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December 16, 1975

STATE OF MAINE, et al, Plaintiffs,

The opinion of the court was delivered by: HART

HART, Judge.

 The plaintiffs, seventeen States and Commonwealths of the Union suing in their own right and as parens patriae on behalf of their citizens, have moved for a preliminary injunction against the imposition by the defendant United States Postal Service of a temporary increase in first-class postal rates pursuant to 39 U.S.C. § 3641 (1970). Plaintiffs allege that the proposed temporary rates impose an undue burden upon first-class mail users, resulting in discrimination and cross-subsidization among classes of mail and maintain that this is illegal under standards established by the courts and by the Postal Reorganization Act, Pub. L. No. 91-375, 84 Stat. 719 (1970), codified at 39 U.S.C. § 101 et seq. (1970) (the "Act"). The proposed rate increases, unless enjoined, will commence December 28, 1975 and continue at least until June of 1976.


 Plaintiffs' case challenging temporary rates under 39 U.S.C. § 3641 (1970) arises in a different statutory context than review of permanent postal ratemaking. Permanent ratemaking is accomplished by a complex administrative process involving, first, the filing of a request by the Postal Service for rate increases with the independent Postal Rate Commission; second, hearings by the Commission resulting in its recommended decision; third, approval, rejection or modification of that decision by the Governors of the Postal Service; and fourth, exclusive judicial review of action by the Governors in the United States Courts of Appeals by any party to the hearings. 39 U.S.C. §§ 3621-22, 3624-25, 3628 (1970). Temporary rate increases, on the other hand, may be imposed unilaterally by the Postal Service if within 90 days after the filing of a request for permanent rate increases the Commission has not transmitted its recommended decision to the Governors. Such rates may remain in effect no longer than 30 days after transmittal by the Commission of its recommended decision. Temporary rate increases are limited to the lesser of one-third of the preexisting permanent rates or the increases sought in the permanent rate request. Subject to these limitations the Postal Service may set such temporary rates as "it considers appropriate to carry out the provisions of this title." 39 U.S.C. § 3641 (1970).

 Jurisdiction in this Court to review the legality of temporary ratesetting is clearly established. Direct Mail/Marketing Ass'n v. United States Postal Service, 163 U.S.App. D.C. 157, 501 F.2d 717 (1974); Direct Mail Advertising Ass'n v. United States Postal Service, 147 U.S.App.D.C. 394, 458 F.2d 813 (1972).


 On September 18, 1975 the Postal Service filed with the Commission a request for a recommended decision on permanent increases in postal rates. Request for Recommended Decision, Docket R76-1, United States Postal Rate Commission (Sep. 18, 1975) [hereinafter cited as Request ]. 40 Fed. Reg. 44044 (Sep. 24, 1975). Estimating its revenue shortfall at $2.6 billion for fiscal year 1976, the Service requested substantial increases in virtually all classes of mail. In the case of first-class mail the Service proposed that rates be increased from ten cents to thirteen cents for the first ounce, from nine cents to eleven cents for each succeeding ounce, and from seven cents to ten cents for post cards.

 Proceedings upon the Service's request before the Commission, in which at least eight of the plaintiff States intervened, are scheduled to extend at least into May of 1976.

 On October 9, 1975 the Postal Service announced that on December 28, 1975 it would impose as temporary rates effective December 28, 1975 rates nearly identical to those requested as permanent rates. 40 Fed. Reg. 47589 (1975). In the case of first-class mail, only the temporary rate for post cards, set at nine cents, *fn1" differed from the requested permanent rates.


 In considering this motion for a preliminary injunction the Court must carefully weigh and evaluate four factors: 1) whether the plaintiffs have shown a substantial likelihood of success on the merits of their case; 2) whether plaintiffs have shown that they would be irreparably harmed if the injunction were denied; 3) the extent of inconvenience to the defendant if the injunction were granted; and 4) the public interest in the injunction's grant or denial. A Quaker Action Group v. Hickel, 137 U.S.App. D.C. 176, 181, 421 F.2d 1111, 1116 (1969).

 In weighing the second, third and fourth factors, all are difficult to weigh and balance. Injury to the plaintiffs if the injunction is denied follows convincingly from the fact that the resulting increases in plaintiffs' first-class postage costs, which increases they allege will exceed $300 million a year, are by statute not refundable even if upon review after permanent ratemaking the increases are found to be illegal. 39 U.S.C. § 3681 (1970). The public injury in denial of the injunction is on the one hand not different in kind from that of plaintiffs, although on the whole greater in degree. On the other hand defendant's operations, wherein also lies the public interest, face injury from its mounting deficits, estimated by defendant at $130 million monthly, if the injunction is granted. Plaintiffs suggest that such injury could be mitigated in various ways, including the imposition of equitable temporary rates or the sale of bonds. The former would be of limited effectiveness and the latter of dubious value.

 We move then to the first consideration listed above, whether the plaintiffs have shown a substantial likelihood of success on the merits.


 Plaintiffs allege that the temporary rate increases set by the defendant are illegal under 39 U.S.C. § 101(d) (1970), which reads:

"Postal rates shall be established to apportion the costs of all postal operations to all users of the mail on a fair and equitable basis."

 and under 39 U.S.C. § 403(c) (1970) which reads:

"In providing services and in establishing classifications, rates, and fees under this title, the Postal Service shall not, except as specifically authorized in this title, make any undue or unreasonable discrimination among users of the mails, nor shall it grant any undue or unreasonable preferences to any such users." (Emphasis supplied.)

 Section 403(c) has been found to apply to the setting of temporary rates, Direct Mail/Marketing Ass'n, supra, 163 U.S.App. D.C. at 158, 501 F.2d at 718, and therefore § 101(d), an even more general statement of rate policy than § 403(c), must also apply.

 A question arises concerning the application to temporary ratesetting of 39 U.S.C. § 3622(b) (1970), the general statement of rate policy with regard to permanent ratemaking by the Commission, which reads:

"Upon receiving a request, the Commission shall make a recommended decision on the request for changes in rates or fees in each class of mail or type of service in accordance with the policies of this title and the following factors:
(1) the establishment and maintenance of a fair and equitable schedule;
(2) the value of the mail service actually provided each class or type of mail service to both the sender and the recipient, including but not limited to the collection, mode ...

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