790 F.3d 186
D.C. Cir.2015Background
- The U.S. Postal Service sought an exigent (above-inflation) 4.3% rate increase after the 2008 recession caused unprecedented declines in mail volume and revenue.
- The Postal Regulatory Commission (PRC) agreed the recession was an "extraordinary or exceptional" circumstance but awarded only $2.8 billion in recovery and limited the rate increase to under two years.
- PRC adopted a "new normal" test: the exigent causation link ends when the Postal Service has (1) macro indicators near historic trends, (2) positive projected mail-volume change, (3) regained forecasting ability, and (4) shown operational adjustment to lower volumes.
- PRC also adopted a separate "count once" rule: lost mail volume is counted only in the year it first disappeared, not on an ongoing basis.
- Postal Service challenged PRC’s refusal to treat enduring volume losses as "due to" the recession; major mailers also challenged the award as too large.
- The D.C. Circuit upheld the "new normal" causation approach and PRC’s econometric judgments but vacated the "count once" rule as inconsistent with the new-normal rationale; it remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether lost mail volume attributable to the recession remains "due to" the exigent circumstance indefinitely | USPS: recession-caused losses persist and justify ongoing recovery | PRC: "due to" link ends once a "new normal" is reached and effects are no longer extraordinary | Court: PRC’s "new normal" test is a permissible interpretation and upheld |
| Whether PRC may count lost mail volume only in the year it first disappeared ("count once") | USPS: ongoing losses should be recoverable beyond year one | PRC: counting beyond year one makes causation calculation impossible and USPS should have adjusted expectations | Court: "count once" rule vacated as arbitrary and inconsistent with the new-normal analysis |
| Whether PRC reasonably evaluated USPS’s econometric model (Thress) and treatment of intervention variables | USPS: model valid; linear intervention variables capture recession effects | Mailers/PRC: some variables ambiguous; linear trends may reflect secular electronic diversion, not recession | Court: PRC’s selective acceptance/rejection of model components was supported by substantial evidence and within agency expertise |
| Whether PRC shifted burden or otherwise misapplied technical econometrics | Mailers: PRC inverted burden and confused correlation/causation | PRC: analyzed each model component and found sufficient causation for some losses | Court: PRC did not invert burden; its causal findings were supported and not arbitrary |
Key Cases Cited
- CSX Transp., Inc. v. McBride, 131 S. Ct. 2630 (Sup. Ct.) (principle that consequences of acts can have long causal chains; discussed re: literal causation)
- Chevron U.S.A. Inc. v. Nat. Res. Def. Council, 467 U.S. 837 (Sup. Ct.) (agency statutory-interpretation deference framework)
- United States Postal Service v. Postal Regulatory Comm’n, 640 F.3d 1263 (D.C. Cir.) (prior remand holding on "due to" requiring causal link)
- NRG Power Mktg., LLC v. FERC, 718 F.3d 947 (D.C. Cir.) (deference to agency technical judgments)
- Tex Tin Corp. v. EPA, 992 F.2d 353 (D.C. Cir.) (agency may not find causation where substantial alternative cause exists)
- City of Los Angeles v. United States Dep’t of Transp., 165 F.3d 972 (D.C. Cir.) (courts defer to reasonable agency judgment; not a technical peer review)