Brief for Amicus Curiae J. Gregory Sidak in Support of Petitioner

The PRC is unusual among American regulatory commissions in that it regulates only one firm. Perhaps that artifact explains why, in the 47 years since the Postal Reorganization Act of 1970 (updated by the Postal Accountability and Enhancement Act of 2006 (PAEA)), neither the PRC nor its predecessor has managed to persuade the Postal Service to produce even minimally transparent or comprehensible cost attribution. As a loosely regulated state-owned enterprise, the Postal Service has both the incentive and the ability to sacrifice profit to expand its scale—particularly with respect to competitive products. Its custom accounting methods, which both violate the PAEA and inexplicably depart from industry practice, provide it ample opportunity to underprice its competitive products.

The PAEA is clear: competitive products must cover their attributable costs, which are “the direct and indirect postal costs attributable to [a] product through reliably identified causal relationships.” The PRC’s interpretation of attributable costs in its Order flouts the statute by neglecting to attribute indirect costs, which are costs that two or more products cause jointly. Instead, the PRC requires that the Postal Service attribute only costs that each product individually causes. Moreover, the PRC’s rejection of the Shapley Value methodology is based on an incorrect understanding of that methodology’s purpose. The Shapley Value—and United Parcel Service (UPS) Proposal One, which yield similar results—comply with the PAEA by supplying a reliably identified causal relationship for assigning indirect attributable costs to the products that jointly cause them. Given these errors on the part of the PRC, the Court should grant the petitions for review.

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