USPS v. PRC ( 2011 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 15, 2011 Decided May 24, 2011
No. 10-1343
UNITED STATES POSTAL SERVICE,
PETITIONER
v.
POSTAL REGULATORY COMMISSION,
RESPONDENT
NATIONAL POSTAL MAIL HANDLERS UNION ET AL.,
INTERVENORS
On Petition for Review of an Order of the Postal Regulatory
Commission
Paul D. Clement argued the cause for the petitioner. Jeffrey
S. Bucholtz, Zachary D. Tripp, Paul A. Mezzina and Michael J.
Elston, Attorneys, United States Postal Service, were on brief.
Bruce R. Lerner and Osvaldo Vazquez were on brief for
intervenor National Postal Handlers Union in support of the
petitioner.
Peter D. DeChiara was on brief for amicus curiae National
Association of Letter Carriers, AFL-CIO in support of the
petitioner.
Daniel Tenny, Attorney, United States Department of
Justice, argued the cause for the respondent. Michael S. Raab,
2
Attorney, Stephen L. Sharfman, General Counsel, Postal
Regulatory Commission, R. Brian Corcoran, Assistant General
Counsel, and Richard A. Oliver, Attorney, were on brief.
Ian D. Volner, David M. Levy, David R. Straus, Michael W.
Hall, Tonda F. Rush, William B. Baker, John M. Burzio, Thomas
W. McLaughlin and Timothy L. Keegan were on brief for
intervenors Affordable Mail Alliance et al. in support of the
respondent.
Susan M. Collins, pro se, was on brief for amicus curiae
United States Senator Susan M. Collins in support of the
respondent.
Before: HENDERSON, TATEL and BROWN, Circuit Judges.
Opinion for the Court filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: Section
201(d) of the Postal Accountability and Enhancement Act of
2006 (PAEA or Act), Pub. L. No. 109-435, 120 Stat. 3198,
generally limits annual increases in the postal rates for market
dominant products to an amount equal to the change in the
Consumer Price Index for All Urban Consumers (CPI-U). The
United States Postal Service (Postal Service) filed a request with
the Postal Regulatory Commission (Commission) to exceed the
annual cap pursuant to section 201(d)(1)(E), which authorizes
the Commission to “establish procedures whereby rates may be
adjusted [above the annual CPI-U cap] on an expedited basis
due to either extraordinary or exceptional circumstances,” citing
as the exigent circumstance the recent recession and declines in
mail volume resulting therefrom. 39 U.S.C. § 3622(d)(1)(E).
The Postal Commission denied the exigent rate request on the
ground that the Postal Service failed to demonstrate, as required
under the statutory language, that the proposed rate adjustments
are “due to” the cited “extraordinary or exceptional
circumstances.” Although the Commission correctly construed
“due to” to require a causal relationship between the exigent
3
circumstances’ effects on the Postal Service and the amount of
the above-cap rate increases, it incorrectly concluded the plain
meaning of that phrase requires the proposed rate adjustments to
be “tailored to offset the specific effects of the claimed
exigency.” Exigent Request Denial at 65. We therefore remand
to the Commission so that it can exercise its discretion to
construe the ambiguous language of section 201, explaining the
extent of causation the Commission requires the Postal Service
to demonstrate between the exigent circumstance’s impact on
Postal Service finances and the proposed rate increase.
I.
PAEA, enacted on December 20, 2006, directed that the
Commission establish by regulation within eighteen months
(and revise thereafter as necessary) “a modern system for
regulating rates and classes for market-dominant products.”1 39
U.S.C. § 3622(a). The Act sets out various “objectives” for the
Commission to “appl[y] in conjunction with [each other]” and
enumerates fourteen “[f]actors . . . [to] take into account.” Id.§ 3622(b), (c). The Act also sets forth specific “[r]equirements”
for the system, including an annual limit on the percentage
changes in rates “equal to the change in the [CPI-U].” Id.
§ 3622(d)(1)(A). In addition, the Act directs the Commission to
set a schedule for rates to change at regular intervals by
predictable amounts and procedures for public notice and
Commission review before a rate change takes effect. Id.
§ 3622(d)(1)(B)-(C). Notwithstanding the CPI-U limitation and
the statutory procedural requirements, the Congress inserted a
“safety valve” into the statute, which directs the Commission to
1
The Postal Service’s market dominant products are enumerated
at 39 U.S.C. § 3621(a). See 39 U.S.C. § 102(8). The products at issue
here are: First-Class Mail, Standard Mail, Periodicals, Package
Services and Special Services.
4
establish procedures whereby rates may be adjusted on
an expedited basis due to either extraordinary or
exceptional circumstances, provided that the
Commission determines, after notice and opportunity
for a public hearing and comment, and within 90 days
after any request by the Postal Service, that such
adjustment is reasonable and equitable and necessary
to enable the Postal Service, under best practices of
honest, efficient, and economical management, to
maintain and continue the development of postal
services of the kind and quality adapted to the needs of
the United States.
Id. § 3622(d)(1)(E). Per the statute’s directive, the Commission
promulgated regulations establishing procedures for regulating
market dominant rates, 39 C.F.R. pt. 3010, including the
exception for above-CPI-U rate adjustments in extraordinary or
exceptional circumstances, id. subpt. E (§§ 3010.60-.66).2
The Postal Service submitted its first above-cap “exigent”
request under the new regulatory system on July 6, 2010. The
request proposed “exigent prices representing an aggregate
increase of approximately 5.6 percent . . . for implementation of
new prices on January 2, 2011.” Exigent Request of the U.S.
Postal Service (Exigent Request), Docket No. R2010-4, at 1
2
Regulation 3010.60 provides generally: “The Postal Service may
request to increase rates for market dominant products in excess of the
annual limitation on the percentage changes in rates described in
§ 3010.11(d) due to extraordinary or exceptional circumstances. Such
requests will be known as exigent requests.” The Postal Service’s
exigent request must include, inter alia, “[a] full discussion of the
extraordinary or exceptional circumstance(s) giving rise to the request,
and a complete explanation of how both the requested overall increase,
and the specific rate increases requested, relate to those
circumstances.” 39 C.F.R. § 3010.61(a)(3).
5
(July 6, 2010). As the supporting exigent circumstance
justifying the increases, the Postal Service cited “the dramatic,
rapid and unprecedented decline in mail volume” in the short
time since PAEA had been enacted. Id. According to the Postal
Service, “mail volume stalled” in FY 2007, “then plunged” in
FY 2008 and FY 2009, “falling a total of nearly 17 percent
between FY 2006 and FY 2009.” Id. The Service
acknowledged that volume from “the long-term impact of
electronic diversion ha[d] been widely acknowledged over the
last 10 years” but asserted that “the depth and severity of the
current recession—and its impact on mail volume—were
unforeseeable,” particularly given that “[h]istorically, mail
volume has generally increased from year to year, and even in
the comparatively few instances of decreases, they were of a
much smaller order of magnitude.” Id. at 6.
In a decision dated September 30, 2010, the Commission
denied the exigent request, concluding that “the requested
increases are not justified as lawful exigent rate adjustments.”
Order denying Request for Exigent Rate Adjustments, Order No.
547, Docket No. R2010-4, at 4 (Sept. 30, 2010) (Exigent
Request Denial). The Commission agreed with the Postal
Service that “the recent recession, and the decline in mail
volume experienced during the recession,” qualified as an
“extraordinary or exceptional circumstance” under section
201(d)(1)(E). Id. at 3. The Commission concluded, however,
that the rate request, as submitted, did not otherwise qualify for
section 201(d)(1)(E)’s narrow exception to the statutory rate
cap. The Commission explained that the “determination that
‘extraordinary or exceptional circumstances’ have occurred is
not by itself sufficient to authorize the collection of rates in
excess of otherwise applicable rate caps”—two additional
statutory requirements must be satisfied: (1) “the proposed
adjustment must be ‘due to’ the extraordinary or exceptional
circumstances” and (2) the adjustment “must meet a ‘reasonable
and equitable and necessary’ test.” Id. at 53. “Together,” the
6
Commission stated, “the three requirements (the existence of
extraordinary or exceptional circumstances; the requirement that
the adjustment be ‘due to’ those circumstances; and the
requirement that the adjustment be reasonable and equitable and
necessary) create a narrow exception to the general statutory
rule that rates for market dominant products are limited by
CPI-U-based rate caps.” Id. at 54. Addressing the meaning of
the statutory language, the Commission explained that the
preposition “due to” “expresses a causal relationship,” which
mandates that the proposed exigent rate adjustments be causally
related to the cited exigent circumstance. Id. In addition, the
Commission continued, the “reasonable and equitable and
necessary” language “provides context for the statutory [due to]
command” and “implicitly” reinforces its causal requirement
because “[f]or an adjustment to be ‘due to’ an extraordinary or
exceptional circumstance, the Postal Service must show that the
adjustment is a ‘reasonable and equitable and necessary’ way to
respond to the circumstance.” Id. at 55-56. Accordingly, the
Commission denied the request on the ground the proposed rates
are “not designed to respond to the recent recession, or its
impact on mail volume.” Id. at 3. The Commission found
instead that they “represent an attempt to address long-term
structural problems not caused by the recent recession,” id., but
rather by the inescapable fact that “ ‘[t]he bulk of [the Postal
Service’s] costs are fixed by laws, contract or regulations and its
operating flexibility is severely limited,’ ” id. at 61-62 (quoting
Statement of Joseph Corbett, Postal Service Chief Financial
Officer, at 2) (alterations in original).3 In particular the
3
According to the Commission, the “principal cause of the Postal
Service’s impending liquidity crisis” is PAEA’s mandate that the
Postal Service make a $5 billion payment each September through
2016 to prefund its Retiree Health Benefits Fund. Exigent Request
Denial at 68; see PAEA § 803(a)(1)(B), 120 Stat. at 3251 (codified at
5 U.S.C. § 8909a(d)(3)(A)).
7
Commission found the Postal Service failed to “quantify the
impact of the recession on postal finances, address how the
requested rate increases relate to the recession’s impact on
postal volumes, or identify how the requested rates resolve the
crisis at hand.” Id. at 4.
II.
Because the Congress expressly delegated to the
Commission responsibility to implement PAEA section 201, we
review its interpretation under Chevron U.S.A. Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984).
See NetCoalition v. SEC, 615 F.3d 525, 533 (D.C. Cir. 2010); cf.
U.S. Postal Serv. v. Postal Regulatory Comm’n, 599 F.3d 705,
710 (D.C. Cir. 2010) (court must defer to and uphold as
reasonable Commission’s interpretation of PAEA § 404(e)(3)
because “that provision was clearly delegated to the
Commission to implement and thereby to interpret”). Under
Chevron step 1, if the “Congress has directly spoken to the
precise question at issue . . . , that is the end of the matter; for
the court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress.” Chevron, 467
U.S. at 842-43. Under Chevron step 2, “if the statute is silent or
ambiguous with respect to the specific issue, the question for the
court is whether the agency’s answer is based on a permissible
construction of the statute.” Id. at 843. In reviewing the
Commission’s Exigent Request Denial, we end our first inquiry
at step 1 because the Commission based its interpretation on the
“plain meaning” of the statutory language. Exigent Request
Denial at 27; see Peter Pan Bus Lines, Inc. v. Fed. Motor
Carrier Safety Admin., 471 F.3d 1350, 1354 (D.C. Cir. 2006)
(“Chevron step 2 deference is reserved for those instances when
an agency recognizes that the Congress’s intent is not plain from
8
the statute’s face.” (citing PDK Labs., Inc. v. DEA, 362 F.3d 786(D.C. Cir. 2004))).4
First, we agree with the Commission that the plain meaning
of “due to” mandates a causal relationship between the amount
of a requested adjustment and the exigent circumstances’ impact
on the Postal Service. The plain meaning of “due to” is “because
of.” See Webster's Third New Int’l Dictionary 699 (1993); see
also Exigent Request Denial at 54 (“According to Webster’s
Third New International Dictionary (G. & C. Merriam Co.
1966) the expression ‘due to’ means ‘because of.’ Roget’s 21st
Century Thesaurus (3rd ed. 2010) provides the following
synonyms for the expression ‘due to’: ‘by reason of’; ‘by cause
of’; ‘by virtue of’; and ‘as a result of.’ Each meaning and
synonym expresses a causal relationship and leads the
Commission to conclude that the Postal Service’s proposed
adjustment must be causally related to the alleged extraordinary
or exceptional circumstance.”). Thus, under the plain meaning
of the statutory language, a rate may be “adjusted on an
expedited basis” only because of “extraordinary or exceptional
circumstances.”
The Postal Service acknowledges that the exigent
adjustment must be triggered by the threshold presence of
“extraordinary or exceptional circumstances.” See Exigent
Request at 6 (“The unprecedented drop in mail volume
constitutes the ‘extraordinary or exceptional circumstances’ that
trigger the need for an exigent increase.”). It nonetheless
disagrees with the Commission’s interpretation that the amount
of the adjustment is determined by the amount of the revenue
lost due to the exigent circumstance—at least to the extent the
4
Our second inquiry will require us to proceed to Chevron step 2
because the phrase “due to” has an additional—and
ambiguous—meaning, which the Commission did not address. See
infra pp. 9-11.
9
Commission imposed a “strict ‘nexus’ or offset test.” The
Commission’s interpretation, the Postal Service maintains, is
undercut by the placement of the phrase “due to” “in an
inapposite statutory clause” rather than in the following clause
which sets out the “statutory standard governing the merits of an
exigent rate request,” Pet’r’s Br. 22-24, namely, that the
adjustment be “ ‘reasonable and equitable and necessary to
enable the Postal Service, under the best practices of honest,
efficient, and economical management, to maintain and continue
the development of postal services of the kind and quality
adapted to the needs of the United States,” 39 U.S.C.
§ 3622(d)(1)(E). See Pet’r’s Br. 26-27. The prepositional
phrase, however, appears exactly where it belongs—up-front,
alongside the directive that the Commission “establish
procedures” for making an adjustment—which adjustment must
therefore be “due to” the exigent circumstance.
Having concluded that the plain meaning of section 201
requires a causal relationship between the exigent circumstances
and the proposed rate adjustments, we next consider how close
the relationship must be, that is, how much of the proposed
adjustment must be due to the exigent circumstance. The Postal
Service asserts the Commission incorrectly imposed a “strict
‘nexus’ or offset test,” requiring that the proposed adjustments
mirror the amount of revenue the Postal Service can demonstrate
was lost solely “due to” the recession and its effect on mail
volume, dollar-for-dollar. Pet’r’s Br. 3-5. Indeed, the
Commission seems to have required a very close match,
expecting the Postal Service to “show that its proposed rate
adjustments are tailored to offset the specific effects of the
claimed exigency.” Exigent Request Denial at 65; see also id.
at 60-61 (“[I]t is incumbent on the Postal Service to demonstrate
how the specific rate increases it proposes flow from the
particular circumstances that it cites as exceptional.” (emphases
added)). The statute itself, however, is mute on how close the
match must be. In particular, the “due to” phrase itself is not
10
determinative on this issue because, although it has a plain
meaning regarding causal connection vel non, as we concluded
supra, it has no similar plain meaning regarding the closeness of
the causal connection. In the latter sense,
[t]he phrase “due to” is ambiguous. “The words do not
speak clearly and unambiguously for themselves. The
causal nexus of ‘due to’ has been given a broad variety
of meanings in the law ranging from sole and
proximate cause at one end of the spectrum to
contributing cause at the other.”
Kimber v. Thiokol Corp., 196 F.3d 1092, 1100 (10th Cir. 1999)
(quoting Adams v. Director, OWCP, 886 F.2d 818, 821 (6th Cir.
1989)).5 In other words, the phrase can mean“due in part to” as
well as “due only to.” A financial crisis can often result from
multiple contributing factors, of which only one may be
“extraordinary or exceptional.” It would not be incorrect to say
that the requested rate increase is “due to” the extraordinary
factor simply because it is also “due to” other factors as well.6
The statute on its face does not make clear which meaning of
“due to” the Congress intended. The Commission therefore
could not properly reject the proposed adjustments at Chevron
step 1. Instead, as the agency charged with implementing
section 201(d)(1)(E), the Commission was bound to proceed to
5
See Adams, 886 F.2d at 821 (interpreting term “due to
pneumoconiosis” in Black Lung Benefits Act to require claimant to
“establish only that his totally disabling respiratory impairment . . .
was due ‘at least in part’ to his pneumoconiosis” and rejecting
proposed causation standard that would have required proof that
pneumoconiosis ‘in and of itself’ caused totally disabling condition).
6
That said, given the posture of this case, we have no need to
decide here whether an increase might be so disproportionate to the
exigency’s impact on the Postal Service that it could not be considered
“due to” that exigency.
11
Chevron step 2 to fill the statutory gap by determining how
closely the amount of the adjustments must match the amount of
the revenue lost as a result of the exigent circumstances.
Because the Commission did not proceed to step 2, we remand
for it to do so now. See Peter Pan Bus Lines, Inc, 471 F.3d at
1354.
For the foregoing reasons, we deny the Postal Service’s
petition in part, upholding the Commission’s Chevron step 1
interpretation of the plain meaning of “due to” in PAEA section
201(d) as requiring a causal connection between the exigent
circumstances and the proposed rate adjustments. We also
grant the petition in part, rejecting the Commission’s
Chevron step 1 interpretation of “due to” as requiring that the
Postal Service match the amount of the proposed adjustments
precisely to the amount of revenue lost as a result of the exigent
circumstances. Accordingly, we remand to the Commission to
address the latter issue at Chevron step 2.
So ordered.