Petition — United States Postal Service v. United Parcel Service, Inc.
Supreme Court brief1980
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79-1386
No. ¥ ¥. ff iy AFY
In the Supreme Court of the United States
OCTOBER TERM, 1979
UNITED STATES POSTAL SERVICE, PETITIONER
Vv.
UNITED PARCEL SERVICE, INC., ET AL.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR
THE THIRD CIRCUIT
WADE H. McCCREE, JR.
Solicitor General
ALICE DANIEL
Assistant Attorney General
PETER BUSCEMI
Assistant to the Solicitor General
BARBARA L. HERWIG
BURTON D. FRETZ
Attorneys
Department of Justice
Washington, D.C. 20530
Page
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CITATIONS
Case:
United Telegraph Workers, AFL-CIO v.
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Statutes and regulations:
Administrative Procedure Act, 5 U.S.C.
551 et seq.
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Postal Reorganization Act, Pub. L. No.
91-375, Section 11(b), 84 Stat. 785...... 8,9
Postal Reorganization Act, 39 U.S.C. 101
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Statutes and regulations—Continued Page
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39 U.S.C. 3622(b) (8) :.........-..........---. 15
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39 U.S.C. (1964 ed.) 504(a) -...00000... 14
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Ill
Statutes and regulations—Continued
89 C.F.R, 221.6(d) (1)
89 C.F.R. Part 3001 ..-.---n-.-ocseoccecoceeo-e--
89 C.FLR. 3001.54 (8) .-.-----nc--ccecncecoceeoceeoe--
Miscellaneous:
116 Cong. Rec. 19844 (1970) 22.02...
116 Cong. Rec. 20491-20492 (1970) ........
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H.R. Rep. No. 91-1104, 91st Cong., 2d
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1 Moore’s Federal Practice (2d ed. 1979)..
S. Rep. No. 91-912, 91st Cong., 2d Sess.
PIPE kaos asin cestianeaclosb tats niainaonadcqnambneneith
In the Supreme Court of the United States
OCTOBER TERM, 1979
No.
UNITED STATES POSTAL SERVICE, PETITIONER
Vv.
UNITED PARCEL SERVICE, INC., ET AL.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR
THE THIRD CIRCUIT
The Solicitor General, on behalf of the United
States Postal Service, petitions for a writ of certio-
rari to review the judgment of the United States
Court of Appeals for the Third Circuit in this case.
OPINIONS BELOW
The opinion of the court of appeals (App. A, infra,
la-50a) is reported at 604 F.2d 1370. The opinion
of the district court (App. D, infra, 55a-115a) is
reported at 455 F. Supp. 857.
JURISDICTION
The judgment of the court of appeals (App. B,
infra, 51a-52a) was entered on August 7, 1979, and
(1)
2
a petition for rehearing was denied on October 9,
1979 (App. C, infra, 58a-54a). On December 28,
1979, Mr. Justice Brennan extended the time for
filing a petition for a writ of certiorari to and in-
cluding March 7, 1980 (App. E, infra, 116a). The
jurisdiction of this Court is invoked under 28 U.S.C.
1254(1).
QUESTION PRESENTED
Whether the Postal Service may conduct a limited,
temporary marketplace experiment to test the feasi-
bility and desirability of possible changes in mail
rates or classifications, without first obtaining the
approval of the Postal Rate Commission in accord-
ance with the statutory procedures applicable to
permanent changes in rates or classifications.
STATUTES INVOLVED
39 U.S.C. 403(a) provides in pertinent part:
The Postal Service shall plan, develop, pro-
mote and provide adequate and efficient postal
services at fair and reasonable rates and fees.
aa
39 U.S.C. 3622(a) provides:
From time to time the Postal Service shall re-
quest the Postal Rate Commission to submit a
recommended decision on changes in a rate or
rates of postage or in a fee or fees for postal
services if the Postal Service determines that
such changes would be in the public interest and
in accordance with the policies of this title. The
Postal Service may submit such suggestions for
rate adjustments as it deems suitable.
3
89 U.S.C. 3623(b) provides:
Following the establishment of the [initial]
mail classification schedule * * *, the Postal Serv-
ice may from time to time request that the Com-
mission submit, or the Commission may submit
to the Governors on its own initiative, a recom-
mended decision on changes in the mail classifi-
cation schedule.
STATEMENT
1. The Postal Reorganization Act of 1970, 39
U.S.C. 101 et seg., abolished the Post Office Depart-
ment and created the United States Postal Service as
“an independent establishment of the executive branch
of the [federal] Government” (39 U.S.C. 201). The
Act provides that an 11-member Board of Governors
shall direct the exercise of the Service’s powers. 39
U.S.C. 202. Nine Governors (no more than five of
whom may be adherents of the same political party)
are apnointed by the President with the advice and
consent of the Senate. They serve staggered nine-
year terms. The Governors in turn appoint the Post-
master General, who is the Service’s chief executive
officer and serves as a member of the Board. To-
gether, the Governors and the Postmaster General
appoint the Board’s eleventh member, the Deputy
Postmaster General. 39 U.S.C. 202(c), (d), 203.
By regulation promulgated under authority dele-
gated by the Board of Governors, the Postal Serv-
ice has established its Executive Committee, the
“organization through which the Postmaster General
and his top staff collectively consider and act on major
policy, planning, and other management control mat-
4
ters.” 39 C.F.R. 221.5(d)(1). The Executive Com-
mittee is composed of the Postmaster General, the
Deputy Postmaster General, seven Assistant Post-
masters General, the Chief Postal Inspector, and the
General Counsel.
The Reorganization Act created the Postal Rate
Commission in addition to the Postal Service. Like
the Service, the Commission is an “independent estab-
lishment of the executive branch of the [federal]
Government” (39 U.S.C. 3601). The Commission is
composed of five Commissioners (no more than three
of whom may be adherents of the same political
party) appointed by the President with the advice and
consent of the Senate. The Commissioners serve stag-
gered six-year terms.
In a subchapter entitled “Permanent Rates and
scribes the respective roles of the Governors and
the Commission in “establish[ing] reasonable and
equitable classes of mail and reasonable and equi-
table rates of postage and fees for postal service”
(39 U.S.C. 3621). Typically, the Postal Service, after
considering the available data and obtaining authori-
zation from the Board of Governors (see 39 C.F.R.
3.4(h), (i)), submits a proposed permanent change
in rates or mail classifications to the Commission and
requests the Commission to forward a recommended
decision on the proposal to the Governors. In evalu-
ating such a proposed change, the Commission must
consider the specific factors enumerated in 39 U.S.C.
3622(b) (changes in rates or fees) or 39 U.S.C.
lasses of Mail," 239 U.S.C, 3621-3628, the Act de-
5
3623(c) (changes in the mail classification schedule).
Before reaching its recommended decision, the Com-
mission is required, under 39 U.S.C. 3624(a), to
afford the Postal Service and users of the mails an
opportunity for a public hearing on the record, in
accordance with the Administrative Procedure Act, 5
U.S.C. 556 and 557. The recommended decision trans-
mitted from the Commission to the Governors must
“include a statement specifically responsive to the
criteria established under section 3622 or 3623, as
the case may be.” 39 U.S.C. 3624(d).
On receiving a recommended decision from the
Commission, the Governors must choose one of the
options provided in 39 U.S.C. 3625. The Governors
may (a) approve the decision and order it into effect;
(b) allow the decision to take effect under protest
and either (1) seek judicial review under 39 U.S.C.
3628 or (2) return the decision to the Commission for
reconsideration; or (c) reject the decision and permit
the Postal Service to resubmit its proposal for re-
consideration. If the Postal Service resubmits a re-
quested change, the Commission must render a fur-
ther recommended decision. At that stage, the
Governors may exercise any of the options previously
available or they may modify the Commission’s rec-
ommendation if they expressly find that
(1) such modification is in accord with the rec-
ord and the policies of this chapter, and (2) the
rates recommended by the Commission are not
adequate to provide sufficient total revenues so
that total estimated income and appropriations
6
will equal as nearly as practicable estimated total
costs.
39 U.S.C. 3625(d). Unless the Governors make these
findings, they may not order into effect a change in
rates or classifications not recommended by the Com-
mission. Judicial review of the Governors’ decision
to “approve, allow under protest, or modify” the Com-
mission’s recommendation is available in “any court
of appeals of the United States” at the instance of
an aggrieved party who appeared at the public hear-
ing conducted by the Commission. 39 U.S.C. 3628.
2. On September 26, 1977, the Executive Commit-
tee of the Postal Service approved the Local Parcel
Service Test Plan, a parcel post experiment designed
to test the feasibility and desirability of reduced
third- and fourth-class bulk postage rates, calculated
on a fixed fee per item basis, for mailings within a
single Bulk Mail Center service area. App. A, infra,
2a-4a; App. D, infra, 60a-62a; A. 17-27, 35-46." The
test program was not available to the public gen-
erally, but was limited to 20 volunteer shippers in five
metropolitan areas.”
The shippers agreed to provide a minimum daily
and weekly volume of qualified parcels, to segregate
those parcels from other mailings, and to place them
in appropriate containers. The Postal Service agreed
1“A ” refers to the appendix in the court of appeals.
2 The five areas were: Seattle, Washington; Dallas-Fort
Worth, Texas; Omaha, Nebraska; Boston, Massachusetts ; and
Washington, D.C. A list of the shippers involved is reprinted
at A. 49.
7
to determine the applicable postage rate by weighing
randomly selected samples of a shipper’s parcels. If
the average sample weight was five pounds or less,
the shipper paid $0.87 per parcel; if the average
weight was more than five pounds but not more than
20 pounds, the shipper paid $1.15 per parcel. These
rates were lower than those generally available to
Postal Service customers and were not tied to the
distance a particular parcel was mailed within the
designated service area. See App. D, infra, 6la &
n.7.
The experiment began in mid-October 1977 and was
scheduled to continue for approximately 12 months.
Shortly before the test began, its features and purposes
were described and discussed at a regularly sched-
ulvcl open meeting of the Board of Governors. 42 Fed.
Reg. 51727 (1977); A. 14, 50-52. The Postal Service
unde: cook the experiment in order to determine
whether it should request the Commission to recom-
mend permanent changes in rates and classes of mail
to the Governors. |
3. On October 20, 1977, respondents United Parcel
Service, Inc. of New York and United Parcel Service,
Ine. of Ohio filed this action in the United States
District Court for the Eastern District of Pennsyl-
vania. They alleged that they would “suffer a ma-
terial diversion of parcels and a consequent loss of
revenues” if the Postal Service were permitted to
proceed with the Local Parcel Service Test Plan
(A.9). Respondents sought a permanent injunction
against the experiment on two grounds. First, they
argued that the test program entailed a change in
8
rates and mail classifications that could become effec-
tive only if the Postal Service complied with the
procedures for obtaining a recommended decision
from the Postal Rate Commission in accordance with
39 U.S.C. 3622-3624. Second, respondents contended
that, by making favorable bulk postage rates avail-
able only to shippers participating in the experiment,
the Postal Service was unreasonably discriminating
among users of the mails, in violation of 39 U.S.C.
403(c).
Adopting the first of respondents’ arguments and
not reaching the second (see App. D, infra, 63a-64a
n.10), the district court granted permanent injunctive
relief. The court acknowledged that “as a matter of
pure policy the result advocated by the Postal Service
is more desirable’ (id. at 65a). Nevertheless, the
court held that the plain language of the statute
“compels the conclusion” that even “a reasonable,
limited, and temporary experiment * * * conducted
as a research and development activity” may be im-
plemented only through the Commission review pro-
cedure established by 39 U.S.C. 3622-3624. The court
reasoned that the experiment at issue here involves
a change in rates and mail classifications and there-
fore falls within the ambit of Sections 3622 and
3623.*° Although the court conceded that many of the
3 The district court attributed no significance to the heading
of the statutory subchapter in which Sections 3622 and 3623
appear. Aithough the heading indicates that the sections
apply only to “Permanent Rates and Classes of Mail,” the
court held (App. D, infra, 102a n.21) that Section 11(b) of
the Postal Reorganization Act, Pub. L. No. 91-375, 84 Stat.
9
criteria listed in Sections 3622(b) and 3623(c) “do
seem out of place when applied to experiments” (App.
D, infra, 107a), the court concluded that the “catch-
all provisions” in Sections 3622(b) (9) and 3623(c)
(6) might well afford the Commission sufficient flexi-
bility to conduct a meaningful review of test programs
proposed by the Postal Service. In any event, the dis-
trict court declared (App. D, infra, 110a):
It is not for us * * * to articulate the evi-
dentiary factors the Commission might consider
and to erect the procedural structure in which it
would conduct its review. Our role is confined
to determining whether, consistently with the
statutory purposes, Congress might reasonably
have intended, as the plain language suggests,
that the Postal Service go to the Postal Rate
Commission before any rate or mail classifica-
tions are changed, experimentally or otherwise.
A divided panel of the court of appeals affirmed
(App. A, infra, 1a-50a). Following the analysis of
the district court, the court of appeals ruled that “the
Act is completely unequivocal in requiring all changes
in any rates and any mail classification to be proc-
essed through and by the Commission” (id. at 13a).
The court asserted that, if limited experiments could
be conducted without Commission review, the Postal
785, precludes all use of such captions as a tool of statutory
construction. Section 11(b) provides:
An inference of a legislative construction is not to be
drawn by reason of a chapter in title 39, United States
Code, as enacted by section 2 of this Act, in which a
section is placed nor by reason of the caption or catchline.
10
Service would effectively be authorized “to make sub-
stantial de facto and unregulated changes in either
rates or mail classifications so long as the changes
made were neither ‘permanent’ nor ‘nationwide’ ” (id.
at 22a). The court assumed arguendo that the general
powers conferred on the Postal Service by 39 U.S.C.
401(10) and 403(a) are sufficient to permit market-
place experiments in furtherance of the Service’s
statutory obligation to “plan, develop, promote, and
provide adequate and efficient postal services.” But,
the court insisted (App. A, infra, 26a), “any pro-
posal which would effect a change in mail classifica-
tion or a rate, including a test or experiment em-
bodying those features, must be submitted to the
Rate Commission, no matter how experimental, tem-
porary, or limited in scope the change.”
Judge Higginbotham dissented (App. A, infra,
29a-50a). Emphasizing that both the statutory lan-
guage and the legislative history of the Reorganiza-
tion Act are silent on the question of rate and classifi-
cation experiments, Judge Higginbotham looked to
the overall purpose that the 1970 restructuring was
designed to achieve. He found that, in creating the
Postal Service, Congress intended to remedy past in-
efficiencies attributable to “a lack of managerial flexi-
bility and freedom” and “a lack of centralized con-
trol” (id. at 35a-36a). In Judge Higginbotham’s
view, “Congress went to considerable effort to give
the Postal Service full management authority” in
order to ensure that postal modernization would not
be obstructed by unnecessary administrative hurdles
11
(id. at 34a). In keeping with this overriding legisla-
tive goal, Judge Higginbotham concluded that the Act
does not bar the Postal Service from engaging in a
“modest and limited experiment * * * designed to
develop data on new techniques for the handling of
parcel post and the effect of different rates and classi-
fications” (id. at 30a, 41a). The dissenting judge
supported his conclusion by noting the incompatibility
of the Commission’s statutory review procedures with
test programs intended to collect information of the
very kind necessary for a meaningful hearing on the
desirability of particular rate or classification changes
(id. at 42a-45a).
REASONS FOR GRANTING THE PETITION
The district court and the court of appeals have
misconstrued the Postal Reorganization Act in a way
that threatens to defeat the salutary purpose Con-
gress sought to achieve in its 1970 reform of the
postal system. If the Postal Service must seek a
recommended decision from the Rate Commission be-
fore it may conduct any marketplace experiments
involving rates or mail classifications, the Service will
be severely hampered in its efforts to “plan, develop,
promote, and provide adequate and efficient postal
services at fair and reasonable rates and fees.” 39
U.S.C. 403(a). As a practical matter, the Service
will be unable to gather the detailed emp? ical infor-
mation needed for reliable evaluation of potential
changes in the postal rate structure or mail classifi-
cation schedule. Review by this Court is necessary to
12
reinstate the division of administrative responsibility
established by Congress and thus to permit the Postal
Service to fulfill its statutory mandate unhindered by
bureaucratic obstacles of precisely the kind Congress
sought to eliminate in the 1970 Act.
1. A principal motivation for passage of the Postal
Reorganization Act was the congressional recognition
that the Post Office Department suffered under the
burden of “serious handicaps * * * imposed * * * by
certain legislative, budgetary, financial, and person-
nel policies that are outmoded, unnecessary, and in-
consistent with the modern management and business
practices that must be available if the American pub-
lic is to enjoy efficient and economical postal service
* * *” HR. Rep. No. 91-1104, 91st Cong., 2d Sess.
2 (1970). By abolishing the Department and creat-
ing a new, independent Postal Service, Congress hoped
to rid the mail system of inefficiencies attributable to
political interference and to a lack of effective, cen-
tralized management authority. The Senate Commit-
tee Report, for example, referred to “the obvious
requirement that postal management must now be
given the unfettered authority and freedom it has
been denied for years to maintain and operate an
efficient service.” S. Rep. No. 91-912, 91st Cong.,
2d Sess. 2 (1970). See also H.R. Rep. No. 91-1104,
supra, at 5; App. A, infra, 34a-38a (Higginbotham,
J., dissenting); 116 Cong. Rec. 19844 (1970) (re-
marks of Rep. Dulski, Chairman of the House Com-
mittee on Post Office and Civil Service) ; 7d. at 20491-
20492 (remarks of Rep. Hamilton).
13
The management authority and flexibility desired
by Congress are especially important in connection
with the development and timely modification of the
postal rate structure and mail classification schedule.
In the words of the House Committee (H.R. Rep. No.
91-1104, supra, at 5), “[t]he postal system needs, and
the American public deserves, a means of determining
and adjusting postal rates that is readily responsive
to changing economic conditions and that brings to
bear expert analysis and technical proficiency on the
highly intricate problems of ratemaking.” Indeed, both
the district court and the court of appeals in the
present case acknowledged that, as a policy matter,
the Postal Service should have the authority to test
possible rate or classification changes without under-
taking a formal administrative proceeding before the
Rate Commission. App. A, infra, 28a n.16; App. D,
infra, 65a, 114a. Both courts concluded, however,
that the statutory language adopted by Congress does
not confer such authority on the Service.
Congress itself perceived no such limitation on the
Service’s powers. The House Committee Report ex-
plicitly stated (H.R. Rep. No. 91-1104, supra, at 9):
“The Postal Service is required to develop and pro-
vide adequate and efficient postal service at fair and
reasonable rates * * *. The Postal Service is em-
powered to engage in research and development pro-
grams directed toward the expansion of present postal
service and the development of new services responsive
to the evolving needs of the United States.” The
Act contains not only a specific provision referring
14
to the Service’s duty to “plan, develop, promote, and
provide adequate and efficient postal services” (39
U.S.C. 403(a)) but also a general provision granting
the Service all “powers incidental, necessary, or ap-
propriate to the carrying on of its functions or the
exercise of its specific powers” (39 U.S.C. 401(10)).
This broad language is sufficient to comprehend the
limited parcel post experiment at issue here.*
2. No other provision in the Postal Reorganiza-
tion Act restricts the Service’s authority to conduct
limited, temporary experiments for the purpose of
gathering data concerning possible adjustments in
prevailing rates or classifications. The courts below
erred in attributing such a restrictive effect to 39
*At minimum, Congress’ repeatedly expressed intention
to grant postal managers greater authority supports the con-
clusion that the Reorganization Act should not be construed
to deny the Postal Service powers previously exercised by the
Postmaster General under the statutory scheme in effect
before 1970. Yet that is the consequence of the court of ap-
peals’ decision in this case. Under 39 U.S.C. (1964 ed.)
504(a), the Postmaster General was directed to “maintain
in the Department a research and development program, in-
cluding investigations and studies, for the purpose of intro-
ducing or improving equipment, supplies, methods, proce-
dures, means, and devices used in the Department in order
that its business may be more efficiently and economically
operated.” This provision was interpreted to authorize the
Post Office Department to “engag[e] in experiments as part
of a research and development program to improve the
economy and efficiency of its business.” United Telegraph
Workers, AFL-CIO v. FCC, 436 F.2d 920, 926 (D.C. Cir.
1970). As the court of appeals stated in that case (ibid.),
“the Post Office’s mandate to improve mai! service through
innovative techniques should not be frustrated by implied
or niggardly restrictions upon its authority.”
15
U.S.C. 3622 and 3623. The content and context of
those sections demonstrate that they are applicable
only to proposed permanent changes in the postal
rates and mail classification schedule governing
throughout the nation.
Even putting aside the subchapter heading ‘‘Perma-
nent Rates and Classes of Mail” in deference to the
congressional injunction that captions not be used
for purposes of statutory construction (see note 3,
supra), the provisions establishing the Postal Rate
Commission and describing its role and operation
show that the Commission was intended only to re-
view and regulate permanent changes in rates and
classifications, not to limit the day-to-day activities
of the Postal Service in ascertaining whether such
changes are necessary or desirable. Section 3622(b)
lists numerous factors that must be considered by the
Commission in reviewing a Postal Service request for
a recommended decision on a change in rates. These
criteria make sense only with respect to permanent
changes. For example, Section 3622(b)(3) requires
the Commission to ensure that “each class of mail or
type of mail service bear[s] the direct and indirect
postal costs attributable to that class or type plus
that portion of all other costs of the Postal Service
reasonably assignable to such class or type * * *.”
The detailed assignment of costs contemplated by this
provision is impossible in the context of a temporary
experiment. The critical information relevant to cost
allocation and the other factors listed in Section
3622(b) is not available until after the experiment
16
has been conducted. Indeed, experiments like the
Local Parcel Service Test Plan are designed and im-
plemented precisely for the purpose of obtaining
sufficient information to enable the Postal Service to
decide whether to request a rate change from the
Commission and, if so, what kind of change to pro-
pose. See App. A, infra, 42a-43a (Higginbotham, J.,
dissenting).
Like the substantive inquiries mandated by Sections
3622(b) and 3623(c), the formal hearing procedure
required by Section 3624 as a precondition to any
recommended decision by the Commission is out of
place in the context of a limited, temporary experi-
ment. The Section 3624 hearing requirement was de-
signed to ensure that all users of the mails have an
opportunity to be heard before permanent changes
in rates or mail classifications are implemented. The
elaborate procedural protections established by the
statute and the Commission’s regulations (see 39
C.F.R. Part 3001) are appropriate in that context,
but they cannot profitably be employed as a method
of screening test programs that the Service wishes
to use to collect data on possible future rate or classifi-
cation changes. In the first place, a formal Rate Com-
mission proceeding ordinarily requires several months.
Delay of this kind is antithetical to the success of
marketplace experiments.° Moreover, Postal Service
5In responding to the Postal Service’s argument concern-
ing the inapplicability of the Section 3624 hearing require-
.ment to a proposed experiment, the court of appeals’ major-
ity pointed to 39 C.F.R. 3001.54(s), a regulation in which the
17
competitors eager to thwart the development of new
and more efficient postal rates and services may well
use information obtained in a Section 3624 hearing to
skew the results of a proposed experiment by offering
special terms to shippers in an effort to discourage
their participation in the test program. Finally, as
Judge Higginbotham observed (App. A, infra, 43a-
44a), experiments, by their very nature, frequently
require modification in the course of their perform-
ance, but, if the court of appeals’ decision is per-
mitted to stand, such adjustments in the light of
initial experience will effectively be precluded by the
need to return to the Commission for a new and time-
consuming proceeding under Section 3624.
The Senate Report confirms the foregoing in-
terpretation of the Act derived from the statutory
language. The congressional draftsmen who created
the Postal Rate Commission never intended it to
pass on every temporary variation in rates or clas-
sifications undertaken in order to test possible im-
provements in the total services provided. That
is why, in discussing the Commission’s role, the
Senate Committee described in detail “[t]he rate-
making cycle” and noted that, in the version of the
Rate Commission has provided “a measure of relief” from
the administrative burdens ordinarily associated with formal
hearings on rate or classification changes. App. A, infra,
26a-27a. The regulation cited, however, authorizes only waiv-
ers of certain filing requirements and falls far short of
eliminating the major obstacles imposed by the court of ap-
peals’ ruling that a Section 3624 hearing is a prerequisite to
every marketplace experiment involving rates or mail classi-
fications.
18
Reorganization Act approved by the Committee, the
Postal Service was required to request “appropriate
changes in the rate structure * * * at least once every
2 years, unless the Board’s estimates of income and
costs are approximately in balance, and the Board
does not believe that a change would be in the public
interest” (S. Rep. No. 91-912, supra, at 14-15). The
Committee clearly was referring to permanent rate
changes applicable throughout the nation. That is the
only way to explain the Committee’s instructions that
the Rate Commission “recommend a decision on
changes in the rate structure which, when imple-
mented, will provide sufficient total revenue to bring
the total estimated income and appropriations of the
postal service into balance, as nearly as possible, with
the total estimated costs” (id. at 15). It is difficult
to believe that Congress intended such overall calcu-
lations to be made in connection with every limited
marketplace experiment of the kind at issue here.
38. As Judge Higginbotham’s dissenting opinion
persuasively demonstrates (App. A, infra, 44a-47a),
the Postal Service’s interpretation of its own statute
would not only contribute substantially to the efficient
functioning of the nation’s postal system but it would
do so without infringing the congressionally prescribed
prerogatives of the Rate Commission. Congress be-
lieved that establishment of the Commission was de-
sirable for several reasons: (1) to “ensure that postal
rates reflect[] not only management objectives but
also serve[] broader public purposes”; (2) to pre-
serve “some distance from the day-to-day operations
19
of the Postal Service” in order to facilitate “sound
business decisions on rates”; and (3) to guard against
political pressure on rate and classification determi-
nations. Ibid. None of these concerns is implicated
or jeopardized by the Postal Service’s conduct of the
limited experiment at issue in the present case.
Neither the court of appeals nor the district court
offered any support for the assertion that acceptance
of the Postal Service’s position “would permit un-
regulated changes in rates and mail classification at
any time and under any circumstances whereby less
than all members of the public were entitled to bene-
fits stemming from such changes” (App. A, infra,
17a-18a). In Judge Higginbotham’s apt characteri-
zation, “[t]his ‘logic’ is the worst example of the
parade of horribles” (id. at 48a). If the Postal Serv-
ice were to attempt to usurp the authority of the
Commission under the rubric of experimentation,
both a reviewing court and the Commission itself,
in the exercise of its power to deal with rate and
service complaints under 39 U.S.C. 3662, would be
equal to the task of halting actions inconsistent with
the fundamental statutory scheme. But the experi-
ment challenged by respondents is not such an at-
tempt, and the specter raised by the court of appeals’
majority is chimerical. Illusory predictions about
potential future excesses by the Postal Service should
not be permitted to produce a construction of the
Postal Reorganization Act that “shackle[s] and pre-
vent[s the Service] from pursuing * * * modest
20
experimentation * * * [in order] to provide the
American public with better service and its major
competitor with more robust competition” (id. at 30a).
4. This is the first case in which the Postal Serv-
ice’s authority to conduct marketplace experiments
independent of the Rate Commission has been chal-
lenged. Although there is no conflict among the
circuits, further review is essential at this time be-
cause the court of appeals’ decision is virtually cer-
tain to have a nationwide impact. None of the five
cities involved in the Local Parcel Service Test Plan
is located in the Third Circuit, and the propriety of
venue in the Eastern District of Pennsylvania did not
depend on whether any of the mailings affected by the
experiment was destined for an address in that dis-
trict.° Rather, under 28 U.S.C. 1891(e) and 39
U.S.C. 409(b), the choice of venue was apparently
justified on the ground that one of the respondent cor-
porations has “a place of business” in Philadelphia
(A. 3) and therefore “resides” in the Eastern Dis-
trict of Pennsylvania.” If federal courts may be
chosen on this basis, a conflict among the circuits is
likely never to arise on the question presented here.
® Indeed, the parties stipulated that none of the Bulk Mail
Center service areas involved in the experiment included any
states or parts of states within the Third Circuit. A. 31.
7 Professor Moore reports that the question “whether a
plaintiff corporation may claim residence for venue purposes
in any district in which it is doing business has produced a
split of authority” among the federal district courts. See
1 Moore’s Federal Practice {| 0.142[7], at 1450.2 & n.19 (2d ed.
1979), and cases there cited.
‘
é
21
Major competitors of the Postal Service operate na-
tionwide and therefore would presumably challenge
any future Postal Service experiment in the Third
Circuit. Accordingly, the prospects for appellate re-
view elsewhere are bleak, even assuming the Postal
Service could construct other experiments like the
Local Parcel Service Test Plan that do not involve
any mailings to or from the Third Circuit. Because
of the practical importance of the question pre-
sented to the Postal Service and its nationwide im-
plications, the final determination should not be left
to a divided panel of a single court of appeals.
CONCLUSION
The petition for a writ of certiorari should be
granted.
Respectfrtiy submitted.
WADE H. McCREE, JR.
Solicitor General
ALICE DANIEL
Assistant Attorney General
PETER BUSCEMI
Assistant to the Solicitor General
BARBARA L. HERWIG
BURTON D. FRETZ
Attorneys
MARCH 1980
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la
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 78-2390
UNITED PARCEL SERVICE, INC.,
a New York Corporation,
and
UNITED PARCEL SERVICE, INC., an Ohio Corporation
v.
UNITED STATES POSTAL SERVICE, APPELLANT
Argued March 26, 1979
Decided Aug. 7, 1979
Before GARTH, HIGGINBOTHAM, Circuit Judges,
and SCHWARTZ,* District Judge. Circuit Judge
Higginbotham dissented and filed an opinion.
GARTH, Circuit Judge.
This is an appeal from a final order of the district
court which permanently enjoined the defendant
United States Postal Service (hereafter Postal Serv-
ice) from engaging in a parcel post experiment un-
til it obtained approval from the Postal Rate Com-
mission, in compliance with 39 U.S.C. §§ 3622-25.
We affirm.
* Sitting by designation.
2a
I
In 1970 Congress enacted the Postal Reorganiza-
tion Act of 1970, 39 U.S.C. §§ 101 et seg. The Act
created the Postal Service as an independent unit of
the executive branch, 39 U.S.C. § 201. It also created
the Postal Rate Commission as a separate independent
establishment, 39 U.S.C. § 3601.
The Postal Service is governed by a Board of
Governors, 39 U.S.C. § 202, which pursuant to 39
U.S.C. § 402 established an Executive Committee.
The Executive Committee is comprised of the Post-
master General, the Deputy Postmaster General, var-
ious Assistant Postmasters General, the Chief Postal
Inspector, and the General Counsel. 39 C.F.R. § 221.5
(d) (1) [1978].
On September 26, 1977 the Executive Committee
in accordance with the duty imposed upon the Postal
Service to “plan, develop, promote, and provide ade-
quate and efficient postal services at fair and reason-
able rates and fees,” 39 U.S.C. § 403(a), approved
implementation of a parcel post experiment called
the Local Parcel Service Test Plan. A detailed de-
scription of the Plan may be found in the district
court’s opinion, United Parcel Service v. United
States Postal Service, 455 F.Supp. 857, 861-62 (E.D.
Pa. 1978). Suffice it to say that the Postal Service
in mid-October 1977 instituted a twelve-month bulk
mailing experiment to test the cost and service feasi-
bility of charging a fixed fee per item for each item
mailed by twenty selected shippers, rather than cal-
culating the amount of postage by weighing each
3a
individual parcel. Twenty selected shippers in five
metropolitan communities * entered into contracts with
the Postal Service whereby each guaranteed a mini-
mum mailing volume of 50 pieces per day and 250
pieces per week. Delivery of the items was limited
to the geographic area covered by the Postal Service
Bulk Mail Facility serving the shipper (intra-BMC
delivery). Under the test plan eligible articles were
(1) items mailable as parcel post and (2) third class
single piece mail. ‘“Nonmachineable outsides” (i.e.,
parcels of unusual dimensions which require hand pro-
_cessing) were not eligible articles. The articles had
to be containerized, addressed for delivery in the
BMC service area and all special service parcels had
to be isolated.
Sample weighings of randomly selected items in
the bulk shipment were used to determine the aver-
age weight of all items. The cost of mailing each
‘tem was based on the average weight thus deter-
mined. The cost to the shipper of mailing 50 or
more items averaging five pounds or less was 87
cents per item. The cost per item when average
item weight was over five, but under twenty, pounds
was $1.15 per item. This fixed-fee postage payment
system eliminated the need to calculate postage in-
dividually on each parcel. In any event, the cost of
mailing an item under the test plan differed sub-
stantially from the cost of mailing the same item by
regular parcel post under the rates and mail classi-
1 Seattle, Dallas-Ft. Worth, Omaha, Boston and Washing-
ton, D.C.
4a
fication schedule then in effect. 455 F.Supp. at 861
n.7, Exhibit 2, Appendix at 47.
United Parcel Service (hereafter UPS), the plain-
tiff in this action, is a private parcel delivery service.
UPS, complaining that the Postal Service had no
authority under statute or regulation for conducting
such an experiment, commenced an action in the
Eastern District of Pennsylvania seeking to enjoin
the Postal Service test.
The Postal Service, however, asserting that its
test involved neither a change in rates nor a change
in classification of mail within the meaning of 39
U.S.C. §8§ 3622-28, claimed that such a Plan did not
require submission to approval by, or authorization
of the Rate Commission.”
The Postal Service and UPS submitted the issues
to the district court on a stipulation of facts together
with certain exhibits and affidavits. Although ex-
pressing its belief that “as a matter of pure policy
the result advocated by the Postal Service is more
desirable . .. .” 455 F.Supp. at 863, the district
court held that the test plan effected a change in a
postal rate and a mail classification. Agreeing with
2 At no time did the Postal Service contend that the rates
charged to the shippers participating in the test plan were
the same rates then being charged for regular parcel post
mailings. Nor has it urged that the classifications under the
test plan for the twenty selected shippers were the same as
the prevailing classifications established for all other ship-
pers. Nor has the Postal Service ever argued that Rate Com-
mission approval would not be required if it sought to insti-
tute any feature of its test plan or the test plan itself on a
permanent nationwide basis.
5a
UPS, it thereupon entered an order on July 19, 1978
which “. . . permanently enjoined [the United States
Postal Service], from continuing in operation the
parcel post experiment known as the Service Test
Plan until such time as it has complied with the
provisions of 39 U.S.C. §§ 3622-25 (which we have
held applicable here).” The statutes which the dis-
trict court held to be applicable and with which the
Postal Service was obliged to comply would require
a recommended decision by the Rate Commission ap-
proving the test plan. This appeal followed.
II
Congressional dissatisfaction with postal ineffi- °
ciency reached a peak in 1970. It was then that
the Postal Service was established pursuant to the
Reorganization Act. Congressional declarations of
postal policy resulted in a direction that the Postal
Service be “operated as a basic and fundamental
service provided to the people. . .” 39 U.S.C. § 101
(a). At the same time, Congress commanded that
“Tp]ostal rates shall be established to apportion the
costs of all postal operations to all users of the mail
on a fair and equitable basis.” 39 U.S.C. § 101(d).
In order to eliminate any effect of policies and special
interest lobbying on rate-setting and mail classifica-
tion, Congress completely delegated its rate-setting
authority. The power to set rates of postage and to
establish classes of mail was vested in the nine Presi-
6a
dentially appointed Governors * of the Postal Service.
That power, however, was limited to the extent that
the Governors’ authority over rates and classifica-
tions could only be exercised after comprehensive re-
view and recommendation by the Postal Rate Com-
mission, the regulatory agency which Congress cre-
ated to oversee the ratemaking and mail classifica-
tion process.
The Postal Rate Commission is completely inde-
pendent of the Postal Service. It is comprised of five
Commissioners appointed by the President with the
advice and consent of the Senate. 39 U.S.C. § 3601.
The concept of the Postal Rate Commission in the
statutory scheme was described in the Senate Report
in these terms:
The bill [Postal Reorganization Act] provides
that the Postal Rate Commission shall be a body
fully independent of the Board of Governors and
fully independent of any influence whatsoever of
the Postmaster General or of members of his
staff. The Commission’s independence is con-
templated as being complete from the other arms
of the postal service, subject to no subordination
within the postal service either expressed or im-
plied. The limited circumstances under which a
339 U.S.C. §102(3). The Governors are appointed with
the advice and consent of the Senate and are to represent the
public interest in the exercise of the powers of the Postal
Service by the Board of Governors. The Board has eleven
members—the nine Governors plus the Postmaster General
and Deputy Postmaster General both of whom are officers
of the Postal Service and are appointed by the Governors.
89 U.S.C. § 202.
Ta
recommended rate decision made by the Commis-
sion may be modified by the Governors are care-
fully spelled out in the language of the bill.
It is expected that the Commission will work
in harmony with the Board of Governors, acting
in a timely and responsive manner to the Board’s
requests for recommended decisions for changes
in rates, fees and classifications.
In discharging the highly important responsi-
bilities vested in the Commission, it must exer-
cise its best judgment to insure that all postal
rates, fees, and classifications are reasonable and
equitable, and to insure that the rights of all
mail users are protected, throughout the rate-
making and classification process, by careful
consideration of all the specific public-interest
factors that the statute requires be taken into
account, and by faithful adherence to all of the
ratemaking and classification standards set forth
in the statute.
S. Rep. 91-912, 91st Cong., 2d Sess. at 13-14. In
establishing the “partnership” between the, Board of
Governors and the Rate Commission, the Senate Com-
mittee expressed a fear that:
if the Board of Governors were authorized to
control revenues, it would place them in a posi-
tion of some businesses in the private sector of
the eeonomy—pricing with one eye . . . over
their shoulder to the effect of the cost of an up-
coming labor-management agreement.
Id. at 13.
As an example of the need for independence of the
Rate Commission, the Senate Committee referred to
a proposal to raise first-class mail rates:
8a
The recent proposal for a 10-cent first-class
stamp in order to raise sufficient revenue to bal-
ance the books of the Post Office in one single
step is fair proof of that quest for catching up
with costs. Most of the money in the postal sys-
tem comes from first-class mail. A 100-percent
increase in the rates for all second-clas mail
would not produce as much revenue as a 5-
percent increase in the first-class rate. The temp-
tation to resolve the financial problems of the
Post Office by charging the lion’s share of all
operational costs to first class is strong; that’s
where the big money is. The necessity for pre-
venting that imposition upon the only class of
mail which the general public uses is one of the
reasons why the Postal Rate Commission should
be independent of operating management.
Id. at 18. It was the Senate’s view of the Rate Com-
mission which ultimately prevailed in conference and
consequently that view now finds its expression in
39 U.S.C. §§ 3621-28. The provisions of these stat-
utes implement the concepts deemed important by
the Senate Committee. Thus, after one of the most
extensive studies in the Committee’s history, S. Rep.
91-912 at 1, the postal legislation which was enacted
transferred from a burdened Congress to the Postal
Rate Commission the “highly intricate problems of
ratemaking.” It did so because the postal rate struc-
ture “need[ed] the fulltime skills of professional eco-
nomists, trained rate analysts, and the like.” H.
Rep. 91-1104, U.S. Code Cong. & Admin. News 1970,
p. 3649 supra, at 3654.
9a
The Postal Service, while recognizing that changes
in rates and mail classifications are committed for all
practical purposes to the Rate Commission, neverthe-
less argues before us that it was not obliged to sub-
mit its parcel post test plan to the Rate Commission.
Essentially it bases this argument on the assertion
that no changes in rates or mail classifications were
involved. Additionally it argues that a contrary in-
terpretation of the Act would be inconsistent with
Congressional intent to increase flexibility and Postal
Service control over postal operations.
III
39 U.S.C. § 3622 requires that any change in a
rate of postage be recommended by the Postal Rate
Commission.t There are nine specified factors in ad-
439 U.S.C. § 3622. Rates and Fees
(a) From time to time the Postal Service shall request
the Postal Rate Commission to submit a recommended
decision on changes in a rate or rates of postage or in a
fee or fees for postal services if the Postal Service deter-
mines that such changes would be in the public interest
and in accordance with the policies of this title. The
Postal Service may submit such suggestions for rate
adjustments as it deems suitable.
(b) Upon receiving a request, the Commission shall
make a recommended decision on the request for changes
in rates or fees in each class of mail or type of service in
accordance with the policies of this title and the follow-
ing factors:
(1) the establishment and maintenance of a fair and
equitable schedule;
(2) the value of the mail service actually provided
each class or type of mail service to both the sender and
10a
dition to the policies of the Act (see 39 U.S.C. § 101)
which the Commission is to consider in making its
recommendation, 39 U.S.C. § 83622 (b) (1)-(9).
Just as changes in rates are the subject of § 3622,
changes in mail classification are subject to the pro-
visions of § 3623.5 That section requires that any
the recipient, including but not limited to the collection,
mode of transportation, and priority of delivery ;
(3) the requirement that each class of mail or type
of mail service bear the direct and indirect postal costs
attributable to that class or type plus that portion of all
other costs of the Postal Service reasonably assignable
to such class or type;
(4) the effect of rate increases upon the general pub-
lic, business mail users, and enterprises in the private
sector of the economy engaged in the delivery of mail
matter other than letters;
(5) the available alternative means of sending and
receiving letters and other mail matter at reasonable
costs ;
(6) the degree of preparation of mail for delivery into
the postal system performed by the mailer and its effect
upon reducing costs to the Postal Service;
(7) simplicity of structure for the entire schedule and
simple, identifiable relationships between the rates or
fees charged the various classes of mail for postal
services ;
(8) the educational, cultural, scientific, and informa-
tional value to the recipient of mail matter, and
(9) such other factors as the Commission deems ap-
propriate.
5 39 U.S.C. § 3623. Mail Classification
(a) Within 2 years after the effective date of this
subchapter, the Postal Service shall request the Postal
Rate Commission to make a recommended decision on
ene
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pester iti 2.
lla
establishing a mail classification schedule in accordance
with the provisions of this section.
(b) Following the establishment of the mail classifica-
tion schedule requested under subsection (a) of this
section, the Postal Service may from time to time request
that the Commission submit, or the Commission may sub-
mit to the Governors on its own initiative, a recom-
mended decision on changes in the mail classification
schedule.
(c) The Commission shall make a recommended deci-
sion on establishing or changing the schedule in accord-
ance with the policies of this title and the following
factors:
(1) the establishment and maintenance of a fair and
equitable classification system for all mail;
(2) the relative value to the people of the kinds of
mail matter entered into the postal system and the
desirability and justification for special classifications
and services of mail;
(3) the importance of providing classifications with
extremely high degrees of reliability and speed of de-
livery ;
(4) the importance of providing classifications which
do not require an extremely high degree of reliability and
speed of delivery ;
(5) the desirability of special classifications from the
point of view of both the user and of the Postal Service;
and
(6) such other factors as the Commission may deem
appropriate. °
(d) The Postal Service shall maintain one or more
classes of mail for the transmission of letters, sealed
against inspection. The rate for each such class shall be
uniform throughout the United States, its territories and
possessions. One such class shall provide for the most
expeditious handling and transportation afforded mail
matter by the Postal Service. No letter of such a class
of domestic origin shall be opened except under authority
of a search warrant authorized by law, or by an officer or
employee of the Postal Service for the sole purpose of
determining an address at which the letter can be de-
livered, or pursuant to the authorization of the addressee.
12a
change in mail classification be recommended or in-
itiated by the Postal Rate Commission. The policies
of the Act and six specified factors are to be con-
sidered by the Commission in recommending any such
classification change. 39 U.S.C. § 3623 (c) (1)-(6).
Tne Postal Service, contrary to the argument of
UPS, contends that the test plan at issue here does
not involve a “change” in any “rate” or “mail clas-
sification.” As such, the Postal Service asserts that
its test plan need not be submitted to the Rate Com-
mission, and it therefore need not obtain a recom-
mended decision of that body. We cannot agree.
A
The Postal Service claims that because §§ 3622-
23 do not by their express terms require a recom-
mended decision for the conduct of experiments, it
may experiment or test in the marketplace without
complying with the statutory requirements involving
submissions to the Rate Commission. The difficulty
with this argument is that while it is clear that
§§ 3622-23 do not expressly require Rate Commission
approval of Postal Service experiments, it is equally
clear that these statutes contain no express excep-
tion for experiments which involve changes in rates
and classifications.
We recognize that the Postal Service is under a
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). In discharg-
ing its duty to plan and develop, we can understand
a hl AB Ria
13a
the desire of the Postal Service to institute test plans
or experiments so that postal efficiencies will result.
However, it is apparent that in fulfilling its duty to
“plan, develop [and] promote,” the Postal Service
is just as subject to the rate and classification -pro-
visions of Chapter 36 of the Act, 39 U.S.C. § 3601
et seq. as it is in fulfilling its duty “to provide ade-
quate and efficient postal services at fair and reason-
able rates and fees.” Under the Act no distinction
is made in favor of experiments or tests which in-
volve changes in rates or mail classification. Rather,
the Act is completely unequivocal in requiring all
changes in any rates and any mail classification to
be processed through and by the Commission. In such
a posture, the Postal Service argument which relies
on an absence of express terminology in the statute,
is less than compelling.
B
The Postal Service argues, however, that its parcel
post test does not involve any “rate” or “mail clas-
sification” let alone any “change” in any rate or mail
classification. According to the Postal Service, a
“rate” is only a “rate” when it applies and is avail-
able to the entire public at large. Conversely, claims
the Service, a “rate” is not a “rate” when it is re-
stricted to twenty selected shippers. Similarly, the
Service contends that a “mail classification” is not a
“mail classification” when it is limited to twenty
volunteer participants.
l4a
In advancing their respective arguments as to the
meaning of “rate’’, the Postal Service and UPS have
engaged in a definitional contest. Each has referred
us to varying definitions of “rate” which appear in
Black’s Law Dictionary, 4th Ed., at 1427-28.° Just
as the district court declined to enter such a fray, so
do we. The district court met this challenge to our
satisfaction by stating:
The common meaning of a “rate of postage” is
simply the fee the Postal Service charges for
processing, transporting, and delivering a par-
ticular type of mail. Similarly, the ordinary
understanding of a mail classification is nothing
more complex than a grouping of mail based on
established and shared criteria. See National
Retired Teachers Ass’n v. United States Postal
Service, 480 F.Supp. 141, 146 (D.D.C. 1977).
The usual interpretation of “change” is altera-
tion or making different.
455 F.Supp. at 863.
The wisdom of interpreting these statutory terms
in an “ordinary sense” and giving them an ordinary
and common meaning is borne out by reference to
other sections of the Act. For example, the Act
6 The Postal Service in referring to p. 1427 of Black’s Law
Dictionary, 4th Edition, claims that a rate is “a charge to the
public for a service open to all and upon the same terms.”
UPS, relying on p. 1428 of the same volume recites the
definition as follows: “As used in the interstate commerce
law, [the term rate] means the net cost to the shipper of the
transportation of his property; that is to say, the net amount
the carrier receives from the shipper and retains.”
loa
as it employs the particular terms involved here,
distinguishes between a rate of postage and an
amount ef postage: the “rate” being the charge for
a particular type of mail (i.e. one ounce of first class
mail for 15 cents) and the “amount of postage” being
the total charge assessed for any particular item of
mail at the prescribed rate (i.e.) three ounces of first
class mail at 15 cents results in an “amount of post-
age” of 45 cents).’ It is completely evident that the
amount of postage per item mailed under the test
plan was not in accordance with any existing rate
which had been recommended by the Rate Commis-
sion. Rather, the amount of postage prescribed under
the plan was determined only by applying a new rate
established by the Postal Service.
By the same token, it is the mail classification
which determines which rate of postage is applicable
to the particular item mailed. Thus, mail “classifica-
tion is a ‘grouping’ of mailing matter for the purpose
of assigning it a specific rate or method of handling.
7 Although the term “rate” is not specifically defined in the
Act, nor has it been defined in any of the earlier postal acts,
the use of that term prior to 1970 gives some Congressional
understanding to its content. For example, in 1967, 39 U.S.C.
§ 4253(a) prescribed postage on first class mail by stating
“.. [e]xcept as other wise provided ... the rate of postage
on first class mail weighing thirteen ounces or less is 6 cents
for each ounce or fraction of an ounce.” (Italics added).
See also 39 U.S.C. §§ 4808, 4858-59, 4862, 4422, 4452, 4554
and 4556-57 [1967]. These sections use the term “rate” in
the general sense of the method by which an amount of
postage due from the mailer is to be calculated, whether
that amount is calculated separately for each piece, as in
39 U.S.C. § 4253(a) (1967), or in bulk, as in 39 U.S.C.
§ 4422 (1967).
16a --
Relevant factors include size, weight, content, ease of
handling, and identity of both posting party and
recipient.” National Retired Teachers Ass’n v. United
States Postal Service, 430 F.Supp. 141, 147 (D.D.C.
1977), affirmed, 593 F.2d 1360 (D.C. Cir. 1979)
(footnote deleted).* Again, it is evident that the
Postal Service created de facto a new mail classifica-
tion by virtue of the criteria which it established
for participation in the plan, to wit, machineable,
containerized, fourth class mail delivered to the BMC
in lots of 50 items per day with an average weight
of 20 pounds or less and destined for delivery in the
BMC service area. Satisfaction of these criteria en-
titled the mailer to the fixed fee rate for calculating
the amount of postage outlined above.
The Act grants the Governors the exclusive and non-
delegable authority to establish “classes of mail” and
“rates of postage,” 39 U.S.C. §§ 402, 3621, but only
after the Governors have received a recommended de-
cision from the Postal Rate Commission. The Postal
Service, on the other hand, is only vested with the
8 Again, although the term “class” or “classification” has
not been specifically defined in this or prior acts, it is evident
from its usage prior to 1970 that the term simply means a
grouping of mail on the basis of shared physical criteria.
For example, prior to 1970, first class mail was “mailable
(1) postal cards, (2) post cards, (3) matter wholly or par-
tially in writing or typewriting .. ., (4) bills and statements
of account, and (5) matter closed against postal inspection.”
39 U.S.C. § 4251 [1967]. The size and weight limitations ap-
plied to that class were “one hundred inches in length and
girth combined” and seventy pounds. 39 U.S.C. § 4252,
[1967]. See also 39 U.S.C. §§ 4301, 4351, 4421, 4451 and
4551 [1967] establishing criteria for other mail classifications.
Oe eee
17a
power “to prescribe, in accordance with this title, the
amount of postage and the manner in which it is to
be paid,” 39 U.S.C. § 404(a) (2). It is thus evident
that the amount of postage collected by the Postal
Service on any particular piece of mail or parcel must
be prescribed in accordance with established rates
of postage and established classes of mail. Pursuant
to UPS’s argument therefore, it would appear that by
the institution of its test plan the Postal Service estab-
lished not only a new classification but also a new
rate for that classification. In so doing, UPS claims,
the Service has usurped the function assigned by
Congress to the Rate Commission and the Governors.
The Postal Service contends, however, that under
the Act the terms “rate” and “mail classification” only
apply to a service made available to all members of
the public on the same terms. If the service is not so
available, i.e., if it is restricted to only a portion of
the public, then the Service claims that the charges
imposed do not constitute a rate and the criteria
employed for plan participation do not constitute a
mail classification. Hence, the Service argues that
anything short of such nationwide availability of a
service (such as restricting availability to twenty
selected voluntary shippers) does not trigger the
rate and mail classification regulatory provisions of
Chapter 36 of the Act. It therefore concludes that
it may proceed with its test plan without prior re-
course to the Rate Commission.
We reject this argument. In essence this position
taken by the Postal Service would permit unregulated
changes in rates and mail classification at any time
18a
and under any circumstances whereby less than all
members of the public were entitled to benefits stem-
ming from such changes. We have been shown noth-
ing in the Act which supports the distinction on which
the Postal Service relies and we can find no authori-
zation for such a construction of the Act. To the
contrary, the Act specifically proscribes the Postal
Service from discriminating among its users. 39
U.S.C. § 403(c) reads:
In providing services and in establishing clas-
sifications, rates, and fees under this title, the
Postal Service shall not, except as specifically au-
thorized in this title, make any undue or unrea-
sonable discrimination among users of the mails,
nor shall it grant any undue or unreasonable
preferences to any such user.
As recited earlier, we have found, and the Postal
Service has pointed to, no exception which would
authorize a test plan such as the one instituted here,
in derogation of this section.
While we need not, and do not, decide that a test
plan could never be instituted because of the operation
of § 403(c), we are nevertheless persuaded that in
light of § 403(c) the Postal Service’s view of “rate”
and “mail classification” is incorrect and cannot pre-
vail.
Not only are the Service’s definitions of rate and
mail classification unsupported by the Act, and indeed
inconsistent with § 403(c) as we have indicated, but
apparently the Postal Service itself has recognized
that the test plan instituted here involves a change
4
|
19a
in rate. The definition urged upon us here by the
Postal Service is inconsistent with use of the term
“rate” as it was employed by Deputy Postmaster
General William F. Bolger when he discussed the
test plan during a Postal Forum in September of
1977:
Basically, the main features of the test program
are...a greatly simplified rate structure based
on average weights . . . [which] allows mailers
to forget weight and zone calculations for most
intra-BMC deliveries . . .” (Emphasis added.)
Fairly read, the term “rate” as it appears in the
test plan description is employed in a sense sig-
nificantly different from that suggested by the Postal
Service here, but no different from the meaning given
it by the district court and approved by us.
C
Consistent with its denial that the charges imposed
upon participants in the test plan were “rates,” and
that the test plan itself constituted a new “mail classi-
fication’, the Postal Service also urges that the term
“change” as it appears in §$§ 3622-23 has a meaning
different from that normally accorded that word. The
Postal Service contends that a change in rate or class
only becomes a “change” within the meaning of
§§ 3622-23 when it is permanent and nationwide—
not experimental, limited or temporary. It argues
that because only nationwide changes in postal serv-
ices need be submitted to the Rate Commission under
20a
39 U.S.C. § 3661,° that Congress intended that Rate
Commission jurisdiction over rates and mail classifi-
cations would similarly exiend only to matters affect-
ing the entire country. However, neither the Act nor
its legislative history suggests that any such qualifi-
cation upon the word “change” was ever intended or
effected in §§ 3622-23.
Although it is true that such a nationwide qualifi-
cation does exist with respect to changes in the nature
of postal services, 39 U.S.C. § 3661, no such qualifi-
cation appears in §§ 3622-23, the statutes with which
we are concerned. With respect to postal services,
Congress clearly contemplated that the nature of such
services would vary from one locale to another de-
pending on local conditions such as sparsity of popu-
® 39 U.S.C. § 3661. Postal Services
(a) The Postal Service shall develop and promote ade-
quate and efficient postal services.
(b) When the Postal Service determines that there
should be a change in the nature of postal services which
will generally affect service on a nationwide or substan-
tially nationwide basis, it shall submit a proposal, within
a reasonable time prior to the effective date of such pro-
posal, to the Postal Rate Commission requesting an ad-
visory opinion on the change.
(c) The Commission shall not issue its opinion on any
proposal until an opportunity for hearing on the record
under sections 556 and 557 of title 5 has been accorded
to the Postal Service, users of the mail, and an officer of
the Commission who shall be required to represent the
interests of the general public. The opinion shall be in
writing and shall include a certification by each Commis-
sioner agreeing with the opinion that in his judgment the
opinion conforms to the policies established under this
title.
RT 2 LL ee
21a
lation, ordinances prohibiting curbside delivery, etc.,
and that changes in such services would often affect
only a relatively small number of people in a limited
geographic area. Recognizing the lack of national in-
terest in purely local conditions requiring changes in
the nature of postal services, Congress did not require
Rate Commission action when such localized changes
were effected. However, when a nationwide or sub-
stantially nationwide postal service change is pro-
posed, then Congress required that the proposed
change be submitted to the Rate Commission—not for
a recommended decision (as required for a rate or
classification change) but merely for an advisory
(and hence not binding) opinion. It is obvious to us
that the substantive differences in § 3661 (services)
as contrasted with § 3662 (rates) and § 3623 (classi-
fications) reflect different Congressional concerns and
therefore different Congressional requirements. Un-
der such circumstances we perceive little value in
attempting to construe §§ 3622-23 by reference to
§ 3661. We perceive even less value in attempting
judicially to impose on the plain and comprehensive
terms of §§ 3622-23, the special provisions which
Congress incorporated in § 3661 for manifestly dif-
ferent purposes and reasons. Moreover, it is quite
clear that, if Congress had intended to qualify the
provisions of §§ 3622-23 by requiring Rate Commis-
sion approval of only nationwide changes, it could
have accomplished that task in the same manner as
it did in § 3661.
22a
Furthermore, if we were to interpret §§ 3622-23
as the Postal Service urges, we would be permitting
the Service to make substantial de facto and unregu-
lated changes in either rates or mail classifications so
long as the changes made were neither “permanent”
nor “nationwide”. Such a view finds no support in
the Act or in the legislative history. Indeed, such a
construction of the Act is capable of completely under-
mining Congressional regulation via the Rate Com-
mission of those aspects of postal affairs which are
most heavily infused with the public interest—an
interest which the Rate Commission is charged with
protecting.”° As the D.C. Circuit explained, albeit in
a different but analogous context,
10 The Postal Service’s construction is also at odds with the
thrust of Congressional intent evident in the 1976 amend-
ments to the Act. Prior to that time, the Rate Commission
was not required to act upon a request for a rate change
within any specified time period and under 39 U.S.C. § 3641
the Postal Service could institute a temporary rate change
90 days after Rate Commission submission. Substantial de-
lays in Commission action produced new requests for rate
changes before final action was taken on older requests. To
remedy this, Congress required that the Rate Commission
act within 10 months but simultaneously amended § 3641 to
preclude the Postal Service from instituting a temporary rate
change until that 10-month period had elapsed. The premium
placed on Rate Commission consideration of, and public
hearings on, rate changes is therefore evident. Permitting
experiments which involve changes in rates and mail classi-
fications would effectively overrule § 3641. Such “experi-
ments” could be commenced and continued throughout the
10-month course of Rate Commission consideration, so long
as the experiment was neither permanent nor nationwide,
according to the Postal Service’s interpretation.
23a
any reasonable examination of the purposes of
the Act discloses Congress’ implicit design that
the distinct functions of service provision and
rate adjustment be divided between the Postal
Service and the Rate Commission. The expertise
of the Postal Service supposedly is in manage-
ment, and its authority therefore reasonably ex-
tends to basic decisions pertaining to the pro-
vision of special, non-postal and other services.
The Postal Rate Commission, however, was cre-
ated specifically to oversee the ratemaking proc-
ess. Its expertise is in the setting of rates and
fees that are fair and equitable, and its au-
thority therefore reasonably extends to all as-
pects of such decisions, including review of bud-
get estimates, allocation of postal costs, establish-
ment of rates for postage, and, it would seem
plainly, the setting of fees for those special
services which management. decides should be
provided.
National Association of Greeting Card Publishers v.
United States Postal Service, 186 U.S.App.D.C. 331,
358, 569 F.2d 570, 597 (1976), vacated in part not
relevant here, 434 U.S. 884, 98 S.Ct. 258, 54 L.Ed.2d
169 (1977).
Thus we do not find persuasive the Postal Service
contention that because only twenty test participants
were involved in its test plan no “change” in a “rate”
or “mail classification” has been effected."
11 The district court expressed its conclusion as follows:
There is nothing “plainer” than the fact that postal
rates and classifications have been changed as to the
participants in the Service Test Plan. When the rates
24a
IV
As we indicated earlier, the Postal Service’s other
major contention is that Congress intended to recog-
nize the need for increased flexibility and Postal Serv-
ice control over postal operations so that the Service
could more readily respond to postal needs. The
Service argues that the district court’s interpretation
of the Act is therefore inconsistent with Congressional
intention.
As our discussion has revealed, we do not believe
that, despite Congressional and public desire for in-
creased efficiency in the postal service, the specific and
plain provisions of the rate and classification sections
can be ignored. Accordingly, we are not impressed
with the Postal Service’s argument that the mandate
given to it to “plan, develop, promote, and provide
adequate and efficient postal services,” 39 U.S.C.
§ 403(a), supersedes and overrides the specific re-
sponsibilities imposed in the first instance upon the
Rate Commission and thereafter upon the Governors
to determine the rates and classifications which are
components of the “postal services” which the Postal
Service is to provide.
and classifications applicable to certain users of the
Postal Service have in fact been changed, we find it both
conceptually and linguistically bizarre to say that al-
though certain postal rates and classifications have been
changed, there has not been a change in the rates or
classification of postage.
455 F.Supp. at 865.
25a
The general powers provision of 39 U.S.C. § 401
(10)** may well vest the Postal Service with authority
to conduct marketplace experiments.** Assuming
arguendo the existence of such authority, we are
nevertheless constrained to reject the Postal Service’s
interpretation of a general grant of power as auth-
orizing activities which necessarily are precluded by
other sections of the Act (§§ 3622-23) specifically
mandating the manner by which rates and mail classi-
fications must be established. “[A] general powers
provision like section [401(10) here at issue] may
not ordinarily override a specific provision such as
section [s403(a) 404(a)(2) and Chapter 36 as
here].” National Association of Greeting Card Pub-
lishers vy. United States Postal Service, supra, 186
U.S.App.D.C. at 358, 569 F.2d at 597. Thus, any
power the Postal Service may have to engage in
marketplace experiments may not be exercised so as
to permit the Postal Service to impose rates or estab-
lish mail classifications absent compliance with Chap-
12The Postal Service shall “have all other powers inci-
dental, necessary, or appropriate to the carrying on of its
functions or the exercise of its specific powers.”
13 Contrary to the suggestion of the dissent (see n.9,
p. 1878), the issue of whether the Postal Service has statu-
tory power to engage in marketplace experiments with Rate
Commission approval is not before us. It was not raised in
the district court, nor was it addressed or briefed on appeal.
‘Under these circumstances we do not deem it apropriate to
discuss or resolve that issue.
a eT a Fen nen Ste ae Ea
26a
ter 36 of the Act, 39 U.S.C. §§ 3601 et seg."
Supplementing its “flexibility” and “control” argu-
ment, the Postal Service additionally argues that re-
quiring submission of test plans to the Rate Commis-
sion is unduly burdensome. We do not here hoid that
all “test plans” must be submitted to the Rate Com-
mission (see e.g. Part III B, supra, p. [18a]). We do
hold, however, that any proposal which would effect a
change in mail classification or a rate, including a
test or experiment embodying those features, must be
submitted to the Rate Commission, no matter how
experimental, temporary, or limited in scope the
change. As to the burdensomeness of such submis-
sions, we observe that the Rate Commission in 39
C.F.R. § 3001.54(s) [1978] has provided that:
The Commission may, upon the filing of a
proper motion by the Postal Service, together
with a showing of good cause therefor, waive
certain of the filing requirements of paragraphs
(b)-(r) of this section if in the Commission’s
judgment it has been demonstrated that the pro-
posed change in a rate or rates of postage and
a fee or fees for postal services does not sig-
14 The district court, while recognizing the legitimacy of the
Postal Service’s argument, nevertheless expressed its dis-
agreement with the Postal Service’s conclusion by stating:
The very existence and function of the Postal Rate Com-
mission bespeaks a limitation on postal management’s
freedom. . . . Thus, although requiring that the Postal
Service go to the Postal Rate Commission with market-
place experiments might impede one congressional pur-
pose, it would promote another.
455 F.Supp. at 869.
27a
nificantly change the then effective rates and
fees or alter the cost-revenue relationships of
the various classes and types of postal services.
Thus the Rate Commission itself has provided a meas-
ure of relief from the burdens hypothesized by the
Postal Service and of which it complains. Moreover,
if indeed the Postal Service conceives that it is truly
burdened by our construction of the Act, it should
address that concern to the Congress, for in the pres-
ent context we do no more than enforce the Congres-
sional command.”
V
Although the Postal Service advances other addi-
tional arguments all of which are predicated on its
interpretation of the Act, we do not find that those
arguments merit discussion. One final contention,
though, does warrant our response. The Postal Serv-
ice contends that we should accord great deference
to its interpretation of the Postal Reorganization Act.
15 This regulation has never been challenged and hence we
express no opinion as to its validity.
16 The dissent is unable to point to any authority, statute
or legislative history supporting its contention that Congress
intended to bypass or override the rate and classification
mandates of §§ 3622-23 when they impact upon the man-
agerial functions assigned to the Postal Service. Indeed
the dissent acknowledges that the Act and its legislative his-
tory are silent in this respect. The dissent premises its
entire argument on Congressional efforts to increase the
efficiency of the Service, evidenced by Congress giving the
Postal Service full management authority (Dissent, pp. [34a-
86a])—an argument which not even the Postal Service em-
phasized to any great extent.
Our more basic difference with the dissent, however, is our
belief that the concerns expressed by the dissent are more
28a
In doing so, we of course would thereby be obliged to
accept the construction placed upon the Act by the
Postal Service, including the various definitional argu-
ments which we have previously rejected.
This same contention was made in National Asso-
ciation of Greeting Card Publishers v. United States
Postal Service, supra, 186 U.S.App.D.C. at 357 n.110,
569 F.2d at 596 n.110. The court there declined to
defer to the Postal Service’s interpretation on two
grounds. In the first instance the D.C. Circuit found
the Postal Service’s “construction too ‘curious’ and
‘narrow’ to prevail over a commonsense reading of the
statute,” an observation equally appropriate here, and
one with which we are in accord. Second, it was
recognized there, as we do here, that the agency en-
titled to deference in the interpretation of 39 U.S.C.
§§ 3622-24 is the Rate Commission—not the Postal
Service—as it is the Rate Commission which is
charged with making recommended decisions on
appropriate for legislative rather than judicial consideration
and action. Our function as jurists is to require compliance
with those statutes enacted by Congress. In this case it is not
for us to substitute our view of postal policy for the legisla-
tion which has been passed by Congress. Certainly Congress
is free to modify its enactments so as to accommodate the
considerations suggested by the dissent and in fact, we might
applaud such legislative adjustments if mide. Failing their
enactment by Congress, however, and rec: gnizing that Con-
gress has explicitly required all rate and clussification changes
without exception to be submitted to the Commission, we do
not think it is our function to rewrite the Act, or at a mini-
mum, to create a legislative exception where none is inti-
mated.
29a
changes in rates and mail classification.
Both of these reasons are sufficient grounds for re-
jecting the Postal Service’s contentions regarding
judicial deference to administrative interpretations.
VI
Thus, by giving the common and ordinary meaning
to the relevant terms of §§ 3622-23, it is apparent
that the parcel post test plan at issue here involved
changes in the rates of postage and classification of
mail. This being so, it was incumbent on the Postal
Service to resort to the Rate Commission as mandated
by §§ 3622-23. It did not do so. As a result, the dis-
trict court under date of July 19, 1978 enjoined the
Postal Service from continuing in operation the Serv-
ice Test Plan until such time as it has complied with
the provisions of 39 U.S.C. §§ 3622-25.
Having concluded that the district court did not
err, we will affirm the July 19, 1978 order.
A. LEON HIGGINBOTHAM, Jr., Circuit Judge,
dissenting.
I.
Competition, experimentation and creative business
policies designed to better serve the consumer are
highly valued in American society. The traditional
folklore has been that one beats his competition by
“building a better mousetrap,” or, in the context of
this case, by providing better delivery services. The
majority rejects these traditional values—so they say,
because of a statutory mandate. Thus, we have the
80a
paradox of the United Parcel Service (UPS) one of
the United States Poste! Service’s (Postal Service)
major competitors, preventing the Postal Service from
undertaking on its own a modest and limited experi-
ment which is a relatively small threat, if any, to the
plaintiffs, involving no more than twenty selected
shippers in no more than five metropolitan areas. As
I view the applicable statutes, the Postal Service need
not be shackled and prevented from pursuing such
modest experimentation. It has some latitude to ex-
periment, without indulging in further bureaucratic
processes, and to determine whether a plan can be
devised to provide the American public with better
service and its major competitor with more robust
competition. The learned trial judge below, in his
customarily thorough fashion, noted that “as a mat-
ter of pure policy the result advocated by the Postal
Service is more desirable.” United Parcel Service v.
United States Postal Service, 455 F.Supp. 857, 863
(E.D. Pa. 1976). However, he and the majority have
concluded that the statute precludes even the modest
experiment proposed by the Postal Service in this
case. I agree that the result advocated by the Postal
Service is far more desirable. But, I disagree with
the majority, and the court below, because their de-
cision, from my view, makes no sense when con-
sidered against the relevant legislative history. Thus,
I dissent.
II.
As the majority’s opinion observes, the Postal Serv-
ice and the Postal Rate Commission (Commission)
cinerea 3
sla
were established under the Postal Reorganization Act
of 1970, 39 U.S.C. §§ 101-5605 (the Act), which
created a new and comprehensive scheme for the
management of the nation’s postal system,’ so that
the nation’s mail could be handled more efficiently and
with less expense.
Acting in accord with this Congressional design,
the Postal Service has attempted to undertake a very
small and temporary experiment in order to develop a
new technique to deliver parcel post more efficiently.
The experiment was to involve only twenty shippers
in five metropolitan areas, who were to handle about
907,000 items of mail. Defendant’s Brief Before Dist.
Ct., Exhibits 1(A)-1(R). When compared with the
approximately 92.2 billion items of mail and 387
million items of parcel post that the Postal Service
processed in 1977, the limited nature of this experi-
ment is self-evident. Department of Commerce, Sta-
tistical Abstract of the United States 585, 587
(1978); Joint Appendix, at 29.
In this appeal we are presented with the questions
of how Congress intended for the new postal manage-
ment to modernize the postal system and where Con-
gress placed the responsibility of supervising rate and
classification experiments.
In order to decipher the Congressional scheme and
resolve this question, the Act and its extensive legis-
1 The Act also established a fourteen member Postal Serv-
ice Advisory Council to advise the Postal Service on “all
aspects of postal operations.” 39 U.S.C. § 206. The role of
the Advisory Council is not raised in this appeal.
82a
lative materials must be reviewed. I am convinced
that a review of the legislative materials in their
totality is especially important here where the legis-
lation was designed to effect a comprehensive reorga-
nization.
The majority focuses on the language of sections
3622 and 3623 and urges that these provisions place
the responsibility for supervising rate and classifi-
cation experiments in the hands of the Rate Commis-
sion. To be sure, the challenged experiment involves
a “change” in the way the limited number of program
participants send their parcel post. It is also evident
that the “rates” and “classifications” used in this
experiment are different from those normally applied
to the Postal Service’s customers. However, it is not
self-evident whether the temporary and small-scale
“changes” which occur as a result of an experiment
are the “changes” Congress was referring to when it
drafted these sections of the Act. The decision to
make a national or permanent rate or classification
change is a management decision of a different quality
from a decision to undertake an experiment. At the
very least, different criteria of evaluation may be used
and different results may flow from the decision.
Therefore, before these sections are read to cover ex-
periments it is necessary to unravel the management
scheme Congress envisioned.
The majority does so by analyzing whether the
ordinary, plain, dictionary, or regulatory definitions
2 See Majority opinion, supra, at nn. 4 & 5 for text of
statutes.
33a
of the words “rates,” “classifications” and “change”
are to be used. In doing so, the majority misses the
essential question: Whether these sections were in-
tended to give the Commission the responsibility of
supervising rate and classification experiments. As
Learned Hand said:
_ [I]t is one of the surest indexes of a mature
and developed jurisprudence not to make a
fortress out of the dictionary; but to remember
that statutes always have some purpose or ob-
ject to accomplish, whose sympathetic and
imaginative discovery is the surest guide to their
meaning.
Cabell vy. Markham, 148 F.2d 737, 789 (2d Cir.),
affd, 326 U.S. 404, 66 S.Ct. 193, 90 L.Ed. 165
(1945) quoted in, United States v. Cerilli, 603 F.2d
415, 429 (3d Cir. 1979) (Aldisert, J., dissenting).
Arguably Congress might have intended for sections
3622 and 3623 to cover experiments, although they
make no reference to experiments. The majority
argues that the absence of such a reference supports
their view of the Act. It seems equally plausible to
me that it indicates a possible limitation on the scope
of the Commission’s authority. The ease with which
contrary arguments can be made about the impor-
tance of the absence of a single word in the statute
strengthens my conviction that resort to the legisla-
tive history is essential.
In this case, our inquiry into Congressional intent
is made difficult by the fact that the legislative ma-
terials are also silent about rate and classification
84a
experiments. However, we are obliged to find an
answer and therefore must resort to materials from
which the Congressional intent can only be inferred.
III.
A.
After reviewing the Act in its entirety and its
legislative history, I am convinced that Congress in-
tended to permit the Postal Service to undertake rate
and classification experiments and that it did not
intend for the Postal Service to seek Commission ap-
proval before it undertook such an experiment. I
reach this conclusion because of the overwhelming
evidence contained in the legislative history that
shows that Congress went to considerable effort to
give the Postal Service full management authority.
Congress wished to strip away and not create layers
of managerial control so that new and more efficient
modes of operation could be developed and could be-
come a part of our nation’s postal system. Commis-
sion review of experiments would be inconsistent with
that Congressional purpose. Moreover, I have found
nothing in the legislative materials that shows that
Commission review was nevertheless intended. In-
deed, the references to the Commission contained in
both the Act and the legislative history show that the
Commission was established and structured so it
might address concerns that are not implicated in
the experimentation process.
35a
B.
In this case, as in many others, the legislative his-
tory is ambiguous in many regards. But arising
above all ambiguity is the Congressional conviction
that the Postal Service should be more efficient,
utilizing modern managerial techniques rather than
sinking further into its maelstrom and that the Postal
Service should have, in most instances, full authority
to undertake that effort.
The Congressional debates, reports, and the other
legislative materials are replete with references to the
inefficiencies of the pre-1970 postal system. For ex-
ample, the House Report stated:
For several years there has been a growing
awareness .. . that our vast sprawling postal
complex is heavily overburdened and in deep
trouble. Delays, breakdowns, errors, damage,
and other inconvenience to the public have be-
come more and more frequent.
H. Rep. No. 91-1104, 91st Cong., 2d Sess. (1970) re-
printed in [1970] U.S. Code Cong. & Admin. News
3652 [hereinafter H. Rep.] See also S. Rep. No. 91-
912, 91st Cong., 2d Sess. 2 (1970) [hereinafter Sen.
Rep.]; Remarks of Rep. Dulski, 116 Cong. Ree. 19844
(June 16, 1970); Towards Postal Excellence the Re-
port of The President’s Commission on Postal Orga-
nization 1-14 (1968) [hereinafter President’s Com-
mission }.
These materials are also replete with references
that show that Congress believed these deficiencies
were caused by ineffective management, which in turn
resulted primarily from a lack of managerial flexi-
36a
bility and freedom and from a lack of centralized
control. For example, the Senate Report which ac-
companied the Senate version of the Act stated:
[T]he Postmaster General is blocked or under-
cut at every turn by a labyrinth of postal stat-
utes echoing every postal concern, interest, or
whim expressed by Congress over a 200 year
period ... leaving the Postmaster General bound
in his own house. Twist and turn as he may, he
cannot function in the public interest as a re-
sponsible manager.
Sen. Rep., supra, at 2.
The House report stated:
It has now become apparent that all the short-
comings of The Post Office Department are bound
up in the fact that responsibility for managing
the system is shared by a number of executive
agencies and by several congressional commit-
tees.
H. Rep., supra, at 3653. See also President’s Com-
mission, supra, at 33-43.
The Act was designed to correct this problem. New
and more efficient systems were to be developed. The
new managers would
create a lasting foundation for a modern, dy-
namic, and viable postal institution that is
equipped and empowered at all times to satisfy
the postal requirements of the future.
H. Rep., supra, at 3650.
And the Postal Service was to have major responsi-
bility for the development of those new systems. The
House Report stated:
37a
The Postal Service is empowered to engage in
research and development programs directed to-
ward the expansion of present postal service and
the development of new services responsive to the
evolving needs of the United States.
H. Rep., supra, at 3657. The Act itself provides that
the Postal Service “shall plan, develop, promote, and
provide adequate and efficient postal services.” 39
U.S.C. § 403.
Further, it is evident that Congress felt that mod-
ernization could be accomplished only if the Postal
Service was provided broad authority to undertake
its duties.
The House Report stated that the Act was de-
signed to
[e]liminate serious handicaps that are now im-
posed on the postal service by certain legislative,
budgetary, financial, and personal policies that
are outmoded, unnecessary, and inconsistent with
the modern management and business practices
that must be available if the American public is
to enjoy efficient and economical postal service.
H.Rep., supra, at 3650. It also stated:
[T]he only solution to these problems is funda-
mental reform that puts complete responsibility
in a single place, with appropriate safeguards
against abuse of that responsibility.
Id. at 3653.
The Senate agreed. Its report stated:
[The Act] is not a halfway measure. Its objec-
tive is to establish a postal structure and a
38a
method of operating that will entrust the nian-
agement of the U.S. Postal Service, within broad
policy guidelines designed to protect the ordi-
nary mailer, to responsible public officials.
Sen. Rep., supra, at 3.
Thus modernization and managerial freedom were
prime Congressional objectives.
C.
It is also evident that Congress anticipated that
rates and classifications would be changed as a result
of the development of more efficient systems and that
the Postal Service would be involved in that process.
The interrelationship between rates and classifica-
tions changes and the modernization of postal services
was discussed in the House Report which stated:
Since the Postal Service will be required to pro-
vide postal services ‘“‘at reasonable and equit-
able rates and fees,” massive and far-reaching
improvement in postal efficiency must be achieved
before a self-supporting Postal Service becomes
a reality.
H.Rep., supra, at 3665.
Ample evidence is available to show that Congress
intended for the Postal Service to be involved with
rate and classification changes.
Most dramatic is the fact that the Act very ex-
plicitly states that the Postal Service and not the
Commission has the final authority to set rates and
classifications. The Act provides:
39a
Upon receiving a recommended decision from
the Postal Rate Commission, the Governors [of
the Postal Service] may approve, allow under
protest, reject, or modify that decision. 39
U.S.C. § 3625.°
Moreover, there is evidence that shows that Con-
gress intended for the Postal Service to provide the
Commission with information so that the Commission
could make decisions about rate and classification
changes.
For example, one of Congress’s concerns about the
pre-1970 rate-making process was that costs attribut-
able to a particular class of mail were often not
charged to that class of mail. Under the Act, each
class of mail was to bear its own costs. 39 U.S.C.
§ 3622. While perhaps a simple theory, it was antici-
pated that implementation of this mandate would be
difficult because, under the accounting system used by
the Post Office Department, costs could not readily
be attributed to a particular class of mail. President’s
Commission, supra, at 132-35. The Postal Service
was thus empowered and given a Congressional man-
date to develop an accounting system that permitted
cost attribution so rates could be accurately set. 39
U.S.C. §§ 2008, 2009, 2401. See Association of Ameri-
can Publishers v. Governors of U.S. Postal Service,
157 U.S.App.D.C. 397, 485 F.2d 768 (1973).
3 The full text provides that in the event that the Postal
Service wishes to reject or modify a decision, the Postal
Service must resubmit its request and if still dissatisfied it
may modify or reject the decision if it is inconsistent with
the Act or if it will produce insufficient revenues.
Te TS ene
40a
I therefore disagree with the Court of Appeals for
the District of Columbia, which implied in language
the majority quotes, that rates and classifications
were Commission business and that the Postal Service
was to have nothing to do with those matters.‘ Na-
tional Association of Greeting Card Publishers V.
United States Postal Service, 186 U.S.App.D.C. 331,
569 F.2d 470 (1976), vacated in part, 434 U.S. 884,
98 S.Ct. 253, 54 L.Ed.2d 169 (1977). The Act does
not provide for such a sharp delineation of duties.
Indeed, the majority concedes that the Postal Service
has an independent role to play in rate and classifica-
tion making when it recognizes the right of the Postal
Service to develop, plan and implement a “test plan”
thet would provide information that would be used
by the Commission. Majority’s opinion, supra, at
[18a].°
It is against this backdrop of Congressional con-
cern that the responsibility fur experimentation
should be evaluated. Alone, it would support the
41 do not mean to suggest by this point that the Commis-
sion does not have substantial and dominant authority in the
area of rate and classification making. My point is simply
that Congress intended for the Postal Service to have a
significant involvement in this process, especially with regard
to the development of data to be considered by the Com-
mission.
5’ The majority has reserved for another day the question
of whether the Postal Service may conduct, even with Com-
mission approval, marketplace experiments. However, the
majority does not seem disturbed by the Postal Service’s
involvement in rates and classifications; it is merely the type
of involvement it questions.
a, eae Tee
4la
Postal Service’s authority to engage in the rate and
classification experiment challenged by the UPS, an
experiment which was designed to develop data on
new techniques for the handling of parcel post and
the effect of different rates and classifications.
D.
The majority argues that regardless of this history,
the existence of the Commission demonstrates a Con-
gressional intent to restrict the power of the Postal
Service to undertake experiments. I do not agree. It
is my belief that the legislative materials discussed
above compel any court to exercise caution before it
decides that Congress intended to place a restraint on
the Postal Service’s management authority. Indeed,
I believe that this history, which demonstrates an
overwhelming concern with deregulation, almost com-
pels us to hold that management flexibility exists,
unless contrary evidence is provided. Cf. United Tele-
graph Workers v. F.C.C., 141 U.S.App.D.C. 190, 194,
436 F.2d 920, 924 (1972) (“This expression of con-
gressional desire that the Commission encourage tech-
nological innovation requires us to demand a com-
pelling showing of legislative prohibition before we
strike down an experiment . . . which is designed
to furnish the information input that makes such
innovation possible.” ).
It is my view that the legislative materials do not
provide the evidence necessary to reject the presump-
tion of flexibility and to hold that Congress intended
to have the Commission supervise experiments. More-
TT eT TT es Monten nine then e enn enn nyu nrsens Sunn n NNO OSE vane AgSS
iii iis (ili
42a
over, these materials provide positive support for my
conclusion that supervision of experiments was not
one of the duties envisioned for the Commission.
As I note above, the descriptions of the Commis-
sion’s responsibilities contained in the legislative docu-
ments are somewhat lacking as they contain no ref-
erence to rate and classification experiments. How-
ever, read in their totality they suggest that the Com-
mission was given the responsibility of setting na-
tional policy on rates and classifications and acting
as an overseer to ensure that these policies were
properly implemented. See H.Rep., supra, at 3666,
3667-68, 3692-95 and Sen.Rep., supra, at 13-17. To
be sure, at times this responsibility would include
the supervision of permanent rate or classification
changes that would have a limited impact, for ex-
ample, a subsidized rate for sending a particular type
of periodical. However, the duty to supervise these
changes is derived from the broader duties. In the
case of an experiment, such as the one challenged here,
whose object is the testing of new systems of handling
mail, these broader duties are not implicated. This
suggests that the duty to supervise experiments was
not included among the Commission’s responsibilities.
Sections 3622 and 3623 also make no reference to
rate and classification experiments. Again, read in
their totality they give us some assistance. For ex-
ample, the statutes outline a specific process which
the Commission must follow when it makes rate and
classification decisions. Section 3624 further provides
that the Commission can approve a request by the
43a
Postal Service only after an opportunity for a
hearing conducted pursuant to the Administrative
Procedure Act has been granted.° This process
is simply not a productive one when a managerial
decision as to the necessity for the development
of data on a system change is being made. More-
over, the information that would be necessary to have
a meaningful kearing on the desirability of the change
would not be available until the experiment is con-
ducted. Cf. Delta Airlines v. CAB, 147 U.S.App.D.C.
272, 276, 455 F.2d 1340, 13844 (1971) (“The CAB
in reality is not able to investigate without testing
how this experimental tariff actually works.”) and
American Airlines v. CAB, 123 U.S.App.D.C. 310,
319, 359 F.2d 624, 633 cert. denied, 385 U.S. 843, 87
S.Ct. 73, 17 L.Ed. 78, 17 L.Ed.2d 75 (1966) (“A
month of experience will be worth a year of hear-
ings.’’).
In addition, I envision that during the process of
an experiment the Postal Service might wish to
modify some portion of the experimental design on
rates or classifications. Under the majority’s reading
of the statute, hearings would be necessary. I cannot
believe Congress intended so absurb a result. For
® 39 U.S.C. § 3624 provides:
(a) The Postal Rate Commission shall promptly con-
sider a request made under section 3622 or 3623 of this
title, except that the Commission shall not recommend a
decision until the opportunity for a hearing on the record
under sections 556 and 557 of title 5 has been accorded
to the Postal Service, users of the mails, and an officer
of the Commission who shall be required to represent the
interests of the general public.
44a
example, during the course of the experiment chal-
lenged here the Postal Service might decide that pack-
ages were falling in different weight groups than
originally anticipated and may wish to change the
weight classifications in the experiment. It would
simply make no sense to have a hearing to make the
modification.
Another indication that Congress did not intend
to have the Commission review experiments is also
found in sections 3622 and 3623. These provisions,
section 3622(b) and section 3623(c), state that the
Commission’s decisions are to be made in accordance
with the policies of the Act and with a number of
itemized factors.” These factors, which include fac-
tors such as the relative value of the kind of mail
transmitted and the effect of rate increases upon the
general public are not generally applicable to experi-
ments. E.g., 39 U.S.C. § 83622(b) (4) and § 3623(c)
(2). Moreover, some of the factors involve cost evalu-
ations that cannot be made before an experiment is
complete. 39 U.S.C. & 3622(b) (5) & (6).
Finally, an examination of the reasons that were
given to support the Commission’s creation leads me
to conclude that the Commission was not designed to
supervise experiments. These reasons are, for the
most part, relevant only when major policy decisions
are made, when the integrity of the Postal Service
could be threatened, or when one of the Act’s under-
7 See Majority opinion, supra, at [9a-lla] n.4, & n.5 for
the text of the statute.
= 8 oe owe are ew Oe ae
45a
lying purposes could be frustrated. These are not
concerns which arise during an experiment.
First, many members of Congress were concerned
that while they wanted the Postal Service to operate
as an efficient business enterprise, they were con-
cerned that the
Postal Service in fact and shall be operated
as a service to the American people, not as a
business enterprise, designed to provide excel-
lent postal service.
Sen.Rep., supra, at 4.
It was felt that the Commission would be able to strike
the necessary balance, and would ensure that postal
rates reflected not only management objectives but
also served broader public purposes, e.g., certain non-
profit organizations might be given special rates.
These broader public purposes are not implicated by
an experiment.
A second impetus for the establishment of the Com-
mission was the sentiment that some distance from
the day-to-day operations of the Postal Service might
be necessary to make sound business decisions on
rates. See Majority’s Opinion, supra, at [6a-8a].
Again an experiment would not tamper with this con-
cern, and would, if anything, permit the Postal Serv-
ice to give the Commission information it needs to
perform this function.
Congress was also concerned about the impact
political pressure had had on rate and classification
determinations. Under the reorganization, Congress
wished to design a system that would be as free from
46a
political influence as possible, where experts could
make decisions based on the technical problems of
running the postal system and not the effectiveness of
particular lobbyists. See, e.g., Remarks, Sen. McGee,
116 Cong. Rec. 26955 (1970).
The Commission was seen as a Solution to this
problem. The House report stated:
The Commission provides an invaluable buffer
between the management of the Postal Service
and the possible influence of partisan politics.
Insulation from partisan politics is one of the
principal purposes to be served.
H.Rep., supra, at 3660.
It is conceivable that partisan politics could influence
the Postal Service’s decision to select particular par-
ticipants in an experiment which used cheaper rates.
But there is no showing of partisan politics in the
pleadings or the stipulated facts in this case. To the
contrary, it is clear that this “Local Parcel Service
Test Plan” was created for managerial purposes.*®
8 The Postal Service outline of the experiment indicates the
following:
Test Objectives
A. The first objective is to determine the feasibility of
the new operations configuration affecting:
1. Acceptance procedures.
2. Local Holdout and BMC processing.
3. MVS operations.
B. The second objective is to determine the costs asso-
ciated with reduced handlings which result from the new
operations configuration.
[Footnote continued on page 47a]
47a
The authority to undertake limited and temporary
experiments does not permit the return to the days
when every interest group imaginable had special
permanent rates established for them. Moreover,
political influence on the decision to undertake an
experiment or to choose a participant is simply not
as dangerous as on decisions where national policy is
made.
In our zeal to protect the public we must remember
that the public is not always protected by more regu-
lation and more supervision. That is the overwhelm-
ing message of the Postal Reorganization Act. In-
deed, in this case, the effort to impose regulation upon
the Postal Service and to require it to seek Commis-
sion review is spearheaded not by a representative of
8 [Continued ]
C. The third objective is to determine the service and
cost impact on the mailer and to measure mailer ac-
ceptance of this impact.
D. The fourth objective is to analyze the service within
the context of our continuing review of the structure of
traditional services. Issues to be explored are:
1. Whether nearer Parcel Post zones are in need of an
adjustment?
2. Whether volume requirements for Bulk Parcel Post
are in need of adjustment?
38. Whether pick-up (not plant load) offered as an
option or offered as a feature (no option) of the service
is needed?
4. Whether further refinements are needed in the single
piece third class and zone-rated, fourth class classifica-
tions and rate design?
48a
the general public but by one of the Postal Service’s
major competitors, the United Parcel Service.
The majority rejects the present plan because it
hypothesizes that the authority to approve an experi-
ment for twenty shippers in five metropolitan areas
“would permit unregulated changes in rates and mail
classification at any time and under any circumstance
whereby less than all members of the public were en-
titled to benefits stemming from such changes.” Ma-
jority Opinion, supra, at [17a-18a]. This “logic” is the
worst example of the parade of horribles. If the
Postal Service, under the rubric of experimentation,
attempted to set up permanent or specialized rates
for any individual or group presumably a court would
not be misled by a label marked “experiment.” More-
over, if the Postal Service abused the limited author-
ity that I believe Congress intended for it to have,
the Commission has the power under 39 U.S.C. § 3662
to review and prohibit Postal Service actions that
circumvent the policies of the Act.
One final point raised by the majority. I believe
39 U.S.C. § 403, which proscribes the “unreasonable
discrimination” “preferences,” provides no assistance
in resolving the question in this appeal. Majority’s
Opinion, supra, at [18a]. First, any experiment will
discriminate against other users of the postal system
whether or not the Commission approves it. And sec-
ond, the section only prevents “unreasonable discrimi-
nation.” A properly conducted marketplace experi-
49a
ment is certainly not an “unreasonable” type of “dis-
crimination” or “preference.”
IV.
I believe the experiments are a permissible exercise
of Postal Service authority. I do not believe, as the
majority concludes, that the Congress, in its attempt
to free the postal system of constraints so that it
might operate as a modern and efficient enterprise,
intended to require the Postal Service to undertake
the time-consuming process of hearings and Commis-
sion review in order to develop and provide data for
the Commission’s rate-making judgments.
One of the nation’s leading scholars on administra-
tive law, Dean James O. sreedman, in his classic
treatise, Crisis and Legitimacy: The Administrative
Process and the American Government, 261-62
(1978), has stressed:
The legitimacy of the administrative process can-
not turn, then, upon its non-conformity to a
simplistic version .... Rather, it must be tested
pragmatically, by the responsiveness of adminis-
trative institutions to the most fundamental prin-
ciples of a democratic society ard by the degree
to which administrative institutions meet the
nations highest aspirations for justice and effec-
tive government.
Unfortunately in this case, despite the Congressional
dream and design to bring flexibility, creativity and
managerial efficiency to the Postal Service, the pub-
lic’s aspirations have once again been dashed. The
50a
public has been precluded from having within the
Postal Service “justice and effective government.”
I therefore dissent.’
® The majority has decided this appeal without determining
whether the Postal Service has the authority to undertake
the experiment even if it seeks Commission approval. At oral
argument the Postal Service indicated that it still had an
interest in conducting this specific experiment. As a result
of the majority’s decision, the Postal Service will have to
submit the proposed experiment to the Commission and par-
ticipate in hearings with the possibility that it will be deter-
mined after a second challenge, a second decision by a dis-
trict court and a second appeal to this court, that the Postal
Service cannot undertake marketplace experiments even with
‘Commission approval. (I would of course disagree with that
conclusion). I believe this would be a waste of the resources
of the Postal Service, the Commission and the judiciary. The
majority should reach this issue.
5la
APPENDIX B
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 78-2390
UNITED PARCEL SERVICE, INC.,
a New York Corporation,
and
UNITED PARCEL SERVICE, INC., an Ohio Corporation
vs.
UNITED STATES POSTAL SERVICE, APPELLANT
(D.C. Civil No. 77-3620)
ON APPEAL FROM THE
UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF PENNSYLVANIA
Present: GARTH and HIGGINBOTHAM, Circuit Judges
and SCHWARTZ,* District Judge
JUDGMENT
This cause came on to be heard on the record from
the United States District Court for the Eastern
District of Pennsylvania and was argued by counsel
on March 26, 1979.
* Honorable Murray M. Schwartz, United States District
Judge for the District of Delaware, sitting by designation.
52a
On cowsideration whereof, it is now here ordered
and adjudged by this Court that the judgment of the
said District Court, filed July 19, 1978, be, and the
same is hereby affirmed. Costs taxed against appel-
lant.
ATTEST:
/s/ Thomas F. Quinn
Clerk
August 7, 1979
53a
APPENDIX C
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
[Filed October 9, 1979]
No. 78-2390
UNITED PARCEL SERVICE, INC.,
a New York Corporation,
and
UNITED PARCEL SERVICE, INC., an Ohio Corporation
Vv.
UNITED STATES POSTAL SERVICE, APPELLANT
SUR PETITION FOR REHEARING
Present: SEITZ, Chief Judge, ALDISERT, GIBBONS,
ROSENN, HUNTER, WEIS, GARTH, HIGGIN-
BOTHAM and SLOVITER, Circuit Judges, and
SCHWARTZ, District Judge
The petition for rehearing filed by United States
Postal Service, Appellant in the above entitled case
having been submitted to the judges who participated
in the decision of this court and to all the other avail-
able circuit judges of the circuit in regular active
service, and no judge who concurred in the decision
having asked for rehearing, and a majority of the
circuit judges of the circuit in regular active service
not having voted for rehearing by the court in banc,
54a
the petition for rehearing is denied. Judge Higgin-
botham would grant the petition for rehearing.
By THE COURT:
/s/ Garth
Circuit Judge
SO Dee ahd Med 2 hint ALL et ho a nb om
a a De)
Oa Ait Res tb ROR LT eet ah ele ey
55a
APPENDIX D
UNITED STATES DISTRICT COURT
E. D. PENNSYLVANIA
Civ. A. No. 77-3620
UNITED PARCEL SERVICE, INC.,
a New York Corporation
and
UNITED PARCEL SERVICE, INC., an Ohio Corporation
Vv.
UNITED STATES POSTAL SERVICE
July 19, 1978
OPINION AND ORDER
EDWARD R. BECKER, District Judge.
I. Preliminary Statement
This case raises the question whether the United
States Postal Service may, without notice, hearing, or
prior submission to the Postal Rate Commission, con-
duct limited and temporary experiments in which
proposed new mail classifications, offered at hereto-
fore unavailable rates, are tested in the marketplace
or, conversely, whether the institution of such experi-
mental postal services is subject to the procedures
governing changes in permanent rates and classifica-
56a
tions.: The question appears to be one of first im-
pression.
The United States Postal Service and the postal
procedures at issue in the case at bar find their com-
mon genesis in the Postal Reorganization Act of 1970,
Pub.L. 91-375, 84 Stat. 719 (codified at 39 U.S.C.
§§ 101-5605) [hereinafter “Act”]. Passage of the
Act signalled a major change in the structure and
accountability of the postal bureaucracy. Critics of
the Post Office Department claimed that the Post
Office was at once over-political and under-efficient,
see generally H.R.Rep. No. 91-1104, 91st Cong., 2d
Sess., reprinted in [1970] U.S. Code Cong. & Admin.
News, pp. 3649, 3651-54, 3660-61; S.Rep. No. 91-
912, 91st Cong., 2d Sess. 1-3 (1970); President’s
Commission on Postal Organization, Towards Postal
Excellence (1968) and that the Postmaster General
was generally powerless to take the kind of extensive
remedial action necessary to affect significantly the
Department’s all too apparent ills, see S.Rep., supra,
at 3.’
1 Postal rates and mail classifications are distinct concepts
in the statutory scheme. 39 U.S.C. §§ 3622 & 3623.
2 Tilustrative of this problem is the following exchange in
1967 between then-Postmaster General Lawrence O’Brien and
the Chairman of the House Post Office Appropriations Sub-
committee:
MR. STEED: General . . . would this be a fair sum-
mary: that at the preset time, as the manager of the
Post Office Department, you have no control over your
workload, you have no control over the pay rates of the
employees that you employ, you have very little control
over the conditions of the service of these employees, you
OT: TERE NE NN
nS I on Tt
eek ee ote re ath AN
57a
Congressional response to these postal maladies was
far-reaching. The Post Office was taken out of the
Cabinet and established as the United States Postal
Service, an independent unit of the executive branch.
39 U.S.C. § 201. Under the new system, the Post-
master General is no longer appointed by the Presi-
dent; rather, the President appoints the nine Gov-
ernors of the Postal Service, no more than five of
whom may be from the same political party. The
Governors, who serve for rotating nine year terms,
appoint the Postmaster General and Deputy Post-
master General and set the latters’ tenure and com-
pensation; the Governors and their two appointees
become the Board of Governors of the Postal Service.
Id. § 202.
The Postal Reorganization Act gives to the Postal
Service increased control of and responsibility for
postal operations and management, free of the formal
and direct supervision of the legislative and executive
branches. Thus, the Postal Service is empowered to
sue and be sued in its own name, to adopt rules and
have virtually no control, by the nature of it, of your
physical facilities, and you have only a limited control,
at best, over the transportation facilities that you are
compelled to use—all of which adds up to a staggering
amount of “no control” in terms of the duties you have
to perform.
MR. O’BRIEN: Mr. Chairman, I would have to gen-
erally agree with your premise. . . . that is a staggering
list of “‘no control.” I don’t know [whether] it has ever
been put that succinctly to me. If it had been at an
appropriate time, perhaps I wouldn’t be sitting here.
H.R.Rep. 91-912, 91st Cong., 2d Sess. 3 (1970).
58a
regulations, to enter into and perform contracts, to
keep its own system of accounts, to acquire and dis-
pose of property, etc. Id. § 401. To professionalize
and depoliticize the Postal Service even further, a
postal career service was established, id. § 1001(a),
provision was made for hiring executives, id. § 1001
(c), and otherwise upgrading postal management,
id. § 1004, and political recommendations on person-
nel matters were prohibited, id. § 1002. As to em-
ployee-management matters, collective bargaining was
made applicable to postal service employees, with pro-
vision for binding arbitration in the event of lack of
agreement, id. §§ 1202-1207, and postal employees
were granted the right to work, zd. § 1209(c).
Reform in the area of setting postal rates and
classes was at least as thoroughgoing as the other
reforms just referred to. Congress abandoned the
business of postal rate-making and established a
quasi-regulatory agency, the bipartisan Postal Rate
Commission. The Commission, which is independent
of the Postal Service and the members of which serve
for rotating six year terms, was given primary re-
sponsibility for overseeing changes in postal rates,
classes, and services. Jd. §§ 3601-3604. Although the
Governors of the Postal Service are charged with the
establishment of fair and equitable classes of mail
and postal rates and fees, id. § 3621, before insti-
tuting such rates or classes the Post Service must
request recommended decisions from the Postal Rate
Commission, id. §§ 3622 & 3623. The Commission is
to hold evidentiary hearings under 5 U.S.C. §§ 556
59a
& 557 (Administrative Procedure Act) pursuant to
regulations that it may establish, 39 U.S.C. § 3624,
to evaluate the proposed rates or classes of mail ac-
cording to criteria established by Congress, id. §§ 3622
& 3623. Upon receiving the recommended decision of
the Commission, the Governors of the Postai Service
may approve, allow under protest, reject, or modify
the decision in accordance with specific statutory
provisions. Jd. § 3625. If no decision is forthcoming
from the Commission within a specified period of
time, the Postal Service may, upon ten days notice in
the Federal Register, establish temporary changes in
rates or classes in accordance with the proposed
changes under consideration by the Commission. /d.
§ 3641.° Proposed changes in the nature of postal
services that will generally affect service on a nation-
3 Section 3641 of the Act, providing for temporary changes
in rates and classes of mail, permits the Postal Service to
institute a temporary rate if the Postal Rate Commission fails
to transmit a recommended decision in accordance with
§ 3624(c). 39 U.S.C. § 3641(a). Section 3624(c) requires
the Commission to transmit its recommended decision within
ten months after receiving the request for such a decision
from the Postal Service, except that if the Commission’s
failure to comply is caused by the Postal Service’s delay in
responding to any lawful order of the Commission, the ten
month period is exsended by the time of the Postal Service’s
noncompliance. The temporary rate instituted under § 3641
is to be in accordance with the rate proposal under considera-
tion by the Commission, id. § 3641(c), and must terminate no
later than 150 days after the Commission renders its recom-
mended decision, id. § 3641(d). Section 3641(e) permits the
Postal Service to institute a temporary change in mail
classification if a recommended decision is not forthcoming
from the Commission within 90 days of submission of a
reguest by the Postal Service. Such a temporary classifica-
60a
wide or substantially nationwide basis must also be
submitted to the Commission for hearing and an ad-
visory opinion before such changes may be instituted.
Id. § 3661.
Responding to its congressional mandate to “plan,
develop, promote, and provide adequate and efficient
postal services at fair and reasonable rates and fees,”
id. § 403(a), in mid-October of 1977 the Postal Serv-
ice instituted an experimental parcel delivery service
that is scheduled to last approximately twelve months.
Under this test program, which is not available to
the public generally, about twenty selected shippers *
in five metropolitan areas ° entered into service agree-
tion change must be in accordance with the proposal made
to the Commission and must terminate no later than 30 days
after the Commission transmits its recommended decision.
The procedures for temporary rate changes were estab-
lished as stated above in 1976 by Pub.L. 94-421, 90 Stat. 1303
(1976). The original 1970 Act had permitted temporary
rate increases to gu into effect 90 days after submission to the
Commission, but such increases were not to exceed 33% of
the existing permanent rates. Further, they expired 30 days
after the Commission rendered its decision. There was no
statutory provision requiring the Commission to render a
decision within a specified period of time. Temporary classi-
fication changes were unaffected by the 1976 amendment.
4Shippers were selected from among the Postal Service’s
regular parcel post patrons whose mailing patterns made
them likely prospects for the service represented by the
test plan.
5 The metropolitan areas involved are: Seattle, Washing-
ton; Dallas-Fort Worth, Texas; Omaha, Nebraska; Boston,
Massachusetts; and Washington, D.C. One test participant is
in fact located in Baltimore, Maryland, but, in accordance
with past practice, mails its parcels at the Washington, D.C.
Bulk Mail Center. '
6la
ments with the Postal Service. These agreements pro-
vide that parcels mailed by the test participants, when
suitably packaged for bulk mail processing,® will be
assessed postage based upon the average weight of
such packages. For example—and subject to the dis-
tance limitations set out in note 7 infra—regardless
of the actual weight of any given package, if the
average weight of the pieces tendered, based on
sample weighings, is five pounds or less, postage for
each parcel is $.87; if the average weight of the
packages is more than five but not more than twenty
pounds, postage for each parcel is $1.15. These
charges are significantly less than the generally avail-
able parcel post rates of the Postal Service. Further,
the postage charges under the test program do not,
for the most part, vary with distance, as they do
under regular parcel post.’ Participants in the pro-
®The Postal Service’s Bulk Mail System came into full
operation in 1976 in an effort to automate and expedite the
mailing of parcels. It consists of 21 Bulk Mail Centers and
9 auxiliary facilities. As a result, postal operations involving
parcel post and third-class parcels are now organized around
the Bulk Mail System facilities, rather than around standard
post offices and the general mail network. Packages mailed
through the Bulk Mail System must meet certain packaging,
size, weight, shape, and content restrictions. Basically, these
limitations seek to ensure that the packages are “machine-
able” by standardizing to some extent parcels mailed through
the System. A minimum of 300 pieces per mailing must be
tendered in order to qualify for bulk parcel post. Rates are
based on the average weight per piece of all parcels in the
mailing and vary with distance.
7 Distance is limited to the extent that the delivery destina-
tion of the parcel cannot be outside the geographic area
covered by the Postal Service Bulk Mail Facility that serves
62a
gram must provide a minimum volume of 50 pieces
per mailing and 250 pieces per week. They also must
present all parcels to the Postal Service in containers
and cooperate with the Postal Service in data collec-
tion and research activities.*
The plaintiffs, large nationwide providers of parcel
delivery services that compete with the Postal Serv-
ice’s parcel post program and that would suffer ad-
verse competitive impact were the current Postal
the shipper. Thus, the Boston Bulk Mail Center service area
is Maine, Vermont, New Hampshire, Massachusetts, Rhode
Island, Connecticut, and a part of upper New York; packages
mailed from Boston as part of the test plan are limited to
that area. As a further example, the Dallas-Fort Worth Bulk
Mail Center service area is most of Texas and parts of Louisi-
ana, Arkansas, Oklahoma, and Kansas.
Within such service areas, which cover five parcel post
zones—a local zone and four numbered zones—a five-pound
package mailed under normal parcel post would cost from
$.91 to $1.86, depending on distance; under the test plan,
paskages averaging five pounds would each cost $.87, regard-
less of distance within the service area. Similarly, a twenty-
pound package would regularly cost anywhere from $1.58
to $2.93; the test plan standardizes the cost at $1.15. Com-
parable rates for parcels shipped via plaintiff United Parcel
vary by distance from $1.05 to $1.28 for five-pound parcels
and from $2.10 to $3.02 for twenty-pound packages.
A further limitation on distance under the current plan is
that regardless of the size of the service area, no more than
25% of the test volume may be delivered beyond parcel post
zone number two, which is approximately 150 miles from the
parcel’s point of origin.
®As an additional aspect of the test, a service feature
known as Day Certain Delivery, not being generally pro-
moted by the Postal Service during the experiment, is being
promoted to the shippers participating in the test.
63a
Service test instituted on a permanent and system-
wide basis,’ contend that the Postal Service’s experi-
ment is in violation of the policy and procedures
established by the Postal Reorganization Act. Al-
though the particular experiment at issue in this case
poses a relatively small threat to plaintiffs, see notes
9 supra & 11 infra, the plaintiffs fear that other less
restricted experiments will be deleterious. Choosing
to strike before significant harm is done rather than
after, they attack the precedent of marketplace ex-
periment sans Rate Commission approval which the
Service Test Plan establishes. The primary focus of
this attack on the Service Test Plan is grounded on
the procedures mandated by 39 U.S.C. §§ 3622-3624
for rate and mail classification changes.’ Plaintiffs
® Although plaintiffs, the United Parcel Service companies,
now have only limited contract carrier rights to deliver par-
cels for designated retail stores, U.P.S. currently has a pro-
posal before the Interstate Commerce Commission that, if
approved, would grant U.P.S. the unlimited right to deliver
for retail stores as a common carrier. N.T., Dec. 30, 1977,
at 9. The service presaged by the Postal Service’s experiment
would also be aimed in large measure at retailers. See Stipu-
lated Exhibits 4, 5. The test itself however, has relatively
little competitive impact on U.P.S. since distance of delivery
and participant limitations have been imposed on the experi-
ment by stipulation of the parties. See N.T., Nov. 21, 1977,
at 3-4, 5.
10 Plaintiffs originally asserted that the Postal Service’s
experiment violates both the mandate of 39 U.S.C. § 403(c)
that “[i]n providing services and in establishing classifica-
tions, rates, and fees under this title, the Postal Service shall
not . . . make any undue or unreasonable discrimination
among users of the mails, nor shall it grant any undue or
unreasonable preferences to any such user” and the require-
64a
contend that, insofar as the test takes place in the
marketplace, because the rates charged to participants
in the experiment are previously unavailable rates
and because the plan represents a new class of mail,
the Postal Service is required to submit the plan to
the Postal Rate Commission and await the Commis-
sion’s recommended decision before instituting the
test. Plaintiffs argue that the Postal Service may not
lawfully circumvent the statutorily required proce-
dures for postal rate and classification changes merely
by unilaterally denominating the changes “experimen-
tal.” Since the statutory procedures, which contain
no exceptions for market “experiments,” were not fol-
lowed, plaintiffs argue that the Service Test Plan
should be enjoined.”
ment of § 3661 that any service change “which will gen-
erally affect service on a nationwide or substantially nation-
wide basis” must be submitted to the Postal Rate Commis-
sion for an advisory opinion before it is instituted. In brief-
ing and argument, however, plaintiffs placed primary em-
phasis on the argument based on §§ 3622 & 3623. Because of
our disposition of the latter argument, we need not address
plaintiffs’ alternative contentions.
11 The complaint was filed on October 20, 1977, and a motion
for preliminary injunction was filed on October 28. A hear-
ing on the motion was scheduled for November 21. On that
date, but prior to the scheduled hearing, plaintiffs and de-
fendant entered into a stipulation restricting the scope of the
test. See note 9 supra. As part of that stipulation, plaintiffs
withdrew their motion for a preliminary injunction. On the
scheduled trial date of December 30, 1977, a stipulation of
facts was moved into evidence and the matter was submitted
on final hearing as a case stated.
‘
|
65a
The Postal Service rejoins that, although the pro-
cedures cited by plaintiffs would indeed be applicable
if the Service Test Plan were instituted on a perma-
nent and system-wide basis, those procedures are not
triggered where, as here, a reasonable, limited, and
temporary experiment is conducted as a research aid
development activity pursuant to the Postal Service’s
duty to “plan [and] develop . . . adequate and effi-
cient postal services.” 39 U.S.C. § 403(a). The ex-
periment, the Postal Service maintains, is designed
to assist the Service in determining what, if any, rate
and/or classification changes it should make in order
to better utilize the Bulk Mail System, and is not
itself such a change.
For reasons that will at length appear, although
we believe that as a mxtter of pure policy the result
advocated by the Postal Service is more desirable,
construction of the statute compels the conclusion that
the plaintiffs must prevail and that continution of the
“experimental” parcel delivery service at issue must
be enjoined.
II. Discussion
A. The Statutory Language; Some General Princi-
ples of Statutory Construction and the Principle
of “Plain Meaning”
We begin our inquiry by focusing on the statutory
language that governs the Postal Service’s submission
of changes in rates and classifications to the Postal
Rate Commission. Section 3622(a) of the Postal Re-
organization Act provides:
66a
From time to time the Postal Service shall
request the Postal Rate Commission to submit
a recommended decision on changes in a rate or
rates of postage or in a fee or fees for postal
services if the Postal Service determines that
such changes would be in the public interest and
in accordance with the policies of this title. The
Postal Service may submit such suggestions for
rate adjustments as it deems suitable.
39 U.S.C. § 3622(a). Similarly, the next section pro-
vides :
Following the establishment of [an initial]
mail classification schedule . . . the Postal Service
may from time to time request that the Com-
mission submit, or the Commission may submit
to the Governors on its own initiative, a recom-
mended decision on changes in the mail classi-
fication schedule.
Id. § 3623(b).
Our objective as we seek to determine the meaning
to be given this statutory language is, of course, to
give effect to the congressional intent. Philbrook v.
Glodgett, 421 U.S. 707, 718, 95 S.Ct. 1893, 44 L.Ed.2d
525 (1975). We think it reasonable to assume that
in expressing its intent through the Postal Reorgani-
zation Act, Congress sought clarity rather than obfus-
cation and, unless the contrary appears, that Congress
therefore used statutory words in their ordinary and
usual sense and with the meaning commonly attrib-
uted to them. Caminetti v. United States, 242 U.S.
470, 485-86, 87 S.Ct. 192, 61 L.Ed. 442 (1917);
i ae
Saaiinn ieddaiidnaie onaitere Saeed
67a
Institute for Scientific Information, Inc. v. United
States Postal Service, 555 F.2d 128, 131 (8d Cir.
1977).
Reading the statute according to this general princi-
ple, there does not on the surface appear to be any-
thing inherently difficult or ambiguous about the
language involved. The common meaning of a “rate
of postage” is simply the fee the Postal Service
charges for processing, transporting, and delivering a
particular type of mail. Similarly, the ordinary un-
derstanding of a mail classification is nothing more
complex than a grouping of mail based on established
and shared criteria. See National Retired Teachers
Ass’n v. United States Postal Service, 430 F.Supp.
141, 146 (D.D.C. 1977). The usual interpretation of
“change” is alteration or making different. Although
the Postal Service argues vigorously that, in the con-
text of Postal Rate Commission supervision, “changes”
in “rates of postage” and “mail classifications” sig-
nifies only permanent and system-wide rate and classi-
fication changes rather than the limited experimental
adjustments in rates and classifications at issue in the
instant case, the statute itself does not at any point
set out or specifically allude to any exceptions to the
general scheme,” nor do the particular provisions on
12 There is provision for temporary rates and classes in
39 U.S.C. 3641, see note 2 supra & accompanying text, but
such temporary changes are not exceptions from the require-
ment that. rate and classification «aanges be filed with the
Postal Rate Commission. Temporary rates and classes are
permitted when changes, already filed with the Postal Rate
Commission, are not acted upon within statutorily prescribed
time periods.
68a
which we have focused expressly limit their applica-
bility to changes of a nationwide, systemwide, or
permanent scope. On the face of the statute, there-
fore, there appears no reason to restrict the ordinary
and usual scope of the statutory terms, which, we
think, would generally be read to include any change
in rates or classifications.
Turning our attention to the particular actions of
the Postal Service that are challenged in this case,
there can be no doubt that the Postal Service’s ex-
periment does involve rates of postage and classifi-
cations of mail within the ordinary meaning of those
terms. Fees are being paid to the Postal Service to
transport and deliver a certain type of mail that is
grouped according to established and shared criteria.
Indeed, as we have already observed, the Postal Serv-
ice concedes that the very changes at issue would
have to be submitted to the Postal Rate Commission
pursuant to §§ 3622 and 3623 were these innovations
permanent and systemwide. Further, it is clear that
as to the twenty participants in the Service Test Plan,
postal rates and mail classifications have in fact been
changed, for the participating shippers now mail their
packages under previously unavailable rates as part
of a previously nonexistent class of mail. So stated,
where the “experiment” does not consist of mock
packages mailed at hypothetical rates but instead re-
quires the payment of real postage by real shippers
for real parcel post service, there have been changes,
however limited, in rates of postage and classifications
of mail that affect these shippers and that fall within
a “plain meaning” reading of the statutory language.
eaten? pe wks ot. tbe PO ee
69a
There is a possible counterpoint to our “plain
meaning” analysis, which can be constructed by
analogy to 39 U.S.C. § 3661; ** that is, by compar-
ing, in the postal context, rate, classification, and
service changes."* When one thinks of a rate or
classification change, the argument goes, one naturally
tends to think in systemwide terms; 7.e., when one
thinks of a change in the rates, for example, of
parcel post, it is the more “common” understanding
that such a change would be across the board, and
not a change affecting only twenty mailers and only
for a predetermined length of time. The “common”
or “ordinary” conception of a classification change
might be said to be similar. In the case of a service
change, however, the argument continues, one might
more naturally think in less sweeping terms. To be
sure, a service change could be systemwide. But it
commonly also could be purely !ocal—for example, the
decision to discontinue home delivery in a single
town when the mailboxes are moved farther away
from the curb. Grover City v. United States Postal
Service, 391 F.Supp. 982 (C.D.Cal. 1975). See also
Bradley v. United States Postal Service, 554 F.2d
186 (5th Cir. 1977) (decision to discontinue door-to-
18 Under § 3661, Postal Rate Commission involvement in
service changes is triggered only when the Postal Service
plans “a change in the nature of postal services which will
generally affect service on a nationwide or substantially na-
tionwide basis.” 39 U.S.C. § 3661. See generally Part II.B.4
infra.
14 This argument is hinted at by the Postal Service in its
brief, though not clearly articulated.
10a
door delivery in one town not a service change of
nationwide or substantially nationwide scope) ; Mar-
tin v. Sloan, 482 F.Supp. 616 W.D.N.C. 1977) (con-
solidation of two rural postal routes not a service
change of nationwide or substantially nationwide
scope). Thus, in § 3661 Congress had to modify the
ambiguous “plain meaning” of a “service change”
to make it clear that Postal Rate Commission in-
volvement was to be only in the broader, systemwide
situation. Under this theory, no such modification of
the plain meaning of rate or classification changes
was necessary in § 3622 or § 3623 because the ordi-
nary usage of such terms already includes a ‘“‘system-
wide” component, but modification would have been
necessary to expand Rate Commission jurisdiction to
the less-than-systemwide situation. The argument
concludes that the plain meaning reflects, consistent
with § 3661, a congressional desire to reserve Rate
Commission review of the “‘big’’ case.
The effect of the foregoing argument, if successful,
would be to reverse the presumption under which we
otherwise would be laboring. For if the “plain mean-
ing” of the statute is as we initially articulate it,
it is incumbent on the Postal Service to demonstrate
that imputing such a meaning to the words of the
Act would be unreasonable in terms of the Act’s pur-
pose and structure. See discussion infra. If, how-
ever, the “plain meaning” is as the Postal Service
posits it to be, the presumption reverses and it be-
comes the burden of the plaintiff to show unrea-
sonableness.
4
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Although the Postal Service’s argument has some
appeal, we ultimately are unconvinced by it. There
is nothing “plainer” than the fact that postal rates
and classifications have been changed as to the par-
ticipants in the Service Test Plan. When the rates
and classifications applicable to certain users of the
Postal Service have in fact been changed, we find it
both conceptually and linguistically bizarre to say
that although certain postal rates and classifications
have been changed, there has not been a change in
the rates or classification of postage. We do not say
that such a statutory definition is impossible; the
ultimate length of this opinion is testimony to its
possibility. We do, however, say that it strains “plain
meaning” to impose such a definition on the language
as a presumptive matter.
Moreover, this argument ultimately hinges on the
assumption that Congress wanted the approach to
rate, classification, and service changes to be identical
vis-4-vis Rate Commission involvement. Congress’
linguistically different treatment of the different
kinds of changes, however, may well indicate that
the changes were thought of in different categories
because, for example, of the different areas of ex-
pertise of the Postal Service (Service Management)
and the Postal Rate Commission (ratemaking).
See National Association of Greeting Card Publishers
v. United States Postal Service, 186 U.S.App.D.C.
331, 358, 569 F.2d 570, 597 (1976) [hereinafter
“NAGCP”’]. Thus, comparing rate changes and serv-
ice changes is like comparing apples and oranges.
Even without drawing an inference adverse to the
72a
Postal Service from § 3661, we therefore are unable
to employ § 3661 to provide a restrictive gloss on
the facially comprehensive language of §§ 3622 and
3623.
Rather than lowering the curtain on our inquiry
into the meaning of the statute, however, we think
that the foregoing actually only sets the stage for
further analysis. Although it is received wisdom that
when a statute’s plain meaning is clear “the duty
of interpretation does not arise and the rules which
are to aid doubtful meanings need no discussion,”
Caminetti v. United States, supra, 242 U.S. at 485,
37 S.Ct. at 194, it is also an endorsed caveat to this
rule that “[w]hether or not the words of a statute
are clear is itself not always clear.” Barbee v.
United States, 392 F.2d 532, 535 n.4 (5th Cir. 1968).
Thus, what might appear to be the plain meaning
must yield if it is inequitable, un:easonable in con-
text, or manifestly contrary to the statutory purpose
or legislative intent. See, e.g., Center for National
Policy on Race and Urban Issues v. Weinberger, 163
U.S.App. D.C. 368, 372, 502 F.2d 370, 374 (1974).
Our goal, after all, is to vindicate Congress’ intent,
and we therefore must read statutory language as
Congress used it—which may or may not be precisely
as Webster defined it. In order to determine whether
the “plain meaning” of a particular provision is in
fact unreasonable in light of the totality of the stat-
ute, the statutory purpose, or the legislative intent, -
a court must in the first instance engage in at least
some measure of further statutory analysis. See 2A
73a
Sands, Statutes and Statutory Construction §§ 46.
02.04 (4th ed.) Additionally, since the terms with
which we are concerned are used in the Postal Re-
organization Act against the particular background
of regulatory activity, and, indeed, against the even
more particular background of postal regulatory ac-
tivity, we must discern whether such contexts im-
parted to the operative terms some modifying quasi-
technical meaning at variance with the terms’ “plain
meaning.” NLRB v. Coca-Cola Bottling Co., 350 U.S.
264, 76 S.Ct. 383, 100 L.Ed. 285 (1956); Barber v.
Gonzales, 347 U.S. 637, 74 S. Ct. 822, 98 L.Ed. 1009
(1954).
Thus, the “plain meaning” of the statutory lan-
guage raises no more than a presumption, which may
be rebutted, as to the true “statutory meaning” of
that language. The meaning of a federal statute is
for the federal courts to decide. Enochs v. Smith,
359 F.2d 924, (5th Cir. 1966). When a court is
faced with a situation in which Congress could ‘“‘rea-
sonably” have meant two different things, 7. e. when
one expressed statutory purpose might lead to one
interpretation but a different clear purpose leads
to another, and when on its own terms the statute
makes a coherent whole whichever of two ways par-
ticular provisions are interpreted, a more complicated
situation is present. Rut, in such a case, we must
remember: (1) that we are a court, not a legislature,
and are charged with interpreting the words that
Congress used, not with choosing them; and (2)
though our own normative preference might be other-
wise, if the plain and ordinary meaning of the lan-
74a
guage is itself reasonable in light of the broad pur-
poses of the statute and in light of the structure and
context of the legislation'as a whole, we must uphold
that meaning. Arkansas Valley Industries, Inc. v.
Freeman, 415 F.2d 713 (8th Cir. 1969); Sea-Land
Service, Inc. v. Federal Maritime Commission, 131
U.S.App.D.C. 246, 404 F.2d 824 (1968).
Our modus procedendi in pursuing the further
statutory analysis which is necessary will be to
analyze a number of considerations asserted by the
Postal Service to militate against application of the
“plain meaning principle.” First, we shall consider
the Postal Service’s research and development role
and the congressional goal of managerial flexibility.
Second, we shall address the possible analogy to re-
search and development provisions of other federal
regulating schemes. Third, we shall consider the
alleged cumbersomeness and futility of APA type
hearings and the alleged unsuitability of the stat-
utory criteria governing evaluations of rate changes
to experimental rates (and the question whether
these are parameters of congressional intent contra
subjecting experimental rates and classifications to
Postal Rate Commission review). Fourth, we shall
further explore the Service’s argument based on 39
U.S.C. § 3661. As will be seen, when all is said and
done, the plain meaning principle will survive the
assault.
re Tes Sank hain nat
eee
B. Considerations Alleged to Militate Against the
Application of the Plain Meaning Principle
1. The Postal Service’s Research and Development
Role and the Goal of Managerial Flexibility.
The argument most vigorously pressed by the
Postal Service against an inclusive reading of the
statutory jurisdiction of the Postal Rate Commis-
sion—and the one that is apparently at the core of
the Service’s position—is based on § 403(a) of the
Act. This section makes it the responsibility of the
Postal Service to plan, develop, promote, and provide
adequate and efficient postal services at fair and rea-
sonable rates and fees.” 39 U.S.C. § 403(a). When
coupled with §401(10), which provides that the
Postal Service shall “have all . . . powers incidental,
necessary, or appropriate to the carrying on of its
functions or the exercise of its specific powers,” the
Postal Service contends that the duty to “plan, de-
velop, promote, and provide” efficient postal services
means that the Service has the authority to conduct
marketplace experiments like the Service Test Plan.
In support of its position, the Postal Service cites
to the history of the Post Office in general and of the
Postal Reorganization Act in particular. The Serv-
ice points especially to the explicitly articulated con-
gressional purpose of permitting—indeed mandat-
ing—increased managerial initiative and flexibility.
See, e. g., Buchanan v. United States Postal Service,
508 F.2d 259, 268 (5th Cir. 1975). Thus, the Senate
Report accompanying the Act found it “obvious” that
76a
“postal management must now be given the unfet-
tered authority and freedom it has been denied for
years to maintain and operate an efficient service.”
S.Rep. No. 91-912, 91st Cong., 2d Sess. 2 (1970).
The Postal Service argues that “unfettered authority
and freedom” to experiment with new rates and new
classes of mail is essential to fulfilling this congres-
sional expectation. Without experimentation, it is
said, the Service would risk either operational stag-
nation or premature implementation on a systemwide
scale of innovations that might turn out to be coun-
terproductive or, at least, not trouble-free. The Postal
Service reminds us that the old Post Office was con-
sidered to have been deficient in the degree to which
it engaged in service experimentation, see President’s
Commission on Postal Organization, Towards Postal
Excellence 37 (1968) (‘“[N]o service experimenta-
tion program [currently] exists. As a result, though
the service ideal is deeply imbedded in postal em-
ployees, they serve a market whose needs are but
dimly perceived.”), and that Congress clearly in-
tended that the new Postal Service would remedy this
shorteoming, see H.R.Rep. 91-1104, 91st Cong., 2d
Sess. 9, reprinted in [1970] U.S.Code Cong. &
Admin.News pp. 3649, 3657 (‘“‘The Postal Service is
empowered to engage in research and development
programs directed toward the expansion of present
postal service and the development of new services
responsive to the evolving needs of the United
States.”’).
ee ee ee eee
+ ubedle cts we
: >, TIO ‘ated: °
77a
Furthermore, argues the Postal Service, even un-
der the predecessor provisions of § 403(a) in the
old postal legislation, e. g., Pub.L. No.. 86-682, 74
Stat. 578 (1960), which was replaced by the Postal
Reorganization Act, the Post Office was permitted to
engage in marketplace experiments. Thus, the old
§504(a) of Title 39 of the United States Code
provided:
The Postmaster General shall maintain in the
Department a research and development pro-
gram, including investigations and studies, for
the purpose of introducing or improving equip-
ment, supplies, methods, procedures, means, and
devices used in the Department in order that its
business may be more efficiently and economically
operated.
In United Telegraph Workers vy. FCC, 141 US.
App.D.C. 190, 436, F.2d 920 (1970) the D.C. Circuit
upheld the Post Office’s participation, jointly with
Western Union, in the Mailgram experiment. Mail-
gram was conceived of as a hybrid of the traditional
telegram and first-class mail, between the two in
speed and cost. The experimental service was to
be available to Western Union subscribers in 12
selected cities for a test period of two years. It
was projected that the subscribers would be able
to send messages through Western Union communi-
cations network to one of the 110 post offices nation-
wide that would have teleprinters installed. Postal
workers were to scan the printed messages for com-
pleteness and legibility and then insert them in win-
78a
dow envelopes for placement in ordinary first class
mail. The Post Office charged Western Union a han-
dling fee; postage was the nermal first-class rate.
In finding that § 504(a) of the postal statute per-
mitted the Post Office’s participation in the experi-
ment, the D.C. Circuit relied on its earlier decision
in Atchison, T. & S. F. Ry. v. Summerfield, 97
U.S.App.D.C. 208, 229 F.2d 777 (1955), cert. denied,
351 U.S. 926, 76 S.Ct. 779, 100 L.Ed. 1456 (1956).
In Summerfield, the Postmaster General had insti-
tuted an experiment whereby ordinary first-class mail
was to be carried by air on a space available basis,
without payment of additional airmail postage. In
all other respects (e. g., handling and distribution )
the first-class mail procedures were unchanged. The
district court recognized the Post Office’s power to
experiment, but held that the experiment was unduly
prolonged and so not a true experiment. 128 F.Supp.
266, 274 (D.D.C.1955). The D.C. Circuit reversed,
stating that “we are unable to find any prohibition
of the present experimental program, while we do
find statutory provisions broad enough to encompass
it within their terms.” 97 U.S. App.D.C. at 208, 229
F.2d at 782. However, the statutory provisions to
which the Swmnmerfield court referred included ap-
parent approval of the experiment by the Congress in
an appropriations bill, Act of May 28, 1954, 68 Stat.
144, 148, see S.Rep. No. 1286, 83d Cong., 2d Sess.
(1954), and the Postmaster General’s authority to
provide for the transportation of the mail, 52 Stat.
1027 (1938). The opinion in fact made no mention
19a
of the Postmaster General’s research and develop-
ment responsibilities under 63 Stat. 608 (1949),
which was the direct line ancestor of the old § 504
(a), on which the United Telegraph Workers court
and the Postal Service here rely.
On the basis of this rather brief history of the Pos-
tal Reorganization Act and also of the Postal Serv-
ice’s research and development power, as subsumed
within the cited cases, the Service would have us ap-
prove the Test Plan as a legitimate exercise of that
power. The Service further asserts that requiring
submission to the Postal Rate Commission of pro-
posals like the Service Test Plan would thwart the
goal of managerial freedom and would impede im-
plementation of a managerially ordered undertaking
designed to improve the efficiency of the Postal Serv-
ice.
The reliance of the defendant Postal Service on
cases that antedate the Postal Reorganization Act is
misplaced and its evaluation of the Act’s legislative
history one-sided. For the Act produced broad
changes in postal responsibility that went beyond the
simple transfer of the responsibilities of Congress to
the Postal Rate Commission and the responsibilities
of the Post Office to the Postal Service. It is an in-
complete characterization of the changes worked by
the Act to assert that because the Post Office once
took certain actions—e. g., initiation of experimen-
tation—without input from Congress, the Postal
Service may now take those actions without input
from the Postal Rate Commission. This point was at
‘
80a
issue in NAGCP, supra. The Postal Service there as-
serted that it was authorized under the Postal Re-
organization Act to set fees for special services,’* pri-
marily because it had had the power to set such
fees under prior law. The Service also relied on § 404
(a) (6) of the Act, a general power provision that
authorizes the Service “to provide, establish, change,
or abolish special nonpostal or similar services.” Yet,
relying on the “plain language” of the new Act, 39
U.S.C. § 3622, and referring to the postal restruc-
turing rendered by that Act, the D.C. Circuit rejected
the Postal Services’ claim of fee-setting power.
[Any] reasonable examination of the purposes
of the Act discloses Congress’ implicit. design
that the distinct functions of service provision
and rate adjustment be divided between the
Postal Service and the Rate Commission. The
expertise of the Postal Service supposedly is in
management, and its authority therefore reason-
ably extends to basic decisions pertaining to the
provision of special, non-postal and other serv-
ices. The Postal Rate Commission, however,
was created specifically to oversee the ratemak-
15 The services in question included: (1) the furnishing of
mail list corrections; (2) the privilege of prepayment of
postage without stamps; (3) the forwarding or returning of
undeliverable mail; (4) the registry of mail; (5) the insur-
ance of mail; (6) the provision of COD mail; (7) the certifi-
cation of mail; (8) the securing of a signed receipt upon
the delivery of mail and the returning of it to the sender;
(9) special delivery; (10) the special handling of mail;
(11) the provision of money orders. See 40 Fed.Reg. 43233-
84 (Sept. 19, 1975).
“wero NE ma
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