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Court Ruling Means FCC Free to Issue Unreviewable TCPA “Guidance”




by:
Troutman Sanders LLP - Atlanta Office

 
February 4, 2014

Previously published on January 24, 2014

A procedural ruling by the D.C. Circuit may have the effect of allowing federal agencies to issue influential interpretations of law without any accountability in court. On January 22, 2014, a D.C. Circuit panel refused Dish Network LLC’s petition to review the Federal Communications Commission’s (FCC) guidance, which was embedded in a formal administrative ruling. The panel found that the guidance portions were not binding on courts, and thus were not subject to judicial review. The FCC’s guidance stated that companies may be held liable under federal common-law principles of agency for Telephone Consumer Protection Act (TCPA) violations committed by vendors. While Dish Network asserted that the FCC overstepped its bounds in issuing the guidance, the FCC argued that its decision was not binding on courts and, therefore, could not be challenged in court.

Nuts and Bolts

The panel’s opinion presents two main concerns. First, the issue of common-law liability speaks directly to the TCPA liability of entities for the conduct of their vendors - a significant risk considering the strict liability nature of the TCPA and the large statutory penalties permitted under the TCPA. The FCC’s guidance threatens to “bend the curve” on the issue in a way that could dramatically expand TCPA liability.

Second, the commentary on the nature of the regulatory “guidance” under the law is important because the FCC has been able to circumvent normal “notice and comment” requirements for rulemaking by issuing “guidance,” which courts may not review but by which courts should be “persuaded.” On the one hand, these decisions are beyond judicial review, but, on the other, due to the lack of official guidance under the TCPA itself and the somewhat limited amount of case law that exists currently under the TCPA, the FCC decisions may be the only concrete evidence of how companies should comply with the law. Indeed, the FCC’s guidance could have a significant influence on companies’ actual behavior as well as on the development of the law.

The FCC is not the only agency to issue “guidance” in lieu of formal rulemaking or case decisions. The Consumer Financial Protection Bureau also has been criticized for modifying the scope of the law through issuing “bulletins” that have no legal basis but remain persuasive evidence for state and federal regulatory oversight and enforcement actions.

In sum, the ironic affect of a ruling that purports to disparage the import of federal regulatory “guidance” as being non-binding is to further the effective unreviewable powers of federal agencies.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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