William H. Rehnquist: We'll hear argument now on No. 89-1416, Air Courier Conference of America v. American Postal Workers Union. Mr. Farkas, you may proceed whenever you're ready. ORAL ARGUMENT OF L. PETER FARKAS ON BEHALF OF THE PETITIONER--
L. Peter Farkas: Mr. Chief Justice, and may it please the Court: This case concerns in the first instance international remail. I thought I might open up by saying a little more about remail than we said in our briefs. I think it might be helpful to decide both the issues presented. I will then discuss the standing issue, and Mr. Larkin will go with the merits of the administrative procedure. International remail involves the shipment in bulk of large volumes of business documents, publications, and business correspondence to post offices abroad for mailing to the ultimate addressee. For example, American banks that have overseas depositors, credit card companies that have overseas cardholders have to send the monthly statements. Rather than go to the post office, affixing U.S. Postal Service's international air rate, and sending them off to... for delivery abroad, under international remail the courier will pick up those monthly statements in bulk, will... they would be unstamped. They would be put on an air plane that evening, and they would be delivered to a foreign post office the following morning, where they would be mailed at... usually at negotiated rates for ultimate delivery by that post office or by another foreign post office in some other country. The international remail involves a savings of time. Some shipments are delivered in half the time it would take the United States Postal Service to deliver, to deliver the same correspondence. It involves a savings in money. Some of... the record shows that savings of up to 50 percent exist in certain market for delivery by international remail. These savings of time and money save American jobs. The record shows that if remail were unavailable that certain publishers would move their printing operations abroad. Under the example I noted before, if remail were unavailable, that is, if low cost, reliable and quick service for delivery of statements were unavailable, the banks or credit card companies may think... start thinking about moving their computer billing operations abroad. So in short, this saves, saves American jobs. It promotes exports, and it does so without necessarily cutting into the business of the Postal Service because international trade is not a zero sum game. Now let me turn to the standing issue. The... in 1979 the United States Postal Service suspended the operation of the restrictions on private carriage of letters--
William H. Rehnquist: Could you speak up a little bit, Mr. Farkas. I'm having a little trouble hearing. Perhaps if you raised the lectern a little.
L. Peter Farkas: --In 1979... can you hear me now? Thank you, Your Honor. In 1979, the United States Postal Service suspended the restrictions on private carriage of letters by... and that... those laws... the restrictions on private carriage of letters are referred to the postal monopoly laws, also referred to in the briefs as the private express statutes. The 1979 suspension related to both domestic urgent letters and international urgent letters. Soon after the suspension, the practice... the international side of the urgent letter rule was used both to deliver urgent letters to... individually to foreign addressees and also to deliver international letters, urgent letters in bulk, to foreign post offices. In 1985 the United States Postal Service took exception to the delivery of letters, urgent letters, to foreign post offices and initiated a rule making to prohibit that practice. The users of remail, the remailers themselves with the help of the administration and members of Congress, participated in that rule making and the... eventually the Postal Service turned around and issued a rule that said remail was okay. It was lawful. The American Postal Workers Union and the National Association of Letter Carriers then sued the Postal Service, saying that the suspension was improper and therefore violated the postal monopoly laws. They alleged as their injury the possibility of losses of jobs, postal employment jobs, and the district court found that to meet the Article III injuring fact test but dismissed the case on the grounds that the postal employees were not in the zone of interest of the postal monopoly laws. The court of appeals reversed, and we're here on petition for certiorari.
Sandra Day O'Connor: Did you raise below the jurisdictional question at all, whether it was appropriately brought under the Administrative Procedure Act?
L. Peter Farkas: No, we did not and we disagree with the Government that that issue was either properly raised here and we also disagree with their position on the merits of that issue. In order to... under the zone of interest test, in order to look at whether... one looks to the statute and its legislative history to determine whether a party asserting a violation of an act was the party who's rightfully entitled to pursue that suit. The private express statutes were originated in the late 19... late 1700's as a general tax provisions and as a means of paying for post roads. The only time that Congress ever debated the postal monopoly laws were in 1845. And at that time, there were two... two reasons advanced for the postal monopolies. The first one was to help bind and build the frontier and connect it to the rest of the country. The second reason was to control the flow of information. At the time it was believed unfair that some individuals might take advantage of commercially useful information that travelled faster than the mails could carry them. Never in the history of any consideration of, of a postal monopoly laws were the interests of postal employees ever considered. Therefore, we contend that the postal employees are not within the zone of interest of the postal monopoly laws and the case was properly dismissed by the district court. The unions here have not seriously challenged... in fact they appear to have abandoned the contention that the private express statutes give them standing. They now turn to the Postal Reorganization Act of 1970 as the appropriate statute to look to for standing purposes for zone of interest purposes. We believe that the Postal Reorganization Act does not confer standing because it was no more a postal employment act... it no more promoted postal employment... Congress no more considered postal employment... that is, in numbers... in promulgating that act--
Byron R. White: Is this, is this really an argument or is it part of an argument that the statute doesn't provide the private cause of action to anybody?
L. Peter Farkas: --No, this is not a private cause of action case. This is a judicial review case. And I think the judicial... if that's made clear, that also reflects on the... on the reviewability on the Administrative Procedures Act issue raised by the Government by the Postal Service.
William H. Rehnquist: At the time of the debate on the Postal Reorganization Act of 1970, was any of that debate addressed to the merits of the private express statute?
L. Peter Farkas: No, it wasn't. Congress specifically declined to change the private express statutes at that time, and the legislative history says so. In short, the Postal Reorganization Act was intended to make the Post Office into a more businesslike... Government-owned corporation. The unions opposed the Postal Reorganization Act because they ended Civil Service protection for employees, and it was predicted to reduce postal employment in the long run because it was predicted to, to help the Post Office automate and help the Post Office get the Congress off its back to keep it from automating. And, therefore, the purposes of the act, of the 1970 act, do not bring the postal employees within the zone of interest of the private express statutes.
Anthony M. Kennedy: Well, that's parallel with their contention here, isn't it? They're saying it's just a, a continuation of that, and we object. They're not being inconsistent.
L. Peter Farkas: Well, they are being inconsistent in the sense that, Justice Kennedy, that they were opposed to the Postal Reorganization Act because they thought it would cost them jobs. If that's so--
Anthony M. Kennedy: Well, they're still saying that.
L. Peter Farkas: --Well, but they're--
Anthony M. Kennedy: And then it shows they have a continuing interest in the enforcement and the operation of this statute. They say now that you've done it, just don't carry it too far. Isn't that... isn't that their claim?
L. Peter Farkas: --Well, but Congress has spoken by passing... by passing the Postal Reorganization Act over their objections, and Congress--
Anthony M. Kennedy: Well, the question is whether the--
L. Peter Farkas: --That's not their intention to save postal jobs.
Anthony M. Kennedy: --Well, it was... it was to keep jobs in some stat, in... at some level.
L. Peter Farkas: In any event, the purposes of the private express statutes are not clarified or helped by the Postal Reorganization Act. They were passed for different purposes and therefore, the Postal Reorganization Act is irrelevant to bringing the postal employees within the zone of interest of the postal monopoly laws. I'd like to... with the Court's permission, I'd like to save the... my remaining time for rebuttal.
William H. Rehnquist: Very well, Mr. Farkas. Mr. Larkin, we'll hear now from you.
Paul J. Larkin, Jr.: Thank you, Mr. Chief Justice, and may it please the Court: We agree with the petitioners that the unions cannot bring this law suit under the APA. As we explained in our opening and reply briefs, we believe that the unions did not and cannot satisfy the zone of interest tests that this Court has set out in its decisions. But we and in this case, we alone, also believe that there is an additional reason why the unions cannot invoke the APA in this case, and that is that Congress has exempted the Postal Service from the APA by passing section 410(a) of the postal code.
William H. Rehnquist: Well, Mr. Larkin the Government did not petition for review in this case.
Paul J. Larkin, Jr.: Correct.
William H. Rehnquist: And it's simply here is a respondent, right?
Paul J. Larkin, Jr.: Correct.
William H. Rehnquist: Is it permitted to raise a separate question from that raised by the petitioners?
Paul J. Larkin, Jr.: Normally, no. There is only one small category of cases where we think that could be done. We think this case fits into that category.
William H. Rehnquist: What's the authority for that exception?
Paul J. Larkin, Jr.: The exception would be where the matter is jurisdictional, and we think that the way this Court discussed this type of issue in the case of Block v. Community Nutrition Institute that it treated these types of issues as being... as the Court said in Block... in effect jurisdictional. The last footnote in the Block case, footnote 4, was the footnote in which the Court said that it declined in that case to resolve the Article III question that was before the Court. The question in that case under Article III was whether the plaintiff's net lawsuit had standing. There was an additional question in that case of whether or not review was precluded under the APA. The Court resolved the case by looking to the preclusion issue and not resolving the standing issue. So we think that both what the Court said in the Block case and what the Court did in the Block case indicates that the Court believes an issue like this is one that can be raised in this sort of matter.
William H. Rehnquist: Even though... even though not jurisdictional in any strict sense of the word at all.
Paul J. Larkin, Jr.: Well, the term "jurisdictional", Your Honor, is one, I readily admit, has been used to cover a variety of different types of claims. For example, sometimes the word jurisdictional is used when really the word authority is an issue. Sometimes the word jurisdictional is used to discuss threshold issues which would normally not be jurisdictional in the Article III sense. They would be threshold issues such as whether or not someone has exhausted remedies in the administrative process. But the peculiar factual scenario in the Block case tends to indicate, I think, that the Court meant that in the stronger jurisdictional sense because there was in fact an Article III question that was presented by the Government in that case. We brought a challenge on that type of ground to the decision below. It was one of the questions that we briefed in the case, and the Court, rather than resolve the Article III issue, resolved this other issue. So that is why, Your Honor, even though I readily confess that we did not raise the issue below, we raised it for the first time in our brief in opposition, and that normally a respondent, of course, cannot interject a new issue into the case. We think nonetheless this fits into that category. And there is another and a smaller reason, I might like to add at this point, why you... Court may wish to consider it.
William H. Rehnquist: A narrow one.
Paul J. Larkin, Jr.: A narrow one. The narrow one is this. As the Court pointed out in the opinion by Justice White in the Clarke case, the zone of interest tests is principally a gloss on section 702 of the APA. If, therefore, we are right in this case and the APA is inapplicable to the Postal Service, then that is the type of issue you would want to consider in deciding whether or not the zone of interest test is the proper way of looking at this case. We think the zone of interest test has not been satisfied by the unions.
William H. Rehnquist: That surely is not a jurisdictional argument.
Paul J. Larkin, Jr.: True. That... that's not a jurisdictional one, I agree. That's more a prudential one. And I bring it to your attention because we thought, since this is one of the issues that a court looking at this sort of problem would have to consider that is one the Court would probably want to keep in mind.
John Paul Stevens: Mr. Larkin, in addition to the APA problem I guess there's also the question whether the postal express statutes create a private cause of action, and of course you say, you say they don't. Is that a jurisdictional issue also in your view?
Paul J. Larkin, Jr.: Well, there is indication of that in the case that is cited in footnote 4 in the Block opinion, which is the Amtrak case, where in that case the Court resolved a cause of action issue without, to the best of my recollection, resolving a different type of standing issue. So if that case... that case would therefore tend to indicate that a private right of action case, perhaps only where you're dealing with the Government rather than a private party, would at least be seen on that sort of parallel. But I would also admit the Amtrak case did not use the word "forfeit". It didn't say that this was the type of issue that could not be forfeited. Normally, a private right of action issue is not one that you would think of as a jurisdictional issue. That I agree.
Thurgood Marshall: Mr. Larkin, you didn't raise this below?
Paul J. Larkin, Jr.: Correct, we made a mistake.
Thurgood Marshall: Well, do you know of any other instance where we take up a point that wasn't raised below?
Paul J. Larkin, Jr.: Well, generally the Court doesn't resolve questions that weren't raised below, but for example, if the Court believes it's necessary properly to resolve the case... yesterday's opinion is some indication that the Court will resolve the case at least on a basis that wasn't--
Thurgood Marshall: Do you know--
Paul J. Larkin, Jr.: --argued by the parties.
Thurgood Marshall: --Do you know of any instance, other than the one you gave, where this has been done?
Paul J. Larkin, Jr.: Not off the top of my head, no.
Thurgood Marshall: Off of any other part? [Laughter]
Paul J. Larkin, Jr.: You've got... the rest of me can't come up with an answer either. And we think for the reasons I have said now and tried to summarize in our brief that it's an issue that the Court would want to consider and proper--
Thurgood Marshall: Well, what is different from that and an amicus curiae?
Paul J. Larkin, Jr.: --Well, we, as a respondent, I don't think, Your Honor, don't have any greater right to--
Thurgood Marshall: The trouble is you can't be a respondent and an amicus curiae.
Paul J. Larkin, Jr.: --Correct.
Thurgood Marshall: But aren't you doing just that?
Paul J. Larkin, Jr.: I don't think so. I'm not trying to. I don't want to try to force something on the Court, but--
Thurgood Marshall: Well, you won't. You won't. [Laughter]
Paul J. Larkin, Jr.: --But it is... it is the way we looked at the case, and we think that it's one that the Court could decide. And under it's precedents, as I pointed out, there would be reasons to believe that the Court should decide it. Now the issue--
Antonin Scalia: Mr. Larkin, in the case that we decided yesterday... I assume you're referring to Arcadia?
Paul J. Larkin, Jr.: --Yes, sir.
Antonin Scalia: There, it was difficult to decide correctly the issue that was initially presented, namely whether you needed a conflict or there was field preemption, without first deciding... it bore upon that question whether the field you're talking about was the entirety of FURC jurisdiction. Now, is that same situation here that we couldn't resolve the other issue intelligently without first reaching the APA coverage issue?
Paul J. Larkin, Jr.: I think that bears on my answer to what I gave to Justice White.
Antonin Scalia: Which I didn't understand, I guess.
Paul J. Larkin, Jr.: Well, what the Court in the Clarke case said, that the zone of interest inquiry is best looked at... best looked upon as analysis of section 702 of the APA. It's a gloss, if you will, on the test of section 702 of the APA. And its zone of interest inquiry, the Court said in Clarke, is also far more generous than the type of analysis someone... a court would have to employ under a Cort v. Ash. So whether or not the APA applies, therefore, determines to some extent the type of analysis you have to follow.
Antonin Scalia: Well, we'd still decide the zone of interest thing the same way. I mean, we wouldn't... it wouldn't affect how we came out on this zone of interest issue.
Paul J. Larkin, Jr.: Well, I--
Antonin Scalia: All you're saying is that the zone of interest test maybe shouldn't be applied, but we could... we would still apply it correctly even though it might be unnecessary.
Paul J. Larkin, Jr.: --Well, you... the zone of interest test wouldn't be applied differently, but as you say, you may or may not want to apply it. Now, in our view they haven't satisfied the zone of interest test. The private express statutes are the relevant statutes to look to in this sort of context, and the unions cannot make out a satisfactory showing that they are within the zone of interest of the private express statutes. For that reason I believe the unions have in part also tried to raise what they call a common law, non-statutory type of claim. Now, this Court has in some limited circumstances allowed that type of showing to be sufficient, basically in two types of circumstances. One is where someone can satisfy the prerequisites for obtaining mandamus. That the unions cannot do here. In fact, they've made no real effort to try to satisfy the strict requirements for mandamus. And the other is best illustrated by the Court's discussion in the case of Stark v. Wickard... is a situation in which Congress has implicitly granted someone the right to bring a suit. That also is not the type of showing that we think the unions can make out. That is essentially the type of showing a union would have to make out to satisfy the Cort v. Ash test, and we don't think they can satisfy that very strict showing. So if you look at it as a matter of the zone of interests analysis, we don't the unions can satisfy that. They can't show that they are within the zone of interest. And to be perfectly candid, I think no one is within the zone of interest except the Postal Service. The purpose of the private express statutes was to protect the Postal Service's ability to obtain sufficient revenue so that it could serve the Nation at a uniform rate. It wasn't designed to protect the unions or postal employees, which... and the concept of postal employees unions would have been unheard of in 1845, when the statutes essentially took their current shape... and the statutes weren't designed to protect anyone else. It was designed basically to protect the union... excuse me, the Postal Service and, therefore, the public as a whole. So therefore, it's really the Postal Service that fits within the... the zone of interest of the private express statutes. And as we've explained in our brief and I've tried to summarize here, the unions also cannot satisfy the necessary prerequisites for making out an implied right of action. If I can, then, I'd like to say a few words about the merits of the case in the remaining time. And that is this. We think that this record here is an excellent example of precisely how Congress intended the rule-making process to operate. The Postal Service started out with a rule, a proposed rule, in which it believe that the international remailing practice was unlawful. After hearing from considerable commentary by both members of the public and... as well as other Government officials, the Postal Service changed its mind in reliance on those comments and ultimately adopted the international remailing rule. The unions have, I think, essentially two arguments that they've made to try to criticize the Postal Service in this case. The first is that the rule is not likely to benefit the public as a whole and is likely to benefit those businesses that engage in international business. I think that's a misdirected inquiry. The question is not whether the entire public can make use of a suspension, but is whether the suspension will benefit the public. In this case, the Postal Service concluded that it would for a variety of reasons benefit the public, and that was based upon information from parties not only in the private sector, as I said, but also from Secretary of Commerce, the Chairman of the President's Council of Economic Advisors, the Director of the Office of Management and Budget, and the Attorney General of the United States. Those comments indicated that this will help American businesses sell goods overseas, which is in the public interest. The second challenge that the unions have raised is that the postal service did not adequately consider the potential revenue effect of the suspension on its ability to serve the public as a whole. And we think that criticism is unfair. The Postal Service admitted both at the out--
Byron R. White: Well, maybe it's right?
Paul J. Larkin, Jr.: --No, it's not. It's worse than not right. It's unfair. The Postal Service at the outset and at the conclusion of the process admitted that it did not have the hard data that it would have liked. It asked the public for that data, but it wasn't forthcoming. The Postal Service therefore faced a decision, because making no decision... that is, not adopting a suspension or deferring a suspension would be as much of a decision as allowing suspension to go into effect. What the Postal Service did was use a worst-case scenario. It took a very high over-estimate of the potential loss that it would suffer, and using that over-estimate of its potential loss, nonetheless came to the conclusion that the potential benefits out weighed the potential loss. And that's not an irrational result. Under a public interest standard, an agency is entitled to make that sort of assessment, particularly since the agency has the ability over time to monitor the situation. If in fact it were to prove that this would be too financially debilitating, the Postal Service would have the ability to modify the suspension or repeal it entire... in its entirety. But what the respondents would have us do in this case is, in the absence of complete and perfect data, take no action at all, basically to stymie the agency until it had the type of data that, I'm told by the Postal Service, it really can't ever get. In those circumstances, that would simply be forcing upon the Postal Service a rule that's inconsistent with this Court's decisions in cases such as Listeners Guild. For these sorts of reasons and the ones laid out in our brief, we ask the Court to uphold the Postal Service's decision in this case on the ground that it was eminently reasonable and satisfied all of the requirements of the APA.
Antonin Scalia: But you don't have to give reasons not to adopt a rule, do you? You have to give reasons to adopt one, and that's, I guess, if you have no data, you don't adopt.
Paul J. Larkin, Jr.: Well, you had a request in this case and you had a difference of opinion between some officials in the Executive Branch and the Postal Service over whether or not for example this was a practice that could be conducted under the regulations that existed beginning in 1979. The Postal Service included its most forthright way of resolving this problem was to go ahead and adopt a regulation setting forth its considered view of the matter. And in that circumstance, we believe that what they did was eminently reasonable. Now, maybe they could have done nothing, but it would have left this cloud, as Chairman McKean said. They thought that the most responsible thing for the agency to do was to dissipate that cloud. Thank you.
William H. Rehnquist: Thank you, Mr. Larkin. Mr. Secular?
Keith E. Secular: Mr. Chief Justice, and may it please the Court: I'd like to begin by just following up on Justice Scalia's last question and the response. This case is not, and I really want to emphasize this. This case is not about the legality or the illegality of international remailing. Mr. Farkas' clients were in business before the suspension, and regardless of what happens here, they're going to continue to be in business. This case really has to be understood in the context of the 1979 urgent letter suspension. That's the suspension under which the international remail practice grew up. That suspension prescribed two tests, certain delivery deadlines which had to be satisfied and it prescribed an alternative cost test. The private courier had to charge a certain minimum amount. And if that minimum amount was charge then there was presumably a reason why the mailer wanted to use a private courier rather than the Postal Service. That was the balance the Postal Service struck to meet the needs of mailers who needed to go outside the Postal Service while at the same time safe guarding the monopoly. What the regulation here did, and this is the point that petitioners' arguments are missing, is to release the international remailers and their customers from those requirements. To simplify it, there's a minimum requirement of a charge of twice the applicable postage or $3... let's just say $3... for a given mailing. Under the international remail suspension, that charge is no longer in effect for this one group. And it was that that we... that we attacked. It was the... what we saw as an arbitrary and capricious release of this one group from the same requirements that are applicable to all other mailers who wish to use private carriage rather than the Postal Service, and it's that aspect of the case that we contended was unjustified by anything in the record.
William H. Rehnquist: Did you present testimony or present your views to the hearing?
Keith E. Secular: We presented comments.
William H. Rehnquist: Comments.
Keith E. Secular: Yes. Now as... just to follow up on the merits for the moment and I'll move on to the reviewability and standing issues. The issue with respect to revenue loss, which was the primary concern of the court of appeals. It's not simply whether or not the Postal Service forecasted or attempted to forecast how much revenue would be lost. The question is the failure of the Postal Service to examine the economic tradeoffs that are involved. For example, international mail, just like any other class of mail, is expected to make a contribution to the maintenance of the Postal Service's institutional infrastructure. The Court has examined the rate-making procedures set forth in the Postal Reorganization Act in the National Greeting Card case. And essentially there are two types of costs which arise in the Postal Service rate-making scheme. One are attributable costs, those costs which can be attributed to a specific class of mail, and other cost, which is simply assigned on an equitable basis, based on statutory criteria, to all the classes of mail in order to preserve the Postal Service's institutional infrastructure. Now, while international mail is outside the scheme of the Postal Rate Commission, it has historically... and the evidence we submitted in the record makes that clear... it has historically made a contribution to the, to the Postal Service's institutional costs.
William H. Rehnquist: Mr. Secular, it strikes me--
Keith E. Secular: Yes.
William H. Rehnquist: --now these are your arguments on the merits, you say.
Keith E. Secular: That's right.
William H. Rehnquist: It strikes me there as something that could be made by any person from the general public, so to speak. Do they have any connection with the special standing you claim as being Postal Service employees?
Keith E. Secular: Well, under the case law, as I understand it, standing is a separate inquiry and--
William H. Rehnquist: You say, in effect, that if you can show standing, then you can come in and make arguments that have nothing to do with the reason for your standing?
Keith E. Secular: --Yes, we can assert the public interest once standing is established. I think the cases do... like the Sierra Club establishes that and some of the--
William H. Rehnquist: Does that seem at all odd to you?
Keith E. Secular: --Well, it's a... it's a bifurcated inquiry. I think it's consistent with the function of the zone of interest tests. The zone of interest test, as most recently articulated in Clarke, is a guide to the Court to determine who is an appropriate plaintiff, who should the Court hear from. It's, in effect, to screen out inappropriate plaintiffs, those plaintiffs whose interests are so marginal or inconsistent with the statute that presumption is fair that that particular plaintiff would not be a reasonable plaintiff for the Court to hear. But once someone has satisfied the zone of interest test and comes before the Court as a reasonable plaintiff, I think the cases then allow that plaintiff to challenge the legality under the statute without regard to the specifics of his interests. Just to finish up the point on costs. The question that the Postal Service did not examine was what effect would the loss of revenue that it forecasted have on the remaining users of the mail. This is very, very simplistic for anyone who is familiar with the rate-making process, but the Postal Service calculated the cost under its worst-case scenario as a little bit over 3 percent of its total revenue. That's an enormous amount of money. 3 percent, if it were distributed evenly over the rest of the rate structure, could mean, for example, close to a penny increase on the first class stamp. The question is what is the rationale for making the remaining users of the mail pay ultimately more for their postage so that the customers of the international remailers could have, in essence, free access to the remailers. Maybe there is a public interest rationale. The Postal Service never articulated it. That's what troubled the court of appeals and that's why the court of appeals remanded the case back to the Postal Service to articulate that kind of rationale.
John Paul Stevens: May I interrupt with a question, and I don't know if the record comments on this at all, but we're talking about a net loss... I mean, a loss of gross revenues. And presumably... and this is why you're objecting... there are also some jobs that are going to be lost as a result of this, which means that there are some costs that are going to be saved. That's inherent in your position, isn't it?
Keith E. Secular: That's... what you're driving at is whether or not the net... whether there would be a loss of net revenue.
John Paul Stevens: Yes.
Keith E. Secular: Whether the costs incurred by a Postal Service in furnishing international mail service are greater than the loss of revenue.
John Paul Stevens: Is there anything in the record that--
Keith E. Secular: Yes, we submitted a declaration by an economist which was not rebutted which tended to show... and the court of appeals cited to that, although without referencing the declaration... that there was a net loss, and that in fact--
John Paul Stevens: --Is there anything to indicate the magnitude of the net loss?
Keith E. Secular: --There are documents, and I don't have the number off the top of my head, but there are documents in the record from the Postal Service's comprehensive annual statement of operations which show a declining international mail volumes and textually a comment by the Postal Service that attributes at least a significant portion of that loss to the growing practice of remailing. So there is something in the record--
John Paul Stevens: I'm not sure that responds to my question. Is... and... and maybe it doesn't make any difference, but there's a little bit of a... sort of a little bit of a tension between--
Keith E. Secular: --I don't... yeah... I understand. I don't--
John Paul Stevens: --your standing argument that you're hurt by this and your relying entirely on the loss of gross revenues, it seems to me.
Keith E. Secular: --Well, it was the Postal Service that cited the loss of gross revenue. There is no specific estimation of the loss of net revenue. And in fact, and I may regret saying this if the case proceeds any further, if the case goes back to the Postal Service and the Postal Service establishes that there is no significant loss of net revenue, it may be that we're not going to prevail ultimately in the court of appeals. That... having addressed the--
John Paul Stevens: Let me ask one other question. This gets a little closer to standing. Is there anything in the record to indicate the impact on loss of jobs? How many jobs are affected by--
Keith E. Secular: --No, what we cited to was the threat of job loss, which I think is sufficient to confer injury and fact standing under the cases.
John Paul Stevens: --Was there anything to show the impact on jobs of the 1979 regulation?
Keith E. Secular: No, there's no evidence of that.
John Paul Stevens: Because there would have been some history to work with there I suppose?
Keith E. Secular: Well, one of the interesting issues that is raised by... and I may be wasting my time by elaborating on this. I think there are a couple of questions that are raised by the urgent letter exception, and one is whether or not there was any diversion. The philosophical assumption of the urgent letter exemption was that there was a type of service that the public needed the Postal Service couldn't provide. So, in theory at least, the mail volume that was generated by the urgent letter exemption is not volume that the Postal Service was already processing.
John Paul Stevens: Yes, I see.
Keith E. Secular: It's also... now I'm really just speculating but I think it's fair... one could theorize that the marketing activities of the express mail industry have increased the overall market, and possibly increased the Postal Service's express mail business. So it would be difficult to forecast the loss in revenue or job impact from the urgent letter exemption. As to... briefly on the question of judicial review and whether or not the... this case can probably brought under the Administrative Procedure Act. The only justification that's been offered for raising that issue for the first time is the notion that this is in essence a jurisdictional claim, and the authority for that proposition is Block v. Community Nutrition Institute. I would point out that what Block was focusing on is whether the substantive statute precluded review in its entirety, not simply a question of whether the APA was applicable. And it was on that basis that the Court characterized the preclusion... the issue as jurisdictional. There's no basis in the case law for treating the availability of the APA as jurisdictional. In fact, Califano v. Sanders settled that the APA was not a jurisdictional statute. This... the jurisdictional statutes involved here were the Federal question statute and section 409 of the Postal Reorganization Act. That's what creates jurisdiction in the district courts for bringing this lawsuit and seeking the relief that we sought. At that point, I would point out, it's the Government that focused and defined the issues in terms of the APA zone of interest test. So I think there's no basis for that issue being raised here for the first time.
John Paul Stevens: Let me go back to Block for a second. That wasn't really a fact that there was no review. There was no review for the particular class of litigant that was before the Court.
Keith E. Secular: That's correct. As I indicated in earlier responses, the standing question as the case now... as the case now appears before the Court is defined solely in terms of the zone of interest test. The zone of interest test focuses on whether the plaintiff is arguably within the zone of interest to be protected or regulated by the statute in question. Now, the argument advanced by petitioner in this case focuses primarily on the notion that the private express statutes are different from the Postal Reorganization Act, which is the organic statute involved. And we're claiming a violation of the postal... of the private express statutes, which date back to the seven... 1700's, when there were no postal unions, and therefore we couldn't be within the zone of interest. I'd like to address that argument. First of all, let's start with what it is we're contending, because I think that's the beginning of a standing inquiry. Our contention on the merits is that the Postal Service acted in excess of its authority, that it abused its discretion. It acted arbitrarily in... and capriciously. The source of the authority to act that we claim the Postal Service exceeded, or the source of discretion which we say it abused, is 39 U.S.C. 601(b). That is the one provision which the Postal Service claims is the source of its authority to suspend the private express statutes. The argument that is being made is that 601 should not be considered part of the Postal Reorganization Act. It should be considered some sort of 19th century enactment. And let me digress and just address the history here, which is summarized in our brief.
William H. Rehnquist: Well, where is... is that particular statutory section set out in your brief?
Keith E. Secular: 601 is in the statutory appendix.
William H. Rehnquist: Whereabouts? Well, don't worry... don't take time from your argument to--
Keith E. Secular: Just to paraphrase it, it provides that the Postal Service may suspend the foregoing section or any part thereof where the public interest requires the suspension. It's referring to section 601(a), which sets forth certain conditions under which mail that would otherwise be covered by the private express statutes can be carried outside the mail. In essence, if an individual puts appropriate postage on a letter, seals it, and marks it appropriately, the letter can be carried outside the mail. That privilege of carrying letters outside the mail was enacted in 1852. In 1852 the Postal Service... Congress enacted a statute which gave the Postal Service the authority to manufacture embossed envelopes with postal on the envelopes and permitted the Post Office... and further provided that those... letters sealed in those envelopes could be carried outside the mail. In 1864, Congress passed another statute which authorized the Postmaster General to suspend the 1852 law. In other words, to revoke the privilege of carrying letters outside the mail. That original 1864 enactment never authorized the Post Office Department to suspend the monopoly, and that was clear as the statute developed in 1872, in 1938. And it wasn't until 1960 when the... when Title 39 was revised, that the present structure came into effect.
William H. Rehnquist: --The present structure authorizing the suspension of the PES?
Keith E. Secular: Yes, the present structure which can be read as authorizing suspension of the private express statute. And I would point out that was enacted without any debate. Be that as it may, there is no historical practice of suspending the private express statutes, which dates back to the 19th century. It's a modern development.
William H. Rehnquist: Well, was there any debate or discussion or was the statute that was finally formed in 1960, was that changed in any way in the Postal Reorganization Act of 1970?
Keith E. Secular: Only in the sense that Post Office was changed... postmaster... the reference to Postmaster General was changed to Postal Service.
William H. Rehnquist: Well, no substantive change?
Keith E. Secular: No substantive change.
William H. Rehnquist: So, no part of the debate over the Postal Reorganization Act in 1970 involved this statute, which you say is the crux of the Government's power to move here... the Post Office's power to move.
Keith E. Secular: That's correct. But I would point out that there really wasn't any reason for Congress to be thinking in terms of suspensions of the private express statutes when it debated the Postal Reorganization Act.
William H. Rehnquist: No, that wasn't what they were thinking about.
Keith E. Secular: That's right.
William H. Rehnquist: And it seems to me that greatly weakens your case for standing. The court of appeals relied on the Postal Reorganization Act, saying that there had been considerable discussion of the role of postal workers and the concern for them. But in... that may well have been. But it seems to me that what you're talking about is something quite different from that.
Keith E. Secular: Well, I... let me make two responses to that... to that point, Mr. Chief Justice. One is that I don't think that the 1960 statute could have been fairly interpreted, at least in terms of congressional intent, as authorizing suspensions of the monopoly. The Postal Service really began to view 601(b) as a source of authority to suspend the monopoly for reasons of policy with respect to certain specific classes of mail, after the Postal Reorganization Act was enacted. That's an historical response.
William H. Rehnquist: But did... but did that have any... but did its viewing when it did at the 1960 statute in such a way have anything to do with the Postal Reorganization Act?
Keith E. Secular: The governor's report in 1973 didn't address the issue as... in any thorough way. But let me move onto another response.
William H. Rehnquist: Well, what is your answer to that question, the question I just asked you? Did the position taken by the Post Office after the Postal Reorganization Act about the authority in the... have anything to do with the postal reorganization?
Keith E. Secular: No.
Antonin Scalia: Before you move on, can I ask another question about the same section?
Keith E. Secular: Yes.
Antonin Scalia: Why is that the crucial section? It seems to me what you are doing is claiming the benefit of the monopoly, and this is a section authorizing the Postal Service to eliminate the monopoly as to certain portions. But the statute that you claim gives you the protection is the basic conferral of the monopoly upon the Postal Service.
Keith E. Secular: Well, this--
Antonin Scalia: Not the later provision, whenever it was adopted, allowing an exception from it.
Keith E. Secular: --Well, I'm not sure, claiming the protection of the monopoly is precisely the right characterization.
Antonin Scalia: Well, you're claiming it was... you're within the zone of interests for which the monopoly was designed. It seems to me that that's your claim. I don't see how the exception statute does anything except affect the scope of the monopoly.
Keith E. Secular: Well, our argument on standing, our basic argument on standing, treats the Postal Reorganization Act and the private express statutes as functionally a... an integrated statutory scheme. And that's because essentially the purposes of the Postal Reorganization Act and the postal monopoly laws are crucial interdependent. The policies of the Postal Reorganization Act cannot be achieved without the monopolies. Similarly, the purposes of the monopoly, viewed post-1970, are to effectuate and guarantee the conditions under which the policies of the Postal Organization Act can be realized. The court of appeals, I think fairly, characterized the private express statutes as a linchpin of the entire statutory scheme. Let me also point out, and I think this is an important--
William H. Rehnquist: But they were... they were the linchpin before the Postal Reorganization Act and afterwards, weren't they?
Keith E. Secular: --That's correct. That's correct.
William H. Rehnquist: The Postal Reorganization Act didn't change them.
Keith E. Secular: That's correct. But a related point, which I haven't articulated quite yet, is that it shouldn't matter whether private express statutes and the Postal Reorganization Act are considered one statute or two statutes or however many statutes, because if that were true then there would be... the holdings of the banking law cases from Data Processors on through Clarke would have been different. In Data Processors, for example, the claim, the only claim on the merits that was made, was that the allowance of national banks to perform data processing services was a violation of the National Bank Act. When it came to standing, the court looked not the national... the policies of the National Bank Act but to the policies of the National Bank Service Corporation Act of 1962, a much later enactment. And it developed a zone of interest tests on the basis of the interests that were protected by that statute. Similarly, in the Investment Corporation case that followed just a couple of years later, the claim on the merits that was advanced by the plaintiffs was that the regulation allowing... you know, the ruling allowing national banks to provide investment services was in violation of the Glass-Steigal Act. Well, there was no finding at any time by the court that the Glass-Steigal Act was designed to protect the interests of businesses in the stock brokerage business. It was designed to protect and safeguard the interest of the national banks. Nonetheless, the court, citing Data Processors, found that the policies recognized in Data Processors were sufficient to confirm standing. That also true in Clarke. In Clarke the statute that formed the basis for the claim on the merits were the anti-branching provisions of title XII. Instead of focusing narrowing on the anti-branching policies, the court looked to the overall policies of the National Bank Act. So, I think--
William H. Rehnquist: Does this... again I'll ask you the question I asked. Does this seem logical or sensible to you?
Keith E. Secular: --Well, I think it depends, Mr. Chief Justice, on the case. We use the term, and I think this is the one bit of terminology we attempted to add the case law. The inquiry must be statute specific. In a given case, it may very well be appropriate that... to hear from a plaintiff who is claiming an interest from an enactment which is, which is different, although related to, the enactment which is... which will control the merits. And I think this is clearly one of those cases. I think we've got a much stronger case here, because the relationship between the statutes at issue is so intimate. The policies involved are critically interrelated. They don't make sense without one or the other. And for that reason, I think it's fair to characterize the zone of interest as the zone of interest that would flow from the Postal Reorganization Act and the private express statutes viewed as an integrated, functional whole. And I certainly think that there's enough legislative history to indicate that that's how Congress thought of the relationship between--
John Paul Stevens: Mr. Secular, I'm not quite clear on why it is essential to the Postal Reorganization Act and the various things it accomplished that there also be a monopoly.
Keith E. Secular: --The basic rationale for that was articulated in the 1973 Governor's Report. Briefly, what... the focus is on the requirement of the Postal Reorganization Act that the Postal Service provide universal service at uniform rates. Those... both those concepts are important. The Postal Service cannot provide uniform service at a uniform rate to thinly populated rural areas if it's going... if at the same time private companies can skim off profitable mail service in highly populated urban areas. That's essentially the underlying rationale of the private express statutes to... as found by the Governor's 1973 report. It's to prevent cream skimming. Cream skimming must be prevented in order to allow the Postal Service not only to provide universal service but to charge the same rate for transporting a letter from Washington, say, to Alaska.
Antonin Scalia: I don't see how that follows. It just depends on how the rate is. You, you can provide universal service at uniform rates so long as the rate is high enough.
Keith E. Secular: Well, the statute also--
Antonin Scalia: Even if other people are scream... cream skimming, the people left will pay the freight.
Keith E. Secular: --We can get into an economic debate on that, Justice Scalia. The result of that would be that the rates charged by the Postal Service would skyrocket above and beyond the rate of inflation, which would have a devastating impact on volume. I think that it's fair to say the system--
William H. Rehnquist: Already... they've already skyrocketed far beyond the rate of inflation.
Keith E. Secular: --Well, the Postmaster General has made that a fact, and I think that points up our argument on the merits. 3 percent loss of revenue, if that's all that the Postal Service is talking about, could very well be the difference between whether or not rates go up more than or less than the rate of inflation. It's that tradeoff which the Postal Service never examined.
Antonin Scalia: Maybe competition might determine it, too.
Keith E. Secular: I'm not sure I understand the thrust of the question, Justice Scalia.
Antonin Scalia: Determine how fast rates go up, as it does in other segments of the economy. We're talking economics here.
Keith E. Secular: Well, the problem with that is that the Postal Service has to maintain a fixed, nationwide infrastructure, which prevents it, I think, from responding to competition out on the fringes in those particular areas where rates... where rates... where a lower rate could be charged by a private business while competing with the Postal Service. That's essentially the rationale that was articulated in the 1973 Governor's Report. It's the rationale that underscores the conditions which the Postal Service imposed when it suspended the private express statutes for urgent letters, and it's that basic rationale that the Postal Service ignored. There's one other point I want to make, just to follow up on Justice Scalia's question. One of the... another one of the policies of the Postal Reorganization Act which I may have neglected to mention is the requirement that the Postal Service break even, that it... it's... it cannot run at a loss. It cannot make a profit. Over time the Postal Service is to break even. And the basic thrust of that, in terms of the 1970 reorganization, was to ensure that the Postal Service would no longer ultimately have to depend on subsidies from the taxpayer. That's another aspect of the Postal Reorganization Act which is dependent on the maintenance of the private express statutes.
Antonin Scalia: But the employees of the Postal Service are within the zone of interest that that actively, as you say, intended to protect?
Keith E. Secular: Oh, there's no question of that.
Antonin Scalia: The purpose of this legislation, of establishing the Post Office is--
Keith E. Secular: A substantial--
Antonin Scalia: --is to ensure employment to people?
Keith E. Secular: --A substantial purpose of the 1970 reorganization was to address the legitimate grievances... that the phrase that's found on the House report... of the employees. The statute was literally a response to a nationwide work stoppage. It was literally collectively bargained by the unions and representatives of the administration in the White House. After the strike was settled, the unions and the administration met, settled on the broad outlines of the statute, and presented it to Congress. That PRA is unique in that aspect. But I think it clearly demonstrates that the employees are within the zone of interest in that act.
William H. Rehnquist: Thank you, Mr. Secular. Mr. Farkas, do you have rebuttal?
L. Peter Farkas: Yes, Mr. Chief Justice. Mr. Secular mentioned that the Postal Service had failed to consider the economic tradeoffs. At Joint Appendix, page 72 to 73, the Postal Service did state... give notice of the estimates of $25 million to $250 million in gross revenue losses and net losses of $3 million. The postal unions failed to present any evidence, contrary evidence, of tradeoffs. There's no reason for the Postal Service to have considered evidence or arguments that weren't raised. As to the APA argument, it's really not an APA argument. It's a reviewability argument, and independently of the APA, there's a presumption of reviewability. And there's nothing in the private express statutes that precludes reviewability. In fact, the court, as early as 1921 in the Burleson case, recognized the right to review Postal Service... at that time, Postmaster General's... administrative determinations. When the APA was passed, there was... it intended to broaden, not limit, reviewability. The APA did not include the postal... the Post Office in either section 551 or 701 under the list of exempt agencies. In 1970, when the Postal Reorganization Act was passed, the Congress did not amend 551 or 701. Therefore, 410, section 410 of the PRA, has to be limited to the purposes of the PRA and do not overcome the presumption of reviewability of administrative actions under the private express statutes. Thank you, Your Honor.
William H. Rehnquist: Thank you, Mr. Farkas. The case is submitted.