KAREN LeCRAFT HENDERSON, Circuit Judge:
Section 201(d) of the Postal Accountability and Enhancement Act of 2006 (PAEA or Act), Pub.L. No. 109-435, 120 Stat. 3198, generally limits annual increases in the postal rates for market dominant products to an amount equal to the change in the Consumer Price Index for All Urban Consumers (CPI-U). The United States Postal Service (Postal Service) filed a request with the Postal Regulatory Commission (Commission) to exceed the annual cap pursuant to section 201(d)(1)(E), which authorizes the Commission to "establish procedures whereby rates may be adjusted [above the annual CPI-U cap] on an expedited basis due to either extraordinary or exceptional circumstances," citing as the exigent circumstance the recent recession and declines in mail volume resulting therefrom. 39 U.S.C. § 3622(d)(1)(E). The Postal Commission denied the exigent rate request on the ground that the Postal Service failed to demonstrate, as required under the statutory language, that the proposed rate adjustments are "due to" the cited "extraordinary or exceptional circumstances." Although the Commission correctly construed "due to" to require a causal relationship between the exigent circumstances' effects on the Postal Service and the amount of the above-cap rate increases, it incorrectly concluded the plain meaning of that phrase requires the proposed rate adjustments to be "tailored to offset the specific effects of the claimed exigency." Exigent Request Denial at 65. We therefore remand to the Commission so that it can exercise its discretion to construe the ambiguous language of section 201, explaining the extent of causation the Commission requires the Postal Service to demonstrate between the exigent circumstance's impact on Postal Service finances and the proposed rate increase.
PAEA, enacted on December 20, 2006, directed that the Commission establish by regulation within eighteen months (and revise thereafter as necessary) "a modern system for regulating rates and classes for market-dominant products."
Id. § 3622(d)(1)(E). Per the statute's directive, the Commission promulgated regulations establishing procedures for regulating market dominant rates, 39 C.F.R. pt. 3010, including the exception for above-CPI-U rate adjustments in extraordinary or exceptional circumstances, id. subpt. E (§§ 3010.60-.66).
The Postal Service submitted its first above-cap "exigent" request under the new regulatory system on July 6, 2010. The request proposed "exigent prices representing an aggregate increase of approximately 5.6 percent . . . for implementation of new prices on January 2, 2011." Exigent Request of the U.S. Postal Service (Exigent Request), Docket No. R2010-4, at 1 (July 6, 2010). As the supporting exigent circumstance justifying the increases, the Postal Service cited "the dramatic, rapid and unprecedented decline in mail volume" in the short time since PAEA had been enacted. Id. According to the Postal Service, "mail volume stalled" in FY 2007, "then plunged" in FY 2008 and FY 2009, "falling a total of nearly 17 percent between FY 2006 and FY 2009." Id. The Service acknowledged that volume from "the long-term impact of electronic diversion ha[d] been widely acknowledged over the last 10 years" but asserted that "the depth and severity of the current recession—and its impact on mail volume—were unforeseeable," particularly given that "[h]istorically, mail volume has generally increased from year to year, and even in the comparatively few instances of decreases, they were of a much smaller order of magnitude." Id. at 6.
In a decision dated September 30, 2010, the Commission denied the exigent request, concluding that "the requested increases are not justified as lawful exigent rate adjustments." Order denying Request for Exigent Rate Adjustments, Order No. 547, Docket No. R2010-4, at 4 (Sept. 30, 2010) (Exigent Request Denial). The Commission agreed with the Postal Service that "the recent recession, and the decline in mail volume experienced during the recession," qualified as an "extraordinary or exceptional circumstance" under section 201(d)(1)(E). Id. at 3. The Commission concluded, however, that the rate request, as submitted, did not otherwise qualify for section 201(d)(1)(E)'s narrow exception to the statutory rate cap. The Commission explained that the "determination that `extraordinary or exceptional circumstances' have occurred is not by itself sufficient to authorize the collection of rates in excess of otherwise applicable rate caps"—two additional statutory requirements must be satisfied: (1) "the proposed adjustment must be `due to' the extraordinary or exceptional circumstances" and (2) the adjustment "must meet a `reasonable and equitable and necessary' test." Id. at 53. "Together," the Commission stated, "the three requirements (the existence of extraordinary or exceptional circumstances; the requirement that the adjustment
Because the Congress expressly delegated to the Commission responsibility to implement PAEA section 201, we review its interpretation under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). See NetCoalition v. SEC, 615 F.3d 525, 533 (D.C.Cir.2010); cf. U.S. Postal Serv. v. Postal Regulatory Comm'n, 599 F.3d 705, 710 (D.C.Cir.2010) (court must defer to and uphold as reasonable Commission's interpretation of PAEA § 404(e)(3) because "that provision was clearly delegated to the Commission to implement and thereby to interpret"). Under Chevron step 1, if the "Congress has directly spoken to the precise question at issue . . ., that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778. Under Chevron step 2, "if 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, 104 S.Ct. 2778. In reviewing the Commission's Exigent Request Denial, we end our first inquiry at step 1 because the Commission based its interpretation on the "plain meaning" of the statutory language. Exigent Request Denial at 27; see Peter Pan Bus Lines, Inc. v. Fed. Motor Carrier Safety Admin., 471 F.3d 1350, 1354 (D.C.Cir.2006) ("Chevron step 2 deference
First, we agree with the Commission that the plain meaning of "due to" mandates a causal relationship between the amount of a requested adjustment and the exigent circumstances' impact on the Postal Service. The plain meaning of "due to" is "because of." See Webster's Third New Int'l Dictionary 699 (1993); see also Exigent Request Denial at 54 ("According to Webster's Third New International Dictionary (G. & C. Merriam Co. 1966) the expression `due to' means `because of.' Roget's 21st Century Thesaurus (3rd ed. 2010) provides the following synonyms for the expression `due to': `by reason of; `by cause of; `by virtue of; and `as a result of.' Each meaning and synonym expresses a causal relationship and leads the Commission to conclude that the Postal Service's proposed adjustment must be causally related to the alleged extraordinary or exceptional circumstance."). Thus, under the plain meaning of the statutory language, a rate may be "adjusted on an expedited basis" only because of "extraordinary or exceptional circumstances."
The Postal Service acknowledges that the exigent adjustment must be triggered by the threshold presence of "extraordinary or exceptional circumstances." See Exigent Request at 6 ("The unprecedented drop in mail volume constitutes the `extraordinary or exceptional circumstances' that trigger the need for an exigent increase."). It nonetheless disagrees with the Commission's interpretation that the amount of the adjustment is determined by the amount of the revenue lost due to the exigent circumstance—at least to the extent the Commission imposed a "strict `nexus' or offset test." The Commission's interpretation, the Postal Service maintains, is undercut by the placement of the phrase "due to" "in an inapposite statutory clause" rather than in the following clause which sets out the "statutory standard governing the merits of an exigent rate request," Pet'r's Br. 22-24, namely, that the adjustment be "`reasonable and equitable and necessary to enable the Postal Service, under the best practices of honest, efficient, and economical management, to maintain and continue the development of postal services of the kind and quality adapted to the needs of the United States," 39 U.S.C. § 3622(d)(1)(E). See Pet'r's Br. 26-27. The prepositional phrase, however, appears exactly where it belongs—up-front, alongside the directive that the Commission "establish procedures" for making an adjustment—which adjustment must therefore be "due to" the exigent circumstance.
Having concluded that the plain meaning of section 201 requires a causal relationship between the exigent circumstances and the proposed rate adjustments, we next consider how close the relationship must be, that is, how much of the proposed adjustment must be due to the exigent circumstance. The Postal Service asserts the Commission incorrectly imposed a "strict `nexus' or offset test," requiring that the proposed adjustments mirror the amount of revenue the Postal Service can demonstrate was lost solely "due to" the recession and its effect on mail volume, dollar-for-dollar. Pet'r's Br. 3-5. Indeed, the Commission seems to have required a very close match, expecting the Postal Service to "show that its proposed rate adjustments are tailored to offset the specific effects of the claimed
Kimber v. Thiokol Corp., 196 F.3d 1092, 1100 (10th Cir.1999) (quoting Adams v. Director, OWCP, 886 F.2d 818, 821 (6th Cir.1989)).
For the foregoing reasons, we deny the Postal Service's petition in part, upholding the Commission's Chevron step 1 interpretation of the plain meaning of "due to" in PAEA section 201(d) as requiring a causal connection between the exigent circumstances and the proposed rate adjustments. We also grant the petition in part, rejecting the Commission's Chevron step 1 interpretation of "due to" as requiring that the Postal Service match the amount of the proposed adjustments precisely to the amount of revenue lost as a result of the exigent circumstances. Accordingly, we remand to the Commission to address the latter issue at Chevron step 2.