United States Postal Service v. Postal Regulatory Commission
415 U.S. App. D.C. 141
| D.C. Cir. | 2015Background
- In April 2013 USPS amended its Domestic Mail Manual: "basic-service" Intelligent Mail would no longer qualify for automation discounts; only "full-service" would. Posted rates did not change—eligibility rules did.
- USPS filed notice of separate price increases for market‑dominant products; commenters argued the Manual change reclassified mail and raised actual prices on affected mailpieces, so its effects must count against the statutory inflation-based price cap.
- The Postal Regulatory Commission held the Manual change redefined/deleted a rate cell and adopted a test: a mail‑preparation change is a classification/rate change if it “requires mailers to alter a basic characteristic of a mailing” to remain eligible for the same rate.
- The Commission applied historical volumes (constant mail mix) and concluded the combined effects of the Manual change and USPS’s posted increases would exceed the price cap; it gave USPS the option to delay the Manual change or revise rates.
- USPS petitioned for review, arguing (1) the statute and regulations unambiguously limit "changes in rates" to posted price changes and (2) the Commission’s new "basic characteristic" standard is arbitrary, capricious, and inconsistently applied.
Issues
| Issue | USPS's Argument | PRC's Argument | Held |
|---|---|---|---|
| Whether "changes in rates" under 39 U.S.C. §3622(d)(1)(A) covers operational/manual changes that alter which price a mailpiece pays | "Changes in rates" means only changes to posted prices; Manual eligibility changes are not "rates" | "Changes in rates" may include changes to the rates actually applied to mailpieces when classification/eligibility changes cause mail to pay higher prices | Statute ambiguous; not limited to posted prices; Chevron step 1 not satisfied (agency gap to fill) |
| Whether 39 C.F.R. §3010.23(d) (account for classification changes) applies to Manual mail‑preparation rules or only to formal Mail Classification Schedule amendments | §3010.23(d) applies only to Commission‑supervised Mail Classification Schedule changes, not to operational Manual rules | The regulation is ambiguous and can reasonably cover Manual changes that redefine eligibility and thus reclassify mailpieces | Regulation ambiguous; PRC interpretation permissible under Thomas Jefferson Univ. deference, but not dispositive because of APA review |
| Whether the Commission reasonably defined and applied a standard for when mail‑preparation changes are "changes in rates" | Commission’s "basic characteristic of a mailing" test is vague; its application to Intelligent Mail but not bundling is inconsistent; arbitrary and capricious | The test distinguishes significant practice‑changing rules from minor operational rules and prevents indiscriminate treatment | Court: PRC failed to provide reasoned, coherent explanation; the standard is cryptic and applied inconsistently—arbitrary and capricious; remand required |
| Whether PRC unreasonably refused to account for likely mailer behavior (upgrades to full‑service) when computing effects | USPS: likely mailers would upgrade, so historical‑constant‑mix assumption overstates price effects; PRC should consider behavior | PRC: regulation requires use of historical data/known characteristics, not forecasts of mailer behavior | Court rejects USPS’s argument on this ground (no merit); but remands on clarity and reasoned explanation issues |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (framework for deference to agency statutory interpretation)
- Allentown Mack Sales & Serv., Inc. v. NLRB, 522 U.S. 359 (agencies must engage in reasoned decisionmaking in adjudication)
- Thomas Jefferson Univ. v. Shalala, 512 U.S. 504 (deference to agency interpretation of its own regulations unless plainly erroneous)
- Tripoli Rocketry Ass’n v. Bureau of Alcohol, Tobacco, Firearms & Explosives, 437 F.3d 75 (no deference where agency rationale is incomprehensible)
- LePage’s 2000, Inc. v. Postal Regulatory Comm’n, 642 F.3d 225 (agency must explain differential treatment of similar cases)
- Mfrs. Ry. Co. v. Surface Transp. Bd., 676 F.3d 1094 (agency action must be reasonable and reasonably explained)
- USPS v. Postal Regulatory Comm’n, 676 F.3d 1105 (prior review of PRC authority over postal rates)
- Checkosky v. SEC, 23 F.3d 452 (courts may remand for fuller agency explanation)
- Air Line Pilots Ass’n v. FAA, 3 F.3d 449 (remand appropriate where agency reasoning inconsistent)