891 F.2d 304 (D.C. Cir. 1989), 88-5436, American Postal Workers Union, AFL-CIO v. U.S. Postal Service

Docket Nº:88-5436.
Citation:891 F.2d 304
Party Name:AMERICAN POSTAL WORKERS UNION, AFL-CIO, et al., Appellants, v. UNITED STATES POSTAL SERVICE, Appellee.
Case Date:December 08, 1989
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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891 F.2d 304 (D.C. Cir. 1989)

AMERICAN POSTAL WORKERS UNION, AFL-CIO, et al., Appellants,

v.

UNITED STATES POSTAL SERVICE, Appellee.

No. 88-5436.

United States Court of Appeals, District of Columbia Circuit.

December 8, 1989

As Amended Dec. 8, 1989.

Argued Oct. 19, 1989.

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Appeal from the United States District Court for the District of Columbia; Richey, J.

Keith E. Secular, New York City, with whom Anton G. Hajjar, Washington, D.C., was on brief, for appellants.

Wilma A. Lewis, Asst. U.S. Atty. with whom Jay B. Stephens, U.S. Atty., John D. Bates, R. Craig Lawrence, Asst. U.S. Attys. and Charles D. Hawley, Atty., Washington, D.C., U.S. Postal Service were on brief, for appellee.

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Before WALD, Chief Judge, and MIKVA and RUTH BADER GINSBURG, Circuit judges.

Opinion for the Court filed by Circuit Judge MIKVA.

Concurring opinion filed by Circuit Judge RUTH BADER GINSBURG.

MIKVA, Circuit Judge:

Appellants in this action challenge the district court's grant of summary judgment for the United States Postal Service ("USPS" or "Postal Service"). The district court found that appellants lacked standing to seek review of a final order of the USPS which suspended the Postal Service's statutory monopoly to allow private entities to participate in a mail delivery market known as international remailing. On the merits, the district court concluded that the USPS did not act arbitrarily, capriciously or beyond its statutory authority in promulgating the international remailing regulation. Appellants, the American Postal Workers Union, AFL-CIO and the National Association of Letter Carriers, AFL-CIO (collectively, "the Unions") assert that they are within the "zone of interests" implicated by the Private Express Statutes ("PES")--the statutes codifying the Postal Service's historic monopoly on the carriage of letters over postal routes. The Unions challenge the USPS's wholesale suspension of the international remailing restriction as arbitrary, capricious and not supported by a sufficient factual showing that the "public interest" required such suspension.

We agree. The district court correctly concluded that the Unions satisfy the requisites for article III standing. We find, however, that the district court erred in concluding that the Unions' interest in preserving employment opportunities bears no reasonable relationship to the purposes of the PES. Because the Private Express Statutes are an integral part of a comprehensive statutory scheme which clearly addresses the welfare and employment of postal employees, we conclude that the Unions are within the zone of interests of the PES. The USPS's suspension of the PES to allow unrestricted international remailing by private entities constitutes arbitrary and capricious agency action because the USPS did not develop a record to project the impact of the suspension on uniform postal rates and service. Consequently, we remand this case to the district court to vacate its order and allow the USPS to reopen its proceedings or take other action consistent with this opinion.

  1. BACKGROUND

    The Private Express Statutes historically have granted to the USPS a monopoly over the carriage of letters by prohibiting, with certain exceptions, private competition in conveying letters over postal routes. See 18 U.S.C. §§ 1693-1699, 1729 (1982); 39 U.S.C. §§ 601-606 (1982). The USPS may "suspend [the Private Express restrictions] upon any mail route where the public interest requires the suspension." 39 U.S.C. § 601(b). In 1979, the Postal Service exercised its authority under § 601(b) to suspend the PES for the carriage of extremely urgent letters, otherwise known as express mail or overnight service. See 44 Fed.Reg. 61,181 (Oct. 24, 1979). As a result, private mail services began to rely on the urgent letter suspension to support the practice of "international remailing," or carriage of letters overseas for deposit into foreign postal systems--thus allowing users of this service to bypass completely the U.S. Postal Service. In October of 1985, the USPS announced its intention to amend the urgent letter suspension to limit sharply its applicability to international remailing. See 50 Fed.Reg. 41,462 (Oct. 10, 1985). This proposal was greeted with massive opposition from the business community and the disapproval of several members of Congress and senior executives in the Reagan Administration. Opponents argued primarily that preventing private remailers from offering inexpensive, speedy service would jeopardize the ability of American companies to compete for business abroad.

    In March of 1986, the Chairman of the Postal Service's Board of Governors, John McKean, announced the USPS's intention to initiate another rulemaking proceeding "to remove the cloud that now hangs over

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    the international remail services and preserve the benefits of desirable competition between the Postal Service and private companies." The USPS withdrew its earlier proposal and began considering whether to suspend the PES to allow international remailing. See 51 Fed.Reg. 9652 (March 21, 1986). Two rulemaking notices to this effect and a public meeting produced little additional factual information.

    On August 20, 1986, the USPS published a final rule suspending the PES to permit unrestricted international remailing. See 51 Fed.Reg. 29,636. The regulation allows private carriers to deliver mail from the United States directly to foreign postal systems, bypassing the USPS, without meeting certain cost conditions that applied under the urgent letter suspension. See 39 CFR § 320.8 (1988). Responding to the Unions' complaint that the record was inadequate to support a "public interest" finding, the USPS stated:

    The Postal Service ... sought ... to obtain precise and detailed information regarding the level of services provided by remailers, and the benefits which [their] customers ... derive. It may well be, however, that because of the diverse character of the remail industry and the relatively recent development of remailing, the comprehensive information we had hoped to receive to supplement the essentially anecdotal information, which was furnished to us, is not available. Nonetheless, the Postal Service has compiled a record which appears to demonstrate the existence of a public benefit and to support the suspension.

    51 Fed.Reg. 29,637 (Aug. 20, 1986). Indeed, in its final notice of proposed rulemaking the USPS had emphasized the sketchy nature of the factual record, referring to the "anecdotal character" of tables charting relative delivery times, the "imprecision of the data" on the need of U.S. businesses for private international remailing, and the presence of "little or no reliable information as to the amount of revenues diverted to date by the activities of remailers." 51 Fed.Reg. 21,931 (June 17, 1986).

    The Unions filed suit in the district court, seeking declaratory and injunctive relief against enforcement of the international remailing regulation. The district courts have original jurisdiction over suits by or against the Postal Service. 39 U.S.C. § 409 (1982). Although the USPS is exempt from the strictures of the Administrative Procedure Act ("APA"), see 39 U.S.C. § 410(a), it has chosen to follow APA procedures when promulgating rules affecting the PES. See 39 CFR § 310.7 (1988). Therefore, the APA provides the appropriate standards for evaluating the procedural and substantive issues in this case.

    Issuing a memorandum opinion, the district court granted the Postal Service's motion for summary judgment. Because the suspension threatened workers with the prospect of reduced employment opportunities, the court found that the Unions met the constitutional requirements for standing under Article III. The court concluded, however, that the Unions were not within the zone of interests implicated by the PES. Applying Clarke v. Securities Industry Association, 479 U.S. 388, 107 S.Ct. 750, 93 L.Ed.2d 757 (1987), the court reasoned that the Unions' interests bore no reasonable relationship to the purposes of the PES because those statutes were "designed to ensure only that the Service maintains sufficient revenue to be able to provide efficient and effective mail delivery services to all aspects of the market." In addition, the court asserted that, in certain circumstances, the interests of the Unions might diverge from the purposes of the PES because Congress, in enacting the "public interest" exception, recognized that there might be situations in which the revenue objectives of the PES could be achieved without the benefit of a monopoly. Finally, the court concluded that a finding of standing in this case implicitly would afford standing "to any agency employee whose job or employment opportunities were threatened as a result of an agency decision."

    On the issue of statutory authority, the court reasoned that the "public interest requires" language of § 601(b) conferred broad discretion on the Postal Service "to

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    define the public interest in a given situation and to act accordingly." The court concluded that the suspension decision was made on a reasoned basis, rejecting the charge that the evidence was inadequate. While the court acknowledged "the relative dearth of empirical data" in the record, it relied upon court precedents which upheld agency decisions lacking factually specific support. See, e.g., FCC v. National Citizens Committee for Broadcasting, 436 U.S. 775, 813-14, 98 S.Ct. 2096, 2121, 56 L.Ed.2d 697 (1978) (factual specificity not always required where "a forecast of the direction in which future public interest lies necessarily involves deductions based upon the expert knowledge of the agency").

  2. ANALYSIS

    1. Standing

      The law of standing is based on a set of constitutional and...

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