Cooper v. Navient Solutions, Llc

MOTION for partial summary judgment

M.D. Fla.March 23, 2017

{41174922;1} UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION CATHERINE COOPER, Plaintiff, v. Case 8:16-cv-03396-JSM-MAP NAVIENT SOLUTIONS, LLC, Defendant. DEFENDANT NAVIENT SOLUTIONS, LLC’S MOTION FOR PARTIAL SUMMARY JUDGMENT Defendant Navient Solutions, LLC, formerly known as Navient Solutions, Inc. (“NSL”), by and through undersigned counsel, moves this Court for partial summary judgment pursuant to Federal Rule of Civil Procedure 56, and, in support thereof, states as follows: INTRODUCTION Plaintiff Catherine Cooper (“Cooper”) brings claims against NSL for alleged violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (the “TCPA”).1 The TCPA prohibits, among other things, making a call to a cellular telephone through the use of an automated telephone dialing system without the called party’s “prior express consent.” NSL is a servicer of student loans, including with respect to federal student loans that are owned or guaranteed by the United States Department of Education (“ED”). As part of its servicing function, NSL makes calls and sends letters to borrowers, so as to collect on delinquent loan amounts and advise them of available repayment options. 1 Plaintiff also alleges claims under the Florida Consumer Collection Practices Act, Fla. Stat. § 559.55, et seq., The Motion is not directed to those claims. Case 8:16-cv-03396-JSM-MAP Document 17 Filed 03/23/17 Page 1 of 8 PageID 62 {41174922;1} -2- In the Complaint, Cooper contends that NSL violated the TCPA when it called her on her cell phone regarding her federal student loan(s). However, very simply, these claims fail as a matter of law. The Bipartisan Budget Act of 2015 (the “Budget Act”), effective as of November 2, 2015, amended the TCPA to eliminate the prior express consent requirement for calls “made solely to collect a debt owed to or guaranteed by the United States.” 47 U.S.C. 227(b)(1)(A)(iii). Because NSL called Cooper with respect to her federal student loan, and only after the Budget Act’s effective date, it has no liability under the TCPA. BACKGROUND I. NSL, Cooper’s Loan And The Phone Calls NSL is engaged in the business of servicing student loans, including with respect to loans owed to or guaranteed by ED. The servicing of federal student loans is governed by a complex set of federal regulations promulgated by ED, pursuant to the Higher Education Act of 1965, as amended. See 34 C.F.R. §§ 682.400-682.423. As relevant here, when federal student loans become past due, the servicer, such as NSL, is required to contact delinquent borrowers. (34 C.F.R. § 682.411(c)-(f)). Cooper applied for and obtained a Federal Consolidation student loan (the “Loan”) under the Federal Family Education Loan Program (“FFELP”), which consolidated four Federal Stafford student loans Cooper had previously obtained. (Declaration of Carl Cannon, ¶ 5.). The Loan is evidenced by a Federal Consolidation Loan Master Promissory Note dated July 1, 2006, and attached hereto as Exhibit A. Pursuant to the terms and conditions of the Federal Consolidation Loan Promissory Note, the Loan was disbursed on July 12, 2006, in the original principal amount of $8,589.81. (Declaration of Carl Cannon, ¶ 6.) NSL has serviced the Loan since it was disbursed in July 2006. (Id.) At various times following the disbursement of the Case 8:16-cv-03396-JSM-MAP Document 17 Filed 03/23/17 Page 2 of 8 PageID 63 {41174922;1} -3- Loan, Cooper became delinquent on her repayment obligations, and NSL attempted to contact her in its capacity as loan servicer. (Id., ¶ 7.) II. The Complaint Plaintiff alleges that, on or about January 2016, during a phone call with one of NSL’s agents, she revoked her prior express consent for calls to her cellular telephone. (Complaint, ¶ 14.) However, according to Cooper, NSL called her thereafter approximately 100 times. (Id., ¶ 17.) Accordingly, on December 12, 2016, Cooper filed her Complaint against NSL, asserting a claim for violation of the TCPA. ARGUMENT I. The Legal Standard “Adjudications of partial summary judgment are authorized under Rule 56(d), Fed. R. Civ. P., and are governed by the standards for summary judgment in Rule 56(c).” Heller v. Plave, No. 89-0639-CIV-ATKINS, 1993 WL 557846, at *4 (S.D. Fla. Aug. 2, 1993) (citing Johns v. Jarrard, 927 F.2d 551, 554-56 (11th Cir. 1991)). A partial summary judgment “serves the purpose of speeding up litigation by eliminating before trial matters wherein there is no genuine issue of fact.” Heller, 1993 WL 557846 at *4; Advisory Committee Note to Rule 56(d), 1946 Amendment; see also Fed. R. Civ. P. 56(a). The party moving for summary judgment bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L.Ed. 2d 265 (1986); see also Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). A fact is material when, under the substantive governing law, it affects the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). If the evidence offered in support of the motion establishes every essential element of a defense, there is no need to offer evidence to negate or disprove matters on which the Case 8:16-cv-03396-JSM-MAP Document 17 Filed 03/23/17 Page 3 of 8 PageID 64 {41174922;1} -4- opposing party has the burden of proof at trial. Celotex Corp., 477 U.S. at 323, 106 S. Ct. at 2548. “After the movant has met its burden under Rule 56(a), the burden of production shifts, and the non-moving party ‘must do more than simply show that there is some metaphysical doubt as to the material facts.’” Legg v. Voice Media Grp., Inc., 20 F. Supp. 3d 1370, 1373 (S.D. Fla. 2014) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986)). To show there is a genuine issue of material fact “requires more than showing a mere scintilla of evidence; the non-movant must show that reasonable jurors could find by a preponderance of the evidence that the non-movant is entitled to a verdict.” Velten v. Lippert, 985 F.2d 1515, 1523 (11th Cir. 1993) (citing Anderson, 477 U.S. at 252, 106 S. Ct. at 2512). Indeed, the Eleventh Circuit has held that the non-moving party “may not rest upon the mere allegations or denials in its pleadings” but instead must present “specific facts showing that there is a genuine issue for trial.” Walker v. Darby, 911 F. 2d 1573, 1576–77 (11th Cir. 1990). Here, NSL easily meets the standard for summary judgment. As explained below, the facts are narrow and extraordinarily simple, and the governing law is clear and unmistakable. The Court therefore should grant the Motion. II. The Budget Act Bars Cooper’s TCPA Claims In Their Entirety. On November 2, 2015, the President signed the Budget Act into law. Section 301 of the Budget Act (the “Amendment”) provides that autodialed calls are exempt from the TCPA’s prior express consent requirement if they are “made solely to collect a debt owed to or guaranteed by the United States.” 47 U.S.C. § 227(b)(1)(A)(iii). Here, Cooper proposes to recover for autodialed calls made by NSL on her federal student loan after January 2016. Because these Case 8:16-cv-03396-JSM-MAP Document 17 Filed 03/23/17 Page 4 of 8 PageID 65 {41174922;1} -5- calls took place after the effective date of the Amendment, no prior express consent requirement applied to them, and the calls to Cooper therefore did not violate the TCPA. Moreover, the calls made to Cooper are precisely of the type that Congress intended to permit through the Amendment. For example, in the lead-up to passage of the Budget Act, ED issued a report calling for Congress to “change the law to ensure that servicers can contact borrowers using modern technology.” See “Strengthening the Student Loan System to Better Protect All Borrowers,” U.S. Department of Education, October 1, 2015, at p. 16 (last viewed May 4, 2016). ED argued that: If servicers are able to contact a borrower, they have a much better chance at helping that borrower resolve a delinquency or default. Many student loan borrowers, especially those that may just be graduating, move frequently in addition to no longer having landline phone numbers. As such, it can be difficult for servicers to find a borrower except by using a cell phone number. Current Federal law prohibits servicers from contacting borrowers on a cell phone number using an auto-dialer unless the borrower has provided explicit consent to be contacted at that number. With phone numbers changing or being reassigned on a regular basis, it is virtually impossible for servicers to use auto-dialing technology. The President’s 2016 Budget proposed amending this law to allow the use of automated dialers to contact borrowers to inform them of their federal repayment obligations and benefits like Pay As You Earn, or Rehabilitation, in the case of a defaulted borrower. Id. Thus, based on the Amendment and ED’s sound, underlying rationale in requesting it, the Court should find that Cooper’s claims fail. Furthermore, the Court should reject any contention from Cooper that this outcome somehow changes in light of rulemaking issued by the Federal Communications Commission (the “FCC”) on August 11, 2016. The Budget Act directed the FCC to “prescribe regulations to implement the amendments made” by Section 301 within nine months of enactment. See Budget Act at § 301(b). The FCC did just that on August 11, 2016, when it released a Report and Order to implement the Amendment. See In the Matter of Rules and Regulations Implementing the Case 8:16-cv-03396-JSM-MAP Document 17 Filed 03/23/17 Page 5 of 8 PageID 66 {41174922;1} -6- Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Report and Order, FCC 16-99 (August 11, 2016) (the “August 2016 Order”), attached as Exhibit B. The August 2016 Order appended the FCC’s Final Rules implementing the Amendment; however, the Final Rules are not yet effective. As the August 2016 Order makes clear, because certain of the Final Rules implicate the Paperwork Reduction Act, as a whole, the rules will not become effective “until 60 days after the Commission publishes a Notice in the Federal Register indicating approval of the information collection by the Office of Management and Budget (OMB).” See August 2016 Order at 24 at ¶¶ 59-60. Thus, the Final Rules are not in place and, until they are, the Amendment applies, as written. CONCLUSION For the foregoing reasons, NSL respectfully requests that this Court grant summary judgment in favor of NSL on Cooper’s claims under the TCPA. Case 8:16-cv-03396-JSM-MAP Document 17 Filed 03/23/17 Page 6 of 8 PageID 67 {41174922;1} -7- Dated: March 23, 2017 Respectfully submitted, NAVIENT SOLUTIONS, LLC By: Heather L. Fesnak By Its Attorneys HEATHER L. FESNAK Florida Bar No. 85884 heather.fesnak@akerman.com DAVID A. KARP Florida Bar No. 069226 david.karp@akerman.com 401 E. Jackson Street, Suite 1700 Tampa, FL 33602-5250 T: 813-223-7333 F: 813-223-2837 -and- WILLIAM P. HELLER Florida Bar No. 987263 William.heller@akerman.com Las Olas Centre II, Suite 1600 350 East Las Olas Blvd. Fort Lauderdale, FL 33301-2229 T: 954-463-2700 F: 954-463-2224 Case 8:16-cv-03396-JSM-MAP Document 17 Filed 03/23/17 Page 7 of 8 PageID 68 {41174922;1} -8- CERTIFICATE OF SERVICE I hereby certify that on March 23, 2017 a copy of the foregoing DEFENDANT NAVIENT SOLUTIONS, LLC’S MOTION FOR PARTIAL SUMMARY JUDGMENT was served by electronic mail through the Court's CM/ECF system on: Amy Ferrera, Esq. Morgan & Morgan, Tampa, P.A. One Tampa City Center 201 N. Franklin Street, 7th Floor Tampa, FL 33602 T: 813-223-5505 F: 813-223-5402 amferrera@forthepeople.com Heather L. Fesnak Heather L. Fesnak Case 8:16-cv-03396-JSM-MAP Document 17 Filed 03/23/17 Page 8 of 8 PageID 69 Case 8:16-cv-03396-JSM-MAP Document 17-1 Filed 03/23/17 Page 1 of 2 PageID 70 Case 8:16-cv-03396-JSM-MAP Document 17-1 Filed 03/23/17 Page 2 of 2 PageID 71 EXHIBIT A Case 8:16-cv-03396-JSM-MAP Document 17-2 Filed 03/23/17 Page 1 of 11 PageID 72 Federal Family Education Loan Program (FFELP) Federal Consolidation Loan Application and Promissory Note WARNING: Any person who knowingly makes a false statement or misrepresentation on this form is subject to penalties which may include fines, imprisonment, or both, under the United States Criminal Code and 20 U.S.C. 1097. Guarantor, Program, or Lender Identification OMB No. 1845-0036 Form approved Exp. date 10/31/2006 Before You Begin Read the Instructions for Completing the Federal Consolidation Loan Application and Promissory Note. Print using dark ink or type. This form must be signed and dated by the applicant(s). Section A. Borrower Information 1 . Last Name First Name MI 3A. Permanent Street Address (Include Number, Street, Apartment Number, City, State, Zip Code) 2. Social Security Number 5. Former Name(s) 6. Date of Birth (Month/Day/Year) 7. Driver’s License State and Number 8. Fax Number and E-mail Address (Optional) E-mail Address State # Fax 9. Employer Name Address City State Zip Code 10. Consolidating Lender Name 1 1 . Lender Code, if known Section B. Spouse Information Only complete this section if your spouse has eligible loans and you both wish to consolidate jointly. If you complete Section B, also include your spouse’s loan(s) in Sections D.1 and D.2. Your spouse must also sign and date Item 38 in Section G. 12. Last Name First Name MI 13. Social Security Number 14. Date of Birth (Month/Day/Year) 15. Former Name(s) 16. Driver’s License State and Number State # E-mail Address 17. Fax Number and E-mail Address (Optional) Fax 18. Employer Name Address City State Zip Code Section C. Reference Information You must provide two separate references with different U.S. addresses. Do not include individuals who live with you (e.g., spouse) or live outside the United States. Both references must be completed fully and should be relatives or acquaintances you (or you and your spouse, if consolidating jointly) have known for at least three years. Page 1 of 9 4. Home Area Code/Telephone Number ( ) 3B. Permanent Mailing Address, if different (Include P.O. Box, RFD, or General Delivery, City, State, Zip Code) Employer Area Code/Telephone Number ( ) Employer Area Code/Telephone Number ( ) 19. Name A. B. Permanent Address City, State, Zip Code E-mail Address (Optional) Area Code/Telephone Number ( ) ( ) Relationship to Borrower ( ) ( ) 506642680 9039304 COOPER CATHERINE R 2680 PLANT CITY 2728 GOLF LAKE DR FL 33566 813 754-2776 /1951 FL C160-136-51-766 COLDWELLBANKER 1513 S. JAMES REDMAN PKWAY PLANT CITY FL 33563 Sallie Mae 813 754-3586 DAVE MCCARTHEY 15135 COLLINS PLANT CITY, FL 33563 813 263-4797 813 717-7739 PLANT CITY, FL 35362 1307 CHARLIE GRIFFIN RD MARILYN GENTRY WEB Case 8:16-cv-03396-JSM-MAP Document 17-2 Filed 03/23/17 Page 2 of 11 PageID 73 Page 2 of 9 Borrower’s Name Social Security Number Spouse’s Name Social Security Number (Please print. Enter spouse’s information only if you completed Section B.) Read the instructions before completing this section. List all education loans you want to consolidate, including loans currently held by the lender that will be consolidating your loans. Use the Loan Codes listed in the instructions. If you need to list additional loans, use the Additional Loan Listing Sheet included in this package. Include your spouse’s loans only if Section B has been completed. ONLY LIST LOANS THAT YOU WANT TO CONSOLIDATE IN THIS SECTION. 20. Loan Code (See Instructions) 21 . Loan Holder Name and Mailing Address 22. B=Borrower S=Spouse J=Joint 23. Loan Account Number 24. Interest Rate 25. Payoff Amount 26. Grace Period End Date – If any of the loans that you have selected for consolidation are in a grace period and you wish to delay processing until you have completed your grace period, enter your expected grace period end date. If you do not wish to delay processing, leave this field blank. (Month/Year) Section D.1 . Education Loan Indebtedness — Loans You Want to Consolidate COOPER CATHERINE R 2680 STFS STFS STFS STF3 SALLIE MAE TRUST - LSC/FL 1002 ARTHUR DRIVE LYNN HAVEN, FL SALLIE MAE TRUST - LSC/FL 1002 ARTHUR DRIVE LYNN HAVEN, FL SALLIE MAE TRUST - LSC/FL 1002 ARTHUR DRIVE LYNN HAVEN, FL SALLIE MAE TRUST - LSC/FL 1002 ARTHUR DRIVE LYNN HAVEN, FL B 506-64-2680-1-01 506-64-2680-1-02 B 7.94 $2,032.35 7.94 $2,197.31 $2,775.977.94 506-64-2680-1-03 B B 506-64-2680-1-04 7.94 $1,564.06 Case 8:16-cv-03396-JSM-MAP Document 17-2 Filed 03/23/17 Page 3 of 11 PageID 74 Page 3 of 9 Borrower’s Name Social Security Number Spouse’s Name Social Security Number (Please print. Enter spouse’s information only if you completed Section B.) Read the instructions before completing this section. List all education loans that you are not consolidating but want considered in calculating your maximum repayment period. Remember to include loans held by the lender that will be making the Federal Consolidation Loan, but that you do not want to include in the Federal Consolidation Loan. Use the Loan Codes listed in the instructions. If you need to list additional loans, use the Additional Loan Listing Sheet included in this package. Include your spouse’s loans only if Section B has been completed. ONLY LIST LOANS THAT YOU DO NOT WANT TO CONSOLIDATE IN THIS SECTION. Section D.2. Education Loan Indebtedness — Loans You Do Not Want to Consolidate Section E. Repayment Plan Selection 27. Loan Code (See Instructions) 28. Loan Holder Name and Mailing Address 29. B=Borrower S=Spouse J=Joint 30. Loan Account Number 31 . Interest Rate 32. Current Balance Item 33: You may choose one of the repayment options described below for your Federal Consolidation Loan. The maximum repayment period will be 10 to 30 years depending on your student loan debt. You can request a payment period that is shorter than the maximum period allowed. If you do not notify your lender of your choice of payment plans or do not provide your lender with the required documentation for an income-sensitive schedule, your lender will establish a standard payment schedule. 33. Repayment Options (select one): STANDARD PAYMENT PLAN GRAD CHOICESM 2 with two years of reduced payments EXTENDED PAYMENT PLAN with two years of interest-only payments EXTENDED PAYMENT PLAN with four years of interest-only payments INCOME-SENSITIVE PAYMENT PLAN GRAD CHOICESM 3 with three years of reduced payments GRAD CHOICESM 4 with four years of reduced payments GRAD CHOICESM 5 with five years of reduced payments EXTENDED PAYMENT PLAN with standard payments COOPER CATHERINE R 2680 X Case 8:16-cv-03396-JSM-MAP Document 17-2 Filed 03/23/17 Page 4 of 11 PageID 75 Section F. Borrower Certification and Authorization Section G. Promissory Note (continued on next page) To be completed and signed by the borrower and spouse, if applicable. 34. I declare under penalty of perjury that the following is true and correct: A. The information I have provided on this Federal Consolidation Loan Application and Promissory Note is true, complete, and correct to the best of my knowledge and belief and is made in good faith. B. (i) I do not owe an overpayment on a Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, or a Leveraging Educational Assistance Partnership Grant (formerly State Student Incentive Grant), or if I owe an overpayment, I have made satisfactory arrangements with the holder to repay the amount owed. (ii) I am not now in default on any loan that I am consolidating or, if I am in default, I have either (a) made satisfactory arrangements with the holder of the defaulted loan(s) to repay the amount owed, or (b) for Federal Stafford, SLS, PLUS, or Consolidation loans, I agree to repay the Federal Consolidation Loan under income-sensitive repayment terms. C. The loans I am requesting to consolidate are in grace or in repayment status (including loans in deferment or forbearance). D. I do not have any other application pending for a Federal Consolidation Loan with any other lender. If all of my FFELP loans are with one holder who is not the consolidating lender, I further certify that I have sought and been unable to obtain a Federal Consolidation Loan from the holder of my loans, or the holder declined to provide me with an income-sensitive repayment schedule. E. If I have an outstanding Federal Consolidation Loan, I am eligible for another Federal Consolidation Loan because: (i) I have subsequently borrowed another eligible loan(s), or (ii) I am consolidating a Federal Consolidation Loan with at least one other eligible loan. F. All of the loans selected for consolidation have been used to finance my education or my child’s education. G. I am not subject to a judgment secured through litigation or to an order for wage garnishment, except as I have disclosed. H. If I am applying jointly with my spouse, we are legally married to each other. 35. I also make the following authorizations and statements of understanding: A. I understand that the amount of my Federal Consolidation Loan will be based on the payoff amounts of my outstanding eligible loans that I selected for consolidation, as provided by the holders of those loans, and may exceed my estimate of such payoff amounts. The actual payoff amounts may differ from the estimated payoff amounts because the holders will include unpaid principal, unpaid accrued interest, and other costs as permitted by federal regulations in the payoffs reported to the consolidating lender. I understand that if any collection costs are owed on the loans selected for consolidation, these costs may be added to the principal balance of the Federal Consolidation Loan and, in the case of Federal Stafford, SLS, PLUS, or Consolidation loans in default and held by a guaranty agency, may not exceed 18.5 percent of the outstanding principal and interest on the loan at the time the holders certify the payoff amounts. B. I understand that I may no longer be eligible for some deferment types and for subsidized deferment periods on some loans being consolidated. I also understand that I may no longer be eligible for some loan discharges and types of forgiveness that were available on the loans being consolidated. If I am applying jointly with my spouse, I further understand that my Federal Consolidation Loan will be fully discharged only if both of us qualify for discharge and may be partially discharged if only one of us qualifies for discharge. I also understand that I may postpone repayment of the loan only if I provide the lender with a request that confirms deferment or forbearance eligibility for both of us at the same time. C. I authorize the consolidating lender to contact the holders identified on my application to determine the eligibility and/or payoff amounts for the loans I have selected for consolidation. I further authorize those holders to release that information. D. I authorize the consolidating lender to send the proceeds of my Federal Consolidation Loan to each holder of the loans I have identified to pay off the debts. E. If the amounts my consolidating lender sends to my holders exceed the amounts needed to pay off the balances of the selected loans, I understand that the holders will refund the excess to my consolidating lender to be applied against the outstanding balance of this loan. If the amounts my consolidating lender sends to my holders are less than the amounts needed to pay off the balances of the loans selected for consolidation, I will be responsible for notifying my consolidating lender about the remaining amounts. I authorize the consolidating lender to include the remaining amounts in this Federal Consolidation Loan, unless I pay off the remaining balances. F. I authorize the consolidating lender, the guarantor, or their agents to investigate my credit record and report information concerning my loan status to persons and organizations permitted by law to receive such information. G. I authorize the release of information pertinent to this loan: (i) by the school(s), the lender, and the guarantor, or their agents, to the references on this loan and to members of my immediate family unless I submit written directions otherwise; and (ii) by and among my schools, lenders, guarantors, the Department of Education, and their agents. H. I authorize the Department of Education and its agent(s) to verify my Social Security Number with the Social Security Administration (SSA) and, if the number on my loan record is incorrect, then I authorize SSA to disclose my correct Social Security Number to these parties. I. If I have HEAL loans serviced by the consolidating lender and such loans are not included in this Federal Consolidation Loan, I authorize the establishment of a combined payment plan on my behalf. (In the case of a Federal Consolidation Loan made to a married couple, all references to “I,” “me,” “my,” “you,” and “your” in the Promissory Note; Borrower’s Rights and Responsibilities Statement; Borrower Certification and Authorization; as well as other materials provided in connection with this loan apply equally to the borrower and the borrower’s spouse unless otherwise stated.) (In this Promissory Note, “lender” refers to, and this Promissory Note benefits, the original consolidating lender and its successors and assigns, including any subsequent holder of this Promissory Note.) 36. Promise to Pay: I promise to pay to the order of the lender, all sums disbursed (hereafter “loan”) under the terms of this Promissory Note (hereafter “Note”) to pay off my prior loan obligations, plus interest and other charges and fees that may become due as provided in this Note. Unless I make interest payments, interest that accrues on my loan during forbearance periods and on the unsubsidized portion of my loan during deferment periods will be added, as provided under the Act, to the principal balance of the loan. If I fail to make any payments on this Note when due, I will also pay reasonable collection costs, including but not limited to attorney’s fees, court costs, and other fees. If I am applying jointly with my spouse, I understand and agree that I am and will continue to be held jointly and severally liable for the entire amount of the debt represented by the Federal Consolidation Loan without regard to the amounts of our individual loan obligations that are consolidated and without regard to any change that may occur in our marital status. I understand this means that I may be required to pay the entire amount due if my spouse is unable or refuses to pay. I understand that this is a Promissory Note. I will not sign this Note before reading the entire Note even if I am otherwise advised. I am entitled to an exact copy of this Note and the Borrower’s Rights and Responsibilities Statement. My signature certifies I have read, understand, and agree to the terms and conditions of this Note, including the Borrower Certification and Authorization and the Borrower’s Rights and Responsibilities Statement. I UNDERSTAND THAT THIS IS A LOAN THAT I MUST REPAY. 37. Borrower’s Signature Today’s Date (Month/Day/Year) 38. Spouse’s Signature (If consolidating jointly) Today’s Date (Month/Day/Year) Page 4 of 9 Borrower’s Name Social Security Number Spouse’s Name Social Security Number (Please print. Enter spouse’s information only if you completed Section B.) COOPER CATHERINE R 2680 CATHI R COOPER FAB7DD69AC4D66D7D1ECA37D6E98E105 07012006 Case 8:16-cv-03396-JSM-MAP Document 17-2 Filed 03/23/17 Page 5 of 11 PageID 76 Federal Consolidation Loan Application and Promissory Note (continued) Disclosure of Terms This Note applies to Federal Consolidation Loans made under the Federal Family Education Loan Program. In this Note, the Higher Education Act of 1965, as amended, 20 U.S.C. 1070 et seq., and applicable U.S. Department of Education regulations are referred to as the “Act.” At or about the time my Federal Consolidation Loan is disbursed, a disclosure statement and repayment schedule (“disclosure”) will be provided to me. This disclosure will identify my Federal Consolidation Loan amount and additional terms of the loan. If I have questions about the information disclosed, I will contact the lender. If the information in this Note conflicts with information in the disclosure, the specific terms and information in the disclosure apply to my loan. Important additional terms of this loan are disclosed in the Borrower’s Rights and Responsibilities Statement accompanying this Note. I agree that the lender may assign my loan to another holder. Interest Unless my lender notifies me in writing of a lower rate(s), the rate(s) of interest for my loan is that specified in the Act. Interest rate information is presented in the Borrower’s Rights and Responsibilities Statement accompanying this Note. The interest rate is presented in a disclosure that is issued to me. Interest accrues on the unpaid principal balance of my Federal Consolidation Loan from the date of disburse- ment by the lender until the entire principal balance is paid in full. This includes interest accruing during any period of deferment or forbearance. I agree to pay all interest charges on my loan except for interest payable by the federal government under the Act. I will be responsible for the interest that begins accruing upon disbursement of my loan. If I do not make payments of interest before the beginning of principal payment, or during a period of authorized deferment or forbearance, I agree that the lender may capitalize such interest to the extent permitted by the Act. Except for any portion of the Federal Consolidation Loan attributable to a HEAL Loan, this loan will bear simple interest at an annual rate that is fixed for the term of the loan. The maximum interest rate on this loan will be equal to the weighted average of the interest rates (as certified by the holder) on the loans being consolidated, rounded up to the nearest higher one-eighth of one percent, not to exceed 8.25 percent. If I choose to consolidate a fixed rate Federal ALAS/SLS Loan(s) or Federal PLUS Loan(s), I request that the existing interest rate of each loan be converted before consolidation to the refinancing rate provided for in the Act, if that rate is lower than the existing rate. If my lender grants this request, I understand there will be no separate document evidencing this refinancing. For the portion of the Federal Consolidation Loan attributable to a HEAL loan (if applicable), the interest rate is a variable rate and is adjusted annually on July 1 . The variable rate for each 12-month period will be equal to the average of the bond equivalent rates of the 91-day Treasury Bills auctioned for the quarter ending June 30, plus 3.0 percent; there is no maximum interest rate on this portion of the loan. 180 Day Add-On Provision If I do not consolidate all of my eligible loans at this time, I understand that I may later add to this Federal Consolidation Loan eligible loans made before or after the date of this consolidation. To add an additional loan(s), I understand I must complete a Request to Add Loans form which is available from the lender and which must be received by the lender within 180 days of the date this Federal Consolidation Loan is disbursed. If I add a loan during this period, the lender will disclose new terms to me. The new terms and information will supersede the terms and information in any prior disclosure. After the 180-day period, no loan can be added to this Federal Consolidation Loan. Late Charges and Collection Costs The lender may collect from me: (i) a late charge for each late installment payment if I fail to make any part of a required installment payment within 15 days after it becomes due, and (ii) any other charges and fees that are permitted by the Act for the collection of my loans. If I default on the loan, I will pay reasonable collection fees and costs, plus court costs and attorney’s fees. Repayment I am obligated to repay the full amount of the loan made under this Note and the interest that accrues on that amount. Repayment begins upon disbursement of the loan, and my first payment will be due within 60 days after the disbursement. Payments will be scheduled in monthly installments according to the disclosure my lender will provide to me. The disclosure will state my payment amounts and due dates. The maximum scheduled repayment period may be up to 30 years in length, depending upon the amount of my student loan indebtedness and my repayment plan. The minimum payment on my loan must equal at least the amount of interest that accrues between scheduled payments. Payments submitted by me or on my behalf (exclusive of refunds) may be applied first to late charges and collection costs that are due, then to accrued interest that has not been capitalized, and finally to the principal amount. If I am unable to make my scheduled loan payments, the lender may allow me to reduce my payment amount, to extend the time for making payments, or to temporarily stop making payments as long as I intend to repay my loan. Allowing me to temporarily delay or reduce my loan payment is called forbearance. I agree my lender may grant me a forbearance for purposes of aligning payment due dates on my loans or to eliminate any delinquency that persists even though I am making payments. I may prepay all or any part of the unpaid balance on my loan at any time without penalty. Upon payment in full of this Note, I agree to accept written notification of the payoff in place of receiving the original Note. Acceleration and Default At the option of the lender, the entire unpaid balance will become immediately due and payable when either of the following events occurs: (i) I make a false representation that results in my receiving a loan for which I am not eligible, or (ii) I default on the loan. The following events shall constitute a default on my loan: (i) I fail to pay the entire unpaid balance after the lender has exercised its option under the preceding paragraph, (ii) I fail to make installment payments when due and my failure persists for at least 270 days, or (iii) I fail to comply with other terms of the loan, and the lender or guarantor reasonably concludes I no longer intend to honor my repayment obligation. If I default, the guarantor may purchase my loan and capitalize all outstanding interest into a new principal balance. The new principal balance and collection fees will become immediately due and payable. If I default, the default will be reported to all national credit bureaus and will significantly and adversely affect my credit history. I acknowledge that a default shall have additional adverse consequences to me as disclosed in the Borrower’s Rights and Responsibilities Statement. Following default, the loan may be subject to income-contingent repayment (including potential collection of amounts in excess of the principal and interest) in accordance with the Act. Governing Law and Notices The terms of this Note will be interpreted according to the Higher Education Act of 1965, as amended (20 U.S.C. 1070 et seq.), other applicable federal statutes and regulations, and the guarantor’s policies. Applicable state law, except as preempted by federal law, may provide for certain borrower rights, remedies, and defenses in addition to those stated in this Note. If I reside in the state where the guarantor’s principal office is located, the guarantor may sue to enforce the loan in the county where the guarantor’s office is located. However, if I object to being sued there and I mail a written objection to the guarantor that is postmarked no later than 30 days after I am served with the lawsuit, the guarantor will either have the court transfer the lawsuit to the county where I live or will dismiss the lawsuit. Any notice required to be given to me will be effective if sent by first class mail to the latest address the lender has for me or by electronic means to an address that I have provided. I will immediately notify the lender of any change of address or status as specified in the Borrower’s Rights and Responsibilities Statement. Failure by the lender to enforce or insist on compliance with any term of this Note shall not waive any right of the lender. No provision of this Note may be modified or waived except in writing by the lender of the Note. If any provision of this Note is determined to be unenforceable, the remaining provisions shall remain in force. Page 5 of 9 Case 8:16-cv-03396-JSM-MAP Document 17-2 Filed 03/23/17 Page 6 of 11 PageID 77 Federal Family Education Loan Program (FFELP) Instructions for Completing the Federal Consolidation Loan Application and Promissory Note Guarantor, Program, or Lender Identification Before beginning, gather all of your education loan records, account statements, and bills so that you have the information you need to complete the Federal Consolidation Loan Application and Promissory Note. Complete the form using dark ink or type. This form must be signed and dated by the applicant(s). If an item has been completed for you and it is incorrect, cross out the incorrect information and print the correct information. Incorrect or incomplete information may delay processing of your application. If you have any questions about completing this application, contact the entity identified above. Item 1 : Enter your last name, then your first name and middle initial. Item 2: Enter your nine-digit Social Security Number. If this item has been completed for you, review it for correctness. Item 3: Enter your permanent home address (number, street, apartment number, city, state, zip code). If your mailing address is an RFD, post office box, or general delivery, you must list both the street address and mailing address. Item 4: Enter the area code and telephone number for the address listed in Item 3. If you do not have a telephone, enter N/A. Item 5: Enter any former names under which one or more of your loans may have been disbursed. If you do not have a former name, enter N/A. Item 6: Enter the month, day, and four-digit year of your birth. Use only numbers. Be careful not to enter the current year. Item 7: Enter the two-letter abbreviation for the state that issued your driver’s license followed by the driver’s license number. If you do not have a driver’s license, enter N/A. Item 8: Enter your fax number and the e-mail address you use most frequently. These may be used to communicate with you. If you do not have a fax number or e-mail address, or do not wish to provide this information, enter N/A. Item 9: It is important that the consolidating lender is able to reach you during the process of making this loan and during repayment. Enter your employer’s name, address, including city, state, and zip code, and telephone number. If you are self- employed, enter the name, address, and telephone number of your business. If you are not employed, enter N/A. Item 10: Enter the name of the lender you would like to finance your Federal Consolidation Loan. Item 1 1 : If you know the lender code, enter it here. Otherwise, leave this field blank. Note: Complete this section only if you are married and you both wish to consolidate your loans jointly. Include your spouse’s loan(s) in Section D. Your spouse must sign and date Item 38 in Section G. Remember, if you take out a joint Federal Consolidation Loan, you are both responsible for repaying the total Federal Consolidation Loan, even if you become separated or divorced. Item 12: Enter your spouse’s last name, then your spouse’s first name and middle initial. Item 13: Enter your spouse’s nine-digit Social Security Number. If this item has been completed for you, review it for correctness. Item 14: Enter the month, day, and four-digit year of your spouse’s birth. Use only numbers. Be careful not to enter the current year. Item 15: Enter any former names under which one or more of your spouse’s loans may have been disbursed. If your spouse does not have a former name, enter N/A. Item 16: Enter the two-letter abbreviation for the state that issued your spouse’s driver’s license followed by the driver’s license number. If your spouse does not have a driver’s license, enter N/A. Item 17: Enter your spouse’s fax number and the e-mail address your spouse uses most frequently. These may be used to communicate with your spouse. If your spouse does not have a fax number or e-mail address, or does not wish to provide this information, enter N/A. Item 18: It is important that the consolidating lender is able to reach your spouse during the process of making this loan and during repayment. Enter your spouse’s employer’s name, address (including city, state, and zip code), and telephone number. If your spouse is self-employed, enter the name, address, and telephone number of your spouse’s business. If your spouse is not employed, enter N/A. Note: You must provide two separate references with different U.S. addresses. Do not include individuals who live with you or live outside the U.S. Both references must be completed fully and should be relatives or acquaintances you (or you and your spouse, if consolidating jointly) have known for at least three years. Items 19A and 19B: Enter the requested reference information for two adults who do not share a common address. References with addresses outside the U.S. are not acceptable. Both references must be completed in full. If a reference does not have a telephone or an e-mail address, or does not wish to provide an e-mail address, write N/A. If you provide an e-mail address for a reference, the holder of your Federal Consolidation Loan may use it to communicate with your reference as part of collecting on the loan. All requested items must be completed or your loan will be delayed. Education Loans The following types of education loans (except those represented by the code OTHR) are eligible for consolidation: Loan Code Education Loans SS Subsidized Federal Stafford Loans, formerly Guaranteed Student Loans (GSL) DSS Direct Subsidized Stafford/Ford Loans US Unsubsidized and Nonsubsidized Federal Stafford Loans DUS Direct Unsubsidized Stafford/Ford Loans SLS Federal Supplemental Loans for Students, formerly Auxiliary Loans to Assist Students (ALAS) and Student PLUS Loans PERK Federal Perkins Loans, formerly National Defense/National Direct Student Loans (NDSL) HPSL Health Professions Student Loans, including Loans for Disadvantaged Students HEAL Health Education Assistance Loans FISL Federal Insured Student Loans PLUS Federal PLUS Loans DPLUS Direct PLUS Loans SCON Subsidized Federal Consolidation Loans DSCON Direct Subsidized Consolidation Loans UCON Unsubsidized Federal Consolidation Loans DUCON Direct Unsubsidized Consolidation Loans, including Direct PLUS Consolidation Loans NSL Federal Nursing Loans OTHR Other education loans not eligible for consolidation that you want used to calculate the maximum repayment period Information you need to answer items in this section is available in loan documents, such as: The last monthly billing statement you received, Your quarterly interest statement or annual statement, Your coupon book, or The Internet site of your loan holder or servicer. If you are unsure of the correct information on your loans, call your loan holder or servicer, or check the most recent correspondence from them. Before You Begin Continued on next page. Section A. Borrower Information Section B. Spouse Information Section C. Reference Information Section D. Education Loan Indebtedness Page 6 of 9 506642680 9039304 WEB Case 8:16-cv-03396-JSM-MAP Document 17-2 Filed 03/23/17 Page 7 of 11 PageID 78 Step 1 : Begin by listing (according to the instructions that follow for Items 20-26) eligible loan(s) that you (or you and your spouse jointly) wish to consolidate, including any loan(s) currently held by the lender that will be consolidating your loan(s). You may consolidate a Federal Consolidation Loan only if you are combining that loan with at least one other eligible loan. If you are in default on any loan that you wish to consolidate, you must have made satisfactory repayment arrangements with the holder to repay the loan before it is eligible for consolidation. Satisfactory arrangements usually involve making a series of payments on the defaulted loan. For Federal Stafford, Federal SLS, Federal PLUS, or Federal Consolidation loans, satisfactory repayment arrangements involve making a series of reasonable and affordable payments or agreeing to repay the new Federal Consolidation Loan under an income-sensitive repayment plan. Contact the holder of your defaulted loan for specific information. Item 20: Enter the code that corresponds to the loan type from the Education Loans list. If you are not sure about the loan type, leave this item blank. Item 21 : Enter the full name and mailing address of each holder of your education loans or the holder’s servicer. (This is the address to which you are or will be sending your payments.) If the loan is in default, enter the full name and address of the guarantor or the guarantor’s servicer. If the loan is a Perkins Loan, enter the full name and address of the school or school’s servicer. Do not use initials instead of full names. Item 22: Enter “B” for each loan that is yours, “S” for each loan that is your spouse’s, and “J” for each loan that belongs to both you and your spouse. Item 23: Enter the account number for each loan. This may be listed on your monthly billing statement or coupon or in other information your holder or holder’s servicer provides. Item 24: Enter the interest rate you are paying on each loan. Item 25: Enter the estimated payoff amount, including any unpaid interest, late fees, and collection costs. Item 26: If you are in your grace period (specified period of time after a student graduates or leaves school during which loan payments are not required and during which interest on loans may be payable by the federal government) for any of the loans selected for consolidation and you wish to delay processing until you have completed your grace period, enter the month and year that your grace period ends. If you request such a delay, processing of the Federal Consolidation Loan will begin approximately 60-90 days before the latest grace period end date. If you do not wish to delay processing, leave this field blank. Step 2: The maximum length of your Federal Consolidation Loan repayment period is determined by your total education loan debt, including: Loans you are consolidating, Loans eligible for consolidation that you are not consolidating, and Loans not eligible for consolidation. In Items 27-32, list both eligible loans you do not wish to consolidate and outstanding education loans not eligible for consolidation that you want used to determine your maximum repayment period. Outstanding education loans not eligible for consolidation must have been made exclusively to finance postsecondary education by an entity such as a bank, school, or state agency under a public or private loan program. Personal loans from family or friends or loans in default may not be listed. The amount of the loans that are not included in the Federal Consolidation Loan but are used to determine your repayment period will not exceed the amount of the loans consolidated. Item 33: You may choose one of the repayment options described below for your Federal Consolidation Loan. The maximum repayment period will be 10 to 30 years depending on your student loan debt. You can request a payment period that is shorter than the maximum period allowed. STANDARD PAYMENT PLAN – This option provides equal monthly payments over the term of the loan. Payments cover all principal and interest due that month. GRADUATED PAYMENT PLAN – This option provides reduced payments that may be as low as interest only for a specified number of years. Payments then increase to standard payments of principal and interest for the remaining term. GRAD CHOICESM 2 – Reduced payments for two years. GRAD CHOICESM 3 – Reduced payments for three years. GRAD CHOICESM 4 – Reduced payments for four years. GRAD CHOICESM 5 – Reduced payments for five years. INCOME-SENSITIVE PAYMENT PLAN – This option establishes payments annually based on your expected total monthly gross income from employment and all other sources. If you and your spouse jointly consolidate your loans, payments will be based on your total household income from all sources. EXTENDED PAYMENT PLAN – This option allows borrowers with debt in excess of $30,000 to repay over a 25-year period on either a standard or graduated schedule. If you have education debt of $60,000 or more and wish to repay over a 30-year period, you should select one of the other repayment options. If you do not notify your lender of your choice of payment plans or do not provide your lender with the required documentation for an income-sensitive schedule, your lender will establish a standard payment schedule. Note: If all of your FFELP loans are with one holder and you certify that you have been unable to obtain a Federal Consolidation Loan or a Federal Consolidation Loan with income-sensitive repayment terms from your current holder, you may apply for a Federal Consolidation Loan from another FFELP lender. If you have FFELP loans with more than one holder, you may apply for a Federal Consolidation Loan from any FFELP lender. Alternatively, if you have an outstanding balance on a FFELP loan and you are unable to obtain a Federal Consolidation Loan or a Federal Consolidation Loan with income-sensitive repayment terms that are acceptable to you, you may apply for a Federal Direct Consolidation Loan from the U.S. Department of Education. Items 34 and 35: Read these items carefully. The statements confirm the accuracy of the information that you supply, authorize various parties to perform certain functions, and certify your understanding and acceptance of certain terms and conditions of the loan. This is a legally binding contract. Item 36: Carefully read the entire Promissory Note, Borrower Certification and Authorization, Borrower’s Rights and Responsibilities Statement, and the other materials provided in connection with this loan. Item 37: Sign and date the Promissory Note. Item 38: If you and your spouse are jointly consolidating your loans, your spouse must also sign and date the Promissory Note. If you and your spouse are not jointly consolidating your loans, your spouse should not sign the Promissory Note. Note: Signature(s) is required. If you (or you and your spouse, if consolidating jointly) fail to sign the Promissory Note, your application will be delayed. Review all information on your Federal Consolidation Loan Application and Promissory Note. Return your completed application and promissory note to your consolidating lender for processing. Keep a copy for your records. If you are applying with your spouse, you and your spouse should each keep a copy for your records. Remember to continue making your regularly scheduled education loan payments until your consolidating lender notifies you that the consolidation is complete. If you would like to temporarily postpone your payments while your Federal Consolidation Loan is being processed, contact your holder regarding forbearance. When your loans are consolidated, you will receive a repayment schedule and disclosure statement for your Federal Consolidation Loan. It will provide information about your new loan and instructions on where to send your monthly payments. Mailing Instructions: Mail the original copy of the Federal Consolidation Loan Application and Promissory Note and the Additional Loan Listing Sheet, if applicable, to your consolidating lender. Section E. Repayment Plan Selection Section F. Borrower Certification and Authorization Section G. Promissory Note Page 7 of 9 Submitting Your Application and Promissory Note Case 8:16-cv-03396-JSM-MAP Document 17-2 Filed 03/23/17 Page 8 of 11 PageID 79 Borrower’s Rights and Responsibilities Statement FFELP Definition - The Federal Family Education Loan Program (FFELP) includes the following loans: Subsidized Federal Stafford Loan [formerly known as Guaranteed Student Loan (GSL)], Unsubsidized Federal Stafford Loan, Federal Insured Student Loan (FISL), Federal Supplemental Loans for Students (SLS), also known as ALAS, Federal PLUS Loan, and Federal Consolidation Loan. The FFELP is authorized by Title IV, Part B of the Higher Education Act of 1965, as amended. 1 . Governing Law – A loan disbursed under this Federal Consolidation Loan Promissory Note (“Note”) is subject to the Higher Education Act of 1965, as amended (20 U.S.C. 1070 et seq.), and applicable U.S. Department of Education regulations (collectively referred to as the “Act”). 2. Change of Status – I must notify my lender (or any subsequent holder of my loan) if any of the following events take place before my loan is repaid: I change my permanent address, e-mail address, or telephone number, I change my name (for example, maiden name to married name), I change my employer or my employer’s address or telephone number changes, and/or I have any other change in status that would affect my loan (for example, the loss of eligibility for an unemployment deferment by obtaining a job). 3. Interest Rate – The interest rate on my Federal Consolidation Loan will be based on the weighted average of the interest rates on the loans being consolidated rounded up to the nearest higher one-eighth of one percent, but will not exceed 8.25 percent. This fixed interest rate will remain the same throughout the life of the loan. For the portion of the Federal Consolidation Loan attributable to a HEAL loan (if applicable), the interest rate is a variable rate and is adjusted annually on July 1 . The variable rate for each 12-month period will be equal to the average of the bond equivalent rates of the 91 -day Treasury Bills auctioned for the quarter ending June 30, plus 3.0 percent; there is no maximum interest rate on this portion of the loan. The interest rate that applies to my Federal Consolidation Loan will be disclosed to me by my lender at or about the time my loan is disbursed. 4. Payment of Interest – Interest will be charged from the date my Federal Consolidation Loan is disbursed. It is my responsibility to pay interest on my loan. The federal government will pay interest that accrues during deferment on the portion of my Federal Consolidation Loan that repays subsidized Federal Stafford Loans, subsidized Federal Direct Stafford Loans, subsidized FISL loans, subsidized Federal Consolidation Loans, and subsidized Federal Direct Consolidation Loans. I will be responsible for interest that accrues during deferment on the portion of my Federal Consolidation Loan that repays other loan types. I am responsible for paying the interest that accrues during a forbearance period. If I choose not to pay the interest that accrues on my loan during any period of authorized deferment or forbearance, the interest may be capitalized to the extent permitted by the Act. Capitalization of interest will result in the unpaid interest being added to the principal balance of the loan and increase the total cost of my loan. I may be able to claim a federal income tax deduction for interest payments I make on my FFELP loans. For further information, I may refer to the IRS Publication 970 available at http://www.irs.gov. 5. Sale or Transfer of Loan – The lender may sell or otherwise transfer my loan without my consent. Should ownership of my loan be transferred, I will be notified of the name, address, and telephone number of the new lender if the address to which I make my payments changes. Sale or transfer of my loan does not affect my rights and responsibilities under the loan. 6. Consequences of Default – Default is defined in detail in my Note. If I default, the entire unpaid balance and collection fees will become immediately due and payable. Failure to repay this loan according to its terms and conditions may result in any or all of the following: Loss of federal and state income tax refunds, Loss of other federal or state payments, My employer withholding part of my wages to give them to my guarantor (administrative wage garnishment), Legal action against me, Collection charges (including attorney’s fees) being assessed against me, Loss of my professional license, An increase in my interest rate, Loss of eligibility for other student aid and assistance under most federal benefit programs, Loss of eligibility for loan deferments, and Negative credit reports to credit bureaus. 7. Credit Bureau Notification – Information concerning the amount, disbursement, and repayment status (current or delinquent) of my loan will be reported by my lender to one or more national credit bureaus on a regular basis. If I default on my loan, the guarantor will report the default to all national credit bureaus. Before the guarantor reports such a default, it will give me at least 30 days notice that default information will be disclosed to the credit bureaus unless I enter into a repayment arrangement within 30 days of the date of the notice. The guarantor will give me a chance to ask for a review of the debt before the default is reported. My lender or guarantor, as applicable, must provide a timely response to a request from any credit organization regarding objections I might raise with that organization about the accuracy and completeness of information reported by the lender or guarantor. 8. Loan Discharge & Forgiveness – My loan will be discharged if documentation of my death is submitted to my lender. If I am consolidating a PLUS Loan and the dependent student for whom I borrowed the PLUS Loan dies, the portion of my Federal Consolidation Loan attributable to that PLUS Loan will be discharged if documentation of the dependent student’s death is submitted to my lender. My loan may also be discharged if a physician certifies that I am totally and permanently disabled as defined by the Act. In addition, I must meet certain income requirements and may not receive any additional FFELP, Direct, or Federal Perkins loans during a 3-year conditional discharge period. I may not receive a discharge due to total and permanent disability based on a condition that existed before I applied for this loan, unless a physician certifies that the condition substantially deteriorated after the disbursement dates on the loans that are consolidated. I understand that I may not qualify for a disability discharge of my Federal Consolidation Loan if any loan I am consolidating does not meet the discharge conditions. My loan will not be automatically discharged in bankruptcy. In order to discharge a loan in bankruptcy, I (and my spouse, if a joint consolidation co-maker) must prove undue hardship in an adversary proceeding before the bankruptcy court. In certain cases, the Act provides discharge of all or a portion of my Federal Consolidation Loan if I was unable to complete a course of study because my school closed, or my eligibility was falsely certified by my school. The Act also provides for loan discharge in the amount of any required refund that my school failed to make to my lender on my behalf. Neither the lender, the guarantor, nor the Department of Education vouch for the quality or suitability of the academic programs offered by participating schools. Unless I qualify for loan discharge under the Act, I must repay this loan even if I do not complete my education, I am unable to obtain employment in my field of study, or I am dissatisfied with, or do not receive, the education I paid for with the loan(s) being consolidated. If I am a full-time teacher and at the time I obtained a subsidized or unsubsidized Stafford Loan that I am consolidating I had no outstanding balance on a Title IV loan disbursed before October 1 , 1998, I may be eligible for forgiveness under the Teacher Loan Forgiveness Program. A fixed amount of my Stafford Loan(s) that I am consolidating may be repaid if I have worked as a full-time teacher for five consecutive school years and if I meet all other eligibility requirements under the Act. I understand that, by consolidating, I may forego some discharges that might otherwise be available for the loan(s) being consolidated. If I am applying with my spouse for a joint consolidation loan, I further understand that the Federal Consolidation Loan will be fully discharged or forgiven only if both of us qualify for the same or a different discharge or forgiveness. However, the loan may be partially discharged or forgiven under certain circumstances, if only one of us qualifies for a discharge or forgiveness. 9. Deferment – Under certain circumstances, I have a right to defer (postpone) repayment. Upon request, my lender will provide me with a deferment application that explains the eligibility requirements. If I am in default on my Federal Consolidation Loan, I am not eligible for deferment unless I make payment arrangements satisfactory to my lender before the payment of a default claim on the loan. If I consolidate my loans jointly with my spouse, we both must simultaneously qualify for the same or different deferments in order to postpone repayment on the loan. The maximum periods authorized for deferment on Federal Consolidation Loans are determined by the Act. The total deferment period combined for the borrower and spouse cannot exceed these limits. Important Notice: The Borrower’s Rights and Responsibilities Statement provides additional information about the terms and conditions of your Federal Consolidation Loan. Please retain this Statement for your records. You may contact your lender at any time for another copy of this Statement. Page 8 of 9 Case 8:16-cv-03396-JSM-MAP Document 17-2 Filed 03/23/17 Page 9 of 11 PageID 80 If I consolidate all of my eligible FFELP loans, deferments are available while I am: Enrolled at least half time at an eligible school, Engaged in a full-time course of study in a graduate fellowship program, Engaged in a full-time rehabilitation training program for individuals with disabilities (if the program is approved by Department of Education), Conscientiously seeking, but unable to find, full-time employment (for up to three years), Experiencing an economic hardship (including Peace Corps service) as defined by federal law (for up to three years). My lender will process an in-school deferment based on (i) my request along with documentation verifying my eligibility, (ii) my lender’s receipt of information from my school about my eligibility in connection with a new loan, or (iii) my lender’s receipt of student status information indicating that I am enrolled on at least a half-time basis. For all other deferment types, I must provide my lender with a deferment request and evidence that verifies my eligibility. If I did not consolidate all of my FFELP loans, the deferment options available to me for this Federal Consolidation Loan will be based on the deferment provisions that are in effect for any outstanding loan(s) not consolidated, provided the deferment is authorized for Federal Consolidation Loans. (See Item 4, “Payment of Interest.”) My lender can provide additional information about deferment eligibility. 10. Forbearance – If I am unable to make my scheduled loan payments, the lender may allow me to reduce my payment amount, to extend the time for making payments, or to temporarily stop making payments as long as I intend to repay my loan. Allowing me to temporarily delay or reduce loan payments is called a forbearance. Interest charges continue to accrue during a forbearance period. The lender may grant me forbearance due to poor health or other acceptable reasons. My lender is generally not required to grant a forbearance and may require me to provide my reasons for the request and other information. The lender may grant me a forbearance to eliminate a delinquency that persists even though I am making scheduled installment payments. My lender may grant me an administrative forbearance for up to 60 days in order to collect and process documentation supporting my request for a deferment, forbearance, change in repayment plan, or consolidation. Circumstances that require my lender to grant me forbearance include: Serving in a medical or dental internship or residency program, if I meet certain criteria. Serving in a national service position for which I receive a national service education award under the National and Community Service Trust Act of 1993. In some cases, the interest that accrues on a qualified loan during the service period will be paid by the Corporation for National and Community Service. Qualifying for partial repayment of my loans under the Student Loan Repayment Program, as administered by the Department of Defense. Having a monthly debt burden for Title IV loans that collectively equals or exceeds 20 percent of my total monthly gross income (for up to three years). Being called to active duty in the U.S. Armed Forces. If my spouse and I are consolidating jointly, we must simultaneously qualify for the same or a different forbearance in order to forbear repayment of the loan. If I choose not to pay the interest that accrues on my loan during any period of authorized forbearance, the interest may be capitalized to the extent permitted by the Act. Capitalization of interest will result in the unpaid interest being added to the principal balance of the loan. 1 1 . Applicability to Aggregate Loan Limits – If the loans I have selected for consolidation were made under the Federal or Direct Stafford (subsidized, nonsubsidized, or unsubsidized), SLS, Perkins, or HPSL loan programs, a percentage of the outstanding balance on my Federal Consolidation Loan will be counted towards the aggregate loan limit for each type of loan selected. 12. Adding Loans – If I do not consolidate all eligible loans at this time, I understand that I may include an additional eligible loan(s) by submitting a request to my lender. My lender must receive my request within 180 days after the date on which my Federal Consolidation Loan is disbursed. After this period of time, I will need to apply for a new Federal Consolidation Loan to consolidate any eligible loan(s). IMPORTANT NOTICES Privacy Act Notice The Privacy Act of 1974 (5 U.S.C. 552a) requires that the following notice be provided to you: The authority for collecting the requested information from and about you is §428(b)(2)(A) et seq. of the Higher Education Act of 1965, as amended (20 U.S.C. 1078(b)(2)(A) et seq.), and the authority for collecting and using your Social Security Number (SSN) is §484(a)(4)(B) of the HEA (20 U.S.C. 1078-2(f)). Participating in the Federal Family Education Loan Program (FFELP) and giving us your SSN are voluntary, but you must provide the requested information, including your SSN, to participate. The principal purposes for collecting the information on this form, including your SSN, are to verify your identity, to determine your eligibility to receive a loan(s) or a benefit on a loan(s) (such as a deferment, forbearance, discharge, or forgiveness) under the FFELP, to permit the servicing of your loan(s), and, if it becomes necessary, to locate you and to collect on your loan(s) if your loan(s) becomes delinquent or in default. We also use your SSN as an account identifier and to permit you to access your account information electronically. The information in your file may be disclosed to third parties as authorized under routine uses in the appropriate systems of records. The routine uses of this information include its disclosure to federal, state, or local agencies, to other federal agencies under computer matching programs, to agencies that we authorize to assist us in administering our loan programs, to private parties such as relatives, present and former employers, business and personal associates, to credit bureau organizations, to educational and financial institutions, to guaranty agencies, and to contractors in order to verify your identity, to determine your eligibility to receive a loan(s) or a benefit on a loan(s), to permit the servicing or collection of your loan(s), to counsel you in repayment efforts, to enforce the terms of the loan(s), to investigate possible fraud and to verify compliance with federal student financial aid program regulations, to locate you if you become delinquent in your loan payments or if you default, to provide default rate calculations, to provide financial aid history information, Page 9 of 9 to assist program administrators with tracking refunds and cancellations, or to provide a standardized method for educational institutions efficiently to submit student enrollment status. In the event of litigation, we may send records to the Department of Justice, a court, adjudicative body, counsel, party, or witness if the disclosure is relevant and necessary to the litigation. If this information, either alone or with other information, indicates a potential violation of law, we may send it to the appropriate authority for action. We may send information to members of Congress if you ask them to help you with federal student aid questions. In circumstances involving employment complaints, grievances, or disciplinary actions, we may disclose relevant records to adjudicate or investigate the issues. If provided for by a collective bargaining agreement, we may disclose records to a labor organization recognized under 5 U.S.C. Chapter 71 . Disclosures may also be made to qualified researchers under Privacy Act safeguards. Financial Privacy Act Notice Under the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 -3421 ), the U.S. Department of Education will have access to financial records in your student loan file maintained by the lender in compliance with the administration of the Federal Family Education Loan Program. Paperwork Reduction Notice According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a currently valid OMB control number. The valid OMB control number for this information collection is 1845-0036. The time required to complete this information is estimated to average 1.0 hours (60 minutes) per response, including the time to review instructions, search existing data resources, gather and maintain the data needed, and complete and review the information collection. If you have any comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: U.S. Department of Education Washington, DC 20202-4651 If you have any comments or concerns regarding the status of your individual submission of this form, contact the lender, guarantor, or program identified in the upper right-hand corner of this form. Case 8:16-cv-03396-JSM-MAP Document 17-2 Filed 03/23/17 Page 10 of 11 PageID 81 Case 8:16-cv-03396-JSM-MAP Document 17-2 Filed 03/23/17 Page 11 of 11 PageID 82 EXHIBIT B Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 1 of 67 PageID 83 Federal Communications Commission FCC 16-99 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 ) ) ) ) CG Docket No. 02-278 REPORT AND ORDER Adopted: August 2, 2016 Released: August 11, 2016 By the Commission: Chairman Wheeler and Commissioner Clyburn issuing separate statements; Commissioner Rosenworcel concurring and issuing a statement; Commissioners Pai and O’Rielly dissenting and issuing separate statements. TABLE OF CONTENTS Heading Paragraph # I. INTRODUCTION.................................................................................................................................. 1 II. BACKGROUND.................................................................................................................................... 3 III. DISCUSSION ...................................................................................................................................... 10 A. Covered Calls................................................................................................................................. 11 B. Limits on Number and Duration of Federal Debt Collection Calls ............................................... 30 C. Other Implementation Issues ......................................................................................................... 50 D. Severability .................................................................................................................................... 58 E. Effective Date ................................................................................................................................ 59 IV. JURISDICTION................................................................................................................................... 61 V. PROCEDURAL MATTERS................................................................................................................ 67 VI. ORDERING CLAUSES....................................................................................................................... 72 APPENDIX A – Final Rules APPENDIX B – Comments Filed APPENDIX C – Final Regulatory Flexibility Analysis I. INTRODUCTION 1. In this Report and Order (Order), we take steps to implement Section 301 of the Bipartisan Budget Act of 2015,1 which amends the Telephone Consumer Protection Act2 by excepting from that Act’s consent requirement robocalls “made solely to collect a debt owed to or guaranteed by the United States”3 and authorizing the Commission to adopt rules to “restrict or limit the number and 1 Bipartisan Budget Act of 2015, Pub. L. No. 114-74, 129 Stat. 584 (Budget Act). 2 The Telephone Consumer Protection Act (TCPA) is codified at section 227 of the Communications Act of 1934, as amended. See 47 U.S.C. § 227. 3 Budget Act § 301(a)(1)(A) (amending 47 U.S.C. § 227(b)(1)(A)); see also id. § 301(a)(1)(B) (amending 47 U.S.C. § 227(b)(1)(B) to read, in part, that artificial- or prerecorded-voice calls cannot be made to a residential telephone line without the consent of the called party unless the call is “made solely pursuant to the collection of a debt owed to or guaranteed by the United States”). “Robocalls” include calls made either with an automatic telephone dialing (continued….) Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 2 of 67 PageID 84 Federal Communications Commission FCC 16-99 2 duration” of any wireless calls “to collect a debt owed to or guaranteed by the United States.”4 The Budget Act requires the Commission to “prescribe regulations to implement the amendments made” by Section 301 within nine months of enactment.5 In implementing these provisions, we recognize and seek to balance the importance of collecting debt owed to the United States6 and the consumer protections inherent in the TCPA.7 2. Based on record evidence that consumers may benefit from calls that can prevent them from falling into potentially devastating debt, we make clear that certain debt servicing calls are permitted under the exception. At the same time, and in recognition of the substantial number of comments urging clear, strong limits on the number and duration of debt collection calls, we cap the number of permitted calls to wireless numbers at no more than three within a thirty-day period;8 ensure that consumers have the right to stop such calls at any time; and adopt other consumer protections. The measures we adopt today implement Congress’s mandate to ensure the TCPA does not thwart important calls that can help consumers avoid debt troubles while preserving consumers’ ultimate right to determine what calls they wish to receive. II. BACKGROUND 3. The TCPA and the Current Rules. In 1991, Congress enacted the TCPA and made clear that “[i]ndividuals’ privacy rights, public safety interests, and commercial freedoms of speech and trade must be balanced in a way that protects the privacy of individuals and permits legitimate telemarketing practices.”9 Among other things, the TCPA requires the called party’s consent before certain robocalls (Continued from previous page) system (“autodialer”) or with a prerecorded or artificial voice. See Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Declaratory Ruling and Order, 30 FCC Rcd 7961, 7694, para. 1 n.1 (2015) (2015 TCPA Declaratory Ruling and Order). The Commission has interpreted the TCPA to apply both to voice calls and to text messages. Id. at 8016-17, para. 107. Throughout this Order we refer to robocalls that are subject to the Budget Act’s consent exception as “covered calls.” “Calls,” for this exception, include any initiated call; this is consistent with the Commission’s previous interpretation of “call” for TCPA purposes. See also para. 28, infra. 4 Budget Act § 301(a)(2) (amending 47 U.S.C. § 227(b)(2)). 5 Budget Act § 301(b). 6 See para. 8, infra. 7 See 2015 TCPA Declaratory Ruling and Order, 30 FCC Rcd at 7964, paras. 1-2 (“we affirm the vital consumer protections of the TCPA”). While one dissent suggests that Congress determined in the Budget Act amendments that the benefits of these calls outweigh the privacy concerns, we disagree with this assessment. Congress’s authorization allowing us to set number and duration limits on these calls, as well as the consumer protections inherent in the TCPA itself, indicate that Congress intended the Commission to balance the statutory consumer protection purposes against the benefits of robocalls for the purpose of collecting debt owed to or guaranteed by the United States. 8 As explained at paras. 48-49, infra, we determine that the Budget Act amendments do not alter our current rules regarding non-telemarketing autodialed, prerecorded-voice, and artificial-voice calls to residential numbers. 9 TCPA, Pub. L. No. 102-243, § 2(9). As its name makes clear, the Telephone Consumer Protection Act is a broad consumer protection statute that addresses the calling practices of both bad actors attempting to perpetrate frauds and legitimate callers who employ calling practices consumers may find objectionable. The TCPA makes it unlawful for any person to make robocalls that do not comply with the provisions of the statute. While the Commission has sought to “reasonably accommodate[] individuals’ rights to privacy as well as the legitimate business interests of telemarketers,” Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 92-90, Report and Order, 7 FCC Rcd 8752, 8754, para. 3 (1992) (1992 TCPA Order), legitimate callers are not exempt from the statute’s consumer protections. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 3 of 67 PageID 85 Federal Communications Commission FCC 16-99 3 can be made to residential and wireless phones,10 restricts unsolicited facsimile advertisements,11 regulates the manner of artificial and prerecorded telephone messages,12 and grants consumers a private right of action against alleged violators separate from regulatory enforcement.13 4. The TCPA and the Commission’s rules generally require a caller to obtain the prior express consent of the called party when: (1) making a non-emergency telemarketing call using an artificial or prerecorded voice to residential telephone lines;14 and (2) making a non-emergency call using an automatic telephone dialing system (“autodialer”) or an artificial or prerecorded voice to a wireless telephone number, among other specified recipients.15 Unless exempted by rule or an order of the Commission,16 a caller must ensure that he or she has the consent of the called party17 prior to each such call he or she makes.18 5. Budget Act Amendments. As amended by Section 301 of the Budget Act, Sections 227(b)(1)(A) and (B) of the TCPA now explicitly except from the prior express consent requirement certain autodialed, artificial-voice, and prerecorded-voice calls either to wireless phones or to residential landline phones, if the calls are “made solely to collect a debt owed to or guaranteed by the United States.”19 The law says that, in implementing the Budget Act amendments, the Commission “may restrict or limit the number and duration of calls made to a telephone number assigned to a cellular telephone service to collect a debt owed to or guaranteed by the United States.”20 While no legislative history exists that lays out the legislative intent, we believe two reasonable interpretations of the statute are to: (1) make 10 See 47 U.S.C. § 227(b)(1)(A)-(B); 47 CFR § 64.1200(a)(1)-(3). 11 See 47 U.S.C. § 227(b)(1)(C); 47 CFR § 64.1200(a)(4). 12 See 47 U.S.C. § 227(d)(3); 47 CFR § 64.1200(a)(7)(i)(B), (b)(3). 13 See id. § 227(b)(3). 14 Id. § 227(b)(1)(B); 47 CFR § 64.1200(a)(3). Consent to telemarketing calls must be in writing and satisfy the requirements of 47 CFR § 64.1200(f)(8). See 47 CFR § 64.1200(a)(3). Telemarketing calls to residential lines that are made by or on behalf of a tax-exempt nonprofit organization and telemarketing calls subject to the Health Insurance Portability and Accountability Act of 1996 (HIPAA) may be made without the consent of the called party. Id. 15 47 U.S.C. § 227(b)(1)(A); 47 CFR § 64.1200(a)(1)-(2). The restriction also applies to such calls directed to emergency numbers and other specified locations. For autodialed or artificial- or prerecorded-voice telemarketing calls to wireless numbers, prior express consent must be in writing and satisfy the requirements of 47 CFR § 64.1200(f)(8). See Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Report and Order, 27 FCC Rcd 1830, 1838, para. 20 (2012) (2012 TCPA Order); 47 CFR § 64.1200(a)(2). 16 See 47 U.S.C. § 227(b)(2)(B), (C). 17 See 2015 TCPA Declaratory Ruling, 30 FCC Rcd at 8000-06, paras. 73-84. 18 See id. at 8014, para. 100; see also id. at 7993-99, paras. 55-70 (explaining that a consumer may revoke consent through any reasonable means). 19 Budget Act § 301(a)(1) (amending 47 U.S.C. § 227(b)(1)(A)). The phrasing is slightly different in the amended § 227(b)(1)(B): “made solely pursuant to the collection of a debt owed to or guaranteed by the United States.” Section 227(b)(1)(A)(iii) is not limited to wireless phone numbers, but states that non-emergency robocalls require consumer consent if made “to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call, unless such call is made solely to collect a debt owed to or guaranteed by the United States.” 47 U.S.C. § 227(b)(1)(A)(iii) (as amended). 20 Budget Act § 301(a)(2)(C) (adding 47 U.S.C. § 227(b)(2)(H)). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 4 of 67 PageID 86 Federal Communications Commission FCC 16-99 4 it easier for owners of debts owed to or guaranteed by the United States and their contractors21 to make calls to collect the debts; and (2) make it easier for consumers to obtain useful information about debt repayment, which may be conveyed in these calls. 6. On timing, the Budget Act states: “Not later than 9 months after the date of enactment of this Act, the Federal Communications Commission, in consultation with the Department of the Treasury, shall prescribe regulations to implement the amendments made by this section.”22 Commission staff has consulted with Department of Treasury staff, along with other interested agencies, on Budget Act implementation questions. The Commission issued a Notice of Proposed Rulemaking (NPRM) on May 6, 2016, to begin the process of prescribing regulations to implement the TCPA amendments, as Congress directed.23 7. Robocalls Generally. TCPA complaints as a whole are the largest category of informal complaints the Commission receives.24 In addition, the Federal Trade Commission (FTC) received more than 900,000 consumer complaints in 2015 relating to debt collection—more than any other industry or practice.25 In its comments, FTC staff states: “Robocalling increases the number of possible collection contacts, and any expansion in their use likely will magnify consumer harms arising from debt collection calls.”26 The FTC staff also notes that, “[b]ecause the TCPA amendments now allow robocalls to collect a debt owed to the U.S. Government, it will be more challenging for consumers to distinguish between legitimate debt collection calls and calls placed by scammers impersonating the government.”27 8. Collection of Federal Debt and Debt Collection Generally. According to the Department of Treasury, in Fiscal Year 2015, the federal Government had $1.3 trillion of non-tax receivables (current and delinquent), of which $162.1 billion was delinquent.28 According to the same report, the top federal creditor agencies were the Department of Education, the Department of Agriculture, the Department of Housing and Urban Development, the Department of Health and Human Services, and the Export-Import 21 For purposes of this Order and the accompanying rules, we use the term “contractor” to refer to both contractors and agents. 22 Budget Act § 301(b). 23 Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Notice of Proposed Rulemaking, FCC 16-57 (May 6, 2016) (NPRM). Because of this congressionally mandated deadline, the Commission declines to entertain the request by ACA International that it “wait to see how the [Consumer Financial Protection Bureau] addresses” certain issues before issuing rules. See ACA Comments at 15. 24 See Federal Communications Commission Encyclopedia, Quarterly Reports-Consumer Inquiries and Complaints, Top Complaint Subjects, http://www.fcc.gov/encyclopedia/quarterly-reports-consumer-inquiries-and-complaints (last visited July 14, 2016). 25 FTC BCP Staff Comments at 2. 26 Id. at 3. 27 Id. at 3. 28 U.S. Dept. of the Treasury, Fiscal Year 2015 Report to the Congress: U.S. Government Receivables and Debt Collection Activities of Federal Agencies (April 2016), https://fiscal.treasury.gov/fsservices/gov/debtColl/pdf/reports/debt15.pdf. One media source reports that, according to the Federal Reserve Bank of New York, student debt has “more than doubled since 2007 to $1.3 trillion, and as many as one in four borrowers—excluding those still in school—are 90 days behind on payments.” Brent Kendall and Josh Mitchell, Supreme Court Denies Appeal on Student-Loan Erasure, Wall Street Journal, Jan. 11, 2016, http://www.wsj.com/articles/supreme-court-denies-appeal-on-student-loan-erasure-1452527286. “More than 80% of all outstanding student debt in the U.S. is guaranteed by or directly owed to the Education Department.” Id. The Department of Education reports: “At the end of fiscal year 2016, 41.7 million student loan borrowers owed $1.25 trillion in federal student loans to the Department, banks, guaranty agencies, and schools.” Dept. of Education Reply Comments at 2. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 5 of 67 PageID 87 Federal Communications Commission FCC 16-99 5 Bank.29 Federal agencies employ a variety of collection tools to recover this debt, including calls.30 The Debt Collection Improvement Act (DCIA) guides agencies and contractors acting on their behalf in their efforts to collect non-tax debts owed to the United States.31 In Fiscal Year 2015, private collection agencies assisted federal creditor agencies by collecting $465.2 million.32 The Fair Debt Collection Practices Act (FDCPA)33 governs consumer debt collection practices by eliminating abusive debt collection practices, ensuring that debt collectors who refrain from using abusive practices are not competitively disadvantaged, and promoting consistent State action to protect consumers against debt collection abuses.34 9. The Record in Response to the NPRM. Consumer response to the NPRM reflects the public’s general dislike for robocalls and their desire for the Commission to provide them greater protection against unwanted calls. Over 15,700 individuals filed comments directly in the record. Over 12,500 of those comments expressed a general dislike for robocalls, while approximately 2,500 included more pointed comments regarding debt collection and calls by the federal government. In addition to the 15,700 individual comments, Consumer’s Union submitted a petition containing 4,800 signatures asking the FCC to stop robocalls to cellphones and Americans for Financial Reform submitted a petition containing 5,346 comments from members in support of the FCC’s proposed limitations on calls. Commenters also report consumers’ fear of scam robocalls, fear for their safety when receiving robocalls while driving, and fear that robocalls impact the physical and mental health of senior adults.35 One commenter states that because the Budget Act amendments could expose an additional 47 to 61 million people to robocalls that previously required consent, the Commission must consider these concerns and the increase in the magnitude of these concerns.36 By contrast, debt servicers and collectors emphasize the important need served by such calls, i.e., that they can help educate debtors, often younger individuals, about repayment options that can save them from substantial debt from which they may not recover. Consumer groups and our federal partners generally agree on the value of such calls but ask the Commission to adopt reasonable limits. 29 U.S. Dept. of the Treasury, Fiscal Year 2015 Report to the Congress: U.S. Government Receivables and Debt Collection Activities of Federal Agencies, 4 (April 2016), https://fiscal.treasury.gov/fsservices/gov/debtColl/pdf/reports/debt15.pdf. 30 See, e.g., id. at 12. 31 Debt Collection Improvement Act of 1996, Pub. L. No. 104-134, 110 Stat. 1321 (1996) (codified at 31 U.S.C. § 3701(b)(1), (f)). 32 U.S. Dept. of the Treasury, Fiscal Year 2015 Report to the Congress: U.S. Government Receivables and Debt Collection Activities of Federal Agencies at 11 (April 2016), https://fiscal.treasury.gov/fsservices/gov/debtColl/pdf/reports/debt15.pdf. 33 15 U.S.C. §§ 1692-1692p. 34 15 U.S.C. § 1692(e). 35 See, e.g., LL Price Comments at 1 (“Scammers will gleefully join the robocall party to target seniors, and to prey on the feeble. Don’t sanction mass-harassment of ordinary citizens.”); Alan Rosenfeld Comments at 1 (“It’s especially unsafe to receive these annoying calls when driving.”); Jeanette Burket Comments at 1 (“Seniors are being frightened, coerced, and financially exploited by these calls. Their emotional and even physical health is very often compromised on a daily basis by the un-ending personal intrusion, anxiety, and harassment of these callers, particularly the debt collectors who are bent on collection of debts not even belonging to the targeted person. These calls are truly a new form of elder abuse.”). The U.S. Senate Special Committee on Aging held a hearing on July 10, 2015, concerning the effects of robocalls on senior adults entitled “Ringing Off the Hook: Examining the Proliferation of Unwanted Calls.” See http://www.aging.senate.gov/hearings/ringing-off-the-hook_examining-the- proliferation-of-unwanted-calls. 36 Letter from Sherrod Brown, Ranking Member, United States Senate Committee on Banking, Housing, and Urban Affairs, to Marlene H. Dortch, Secretary, FCC at 2 (Mar. 28, 2016) (on file in CG Docket No. 02-278) (Brown Letter); NCLC Comments at 6. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 6 of 67 PageID 88 Federal Communications Commission FCC 16-99 6 III. DISCUSSION 10. We adopt rules to implement the Budget Act’s amendments to the TCPA, including— based on substantial record support, and in furtherance of the TCPA’s consumer-protection goals— restrictions on the number and duration of calls that may be made pursuant to the amendments. Among other things, we determine who may make covered calls, limit the number of federal debt collection calls37 that may be made, and determine who may be called. We also create rules to, among other things:  Permit calls made by debt collectors when the loan is in delinquency, and by debt servicers following a specific, time-sensitive event affecting the amount or timing of payment due, and in the 30 days before such an event.  Determine that consumers have a right to stop the autodialed, artificial-voice, and prerecorded- voice servicing and collection calls regarding a federal debt to wireless numbers at any point the consumer wishes.  Specify that covered calls may be made by the owner of the debt or its contractor, to: (1) the wireless telephone number the debtor provided at the time the debt was incurred; (2) a phone number subsequently provided by the debtor to the owner of the debt or its contractor; and (3) a wireless telephone number the owner of the debt or its contractor has obtained from an independent source, provided that the number actually is the debtor’s telephone number. A. Covered Calls 11. “Solely to Collect a Debt.” The Budget Act excepts covered calls from the prior- express-consent requirement when they are “solely to collect a debt owed to or guaranteed by the United States.”38 We begin by interpreting the statutory phrase “solely to collect a debt” so as to determine whether calls are covered.39 Because the statutory term “solely to collect a debt” is ambiguous, the Commission has discretion to reasonably interpret that phrase. 12. We reject a subjective standard of what a caller may intend when determining whether a call is a covered call and instead look to objective characteristics of the call. We note that an objective standard is consistent with our approach to other aspects of the TCPA, such as the meaning of “called party” for purposes of reassigned wireless numbers.40 Furthermore, a subjective standard would be difficult to administer, while an objective standard enables us to look at actual, measurable characteristics of a call. 13. In the NPRM, we asked whether covered calls should begin at delinquency or default. Several commenters support the proposal that covered calls begin at delinquency, stating that calls during delinquency can assist a debtor in determining whether alternative payment plans are an option.41 The FTC staff’s comments, however, promote default as the starting point for covered calls. They argue that 37 Throughout this Order we refer to robocalls that are subject to the rules we enact, pursuant to the authority granted to us in the Budget Act to “restrict or limit the number and duration of calls made to a telephone number assigned to a cellular telephone service to collect a debt owed to or guaranteed by the United States,” Budget Act § 301(a)(2)(C) (adding 47 U.S.C. § 227(b)(2)(H)), as “federal debt collection calls.” “Robocalls” include calls made either with an automatic telephone dialing system (“autodialer”) or with a prerecorded or artificial voice. 38 Budget Act § 301(a)(1)(A) (amending 47 U.S.C. § 227(b)(1)(A)(iii)). 39 Budget Act § 301(a)(1)(A) (amending 47 U.S.C. § 227(b)(1)(A)(iii)). 40 2015 TCPA Declaratory Ruling and Order, 30 FCC Rcd at 8002-03, para. 78. 41 See Letter from Edward J. Markey et al., United States Senator, to Marlene H. Dortch, Secretary, FCC at 1 (Jun. 8, 2016) (on file in CG Docket No. 02-278) (Markey Jun. 8, 2016 Letter) (signed by 29 members of Congress); QLI Comments at 3; NCLC Comments at 17; see also CAC Comments at 2. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 7 of 67 PageID 89 Federal Communications Commission FCC 16-99 7 the FDCPA uses default as the “touchstone for coverage,” and that those collecting debts that were not in default when their agency obtained them are not considered debt collectors under the act.42 Because the amended TCPA is not limited to third-party debt collectors, however, this distinction is less important and the reasoning for using default rather than delinquency as an initiating event is likewise less persuasive. 14. We interpret “solely to collect a debt,” and, therefore, calls made pursuant to the exception created in the Budget Act, to be limited to debts that are delinquent43 at the time the call is made or to debts that are at imminent risk of delinquency as a result of the terms or operation of the loan program itself. As a practical matter, this means that, at the time the call is made, the debt is delinquent or there is an imminent, non-speculative risk of delinquency due to a specific, time-sensitive event that affects the amount or timing of payments due, such as a deadline to recertify eligibility for an alternative repayment plan or the end of a deferment period. Many federal loan programs offer various alternate and income-based repayment options for which a debtor might qualify at various times during the life of the debt, and the amount or timing of payments due can vary significantly following expiration of a deferral period or an alternate payment plan. For example, some income-based repayment plans for student loans allow a debtor to make a monthly payment of zero dollars without being considered delinquent or in default, but higher monthly payments are required automatically if the debtor does not periodically recertify that he continues to qualify for the program. As such, calls regarding changes in the amount or timing of payments are directly related to the collection of the underlying debt in that they can ensure payments that would likely otherwise would not be made. 15. Some commenters, argue that the Commission may not limit covered calls to those that are “delinquent” or in “default” because the Budget Act did not include such limiting language. For example, ACA states: “Congress made absolutely no mention of the [exception] being limited to calls made post delinquency or post-default. As a result it would be inappropriate for the Commission to read such a limitation into the amendment.”44 We disagree with regard to our discretion to interpret the statutory language, but note that we are not limiting covered calls only to those made after default or delinquency. As commenters note, the Supreme Court has confirmed that a person or entity “collects” a debt by attempting to obtain payment on it.45 Thus, we believe that covered calls must have a reasonable nexus to seeking to obtain payment and that the calls permitted under our interpretation of “solely to collect” have such a nexus. In contrast, calls outside the scope of covered calls lack such a nexus because the risk of delinquency would be too speculative and too far removed (i.e., not imminent) from an event affecting the amount or timing of payments due. 16. Other commenters argue that covered calls should begin before delinquency because calls that occur after delinquency or default are “too late to prevent damage to the consumer’s credit profile and fail[] to allow the borrower to receive timely information to choose the repayment plan best suited for the borrower’s unique circumstances.”46 We agree. Certain calls to service a debt owed to or guaranteed by the government may be so closely tied to an imminent and non-speculative risk of delinquency as to 42 FTC BCP Staff Comments at 5-6. 43 Because we lack a developed record on the point, we do not formally define “delinquent” or “delinquency.” Rather, the terms of a contract or other instrument that created the debt defines when a debt is delinquent. See NCLC Comments at 17; Navient Mar. 29, 2016 Letter at 2; ECMC Comments at 5; ACA Comments at 9; EFC Letter at 2, n.4; Navient Comments at 6; NCHER Comments at 3-4. For purposes of this order, however, we generally use “delinquent” to refer to debts that are not current on payments per the terms of the debt agreement, and distinguish that from “default,” which we generally understand to refer to debts that are significantly delinquent. See, e.g., Navient Comments at 6; NCHER Comments at 3-4. 44 ACA Comments at 9; see also ConServe Comments at 3; SLSA Comments at 19. 45 See Navient Comments at 31 (citing Heintz v. Jenkins, 115 S.Ct. 1489, 1491 (1995); Direct Mktg. Ass’n v. Brohl, 135 S.Ct. 1124, 1130 (2015)); EFC Letter at 4. 46 NCHER Comments at 2. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 8 of 67 PageID 90 Federal Communications Commission FCC 16-99 8 also be “solely to collect a debt.” These calls pertain to specific, time-sensitive events that affect the amount or timing of payments due. Once these time-sensitive events are sufficiently imminent, calls about these events are no longer just about a debt, but are solely about the collection of a debt. The time- sensitive nature of these calls necessitates that they are “solely to collect a debt” for only a limited time— following the event and in the30 days before such an event. Any earlier and the calls are too speculative and attenuated for the purpose of the call to be “solely to collect a debt.” 17. The record indicates that these debt servicing calls help a debtor avoid delinquency or default, which can preserve the debtor’s payment history and credit rating, and help maintain eligibility for future loans.47 The potential value of these servicing calls to debtors by helping them avoid delinquency or default, and the probability that servicing calls will create conditions that allow debts to be more readily collected by the United States, lead us to determine that certain servicing calls should be included in our interpretation of “solely to collect a debt.”48 18. A caller, therefore, need not wait until a debtor is delinquent to begin making certain debt servicing calls. Rather a caller may make debt servicing calls following a specific, time-sensitive event that affects the amount or timing of payments due, such as a recertification deadline or the end of a deferment period, and in the 30 days before such an event.49 For purposes of the limits on the number of covered calls, no debt servicing calls will be permitted except those regarding an approaching deadline or a change in status (deferment, forbearance, rehabilitation), calls regarding enrollment or reenrollment in income-driven or income-based repayment plans, and calls regarding similar time-sensitive events or deadlines affecting the amount or timing of payments due.50 While commenters list other pre- delinquency calls they would like the Commission to include in the list of debt servicing calls for purposes of the Budget Act amendments,51 we decline to do so. This list of calls we are permitting as covered debt servicing calls includes the most-requested debt servicing calls and includes calls both to enroll debtors in consumer-friendly programs and to keep them enrolled in those programs. It also includes calls aimed at alerting debtors when significant events will occur that will change their payment patterns. The list does not include calls regarding routine events, such as reminders about scheduled upcoming payments. We would consider a routine event one that occurs by operation of the contract alone, as contrasted with the events we describe above, which require affirmative steps by the debtor to 47 See Dept. of Education Reply Comments at 3; Navient Comments at 7-8; EFC Letter at 3; EFC Comments at 3; see also Navient Comments at 2. 48 See EFC Comments at 5 (“between October 2013 and November 2014, nearly 60 percent of borrowers enrolled in IDR programs did not recertify their incomes as required before their deadlines. The data showed that one-third of these borrowers faced financial havoc when they forgot to recertify, and their loans went into hardship related forbearance or deferment”); Letter from Mark W. Brennan, Counsel to Navient Corp., to Marlene H. Dortch, Secretary, FCC at 3-4 (Mar. 29, 2016) (on file in CG Docket No. 02-278) (Navient Mar. 29, 2016 Letter); SLSA Comments at 11-12. 49 NCLC argues in its Comments that the Commission should permit these types of debt servicing calls “if the consumer is delinquent in responding to a requirement to arrange for a payment plan or forbearance program.” NCLC Comments at 3. In its Reply Comments, NCLC states that it has altered its argument and supports servicing calls in “the 30-day period before the debtor will be delinquent in maintaining eligibility for payment plan[s].” NCLC Reply Comments at 7. A commenter notes that, for some programs such as income-driven repayment (IDR) plans, “there is a 10-day window between the formal deadline to recertify for IDR and the triggering of adverse consequences, such as interest capitalization and resetting the monthly payment to a much higher amount.” SLSA Reply Comments at 8. See also Letter from James P. Bergeron, President, National Council of Higher Education Resources, to Marlene H. Dortch, Secretary, FCC at 8 (Jun. 22, 2016) (on file in CG Docket No. 02-278) (NCHER June 22, 2016 Letter). 50 See Dept. of Education Reply Comments at 3; Navient Comments at 32-33; EFC Comments at 4; Nelnet Comments at 7; 51 See, e.g., SLSA Comments at 11-12; NCHER Comments at 5; EFC Comments at 4. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 9 of 67 PageID 91 Federal Communications Commission FCC 16-99 9 take advantage of the provisions of the debt contract. These included calls, which often increase the probability that debts will be more readily collected and that a debtor will avoid delinquency, achieve the desired result of enabling the caller to collect a debt owed to or guaranteed by the United States and simultaneously can benefit the debtor. Our interpretation of covered calls permit no debt servicing calls unless the call follows one of these specific, time-sensitive events, and in the 30 days before such an event. 19. “Owed to or guaranteed by the United States.” We turn next to the types of debts that are included in the phrase “owed to or guaranteed by the United States.”52 We determine that, for TCPA purposes, this phrase includes only debts for which the United States53 is currently the owner or guarantor of the debt.54 The Budget Act amendments specify that covered calls may be made regarding “debts owed to or guaranteed by the United States.”55 Because we lack a developed record on the issue, we do not seek to define or determine with particularity exactly which debts are included in or excluded from this phrase; like commenter SLSA, we are cognizant of the “variety of types of debts covered by the provision,” and while we do not “believe that the definitions applicable to each specific federal program should be used to [automatically] determine whether debt in that program is considered owed or guaranteed by the United States,” we view such definitions—and any agency or judicial interpretations of 52 Budget Act § 301(a)(1)(A) (amending 47 U.S.C. § 227(b)(1)(A)(iii)) 53 We note that Section 3 of the Communications Act, as amended, defines “United States” to mean “the several States and Territories, the District of Columbia, and the possessions of the United States, but does not include the Canal Zone.” 47 U.S.C. § 153(58). Based on this statutory language, the context of “debts owed to or guaranteed by the United States” as used in the Budget Act amendments, and our consultation with other federal agencies with substantive expertise regarding debtor-creditor relationships, we find and apply a definition of “United States” in this instance that encompasses a narrower scope that only includes debts owed to or guaranteed by the federal government, as opposed to the broader definition of “United States” included in Section 3 of the Communications Act, as amended. We find this narrower definition more closely comports with the scope intended under the Budget Act. We also decline to issue regulations to limit the number and duration of robocalls seeking to collect debts owed to or guaranteed by state or local government entities as at least one commenter has requested. See Luster Comments at 1-2. 54 One commenter asserts that the exception should include debts “insured, guaranteed, coinsured, or reinsured, in whole or in part, by the U.S. government or any agency or instrumentality thereof, directly or indirectly.” ABA/CBA Comments at 3. We disagree. Congress specified that the debt should be “owed to or guaranteed by the United States.” Budget Act § 301(a)(1)(A) (amending 47 U.S.C. § 227(b)(1)(A)(iii)). We, therefore, determine that debts insured by the United States are not included in the language of the Budget Act amendments; only debts owed to or guaranteed by the United States are included in the language of the Budget Act amendments. Commenters who advocate for including “insured” debts within the language of the Budget Act amendments do not explain how the statutory terms “owed to or guaranteed by” encompasses the term “insured,” so we do not included “insured” debts within the scope of the terms “owed to or guaranteed by” in our interpretation of the statutory language. Commenter Federal Housing Finance Authority (FHFA)—the agency charged with regulating Fannie Mae and Freddie Mac—states in its comments that “the statutory exemption for debts owed to or guaranteed by the United States does not appear applicable to Fannie Mae and Freddie Mac loans.” FHFA Comments at 2. The Commission will not render a decision on this factual issue, particularly because little in the way of facts has been entered into the record. FHFA also asks the Commission to grant an exemption to “entities that service 1-4 unit residential mortgage loans from prohibitions against the use of automatic telephone dialing systems or artificial or prerecorded voices when calling a delinquent borrower for the purpose of servicing that borrower’s mortgage.” FHFA Comments at 3. In its request, FHFA cites two different exemption provisions, but fails to provide the factual information necessary for the Commission to determine whether the calls at issue would satisfy the threshold requirements for an exemption, including whether calls to wireless numbers would be without charge to the called party. See 47 U.S.C. § 227(b)(2) (B), (C). Furthermore, the Commission has no record on which to consider this request for exemption. As such, it would be premature for the Commission to rule on the exemption request. 55 Budget Act § 301(a)(1)(A) (amending 47 U.S.C. § 227(b)(1)(A)(iii)). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 10 of 67 PageID 92 Federal Communications Commission FCC 16-99 10 them—as highly relevant evidence regarding whether a debt is “owed to or guaranteed by the United States.”56 20. We clarify that the debt must be currently owed to or guaranteed by the federal government at the time the call is made. Debts that have been satisfied are not among the covered debts,57 and debts that have been sold in their entirety by the federal government are, likewise, not covered.58 In these cases, the debt is no longer “owed to . . . the United States.” We note that basic contract principles dictate that when an owner sells an item, it no longer belongs to the original owner, but to the purchaser.59 Likewise, the purchaser of a debt is owed the repayment obligation, not the prior obligee.60 For example, a debt is not still “owed to . . . the United States” if the right to repayment is transferred in whole to anyone other than the United States, or a collection agency that has acquired ownership of the debt from the federal government collects the funds and then remits to the federal government a percentage of the amount collected. In such circumstances, the debt is no longer owed to the United States and our rules permit no calls under this exception.61 21. Who may be called? We next turn to the question of who may be called using the exception created by the Budget Act. We determine that, because calls made pursuant to the exception must be made “solely to collect a debt,” the covered calls may only be made to the debtor or another person or entity legally responsible for paying the debt.62 Calls are not permitted to other persons listed on the debt paperwork, such as references or witnesses, under our rules. These persons are not liable for the debt; consequently, calls to these persons cannot be “solely to collect” the debt.63 Senators and Members of Congress support our decision to limit covered calls in this way, writing: “The regulations should limit the calls to those made just to the debtors” and “[r]estrict the calls and texts to those made just to debtors—not their family or friends.”64 Another Senator writes separately, urging: “Calls to 56 SLSA Comments at 21. Likewise, we do not define what constitutes a “debt” for purposes of the Budget Act amendments to the TCPA, but will assess on a case-by-case basis whether any individual agency’s interpretation of “debt” is reasonable. 57 See MFY Comments at 2; AFR Comments at 2; NCLC Comments at 3; YI Comments at 2 58 See Markey Jun. 8, 2016 Letter at 1; Brown Letter at 2; Letter from Margot Saunders, National Consumer Law Center, to Marlene H. Dortch, Secretary, FCC at 4, 19 (Mar. 29, 2016) (on file in CG Docket No. 02-278) (NCLC Letter); ConServe Comments at 3; CAC Comments at 2. 59 Restatement (Second) of Contracts § 22 (1981) (“The manifestation of mutual assent to an exchange ordinarily takes the form of an offer or proposal by one party followed by an acceptance by the other party or parties.”); id. § 317(1) (“An assignment of a right is a manifestation of the assignor’s intention to transfer it by virtue of which the assignor’s right to performance by the obligor is extinguished in whole or in part and the assignee acquires a right to such performance.”). 60 Restatement (Second) of Contracts § 317, Illustration 1 (1981) (“A has a right to $100 against B. A assigns his right to C. A’s right is thereby extinguished, and C acquires a right against B to receive $100.”). 61 The debt may, however, be guaranteed by the United States after the debt is sold. In such a case, the debt could be subject to covered calls based on the “or guaranteed by” language of the amended TCPA. See CMC Comments at 11-12. 62 This includes co-signors on the debt. Because co-signors are legally responsible for payment of the debt, calls to them may be construed to be for the sole purpose of collecting a debt, absent a showing that the call’s true purpose was for marketing or some other purpose specifically disallowed by the TCPA. The same would be true for representatives of a person or entity liable to pay the debt, such as executors, guardians, administrators, and trustees. 63 As stated at para. 12, supra, we reject a subjective- or intent-based approach. A call is not solely to collect a debt unless it reaches the debtor. Regardless of the caller’s intent, unless the call is placed to one of the three categories of numbers we specify in paragraph 23, infra, the call is unlikely to reach the debtor and result in collection; it, therefore, falls outside the statutory interpretation we establish herein. 64 Markey Jun. 8, 2016 Letter at 1. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 11 of 67 PageID 93 Federal Communications Commission FCC 16-99 11 persons who are not the borrower should be eliminated.”65 Consumer groups concur, stating “the only reasonable way to read the phrase ‘solely to collect a debt’ is to exclude all calls to persons who do not owe the debt.”66 The FTC staff also supports this limitation, stating “FTC staff recommends that covered calls be limited to calls directed at the person or persons obligated to pay the debt.”67 22. Other commenters, however, urge the Commission to permit covered calls to persons other than the debtor. Navient, in particular, comments on the need to call the parents, relatives, and references of a borrower in order to locate the borrower.68 Navient writes: “[C]alling numbers obtained through skip tracing is sometimes the only way to reach a defaulted borrower.”69 It also notes that the Department of Education requires “lenders to contact every ‘endorser, relative, reference, individual, and entity’ identified in a delinquent borrower’s loan file as part of their due diligence efforts.”70 Navient fails to note, however, that there is no requirement to make these contacts via robocall.71 Navient also makes clear in its comments that its purpose in calling relatives and references is to locate the debtor, not to collect the debt. Because the language of the Budget Act authorizes the Commission to limit calls “solely to collect a debt,” our rules permit covered calls only to persons who are responsible for repaying the debt.72 23. Numbers that May be Called. Our interpretation of the phrase “solely to collect a debt” permits no covered calls unless the call is made to the debtor or person responsible for paying the debt at one of three categories of wireless telephone numbers. First, calls may be made to the wireless telephone number the debtor provided at the time the debt was incurred, such as on the loan application.73 Second, covered calls may be made to a wireless phone number subsequently provided by the debtor to the owner of the debt or the owner’s contractor.74 Because the debtor has provided the phone numbers in these first two categories, the caller risks liability for the call after the first call to the number, if the number has been reassigned from the debtor to a third party.75 Third, covered calls are permitted to a wireless telephone number the owner of the debt or its contractor has obtained from an independent source, provided that the number actually is the debtor’s telephone number. Our decision to permit calls to these 65 Brown Letter at 2. 66 NCLC Comments at 21; see also YI Comments at 1; MFY Comments at 2; AFR Comments at 2; ACA Comment at 7. 67 FTC BCP Staff Comments at 6. 68 Navient Mar. 29, 2016 Letter at 4. 69 Id. 70 Navient Comments at 36. 71 See NCLC Comments at 28 (“Industry callers have argued that, because other laws and regulations require contacts at several points in the collection process, the limits imposed on calls covered by the TCPA are inappropriate and require callers to make a Hobson’s choice about which laws they will follow. We do not dispute that there are a myriad of other laws and regulations that require callers to contact consumers by phone. The key here is that these are requirements for contact. They do not require contact by robocall. No one has an inalienable right to make robocalls.”). 72 See CAC Comment at 2. 73 The debtor might have incurred the debt through a penalty or fine rather than an application. In such case, the debtor may not have provided a phone number at the time the debt was incurred. There, the caller may make calls to the phone number the debtor provided on the most recent document submitted to the federal government agency holding the debt, such as a tax return or discharge papers. 74 The debtor need only provide the phone number to the servicer or owner of the debt; the debtor need not provide the phone number in the context of providing consent to receive autodialed, artificial-voice, and prerecorded-voice calls. See ACA Comments at 9. 75 See paras. 25-26, infra, for a discussion of calls to reassigned numbers. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 12 of 67 PageID 94 Federal Communications Commission FCC 16-99 12 three categories of numbers is consistent with our interpretation of the phrase “solely to collect a debt,” and continues to satisfy the TCPA’s consumer protection goals to the extent possible. As the connection between the phone numbers called and the debtor becomes more attenuated, so, too, does the likelihood of reaching the debtor. Beyond these three categories of numbers, persons reached will not likely be the debtor, so calls will not likely result in the collection of a debt owed to or guaranteed by the United States. 24. We note that the rules we are adopting, which permit calls only if they are to these three categories of numbers, are broader than the proposal in the NPRM. We have included calls to numbers subsequently provided by the debtor to the owner of the debt or the owner’s contractor, and to numbers the owner of the debt or its contractor has obtained from an independent source, provided that any such number actually is the debtor’s number. These additional categories of numbers should prevent uninvolved consumers from receiving robocalls about debts they do not owe,76 while mitigating concerns that the phone number provided on the loan application no longer belongs to the debtor when the debt enters repayment.77 25. This limitation we are placing on the number of covered calls, which limits covered calls only to these three categories of numbers, is a determination that robocalls to wrong numbers are not covered by the exception created in the Budget Act amendments. Calls to reassigned wireless numbers may not be made pursuant to the exception either.78 Wrong numbers, as the Commission used the term in the 2015 Declaratory Ruling and Order, are “numbers that are misdialed or entered incorrectly into a dialing system, or that for any other reason result in the caller making a call to a number where the called party is different from the party the caller intended to reach or the party who gave consent to be called.”79 We determine that covered calls to reassigned wireless numbers,80 however, are subject to the one-call window the Commission clarified in the 2015 Declaratory Ruling and Order.81 For purposes of this exception, the reassigned wireless number provision would come into play when the caller makes a call to the wireless number provided by the debtor but the number was subsequently reassigned. In this circumstance, the caller would be entitled to the one-call window the Commission previously clarified if the caller did not know of the reassignment. 26. Numerous parties in the record urge the Commission to apply the same wrong number and reassigned number standards set forth in the 2015 Declaratory Ruling and Order to these covered calls.82 Others ask the Commission to abandon or alter the wrong-number and reassigned-number standard so that covered calls are treated differently from other robocalls, but do not set forth a persuasive argument for why a covered call is different from a typical robocall subject to the one-call window. 76 AFR Comments at 2; NCLC Comments at 10-11. 77 Nelnet Comments at 10; ConServe Comments at 6. 78 See para. 12, supra (rejecting a subjective- or intent-based approach). 79 2015 TCPA Declaratory Ruling and Order, 30 FCC Rcd at 7999, para. 72 n. 256. 80 The reassigned number must have been provided by the debtor. 81 See 2015 TCPA Declaratory Ruling and Order, 30 FCC Rcd at 8006-10, paras. 85-92. As the Commission explained, calls to reassigned wireless numbers are different from calls to wrong numbers. Calls to reassigned numbers, where the caller is unaware of the reassignment at the time the call is made, “would have had the valid prior express consent of the subscriber or customary user but for the reassignment.” Id. at 30 FCC Rcd at 8000, para. 72 n. 262. Wrong number calls, however, “are not eligible for the opportunity to make one additional call to discover whether the number has been reassigned [because] the caller never had valid prior express consent from the subscriber or customary user to make any call to that misdialed or incorrectly-entered phone number.” Id. 82 See Letter from Edward J. Markey et al., United States Senator, to Marlene H. Dortch, Secretary, FCC at 1 (Nov. 18, 2016) (on file in CG Docket No. 02-278) (signed by 41 members of Congress); Brown Letter at 2; NCLC Comments at 3; CU Comments at 4; AFR Comments at 2; MFY Comments at 2; YI Comments at 2; CAC Comments at 3. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 13 of 67 PageID 95 Federal Communications Commission FCC 16-99 13 Several commenters argue for a “reasonable belief” or “actual knowledge” standard.83 The Commission, however, rejected those standards in the 2015 Declaratory Ruling and Order.84 And while ABA/CBA argues that separate regulations “mandate[] that calls be made to distressed borrowers at their last known phone number of record,”85 it does not indicate that the regulations require that those calls be made using an autodialer, artificial voice, or prerecorded voice. Consequently, ABA/CBA could comply with these separate regulatory requirements by manually dialing the last known phone number of record. 27. Who May Make the Calls? We next consider who may make the covered calls at issue. We find that a call is made “solely to collect a debt owed to or guaranteed by the United States” only if it is made by the owner of such a debt or its contractor. The record supports this interpretation. A number of commenters urge the Commission to determine that covered calls may be made by “creditors and those calling directly on their behalf,”86 or “creditors and those calling on their behalf, including their agents.”87 Two commenters ask the Commission to broaden the universe of those who may make covered calls, asking that “subcontractors [] be permitted to call, even if the subcontractor is not an agent.”88 We decline to adopt rules that are as broad as “subcontractor,” but limit permitted callers to the owner of the debt or its contractor. As we have noted above, consumers consistently complain to the Commission, the FTC, and CFPB about abusive and persistent debt-collection robocalls.89 In creating the rules limiting the number of covered calls, we seek to balance the goals of increasing the likelihood that debts owed to or guaranteed by the United States will be paid by the debtor and of protecting consumers. Our rules properly balance these goals by recognizing the practicality that owners of debts might use the services of contractors to make covered calls in a manner that reduces the potential for abuse or causing debtors undue hardship. 28. What constitutes a “call made”? “Call,” for this exception, is consistent with the Commission’s previous interpretation of “call” for TCPA purposes.90 A call is any initiated call.91 The call need not be completed, and need not result in a conversation or voicemail. While many commenters support this interpretation of “call,”92 others argue that the definition for purposes of the exception created 83 NCHER Comments at 7; ACA Comments at 11-12. 84 See 2015 TCPA Declaratory Ruling and Order, 30 FCC Rcd at 7999-8010, paras. 71-92. 85 ABA/CBA Comments at 9. 86 NCLC Letter at 3. 87 ACA Comments at 13-14; SLSA Comments at 24. 88 CMC Comments at 16; see also SLSA Comments at 24. 89 See para. 7, supra. 90 The Commission’s implementing rule states that no person or entity may “initiate any telephone call” to the specified recipients. 47 C.F.R. § 64.1200(a)(1) (emphasis added). The Commission, in the 2013 DISH Declaratory Ruling, noted that neither the statute nor our rules define “initiate,” and determined that “a person or entity ‘initiates’ a telephone call when it takes the steps necessary to physically place a telephone call.” DISH Declaratory Ruling, 28 FCC Rcd at 6583, para. 26. While DISH Declaratory Ruling interpreted and applied section 227(b)(1)(B), the Commission has stated that the same logic that applies to the “initiation” of calls under section 227(b)(1)(B) applies to the “making” of calls under section 227(b)(1)(A). See DISH Declaratory Ruling, 28 FCC Rcd at 6575, 6583, paras. 3, 26; 47 U.S.C. § 227(b)(1). While some may argue that using call attempts as the basis for determining the permissible number of calls is an arbitrary limitation, our interpretation of the term “call” is consistent for the TCPA as a whole and does not distinguish between calls regarding debts owed to or guaranteed by the United States and calls with other content. 91 47 C.F.R. § 64.1200(a)(1). 92 NCLC Letter at 4; EFC Comments at 7-8; OSLA Comments at 2; NCHER Comments at 12; MFY Comments at 2; AFR Comments at 2; YI Comments at 2; CAC Comments at 2. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 14 of 67 PageID 96 Federal Communications Commission FCC 16-99 14 by the Budget Act should be “connected calls” or “actual contacts.”93 The Commission finds no statutory basis to deviate from its existing interpretation of “call” and “made,” and finds persuasive one commenter’s argument that “[e]very time the phone rings can cause anxiety. Whether or not the collector leaves a message on voice mail does not assuage this harassment.”94 Consistent with the text of the TCPA and the Commission’s previous clarifications, covered calls may be an autodialed call, a prerecorded- or artificial-voice call, or a text message sent using an autodialer.95 29. Content of the covered calls. The NPRM asked how to ensure that covered calls do not include extraneous material that consumers do not want, such as marketing content. We agree with the many commenters who argue that content that includes marketing, advertising, or selling products or services, and other irrelevant content is not solely for the purpose of collecting a debt owed to or guaranteed by the United States.96 The Commission has previously found that calls solely for the purpose of debt collection do not constitute telemarketing.97 Content in these calls that is telemarketing, therefore, transforms the call from one solely for the purpose of debt collection into a telemarketing call.98 B. Limits on Number and Duration of Federal Debt Collection Calls 30. Need for restrictions. In considering the need for restrictions on calls to collect debts owed to or guaranteed by the United States, we note the volume of consumer complaints, as set forth above.99 These factors, along with Congress’ explicit grant of authority to the Commission to “restrict or limit the number and duration of calls made to a telephone number assigned to a cellular telephone service to collect a debt owed to or guaranteed by the United States,”100 lead us to adopt certain restrictions. 31. Scope. Section 301(a)(2) of the Budget Act, which enacts a new statutory provision at 47 U.S.C. § 227(b)(2)(H), authorizes the Commission to “restrict or limit the number and duration of calls made to a cellular telephone number to collect a debt owed to or guaranteed by the United States.” The scope of this authority is broader than the scope of the exception from the prior-express-consent requirement, because—unlike the exception—it is not limited to calls made “solely” to collect a covered debt. Thus, the rules we promulgate under this authority apply to any autodialed, prerecorded-voice, and artificial-voice calls that reasonably relate to the collection of a covered debt and therefore apply even if the calls are not “calls made solely to collect a debt” under 227(b)(1): e.g., as noted above, if the calls also contain other content (such as advertising) or precede the specified time period for calls excepted from the consent requirement. Moreover, these number and duration rules apply to calls by the federal government (to the extent it is the owner or guarantor of the debt) and its contractors, as explained in the Jurisdiction section below.101 93 Navient Mar. 11, 2016 Letter at 2-3; ACA Comments at 16-17; AACC Comments at 2. 94 NCLC Comments at 26. 95 See 47 U.S.C. § 227(a)(1); 2015 TCPA Declaratory Ruling and Order, 30 FCC Rcd at 8017, para 107. 96 See, e.g., FTC BCP staff Comments at 7-8; ACA Comments at 10-11; NCHER Comments at 5; EFC Comments at 4; NCLC Comments at 20. 97 Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Request of ACA International for Clarification and Declaratory Ruling, CG Docket No. 02-278, 23 FCC Rcd 559, 565, para. 11 (2008) (ACA Declaratory Ruling). 98 Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Report and Order, 18 FCC Rcd 14014, 14097-98, para. 140 (2003). 99 See para. 7, supra. 100 Budget Act § 301(a)(2)(C) (adding 47 U.S.C. § 227(b)(2)(H)). 101 This does not limit the applicability of the number and duration rules to only calls made by the federal government and its contractors where the debt is owed to or guaranteed by the United States. Rather, we clarify that (continued….) Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 15 of 67 PageID 97 Federal Communications Commission FCC 16-99 15 32. The nature of restrictions, generally. We determine, based on consumer complaints and on support from the record,102 that restrictions on the number and duration of federal debt collection calls are appropriate and necessary. In reaching this conclusion, we bear in mind one reasonable interpretation of Congress’ action in enacting the amendments: to make it easier for owners of debts owed to or guaranteed by the United States, as well as their contractors, to make calls to collect the debts. We also bear in mind the TCPA’s overarching goal to protect the privacy interests of consumers and Congress’ express grant of authority to the Commission to place certain restrictions on federal debt collection calls. In seeking to balance these two interests, we limit the number of federal debt collection calls to three in thirty days, with exceptions as noted below; limit the length of calls using an artificial voice or prerecorded voice, and autodialed text messages; and limit the times of day when federal debt collection calls may be made to wireless numbers. As explained more fully below, these limits apply in the aggregate to all calls from a caller to a debtor, regardless of the number of debts of each type the servicer or collector holds for the debtor.103 This cap of three calls per thirty days is cumulative for debt servicing calls and debt collection calls.104 Finally, we limit the number of calls in light of a debtor’s right to stop federal debt collection calls and to be notified of this right. 33. Number of calls. In the NPRM, we proposed to limit the number of federal debt collection calls to three per month, per delinquency, only after delinquency. Several commenters support this number.105 One commenter reminds the Commission, “it is important to keep in mind that the calls made pursuant to this regulation are without consent, and are likely to comprise only a portion of the many other calls and contacts that debt collectors have with the debtors from whom they are collecting.”106 Other commenters, however, argue for higher limits, stating that “it takes significantly more than three contact attempts to reach the borrower and additional contacts to effectively resolve a borrower’s delinquency or default.”107 One commenter asserts that it needs 50 calls over several months to reach the right person and have a conversation.108 Another states that it takes 14.3 attempts to contact a (Continued from previous page) the number and duration rules apply to the federal government and its contractors, notwithstanding our recent clarification in the Broadnet Declaratory Ruling, as explained in the “Jurisdiction” section, below. Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Broadnet Teleservices LLC Petition for Declaratory Ruling, CG Docket No. 02-278, FCC 16-72 (2016) (Broadnet Declaratory Ruling). Non-government owners of debt and their contractors, where the debt is guaranteed by the United States, must also comply with the number and duration rules if they wish to make federal debt collection calls pursuant to the Budget Act amendments. 102 See, e.g., CFPB Comments at 10 (“The Bureau’s examinations of debt collectors have also revealed excessive calling and consequent consumer harm. The Bureau therefore believes that a regulatory intervention limiting the number of such calls placed to cell phones by auto-dialers would be a beneficial complement to examination and enforcement to protect consumers from excessive calls from collectors (as well as from creditors and servicers).”) (listed in the Commissions comment filing system as filed on May 8, 2016 rather than June 8, 2016). 103 As explained more fully in para. 45, infra, some debtors have multiple debts with the same owner or servicer. See NCLC Reply Comments at 7 (“[S]ome servicers collect debts owed to different agencies of the federal government, yet the collection activities devoted to separate agencies are cabined such that it would be difficult for the servicers to coordinate among sections.”). Multiple debts owed by one debtor that are serviced or collected by the same entity on behalf of the same loan holder or federal agency shall be considered one debt. This will prevent one debtor with multiple debts of the same type from receiving more than three calls in thirty days, where the debts are owned or serviced by the same caller. 104 If a caller is making both servicing and collection calls to a wireless number regarding a particular debt, it may make a total of three calls within thirty days; it may not make three servicing calls and three collection calls within a thirty-day period. 105 See, e.g., Markey Jun. 8, 2016 Letter at 1; NCLC Letter at 3. 106 NCLC Comments at 27. 107 ECMC Comments at 6. 108 Navient Comments at 10. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 16 of 67 PageID 98 Federal Communications Commission FCC 16-99 16 consumer.109 A third commenter states that it needs approximately 50 follow-up calls, but that those calls are consented-to.110 Two commenters assert that approximately ten call attempts per month is an appropriate rate at which to contact debtors.111 A mortgage servicer states: “By making up to five calls in the two weeks prior to a client becoming 60 days delinquent, we saw approximately 50% more clients become current on the loan when compared to those who weren’t called.”112 34. As these comments demonstrate, there is no consensus in the record. The Department of Education states that it “does not believe that allowing loan servicers and [private collection agencies] to make three [federal debt collection calls] per month would measurably increase the likelihood that they would reach a borrower,” but that “a higher limit will reasonably allow” them to do so.113 Consumer groups generally argue that three calls is the appropriate number for calls pursuant to the Budget Act amendments. As commenter Navient notes, however, these commenters often “fail to explain why three calls is an appropriate limit.”114 Additionally, callers filing comments cite statistics and call patterns documenting their perceived need for more calls—but even callers vary widely when advocating for a number on federal debt collection calls. Congress gave us express authority to limit the number and duration of wireless federal debt collection calls, and the record documents the benefits to consumers of some number of covered calls. The Commission, therefore, must engage in an exercise in line drawing as we balance the competing interests to determine an appropriate limit on the number of federal debt collection calls. 35. We determine, subject to the exception below, that a limit of three federal debt collection calls in a thirty-day period is appropriate. As stated above, a significant number of commenters support this numeric restriction. Furthermore, the overwhelming majority of individual commenters support our imposing a low limit on the number of calls allowed pursuant to the Budget Act amendments.115 Commenters asking for a higher limit have failed to offer a compelling justification for any of the various limits they support. At the same time, we agree with consumer groups that have noted that callers may make as many calls as they like—they simply need to obtain the consent of the debtor or contact consumers without making a robocall.116 36. We, therefore, conclude that the appropriate limit for the number of federal debt collection calls is three calls within thirty days while the delinquency remains or following a specific, time-sensitive event, with such calls also permitted in the 30 days before such an event (but not before delinquency). We recognize, however, that some federal agencies, based on their expertise administering their respective statutes and programs, may desire additional calls.117 Balancing these needs with the TCPA’s goal of protecting consumers from unwanted calls, we note that federal agencies may request a waiver seeking a different limit on the number of autodialed, prerecorded-voice, and artificial-voice calls 109 ECMC Comments at 7. 110 ConServe Comments at 3. 111 Nelnet Comments at 14; SLSA Comments at 26. 112 QLI Comments at 3. 113 Dept. of Education Reply Comments at 4. 114 Navient Reply Comments at 10. 115 See para. 9, supra. 116 See, e.g., NCHER Comments at 12 (proposing that “[n]othing in the rule limits or prohibits calls or texts requested or agreed upon by the consumer”). 117 See Dept. of Education Reply Comments at 4. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 17 of 67 PageID 99 Federal Communications Commission FCC 16-99 17 that may be made without consent of the called party.118 We delegate to the Consumer and Governmental Affairs Bureau the authority to address any such waivers.119 37. We are not persuaded by callers who argue that more calls are needed or that other regulatory or contractual obligations might impose higher limits on the total number of calls.120 We are not limiting the total number of calls that may be made; instead, we are exercising our statutory authority and discretion to establish a limit on the number of autodialed, prerecorded-voice, and artificial-voice calls that can be made without the consent of the called party for the limited purpose at issues here. Thus, we set this limit with the knowledge that callers may make additional autodialed, artificial-voice, and prerecorded-voice calls if they obtain the prior express consent of the called party121 or if they dial manually. Robocallers are free, of course, to obtain prior express consent for additional calls and we presume that consumers who find the calls beneficial will provide it. 38. Consumer ability to stop federal debt collection calls. The Commission has determined that an ability to stop unwanted calls is critical to the TCPA’s goal of consumer protection.122 That right is likely more important here, where consumers need not consent to the calls in advance in order for a caller to make federal debt collection calls. As one commenter notes, “[r]equiring calls to stop after the consumer so requests constitutes a limit on the number of calls that can be made, and Congress explicitly authorized the Commission to limit the number of calls.”123 We agree. We have stated that one reasonable interpretation of the statute is that Congress intended to make it easier for consumers to obtain useful information about debt repayment, which may be conveyed in these calls. When a debtor has rejected that presumption and declared that he or she no longer wishes to receive these calls, there is no longer any reason for the calls to continue. We determine, per our authority to limit the number of federal debt collection calls,124 that consumers have a right to stop the covered autodialed, artificial-voice, and 118 See 47 CFR § 1.3. 119 Contrary to the claim of one dissent, our decision to adopt a limit of three calls per thirty days does not lack a rational basis. It is well established that a paramount goal of Congress in adopting the TCPA was to recognize the intrusive nature of robocalls and to limit the burden they impose on consumers. See TCPA, Pub. L. No. 102-243, § 2(9). Nothing in the Budget Act indicates that Congress intended to depart from this goal. To the contrary, we believe Congress granted the Commission rulemaking authority in subparagraph (b)(2)(H) precisely to ensure that this law does not inadvertently open the floodgates to unwanted robocalls. While it is true that some commenters urged us to adopt limits much higher than three per thirty days, against the backdrop of Congress’s enduring goal of limiting the intrusiveness of robocalls, we believe prudence counsels in favor of adopting limits at the lower end of the range of proposals in the record at this time. To the extent that subsequent experience with the waiver process demonstrates that higher limits may we warranted, we can revisit the limits in the future. One dissent questions the adequacy of the waiver process, particularly given some specific concerns raised in the record about federal laws and rules under the auspices of other agencies. Because the Commission lacks expertise with respect to such laws and rules (including whether they necessarily require robocalls instead of, say, manual calls), we believe a waiver process is the best way to address any such situations; such a process will allow a full record to be developed regarding the nature of any relevant statutes and rules. To the extent that it is demonstrated in a waiver proceeding that a genuine conflict exists between our three-per-thirty-days limit and another federal law, we are likely to view that factor as probative of the “good cause” needed to justify a waiver, although we also would consider any countervailing issues raised in the record. 120 See, e.g., ConServe Comments at 10; MBA Reply Comments at 9; HOPE NOW Reply Comments at 2-3. 121 See 47 U.S.C. § 227(b)(1)(A); 47 CFR § 64.1200(a)(1). 122 See 2015 TCPA Declaratory Ruling and Order, 30 FCC Rcd at 7997, para. 66 (“As we have found above, the most reasonable interpretation of ‘prior express consent’ in light of the TCPA’s consumer protection goals is to permit a right of revocation.”); see also id. at 7993-99, paras. 55-70 (discussing revocation of consent and a consumer’s methods of revoking consent). 123 NCLC Comments at 28; but see EFC Comments at 8; NSC Comments at 13. 124 Budget Act § 301(a)(2)(C) (adding 47 U.S.C. § 227(b)(2)(H)). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 18 of 67 PageID 100 Federal Communications Commission FCC 16-99 18 prerecorded-voice servicing and collection calls to wireless numbers at any point the consumer wishes.125 The debtor may make this request to the caller. Several commenters support this decision and the Commission’s ability to make it.126 If Congress intended these amendments to make it easier for consumers to obtain useful information about debt repayment,127 then consumers may request that the calls stop if they do not find the calls or the information they contain useful. Our rules, therefore, require that zero federal debt collection calls are permitted once a debtor asks the owner of the debt or its contractor to cease federal debt collection calls. This requirement that callers immediately honor a request to stop calls applies even where the caller has previously obtained prior express consent to make federal debt collection calls. 39. We also understand that debts may be transferred from one servicer or collector to another. This stop-calling request is specific to the debt and the consumer, and transfers with the debt; once the consumer has asked that the number of federal debt collection calls be reduced to zero, only the consumer can alter that number restriction. Consequently, a stop-calling requests applies to a subsequent collector or servicer of the same debt.128 In reaching this determination, we reject a commenter’s proposal that a stop-calling request be limited to a period of time such as a month, but be renewable.129 Because the stop-calling request for federal debt collection calls applies for the life of the debt, servicers and collectors must ensure that information regarding the request conveys with the other relevant information regarding the debt when it is sold or transferred between servicers or collectors.130 The requirement that the stop-call request conveys from one servicer or collector to the next implicates the Paperwork Reduction Act, as indicated in our rules, contained in Appendix A, and in the Final Regulatory Flexibility Act, contained in Appendix C. 40. Granting consumers a right to request calls stop at any point is only useful if consumers know of this right.131 We agree with the FTC staff that “[a]n opt-out right [] is only effective if it is well- known”132 rather than with the commenters who argue that a consumer should be notified of the right only once and in writing,133 or that notifying consumers of the right within every phone call will “cause a consumer to attach undue significance to such a right.”134 We, therefore, require callers to inform debtors of their right to make such a request.135 The disclosure of rights must inform the debtor that he or she has 125 The TCPA does not prohibit callers from manually dialing these calls even if the consumer requests that the caller cease making autodialed, artificial-voice, and prerecorded-voice calls. CFPB Comments at 10; SLSA Comments at 30-31; ISL Comments at 2. 126 See, e.g., Markey Nov. 18, 2016 Letter at 1; MFY Comments at 2; NCLC Comments at 3; AFR Comments at 2; CAC Comments at 2. 127 See para. 5, supra. 128 ACA Declaratory Ruling, 23 FCC Rcd at 564-65, paras. 9-10 (discussing calls made “in connection with an existing debt”). While the Commission is not imposing specific record-keeping requirements for stop-calling requests, callers bear the burden of proof should there be any dispute about such requests. Callers, therefore, are advised to maintain a record of such requests and to transfer them to subsequent callers along with other information about the debt. 129 NCHER Comments at 14. 130 Compare CMC Comments at 16 with NCLC Comments at 29. 131 Brown Letter at 2; Markey Jun. 8, 2016 Letter at 1; CFPB Comments at 11. 132 FTC BCP Staff Comments at 11; see also CAC Comments at 2. 133 ConServe Comments at 11. 134 ACA Comments at 19. 135 See Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 651 (1985) (disclosure requirements are consistent with the First Amendment so long as they are “reasonably related to the [government's] interest in preventing deception of consumers”). The disclosure we require here prevents deception because, without the disclosure, (continued….) Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 19 of 67 PageID 101 Federal Communications Commission FCC 16-99 19 a right to request that no further autodialed, artificial-voice, or prerecorded-voice calls be made to the debtor for the life of the debt, and that such request may be made by any reasonable method. Disclosures must be made in a manner that gives debtors an effective opportunity to stop future calls. Callers must disclose this consumer right within every completed autodialed call with a live caller, whether the caller speaks with the debtor or leaves a voicemail message. Calls using a prerecorded or artificial voice must disclose the right within each message.136 Covered text messages must disclose the right within each text message or in a separate text message that contains only the disclosure and is sent immediately preceding the first covered text message. If the disclosure is in a separate text message, that message does not count toward the numeric limits we impose in this Order. 41. The Commission has previously determined that consumers may opt out of calls for which prior consent is required, and that they may do so using any reasonable method, including orally or in response to a text message.137 Here, where the federal debt collection calls do not require consent, but where consumers may request at any time that calls stop, consumers may also make a stop-calling request using any reasonable method, including orally or in response to a text message. We reach this conclusion regarding the methods by which a consumer may make a stop-calling request after considering consumer confusion, standard calling practices, and recordkeeping procedures.138 We anticipate that confusion will be minimized and calling practices will be streamlined if stop-calling methods and opt-out procedures are consistent. For similar reasons, we determine that federal debt collection calls made using a prerecorded or artificial voice must include an automated, interactive voice- and/or key press-activated opt-out mechanism so that debtors who receive these calls may make a stop-calling request during the call by pressing a single key.139 When a federal debt collection call using an artificial voice or prerecorded voice leaves a voicemail message, that message must also provide a toll-free number that the debtor may call at a later time to connect directly to the automated, interactive voice and/or key press-activated mechanism and automatically record the stop-calling request. Text message disclosures must include brief explanatory instructions for sending a stop-call request by reply text message and provide a toll-free number that enables the debtor to call back later to make a stop-call request. The requirement that the artificial- and prerecorded-voice calls, as well as text messages, include opt-out instructions and features implicates the Paperwork Reduction Act, as indicated in our rules, contained in Appendix A, and in the Final Regulatory Flexibility Act, contained in Appendix C. 42. When may federal debt collection calls be made? In order for a federal debt collection call to produce the intended effect of “collect[ing] a debt owed to or guaranteed by the United States,”140 it must occur close in time to a key event in the life of the debt. As set forth above, calls “solely to collect a debt” may be collection calls or servicing calls because both increase the likelihood of a debt being collected. We have interpreted the statutory phrase “solely to collect a debt” to limit debt collection calls to a period when a debt is delinquent, and to limit debt servicing calls to following a specific, time- sensitive event and in the 30 days before such an event. We here use the authority Congress granted us to limit the number and duration of calls “to collect a debt owed to or guaranteed by the United States.”141 (Continued from previous page) consumers may be deceived into believing that they must be subject to these federal debt collection calls. See also Am. Meat Inst. v. U.S. Dep’t. of Agric., 760 F.3d 18, 27 (D.C. Cir. 2014). 136 47 U.S.C. § 227(d)(3). 137 See 2015 TCPA Declaratory Ruling and Order, 30 FCC Rcd at 7996, para. 64. 138 See FTC BCP Staff Comments at 11 (“FTC staff supports expanding the opt-out mechanisms for telemarketing robocalls to the covered debt collection calls due to the similar significant impact on consumer privacy.”). 139 Cf. 47 CFR § 64.1200(b)(3); 47 CFR § 64.1200(a)(7)(i)(B); see also 16 CFR § 310.4(b)(1)(v)(B)(ii)(A)-(B); FTC BCP Staff Comments at 10; NCLC Comments at 30; NCHER Comments at 15. 140 Budget Act § 301(a)(2)(C) (adding 47 U.S.C. § 227(b)(2)(H)). 141 Budget Act § 301(a)(2)(C) (adding 47 U.S.C. § 227(b)(2)(H)). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 20 of 67 PageID 102 Federal Communications Commission FCC 16-99 20 The rules we enact today state that zero calls are permitted under the Budget Act amendments unless they occur: (1) during the period of delinquency for debt collection calls; and (2) following an enumerated, specific, time-sensitive event and in the 30 days before such an event for debt servicing calls. 43. Content of the calls. As stated above, our interpretation of the statutory phrase “solely to collect a debt” excludes calls that contain marketing, advertising, or selling products or services. We here use the authority Congress granted us to limit the number and duration of calls “to collect a debt owed to or guaranteed by the United States.”142 The rules we enact today state that zero calls are permitted under the Budget Act amendments if the autodialed, prerecorded-voice, or artificial-voice call contains any marketing, advertising, or selling of products or services. Commenters support this determination.143 Our determination regarding calls that contain marketing, advertising, or sales also supports our interpretation of Congress’ intent that the calls provide consumers with useful information about repaying their debt, and it is a step in preventing the very real problem that consumers will be subject to fraudulent calls and programs.144 44. Calls only to the debtor. We also here enact rules stating that zero calls are permitted under the Budget Act amendments unless the calls are to the debtor or the person responsible for paying the debt, and the call is made to that person at one of the three categories of numbers specified in the Order above. Our interpretation of the statutory phrase “solely to collect” explains our reasoning for establishing these limits on who may be called and the numbers at which these persons may be called. We find that the reasoning applies here as well, where Congress has authorized us to limit the number of calls made “to collect a debt.”145 Calls to persons other than the debtor or other entities responsible for paying the debt are not directly tied to collecting a debt. In balancing the inconvenience to uninvolved persons against the interests of callers, we determine it is not appropriate to extend federal debt collection calls beyond the debtor and others responsible for paying the debt. Likewise, calls to numbers other than the three categories of telephone numbers we specified above are unlikely to reach the person responsible for repaying the debt, and so are unlikely to result in collection of the debt. We, therefore, limit to zero calls made to persons or telephone numbers other than these. 45. Call limits are per caller. Commenters also ask the Commission to “clarify whether the [limited number of federal debt collection calls] is per debtor (e.g., inclusive of all telephone numbers used by the debtor)”146 per delinquency,147 or per servicer or collector.148 One consumer advocate states: “[B]ecause many consumers have multiple loans—often eight to ten student loans for each borrower—we recommend that the number of calls or texts permitted to be made without consent should be limited to three calls per servicer or collector. Without this limitation, consumers who have eight to ten outstanding loans, as many do, could be receiving between twenty-four and thirty robocalls per month to their cell phones.”149 Because the Commission has set the federal debt collection call limit at three calls per thirty days, that number could rise to twenty-four to thirty robocalls per month if we were to determine that the call limit applied per loan. In light of the record, and to prevent an excessive number of calls to individual debtors, we determine that the call limit on federal debt collection calls to wireless numbers 142 Budget Act § 301(a)(2)(C) (adding 47 U.S.C. § 227(b)(2)(H)). 143 See, e.g., FTC BCP Staff Comments at 7-8; ACA Comments at 10-11; NCHER Comments at 5; EFC Comments at 4; NCLC Comments at 20. 144 See FTC BCP Staff Comments at 3; CMC Comments at 17. 145 Budget Act § 301(a)(2)(C) (adding 47 U.S.C. § 227(b)(2)(H)). 146 NSC Comments at 8. 147 EFC Comments at 7. 148 CU Comments at 4; MFY Comments at 2; AFR Comments at 2; NCLC Comments at 25; YI Comments at 2. 149 NCLC Comment at 3. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 21 of 67 PageID 103 Federal Communications Commission FCC 16-99 21 applies for each servicer or collector.150 If the servicer or collector has contracts with the United States for more than one type of debt—for example to collect or service student loans and Department of Agriculture loans—the servicer may utilize a three-call in thirty day limit for each type of loan the servicer or collector manages for the debtor. 46. Length of federal debt collection calls. In the NPRM, we sought comment on the maximum duration of a voice call, and whether we should adopt different duration limits for prerecorded- or artificial-voice calls than for autodialed calls with a live caller. Commenters generally support the idea of a maximum length for artificial-voice and prerecorded-voice calls, but not a maximum length for autodialed calls with a live caller because this could impinge on a potentially lengthy conversation between a servicer and a debtor.151 Commenters who support a maximum length for artificial- and prerecorded-voice calls suggest caps of 30 or 60 seconds.152 Some commenters suggest that the time limit include time for any required disclosures, while others ask that required disclosures be outside of any time cap the Commission sets.153 In light of the record, we determine that artificial-voice and prerecorded- voice calls may not exceed 60 seconds, exclusive of any required disclosures. We do not place any cap on the duration of live-caller, autodialed calls made pursuant to the Budget Act exception. 47. We also asked in the NPRM whether we should impose a limit on the length of text messages, and what that limit should be. Commenters note that senders of text messages generally keep the messages short because “[a] long text message would get split up into multiple texts and could confuse the borrower.”154 Other commenters ask that any cap on the length of a text message account for required disclosures.155 Text messages are generally limited to 160 characters.156 As stated above, any required disclosures may be included within this 160-character limit for a single text message or may be sent as a separate text message that does not count toward the numeric limits we impose herein. 48. Time of day restrictions. We impose an additional restriction on the number of federal debt collection calls or texts allowed, and determine that no federal debt collection calls or texts are permitted outside the hours of 8:00 a.m. to 9:00 p.m. (local time at the called party’s location), which is identical to the rule for telemarketing calls.157 Congress stated that federal debt collection calls are intended “to collect a debt,” and during these times consumers are likely available to answer calls and receptive to receiving information from callers. The record supports our determination that consumers 150 CAC Comments at 2. 151 See, e.g., NCHER Comments at 12-13; CFBP Comments at 11-12; Letter from Timothy M. Fitzgibbon, Senior Vice President, National Council of Higher Education Resources, to Marlene H. Dortch, Secretary, FCC at 3 (Apr. 05, 2016) (on file in CG Docket No. 02-278) (NCHER Letter); NSC Comments at 10-11; ECF Comments at 8; OSLA Comments at 2; NCHER Comments at 13; AFSA Comments at 8; ACA Comments at 20; ConServe Comments at 2; CMC Comments at 15; ISL Comments at 2; ABA/CBA Comments at 11-12; SLSA Comments at 28. 152 ECF Comments at 8; NCHER Comments at 13; NCLC Comments at 26; SLSA Comments at 29. 153 CFPB Comments at 11-12; NCLC Comments at 26; SLSA Comments at 29. 154 AFSA Comments at 8. 155 CFPB Comments at 12; EF Comments at 8. 156 See https://en.wikipedia.org/wiki/Short_Message_Service. 157 See 47 CFR § 64.1200(c)(1). One commenter argues that it “cannot determine which time zone the borrower is in.” Nelnet Comments at 15. Another commenter states that it has adopted operational practices involving ZIP codes to better determine a consumer’s likely location rather than relying on area code. ECMC Comments at 8. The rule we adopt today is the same as our time-of-day restriction on telemarketing calls and as the FTC’s Telemarketing Sales Rule. This restriction has not proved unworkable, and we do not anticipate that it will be unfeasible here. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 22 of 67 PageID 104 Federal Communications Commission FCC 16-99 22 are generally comfortable with receiving calls during these times.158 Furthermore, FTC staff notes that the FDCPA and the Telemarketing Sales Rule “similarly limit debt collection and telemarketing calls to this same timeframe.”159 Adding a new category of calls to this generally accepted timeframe will cause less inconvenience and confusion to consumers than if we were to impose a different schedule or no schedule for these calls. Likewise, call centers that contract with businesses to make calls on their behalf are familiar with these time-of-day restrictions; this restriction should not impose a burden on callers or their contractors making federal debt collection calls. 49. Multiple sets of regulations. We acknowledge that other statutes and regulations impact debt collection calls, yet we recognize that Congress assigned to the Commission responsibility for crafting rules for autodialed, artificial-voice, and prerecorded-voice debt collection calls where the debt is owed to or guaranteed by the United States. Because Congress specifically gave the Commission certain authority over these federal debt collection calls, we assume that callers will follow the most restrictive rules for the call being made. Which rules apply will vary based on a number of factors, such as whether the caller is a debt collector or a debt servicer, the nature of the debt, and the length of delinquency. Where multiple rules apply to the same call and one of the rules is enacted by the Commission to implement the TCPA, a caller must comply with the most restrictive requirements regarding factors such as frequency, time of day, and so on. Section 301 affects the TCPA and its implementing regulations but does not affect other laws, including specifically those for which the CFPB or the FTC have responsibility.160 C. Other Implementation Issues 50. Covered Calls to Residential Lines. We note that under our current rules, artificial- or prerecorded-voice calls to residential lines that are made for the purpose of collecting a debt are currently not subject to the prior express consent requirement. Although the TCPA allows for broad coverage of the prior express consent requirement to all non-emergency artificial- and prerecorded-voice calls to residential lines,161 the Commission has exercised its statutory exemption authority so as to apply the consent requirement only to calls that include or introduce an advertisement or constitute telemarketing.162 The Commission has also found that debt collection calls do not constitute telemarketing.163 51. Congress, in authorizing the Commission to enact rules implementing the Budget Act’s amendments, stated that the Commission could “restrict or limit the number and duration of calls made to a telephone number assigned to a cellular telephone service.”164 Congress, by omission, did not authorize the Commission to enact rules to limit the number and duration of calls made to a telephone number assigned to a residential telephone line. Commenters support this understanding of the Budget Act amendment with regard to calls to numbers assigned to residential lines, stating: “Congress did not grant the Commission the authority to restrict or limit” these calls.165 Consequently, the Commission’s current rules regarding non-telemarketing autodialed, prerecorded-voice, and artificial-voice calls to residential 158 See, e.g., Markey June 8, 2016 Letter at 1; EFC Comments at 8; NCHER Comments at 12; NCLC Comments at 3; ACA Comments at 9-20; CAC Comments at 2. 159 FTC BCP Staff Comments at 9-10. 160 See CFPB Comments at 4; FTC BCP Staff Comments at 1. 161 47 U.S.C. § 227(b)(1)(B) (requiring prior express consent for all non-emergency artificial- or prerecorded-voice calls to residential lines unless exempted by the Commission). 162 47 CFR § 64.1200(a)(3); 1992 TCPA Order, 7 FCC Rcd at 8755, para. 5 163 ACA Declaratory Ruling, 23 FCC Rcd at 565, para. 11. 164 Budget Act § 301(a)(2)(C) (adding 47 U.S.C. § 227(b)(2)(H)). 165 ABA/CBA Comments at 9; see also Navient Comments at 15-16; NCHER Comments at 15; ConServe Comments at 12; ECMC Comments at 11; SLSA Comments at 32. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 23 of 67 PageID 105 Federal Communications Commission FCC 16-99 23 numbers are not altered by the Budget Act amendments. The Commission is not imposing restrictions on these calls. Callers may, however, be subject to restrictions under other applicable statutes and regulations, such as the Fair Debt Collection Practices Act. 52. Restrictions on Calls to Cellular Telephone Service. Congress authorized the Commission to “restrict or limit the number and duration of calls made to a telephone number assigned to a cellular telephone service to collect a debt owed to or guaranteed by the United States.”166 Yet, the amendment to the TCPA, authorizing calls made to collect a debt owed to or guaranteed by the United States, is broader, applying to “any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call.”167 Considering the identical language in the prior delegation of authority in Section 227(b)(2)(C), we conclude that Congress delegated the Commission authority to limit the number and duration of all calls made pursuant to the debt collection exception in section 227(b)(1)(A)(iii). 53. Congress, in granting the Commission authority to limit the number and duration of calls, used identical language to the language it used in the separate delegation of authority in Section 227(b)(2)(C).168 The identical language in these two delegations of authority indicates that Congress intended the two provisions to apply to the same services.169 54. The Commission has interpreted Section 227(b)(2)(C) to apply to all services mentioned in Section 227(b)(1)(A)(iii). In so doing, it has interpreted “cellular telephone service” by asking whether services are functionally equivalent from the consumer perspective rather than on technical or regulatory differences, such as which spectrum block is used to provide the service.170 This avoids, for example, consumers receiving wireless voice service from being treated differently depending on which spectrum block their carriers use and callers having to determine which spectrum block is used for a particular consumer’s service in order to know which requirements apply. 55. Applying the canon of statutory construction that Congress knows the law, including relevant agency interpretations, at the time it adopts a statute, we presume that Congress knew of the Commission’s interpretation of this key language.171 Congress used the same language in the recent delegation of authority without taking any action to alter the Commission’s interpretation of identical language elsewhere in the same statute. We therefore conclude that the authority delegated to us in the new Section 227(b)(2)(H) added by the Budget Act applies to all services to which amended Section 227(b)(1)(A)(iii) applies. 56. Application of Other TCPA Restrictions to Covered Calls. We believe the most reasonable interpretation of the Budget Act amendments is that they except covered calls from the requirement to obtain the consent of the called party, and that calls must in every other respect comply 166 Budget Act § 301(a)(2)(C) (adding 47 U.S.C. § 227(b)(2)(H)). 167 Budget Act § 301(a)(1)(A) (amending 47 U.S.C. § 227(b)(1)(A)(iii)). 168 47 U.S.C. § 227(b)(2)(C) (authorizing the Commission to exempt certain calls made “to a number assigned to a cellular telephone service” from the requirements of Section 227(b)(1)(A)(iii)). 169 See, e.g., Vonage Holdings Corp. v. FCC, 489 F.3d 1232, 1240 (D.C. Cir. 2007). 170 See 2015 TCPA Declaratory Ruling and Order, 30 FCC Rcd at 7988, para. 43 n.174. The Commission also has taken a similar consumer-oriented approach to wireless services in other contexts. See also Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including Commercial Mobile Services, WT Docket No. 13- 135, Seventeenth Report, 29 FCC Rcd 15311, 15314, para. 3 (WTB 2014) (“Similar to previous reports, the analysis in this Report is based on a consumer-oriented view of mobile services, with a focus on specific product categories regardless of their regulatory classification.”). 171 See, e.g., Washington Legal Foundation v. U.S. Sentencing Commission, 17 F.3d 1446, 1450 (D.C. Cir. 1994). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 24 of 67 PageID 106 Federal Communications Commission FCC 16-99 24 with the TCPA unless compliance with a requirement of the TCPA is prohibited by a separate regulation pertaining to debt collection calls generally. The Budget Act amendments apply to the consent requirement of Section (b)(1), but other sections of the TCPA are left unaffected. For example, the identification requirements of section 64.1200(b)(1)-(2) apply to both excepted calls and other calls made using an autodialer, a prerecorded voice, and an artificial voice. The exception Congress created in the Budget Act amendments is not an exception to compliance with the TCPA as a whole, but only with the requirement to obtain the consent of the called party to make the call. The Commission will resolve conflicts on a case-by-case basis. 57. Other Issues. Commenters in the record raise other arguments for the Commission’s consideration in enacting rules for the Budget Act amendments. For example, one commenter asks the Commission to state that “no debt collection calls [may be made to] people receiving Supplemental Security Income (SSI) benefits on the basis of old age or disability, and that Treasury not pass along information on debts owed by SSI recipients to debt collectors.”172 Another commenter asks the Commission to develop “a separate set of rules to assist federal student loan borrowers.”173 A separate commenter asks the Commission to create a certification system that authorizes callers to use autodialers for purposes of making covered calls and only renews the certification if the caller’s yearly performance meets standards established by the Commission and the Department of Education.174 The Commission declines to address these and other ancillary issues and arguments raised in the record as they are outside the scope of this proceeding. Moreover, these issues are not fully developed in the record and we would need more facts to meaningfully and cogently address these issues. D. Severability 58. All of the rules that are adopted in this Order are designed to ensure a caller’s ability to make calls pursuant to the Budget Act amendments and a debtor’s ability to control the calls he or she receives. Each of the determinations we undertake in this Order serve a particular function toward this goal. Therefore, it is our intent that each of the rules and regulations adopted herein shall be severable. We believe that debtors will benefit from the information they may receive from callers and will also benefit from the ability to ask that calls be stopped. If any of the rules or regulations, or portions thereof, are declared invalid or unenforceable for any reason, it is our intent that the remaining rules shall be in full force and effect. E. Effective Date 59. As noted in the discussion above, two portions of our rules implicate the Paperwork Reduction Act (PRA). These portions involve the rules for the recording of a debtor’s request to stop receiving autodialed, artificial-voice, and prerecorded-voice calls to collect a debt owed to or guaranteed by the United States, and rules for the conveyance of that stop-call request from one servicer or collector to another. Because these portions of our rules implicate the PRA, they will not become effective until 60 days after the Commission publishes a Notice in the Federal Register indicating approval of the information collection by the Office of Management and Budget (OMB). 60. The remaining rules will not become effective until the rules requiring OMB approval become effective. While these remaining rules do not require OMB approval and could become effective immediately upon release of this Order, we determine that the consumer-protection rules regarding stop- call requests and conveyance of those requests are so integral to this regulatory scheme that the remaining rules should not become effective until the consumer-protection rules are in place. The rules that could become effective immediately permit a caller to make calls—they specify how many calls may be made, who may make the calls, when the calls can be made, and to which numbers the calls may be made, 172 NCLC Comments at 16. 173 AACC Comments at 2. 174 UNCF Comments at 2. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 25 of 67 PageID 107 Federal Communications Commission FCC 16-99 25 among other things. These rules give effect to one of the reasonable interpretations we have identified for Congress’ passage of the Budget amendments: to make it easier for owners of debts owed to or guaranteed by the United States and their contractors to make calls to collect debts. But the second reasonable interpretation—to make it easier for consumers to obtain useful information about debt repayment—carries with it a consumer’s prerogative to determine that the debtor does not want the information conveyed in the calls and to ask that the calls stop. The rules that give effect to this interpretation of Congress’ intent are delayed by PRA requirements and OMB approval. We determine that the regulatory scheme we implement today must include both the ability for callers to make calls and the right of debtors to ask that calls stop—and that both portions of the regulatory scheme become effective simultaneously. To do otherwise would be to allow callers to make calls but to leave debtors with no consumer protections until OMB approval is complete. We determine that both portions of the rules must become effective for the regulatory scheme to be effective. IV. JURISDICTION 61. In section 301 of the Budget Act, Congress amended section 227 of the Communications Act by, inter alia, adding subparagraph (b)(2)(H), which grants the Commission authority to “restrict or limit the number and duration of calls made to a telephone number assigned to a cellular telephone service to collect a debt owed to or guaranteed by the United States.”175 Section 301 also directed the Commission to “prescribe regulations to implement the amendments made by this section.”176 With this Order, we exercise these grants of authority by adopting regulations that limit both the number and duration of calls covered by subparagraph (b)(2)(H). These limitations apply irrespective of the identity of the caller and thus encompass wireless debt-collection calls placed by the owner of the debt or its contractors. We find that this approach—which focuses on the type of “calls made” to a cellular number and not the identity of the caller—is consistent both with the Budget Act and with the Broadnet Declaratory Ruling in which we recently found that the federal government and its agents are not “persons” covered by section 227(b)(1). 62. By its express terms, new subparagraph (b)(2)(H) authorizes the Commission to regulate the frequency and duration of government-debt-collection “calls made” to cellular numbers, even though those calls are excepted from the TCPA’s separate prior-express-consent requirement by virtue of the Budget Act’s amendment of section 227(b)(1)(A)(iii).177 Given that the same section of the Budget Act both excepts these calls from the prior-express-consent requirement and authorizes the FCC to regulate their frequency and duration, it seems clear that Congress’s goal in adding section 227(b)(2)(H) was to protect consumers by ensuring that calls that are excepted from the consent requirement are nonetheless regulated in other respects.178 Moreover, whereas the prior-express-consent requirement applies only to “persons”—which the Commission has interpreted to exclude the federal government and its agents179— section 227(b)(2)(H) contains no such limitation on the Commission’s authority to regulate the frequency and duration of government-debt-collection “calls.” Thus, although we have ruled that calls by the federal government and its agents are excepted from the prior-express-consent requirement of section 175 Budget Act § 301(a)(2)(C) (adding 47 U.S.C. § 227(b)(2)(H)). 176 Budget Act § 301(b). 177 Budget Act § 301(a)(1)(A) (amending 47 U.S.C. § 227(b)(1)(A)(iii)). 178 We find no support for the claim in one dissent that “[t]he Budget Act exemption was designed to protect federal agencies and their contractors from liability when they make calls without consent of the called party,” or that the “intent of the law . . . was to enable lenders to use modern dialing equipment as part of their efforts to collect debt.” No legislative history is cited for these assertions, nor does any appear to exist. Further, had Congress wanted callers to be wholly exempt from liability, or never to manually place calls, it would not have granted the Commission express authority to adopt rules limiting the number and duration of debt-collection robocalls. 179 Broadnet Declaratory Ruling, FCC 16-72 at para. 10. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 26 of 67 PageID 108 Federal Communications Commission FCC 16-99 26 227(b)(1),180 we conclude that calls by the federal government and its contractors are subject to the regulations we promulgate in this order pursuant to our authority to regulate the frequency and duration of calls under section 227(b)(2)(H).181 63. This conclusion is further supported by the timing of the Budget Act. In particular, when Congress passed that legislation, the Commission had not yet resolved whether the federal government or its contractors are “person[s]” subject to the prior-express-consent requirement of section 227(b)(1)(A)(iii). Against this backdrop (of which Congress presumptively was aware182), Congress wrote subsection (b)(2)(H) in language that does not limit the Commission’s regulatory authority under this new subparagraph to “persons.” This decision indicates that Congress intended the regulations adopted under this new subsection to apply to all callers, not just those who qualify as “person[s]” under the statute, and thus to apply to the federal government and government contractors even if the Commission were to find (as it later did) that those entities do not qualify as “persons” under subsection (b)(1)(A)(iii).183 (This inference is also consistent with the view, articulated in the previous paragraph, that Congress intended to protect consumers by authorizing frequency and duration limits as a substitute for the prior-express-consent requirement for calls that are no longer covered by the latter requirement.) If, on the other hand, Congress had wanted to exclude the federal government or government contractors from the frequency and duration limits, it naturally could have done so by adding language to that effect. For instance, Congress easily could have added a proviso at the end of subparagraph (b)(2)(H) along the following lines: “[The Commission] may restrict or limit the number and duration of calls made to a telephone number assigned to a cellular telephone service to collect a debt owed to or guaranteed by the United States, except that the Commission may not so restrict or limit any call made by the federal government or its contractors.” That Congress opted not to include such a proviso supports our conclusion that Congress’s intent in adopting section 301 was to authorize the Commission to limit the frequency and duration of any debt collection call that meets the parameters of section 227(b)(2)(H), without regard to the identity of the caller. 64. We reject arguments in both dissents that the prefatory reference to “person” in section 227(b)(1) necessarily means that any rules adopted under subparagraph (b)(2)(H) must extend only to “persons.” In addition to the reasons cited above, we believe a broader interpretation of (b)(2)(H) is at least rendered permissible by the literal language of section 227(b)(2). That paragraph directs the Commission to prescribe regulations to implement the requirements “of this subsection.” The term “this subsection” refers to the entirety of subsection (b). While one of the requirements in subsection (b) is set forth in paragraph (b)(1), which hinges on whether the caller is a “person,” another requirement in subsection (b) appears in new subparagraph (b)(2)(H). There, no mention whatsoever is made of “persons”; rather, the clear focus is on the nature of the call—namely, whether it is “made” to a cellular 180 See id. 181 In reaching this conclusion, we note that the Budget Act amendments to the TCPA were enacted some 25 years after the statute first became law. 182 See, e.g., Fogerty v. Fantasy, Inc., 510 U.S. 517, 527-233 (1994), citing Lorillard v. Pons, 434 U.S. 575, 580 (1978) (Congress is presumed to be aware of an administrative or judicial interpretation of a statute); Goodyear Atomic Corp. v. Miller, 486 U.S. 174, 184 (1988) (Congress is presumed to know the existing law pertinent to the legislation it enacts); Hernstadt v. FCC, 677 F.2d 893, n.22 (D.C. Cir. 1980) (“Congress is presumed to be cognizant of, and legislate against the background of, existing interpretations of law.”); Letter from Robert E. Latta, United States Congress, to Marlene H. Dortch, Secretary, FCC at 1 (July 8, 2015) (on file in CG Docket No. 02-278) (writing in support of petitions filed by Broadnet Teleservices, LLC, and RTI International, Inc., seeking clarification that the “Commission’s TCPA rules do not apply to calls made by or on behalf of local, state and federal governments”). 183 To be clear, in the Broadnet Declaratory Ruling the Commission found that the federal government and its agents are not persons under section 227(b)(1). See Broadnet Declaratory Ruling, FCC 16-72 at para. 10. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 27 of 67 PageID 109 Federal Communications Commission FCC 16-99 27 number “to collect a debt owed to or guaranteed by the United States.”184 Thus, under a literal reading of the statute, the Commission has clear authority to adopt number-and-duration limits that apply to all government debt collection calls, irrespective of whether they were made by a “person.” In addition, we do not think that our authority under section 227(b)(2)(H) is necessarily limited by section 227(b)(1), given that section 227(b)(2)(H) grants us authority to regulate a class of calls (those to collect certain government-backed debts) that, by definition, are not subject to section 227(b)(1). 65. For similar reasons, we reject the argument of one dissenter that our interpretation of subparagraph (b)(2)(H) is impermissible because federal law does not apply to the sovereign absent “some affirmative showing of statutory intent to the contrary.”185 Here, Congress has provided the requisite affirmative showing by carefully structuring186 subsection (b) such that paragraph (b)(2) empowers the FCC to prescribe regulations to implement any requirement in the entire “subsection,” whether located in (b)(1) or (b)(2). We see no reason to effectively rewrite this directive by restricting our rulemaking authority solely to requirements set forth in (b)(1). Finally, the “settled propositio[n]” that waiver of the United States’ sovereign immunity “cannot be implied” is simply not relevant here. This item simply does not address sovereign immunity, which is an issue for the courts to decide, as one dissenter has previously emphasized.187 This item simply interprets what we understand the TCPA itself to require, and if a defendant facing claims for violating the TCPA wants to raise a sovereign immunity defense, it remains free to do so, and the court can then address whether these TCPA requirements constitute a waiver of sovereign immunity. 66. Finally, there is no merit to the claim of one dissenter that the Commission failed to provide adequate notice “to non-persons such as the federal government.” In the NPRM, the Commission expressly raised the issue of the government’s personhood, noting that “petitions pending before the Commission seek clarification regarding the meaning of ‘persons’ and whether the federal government or its agents are persons for purposes of the TCPA, among other things.”188 Against that backdrop of uncertainty regarding the government’s personhood, the Commission sought comment on “what types of number and duration restrictions we should adopt for the covered calls” and “how we should restrict or limit the number and duration of covered calls,” and then proceeded to “propose that the limit on the number of [covered] calls should be for any initiated calls,” provided those calls were “autodialed, prerecorded, or artificial voice calls to wireless numbers.”189 The expansive nature of this proposal, which would cover “any” initiated call, should have made clear the Commission was at least contemplating applying number-and-duration limits to all debt-collection calls to wireless numbers, regardless of the identity of the caller. At a minimum, therefore, this outcome qualifies as a logical outgrowth of the NPRM.190 184 47 U.S.C. § 227(b)(2)(H). 185 See Vermont Agency of Natural Resources v. Unites States ex rel. Stevens, 529 U.S. 765, 781 (2000). 186 In this regard, we agree with the statement in one dissent that “[t]he structure is key” when interpreting paragraph (b)(2). We see no relevance, however, to the fact that the FCC has not previously found relevant the omission of the word “person” in subparagraphs other than (b)(2)(H). The agency’s prior silence is this regard has no bearing on the issues now before us, and should not be read as some kind of implicit endorsement of a view contrary to the one we now adopt. 187 See Statement of Commissioner Pai to Broadnet Declaratory Ruling (stating that “[t]he federal common law of immunity is a general body of law that covers numerous agencies,” and the FCC “cannot opine . . . on its scope or meaning”). 188 NPRM at para. 16. 189 NPRM at para. 18 (emphasis added). 190 See, e.g., United States Telecom. Ass’n v. FCC, 2016 WL 3251234, *10 (2016) (“An NPRM satisfies the logical outgrowth test if it “expressly ask[s] for comments on a particular issue or otherwise ma[kes] clear that (continued….) Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 28 of 67 PageID 110 Federal Communications Commission FCC 16-99 28 V. PROCEDURAL MATTERS 1. Regulatory Flexibility Act Analysis 67. Pursuant to the Regulatory Flexibility Act of 1980, as amended,191 the Commission’s Final Regulatory Flexibility Analysis in this Order is attached as Appendix C. 2. Paperwork Reduction Act 68. The Order contains either new or modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA).192 It will be submitted to the Office of Management and Budget (OMB) for review under Section 3507(d) of the PRA. OMB, the general public, and other federal agencies are invited to comment on the new or modified information collection requirements contained in this proceeding. 3. Congressional Review Act 69. The Commission will send a copy of this Report and Order to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. § 801(a)(1)(A). 4. Late-Filed Comments 70. We note that there were comments filed late in this proceeding. In the interest of having as complete and accurate a records as possible, and because we would be free to consider the substance of those filings as part of the record in this proceeding in any event,193 we will accept the late-filed comments and waive the requirements of 47 CFR § 1.46(b), and have considered them in this I Order. 5. Materials in Accessible Formats 71. To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty). This Report and Order can also be downloaded in Text and ASCII formats at: https://www.fcc.gov/general/telemarketing-and-robocalls. VI. ORDERING CLAUSES 72. IT IS ORDERED, pursuant to the authority contained in sections 1-4, 227, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151-154, 227, 303(r); and the Telephone Consumer Protection Act as amended by the Bipartisan Budget Act of 2015, Public Law 114-74, 129 Stat. 584, that this Report and Order IS ADOPTED and that Part 64 of the Commission’s rules, 47 CFR 64.1200, is amended as set forth in Appendix A. The requirements of this Report and Order shall become effective 60 days after the Commission’s publication of a notice in the Federal Register, which will announce approval of portions of the rules requiring approval by OMB under the PRA. 73. IT IS FURTHER ORDERED that the Commission’s Consumer & Governmental Affairs Bureau, Reference Information Center, SHALL SEND a copy of this Report and Order to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. § 801(a)(1)(A). (Continued from previous page) the agency [is] contemplating a particular change.” (quoting CSX Transportation, Inc. v. Surface Transportation Board, 584 F.3d 1076, 1081 (D.C. Cir. 2009)). 191 See 5 U.S.C. § 603. 192 Pub. L. No. 104-13. 193 See 47 CFR § 1.1206 (discussing ex parte filings in permit-but-disclose proceedings). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 29 of 67 PageID 111 Federal Communications Commission FCC 16-99 29 74. IT IS FURTHER ORDERED that the Commission’s Consumer and Governmental Affairs Bureau, Reference Information Center, SHALL SEND a copy of this Report and Order, including the Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. FEDERAL COMMUNICATIONS COMMISSION Marlene H. Dortch Secretary Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 30 of 67 PageID 112 Federal Communications Commission FCC 16-99 30 APPENDIX A Final Rules The Federal Communications Commission amends part 64 of Title 47 of the Code of Federal Regulations (CFR) as follows PART 64 – MISCELLANEOUS RULES RELATING TO COMMON CARRIERS 1. The authority citation for part 64 is amended to read as follows: Authority: 47 U.S.C. § 154, 254(k); 403(b)(2)(B), (c), Pub. L. 104-104, 110 Stat. 56. Interp. or apply 47 U.S.C. 201, 218, 222, 225, 226, 227, 228, 254(k), 616, 620, the Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. 112-96, and the Bipartisan Budget Act of 2015, Pub. L. 114-74, 129 Stat. 584 unless otherwise noted. 2. Amend section 64.1200 by revising paragraphs (a)(1)(iii) and (a)(3)(iv), (v), and (vi); by adding paragraphs (f)(17), (i), and (j) to read as follows: § 64.1200 Delivery restrictions. (a) * * * (1) * * * (iii) To any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call, unless such call is made solely to collect a debt owed to or guaranteed by the federal government of the United States. * * * (3) * * * (iv) Is made by or on behalf of a tax-exempt nonprofit organization; (v) Delivers a “health care” message made by, or on behalf of, a “covered entity” or its “business associate,” as those terms are defined in the HIPAA Privacy Rule, 15 CFR 160.103; or (vi) Is made solely pursuant to the collection of a debt owed to or guaranteed by the federal government of the United States. * * * (f) * * * (17) The term debtor for paragraphs (i) and (j) of this section means the debtor; a co-signor or other person or entity legally obligated to pay the debt; and an executor, guardian, administrator, receiver, trustee, or similar legal representative of the debtor or of another person or entity legally obligated to pay the debt. *** (i) A telephone call is made “solely to collect a debt owed to or guaranteed by the United States” for purposes of paragraph (a)(1)(iii) of this section only if: (1) the telephone call has as its exclusive subject a debt that, at the time of the call, is owed to or guaranteed by the federal government of the United States and contains no marketing, advertising, or sales information; Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 31 of 67 PageID 113 Federal Communications Commission FCC 16-99 31 (2) the telephone call is made by the owner of the debt, or its contractor, to the debtor and the entire content of the call is directly and reasonably related either to: (A) collecting payment of a delinquent amount in order to cure such delinquency or resolve the debt either by obtaining payment of such delinquent amount or by entering into an alternative payment arrangement that will cure such delinquency or resolve the debt, during a time period when a delinquency exists, or (B) collecting payment of the debt by providing information about changes to the amount or timing of payments following the end of, or in the 30 days before: a grace, deferment, or forbearance period; expiration of an alternative payment arrangement; or occurrence of a similar time-sensitive event or deadline affecting the amount or timing of payments due; and (3) the telephone call is made to the debtor at: (A) the wireless telephone number the debtor provided at the time the debt was incurred, (B) a wireless telephone number subsequently provided by the debtor to the owner of the debt or the owner’s contractor, or (C) a wireless telephone number the owner of the debt or its contractor has obtained from an independent source, provided that the number actually is the debtor’s telephone number. (j) A telephone call made using an autodialer or a prerecorded or artificial voice “to collect a debt owed to or guaranteed by the United States” must comply with the following limits on the number and duration of such calls: (1) The maximum number of telephone calls that may be made to a debtor is: (A) three telephone calls within a thirty-day period, and (B) zero telephone calls following a request by the debtor for no further telephone calls. These limits apply in the aggregate as follows: Where the owner of the debt makes the telephone calls itself, this limit applies to all telephone calls made by the owner of the debt to the debtor. Where a contractor of the owner(s) makes telephone calls, multiple debts owed by one debtor shall be considered one debt if the agent or contractor is servicing or collecting those debts on behalf of the same owner under the same contractual or agency relationship. The limit in (j)(1)(B) applies for the life of the debt; the limit in (j)(1)(A) applies during each time period in which telephone calls may be made pursuant to paragraph (i)(2) of this section. (2) Artificial-voice and prerecorded-voice telephone calls may not exceed 60 seconds in length, excluding any required disclosures and stop-calling instructions. Text messages are limited to 160 characters in length. (3) Telephone calls must include a disclosure that the debtor has a right to request that no further autodialed, artificial-voice, or prerecorded-voice telephone calls be made to the debtor for the life of the debt and that such requests can be made by any reasonable method. Disclosures must be made in a manner that gives debtors an effective opportunity to stop future calls. For voice telephone calls, the disclosure must be made within each telephone call. For text messages, the disclosure must be within each text message or in a separate text message that contains only the disclosure and that is sent immediately preceding the first text message permitted in paragraph (j)(2). When the disclosure is made in a separate text message, the text message containing the disclosure does not count toward the limits in paragraph (j)(2). (4) A debtor may request to the owner of the debt or its contractor that no further telephone calls be made to the debtor for the life of the debt by any reasonable method, including orally and by reply text message. No autodialed, prerecorded-voice, or artificial-voice federal debt collection calls are permitted after the stop-call request. Telephone calls using an artificial or prerecorded voice must include an automated, interactive voice- and/or key press-activated opt-out mechanism that enables the debtor to make a stop- calling request prior to terminating the call, including brief explanatory instructions on how to use such mechanism. When a debtor elects to make a stop-calling request using such mechanism, the mechanism must automatically record the request and immediately terminate the call. When a telephone call using an artificial or prerecorded voice leaves a message on an answering machine or a voice mail service, such message must also provide a toll free number that enables the debtor to call back at a later time and connect directly to the automated, interactive voice- and/or key press-activated opt-out mechanism and Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 32 of 67 PageID 114 Federal Communications Commission FCC 16-99 32 automatically record the stop-calling request. Text messages containing the disclosure required in paragraph (j)(3) of this section must include brief explanatory instructions for sending a stop-calling request by reply text message and provide a toll free number that enables the debtor to call back later to make a stop-calling request. (5) No telephone calls shall be made before 8:00 a.m. or after 9:00 p.m. local time at the debtor’s location. (6) No calls are permitted if the call contains marketing, advertising, or sales information. (7) No calls are permitted except to the debtor at: (A) the wireless telephone number the debtor provided at the time the debt was incurred, (B) a wireless telephone number subsequently provided by the debtor to the owner of the debt or the owner’s contractor, or (C) a wireless telephone number the owner of the debt or its contractor has obtained from an independent source, provided that the number actually is the debtor’s telephone number. (8) No calls are permitted except: (A) during a time period when a delinquency exists, or (B) following, or in the 30 days before: the end of a grace, deferment, or forbearance period; expiration of an alternative payment arrangement; or occurrence of a similar time-sensitive event or deadline affecting the amount or timing of payments due. (9) Notwithstanding anything to the contrary, the number and duration rules in this paragraph apply to all autodialed, artificial-voice, and prerecorded-voice calls made to a wireless number to collect a debt owed to or guaranteed by the United States, including, for example, calls by any governmental entity or its agent. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 33 of 67 PageID 115 Federal Communications Commission FCC 16-99 33 APPENDIX B Comments Filed Commenter Abbreviation ACA International ACA American Association of Community Colleges AACC American Bankers Association and Consumer Bankers Association ABA/CBA American Financial Services Association AFSA Americans for Financial Reform AFR Association of Community College Trustees ACCT California and Nevada Credit Union Leagues CNCUL College Foundation, Inc. CFI Connecticut Legal Services, Inc. CLSI Consumer Financial Protection Bureau CFPB Consumer Mortgage Coalition* CMC Consumers Union CU Continental Service Group ConServe Credit Union Association of the Dakotas CUAD Credit Union Nation Association CUNA Department of Education Dept. of Education Edfinancial Services, LLC Edfinancial Education Finance Council EFC Educational Credit Management Corporation ECMC Educational Funding of the South, Inc. EFS FCC Consumer Advisory Committee CAC Federal Housing Finance Agency FHFA Federal Trade Commission Bureau of Consumer Protection Staff FTC BCP Staff Finance Authority of Maine FAME Frederick Luster Luster GuidEd Solutions GuidEd HOPE NOW Alliance HOPE Iowa Student Loan ISL MFY Legal Services, Inc. MFY Mortgage Bankers Association MBA National Association of College and University Business Officers NACUBO National Association of Student Financial Aid Administrators NASFAA National Consumer Law Center* NCLC National Council of Higher Education Resources* NCHER National Student Loan Program NSLP Navient Corporation* Navient Nelnet, Inc.* Nelnet NHHEAF Network Organizations NHHEAF Noble Systems Corporation NSC Oklahoma Student Loan Authority OSLA Pinnacle Recovery, Inc. Pinnacle Progressive Financial Services, Inc. Progressive Quicken Loans Inc. QLI Robert Biggerstaff Biggerstaff Senator Edward J. Markey et al.* Markey Senator Sherrod Brown Brown Student Loan Servicing Alliance* SLSA The Institute for College Access & Success TICAS Transworld Systems Inc. Transworld Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 34 of 67 PageID 116 Federal Communications Commission FCC 16-99 34 United Negro College Fund UNCF Utah Higher Education Assistance Authority Utah Vermont Student Assistance Corporation Vermont Vincent Lucas* Lucas Young Invincibles YI Over 15,700 individuals filed comments directly in the record. Over 12,500 of those comments expressed a general dislike for robocalls, while approximately 2,500 included more pointed comments regarding debt collection and calls by the federal government. In addition to the 15,700 individual comments, Consumer’s Union submitted a petition containing 4,800 signatures asking the FCC to stop robocalls to cellphones and Americans for Financial Reform submitted a petition containing 5,346 comments from members in support of the FCC’s proposed limitations on calls. * filing both comments and reply comment (bold - reply comments only). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 35 of 67 PageID 117 Federal Communications Commission FCC 16-99 35 APPENDIX C Final Regulatory Flexibility Analysis 1. As required by the Regulatory Flexibility Act of 1980 (RFA),1 as amended, an Initial Regulatory Flexibility Analyses (IRFA) was incorporated into the Notice of Proposed Rule Making (NRPM).2 The Commission sought written public comment on the proposals in the NRPM, including comment on the IRFA. The comments received are discussed below. This Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.3 A. Need for, and Objectives of, the Order 2. This Report and Order (Order) promulgates rules to implement Section 301 of the Bipartisan Budget Act of 2015,4 which amends the Telephone Consumer Protection Act5 by excepting from that Act’s consent requirement robocalls to wireless numbers “made solely to collect a debt owed to or guaranteed by the United States”6 and authorizing the Commission to adopt rules to “restrict or limit the number and duration” of any calls to wireless numbers “to collect a debt owed to or guaranteed by the United States.”7 The Budget Act requires the Commission, in consultation with the Department of the Treasury, to “prescribe regulations to implement the amendments made” by Section 301 within nine months of enactment.8 In implementing these provisions, we recognize and seek to balance the importance of collecting debt owed to or guaranteed by the United States and the consumer protections inherent in the TCPA. In adopting these rules today, the Commission fulfills the statutory requirement to prescribe rules to implement the amendments to the TCPA. 3. Covered Calls. In paragraphs 11 through 18 of the Order, we interpret “solely to collect a debt” and, therefore, calls made pursuant to the exception created by Section 301 of the Budget Act, to be limited to 1) debts that are delinquent at the time the calls are made, and 2) debts for which there is an imminent, non-speculative risk of delinquency due to a specific, time-sensitive event that affects the amount or timing of payments due, such as a deadline to recertify eligibility for an alternative payment 1 5 U.S.C. § 603. The RFA, 5 U.S.C. §§ 601-612 has been amended by the Contract With America Advancement Act of 1996, Public Law No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). 2 Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Notice of Proposed Rulemaking, FCC 16-57 (May 6, 2016) (NPRM). 3 See 5 U.S.C. § 604. 4 Bipartisan Budget Act of 2015, Pub. L. No. 114-74, 129 Stat. 584 (Budget Act). 5 The Telephone Consumer Protection Act (TCPA) is codified at section 227 of the Communications Act of 1934, as amended. See 47 U.S.C. § 227. 6 Budget Act § 301(a)(1)(A) (amending 47 U.S.C. § 227(b)(1)(A)); see also id. § 301(a)(1)(B) (amending 47 U.S.C. § 227(b)(1)(B) to read, in part, that artificial- or prerecorded-voice calls cannot be made to a residential telephone line without the consent of the called party unless the call is “made solely pursuant to the collection of a debt owed to or guaranteed by the United States”). “Robocalls” include calls made either with an automatic telephone dialing system (“autodialer”) or with a prerecorded or artificial voice. See Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Declaratory Ruling and Order, 30 FCC Rcd 7961, 7694, para. 1 n.1 (2015) (2015 TCPA Declaratory Ruling and Order). The Commission has interpreted the TCPA to apply both to voice calls and to text messages. Id. at 8016-17, para. 107. Throughout this Order we refer to robocalls that are subject to the Budget Act’s consent exception as “covered calls.” “Calls,” for this exception, include any initiated call; this is consistent with the Commission’s previous interpretation of “call” for TCPA purposes. 7 Budget Act § 301(a)(2) (amending 47 U.S.C. § 227(b)(2)). 8 Budget Act § 301(b). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 36 of 67 PageID 118 Federal Communications Commission FCC 16-99 36 plan or the end of a deferment period. In paragraphs 19 through 20 of the Order, we interpret “owed to or guaranteed by the United States” to include only debts that are owed to or guaranteed by the federal government at the time the call is made. 4. In paragraphs 21 through 22 of the Order, we determine that, because calls made pursuant to the exception must be made “solely to collect a debt,” the covered calls may only be made to the debtor or another person or entity legally responsible for paying the debt. We further determine that covered calls may only be made to the wireless telephone number the debtor provided at the time the debt was incurred, such as on the loan application; to a wireless phone number subsequently provided by the debtor; or to a wireless number that the owner of the debt or its contractor has obtained from an independent source, provided that the number actually is the debtor’s telephone number. 5. In paragraphs 25 through 26 of the Order, we determine that robocalls to wrong numbers are not covered by the exception created in the Budget Act amendments. Calls to reassigned wireless numbers may not be made pursuant to the amendment either, but they are subject to the 1-call window the Commission clarified in the 2015 Declaratory Ruling and Order.9 6. In paragraph 27 of the Order, we limit eligible callers to the owner of the debt or its contractor. In paragraph 28 of the Order, we determine that a “call,” for this exception, includes any initiated call, including a text message. In paragraph 29 of the Order, we determine that the excepted calls are limited in content to debt collection and servicing; they may not include any marketing, advertising, or selling products or services, or other irrelevant content. 7. Limits on Number and Duration of Federal Debt Collection Calls. In paragraphs 33 through 37 of the Order, we limit the number of federal debt collection calls to three calls within a thirty- day period while the delinquency remains or following a specific, time-sensitive event, and in the 30 days before such an event. In paragraphs 38 through 41 of the Order, we determine that consumers have a right to stop autodialed, artificial-voice, and prerecorded-voice servicing and collection calls to wireless numbers at any point the consumer wishes. Callers must inform debtors of their right to make such a request. In paragraph 42 of the Order, we limit federal debt collection calls so that zero calls are permitted unless they occur: (1) during the period of delinquency for debt collection calls; and (2) following an enumerated, specific, time-sensitive event for debt servicing calls, and in the 30 days before such an event. 8. In paragraphs 46 through 47 of the Order, we determine that artificial-voice and prerecorded-voice calls may not exceed 60 seconds, excluding any required disclosures. We do not place any cap on the duration of live-caller, autodialed calls. We limit text messages to 160 characters. Any required disclosures may be included within these 160 characters or may be sent as a separate text message that does not count toward the numeric limits we impose. In paragraph 48 of the Order, we determine that no federal debt collection calls or texts are permitted outside the hours of 8:00 a.m. to 9:00 p.m. (local time at the called party’s location). In paragraph 49 of the Order, we determine that if multiple rules apply to the same call and one of the rules is enacted by the Commission to implement the TCPA, a caller must comply with the most restrictive requirements regarding factors such as frequency, time of day, and so on. 9. Other Implementation Issues. In paragraphs 50 through 55 of the Order, we interpret Section 227(b)(2)(C) to apply to all services mentioned in Section 227(b)(1)(A)(iii), which excludes residential lines. 9 See 2015 TCPA Declaratory Ruling and Order, 30 FCC Rcd at 8006-10, paras. 85-92. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 37 of 67 PageID 119 Federal Communications Commission FCC 16-99 37 B. Summary of Significant Issues Raised by Public Comments in Response to the IRFA 10. In the NPRM, we solicited comments on how to minimize the economic impact of our proposals on small businesses. We received three comments directly addressing the IRFA.10 Two of the comments addressed the area of duplicate, overlapping, or conflicting rules, and one addressed coordination with the ongoing Consumer Financial Protection Bureau (CFPB) rulemaking. In addition, we received six consumer comments that were against robocalls, where the filer mentioned being the owner of a small business.11 None of the comments pointed out any areas where small businesses would incur a particular hardship in complying with the rules. 11. Duplicate, Overlapping, or Conflicting Rules. Both CMC and NSC claim that the Commission failed to identify rules that “duplicate, overlap or conflict with the proposed rule” as required by the Regulatory Flexibility Act.12 In paragraph 49 of the Order, we acknowledge that other statutes and regulations impact debt collection calls. The TCPA regulates autodialed, prerecorded-voice, and artificial-voice calls. The rules we adopt today are concerned only with regulating that subset of autodialed, artificial-voice, and prerecorded-voice calls that are made to wireless numbers and to collect a debt that is owed to or guaranteed by the United States. The TCPA amendments and these implementing rules change only the specific conditions under which a caller can use an autodialer, prerecorded voice, and artificial voice to make calls to a wireless number without the prior express consent of the called party and the limitations that apply to autodialed, prerecorded-voice, or artificial-voice calls to a wireless number made to collect a debt owed to or guaranteed by the United States. 12. CMC suggests that the rules conflict with “longstanding federal and state foreclosure prevention efforts and policies”; “several federal requirements to call mortgage borrowers by telephone to try to prevent foreclosures”; “any new FCC rule permitting consumers to block calls”; “[t]he FDCPA prohibit[ion of] unfair practices by debt collectors in attempting to collect a debt”; and “[t]he Dodd-Frank Act prohibit[ion of] unfair, deceptive, or abusive acts or practices by covered persons or service providers, including consumer mortgage servicers.”13 However, none of the rules cited by CMC require that calls to wireless numbers be autodialed, artificial-voice, or prerecorded-voice calls. The TCPA, with or without the amendments, does not regulate whether or when a debt collector can make a debt collection call, nor does it in any way prohibit a mortgage servicer from making a call in compliance with foreclosure requirements. Debt collectors and mortgage servicers continue to be free to make calls in compliance with non-TCPA law. The rules we adopt today apply only to autodialed, prerecorded-voice, and artificial-voice calls. Therefore the rules cited by CMC do not “duplicate, overlap or conflict with” the proposed rule. 13. Coordination with the CFPB. ACA notes that the CFPB “will convene one or more panels under the Small Business Regulatory Enforcement Fairness Act to assess the potential impact of its debt collection proposals under consideration on affected small business, including by obtaining feedback from small entity representatives.”14 ACA suggests that we wait for the results of the CFPB’s analysis, particularly since “the substantial majority of collection agencies are ‘small’ under the Small Business Administration’s size standard.”15 We decline to do so for two reasons. First, the deadline of August 2nd 10 ACA International Comments at 21-22 (ACA Comments); Consumer Mortgage Coalition Comments at 17 (CMC Comments); Noble Systems Corporation Comments at 6 (NSC Comments). 11 Robert Minor Comments at 1; Dan O’Brien Comments at 1, Deborah Hamilton Comments at 1, Jan Reyes Comments at 1; John Nowosielski Comments at 1; Wayne Paquette Comments at 1. 12 CMC Comments at 17; NSC Comments at 6. 13 CMC Comments at 17. 14 ACA Comments at 21-22. 15 ACA Comments at 21. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 38 of 67 PageID 120 Federal Communications Commission FCC 16-99 38 imposed by Congress prohibits us from delaying this rulemaking.16 Second, the CFPB is analyzing overall debt collection rules and policies, a much wider scope than the narrow area covered by these rules, which are limited to regulating autodialed, artificial-voice, and prerecorded-voice calls to wireless numbers to collect a debt owed to or guaranteed by the United States. It is unlikely that the CFPB panels will provide more information than we have already received through the notice and comment process that began with the NPRM. 14. Cost Analysis. CMC recommends that we “consider the costs of mortgage delinquencies and foreclosures and mortgage ‘rescue’ scams that telephone calls could have prevented or mitigated” as part of the cost analysis.17 We have considered comments asserting the potential benefits to debtors of receiving the autodialed, pre-recorded voice, and artificial-voice calls at issue in developing the rules we adopt today, including in balancing the importance of collecting debt owed to or guaranteed by the United States and the consumer protections inherent in the TCPA. Such costs as CMC mentions would not be incurred by regulated entities and, in this context, would be both hypothetical and highly speculative. As a result, we do not attempt to quantify the costs raised by CMC in the Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities section below. C. Response to Comments by the Chief Counsel for Advocacy of the Small Business Administration 15. Pursuant to the Small Business Jobs Act of 2010, which amended the RFA, the Commission is required to respond to any comments filed by the Chief Counsel for Advocacy of the Small Business Administration (SBA), and to provide a detailed statement of any change made to the proposed rules as a result of those comments.18 The Chief Counsel did not file any comments in response to the proposed rules in this proceeding. D. Description and Estimate of the Number of Small Entities to Which Rules Will Apply 16. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the rules adopted herein.19 The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.”20 In addition, the term “small business” has the same meaning as the term “small-business concern” under the Small Business Act.21 A “small-business concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.22 17. The Commission’s rules restricting autodialed, artificial-voice, and prerecorded-voice calls to wireless numbers apply to all entities that make such calls or texts to wireless telephone numbers to collect debts owed to or guaranteed by the United States. Thus, the rules set forth in this proceeding are likely to have an impact on a substantial number of small entities in several categories. 16 Budget Act § 301(b). 17 CMC Comments at 17. 18 5 U.S.C. sec 604 (a)(3). 19 See 5 U.S.C. § 603(b)(3). 20 See 5 U.S.C. § 601(6). 21 See 5 U.S.C. § 601(3) (incorporating by reference the definition of “small-business concern” in the Small Business Act, 15 U.S.C. § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register.” 22 See 15 U.S.C. § 632. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 39 of 67 PageID 121 Federal Communications Commission FCC 16-99 39 18. Collection Agencies. This industry comprises establishments primarily engaged in collecting payments for claims and remitting payments collected to their clients.23 The SBA has determined that Collection Agencies with $15 million or less in annual receipts qualify as small businesses.24 Census data for 2012 indicate that 3,361 firms in this category operated throughout that year. Of those, 3,166 firms operated with annual receipts of less than $10 million.25 We conclude that a substantial majority of businesses in this category are small under the SBA standard. 19. Telemarketing Bureaus and Other Contact Centers. This U.S. industry comprises establishments primarily engaged in operating call centers that initiate or receive communications for others—via telephone, facsimile, email, or other communication modes—for purposes such as (1) promoting clients products or services, (2) taking orders for clients, (3) soliciting contributions for a client, and (4) providing information or assistance regarding a client's products or services. These establishments do not own the product or provide the services they are representing on behalf of clients.26 The SBA has determined that Telemarketing Bureaus and other Contact Centers with $15 million or less in annual receipts qualify as small businesses.27 U.S. Census data for 2012 indicate that 2,251 firms in this category operated throughout that year. Of those, 2,014 operated with annual receipts of less than $10 million.28 We conclude that a substantial majority of businesses in this category are small under the SBA standard. 20. Commercial Banks and Savings Institutions. Commercial banks are establishments primarily engaged in accepting demand and other deposits and making commercial, industrial, and consumer loans. Commercial banks and branches of foreign banks are included in this industry.29 Savings institutions are establishments primarily engaged in accepting time deposits, making mortgage and real estate loans, and investing in high-grade securities. Savings and loan associations and savings banks are included in this industry.30 The SBA has determined that Commercial Banks and Savings Institutions with $500 million or less in assets qualify as small businesses.31 December 2013 Call Report data compiled by SNL Financial indicate that 6,877 firms in this category operated throughout that year.32 23 U.S. Census Bureau, 2012 NAICS Definitions, 561440 Collection Agencies, http://www.census.gov/cgi- bin/sssd/naics/naicsrch (last visited July 6, 2016). 24 13 CFR § 121.201; 2012 NAICS code 561440. 25 2012 U.S. Economic Census, NAICs Code 516440, at http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_56SSSZ4&prodT ype=table. 26 U.S. Census Bureau, 2012 NAICS Definitions, 561422 Telemarketing Bureaus and Other Contact Centers, http://www.census.gov/cgi-bin/sssd/naics/naicsrch (last visited July 6, 2016). 27 13 CFR § 121.201; 2012 NAICS code 561422. 28 2007 U.S. Economic Census, NAICs Code 561422, at http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_56SSSZ4&prodT ype=table. 29 U.S. Census Bureau, 2012 NAICS Definitions, 522110 Commercial Banks, http://www.census.gov/cgi- bin/sssd/naics/naicsrch (last visited July 6, 2016). 30 U.S. Census Bureau, 2012 NAICS Definitions, 522120 Savings Institutions, http://www.census.gov/cgi- bin/sssd/naics/naicsrch (last visited July 6, 2016). 31 13 CFR § 121.201; 2012 NAICS code 522110 and 2012 NAICS code 522120. A financial institution's assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year. "Assets" means the assets defined according to the Federal Financial Institutions Examination Council 041 call report form for NAICS Codes 522110, 522120, 522190, and 522210 and the National Credit Union Administration 5300 call report form for NAICS code 522130. 32 Bureau of Consumer Financial Protection, Home Mortgage Disclosure (Regulation C), Final Rule, 80 Fed. Reg. 66128, 66301 (Oct. 28, 2015) (CFPD Rule) (citing December 2013 Call Report data as compiled by SNL Financial). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 40 of 67 PageID 122 Federal Communications Commission FCC 16-99 40 Of those, 5,533 qualify as small entities.33 Based on this data, we conclude that a substantial number of businesses in this category are small under the SBA standard.34 21. Credit Unions. This industry comprises establishments primarily engaged in accepting members' share deposits in cooperatives that are organized to offer consumer loans to their members.35 The SBA has determined that Credit Unions with $550 million or less in assets qualify as small businesses.36 The December 2013 National Credit Union Administration Call Report data indicate that 6,687 firms in this category operated throughout that year.37 Of those, 6,252 qualify as small entities.38 Based on this data, we conclude that a substantial number of businesses in this category are small under the SBA standard.39 22. Other Depository Credit Intermediation. This industry comprises establishments primarily engaged in accepting deposits and lending funds (except commercial banking, savings institutions, and credit unions). Establishments known as industrial banks or Morris Plans and primarily engaged in accepting deposits, and private banks (i.e., unincorporated banks) are included in this industry.40 The SBA has determined that Other Depository Credit Intermediation entities with $550 million or less in assets qualify as small businesses.41 Census data for 2012 indicate that 6 firms in this category operated throughout that year.42 Due to the nature of this category, we conclude that a substantial number of businesses in this category are small under the SBA standard. 23. Sales Financing. This industry comprises establishments primarily engaged in sales financing or sales financing in combination with leasing. Sales financing establishments are primarily engaged in lending money for the purpose of providing collateralized goods through a contractual installment sales agreement, either directly from or through arrangements with dealers.43 The SBA has determined that Sales Financing entities with $38.5 million or less in annual receipts qualify as small 33 Id. 34 Note that the 2012 U.S. Census Economic Data does not include information on assets. 35 U.S. Census Bureau, 2012 NAICS Definitions, 522130 Credit Unions, http://www.census.gov/cgi- bin/sssd/naics/naicsrch?code=522130&search=2012%20NAICS%20Search (last visited July 6, 2016). 36 13 CFR § 121.201; 2012 NAICS code 522130. A financial institution's assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year. "Assets" means the assets defined according to the Federal Financial Institutions Examination Council 041 call report form for NAICS Codes 522110, 522120, 522190, and 522210 and the National Credit Union Administration 5300 call report form for NAICS code 522130. 37 CFPD Rule at 66301 (citing National Credit Union Administration 5300 call report form). 38 Id. 39 Note that the 2012 U.S. Census Economic Data does not include information on assets. 40 U.S. Census Bureau, 2012 NAICS Definitions, 522190 Other Depository Credit Intermediation, http://www.census.gov/cgi-bin/sssd/naics/naicsrch (last visited July 6, 2016). 41 13 CFR § 121.201; 2007 NAICS code 522190. A financial institution's assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year. "Assets" means the assets defined according to the Federal Financial Institutions Examination Council 041 call report form for NAICS Codes 522110, 522120, 522190, and 522210 and the National Credit Union Administration 5300 call report form for NAICS code 522130. 42 2012 U.S. Economic Census, NAICs Code 522190, at http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_52SSSZ4&prodT ype=table. 43 U.S. Census Bureau, 2012 NAICS Definitions, 522220 Sales Financing, http://www.census.gov/cgi- bin/sssd/naics/naicsrch (last visited July 6, 2016). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 41 of 67 PageID 123 Federal Communications Commission FCC 16-99 41 businesses.44 Census data for 2012 indicate that 2,093 firms in this category operated throughout that year. Of those, 1,950 operated with annual receipts of less than $25 million.45 We conclude that a substantial majority of businesses in this category are small under the SBA standard. 24. Consumer Lending. This U.S. industry comprises establishments primarily engaged in making unsecured cash loans to consumers.46 The SBA has determined that Consumer Lending entities with $38.5 million or less in annual receipts qualify as small businesses.47 Census data for 2012 indicate that 2,768 firms in this category operated throughout that year. Of those, 2,702 operated with annual receipts of less than $25 million.48 We conclude that a substantial majority of businesses in this category are small under the SBA standard. 25. Real Estate Credit. This U.S. industry comprises establishments primarily engaged in lending funds with real estate as collateral.49 The SBA has determined that Real Estate Credit entities with $38.5 million or less in annual receipts qualify as small businesses.50 Census data for 2012 indicate that 2,535 firms in this category operated throughout that year. Of those, 2,223 operated with annual receipts of less than $25 million.51 We conclude that a substantial majority of businesses in this category are small under the SBA standard. 26. International Trade Financing. This U.S. industry comprises establishments primarily engaged in providing one or more of the following: (1) working capital funds to U.S. exporters; (2) lending funds to foreign buyers of U.S. goods; and/or (3) lending funds to domestic buyers of imported goods.52 The SBA has determined that International Trade Financing entities with $38.5 million or less in annual receipts qualify as small businesses.53 Census data for 2012 indicate that 126 firms in this category operated throughout that year. Of those, 120 operated with annual receipts of less than $25 million.54 We conclude that a substantial majority of businesses in this category are small under the SBA standard. 44 13 CFR § 121.201; 2012 NAICS code 522220. 45 2012 U.S. Economic Census, NAICs Code 522220, at http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_52SSSZ4&prodT ype=table. 46 U.S. Census Bureau, 2012 NAICS Definitions, 522291 Consumer Lending, http://www.census.gov/cgi- bin/sssd/naics/naicsrch (last visited July 6, 2016). 47 13 CFR § 121.201; 2012 NAICS code 522291. 48 2012 U.S. Economic Census, NAICs Code 522291, at http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_52SSSZ4&prodT ype=table. 49 U.S. Census Bureau, 2012 NAICS Definitions, 522292 Real Estate Credit, http://www.census.gov/cgi- bin/sssd/naics/naicsrch (last visited July 6, 2016). 50 13 CFR § 121.201; 2007 NAICS code 522292. 51 2012 U.S. Economic Census, NAICs Code 522292, at http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_52SSSZ4&prodT ype=table. 52 U.S. Census Bureau, 2012 NAICS Definitions, 522293 International Trade Financing, http://www.census.gov/cgi- bin/sssd/naics/naicsrch (last visited July 6, 2016). 53 13 CFR § 121.201; 2012 NAICS code 522293. 54 U.S. Economic Census, 2012 NAICs Code 522293, at http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_52SSSZ4&prodT ype=table. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 42 of 67 PageID 124 Federal Communications Commission FCC 16-99 42 27. Secondary Market Financing. This U.S. industry comprises establishments primarily engaged in buying, pooling, and repackaging loans for sale to others on the secondary market.55 The SBA has determined that Secondary Market Financing entities with $38.5 million or less in annual receipts qualify as small businesses.56 Census data for 2012 indicate that 89 firms in this category operated throughout that year. Of those, 78 operated with annual receipts of less than $25 million.57 We conclude that a substantial majority of businesses in this category are small under the SBA standard. 28. All Other Nondepository Credit Intermediation. This U.S. industry comprises establishments primarily engaged in providing nondepository credit (except credit card issuing, sales financing, consumer lending, real estate credit, international trade financing, and secondary market financing).58 Examples of types of lending in this industry are: short-term inventory credit, agricultural lending (except real estate and sales financing), and consumer cash lending secured by personal property.59 The SBA has determined that All Other Nondepository Credit Intermediation entities with $38.5 million or less in annual receipts qualify as small businesses.60 Census data for 2012 indicate that 4,960 firms in this category operated throughout that year. Of those, 4,872 operated with annual receipts of less than $25 million.61 We conclude that a substantial majority of businesses in this category are small under the SBA standard. 29. Mortgage and Nonmortgage Loan Brokers. This industry comprises establishments primarily engaged in arranging loans by bringing borrowers and lenders together on a commission or fee basis.62 The SBA has determined that Mortgage and Nonmortgage Loan Brokers with $7.5 million or less in annual receipts qualify as small businesses.63 Census data for 2012 indicate that 6,157 firms in this category operated throughout that year. Of those, 5,939 operated with annual receipts of less than $5 million.64 We conclude that a substantial majority of businesses in this category are small under the SBA standard. 30. Other Activities Related to Credit Intermediation. This industry comprises establishments primarily engaged in facilitating credit intermediation (except mortgage and loan 55 U.S. Census Bureau, 2012 NAICS Definitions, 522294 Secondary Market Financing, http://www.census.gov/cgi- bin/sssd/naics/naicsrch (last visited July 6, 2016). 56 13 CFR § 121.201; 2012 NAICS code 522294. 57 2012 U.S. Economic Census, NAICs Code 522294, at http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_52SSSZ4&prodT ype=table. 58 U.S. Census Bureau, 2012 NAICS Definitions, 522298 All Other Nondepository Credit Intermediation, http://www.census.gov/cgi-bin/sssd/naics/naicsrch (last visited July 6, 2016). 59 Id. 60 13 CFR § 121.201; 2012 NAICS code 522298. 61 2012 U.S. Economic Census, NAICs Code 522298, at http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_52SSSZ4&prodT ype=table. 62 U.S. Census Bureau, 2012 NAICS Definitions, 522310 Mortgage and Nonmortgage Loan Brokers, http://www.census.gov/cgi-bin/sssd/naics/naicsrch (last visited July 6, 2016). 63 13 CFR § 121.201; 2012 NAICS code 522310. 64 2012 U.S. Economic Census, NAICs Code 522310, at http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_52SSSZ4&prodT ype=table. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 43 of 67 PageID 125 Federal Communications Commission FCC 16-99 43 brokerage; and financial transactions processing, reserve, and clearinghouse activities).65 The SBA has determined that Other Activities Related to Credit Intermediation entities with $20.5 million or less in annual receipts qualify as small businesses.66 Census data for 2012 indicate that 3,989 firms in this category operated throughout that year. Of those, 3,860 operated with annual receipts of less than $20.5 million.67 We conclude that a substantial majority of businesses in this category are small under the SBA standard. E. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities 31. This Order amends the Commission’s rules implementing the TCPA to align them with the amended statutory language of the TCPA enacted by Congress in the 2015 Budget Act, creating an exception that allows the use of an autodialer, prerecorded-voice, and artificial-voice when making calls to wireless telephone numbers without the prior express consent of the called party when such calls are made solely to collect a debt owed to or guaranteed by the United States, and imposing limitations on autodialed, prerecorded-voice, and artificial-voice calls to collect a debt owed to or guaranteed by the United States. The Order will likely impose a one-time cost on some entities to set up new recordkeeping and other compliance requirements. These changes affect small and large companies equally, and apply equally to all of the classes of regulated entities identified above. 32. To comply with the right of the consumer to stop autodialed, artificial-voice, and prerecorded-voice federal debt collection calls to wireless numbers without consent, regulated entities must keep a record of any request made by a consumer for the cessation of the calls, and must pass that information to any subsequent collector or servicer of the debt if the debt is transferred. This rule obligates callers to retain records of consumers opting out of receiving these autodialed or prerecorded federal debt collection messages. Because autodialed, artificial-voice, and prerecorded-voice federal debt collection calls to wireless numbers required consent prior to these amendments, we assume calling entities have systems and procedures already in place to record consent and that the current way of doing business will be sufficient for tracking revocation of consent and will not impose new costs. However, the requirement to inform subsequent collectors or servicers of the revocation of consent might be new for some calling entities, and could impose a small initial cost to modify systems or procedures. This provision does not impose a significant economic impact on small businesses. We did not receive any comments stating that this rule would cause a significant economic impact on small businesses. The Commission does not require a particular form or format to be used in conveying the revocation of consent to subsequent collectors or servicers when a debt is transferred. 33. Federal debt collection calls made using a prerecorded or artificial voice must include an automated, interactive voice- and/or key press-activated opt-out mechanism so that debtors who receive these calls may make a stop-calling request during the call by pressing a single key. When a federal debt collection call using an artificial voice or prerecorded voice leaves a voicemail message, that message must also provide a toll-free number that the debtor may call at a later time to connect directly to the automated, interactive voice and/or key press-activated mechanism and automatically record the stop- calling request. Text message disclosures must include brief explanatory instructions for sending a stop- call request by reply text message and provide a toll-free number that enables the debtor to call back later to make a stop-call request. This rule obligates callers to modify their systems to produce the message, maintain toll-free numbers, and record any stop-call requests. Such records should demonstrate the 65 2012 U.S. Census Bureau, 2012 NAICS Definitions, 522390 Other Activities Related to Credit Intermediation, http://www.census.gov/cgi-bin/sssd/naics/naicsrch. 66 13 CFR § 121.201; 2012 NAICS code 522390. 67 2007 U.S. Economic Census, NAICs Code 522390, at http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_52SSSZ4&prodT ype=table. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 44 of 67 PageID 126 Federal Communications Commission FCC 16-99 44 caller’s compliance with the provision and utilization of the automated, interactive opt-out feature. The Commission allows the calling entities the flexibility to determine how to implement the mechanism. The Commission does not require a particular form or format evidencing this mechanism or its implementation. This provision does not impose a significant economic impact on small businesses. We did not receive any comments stating that this rule would cause a significant economic impact on small businesses. F. Steps Taken to Minimize the Significant Economic Impact on Small Entities, and Significant Alternatives Considered 34. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its approach, which may include the following four alternatives, among others: (1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.68 35. The amendments to the rules change the specific conditions under which a caller can use an autodialer, prerecorded voice, and artificial voice to make calls to a wireless number without the prior express consent of the called party and the limitations that apply to autodialed, prerecorded-voice, and artificial-voice calls to a wireless number made to collect a debt owed to or guaranteed by the United States. The limitations balance the importance of collecting debt owed to the United States and the consumer protections inherent in the TCPA. In paragraph 27 of the Order, the Commission interprets the amendments as allowing such calls to be made by the federal government, owners of debt guaranteed by the federal government, and by their respective contractors. The amendments therefore benefit the federal government, owners of debt guaranteed by the federal government, and their respective contractors. Although the federal government is not a small business, many of the owners of debt guaranteed by the federal government and the contractors who make these calls are small businesses. Thus, the Commission considered the needs of small businesses in reaching its approach. 36. Automated dialers and artificial-voice, and prerecorded-voice calling systems can be used to make thousands of calls without requiring commensurate staffing. By automating the process of making calls and texts, small businesses can make as many calls as large businesses. The volume of calls is not limited by the size of the business. Therefore limitations designed to protect consumer interests must apply to both large and small calling entities to be effective. The Commission believes that any economic burden these proposed rules may have on callers is outweighed by the benefits to consumers. 37. Feedback. The Commission considered feedback from the NPRM in crafting the final order. Although none of the comments offered suggestions of ways to make the rules more friendly to small businesses, there were many comments from regulated callers with suggestions to make compliance easier for all, large and small. We evaluated the comments in light of balancing the need to collect the debt with the need to protect consumer interests, and modified the proposed rules in several ways. For example, in paragraphs 11 through 18 of the Order, the Commission expanded the definition of the types of calls permitted to include debt servicing calls made following a specific, time-sensitive events such as a recertification deadline or the end of a deferment period, and in the 30 days before such an event, rather than limiting the exception to calls made when the debt is delinquent or in default. Similarly, in paragraphs 23 through 26 of the Order, we expanded the reach of the exception by allowing covered calls to be made to a phone number subsequently provided by the debtor to the servicer or owner of the debt, or a number obtained from an independent source, rather than limiting calls to the number provided on the loan application. These changes benefit regulated entities of all sizes. 38. Timetables. The Commission does not see a need to establish a special timetable for 68 5 U.S.C. § 603. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 45 of 67 PageID 127 Federal Communications Commission FCC 16-99 45 small entities to reach compliance with the modification to the rules. No small business has asked for a delay in implementing the rules. 39. Reporting requirements; performance standards. Since the rule does not impose reporting requirements, there is no need to establish less burdensome reporting requirements for small businesses. Similarly, there are no design standards or performance standards to consider in this rulemaking. 40. Exemption. The Commission does not see a need to consider an exemption for small businesses from the modified rules. No small business has asked for such an exception. G. Report to Congress 41. The Commission will send a copy of the Order, including this FRFA, in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act.69 In addition, the Commission will send a copy of the Order, including this FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the Order (or summaries thereof) will also be published in the Federal Register.70 69 5 U.S.C. § 801(a)(1)(A). 70 See id. § 604(b). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 46 of 67 PageID 128 Federal Communications Commission FCC 16-99 46 STATEMENT OF CHAIRMAN TOM WHEELER Re: Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278 Unwanted calls continue to be the top consumer complaint we receive at the Commission. It is vital that we continue to use all the tools at our disposal to help protect consumers against unwanted calls. Consumers want and deserve control over the calls and text messages they receive. To that end, we continue to push carriers and other providers to offer consumers robocall filtering tools. Last year, in our Omnibus ruling, we reinforced and further clarified our robocall restrictions, including placing limits on calls to reassigned numbers. Today’s action complies with a specific directive from Congress while taking steps to protect consumers. In its passage of the Bipartisan Budget Act of 2015, Congress directed that robocalls to help collect federally-backed debt, such as some mortgages and student loans, must be allowed without prior consent. At the same time, Congress empowered the Commission to set limits on such calls. That is what we are doing in the order released today. With this Report and Order, the Commission is establishing strong, pro-consumer limits on robocalls to collect federal debt. Wherever possible, the Commission has sought to limit the number of unwanted robocalls and ensure consumers have the tools to stop them. This is true in this order as it was in last year’s Omnibus ruling. Today’s rules limit the number of robocalls, including text messages, to three per month. The new rules also only allow robocalls concerning debts that are delinquent or at imminent risk of delinquency, unless there is prior express consent otherwise. The new rules require that, absent consent, callers only call the individual who owes the debt, not his or her family or friends. This includes limiting the number of robocalls allowed to reassigned numbers, consistent with last year’s Omnibus robocall ruling. The new rules reiterate that consumers have the right to stop calls they do not want at any point they wish, and require callers to inform consumers of that right. The new rules place limits on the duration of calls (excluding required disclosures). Specifically, pre- recorded or artificial voice calls cannot exceed 60 seconds and text messages cannot exceed 160 characters. The new rules apply to each caller, rather than each debt. Otherwise, consumers who have multiple loans with a single owner of the debt, as many do, could be receiving an excessive number of robocalls per month to their cell phones. This limitation prevents that from occurring. In addition, the Commission’s rules limit the time of day when robocalls can take place, requiring that no robocalls can may be made before 8 a.m. and after 9 p.m. local time at the called party’s location. These protections are particularly important following a January Supreme Court ruling that federal government entities conducting official business are not subject to robocall limits unless Congress says otherwise. Our decision implements Congress’s directive and responds to thousands of comments from consumers expressing frustration with robocalls and urging clear, strong limits on debt collection calls. It is important to note that our decision will not open a door for telemarking calls. Congress specified that excepted calls must be “solely” to collect a federal debt, and we have ensured they do not go beyond that. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 47 of 67 PageID 129 Federal Communications Commission FCC 16-99 47 Congress gave us a quick deadline to implement these new rules. I am proud that we have met that deadline and thank my fellow Commissioners and other Federal agencies for their helpful input into the decision. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 48 of 67 PageID 130 Federal Communications Commission FCC 16-99 48 STATEMENT OF COMMISSIONER MIGNON L. CLYBURN Re: Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278 We have heard loud and clear that consumers hate receiving robocalls. During the first six months of 2016, Telephone Consumer Protection Act (TCPA) related issues accounted for nearly half of the more than 175,000 tickets filed with the Commission’s consumer help center. In our ‘Federal Debt Collection Proceeding,’ nearly 16,000 individuals filed comments, with approximately 80 percent expressing a general dislike for robocalls. As a result, we must strike a delicate balance in this Order between the Commission’s mandate to protect consumers and specific instructions given to us by Congress in last year’s Budget Act regarding robocalls “made solely to collect a debt owed to or guaranteed by the United States.” While I recognize the importance of delivering timely information to an individual who is delinquent on their debt, and am in agreement that direct communication could actually prevent a borrower from experiencing long-term financial consequences, clear limits must be in place to prevent robocalls and texts from becoming harassment. By setting a limit of three robocalls per month, with explicit flexibility given to federal agencies to request a waiver seeking higher volume limits if needed, we have appropriately tailored a framework which both protects consumers and ensures access to critical information on debt repayment. Despite the limitations laid out in this Order, debt servicers will continue to have many means of communicating with borrowers: calls made with prior express consent; calls manually dialed; as well as email and traditional postal mail. The TCPA was enacted in part to protect consumers from being inundated with unwanted calls, such as those from debt collectors, and our decision here, consistent with the most recent direction of Congress, furthers that goal by placing clear restrictions on what is permissible when collecting federal debt. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 49 of 67 PageID 131 Federal Communications Commission FCC 16-99 49 CONCURRING STATEMENT OF COMMISSIONER JESSICA ROSENWORCEL Re: Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278 Consumers are fed up with robocalls. They are irritated when their phones buzz with services that sound like scams and they are troubled by the difficulty they have distinguishing them from calls about debts honestly owed and services actually rendered. Twenty-five years ago Congress passed the Telephone Consumer Protection Act to help consumers get the calls they need and avoid the ones they do not. But this law is showing its age. The years since its passage have brought a mix of technological advances and legal developments, creating new complications for both callers and those who receive calls. It’s no wonder that robocalls represent the single largest category of complaints the Commission receives. As a result, last year, in the Bipartisan Budget Act, Congress updated the Telephone Consumer Protection Act. Specifically, Congress authorized the Commission to develop policies for calls made to wireless phones for the collection of government debt. Today’s order responds to this charge by adopting reasonable limits on government debt collection calls, making clear that consumers have a right to stop robocalls, and clarifying who may be called to seek repayment of an outstanding debt obligation. This is a fair effort to respond to our legislative charge under the law. Nonetheless, I concur because this result—however warranted by the Bipartisan Budget Act— creates a legal landscape that is undeniably messy. It is difficult to reconcile the result here with the Commission’s recent Broadnet Declaratory Ruling which finds that the federal government and its agents are not “persons” under the Telephone Consumer Protection Act and hence fall outside of the Act’s reach. It may be harder still to harmonize both decisions with the Supreme Court’s opinion in Campbell- Ewald v. Gomez, which holds that no derivative immunity exists under the Telephone Consumer Protection Act when a contractor of the federal government acts outside of the scope of its authority. Simply put, the legal calisthenics required to navigate this series of decisions are exhausting. Moreover, the result for consumers is uneven. It may unfortunately yield more, rather than fewer robocalls—and if it does, consumers will be justifiably angry. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 50 of 67 PageID 132 Federal Communications Commission FCC 16-99 50 DISSENTING STATEMENT OF COMMISSIONER AJIT PAI Re: Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278 Last month in the Broadnet/RTI Declaratory Ruling, my colleagues voted to find that federal contractors, including federal debt collectors, are not “persons” under the Telephone Consumer Protection Act (TCPA) and thus get a free pass to robocall the American people.1 I did not support that decision. In my view, federal law makes clear that federal contractors are “persons” and thus are subject to the TCPA’s consumer protections.2 The FCC should reverse this mistake. As the National Consumer Law Center, the Electronic Privacy Information Center, the NAACP, and 48 other organizations have told us, “[i]f the Commission does not reconsider and change its ruling in [the Broadnet/RTI] proceeding, tens of millions of Americans will find their cell phones flooded with unwanted robocalls from federal contractors with no means of stopping these calls and no remedies to enforce their requests to stop these calls.”3 The FCC takes the same path here as it did in the Broadnet/RTI Declaratory Ruling by again failing to follow the law. Some background: Section 227(b)(1) of the TCPA prohibits “any person” from using certain automated telephone equipment without the called party’s prior express consent.4 Section 227(b)(2) authorizes the FCC to “prescribe regulations to implement the requirements of this subsection.”5 Last year’s budget deal snuck a special exemption for federal debt collectors into the TCPA.6 First, it amended section 227(b)(1) to exempt calls “made solely to collect a debt owed to . . . the United States.”7 Next, it amended section 227(b)(2) to give the FCC authority to “restrict or limit the number and duration of calls made . . . to collect a debt owed to . . . the United States.”8 It also instructed the FCC to adopt final rules implementing these changes by August 2, 2016.9 As I said when we started this proceeding to implement this exemption, I do not believe the federal government should be bestowing regulatory largesse upon favored industries such as federal debt collectors.10 I hope Congress will soon reverse course and eliminate this special exemption. 1 Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991; Broadnet Teleservices LLC Petition for Declaratory Ruling; National Employment Network Association Petition for Expedited Declaratory Ruling; RTI International Petition for Expedited Declaratory Ruling, CG Docket No. 02-278, Declaratory Ruling, FCC 16-72 (July 5, 2016) (Broadnet/RTI Declaratory Ruling). 2 Id. (Statement of Commissioner Ajit Pai, Approving in Part and Dissenting in Part) (“But I part ways with the Commission’s conclusion that federal contractors are not persons under the TCPA.”). 3 National Consumer Law Center et al. Petition for Reconsideration of Declaratory Ruling and Request for Stay Pending Reconsideration, CG Docket No. 02-278, at 2 (July 26, 2016). 4 Communications Act § 227(b)(1). 5 Communications Act § 227(b)(2). 6 Bipartisan Budget Act of 2015, Pub. L. No. 114-74, § 301(a), 129 Stat. 584 (Budget Act). 7 See Communications Act § 227(b)(1)(A)(iii), (b)(1)(B). 8 See Communications Act § 227(b)(2)(H). 9 Budget Act § 301(b). 10 Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Notice of Proposed Rulemaking, 31 FCC Rcd 5134, 5154–55 (2016) (Notice) (Dissenting Statement of Commissioner Ajit Pai). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 51 of 67 PageID 133 Federal Communications Commission FCC 16-99 51 Anyway, enough background. In this case, the FCC tries to solve the problem it created in the Broadnet/RTI Declaratory Ruling by arguing that even if the TCPA’s consumer protections in section 227(b)(1) do not apply to federal contractors, the Commission is free to regulate non-persons—including “the federal government and its contractors”—under section 227(b)(2).11 The Commission’s approach is unlawful and makes a dog’s breakfast of the TCPA. First, the plain text of the TCPA limits the scope of the FCC’s rulemaking authority under section 227(b)(2). The Commission does not have unlimited power to “restrict or limit the number and duration of [federal debt collection] calls” but only that necessary to (as the preface of that paragraph puts it) “implement[] the requirements of this subsection.”12 Those requirements are outlined in section 227(b)(1) and apply only to “any person.”13 Thus, our authority under section 227(b)(2)(H) can only extend to “any person” otherwise subject to the requirements of section 227(b)(1)—and not to the federal government itself, a non-person as all agree. Second, the canons of construction confirm that section 227(b)(2) does not extend to the federal government. Federal law does not apply to the sovereign absent “some affirmative showing of statutory intent to the contrary.”14 That principle drove the FCC’s decision to exclude the federal government from the scope of the TCPA in the Broadnet/RTI Declaratory Ruling. There, we rightly held that Congress’s decision to apply the TCPA to “any person” was insufficient to conclude that it intended to extend the TCPA to the federal government.15 A clearer statement of Congressional intent was needed. And that holding mortally wounds this one: Congress’s decision to indirectly indicate to whom section 227(b)(2) applies (through its reference to the “requirements” of section 227(b)(1)) cannot possibly be a more “affirmative showing” than Congress’s decision to directly indicate that section 227(b)(1) applies to “any person.”16 11 Order at para. 62. Although I focus on the application of section 227(b)(2) to the federal government here, these arguments carry equal force with respect to federal contractors, at least so long as the FCC continues to believe it an “untenable result” to apply the TCPA to federal contractors when those contractors make calls the TCPA allows the government itself to make. See Broadnet/RTI Declaratory Ruling, FCC 16-72, at para. 16. 12 See Communications Act § 227(b)(2)(H) (“The Commission shall prescribe regulations to implement the requirements of this subsection. In implementing the requirements of this subsection, the Commission— . . . may restrict or limit the number and duration of calls made to a telephone number assigned to a cellular telephone service to collect a debt owed to or guaranteed by the United States.”). 13 See Communications Act § 227(b)(1) (“It shall be unlawful for any person . . . .”); Broadnet/RTI Declaratory Ruling, FCC 16-72, at para. 10. The Order responds that “another requirement in subsection (b) appears in new subparagraph (b)(2)(H).” Order at para. 64. Not true. For one, new subparagraph (b)(2)(H) is not a “requirement.” It mandates no action. It prohibits no conduct. It does not even require the FCC to adopt rules. All it says is that the Commission “may” adopt certain limits. And any such limits would be “requirements” of the FCC’s regulations, not requirements of subsection (b). Cf. Communications Act § 227(b)(3) (distinguishing between violations of “this subsection” and violation of “the regulations prescribed under this subsection”). For another, the Order’s reading renders the prefatory language hopelessly circular. After all, if the prefatory language refers to the provisions of paragraph (b)(2) (such as new subparagraph (b)(2)(H)), then the Commission would automatically be “implementing the requirements of this subsection” whenever it adopted rules under paragraph (b)(2). In other words, the prefatory language does no work at all and is mere surplusage. We must interpret this language in a way that gives meaning to every clause. See Potter v. United States, 155 U.S. 438, 446 (1894) (the presence of statutory language “cannot be regarded as mere surplusage; it means something”). 14 Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 781 (2000). 15 See Broadnet/RTI Declaratory Ruling, FCC 16-72, at para. 12. 16 The Order responds that the existence of rulemaking authority under section 227(b)(2) is the “requisite affirmative showing.” Order at para. 65. But that misses the point. No one doubts that Congress intended the FCC to issue some rules. The question is whether there’s an affirmative showing that Congress intended to encompass (continued….) Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 52 of 67 PageID 134 Federal Communications Commission FCC 16-99 52 Perhaps even more fatal is the “settled propositio[n]” that the United States’ waiver of sovereign immunity “cannot be implied but must be unequivocally expressed.”17 Notably, the necessary consequence of applying section 227(b)(2) to the federal government is a waiver of federal sovereign immunity. That’s because section 227(b)(3) expressly empowers private parties to bring an action for money damages against anyone who violates “the regulations prescribed under this subsection,” i.e., the regulations enacted under section 227(b)(2).18 But the United States obviously has not delegated authority to the FCC to waive federal sovereign immunity. And section 227(b)(2) contains no unequivocal expression, no implication, not even a wink suggesting that Congress intended to waive the government’s sovereign immunity.19 Third, the structure of the TCPA does not support an expansive reading of section 227(b)(2)’s scope. After all, section 227(b)(2)(H) is not unique in omitting the word “person.” In fact, not one of the regulatory authorities contained in subsection 227(b)(2) uses that word. Not one FCC precedent (until today) has found that omission meaningful. And not once has the FCC suggested that these other regulatory authorities could apply to the federal government. The structure is key20: Whereas section 227(b)(1) contains mandatory prohibitions (e.g., barring robocalls to consumers’ cellphones), section 227(b)(2) only contains discretionary prohibitions (e.g., asking the FCC to consider banning robocalls to businesses). And every FCC to date has apparently recognized that it makes no sense to say that Congress intended a narrower scope (only “any person”) for the mandatory prohibitions and a broader scope (“any person” plus the federal government) for the discretionary prohibitions. Fourth, the FCC never proposed to extend its new rules to non-persons such as the federal government. Notice to the public is the critical first step in any rulemaking under the Administrative Procedure Act.21 But the Commission never proposed in the Notice to extend its rules beyond “any person” already covered by the TCPA. Indeed, the Notice apparently recognized that the TCPA did not extend beyond persons and instead asked the converse question, “whether the Budget Act amendments imply that the federal government is a person for TCPA purposes.”22 And the proposed rules never suggested they’d apply to the federal government.23 So it’s no surprise that the Order does not identify a (Continued from previous page) the federal government in those rules. And though the Order repeatedly points to places where Congress could have inserted such a showing, the lack of a showing just doesn’t suffice. 17 College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, 527 U.S. 666, 682 (1999) (quoting United States v. King, 395 U.S. 1, 4 (1969)). 18 Communications Act § 227(b)(3). 19 I agree with the Order that the FCC should not be deciding questions of sovereign immunity. See Order at para. 65. Nonetheless, we must grapple with the natural consequences of our construction of the statute. The Order’s reading naturally raises the question of whether the United States has waived its sovereign immunity. I do not believe that it has. 20 See, e.g., King v. Burwell, 135 S. Ct. 2480, 2483–84 (2016) (noting the “‘fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme’” (quoting Utility Air Regulatory Group v. EPA, 134 S. Ct. 2427, 2441 (2014)). 21 See 5 U.S.C. § 553(b). 22 Notice, 31 FCC Rcd at 5140, para. 16. 23 Id. at 5146 (Appendix A). Notably, the Order appears to agree and suggests that commenters should have somehow guessed that divergent strands from different sections of the Notice could be stitched together to apply these section 227(b)(2) regulations to non-persons. See Order at para. 66 (quoting section III.A of the Notice (discussing calls exempted from section 227(b)(1)) and section III.B of the Notice (discussing rules under section 227(b)(2)). But the Administrative Procedure Act does not require a post-hoc explanation. It requires advance notice. Furthermore, even the Order’s attempt to stitch together notice fails. As the Order recognizes, the Notice only proposed applying limits to “covered calls,” Notice, 31 FCC Rcd at 5140, paras. 17–18, i.e., those calls exempted by the Budget Act amendments and thus only calls by “persons” subject to the TCPA, id. at 5139, para. (continued….) Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 53 of 67 PageID 135 Federal Communications Commission FCC 16-99 53 single stakeholder that’s even commented on the issue, let alone supported the Order’s interpretation. And that includes the Treasury Department, which oversees federal debt collection efforts and with which we are legally required to “consult[].”24 In the end, we can’t mitigate by misinterpreting. The FCC got the Broadnet/RTI Declaratory Ruling wrong. Adding a second wrong to the first does not make a right. For all these reasons, I respectfully dissent. (Continued from previous page) 15. And the Order omits the relevant context when it says the FCC proposed applying rules to “any call.” The Notice used that phrase to cover calls “even if unanswered by a person.” Id. at 5140, para. 18. At no point did the Notice suggest it would cover calls made by anyone. 24 Budget Act § 301(b). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 54 of 67 PageID 136 Federal Communications Commission FCC 16-99 54 DISSENTING STATEMENT OF COMMISSIONER MICHAEL O’RIELLY Re: Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278 When Congress enacted the Bipartisan Budget Act of 2015 (Budget Act), which included certain relief from the Telephone Consumer Protection Act (TCPA), the intent seemed clear. Faced with the alarming prospect that the FCC’s misguided interpretations of the TCPA, culminating in the order last June, might prevent the United States from collecting its debts, Congress stepped in to exempt calls regarding such debts from the TCPA’s prior express consent requirements. In other words, out of all of the legitimate entities that have valid reasons to autodial consumers, the federal government, along with companies servicing loans or collecting debts on behalf of the federal government, were moved to the front of the line and granted significant relief from the FCC’s wrongheaded rules. After all, the federal government has a significant interest both in helping borrowers avoid the potentially devastating financial consequences of defaulting on loans, as well as ensuring taxpayers recoup the $139.3 billion of delinquent debt owed to or guaranteed by the United States.1 The U.S. Department of the Treasury rightfully has pressed for relief for nearly a decade. In 2007, its Financial Management Service (FMS) wrote that “[a] ruling by the FCC that would apply the restrictions on the use of autodialers to the efforts of private collection agencies collecting debts on behalf of the United States, or leaving the issue unresolved, could hinder FMS’ successful partnership with private debt collection agencies and negatively impact collections government-wide.”2 Again in 2010, FMS wrote to the FCC to reiterate that “autodialer restrictions should not apply to debt collectors.”3 At a minimum, the “use of autodialers should be permitted when collecting debts owed to the U.S., because additional protections are in place and the prohibition would decrease collections revenue.”4 Specifically, FMS noted:  “[D]ebt collection is inherently different than telemarketing, as it is based on the collection of legitimate debts owed by individuals and other entities with a preexisting obligation to pay. Debt collectors are not using autodialers to cold call potential customers, but are instead using autodialers to contact individuals who have an existing relationship or indebtedness.  [D]ebt collectors are already subject to numerous federal and state consumer protection laws, such as the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA), that prevent abusive use of all debt collection practices, including potential misuse of autodialers.  [B]y reducing the potential for human error, autodialers assist with collectors’ compliance with consumer protection laws and sound debt collection practices.”5 1 See Comments of the American Bankers Association and the Consumer Bankers Association, CC Docket No. 02- 278, at 2 (filed June 6, 2016) (ABA/CBA Comments). 2 Letter from Rita Bratcher, Financial Management Service, U.S. Department of the Treasury, to Kevin Martin, FCC, CC Docket No. 02-278, at 2 (filed Jan. 26, 2007). 3 Letter from Scott Johnson, Financial Management Service, U.S. Department of the Treasury, to Marlene Dortch, FCC, CC Docket No. 02-278, at 2 (filed May 20, 2010). 4 Id. 5 Id. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 55 of 67 PageID 137 Federal Communications Commission FCC 16-99 55 These concerns became even more imperative in the wake of the 2015 TCPA Omnibus Order, which placed even more restrictions on legitimate callers. 6 Against this backdrop, and without knowing how the FCC would ultimately decide pending petitions about whether federal agencies and their contractors were subject to the TCPA, Congress enacted the Budget Act exemption to ensure that, at a minimum, federal agencies and their contractors are protected when calling to collect debts owed to or guaranteed by the U.S. government.7 Just two months ago, however, a near unanimous Commission provided further clarification, determining that all federal agencies and their contractors performing any legitimate, government authorized functions are exempt from the TCPA. That’s because the Commission determined, consistent with Supreme Court precedent, that the federal government and its agents are not “persons” under the TCPA. Having issued that broad and appropriate determination, this narrower item, required only to comply with the Budget Act, should have been simple and straightforward. It should have confirmed that federal agencies and their contractors are not subject to TCPA restrictions, regardless of whether they are calling to locate a debtor, service a debt, collect a debt, or for any other legitimate purpose, because they are not “persons” under the TCPA. Therefore, it is beyond disappointing that the order decides that the federal government and its contractors will face more restrictions when making calls to collect debts than for any other type of call they make. That’s the exact opposite of what the Budget Act exemption was designed to accomplish.8 Clearly, no good law goes unabused in this Commission. 6 See ABA/CBA Comments at 2 (“The Commission’s recent interpretations of the TCPA . . . fail to reflect technological change and consumer communication preferences, preventing consumers from receiving important communications from businesses and government entities on their mobile phones, communications that provide important information that consumers want and need to receive. This untenable situation prompted the Administration, beginning in 2013, to include in its budget proposals a request to exempt from the TCPA’s prior express consent requirement calls to mobile phones to collect on debts owed to or guaranteed by the United States. In 2015, Congress enacted a statutory provision codifying the exemption. Clearly, both the Administration and the Congress recognize that borrowers trying to manage their finances responsibly are best served if they communicate with their lender.”). 7 See Comments of ACA International, CC Docket No. 02-278, at 6 (filed June 6, 2016) (“Congress enacted the Budget Act exemption so that one category of debt collectors – those who collect debt owed to or guaranteed by the United States – would have a clear pathway to use modern calling technology to contact consumers on their mobile telephones in order to increase the recovery of government debt. Given this, the Commission must ensure that any final rules adopted reflect Congress’s clear intent to exempt government debt collectors from the TCPA’s prior express consent requirement.”). 8 See Comments of Navient Corporation, CC Docket No. 02-278, at viii (filed June 6, 2016) (Navient Comments) (“The FCC’s proposal effectively eliminates the exemption enacted by Congress and is contrary to Congress’ clear directive in passing the Bipartisan Budget Act (and contrary to the Administration’s longstanding efforts to include an exemption as part of the budget).”); see also id. at 18 (“Through its amendment, Congress unequivocally prioritized the collection of federal debt above other competing interests underlying the TCPA when it removed calls made solely to collect federal debts from the purview of the TCPA’s consent restrictions”); see also Reply Comments of the Mortgage Bankers Association, CC Docket No. 02-278, at 2 (filed June 16, 2016) (MBA Reply Comments) (observing that, in creating the exemption, “Congress highlighted the importance of collecting these debts owed to or guaranteed by the United States Government.”); see also Comments of Nelnet, Inc., CC Docket No. 02-278, at 2 (filed June 6, 2016) (Nelnet Comments) (Noting that the proposal “fails to effectuate the unequivocal policy objectives of the Budget Act amendments, which the White House has explained include “ensur[ing] that all debt owed to the United States is collected as quickly and efficiently as possible”) (citing Analytical Perspectives, Budget of the United States Government, Fiscal Year 2016, at 128, available at https://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/spec.pdf). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 56 of 67 PageID 138 Federal Communications Commission FCC 16-99 56 To reach this illogical outcome, the order pretends that section 227(b)(2)(H), which permits, but does not require, the FCC to adopt certain limits on debt collection calls, applies to non-persons. That’s absurd. Section 227(b)(2) directs the Commission “to prescribe regulations to implement the requirements of this subsection.” This subsection, of course, is section 227(b), and its requirements set forth in section 227(b)(1) make it “unlawful for any person within the United States” or “any person outside the United States if the recipient is within the United States” to make a call or send an unsolicited fax, subject to certain exceptions. It could not be clearer, therefore, that the subsection is confined to persons. Therefore, any rules adopted to implement the subsection, are also limited to regulating persons. If an entity is not a person, it is not subject to section 227(b), and it is certainly not subject to rules enacted to implement section 227(b). Sensing the weakness of its argument, the Commission attempts the legal equivalent of a Hail Mary pass: hoping that a reviewing court will find its argument “at least rendered permissible”. It is not. Contrary to the revised order, section 227(b)(2)(H) is not another “requirement” of section 227(b). It states that the Commission “may restrict or limit the number and duration of calls . . . .” Not shall. Not must. May. That means it is not a requirement. Nor could it be. The “requirements” of section 227(b) are set forth in 227(b)(1). Section 227(b)(2), on the other hand, simply guides the Commission’s adoption of administrative rules implementing section 227(b)(1). Administrative rules, of course, are not statutory requirements. Even if the Commission were able to overcome this significant threshold problem regarding the scope of its authority, which is impossible, the rules themselves are contrary to the law. The Budget Act exemption was designed to protect federal agencies and their contractors from liability when they make calls without consent of the called party. The revised order counters that there is “no support” for this statement as there is no legislative history. Wow. If only the Commission would read the text of the law itself, it would understand the purpose. Section 227(b)(1)(A) prohibits persons from using autodialers to “make any call (other than a call made for emergency purposes or made with the prior express consent of the called party)”. To state it another way, only emergency calls or calls made with prior express consent may be made using autodialers. The Budget Act exemption changes that by adding “unless such call is made solely to collect a debt owed to or guaranteed by the United States”. Accordingly, federal agencies and their contractors are no longer required to have prior express consent when they use autodialers to place calls solely to collect a debt. The fact that the Commission is authorized to place reasonable limits on the number and duration of calls does not change the fact that the exemption is from the prior express consent requirement. After all, if callers already have consent to make calls—either from communicating with the borrower, or because the borrower has provided a number and therefore can be contacted for purposes related to the reason for which the number was provided—then there is no need for an exemption.9 Rather, the relief was intended to protect these specific callers when they do not have prior express consent.10 That is, when they misdial a number, when they call a number that, unbeknownst to them, has been reassigned, when they make calls in an attempt to track down the borrower’s current number, when 9 See, e.g., Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Request of ACA International for Clarification and Declaratory Ruling, CG Docket No. 02-278, Declaratory Ruling, 23 FCC Rcd 559, 564, para. 9 (2007) (concluding that the provision of a cell phone number to a creditor, e.g., as a part of a credit application, reasonably evidences prior express consent by the cell phone subscriber to be contacted at that number regarding the debt). 10 See, e.g., Navient Comments at 3 (“We already have consent to autodial nine out of 10 of the federal student loan borrowers whose loans we service today, and they are far more likely to be current. But reaching the remaining 10 percent of borrowers has been challenging, and they are far more likely to default.”). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 57 of 67 PageID 139 Federal Communications Commission FCC 16-99 57 the borrower provided the wrong number by mistake, and so forth. In doing so, Congress determined that the well documented benefits of making these calls outweighed any theoretical privacy concerns.11 Indeed, contrary to the revised order, the fact that Congress permitted the FCC to limit the number and duration of calls—but did not give the Commission authority to limit which numbers may be dialed— shows that Congress expected that, in the process of trying to reach the borrower, some number of calls would be made to people other than the borrower.12 While certain, reasonable limits on the number and duration of such calls may be permissible under the law, the order’s outright prohibition on misdialed calls and calls to entities other than the borrower, as well as the effective ban on calls to reassigned numbers do not “balance” the benefits and concerns as the revised order claims. They run counter to the law.13 The order takes the position that these types of calls are not calls “made solely to collect a debt”. I disagree. To start, that phrase is not ambiguous as the Commission now claims.14 Therefore, it also should not receive deference for any of the limitations that flow from that decision, including the limitations on when calls may be made and who may be called.15 Even if the phrase could somehow be construed by someone as ambiguous, the fact that a caller may have simply reached the wrong person—that is, made a mistake—does not change the fact that the call was placed with the sole purpose of trying to collect a debt. Consider this parallel: if I’m driving to a specific destination and I make a wrong turn along the way, that doesn’t change the fact that I am driving to that destination. Including one free pass for reassigned numbers does nothing to remedy the problem. As many commenters and I have explained, one call frequently will be insufficient to determine that a number has been reassigned. In addition, given that over 100,000 numbers are recycled each day, I expect that a particularly high percentage of numbers will have changed hands between the time that student loan borrowers, for example, take out loans when they start school, when they graduate and actually begin to 11 See also id. at 15 (“Ultimately, Congress prioritized collecting federal debts (and assisting these borrowers in avoiding delinquency and default) over other concerns that would otherwise suggest a need to obtain ‘consent’ from callers for exempted calls.”). 12 See id. (“Congress also afforded the FCC minimal discretion to adopt rules implementing this clear directive: the enabling legislation only permits the Commission to adopt regulations concerning the number and the duration of exempted calls, and only related to exempted calls to a telephone number assigned to a cellular telephone service.”); see id. at 35. 13 See id. at v (“If adopted, the proposals would undoubtedly turn the amendment on its head, essentially requiring callers to obtain ‘prior express consent’ to place calls that are exempt from the ‘prior express consent’ requirements (e.g., by limiting covered calls to only those to telephone numbers provided by the borrower).”). 14 See id. at 15 (“In relatively few words and using clear and concise language, Congress took decisive action to override prior Commission decisions that limited calls to collect federally owned or guaranteed debt.”); Comments of the National Council of Higher Education Resources (NCHER), CC Docket No. 02-278, at 3 (filed June 6, 2016) (NCHER Comments) (“NCHER believes that there is nothing in the Budget Act suggesting a narrow interpretation of what calls are covered. In fact, parsing the individual words of the statute ignores its plain reading that provides an exception for calls that are made for the purpose of collecting a debt and for no other purpose.”). 15 Separately, the order also refuses to address whether Fannie Mae and Freddie Mac loans are “owed to or guaranteed by” the federal government. The order claims that there are not enough facts in the record to decide the question. That ignores detailed filings on the issue. See, e.g., MBA Reply Comments at 3-8; ABA/CBA Comments at 3-6. Similarly, the order is silent as to whether Perkins Loans and HRSA Loans are covered by the exemption, despite filings in the record on the issue. See, e.g., Comments of the Coalition of Higher Education Assistance Organizations, CC Docket No. 02-278, at 2-3 (filed June 6, 2016). Failing to answer these and other questions will only create more uncertainty for both callers and borrowers. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 58 of 67 PageID 140 Federal Communications Commission FCC 16-99 58 repay the loans, and when they finally pay them off.16 In addition, as one commenter points out, “[m]ortgage servicers are required to place calls to the last known phone number of record, even if the borrower is not the current subscriber.”17 This item makes compliance with those requirements illegal. Moreover, nothing in the law limits the relief to calls made to the borrower.18 Perhaps that is because some agencies require contractors to call people other than the borrower. As the item itself notes, the Department of Education requires lenders to contact every “endorser, relative, reference, individual, and entity” identified in the delinquent borrower’s loan file as part of their due diligence efforts.19 Of course, the order falls back on the tired notion that lenders could manually dial these other people. But that is both unworkable, given the number of calls that must be made, and contrary to the intent of the law, which was to enable lenders to use modern dialing equipment as part of their efforts to collect debts on behalf of the federal government.20 Here again, the revised order finds “no support” for this statement and, here again, one need look no further than the statute itself. Section 227(b)(1)(A) sets forth a general prohibition on the use of autodialers, subject to certain exceptions. The Budget Act adds an exemption for calls made solely to collect a debt. Therefore, it is clear on its face that the exemption also enables this class of callers to use autodialers to make debt collection calls.21 If Congress intended that all of these calls be manually dialed, it would not have provided an exemption because manually dialed calls are not subject to the TCPA.22 I suppose the Commission’s next argument will be that section 227(b)(2)(H) gives it authority over manually dialed calls (i.e., non-autodialed calls). But that is no more 16 Navient Comments at vii (“Borrower relationships can last 10 to 20 years or even longer, increasing the need to contact references and other non-borrowers, as well as the potential for the borrower’s number to change or be reassigned over time. Congress was aware of these situations and chose not to carve them out of the exemption.”); see id. at 42. 17 MBA Reply Comments at 13 (citing HAMP Handbook, 2.2.1 (01/06/16) (requiring a minimum of four telephone calls to the last known phone numbers of record, at different times of the day, within 30 day period)). 18 See Navient Comments at 35. 19 See id. at 36 (citing 34 C.F.R. § 682.411(h)). 20 See Nelnet Comments at 3 (“One clear purpose of the Budget Act amendments, then, is to facilitate the repayment of student loan and other debts owed to or guaranteed by the United States as a means of protecting federal assets. Toward that end, the Budget Act amendments are intended to and should authorize use of the full range of communication strategies that the federal government itself would undertake to service and collect its debts, including the use of automated and predictive dialing technology and artificial and prerecorded voice messages to contact borrowers through the communication channels that borrowers prefer (e.g., contact via cell phone calls and text messages).”). 21 Even though it is perfectly clear from the text of the law itself, I also note that the Administration was quite explicit that an intent of the Budget Act exemption was to authorize the use of autodialers. See, e.g., Nelnet Comments at 2 (citing Analytical Perspectives, Budget of the United States Government, Fiscal Year 2016, at 128, available at https://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/spec.pdf) (“The Budget proposes to clarify that the use of automatic dialing systems and prerecorded voice messages is allowed when contacting wireless phones in the collection of debt owed to or granted by the United States. In this time of fiscal constraint, the Administration believes that the Federal Government should ensure that all debt owed to the United States is collected as quickly and efficiently as possible and this provision could result in millions of defaulted debt being collected.”). In addition, a section-by-section summary posted by the House of Representatives states that “Subsection 301(a) amends the Communications Act of 1934 to authorize the use of automated telephone equipment to call cellular telephones for the purpose of collecting debts owed to the United States government.” See Bipartisan Budget Act of 2015 Section-by-Section Summary (last visited Aug. 9, 2016) (emphasis added), available at http://docs.house.gov/meetings/RU/RU00/CPRT-114-RU00-D001.pdf. 22 I continue to oppose the idea, set forth in the TCPA Omnibus Order, that even manually dialed calls may be treated as autodialed calls, unless placed from a rotary telephone, because the equipment could be modified into an autodialer. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 59 of 67 PageID 141 Federal Communications Commission FCC 16-99 59 plausible than asserting authority over non-persons. If a call or caller is outside the scope of the requirements set forth in section 227(b)(1), then the Commission has no authority to regulate them. Moreover, the fact that the law permits the Commission to adopt appropriate limits on the number and duration does not change the fact that the law authorizes the federal government and its contractors to use autodialers in the first instance.23 Nor does the law limit calls made before delinquency is imminent. Indeed, any call to a borrower about the loan should be considered a call made solely to collect the debt. Yet, the order would bar “routine” communications, including calls to remind borrowers about scheduled upcoming payments. The Commission states that it will allow certain calls—ones that “often increase the probability that debts will be more readily collected and that a debtor will avoid delinquency”—but then it prohibits routine or other calls that meet this test. It also limits calls to only 30 days before a qualifying event. The order further restricts the exemption to three call attempts per month. While the law gives the Commission the authority to limit the number of calls, this is far too narrow. The Commission is counting calls that never even go through. How is that supposed to help borrowers get the relief they might need or want? Multiple commenters noted that it can take dozens of call attempts just to reach a borrower, much less help them navigate their loan options. For example:  The Bureau of the Fiscal Service (Fiscal) at the Treasury Department serviced certain student loan debt as part of a two-year pilot program, and it found that borrowers answered Fiscal’s calls less than 2 percent of the time. After one year, the Bureau had obtained live contact with just 33 percent of the borrowers.24  Another commenter noted that its takes “more than 15 call attempts to reach a right point of contact for approximately half of its delinquent federal student loan borrowers, and that for 25 percent of its delinquent federal student loan borrowers, it takes [the company] 40 or more call attempts.”25 Counting call attempts as calls, therefore, will only hurt the people that the Budget Act exemption is trying to help.26 23 I also want to make clear that, contrary to prior misguided Commission orders, predictive dialers are not autodialers. They do not meet the statutory definition because they do not “store or produce numbers to be called, using a random or sequential number generator”. 47 U.S.C. § 227(a)(1)(A) (emphasis added). 24 See Letter from Mark Brennan, Counsel to Navient, to Marlene Dortch, FCC, CC Docket No. 02-278, at 1-2 (filed July 8, 2016) (Navient July 8, 2016 Ex Parte) (citing BUREAU OF THE FISCAL SERVICE, U.S. DEPARTMENT OF THE TREASURY, REPORT ON INITIAL OBSERVATIONS FROM THE FISCAL-FEDERAL STUDENT AID PILOT FOR SERVICING DEFAULTED STUDENT LOAN DEBT (2016), at https://www.treasury.gov/connect/blog/Documents/student-loan-pilot-report-july-2016.pdf); see also Letter from Debra J. Chromy, Education Finance Council, to Marlene Dortch, FCC, CC Docket No. 02-278, at 3 (filed July 18, 2016) (citing the same pilot program and statistics and also noting that, “[p]rior to contacting borrowers, Fiscal attempted to update contact information with a commercially available database.”). 25 Navient Comments at 42-43. 26 See, e.g., NCHER Comments at 1-2 (“Live communication is key to borrowers understanding their rights, and a three call attempt per month restriction will largely nullify meaningful borrower contact. This arbitrary limit will be harmful to millions of federal student loan borrowers who want and need timely and accurate information to better manage their debt to avoid delinquency and default and to rehabilitate their defaulted loans.”); see also id. at 12 (“Unfortunately, far too many borrowers fail to have any meaningful contact with their student loan servicer, and the Commission’s proposed rule will not facilitate such contact, as was intended by the Congress when it passed the Bipartisan Budget Act of 2015.”); see also Nelnet Comments at 14 (“Borrowers are overwhelmingly relieved to (continued….) Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 60 of 67 PageID 142 Federal Communications Commission FCC 16-99 60 Moreover, there is absolutely no justification for the number three other than the fact that some particular commenters liked it. These commenters, however, did not provide any explanation or data to support a three call limit. The Commission can’t make policies based on the number of likes it gets or emojis. It is required to have a rational basis for its decisions, and that is utterly lacking here. The Commission’s laziness stands in sharp contrast to the comments of parties that could actually be impacted by the rules, who provided plenty of reasons and data for choosing a higher number. Chief amongst these is that fact that some are required by federal laws and rules to place more than three calls per month. Commenters summarized these requirements in the filings.27 I attach one such example to this statement so that it is very clear to the public and any reviewing court that the Commission’s decision is arbitrary and capricious.28 Notably, several of these requirements take the form of a minimum number of required calls. In many cases, more calls are needed to actually reach borrowers and help them obtain relief. Here again, commenters stepped up and provided actual data to show how many calls it can take to assist a borrower. For example, one commenter noted that “20 percent of [its] federal student loan borrowers require more than 50 calls to reach a right point of contact. These borrowers would take well over a year to reach under the FCC’s proposal and, during that time, could easily reach default status without having a conversation about their repayment, forbearance, and forgiveness options.”29 In addition, the Consumer Financial Protection Bureau (CFPB), who has informally consulted with the Commission on the Budget Act exemption, just last week proposed rules for the debt collection practices of consumer financial services providers that would be more flexible than the rules that the Commission is about to impose on the federal government and its contractors.30 The proposal would permit up to six total contact attempts per week.31 So even though CFPB knew that the Commission is about to adopt more stringent rules for federal agencies, it nonetheless proceeded to propose less restrictive rules for the private sector. Incredibly, the FCC order before us points to all of the data submitted as a reason not to pick a different number or set of numbers. It says there’s no consensus in the record. Well, perhaps that’s because different agencies have different rules on the number of calls that must be placed. Given the work that commenters did to compile the various provisions, it would not take much for the Commission to review these filings and set different numbers where appropriate. Or it could choose the highest number required by the various federal laws to ensure that no particular type of caller will be left liable for complying with their agency’s rules. Instead, the order simply falls back on the number three. (Continued from previous page) understand their options and to resolve their account, but these solutions only work when servicers are able to reach the borrower.”). 27 See, e.g., MBA Reply Comments at 9-10; Letter from Eric Selk, HOPE NOW Alliance, to Marlene Dortch, FCC, CC Docket No. 02-278, at 2-3 (filed June 20, 2016). 28 See Letter from Mark Brennan, Counsel to Navient, to Marlene Dortch, FCC, CC Docket No. 02-278, at Appendix A (filed July 12, 2016). 29 Navient Comments at 43. 30 Consumer Financial Protection Bureau, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking; Outline of Proposals Under Consideration and Alternatives Considered (July 28, 2016), http://files.consumerfinance.gov/f/documents/20160727_cfpb_Outline_of_proposals.pdf. 31 Id. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 61 of 67 PageID 143 Federal Communications Commission FCC 16-99 61 Of course, if there are other laws that are stricter, in terms of the number of calls, time of day, or other restrictions, then the Commission is not fazed at all by the lack of uniformity. In those instances, the item requires that the most restrictive limit apply. The Commission tries to salvage this mess with a waiver process. Incredibly, even though the Commission has a complete record for deciding appropriate limits now, it is putting the burden back on federal agencies to demonstrate, to a Bureau, that more relief would be appropriate. That is a cowardly attempt to avoid responsibility for implementing the law. In short, the FCC will consider providing relief, but only if: (1) someone else can provide the Commission with political cover to act; and (2) Commissioners are shielded from having to vote on it. In post-adoption edits added to the item in a weak attempt to shore up the three-call-attempt limit and waiver process, the Commission asserts that section 227(b)(2)(H) was added to avoid “open[ing] the floodgates to unwanted robocalls.” However, the federal agency calling requirements summarized in the attached chart, and proposed by the CFPB, hardly constitute a flood. Even consumer advocacy groups have proposed limits that are higher than those adopted in this order.32 The revised order also claims that given “Congress’s enduring goal of limiting the intrusiveness of robocalls, we believe prudence counsels in favor of adopting limits at the lower end of the range”. This claim is wrong on many levels. First, Congress’s primary goal in enacting the TCPA, as evident in both the law and supporting documentation, was to restrict telemarketing calls placed by equipment that would indiscriminately dial random numbers or blocks of numbers at a time.33 Calls by the federal government and its contractors to collect debt are nothing of the sort. The Commission itself has recognized that debt collection calls are informational calls.34 Moreover, nothing in the record suggests that the federal government or its contractors are calling random numbers or blocks of numbers. Indeed, the Treasury Department has said that it not the case,35 and it would be a nonsensical waste of time and resources. Second, three call attempts is the rock bottom of the range, as the attached chart makes clear. Third, setting the limit at three call attempts is far from prudent. As the U.S. Department of Education wrote: “[T]he FCC’s proposal to limit the number of covered calls to three per month per delinquency . . . would not afford borrowers with sufficient opportunity to be presented with options to establish more reasonable payment amounts and avoid default, especially given that the proposal limits the number of initiated calls, even if calls go unanswered.”36 The Department of Education further characterized the three-call-attempt limit as placing “severe limitations” on calls, with “significant downsides to borrowers in terms of the information they need to make sound decisions to manage their debt effectively.”37 32 Navient notes that, “in the context of the Fair Debt Collection Practices Act, NCLC urged the Consumer Financial Protection Bureau to limit calls from debt collectors to three per week.” Navient Comments at 44 (citing APRIL KUEHNHOFF AND MARGOT SAUNDERS, NATIONAL CONSUMER LAW CENTER, DEBT COLLECTION COMMUNICATIONS: PROTECTING CONSUMERS IN THE DIGITAL AGE 4 (June 2015), available at http://bit.ly/1LQxpDK.). 33 See also Navient Comments at 15. 34 See, e.g., Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Report and Order, 27 FCC Rcd 1830, 1841, para. 28 (2012) (declining to require that prior express consent for non-telemarketing, informational calls, including debt collection calls, be provided in writing, as is the case for telemarketing calls). 35 See supra page 1 and note 3 (“Debt collectors are not using autodialers to cold call potential customers, but are instead using autodialers to contact individuals who have an existing relationship or indebtedness.”). 36 Letter from Ted Mitchell, United States Department of Education to Marlene Dortch, FCC, CC Docket No. 02- 278, at 4 (filed July 11, 2016) (Department of Education Ex Parte). 37 Id. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 62 of 67 PageID 144 Federal Communications Commission FCC 16-99 62 The revised order further states that “[n]othing in the Budget Act indicates that Congress intended to depart from that goal.” But that, again, ignores the fact that the Budget Act is proof in and of itself. If the Commission had taken a prudent course in interpreting the TCPA, then there would have been no need for a Budget Act exemption to the Commission’s rules. Instead, the Commission’s interpretations of the TCPA were so unworkable that the Administration and Congress took the momentous step of overruling the Commission to authorize this specific class of callers to use autodialers without prior express consent to collect debt.38 By adopting limitations that are the same as those that apply to other callers (or even more restrictive as compared to other federal agency or contractor calls or texts), the Commission brazenly ignores the rebuke and guts the exemption. Far from preventing “abuse and harassment”,39 the order would curtail expected and desired communications and chill speech.40 In addition, the revised order attempts to justify its specious waiver process by acknowledging that it lacks expertise regarding other federal laws and rules. I agree that the FCC is not the expert agency, but that is why the law directs the Commission to consult with the Treasury Department. And it is why the Commission should have heeded the comments of the Department of Education, which is the expert agency with respect to its loans, stating that covered calls should not be limited to three per month. Instead, agencies will be subject to a waiver process, in which evidence presented by an expert agency “demonstrat[ing] . . . that a genuine conflict exists” will be merely “probative” of the need for a waiver. Moreover, agencies are on notice that the Bureau will also “consider any countervailing issues raised in the record” including whether the rules “necessarily require robocalls instead of, say, manual calls.” Additionally, the Commission makes no commitment that the Bureau will rule on any such requests in a timely fashion. In short, the waiver process is cold comfort to any agency that thought it would get a fair shake from this Commission. In reality, it is nothing more than a thinly veiled and wholly inadequate attempt to fend off additional complaints from the Administration and to survive judicial review. Finally, I object to the conclusion that consumers can stop calls altogether. The order claims that “once a borrower has declared that he or she no longer wishes to receive these calls, there is no longer any reason for the calls to continue.” That’s flat out wrong. The reason the calls must continue is so that the federal government can collect its debts. That is the ultimate purpose of the Budget Act provision.41 While I am glad that the law also enables servicers to contact borrowers to offer relief before a loan ever becomes delinquent or enters default, should that occur, the government must be able to protect its financial interests, including by contacting debtors until the debt is paid or otherwise resolved to the government’s satisfaction. 38 See, e.g., Nelnet Comments at 2 (citing Analytical Perspectives, Budget of the United States Government, Fiscal Year 2016, at 128, available at https://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/spec.pdf) (“The Budget proposes to clarify that the use of automatic dialing systems and prerecorded voice messages is allowed when contacting wireless phones in the collection of debt owed to or granted by the United States. In this time of fiscal constraint, the Administration believes that the Federal Government should ensure that all debt owed to the United States is collected as quickly and efficiently as possible and this provision could result in millions of defaulted debt being collected. While protections against abuse and harassment are appropriate, changing technology should not absolve these citizens from paying back the debt they owe their fellow citizens.”). 39 Id. 40 See Navient Comments at 39-41 (raising First Amendment concerns about certain restrictions). 41 See, e.g., MBA Reply Comments at 13, 14 (“Creating a ‘stop calling’ right to receive covered calls frustrates the purpose of the Exemption and threatens to deprive consumers of important, beneficial calls. . . . Congress did not create a ‘stop calling’ right within the Exemption nor did it authorize the Commission to create such a right. In fact, creating a “stop calling” right would substantively repeal, not implement, the Budget Act Amendment.”). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 63 of 67 PageID 145 Federal Communications Commission FCC 16-99 63 In the end, the order simply ignores the costs to consumers and the economy when these calls are not made, as well as the benefits when they are. As one Treasury Department official highlighted, Delinquencies are reported to the private credit bureaus and can inhibit a borrower’s access to future credit for buying a home, starting a business, or completing or furthering education. Borrowers may also have a portion of their wages taken directly from their paychecks. In other words, they may disengage from personal and professional development, and may drop into the ranks of those preyed upon by scams. Additionally, the fresh start afforded by bankruptcy is not available for student loan debt, unless student loan debtors mount a case that proves undue hardship. Given the weight of these and all the consequences I’ve discussed, as well as the importance of higher education in our nation’s prosperity, it is imperative that we structure an effective servicing and collection regime focused on helping borrowers avoid default and delinquency.42 Moreover, as the Department of Education wrote: The consequences of default on a federal student loan are indeed severe, and effective communication to borrowers by their loan servicers before default is critical to helping borrowers avoid those consequences. Defaulted borrowers are subject to offset of federal and state payments (including tax refunds and Social Security benefit payments) under the Treasury Offset Program, administrative wage garnishment, reporting of the default to credit reporting agencies, ineligibility for additional student loans, and potentially a civil judgment. Given these consequences, some of which are only available to collect on debts owed to the federal government, it seems appropriate to weigh the cost of a potentially unwanted phone call against garnishing the wages of a borrower who could have been enrolled in an income-driven repayment plan. When callers do reach borrowers, however, borrowers get the information and relief that they need. As one commenter noted: “More than 90 percent of the time that we have a live conversation with a federal loan borrower, we are able to resolve a loan delinquency.”43 Rather than facilitate these critical conversations, the order would chill them. Countless consumers will see their credit ruined for want of a phone call or text. Companies working for the federal government will face predatory lawsuits. And the federal government still won’t be able to collect its debts. That is contrary to the law and detrimental to all parties involved. I cannot support it. 42 Remarks of Deputy Secretary Raskin on Student Loans at the National Consumer Law Center's Annual Consumer Rights Litigation Conference (Nov. 6, 2014), https://www.treasury.gov/press-center/press- releases/Pages/JL2689.aspx. See also ABA/CBA Comments at 2 (“Communications between a borrower and lender may help the borrower prevent missed payments, minimize negative impacts to a borrower’s credit report, take advantage of loan modification or other workout programs, and avoid default. Successful loan workouts and other foreclosure alternatives also reduce credit risk and financial losses to the United States, helping taxpayers recoup the $139.3 billion of delinquent debt owed to or guaranteed by the United States. Using efficient dialing technology to communicate with borrowers enables more contacts and important conversations to occur with fewer personnel, reducing the cost of servicing and collections. This, in turn, promotes the affordability and availability of consumer credit.”); Reply Comments of Nelnet, Inc., CC Docket No. 02-278 (filed June 21, 2016) (summarizing comments filed by multiple parties showing the costs to consumers when calls are not made and the benefits when they are). 43 Navient Comments at 6; see also id. at 2 (“If we are able to speak to a borrower in real-time, we can counsel the borrower on the more than 16 repayment options—some of which involve monthly payments as low as $0 per month—or the 32 deferment, forbearance and forgiveness options available to the borrower.”); see also id. at 7-8 (“Conversely, 90 percent of borrowers who default on their federal student loans do not have a live telephone conversation with us, despite our efforts to reach them.”). Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 64 of 67 PageID 146 Federal Communications Commission FCC 16-99 64 Finally, I do respect that the Commission must issue an order to comply with the Budget Act. My vote to dissent is not a vote against complying with the law. Rather, given that the Chairman has secured the necessary votes to approve this item and move it forward, my particular vote line does not impact whether the agency is in compliance with the law. Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 65 of 67 PageID 147 Federal Communications Commission FCC 16-99 65 Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 66 of 67 PageID 148 Federal Communications Commission FCC 16-99 66 Case 8:16-cv-03396-JSM-MAP Document 17-3 Filed 03/23/17 Page 67 of 67 PageID 149