Governors of U.S. Postal Service v. U. S. Postal Rate Commission

• Decision Date: 29 May 1981
• Docket Number: No. 80-1971,80-1971
• Citation: 654 F.2d 108
• Parties: The GOVERNORS OF the UNITED STATES POSTAL SERVICE, Petitioner, v. The UNITED STATES POSTAL RATE COMMISSION, Respondent, Southern Pacific Communications Company and GTE Telenet Communications Corporation, Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 108

654 F.2d 108

210 U.S.App.D.C. 1

The GOVERNORS OF the UNITED STATES POSTAL SERVICE, Petitioner, v. The UNITED STATES POSTAL RATE COMMISSION, Respondent Southern Pacific Communications Company and GTE Telenet Communications Corporation, Intervenors.

No. 80-1971.

United States Court of Appeals District of Columbia Circuit.

Argued Jan. 21, 1981.

Decided May 29, 1981.

Benjamin W. Heineman, Jr., Washington, D. C., with whom Joseph A. Califano, Jr., Louis A. Cox, Gen. Counsel and Harold J. Hughes, Associate Gen. Counsel, U. S. Postal Service, Washington, D. C., were on the brief, for petitioners.

David F. Stover, Gen. Counsel, U. S. Postal Rate Commission with whom Stephen A. Gold, Deputy Gen. Counsel and Ira M. Pesserilo, Atty., U. S. Postal Rate Commission, Washington, D. C., were on the brief, for respondent.

John V. Kenny, Washington, D. C., was on the brief, for intervenor, Southern Pacific Communications Co.

Donald E. Ward and Philip M. Walker, Washington, D. C., were on the brief, for intervenor, GTE Telenet Communications Corp.

Before WRIGHT, ROBB and EDWARDS, Circuit Judges.

Opinion for the Court filed by Circuit Judge ROBB.

Dissenting opinion filed by Circuit Judge J. SKELLY WRIGHT.

ROBB, Circuit Judge:

In this case we must resolve a dispute between two governmental agencies, the United States Postal Service and the Postal Rate Commission. Both these agencies have responsibilities under the Postal Reorganization Act, Pub.L. 91-375, 84 Stat. 719 (1970), codified at 39 U.S.C. § 101 et seq. (1976). Pursuant to that statute the Postal Service submitted to the Rate Commission a mail classification proposal to add to the Domestic Mail Classification Schedule a new "electronic mail" service known as "E-COM", an acronym for Electronic Computer Originated Mail. After the hearing required by sections 3623 and 3624 of the Act, 39 U.S.C. §§ 3623, 3624, the Commission transmitted to the Governors a decision recommending that the E-COM service be designated as "experimental" with a fixed terminal date. The Board of Governors contends on this appeal that the Commission has no authority to make such a recommendation. We hold that the Board is right.

By passing the Postal Reorganization Act in 1970 Congress abolished the old Post Office Department and created in its place the United States Postal Service and the Postal Rate Commission. One of the principal reasons for this sweeping revision of the postal establishment was inadequate or diffused management authority in the Post Office.

In 1970 postal management was beset with the problem of inadequate authority to perform the task of delivering the mail. For example, the practices and procedures of local post offices were often dictated by antiquated statutes and rules. Report of the President's Commission on Postal Organization, Towards Postal Excellence 18, 34 (1968) (President's Commission Report). Postmasters and other postal employees were often selected because of political loyalty rather than merit, id. at 40-41. The decision to build a postal facility was made by Congress, id. at 145. See H.R.Rep.No.91-1104, 91st Cong. 2d Sess. 5 (1970), U.S.Code Cong. & Admin.News 1970, p. 3649. Management decisions were shared by eight different governmental agencies, dividing up finance, transportation, and other functions. See Note, The Postal Reorganization Act: A Case Study of Regulated Industry Reform, 58 Va.L.Rev. 1030, 1032 (1972). In short, postal managers were given broad duties but their powers were insufficient to enable them to fulfill those duties. See President's Commission Report, supra at 33-34, 43-46; H.R.Rep.No.91-1104, supra, at 5.

The Postal Reorganization Act of 1970, an outgrowth of the President's Commission Report, was designed to free postal management from entangling red tape and to concentrate management authority so as to provide an efficient and economical postal system. See H.R.Rep.No.91-1104, supra, at 5-6; S.Rep. 91-912, 91st Cong., 2d Sess. 2, 4-5 (1970). To accomplish these purposes the Postal Service was established and charged with the duty to "plan, develop, promote, and provide adequate and efficient postal services at fair and reasonable rates and fees." 39 U.S.C. § 403(a). Among other powers the Postal Service was given the power "to adopt, amend, and repeal such rules and regulations as it deems necessary to accomplish the objectives of this title"; to enter into and perform contracts; to acquire personal or real property; to construct, operate, lease, and maintain buildings and facilities; and to determine the need for post offices, and postal and training facilities. 39 U.S.C. § 401(3), (5), (6); § 404(a)(3).

The Postal Service is governed by an eleven-member Board of Governors, nine of whom are appointed by the President. 39 U.S.C. § 202(a). One of the two remaining members, the Postmaster General, is appointed by the nine governors. 39 U.S.C. § 202(c). The eleventh member, the Deputy Postmaster General, is appointed by the nine governors and the Postmaster General. 39 U.S.C. § 202(d). The Governors oversee the Postal Service as it plans, develops promotes, and provides mail service throughout the United States. 39 U.S.C. §§ 202(d), 403(a).

The Postal Rate Commission was created as an independent establishment and charged with the duty of making recommendations to the Governors of the Postal Service with respect to rate, fee and classification matters. 39 U.S.C. §§ 3601, 3622, 3623 and 3624.

The Commission is composed of five commissioners appointed by the President. 39 U.S.C. § 3601. It is empowered, upon request from the Postal Service, to submit to the Service a recommended decision on changes in rates or fees. 39 U.S.C. § 3622. Upon such a request or on its own initiative, the Commission may submit a recommended decision on changes in the mail classification schedule. 39 U.S.C. § 3623(b).

In considering Postal Service requests for recommended decisions on rates, fees, and classifications under sections 3622 or 3623 the Commission is required to accord to the Postal Service, users of the mails, and an officer of the Commission representing the public, an opportunity for a hearing under 5 U.S.C. §§ 556-57. 39 U.S.C. § 3624(a), (b). The recommended decision which the Commission submits must address specifically the statutory criteria established under 39 U.S.C. § 3622 or § 3623. 39 U.S.C. § 3624(d).

Upon receiving a recommended decision of the Commission the Governors have several options. They may approve the Commission's recommendation and order it to take effect, 39 U.S.C. § 3625(b), or reject the decision and return it to the Commission for reconsideration. 39 U.S.C. § 3625(d). As an alternative the Governors may, under protest, allow the recommended decision to take effect and either seek judicial review under 39 U.S.C. § 3628 or return the decision to the Commission for reconsideration and a further recommended decision. 39 U.S.C. § 3625(c). If the Governors return the decision for reconsideration they may seek judicial review of the Commission's further recommended decision. 39 U.S.C. § 3625(c) & (d). ¹

At issue in this case is the scope of the Commission's authority in recommending decisions to the Governors pursuant to 39 U.S.C. § 3624. As we have said, the controversy arises out of a postal service proposal to enter the field of electronic mail and the Commission's recommended decision in response to that proposal.

As its name implies, Electronic Computer Originated Mail, or E-COM, is essentially a bulk mail service, whereby large quantities of computer-generated letters can be sent out. The messages need not be identical, because the computer can handle the insertions of differing addresses, amounts due (e. g., on bills) or other items from message to message. Upon reception at a specially equipped post office the electronic impulses representing the messages are converted by a printer into hard copy, placed in envelopes, and delivered as letters in the first class mail.

On September 8, 1978 the Postal Service requested the Commission to make and submit to the Governors a recommended decision on a change in the classification schedule to establish electronic computer originated mail as a new subclass of first class mail, known as E-COM. The Postal Service proposal contemplated a sole-source contract between the Postal Service and Western Union Telegraph Company. Under this contract the Service would accept E-COM messages at the site of Western Union's computer in Middletown, Virginia, and the messages would then be transmitted to one of twenty-five specially equipped post offices, known as Serving Post Offices or SPO's where they would be printed, inserted in envelopes and delivered as first class mail.

A number of intervenors appeared in the case, including the United States Department of Justice, the Federal Communications Commission, and the National Telecommunications and Information Administration of the Commerce Department, as well as a number of telecommunications firms. The Officer of the Commission, representing the interests of the general public pursuant to 39 U.S.C. § 3624(a), proposed an alternative system which he considered superior to the Service's plan. His plan was to distribute the data-processing equipment among the twenty-five specially equipped post offices, rather than limit it to Western Union's computer site. He believed his system was superior to the Service's plan because it contemplated free entry into the telecommunications phase by any qualified carrier and permitted the use of more modern and less expensive computers and lower rates.

After extensive hearings on the record the Commission recommended the Officer's proposal in preference to the Service's plan. The Commission also concluded that whatever system was chosen E-COM should be recommended as an "experiment", to provide for a resolution of questions which the Commission thought were left...