 United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued January 13, 2020                Decided April 14, 2020

                         No. 19-1026

               UNITED PARCEL SERVICE, INC.,
                       PETITIONER

                              v.

             POSTAL REGULATORY COMMISSION,
                      RESPONDENT

            AMAZON.COM SERVICES, INC., ET AL.,
                     INTERVENORS


             On Petition for Review of an Order
            of the Postal Regulatory Commission


     Kathleen M. Sullivan argued the cause for petitioner. With
her on the briefs was Steig D. Olson.

    Michael Shih, Attorney, U.S. Department of Justice,
argued the cause for respondent. With him on the brief were
Michael S. Raab, Attorney, David A. Trissell, General Counsel,
Postal Regulatory Commission, Anne J. Siarnacki, Deputy
General Counsel, and Reese T. Boone, Attorney.

    Eric P. Koetting and Morgan E. Rehrig, Attorneys, U.S.
Postal Service, Michael F. Scanlon, John Longstreth, and
James Pierce Myers were on the brief for intervenors
                                2
Amazon.com Services, et al. in support of the Postal
Regulatory Commission.

   Before: HENDERSON and MILLETT, Circuit Judges, and
EDWARDS, Senior Circuit Judge.

   Opinion for the Court filed by Senior Circuit Judge
EDWARDS.

     EDWARDS, Senior Circuit Judge: This case involves a
petition for review filed by United Parcel Service, Inc.
(“UPS”), challenging the Postal Regulatory Commission’s
(“Commission”) Order Adopting Final Rules Relating to the
Institutional Cost Contribution Requirement for Competitive
Products, No. 4963, Dkt. No. RM2017-1 (P.R.C. Jan. 3, 2019)
(“Order”), reprinted in Joint Appendix (“J.A.”) 515-712. The
disputed Order modifies Commission regulations that are
meant to “ensure that all [of the Postal Service’s] competitive
products collectively cover what the Commission determines
to be an appropriate share of the institutional costs of the Postal
Service.” 39 U.S.C. § 3633(a)(3). In making this “appropriate
share” determination under § 3633(a)(3), the Commission is
obligated to “consider,” among other things, “the degree to
which any costs are uniquely or disproportionately associated
with any competitive products.” Id. § 3633(b). However, the
Commission concluded that “there are no costs uniquely or
disproportionately associated with competitive products that
are not already attributed to those products under the
Commission’s current cost attribution methodology” under
§ 3633(a)(2). Order at 28, J.A. 547.

     The problem is that § 3633(a)(2) only requires the
Commission to “ensure that each competitive product covers
its costs attributable.” The term costs attributable is narrowly
defined as “the direct and indirect postal costs attributable to [a
                               3
particular competitive] product through reliably identified
causal relationships.” 39 U.S.C. § 3631(b). However, it is not
at all clear that “uniquely or disproportionately associated”
costs described under § 3633(b) include only those costs that
are attributable “through reliably identified causal
relationships.” And § 3633(b) makes it clear that “the
Commission shall consider . . . the degree to which any costs
are uniquely or disproportionately associated with any
competitive products.” Id. § 3633(b) (emphasis added). The
Commission’s Order fails to explain why these seemingly
distinct statutory phrases cover the same costs, and further
elides the requirements of § 3633(a)(3) and (b) by suggesting
that, to the extent these statutory phrases overlap, the
Commission need not consider costs under § 3633(b) if it
already accounted for them under § 3633(a)(2).

     UPS argues that the Commission’s position is contrary to
law because “the Order fails to consider . . . costs ‘uniquely or
disproportionately associated with any competitive products,’
as the Act requires in section 3633(b).” Br. for Petitioner at 3.
UPS also contends that the Commission erred in simply
assuming, without adequate explanation, that “there are no
institutional costs uniquely or disproportionately associated
with competitive products.” Id. We agree.

     Two aspects of the Commission’s Order require a remand.
First, the Commission has not adequately explained how the
statutory phrases “direct and indirect postal costs attributable
to [a particular competitive] product through reliably identified
causal relationships” and “costs . . . uniquely or
disproportionately associated with any competitive products”
can coincide. It is far from clear that these phrases have the
same meaning. And the Commission has not demonstrated that,
although they have distinct meanings, the phrases nonetheless
coincide in application. Second, in focusing on costs attributed
                               4
to competitive products under § 3633(a)(2), the Commission
failed to discharge its responsibility under § 3633(b) to
“consider . . . the degree to which any costs are uniquely or
disproportionately associated with any competitive products.”
39 U.S.C. § 3633(b) (emphasis added). The Commission must
consider any costs made relevant by § 3633(b). It does not
matter whether the Commission has arguably considered such
costs in implementing its responsibilities under § 3633(a)(2).
These two points are amplified in the opinion below.

     The bottom line is that the Commission’s Order is arbitrary
and capricious because it is “largely incomprehensible” with
respect to the matters in issue. U.S. Postal Serv. v. PRC, 785
F.3d 740, 753 (D.C. Cir. 2015). Therefore, we are constrained
to remand the case for further consideration. On remand, the
Commission must adhere to the commands of the statute and
address the costs specified in § 3633(b) in determining the
“appropriate share” under § 3633(a)(3). Following
reconsideration of this case, any Commission Order must be
coherent and transparent, and it must satisfy the requirements
of reasoned and reasonable decision-making. Id. at 744, 753.
The present Order fails to meet these standards “because it fails
to articulate a comprehensible standard,” id. at 753, regarding
the meaning and application of § 3633(a)(3) and (b).

                       I. BACKGROUND

   A. Statutory Background

     The Postal Service offers both “market dominant” and
“competitive” products. Market-dominant products, like first-
class mail, are “those over which the ‘Postal Service exercises
sufficient market power that it can effectively’ raise prices or
decrease quality ‘without risk of losing a significant level of
business to other firms offering similar products.’” UPS v.
                               5
PRC, 890 F.3d 1053, 1055 (D.C. Cir. 2018) (quoting 39 U.S.C.
§ 3642(b)(1)); see also 39 U.S.C. § 3621 (listing market-
dominant products). Competitive products, on the other hand,
like priority mail or parcel post, are “products over which the
Postal Service faces meaningful market competition” from
companies like UPS. UPS v. PRC, 890 F.3d at 1056 (internal
quotation marks and citation omitted); see also 39 U.S.C.
§ 3631 (listing competitive products).

     In 2006, Congress enacted the Postal Accountability and
Enhancement Act, Pub. L. No. 109-435, 120 Stat. 3198 (2006)
(“Accountability Act”), to ensure (among other things) that the
Postal Service offers its competitive products on fair terms. See
S. REP. NO. 108-318, at 14-16 (2004). To that end, the
Accountability Act requires the Commission to promulgate
regulations that ensure that the Postal Service is not “using
revenues from market-dominant products subject to its
monopoly power to defray costs competitive products would
otherwise have to be priced to cover.” UPS v. PRC, 890 F.3d
at 1055.

     Specifically, § 3633(a) requires the Commission to issue
three sets of regulations:

    (a) In general.—The Postal Regulatory Commission
    shall, within 18 months after the date of enactment of
    this section, promulgate (and may from time to time
    thereafter revise) regulations to—

         (1) prohibit the subsidization of competitive
             products by market-dominant products;

         (2) ensure that each competitive product covers
             its costs attributable; and
                                6
         (3) ensure that all competitive products
             collectively cover what the Commission
             determines to be an appropriate share of the
             institutional costs of the Postal Service.

39 U.S.C. § 3633(a)(1)-(3). As may be seen, the foregoing
provisions refer to “costs attributable” and “institutional costs.”
These terms are important in our consideration of the issues
presented in this case.

      As explained in the introduction to this opinion, the
Accountability Act defines the term “costs attributable” as “the
direct and indirect postal costs attributable to [a particular
competitive] product through reliably identified causal
relationships.” Id. § 3631(b). The Commission, in turn,
interprets the term “institutional costs” to mean “residual costs”
– that is, the Postal Service’s total costs minus its costs
attributable under § 3633(a)(2). See UPS v. PRC, 890 F.3d at
1055-56, 1061-63 (explaining the relationship between
“institutional costs” and “costs attributable”).

     The Accountability Act calls for the Commission to
periodically review its “appropriate share” determination under
§ 3633(a)(3). The statute also specifies that the Commission
“shall consider” the following matters when it conducts that
review:

    (b) Review of minimum contribution.—Five years
    after the date of enactment of this section, and every
    5 years thereafter, the Postal Regulatory Commission
    shall conduct a review to determine whether the
    institutional costs contribution requirement under
    subsection (a)(3) should be retained in its current
    form, modified, or eliminated. In making its
    determination, the Commission shall consider all
                               7
    relevant circumstances, including the prevailing
    competitive conditions in the market, and the degree
    to which any costs are uniquely or disproportionately
    associated with any competitive products.

39 U.S.C § 3633(b).

     In effect, then, the Accountability Act requires the
Commission to establish a multi-part “price floor” for its
competitive products. See UPS v. PRC, 890 F.3d at 1055-56.
First, the Commission must issue regulations to prevent
market-dominant products from subsidizing competitive
products. Second, the price of “each competitive product” must
be set high enough to cover the “direct and indirect postal costs
attributable to such product through reliably identified causal
relationships.” Third, the Commission must also ensure that
“all competitive products collectively” cover what the
Commission determines to be an “appropriate share” of the
Postal Service’s institutional (i.e., unattributed) costs. The
Commission, in determining what share is appropriate, “shall
consider,” among other things, “the degree to which any costs
are uniquely or disproportionately associated with any
competitive products.”

   B. The Commission’s             2016   Order     Addressing
      § 3633(a)(2)

    In 2016, the Commission issued an Order adopting a new
method for calculating costs attributable under § 3633(a)(2).
See Order Concerning United Parcel Service, Inc.’s Proposed
Changes to Postal Service Costing Methodologies (UPS
Proposals One, Two, and Three), No. 3506, Dkt. No. RM2016-
2 (P.R.C. Sept. 9, 2016) (updated Oct. 19, 2016) (“2016
Order”). UPS challenged this 2016 Order on various grounds.
In UPS v. PRC, 890 F.3d 1053 (D.C. Cir. 2018), we upheld the
                                8
Commission’s cost-attribution method as “reasonable and
reasonably explained.” Id. at 1069. Because the court’s 2018
decision thoroughly explains the Commission’s cost-
attribution method, the decision provides important context for
the questions at issue in this case.

    First, the court’s 2018 decision explains several concepts
that the Commission uses to sort out the Postal Service’s costs.
To start, the decision explains that “the Commission
distinguishes (albeit necessarily imperfectly) between ‘fixed
costs,’ . . . which remain constant regardless of overall product
volume, and ‘variable costs,’ . . . which vary with the Service’s
production levels.” Id. at 1056 (citing 2016 Order at 6).
Examples of fixed costs include executive salaries and product-
specific fixed costs like advertising. See id. In addition, the
decision explains that the Commission distinguishes between
variable costs that are “volume-variable” – i.e., which vary
directly with the marginal cost of the cheapest relevant unit and
the total number of units, id. at 1057 (citing 2016 Order at 36
n.56) – and variable costs that are not “volume-variable” in this
sense, which the Commission calls “inframarginal costs,” id. at
1058 (citing 2016 Order at 35). The concept of inframarginal
costs is not entirely intuitive. The basic idea is that, thanks to
economies of scale, marginal costs tend to decrease with
volume, and the sum of the differences between the marginal
cost of earlier, more expensive units and the marginal cost of
the last, cheapest unit is the inframarginal cost. See id. at 1057-
58; 2016 Order at 35-36.

    Second, the court’s 2018 decision holds that the
Commission’s decision to define “institutional costs” as
“residual costs” – that is, as any costs not attributed to
competitive products through reliably identified causal
relationships under § 3633(a)(2) – was based on a permissible
reading of the Accountability Act. UPS v. PRC, 890 F.3d at
                                9
1061-63. An important upshot of the Commission’s choice to
treat institutional costs as “residual” is that the composition of
the Postal Service’s institutional costs will (by definition)
depend on how attributed costs are calculated. For example, if
the Commission were to attribute to each competitive product
its product-specific fixed costs and its volume-variable costs –
which is what the Commission did until 2016 – then the Postal
Service’s institutional costs would include all its other fixed
costs and all of its inframarginal costs. See id. at 1056-58.

     Third, the court’s 2018 decision upholds the Commission’s
revised method for attributing costs under § 3633(a)(2). See id.
at 1066-69. In short, the Commission adopted a method that
enables it to attribute product-specific fixed costs, volume-
variable costs, and some (but not all) inframarginal costs to
each competitive product. See id. at 1060. The Commission is
able to tie a portion of the Postal Service’s inframarginal costs
to specific competitive products through “reliably identified
causal relationships” by calculating the “costs that would
disappear were the Postal Service to stop offering those
products for sale.” Id. at 1055. This “incremental cost” method
accounts for not only a “product’s share of volume-variable
costs, but also the inframarginal costs that would be removed
if the product were not to be provided.” Id. at 1059 (internal
quotation marks omitted) (quoting 2016 Order App’x A at 19).
In the Commission’s view, “because the portion of
inframarginal costs included within a product’s incremental
cost has a causal relationship with that product, the
Accountability Act requires the Postal Service to attribute it.”
Id. at 1059-60 (internal quotation marks omitted) (quoting
2016 Order at 55, 61). The court’s 2018 decision finds the
Commission’s position reasonable and reasonably explained.
Id. at 1069.
                               10
     Fourth, the court’s 2018 decision notes that the
Commission’s cautious cost-attribution method leaves some of
the Postal Service’s inframarginal costs unattributed. See id. at
1060 (“All other costs, including all remaining inframarginal
costs, remain classified as institutional.”). Indeed, the decision
concludes that the Commission’s caution was reasonable,
given the Accountability Act’s requirement that attributed
costs have “reliably identified causal relationships” to
competitive products. See id. at 1068. For example, the 2018
decision rejects the argument that the Commission’s approach
was arbitrary and capricious for assuming that competitive
products are responsible for only the lowest-cost units
associated with a given activity. The decision reasons that
“[a]ttributing more than this amount . . . necessitates
guesswork, and the Commission sensibly concluded that such
guesswork was inconsistent with its statutory obligation to base
attribution on only ‘reliably identified causal relationships.’”
Id. (quoting 39 U.S.C. § 3631(b)).

    It is clear, then, that the court’s 2018 decision in UPS v.
PRC upholding the Commission’s cost-attribution method
under § 3633(a)(2) leaves open important questions that
provide context for understanding and assessing the
Commission’s § 3633(a)(3) determination in this case. These
questions include: Are some of the Postal Service’s
institutional costs – and especially its unattributed
inframarginal costs – still related in some meaningful way to
competitive products, even if those costs cannot be attributed
under § 3633(a)(2)? And if so – if, for instance, some of those
institutional costs are “uniquely or disproportionately
associated with competitive products,” 39 U.S.C. § 3633(b) –
might they need to be accounted for when the Commission
issues regulations under another provision of the
Accountability Act?
                                11
    C. The Commission’s Disputed Order in this Case

    On January 3, 2019, the Commission issued the Order
modifying its “appropriate share” determination under
§ 3633(a)(3) that is the subject of the dispute in this case. In the
past, the Commission had determined that “all competitive
products collectively” must cover at least 5.5% of the Postal
Service’s institutional costs. See Order at 4-5, J.A. 523-24
(summarizing the Commission’s 2007 and 2012 orders). In the
2019 Order, however, the Commission decided that the
“appropriate share” of the Postal Service’s institutional costs to
be covered by “all competitive products collectively” should
be set using a dynamic formula. In short, the Commission’s
formula relies on two primary variables: the “Competitive
Contribution Margin” and the “Competitive Growth
Differential.” These variables are meant to represent the Postal
Service’s market power and market position. See id. at 19-28,
J.A. 538-47. The Commission intends to use the formula “to
annually update the appropriate share based on prevailing
competitive conditions in the market and other relevant
circumstances.” Id. at 19, J.A. 538.

    For our purposes, however, the details of the Commission’s
formula-based approach are not critical. Instead, our focus in
this case is on whether the Commission, in making its
determination, adequately discharged its obligation under
§ 3633(b) to “consider all relevant circumstances, including the
prevailing competitive conditions in the market, and the degree
to which any costs are uniquely or disproportionately
associated with any competitive products.” Therefore, this
background section is similarly focused on the Commission’s
§ 3633(b) analysis and in particular on the Commission’s
“consider[ation of] . . . the degree to which any costs are
uniquely or disproportionately associated with any competitive
products.”
                               12

     In a section of its Order titled “Connection to Section
3633(b) Criteria,” the Commission recited the factors that the
Accountability Act says it “shall consider,” and then explained
its position on costs “uniquely or disproportionately associated
with” competitive products:

    The Commission has repeatedly found that there are
    no costs uniquely or disproportionately associated
    with competitive products that are not already
    attributed to those products under the Commission’s
    current cost attribution methodology. As a result, the
    formula-based approach does not separately account
    for such costs.

Order at 28-29, J.A. 547-48 (citations omitted).

      The Commission’s conclusion draws on its analysis in
earlier notices in the same docket. See Notice of Proposed
Rulemaking to Evaluate the Institutional Cost Contribution
Requirement for Competitive Products, No. 4402, Dkt. No.
RM2017-1 (P.R.C. Feb. 8, 2018) (“Initial Notice”); Revised
Notice of Proposed Rulemaking, No. 4742, Dkt. No. RM2017-
1 (P.R.C. Aug. 7, 2018) (“Revised Notice”). In its Initial
Notice, for instance, the Commission offered an explanation of
its thinking:

        The Commission finds that there are no costs
    uniquely or disproportionately associated with
    competitive products that are not already attributed to
    competitive products. Under the Commission’s
    methodology, any cost that is uniquely or
    disproportionately associated with any competitive
    product is identified as an attributable cost because it
    exhibits a reliably identifiable causal relationship with
                              13
    a specific competitive product. With regard to costs
    that are disproportionately associated with
    competitive products, the Commission’s cost
    attribution methodology identifies relationships
    between costs and cost drivers, which include mail
    characteristics such as weight and shape (e.g., letters
    or parcels). . . . In this way, the costs attributed to
    products reflect any disproportionate association of
    those costs with any specific products (including any
    competitive products).

        Under the Commission’s methodology, the
    Commission also classifies any cost that is uniquely
    associated with any product (including any
    competitive product) as attributable to that product.
    These costs are often referred to as product-specific
    costs. For example, advertisements for a specific
    product and supplies for money orders are unique
    costs attributed to specific products under the
    Commission’s methodology.

         ....

         For the reasons discussed above, the Commission
    concludes that its costing methodology already
    accounts for the “the degree to which any costs are
    uniquely or disproportionately associated with any
    competitive products.” To the extent that any costs
    can be attributed to specific competitive products,
    they are already distributed under the Commission’s
    current costing methodology and are not included in
    the institutional costs of the Postal Service.

Initial Notice at 43-45, J.A. 147-49; see also Revised Notice at
52-53, J.A. 304-05 (summarizing this same point).
                                14

    Later, in response to comments from UPS and others, the
Commission provided a succinct summary of the position it
took in its Initial Notice. See Order at 138-162, J.A. 657-81.

    In [the Initial Notice], the Commission found that
    there are no costs uniquely or disproportionately
    associated with competitive products that are not
    already attributed to those products. This is because
    all costs that are uniquely or disproportionately
    associated with competitive products exhibit a
    reliably identified causal relationship with a specific
    competitive product or group of products and are
    therefore attributed. The Commission described
    “unique” costs as product-specific costs and
    determined that any cost that is uniquely associated
    with a competitive product is attributed to that product
    through a reliably identified causal relationship. . . . In
    addition, the Commission found that any cost
    disproportionately associated with a competitive
    product is attributed to that product through the cost
    methodology’s use of cost drivers. . . . In this way, the
    costs attributed products reflect any disproportionate
    association of those costs with specific products. As a
    result, the Commission determined that both types of
    costs are attributed to the competitive products that
    cause them.

Order at 138-39, J.A. 657-58 (citing Initial Notice at 43-44).

    Finally, in response to UPS’s comment suggesting that the
Commission’s analysis mistakenly conflates the “associated
with” standard and the “reliably identified causal relationships”
standard, the Commission concluded that “UPS overlooks key
terms in section 3633(b), as well as the context of the statutory
                               15
scheme as a whole.” Order at 143, J.A. 662. The Commission
emphasized the “degree of flexibility . . . inherent in the
appropriate share provisions of section 3633” and the lack of
any mechanical relationship between the Commission’s
consideration of the statutory factors and the Commission’s
ultimate determination. Id. at 144, J.A. 663. The Commission
continued:

         For the relevant factor at issue, “the degree to
    which any costs are uniquely or disproportionately
    associated with any competitive products,” UPS
    focuses on only a portion of the statutory language—
    “disproportionately associated.” However, in reading
    the relevant factor in its entirety, the use of the words
    “degree” and “any” plainly contemplate that there
    may be no uniquely or disproportionately associated
    competitive product costs. Congress does not require
    costs to be found; only for the Commission to
    “consider” whether “any” exist. Nothing in section
    3633(b) prevents the Commission from concluding as
    it has—that all costs uniquely or disproportionately
    associated with competitive products are, in fact,
    captured by the costing methodology it currently
    employs pursuant to section 3633(a)(2).

Order at 144, J.A. 663.

     In short, the Commission’s position appears to be that the
statutory phrase “costs . . . uniquely or disproportionately
associated with any competitive products” is no broader than
the phrase “direct and indirect postal costs attributable to [a
particular competitive] product through reliably identified
causal relationships.” And the Commission appears to base that
conclusion on the assumption that costs are uniquely or
                               16
disproportionately associated with competitive products only if
competitive products can be reliably said to cause such costs.

                         II. ANALYSIS

   A. Standard of Review

    “‘Because the Congress expressly delegated to the
Commission responsibility to implement [the Accountability
Act], we review its interpretation’ of that statute under the
standards enunciated in Chevron and its progeny.” U.S. Postal
Serv. v. PRC, 785 F.3d 740, 750 (D.C. Cir. 2015) (quoting U.S.
Postal Serv. v. PRC, 640 F.3d 1263, 1266 (D.C. Cir. 2011)).

    Under Chevron’s First Step, if “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.” If the statute is ambiguous,
    Chevron’s Second Step then requires us to consider
    whether the Commission has acted pursuant to
    delegated authority and, if so, whether its
    interpretation of the statute is “permissible.”

U.S. Postal Serv. v. PRC, 785 F.3d at 750 (quoting Chevron
U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842-
43 (1984)). “Even if the statute is ambiguous and does not
foreclose the Commission’s interpretation, however, the
Commission’s exercise of its authority must be ‘reasonable and
reasonably explained’ in order to survive arbitrary and
capricious review under the Administrative Procedure Act.
Mfrs. Ry. Co. v. Surface Transp. Bd., 676 F.3d 1094, 1096
(D.C. Cir. 2012).” Id.; see also 39 U.S.C. § 3663 (incorporating
APA review under 5 U.S.C. § 706).
                               17
     In deciding whether the Commission’s Order is arbitrary
and capricious, we are “reluctan[t] to interfere with [the
Commission’s] reasoned judgments about technical questions
within its area of expertise.” UPS v. PRC, 890 F.3d 1053, 1066
(D.C. Cir. 2018) (internal quotation marks omitted) (quoting
All. of Nonprofit Mailers v. PRC, 790 F.3d 186, 197 (D.C. Cir.
2015)). At the same time, the Commission must adequately
“consider” all the factors that the Accountability Act makes
relevant, see Lindeen v. SEC, 825 F.3d 646, 657 (D.C. Cir.
2016), and the Commission’s decision-making must be
comprehensible, see U.S. Postal Serv. v. PRC, 785 F.3d 740,
753 (D.C. Cir. 2015); Glob. Tel*Link v. FCC, 866 F.3d 397,
413 (D.C. Cir. 2017).

   B. The Commission’s Disputed Interpretation and
      Application of § 3633(a)(3)

    The dispositive question before the court in this case is
whether the Commission, in reviewing its appropriate share
determination, adequately discharged its statutory obligation to
“consider” the “degree to which any costs are uniquely or
disproportionately associated with any competitive products.”
We hold that the Commission failed to do this and, therefore,
we are constrained to remand the case.

     We do not mean to render any decision on what the
appropriate share determination under § 3633(a)(3) should be.
That is for the Commission to determine in the first instance.
At this point, however, the Commission’s interpretation and
application of § 3633(a)(3) and (b) are incomprehensible and,
thus, unreasonable. No deference is due to the Commission’s
current position because the disputed Order fails to apply the
relevant terms of the statute, and it offers no reasoned basis for
this failure.
                              18
     As detailed above, the Commission’s position appears to
be that the term “costs . . . uniquely or disproportionately
associated with any competitive products” in § 3633(b) is no
broader than – and indeed may coincide with – the term “direct
and indirect postal costs attributable to [a particular
competitive] product through reliably identified causal
relationships,” which defines “costs attributable” in
§ 3633(a)(2). To reach that conclusion, the Commission
assumed that “all costs that are uniquely or disproportionately
associated with competitive products exhibit a reliably
identified causal relationship with a specific competitive
product or group of products and are therefore attributed.”
Order at 138, J.A. 657. The Commission thus reasons that none
of the Postal Service’s institutional costs – including,
apparently, its “remaining inframarginal costs,” UPS v. PRC,
890 F.3d at 1060 – are uniquely or disproportionately
associated with its competitive products in the sense intended
in § 3633(b). This leads the Commission to conclude that there
are no costs for it to “consider” under § 3633(b). See, e.g.,
Order at 28-29, J.A. 547-48. The Commission’s analysis defies
reasoned decision-making.

     As noted at the outset of this opinion, there are two
significant problems with the Commission’s position. First, the
Commission has not adequately explained how the statutory
phrases “direct and indirect postal costs attributable to [a
particular competitive] product through reliably identified
causal relationships,” 39 U.S.C. § 3631(b), and “costs . . .
uniquely or disproportionately associated with any competitive
products,” id. § 3633(b), can effectively coincide. Second, in
focusing narrowly on costs attributed to competitive products
under § 3633(a)(2), the Commission failed to discharge its
responsibility under § 3633(b) to “consider . . . the degree to
which any costs are uniquely or disproportionately associated
                                19
with any competitive products.” Id. § 3633(b) (emphasis
added). We elaborate on these points in turn.

    1. The Commission’s Interpretation of Costs “Uniquely
       or Disproportionately Associated with Competitive
       Products” Under § 3633(b)

      The Commission’s current analysis of the relationship
between costs “attributed through reliably identified causal
relationships” and costs “uniquely or disproportionately
associated with” is incomprehensible. In the passages from the
Commission’s Order reprinted above, the Commission
assumes that the Postal Service’s costs can be “uniquely or
disproportionately associated with” competitive products only
if there is a reliably identified causal relationship between those
costs and competitive products. See Initial Notice at 43-44, J.A.
147-48; Order at 138-39, 657-58. In its brief to this court and
at oral argument, however, the Commission’s counsel suggests
that the Commission gave the phrase “uniquely or
disproportionately associated with” a distinct interpretation,
and only then proceeded to conclude that there are no costs in
that independent category that are not already attributed to
competitive products under § 3633(a)(2). See Br. for
Respondent at 29-32; Tr. of Oral Argument at 54-55. It is an
understatement to say that one is hard-pressed to understand
what the Commission means to say regarding the meaning of
§ 3633(b).

     At this point, we cannot credit either one of the foregoing
interpretations of the Accountability Act. To start, the
Commission cannot simply assume that the “uniquely or
disproportionately associated with” standard is subsumed by
the “reliably identified causal relationships” standard. That
would impermissibly conflate the language of § 3633(a)(2) –
which incorporates the definition of “costs attributed” from
                                  20
§ 3631(b) – with the evidently distinct language of § 3633(b).
See BP Energy Co. v. FERC, 828 F.3d 959, 968 (D.C. Cir.
2016) (“Even under the most deferential standard, an agency
cannot read statutory provisions out of existence but must
interpret statutes ‘so that effect is given to all its provisions . . .
[and] no part will be inoperative or superfluous, void or
insignificant.’” (alteration in original) (quoting Corley v.
United States, 556 U.S. 303, 314 (2009))). Instead, the
Commission must explain why these two statutory phrases
have the same practical reach despite the use of different
language.

     As noted above, the Commission attempted to offer such
an explanation in its brief to this court. The Commission
belatedly argues that it did not “equate[]” the two statutory
phrases “as an interpretative matter.” Br. for Respondent at 34.
Rather, the Commission now contends that it gave independent
meaning to the statutory terms “uniquely . . . associated with”
and “disproportionately associated with,” using the ordinary
tools of statutory interpretation. See id. at 29-34; Tr. of Oral
Argument at 54-55. Then, according to counsel, the
Commission concluded that “all ‘uniquely associated’ costs
and all ‘disproportionately associated’ costs satisfy the
Commission’s independent definition of the ‘costs attributable’
to a competitive product.” Br. for Respondent at 31. This line
of argument is hard to discern in what the Commission actually
said, and it is somewhat hard to fathom on its own terms. But
if that is the Commission's view, it must spell it out.

    In any event, as things stand now, “we simply cannot
comprehend the [Commission’s] reasoning” about the meaning
and application of § 3633(b). Glob. Tel*Link v. FCC, 866 F.3d
397, 413 (D.C. Cir. 2017). Therefore, the Commission’s Order
is neither reasoned nor reasonable. “At its core, the
Commission’s Order is arbitrary and capricious because it fails
                               21
to articulate a comprehensible standard . . . .” U.S. Postal Serv.
v. PRC, 785 F.3d 740, 753 (D.C. Cir. 2015). “[W]e owe no
deference to an agency determination that is ‘largely
incomprehensible.’” Id. (quoting Coburn v. McHugh, 679 F.3d
924, 926 (D.C. Cir. 2012)). The bottom line is that the
Commission has not adequately explained why the statutory
phrases at issue here have similar meanings, nor has it
demonstrated that these statutory categories, even if distinct in
meaning, nevertheless coincide in application. Therefore, the
Commission’s application of § 3633(a)(3) and (b) was
arbitrary and capricious and must be remanded.

    2. The Commission’s Consideration of “Any” Such Costs
       Under § 3633(b)

      A second problem with the disputed Order is that, in
focusing its analysis on costs attributed to competitive products
under 39 U.S.C. § 3633(a)(2), the Commission failed to
“consider . . . the degree to which any costs are uniquely or
disproportionately associated with any competitive products”
as required by 39 U.S.C. § 3633(b). As the plain meaning of
that provision suggests, the Accountability Act clearly requires
the Commission to consider any costs uniquely or
disproportionately associated with competitive products at the
time it reviews its appropriate share determination under
§ 3633(a)(3). This includes, but is not limited to, any costs
fitting that description that the Commission may have already
considered when it promulgated regulations under § 3633(a)(1)
or § 3633(a)(2).

     The record in this case indicates that the Commission did
not follow this statutory mandate. Instead, the Commission,
relying on its inadequately explained interpretation of the
Accountability Act, focused narrowly on the costs it had
considered – and attributed – in promulgating regulations under
                               22
§ 3633(a)(2). At oral argument, counsel for the Commission
suggested that by piecing together the Commission’s responses
to various comments, we could find that the Commission did
indeed consider a broader class of costs. Tr. of Oral Argument
at 75; see also Br. for Respondent at 35-38. Even assuming that
is right, however, the Commission’s Order does not make it
clear or comprehensible, and we cannot fill in the blanks in the
Commission’s reasoning. The simple point here is that the
Commission erred in concluding that it had discharged its
responsibility to consider any costs uniquely or
disproportionately associated with competitive products by
virtue of the fact that it had already considered these costs when
setting the price floor under § 3633(a)(2).

     An agency Order that is at odds with the requirements of
the applicable statute cannot survive judicial review. See, e.g.,
Michigan v. EPA, 135 S. Ct. 2699, 2706 (2015). “An agency’s
failure to consider and address during rulemaking ‘an
important aspect of the problem’ renders its decision arbitrary
and capricious. A ‘statutorily mandated factor, by definition, is
an important aspect of any issue before an administrative
agency . . . .’” Mozilla Corp. v. FCC, 940 F.3d 1, 60 (D.C. Cir.
2019) (per curiam) (first quoting Motor Vehicle Mfrs. Ass’n v.
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983); then
quoting Pub. Citizen v. Fed. Motor Carrier Safety Admin., 374
F.3d 1209, 1216 (D.C. Cir. 2004)). On the record before us, the
Commission’s treatment of § 3633(b) cannot survive judicial
review. Therefore, we are constrained to remand the Order to
the Commission for further consideration.

    On remand, the Commission must consider all costs
uniquely or disproportionately associated with competitive
products in setting the appropriate share, even if it has already
accounted for those costs under § 3633(a)(1) and (a)(2).
                              23
     Furthermore, the Commission should fully address the
issue left open in the court’s 2018 decision in UPS v. PRC. The
court in that decision recognized that, because the costs
attributed test under § 3633(a)(2) is conservative, there may be
institutional costs that are “uniquely or disproportionately
associated with competitive products,” even though they
cannot be said to stand in “reliably identified causal
relationships” with them. The Commission’s Order in this case
does not address this.

     In addition, the Commission must explain the relevance (if
any) of costs it may have considered in implementing
§ 3633(a)(1). At oral argument, counsel for the Commission
suggested that the Commission might not have to further
consider costs uniquely or disproportionately associated with
competitive products under § 3633(b) because it had already
considered them pursuant to § 3633(a)(1). Tr. of Oral
Argument at 43-44, 48, 54-55. However, this possibility is
offered as nothing more than a fleeting suggestion in the
Commission’s Order and its brief to the court. Compare Order
at 144, J.A. 663, and Br. for Respondent at 19 (focusing only
on § 3633(a)(2)), with Order at 160 n.294, J.A. 679 n.294, and
Br. for Respondent at 36 (mentioning the Commission’s test
under § 3633(a)(1)). If this point is somehow critical to the
Commission’s analysis, the Commission must make that clear
in the first instance. See SEC v. Chenery Corp., 318 U.S. 80,
94-95 (1943).

     We do not mean for these examples to exhaust the issues
that the Commission must address on remand, only to illustrate
some of what a fuller “consider[ation]” of the relevant costs
will involve.

                             ***
                               24
    In sum, the Commission must address the issues
highlighted above before we can say whether its formula-based
approach to determining the appropriate share under
§ 3633(a)(3) is permissible and reasonable. On remand, the
Commission might decide to revise its judgment regarding the
“appropriate share” under § 3633(a)(3). Indeed, at oral
argument, counsel for the Commission conceded that the
“floor” established under § 3633(a)(3) might need to be
adjusted if the Commission found any costs uniquely or
disproportionately associated with competitive products. Tr. of
Oral Argument at 49-50. It is also possible, however, that the
Commission might decide against revising its bottom-line
judgment, given the other factors the Commission must
consider under § 3633(b) and the latitude that the text affords
the Commission in making a final determination.

     We take no position on this matter. It is not for this court
to say that the Commission must account for costs in any
specific way under § 3633(b) or that the Commission must
make any particular “appropriate share” determination under
§ 3633(a)(3). Rather, the judgment of the court is that, on
remand, the Commission must consider all the costs referenced
under § 3633(b), as the Accountability Act clearly commands.
And any decision that the Commission reaches regarding the
meaning and application of § 3633(b) in connection with the
“appropriate share” determination under § 3633(a)(3) must be
consistent with the terms of the statute, must be
comprehensible, and must otherwise satisfy the requirements
of reasoned decision-making.

                       III. CONCLUSION

     For the reasons set forth above, we grant UPS’s petition
for review and remand the case to the Commission for further
consideration consistent with this opinion.
