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USCA Case #20-1510 Document #1882186 Filed: 01/27/2021 Page 1 of 393 USCA Case #20-1510 Document #1882186 Filed: 01/27/2021 Page 1 of 393 IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT NATIONAL POSTAL POLICY COUNCIL Petitioner, v. Case No. 17-1276 POSTAL REGULATORY COMMISSION, Respondent. NATIONAL POSTAL POLICY COUNCIL AND MAJOR MAILERS ASSOCIATION, Petitioners, Case No. 20-1505 v. POSTAL REGULATORY COMMISSION, Respondent. ALLIANCE OF NONPROFIT MAILERS, et al., Petitioners, v. Case No. 20-1510 POSTAL REGULATORY COMMISSION, Respondent. UNITED STATES POSTAL SERVICE, Petitioner, v. Case No. 20-1521 POSTAL REGULATORY COMMISSION, Respondent. ALLIANCE OF NONPROFIT MAILERS, et al, Intervenors. MOTION OF PETITIONERS ALLIANCE OF NONPROFIT MAILERS, AMERICAN CATALOG MAILERS ASSOCIATION, ASSOCIATION FOR POSTAL COMMERCE, MPA – THE ASSOCIATION OF MAGAZINE MEDIA, MAJOR MAILERS ASSOCIATION, AND NATIONAL POSTAL POLICY COUNCIL FOR STAY AND EXPEDITIOUS CONSIDERATION USCA Case #20-1510 Document #1882186 Filed: 01/27/2021 Page 2 of 393 Table of Contents I. INTRODUCTION ............................................................................................ 1 II. BACKGROUND .............................................................................................. 3 III. MOTION FOR STAY ...................................................................................... 5 A. LEGAL STANDARD ............................................................................................. 5 B. MOVANTS ARE LIKELY TO PREVAIL ON THE MERITS ........................................ 5 1. The CPI Price Cap is a Non-Discretionary and Binding Feature of Any Ratemaking System. ........................................................................... 6 2. The Statutory Interpretation Adopted by the Commission Places the Statute in Substantial Constitutional Jeopardy. ...................................... 13 C. MOVANTS WILL SUFFER IRREPARABLE INJURY ABSENT A STAY .................... 16 D. A STAY WOULD NOT IMPOSE SERIOUS HARM ON ANY PARTY ........................ 18 E. A STAY IS IN THE PUBLIC INTEREST ................................................................. 20 IV. IF A STAY IS DENIED, EXPEDITIOUS CONSIDERATION IS REQUESTED ..........................................................................................................21 V. CONCLUSION ...............................................................................................22 USCA Case #20-1510 Document #1882186 Filed: 01/27/2021 Page 3 of 393 I. Introduction The Alliance of Nonprofit Mailers, the American Catalog Mailers Association, the Association for Postal Commerce, MPA – The Association of Magazine Media, the Major Mailers Association, and the National Postal Policy Council (“Movants”) respectfully request that this Court stay the implementation of final rules issued by the Postal Regulatory Commission (“Commission”) that enlarge the ratemaking authority of the United States Postal Service (“Postal Service”) over market-dominant postal products. See Order No. 5763, Order Adopting Final Rules for the System of Regulating Rates and Classes for Market Dominant Products , PRC Docket No. RM2017-3 (Nov. 30, 2020) & Order No. 4257, Order on the Findings and Determination of the 39 U.S.C. 3622 Review (Dec. 1, 2017). If upheld, the new rules would subject Movants (and anyone else in the nation who mails market- dominant products) to rate increases far in excess of the statutory limit that has been in effect since 2006. The new rules are ultra vires. They violate Congress’s mandate that the market-dominant ratemaking system “shall” include a cap on annual price increases equal to changes in the Consumer Price Index (“CPI”) for All Urban Consumers. The Commission has previously recognized the CPI cap as the “centerpiece” of its authorizing legislation, but now attempts to write it out of the statute. Movants are 1 USCA Case #20-1510 Document #1882186 Filed: 01/27/2021 Page 4 of 393 likely to succeed on the merits of their Petition because the Commission’s actions exceed its statutory authority. Moreover, Movants will be irreparably harmed in the absence of a stay: they will be forced to pay higher rates, compelled to reduce their mailings (irreparably damaging their missions, programs, beneficiaries, customers, and financial stability), and are precluded by statute from recovering the overcharges even if the rules are later found unlawful. Conversely, the Postal Service would not suffer substantial harm if a stay were to issue. Three years ago, the Commission determined that the Postal Service had achieved short-term financial stability, and the Service’s performance on relevant financial metrics has since improved substantially. Its status as a viable public service is in no danger here. Finally, the public interest favors a stay, both because the public has an interest in the Commission’s adherence to its statutory mandate, and because of the public benefits resulting from continued access to affordable print magazines, newsletters, greeting cards, invoices, and charitable services funded by direct mail campaigns, all of which will diminish if the challenged rules are implemented. Movants requested a stay from the Commission on December 28, 2020, and the Commission denied the motion on January 19, 2021. See Order No. 5818, Order Denying Stay, PRC Docket No. RM2017-3 (Jan. 19, 2021). Movants attach a copy of that order as Exhibit 1 to this motion. Movants now request a stay from this Court. 2 USCA Case #20-1510 Document #1882186 Filed: 01/27/2021 Page 5 of 393 If the Court denies Movants’ request, we ask that the Court expedite a decision on the merits as quickly as practicable to minimize harm to the public that would ensue from implementation of the unlawful rates authorized by the Commission. II. Background Congress enacted the Postal Accountability and Enhancement Act (the “Act”), Pub. L. 109-435, 120 Stat. 3198, in 2006. The Act directs that the Commission “shall . by regulation establish (and may from time to time thereafter by regulation revise) a modern system for regulating rates and classes for market- dominant products.” 39 U.S.C. §3622(a). The Act further provides that the system established by the Commission “shall be designed to achieve” nine “objectives,” and that “in establishing or revising such system, the Postal Regulatory Commission shall take into account” fourteen statutorily prescribed “factors.” 39 U.S.C. §§ 3622(b) & (c). Next, the Act imposes statutory “requirements” that the system must meet, first and foremost being a price cap limiting average postal rate increases to annual changes in the CPI: (d) Requirements.̶ (1) In general. ̶ The system for regulating rates and classes for market-dominant products shall ̶ (A) include an annual limitation on the percentage changes in rates to be set by the Postal Regulatory Commission that will be equal to the change in the Consumer Price Index 3 USCA Case #20-1510 Document #1882186 Filed: 01/27/2021 Page 6 of 393 for All Urban Consumers unadjusted for seasonal variation over the most recent available 12-month period preceding the date the Postal Service files notice of its intention to increase rates; 39 U.S.C. §3622(d)(1)(A) (emphasis added). Congress also required the Commission to review the ratemaking system that it created under §3622(a) ten years later to determine if the system requires adjustment: Ten years after the date of enactment . the Commission shall review the system for regulating rates and classes for market-dominant products established under this section to determine if the system is achieving the objectives in subsection (b), taking into account the factors in subsection (c). If the Commission determines, after notice and opportunity for public comment, that the system is not achieving the objectives in subsection (b), taking into account the factors in subsection (c), the Commission may, by regulation, make such modification or adopt such alternative system for regulating rates and classes for market-dominant products as necessary to achieve the objectives. 39 U.S.C. §3622(d)(3). The Commission initiated this ten-year review in December 2016 and, in December 2017, concluded that the existing ratemaking system had not achieved all of the objectives in section 3622(b). See Order No. 4257 at 275. On November 30, 2020, in Order No. 5763 (at 4-6, 32-68), the Commission concluded that it had the authority to adopt a new ratemaking system that was not subject to the Act’s 4 USCA Case #20-1510 Document #1882186 Filed: 01/27/2021 Page 7 of 393 “requirements” and adopted rules allowing the Postal Service to increase rates for market-dominant products at levels well in excess of CPI. Movants have petitioned this Court to set aside Order Nos. 4257 and 5763 on the basis that the Commission’s findings and rules violate the Act, rest on authority that Congress did not and could not constitutionally delegate, and are arbitrary and capricious. III. Motion for Stay A. Legal Standard A motion for stay shall be granted if the movants demonstrate: (i) that the movant is likely to prevail on the merits; (ii) that the movant is likely to suffer irreparable injury absent relief; (iii) that other parties will not suffer harm if relief is granted; and (iv) that a stay is in the public interest. See Virginia Petroleum Jobbers Ass’n v. Fed. Power Comm’n, 259 F.2d 921, 925 (D.C. Cir. 1958). B. Movants Are Likely To Prevail on the Merits “When reviewing a rule under the [Administrative Procedure Act, this Court] will set aside an order that is ‘arbitrary, capricious,
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