Postal Regulatory Commission To Close If Government Shuts Down
The Postal Regulatory Commission issued the following news release:
If the current continuing resolution expires at 12:01 a.m. on April 9, 2011 without passage of an FY 2011 appropriations bill or a further continuing resolution, the Postal Regulatory Commission will be required to shut down.
In that event, effective April 11, 2011, the Commission will be closed until such time as an FY 2011 appropriation or a continuing resolution for the Commission has been approved. With respect to proceedings pending before the Commission, the due date for all filings will be extended day-for-day for the duration of the shutdown. Thus, if the shutdown lasts a total of seven (7) calendar days, the due date for all filings otherwise due during the shutdown is extended by seven (7) days from the due date. For example, assuming an initial due date of April 13, 2011 and a 7-day shutdown which concludes April 18, 2011, the revised due date is April 20, 2011. During the shutdown, the Commission’s Docket section will not be operational. However, filings may be submitted. All filings submitted during the shutdown will be processed and posted to the Commission’s website when the Commission resumes normal operations.
Three Research Contracts Awarded by Postal Regulatory Commission
Filed under: postal, postal news, PRC, press releases, usps
Office of Public Affairs and Government Relations
In October 2009, the Commission awarded a scoping contract to The Urban Institute to identify the array of benefits provided by the Postal Service that contribute to the social value of the post in the United States. The study was intended to identify possible metrics and methods for estimating the value of these benefits, and to provide a categorization framework. The Commission believes this is the first such research on this subject.
The Urban Institute conducted a literature search, interviewed a large number of knowledgeable individuals, and drew upon analytical experience in the fields of sociology and economics. The contractor submitted its Final Report on February 2, 2010. http://www.prc.gov/prc-docs/home/whatsnew/Final_Report_Sent_to_PRC_Feb_3_943.pdf
The report identified and described dozens of benefits, clustered around the following eight broad categories:
- Consumer
- Business
- Safety and Security
- Environmental
- Delivery of Other Government Services
- Information Exchange
- Social Linkage
- Civic Pride and Patriotism
The study also described additional research methodologies that could quantify the social and economic value of the described social benefits.
On May 7, 2010, the Commission issued a Request for Proposal http://www.prc.gov/prc-docs/home/whatsnew/Request%20for%20Proposal%20Social%20Value_942.pdf seeking proposals to quantify some or all of the social benefits identified in the scoping study, and received thirteen proposals by the deadline. Three of these proposals were selected for further research work, beginning in August 2010 and continuing into FY 2011. Contracts were signed with SJ Consulting, Joy Leong Consulting, and The Urban Institute.
SJ Consulting will quantify the benefit of the Postal Service’s rural services by measuring the percent of population affected by Delivery Area Surcharges and determine if there is a cost basis for the Delivery Area Surcharges by the two major parcel carriers and the benefits from the Postal Service having a more frequent delivery network in rural areas.
Urban Institute will measure the Economic Effects of Post Offices by researching available data and providing an impact analysis of the presence of post offices on real estate values, business activity, and employment through sampling the impact of about 125 closed post offices.
Urban Institute will research the role and benefits of Price Leadership of the Postal Service from lower priced postal products such as parcels or expedited services, money orders and post office boxes to determine the competitive advantages the Postal Service offers with these products compared to its competitors.
Urban Institute will quantify the benefits of the Postal Service to Community Security and Public Safety by researching Postal Service and NALC data, and Metropolitan Police Department crime data to measure the impact on crime in the District of Columbia by changing retail service hours and postal carrier routes, considering neighborhood characteristics, and Postal Service personnel training regarding community security and public safety reporting.
Leong Consulting will quantify the benefits of the Postal Service’s Disaster Response, Emergency Preparedness, and Safety including its role in neighborhood safety, as a first responder and as a communications network in an area devastated by natural disaster by estimating the “savings” to government agencies from Postal Service performance of these duties and assess the Postal Service’s role in the Nation’s preparation for bioterrorism, including neighborhood safety, and the Cities Readiness Initiative (CRI), the Bio-Detection System, and the Custom-Trade Partnership Against Terrorism (C-TPAT).
Leong Consulting will also quantify the Essential Services for the Unbanked Population provided by the Postal Service using publicly available data from banking industry organizations and consumer advocacy groups and assess the value of Postal Service products provided to the unbanked population and identify other areas where the Postal Service could offer useful financial-type services, particularly to those receiving hard-copy checks.
USPS’ Preliminary Statement Of Issues In Rate Case Appeal
On Petition for Review from the Postal Regulatory Commission,PRC Docket No. R2010-4
1. Whether the PRC’s refusal to allow the Postal Service to make any adjustment to postage rates in response to the “extraordinary and exceptional” volume declines in the recent recession was based on an erroneous construction of 39 U.S.C. § 3622.
2. Whether the PRC’s refusal was arbitrary and capricious because the Postal Service did not have notice of the PRC’s interpretation of § 3622.
Appeals Court Approves USPS Request To Expedite Rate Case Appeal Schedule
According the DC Circuit Court of Appeals has granted the USPS’s request to expedite rate denial request case against Postal Regulatory Commission.
The court ordered the following:
Upon consideration of petitioner’s unopposed motion to expedite consideration and for an abbreviated briefing schedule, it is ORDERED that the following briefing schedule will apply in this case:
Petitioner’s Brief November 23, 2010
Appendix November 23, 2010
Respondent’s Brief January 14, 2011
Petitioner’s Reply Brief January 28, 2011
Joint briefs of intervenors, if any, are due on the same date as the briefs of the party they support.
All issues and arguments must be raised by petitioner in the opening brief. The court ordinarily will not consider issues and arguments raised for the first time in the reply brief.
The court reminds the parties that
In cases involving direct review in this court of administrative actions, the brief of the appellant or petitioner must set forth the basis for the claim of standing. . . .When the appellant’s or petitioner’s standing is not apparent from the
administrative record, the brief must include arguments and evidence establishing the claim of standing.
Postal Service Appeals PRC Decision on Exigent Price Request
Petition to be Filed in the U.S. Court of Appeals
WASHINGTON — The U.S. Postal Service today announced its decision to appeal the Sept. 30 ruling of the Postal Regulatory Commission denying the Postal Service exigent price request.
The Postal Service Governors decision means that a petition will be filed in the United States Court of Appeals for the District of Columbia Circuit, seeking a review of the PRC’s interpretation of the law that governs how prices can be set under extraordinary and exceptional circumstances.
The Postal Service position is that the PRC misread the statute and applied an incorrect standard in evaluating the request for an exigent price increase.
“We have a fundamental disagreement with the PRC’s interpretation of the law,” said Postmaster General John E. Potter. “This action is an investment in our future. We need to understand and define the rules under the current law should the Postal Service find itself in a similar situation in the future.”
The petition also asks the Court of Appeals to confirm the Postal Service right to pursue the exigent price increase as originally requested of the PRC.
It is expected that the Court of Appeals will ask for briefs from both the Postal Service and the PRC. Oral arguments also may be scheduled by the court once the petition challenging the PRC ruling is filed.
The Postal Service continues to evaluate other options to address the PRC’s ruling. The exigent price request would have generated about $2.3 billion in much needed revenue for the first nine months of calendar year 2011.
Filing for an exigent price change was the one tool the Postal Service had to use within the confines of the law to help address the impact the recession had on the its financial situation. But pricing is only one of a suite of solutions to address the dire financial situation the Postal Service faces. The long-term financial viability of the Postal Service will remain questionable unless the March 2 action plan is fulfilled.
A quick and timely resolution of the appeal is an important part of the Postal Service plan.
The Postal Service receives no tax dollars for operating expenses, and relies on the sale of products and services to fund its operations.
USPS Takes PRC To Court Over Denied Request For Rate Increase
News Alert from Business Mailers Review
In a surprise move the Postal Service announced it will appeal the Postal Regulatory Commission’s (PRC’s) Sept. 30 decision rejecting a request for a 5.6% rate hike – the first such request under the 2006 postal reform law’s exigent rate clause.
The PRC found the deep recession and resulting drop in mail volume represented the type of exception to the annual CPI-based cap on rate hikes the 2006 law envisioned. However, the commission said, USPS failed to show a direct link between its specific request and the exceptional circumstance.
In its appeal to the U.S. Court of Appeals for the District of Columbia Circuit, the Postal Service will argue that the PRC misread the statute and applied an incorrect standard in evaluating the request for an exigent price increase.
USPS said it is hoping for a quick result and is also asking the court to affirm that it has the right to pursue the exigent rate increase as originally filed with the PRC.
USPS says this appeal is independent of any decision to increase prices at the rate of inflation within the CPI cap.
From USPS Government Relations:
On October 22, 2010, the Postal Service filed an appeal with the U.S. Court of Appeals for the D.C. Circuit regarding the September 30, 2010 ruling of the Postal Regulatory Commission (PRC) denying the Postal Service exigent price request.
The Postal Service is requesting a review of the PRC’s interpretation of the law that governs how prices can be set under “extraordinary and exceptional” circumstances –an exigent” price increase. The Postal Service is also requesting that the Court of Appeals confirm that the Postal Service has the right to the exigent price increase, as
originally filed with the PRC.The Postal Service disagrees with the PRC’s interpretation of the statutory language and believes that the PRC applied an incorrect standard in evaluating the request for an exigent price increase.
The Postal Service believes we need clarity regarding the exigent price increase rules under current law should the Postal Service find itself in a similar situation in the future. The Court of Appeals will ask for briefs from both the Postal Service and the PRC. Oral arguments also may be scheduled by the court.
The Postal Service continues to evaluate other options to address the PRC’s ruling. The exigent price request would have generated about $2.3 billion in much needed revenue for the first nine months of calendar year 2011.
As laid out in the Postal Service’s March 2nd Action plan, requesting an exigent price increase was the one option the Postal Service could exercise under current law to help address its current dire financial situation.
Increasing revenue is only one part of the solution. The long-term financial viability of the Postal Service will remain questionable unless the actions recommended on March 2nd are implemented. These include:
- Addressing the statutory retiree health benefit pre-funding requirement, averaging $5.5 billion;
- Allowing the Postal Board of Governors to direct the Postal Service to move to five day delivery;
-Requiring an arbitrator to consider the financial health of the Postal Service when making a determination;
- Allowing the Postal Service greater freedom to close Post Offices;
- Permitting the Postal Service to offer new products and services; and
- Giving the Postal Service greater pricing flexibility
source: Postcom.org
PRC Upholds Linkage in First-Class Mail Discounts
Filed under: postal, postal news, PRC, press releases, usps
Press Release From the Postal Regulatory Commission
Washington, DC – The Postal Regulatory Commission today issued Order No. 536 in Docket RM2009-3 finding that First-Class Single-Piece and Presort mail have a worksharing relationship and therefore a linkage when setting price discounts. Worksharing refers to activities such as sorting and transportation that are performed by the mailer instead of the Postal Service in exchange for price discounts.
Under section 3622(e) of the Postal Accountability and Enhancement Act of 2006 (PAEA), workshare discounts for market-dominant products are limited to the costs avoided by worksharing. The last time the Postal Service adjusted its rates, it contended that under the PAEA, this limitation only applies below the level of individual products. The Commission established Docket RM2009-3 to solicit public input and develop a full record on issues concerning the proper interpretation, scope, and application of section 3622(e).
Today, the Commission has reaffirmed that the section 3622(e) limitation on the size of workshare discounts applies to discounts between different products, such as Single-Piece and presort First-Class Mail, which serve the same market. The Commission concluded that:
- There is a large subset of Single-Piece First-Class mail that serves essentially the same market as presort First-Class Mail, and that a worksharing relationship exists between the two groups;
- The benchmark currently used to measure avoided costs for presort First-Class Mail is obsolete; and
- Because Standard High Density and Standard Saturation Mail serve separate markets, the section 3622(e) limitations on workshare discounts do not apply to the rate relationship between those two categories.
The Commission has also established guidelines to help determine the scope of worksharing activities. The Commission is initiating Docket RM2010-13 to consider proposals to identify appropriate benchmarks to use to measure the costs avoided by worksharing and establish discounts in the future.
PRC To Meet September 9, 2010 To Consider Postal Rate Case
Filed under: postal, postal news, PRC, rate increase, usps
From the Postal Regulatory Commission web site:
The Commission will meet in CLOSED session at 10 a.m. on Thursday, September 9, 2010 to consider Deliberations and Decision in Docket R2010-4, Rate Adjustment due to Extraordinary or Exceptional Circumstances
PRC to hold August 16 Briefing on $50 Billion Discrepancy Identified In Postal Service Pension Payments
Washington, DC –The Postal Regulatory Commission invites press and interested parties to a briefing on the actuarial report of The Segal Company regarding calculation of U.S. Postal Service pension liability for former Post Office Department employees. Questions will be entertained following the briefing.
What: Public briefing on the actuarial analysis of liability related to funding of Postal Service pensions. The Commission report finds that an adjustment of roughly $50-$55 billion in favor of the Postal Service would be equitable.
Who: Commissioners and Commission staff The Segal Company representatives
When: 10:00 a.m. Monday, August 16, 2010
Where: Hearing Room, Postal Regulatory Commission
901 New York Avenue, NW, Suite 200
Washington DC 20268
Background: On June 30, 2010, the Commission released an independent actuarial report, prepared by The Segal Company, on the allocation of the costs of Civil Service Retirement System (CSRS) benefits paid to former Post Office Department (POD) employees. Segal finds that the current allocation overstates U.S. Postal Service responsibility for CSRS payments to former POD employees, and estimates assets currently allocated for that purpose fall short of an equitable allocation by roughly $50 to $55 billion.
The Commission finds that the Segal Report provides a persuasive statement of the relevant generally accepted actuarial practices and principles and how they should be used to develop the current postal surplus or liability.
USPS To PRC: We Use Business Judgment To Determine Price Increases
RESPONSE OF USPS JAMES KIEFER TO PRESIDING OFFICER’S INFORMATION REQUEST
“… the Postal Service used its business judgment to determine the relative price increases each category should be asked to bear. This judgment was informed by knowledge of the industries that use these products, and our customers for these products. This knowledge was gained by regular contact with customers and industry representatives, as well as information gathered through meetings, conferences, consultation with experts, and the media that cover these industries and customers. Using this knowledge the Postal Service made an informed judgment as to the appropriate prices for these and other price categories.”
From Postcom.org: USPS answer to PRC presiding officer:
Q. The discussion of the proposed price changes for First-Class Mail states that “the Postal Service does not believe that the erosion of single-piece mail through electronic diversion can be materially affected by limiting the growth of the stamp price….Please provide all studies and analyses underlying the conclusion that electronic diversion of single-piece mail is essentially unaffected by price”
A. No specific study underlies this conclusion….Postal Service demand models do not estimate separate equations for various shapes, such as flats and parcels. The Postal Service does not have sufficient information to confirm or reject the proposition that “First-Class Mail presort flats . . . . are not as susceptible to price-driven electronic diversion as presort letters . . . .”
Q. The response to CHIR No. 2 question 6, states that one reason for proposing an 11.9 percent increase for First-Class Mail presort flats “is the desire of the Postal Service to improve cost coverage for flats.” While acknowledging the “unprecedented challenges” facing the periodicals industry, the Postal Service proposes an 8 percent increase for Periodicals Mail to improve its cost coverage. Statement of James M. Kiefer at 39. In contrast, the Postal Service proposes a much smaller 5.1 percent increase for Standard Mail Flats, due to concern for the delicate financial position of the catalogue industry. Id. at 28-30. Please provide all studies and analyses relied upon to evaluate and compare the relative financial health of the periodicals industry, the catalogue industry, and industries that use First-Class presort flats.
A. The Postal Service did not conduct studies or analyses to evaluate and compare the relative financial health of the periodicals industry, the catalogue industry and industries that use First-Class Mail presort flats. Also, the Postal Service did not conduct studies or analyses to evaluate the relative ability of each industry to withstand postal rate increases of various sizes.
Q. Has the Postal Service determined the own-price elasticity for Standard Mail Flats?
A. The Postal Service has not yet been able to produce own-price elasticity estimates for Standard Mail Flats.
[Postcom EdNote: And upon this lack of knowledge the Postal Regulatory Commission is supposed to approve the Postal Service's exigency increases? About the only thing the Postal Service found time to do since the March 2nd announcement of its "plan" was to figure how to jack up postal rates and get customers to pay for what the USPS itself has failed to do...or even try.]