USPS v. PRC

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 20, 2016 Decided November 15, 2016
No. 15-1297
UNITED STATES POSTAL SERVICE,
PETITIONER
v.
POSTAL REGULATORY COMMISSION ,
RESPONDENT
ALLIANCE OF NONPROFIT MAILERS, ET AL.,
INTERVENORS
On Petition for Review of an Order
of the Postal Regulatory Commission
David C. Belt, Attorney, United States Postal Service,
argued the cause and filed briefs for the petitioner. Stephan J.
Boardman, Chief Counsel, United States Postal Service,
entered an appearance.
Daniel Tenny, Attorney, United States Department of
Justice, argued the cause for the respondent. Benjamin C.
Mizer, Principal Deputy Assistant Attorney General, Michael
S. Raab, Attorney, David A. Trissell, General Counsel, Postal
Regulatory Commission, Christopher J. Laver and Anne J.
Siarnacki, Deputy General Counsels and Elisabeth S. Shellan,
Attorney were with him on brief.
2
David M. Levy, Matthew D. Field, Ian D. Volner,
Jeremiah L. Morgan and William J. Olson were on brief for the
mailer intervenors in support of the Postal Regulatory
Commission.
Before: HENDERSON and G RIFFITH, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: The Postal
Accountability and Enhancement Act of 2006 authorizes the
Postal Regulatory Commission (Commission) to regulate the
rates of the United States Postal Service’s (Postal Service)
market-dominant products. See 39 U.S.C. §§ 3621–29.
Although annual price increases for these products are
generally capped at the rate of inflation, the Commission is
permitted to approve raising rates above this mark “on an
expedited basis due to either extraordinary or exceptional
circumstances.” Id. § 3622(d)(1)(E). In Order No. 1926,1 the
Commission—recognizing that the Great Recession of 2008
was just such an exigent circumstance—allowed for a rate
increase but also sought to calculate the extent to which
decreased mail volume was “due to” the economic downturn in
order to determine how long that rate increase should remain in
effect. As part of its inquiry, the Commission created a “new
normal” test to determine when the “extraordinary or
exceptional circumstances” no longer supported a rate
increase. In an earlier case, the Postal Service had petitioned
this Court for review of that “new normal” test and we upheld
1
Postal Regulatory Commission, Order Granting Exigent Price
Increase, Order No. 1926, Docket No. R2013–11 (December 24,
2013) (Order No. 1926).
3
the Commission’s approach as “well reasoned and grounded in
the evidence before the Commission . . . [and] comfortably
pass[ing] deferential APA review.” All. of Nonprofit Mailers v.
Postal Regulatory Comm’n, 790 F.3d 186, 196 (D.C. Cir.
2015). The Postal Service sought reconsideration, claiming
that the Commission “altered its original decision” by
“changing the meaning and role of the ‘ability to adjust’
element of its [‘new normal’] test,” Pet’r Reply Br. 7, and, in
Order No. 2623,2 the Commission denied that request. Because
the Commission’s denial of reconsideration is unreviewable,
we dismiss the Postal Service’s petition for lack of jurisdiction.
Entravision Holdings, LLC v. FCC, 202 F.3d 311, 313 n.2
(D.C. Cir. 2000).
I.
In enacting the Postal Accountability and Enhancement
Act of 2006 (the Act), Pub. L. No. 109–435, 120 Stat. 3198, the
Congress directed the Commission to establish a modern
system for regulating the rates and classes of the Postal
Service’s market-dominant products. See 39 U.S.C. §§ 3621–
29. Although the Act affords the Commission some flexibility
in carrying out its charge, see id. § 3622 (authorizing
Commission to create “modern system for regulating rates” but
also mandating that Commission account for certain “factors,”
“objectives” and “requirements” in so doing), the Congress set
forth a price cap for market-dominant products, generally
limiting each price increase to an amount equal to the annual
change in the Consumer Price Index for All Urban Consumers
(CPI-U). See id. § 3622(d)(1)(A). The Act also provides
“procedures whereby rates may be adjusted on an expedited
basis due to either extraordinary or exceptional circumstances”
2
Postal Regulatory Commission, Order Resolving Issues on
Remand, Order No. 2623, Docket No. R2013–11R (July 29, 2015)
(Order No. 2623).
4
without regard to the CPI-U limitation. Id. § 3622(d)(1)(E).
Specifically, for this statutory “safety valve” to take effect, the
Commission must find
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.
The Postal Service first requested an above-CPI-U rate
increase in July 2010 as it sought to make up for substantial
losses resulting from the “dramatic, rapid and unprecedented
decline in mail volume” caused by the Great Recession. See
U.S. Postal Serv. v. Postal Regulatory Comm’n, 640 F.3d
1263, 1265 (D.C. Cir. 2011) (internal quotation marks
omitted). Although the Commission agreed that “the recent
recession, and the decline in mail volume experienced during
the recession” qualified as an “extraordinary or exceptional
circumstance,” it nonetheless denied the Postal Service’s
request for an above-CPI-U rate increase because it found that
the Postal Service had failed to quantify properly its losses
“due to” the recession with particularity. See Postal Regulatory
Commission, Order Denying Request for Exigent Rate
Adjustments, Order No. 547, Docket No. R2010–4, at 3-4
(Sept. 30, 2010). This Court disagreed with the latter portion of
the Commission’s analysis, finding that, although “the plain
meaning of ‘due to’ mandates a causal relationship between the
5
amount of a requested adjustment and the exigent
circumstances’ impact on the Postal Service,” the Act is
ambiguous as to “how close the relationship must be.” 640
F.3d at 1267–68. We remanded the case to the Commission to
fill that statutory gap, which it did in Order No. 864. See Postal
Regulatory Commission, Order Resolving Issues on Remand,
Order No. 864, Dkt. No. R2010-4R, at 25 (Sept. 20, 2011)
(noting that “exigent rate adjustments are permitted only if, and
to the extent that, they compensate for the net adverse financial
impact of the exigent circumstances”).
In September 2013, the Postal Service renewed its request
for an above-CPI-U rate increase, seeking a 4.3% price hike for
an indefinite period of time. In Order No. 1926, the
Commission granted the Postal Service’s request in part. Order
No. 1926, Docket No. R2013–11. The Commission reaffirmed
that the Great Recession constituted an exigent circumstance
warranting a rate increase but it still disagreed with the Postal
Service on the extent to which mail volume losses had been
caused by the economic downturn. See id. at 44. Thus, the
Commission allowed the 4.3% above-CPI-U rate increase to
remain in effect for only so long as necessary for the Postal
Service to recover $2.8 billion. Id. at 181.
The rationale underlying the Commission’s decision in
Order No. 1926 was twofold. First, the Commission
determined that mail volume losses could not be considered
“due to” the economic downturn once a “new normal” in
operational levels was achieved. See id. at 83–94. The related
“new normal” test, in turn, examined four factors:
(1) the disruption to a sufficient number of
relevant macroeconomic indicators
demonstrate[d] a return to near historic positive
trends; (2) application of the macroeconomic
6
variables accurately project[ed] change, and the
rate of change on Postal Service mail volumes is
positive; (3) the Postal Service regain[ed] its
ability to predict or project mail volumes
following an extraordinary or exceptional event;
and (4) the Postal Service demonstrate[d] an
ability to adjust operations to the lower
volumes.
Id. at 86 (emphasis added). Second, the Commission
implemented a “count once” rule in calculating mail volume
losses, meaning that the Commission counted decreased mail
volume only in the first year it occurred—in “subsequent years,
the Postal Service [was] aware of that loss” and thus able to
adjust to account for the same. Id. at 96.
Entering the fray once more, this Court reviewed the
Postal Service’s challenge to Order No. 1926 in Alliance of
Nonprofit Mailers v. Postal Regulatory Commission, 790 F.3d
at 189. We held that the Commission’s “new normal” test was
“well reasoned and grounded in the evidence before the
Commission . . . comfortably pass[ing] deferential APA
review.” Id. at 196. “In other words, the Commission
permissibly reasoned that just because some of the effects of
exigent circumstances may continue for the foreseeable future,
that does not mean that those circumstances remain
‘extraordinary’ or ‘exceptional’ for just as long.” Id. at 194.
We found the logic of the Commission’s “count once” rule,
however, difficult to reconcile with its explanation of the “new
normal” test. See id. at 195–96. We therefore vacated the
portion of Order No. 1926 setting out the “count once” rule. Id.
Finally, the Court in a footnote mentioned an additional
argument, reciting that “[a]t oral argument, counsel for the
Postal Service argued that the ‘new normal’ analysis in the
Order is also inconsistent with the Commission’s analysis of
7
whether the rate increase was ‘necessary’” within the meaning
of 39 U.S.C. § 3622(d)(1)(E). 3 Id. at 196 n.3. Because the
argument had not been briefed, we concluded that it was not
properly before the Court, at the same time noting that the
Commission was “free to consider that argument on remand.”
Id.
On remand from Order No. 1926, the Commission
removed the vacated “count once” rule, replacing it with a
cumulative counting system for determining lost mail volume.
Order No. 2623, Docket No. R2013–11R, at 28–46. Although
the Postal Service had encouraged the Commission to “accept
the court’s invitation” to reconsider the “new normal” test and
reconcile a perceived inconsistency between Parts IV and V of
Order No. 1926, 4 the Commission rejected the invitation,
declaring that it “decline[d] to revise the ‘new normal’ analysis
of Order No. 1926 . . . .” Order No. 2623, Docket No. R2013–
11R, at 23. The Commission elaborated that, notwithstanding
its “discretion to reopen its decisions, an exercise of that
3
Whether a rate increase is “necessary” is the final inquiry the
Commission undertakes before approving an above-CPI-U rate
increase. See 39 U.S.C. § 3622(d)(1)(E); All. of Nonprofit Mailers,
790 F.3d at 194 (“The ‘reasonable and equitable and necessary’ test
. . . applies only after exigent causation for a loss has been
established and turns on the Postal Service’s current need to get back
on its feet in the wake of the now-defined exigency.”). Focusing on
recovery rather than causation, the “necessary” inquiry asks whether
the Postal Service requires increased rates in order “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.
§ 3662(d)(1)(E), in light of the exigent circumstance’s effect on the
marketplace. All. of Nonprofit Mailers, 790 F.3d at 194.
4
See United States Postal Service, Initial Comments of the
United States Postal Service in Response to Commission Order No.
2540, Docket No. R2013-11R, at 7 (June 26, 2015).
8
discretion is not warranted here given the interest in finality
and the lack of any newly available evidence that would justify
raising the issue at this late stage.” Id. at 24.
The Postal Service again petitioned this Court for review.
II.
Under ICC v. Brotherhood of Locomotive Engineers, 482
U.S. 270, 280 (1987), an agency’s decision to deny
reconsideration of an earlier order is unreviewable, except
insofar as the request for reconsideration is based upon new
evidence or changed circumstances. Entravision Holdings,
LLC, 202 F.3d at 313; accord Sendra Corp. v. Magaw, 111
F.3d 162, 167 (D.C. Cir. 1997) (“[A]n agency order stating
only that it is denying reconsideration is conclusive, so long as
the agency has not altered its original decision.”). The new
evidence or changed circumstances exceptions exist because
otherwise “the petitioner will have been deprived of all
opportunity for judicial consideration . . . of facts which,
through no fault of his own, the original proceeding did not
contain.” Bhd. of Locomotive Engineers, 482 U.S. at 279.
Nevertheless, even if new evidence or changed circumstances
exist, “overturning the refusal to reopen requires a showing of
the clearest abuse of discretion.” Id. at 278 (internal quotation
marks omitted).
The Postal Service distinguishes Brotherhood of
Locomotive Engineers, arguing that the Commission changed
both the meaning and the role of the “ability to adjust”
inquiry—the fourth element of Order No. 1926’s “new
normal” test 5 —in Order No. 2623. We disagree. Order No.
2623 plainly states that the “Commission declines to revisit the
‘new normal’ analysis in Order No. 1926 that was affirmed by
5
Supra at 5–6.
9
the [Alliance of Nonprofit Mailers] Court.” Order No. 2623,
Docket No. R2013–11R, at 23. Order No. 2623 contains no
departure from Order No. 1926; rather, it explains its reasoning
in denying reconsideration. In fact, Order No. 2623 adopts
wholesale the earlier order’s findings and conclusion under the
“new normal” test. JA 579–84. Simply discussing the merits of
an earlier agency decision does not open a reconsideration
denial to review. Bhd. of Locomotive Engineers, 482 U.S. at
280–81 (“It would hardly be sensible to say that the [agency]
can genuinely deny reconsideration only when it gives the
matter no thought.”). As our Court has recognized:
That the agency discusses the merits at length
when it denies a request for reconsideration
does not necessarily mean the agency has
reopened the proceedings . . . . It would make
no sense whatsoever to hold that when an
agency offers an explanation for “affirming a
prior denial,” it has in effect reopened the
proceedings and rendered a new,
judicially-reviewable decision.
Fort Sumter Tours, Inc. v. Babbitt, 202 F.3d 349, 356 (D.C.
Cir. 2000) (internal quotation marks omitted). According to the
Postal Service, however, we should read between the lines of
the Commission’s analysis, inferring substantive change
behind the façade of a denial of reconsideration. Pet’r Br. 29–
34. Although we note Order No. 2623’s less than
seamless language, the Commission’s ultimate disposition is
nonetheless clear: it declined to reconsider the “new normal”
test as set forth in Order No. 1926.6 See Bhd. of Locomotive
6
Because we do not agree with the Postal Service’s claim that
Order No. 2623 dilutes the “ability to adjust” prong of the “new
normal” test to such an extent that it reads that prong out, see Pet’r
10
Engineers, 482 U.S. at 280–81 (“[I]t is the Commission’s
formal action, rather than its discussion, that is dispositive.”).7
The closest the Postal Service came to mounting a “new
evidence” challenge appears on page 45 of its opening brief,
where it cited the Commission’s Financial Analysis Report for
2013 to explain why it would not be too late for the
Commission to “revisit the inconsistencies in [its] ‘ability to
adjust’ findings.” Pet’r Br. 45. The Postal Service did not,
however, finish that thought by asking us to find that the
Commission’s refusal to reopen Order No. 1926 was an abuse
of discretion—whether on the new evidence ground or
otherwise. In fact, on pages 3–5 of its reply brief, the Postal
Service rejected the notion that it was challenging the
Commission’s “deni[al]” of its “request for reconsideration of”
Order No. 1926—or “the four-part test” introduced in that
Order—or even the Order’s “findings” based on that test. Pet’r
Reply Br. 3–5. It assured us that it did not rely on Sendra Corp.
and Locomotive Engineers, precisely because both cases dealt
with refusals to reconsider. Id. And it distinguished the
challenges in those cases from its claim that Order No. 2623
“altered” the Commission’s earlier decision. Id. The alteration,
the brief drove home, “is what the Postal Service now
challenges.” Id. at 5. We conclude, then, that the Postal Service
did not rely on the “new evidence” exception and that
Reply Br. 16–19, we offer no opinion on the validity of that reading
of the “new normal” test.
7
Counsel for the Postal Service conceded at oral argument that
Alliance of Nonprofit Mailers’s footnote discussed earlier, supra at
6–7, did not order the Commission to reconsider its “new normal”
test. Oral Arg. Tr. at 4–5.
11
challenge is therefore forfeited. Nat’l Oilseed Processors Ass’n
v. OSHA, 769 F.3d 1173, 1182 (D.C. Cir. 2014).8
For the foregoing reasons, the Postal Service’s petition for
review is dismissed for lack of jurisdiction.
So ordered.
8
Had the Postal Service’s brief expressly articulated that
reconsideration of the “new normal” test was mandated by new
evidence in the form of the Commission’s Financial Analysis Report
for 2013 (Financial Report), we nonetheless would have denied (but
not dismissed) the petition. As noted earlier, Brotherhood of
Locomotive Engineers instructs that “overturning the refusal to
reopen requires a showing of the clearest abuse of discretion,” Bhd.
of Locomotive Engineers, 482 U.S. at 278–79 (internal quotation
marks omitted), and the Postal Service’s claim would fall far short of
that standard. Although the Financial Report appeared three months
after Order No. 1926 issued, it contained no new evidence that
materially differed from the evidence used by the Commission in
issuing its then-recent Order No. 1926.