Court Opinion

ID: 4545155
Source: CourtListenerOpinion
Date Created: 2020-06-30 16:00:29.504862+00
Date Added: 2024-06-11T12:50:45.713508
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 8, 2020                    Decided June 30, 2020

                        No. 19-1155

              UNITED STATES POSTAL SERVICE,
                       PETITIONER

                             v.

            POSTAL REGULATORY COMMISSION,
                     RESPONDENT

           ASSOCIATION FOR POSTAL COMMERCE,
                      INTERVENOR

          On Petition for Review of an Order of the
              Postal Regulatory Commission

     Stephan J. Boardman, Attorney, United States Postal
Service, argued the cause for petitioner. On the briefs were
Redding C. Cates and Morgan E. Rehrig, Attorneys. David C.
Belt entered an appearance.

     Dennis Fan, Attorney, U.S. Department of Justice, argued
the cause for respondent. With him on the brief were Daniel
Tenny, Attorney, David A. Trissell, General Counsel, Postal
Regulatory Commission, Anne J. Siarnacki, Deputy General
Counsel, and Lauren A. D=Agostino, Attorney.
                               2
     Matthew D. Field and Ian D. Volner were on the brief for
intervenor Association for Postal Commerce in support of
respondent.

    Daryl L. Joseffer, Michael B. Schon, and Ashley C. Parrish
were on the brief for amicus curiae Chamber of Commerce of
the United States of America in support of respondent.

    Before: ROGERS, GRIFFITH, and RAO, Circuit Judges.

    Opinion for the Court filed by Circuit Judge GRIFFITH.

    Concurring opinion filed by Circuit Judge RAO.

     GRIFFITH, Circuit Judge: When foreigners send mail to the
United States by “Inbound Letter Post,” they pay their local
postal carrier, who bears the cost of delivering that mail to our
shores. Inside the country, the Postal Service takes over.
Although foreign carriers pay dues to the Postal Service to
defray the cost of delivery, those dues—which were previously
set largely by the Universal Postal Union (UPU), a component
of the United Nations—have long undercompensated the
Postal Service to the tune of hundreds of millions of dollars per
year. Periodic Reporting Requirements, 83 Fed. Reg. 33,879,
33,883 (July 18, 2018). The Postal Regulatory Commission,
which oversees the Postal Service’s ratemaking, ordered
disclosure of certain financial data related to Inbound Letter
Post. The Commission hoped to facilitate public participation
in discussions of possible reforms and to help the public
understand why Inbound Letter Post was so unprofitable.
Seeking to keep that data confidential, the Postal Service
petitioned for review. Because we hold that the Commission
reasonably ordered disclosure, we deny the petition.
                               3
                               I

     The Postal Accountability and Enhancement Act requires
the Postal Service to submit an annual compliance report to the
Commission. 39 U.S.C. § 3652. The Postal Service may
designate information in this report as confidential, id.
§§ 410(c)(2), 3652(f)(1), and it bears the “burden of
persuasion” that such materials “should be withheld” from the
public, 39 C.F.R. § 3007.201(a). In deciding whether the Postal
Service has met this burden, the Commission must “balance the
nature and extent of the likely commercial injury to the Postal
Service against the public interest in maintaining the financial
transparency of a government establishment competing in
commercial markets.” 39 U.S.C. § 504(g)(3)(A).

     After reviewing the Postal Service’s 2018 compliance
report, the Commission voted to disclose revenue, volume,
cost, and contribution data for Inbound Letter Post. The
Commission reasoned that the public had a “vital” interest in
disclosure because Inbound Letter Post “threaten[ed] the
financial integrity of the Postal Service.” J.A. 649, 651. If
foreign mailers didn’t pay their fair share, the Postal Service
would need to charge domestic mailers more or cannibalize
profits from other ventures to make up the difference.
Moreover, artificially low rates for Inbound Letter Post
“distort[ed] competition” from domestic shipping companies.
J.A. 625. Finally, releasing the data would facilitate public
participation in discussions over how best to reform the
payment structure for Inbound Letter Post. At the time, the
UPU set the default rates that applied in the absence of any
superseding international agreement. Because the UPU’s rates
failed to compensate the Postal Service, the President had
announced that the United States would withdraw from the
UPU unless the UPU allowed it to set its own rates.
                               4
     As to commercial harm, the Commission asserted that the
Postal Service had failed to “explain how competitors,
suppliers, or anyone else would be able” to use the data “to
identify opportunities to divert business from or extract more
favorable terms in negotiations with the Postal Service.” J.A.
664. Specifically, the Postal Service “[did] not explain how the
aggregated historical data would be useful for a competitor in
the rapidly evolving market.” J.A. 669. And there were “too
many unknown variables” for the data to help with “target[ing]
specific customers or markets.” Id. Finally, since the data was
aggregated by the UPU’s four country groups, it did not reveal
country-specific information and thus would not be particularly
useful to foreign nations negotiating with the United States for
rates other than the UPU’s default rates.

     Two of the five Commissioners concurred in part and
dissented in part. They would have disclosed revenue and
volume data only, not cost and contribution data, fearing that
competitors could use the latter to “undercut the Postal Service
in pricing and service offerings” and that foreign nations could
leverage this data to gain the upper hand in negotiations,
especially if the United States left the UPU. J.A. 694. However,
that “worst case scenario,” J.A. 695, did not come to pass
because after the Commission voted to disclose the data at issue
in this case, the UPU agreed to let the United States set rates
for “bulky” letters and small parcels weighing up to two
kilograms, see Universal Postal Convention art. 28b (2019).

     The Postal Service petitioned for review, and the
Commission stayed release of the data pending our disposition.
The Postal Service argues that the Commission misinterpreted
the statutory balancing test and that its order was arbitrary and
capricious. We have jurisdiction under 39 U.S.C. § 3663. We
review the Commission’s statutory interpretations under “the
familiar standard of Chevron,” USPS v. Postal Regulatory
                                5
Comm’n (USPS II), 886 F.3d 1253, 1255 (D.C. Cir. 2018)
(internal quotation marks omitted), and its orders under the
Administrative Procedure Act, United Parcel Serv., Inc. v.
Postal Regulatory Comm’n, 890 F.3d 1053, 1060-61 (D.C. Cir.
2018).

                                II

     We deny the petition for review. The Postal Service’s
statutory argument hinges on a misreading of the Act, and its
arguments that the Commission’s decision was arbitrary and
capricious fail to overcome the deference we owe to the
Commission’s reasoned decisions.

                                A

     The Act directs the Commission to consider the “public
interest in maintaining the financial transparency of a
government establishment competing in commercial markets.”
39 U.S.C. § 504(g)(3)(A). Conceding that the Commission’s
interpretation of the Act is entitled to Chevron deference, the
Postal Service nonetheless finds that interpretation
unreasonable. See Oral Arg. Tr. 4:14-14:18, 6:25-7:2.
Specifically, the Postal Service argues that the phrase
“government establishment competing in commercial markets”
limits the Commission’s consideration of the public interest to
“protecting against competitive abuse of a statutory monopoly
or of some other incident of governmental status.” USPS Br.
20. We disagree.

     No such limitation appears in the text of the statute, and as
the Commission explained, financial losses to a government
establishment such as the Postal Service burden the public.
Surely, the public has an interest in understanding why a
government establishment is hemorrhaging hundreds of
                                 6
millions of dollars per year. After all, artificially low prices can
distort domestic competition and result in Americans paying
more than they should for other mail products.

     Finding no support in the text, the Postal Service turns to
the legislative history. Noting that a draft version of the Act did
not include the phrase “competing in commercial markets,” the
Postal Service argues that its later insertion worked to narrow
the Commission’s consideration of the public interest. USPS
Br. 21 (citing H.R. REP. NO. 109-66, pt. 1, at 25 (2005)).
Perhaps, but it does not follow that Congress intended to cabin
the “public interest” to nothing more than preventing
government abuse. If it had intended such a significant
limitation to the oft-invoked concept of “the public interest,”
Congress could have easily used those words. The Postal
Service also points to a statement in the Senate Report that
disclosure should not “serve as an unlimited opportunity to
access any and all Postal Service data including that which may
be, at best, tangentially-related to evaluating compliance with
the [Act’s] rate and service provisions.” S. REP. NO. 108-318,
at 20 (2004). But the Postal Service does not suggest that the
data in this case is merely “tangentially” related to compliance,
because it cannot. The data is clearly related to the Act’s
directive that the Commission review the Postal Service’s
finances to ensure revenues cover costs. See 39 U.S.C.
§ 3622(b)(5), (c)(2); id. § 3633(a)(2). And if anything, the
legislative history bolsters the Commission’s understanding of
the public interest. The Act “guarantees a higher degree of
transparency” than prior legislation to “ensure fair treatment”
of customers and competitors. USPS II, 886 F.3d at 1263
(quoting S. REP. NO. 108-318, at 1); see also H.R. REP. NO.
109-66, pt. 1, at 46 (“[T]he Postal Service must be subject to a
high degree of transparency, including in its finances and
operations.”).
                               7
     Shifting to prudential arguments, the Postal Service
objects that under the Commission’s view the “balance [will]
always tilt toward disclosure,” USPS Reply 7, preventing the
Postal Service from competing with private carriers as
Congress intended, USPS Br. 21 (citing S. REP. NO. 108-318,
at 15). We disagree. Even under the Commission’s broader
interpretation, a specific risk of commercial harm should
outweigh general curiosity about the Postal Service’s finances.
The Postal Service also faults the Commission for relying on
the “degree to which members of the public have lobbied for
publication.” Id. at 23. But it is reasonable for the Commission
to consider the extent to which commenters have expressed an
interest in disclosure, and indeed, the Administrative Procedure
Act requires the Commission to address significant public
comments. See Int’l Fabricare Inst. v. EPA, 972 F.2d 384, 389
(D.C. Cir. 1992).

    Finally, the Postal Service argues that even if the Act can
be read as broadly as the Commission suggests, the
Commission never defined “public interest” and its lawyers
may not do so now. USPS Reply 8; see also SEC v. Chenery
Corp. (Chenery I), 318 U.S. 80, 95 (1943). But phrases like
“the public interest” are inherently open-ended, and the
Commission need not articulate precise and comprehensive
definitions before applying them. It is enough for the
Commission to explain why the public interest would be served
by disclosure, as it did here.

                               B

    The Postal Service argues that the Commission’s
reasoning was arbitrary and capricious in that it failed: (1) to
“properly take into account the substantial risks of commercial
harm”; (2) to “respond to the dissenting opinions of two
Commissioners”; and (3) to “provide a meaningful standard for
                                8
when Postal Service confidential submissions can remain
under seal.” USPS Br. 23. None of these arguments is
persuasive.

                                1

     The Postal Service’s core objection is that the Commission
gave short shrift to the risk of commercial harm from disclosure
relative to the public interest in disclosure. But “[o]ur review
of agency decisions based on multi-factor balancing tests . . . is
necessarily quite limited. We may not merely substitute the
balance we would strike for that the agency reached.” USAir,
Inc. v. Dep’t of Transp., 969 F.2d 1256, 1263 (D.C. Cir. 1992).

     The Postal Service claims that the data is more detailed
than the Commission admits and that its release will be useful
to domestic competitors and to foreign nations negotiating for
better prices. Although the data is aggregated into four country
groups, the Postal Service hazards that competitors and foreign
nations may be able to divine country-specific information for
countries that are outsized suppliers of mail. But the
Commission reasonably concluded that “the UPU country
groups are too broad and diverse to allow participants to infer
[country]-specific data.” J.A. 667. Each group includes at least
34 countries or territories, spanning multiple continents. Even
if individuals knew that one country dominated its group, they
wouldn’t know its exact share of the market. J.A. 665-68; see
also Mudge Rose Guthrie Alexander & Ferdon v. U.S. Int’l
Trade Comm’n, 846 F.2d 1527, 1531 (D.C. Cir. 1988)
(reasoning that even in industries “dominated by one or two
firms,” industry data does not “necessarily” reveal firm-
specific data). And of course, that market share might change
with the UPU’s new rate structure.
                               9
     The Postal Service also asserts that the Commission failed
to adequately consider the risk of harm from increased
competition. The Postal Service fears that its domestic
competitors could use the data to target its most lucrative
markets and underbid it. But again, the Commission reasonably
concluded that “there [were] too many unknown variables” for
the data to be useful to competitors hoping to undercut the
Postal Service. J.A. 669. The data is not “disaggregated by cost
segment or even by leg (processing, transportation, and
delivery),” and it does not disclose details that bear on cost,
such as where each letter originated, whether it was sent by air
or by surface, and where it was ultimately delivered. J.A. 670
(footnote omitted).

     The Postal Service makes no response to these arguments
except to insist that the data is “sufficiently granular to give
competitors fresh business insights with respect to certain high-
volume countries.” USPS Br. 30. But what insights? And
which countries? The Postal Service doesn’t say. It merely
repeats its refrain that competitors could combine the data with
other “proprietary and nonproprietary data” to unearth weak
spots in its supply chain. USPS Br. 26; see also USPS Reply
14-15. Given these feeble objections, we see no reason to
disagree with the conclusion that the Postal Service’s
allegations are “conclusory and unsupported.” J.A. 671.

     The Postal Service also argues that the data could harm its
negotiations with foreign nations. But again, the Commission
reasonably concluded that any such harms would be minimal.
First off, because the data is not country-specific, the most it
could provide is some information about the Postal Service’s
average cost of delivery. And that average cost may not
“accurately represent the Postal Service’s costs to provide the
services included” in any particular negotiated agreement,
                               10
since many agreements cover related issues and services that
affect delivery costs. J.A. 673-74.

     The Postal Service further contends that the Commission
should not have disclosed the data at this time. The Postal
Service reasons that the public no longer has an interest in
disclosure because UPU reforms have fixed the problem; now
that the United States can set some of its own rates, the Postal
Service shouldn’t continue to bleed cash. But we “judge the
reasonableness of an agency’s decision on the basis of the
record before the agency at the time it made its decision.”
NTCH, Inc. v. FCC, 950 F.3d 871, 881 (D.C. Cir. 2020)
(internal quotation marks omitted). And in any event, the
Commission concluded that “factors other than the existing
UPU [rates] structure contribute to [Inbound Letter Post’s]
poor financial performance” and that the public has an interest
in understanding why this service lost money in the past. J.A.
654.

     Finally, the Postal Service suggests that disclosure isn’t
necessary because interested parties can already view the data
under protective conditions. But, as the Commission explained,
this alternative imposes restrictions that “unfairly burden
participants” and “hinder” transparency. J.A. 657; see also
Intervenor Br. 7-8 (noting that this alternative “limit[s] an
organization’s ability to share information with its members,
receive feedback, and develop informed comment”).
Reasonable minds could certainly debate the appropriate
balance between the public interest and the risk of commercial
harm in the first instance. But under our deferential standard of
review, we find the Commission’s decision reasonable.
                                11
                                2

     The Postal Service argues that the Commission’s decision
is arbitrary and capricious because it failed to adequately
consider the dissenting Commissioners’ arguments. Although
the Commission is “not required to agree with arguments raised
by a dissenting Commissioner, it must, at a minimum,
acknowledge and consider them.” Am. Gas Ass’n v. FERC, 593
F.3d 14, 20 (D.C. Cir. 2010) (citation omitted); see also
Chamber of Commerce v. SEC, 412 F.3d 133, 144-45 (D.C.
Cir. 2005). The Commission did just that. It considered and
rejected the arguments that disclosure could harm negotiations
and create new opportunities for domestic competition. The
Postal Service’s true objection seems to be that the
Commission unreasonably rejected these arguments, not that it
failed to address them. That simply reprises the first argument,
and it fares no better once repackaged.

                                3

     Finally, the Postal Service objects that the Commission’s
decision provides no workable standard to guide its assessment
of future confidential submissions. The Postal Service attempts
to analogize this case to USPS v. Postal Regulatory Comm’n
(USPS I), 785 F.3d 740, 753 (D.C. Cir. 2015), in which we held
that the Commission “fail[ed] to articulate a comprehensible
standard” for rate adjustments. But that case is far afield. There,
the Commission set out a “cryptic” standard, failed to explain
how that standard applied to the facts, and worse still, applied
that standard inconsistently across similar cases. Id. at 754.
Here, the Act itself provides the test the Commission must
apply. 39 U.S.C. § 504(g)(3)(A). And while the Postal Service
complains that the Commission rejected its allegations of
commercial harm without saying what allegations would
suffice, the Commission adequately explained the problems it
                             12
saw with each chain of inference and it need not announce in
advance how it might rule on other hypothetical scenarios. See
SEC v. Chenery Corp. (Chenery II), 332 U.S. 194, 203 (1947).

                             III

    Because the Commission’s order is neither contrary to law
nor arbitrary and capricious, we deny the petition for review.

                                                  So ordered.
     RAO, Circuit Judge, concurring: I join the court’s opinion
in full. I write separately to note the constitutional quandary
raised by a federal court resolving a lawsuit between two
Executive Branch agencies. On one side of this dispute, we
have the United States Postal Service—“an independent
establishment of the executive branch of the Government of the
United States.” 39 U.S.C. § 201. On the other, we have the
Postal      Regulatory      Commission—“an          independent
establishment of the executive branch of the Government of the
United States.” Id. § 501. Litigating on behalf of the
Commission, the Department of Justice has taken sides in a
disagreement between two Executive Branch entities tasked
with oversight and administration of the nation’s mails.

     This litigation stands in tension with Article II of the
Constitution, which vests all executive power in the President
and assigns him the duty to “take Care that the Laws be
faithfully executed.” U.S. CONST. art. II, §§ 1, 3. “Moreover,
because agencies involved in intra-Executive Branch disputes
are not adverse to one another (rather, they are both subordinate
parts of a single organization headed by one CEO), such
disputes do not appear to constitute a case or controversy for
purposes of Article III.” SEC v. FLRA, 568 F.3d 990, 997 (D.C.
Cir. 2009) (Kavanaugh, J., concurring). The Constitution
creates a unitary executive and limits federal courts to deciding
the rights of individuals in properly presented cases and
controversies. The posture of this case thus presents
constitutional questions about the power of an Article III court
to resolve a purely Article II dispute. The fact that Congress
specifically created federal court jurisdiction between the
Postal Service and the Commission, see 39 U.S.C. § 3663, does
not necessarily eliminate the constitutional concern because
Congress cannot expand federal court jurisdiction beyond the
Article III judicial power. See Seminole Tribe of Fla. v. Fla.,
517 U.S. 44, 65 (1996) (citing Marbury v. Madison, 1 Cranch
137 (1803)).
                              2
     Our precedents are clear, however, that such disputes
between “independent” agencies, such as the Postal Service
and the Commission, are justiciable. See SEC v. FLRA, 568
F.3d at 997 (Kavanaugh, J., concurring) (collecting cases); see
also USPS v. Postal Regulatory Comm’n, 886 F.3d 1253 (D.C.
Cir. 2018). Therefore, I join the court’s well-reasoned opinion
in this case.