PRC Establishes Procedures For Remanded USPS Exigent Rate Case
On May 24, 2011, the United States Court of Appeals for the District of Columbia Circuit issued its opinion in United States Postal Service v. Postal Regulatory Commission, 640 F.3d 1263 (D.C. Cir. 2011). The court denied in part and granted in part a Postal Service petition for review of the Commission’s September 30, 2010 order denying a Postal Service request for an exigent rate adjustment under 39 U.S.C. 3622(d)(1)(E).1 640 F.3d at 1268.
On July 11, 2011, the court issued its mandate remanding the case to the Commission. The Commission is issuing this Order to promptly establish procedures for receiving initial and reply comments that address the causation standard applicable to exigent rate adjustment requests submitted under 39 U.S.C. 3622(d)(1)(E).2
PRC Establishes Procedures For Remanded USPS Rate Case
Senator Collins Files Brief Regarding USPS Requested Rate Increase
As the Author of Law, Senator Collins Says Postal Service Lacks Justification for Request
WASHINGTON, D.C. — U.S. Senator Susan Collins, Ranking Member of the Senate Homeland Security and Governmental Affairs Committee, today filed an amicus brief arguing that the U.S. Court of Appeals for the District of Columbia Circuit uphold the Postal Regulatory Commission’s (PRC) unanimous decision to reject the U.S. Postal Service’s requested exigent rate hikes. Senator Collins’s committee has jurisdiction over the Postal Service.
Senator Collins’s brief argues that the PRC’s decision is consistent with the text, legislative history, purpose, and intent of the comprehensive rate system included in the Postal Accountability and Enhancement Act (PAEA) – a 2006 law that she authored. Senator Collins further notes that the Postal Service’s current financial condition is the result of numerous non-exigent factors. Under the law, these factors cannot support an exigent rate increase because they have no connection to an “extraordinary or exceptional circumstance” that the Postal Service could not reasonably be expected to have accounted for in the normal course of business.
“The economy and technology are affecting the Postal Service and, indeed, all businesses. But in writing postal reform legislation in 2006, my intention was not to permit rate increases above the inflation-based cap as relief from chronic, ordinary, or unexceptional circumstances and general Postal Service red ink,” said Senator Collins. “I hope the Court of Appeals will uphold the September 2010 PRC decision which found that the Postal Service failed to prove that its request met the standard of the law.
“Allowing the Postal Service’s exigent rate increase would undermine the stability and predictability in rates that the PAEA sought to establish. Moreover, such an interpretation of the law would produce absurd results – allowing the Postal Service to raise rates to cover revenue shortfalls from any cause, so long as it could identify an ‘extraordinary or exceptional circumstance’ affecting any portion of postal operations. The resulting loophole in the hard, inflation-based cap would lead to disastrous consequences for the Postal Service as the resulting rates would further erode volume as postal customers seek alternatives to mailing.
“The Postal Service 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 the Postal Service on these vital reforms.”
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.
On July 6, the Postal Service filed its exigent rate case with the PRC, seeking approval for a wide array of rate increases. The Postal Service experienced a loss of more than $8 billion for fiscal year 2010. Its requested exigent 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.
Sen. Susan Collins Urges PRC to Reject USPS Rate Case Proposal
In a letter filed with the PRC as part of the docket considering the rate proposal, Senator Susan Collins, co-author of the 2006 Postal Accountability and Enhancement Act (PAEA), wrote the following :
As the author of the Postal Accountability and Enhancement Act of2006 (PAEA), which grants the Postal Service the limited authority to file an exigent rate case, I want to make the congressional intent regarding the provision completely unambiguous as the Postal Regulatory Commission considers the pending Postal Service request. Neither the language nor the legislative history of the PAEA authorizes the United States Postal Service to file an exigent rate case under the current circumstances.
During the 2007 rulemaking process for the exigent rate case authority, Senator Tom Carper and I sent a letter to the Postal Regulatory Commission (PRC) explaining that the exigent rate authority in the PAEA was intended to be used sparingly. Specifically, the letter explained that the “extraordinary or exceptional circumstances” required to initiate an exigent rate case under the PAEA exist only if “terrorist attacks, natural disasters, and other events … 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.”
This letter lays out the express intent of the legislation, along with supporting legislative history. I urge the PRC to rely on it as you consider the Postal Service’s request. As the author of the exigent rate authority, I can attest that the provision was not intended to be used under the current circumstances. Indeed, the Postal Service’s current financial condition is largely the result of its own failure to sufficiently update its business model to adapt to predictable and natural cyclical changes in the economy and mail usage. The Postal Service’s financial condition is not the result of “extraordinary or exceptional circumstances” required by law to initiate an exigent rate case. As such, I urge the PRC to dismiss the case.
The PRC’s approval of an exigent rate increase under these circumstances would be inconsistent with the law and would undermine the intent of PAEA to provide predictability and stability in postal pricing. In light of the express requirements of the statute and its supporting legislative history. I urge you to follow the letter of the law and reject the Postal Service’s exigent rate case proposal.
Schedule of PRC Hearings On USPS Request for Rate Increase and 5-Day Delivery
Filed under: mail delivery, postal, postal news, rate increase, usps
From the Postal Regulatory Commission (PRC)
Schedule for Hearings on Postage Rate Increase
HEARINGS in Docket N2010-1:
July 14 at 9:30 am …
July 16 at 9:30 am …
July 20 at 9:30 am …
July 21 at 9:30 am
July 22 at 9:30 am /