The Postal Service filed a brief with the U.S. Court of Appeals, District of Columbia, this week, arguing that the Postal Regulatory Commission was wrong in its most recent ruling on the exigent rate increase. As expected, the Postal Service wants the case remanded to the Postal Regulatory Commission for further review so that it can renew its arguments for an extension of the 4.3% surcharge, which otherwise will come to an end sometime this spring—most likely in April.
“It’s totally unpredictable how this will play out,” said David LeDuc, SIIA’s senior director, public policy. “We are assessing the possible outcomes and the opportunity to weigh in on any reconsideration of the exigent surcharge. We will also be meeting next week with senior USPS leadership to ask for process improvements that will lead to increased service standards and on-time delivery of our members’ products. Unfortunately, we’re seeing rates go up and service standards go down.”
It appears that the biggest issue right now is the Postal Service’s “ability to adjust” to lower volumes. An article on the site Save the Post Office said this: “In the brief, the Postal Service argues that the Commission has taken positions on this issue that are ‘illogical,’ ‘absurd,’ ‘hopelessly inconsistent,’ ‘self-contradictory,’ and ultimately ‘arbitrary and capricious’—the legal grounds for remand.
Of the four orders that the Commission has issued on the exigent rate increase, this is the third time the Postal Service has turned to the Court of Appeals to fight a ruling. The Postal Service filed an appendix containing all of the rulings, briefs and comments filed on the case that runs more than 600 pages.
There is a lot of money at stake here. In scenarios it has previously put forth, the Postal Service would be due another $3 billion in contribution (profit), which would extend the surcharge about a year and eight months. In another, the Postal Service would be due another $8.66 billion in contribution, which would extend the surcharge for almost five years.
If the Postal Service’s appeal loses, the surcharge will end in the spring. If the Court remands the issue back to the Commission, the increase could be extended.
The Postal Service concludes its brief with this comment:
It is beyond dispute that the Great Recession caused volume to drop to a level that appears to be permanently lower than its pre-recession level. That lower level of volume deprived the Postal Service of its ability to cover its institutional costs, which are largely outside the Postal Service’s control and do not fall along with declining volume. That does not mean that the Postal Service is entitled to a permanent infusion of revenue to cover such costs, of course, but it does mean that the Commission must analyze the relevant evidence and offer a cogent explanation for the endpoint it has chosen, particularly where reasonable alternatives were proposed…. It has not done so, and accordingly the case must be remanded for further proceedings.