On December 14, the Federal Communications Commission (FCC) ruled that federal and state contractors are “persons” subject to the terms of the Telephone Consumer Protection Act (TCPA). Citing privacy concerns, the order overturns 2016 FCC precedent, exempting government contractors from the TCPA’s restrictions. Now, government contractors must obtain permission from consumers before calling or texting them.

The decision, in In the Matter of Broadnet Teleservices LLC Petition for Declaratory Ruling et al., No. 02-278 at the FCC, arose from consumer group petitions to reconsider the 2016 exemption. It marks the latest expansion of TCPA restrictions and sets the stage for the Supreme Court’s forthcoming decision in Duguid v. Facebook, interpreting the scope of “autodialers” that could further transform the landscape of TCPA compliance efforts.

The TCPA bans “persons” from initiating calls to consumers, subject to certain exceptions for emergency purposes or where consumers have provided prior express consent. The statute defines “person” as an individual, partnership, association, joint-stock company, trust, or corporation. In 2016, the FCC clarified that the federal government was not a person under the TCPA, and extended that exemption to government contractors, who, in the eyes of the FCC, acted as agents of the government.

Under the new ruling, state and federal contractors, as well as local governments, must comply with the TCPA’s provisions because they are not sovereign entities and are not protected by a longstanding presumption against their legal personhood. The federal government remains exempt; however, the FCC expanded the government entity exemption to state governments based on their sovereignty, and the emergency exception still stands.

Additionally, the FCC suggested that government contractors who violated the TCPA by making unsolicited calls may still be protected by civil derivative immunity, which attaches where the government has authorized an action and the authority was validly conferred by Congress. However, the FCC decided it would be “more appropriate for the courts” to draw the precise line for contractors in the TCPA context.

Finally, contractors may have some room to argue that they are not the “makers” of a call, depending on the platform used and “the totality of the facts and circumstances.” The FCC concluded that the contractor at issue, Broadnet, was not the maker of the call, because its “government client is so involved in placing the call as to be deemed to have initiated it.”

Troutman Pepper will continue to monitor regulatory developments affecting TCPA compliance.