United States Court of Appeals, District of Columbia Circuit
Argued: September 9, 2014.
[Copyrighted Material Omitted]
On Petitions for Review of an Order of the Postal Regulatory Commission.
Paul D. Clement argued the cause for petitioner United States Postal Service. With him on the briefs were Jeffrey M. Harris, Barbara A. Smith, and David C. Belt, Attorney, U.S. Postal Service. Stephen T. Boardman, Attorney, entered an appearance.
David M. Levy argued the cause for petitioner Mailer Petitioners and Supporting Intervenors. With him on the briefs were Matthew D. Field, John F. Cooney, David F. 2 Stover, William B. Baker, Matthew D. Field, Ian D. Volner, James E. Anderson, Tonda Rush, Donna Hanbery, William J. Olson, Jeremiah L. Morgan, John S. Miles, and Keith Kupferschmid.
Daniel Tenny, Attorney, U.S. Department of Justice, argued the cause for respondent. With him on the brief were Stuart F. Delery, Assistant Attorney General, Michael S. Raab, Attorney, David A. Trissell, General Counsel, Postal Regulatory Commission, R. Brian Corcoran, Deputy General Counsel, Richard A. Oliver, Robert N. Sidman, and Anne J. Siarnacki, Attorneys.
Before: BROWN, MILLETT and WILKINS, Circuit Judges. OPINION filed by Circuit Judge MILLETT.
Millett, Circuit Judge:
" Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds."  But a bad economy might. Or. so the Postal Service worried when the recent recession caused mail volumes--and thus Postal Service income--to plummet precipitously. Citing exigent economic circumstances, the Postal Service sought a 4.3% rate increase from the Postal Regulatory Commission.
The Commission agreed that the recession that started in 2008 was an " extraordinary or exceptional circumstance" that warranted some rate increase, but the Commission only permitted the Postal Service to recover $2.8 billion in lost revenue. The Commission reasoned that, by 2011, the Postal Service should have adjusted to a " new normal" business environment in which mail volumes appeared to be permanently lower than their pre-recession levels. The Commission also concluded that lost mail volumes could only be counted in the first year they occurred, even before the " new normal" arrived.
The Postal Service says the Commission's decision did not go far enough; mailer industry groups say the Commission went too far; and the Commission says it got the order just right. We hold that the Commission's " new normal" determination is reasonable, but its rule that lost mail volumes should be counted only once makes no sense on this record. We therefore grant the Postal Service's petition for review in part. Finally, because the Commission's econometric analysis was well within the wide bounds of agency expertise, we deny the separate petition for review filed by representatives of the mailing industry.
Since the founding of the Republic, the Postal Service has been charged with " bind[ing] the Nation together through the personal, educational, literary, and business correspondence of the people." 39 U.S.C. § 101(a). The Postal Service does so by providing " prompt, reliable, and efficient service to patrons in all areas and * * * all communities," id., while charging " uniform [prices] throughout the United States, its territories, and possessions," id. § 404(c).
Since 1970, the Postal Service has been a government-owned corporation, which Congress expected to be largely self-sufficient financially. See Pub. L. No. 91-375, 84 Stat. 719 (1970). In the Postal Accountability and Enhancement Act of 2006 (" Accountability Act" ), Pub. L. No. 109-435, 120 Stat. 3198, Congress created the Postal Regulatory Commission to oversee and administer a pricing regime for the Postal Service. 39 U.S.C. § § 502(a), 3622(a). In addition, Congress imposed a price cap on Postal Service charges to " create predictability and stability in rates" while " maximiz[ing] incentives to reduce costs and increase efficiency," 39 U.S.C. § 3622(b)(1) & (2). Postage rates for " market-dominant products" --that is, products over which the Postal Service enjoys either a statutory or practical monopoly (such as first-class mail and periodicals)--may rise
only with the rate of inflation. See id. § 3622(d)(1)(A).
But hard times can call for hard measures. So Congress created a safety valve in the new pricing system that allows the Service to raise rates for market-dominant products above the inflation level if the Commission determines that an increase is warranted " due to either extraordinary or exceptional circumstances." 39 U.S.C. § 3622(d)(1)(E). To permit such an exigent rate change, the Commission must find, after notice and public comment, that " such adjustment is reasonable and equitable and necessary to enable the Postal Service, under best practices of honest, efficient, and economical management, to maintain and continue the development of postal services of the kind and quality adapted to the needs of the United States." Id.
The Postal Service filed its first request for an exigent rate increase in 2010. The Postal Service claimed that the last recession (which the Commission dubs the " Great Recession" ) caused a " dramatic, rapid, and unprecedented decline in mail volume," and sought to raise prices by more than five percent. See Exigent Request of the U.S. Postal ...