Am. Postal Workers Union v. Postal Regulatory Comm'n, 15-1156

• Decision Date: 29 November 2016
• Docket Number: No. 15-1156,15-1156
• Citation: 842 F.3d 711
• Parties: American Postal Workers Union, AFL–CIO, Petitioner v. Postal Regulatory Commission, Respondent United States Postal Service, Intervenor
• Court: U.S. Court of Appeals — District of Columbia Circuit

842 F.3d 711

American Postal Workers Union, AFL–CIO, Petitioner

v. Postal Regulatory Commission, RespondentUnited States Postal Service, Intervenor

No. 15-1156

United States Court of Appeals, District of Columbia Circuit.

Argued October 20, 2016

Decided November 29, 2016

Michael T. Anderson, Boston, MA, argued the cause for petitioner. With him on the brief were Lorrie E. Bradley Washington, DC, and Jeremiah Fugit.

Jeffrey E. Sandberg, Attorney, U.S. Department of Justice, argued the cause for respondent. With him on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Michael S. Raab, Attorney, David A. Trissell, General Counsel, Postal Regulatory Commission, and Christopher Laver, Deputy General Counsel.

Before: Wilkins, Circuit Judge, and Edwards and Williams, Senior Circuit Judges.

Wilkins, Circuit Judge:

The American Postal Workers Union (the "Union") petitions this Court for review of the Postal Regulatory Commission's ("PRC") denial of its December 13, 2013 amended complaint. In its amended complaint, the Union alleged that the United States Postal Service failed to comply with First–Class Mail service standards. See Am. Compl. ¶ 20. Upon review, the PRC dismissed the Union's amended complaint for three reasons. First, the PRC explained that the service standards set forth in 39 C.F.R. § 121.1 are service "expectations" and not service "requirements." U.S. Postal Regulatory Comm'n, Order No. 2512, Order Granting Motion for Reconsideration and Granting Motion to Dismiss 9 (May 27, 2015) [hereinafter PRC Order No. 2512]; see id. at 14. Second, the PRC ruled it remedied the Postal Service's noncompliance when it instructed the Postal Service to improve service compliance in the Annual Compliance Determination. Id. at 17–20. Third, the PRC noted that the Union's amended complaint failed to raise new or material issues of fact or law. Id. at 13–17. For the following reasons, we deny the Union's petition.

I.

In 2006, Congress enacted the Postal Accountability and Enhancement Act ("PAEA") to reform postal operations and mitigate the U.S. Postal Service's financial difficulties. See Postal Accountability & Enhancement Act, Pub. L. No. 109–435, 120 Stat. 3198 (2006). Congress concluded that the Postal Service maintained more facilities than economically necessary, and instructed the Postal Service to devise a strategy for eliminating excess processing capacity. Id. § 302(c)(1)(B), 120 Stat. at 3219. As part of this mandate, Congress created the PRC to ensure postal accountability and oversee postal functions and facility reductions. See 39 U.S.C. § 501.

The PAEA required the Postal Service to establish a set of service standards for market-dominant products, including First–Class Mail. Id. § 3691(a). These standards must be devised in conjunction with the PRC, and serve as enforceable benchmarks published in the Code of Federal Regulations. Id. ; see also U.S. Postal Regulatory Comm'n, Order No. 465, Order Establishing Final Rules Concerning Periodic Reporting of Service Performance Measurements and Customer Satisfaction 5 (May 25, 2010). The service standards are designed to achieve the general policy goals of mail reliability and speed, and specify the amount of time within which a customer may ordinarily expect his mail to be delivered. 39 U.S.C. § 3691(b)(1). The Postal Service promulgated its initial service standards in 2007, and has revised those standards periodically. Id. § 3691(a).

As relevant to this case, the Postal Service issued a final rule on May 25, 2012, altering its existing service standards in conjunction with the Mail Processing Network Rationalization ("MPNR") initiative. The MPNR initiative proposed closing more than 229 mail processing facilities in two phases for a forecasted net savings of $2.1 billion. See U.S. Postal Regulatory Comm'n, No. N2012–1, Advisory Opinion on Mail Processing Network Rationalization Changes 1, 28, 46 (Sept. 28, 2012) [hereinafter MPNR Advisory Opinion]; see generally Revised Service Standards for Market-Dominant Mail Products, 77 Fed. Reg. 31,190, 31,191 –92 (May 25, 2012). During Phase 1, which was scheduled to last from July 1, 2012 through February 2013, the Postal Service proposed closing approximately 140 plants. 77 Fed. Reg. at 31,192 ; MPNR Advisory Opinion, supra , at 46. Phase 2, which would result in the closure of the remaining plants, was scheduled to begin in February 2014. 77 Fed. Reg. at 31,192 ; MPNR Advisory Opinion, supra , at 46. The post-February 2014 service standards for First–Class Mail are summarized as follows:¹

• Overnight Mail: An overnight service standard will be applied to intra-Sectional Center Facility ("SCF") domestic Presort First Class Mail pieces properly accepted at the SCF before the day-zero Critical Entry Time ("CET"). 77 Fed. Reg. at 31,194. The overnight standard will no longer apply to mail sent by retail customers, regardless of location. Id.

• Two–Day Mail: A two-day service standard will be applied to all inter-SCF domestic First–Class Mail pieces that are properly accepted before the day-zero CET if the drive time between the origin Processing and Distribution Center or Facility and destination SCF is six hours or less. Id.

• Three-, Four-, and Five-Day Mail: The three-, four-, and five-day service standards remain unchanged. A three-day service standard will be applied to all domestic First–Class Mail pieces properly accepted before the day-zero CET if the overnight and two-day service standards do not apply and additional origin/destination criteria are satisfied. Id. at 31,194 –95. A four-day service standard will apply to domestic First–Class Mail pieces properly accepted before the day-zero CET if the overnight, two-day, and three-day service standards do not apply and additional origin/destination criteria are satisfied. 39 C.F.R. § 121.1(d) (2014). A five-day service standard will apply to "all remaining domestic First–Class Mail pieces properly accepted before the day-zero CET." Id. § 121.1(e).

These new service standards shifted a substantial portion of mail previously subject to the overnight standard to either the two-, three-, four-, or five-day service standards, and further transferred a large volume of the two-day mail to the three-, four-, and five-day service standards. PRC Order No. 2512, supra , at 18; MPNR Advisory Opinion, supra , at 7; U.S. Postal Regulatory Comm'n, Annual Compliance Determination Report Fiscal Year 2013 105 (Mar. 27, 2014) [hereinafter ACD FY 2013].

The PAEA further directs the Postal Service to develop a "plan" for meeting its service standards, including the establishment of "performance goals" for mail delivery.

PAEA § 302(a), (b)(1), 120 Stat. at 3219; see also U.S. Postal Serv., Postal Accountability and Enhancement Act § 302 Network Plan (June 2008), available at https://about.usps.com/postal-act-2006/postal-service-networkplan.pdf [hereinafter Network Plan]. In accordance with this directive, the Postal Service created a set of "performance targets" to track its success in meeting its service standards. See Network Plan, supra , at 7. For fiscal year 2013, the target on-time delivery rates were 96.7%, 95.1%, and 95.0% for mail subject to overnight, two-day, and three- to five-day service standards, respectively. U.S. Postal Regulatory Comm'n, Annual Compliance Determination Report Fiscal Year 2014 96 tbl. V–4 (Mar. 27, 2015) [hereinafter ACD FY 2014]. The targets increased for fiscal year 2014 to 96.8%, 96.5%, and 95.25% for mail subject to overnight, two-day, and three- to five-day service standards, respectively. Id.

To evaluate the Postal Service's compliance with its service standards, the PRC must issue an Annual Compliance Determination ("ACD") report for each fiscal year. See 39 U.S.C. § 3653(b). If the PRC finds noncompliance, it must take appropriate action to remedy the noncompliance. Id. § 3653(c). During Phase 1 of the MPNR initiative, the PRC concluded that First–Class Mail presorted letters and postcards met or exceeded all annual service performance targets for fiscal year 2013. ACD FY 2013, supra , at 99, 105. Comparably, First–Class Mail single-piece letters and postcards met or exceeded service performance goals for the overnight and two-day service targets, but did not reach the service performance targets for the three- to five-day mail category. Id. at 105. First–Class Mail flats and parcels, however, underperformed and failed to reach any of their on-time delivery performance goals for the third year in a row. Id. at 99, 104, 106–07.

The ACD results for fiscal year 2014 showed a continual decline in Postal Service performance. While First–Class Mail presorted letters and postcards subject to overnight or two-day service standards continued to meet their applicable service goals, all remaining First–Class Mail products failed to satisfy their service requirements, including: (1) single-piece letters and postcards subject to overnight, two-day, and three- to five-day delivery; (2) pre-sorted letters and postcards subject to three- and five-day delivery; (3) flats; (4) parcels; (5) inbound letter post; and (6) outbound single-piece international letters. ACD FY 2014, supra , at 87–88 tbls. V–1, V–2. Although the decreased service performance occurred during Phase 2 of the MPNR initiative, the Postal Service linked its noncompliance to severe winter storms that plagued the first and second quarters of fiscal year 2014. Id. at 88. After reviewing the data, the PRC concluded that winter storms likely impacted service delivery times, but nonetheless cautioned that "weather cannot consistently be employed as a catchall excuse for failing to meet performance standards." Id. at 104. The PRC further instructed that it "expects service performance to improve in FY 2015." Id. Regarding First–Class Mail flats specifically, the PRC directed the Postal Service to "improve service for First–Class Mail Flats in FY 2015 or to provide an explanation...