UPS Worldwide Forwarding, Inc. v. U.S. Postal Service

Decision Date15 September 1995
Docket NumberNo. 94-7423,94-7423
Citation66 F.3d 621
PartiesUPS WORLDWIDE FORWARDING, INC. v. UNITED STATES POSTAL SERVICE, Appellant. Air Courier Conference of America/International Committee (Intervenor in District Court).
CourtU.S. Court of Appeals — Third Circuit

Jonathan R. Siegel (argued), Douglas N. Letter, United States Department of Justice, Civil Division, Appellate Staff, Washington, DC, for appellant, United States Postal Service.

John E. McKeever (argued), Robert L. Kendall, Jr., Karen L. Tomlinson, Schnader, Harrison, Segal & Lewis, Philadelphia, PA, for appellee, UPS Worldwide Forwarding, Inc.

L. Peter Farkas, Graham & James, Washington, DC, for appellee, Air Courier Conference of America/International Committee.

Before: BECKER, SCIRICA, and WOOD, Jr. * , Circuit Judges.


SCIRICA, Circuit Judge.

In this case, UPS Worldwide Forwarding seeks to prevent the United States Postal Service from implementing a new service for customers that ship significant quantities of international mail. In response, the Postal Service attacks UPS's standing to bring suit. The district court determined that UPS had standing but that the Postal Service exceeded its authority in promulgating the new program. We will reverse.


In July 1992, the Postal Service announced the creation, on an interim basis, of an International Customized Mail ("ICM") service. See 57 Fed.Reg. 30651 (1992). Despite protests from UPS, a large delivery company that competes with the Postal Service, the Postal Service adopted the ICM program on a permanent basis in May 1993. See 58 Fed.Reg. 29778 (1993).

Under the ICM service, qualifying international mailers negotiate individualized service agreements with the Postal Service to establish the kind of services to be provided and the rate of postage. To qualify for the service, international mailers must be capable, on an annual basis, of mailing at least one million pounds of international mail or paying at least two million dollars in international postage. Id.

Two months after publication of the permanent regulation, UPS filed suit in the District of Delaware, alleging the ICM service violated several provisions of the Postal Reorganization Act ("PRA"), Pub.L. No. 91-375, 84 Stat. 719 (1970) (codified at 39 U.S.C. Secs. 101-5605). The Postal Service disagreed, claiming that its promulgation of the ICM regulation did not exceed its statutory authority. The Postal Service also contended that UPS lacked standing to file the action. Air Courier Conference of America/International Committee ("ACCA"), an unincorporated association of firms engaged in letter and parcel delivery services, then filed a motion to intervene.

Subsequently, the district court granted UPS's motion for summary judgment. UPS Worldwide Forwarding, Inc. v. United States Postal Serv., 853 F.Supp. 800 (D.Del.1994). First, the court held that UPS had standing to challenge the Postal Service program. Id. at 804. Second, the court found the ICM service violated several sections of the PRA, codified at 39 U.S.C. Secs. 101(d), 1 403(b)-(c), 2 and 407(a) 3 (1988), and issued an injunction barring the Postal Service from operating the program. Id. at 804-07. Finally, the court granted ACCA's motion to intervene. Id. at 806-07. The Postal Service appealed.

The district court had jurisdiction under 28 U.S.C. Secs. 1331 and 1339 (1988) and 39 U.S.C. Sec. 409(a) (1988). We have jurisdiction under 28 U.S.C. Sec. 1291 (1988). Our review of these issues of standing and statutory construction is plenary. See Polychrome Int'l Corp. v. Krigger, 5 F.3d 1522, 1530 n. 19 (3d Cir.1993) ("We have plenary review of the district court's judgment on standing."); Resolution Trust Corp. v. Cityfed Fin. Corp., 57 F.3d 1231, 1237 (3d Cir.1995) ("Our review of the construction of federal statutes is plenary.").


Before addressing standing and the merits, we consider the history of the statutory sections and regulations at the core of this dispute. This review takes us back more than two hundred years.

In 1789, the First Congress established a Post Office and provided for the appointment of a Postmaster General. See Act of Sept. 22, 1789, ch. 16, 1 Stat. 70; National Ass'n of Greeting Card Publishers v. United States Postal Serv., 462 U.S. 810, 813, 103 S.Ct. 2717, 2721, 77 L.Ed.2d 195 (1983). Three years later, Congress approved a statute that "established basic mail rates, granted the Post Office Department a monopoly on mail delivery and authorized the creation of post roads." See Joseph W. Belluck, Increasing Citizen Participation in U.S. Postal Service Policy Making, 42 Buff.L.Rev. 253, 257 (1994); see also Act of Feb. 20, 1792, ch. 7, 1 Stat. 232. Under this Act, Congress set the rates not only for domestic mail, but also for letters and parcels sent abroad. Id. Sec. 26, 1 Stat. at 239.

In 1825 and 1827, Congress passed laws prohibiting the private carriage of letters via stage, boat, horseback, or on foot, thereby "target[ing] transportation of mail which even then was contracted out to private carriers." Air Courier Conference of America v. American Postal Workers Union, 498 U.S. 517, 526, 111 S.Ct. 913, 919, 112 L.Ed.2d 1125 (1991). In the 1825 statute, Congress once again set the rate for domestic and international mail. See Act of Mar. 3, 1825, ch. 64, Secs. 13, 34, 4 Stat. 102, 105, 112.

Despite the prohibitions on private carriers of mail, "high postal rates enabled private expresses to make substantial inroads into the domestic market for delivery of letters and the 1825 and 1827 Acts proved unsuccessful in prosecuting them." Air Courier Conference, 498 U.S. at 526, 111 S.Ct. at 919. In response, Congress passed a series of laws between 1845 and 1851 reducing postage rates. Belluck, supra, at 258. Congress believed the 1845 Act, which strengthened the postal monopoly and reduced rates, "would have the dual virtues of driving private expresses out of business and increasing mail volume of the Post Office." Air Courier Conference, 498 U.S. at 527, 111 S.Ct. at 919 (citing Act of Mar. 3, 1845, 5 Stat. 732). The 1851 Act continued the trend of reducing rates, but for the first time permitted those international rates set by Congress to be changed via "postal treaty or convention already concluded or hereafter to be made." See Act. of Mar. 3, 1851, ch. 20, Sec. 1, 9 Stat. 587, 588. The Act also provided:

[T]he Postmaster General, by and with the advice and consent of the President of the United States, shall be, and he hereby is, authorized to reduce or enlarge, from time to time, the rates of postage upon all letters and other mailable matter conveyed between the United States and any foreign country, for the purpose of making better postal arrangements with other governments, or counteracting any adverse measures affecting our postal intercourse with foreign countries....

Id. Sec. 2, 9 Stat. at 589. In 1872, Congress combined into one statutory section the authority of the Postmaster General to negotiate postal treaties and change international rates. See Act of June 8, 1872, ch. 335, Sec. 167, 17 Stat. 283, 304 ("[T]he Postmaster General, by and with the advice and consent of the President, may negotiate and conclude postal treaties or conventions, and may reduce or increase the rates of postage on mail matter conveyed between the United States and foreign countries.").

Although technology advanced rapidly over the next century, the organization of postal services remained largely unchanged. Congress continued to set domestic mail rates see 39 U.S.C. chs. 51-69 (1964), and the Postmaster General retained the authority to change international rates, with the advice and consent of the President. Id. Sec. 505. Congress also maintained the Post Office monopoly over mail delivery in an effort to keep revenues high and mailing costs low. Air Courier Conference, 498 U.S. at 527-28, 111 S.Ct. at 919-20.

By 1970, however, the Post Office "faced a major financial crisis" that resulted in significant backlogs of mail and postal worker strikes. Belluck, supra, at 262, 265. Congress responded by passing the Postal Reorganization Act, an overhaul of the entire postal system that represented "a dramatic break with the past." See Mail Order Ass'n of America v. United States Postal Serv., 986 F.2d 509, 512 (D.C.Cir.1993); see also H.R. No. 1104, 91st Cong., 2d Sess. (1970), reprinted in 1970 U.S.C.C.A.N. 3649, 3651-52.

The PRA "abolished the Post Office Department, which since 1789 had administered the Nation's mails," and replaced it with the United States Postal Service, an independent agency within the executive branch. National Ass'n of Greeting Card Publishers, 462 U.S. at 813, 103 S.Ct. at 2721. The Act divested Congress of control over postal rates, id., with domestic rates set through a complex process involving the Postal Service, Postal Rate Commission, and Governors of the Postal Service, and international rates set by "[t]he Postal Service, with the consent of the President." Air Courier Conference of America v. United States Postal Serv., 959 F.2d 1213, 1216-23 (3d Cir.1992) (quoting 39 U.S.C. Sec. 407(a)). Congress also ordered the Postal Service to become self-sustaining, generating enough revenue to cover its expenses, thereby "launching 'the Postal Service into the commercial world.' " Loeffler v. Frank, 486 U.S. 549, 556, 108 S.Ct. 1965, 1970, 100 L.Ed.2d 549 (1988) (quoting Franchise Tax Bd. of California v. United States Postal Serv., 467 U.S. 512, 520, 104 S.Ct. 2549, 2554, 81 L.Ed.2d 446 (1984)); see also H.R. No. 1104, 91st Cong., 2d Sess., reprinted in 1970 U.S.C.C.A.N. at 3665. At the same time, the Act generally required fairness and forbade undue discrimination or preferences in the establishment of postal rates and services. See 39 U.S.C. Secs. 101(d), 403(c).

The PRA continued the Postal Service's statutory monopoly "over the carriage of letters in and from...

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