Wednesday, September 24, 2003

FTC News: Do Not Call Struck Down (For Now)

Yesterday U.S. District Judge Lee West, sitting in Oklahoma City, ruled the FTC exceeded its authority in creating the national "Do Not Call" registry without express congressional authorization. This is probably not a long-term defeat for the Commission, since the ruling could be reversed on appeal to the U.S. Court of Appeals for the Tenth Circuit, and failing that Congress will likely give the express authorization Judge West found to be lacking.

Still, this is an important ruling in that it demonstrates the "house of cards" nature of the FTC's exercise of power. FTC leaders inferred their authority to create the Do Not Call registry from various legislative directives permitting the regulation of "abusive" telemarketing practices, yet Congress never actually said "create a Do Not Call registry and fine violators $11,000 per violation." Like most regulatory agencies, the FTC recognizes no inherent limits on its own power, and given the agency's longstanding and vehement opposition to the principle of individual rights, it's no surprise the Commission decided to impose the most stringent form of regulation it could come up with.

This is not the first time the FTC's expansive self-image has been slapped down on appeal. During the 1990s, the FTC lost a series of court battles trying to prevent mergers in the hospital industry. A few years ago, the U.S. Supreme Court rejected the FTC's effort to broadly regulate the voluntarily regulated California Dental Association. Yet no matter how many appellate judges tell the FTC otherwise, the Commission continues to believe it has unrestricted power to govern any aspect of the economy according to its whims. This is why ultimately it is Congress, not the courts, that must step in and cut the FTC down to size (if not eliminate the FTC in its present form altogether).

Such actions are unlikely, however, given Congress' traditional favoritism toward the FTC as a useful tool to attack businesses that have fallen out of political favor. Which is why Congress will almost certainly take pity on the FTC now and authorize the Do Not Call registry.

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