National Easter Seal Soc. for Crippled Children and Adults v. U.S. Postal Service

Decision Date05 May 1981
Docket Number80-1492,Nos. 80-1491,s. 80-1491
Citation656 F.2d 754
PartiesNATIONAL EASTER SEAL SOCIETY FOR CRIPPLED CHILDREN AND ADULTS, March of Dimes Birth Defects Foundation, American Lung Association, and St. Jude Children's Research Hospital, Petitioners, v. UNITED STATES POSTAL SERVICE, Respondent.
CourtU.S. Court of Appeals — District of Columbia Circuit

William J. Olson and Alan R. Swendiman, Washington, D.C., for petitioners.

Harold J. Hughes, Asst. Gen. Counsel, U.S. Postal Service, Washington, D.C., with whom Louis A. Cox, Gen. Counsel, and Gloria Brogan Flanagan, Atty., U.S. Postal Service, Washington, D.C., were on the brief, for respondent.

Dana T. Ackerly, David K. Flynn, and J. Edward Day, Washington, D.C., entered appearances for intervenors Direct Mail/Marketing Ass'n, Inc. and Associated Third Class Mail Users.

Before TAMM and MIKVA, Circuit Judges, and PHILIP NICHOLS, Jr., * Judge, United States Court of Claims.

Opinion for the court filed by Circuit Judge MIKVA.

MIKVA, Circuit Judge:

In 1970, as part of Congress' comprehensive reform of postal administration, the Postal Service was directed to ensure "the establishment and maintenance of a fair and equitable classification system for all mail." 39 U.S.C. § 3623(c)(1) (1976). This case arises from a classification decision of the Governors of the Postal Service that implemented a worksharing discount for third-class bulk mailers who presort their mail in a certain way. Although we reject most of petitioners' challenges to that decision, we agree with petitioners that the Governors misinterpreted and may have exceeded their statutory authority by phasing in the discount only as applied to nonprofit third-class bulk mailers. Accordingly, we return the matter to the Postal Service for further consideration.

I. BACKGROUND
A. The Postal Reorganization Act of 1970

The Postal Reorganization Act of 1970 (Act), 39 U.S.C. §§ 101-5605 (1976), created the United States Postal Service (USPS), an "independent establishment of the executive branch of the Government." Id. § 201. The Act also set up the Postal Rate Commission (PRC or Commission), an independent expert agency charged with making recommendations to the Governors of the Postal Service on rate and classification matters. See id. §§ 3601-3604, 3622-3624. One of the principal goals of the reorganization was to produce a self-supporting, efficient structure that would operate without congressional subsidies and also without excessive congressional regulation.

To that end, the Act contemplates that decisions on postal rates and classifications be made jointly by the Governors of the Postal Service and the Postal Rate Commission, acting as "partner(s), ... work(ing) together to achieve a truly effective postal service." S.Rep.No.912, 91st Cong., 2d Sess. 13 (1970). The Act provides that the Postal Service may initiate changes in postal rates and classifications by requesting that the Commission formulate a proposal. See 39 U.S.C. §§ 3622, 3623. After holding hearings and taking into account the relevant policies described in the Act, the PRC submits a recommended decision to the Governors. See id. §§ 3622-3624. The Governors, nine presidentially appointed officials who have, among other powers, the authority to act on the PRC's rate and classification proposals, then have three options: they may approve the Commission's suggestion; allow it to take effect under protest and either seek judicial review or return the issue to the PRC for reconsideration; or reject the proposal. See id. §§ 202, 3625.

If the third approach is taken, and the recommendation is rejected, the Postal Service may resubmit its request to the Commission for further study. The PRC's recommendation after reconsideration is again subject to review by the Governors, who this time have the additional option of modifying that decision under certain circumstances. See id. § 3625(d). This was the process that led to the decision on review here.

B. The Controversy

Third-class mail, consisting primarily of circulars and catalogs, has traditionally been eligible for a bulk rate when mailed in quantity and sorted according to postal regulations. This rate, which is substantially lower than that for single-piece third-class mail, has been available to both regular (commercial) and nonprofit third-class mailers. Since 1952, the bulk rate for nonprofit mail has been less than that for regular mail. The postal regulations in effect before promulgation of the order challenged here required that bulk mail be sorted according to zip code: ten or more pieces of mail addressed to a particular zip code were to be bundled together and labelled accordingly.

On September 8, 1978, the Postal Service (respondent) submitted to the PRC a proposal for creation of a new subclassification of regular third-class bulk mail. Respondent recommended that a worksharing discount be offered to regular third-class mailers who presorted their mail according to the particular carrier routes. 1 This additional sortation was to be optional, but the discount was available only to regular third-class mailers, and not to nonprofit mailers.

The PRC permitted petitioners (NESS) to intervene and to present a parallel proposal applicable to nonprofit third-class mailers. Hearings were held, as required by section 3624(a) of the Act. During the proceedings, the PRC notified the parties that it was considering a three-tier rate structure for third-class bulk mailers the lowest rate for carrier-route presorted mail, a slightly higher rate for mail separated according to zip code, and the highest rate for all other third-class bulk mail. The Commission invited comments and heard testimony on this proposal, but did not publish notice in the Federal Register that it was contemplating a three-tier system.

On November 28, 1979, the PRC issued its first Opinion and Recommended Decision (First PRC Opinion), PRC Docket No. MC78-2, reprinted in Supplemental Appendix (SA) at 1, which included a three-tier rate structure for both regular and nonprofit third-class bulk mail. 2 The new discounts for nonprofit mailers were to be phased in over a period of years according to a schedule "which maintain(ed) the ratio of phased rates to full rates which existed prior to the restructuring of the classification schedule." Id. at 51, SA at 55.

This recommendation was rejected on December 4, 1979, by the Governors of the Postal Service, who disapproved the PRC's opinion on a number of grounds. See Decision of the Governors of the USPS re Recommended Decision of the PRC on Bulk Third-Class Mail (First USPS Opinion), reprinted in SA at 150. The Governors chastised the Commission for exceeding their statutory authority by transforming the USPS's straightforward request into a complex set of recommendations that would work substantial changes on the rate structure for third-class bulk mail. See id. at 1-2, SA at 150-51. In addition, the Governors had a number of specific objections to the PRC's decision, for example, that an increase was proposed in rates charged a majority of third-class bulk mailers, who had been given only minimal notice and no opportunity to present their views, and that the Commission lacked jurisdiction to adopt phasing schedules. See id. at 3, 5-6, SA at 152, 154-55.

After the Governors' rejection of the PRC's proposal, the Postal Service exercised its right to resubmit its request to the PRC. See 39 U.S.C. § 3625(d). Following reconsideration, the PRC issued a second opinion on March 24, 1980, with two of the five Commissioners dissenting. Opinion and Recommended Decision upon Reconsideration (Second PRC Opinion), reprinted in S.A. at 158. Although this opinion modified the first recommendation in part, the PRC refused to abandon the three-tier rate structure or the phasing schedule. The matter then went back to the Governors.

In an opinion issued April 20, 1980, the Governors utilized their statutory authority to modify a proposal submitted by the Commission after reconsideration, see 39 U.S.C. § 3625(d). Decision of the Governors of the USPS re Further Recommended Decision of the PRC on Bulk Third-Class Mail (Second USPS Opinion), reprinted in SA at 232. The Governors chose to implement a compromise settlement, reprinted in Joint Appendix (JA) at 778, which had been agreed to by respondent and five intervenors, but opposed by NESS and two other parties, and which had been recommended by the two dissenting Commissioners. Under the terms of this settlement, a two-tier rate structure was adopted for both regular and nonprofit third-class mailers: for each type of mail, the current rate was retained, with a discount added for carrier-route presorted mail. The discount was set at a level less than the cost savings expected to be realized by the Postal Service as a result of the worksharing. The Governors also modified the PRC's phasing schedule for nonprofit rates to provide an immediate 0.1cents per-piece discount for carrier-route presorted mail, which would then gradually rise to 1.1cents by July 6, 1987 3; the entire discount for commercial mailers was to take effect at once. 4

It is from this order that petitioners appeal. They argue that the Governors' phasing schedule for the discount is not authorized because the Act contemplates phasing only of postage increases, see 39 U.S.C. § 3626, and because applying the phase-in solely to nonprofit mailers is contrary to the Act's prohibition of undue rate discrimination, see id. § 403(c). Petitioners also challenge the Governors' decision to modify the PRC's recommendation: they insist that the Governors erred in making the required determination that the rates proposed by the PRC would not generate sufficient revenues to cover costs. Finally, NESS maintains that the Governors violated the Administrative Procedure Act by failing to afford notice and opportunity for...

To continue reading

Request your trial
27 cases
  • Shane v. Buck
    • United States
    • U.S. District Court — District of Utah
    • 28 Junio 1985
    ... ... Howard L. BUCK and United States Postal Service, Defendants ... Civ. No. C-84-0780W ... 5 Nat. Easter Seal Soc. v. U.S. Postal Service, 656 F.2d 754, ... including laboratories engaged in national defense research and production activities; ... ...
  • Judicial Watch, Inc. v. U.S. Dept. of Energy
    • United States
    • U.S. District Court — District of Columbia
    • 31 Marzo 2004
    ... ... Executive Office of the President, the National Energy Policy Development Group ("NEPDG"). See ... v. Internal Revenue Service, 359 F.3d 595, 599 (D.C.Cir.2004) (quoting ... official requested this study" and the "US Government was not a paid subscriber to the ... v. United States Postal Service, 297 F.Supp.2d 252, 258-59 (D.D.C.2004) ... ...
  • Pennsylvania v. DeJoy
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • 28 Septiembre 2020
    ... ... , Philadelphia, PA, for United States Postal Service. MEMORANDUM Gerald Austin McHugh, ... 3661, when they made national changes to postal services without submitting a ... : "[w]hen the express terms of a statute give us one answer and extratextual considerations ... 39 U.S.C. 410 ; Nat'l Easter Seal Soc. for Crippled Children & Adults v. U.S ... ...
  • Reese Bros., Inc. v. U.S. Postal Serv.
    • United States
    • U.S. District Court — District of Columbia
    • 27 Noviembre 2012
    ... ... UNITED STATES POSTAL SERVICE, Defendant/Counterclaim Plaintiff/ThirdParty ... 3626. National Retired Teachers Association v. U.S. Postal ... rate, or give us an opportunity to review your contracts with the ... 3d 716, 728 (9th Cir.2004); see also Int'l Soc'y for Krishna Consciousness, Inc. v. Lee, 505 ... of the Postal Service.); see also Nat'l Easter Seal Soc'y v. U.S. Postal Serv., 656 F.2d 754, ... F (Agreement between RBI and Vanished Children's Alliance, Inc. 10(d)) (same).) 22. See DMM ... ...
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT