# Petition — United States Postal Service v. United Parcel Service, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_1810%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1980 - **Citation:** 446 U.S. 957 ## Text 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 hs da ctckatnbawinsncsamiigsiinshconiem 1 Nee ciaenuutensnnnsinene 1 I i icc icceniisavetanniinnivnewnnnnennsiie 2 as taamccieneaseunsenenensnteenes 2 SE Se 3 Reasons for granting the petition .................... 11 Conclusion .........- Re ali rie aie acraicipeaalensenkasnmnnenvelnics 21 Sk ie REE la CL EN SE 5la gh a A 53a eis dniccirwisinmrenmesanhanorcnscen 55a RRS RSE SEES A 116a CITATIONS Case: United Telegraph Workers, AFL-CIO v. I ID oniseccsecnscccsmccnncntannsanen 14 Statutes and regulations: Administrative Procedure Act, 5 U.S.C. 551 et seq. ca ncacsconeiaesomienaniiin 5 oats saatanoniadunn 5 Postal Reorganization Act, Pub. L. 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Oe | | Cena aCe 5 Be I ae cece Sacco visitediac cacdnceacits 5 BP Ree ITED cecieictdnccincatnsinsvnsivenss 6 ee III ciivnicinnsnachesceinicicrensdenccuna'se 5, 6 BF A IIIT Sachs cdc sscoeeicuscrenenciecndecinse 19 re rr ID Sacral eecesertnines 20 39 U.S.C. (1964 ed.) 504(a) -...00000... 14 SP RAI ME eh ices aieasntecntdonseieusionvans 4 i,k) ae 4 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) ........ GB FOG. Te, GEIST CIETY wnsicccevencccescvcs. H.R. Rep. No. 91-1104, 91st Cong., 2d BNI: 0 RIIIT Dias viniecahaccieinccenmisinianerannsaateniiiens 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 tle cnt AL sine iE a ai ale thao aie eae COA 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 a Deaton sas PE et Se ce Oe i 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 an [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_1810%3A1. Public record. Not legal advice.