Document: 462 U.S. 810 103 S.Ct. 2717 77 L.Ed.2d 195 NATIONAL ASSOCIATION OF GREETING CARD PUBLISHERS, Petitioner,v.UNITED STATES POSTAL SERVICE, et al. UNITED PARCEL SERVICE AMERICA, INC., Petitioner, v. Nos. 81-1304, 81-1381. Argued Dec. 1, 1982. Decided June 22, 1983. Syllabus Section 3622(b) of the Postal Reorganization Act (Act) provides that Rate Commission shall recommend rates for classes mail in accordance with nine factors, third which (§ 3622(b)(3)) is "the requirement each class or type service bear direct and indirect postal costs attributable to plus portion all other Service reasonably assignable such type." In reviewing ratemaking proceedings involved here, Court Appeals Second Circuit—contrary earlier decisions District Columbia Circuit prior proceedings—held does not require maximum possible use cost-of-service principles, including allocation on unverified inferences causation, but permits approaches, Commission's original two-tier approach under rate floor was established by first determining Service's total verifiably caused ("attributable to") mail, then "reasonably assigning" remaining various basis noncost, discretionary factors set forth § 3622(b). Held: 1. Although divides responsibility between Service, legislative history Act's structure demonstrate authority vested primarily Commission. Thus, its interpretation due deference. Pp. 820-821. 2. enacting divest itself previous control over setting rates, Congress concerned about influence lobbyists resulting discrimination among service, it did intend principles eliminate ratesetter's discretion as methods assigning costs; simply removed ratesetting function from political arena. The suggest viewed exercise an evil itself. Pp.821-823. 3. a reasonable construction 3622(b)(3). approach—one tier based causation second factors—is consistent statutory language supported history. 823-825. 4. statute requires attribution any source can be identified, leaves Commission, instance, decide provide assurance are result providing one service. 825-833. (a) dictate specific method identifying causal relationships envisions consideration appropriate costing approaches. 825-826. (b) acted consistently mandate Congress' policy objectives refusing accounting lacking basis. On face, 3622(b)(3) deny expert agency sufficiently identify requisite connection particular services costs. supports view when analysis limited insufficient data, will press better rather than construct "attribution" unsupported causation. 826-829 . (c) Because has decided involving long-term short-term variable reliably indicate connections they employed. But support position bar reliable attributing 829-832. (d) A statement indicating should consist inclusion costs, inconsistent frustrate policy. statute's plain broad consisting could view, causally linked 832-833. 663 F.2d 1186 (2nd Cir.1981), affirmed remanded. Bernard G. Segal, Philadelphia, Pa., petitioner No. Matthew S. Perlman, Washington, D.C., 81-1304. John H. Garvey, Lexington, Ky., respondents both cases. Justice BLACKMUN delivered opinion Court. 1 This case arises out ost recent general proceeding, fifth Act. At issue extent responsible federal agencies base principles. 2 * A. 3 When, 1970, enacted (Act), 84 Stat. 719, 39 U.S.C. 101 seq., divested theretofore had exercised fees. abolished Post Office Department, since 1789 administered Nation's mails. See Sept. 1789, ch. 16, 70. place, United States independent direction eleven-member Board Governors. §§ 201, 202.1 also five-member (Rate Commission) Service. 3601. 4 Basic principle that, "practicable," revenue must equal 3621. Guided this principle, Governors, deems public interest, may request new schedule. 3622. After receiving request, holds hearings, 3624(a), formulates schedule, 3624(d). mail2 type."3 Governors approve recommended allow protest, reject it, or, circumstances, modify it. 3625. Governors' decision order into effect appealed court appeals. 3628. 5 Questions confronting us whether follow three-trier process estimates B 6 two Act, determined establishes two-trier allocating requirement. Opinion Recommended Decision, Docket R74-1, pp. 4, 91-93 (1975);4 PRC Op. R71-1, 39-41 (1972). Under approach, determine 3622(b)(3), establish class. 92, 93, 110. assign," see 91-94. 7 concluded 71-1, 42-47. Without committing theory future, chose attribute those shown vary volume "short term"—the period single year.5 considered methods, found only feasible one, given data developed Id., at 47-62. 8 again choice system within discretion. 92-93, 127. contended attribution, reliabily more through analysis. That attributes cost variations associated shifts capacity handle periods time longer year. 111-112, 126-127. go beyond long-run because forbids guesswork, id., 110-111, unable find "any casuality [the] record," 94. urged development improved future proceedings, so relationships, thereby 110-111.6 C 9 Reviewing rejected approach. National Assn. Gree ing Card Publishers 186 U.S.App.D.C. 331, 569 570 (1976) (NAGCP I ), vacated grounds, 434 884, 98 253, 54 169 (1977). held principal goals eliminating price curtailing ratesetting, U.S.App.D.C., 348-350, F.2d, 587-589, "to employ fullest possible." Id. 354, 593; 348, 587. Therefore, stated, mandates "extended attribution" "although measurably variable," handling mail. 347, 586. required allocate some "cost principles." 344, 583; 352, 586, 591. involves apportioning "distribution keys," weight cubic notwithstanding lack proof play causative role. 583, 591.7 10 Appeals, citing purposes statute, three-tier, two-tier, procedure rates. court's tiers—attribution assignment—are proceed basis.8 347 n. 59, 353-354, 586 592-593. Only "residual costs" cannot attributed assigned distributed, tier, 3622(b)'s factors. 11 Despite doubts NAGCP I, R77-1, p. (1978), attempted comply fourth proceeding.9 It adhered variability key "some showing long run" have confidence were consequence 84. improved, satisfied without resort mere "inferences causation." 10, 85.10 12 Turning intermediate assignment created group nonvariable "Service Related Costs" certain categories Costs defined fixed delivery incurred maintaining current six-day-a-week schedule classes, hypothetical three-day-a-week schedule.11 87-124. D 13 controversy began April 21, 1980, requested increase Following extensive continued Appeals' three-tier R80-1, 145-156, despite rejection concept, Decision Rates Postage Fees Services, March 1981, App. Pet. Cert. 13b-14b (Decision Governors). made clear while consider sole been accurate enough permit attribution. 129-131, 140 2.12 permitted these effect.13 14 petitions review, intended ratesetting. Newsweek, Inc. (2 Cir.1981). stated although free required, approaches well, Circuit's construction, based, minimum, variability; b sis remanded reconsideration. 15 inconsistencies holdings Circuits, we granted certiorari. 456 925, 102 1969, 72 439 (1982).14 II 16 As threshold matter, useful what is, not, litigation. Of 3622(b), subsection (b)(3) styled "requirement." With approval Courts placement distinction dictates "assignment" define framework addition, takes "causation logical attribution." parties do dispute premises, no reason question them. 17 exclude identifiable class, whatever method, class.15 An agency's enabling upheld unless contrary frustrates objectives. Federal Election Democratic Senatorial Campaign Committee, 454 27, 32, 38, 42, 70 23 (1981). agencies, demonstrates "that [was] Commission." S.Rep. 91-912, (1970) (Senate Report); Time, 685 760, 771 (CA2 1982); 1200-1201; III, 197 87, 607 401. view.16 While final guaranteeing revenues determines proportion raised doing, applies listed Its 771; Parcel 604 1370, 1381 (CA3 1979), cert. denied, 446 957, 100 2929, 64 815 (1980). III 18 discerned overriding purpose minimize maximizing According failure principles" "assign" extended middle frustrated congressional goals. Animating fact Congress, passing disturbed service; sought "get 'politics Office.' " 349, 588 (quoting H.R.Rep. 91-1104, (House Report, U.S.Code Cong. & Admin.News 3649, 3654)). 19 doubt, problems mind, agree misunderstood solution. 1198. discretion; arena, removing funding budgetary process, 3621 (Postal self-supporting), officers President's control. House 6, 12, 13, 18-19; Senate 8. recognized increasing economic, accounting, engineering complexity issues Members "lacking time, training, staff thorough analysis," place too much reliance lobbyists. 18, 3667. Consequently, remove undue placing hands composed "professional economists, trained analysts, like," 5, 3654, management, subject "broad guidelines," 12. ensure would managed "in businesslike way." 5; 11-12. There suggestion wished substitute educated politically insulated experts own. IV 20 We turn now narrower contentions meaning policies, begin language. North Dakota States, --- ----, 1095, 1102-03, 75 (1983); Dickerson New Banner Institute, Inc., 986, 990, 74 845 (1983). Once allocated , directs bear, assignable" verb "attribute" connotes distribution therefore, section suggests justification interposition causation-based tier.17 21 Moreover, report Organization (Kappel unfair users pay expenditures demonstrably related another Kappel Toward Excellence: Report 130 (1968) Report). But, detailed studies Office, "[a] large segment itself." 30. proposed very similar approach,18 groups 22 version closely followed proposal, directing establishment "so least borne mails generally." H.R. 17070, 91st Cong., 1st Sess., 1201(c) (1970). bill address criteria govern there second, attenuated, Circuit. bill, expressly calling "operating amount overhead, institutional properly mail." 3842, 2d 3704(g)(3) bill's word "assignable," believed mandated undercut reasonableness const uction. either elsewhere envisioned fact, accompanying suggested overall value provided 11. 24 discussed above, compromise law fully structure, contrary. conclude 3622(b)(3).19 V 25 nature 26 observed "[a]llocation matter slide-rule. judgment myriad facts. claim exact science." Colorado Interstate Co. FPC, 324 581, 589, 65 829, 833, 89 L.Ed. 1206 (1945). Generally, legislature perform allocation, see, e.g., American Commercial Lines, Louisville N.R. Co., 392 571, 590-593, 88 2105, 2115-2117, 1289 (1968); U.S., S.Ct., if formula, bound Ibid. 27 "envisions approaches." 46; 127; 129-133. regardless sufficient nexus before attributed. variously described demanding "reliable causality," 94, "reasonable confidence" 77-1, 84, "reasoned 131. Accordingly, interpretation, refused "accounting keys gone proceeding first.20 28 "attributable "attributable," directed look "direct" "indirect."21 selecting phrase costs," avoided term art accounting. normal sense word, "attributable" suppose denies agency, exercising judgment, 29 "press data," "construct 'attribution' 110-111. Before passage Office's ungainly "Cost Ascertainment System," allocated—on keys" like advocated Circuit—all expenses mail.22 "arbitrary [and] uninformative." 30; Many institutional, supporting different data. 29-31, 132-135. proposing recover "demonstrably related" avoid inequity subsidizing class; however, "[r]emaining apportioned several rigid formulas." 61-62. 30 tracked recommendations, generally adopted (1970), "identifiable costs." 10.23 explicitly include causally-based floor. 116 Rec. 22053 (remarks Sen. Fannin). plainly notion binding ratesetters akin used Cost System. "no classification designated incremental cost." 17. 31 conference incorporated contained version, replaced Debate aspects sparse. House, conferee "capable objective determination empirical observation deductive analysis." Cong.Rec. 27606 Rep. Udall). floor, sponsor explained "actual 26954 McGee). Neither explanation resurrected discredited basis.24 32 contends attributed, apart directly indirectly volume. 42-46. 33 record 1970 indicated cause "most difficult" task, Foster Associates Study, 1-5, best available measure" 1-6. consequently "as minimum," capital operating costs—"[i]n economic terms ascribable it." 131.25 believe doing limit emphasize technical matters, focusing instead need non-arbitrary demontrations causation.26 Postmaster General Blount informed employed confusion generated "marginal" "incremental" "Demonstrably he explained, "are traced question. [W]e amply means, shackling generations theory." Hearings Committee Civil 1273 (1969) (Post Response Memoranda Submitted J. Edward Day). 34 mention technique. defining "at own 3659. Given Report's repeated statements ill-equipped deal highly questions lying heart implausible prescribe appointed resolve problem formula relationships. unlikely forever enacted.27 35 Conference abandoned favor significant antecedent retained explicit conferees ensured identification encompass "direct indirect," experts, reasoned basis, 36 controlling definition Statement Managers Part appended H.R.Conf.Rep. 91-1363, 79-90 1199-1200.28 "equal short response changes even though variable, involved." 87 (emphasis supplied), 3720. specifically addressed argument advanced 101-102, 126-127; 42-46, history, say Managers' alone "inconsistent frustrate[s] implement." 42. VI 37 hold construed establishing rateset structure. First, Commissioners, 38 For performed, seek improve identified29 remains open identifies our conscientiously costs—both "overhead" "capacity" where sufficient. 129-131. assign eight Inasmuch according erroneous agencies. said opinion, affirm remanding remand further opinion. 40 ordered. Except indicated, citations statutes herein refer provisions Title Code. classify types governing 3623, Presently, four (letters, post cards, small sealed parcels), (newspapers, magazines, periodicals), (single piece parcels, catalogues, items, bulk services), (primarily parcel post). Brief relevant part: "(b) Upon [from Service], [Rate] make policies title following factors: "(1) maintenance fair equitable schedule; "(2) actually sender recipient, collection, mode transportation, priority delivery; "(3) type; "(4) increases upon public, business users, enterprises private sector economy engaged letters; "(5) alternative means sending letters "(6) degree preparation performed mailer reducing Service; "(7) simplicity struct re entire simple, fees charged services; "(8) educational, cultural, scientific, informational recipient matter; "(9) appropriate." Opinions Decisions cited "PRC Op.," docket number. addition benefit 76; B, 52 These "specific constitute percentage 9. 50% 239a, 52.5% Such utility "fully costing" systems. systems, every utility. infra, 827, 22. distinguishable latter concept greater estimation somewhat former." 588, 59. Challenges R76-1, completed 339, 578, dismissed moot still pending administrative complete. Greeting 76-1611 (CADC 1978) ) (order). By almost 65% 156 (table). constituted slightly seven percent assumption continue extend their techniques, put recommendations. 78, 82-104, 392, 396-418 (1979) (opinion Leventhal, J.) 444 1025, 688, 62 659 More 64% method. 222 1b. returned twice substantially reaffirmed decision, 3625(d), by, changes, abandoning concept. 3625 Matter Proposed Changes Fees, R80-1 (Sept. 29, 1981). modification Circuit, reasoning. 760 Cir.1982). complied remand, Further Explanation Justification Supporting September 1981 Services (Dec. 20, 1982), recently denied review. 81-4183, 81-4185, 81-4203, 81-4205, 81-6216 Cir.1983). matters us. subsequent issue, supra, mooted controversy. frequently briefly litigation concerning them superseded. Reeves, Stake, 447 429, 434, 2271, 2276, 244 judicial review concluded, example, effect. 21; 192, 3, 396, central expectation" petitioners, who taken part most challenges schedules, affected proceedings. Weinstein Bradford, 423 147, 149, 96 46 350 (1975); Murphy Hunt, 455 478, 482, 1181, 1183, 71 353 (1982). par y action. agrees correct affirmed. 49, 46. understand reasoning brief, reading five conducts 3624, enumerated recommendation produce estimated 3625(d)(2). read "Congress assigned," unattributable "will exist 'reasonably assignable' 587 original). followed, believed, section's "only 'that assignable.' Ibid., quoting (CADC's emphasis deleted). assigned. says, instead, receive "would cover service." Second, market 61-62; 130-132. Petitioner Association intervenor Direct Mail/Marketing legality assigning—or attributing—Service Costs. rule issue. conform requiring attenuated "When error law, duty 'correct ., after [agency] afford opportunity examining evidence finding facts law.' NLRB Pipefitters, 429 507, 522, 9, 97 891, 900, 51 (1977), ICC Clyde S.S. 181 32-33, 512, 513-514, 45 729 (1901). assess impact prohibition deviation present six-day Omnibus Budget Reconciliation 1722, 95 759. short-run "because viable presentation us." 56. "long-run incremen al (for example) 'remains theoretical unproven' record." 56-57. became feasible, study recommendations "[t]hose elements unequivocally product output," output product." Associates, Rate-making: Organization, A, iii, iv, reprinted Annex (Foster Study). 1-8 1-11, 2-8 2-12, 4-8 4-24; B; Department Relating Survey Structure, Letter Transmitting his Rates, H.R.Doc. 91-97 (1969). aware deficiencies System hearings subject. Subcommittee (testimony James W. Hargrove, Assistant General). year, subcommittee, Chairman, expressed abolish ascertainment supply figures Revenue Analysis Olsen). argues necessary subsidization competition, post, enjoys monopoly, 39-42. concern cross-subsidies, course, motive conclusion cost, entirely arbitrary. Beyond established, prevent imposition monopolized ways. making meant temptation solve fiscal concentrating far major revenue. 13. consider, "assigning" above letters," 3622(b)(4), 3622(b)(5). underlying likely generate widely fluctuating 1-5 measuring just respect units output, variables output. 3-33 3-34. terms: "[T]o should, causes. Thus added processing causes incur. makes difference nor inquiry confined historically, foreseeable future." 131 original); point, states, elaboration, Arguably, suggests, form tudy "incremental mean excluding overhead. Whatever quoted possibility methods" appropriate. Like task "expert commission," "on scientific quasi-scientific basis." initially passed spoke overhead wherever proper. apparently committee. 1200. Were case, great weight. text Report. certainly significant, status report, Houses. Vaughn Rosen, 173 187, 193, 523 1136, 1142 K. Davis, Administrative Law Treatise 3A.31, 175 (1970 Supp.). constantly stressed importance comprehensive 107, 209-211; 85-87; 83-87, E; 123-127; 48-57. emphasized 5-21, 62. achievement ambitious depend cooperation "alone full scope operations day-to-day procedures keeping," Publishers, 157 397, 408, 485 768, 779 (1973) (concurring opinion), aid fulfilling capable being

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