursuant to 
section 2(f) below.
  Section 2(c) would add a new subparagraph (D) to section 
227(b)(2) of the 1934 Act by setting forth the necessary 
elements of the opt-out notice required by Section 2(a). The 
bill does not prescribe particular language or methods to be 
used for opting out, but it would require that the notice: (i) 
be clearly and conspicuously displayed on the first page of the 
unsolicited advertisement; (ii) inform the recipient of his or 
her ability to opt-out of future unsolicited advertisements to 
any fax machine or machines and that any request must be 
complied with by the sender in the shortest reasonable time; 
(iii) explain the proper requirements for a valid opt out, as 
required in Section 2(d) below; and (iv) include a domestic 
telephone and fax number that will receive an opt-out request 
and describe a ``cost-free mechanism'' for the recipient to 
send such a request to the sender. In order to minimize the 
possible financial consequences of this provision, section 2(c) 
would also give the FCC the authority to exempt certain classes 
of small business senders from the requirement to provide the 
additional cost-free mechanism if the FCC determines that the 
costs to those businesses are unduly burdensome given the 
revenues generated by that class of small business.
  Section 2(c) would also require that the telephone and fax 
numbers, and the cost-free mechanism, provided to a recipient 
must permit an individual or business to make an opt-out 
request at any time. Finally, section 2(c) would require that 
the opt-out notice complies with the current provisions of 
Section 227(d) of the 1934 Act, which require that any 
unsolicited fax being sent contain in the margins at the top or 
bottom of each page the date and time it is sent, the 
identification of the sender of the message, and the telephone 
number of the sending machine.
  Section 2(d) would add a new subparagraph (E) to section 
227(b)(1) of the 1934 Act that sets forth what a recipient must 
do to opt out of future unsolicited advertisements. This 
subsection would require the FCC to promulgate rules to provide 
that an opt-out request is valid if it: (1) identifies the 
telephone number or numbers of the fax machine or machines 
subject to the request; (2) is made to the telephone or fax 
number of the sender that is provided under subparagraph 
(D)(iv) or by any other method as determined by the FCC; and 
(3) is made by a person who has not subsequently provided 
express invitation or permission to receive unsolicited 
advertisements.
  Section 2(e) would add a new subparagraph (F) to 227(b)(1) of 
the 1934 Act that gives the FCC the authority to establish an 
exemption from the opt-out notice requirements for tax- exempt, 
nonprofit trade or professional associations if those faxes are 
in furtherance of the group's tax-exempt purpose.
  Section 2(f) adds a new subparagraph (G)(i) to section 
227(b)(2) of the 1934 Act that gives the FCC the authority to 
establish a time limit on the ``established business 
relationship'' exemption. As this term is defined in section 
2(b), there are no specific time limits on the duration of the 
``established business relationship'' exception because none 
existed under the TCPA junk fax rules as of January 1, 2003. 
This subsection would authorize the FCC to create time limits 
on the duration that the exception would be available following 
an interaction between a sender and the recipient.
  The FCC is prohibited from setting a time limit for the 
established business relationship for the first 3 months after 
enactment of this Act. Following this 3-month period, section 
2(f) would permit the FCC to create a time limit for the 
established business relationship exemption after the 
Commission: (1) determines whether the existence of the 
established business relationship exception has resulted in a 
significant number of complaints to the FCC regarding the 
sending of unsolicited advertisements to telephone facsimile 
machines; (2) determines whether a significant number of 
complaints involve unsolicited advertisements that were sent 
based on an established business relationship that was longer 
than the FCC believes is consistent with the reasonable 
expectations of consumers; (3) evaluates the costs to senders 
of demonstrating the existence of an established business 
relationship within a specified period of time and the benefits 
to recipients of establishing a limitation on the established 
business relationship; and (4) determines whether, for small 
businesses, the costs would not be unduly burdensome.
  Section 2(g) would amend the definition of ``unsolicited 
advertisement'' in section 227(a)(4) of the 1934 Act to mean 
``any material advertising...which is transmitted to any person 
without that person's prior express invitation or permission, 
in writing or otherwise.'' The effect of this amendment would 
be to statutorily prohibit the FCC from promulgating a rule 
that would require prior express permission to be secured only 
in writing.
  Section 2(h) would require the Commission to issue 
regulations to implement the amendments made by section 2 no 
later than 270 days after enactment of S. 714.

Section 3. FCC annual report regarding junk fax enforcement

  Section 3 would add a new section (g) to section 227 of the 
1934 Act to require the FCC to report annually to the Congress 
on the enforcement of the junk fax provisions of the TCPA. 
Specifically, the report would have to include the following: 
(1) the number of complaints received by the Commission 
annually alleging a violation of the general ban on sending 
unsolicited advertisements; (2) the number of citations issued 
for sending unsolicited advertisements; (3) the number of 
notices of apparent liability issued for sending unsolicited 
advertisements; (4) for each such notice (a) the amount of the 
proposed forfeiture, (b) the person to whom the notice was 
issued, (c) the length of time between the date on which the 
complaint was filed and the date the notice was issued, and (d) 
the status of the proceeding; (5) the number of final orders 
imposing forfeiture penalties for sending unsolicited 
advertisements; (6) for each such forfeiture order (a) the 
amount of the penalty, (b) the person to whom the order was 
issued, (c) whether the penalty was paid, and (d) the amount 
paid; and (7) for each case that was referred for recovery (a) 
the number of days from the date the FCC issues such order to 
the date of referral, (b) whether an action has been commenced 
to recover the penalty, and (c) whether the recovery action 
resulted in any amount collected.

Section 4. GAO study on junk fax enforcement

  Section 4(a) would require GAO to conduct a study regarding 
complaints received by the FCC dealing with unsolicited 
advertisements that shall determine the following: (1) the 
mechanisms established by the Commission to receive, 
investigate and respond to such complaints; (2) the level of 
enforcement success by the Commission; (3) whether complainants 
are adequately informed by the Commission regarding their 
complaints; and (4) whether additional enforcement measures are 
necessary to protect consumers, including recommendations for 
additional enforcement measures.
  Section 4(b) would require GAO specifically to examine (1) 
the adequacy of existing statutory enforcement actions 
available to the Commission; (2) the adequacy of existing 
statutory enforcement actions and remedies available to 
consumers; (3) the impact of existing statutory enforcement 
remedies on senders of facsimiles; (4) whether increasing the 
amount of financial penalties is warranted to achieve greater 
deterrent effect; and (5) whether establishing penalties and 
enforcement actions for repeat violators similar to those 
established in section 4 of the CAN-SPAM Act of 2003 (15 U.S.C. 
7703) would have a greater deterrent effect.
  Section 4(c) would require GAO to submit a report to Congress 
on the results of the study under this section no later than 
270 days after enactment of this Act.

                        Changes in Existing Law

  In compliance with paragraph 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill, 
as reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new material is printed 
in italic, existing law in which no change is proposed is shown 
in roman):

                       COMMUNICATIONS ACT OF 1934

SEC. 227. RESTRICTIONS ON USE OF TELEPHONE EQUIPMENT.

                            [47 U.S.C. 227]

    (a) Definitions.--As used in this section--
          (1) The term ``automatic telephone dialing system'' 
        means equipment which has the capacity--
                  (A) to store or produce telephone numbers to 
                be called, using a random or sequential number 
                generator; and
                  (B) to dial such numbers.
          (2) The term ``established business relationship'', 
        for purposes only of subsection (b)(1)(C)(i), shall 
        have the meaning given the term in section 64.1200 of 
        title 47, Code of Federal Regulations, as in effect on 
        January 1, 2003, except that--
                  (A) such term shall include a relationship 
                between a person or entity and a business 
                subscriber subject to the same terms applicable 
                under such section to a relationship between a 
                person or entity and a residential subscriber; 
                and
                  (B) an established business relationship 
                shall be subject to any time limitation 
                established pursuant to paragraph (2)(G)).
          [(2)] (3) The term ``telephone facsimile machine'' 
        means equipment which has the capacity (A) to 
        transcribe text or images, or both, from paper into an 
        electronic signal and to transmit that signal over a 
        regular telephone line, or (B) to transcribe text or 
        images (or both) from an electronic signal received 
        over a regular telephone line onto paper.
          [(3)] (4) The term ``telephone solicitation'' means 
        the initiation of a telephone call or message for the 
        purpose of encouraging the purchase or rental of, or 
        investment in, property, goods, or services, which is 
        transmitted to any person, but such term does not 
        include a call or message (A) to any person with that 
        person's prior express invitation or permission, (B) to 
        any person with whom the caller has an established 
        business relationship, or (C) by a tax exempt nonprofit 
        organization.
          [(4)] (5) The term ``unsolicited advertisement'' 
        means any material advertising the commercial 
        availability or quality of any property, goods, or 
        services which is transmitted to any person without 
        that person's prior express invitation or [permission.] 
        permission, in writing or otherwise.
  (b) Restrictions on Use of Automated Telephone Equipment.--
          (1) Prohibitions.--It shall be unlawful for any 
        person within the United States, or any person outside 
        the United States if the recipient is within the United 
        States--
                  (A) to make any call (other than a call made 
                for emergency purposes or made with the prior 
                express consent of the called party) using any 
                automatic telephone dialing system or an 
                artificial or prerecorded voice--
                          (i) to any emergency telephone line 
                        (including any ``911'' line and any 
                        emergency line of a hospital, medical 
                        physician or service office, health 
                        care facility, poison control center, 
                        or fire protection or law enforcement 
                        agency);
                          (ii) to the telephone line of any 
                        guest room or patient room of a 
                        hospital, health care facility, elderly 
                        home, or similar establishment; or
                          (iii) to any telephone number 
                        assigned to a paging service, cellular 
                        telephone service, specialized mobile 
                        radio service, or other radio common 
                        carrier service, or any service for 
                        which the called party is charged for 
                        the call;
                  (B) to initiate any telephone call to any 
                residential telephone line using an artificial 
                or prerecorded voice to deliver a message 
                without the prior express consent of the called 
                party, unless the call is initiated for 
                emergency purposes or is exempted by rule or 
                order by the Commission under paragraph (2)(B);
                  [(C) to use any telephone facsimile machine, 
                computer, or other device to send an 
                unsolicited advertisement to a telephone 
                facsimile machine; or]
                  (C) to use any telephone facsimile machine, 
                computer, or other device to send, to a 
                telephone facsimile machine, an unsolicited 
                advertisement, unless--
                          (i) the unsolicited advertisement is 
                        from a sender with an established 
                        business relationship with the 
                        recipient; and
                          (ii) the unsolicited advertisement 
                        contains a notice meeting the 
                        requirements under paragraph (2)(D), 
                        except that the exception under clauses 
                        (i) and (ii) shall not apply with 
                        respect to an unsolicited advertisement 
                        sent to a telephone facsimile machine 
                        by a sender to whom a request has been 
                        made not to send future unsolicited 
                        advertisements to such telephone 
                        facsimile machine that complies with 
                        the requirements under paragraph 
                        (2)(E); or
                  (D) to use an automatic telephone dialing 
                system in such a way that two or more telephone 
                lines of a multi-line business are engaged 
                simultaneously.
          (2) Regulations; exemptions and other provisions.--
        The Commission shall prescribe regulations to implement 
        the requirements of this subsection. In implementing 
        the requirements of this subsection, the Commission--
                  (A) shall consider prescribing regulations to 
                allow businesses to avoid receiving calls made 
                using an artificial or prerecorded voice to 
                which they have not given their prior express 
                consent;
                  (B) may, by rule or order, exempt from the 
                requirements of paragraph (1)(B) of this 
                subsection, subject to such conditions as the 
                Commission may prescribe--
                          (i) calls that are not made for a 
                        commercial purpose; and
                          (ii) such classes or categories of 
                        calls made for commercial purposes as 
                        the Commission determines--
                                  (I) will not adversely affect 
                                the privacy rights that this 
                                section is intended to protect; 
                                and
                                  (II) do not include the 
                                transmission of any unsolicited 
                                advertisement; [and]
                  (C) may, by rule or order, exempt from the 
                requirements of paragraph (1)(A)(iii) of this 
                subsection calls to a telephone number assigned 
                to a cellular telephone service that are not 
                charged to the called party, subject to such 
                conditions as the Commission may prescribe as 
                necessary in the interest of the privacy rights 
                this section is intended to [protect.] protect;
                  (D) shall provide that a notice contained in 
                an unsolicited advertisement complies with the 
                requirements under this subparagraph only if--
                          (i) the notice is clear and 
                        conspicuous and on the first page of 
                        the unsolicited advertisement;
                          (ii) the notice states that the 
                        recipient may make a request to the 
                        sender of the unsolicited advertisement 
                        not to send any future unsolicited 
                        advertisements to a telephone facsimile 
                        machine or machines and that failure to 
                        comply, within the shortest reasonable 
                        time, as determined by the Commission, 
                        with such a request meeting the 
                        requirements under subparagraph (E) is 
                        unlawful;
                          (iii) the notice sets forth the 
                        requirements for a request under 
                        subparagraph (E);
                          (iv) the notice includes--
                                  (I) a domestic contact 
                                telephone and facsimile machine 
                                number for the recipient to 
                                transmit such a request to the 
                                sender; and
                                  (II) a cost-free mechanism 
                                for a recipient to transmit a 
                                request pursuant to such notice 
                                to the sender of the 
                                unsolicited advertisement; the 
                                Commission shall by rule 
                                require the sender to provide 
                                such a mechanism and may, in 
                                the discretion of the 
                                Commission and subject to such 
                                conditions as the Commission 
                                may prescribe, exempt certain 
                                classes of small business 
                                senders, but only if the 
                                Commission determines that the 
                                costs to such class are unduly 
                                burdensome given the revenues 
                                generated by such small 
                                businesses;
                          (v) the telephone and facsimile 
                        machine numbers and the cost-free 
                        mechanism set forth pursuant to clause 
                        (iv) permit an individual or business 
                        to make such a request at any time on 
                        any day of the week; and
                          (vi) the notice complies with the 
                        requirements of subsection (d);
                  (E) shall provide, by rule, that a request 
                not to send future unsolicited advertisements 
                to a telephone facsimile machine complies with 
                the requirements under this subparagraph only 
                if--
                          (i) the request identifies the 
                        telephone number or numbers of the 
                        telephone facsimile machine or machines 
                        to which the request relates;
                          (ii) the request is made to the 
                        telephone or facsimile number of the 
                        sender of such an unsolicited 
                        advertisement provided pursuant to 
                        subparagraph (D)(iv) or by any other 
                        method of communication as determined 
                        by the Commission; and
                          (iii) the person making the request 
                        has not, subsequent to such request, 
                        provided express invitation or 
                        permission to the sender, in writing or 
                        otherwise, to send such advertisements 
                        to such person at such telephone 
                        facsimile machine;
                  (F) may, in the discretion of the Commission 
                and subject to such conditions as the 
                Commission may prescribe, allow professional or 
                trade associations that are tax-exempt 
                nonprofit organizations to send unsolicited 
                advertisements to their members in furtherance 
                of the association's tax-exempt purpose that do 
                not contain the notice required by paragraph 
                (1)(C)(ii), except that the Commission may take 
                action under this subparagraph only--
                          (i) by regulation issued after public 
                        notice and opportunity for public 
                        comment; and
                          (ii) if the Commission determines 
                        that such notice required by paragraph 
                        (1)(C)(ii) is not necessary to protect 
                        the ability of the members of such 
                        associations to stop such associations 
                        from sending any future unsolicited 
                        advertisements; and
                  (G)(i) may, consistent with clause (ii), 
                limit the duration of the existence of an 
                established business relationship, however, 
                before establishing any such limits, the 
                Commission shall--
                          (I) determine whether the existence 
                        of the exception under paragraph (1)(C) 
                        relating to an established business 
                        relationship has resulted in a 
                        significant number of complaints to the 
                        Commission regarding the sending of 
                        unsolicited advertisements to telephone 
                        facsimile machines;
                          (II) determine whether a significant 
                        number of any such complaints involve 
                        unsolicited advertisements that were 
                        sent on the basis of an established 
                        business relationship that was longer 
                        in duration than the Commission 
                        believes is consistent with the 
                        reasonable expectations of consumers;
                          (III) evaluate the costs to senders 
                        of demonstrating the existence of an 
                        established business relationship 
                        within a specified period of time and 
                        the benefits to recipients of 
                        establishing a limitation on such 
                        established business relationship; and
                          (IV) determine whether with respect 
                        to small businesses, the costs would 
                        not be unduly burdensome; and
                  (ii) may not commence a proceeding to 
                determine whether to limit the duration of the 
                existence of an established business 
                relationship before the expiration of the 3-
                month period that begins on the date of the 
                enactment of the Junk Fax Prevention Act of 
                2005.
          (3) Private right of action.--A person or entity may, 
        if otherwise permitted by the laws or rules of court of 
        a State, bring in an appropriate court of that State--
                  (A) an action based on a violation of this 
                subsection or the regulations prescribed under 
                this subsection to enjoin such violation,
                  (B) an action to recover for actual monetary 
                loss from such a violation, or to receive $500 
                in damages for each such violation, whichever 
                is greater, or
                  (C) both such actions.
        If the court finds that the defendant willfully or 
        knowingly violated this subsection or the regulations 
        prescribed under this subsection, the court may, in its 
        discretion, increase the amount of the award to an 
        amount equal to not more than 3 times the amount 
        available under subparagraph (B) of this paragraph.
  (c) Protection of Subscriber Privacy Rights.--
          (1) Rulemaking proceeding required.--Within 120 days 
        after the date of enactment of this section, the 
        Commission shall initiate a rulemaking proceeding 
        concerning the need to protect residential telephone 
        subscribers' privacy rights to avoid receiving 
        telephone solicitations to which they object. The 
        proceeding shall--
                  (A) compare and evaluate alternative methods 
                and procedures (including the use of electronic 
                databases, telephone network technologies, 
                special directory markings, industry-based or 
                company-specific ``do not call'' systems, and 
                any other alternatives, individually or in 
                combination) for their effectiveness in 
                protecting such privacy rights, and in terms of 
                their cost and other advantages and 
                disadvantages;
                  (B) evaluate the categories of public and 
                private entities that would have the capacity 
                to establish and administer such methods and 
                procedures;
                  (C) consider whether different methods and 
                procedures may apply for local telephone 
                solicitations, such as local telephone 
                solicitations of small businesses or holders of 
                second class mail permits;
                  (D) consider whether there is a need for 
                additional Commission authority to further 
                restrict telephone solicitations, including 
                those calls exempted under subsection (a)(3) of 
                this section, and, if such a finding is made 
                and supported by the record, propose specific 
                restrictions to the Congress; and
                  (E) develop proposed regulations to implement 
                the methods and procedures that the Commission 
                determines are most effective and efficient to 
                accomplish the purposes of this section.
          (2) Regulations.--Not later than 9 months after the 
        date of enactment of this section, the Commission shall 
        conclude the rulemaking proceeding initiated under 
        paragraph (1) and shall prescribe regulations to 
        implement methods and procedures for protecting the 
        privacy rights described in such paragraph in an 
        efficient, effective, and economic manner and without 
        the imposition of any additional charge to telephone 
        subscribers.
          (3) Use of database permitted.--The regulations 
        required by paragraph (2) may require the establishment 
        and operation of a single national database to compile 
        a list of telephone numbers of residential subscribers 
        who object to receiving telephone solicitations, and to 
        make that compiled list and parts thereof available for 
        purchase. If the Commission determines to require such 
        a database, such regulations shall--
                  (A) specify a method by which the Commission 
                will select an entity to administer such 
                database;
                  (B) require each common carrier providing 
                telephone exchange service, in accordance with 
                regulations prescribed by the Commission, to 
                inform subscribers for telephone exchange 
                service of the opportunity to provide 
                notification, in accordance with regulations 
                established under this paragraph, that such 
                subscriber objects to receiving telephone 
                solicitations;
                  (C) specify the methods by which each 
                telephone subscriber shall be informed, by the 
                common carrier that provides local exchange 
                service to that subscriber, of (i) the 
                subscriber's right to give or revoke a 
                notification of an objection under subparagraph 
                (A), and (ii) the methods by which such right 
                may be exercised by the subscriber;
                  (D) specify the methods by which such 
                objections shall be collected and added to the 
                database;
                  (E) prohibit any residential subscriber from 
                being charged for giving or revoking such 
                notification or for being included in a 
                database compiled under this section;
                  (F) prohibit any person from making or 
                transmitting a telephone solicitation to the 
                telephone number of any subscriber included in 
                such database;
                  (G) specify (i) the methods by which any 
                person desiring to make or transmit telephone 
                solicitations will obtain access to the 
                database, by area code or local exchange 
                prefix, as required to avoid calling the 
                telephone numbers of subscribers included in 
                such database; and (ii) the costs to be 
                recovered from such persons;
                  (H) specify the methods for recovering, from 
                persons accessing such database, the costs 
                involved in identifying, collecting, updating, 
                disseminating, and selling, and other 
                activities relating to, the operations of the 
                database that are incurred by the entities 
                carrying out those activities;
                  (I) specify the frequency with which such 
                database will be updated and specify the method 
                by which such updating will take effect for 
                purposes of compliance with the regulations 
                prescribed under this subsection;
                  (J) be designed to enable States to use the 
                database mechanism selected by the Commission 
                for purposes of administering or enforcing 
                State law;
                  (K) prohibit the use of such database for any 
                purpose other than compliance with the 
                requirements of this section and any such State 
                law and specify methods for protection of the 
                privacy rights of persons whose numbers are 
                included in such database; and
                  (L) require each common carrier providing 
                services to any person for the purpose of 
                making telephone solicitations to notify such 
                person of the requirements of this section and 
                the regulations thereunder.
          (4) Considerations required for use of database 
        method.--If the Commission determines to require the 
        database mechanism described in paragraph (3), the 
        Commission shall--
                  (A) in developing procedures for gaining 
                access to the database, consider the different 
                needs of telemarketers conducting business on a 
                national, regional, State, or local level;
                  (B) develop a fee schedule or price structure 
                for recouping the cost of such database that 
                recognizes such differences and--
                          (i) reflect the relative costs of 
                        providing a national, regional, State, 
                        or local list of phone numbers of 
                        subscribers who object to receiving 
                        telephone solicitations;
                          (ii) reflect the relative costs of 
                        providing such lists on paper or 
                        electronic media; and
                          (iii) not place an unreasonable 
                        financial burden on small businesses; 
                        and
                  (C) consider (i) whether the needs of 
                telemarketers operating on a local basis could 
                be met through special markings of area white 
                pages directories, and (ii) if such directories 
                are needed as an adjunct to database lists 
                prepared by area code and local exchange 
                prefix.
          (5) Private right of action.--A person who has 
        received more than one telephone call within any 12-
        month period by or on behalf of the same entity in 
        violation of the regulations prescribed under this 
        subsection may, if otherwise permitted by the laws or 
        rules of court of a State bring in an appropriate court 
        of that State--
                  (A) an action based on a violation of the 
                regulations prescribed under this subsection to 
                enjoin such violation,
                  (B) an action to recover for actual monetary 
                loss from such a violation, or to receive up to 
                $500 in damages for each such violation, 
                whichever is greater, or
                  (C) both such actions.
        It shall be an affirmative defense in any action 
        brought under this paragraph that the defendant has 
        established and implemented, with due care, reasonable 
        practices and procedures to effectively prevent 
        telephone solicitations in violation of the regulations 
        prescribed under this subsection. If the court finds 
        that the defendant willfully or knowingly violated the 
        regulations prescribed under this subsection, the court 
        may, in its discretion, increase the amount of the 
        award to an amount equal to not more than 3 times the 
        amount available under subparagraph (B) of this 
        paragraph.
          (6) Relation to subsection (b).--The provisions of 
        this subsection shall not be construed to permit a 
        communication prohibited by subsection (b).
  (d) Technical and Procedural Standards.--
          (1) Prohibition.--It shall be unlawful for any person 
        within the United States--
                  (A) to initiate any communication using a 
                telephone facsimile machine, or to make any 
                telephone call using any automatic telephone 
                dialing system, that does not comply with the 
                technical and procedural standards prescribed 
                under this subsection, or to use any telephone 
                facsimile machine or automatic telephone 
                dialing system in a manner that does not comply 
                with such standards; or
                  (B) to use a computer or other electronic 
                device to send any message via a telephone 
                facsimile machine unless such person clearly 
                marks, in a margin at the top or bottom of each 
                transmitted page of the message or on the first 
                page of the transmission, the date and time it 
                is sent and an identification of the business, 
                other entity, or individual sending the message 
                and the telephone number of the sending machine 
                or of such business, other entity, or 
                individual.
          (2) Telephone facsimile machines.--The Commission 
        shall revise the regulations setting technical and 
        procedural standards for telephone facsimile machines 
        to require that any such machine which is manufactured 
        after one year after the date of enactment of this 
        section clearly marks, in a margin at the top or bottom 
        of each transmitted page or on the first page of each 
        transmission, the date and time sent, an identification 
        of the business, other entity, or individual sending 
        the message, and the telephone number of the sending 
        machine or of such business, other entity, or 
        individual.
          (3) Artificial or prerecorded voice systems.--The 
        Commission shall prescribe technical and procedural 
        standards for systems that are used to transmit any 
        artificial or prerecorded voice message via telephone. 
        Such standards shall require that--
                  (A) all artificial or prerecorded telephone 
                messages (i) shall, at the beginning of the 
                message, state clearly the identity of the 
                business, individual, or other entity 
                initiating the call, and (ii) shall, during or 
                after the message, state clearly the telephone 
                number or address of such business, other 
                entity, or individual; and
                  (B) any such system will automatically 
                release the called party's line within 5 
                seconds of the time notification is transmitted 
                to the system that the called party has hung 
                up, to allow the called party's line to be used 
                to make or receive other calls.
  (e) Effect on State Law.--
          (1) State law not preempted.--Except for the 
        standards prescribed under subsection (d) and subject 
        to paragraph (2) of this subsection, nothing in this 
        section or in the regulations prescribed under this 
        section shall preempt any State law that imposes more 
        restrictive intrastate requirements or regulations on, 
        or which prohibits--
                  (A) the use of telephone facsimile machines 
                or other electronic devices to send unsolicited 
                advertisements;
                  (B) the use of automatic telephone dialing 
                systems;
                  (C) the use of artificial or prerecorded 
                voice messages; or
                  (D) the making of telephone solicitations.
          (2) State use of databases.--If, pursuant to 
        subsection (c)(3), the Commission requires the 
        establishment of a single national database of 
        telephone numbers of subscribers who object to 
        receiving telephone solicitations, a State or local 
        authority may not, in its regulation of telephone 
        solicitations, require the use of any database, list, 
        or listing system that does not include the part of 
        such single national database that relates to such 
        State.
  (f) Actions by States.--
          (1) Authority of states.--Whenever the attorney 
        general of a State, or an official or agency designated 
        by a State, has reason to believe that any person has 
        engaged or is engaging in a pattern or practice of 
        telephone calls or other transmissions to residents of 
        that State in violation of this section or the 
        regulations prescribed under this section, the State 
        may bring a civil action on behalf of its residents to 
        enjoin such calls, an action to recover for actual 
        monetary loss or receive $500 in damages for each 
        violation, or both such actions. If the court finds the 
        defendant willfully or knowingly violated such 
        regulations, the court may, in its discretion, increase 
        the amount of the award to an amount equal to not more 
        than 3 times the amount available under the preceding 
        sentence.
          (2) Exclusive jurisdiction of Federal courts.--The 
        district courts of the United States, the United States 
        courts of any territory, and the District Court of the 
        United States for the District of Columbia shall have 
        exclusive jurisdiction over all civil actions brought 
        under this subsection. Upon proper application, such 
        courts shall also have jurisdiction to issue writs of 
        mandamus, or orders affording like relief, commanding 
        the defendant to comply with the provisions of this 
        section or regulations prescribed under this section, 
        including the requirement that the defendant take such 
        action as is necessary to remove the danger of such 
        violation. Upon a proper showing, a permanent or 
        temporary injunction or restraining order shall be 
        granted without bond.
          (3) Rights of commission.--The State shall serve 
        prior written notice of any such civil action upon the 
        Commission and provide the Commission with a copy of 
        its complaint, except in any case where such prior 
        notice is not feasible, in which case the State shall 
        serve such notice immediately upon instituting such 
        action. The Commission shall have the right (A) to 
        intervene in the action, (B) upon so intervening, to be 
        heard on all matters arising therein, and (C) to file 
        petitions for appeal.
          (4) Venue; service of process.--Any civil action 
        brought under this subsection in a district court of 
        the United States may be brought in the district 
        wherein the defendant is found or is an inhabitant or 
        transacts business or wherein the violation occurred or 
        is occurring, and process in such cases may be served 
        in any district in which the defendant is an inhabitant 
        or where the defendant may be found.
          (5) Investigatory powers.--For purposes of bringing 
        any civil action under this subsection, nothing in this 
        section shall prevent the attorney general of a State, 
        or an official or agency designated by a State, from 
        exercising the powers conferred on the attorney general 
        or such official by the laws of such State to conduct 
        investigations or to administer oaths or affirmations 
        or to compel the attendance of witnesses or the 
        production of documentary and other evidence.
          (6) Effect on state court proceedings.--Nothing 
        contained in this subsection shall be construed to 
        prohibit an authorized State official from proceeding 
        in State court on the basis of an alleged violation of 
        any general civil or criminal statute of such State.
          (7) Limitation.--Whenever the Commission has 
        instituted a civil action for violation of regulations 
        prescribed under this section, no State may, during the 
        pendency of such action instituted by the Commission, 
        subsequently institute a civil action against any 
        defendant named in the Commission's complaint for any 
        violation as alleged in the Commission's complaint.
          (8) Definition.--As used in this subsection, the term 
        ``attorney general'' means the chief legal officer of a 
        State.
  (g) Junk Fax Enforcement Report.--The Commission shall submit 
an annual report to Congress regarding the enforcement during 
the past year of the provisions of this section relating to 
sending of unsolicited advertisements to telephone facsimile 
machines, which report shall include--
          (1) the number of complaints received by the 
        Commission during such year alleging that a consumer 
        received an unsolicited advertisement via telephone 
        facsimile machine in violation of the Commission's 
        rules;
          (2) the number of citations issued by the Commission 
        pursuant to section 503 during the year to enforce any 
        law, regulation, or policy relating to sending of 
        unsolicited advertisements to telephone facsimile 
        machines;
          (3) the number of notices of apparent liability 
        issued by the Commission pursuant to section 503 during 
        the year to enforce any law, regulation, or policy 
        relating to sending of unsolicited advertisements to 
        telephone facsimile machines;
          (4) for each notice referred to in paragraph (3)--
                  (A) the amount of the proposed forfeiture 
                penalty involved;
                  (B) the person to whom the notice was issued;
                  (C) the length of time between the date on 
                which the complaint was filed and the date on 
                which the notice was issued; and
                  (D) the status of the proceeding;
          (5) the number of final orders imposing forfeiture 
        penalties issued pursuant to section 503 during the 
        year to enforce any law, regulation, or policy relating 
        to sending of unsolicited advertisements to telephone 
        facsimile machines;
          (6) for each forfeiture order referred to in 
        paragraph (5)--
                  (A) the amount of the penalty imposed by the 
                order;
                  (B) the person to whom the order was issued;
                  (C) whether the forfeiture penalty has been 
                paid; and
                  (D) the amount paid;
          (7) for each case in which a person has failed to pay 
        a forfeiture penalty imposed by such a final order, 
        whether the Commission referred such matter for 
        recovery of the penalty; and
          (8) for each case in which the Commission referred 
        such an order for recovery--
                  (A) the number of days from the date the 
                Commission issued such order to the date of 
                such referral;
                  (B) whether an action has been commenced to 
                recover the penalty, and if so, the number of 
                days from the date the Commission referred such 
                order for recovery to the date of such 
                commencement; and
                  (C) whether the recovery action resulted in 
                collection of any amount, and if so, the amount 
                collected.

                                  
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