Yesterday, the Postal Regulatory Commission (PRC) handed down what will—hopefully—be the final word on the 4.3 percent exigent rate hike (or surcharge) that was granted in late 2013 and the subject of litigation for the last 18+months. That is, the PRC, through an expedited process, made a decision to address issues presented in the exigent rate case that was recently remanded to the Commission by the United States Court of Appeals for the District of Columbia Circuit. Alliance of Nonprofit Mailers v. Postal Regulatory Commission, 2015 WL 3513394 (D.C. Cir. June 5, 2015).
In summary, the decision allows the Postal Service to collect an additional $1.191 billion in contribution as an exigent rate adjustment. This is in addition to the $2.766 billion already authorized and collected over the last 18 months, bringing the total rate adjustment to approx. $4 billion.
So what does this mean for mailers?
The immediate outcome is that the 4.3 percent surcharge will not be going away in August as expected prior to the Court of Appeals decision in early June. Instead, it’s estimated that the additional $1.91 billion in collection authority will allow the Postal Service to keep this rate in place across all classes of mail for approximately another 8 months.
In comments filed on July 6th, SIIA urged the Commission to limit the application of the exigent rate increase to no more than $2.862 billion, or just a modest increase over what had been previously collected. And we urged the PRC not to honor the Postal Service’s request to relitigate the initial loss calculation, known as the “new normal.” So while SIIA and the mailing community were dealt a blow with the additional 15 months of the surcharge, it was a substantial victory coming out of the June court ruling that the surcharge is still temporary, and from this recent PRC decision that the overall increase appears to be smaller than it could have been had the Postal Service gotten what they asked for with re-litigation of the overall counting lost revenue counting method.
Of course, this is Washington DC, so I’m hesitant to ever technically characterize any action as “final,” given the propensity for appeals, litigation, or new rules that offset old ones! More on this to come, but for now, the “new normal” equates to the Postal Service continuing to impose higher rates on mailers to cover their substantial deficits (regardless of cause of the deficits).