Alliance Alert: Alliance Files White Paper with PRC

Today the Alliance of Nonprofit mailers joined seven other associations in filing a white paper with the Postal Regulatory Commission (PRC). The paper deals with the 2017 regulatory review that the 2006 postal legislation directs the PRC to perform.

LIMITATIONS ON THE COMMISSION’S AUTHORITY UNDER SECTION 3622(D)(3)

PREPARED FOR THE POSTAL REGULATORY COMMISSION
39 U.S.C. § 3622(d)(3) directs the Postal Regulatory Commission (“PRC” or “Commission”), ten years after the enactment of the Postal Accountability and Enhancement Act (“PAEA”), Pub. L. 109-435, 120 Stat. 3198 (2006), to “review the system for regulating rates and classes for market-dominant products established under this section.” This White Paper considers whether the Commission’s authority under Section 3622(d)(3) includes the power to rescind or substantially modify the Consumer Price Index (“CPI”) cap established under Section 3622(a) and (d). For the reasons explained here, the answer is no.

EXECUTIVE SUMMARY

In recent months, it has been suggested that the Commission could use the ten-year review to eliminate or substantially modify the CPI-based cap on class-average revenue per piece imposed by 39 U.S.C. §§ 3622(d)(1) and (2). The argument runs as follows: Section 3622(d)(3) provides that the Commission’s ten-year review shall include a determination of whether the “system for regulating rates and classes for market-dominant products established under this section” is achieving the “objectives” of Section 3622(b), “taking into account the factors of” Section 3622(c). If the Commission finds that the “system” is not achieving the Section 3622(b) “objectives” in light of the Section 3622(c) “factors,” the Commission “may, by regulation, make such modifications or adopt such alternative system for regulating rates and classes for market dominant products as necessary to achieve the objectives.” Id. § 3622(d)(3). The CPI cap is part of the regulatory system for market-dominant products. So, the theory goes, the Commission, on finding that the CPI cap is not achieving the “objectives” of Section 3622(b), may eliminate the cap and replace it with some other regulatory “system” or substantially relax the manner in which the cap now operates. This theory fails on two independent grounds:

(1)
The argument is an impermissible construction of the statutory language. Section 3622(d) defines the CPI cap as a binding and mandatory “requirement,” not just a discretionary “objective” or “factor.” Id. § 3622(d)(1). The Commission may not interpret as permissive a statutory provision that is so plainly mandatory. Further, inferring such authority from Section 3622(d)(3) would stretch the “review” of the regulatory scheme far beyond the bounds allowed by the language of Section 3622(d)(3) and Supreme Court precedent such as MCI Telecomm. Corp. v. Am. Tel. & Tel. Co., 512 U.S. 218, 231 (1994).

Moreover, eliminating the CPI cap would contravene the overall structure and purpose of PAEA and, in particular, the relationship between Section 3622(d)(3) and Section 3622(a). The “system” that Section 3622(d)(3) directs the Commission to review and possibly modify after ten years is the same “system” that Section 3622(a) directed the Commission to create. The statute requires that both Commission actions be based on the same “objectives” and “factors” enumerated in Sections 3622(b) and (c). The Commission has repeatedly acknowledged that those “objectives” and “factors,” and the “system” of regulation that Congress directed the Commission to build on them, are all subordinate to the “quantitative pricing standards” of PAEA, including the CPI cap. The role of the CPI cap in the statutory hierarchy is absolute, “central,” and “indispensable”; the Commission’s role in “establishing” the “system for regulating rates and classes” is secondary and interstitial. Docket No. R2010-4, Rate Adjustment Due to Extraordinary or Exceptional Circumstances, Order No. 547 (Sept. 30, 2010) at 10–13, 49–50 [hereinafter Order No. 547]; accord Docket No. RM2009-3, Consideration of Workshare Discount Rate Design, Order No. 536 (Sept. 14, 2010) at 16–17, 35–36 [hereinafter Order No. 536]; USPS v. PRC, 676 F.3d 1105, 1108 (D.C. Cir. 2012), on remand, Order No. 1427 at 17–19. Nothing in the text, structure, or legislative history of PAEA suggests that the Commission’s authority to review, modify, or replace the “system” of regulation under Section 3622(d)(3) is broader than the Commission’s authority to “establish” the “system” of regulation under Section 3622(a).

(2)
The proposed reading of Section 3622(d)(3) would raise constitutional issues. A fundamental canon of statutory construction bars agencies from construing a statute in a way that even raises serious doubts about its constitutionality. Construing Section 3622(d)(3) to authorize the Commission to eliminate the CPI cap would do just that. In Clinton v. State of New York, 524 U.S. 417, 438–99 (1998), the Supreme Court held that the Presentment Clause of the Constitution, U.S. Const., Art. I, § 7, cl. 2, bars Congress from delegating to the executive branch the authority to amend or repeal statutes. In addition, wholesale repeal or modification of the CPI Cap would implicate the Constitutional limitations on the power of Congress to delegate its legislative function to administrative agencies under cases such as Panama Ref. Co. v. Ryan, 293 U.S. 388 (1935) and A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935).

* * *

In sum, PAEA established a system of rate regulation whereby the Postal Service cannot raise rates by more than CPI, as applied at the class level, absent extraordinary or exceptional circumstances. The Commission is not empowered to subvert the judgment of Congress by replacing this constraint with an alternative method of regulating rates.

The full text can be downloaded here.