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AT&T CORP. v. USPS

March 20, 1997

AT&T CORPORATION, Plaintiff,
v.
U.S. POSTAL SERVICE, Defendant.



The opinion of the court was delivered by: GOTTSCHALL

ORDER

 On July 24, 1996, AT&T filed an action for declaratory and injunctive relief relating to a series of sole-source contracts entered into by the defendant, the United States Postal Service, and Public Communication Services ("PCS") for the management of public pay telephones in various locations across the U.S.

 On August 29, 1996, the Postal Service filed a motion to dismiss on the grounds that (1) AT&T lacks standing to challenge alleged violations of the Postal Service's procurement regulations; (2) the Postal Service's procurement decisions are not judicially reviewable; and (3) AT&T has not alleged a proper basis for a breach of contract claim.

 The third issue is easily resolved. In its brief in opposition to the motion to dismiss, AT&T states that it did not intend to plead a breach of contract claim in the complaint. Therefore, the motion to dismiss on this basis is moot.

 The court will consider the issue of judicial review prior to determining whether AT&T has standing to bring this action. The requisite inquiry is whether this court has authority to review the procurement decisions of the Postal Service. The issue was squarely addressed by the Seventh Circuit in a factually similar case, Peoples Gas, Light and Coke Co. v. United States Postal Serv., 658 F.2d 1182 (7th Cir. 1981). In People's Gas, the Seventh Circuit held that an invitation for bids to construct an electrically-powered heating plant was judicially reviewable.

 The substantive basis for jurisdiction in People's Gas was found in two provisions of the Postal Reorganization Act, 39 U.S.C. § 401(2) and (3), which authorize the Postal Service to make rules and regulations relating to procurement needs. Regulations promulgated by the Postal Service provided law to apply in the review action. However, the court went on to address whether, in the absence of specific language in the act creating a right of review, the regulations afforded a private right of action.

 Several Supreme Court cases provided the requisite analytical framework. Judicial review of administrative actions taken pursuant to a statute or regulation "is the rule." Barlow v. Collins, 397 U.S. 159, 166, 25 L. Ed. 2d 192, 90 S. Ct. 832 (1970). "Only upon a showing of 'clear and convincing evidence' of a contrary legislative intent should the courts restrict access to judicial review." Abbott Laboratories v. Gardner, 387 U.S. 136, 141, 18 L. Ed. 2d 681, 87 S. Ct. 1507 (1967) (citation omitted). Where there is no statutory command prohibiting review, the party asserting nonreviewability has "the heavy burden of overcoming the strong presumption that Congress did not mean to prohibit all judicial review." Dunlop v. Bachowski, 421 U.S. 560, 567, 44 L. Ed. 2d 377, 95 S. Ct. 1851 (1974). This presumption in favor of review remains "unless a contrary purpose is fairly discernible in the statutory scheme." Association of Data Processing Serv. Org. v. Camp, 397 U.S. 150, 157, 25 L. Ed. 2d 184, 90 S. Ct. 827 (1970).

 The Seventh Circuit considered the following factors when analyzing the reviewability issue in People's Gas : "A judicial determination of Congressional intent, the functional needs of the agency for flexibility and discretion, and the capacity of the courts to resolve issues presented to them." 658 F.2d at 1191 (quoting National Ass'n of Postal Sup'rs v. United States Postal Serv., 195 U.S. App. D.C. 242, 602 F.2d 420, 429 (D.C. Cir. 1979)). The Postal Service argued that the court could infer a congressional intent to preclude review because § 410 of the act exempted the Postal Service from all federal law dealing with public or federal contracts and from the Administrative Procedure Act. The Seventh Circuit determined that these particular exemptions were not sufficient to foreclose review of alleged violations of the Postal Service's regulations.

 The case at bar involves the current versions of the same statute, the Postal Service Reorganization Act, and its related regulations in the Procurement Manual (incorporated by reference at 39 C.F.R. § 601.100). In this action, AT&T relies on §§ 1.7.2.a, 4.4.1.b and 4.4.1.c of the Procurement Manual. Section 1.7.2.a states that "purchases must be made on the basis of adequate competition whenever feasible" and that "adequate competition means the solicitation and participation of a sufficient number of capable sources to ensure that the required quality and quantity of goods and services is obtained when needed, and that the price is fair and reasonable." Section 4.4.1.b states that "noncompetitive purchasing methods may be used only when competitive purchasing is not feasible or appropriate." Section 4.4.1.c outlines eighteen exceptions to the use of competitive purchasing methods.

 The parties have not cited any changes to the statute, its regulations or its legislative history which would prevent this court from adopting the reviewability analysis in People's Gas. However, since the decision in People's Gas, the Supreme Court has clarified the law on the issue of judicial review of administrative actions. E.g., Block v. Community Nutrition Inst., 467 U.S. 340, 81 L. Ed. 2d 270, 104 S. Ct. 2450 (1984) and United States v. Fausto, 484 U.S. 439, 98 L. Ed. 2d 830, 108 S. Ct. 668 (1988). As a result, the Postal Service would now like this court to find that these Supreme Court pronouncements require the application of a new standard in analyzing reviewability. Yet, Block and Fausto did not enunciate a new standard, but simply elucidated the old standard. The Supreme Court in Block criticized the lower court for applying the "clear and convincing evidence" standard in a strict evidentiary sense: "Where substantial doubt about the congressional intent exists, the general presumption favoring judicial review of administrative action is controlling. That presumption does not control in cases such as this one, however, since the congressional intent to preclude judicial review is 'fairly discernible' in the detail of the legislative scheme." Block at 351. See also Fausto at 452.

 In reviewing the reasoning in People's Gas, this court is not persuaded that the decision reached by the Seventh Circuit is undermined by subsequent Supreme Court doctrine or rendered inapplicable thereby to the instant case. In fact, unlike other circuits, the Seventh Circuit has not announced a need to change its application of the Abbott Laboratories "clear and convincing evidence" standard as a result of Block or Fausto. See, e.g., Commonwealth Edison Co. v. United States Nuclear Regulatory Comm'n, 830 F.2d 610, 613-14 (7th Cir. 1987); Owens v. Brock, 860 F.2d 1363, 1368 (6th Cir. 1988); Rhodes v. United States, 760 F.2d 1180, 1182-83 (11th Cir. 1985). There is no evidence that the Seventh Circuit in People's Gas applied the "clear and convincing" standard in the strict evidentiary sense criticized by the Supreme Court in Block and Fausto.

 Although Block and Fausto provide a framework for analyzing reviewability, the statutory schemes analyzed in those cases are distinguishable from the instant case. In Block, the Court determined that Congress had outlined a "complex and delicate administrative scheme" in the Agricultural Marketing Agreement Act which explicitly provided for dairy handler-initiated review of milk market orders issued by the Secretary of Agriculture but foreclosed such review to consumers. In Fausto, the Court similarly determined that the "comprehensive nature of the CSRA [Civil Service Reform Act], the attention that it gives throughout to the rights of nonpreference excepted service employees, and the fact that it does not include them in provisions for administrative and judicial review" meant that Congress intended to preclude judicial review for those individuals. By contrast, the Postal Service Reorganization Act and related regulations are silent on the issue of judicial review of procurement decisions by any party.

 The Postal Service argues that, under this "new" standard, review is precluded because the act expressly provides for judicial review of agency actions such as rate determinations or employment discrimination, while omitting a provision for review of procurement decisions. However, one of the cardinal principles in analyzing reviewability of agency action remains that "the mere fact that some acts are made reviewable should not suffice to support an implication of exclusion as to others." Commonwealth Edison at 613-14 (citing Abbot Lab. at 141).

 Additionally, the arguments made by the Postal Service regarding whether 39 U.S.C. § 410(a), which exempts the Postal Service from the Administrative Procedure Act, precludes review are not sufficiently persuasive. The Seventh Circuit in People's Gas determined that these exemptions "do not manifest a congressional intent to foreclose all judicial review of alleged violations by the Postal Service's procurement regulations." 658 F.2d at 1191. The concurring opinion of three justices in Air Courier Conference of America v. American Postal Workers Union, AFL-CIO, 498 U.S. 517, 531, 112 L. Ed. 2d 1125, 111 S. Ct. 913 (1991) does not alter this analysis. In that case, the American Postal Workers Union et al. challenged an international remailing regulation of the Postal Service pursuant to the judicial review provisions of the APA. The majority determined that the issue of whether 39 U.S.C. § 410(a) exempts the Postal Service from judicial review under the APA had been waived. The challenge was dismissed because the court held that the union did not have standing. The concurring justices, on the other hand, would have relied solely on the exemption from the APA to dismiss the case. However, unlike the plaintiffs in Air Courier, the plaintiff in the instant case has not explicitly invoked the APA as the basis ...


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