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United States Postal Service v. Postal Regulatory Commission

United States Court of Appeals, District of Columbia Circuit

April 6, 2018

United States Postal Service, Petitioner
Postal Regulatory Commission, Respondent National Postal Policy Council, et al., Intervenors

          Argued January 5, 2018

          On Petition for Review of Orders of the Postal Regulatory Commission

          David C. Belt, Attorney, U.S. Postal Service, argued the cause and filed the briefs for petitioner. Stephan J. Boardman, Chief Counsel, U.S. Postal Service, entered an appearance.

          Dana Kaersvang, Attorney, U.S. Department of Justice, argued the cause for respondent. With her on the brief were Michael S. Raab, Attorney, David A. Trissell, General Counsel, Postal Regulatory Commission, Christopher J. Laver, and Erica A. Barker, Attorneys.

          Before: Pillard, Circuit Judge, and Edwards and Williams, Senior Circuit Judges.


          Williams, Senior Circuit Judge.

         Under the Postal Accountability and Enhancement Act, Pub. L. No. 109-435, 120 Stat. 3198 (2006), the Postal Regulatory Commission is authorized to set rate caps for the "market-dominant products" of the United States Postal Service. (The act contrasts such products, consisting most obviously of products where the Postal Service enjoys a legal monopoly, such as first-class mail, with the Postal Service's "competitive" products.) The Commission is to set "an annual limitation on the percentage changes in rates" equal to the rate of inflation, 39 U.S.C. § 3622(d)(1)(A); the statute defines "rates" as "fees for postal services, " 39 U.S.C. § 102(7).

         In USPS v. Postal Regulatory Comm'n, 785 F.3d 740 (D.C. Cir. 2015) ("USPS I"), we wrestled with the question of whether, and if so under what circumstances, the Commission could treat Postal Service changes in mail preparation requirements as "changes in rates" subject to the cap.

         We rejected the Postal Service's theory that the statute encompassed "only changes to the official posted prices of each product, " id. at 751, saying that "the Commission may have the authority under the price cap statute and regulations to consider mail preparation requirement changes of the kind at issue in this case as changes in rates, " id. at 755. But, mystified by the Commission's efforts to explain how it would decide when a mailing requirement actually was a rate change, we found its action arbitrary and capricious and remanded to the Commission for it to "enunciate an intelligible standard and then reconsider its decision in light of that standard." Id. at 756.

         In due course the Commission produced the order now before us, Order No. 3047, Order Resolving Issues on Remand (Jan. 22, 2016). The order rules that a mail preparation change constitutes a change in rates if it results "in the deletion of a rate cell" or "in the redefinition of a rate cell if the mail preparation change causes a significant change to a basic characteristic of a mailing." Id. at 15.

         Applying this standard, the Commission reaffirmed its earlier decision that the proposed mail preparation change constituted a change in rates. The Postal Service moved for reconsideration, which the Commission denied. Order No. 3441, Order Resolving Motion for Reconsideration of Commission Order No. 3047 (July 7, 2016). The Postal Service again petitions for review.

         We now find that the Commission's new analysis adds no discernible clarity to the reasoning it supplied on the last round and that it rests on an unreasonable interpretation of "changes in rates" that "goes beyond the meaning that the statute can bear." MCI Telecomm. Corp. v. AT&T Co., 512 U.S. 218, 229 (1994). "[U]nder the familiar standard of Chevron, . . . a 'reasonable agency interpretation prevails'"; "[o]f course, 'if Congress has directly spoken to an issue then any agency interpretation contradicting what Congress has said would be unreasonable.'" Loan Syndications & Trading Ass'n v. SEC, 882 F.3d 220, 222 (D.C. Cir. 2018) (quoting Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208, 218 n.4 (2009)). "Even under Chevron, after all, agencies only 'possess whatever degree of discretion [an] ambiguity allows.'" Id. at 224 (quoting City of Arlington v. FCC, 569 U.S. 290, 307 (2013)). We grant the petition and vacate the orders.

         Our 2015 decision recites the relevant background. See USPS I, 785 F.3d at 744-50. We cover the same ground only as necessary.

         The Commission does not apply the rate cap by limiting the rate for each product in isolation. Rather, it allows the Postal Service to trade off above-inflation increases in the rate of one product with below-inflation increases in the rate of another product within the same class (or, of course, constant-dollar decreases in rates). As a result, apart from market-driven changes in volume, the Postal Service's aggregate ...

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