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Mixed Message: Supreme Court Holds Government-Backed Debt Exemption Invalid But Also Finds TCPA Doesn’t Apply to Government at All

Isn’t it ironic?  In Barr, the Supreme Court held the 2015 government-backed debt exemption unconstitutional, yet in footnote 1 of the decision the Court emphasized that “[t]he robocall restriction applies to ‘persons,’ which does not include the Government itself.”   See 47 U. S. C. §153(39).  Hmmmm.  So, what level of “Government” falls into this TCPA workaround?—Local, state, and/or federal “Government”?  Just federal?  Government contractors?  Well, all of this is up for present debate and footnote 1 (and Barr implications more broadly) will likely inspire momentum at the FCC where a possible Broadnet reconsideration is looming.

Broadnet, but I thought this was about Barr?  Let’s go back in time four years.  In 2016, the FCC issued the famous Broadnet declaratory ruling that determined “the TCPA does not apply to calls made by or on behalf of the federal government in the conduct of official government business, except when a call made by a contractor does not comply with the government’s instructions.”  The ruling only embraced federal government contractors.

 But, as can be expected in the TCPA universe, this ruling was met with confusion, friction and petitions for reconsideration.  On the one hand, the National Consumer Law Center asked the Commission to reconsider its ruling to include federal contractors as “persons” under the TCPA and thereby making them subject to the TCPA.  On the other hand, the Professional Services Council asked the Commission to reconsider its reliance on common-law agency principles and to clarify that contractors acting on behalf of the federal government are not “persons” under the TCPA.  As a result, on May 14, 2018, the Commission published a Public Notice seeking comment on several issues to include “whether contractors acting on behalf of federal, state, and local governments are ‘persons’ under the TCPA.”   And since there has not been a ruling to date, maybe Barr will inspire movement, especially since Barr leaves private debt collectors enlisted to collect government-backed debts exposed to TCPA liability.  Completely.  Wide.  Open.

Interestingly, Commissioner O’Rielly’s May 16, 2019 comments are even more insightful in light of the Barr ruling.   In a May, 2019, Commissioner O’Rielly spoke at the ACA International Washington Insights Conference.  First, he highlighted the importance of a functioning debt collection ecosystem for society—“As you know well, without debt collection, the cost of lending would soar, as any defaults would be absorbed by future borrowers.”  The enormity of government backed debt was not lost on the Supreme Court in Barr either.  In fact, Justice Gorsuch highlighted:

 When it comes to student loans alone, the government guarantees more than $150 billion in private loans involving over 7 million individuals.  And, to be clear, its not just the government that’s allowed to call about these loans.  Private lenders and debt collectors are free to send in the robots too, so long as the debt in issue is ultimately guaranteed by the government.

150 billion . . . dollars . . .  brings more life Commissioner O’Rielly closing comments to the conference audience when he said, “granting a reversal [in Broadnet] would create massive burdens for federal agencies and taxpayers and would not be justified.  I certainly agree, and if it were up to me, I would extend Broadnet ruling to apply to state and local governments as well.”  Probably even more reason to do so now that Barr eviscerates the 2015 government-debt exemption from the TCPA.  Poof.  Maybe Barr will inspire the Commission to reconsider the Broadnet ruling?   We will certainly be watching it all unfold here on TCPAWorld. 

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume X, Number 189

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About this Author

Katherine Spicer, attorney, Squire
Attorney

Katherine (Katy), is a litigator who draws on her unique military background to help clients solve their complex legal issues. Katy represents clients in internal and government investigations, complex civil and criminal litigation and international arbitration.

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