REPLY OF INTERVENOR NATIONAL ASSOCIATION OF LETTER CARRIERS, AFL-CIO
TO COMMENTS OF AFFORDABLE MAIL ALLIANCE AND SENATOR COLLINS

The AMA argues that the price-cap regulatory system established by the Postal
Accountability and Enhancement Act (“PAEA”) will be “dead” if the Commission interprets the
exigency clause in 39 U.S.C. §3622(d)(1)(E) to apply to the circumstances currently facing the
United States Postal Service (“USPS”). See AMA Comment at 5. Senator Collins echoes that
position, asserting “unequivocally” that the PAEA “does not provide for an exigent rate case”
under the circumstances set forth in USPS’s request.

These comments misconstrue Congress’ intent when it allowed USPS to seek an
exigent rate increase under “extraordinary or exceptional circumstances.” 39 U.S.C.
§3622(d)(1)(E).

Although she now opposes USPS’s exigent rate request, Senator Collins, in an April 6, 2007 letter to the Commission that she co-authored with Senator Carper (see Collins Comment, at Attachment 1), explained that Congress meant the PAEA’s exigency exception to apply to “significant and substantial” declines in mail volume caused by events beyond USPS’s control:

the “extraordinary and exceptional circumstances” referenced in
the language may include terrorist attacks, natural disasters, and
other events that may cause significant and substantial declines in
mail volume or increases in operating costs that the Postal Service
cannot reasonably be expected to adjust to in the normal course of
business.

The letter cited “terrorist attacks” as an example of an event whose impact on
mail volume could qualify under the statute as an exigent circumstance. See id. In her comment,
Senator Collins now explicitly embraces the idea that “the terrorist attacks of September 11,
2001, or the anthrax attacks later that year could serve as the basis for an exigent rate case.”
Collins Comment at 3; see also id. at Attachment 4, at 11 (S. Rep. 108-318 (2004)) (citing
September 11, 2001 and anthrax attacks as examples of exigencies).

The AMA and Senator Collins argue that the PAEA’s exigency clause must be
read narrowly and only to apply to unforeseen events. See AMA Comment at 12-16; Collins
Comment at 3. Even if that were correct, the current circumstances would still apply. That the
business cycle will ordinarily produce crests and troughs may be foreseeable, but no one could
have foreseen the economic tsunami now known as the “Great Recession” and the carnage it
would leave in its wake: a contraction of the GDP in 2008-2009 of nearly 4%, a drop in private
employment of 7.3%, and a fall in real investment spending of 35.7%; the closure of 228 banks
since January 2008; and the majority of the American workforce in the 30 months preceding July
2010 having faced unemployment, experienced a cut in pay or a reduction in hours, or been
forced into part-time status. See July 6, 2010 Statement of Joseph Corbett in Docket No. R2010-
4, at 14.3 That this was no ordinary recession is evidence by Congress having appointed a
special commission to investigate its causes. And while some argue that the mail-volume loss
was aggravated by a long-term migration of communications to the internet, there is no dispute
that the bulk of the loss was due to the macroeconomic nightmare.

In any event, the claim that the PAEA’s exigency clause only applies in the
narrowest of circumstances and only to unexpected events is wrong, and based on a misreading
of the statute’s text and legislative history. In the original Senate bill, introduced in March 2005,
the exigency exception would only have applied to “unexpected and extraordinary
circumstances.” S. 662, 109th Cong. §3622(d)(1)(D) (2005) (emphasis added). But the statute as
enacted in December 2006 lacks the requirement that the exigent circumstances be
“unexpected.” See 39 U.S.C. §3622(d)(1)(E). Congress not only dropped the unforeseeability
requirement, but also broadened the exigency clause by replacing the restrictive conjunctive
language, marked by the word “and,” with the disjunctive phrase “either … or.” Id. (PAEA
referring to “either extraordinary or exceptional circumstances”) (emphasis added).
3 In fact, recent revisions to Commerce Department data show that the recession, with a 4.1%
drop in GDP, was worse than originally thought. See “A Deeper Hole,” The Economist (Aug. 7,
2010), at 28 (confirming that recession was “the worst of the post-war years”).

The April 2005 congressional testimony quoted by Senator Collins that the
exigency clause establishes a “‘very high bar,’” Collins Comment at 2-3 (quoting testimony in
Attachment 5, at 2) is thus inapt, as it expressly refers to the Senate bill that never became law.
See Collins Comment, Attachment 5, at 2. The April 2004 testimony she quotes that exigent
circumstances must be “‘unexpected’” came even earlier in the legislative process and was thus
even further removed from the actual statutory language. See id. at 3 (quoting testimony in
Attachment 6, at 20).

The Commission itself has made clear that exigencies under the PAEA can be
either foreseen or unforeseen. In its original proposed rules on exigent rate cases, the
Commission would have required USPS, when filing for an exigent rate increase, to justify why
“the circumstance giving rise to the request was neither foreseeable nor avoidable by reasonable
prior action.” Order Proposing Regulations to Establish a System of Ratemaking, Docket No.
RM2007-1 (Aug. 15, 2007), at Proposed Rule 3100.61(a)(7) (emphasis added). But the
Commission changed this language after receiving comments that the assumption behind the
proposed rule — that exigent circumstances must be unforeseen — was inconsistent with the
statutory language. The rule as promulgated by the Commission now only requires USPS to
provide an “analysis of the circumstances giving rise to the request, which should, if applicable,
include a discussion of whether the circumstances were foreseeable or could have been avoided
by reasonable prior action.” Commission Rule 3010.61(a)(7) (emphasis added).

Finally, the AMA devotes much of its comment to arguing that current
circumstances cannot qualify as an exigency because, it claims, USPS’s private-sector
competitors weathered the economic storm while USPS, burdened by purportedly above-market
labor costs and other inefficiencies, has floundered.

This argument ignores the fact that, unlike USPS, its private-sector competitors have no
universal service obligation nor do they bear the unique burden of having to pre-fund retiree
health benefits.4 Moreover, AMA’s argument is based on highly contested assertions that raise
issues that are beyond the scope of the instant rate proceeding and unsupported by anything in
the evidentiary record in this case. For example, AMA’s assertion that USPS pays wages above
wages paid for comparable work in the private-sector, see AMA Comment at 30-31, raises
complex legal and economic issues regarding the meaning and application of the comparability
standard in the Postal Reorganization Act (“PRA”). See 39 U.S.C. §1003 (a) (providing for
postal compensation and benefits “on a standard of comparability to the compensation and
benefits paid for comparable levels of work in the private sector of the economy”). NALC and
its economic experts have argued elsewhere that proper application of the comparability standard
requires comparing letter carrier pay to the pay of employees in large, comparable firms such as
employees of other parcel delivery enterprises — not, as others have argued, to the pay of all
employees throughout the private-sector. In any event, the legislative history makes clear that
the comparability standard leaves ample room for differences over how it is to be interpreted and
applied and that such differences are to be worked out in collective bargaining between USPS
and the postal unions or, failing that, in interest arbitration.5 That comparability is beyond the
For a discussion regarding the impact on USPS of the obligation to pre-fund retiree health
benefits, see Frank Clemente and Tom Kiley, “Congressional Mandates Account For Most Of
Postal Service’s Recent Losses,” Economic Policy Institute, Briefing Paper #268 (June 2010).
5 See, e.g., Post Office Reorganization: Hearings on Various Proposals to Reform the Postal
Establishment Before the House Comm. On Post Office and Civil Service, 91st Cong., 1st Sess.
221 (Postmaster General testifying that “there is a wide variety of difference as to what
comparability might mean” and “that has to be bargained between the parties”); 39 U.S.C.
§1207(c) (providing for interest arbitration in the event that collective bargaining fails to produce
an agreement). Under the PRA, the compensation of bargaining unit postal employees is to be
determined through collective bargaining between USPS and the postal unions in accordance
with the applicable principles of the National Labor Relations Act.

see full NALC reply via PRC