Court Opinion

ID: 2678315
Source: CourtListenerOpinion
Date Created: 2014-06-13 15:00:47.354918+00
Date Added: 2024-06-11T09:38:29.078410
License: Public Domain

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.
                               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
                              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
                                  4
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).
                              5
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).
                               6
      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
                                 7
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).
                                8
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
                                 9
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).
                              10
                              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
                             11
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.
                               12
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-to-
state 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
                               13
(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
                              14
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
                              15
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 long-
distance 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 –
                              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 dial-
around 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 dial-
                             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.
                               18
                          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
                          19
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.