Pennington v. United States Postal Service

627 F.2d 534, 201 U.S. App. D.C. 75
CourtCourt of Appeals for the D.C. Circuit
DecidedJune 26, 1980
DocketNo. 78-1899
StatusPublished
Cited by1 cases

This text of 627 F.2d 534 (Pennington v. United States Postal Service) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pennington v. United States Postal Service, 627 F.2d 534, 201 U.S. App. D.C. 75 (D.C. Cir. 1980).

Opinion

Opinion for the court filed by Circuit Judge TAMM.

TAMM, Circuit Judge:

This case involves the preferential “red-tag” service afforded qualifying senders of second class mail under United States Postal Service regulations. Petitioner Samuel C. Pennington, publisher of a monthly antiques magazine, asserts that the present provision for red-tag service is unlawfully discriminatory under 39 U.S.C. § 403(c) (1971), and on that basis appeals a 1978 decision of the Board of Governors of the Postal Service upholding these regulations. More recently, the Board has directed the Postal Rate Commission to reexamine the question of red-tag service; this proceeding is now underway. We believe the application in the new proceeding of cost methods approved subsequent to the close of the decision appealed here will clarify the issues concerning red-tag service. Accordingly, we do not rule on Pennington’s claim at this time but remand the case to the Board of Governors to allow the Postal Rate Commission to hear Pennington’s claims in the new proceedings.

[77]*77I.

The United States Postal Rate Commission (Rate Commission)1 established four dockets, MC76-1 to -4, in 1976 to consider postal classification changes in the four classes of mail service.2 In MC76-2, the proceeding on second class service classifications, questions arose concerning red-tag service afforded second class mailers. Red-tag pieces receive expedited handling, distribution, and delivery, similar to that afforded first class mail, at no additional charge above the usual second-class rate. The Postal Service offers this mail schedule to provide speedy delivery of time-value materials such as newspapers or periodicals, and to be eligible, a mailer must supply “news of general interest” in a periodical published at least once a week. The costs of this service are borne by all second class mailers.3

An Administrative Law Judge heard evidence in Docket MC76-2. On the question of red-tag service, the officer of the Commission (OOC), charged with representing the public,4 recommended dropping the eligibility requirements for red-tag service, thereby making the service available to all second class mailers. He presented evidence indicating that a surcharge of two cents per piece would cover the added costs of delivery. Other participants at the hearing opposed this proposal, disputing the OOC’s cost estimates and contending that red-tag mail is less expensive to the Postal Service due to extensive presorting by red-tag mailers.

The Administrative Law Judge hearing the matter resigned before the hearings closed. The Commission therefore, pursuant to 5 U.S.C. § 577(b) (1976) and 39 C.F.R. § 3001.39(b) (1979), decided to issue a tentative decision based on the evidence in the record and briefs submitted by interested parties, with an opportunity for parties to file exceptions. The Rate Commission closed the record in May of 1977, and the following September the Commission issued its tentative decision. It rejected the OOC’s proposal to expand red-tag service to all second class mailers. The Commission rejected the OOC’s cost estimates, presented through proxy data,5 as “inherently and critically deficient,” Mail Classification Schedule, 1976, No. MC76-2, at 10 (P.R.C. Sept. 16, 1977) (tentative decision), reprinted in Joint Appendix (J.A.) at 36, 46, and concluded:

the OOC’s proposal for a red-tag surcharge must be rejected on the record before us. At the same time we are not convinced that the existing eligibility requirements should be relaxed and the service made available to other second-class mail in the absence of more precise infor[78]*78mation regarding its present and potential costs.

Id. at 11, reprinted in J.A. at 47.

A week after the Commission issued its tentative decision, petitioner Pennington, the publisher of the monthly Maine Antique Digest, sought to intervene. Because the magazine does not appear weekly, it was not eligible for red-tag service. Pennington argued that the service should be expanded to all second class mailers. He claimed that denial of this service injured him economically because advertisers of time related notices shunned his publication in favor of weekly antique journals, which due to red-tag service received faster and more reliable delivery. He also claimed that the “associations have sold [the Commission] a bill of goods” about the cost savings due to mailers’ presorting: postal regulations, he asserted, required presorting of all second class materials. J.A. at 29-30 (Pennington’s petition).

On November 8, 1977, the Rab. Commission granted Pennington’s request to intervene. Mail Classification Schedule, 1976, No. MC76 — 2 (P.R.C. Nov. 8, 1977) (order granting intervention), reprinted in J.A. at 62. Given the tardiness of the request, however, the Commission limited Pennington’s participation to filing exceptions to the tentative decision. The Commission also allowed other interested parties to file briefs in opposition to Pennington’s exceptions.

During the same period, the Commission also was conducting a general rate proceeding, Docket No. R77-1, to evaluate rates and fees charged for all classes of mail. In the course of this proceeding, the Commission adopted a cost-of-service means of allocating the costs of operations among the different classes of mail. This approach enables the Commission to adjust rates to ensure that each class of mail receives sufficient revenues to cover the costs of delivering that class. The Commission issued its decision in R77-1 on May 12, 1978, and the Governors approved the recommended decision one week later.

Two filings in MC76-2 arose from the proceeding in R77-1. First, before the decision in R77-1, the OOC petitioned the Commission to reopen the record in MC76-2 to introduce the testimony of Pennington before the Commission in R77-1. See J.A. at 69-76. This testimony bolstered the OOC’s contention that the criteria for red-tag service discriminated against certain second class mailers. Later, after the R77-1 decision, Pennington himself filed a petition with the Commission to create a surcharge for red-tag service that allocated costs to users based on the cost of that service. See id. at 118-20.

The Commission rejected both proposals in its final decision, which basically adopted the findings and conclusions of the tentative decision. Mail Classification Schedule, 1976, No. MC76-2 (P.R.C. June 16, 1978) (opinion and recommended decision after exceptions), reprinted in J.A. at 151. The Commission upheld the decision allowing Pennington to intervene but denied the OOC’s request to allow Pennington’s testimony to be admitted into the record. It found that “no useful purpose would be served” by granting the motion and that “[t]he material adds little insight to the resolution of the major issues involved in this proceeding and would not affect our conclusions or final disposition.” Id. at 19-20, reprinted in J.A. at 170-71.

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Related

Pennington v. United States Postal Service
627 F.2d 534 (D.C. Circuit, 1980)

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Bluebook (online)
627 F.2d 534, 201 U.S. App. D.C. 75, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pennington-v-united-states-postal-service-cadc-1980.