UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
NORTHERN AIR CARGO, et al., )
)
Plaintiffs, )
)
v. )
)
UNITED STATES POSTAL SERVICE, ) Civil Action No. 09-2065(EGS)
)
Defendant, )
)
and )
)
PENINSULA AIRWAYS, INC., )
)
Defendant-Intervenor. )
)
MEMORANDUM OPINION
This case involves the decision of the United States Postal
Service (the “Postal Service”) to grant an equitable tender of
nonpriority mainline bypass mail to Peninsula Airways, Inc.
(“PenAir”) on five mainline routes in rural Alaska pursuant to 39
U.S.C. § 5402(g)(5)(c) (“§ 5402(g)(5)(c)”). This equitable
tender is being challenged by three mainline carriers – Northern
Air Cargo (“NAC”), Tatonduk Outfitters Ltd d/b/a Everts Air Cargo
(“Everts”), and Lynden Air Cargo LLC (“Lynden”) (collectively,
“plaintiffs”). Plaintiffs seek declaratory and injunctive
relief. Pending before the Court is plaintiffs’ motion for
summary judgment, as well as cross-motions for summary judgment
filed by Defendant Postal Service and Defendant-Intervenor PenAir
(collectively, “defendants”). Upon consideration of the motions,
the responses and replies thereto, the applicable law, the entire
record, the arguments of counsel made during the motions hearing
held on February 23, 2010, the parties’ post-argument briefs, and
for the following reasons, the Court hereby GRANTS IN PART AND
DENIES IN PART plaintiffs’ motion for summary judgment and GRANTS
IN PART AND DENIES IN PART defendants’ cross-motions for summary
judgment.
I. STATUTORY BACKGROUND
A. Intra-Alaska Bypass Mail System
The State of Alaska is the largest state in the Union and
has a very limited system of roads connecting its communities.
See Congressional Findings, Pub. L. 107-206 § 3002(b)(1) (Aug. 2,
2002). The United States Government owns nearly 2/3 of Alaska’s
landmass, including large tracts of land separating isolated
communities within the State. Id. § 3002(b)(5). This federal
ownership has inhibited the ability of Alaskans to build roads
connecting isolated communities. Id. § 3002(b)(6).
Consequently, most communities and a large portion of the
population in the State can only be reached by air. Id.
§ 3002(b)(7). As a result, the vast majority of food items and
everyday necessities destined for these isolated communities and
populations can only be transported through the air. Id.
§ 3002(b)(8). To tackle the unique challenge of connecting
2
hundreds of rural and isolated communities within the State,
Congress created the Intra-Alaska Bypass Mail system (the “bypass
mail system”). Id. § 3002(b)(9).1
The bypass mail system provides for the carriage of items -
ranging from foodstuffs to building materials to livestock - as
mail, which elsewhere would be transported as freight. It also
provides a means of affordable and reliable passenger service for
rural Alaskans. Indeed, Congress describes the bypass mail
system as a “4-legged stool,” designed to: (1) “provide the most
affordable means of delivering food and everyday necessities to
these rural and isolated communities”; (2) “establish a system
whereby the Postal Service can meet its obligations to deliver
mail to every house and business in the United States”; (3)
“support affordable and reliable passenger service”; and (4)
“support affordable and reliable nonmail freight service.” Id.
B. Rural Service Improvement Act of 2002
In 2002, based upon its determination that some air carriers
were abusing the bypass mail system, Congress enacted the Rural
Service Improvement Act of 2002 (the “RSIA”). See Pls.’ SMF ¶¶
11-12; see also Congressional Findings, Pub. L. 107-206
1
The Postal Service defines bypass mail as: “Standard mail
that is prepared by an authorized bypass mail shipper which
bypasses postal processing. It is tendered directly to an intra-
Alaska air carrier for delivery directly to the addressee under
prescribed guidelines and conditions.” Postal Service’s SOF ¶ 4.
3
§ 3002(b)(11) (“Attempts by Congress to support passenger and
nonmail freight service in Alaska using the Intra-Alaska Bypass
Mail system have yielded some positive results, but some carriers
have been manipulating the system by carrying few, if any,
passengers and little nonmail freight while earning most of their
revenues from the carriage of nonpriority bypass mail.”). In
passing the RSIA, Congress affirmed that “[a]s long as the
Federal Government continues to own large tracts of land within
the State of Alaska which impede access to isolated communities,
it is in the best interest of the Postal Service, the residents
of Alaska and the United States” to: (i) “ensure that the Intra-
Alaska Bypass Mail system remains strong, viable, and affordable
for the Postal Service”; (ii) “ensure that residents of rural and
isolated communities in Alaska continue to have affordable,
reliable, and safe passenger service”; (iii) “ensure that
residents of rural and isolated communities in Alaska continue to
have affordable, reliable, and safe nonmail freight service”;
(iv) “encourage that intra-Alaska air carriers move toward safer,
more secure, and more reliable air transportation . . . where
such operations are supported by the needs of the community”; and
(v) “ensure that the Intra-Alaska Bypass Mail system continues to
be used to support substantial passenger and nonmail freight
service and to reduce costs for the Postal Service.”
Congressional Findings, Pub. L. 107-206 § 3002(b)(12).
4
To achieve these goals, the RSIA created basic tests and
minimum eligibility requirements that carriers must satsify in
order to be eligible to carry bypass mail. Specifically, the
RSIA divides eligible carriers into two groups: (i) mainline
bypass mail carriers; and (ii) bush bypass mail carriers.
Mainline bypass mail carriers operate large aircrafts (greater
than 7500 pound payload capacity) and fly “mainline routes”
between either Anchorage or Fairbanks and a regional Alaska hub.2
See 39 U.S.C. § 5402(a)(13). Bush bypass mail carriers, by
contrast, operate smaller aircrafts (less than 7500 pound payload
capacity) and fly “bush routes” between regional hubs and
smaller, rural communities.3 Id. § 5402(a)(4); see also
generally Postal Service SOF ¶ 6 (“There are two types of
eligible bypass mail carriers in Alaska’s system and two
corresponding types of mail rates available to those carriers:
(1) the higher bush rate mail is distinguished by the size of the
aircraft used to transport it – aircraft having a payload
capacity up to and including 7,500 pounds, and (2) mainline rate
2
A mainline route is a city pair route in which a mainline
carrier is tendered nonpriority mainline bypass mail. See 39
U.S.C. § 5402(a)(14). Mainline carriers must use aircraft
certified to carry at least 19 passengers.
3
A bush route is an air route in which a bush carrier is
tendered nonpriority bush bypass mail. See 39 U.S.C.
§ 5402(a)(6). Bush carriers must use aircraft certified to carry
at least 5 passengers.
5
mail is also distinguished by the size of the aircraft used to
transport it – aircraft having a payload capacity over 7,500
pounds.” (internal quotation marks omitted)).
At the time the RSIA was passed, only four carriers
qualified as existing mainline carriers; those carriers are the
three plaintiffs in this lawsuit – NAC, Everts, and Lynden – as
well as Alaska Airlines.4 Pls.’ SMF ¶ 17; see also 39 U.S.C.
§ 5402(a)(12) (defining the term “existing mainline carrier” as
those carriers that met certain statutory criteria “on January 1,
2001”). PenAir was a bush bypass mail service carrier at that
time. See Pls.’ SMF ¶ 70 (explaining that PenAir has been
providing bush bypass mail service since approximately 1998); see
also PenAir’s Opp’n & Cross-Mot. at 10 (explaining that PenAir is
one of the “largest and oldest airlines” in Alaska, which began
operations over 50 years ago and currently employees more than
500 Alaskan residents).
II. FACTUAL BACKGROUND
A. PenAir’s Request for Equitable Tender of Nonpriority
Mainline Bypass Mail
As noted above, this case arises from the Postal Service’s
determination that PenAir was eligible for the equitable tender
4
Although Alaska Airlines is not a party to this suit, the
airline did challenge the Postal Service’s decision to grant
PenAir an equitable tender of nonpriority mainline bypass mail by
filing an objection with the Postal Service. See infra Section
II.B.
6
of nonpriority mainline bypass mail on five mainline routes:
Anchorage-Dillingham, Anchorage-King Salmon, Anchorage-Aniak,
Anchorage-McGrath, and Anchorage-Unalakleet. PenAir has
historically provided daily service to those communities using
its bush aircrafts. See PenAir’s Opp’n & Cross-Mot. at 10.5 Due
to the economic downturn in 2009, however, PenAir’s ability to
continue to provide daily service to those communities became
less viable. PenAir’s SMF ¶¶ 12-14. Rather than reduce services
to those communities, PenAir sought to become a new mainline
carrier on those routes in order to obtain an equitable tender of
nonpriority mainline bypass mail. See PenAir’s SMF ¶ 15.6
Towards this end, by letters dated July 6, 2009 and July 22,
2009, PenAir applied to the Postal Service for an equitable
tender of nonpriority mainline bypass mail in the Anchorage-
Dillingham and Anchorage-King Salmon markets pursuant to 39
U.S.C. § 5402(g)(5)(C) – the statutory provision governing the
5
An “equitable tender” refers to “the practice of the Postal
Service of equitably distributing mail on a fair and reasonable
basis between those air carriers that offer equivalent services
and costs between 2 communities in accordance with the
regulations of the Postal Service.” 39 U.S.C. § 5402(a)(11).
6
Bypass mail is an important subsidy for airline carriers in
Alaska. As former Senator Ted Stevens explained: “In addition to
ensuring delivery of food and goods, the bypass mail system
assured that passenger seats would be available to rural
Alaskans. The revenues paid to air carriers to transport the
bypass mail helps underwrite the cost of passenger service.” 148
Cong. Rec. S7277 (July 24, 2002).
7
entry of new mainline passenger carriers on routes in which there
is no existing mainline passenger carrier.7 Pls.’ SMF ¶¶ 52-54;
see also Pls.’ Exs. B and C to Declaration of David Karp (“Karp
Decl.”) (letters dated July 6, 2009 and July 22, 2009). By
letter dated August 7, 2009, the Postal Service determined that
PenAir was eligible for an equitable tender of mainline
nonpriority bypass mail in those markets. Pls.’ SMF ¶ 56. In
its letter, the Postal Service explained:
This replies to your letter of July 6, 2009, as
supplemented by your letter of July 22, 2009,
requesting the equitable tender of non-priority
bypass mail as a new 121 mainline passenger carrier
on the city-pair routes of Anchorage-Dillingham and
Anchorage-King Salmon. Having reviewed the matter,
we have concluded that your letters describe
service which would make you eligible for the
equitable tender you have requested in those
markets.
Ex. A to Karp Decl. (letter dated August 7, 2009).
Thereafter, PenAir applied to the Postal Service for an
equitable tender of nonpriority mainline bypass mail in the
additional markets of Anchorage-Aniak, Anchorage-McGrath, and
Anchorage-Unalakleet. Pls.’ SMF ¶ 55; see also Postal Service’s
7
Section 5402(g)(5)(C) provides as follows: “Notwithstanding
subparagraph (A) and paragraph (1)(B), a new 121 mainline
passenger carrier, otherwise qualified under this subsection, may
immediately receive equitable tender of nonpriority mainline
bypass mail to a hub point in the State of Alaska if the carrier
meets the requirements of subparagraphs (A), (C), and (D) of
paragraph (1) and subsection (h)(2)(B) and -(i) all qualified 121
mainline passenger carriers discontinue service on the city pair
route; or(ii) no 121 mainline passenger carrier serves the city
pair route.” 39 U.S.C. § 5402(g)(5)(C).
8
Ex. J to Declaration of Steve Deaton (“Deaton Decl.”) (letter
dated August 24, 2009). By letter dated September 2, 2009, the
Postal Service approved PenAir’s request for equitable tender in
these additional markets, concluding that “[PenAir’s] letters
describe service which would make [it] eligible for the equitable
tender [it has] requested in those markets.” Ex. K to Deaton
Decl. (letter dated Sept. 2, 2009).
On August 22, 2009, PenAir began operating as a mainline
passenger carrier on the Anchorage-Dillingham, Anchorage-King
Salmon, Anchorage-Aniak, Anchorage-McGrath, and Anchorage-
Unalakleet routes. PenAir’s SMF ¶ 23. Soon thereafter, on
November 9, 2009, the Postal Service began tendering nonpriority
mainline bypass mail to PenAir on all five routes. PenAir’s SMF
¶ 23.
B. Alaska Airline’s Objection to the Postal Service’s
Determination Regarding PenAir
After the Postal Service determined that PenAir was eligible
for the equitable tender of nonpriority mainline bypass mail on
the Anchorage-Dillingham and Anchorage-King Salmon routes, Alaska
Airlines submitted a letter to the Postal Service expressing its
“concern and differing viewpoint with the legal argumentation set
forth in [PenAir’s letter dated July 6, 2009].” See PenAir’s Ex.
4 to Declaration of Daniel Seybert (“Seybert Decl.”) (letter
dated August 12, 2009). The letter then described, in detail,
9
the airline’s objections to PenAir’s statutory analysis as well
as its own interpretation of 39 U.S.C. § 5402. Ex. 4 to Seybert
Decl.
By letter dated September 2, 2009 – the same date that the
Postal Service sent a letter approving the equitable tender of
mainline bypass mail to PenAir on additional mainline routes –
the Postal Service provided the following response to Alaska
Airlines:
This replies to your letter of August 12, 2009,
expressing your concern of the equitable tender of
non-priority mainline bypass mail to PenAir as a
new 121 mainline passenger carrier on the city-pair
routes of Anchorage-Dillingham, and Anchorage-King
Salmon. Having reviewed the matter, we have
concluded that the PenAir request describes service
which would make PenAir eligible for the equitable
tender in those markets. That conclusion is
consistent with our understanding of 39 U.S.C.
§ 5402’s requirements and the Congressional
findings on which those requirements are based; if
a carrier is entitled to equitable tender under the
statute, cost and policy issues such as those your
letter addresses are not for our consideration.
Ex. K. to Deaton Decl. (letter dated Sept. 2, 2009).
C. This Action
This action initially came before the Court on November 3,
2009, as a motion for preliminary injunction against the Postal
Service. During a telephonic status hearing on November 4, 2009,
however, plaintiffs informed the Court that they consented to
having their motion for preliminary injunction consolidated with
a determination on the merits pursuant to Federal Rule of Civil
10
Procedure 65(a)(2). See Minute Order dated Nov. 4, 2009. The
Court was also informed during this telephonic status hearing
that PenAir planned to file a motion to intervene pursuant to
Federal Rule of Civil Procedure 24; this motion was granted on
November 6, 2009. Plaintiffs then filed a motion for summary
judgment, and defendants filed cross-motions for summary
judgment. These motions are now ripe for determination by the
Court.
III. STANDARDS OF REVIEW
A. Summary Judgment
Summary judgment should be granted only if the moving party
has shown that there are no genuine issues of material fact and
that the moving party is entitled to judgment as a matter of law.
See Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317,
325 (1986); Waterhouse v. Dist. of Columbia, 298 F.3d 989, 991
(D.C. Cir. 2002). “A fact is material if it ‘might affect the
outcome of the suit under the governing law,’ and a dispute about
a material fact is genuine ‘if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.’”
Steele v. Schafer, 535 F.3d 689, 692 (D.C. Cir. 2008) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The
party seeking summary judgment bears the initial burden of
demonstrating an absence of genuine issues of material fact.
Celotex, 477 U.S. at 322. In determining whether a genuine issue
11
of material facts exists, the Court must view all facts in the
light most favorable to the non-moving party. See Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 597 (1986);
Keyes v. Dist. of Columbia, 372 F.3d 434, 436 (D.C. Cir. 2004).
Likewise, in ruling on cross-motions for summary judgment, the
court shall grant summary judgment only if one of the moving
parties is entitled to judgment as a matter of law upon material
facts that are not genuinely disputed. St. Michael’s Med. Ctr.
v. Sebelius, 648 F. Supp. 2d 18, 25 (D.D.C. 2009) (citing Rhoads
v. McFerran, 517 F.2d 66, 67 (2d Cir. 1975)).
B. The Postal Service’s Interpretation of the RSIA
A challenge to an agency’s construction of a statute that it
administers is subject to the standard of review articulated in
Chevron U.S.A., Inc. v. NRDC, Inc. 467 U.S. 837 (1984). In
assessing the validity of an agency’s interpretation of a
statute, the Court must first determine “whether Congress has
directly spoken to the precise question at issue.” Id. at 842-
43. Courts “use ‘traditional tools of statutory construction’ to
determine whether Congress has unambiguously expressed its
intent,” Serono Labs., Inc. v. Shalala, 158 F.3d 1313, 1319 (D.C.
Cir. 1993), including an examination of the statute’s text,
structure, purpose, and legislative history. See Shays v. FEC,
414 F.3d 76, 105 (D.C. Cir. 2005). “If the intent of Congress is
clear, that is the end of the matter; for the court, as well as
12
the agency, must give effect to the unambiguously expressed
intent of Congress.” Chevron, 467 U.S. at 842-43. If, however,
“the statute is silent or ambiguous with respect to the specific
issue, the question for the court is whether the agency’s answer
is based on a permissible construction of the statute.” Id. at
843. In making such an assessment, “considerable weight” is
generally accorded to “an executive department’s construction of
a statutory scheme it is entrusted to administer[.]” Id.
Indeed, “under Chevron, courts are bound to uphold an agency
interpretation as long as it is reasonable – regardless whether
there may be other reasonable, or even more reasonable, views.”
Serono Labs., 158 F.3d at 1321.
IV. ANALYSIS
A. Jurisdictional Inquiry
As a threshold matter, the Postal Service argues that the
Court lacks subject matter jurisdiction over this action. In
support of its argument, the Postal Service points to 39 U.S.C.
§ 410(a), which provides for judicial review of a Postal Service
action only when the Postal Service is alleged to have exceeded
its statutory authority.8 See Postal Service’s Opp’n & Cross-
8
39 U.S.C. § 410(a) states, in relevant part, that “except as
otherwise provided in this title or insofar as such laws remain
in force as rules or regulations of the Postal Service, no
Federal law dealing with public or Federal contracts, property,
works, officers, employees, budgets, or funds, including the
provisions of chapters 5 and 7 of title 5, shall apply to the
exercise of the powers of the Postal Service.”
13
Mot. at 6-7. The Postal Service argues that because plaintiffs
are only challenging the Postal Service’s “interpretation of the
eligibility requirements of § 5402(g)(5)(C) as applied to PenAir”
– and not the Postal Service’s “authority to grant equitable
tender to an airline under 39 U.S.C. § 5402(g)(5)(C) or that it
passed a regulation that directly contradicts the plain meaning
of the statute” – plaintiffs’ claims are barred by 39 U.S.C.
§ 410(a). See Postal Service’s Opp’n & Cross-Mot. at 10; see
also Postal Service’s Opp’n & Cross-Mot. at 7 (arguing that
§ 410(a) “exempt[s] most Postal Service actions – including ones
such as this, where the Postal Service acted entirely within the
scope of its statutory authority, from judicial review”).
Plaintiffs, relying principally on Aid Association for
Lutherans v. United States Postal Service, 321 F.3d 1166 (D.C.
Cir. 2003), contend that “judicial review is favored when an
agency is charged with acting beyond its authority.” Id. at 1172
(internal quotation marks omitted). Plaintiffs therefore assert
that this Court has jurisdiction to determine whether the Postal
Service exceeded its statutory authority by granting equitable
tender of mainline bypass mail to an air carrier that does not
satisfy the specific eligibility requirements established by
Congress under § 5402(g)(5)(C). See Pls.’ Combined Reply & Opp’n
Br. at 5. This Court agrees.
14
“[T]he case law in this circuit is clear that judicial
review is available when an agency acts ultra vires” because
“[w]hen an executive acts ultra vires, courts are normally
available to reestablish the limits on [its] authority.” Aid
Ass’n for Lutherans, 321 F.3d at 1173 (internal quotation marks
omitted). Therefore, because plaintiffs assert that the Postal
Service exceeded its statutory authority in purporting to apply
§ 5402(g)(5)(C), this Court has jurisdiction over the pending
action. See, e.g., id. (“Appellees’ claims here, that the Postal
Service ‘exceeded its statutory authority’ in purporting to apply
the statute, clearly admit of judicial review.”).
B. The Postal Service’s Determination that PenAir
Qualified for Equitable Tender of Nonpriority Mainline
Bypass Mail Pursuant to § 5402(g)(5)(C)
As discussed above, the Court’s analysis of the validity of
the Postal Service’s interpretation of § 5402(g)(5)(C) is
governed by Chevron, 467 U.S. 837. Plaintiffs argue that this
case should be decided under Chevron step one as the Postal
Service’s decision to tender nonpriority mainline bypass mail to
PenAir was in direct contradiction with the “clear and
unambiguous language” of § 5402(g)(5)(C) and is therefore ultra
vires. In support of their request for summary judgment,
plaintiffs put forth two principal arguments. First, plaintiffs
argue that the Postal Service exceeded its statutory authority in
granting PenAir’s request for equitable tender because PenAir had
15
not operated an aircraft having a payload capacity of greater
than 7500 pounds for 12 consecutive months (the “Prior Service
and Capacity Requirement”), and therefore failed to satisfy
§ 5402(g)(1)(A)(iv)(II) as required by § 5402(g)(5)(C). Second,
plaintiffs argue that PenAir provided nonpriority bypass mail
before January 1, 2001, and therefore cannot qualify as a “new
121 mainline passenger carrier” under § 5402(g)(5)(C). See 39
U.S.C. § 5402(a)(15) (defining a “new” carrier as one that “began
providing nonpriority bypass mail service on a city pair route in
the State of Alaska after January 1, 2001”). The Court will
explore plaintiffs’ arguments in turn.
1. The Prior Service and Capacity Requirement of
§ 5402(g)(1)(A)(iv)(II)
Section 5402(g)(5)(C), the new mainline carrier entry
provision that the Postal Service relied upon in granting
equitable tender of nonpriority mainline bypass mail to PenAir,
states:
Notwithstanding subparagraph (A) and paragraph
(1)(B), a new 121 mainline passenger carrier,
otherwise qualified under this subsection, may
immediately receive equitable tender of
nonpriority mainline bypass mail to a hub point in
the State of Alaska if the carrier meets the
requirements of subparagraphs (A), (C), and (D) of
paragraph (1) and subsection (h)(2)(B) and --
(i) all qualified 121 mainline passenger
carriers discontinue service on the city pair
route; or
(ii) no 121 mainline passenger carrier serves
the city pair route.
16
39 U.S.C. § 5402(g)(5)(C).
As a threshold matter, there is no dispute that PenAir
satisfies subparts (i) through (iii) of § 5402(g)(1)(A). Nor is
there any dispute that PenAir satisfies § 5402(g)(1)(C) or
§ 5402(h)(2)(B).9 The issue the Court must resolve, therefore,
is whether PenAir was required to satisfy the Prior Service and
Capacity Requirement of § 5402(g)(1)(A)(iv)(II) prior to being
granted an equitable tender of nonpriority mainline bypass mail.
This provision requires a carrier to “have provided scheduled
service with at least the number of scheduled noncontract flights
each week established under subparagraph (B)(ii) between 2 points
within the State of Alaska for at least 12 consecutive months
with aircraft . . . over 7,500 pounds payload capacity before
being selected as a carrier of nonpriority bypass mail at the
intra-Alaska mainline service mail rate.” 39 U.S.C.
§ 5402(g)(1)(A)(iv)(II).
Plaintiffs argue that the plain language of § 5402(g)(5)(C)
requires PenAir to comply with § 5402(g)(1)(A)(iv)(II) in order
to be eligible to receive an equitable tender of nonpriority
mainline bypass mail. Pls.’ Mot. at 13-14. Because it is
undisputed that PenAir had not satisfied this requirement at the
9
Due to a legislative drafting error, there is no
subparagraph D of paragraph (1) for PenAir to satisfy.
17
time the Postal Service rendered its decision,10 plaintiffs
assert that it was ultra vires for the Postal Service to assign
PenAir an equitable tender of nonpriority mainline bypass mail.
Defendants respond by arguing that the Postal Service’s
decision to grant an equitable tender of nonpriority mainline
bypass mail to PenAir was based on a reasonable interpretation of
§ 5402(g)(5)(C). Specifically, defendants point to the
“notwithstanding” clause in § 5402(g)(5)(C). The
“notwithstanding” clause, they argue, directs the Postal Service
not to apply the requirements of § 5402(g)(5)(A), which, in turn,
requires a carrier to “meet the requirements of subsection
(g)(1)(A)(iv)(II).” 39 U.S.C. § 5402(g)(5)(A)(i). Accordingly,
it is defendants’ position that subparagraph (g)(1)(A)(iv)(II)
does not apply to carriers under § 5402(g)(5)(C), and is to be
disregarded for purposes of a determination under
§ 5402(g)(5)(C). See Postal Service’s Opp’n & Cross-Mot. at 13,
16 (explaining that “the ‘notwithstanding’ language in the lead-
in clause to § 5402(g)(5)(C) . . . allows equitable tender if all
10
See Postal Service’s Reply Br. at 11 (“There is no dispute
that PenAir does not meet [the 12-Month] requirement[.]”); see
also PenAir SOF ¶ 8 (“Prior to August 22, 2009, PenAir only
operated aircraft having a payload capacity of under 7,500 lbs.,
which qualified as ‘bush’ aircraft.”); Postal Service’s SOF ¶¶ 7-
8 (“Prior to August 22, 2009, PenAir operated as one of the
largest ‘bush’ carriers in the State of Alaska, with a fleet of
aircraft with payload capacity under 7,500 lbs . . . . Subsequent
to August 22, 2009, PenAir began utilizing aircraft with a
payload capacity over 7,500 lbs.”).
18
other qualifications are met, ‘notwithstanding the requirements’
of § 5402(g)(5)(A)”; concluding that the only way to give effect
to § 5402(g)(5)(C), “is to exclude all of the requirements of
(g)(5)(A), including the [Prior Service and Capacity Requirement]
of (g)(1)(A)(iv)(II)”); PenAir’s Opp’n & Cross-Mot. at 16
(“[T]here is a perfectly good reason why the Postal Service did
not apply the [Prior Service and Capacity Requirement] set forth
in subsection (g)(1)(A)(iv)(II) to PenAir: Congress expressly
exempted carriers like PenAir from that very specific statutory
mandate in [§ 5402(g)(5)(C)] through the ‘Notwithstanding’
clause.”).
In further support of their interpretation, defendants point
to the term “immediately” in § 5402(g)(5)(C), and explain that
“[i]t makes sense that a carrier seeking to ‘immediately’ deliver
mainline bypass mail and provide mainline passenger service on a
route where no existing mainline passenger carrier is operating
would not have to abide by the twelve month capacity requirement
of § 5402(g)(1)(A)(iv)(II) or the sixth month passenger
requirement of Section (g)(5)(A)(ii).” Postal Service’s Opp’n &
Cross-Mot. at 14. Likewise, PenAir asserts that “[t]he word
‘immediately’ means ‘occurring without delay[.]’” PenAir’s Opp’n
& Cross-Mot. at 24 (quoting Black’s Law Dictionary 751 (8th ed.
2000)). PenAir explains that “Congress did not use that modifier
in any of the other generally applicable RSIA provisions
19
regarding the tender of nonpriority bypass mail,” but instead
chose to “reserve[ ] the word ‘immediately’ to underscore its
intention – expressed in no uncertain terms through the
‘Notwithstanding’ clause – that new carriers need not satisfy the
generally applicable [Prior Service and Capacity Requirement]
under [§ 5402(g)(5)(C)].” PenAir’s Opp’n & Cross-Mot. at 24.11
Plaintiffs urge the Court to reject these arguments. With
regards to the “notwithstanding” clause, plaintiffs assert that
“the ‘notwithstanding’ language in Section (g)(5)(C) merely
specifies that Section (g)(5)(C) – and not Section (g)(5)(A) –
governs the circumstances under which a new 121 mainline
passenger carrier can qualify to receive equitable tender of
11
This reading of “immediately” finds some support in the
congressional testimony of former Senator Ted Stevens. See 148
Cong. Rec. S7278 (July 24, 2002) (“Under this act, a new
passenger carrier may immediately be tendered bypass mail on a
mainline route if all passenger carriers operating under Federal
Aviation Rules part 121 leave the market or no part 121 passenger
service is available. These provisions mean that under such
conditions a new 121 carrier will not have to wait 6 months to
provide services. It will get bypass mail immediately in
mainline markets with no passenger service. This change will
provide mainline communities with quality passenger service as
mail revenues underwrite passenger transportation.”). But see
Pl.’s Combined Reply & Opp’n Br. at 18 n.10 (explaining that this
statement “refers to the unique requirement in Section (g)(5)(A)
that a carrier provide at least 75 percent of the number of
insured passenger seats as the number of available passenger
seats being provided by the mainline passenger carrier providing
the greatest number of available passenger seats on that route
‘for the 6 months immediately preceding the date on which the
carrier seeks tender of such mail’” (quoting 39 U.S.C.
§ 5402(g)(5)(A))).
20
Mainline Mail where there is no 121 mainline passenger carrier
offering service on the city pair route at issue.” Pls.’
Combined Reply & Opp’n Br. at 9.12 Explaining that the ordinary
meaning of notwithstanding is “despite,” “in spite of,” or
“irrespective,” see Pls.’ Combined Reply & Opp’n Br. at 12
(citing Black’s Law Dictionary and various cases), plaintiffs
urge the Court to give “notwithstanding” its common meaning.
See Pls.’ Combined Reply & Opp’n Br. at 12-13 (“[N]otwithstanding
does not ‘expressly direct the Postal Service not to apply the
[Prior Service and Capacity Requirement].’ Rather, it provides
that ‘irrespective’ of any requirements that a carrier would have
to satisfy to receive Mainline Mail under Subparagraph (A), a
carrier may receive equitable tender of Mainline Mail under
Subparagraph (C) if it satisfies all of the requirements set
forth in Subparagraph (C).” (quoting PenAir’s Opp’n & Cross-Mot.
12
Plaintiffs also point out an important distinction between
the requirement set forth in § 5402(g)(1)(A)(iv)(II) and the
requirement a carrier must satisfy under § 5402(g)(5)(A).
Plaintiffs explain that: “[T]he Prior Service and Capacity
Requirement set forth in Section (g)(1)(A)(iv)(II) only requires
that a carrier provide scheduled service between any two points
in the State of Alaska for 12 consecutive months with aircraft
having over 7500 pounds payload capacity . . . Thus, unlike the
requirements to receive equitable tender of Mainline Mail under
Section (g)(5)(A), a new 121 mainline passenger carrier seeking
equitable tender of Mainline Mail under Section (g)(5)(C) does
not have to operate aircraft with over 7,500 pounds of payload
capacity for 12 consecutive months on the specific city pair
route for which it is seeking equitable tender of Mainline Mail.
Instead, the carrier simply has to operate such aircraft for 12
consecutive months between any two points in the State of
Alaska.” Pls.’ Combined Reply & Opp’n Br. at 10.
21
at 12)). Plaintiffs also argue that by reading the
“notwithstanding” clause in isolation, defendants render part of
§ 5402(g)(5)(C) meaningless, “thereby violating critical canons
of statutory interpretation.” Pls.’ Combined Reply & Opp’n Br.
at 11; see also, e.g., Corley v. United States, 129 S. Ct. 1558,
1566 (2009) (rejecting the government’s statutory interpretation
which was “at odds with one of the most basic interpretative
canons, that ‘a statute should be construed so that effect is
given to all its provisions so that no part will be inoperative
or superfluous, void or insignificant . . . .’” (quoting Hibbs v.
Winn, 542 U.S. 88, 101 (2004))).
In addition, with regards to defendants’ interpretation of
the word “immediately,” plaintiffs assert that “[t]he word
‘immediately’ – read in the context of Section (g)(5)(C) and the
rest of the RSIA – does not exempt a carrier seeking to qualify
under Section (g)(5)(C) from satisfying all of the eligibility
requirements that Congress explicitly enumerated in that
section[.]” Pls.’ Combined Reply & Opp’n Br. at 18. To the
contrary, plaintiffs argue that § 5402(g)(5)(C) clearly
specifies, without qualification, that “‘a new 121 mainline
passenger carrier, otherwise qualified under this subsection, may
immediately receive equitable tender . . . if the carrier meets
the requirements of subparagraphs (A), (C), and (D) of paragraph
(1) and subsection (h)(2)(B).’” Pls.’ Combined Reply & Opp’n Br.
22
at 18 (quoting 39 U.S.C. § 5402(g)(5)(C)) (emphasis in
plaintiffs’ brief).
Having closely considered the arguments of both plaintiffs
and defendants, the Court finds that the Postal Service
impermissibly disregarded the plain language of § 5402(g)(5)(C)
in determining that PenAir was not required to satisfy the Prior
Service and Capacity Requirement set forth in
§ 5402(g)(1)(A)(iv)(II). Congress clearly stated that a new
mainline carrier must “meet[ ] the requirements of subparagraph[]
(A) . . . of paragraph (1),” which includes
§ 5402(g)(1)(A)(iv)(II), in order to be eligible to “receive
equitable tender of nonpriority mainline bypass mail.” 39 U.S.C.
§ 5402(g)(5)(C). The Court, therefore, is unpersuaded by
defendants’ attempts to create an ambiguity where none exists.13
13
Because “Congress has directly spoken to the precise
question at issue,” Chevron, 467 U.S. at 842-43, the Court need
not defer to the Postal Service’s interpretation of the RSIA. As
the D.C. Circuit has counseled – “[w]hen the words of a statute
are unambiguous . . . judicial inquiry is complete.” Teva Pharm.
Indus. v. Crawford, 410 F.3d 51, 53 (D.C. Cir. 2005)(internal
quotation marks omitted). However, even assuming, arguendo, that
the plain language of § 5402(g)(5)(C) is “ambiguous,” the Court
is not persuaded that the Postal Service’s interpretation of
§ 5402(g)(5)(C) is entitled to deference under either Chevron or
Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944). See
Christensen v. Harris County, 529 U.S. 576, 587 (2000)
(explaining that if Chevron deference is not appropriate, courts
may still accord an informal agency determination some deference
under Skidmore; noting, however, that Skidmore deference is
appropriate “only to the extent that those interpretations have
the ‘power to persuade’”). In determining that PenAir satisfied
§ 5402(g)(5)(C), the Postal Service simply stated that “[h]aving
reviewed the matter, we have concluded that your letters describe
23
While the Court is sympathetic to defendants’ position – and
indeed finds it perverse that this decision could have a negative
impact on passenger service in Dillingham, King Salmon, Aniak,
McGrath, and Unalakleet – the Court “‘must presume that a
legislature says in a statute what it means and means in a
statute what it says[.]’” Teva Pharm. Indus. v. Crawford, 410
F.3d 51, 53 (D.C. Cir. 2005) (quoting Conn. Nat'l Bank v.
Germain, 503 U.S. 249, 253-54 (1992)). In this case, therefore,
the Court must presume that Congress intended new carriers to
satisfy the Prior Service and Capacity Requirement set forth in
§ 5402(g)(1)(A)(iv)(II) in order to receive an equitable tender
of nonpriority mainline bypass mail despite its potentially harsh
outcome. See Lamie v. United States Trustee, 540 U.S. 526, 538
(2004) (discussing “‘deference to the supremacy of the
service which would make you eligible for the equitable tender
you have requested in those markets.” See Ex. A to Karp Decl.;
Ex. K to Deaton Decl. This vague assertion fails to reflect any
deliberative process; the Court is left with no indication of who
the decision-makers were, what they considered, or how they
reached their decision. The Court finds that this lack of
thoughtful deliberation undermines defendants’ claims of
deference. See, e.g., New York State Bar Assoc. v. FTC, 276 F.
Supp. 2d 110, 138-39 (D.D.C. 2003) (Walton, J.) (concluding that
an agency’s interpretation was “beyond the ‘Chevron pale,’” due
to the agency’s “total lack of a deliberative process”;
emphasizing that “the vagueness of the Opinion Letter reflects a
complete lack of any thoughtful deliberations”). Nor is the
Court persuaded that the Postal Service reasonably interpreted
§ 5402(g)(5)(C). Simply put, there is nothing in the RSIA to
indicate that Congress empowered the Postal Service to exempt a
carrier from the requirements it set forth in § 5402(g)(5)(C).
24
Legislature,’” and explaining that courts may not “soften the
import of Congress’ chosen words even if [they] believe the words
lead to a harsh outcome” (quoting United States v. Locke, 471
U.S. 84, 95 (1985))).
Accordingly, the Court concludes that the Postal Service
exceeded its statutory authority by granting an equitable tender
of nonpriority mainline bypass mail to PenAir pursuant to
§ 5402(g)(5)(C) despite the carrier’s failure to satisfy
§ 5402(g)(1)(A)(iv)(II). The Court, therefore, GRANTS
plaintiffs’ request for summary judgment on this issue, and
DENIES defendants’ requests for summary judgment on this issue.
2. New Carrier Provision of § 5402(a)(15)
Next, plaintiffs argue that the Postal Service exceeded its
authority in granting an equitable tender of nonpriority mainline
bypass mail to PenAir because PenAir cannot qualify as a “new 121
mainline passenger carrier” as required by § 5402(g)(5)(C). In
support of this argument, plaintiffs point to § 5402(a)(15),
which states:
[T]he term “new”, when referencing a carrier, means a
carrier that –
(A) meets the respective requirements of
subclause (I) or (II) of subsection (g)(1)(A)(iv),
depending on the type of route being served and the
size of aircraft being used to provide service;
(B) began providing nonpriority bypass mail
service on a city pair route in the State of Alaska
after January 1, 2001; and
25
(C) is not comprised of previously qualified
existing mainline carriers as a result of merger or
sale.
39 U.S.C. § 5402(a)(15); see Pls.’ Mot. at 19-20. Plaintiffs
argue that PenAir cannot satisfy subparagraph (B) of this
provision because PenAir “began providing nonpriority bypass mail
service on a city pair route in the State of Alaska after January
1, 2001.” 39 U.S.C. § 5402(a)(15)(B).14
Defendants respond by arguing that it is “absurd and defies
common sense” to interpret § 5402(a)(15)(B) as permanently
barring PenAir from qualifying as a new mainline passenger
carrier simply because it carried bush bypass mail before January
1, 2001. In support of their argument, defendants explain that
the word “new” is an adjective that must be read to modify the
noun to which it refers. See Postal Service’s Opp’n & Cross-Mot.
at 14; PenAir’s Opp’n & Cross-Mot. at 30-31. Defendants assert
that because § 5402 provides for separate definitions of “121
bush passenger carrier” and “121 mainline passenger carrier,” see
39 U.S.C. § 5402(20)-(21), the “new” assessment should be
conducted in reference to the particular noun that it is
14
It is plaintiffs’ position that PenAir can never qualify as
a “new 121 mainline passenger carrier” as required by
§ 5402(g)(5)(C). See Pls.’ Post-Argument Br. at 1 (“During the
hearing, the Court queried whether ‘Congress really intend[ed]
that PenAir forever be excluded’ from carrying mainline bypass
mail. In short, yes. Congress intended to exclude all carriers
of bypass mail before January 1, 2001 from being considered ‘new’
carriers under 39 U.S.C. § 5402.” (internal citations omitted)).
26
modifying.15 Accordingly, under defendants’ desired
interpretation, a carrier may qualify as a “new 121 mainline
passenger carrier” as long as the carrier did not provide
mainline bypass mail prior to January 1, 2001.16 PenAir’s Opp’n
& Cross-Mot. at 31. Defendants explain that “[t]his
interpretation recognizes that the definition of new requires
application of the respective requirements based on the type of
route being served and the size of the aircraft being used” -
i.e., bush or mainline. See PenAir’s Opp’n & Cross-Mot. at 31.
Defendants also assert that the definition of “existing
mainline carrier” supports their statutory interpretation. An
“existing mainline carrier” is defined, in relevant part, as a
carrier “that on January 1, 2001, was . . . qualified to provide
mainline nonpriority bypass mail service.” 39 U.S.C.
§ 5402(a)(12). Defendants argue that it makes sense, then, that
a “new 121 mainline passenger carrier” would be a carrier that
15
As defendant-intervenor PenAir explains: “[This] makes good
sense, given the structure of the RSIA. The RSIA refers
throughout to both ‘new’ mainline carriers, see, e.g.,
§ 5402(g)(5)(C), and ‘new’ bush carriers, see, e.g.,
§ 5402(h)(3)(A). Although Congress could have provided separate
definitions for each type of ‘new’ carrier, it opted instead for
a single flexible definition of ‘new,’ one that would adapt to
whichever carrier was being modified.” PenAir’s Post-Argument
Br. at 1-2.
16
Likewise, a carrier could qualify as a new bush passenger
carrier as long as the carrier did not provide bush bypass mail
after January 1, 2001.
27
was qualified to provide mainline nonpriority bypass mail service
after January 1, 2001. PenAir’s Reply Br. at 21. This Court
agrees.
When viewing the RSIA as a whole, the Court finds that
defendants’ proffered definition of a “new 121 mainline passenger
carrier” as a carrier that began providing nonpriority mainline
bypass mail service on a city pair route in the State of Alaska
after January 1, 2001, harmonizes the definition of “new” with
the overall structure of the statute. See, e.g., Bell Atl. Tel.
Cos. v. FCC, 131 F.3d 1044, 1047 (D.C. Cir. 1997) (recognizing
that “‘the meaning of statutory language, plain or not, depends
on context’” (quoting Bailey v. U.S., 116 S. Ct. 501, 506
(1995))); see also Lanier v. District of Columbia, 871 F. Supp.
20, 22 (D.D.C. 1994) (“In analyzing the meaning to be attached to
particular phrases, it is necessary to view the statute as a
whole, informed by the overall purpose and objective.”).
Specifically, because the word “new” must be read in context with
the type of aircraft that applies - i.e., a mainline carrier or a
bush carrier – it logically follows that the phrase “began
providing nonpriority bypass mail” should be read in context to
refer to the particular type of nonpriority bypass mail that the
new carrier is seeking to carry – i.e., mainline bypass mail or
28
bush bypass mail.17
Accordingly, because PenAir did not transport nonpriority
mainline bypass mail prior to January 1, 2001, the Court
concludes that the Postal Service did not exceed its statutory
authority in determining that PenAir could qualify as a “new 121
mainline passenger carrier” under § 5402(g)(5)(C). The Court,
therefore, GRANTS defendants’ requests for summary judgment on
this issue, and DENIES plaintiffs’ request for summary judgment
on this issue.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS IN PART AND
DENIES IN PART plaintiffs’ motion for summary judgment and GRANTS
PART AND DENIES IN PART defendants’ cross-motions for summary
17
Moreover, despite plaintiffs’ protestations to the contrary,
see Pls.’ Post-Argument Br. at 1-5, this Court is not persuaded
that Congress intended its definition of “new” to impose a
permanent bar preventing a carrier from ever qualifying as a “new
121 mainline passenger carrier” simply because the carrier
provided bush bypass mail service prior to January 1, 2001. See
Postal Service’s Post-Argument Br. at 2 (explaining that “the
plain language of the RSIA establishes that Congress had no
intention of permanently excluding bush carriers from mainline
markets, and vice versa” (citing 39 U.S.C. §§ 5402(g)(2)(C),
5402(g)(2)(D))). To the contrary, the only carrier that Congress
explicitly barred from qualifying as a “new” carrier was a
previously qualified existing mainline carrier. See 39 U.S.C.
§ 5402(a)(15)(C) (“[T]he term ‘new,’ when referencing a carrier,
means a carrier that – . . . (C) is not comprised of previously
qualified existing mainline carriers as a result of merger or
sale[.]”).
29
judgment. Specifically, the Court finds that the Postal Service
exceeded its statutory authority in granting an equitable tender
of nonpriority mainline bypass mail to PenAir despite the
carrier’s failure to satisfy the Prior Service and Capacity
Requirement of § 5402(g)(1)(A)(iv)(II). The Court, therefore,
GRANTS plaintiffs’ request for summary judgment on this issue and
DENIES defendants’ requests for summary judgment on this issue.
The Court finds that the Postal Service did not, however, exceed
its statutory authority in determining that PenAir could qualify
as a “new 121 mainline passenger carrier” under § 5402(g)(5)(C).
Accordingly, the Court GRANTS defendants’ requests for summary
judgment on this issue, and DENIES plaintiffs’ request for
summary judgment on this issue. An appropriate Order accompanies
this Memorandum Opinion.
SIGNED: Emmet G. Sullivan
United States District Court Judge
September 23, 2010
30