Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-13-01059/USCOURTS-caDC-13-01059-0/pdf.json

Parties Involved:
AT&T, Inc.
Intervenor for Respondent
Federal Communications Commission
Respondent
Illinois Public Telecommunications Association
Petitioner
United States of America
Respondent
Verizon
Intervenor for Respondent

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 4, 2014 Decided June 13, 2014

No. 13-1059

ILLINOIS PUBLIC TELECOMMUNICATIONS ASSOCIATION,

PETITIONER

v.

FEDERAL COMMUNICATIONS COMMISSION AND UNITED 

STATES OF AMERICA,

RESPONDENTS

AT&T, INC. AND VERIZON,

INTERVENORS

Consolidated with 13-1083, 13-1149

On Petitions for Review of an Order of

the Federal Communications Commission

Michael W. Ward argued the cause for petitioners Illinois 

Public Telecommunications Association and Payphone 

Association of Ohio, Inc. Keith J. Roland argued the cause 

for petitioner Independent Payphone Association of New 

York. With them on the briefs were Albert H. Kramer, 

Donald J. Evans, and Daniel S. Blynn.

USCA Case #13-1059 Document #1497401 Filed: 06/13/2014 Page 1 of 20
2

Sarah E. Citrin, Counsel, Federal Communications 

Commission, argued the cause for respondents. With her on 

the brief were William J. Baer, Assistant Attorney General, 

U.S. Department of Justice, Robert B. Nicholson and Shana 

M. Wallace, Attorneys, Suzanne M. Tetreault, Deputy General 

Counsel, Federal Communications Commission, Jacob M. 

Lewis, Associate General Counsel, and Richard K. Welch, 

Deputy Associate General Counsel. Joel Marcus, Attorney, 

Federal Communications Commission, entered an 

appearance.

Aaron M. Panner argued the cause for intervenors. With 

him on the brief were Gary L. Phillips, Michael E. Glover, 

and Christopher M. Miller. 

Before: KAVANAUGH and WILKINS, Circuit Judges, and 

SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge

KAVANAUGH.

KAVANAUGH, Circuit Judge: Once upon a time, the only 

way to call home from a roadside rest stop or neighborhood

diner was to use a payphone. Some payphones were owned 

by independent payphone providers. Other payphones were 

owned by Bell Operating Companies. The Bell Operating 

Companies also happened to own the local phone lines. To 

ensure fair competition in the payphone market, Congress 

prohibited Bell Operating Companies from exploiting their 

control over the local phone lines to discriminate against other 

payphone providers in the upstream payphone market. 

Specifically, Congress prohibited Bell Operating Companies 

from subsidizing their own payphones or charging 

discriminatory rates to competitor payphone providers. See 

47 U.S.C. § 276. This case concerns the remedies available 

USCA Case #13-1059 Document #1497401 Filed: 06/13/2014 Page 2 of 20
3

for violations of that prohibition – in particular, whether 

independent payphone providers who were charged excessive 

rates by Bell Operating Companies are entitled to refunds or 

instead are entitled only to prospective relief in the form of 

lower rates. 

We conclude that Congress granted discretion to the 

Federal Communications Commission to determine whether 

refunds would be required in those circumstances and that the 

Commission reasonably exercised that discretion here.

I

Petitioners are trade associations representing 

independent payphone providers in Illinois, New York, and 

Ohio. Since the mid-1980s, independent payphone providers 

have competed with Bell Operating Companies in the 

consumer payphone market. At first, Bell Operating 

Companies had a built-in advantage. In addition to operating

some payphones, Bell Operating Companies owned the local 

phone lines that provide service to all payphones. An 

independent payphone provider was thus “both a competitor 

and a customer” of the local Bell Operating Company. Davel 

Communications, Inc. v. Qwest Corp., 460 F.3d 1075, 1081 

(9th Cir. 2006). And that Bell Operating Company could 

exploit its control over the local phone lines by charging

lower service rates to its own payphones or higher service 

rates to independent payphone providers. See New England 

Public Communications Council, Inc. v. FCC, 334 F.3d 69, 

71 (D.C. Cir. 2003). 

To prevent unfair competition in the payphone market, 

Congress included a payphone services provision in the 

Telecommunications Act of 1996. See Pub. L. No. 104-104, 

§ 151(a), 110 Stat. 56, 106. That provision, codified as a new 

USCA Case #13-1059 Document #1497401 Filed: 06/13/2014 Page 3 of 20
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Section 276 of the Communications Act of 1934, states that a 

Bell Operating Company may not “subsidize its payphone 

service directly or indirectly” or “prefer or discriminate in 

favor of its payphone service.” 47 U.S.C. § 276(a). To 

implement those statutory proscriptions, Congress directed

the FCC to prescribe regulations governing Bell Operating 

Company rates. See id. § 276(b)(1)(C). And to ensure that 

state laws would not undermine the statutory proscriptions, 

Congress provided that “[t]o the extent that any State 

requirements are inconsistent with the Commission’s 

regulations, the Commission’s regulations on such matters 

shall preempt such State requirements.” Id. § 276(c).1 

The FCC and the payphone industry have traveled a long 

and winding road in implementing Section 276. We recount 

here only those developments relevant to this case.

2

 

In 1996, the FCC issued an initial set of orders

implementing Section 276. Those orders required Bell 

Operating Companies to file tariffs demonstrating that the 

rates they charged to independent payphone providers

complied with the requirements of Section 276. The FCC

directed Bell Operating Companies to file those tariffs with 

state regulatory commissions by January 1997. The FCC

 1 The full text of Section 276 is reprinted as an appendix to this 

opinion. 2 Our prior Section 276 cases describe the implementation of 

the provision in greater detail. See AT&T Corp. v. FCC, 363 F.3d 

504 (D.C. Cir. 2004); New England Public Communications 

Council, Inc. v. FCC, 334 F.3d 69 (D.C. Cir. 2003); Global 

Crossing Telecommunications, Inc. v. FCC, 259 F.3d 740 (D.C. 

Cir. 2001); American Public Communications Council v. FCC, 215 

F.3d 51 (D.C. Cir. 2000); MCI Telecommunications Corp. v. FCC, 

143 F.3d 606 (D.C. Cir. 1998); Illinois Public Telecommunications 

Association v. FCC, 117 F.3d 555 (D.C. Cir. 1997).

USCA Case #13-1059 Document #1497401 Filed: 06/13/2014 Page 4 of 20
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directed the state regulatory commissions to review the tariffs 

for compliance with Section 276 based on a pricing standard

known as the “new services test.” State commissions that 

were unable to review the tariffs could order Bell Operating 

Companies in their states to instead file tariffs with the FCC. 

See Order on Reconsideration, Implementation of the Pay 

Telephone Reclassification and Compensation Provisions of 

the Telecommunications Act of 1996, 11 FCC Rcd. 21,233, 

21,308 ¶ 163 (1996); Report and Order, Implementation of the 

Pay Telephone Reclassification and Compensation Provisions 

of the Telecommunications Act of 1996, 11 FCC Rcd. 20,541, 

20,614-15 ¶¶ 146, 147 (1996). 

In Wisconsin, independent payphone providers 

challenged the rates charged by Bell Operating Companies as

unlawful under Section 276. In 2002, in response to the 

Wisconsin litigation, the FCC issued additional guidance on 

the pricing standard that state commissions must apply in 

determining whether Bell Operating Company rates comply

with Section 276. See Order Directing Filings, Wisconsin 

Public Service Commission, 17 FCC Rcd. 2051, 2065-71 

¶¶ 43-65 (2002). The FCC’s new guidance led a number of

states to conclude that Bell Operating Companies had been 

charging excessive rates. Bell Operating Companies in those 

states thus had to (and did) reduce their rates going forward. 

But the independent payphone providers sought more than 

just prospective relief. They argued that they were entitled to

refunds dating back to 1997. Some state regulatory 

commissions and courts agreed and granted full refunds. 

Other states granted partial refunds. Some states granted no 

refunds. See Declaratory Ruling and Order, Implementation 

of the Pay Telephone Reclassification and Compensation 

Provisions of the Telecommunications Act of 1996, 28 FCC 

Rcd. 2615, 2621 ¶ 11 & n.37 (2013) (Refund Order).

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Three state proceedings are relevant here. In Illinois, the 

state commission and state courts declined to order refunds 

primarily because of the filed-rate doctrine, which prohibits

retroactive revisions to rates that a government regulatory 

body has approved. See Illinois Public Telecommunications 

Association v. Illinois Commerce Commission, No. 1-04-0225 

(Ill. App. Ct. Nov. 23, 2005). In New York, the state 

commission and state courts have thus far declined to grant 

refunds but have left the question open pending resolution of 

the independent payphone providers’ petition in this case. See

Independent Payphone Association of New York, Inc. v. 

Public Service Commission of New York, 774 N.Y.S.2d 197 

(N.Y. App. Div. 2004). And in Ohio, the state commission 

awarded partial refunds but the state commission and state 

courts denied the request for refunds back to 1997 based on 

the filed-rate doctrine and state procedural grounds. See

Payphone Association of Ohio v. Public Utilities Commission 

of Ohio, 849 N.E.2d 4 (Ohio 2006).

Having failed to gain retrospective relief through state 

regulatory or judicial proceedings, independent payphone 

providers from Illinois, New York, and Ohio sought a 

declaratory ruling from the FCC. See 47 C.F.R. § 1.2 

(authority to issue declaratory rulings). They asked the 

Commission to declare that Section 276 created an absolute 

entitlement to refunds dating back to 1997 and that the state 

commissions and courts had violated federal law by denying 

relief. The Commission rejected that position. After 

considering the text, history, and purpose of Section 276, the 

Commission concluded that states “may, but are not required 

to, order refunds” for periods dating back to 1997 in which a 

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Bell Operating Company did not have compliant rates in 

effect. Refund Order, 28 FCC Rcd. at 2639 ¶ 47.

3

 

The independent payphone providers filed petitions for 

review in this Court. See 28 U.S.C. § 2342(1); 47 U.S.C. 

§ 402(a). We assess the FCC’s ruling under the 

Administrative Procedure Act. We must determine whether 

the decision was “arbitrary, capricious, an abuse of discretion, 

or otherwise not in accordance with law.” 5 U.S.C. 

§ 706(2)(A). 

II

The independent payphone providers challenge the 

FCC’s decision on three primary grounds. They contend that 

the Refund Order violates Section 276(a), violates Section 

276(c), and constitutes an arbitrary and capricious exercise of 

the FCC’s discretion. We consider those arguments in turn. 

A

The independent payphone providers first contend that 

the FCC’s Refund Order unambiguously violates Section 

276(a). That provision says that a Bell Operating Company 

“shall not subsidize its payphone service directly or indirectly 

from its telephone exchange service operations or its 

 3 The dispute here concerns only retrospective relief. As the 

FCC noted, “no party to this proceeding is contending today that 

the payphone line rates are currently out of compliance with” 

Section 276 “or otherwise inconsistent with federal law; rather, the 

sole question is whether certain states improperly denied refunds.” 

Declaratory Ruling and Order, Implementation of the Pay 

Telephone Reclassification and Compensation Provisions of the 

Telecommunications Act of 1996, 28 FCC Rcd. 2615, 2635 ¶ 41 

(2013) (Refund Order).

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exchange access operations” and “shall not prefer or 

discriminate in favor of its payphone service.” 47 U.S.C. 

§ 276(a). In the independent payphone providers’ view, 

Section 276(a) establishes an absolute entitlement to refunds 

for periods in which the statute was violated. 

The problem for the independent payphone providers is 

that Congress said nothing of the sort. In cases where a Bell 

Operating Company violates the proscriptions established by 

Section 276(a), the statute does not say whether only 

prospective relief is in order, or whether retrospective relief is

also required. In particular, Section 276(a) does not say that 

refunds are required, or that refunds are not required, or 

anything at all about refunds. Rather, as this Court has 

previously recognized, Section 276(a) is “silent regarding the 

mechanism the FCC should adopt to ensure that the statute’s 

requirements are carried out.” Global Crossing 

Telecommunications, Inc. v. FCC, 259 F.3d 740, 744 (D.C. 

Cir. 2001). 

Section 276(a)’s silence on refunds is telling given that 

Congress has expressly specified refund remedies in other 

sections of the Communications Act of 1934 and related 

statutes. See 47 U.S.C §§ 228(f)(1), 543(c)(1)(C); see also

15 U.S.C. § 5711(a)(2)(I). Indeed, several of those provisions 

originated in statutes enacted shortly before the 

Telecommunications Act of 1996, an indication that Congress 

in 1996 was fully capable of specifying a refund remedy when 

it wanted to require one. See Telephone Disclosure and 

Dispute Resolution Act, § 101, Pub. L. No. 102-556, 106 Stat. 

4181, 4185 (1992); Cable Television Consumer Protection 

and Competition Act of 1992, § 3(a), Pub. L. No. 102-385, 

106 Stat. 1460, 1468. Congress’s decision not to include a 

refund remedy in Section 276 thus suggests that it intended to 

leave remedial discretion with the Commission. That 

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interpretation is consistent with the general principle that 

agencies ordinarily have wide discretion to shape remedies for 

statutory violations. See AT&T Co. v. FCC, 454 F.3d 329, 

334 (D.C. Cir. 2006).

In sum, Section 276(a) does not speak to the refund 

question. And one of the first principles of administrative law 

is that “if the statute is silent or ambiguous with respect to the 

specific issue,” the only question for the court is whether the 

agency’s interpretation of that statute is reasonable. City of 

Arlington v. FCC, 133 S. Ct. 1863, 1868 (2013) (quoting 

Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 843 (1984)). 

Whatever the policy virtues of the independent payphone 

providers’ position, we will not read into the statute a 

mandatory provision that Congress declined to supply. See

ANTONIN SCALIA & BRYAN A. GARNER, READING LAW: THE 

INTERPRETATION OF LEGAL TEXTS 93 (2012) (omitted-case 

canon). We instead conclude that FCC has discretion to fill 

Section 276’s gap with a reasonable approach to the refund 

question. Cf. Global Crossing, 259 F.3d at 744-45; Illinois 

Public Telecommunications Association v. FCC, 117 F.3d 

555, 567-68 (D.C. Cir. 1997). And for reasons explained in 

greater depth below, the Commission’s decision was

reasonable.4

 4 In their reply brief, the independent payphone providers 

contend that the FCC’s discretion is constrained by Section 206 of 

the Communications Act, which provides that a carrier violating the 

Act “shall be liable to the person or persons injured thereby for the 

full amount of damages sustained.” 47 U.S.C. § 206. By failing to 

raise this issue until their reply brief, the independent payphone 

providers forfeited the argument. We therefore do not consider it. 

See Lake Carriers’ Association v. EPA, 652 F.3d 1, 10 n.9 (D.C. 

Cir. 2011).

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B

The independent payphone providers next contend that 

the Refund Order contravenes Section 276(c). That provision 

says that “[t]o the extent that any State requirements are 

inconsistent with the Commission’s regulations, the 

Commission’s regulations on such matters shall preempt such 

State requirements.” 47 U.S.C. § 276(c). The independent 

payphone providers argue that the FCC’s 2013 Refund Order

permits refunds dating back to April 1997, and that any state 

decision denying refunds is “inconsistent with the 

Commission’s regulations” and preempted. Id.

That argument rests on a misreading of the FCC’s Refund 

Order. The Commission repeatedly explained that states 

“may, but are not required to, order refunds” for any period in 

which Bell Operating Companies charged non-compliant 

rates. Refund Order, 28 FCC Rcd. at 2639 ¶ 47 (emphases 

added); see id. at 2636 ¶ 42 n.178 (same); id. at 2640 ¶ 49 

(same). Put differently, the fact that states may order refunds 

does not mean that states must order refunds. Therefore, a 

state commission or state court decision that considers a 

Section 276 claim and denies refunds – as happened in the 

three states at issue here – is not inconsistent with the FCC’s

regulations and is not preempted. See id. at 2634-35 ¶¶ 40-

41. That conclusion is further buttressed by the deference that 

this Court affords to the FCC’s reasonable interpretations of 

its own regulations. See Auer v. Robbins, 519 U.S. 452, 461 

(1997); Global Crossing, 259 F.3d at 746. 

In a twist on their Section 276(c) preemption argument, 

the independent payphone providers contend that the FCC’s 

reliance on state refund determinations constitutes an 

unlawful subdelegation of federal authority to the States. As 

an initial matter, states do not require any subdelegation of 

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authority from the FCC to adjudicate federal statutory claims. 

In our federal system, state tribunals have the constitutional 

authority and duty to apply federal statutes and determine 

statutorily appropriate remedies. See U.S. Const. art. VI, cl.

2; Burt v. Titlow, 134 S. Ct. 10, 15 (2013) (“State courts are 

adequate forums for the vindication of federal rights.”);

Tafflin v. Levitt, 493 U.S. 455, 470 (1990) (Scalia, J., 

concurring) (“As Congress made no provision concerning the 

remedy, the federal and the state courts have concurrent 

jurisdiction.”) (alteration omitted). Indeed, the independent 

payphone providers do not contest the FCC’s decision to have 

state regulatory commissions determine whether Bell 

Operating Company rates comply with Section 276 in the first 

instance. See Oral Arg. at 3:41-4:07. They object only to the 

FCC’s decision not to override state decisions denying 

refunds in particular cases. But Congress said nothing about

who should decide whether to award refunds for violations of 

Section 276. That statutory silence sets this case apart from 

United States Telecom Association v. FCC, 359 F.3d 554 

(D.C. Cir. 2004), the leading example of an unlawful 

subdelegation relied upon by the independent payphone 

providers. In the statutory provision at issue in that case,

Congress had expressly directed “the Commission” to make 

certain determinations. 359 F.3d at 565 (emphasis added). 

As the FCC correctly explained here, “Nothing in section 276

requires that the Commission be the arbiter of specific refund 

disputes.” Refund Order, 28 FCC Rcd. at 2635 ¶ 41. We 

therefore reject the subdelegation claim.

C

Because the FCC’s interpretation in the Refund Order is 

not inconsistent with Section 276(a) or Section 276(c), the 

only remaining question is whether the Commission’s 

approach was arbitrary or capricious. See Chevron, 467 U.S. 

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at 844. That is not a high bar for the FCC to clear. As this 

Court explained in another Section 276 case: “Although the 

enforcement regime chosen by the Commission may not be 

the only one possible, we must uphold it as long as it is a 

reasonable means of implementing the statutory 

requirements.” Global Crossing, 259 F.3d at 745. 

Here, the FCC readily satisfied that deferential standard. 

The Commission reasonably concluded that “states, as part of 

their tariff review responsibilities, are well-positioned to 

resolve refund disputes arising from the tariffs they review.” 

Refund Order, 28 FCC Rcd. at 2636 ¶ 42. The FCC

recognized that it was not adopting a “single, federal policy” 

governing refunds and that some state-to-state variation 

would naturally result. Id. at 2636 ¶ 42 n.178; see id. at 2640 

¶ 48. Moreover, an independent payphone provider can opt 

for a federal decisionmaker by suing a Bell Operating 

Company for a Section 276 violation in federal court. See 47 

U.S.C. § 207. And of course, a party who believes that a state 

court has misapplied federal law can ultimately seek review 

of the state court judgment in the U.S. Supreme Court. See

U.S. Const. art. III, §§ 1, 2; 28 U.S.C. § 1257. The Illinois 

independent payphone providers unsuccessfully sought to do 

just that. See 549 U.S. 1205 (2007) (denying certiorari). 

The independent payphone providers contend that the 

FCC’s approach is arbitrary and capricious because it leads to 

refund determinations that vary from state to state. But there 

is nothing inherently arbitrary or capricious about state-tostate variation, especially in the administration of a statute 

based in part on cooperative federalism – that is, a statute that 

relies in part on states to implement federal law. See

generally Heather K. Gerken, Federalism as the New 

Nationalism: An Overview, 123 YALE L.J. 1889 (2014); Abbe 

R. Gluck, Our [National] Federalism, 123 YALE L.J. 1996 

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(2014). As this Court has explained, the Communications Act 

establishes a “system of dual state and federal regulation over 

telephone service” that recognizes states’ traditional role in 

the rate regulation process. New England Public 

Communications Council, Inc. v. FCC, 334 F.3d 69, 75 (D.C. 

Cir. 2003) (quoting Louisiana Public Service Commission v. 

FCC, 476 U.S. 355, 360 (1986)); see 47 U.S.C. §§ 151, 

152(b); see also City of Rancho Palos Verdes v. Abrams, 544 

U.S. 113, 128 (2005) (Breyer, J., concurring)

(Communications Act based on “cooperative federalism” 

framework). The Act authorizes the FCC to preempt state 

law in certain areas, and the FCC has exercised that authority 

by requiring states to review Bell Operating Company tariffs 

under a uniform national pricing standard. See New England 

Public, 334 F.3d at 75-78. But there is nothing arbitrary or

capricious about the FCC’s decision not to further exercise its 

preemptive power to dictate a uniform national answer to the 

refund question, especially given the backdrop of state 

involvement in the ratemaking process. Cf. Batterton v. 

Francis, 432 U.S. 416, 430 (1977) (federal agency can defer 

to local definition of “unemployment” in administering joint 

federal-state welfare program).

The independent payphone providers object in particular 

to states’ invocation of the filed-rate doctrine – the prohibition 

on retroactively changing approved rates. But the filed-rate 

doctrine has long been “a central tenet of telecommunications 

law,” so it hardly seems unreasonable or arbitrary for the FCC 

to allow states to invoke that doctrine. TON Services, Inc. v. 

Qwest Corp., 493 F.3d 1225, 1236 (10th Cir. 2007); see

Arizona Grocery Co. v. Atchison, Topeka & Santa Fe Railway 

Co., 284 U.S. 370, 390 (1932). Moreover, the filed-rate 

doctrine does not present an insuperable barrier to refunds or 

otherwise negate the FCC’s position that refunds are 

permitted in individual cases. Indeed, the FCC expressly 

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recognized that several states have granted refunds 

notwithstanding the filed-rate doctrine. See Refund Order, 28 

FCC Rcd. at 2640 ¶ 48 (citing Indiana and South Carolina

commission decisions).

In sum, we see nothing unreasonable about how the FCC 

filled the statutory gap and exercised its discretion.

III

As an alternative, the independent payphone providers 

have sought refunds through a less direct route. They asked 

the FCC to order Bell Operating Companies to disgorge 

certain payments that those companies had received from 

long-distance carriers (not from independent payphone 

providers). The independent payphone providers would not 

benefit directly from such a disgorgement order. But they 

believed that such an order would induce Bell Operating 

Companies to pay refunds to the independent payphone

providers as a way to avoid complying with the disgorgement 

order. The FCC declined to issue the requested order. The 

independent payphone providers renew the claim in this 

Court. But they lack Article III standing to pursue their claim 

in this Court.

In Section 276, Congress ordered the FCC to “establish a 

per call compensation plan to ensure that all payphone service 

providers are fairly compensated for each and every 

completed intrastate and interstate call using their payphone.” 

47 U.S.C. § 276(b)(1)(A). That provision responded to the 

development of long-distance access codes and 800 numbers 

that allowed callers to use payphones without depositing 

coins, thereby depriving payphone operators of revenue. The 

FCC issued a rule requiring the long-distance carriers who 

benefited from such “dial-around” calls to compensate 

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payphone providers. Sprint Communications Co. v. APCC 

Services, Inc., 554 U.S. 269, 271-72 (2008); see also 47 

U.S.C. § 226; 47 C.F.R. § 64.1300. 

Of relevance here, the FCC stated that the eligibility of

Bell Operating Companies to receive “dial-around”

compensation from long-distance carriers depended on the 

Bell Operating Companies’ compliance with Section 276. 

See Refund Order, 28 FCC Rcd. at 2633-34 ¶ 38. Bell 

Operating Companies, believing their rates compliant with 

Section 276, began collecting dial-around compensation from 

long-distance carriers in 1997. But as explained above, some 

states later concluded that Bell Operating Companies’ rates 

had not actually been compliant with Section 276 in the

several years after 1997. The independent payphone 

providers asked the FCC to order Bell Operating Companies 

to forfeit the payments they had received from the longdistance carriers during those years to the Government. The 

Commission declined to issue such an order. See id. at 2633-

34 ¶ 38 n.161.

We do not reach the merits of the independent payphone 

providers’ petitions for review on that issue because they lack 

Article III standing to challenge that aspect of the 

Commission’s decision. To establish standing, the 

independent payphone providers must show an injury-in-fact 

caused by the Commission’s conduct and redressable by this 

Court. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-

61 (1992). Here, the independent payphone providers assert 

an injury-in-fact: “paying years of excessive charges caused 

by” the Bell Operating Companies’ “failure to have . . . 

compliant rates.” Pet’rs Br. 34; see Oral Arg. at 14:37-14:40 

(“the injury is the overcharging of rates”). But that injury is 

not redressable by this Court. Even if we ordered the FCC to 

do exactly what the independent payphone providers seek –

USCA Case #13-1059 Document #1497401 Filed: 06/13/2014 Page 15 of 20
16

order Bell Operating Companies to disgorge the payments 

they received from long-distance carriers – the independent 

payphone providers would not receive any of that money. 

Rather, Bell Operating Companies would forfeit the money to 

the Government. See App. 847; Oral Arg. at 13:37-13:39. 

That would do nothing to redress the injury suffered by the 

independent payphone providers as a result of the allegedly 

excessive rates charged to them by Bell Operating 

Companies. Cf. Steel Co. v. Citizens for a Better 

Environment, 523 U.S. 83, 106 (1998) (no standing where 

plaintiff “seeks not remediation of its own injury” that has 

abated but rather general “vindication of the rule of law”).

The independent payphone providers respond with a 

rather creative theory of redressability. They suggest that Bell 

Operating Companies would rather accede to their demand for 

refunds than disgorge the supposedly larger amount of dialaround compensation collected from long-distance carriers. 

Thus, in the independent payphone providers’ view, an FCC 

disgorgement order would in turn induce Bell Operating 

Companies to resolve their refund dispute with the 

independent payphone providers and thereby redress the 

independent payphone providers’ injury. The independent 

payphone providers offer nothing beyond sheer speculation to 

support their bank-shot approach. And it is well-established 

that a “merely speculative” theory of redressability does not 

suffice to create Article III standing. Sprint, 554 U.S. at 273

(internal quotation marks omitted); see Lujan, 504 U.S. at 

560-61; Linda R.S. v. Richard D., 410 U.S. 614, 617-18 

(1973); cf. Illinois Public Telecommunications Association v. 

Illinois Commerce Commission, No. 1-04-0225 (Ill. App. Ct. 

Nov. 23, 2005) (same conclusion on state law). 

Because the independent payphone providers have not 

demonstrated Article III standing with respect to their dialUSCA Case #13-1059 Document #1497401 Filed: 06/13/2014 Page 16 of 20
17

around compensation claim, we lack jurisdiction to adjudicate

that portion of their petitions for review. 

* * *

We have carefully considered all of the independent 

payphone providers’ arguments. We deny the petitions in part 

and dismiss the remainder for lack of jurisdiction.

So ordered.

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APPENDIX

§ 276. Provision of payphone service

(a) Nondiscrimination safeguards

After the effective date of the rules prescribed pursuant to 

subsection (b) of this section, any Bell operating company 

that provides payphone service –

(1) shall not subsidize its payphone service directly 

or indirectly from its telephone exchange service 

operations or its exchange access operations; and 

(2) shall not prefer or discriminate in favor of its 

payphone service. 

(b) Regulations 

(1) Contents of regulations

In order to promote competition among payphone 

service providers and promote the widespread 

deployment of payphone services to the benefit of the 

general public, within 9 months after February 8, 1996, 

the Commission shall take all actions necessary 

(including any reconsideration) to prescribe regulations 

that –

(A) establish a per call compensation plan to ensure 

that all payphone service providers are fairly 

compensated for each and every completed intrastate and 

interstate call using their payphone, except that 

emergency calls and telecommunications relay service 

calls for hearing disabled individuals shall not be subject 

to such compensation; 

(B) discontinue the intrastate and interstate carrier 

access charge payphone service elements and payments 

in effect on February 8, 1996, and all intrastate and 

interstate payphone subsidies from basic exchange and 

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exchange access revenues, in favor of a compensation 

plan as specified in subparagraph (A); 

(C) prescribe a set of nonstructural safeguards for 

Bell operating company payphone service to implement 

the provisions of paragraphs (1) and (2) of subsection (a) 

of this section, which safeguards shall, at a minimum, 

include the nonstructural safeguards equal to those 

adopted in the Computer Inquiry-III (CC Docket No. 90-

623) proceeding; 

(D) provide for Bell operating company payphone 

service providers to have the same right that independent 

payphone providers have to negotiate with the location 

provider on the location provider’s selecting and 

contracting with, and, subject to the terms of any 

agreement with the location provider, to select and 

contract with, the carriers that carry interLATA calls 

from their payphones, unless the Commission determines 

in the rulemaking pursuant to this section that it is not in 

the public interest; and 

(E) provide for all payphone service providers to 

have the right to negotiate with the location provider on 

the location provider’s selecting and contracting with, 

and, subject to the terms of any agreement with the 

location provider, to select and contract with, the carriers 

that carry intraLATA calls from their payphones. 

(2) Public interest telephones 

In the rulemaking conducted pursuant to paragraph 

(1), the Commission shall determine whether public 

interest payphones, which are provided in the interest of 

public health, safety, and welfare, in locations where 

there would otherwise not be a payphone, should be 

maintained, and if so, ensure that such public interest 

payphones are supported fairly and equitably.

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(3) Existing contracts 

Nothing in this section shall affect any existing 

contracts between location providers and payphone 

service providers or interLATA or intraLATA carriers 

that are in force and effect as of February 8, 1996. 

(c) State preemption 

To the extent that any State requirements are inconsistent 

with the Commission’s regulations, the Commission’s 

regulations on such matters shall preempt such State 

requirements. 

(d) “Payphone service” defined 

As used in this section, the term “payphone service” 

means the provision of public or semi-public pay telephones, 

the provision of inmate telephone service in correctional 

institutions, and any ancillary services. 

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