## F I L E D United States Court of Appeals Tenth Circuit 

### FEB 17 2004 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

MAINSTREAM MARKETING SERVICES, INC., a Colorado corporation; TMG MARKETING, INC., a Colorado corporation; AMERICAN TELESERVICES ASSOCIATION, Plaintiffs-Appellees,

v. FEDERAL TRADE COMMISSION, Defendant-Appellant, and TIMOTHY J. MURIS, Chairman of the Federal Trade Commission; SHEILA F. ANTHONY, Commissioner, Federal Trade Commission; MOZELLE W. THOMPSON, Commissioner, Federal Trade Commission; ORSON SWINDLE, Commissioner, Federal Trade Commission; THOMAS B. LEARY, Commissioner, Federal Trade Commission; J. HOWARD BEALES, III, Director, Bureau of Consumer Protection, in their official capacities, Defendants. No. 03-1429- 2 -

UNITED STATES OF AMERICA, Intervenor, ALABAMA, ALASKA, ARIZONA, ARKANSAS, CALIFORNIA, COLORADO, CONNECTICUT, DELAWARE, DISTRICT OF COLUMBIA, FLORIDA, GEORGIA, HAWAII, IDAHO, ILLINOIS, IOWA, KANSAS, KENTUCKY, LOUISIANA, MAINE, MARYLAND, MASSACHUSETTS, MICHIGAN, MINNESOTA, MISSISSIPPI, MISSOURI, MONTANA, NEVADA, NEW HAMPSHIRE, NEW JERSEY, NEW MEXICO, NEW YORK, NORTH CAROLINA, OHIO, OKLAHOMA, OREGON, PENNSYLVANIA, PUERTO RICO, RHODE ISLAND, SOUTH CAROLINA, SOUTH DAKOTA, TENNESSEE, TEXAS, UTAH, VERMONT, VIRGINIA, WASHINGTON, WEST VIRGINIA AND WYOMING; AARP; W.J. “BILLY” TAUZI, JOHN D. DINGELL, and certain other members of the House of Representatives of the United States; ACA INTERNATIONAL; UNDERSIGNED MEMBERS OF THE UNITED STATES SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION; THE COUNCIL OF AMERICAN SURVEY RESEARCH ORGANIZATIONS, THE- 3 -

AMERICAN ASSOCIATION FOR PUBLIC OPINION RESEARCH, THE COUNCIL FOR MARKETING AND OPINION RESEARCH, Amici Curiae.

U.S. SECURITY, an Oklahoma corporation; CHARTERED BENEFIT SERVICES, INC., an Illinois corporation, GLOBAL CONTACT SERVICES, INC., a Delaware corporation; INFOCISION MANAGEMENT CORPORATION, a Delaware corporation; DIRECT MARKETING ASSOCIATION, INC., a New York non-profit association, Plaintiffs-Appellees,

v. FEDERAL TRADE COMMISSION, Defendant-Appellant.

ALABAMA, ALASKA, ARIZONA, ARKANSAS, CALIFORNIA, COLORADO, CONNECTICUT, DELAWARE, DISTRICT OF COLUMBIA, FLORIDA, GEORGIA, HAWAII, IDAHO, ILLINOIS, IOWA, KANSAS, KENTUCKY, LOUISIANA, MAINE, MARYLAND, MASSACHUSETTS, MICHIGAN, MINNESOTA, MISSISSIPPI, MISSOURI, MONTANA, NEVADA, No. 03-6258- 4 -

NEW HAMPSHIRE, NEW JERSEY, NEW MEXICO, NEW YORK, NORTH CAROLINA, OHIO, OKLAHOMA, OREGON, PENNSYLVANIA, PUERTO RICO, RHODE ISLAND, SOUTH CAROLINA, SOUTH DAKOTA, TENNESSEE, TEXAS, UTAH, VERMONT, VIRGINIA, WASHINGTON, WEST VIRGINIA AND WYOMING; ACA INTERNATIONAL; THE COUNCIL OF AMERICAN SURVEY RESEARCH ORGANIZATIONS, THE AMERICAN ASSOCIATION FOR PUBLIC OPINION RESEARCH, THE COUNCIL FOR MARKETING AND OPINION RESEARCH, Amici Curiae.

MAINSTEAM MARKETING SERVICES, INC., a Colorado corporation; TMG MARKETING, INC., a Colorado corporation; AMERICAN TELESERVICES ASSOCIATION, Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION; UNITED STATES OF AMERICA, Respondents. 03-9571- 5 -

ALABAMA, ALASKA, ARIZONA, ARKANSAS, CALIFORNIA, COLORADO, CONNECTICUT, DELAWARE, DISTRICT OF COLUMBIA, FLORIDA, GEORGIA, HAWAII, IDAHO, ILLINOIS, IOWA, KANSAS, KENTUCKY, LOUISIANA, MAINE, MARYLAND, MASSACHUSETTS, MICHIGAN, MINNESOTA, MISSISSIPPI, MISSOURI, MONTANA, NEVADA, NEW HAMPSHIRE, NEW JERSEY, NEW MEXICO, NEW YORK, NORTH CAROLINA, OHIO, OKLAHOMA, OREGON, PENNSYLVANIA, PUERTO RICO, RHODE ISLAND, SOUTH CAROLINA, SOUTH DAKOTA, TENNESSEE, TEXAS, UTAH, VERMONT, VIRGINIA, WASHINGTON, WEST VIRGINIA AND WYOMING; ACA INTERNATIONAL; THE COUNCIL OF AMERICAN SURVEY RESEARCH ORGANIZATIONS, THE AMERICAN ASSOCIATION FOR PUBLIC OPINION RESEARCH, THE COUNCIL FOR MARKETING AND OPINION RESEARCH, Amici Curiae.- 6 -

COMPETITIVE TELECOMMUNICATIONS ASSOCIATION Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION; UNITED STATES OF AMERICA, Respondents.

THE COUNCIL OF AMERICAN SURVEY RESEARCH ORGANIZATIONS, THE AMERICAN ASSOCIATION FOR PUBLIC OPINION RESEARCH, THE COUNCIL FOR MARKETING AND OPINION RESEARCH, Amici Curiae. 03-9594

No. 03-1429 Appeal from the United States District Court

for the District of Colorado (D.C. No. 03-N-184 (MJW))
No. 03-6258 Appeal from the United States District Court for the Western District of Oklahoma (D.C. No. 03-CV-122-W)- 7 - Nos. 03-9571, 03-9594 Petitions for Review of an Order of the Federal Communications Commission

(FCC No. 03-153)

Peter D. Keisler, Assistant Attorney General, Washi ngton, D.C.; Lawrence DeMille-Wagman, Attorney, Federal Trade Commission, Washington, D.C., for Defendant-Appellant Federal Trade Commission; Jacob M. Lewis, Associate General Counsel, Federal Communications Commission, Washington, D.C., for Respondent Federal Communications Commission; (JohnA. Rogovin, General Counsel, Susan L. Launer, Deputy Associate General Counsel, Laurence N. Bourne, Rodger D. Citron, Federal Communications Co mmission, Washington, D.C.; William E. Kovacic, General Counsel, John D. Graubert, Principal Deputy General Counsel; John F. Daly, Deputy General Couns el for Litigation, Federal Trade Commission, Washington, D.C.; John W. Suthers , United States Attorney, Robert G. McCampbell, United States Attorney; Mark B. Stern, Appellate Litigation Counsel; Alisa B. Klein, U.S. Departmentof Justice, Washington, D.C., Civil Division, with them on the briefs). Robert Corn-Revere, Davis Wright Tremaine, LLP, Was hington, D.C., for Plaintiffs-Appellees and Petitioners Mainstream Marketing Services, Inc., TMG Marketing, Inc., and American Teleservices Associat ion; Thomas F. O’Neill, III, Piper Rudnick, Washington, D.C., for Plaintiffs-App ellees U.S. Security, Chartered Benefit Services, Inc., Global Contract S ervices, Inc., Infocision Management Corporation, and Direct Marketing Associ ation, Inc. (Ronald G. London, Davis Wright Tremaine, LLP, Washington, D.C .; Sean R. Gallagher, Marianne N. Hallinan, Hogan & Hartson, LLP, Denver, Colorado; Douglas H. Green, John L. Moore, Jr., Emilio W. Cividanes, Pip er Rudnick, Washington, D.C.; James Nesland, Jeffrey Smith, Cooley Godward LLP, Broomfield, Colorado, with them on the briefs). Ian Heath Gershengorn, Jenner & Block, LLC, Washing ton, D.C., for Petitioner Competitive Telecommunications Association (Jonathan Lee, Vice President, Regulatory Affairs, Competitive Telecommunications Association, with him on the briefs.)1 The telemarketers also marshal attacks on the fee s they must pay to

access the national do-not-call registry and to the regulations’ exception for commercial callers who have an established business relationship with the consumer. We address those alternative arguments i n parts IV(A) and IV(B) below. Finally, in part IV(C), we discuss the FTC’ s statutory authority to enact its national do-not-call regulations. - 8 - Before SEYMOUR, EBEL and HENRY , Circuit Judges.

EBEL , Circuit Judge.
The four cases consolidated in this appeal involve challenges to the national do-not-call registry, which allows individ uals to register their phone numbers on a national “do-not-call list” and prohib its most commercial telemarketers from calling the numbers on that list . The primary issue in this case is whether the First Amendment prevents the governm ent from establishing an opt-in telemarketing regulation that provides a mec hanism for consumers to restrict commercial sales calls but does not provid e a similar mechanism to limit charitable or political calls. 1 We hold that the do-not-call registry is a valid commercial speech regulation because it directly ad vances the government’s important interests in safeguarding personal privac y and reducing the danger of telemarketing abuse without burdening an excessive amount of speech. In other words, there is a reasonable fit between the do-not -call regulations and the government’s reasons for enacting them.2 We express no opinion as to whether the do-not-ca ll registry would be

constitutional if it applied to political and chari table callers. - 9 - As we discuss below in greater detail, four key asp ects of the do-not-call registry convince us that it is consistent with Fir st Amendment requirements. First, the list restricts only core commercial spee ch – i.e., commercial sales calls. 2 Second, the do-not-call registry targets speech that invades the privacy of the home, a personal sanctuary that enjoys a unique status in our constitutional jurisprudence. See Frisby v. Schultz , 487 U.S. 474, 484 (1988). Third, the donot-call registry is an opt-in program that puts th e choice of whether or not to restrict commercial calls entirely in the hands of consumers. Fourth, the do-notcall registry materially furthers the government’s interests in combating the danger of abusive telemarketing and preventing the invasion of consumer privacy, blocking a significant number of the calls that cau se these problems. Under these circumstances, we conclude that the requirements of the First Amendment are satisfied. A number of additional features of the national do- not-call registry, although not dispositive, further demonstrate that the list is consistent with the First Amendment rights of commercial speakers. The challenged regulations do not hinder any business’ ability to contact consume rs by other means, such as through direct mailings or other forms of advertisi ng. Moreover, they give consumers a number of different options to avoid ca lls they do not want to3 The company-specific do-not-call regulations requ ire that a company

must respect a consumer’s request not to receive ca lls from or on behalf of that particular business. See 16 C.F.R. § 310.4(b)(1)(iii)(A); 47 C.F.R. § 64.1200(d)(3). - 10 - receive. Namely, consumers who wish to restrict so me but not all commercial sales calls can do so by using company-specific do- not-call lists or by granting some businesses express permission to call. 3 In addition, the government chose to offer consumers broader options to restrict commerc ial sales calls than charitable and political calls after finding that commercial c alls were more intrusive and posed a greater danger of consumer abuse. The gove rnment also had evidence that the less restrictive company-specific do-not-c all list did not solve the problems caused by commercial telemarketing, but ithad no comparable evidence with respect to charitable and political fundraisin g. The national do-not-call registry offers consumers a tool with which they can protect their homes against intrusions that Con gress has determined to be particularly invasive. Just as a consumer can avoi d door-to-door peddlers by placing a “No Solicitation” sign in his or her fron t yard, the do-not-call registry lets consumers avoid unwanted sales pitches that in vade the home via telephone, if they choose to do so. We are convinced that the First Amendment does not prevent the government from giving consumers this o ption.4 Congress has directed the FCC to coordinate its e fforts with the FTC in

order to maximize consistency between the agencies’ do-not-call regulations. DoNot-Call Implementation Act, Pub. L. No. 108-10, 11 7 Stat. 557 (2003). Although the FTC and FCC rules are consistent in mo st respects, there are some situations in which a telemarketer could be subjectto do-not-call restrictions under one agency’s rule but exempt under the other’ s. See Federal Trade Commission, Report to Congress Pursuant to the Do N ot Call Implementation Act on Regulatory Coordination in Federal Telemarketing Laws (2003); Federal Communications Commission, Report on Regulatory Coo rdination (2003). In the interest of simplicity, and because any inconsisten cies between the two rules do not affect our constitutional analysis, we generall y refer to both agencies’ do-notcall provisions as a single regulatory measure (the do-not-call registry). When we mean to discuss the FTC rule or the FCC rule in particular, we do so explicitly.

5 Consumers can register their personal phone numbe rs for the do-not-call list either by phone or online. - 11 - I. BACKGROUND

In 2003, two federal agencies – the Federal Trade C ommission (FTC) and the Federal Communications Commission (FCC) – promu lgated rules that together created the national do-not-call registry. See 16 C.F.R. § 310.4(b)(1)(iii)(B) (FTC rule); 47 C.F.R. § 64.1200(c)(2) (FCC rule). 4 The national do-not-call registry is a list containing the personal telephon e numbers of telephone subscribers who have voluntarily indicated that the y do not wish to receive unsolicited calls from commercial telemarketers. 5 Commercial telemarketers are generally prohibited from calling phone numbers that have been placed on the donot-call registry, and they must pay an annual fee to access the numbers on the registry so that they can delete those numbers from their telephone solicitation6 There has been some confusion throughout this lit igation with respect to

how to define the term “telemarketing.” Compare Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994, Pub. L. No. 103-297, 108 Stat. 1545 at §§ 7 (1994) (“Telemarketing Act”) (defining “telema rketing” as calls “conducted to induce purchases of goods or services”) withMainstream Mktg. Servs., Inc. v. FTC , 283 F.Supp. 2d 1151, 1154 (D. Colo. 2003) (descri bing “telemarketing” as the practice of “soliciting sales and donations” co nducted by businesses, charities, political organizations, and others). Unless otherwise indicated, we use the term “telemarketing” to refer to commercial sales calls made to induce purchases of goods or services (not charitable or political fund raising) consistent with Congress’ definition in the Telemarketing Act.

7The “established business relationship” exception allows businesses to call customers with whom they have conducted a fina ncial transaction or to whom they have sold, rented, or leased goods or services within 18 months of the telephone call. 47 C.F.R. § 64.1200(f)(3); Telemar keting Sales Rule, Statement of Basis and Purpose, 68 Fed. Reg. 4580, 4591 (Jan. 29, 2003). Additionally, sellers can call consumers on the national do-not-c all registry within three months after the consumer makes an inquiry or application. 47 C.F.R § 64.1200(f)(3). A (continued...) - 12 - lists. So far, consumers have registered more than 50 million phone numbers on the national do-not-call registry. The national do-not-call registry’s restrictions ap ply only to telemarketing calls made by or on behalf of sellers of goods or s ervices, and not to charitable or political fundraising calls. 16 C.F.R. §§ 310.4(b)( 1)(iii)(B), 310.6(a); 47 C.F.R. §§ 64.1200(c)(2), 64.1200(f)(9). 6 Additionally, a seller may call consumers who have signed up for the national registry if it has an established business relationship with the consumer or if the consumer h as given that seller express written permission to call. 16 C.F.R. § 310.4(b)(1) (iii)(B)(i-ii); 47 C.F.R. § 64.1200(f)(9)(i-ii). 7Telemarketers generally have three months from th e date7 (...continued)

seller who has an established business relationship with a consumer is still bound to comply with the company-specific rules if the co nsumer requests not to be called. Id. at § 64.1200(f)(3)(i). - 13 - on which a consumer signs up for the registry to re move the consumer’s phone number from their call lists. 16 C.F.R. § 310.4(b) (3)(iv); 47 C.F.R. § 64.1200(c)(2)(i)(D). Consumer registrations remai n valid for five years, and phone numbers that are disconnected or reassigned w ill be periodically removed from the registry. 47 C.F.R § 1200(c)(2); Telemark eting Sales Rule, Statement of Basis and Purpose, 68 Fed. Reg. 4580, 4640 (Jan. 29 , 2003). The national do-not-call registry is the product of a regulatory effort dating back to 1991 aimed at protecting the privacy rights of consumers and curbing the risk of telemarketing abuse. See generallyFTC v. Mainstream Mktg. Servs., Inc. , 345 F.3d 850, 857-58 (10th Cir. 2003). In the Tele phone Consumer Protection Act of 1991 (“TCPA”) – under which the FCC enacted its do-not-call rules – Congress found that for many consumers telemarketin g sales calls constitute an intrusive invasion of privacy. See Pub. L. No. 102-243, 105 Stat. 2394 at § 2 (1991). Moreover, the TCPA’s legislative history c ited statistical data indicating that “most unwanted telephone solicitations are com mercial in nature” and that “unwanted commercial calls are a far bigger problem than unsolicited calls from political or charitable organizations.” H.R. Rep. No. 102-317 at 16 (1991). The8 The TCPA defines a “telephone solicitation” as a “telephone call or

message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services,” excluding, interalia, calls from tax exempt nonprofit organizations. Pub. L. No. 103-297, 108 Stat. 1545 at § 3. - 14 - TCPA therefore authorized the FCC to establish a national database of consumers who object to receiving “telephone solicitations,” which the act defined as commercial sales calls. Pub. L. No. 102-243, 105 S tat. 2394 at § 3. 8 Furthermore, in the Telemarketing and Consumer Frau d and Abuse Prevention Act of 1994 (“Telemarketing Act”) – unde r which the FTC enacted its do-not-call rules – Congress found that consumers l ose an estimated $40 billion each year due to telemarketing fraud. See Pub. L. No. 103-297, 108 Stat. 1545 at § 2 (1994). Therefore, Congress authorized the FTC to prohibit sales calls that a reasonable consumer would consider coercive or abus ive of his or her right to privacy. Id. at § 3. The FCC and FTC initially sought to accomplish the goals of the TCPA and the Telemarketing Act by adopting company-specific do-not-call lists, requiring sellers to maintain lists of consumers who have req uested not to be called by that particular solicitor, and requiring telemarketers t o honor those requests. See Rules and Regulations Implementing the Telephone Co nsumer Protection Act of 1991, Report and Order, 7 FCC Rcd. 8752 at ¶ 23-24 (Sept. 17, 1992); Telemarketing Sales Rule, Statement of Basis and Pu rpose, 60 Fed. Reg. 43842, 43854-55 (Aug. 23, 1995). Yet in enacting the nati onal do-not-call registry, the9 Case No. 03-1429 reaches us on appeal from the Di strict of Colorado,

which held that the FTC’s do-not-call rules were un constitutional on First Amendment grounds. In that case, the district courtenjoined the FTC from implementing the do-not-call registry. We stayed t hat injunction, pending our review on the merits, in FTC v. Mainstream Mktg. Se rvs., Inc. , 345 F.3d 850 (10th Cir. 2003). Case No. 03-6258 reaches us on appeal from the Western District of Oklahoma, which held that the FTC lacke d the statutory authority to enact its do-not-call rules. In that case, the cou rt also approved certain unrelated aspects of the Telemarketing Sales Rule, and the po rtions of its decision addressing those issues are not before us on appeal . In cases No. 03-9571 and No. 03-9594, we review the FCC order directly pursu ant to 47 U.S.C. § 402(a) and 28 U.S.C. § 2342. - 15 - agencies concluded that the company-specific lists had failed to achieve Congress’ objectives. See Telemarketing Sales Rule, Statement of Basis and Purpose, 68 Fed Reg. 4580, 4629, 4631 (Jan. 29, 200 3); Rules and Regulations Implementing the Telephone Consumer Protection Act (TCPA) of 1991, 68 Fed. Reg. 44144, 44144-45 (July 25, 2003). Among other shortfalls, the agencies explained that the large number of possible telepho ne solicitors made it burdensome for consumers to assert their rights und er the company-specific rules, and that commercial telemarketers often ignored con sumers’ requests not to be called. 68 Fed. Reg. at 4629. Accordingly, the ag encies decided to keep the company-specific rules as an option available to co nsumers, but to supplement them with the national do-not-call registry. Id. ; 68 Fed. Reg. at 44144. In this appeal we have consolidated four cases chal lenging various aspects of the national do-not-call registry. 9 Cases Nos. 03-1429, 03-6258 and 03-9571 involve First Amendment attacks on the do-not-call list and its registry fees. We- 16 -

address these issues in parts III and IV(A) respect ively. Case No. 03-9594 involves a challenge to the FCC rule’s established business relationship exception on administrative law grounds. We address this iss ue in part IV(B). Finally, in part IV(C), we address the alternative argument that the FTC lacked statutory authority to enact its do-not-call regulations, an argument that the district court relied upon in case No. 03-6258. We conclude that all of the telemarketers’ challenges lack merit and we uphold the do-not-call list in its entirety.

II. STANDARD OF REVIEW

The constitutionality of the national do-not-call r egistry and its fees under the First Amendment are questions of law we review de novo. See Phelan v. Laramie County Cmty. Coll. Bd. of Trs. , 235 F.3d 1243, 1246 (10th Cir. 2000). We review whether the FCC’s decision to include an established business relationship exception violated the Administrative Procedure Act under the arbitrary and capricious standard. See Friends of the Bow v. Thompson , 124 F.3d 1210, 1215 (10th Cir. 1997). Finally, we review de novo a district court’s decision that an agency lacked authority under the controlling statute to act, keeping in mind that the courts owe deference to a federal agency’s interpretation of a statute it administers. See Southern Utah Wilderness Alliance v. Dabney ,- 17 -

222 F.3d 819, 824 (10th Cir. 2000) (citing Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc. , 467 U.S. 837, 842-43 (1984)).

III. FIRST AMENDMENT ANALYSIS

The national do-not-call registry’s telemarketing r estrictions apply only to commercial speech. Like most commercial speech reg ulations, the do-not-call rules draw a line between commercial and non-commer cial speech on the basis of
content. See Metromedia, Inc. v. City of San Diego , 453 U.S. 490, 504 n.11 (1981) (“If commercial speech is to be distinguishe d, it must be distinguished by its content.”); Bates v. State Bar of Ariz. , 433 U.S. 350, 363 (1977) (same). In reviewing commercial speech regulations, we apply t he Central Hudsontest. Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm ’n of N.Y. , 447 U.S. 557, 566 (1980); see also City of Cincinnati v. Discovery Network, Inc. , 507 U.S. 410, 416, 429-30 (1993) (noting that the challenged law drew content-based distinctions between commercial and non-commercial speech and applying more lenient scrutiny under Central Hudson ); Florida Bar v. Went For It, Inc. , 515 U.S. 618, 634-35 (1995) (“This case ... concerns pure co mmercial advertising, for which we have always reserved a lesser degree of pr otection under the First Amendment.”); Lanphere & Urbaniak v. Colorado , 21 F.3d 1508, 1513 (10th Cir.- 18 -

1994) (content-based regulations disadvantaging com mercial speech are reviewed pursuant to the lesser degree of First Amendment pr otection provided in Central Hudson ). Central Hudsonestablished a three-part test governing First Amen dment challenges to regulations restricting non-misleadin g commercial speech that relates to lawful activity. First, the government must assert a substantial interest to be achieved by the regulation. Central Hudson , 447 U.S. at 564. Second, the regulation must directly advance that governmental interest, meaning that it must do more than provide “only ineffective or remote support for the government’s purpose.” Id. Third, although the regulation need not be the le ast restrictive measure available, it must be narrowly tailored notto restrict more speech than necessary. See id. ; Board of Trs. of the State Univ. of N.Y. v. Fox , 492 U.S. 469, 480 (1989). Together, these final two factors requ ire that there be a reasonable fit between the government’s objectives and the means i t chooses to accomplish those ends. United States v. Edge Broad. Co. , 509 U.S. 418, 427-28 (1993). The government bears the burden of asserting one ormore substantial governmental interests and demonstrating a reasonab le fit between those interests and the challenged regulation. Utah Licensed Bever age Ass’n v. Leavitt , 256 F.3d 1061, 1069 (10th Cir. 2001). The government i s not limited in the evidence it may use to meet its burden. For example, a comm ercial speech regulation may- 19 -

be justified by anecdotes, history, consensus, or s imple common sense. Went For
It , 515 U.S. at 628. Yet we may not take it upon our selves to supplant the interests put forward by the state with our own ide as of what goals the challenged laws might serve. Edenfield v. Fane , 507 U.S. 761, 768 (1993).

A. Governmental Interests The government asserts that the do-not-call regulat ions are justified by its interests in 1) protecting the privacy of individua ls in their homes, and 2) protecting consumers against the risk of fraudulentand abusive solicitation. See 68 Fed. Reg. 44144; 68 Fed. Reg. at 4635. Both of these justifications are undisputedly substantial governmental interests. In Rowan v. United States Post Office Dep’t , the Supreme Court upheld the right of a homeowner to restrict material that coul d be mailed to his or her house. 397 U.S. 728 (1970). The Court emphasized the impo rtance of individual privacy, particularly in the context of the home, s tating that “the ancient concept that ‘a man’s home is his castle’ into which ‘not e ven the king may enter’ has lost none of its vitality.” Id. at 737. In Frisby v. Schultz , the Court again stressed the unique nature of the home and recognized that “the State’s interest in protecting the well-being, tranquility, and privacy of the hom e is certainly of the highest- 20 -

order in a free and civilized society.” 487 U.S. 4 74, 484 (1988) (quoting Carey v.
Brown , 447 U.S. 455, 471 (1980)). As the Court held in Frisby : One important aspect of residential privacy is prot ection of the unwilling listener. ... [A] special benefit of the privacy al l citizens enjoy within their own walls, which the State may legislate to protect , is an ability to avoid intrusions. Thus, we have repeatedly held that ind ividuals are not required to welcome unwanted speech into their own homes andthat the government may protect this freedom. Id. at 484-85 (citations omitted). Likewise, in Hill v. Colorado , the Court called the unwilling listener’s interest in avoiding unwanted communication part of the broader right to be let alone that Justice Brandeis described as “the right most valued by civilized men.” 530 U.S. 703, 716-17 (20 00) (quoting Olmstead v. United States , 277 U.S. 438, 478 (1928) (Brandeis, J., dissentin g)). The Court added that the right to avoid unwanted speech has s pecial force in the context of the home. Id. ; see also FCC v. Pacifica Found. , 438 U.S. 726, 748 (1978) (“[I]n the privacy of the home ... the individual’s right to be left alone plainly outweighs the First Amendment rights of an intruder.”). Additionally, the Supreme Court has recognized thatthe government has a substantial interest in preventing abusive and coer cive sales practices. Edenfield
v. Fane , 507 U.S. 761, 768-69 (1993) (“[T]he First Amendme nt ... does not prohibit the State from insuring that the stream of commercial information flow[s] cleanly as well as freely.”) (quoting Virginia Stat e Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc. , 425 U.S. 748, 771-72 (1976)).- 21 -

B. Reasonable Fit A reasonable fit exists between the do-not-call rul es and the government’s privacy and consumer protection interests if the re gulation directly advances those interests and is narrowly tailored. See Central Hudson , 447 U.S. at 564-65. In this context, the “narrowly tailored” standard does not require that the government’s response to protect substantial intere sts be the least restrictive measure available. All that is required is a propo rtional response. Board of Trs. of State Univ. of N.Y. v. Fox , 492 U.S. 469, 480 (1989). In other words, the national do-not-call registry i s valid if it is designed to provide effective support for the government’s purp oses and if the government did not suppress an excessive amount of speech whensubstantially narrower restrictions would have worked just as well. See Central Hudson , 447 U.S. at 564-65. These criteria are plainly established in this case. The do-not-call registry directly advances the government’s interes ts by effectively blocking a significant number of the calls that cause the prob lems the government sought to redress. It is narrowly tailored because its opt-i n character ensures that it does not inhibit any speech directed at the home of a wi lling listener.- 22 - 1. Effectiveness The telemarketers assert that the do-not-call regis try is unconstitutionally underinclusive because it does not apply to charita ble and political callers. First Amendment challenges based on underinclusiveness fa ce an uphill battle in the commercial speech context. As a general rule, the First Amendment does not require that the government regulate all aspects of a problem before it can make progress on any front. United States v. Edge Broad . Co. , 509 U.S. 418, 434 (1993). “Within the bounds of the general protecti on provided by the Constitution to commercial speech, we allow room fo r legislative judgments.” Id. The underinclusiveness of a commercial speech regul ation is relevant only if it renders the regulatory framework so irrational thatit fails materially to advance the aims that it was purportedly designed to furthe r. See Rubin v. Coors Brewing
Co. , 514 U.S. 476, 489 (1995); see also Central Hudson , 447 U.S. at 564 (“If a regulation “provides only ineffective or remote sup port for the government’s purpose” it cannot be said to bear a reasonable fitwith that purported objective). Cf. City of Ladue v. Gilleo , 512 U.S. 43, 51 (1994) (underinclusiveness provid es a basis for a First Amendment claim when it constit utes an “attempt to give one side of a debatable public question an advantage in expressing its views to the people”).- 23 -

In Rubin , for example, the Supreme Court struck down a law prohibiting brewers from putting the alcohol content of their p roduct on beer labels, purportedly in an effort to discourage “strength wa rs.” 514 U.S. at 478. However, the law allowed advertisements disclosing the alcohol content of beers, allowed sellers of wines and spirits to disclose al cohol content on labels (and even required such disclosure for certain wines), and allowed brewers to signal high alcohol content by using the term “malt liquor .” Id. at 488-89. Under these circumstances, the Court concluded that there was l ittle chance that the beer label rule would materially deter strength wars in light of the “irrationality of this unique and puzzling regulatory framework.” Id. at 489. Likewise, in City of Cincinnati v. Discovery Networ k , the Court struck down a law prohibiting commercial newsracks on publ ic property, purportedly in order to promote the safety and attractive appearan ce of its streets and sidewalks. 507 U.S. 410, 412 (1993). However, the ban appliedto only 62 of the 1,500 to 2,000 newsracks in the city, thus addressing only a“minute” and “paltry” share of the problem. Id. at 417-18. Moreover, the challenged ordinance was not enacted in an effort to address problems posed by newsracks , but was actually an “outdated prohibition against the distribution of a ny commercial handbills on public property ... enacted long before any concern about newsracks developed.”10 In the North Carolina counties Edge served, its b roadcasts accounted for

about 11 percent of all radio listening. Edge Broad

. , 509 U.S. at 431-32. - 24 - Id. For these reasons, the Court held in part II of t hat opinion that “the city did not establish the reasonable fit we require.” Id. at 417-18. Yet so long as a commercial speech regulation mater ially furthers its objectives, underinclusiveness is not fatal under C entral Hudson . For example, in Edge Broadcasting the Supreme Court approved a regulation that prohi bited broadcasters in North Carolina (which did not permi t lotteries) from broadcasting lottery advertisements on the radio, even as applie d to a broadcaster located near the border of Virginia (where lotteries were legal) whose audience consisted of 92.2 percent Virginians. 509 U.S. 418, 423-24, 431 -33 (1993). The Court found it determinative that the regulation prevented lott ery ads from reaching about 127,000 North Carolina residents (7.8 percent of Ed ge’s listeners): 10 It could hardly be denied ... that these facts, sta nding alone, would clearly show that applying the statutory restriction to Edg e would directly serve the statutory purpose of supporting North Carolina’s antigambling policy.... [T]his result could hardly be called either “ineffe ctive,” “remote,” or “conditional.” Nor could it be called only “limite d incremental support” for the Government interest. Id. at 432 (citations omitted). The Court rejected Ed ge’s argument that the regulations banning lottery advertising by in-state radio failed materially to advance the government’s interests because North Carolina residents were already inundated with lottery advertising from other sourc es, such as Virginia radio and- 25 -

television programs. Id. at 434-35. “[T]he Government may be said to advan ce its purpose by substantially reducing lottery advertising, even where it is not wholly eradicated.” Id. at 434; see also Metromedia, Inc. v. City of San Diego , 453 U.S. 490, 511 (1981) (“[P]rohibition of offsite advertising is directly related to the stated objectives of traffic safety and esth etics. This is not altered by the fact that the ordinance is underinclusive because i t permits onsite advertising.”). As discussed above, the national do-not-call registry is designed to reduce intrusions into personal privacy and the risk of te lemarketing fraud and abuse that accompany unwanted telephone solicitation. The reg istry directly advances those goals. So far, more than 50 million telephone numb ers have been registered on the do-not-call list, and the do-not-call regulatio ns protect these households from receiving most unwanted telemarketing calls. Accor ding to the telemarketers’ own estimate, 2.64 telemarketing calls per week – o r more than 137 calls annually – were directed at an average consumer before the d o-not-call list came into effect. Cf. 68 Fed. Reg. at 44152 (discussing the five-fold in crease in the total number of telemarketing calls between 1991 and 2003 ). Accordingly, absent the do-not-call registry, telemarketers would call thos e consumers who have already signed up for the registry an estimated total of 6. 85 billiontimes each year. To be sure, the do-not-call list will not block all of these calls. Nevertheless, it will prohibit a substantial numberof them, making it difficult to11 It is unclear from the record exactly how many te lemarketing calls will

be blocked by the do-not-call regulations. Most si gnificantly, we have not been provided with data as to how many of these unsolici ted sales calls would be permissible under the established business relation ship exception. In applying Central Hudson , however, we are entitled to rely on anecdotal evi dence and make the common sense observation that the do-not-call l ist will apply to a substantial number of telemarketing calls. See Went For It , 515 U.S. at 628; cf. 68 Fed. Reg. at 44153-54 (suggesting that the volume of calls ex empted under the established business relationship exception most likely will be relatively low compared to the volume of calls subject to the do-not-call restrict ions); 68 Fed. Reg. at 4631 (noting that telemarketers expect to lay off up to half of their employees in response to the do-not-call regulations). - 26 - fathom how the registry could be called an “ineffec tive” means of stopping invasive or abusive calls, or a regulation that “fu rnish[es] only speculative or marginal support” for the government’s interests. See also id. (noting the effectiveness of state do-not-call lists in reducin g unwanted telemarketing calls). 11 Furthermore, the do-not-call list prohibits not onl y a significant numberof commercial sales calls, but also a significant perc entage of all calls causing the problems that Congress sought to address (whether c ommercial, charitable or political). The record demonstrates that a substan tial share of all solicitation calls will be governed by the do-not-call rules. See H.R. Rep. No. 102-317, at 16 (1991) (“[M]ost unwanted telephone solicitations ar e commercial in nature.”); 68 Fed. Reg. at 44153-54 (the high volume and unexpect ed nature of commercial calls subject to the national do-not-call registry makes those calls more problematic than nonprofit calls and solicitations based on established business relationships).- 27 -

The telemarketers asserted before the FTC that they might have to lay off up to 50 percent of their employees if the national do-not-call registry came into effect. See 68 Fed. Reg. at 4631. It is reasonable to conclud e that the telemarketers’ planned reduction in force correspon ds to a decrease in the amount of calls they will make. Significantly, the percen tage of unwantedcalls that will be prohibited will be even higher than the percenta ge of all unsolicited calls blocked by the list. The individuals on the do-not -call list have declared that they do not wish to receive unsolicited commercial telem arketing calls, whereas those who do want to continue receiving such calls will n ot register. Cf. 68 Fed. Reg. at 4632 (under the national do-not-call regulations , “telemarketers would reduce time spent calling consumers who do not want to rec eive telemarketing calls and would be able to focus their calls only on those wh o do not object”). Finally, the type of unsolicited calls that the do- not-call list does prohibit – commercial sales calls – is the type that Congress, the FTC and the FCC have all determined to be most to blame for the problems the government is seeking to redress. According to the legislative history acco mpanying the TCPA, “[c]omplaint statistics show that unwanted commerci al calls are a far bigger problem than unsolicited calls from political or ch aritable organizations.” H.R. Rep. No. 102-317, at 16 (1991) (noting that non-com mercial calls were less intrusive to consumers’ privacy because they are mo re expected and because there- 28 -

is a lower volume of such calls); see also 68 Fed. Reg. at 44153. Similarly, the FCC determined that calls from solicitors with an e stablished business relationship with the recipient are less problemati c than other commercial calls. 68 Fed. Reg. at 44154 (“Consumers are more likely t o anticipate contacts from companies with whom they have an existing relations hip and the volume of such calls will most likely be lower.”). Additionally, the FTC has found that commercial cal lers are more likely than non-commercial callers to engage in deceptive and abusive practices. 68 Fed. Reg. at 4637 (“When a pure commercial transact ion is at stake, callers have an incentive to engage in all the things that telem arketers are hated for. But noncommercial speech is a different matter.”). Specif ically, the FTC concluded that in charitable and political calls, a significant pu rpose of the call is to sell a cause, not merely to receive a donation, and that non-comm ercial callers thus have stronger incentives not to alienate the people they call or to engage in abusive and deceptive practices. Id.; cf. Village of Schaumburg v. Citizens for a Better Env ’t , 444 U.S. 620, 632 (1980) (“[B]ecause charitable sol icitation does more than inform private economic decisions and is not primar ily concerned with providing information about the characteristics and costs of goods and services, it is not dealt with as a variety of purely commercial speech .”). The speech regulated by the do-not-call list is therefore the speech most l ikely to cause the problems the- 29 -

government sought to alleviate in enacting that lis t, further demonstrating that the regulation directly advances the government’s inter ests. In sum, the do-not-call list directly advances the government’s interests – reducing intrusions upon consumer privacy and the r isk of fraud or abuse – by restricting a substantial number (and also a substantial percentage) of the calls that cause these problems. Unlike the regulations struck down in Rubinand Discovery Network , the do-not-call list is not so underinclusive that it fails materially to advance the government’s goals.

2. Narrow Tailoring Although the least restrictive means test is not th e test to be used in the commercial speech context, commercial speech regulations do at least have to be “narrowly tailored” and provide a “reasonable fit” between the problem and the solution. Whether or not there are “numerous and o bvious less-burdensome alternatives” is a relevant consideration in our na rrow tailoring analysis. Went
For It , 515 U.S. at 632. A law is narrowly tailored if i t “promotes a substantial government interest that would be achieved less eff ectively absent the regulation.” Ward v. Rock Against Racism , 491 U.S. 781, 799 (1989). Accordingly, we consider whether there are numerous and obvious alternatives that would restrict less speech and would serve the government’s interest as- 30 -

effectively as the challenged law. See Central Hudson , 447 U.S. at 565; Edge Broad. , 509 U.S. at 430. We hold that the national do-not-call registry is n arrowly tailored because it does not over-regulate protected speech; rather, itrestricts only calls that are targeted at unwilling recipients. Cf. Frisby v. Schultz , 487 U.S. 474, 485 (1988) (“There simply is no right to force speech into the home of an unwilling listener.”); Rowan v. United States Post Office Dep ’t , 397 U.S. 728, 738 (1970) (“We therefore categorically reject the argument th at a vendor has a right under the Constitution or otherwise to send unwanted mate rial into the home of another.”). The do-not-call registry prohibits onl y telemarketing calls aimed at consumers who have affirmatively indicated that the y do not want to receive such calls and for whom such calls would constitute an i nvasion of privacy. See Hill v. Colorado , 530 U.S. 703, 716-17 (2000) (the right of privacyincludes an unwilling listener’s interest in avoiding unwanted communicat ion). The Supreme Court has repeatedly held that speech r estrictions based on private choice (i.e. – an opt-in feature) are less restrictive than laws that prohibit speech directly. In Rowan , for example, the Court approved a law under which an individual could require a mailer to stop all futur e mailings if he or she received advertisements that he or she believed to be erotic ally arousing or sexually provocative. 397 U.S. at 729-30, 738. Although itwas the government that12 The Court in Martinsuggested that one kind of regulation of home

solicitation that would pass constitutional muster would be a regulation “which would make it an offense for any person to ring the bell of a householder who has appropriately indicated that he is unwilling to be disturbed.” 319 U.S. at 148. - 31 - empowered individuals to avoid materials they consi dered provocative, the Court emphasized that the mailer’s right to communicate w as circumscribed only by an affirmative act of a householder. Id. at 738. “Congress has erected a wall – or more accurately permits a citizen to erect a wall –that no advertiser may penetrate without his acquiescence. ... The asserte d right of a mailer, we repeat, stops at the outer boundary of every person’s domai n.” Id. Likewise, in rejecting direct prohibitions of speec h (even fully protected speech), the Supreme Court has often reasoned that an opt-in regulation would have been a less restrictive alternative. In Marti n v. City of Struthers , the Court struck down a city ordinance prohibiting door-to-do or canvassing, noting that the government’s interest could have been achieved in aless restrictive manner by giving householders the choice of whether or not to receive visitors. 319 U.S. 141, 147-49 (1943) (“[T]he decision as to whether d istributers of literature may lawfully call at a home ... belongs ... with the ho meowner himself. A city can punish those who call at a home in defiance of the previously expressed will of the occupant.”). 12 More recently, in Watchtower Bible & Tract Soc’y of N.Y., Inc. v. Village of Stratton , the Court struck down a permit requirement for do orto-door advocacy, while noting that another section of the ordinance allowing- 32 -

residents to post “No Solicitation” signs provided ample protection for the unwilling listener. 536 U.S. 150, 153, 168-69 (200 2); see also Village of Schaumburg v. Citizens for a Better Env’t , 444 U.S. 620, 639 (1980) (“[T]he provision permitting homeowners to bar solicitors f rom their property by posting signs reading ‘No Solicitors or Peddlers Invited’ s uggests the availability of less intrusive and more effective measures to protect pr ivacy.”) (citations omitted). The idea that an opt-in regulation is less restrict ive than a direct prohibition of speech applies not only to traditional door-to-d oor solicitation, but also to regulations seeking to protect the privacy of the h ome from unwanted intrusions via telephone, television, or the Internet. See United States v. Playboy Entm’t Group, Inc. , 529 U.S. 803, 815 (2000) (opt-in targeted blockin g of offensive television programming “enables the Government to s upport parental authority without affecting the First Amendment interests of speakers and willing listeners.... Simply put, targeted blocking is less restrictive than banning....”); cf.
Reno v. ACLU , 521 U.S. 844, 860, 879 (1997) (striking down an absolute prohibition against making certain sexually explici t material available to minors on the Internet on the grounds that it curtailed th e speech of adults, contrasting that regulation with the alternative of facilitatin g parental control of such material).- 33 -

Like the do-not-mail regulation approved in Rowan , the national do-notcall registry does not itself prohibit any speech. Instead, it merely “permits a citizen to erect a wall ... that no advertiser may penetrate without his acquiescence.” See Rowan , 397 U.S. at 738. Almost by definition, the do-no tcall regulations only block calls that would consti tute unwanted intrusions into the privacy of consumers who have signed up for the list. Moreover, it allows consumers who feel susceptible to telephone fraud o r abuse to ensure that most commercial callers will not have an opportunity to victimize them. Under the circumstances we address in this case, we conclude that the do-not-call registry’s opt-in feature renders it a narrowly tailored comme rcial speech regulation. The do-not-call registry’s narrow tailoring is further demonstrated by the fact that it presents both sellers and consumers wi th a number of options to make and receive sales offers. From the seller’s perspe ctive, the do-not-call registry restricts only one avenue by which solicitors can c ommunicate with consumers who have registered for the list. In particular, t he do-not-call regulations do not prevent businesses from corresponding with potentia l customers by mail or by means of advertising through other media. Cf. Florida Bar v. Went For It, Inc. , 515 U.S. 618, 633-34 (1995) (holding a 30-day post- accident ban on attorney solicitations narrowly tailored, finding it relevan t that ample alternative channels for advertising legal services were available).- 34 -

From the consumer’s perspective, the do-not-call ru les provide a number of different options allowing consumers to dictate what telemarketing calls they wish to receive and what calls they wish to avoid. Cons umers who would like to receive some commercial sales calls but not others can sign up for the national do-not-call registry but give written permission to call to those businesses from whom they wish to receive offers. See 16 C.F.R. § 310.4(b)(1)(iii)(B)( i ); 47 C.F.R. § 64.1200(f)(9)(i). Alternatively, they may decline to sign up on the national registry but make company-specific do-not- call requests with those particular businesses from whom they do not wish to receive calls. See 16 C.F.R. § 310.4(b)(1)(iii)(A); 47 C.F.R. § 64.1200(d)(3). Therefore, under the current regulations, consumers choose between two default rules – either that telemarketers may call or that they may not. Then, consumers may make company-specific modifications to either of these d efault rules as they see fit, either granting particular sellers permission to ca ll or blocking calls from certain sellers. Finally, none of the telemarketers’ proposed altern atives would serve the government’s interests as effectively as the nation al do-not-call list. Primarily, the telemarketers suggest that company-specific rul es effectively protected consumers. Yet as the FTC found, “[t]he record in this matter overwhelmingly shows the contrary ... it shows that the company-sp ecific approach is seriously- 35 -

inadequate to protect consumers’ privacy from an ab usive pattern of calls placed by a seller or telemarketer.” 68 Fed. Reg. at 4631

. First, the company-specific approach proved to be e xtremely burdensome to consumers, who had to repeat their do-not-call requ ests to every solicitor who called. Id. at 4629. In effect, this system gave solicitors o ne free chance to call each consumer, although many consumers find even aninitial unsolicited sales call abusive and invasive of privacy. Id. at 4629-30; cf. FCC v. Pacifica Found. , 438 U.S. 726, 748-49 (1978) (“To say that one may avoid further offense by turning off the radio when he hears indecent langua ge is like saying that the remedy for an assault is to run away after the firs t blow. One may hang up on an indecent phone call, but that option does not ... avoid a harm that has already taken place.”). Second, the government’s experienc e under the company-specific rules demonstrated that commercial solicitors often ignored consumers’ requests to be placed on their company-specific lists. 68 F ed. Reg. at 4629. Third, consumers have no way to verify whether their numbe rs have been removed from a solicitor’s calling list in response to a company -specific do-not-call request. Id. Finally, company-specific rules are difficult to en force because they require consumers to bear the evidentiary burden of keeping lists detailing which telemarketers have called them and what do-not-call requests they have made. Id.- 36 -

The telemarketers’ objection that the company-speci fic approach should have been more vigorously marketed to consumers is unavailing because the flaws the FTC identified are inherent in the company-spec ific rule. More consumer education simply could not have cured the ineffecti veness of the former system. Similarly, even if we were to agree with the telema rketers’ argument that violations of the company-specific list were not ad equately enforced, the national do-not-call program improves upon failures of the c ompany-specific approach that were not caused by any lack of enforcement. Unlike the national registry, the company-specific approach gave a vast number of pot ential solicitors one shot at each unwilling consumer and was significantly more difficult for consumers to use. Moreover, the national do-not-call registry w ill be easier to enforce than the company-specific rules because there will generally be no dispute as to whether a certain telemarketer is prohibited from calling a p articular number. Finally, the telemarketers argue that it would have been less restrictive to let consumers rely on technological alternatives – such as caller ID, call rejection services, and electronic devices designed to block unwanted calls. Each of these alternatives puts the cost of avoiding unwanted tel emarketing calls on consumers. Furthermore, as the FCC found, “[a]lthough technolo gy has improved to assist consumers in blocking unwanted calls, it has also e volved in such a way as to assist telemarketers in making greater numbers of c alls and even circumventing- 37 -

such blocking technologies.” 68 Fed. Reg. at 44147 . Forcing consumers to compete in a technological arms race with the telem arketing industry is not an equally effective alternative to the do-not-call re gistry. In sum, the do-not-call registry is narrowly tailor ed to restrict only speech that contributes to the problems the government see ks to redress, namely the intrusion into personal privacy and the risk of fra ud and abuse caused by telephone calls that consumers do not welcome into their homes. No calls are restricted unless the recipient has affirmatively d eclared that he or she does not wish to receive them. Moreover, telemarketers stil l have the ability to contact consumers in other ways, and consumers have a numbe r of different options in determining what telemarketing calls they will rece ive. Finally, there are not numerous and obvious less-burdensome alternatives that would restrict less speech while accomplishing the government’s objecti ves equally as well.

C. Discovery Network As should be clear from the foregoing discussion, the telemarketers’ reliance on Discovery Networkis misplaced. In Discovery Network , the Supreme Court applied Central Hudsonto strike down a municipal policy directly prohibiting freestanding commercial newsracks on pu blic property. 507 U.S. at 412, 416. It concluded that the regulation – which did not similarly restrict non-- 38 -

commercial newsracks – did not bear a reasonable fi t to the city’s interests in promoting safety and the attractive appearance of t he city’s public areas. Id. at 412, 417. In particular, the Court emphasized that1) the regulation applied to only a “minute” and “paltry” share of the total num ber of newsracks in the city, id. at 418, and 2) the regulation’s distinction betwee n commercial and noncommercial speech bore “no relationship whatsoeverto the particular interests that the city has asserted.” Id. at 424 (emphasis in original). The trifling number of newsracks regulated in Disco very Network suggested that the policy did not materially advanc e the city’s interests, and this aspect of the regulation was not justified by evide nce demonstrating that despite their small numbers the commercial newsracks dispro portionately caused the problems the city sought to remedy. The Court held , in essence, that a regulation that has only a minimal impact on the identified pr oblem cannot be saved simply because it targets only commercial speech, which oc cupies a lower place in our First Amendment jurisprudence. The Court concludedthat the “low value” of commercial speech was “an insufficient justificatio n for the discrimination against respondents’ use of newsracks that are no m ore harmful than the permitted newsracks, andhave only a minimal impact on the overall number o f newsracks on the city’s sidewalks.” Id. at 418 (emphasis added). Under a straight-forward- 39 -

application of Central Hudson , the Court struck down the city’s newsrack ordinance because it failed directly to advance the city’s interests. Both of the factors the Court emphasized in Discove ry Networkare absent in our case. First, while the regulation in Discov ery Networkapplied only to a minute and paltry number of newsracks, the do-not-c all registry blocks a substantial amount of unwanted telemarketing calls. See suprapart III(B)(1). Second, while the distinction between commercial an d non-commercial speech in Discovery Networkbore no relationship whatsoever to the city’s asse rted interests, the do-not-call registry’s commercial/no n-commercial distinction was based on findings that commercial telephone solicit ation was significantly more problematic than charitable or political fundraisin g calls. Id. ; see also FTC v. Mainstream Mktg Servs., Inc. , 345 F.3d 850, 856-60 (10th Cir. 2003). Additionally, the government had evidence that othe r alternatives (companyspecific restrictions) failed in the commercial con text, but had no comparable experience involving the failure of company-specifi c restrictions with respect to charitable or political callers. See suprapart III(B)(2); 68 Fed. Reg. at 4637.

D. Summary For the reasons discussed above, the government has asserted substantial interests to be served by the do-not-call registry (privacy and consumer13 Our conclusion is consistent with other circuits’ decisions approving

similar telecommunications regulations. See Missouri v. American Blast Fax, Inc. , 323 F.3d 649 (8th Cir. 2003) (upholding TCPA regu lation prohibiting unsolicited commercial fax advertising); Destinatio n Ventures, Ltd., v. FCC , 46 F.3d 54 (9th Cir. 1995) (same); Moser v. FCC , 46 F.3d 970, 972-75 (9th Cir. 1995) (upholding ban on prerecorded commercial tele marketing).

14 The telemarketers’ challenge to the do-not-call r egistry fees was raised below in case No. 03-1429, although the district co urt did not reach this issue. (continued...) - 40 - protection), the do-not-call registry will directly advance those interests by banning a substantial amount of unwanted telemarket ing calls, and the regulation is narrowly tailored because its opt-in feature ens ures that it does not restrict any speech directed at a willing listener. In other wo rds, the do-not-call registry bears a reasonable fit with the purposes the government s ought to advance. Therefore, it is consistent with the limits the First Amendmen t imposes on laws restricting commercial speech. 13

IV. OTHER ISSUES

The telemarketers also challenge various other aspe cts of the do-not-call registry. In turn, we consider 1) whether the fees telemarketers must pay to access the registry are constitutional, 2) whether it was arbitrary and capricious for the FCC to approve the established business rel ationship exception, and 3) whether the FTC had statutory authority to enact it s do-not-call rules. 1414 (...continued)

The challenge to the FCC’s established business rel ationship exception has been raised only in case No. 03-9594, in which we review the FCC action directly. The telemarketers’ challenge to the FTC’s statutory aut hority to enact its do-not-call regulations was raised below in case Nos. 03-1429 and 03-6258. In case No. 03- 1429, the district court declined to reach this iss ue; in case No. 03-6258, the district court held that the FTC lacked statutory a uthority. - 41 - A. The Do-Not-Call Registry Fees To obtain the phone numbers of consumers who have s igned up for the national do-not-call registry, telemarketers must p ay a modest annual access fee determined by the FTC. Currently, the fee is $25 p er area code of data, except that the first five area codes are provided free of charge and the maximum annual fee is capped at $7,375. 16 C.F.R. § 310.8(c). The telemarketers argue that this fee unconstitutionally imposes a revenue tax on pro tected speech. We disagree. It is well-established that the First Amendment pro tects against the imposition of charges, such as a license taxes, forthe enjoyment of free speech rights. Murdock v. Pennsylvania , 319 U.S. 105, 113-14 (1943). Nevertheless, the government is permitted to exact a fee in order to defray the cost of legitimate regulations, even though such a fee incidentally bu rdens speech. See id. at 114 n.8. In Murdock , for example, the Court struck down an ordinance t hat required Jehovah’s Witnesses to pay licensing fees in order to distribute religious materials door-to-door, explaining that the regulation was “n ot a nominal fee imposed as a regulatory measure to defray the expenses of polici ng the activities in question.”- 42 -

Id. at 106, 113-14. The Court employed the same reaso ning in Cox v. New Hampshire , upholding license fees of up to $300 to take partin a parade or procession because the fee was held “to be not a re venue tax, but one to meet the expense incident to the administration of the act a nd to the maintenance of public order in the matter licensed.” 312 U.S. 569, 570-7 1, 576-77 (1941). Accordingly, we recently approved the Utah Charitab le Solicitations Act – which requires charitable fundraisers to register w ith the state and pay $250 for a permit – because that fee offsets increased regulat ory costs associated with the act. American Target Adver., Inc. v. Giani , 199 F.3d 1241, 1246, 1248-49 (10th Cir. 2000). We held that “a regulatory fee may be constitutional only if it serves a ‘legitimate state interest’” and that defraying t he costs of a regulation aimed at protecting citizens from fraud is legitimate. Id. at 1248-49. Such fees may be imposed to defray both administrative expenses (suc h as processing and licensing costs) and the cost of enforcing the regulations. National Awareness Found. v. Abrams , 50 F.3d 1159, 1166 (2d Cir. 1995) (“[E]nforcementpower is necessary to ensure that the purposes of [the regulations] ar e served.”). The Do-Not-Call Implementation Act authorized the F TC to collect fees for fiscal years 2003 to 2007, requiring that “[s]uch a mounts shall be available for expenditure only to offset the costs of activities and services related to the implementation and enforcement of the Telemarketing Sales Rule, and other- 43 -

activities resulting from such implementation and e nforcement.” Pub. L No. 108- 10, 117 Stat. 557 at § 2 (2003). In enacting the fees regulation, the FTC stated it was authorized only “to assess fees sufficient to c over the costs of implementing and enforcing the do-not-call provisions of the Ame nded TSR.” Telemarketing Sales Rule Fees, 68 Fed. Reg. 45134, 45141 (July 31 , 2003). The FTC estimated the costs of implementing and enforcing the nationa l do-not-call registry at $18.1 million for fiscal year 2003. Id. The record conclusively demonstrates that the do-no t-call registry fees are to be used only to pay for expenses incident to the administration of the do-notcall registry, as required by Murdockand Giani . The FTC explained that the costs of the do-not-call registry fall into three major c ategories. First are the actual costs of developing and operating the national regi stry, such as the costs of handling consumer registration and complaints, tran sferring information from state lists to the registry, ensuring telemarketer access to the registry, and managing law enforcement access to appropriate info rmation. Id. Second are the costs of enforcement efforts, such as domestic and international law enforcement initiatives to identify and challenge alleged violators, and consumer and business education efforts. Id. Third are the increased costs of agency infrastru cture and administration, including changes in information te chnology structural support necessary to handle anticipated increases in consum er complaints and requests15 First, the FTC estimated that about 10,000 telema rketing firms would

seek access to the list, and that the average telem arketer would pay to obtain about 73 area codes of data. 68 Fed. Reg. at 45141 . Under those estimates, the expenses incident to the list would amount to about$25 per area code provided, excluding those that would be provided free of char ge. Recognizing that its fee schedule is based on estimated figures, the FTC als o emphasized that these fees would need to be reexamined periodically and adjust ed to reflect the FTC’s actual experience in operating the registry. Id. at 45141-42. - 44 - from law enforcement agencies for access to such co mplaints. Id. The FTC decided upon the $25 per area code fee in order to ensure that it would collect the amount necessary to defray these costs. 15 Therefore, we hold that the registry fees are a per missible regulatory measure designed to offset projected expenses incid ent to the administration and enforcement of the national do-not-call list, not a n unconstitutional revenue tax.

B. The Established Business Relationship Exception The telemarketers next argue that the FCC’s establi shed business relationship exception is arbitrary and capricious in violation of the Administrative Procedure Act. See 5 U.S.C. § 706. In particular, they contend that the FCC failed to give appropriate considerati on to the anti-competitive effect that this exception may have on telecommunic ations markets. We conclude that the FCC did in fact address this concern, and that the FCC’s exception for established business relationships is not arbitraryand capricious under the APA.- 45 -

The arbitrary and capricious standard of review is a narrow one, and we are not empowered to substitute our own judgment for th at of the administrative agency. City of Albuquerque v. Browner , 97 F.3d 415, 424 (10th Cir. 1996). “Generally, an agency decision will be considered a rbitrary and capricious if ‘the agency had relied on factors which Congress had notintended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to t he evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.’” Friends of the Bow v. Thompson , 124 F.3d 1210, 1215 (10th Cir. 1997) (quoting Motor Vehicle Mfrs. Ass’n v. State Farm Mut.
Auto Ins. Co. , 463 U.S. 29, 43 (1983)). The Telecommunications Act of 1996, 47 U.S.C. § 25 1 et. seq., required local telephone monopolies to make their facilities and services available to competitors for negotiated or arbitrated prices, an d directed the FCC to establish regulations to advance local competition. The FCC enacted its do-not-call rules under different statutory authority, the TCPA, whic h specifically authorized the FCC to establish a national database of residential telephone subscribers who object to receiving telephone solicitations. See 47 U.S.C. § 227(c)(3). When an agency is charged to enforce overlapping an d at times inconsistent policies, it cannot act single-mindedly in furthera nce of one of those policies- 46 -

while wholly ignoring the other. Southern S.S. Co. v. NLRB , 316 U.S. 31, 46-47 (1942); McLean Trucking Co. v. United States , 321 U.S. 67, 80 (1944). The FCC rule sufficiently addresses the telemarkete rs’ concerns about the established business relationship exception. In it s notice of rulemaking, the FCC asked for comments on the anti-competitive effect t his exception might have on the telecommunications industry. See 68 Fed. Reg. at 44159. The FCC received responses indicating that such an exception would f avor incumbent telephone service providers who would be able to market new s ervices to their larger customer base. Id. at 44159-60. Also, the FCC noted some respondents ’ concerns that this anti-competitive effect would be particularly strong because telephone solicitations are currently the primary m echanism for selling telecommunications services. Id. at 44159. The FCC then considered several proposed ways in which such an anti-competitive eff ect could be mitigated, rejecting each of them. First, the FCC considered a proposal to narrow the established business relationship exemption so that no telecommunication s company could call its customers to advertise different services. Id. at 44160. However, the FCC cited comments in its administrative record emphasizing t he importance of “flexibility in communicating with ... customers not only about their current services, but also to discuss available alternative services or produc ts.” Id. Accordingly, the FCC- 47 -

concluded that limiting telecommunications companie s’ ability to market new goods or services to existing customers would not b e in the public interest. Id. Second, the FCC considered a proposal that the Comm ission revise the definition of established business relationship so that all providers of telecommunications services would be deemed to have such a relationship with all consumers, even if they had not in fact had any pre existing business connections. Id. Third, it considered an alternative proposal thatthe definition of established business relationship be revised to exclude compani es who have historically been dominant or monopoly service providers, at least until such time as the new entrants to the telecommunications industry suffici ently penetrated the market. Id. The FCC concluded that these proposals would not adequately fulfill Congress’ mandate to protect residential telephone subscribers’ privacy rights to avoid telemarketing calls to which they object: “To permit common carriers to call consumers with whom they have no existing relationships and who have expressed a desire not to be called by registering with the national do-not-call list, would likely confuse consumers and interfere with their ability to manage and monitor the telemarketing calls they receive.” Id. The FCC then explained the factors it believed woul d limit the established business relationship exception’s anti-competitive effect. First, it noted that all providers of telecommunications services – incumbe nt carriers and new- 48 -

competitors alike – may contact competitors’ custom ers who have not signed up for the national do-not-call registry. Id. Second, consumers who have signed up for the do-not-call registry still have the ability to place their carrier on a company-specific do-not-call list, thereby overridi ng the established business relationship exception. Id. Finally, the FCC emphasized that telecommunicatio ns providers are still free to use other means of mark eting their products to consumers, such as direct mailings. Id. The FCC’s rule demonstrates that the agency did notsimply ignore the potential anti-competitive effect of the establishe d business relationship exception or its duties under the Telecommunications Act. Rather, the FCC analyzed the possible effects that this exception may have on th e telecommunications industry and explained why it believed its rule would minimi ze any adverse consequences. When an agency has made a reasoned policy decision, “we are not empowered to substitute our judgment for that of the [agency]” u nder the arbitrary and capricious standard of review. Browner , 97 F.3d at 424. The FCC did not act in an arbitrary and capricious manner in adopting the established business relationship exception, and we decline the telemark eters’ invitation to displace the FCC’s policy judgment.16 In reviewing an agency’s construction of a statut e it administers, we first

ask whether Congress has directly spoken to the pre cise question at issue. If so, that is the end of the matter and Congress’ intent controls. If the statute is silent or ambiguous with respect to this issue, our inquiry is limited to whether the agency’s interpretation is a permissible constructi on of the statute. Chevron , 467 U.S. at 842-43. - 49 - C. The FTC’s Statutory Authority In case No. 03-6258, the district court held that t he FTC lacked statutory authority to enact the do-not-call registry. In th e Telemarketing Act, Congress authorized the FTC to “prescribe rules prohibiting deceptive telemarketing acts or practices and other abusive telemarketing acts or p ractices.” Pub. L. 103-297, 108 Stat. 1545 at § 3. More specifically, Congress directed the FTC to include “a requirement that telemarketers may not undertake a pattern of unsolicited telephone calls which the reasonable consumer wouldconsider coercive or abusive of such consumer’s right to privacy.” Id. The FTC’s conclusion that this language authorized it to enact the national do-not -call registry is entitled to deference under the familiar test outlined in Chevr on, U.S.A., Inc. v. Natural Resources Defense Council . 467 U.S. 837, 842-43 (1984). 16 In light of this deference, we conclude that the FTC did have statut ory authority to promulgate its do-not-call regulations because the agency’s vi ew that the Telemarketing Act authorized it to enact those rules is at least a pe rmissible construction of that

statute.- 50 -

Moreover, even if some doubt once existed, Congress erased it through subsequent legislation. See North Haven Bd. of Educ. v. Bell , 456 U.S. 512, 535 (1982) (“Where an agency’s statutory construction h as been fully brought to the attention of the public and the Congress, and the l atter has not sought to alter that interpretation although it has amended the statute in other respects, then presumably the legislative intent has been correctl y discerned.”); Schism v. United States , 316 F.3d 1259, 1289 (Fed. Cir. 2002) (“Congress m ay ratify agency conduct ‘giving the force of law to official action unauthorized when taken.’”) (citing Swayne & Hoyt v. United States , 300 U.S. 297, 302 (1937)). In the DoNot-Call Implementation Act, Congress directed the FCC and FTC to maximize consistency between their respective do-not-call ru les and authorized the FTC to collect do-not-call registry fees to offset the adm inistrative costs of the regulations. Pub. L. 108-10, 117 Stat. 557 at §§ 2 -3. Furthermore, in response to the district court’s decision in case No. 03-6258, Congress expressly ratified the FTC’s do-not-call regulations. An Act to Ratify th e Authority of the Federal Trade Commission to Establish a Do-Not-Call Registry, Pub. L. 108-82, 117 Stat 1006 (2003). The FTC’s statutory authority is now unmistakably clear.- 51 -

V. CONCLUSION

We hold that 1) the do-not-call list is a valid com mercial speech regulation under Central Hudsonbecause it directly advances substantial governmen tal interests and is narrowly tailored; 2) the registryfees telemarketers must pay to access the list are a permissible measure designed to defray the cost of legitimate government regulation; 3) it was not arbitrary and capricious for the FCC to adopt the established business relationship exception; an d 4) the FTC has statutory authority to establish and implement the national d o-not-call registry. The judgments below in cases 03-1429 and 03-6258 ar e REVERSED with respect to the questions presented in this appeal, and the petitions for review in cases 03-9571 and 03-9594 are DENIED.