United States Postal v. Commis, 09-1032.

• Decision Date: 30 March 2010
• Docket Number: No. 09-1032.,09-1032.
• Citation: 599 F.3d 705
• Parties: UNITED STATES POSTAL SERVICE, Petitioner v. POSTAL REGULATORY COMMISSION and United States of America, Respondents. Alliance of Nonprofit Mailers, et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

599 F.3d 705

UNITED STATES POSTAL SERVICE, Petitioner v. POSTAL REGULATORY COMMISSION and United States of America, Respondents. Alliance of Nonprofit Mailers, et al., Intervenors.

No. 09-1032.

United States Court of Appeals

District of Columbia Circuit.

Argued: Feb. 8, 2010.

Decided: March 30, 2010.

On Petition for Review of an Order of the Postal Regulatory Commission.

Miriam R. Nemetz argued the cause for petitioner. With her on the briefs were Kenneth S. Geller and Melanie W. Rughani.

Eric Fleisig-Greene, Attorney, U.S. Department of Justice, argued the cause for respondents. With him on the brief were Michael S. Raab, Attorney, Stephen L Sharfman, General Counsel, Postal Regulatory Commission, R. Brian Corcoran, Assistant General Counsel, and Kenneth E Richardson, Attorney.

Before: TATEL, Circuit Judge, and SILBERMAN and WILLIAMS, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge SILBERMAN.

SILBERMAN, Senior Circuit Judge:

The United States Postal Service seeks review of a Postal Regulatory Commission order concluding that certain activities carried on by the Service—the provision of philatelic services (relating to stamp collecting) and the leasing and licensing of Postal Service property—are, under the Postal Accountability and Enhancement Act, subject to the Commission's review for possible termination. We deny the Service's petition.

I

In 1970, what was formerly the cabinetlevel Post Office Department was transformed by statute into the modern government-owned corporation known as the United States Postal Service. As part of this transformation, the Service was given a number of new powers: inter alia, the authority to acquire, sell, build, and lease property; to provide philatelic services and to provide "special nonpostal or similar services." ¹

Accordingly, the Service began to engage in a number of ventures unrelated or only tangentially related to the delivery of mail. The Service gradually expanded its lines of business, and by the late 1990s, its nonpostal activities were substantial. They included computer-based mail, international fax services, photocopying, philatelic services, antenna leases, and selling phonecards, T-shirts, mugs, and other souvenirs.

Congress considered legislation that would eliminate or limit the Service's authority to provide such nonpostal services as early as 1996, ² but these efforts were redoubled following the 2003 publication of a report by a presidential blue-ribbon commission tasked with making recommendations to improve the Postal Service. The commission found that the Service had entered "dubious new business ventures that most Americans would consider far afield of its basic function—delivering the mail to everyone." These efforts largely had not been profitable. But by forcing privatecompanies to compete against the Service these ventures had resulted in market distortion, and the Service had been distracted from improving traditional postal services. So the commission recommended that Congress restrict the Service's authority to include only services directly related to the delivery of mail.³

Congress responded in 2006 with the Postal Accountability and Enhancement Act. It repealed the Service's authority to offer "special nonpostal or similar services, " but it did not explicitly mention certain nonpostal activities separately authorized under various statutory provisions, such as the ones particularly at issue in this case—philatelic and property leasing activities. It did, however, provide that the Postal Regulatory Commission was to conduct a review of "each nonpostal service offered by the Postal Service"⁴(emphasis added) to determine whether it should be terminated or continued subject to Commission regulation as either a market dominant, competitive or experimental product.⁵

Several other statutory provisions should be mentioned. A grandfather clause, § 404(e)(2), ensured that certain existing nonpostal services could continue pending Commission review, and § 404(e)(1) defines a nonpostal service as "any service that is not a postal service" (emphasis added). Elsewhere in the postal statutes, postal services are defined to cover "the delivery of letters, printed matter or mailable packages, including acceptance, collection, sorting, transportation, or other functions ancillary thereto."⁶

In December of 2007, the Commission started its review of nonpostal services. The Commission asked the Service to provide details of all of its activities that did not meet the statutory definition of a postal service. The Service refused to do so because, in its view, the Act only gave the Commission authority to review those nonpostal services previously conducted under the repealed section of § 404 (which authorized "special nonpostal or similar services") and did not give authority to review activities authorized by specific grants ofauthority. Thus, according to the Service the Commission could not review the Service's provision of philatelic services or its leasing and licensing of property because the Act left in place specific statutory authorization for those activities in § 404(a)(5) and § 401(5) respectively. Alternatively, the Service argued that its leasing and licensing of property were not subject to the Commission's review because those were not "services" at all. The Commission rejected both arguments and ordered the Service to provide a list of all nonpostal services; the Service complied but continued to assert that the Commission was acting ultra vires.

After nearly a year of adjudicatory proceedings, the Commission issued the results of the review required by § 404(e)(3). Its order, once again, rejected the argument that it was not authorized to review nonpostal services for which an independent grant of statutory authority existed. The Commission explained that under the statute, the Service can only provide two (mutually exclusive) types of services— postal services and nonpostal services— and that § 404(e)(3) plainly requires the Commission to review all nonpostal services. The Commission added that the Service's argument that the statute creates a third category of services—not postal and yet still not subject to the Commission's power—ignores the purpose underlying the Act, which was to rein in all of the Service's nonpostal commercial ventures.

Also rejected was the argument that the leasing and licensing of property did not constitute a "service" under the act. Since the word "service" was not defined by the statute, the Commission sought suggestions by parties to the proceeding, before defining the term as "any ongoing commercial activity offered to the public for the purpose of financial gain." The Commission said that definition encompassed the types of activities that, in its view, were the cause for congressional concerns about the Service straying from its core responsibilities. The Commission concluded that leasing of property and licensing of intellectual property constituted services under this definition. However, the Commission did agree that several revenuegenerating activities—including the sale of property as well as services provided to government agencies—did not qualify as "services" and thus were not subject to the Commission's review.

After its review, the Commission determined that both of the services relevant to this appeal—philatelic services and the licensing and leasing of property—should be allowed to continue, subject to the Commission's regulation over philatelic services as a market dominant product, and licensing and leasing of property as a competitive product.

II

The Service reiterates before us the same arguments it presented to the Commission—1) that the Commission's authority under § 404(e)(3) does not extend to nonpostal services authorized under "independent" explicit grants of authority and alternatively, 2) that leasing and licensing of property does not even constitute a "service." Although the Commission authorized the continuation of the activities in question—philatelic services and leasing—the Service objects to the regulatory burden it must endure.⁷

Taking up the first argument, we note that the Service has a difficult linguistic task. The key statutory provision on which the Commission relies, § 404(e)(3), does say that the Commission shall review each nonpostal service offered by the Postal Service without any stated limitation. Assuming that property leasing and philatelic services are nonpostal services, the plain language of that subsection would appear to cover both activities (the Service does not challenge the Commission's determination that philatelic services are nonpostal services).

In a heroic effort to create at least an ambiguity (the Service actually goes further to claim the statute plainly supports its reading), the Service points first to subsection (e)(2), the grandfather clause, which states that "[n]othing in this section shall be considered to permit or require that the Postal Service provide any nonpostal service, except that the Postal Service may provide nonpostal services which were offered as of January 1, 2006 as provided under this subsection" (emphasis added). The Service's argument, as we understand it, is that by using the phrase "in this section" in § 404(e)(2), the Congress meant to cabin § 404(e)(3), another subsection, in the same fashion, i.e., that § 404(e)(3)'s review authority, despite the phrase, "each nonpostal sendee, " was limited only to nonpostal sendees that were grandfathered by § 404(e)(2). Of course, the obvious response is that § 404(e)(3) does not contain the limitation in § 404(e)(2), and its absence creates a negative implication—that no limitation was intended. Indeed, the "nothing in this section" clause's purpose, apparently was only to rebut the possible implication that this section could, in any respect, constitute a new grant of authority to offer nonpostal services. Thus, we find it difficult to...