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
Postage Rates May Be Going Up In January 2011
Dead Tree Edition – Postage rates are likely to increase about 1.7% in January as a result of a letter that the Postal Regulatory Commission’s chief lawyer issued today. Postmaster General Jack Potter promised not to increase postage rates during 2010, but postal officials seem eager to bump up rates once the calendar changes over to 2011. The Postal Service only has to give 45 days’ notice before announcing price increases that comply with the rate cap. So it seems likely that USPS will announce increases by mid-November, and perhaps as early as Friday, that take effect in early January.
full story from Dead Tree Edition
Senator Collins Applauds PRC Unanimous Decision To Reject USPS’s Requested Rate Hikes
Filed under: postal news, PRC, press releases, rate increase, usps
WASHINGTON, D.C. — U.S. Senator Susan Collins, Ranking Member of the Senate Homeland Security and Governmental Affairs Committee and author of the 2006 Postal Accountability and Enhancement Act, today applauded the Postal Regulatory Commission’s (PRC) unanimous decision to reject the U.S. Postal Service’s requested rate hikes.
“American consumers and businesses that rely on the Postal Service won a major victory today,” said Senator Collins. “I am pleased with this decision, which I argued was required by the language of the 2006 postal reform law.
“By rejecting these proposed rate hikes, the PRC has given the Postal Service an opportunity to improve its operations and thrive. The Postal Service now needs to redouble its efforts to cut costs, develop new services to increase volume, re-invent its business model and work with the Administration to remedy an overpayment to the federal retirement fund. I will continue to press the Administration and Postal Service on these vital reforms,” Senator Collins said.
The Postal Service is the linchpin of a $1 trillion mailing industry that employs approximately 7.5 million Americans in fields as diverse as direct mail, printing, catalog production, paper manufacturing, and financial services.
The 2006 postal reform law that Senator Collins authored allowed for rate increases above the level of inflation “only if the Postal Service could prove ‘extraordinary or exceptional circumstances,’ such as terrorist attacks or natural disasters, have had a profound effect on its operations, well outside normal business cycles,” said Senator Collins.
In its decision released today, the PRC found that the Postal Service failed to prove that its financial condition met the standard of the narrowly worded law.
Senator Collins believes the PRC’s decision will help prevent further declines in mail volumes because unexpectedly higher postage rates would prompt businesses and customers to seek less expensive, digital alternatives. This would have resulted in customers using the Postal Service less, ever-sinking mail volumes and even higher net losses for the Postal Service.
Senator Collins also cited the findings of three recent investigations into Postal Service operations that she requested the Inspector General (IG) conduct. The three probes found stunning evidence of waste, fraud and abuse, especially in the contracting area. All told, the Postal Service could save more than $800 million in 2011 if it implemented all the IG recommendations. Specifically, the IG investigations found that:
• 359 non-competitive contracts were given to former employees, some of whom were hired back to train their replacements at twice their former pay;
• the Postal Service pays 100 percent of health insurance premiums for 835 of its top employees, an expensive perk that occurs at no other federal agency, at an annual cost of $10 million;
• postal employees participate in many of the same health insurance and life insurance programs as federal employees, yet the Postal Services pays a greater share of the premiums;
• the Postal Service’s contract management did not protect the USPS from waste, fraud, and abuse;
• the Postal Service could not even identify how many contracts were awarded without competition, and the IG found that 35 percent of the no-bid contracts lacked justification; and,
• significant savings could be achieved by consolidating the USPS’s area and district field offices.
On July 6, the Postal Service filed its exigent rate case with the PRC, seeking approval for a wide array of rate increases. Today, the Postal Service expects to post a loss of more than $7 billion for fiscal year 2010.
Its requested increases, averaging 4 to 6 percent, would have far exceeded the rate of inflation. For one class of mail, for example, the proposed increase would have been a whopping 23 percent. For catalog mail, the Postal Service proposed a postage hike of more than 5 percent, which owners warned would prompt many catalog businesses to reduce mail usage and direct customers to websites.
Publishers would have responded in a similar way. One national company, which has relied heavily on direct mail, said the proposed increases would have forced it to reduce mail usage by 15 to 20 percent. The rate hikes, had they taken effect, would have made direct mail less of a financially viable, large-volume advertising medium.
Sen. Carper Statement on PRC’s Decision to Deny Latest Postal Rate Increase
WASHINGTON - Today, Sen. Tom Carper (D-Del.), Chairman of the Senate subcommittee with jurisdiction over the U.S. Postal Service, released the following statement in response to the Postal Regulatory Commission’s (PRC) decision to reject the latest postal rate hike:
“I’d like to thank the members of the Postal Regulatory Commission and their staff for their work. I know this was a hard-fought and complicated case so I appreciate the thought and the long hours that went into producing this important decision.
“The Postal Service is clearly in a financial crisis. It lost $4 billion last year and will likely lose as much as $7 billion this year once it closes its books for the fiscal year later today. Postmaster General Potter announced this past spring that, if nothing were done, the Postal Service could accumulate as much as $230 billion or more in losses by 2020. This is clearly an unsustainable path. In fact – if these trends continue and no major changes occur – I understand that the Postal Service will actually run out of cash by the end of fiscal year 2011, just a year from today.
“The rate increase that was denied today would not have fixed the Postal Service’s problems. A number of observers argued that it could actually have made them worse. Regardless, I hope that today’s events will focus the Postal Service, its employees, its customers, and my colleagues in Congress on the need to take dramatic action to arrest the slide the Postal Service is on. Even when our economy has fully recovered from this recession, the Postal Service will still need to deal with the fact that more and more people are turning to electronic communication to keep in touch with friends and family and to conduct their daily business. Postal management has done a tremendous job in recent years cutting costs, becoming more efficient, and reducing its workforce. But despite these efforts, more needs to be done to reduce costs and increase revenue, especially during the labor negotiations currently underway. Perhaps more importantly, Congress needs to clear the way for further progress by passing legislation to free the Postal Service to execute its reform plans.
“If we do nothing, we face a future without the valuable services the Postal Service provides. However, if we act quickly, we can turn things around by passing my recently introduced bill, the Postal Operations Sustainment and Transformation (POST) Act of 2010. This necessary legislation would give the Postal Service the room it needs to manage itself and avoid becoming the latest victim of Congressional gridlock. More specifically, my bill addresses the current budget issues plaguing the Postal Service by proposing a series of provisions including: easing postal employee pension and retiree health costs; addressing postal employee wages and benefits; allowing partnerships with state and local governments; and giving the Postal Service leeway to close post offices, market certain non-postal items, and eliminate Saturday delivery.
“The Postal Service has put forth a plan that shows a commitment to further cost cutting and efforts to make their business relevant during these changing times. Achieving these goals will require a shared sacrifice on the parts of the Postal Service, postal employees, and major postal customers.”
Background: The proposal was a 5.6 percent increase that would have gone into effect in January. The price of a first-class stamp would have increased by two cents from 44 to 46. The Postal Service was anticipating that it would generate $2.3 billion in revenue. It was filed under a process laid out in the 2006 Postal Accountability and Enhancement Act allowing the Postal Service to increase prices above the CPI rate cap during “extraordinary or exceptional” circumstances. The PRC is denying the request.
A summary of the bill follows:
The POST Act (S. 3831)
There are seven provisions in the bill. All of them are based on the legislative proposals the Postal Service made this past spring.
1. Financial Relief – The heart of the bill attempts to permanently address the pension and retiree health issues that have been a drain on postal finances over the years. The Postal Service currently pays into the old Civil Service Retirement System using a formula that the Postal Service Inspector General, the Postal Regulatory Commission, and at least two outside consulting firms have found unfairly allocates costs related to the former Post Office Department to the Postal Service. If true, this has resulted in the Postal Service overpaying its CSRS obligations over the few decades by between $50 billion and $75 billion. In addition, the Postal Service since FY2007 has been required to pay between $5.5 billion and $5.9 billion a year in an effort to prefund its future retiree health obligations. The bill would give the Postal Service more than $5 billion in breathing room each year by making two changes to current law:
- First, it requires OPM to recalculate the Postal Service’s CSRS obligation in a way that makes the Treasury responsible for pension costs related to pay increases Post Office Department employees working for the Postal Service would have gotten had they stayed on the federal payroll. This was the approach recommended by the IG, the PRC, and the consultants who looked at this issue. The recalculation will result in a finding that the Postal Service has paid about $50 billion more into CSRS that it owed.
- Second, it allows the Postal Service to use its $50 billion in overpayments to make the remaining seven retiree health prefunding payments it owes between now and 2016.
2. Saturday Delivery – The bill would remove the Appropriations rider that currently prevents the Postal Service from moving forward with its proposal to eliminate Saturday delivery. Under the 2006 postal reform legislation, the Postal Service was given the authority to reduce delivery frequency when it felt like it was necessary after taking the proposal to the PRC and receiving an advisory opinion. The Appropriators, however, put language in their bill every year negating this authority. Eliminating that rider would allow the Postal Service to achieve the $3 billion or more a year in savings that the Postal Service believes it could achieve if they eliminated Saturday delivery.
3. Post Office Closings – The bill would eliminate several provisions in law that the Postal Service believes forces it to maintain post offices that are no longer necessary. If the Postal Service is able to close some of these facilities, postal management believes they could began the process of rolling out cheaper, more convenient retail options such as automated kiosks or postal stations located in grocery stores or other places where people go every day.
4. Arbitration – Under current law, the Postal Service is required to pay its employees wages and benefits that are comparable to those paid in the private sector. Arbitrators in labor disputes have made it clear in the past that they think this is a legally binding requirement that should be taken into consideration when they render a decision. At times, arbitrators have awarded postal employees what they believe are comparable pay and benefits without taking the Postal Service’s financial condition into account. Recognizing that this situation cannot continue in a world where the Postal Service operates under a rate cap and faces stiffer competition from electronic communication, Senator Coburn proposed language in the past that would require arbitrators to take the Postal Service’s financial condition into account. The contains a similar provision requiring arbitrators to take the Postal Service’s financial condition into account along with other factors such as the comparability requirement and the details of the rate system.
5. Non-Postal Products – Under current law, the Postal Service is prohibited with a few exceptions from offering “non-postal” products and services, meaning products or services not related to the mail. The bill would revise this prohibition so that the Postal Service can begin offering non-postal products that are in the public interest and make use of the existing postal network.
6. State and Local Governments – Under current law, the Postal Service may partner with federal agencies to offer government services in postal facilities. The bill would allow them to enter into similar partnerships with state and local governments.
7. Wine and Beer – Under current law, the Postal Service is prohibited from mailing alcoholic beverages. UPS and FedEx can, however. The bill includes language putting the Postal Service on equal footing with UPS and FedEx with respect to shipping beer and wine.
Affordable Mail Alliance Commends PRC On Rejection Of Postal Rate Hikes
Filed under: postal, postal news, press releases, rate increase, usps
Washington, DC – The Affordable Mail Alliance – an unprecedented coalition of more than 1,200 non-profits, Fortune 500 companies, small businesses, major trade associations, consumer groups, and citizens representing the vast majority of the mail sent in the United States – said today that the decision of the Postal Regulatory Commission (PRC) to reject the rate hikes proposed by the Postal Service is good for businesses, and will actually benefit the USPS in the long run.
The proposed rate hikes, which were to have taken effect next January, would have added $3 billion annually to the nation’s postal bill even though the rate of inflation is close to zero. The PRC decision reaffirms that the Postal Service must limit rate increases to the rate of inflation, as the law requires.
“The PRC today has helped countless businesses stay competitive and saved tens of thousands of jobs,” said Tony Conway, Affordable Mail Alliance spokesperson and Executive Director of the Alliance of Nonprofit Mailers. “The Commissioners recognized that imposing an additional tax on Postal Service customers is not the way to address its financial troubles. Our members look forward to working with the Postal Service on the long-term restructuring needed to restore the Postal Service to competitiveness.”
While today’s decision will help the Postal Service retain volume and revenue, there is still more work to do. Blue ribbon commissions and government auditors have reported for decades that the Postal Service needs to streamline its inefficiently large network of undersized and obsolete mail processing plants. And although contracts with several major employee groups are up for renegotiation, the unions have signaled that they will strongly resist any major concessions. Additionally, Congress should also take a hard look at the Postal Service’s current obligations for prefunding its retiree health benefits program, a major cost burden. This prepayment schedule is another major contributor to the Postal Service’s financial problems.
“The Affordable Mail Alliance is truly an unprecedented effort with members across the country all of whom deserve thanks for uniting to address this important issue,” Conway said. “We are also grateful for our support from Congress and particularly for the leadership of Sen. Susan Collins, the key author of the 2006 Postal legislation at issue here and a tireless advocate for the future of the Postal Service. We stand ready to move forward in addressing the other issues that are so important to the future of the Postal Service.”
More on the Affordable Mail Alliance
The Affordable Mail Alliance is an unprecedented coalition of postal customers. The coalition includes charities, consumer groups, small business, national retailers, utilities, banks, insurance companies, Fortune 500 companies, and the customers who use the Post Office every day. The members represent many of the Postal Service’s biggest customers-and many of its smallest-and use every major class of mail. For further information, please visit www.affordablemailalliance.org or contact Jessica McCreight at jmccreight@skdknick.com or (202) 464-6900.
PRC to Issue Decision Tomorrow on Extraordinary Postage Increase Request
Filed under: postage rates, postal, postal news, PRC, rate increase, usps
Washington, DC –The Postal Regulatory Commission invites press and interested parties to a short briefing on its decision in the U.S. Postal Service Request for an above inflation, “exigent” price increase for its market-dominant products. This is the first time that the issue of what is an “exceptional or extraordinary” circumstance will be decided under the Postal Accountability and Enhancement Act of 2006 (PAEA). Questions from the Press will be entertained following the briefing.
What: The Commission will announce its decision on a closely watched case, the Postal Service exigent price increase request filed on July 6, 2010, seeking to increase prices by an average of 5.6 percent on its Market-Dominant products, including, but not limited to, First-Class and Standard letters and flats, Periodicals, and Standard packages.
Under the PAEA, price increases for Market-Dominant products are capped at the rate of inflation as measured by the Consumer Price Index for All Urban Consumers (CPI-U). The Postal Service may request Market-Dominant increases above the rate of inflation, however, due to “extraordinary or exceptional” circumstances.
Commissioners and Commission staff
11:00 a.m., Thursday, September 30, 2010
Where: Hearing Room
Postal Regulatory Commission
901 New York Avenue, NW, Suite 200
Washington DC 20268
Senator Collins says USPS Should Get Spending Under Control Before Raising Rates
Filed under: oig, postal, postal news, rate increase, usps
Maine Sen. Susan Collins is taking the U.S. Postal Service to task for spending she says is unwarranted at a time when the service is seeking to raise rates. In a speech on the Senate floor, Collins cited an Inspector General’s report, which she says indicates that spending in some areas is out of line.
“Its unbelievable to me that the Postal Service, awash in debt and asking for huge postal rate increases, is paying the full health care premium for 835 of its executives,” she said.
Collins says the IG’s report also indicates that the Postal Service has been hiring back retired executives at salaries well above their original pay — in some cases twice as much.
Collins says the Postal Service needs to get spending under control before raising rates again. Under the current proposal, the price of a stamp would go up to 46-cents in January. That’s twice what it cost to mail a letter in 1985.
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