The opinion is based on the Court’s statutory interpretation of the Junk Fax Protection Act of 2005 (the “Act”). After examining the relevant language of the Act, which prohibits the sending of unsolicited fax advertisements, and contains an exception allowing certain unsolicited fax advertisements, provided they contain an appropriate opt-out notice, the Court found that the text of the Act provided a “clear answer” to the question of the FCC’s jurisdiction with regard to solicited fax advertisements. In particular, according to the Court of Appeals: “Congress has not authorized the FCC to require opt-out notices on solicited fax advertisements. And that is all we need to know to resolve this case.” As such, the Court of Appeals did not need to give deference to the FCC’s decision, pursuant to Chevron U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 & n. 9 (1984).

The Court rejected the FCC’s reasoning that its authority to regulate solicited faxes derived from its authority to define the phrase “prior express permission” in the Act. The FCC had reasoned that because it reasonably defined the term “prior express permission” to mean that such permission lasted only until revoked, it was also within the FCC’s authority to require that all fax advertisements contain a means to revoke that permission. The Court found this argument illogical and unpersuasive.

The Court further rejected the FCC’s view that it could take any action, so long as Congress had not prohibited such action. “That theory has it backwards … The FCC may only take action that Congress has authorized.” (emphasis in original).

Finally, the Court rejected the FCC’s position that requiring opt-out notices for all fax advertisements was “good policy.” The Court stated: “The fact that the agency believes its Solicited Fax Rule is good policy does not change the statute’s text.”

After the decision was released, both Chairman Pai and Commissioner O’Rielly (both of whom dissented from the order) praised the decision and pledged that future FCC decisions would adhere to the limits of the Commission’s statutory authority.

In sum, this is good news for companies facing TCPA class actions based on the failure to include opt-out language in fax communications. The D.C. Circuit Court of Appeals has confirmed that if a fax recipient has consented to receive the fax in question, the FCC may not require companies to include specific language in the facsimile (i.e., an opt-out provision). Moreover, because the ruling concludes that the FCC has no jurisdiction over solicited faxes, other regulations applicable to such faxes would be foreclosed as well.

The order expressly rejects the assertion that the FCC lacks the authority to implement the opt-out notice rule and clarifies that the TCPA is in fact the basis for the rule. The Commission also found that fax ads that “comply substantially” with the rule will not allow the sender to avoid liability for a violation. As justification for its finding that the opt-out notice requirements apply to all fax advertisements, including those sent with the prior express consent of the recipient, the Commission explained “absent a requirement to include an opt-out notice on fax ads sent with prior express permission, recipients could be confronted with a practical inability to make senders aware that their consent is revoked.” The order also noted that the opt-out notice requirement is consistent with the FCC’s implementation of the TCPA in other areas, including robocalls.

The Commission recognized, however, that “inconsistency between a footnote contained in [an order amending the rules concerning fax transmissions] and the [opt-out notice] rule caused confusion or misplaced confidence regarding the applicability of this requirement to faxes sent to those recipients who provided prior express permission.” Specifically, the footnote in question states that the requirement applies only to “unsolicited” fax ads, and many senders have construed this to mean that the opt-out notice was only required on faxes sent without the recipient’s prior express permission. This confusion “left some businesses potentially subject to significant damage awards under the TCPA’s private right of action or possible Commission enforcement.” In light of this recognition, the Commission determined that “granting a retroactive waiver [of the requirement] would serve the public interest.” As such, the petitioners are not subject to liability for “inadvertent violations” of the rule leading up to the order and have an additional six months to come into compliance with it. Similarly situated parties may petition the Commission for a waiver as well, and are also beneficiaries of the six-month grace period for compliance.

Because the FCC resolved this issue via a waiver, individual parties facing the issue would be advised to seek their own waivers as well. We expect to see a second wave of such petitions arriving in the near future.