Exigency to Cost Mailers at Least $1.2 Billion More

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In the wake of an appeals court ruling, the Postal Service asks PRC to suspend the planned removal of the surcharge and add a minimum $1.2 billion to the tab.

The U.S. Postal Service (USPS) yesterday filed a petition with the Postal Regulatory Commission (PRC) asking that the removal of the 4.3% exigent surcharge be delayed until at least $1.2 billion more in rates are collected from mailers. Its action followed a decision handed down last week by the D.C. Circuit Court of Appeals that denied USPS's petition that exigency be extended indefinitely, yet ruled that the PRC should reassess the amount of time needed to arrive at the so-called “new normal” annual mail volume.

The filing asks for an “expeditious” remand of the PRC's plan to roll back the higher rate once it deposited an extra $2.776 billion ($3.2B in revenue) into Postal Service coffers, a number that the Postal Service expected to hit some time this August. USPS accountants figure that the exigent rate should contribute at least $3.956 billion (or $4.6B in revenue) to offset the effect of the “extraordinary of exceptional circumstances” posed to it by the Great Recession.

“The Court of Appeals…has remanded the matter to the Commission for further proceedings. While those proceedings are underway, the commission needs to remand the current mechanism for exigent surcharge removal,” USPS's petition stated. It noted that the $2.8 billion max was seen as insufficient by the court because it “found the Commission's ‘count once' rule makes no sense on this record.”

In assessing volume declines traceable directly to the recession, the PRC's original approval of the exigent rate stipulated that it would not count lost mail volume beyond the year in which it first appeared. The Circuit Court's opinion sided with USPS in this regard, giving the example of a laid-off worker not paying bills by mail for four years because that's how long it took her to find a new job.

The Postal Service's petition took care to acknowledge that it “by no means” agrees that $3.9 billion is the limit of what it lost to the recession. That $1.2 billion added charge, then, is the least amount that rate-payers can look forward to parting with. And, considering that it took the Postal Service nine months to collect $1.4 billion in surcharges last year, exigency promises to be in effect for at least another year. So much for direct mailers' and catalogers' plans for bigger mailings in 2016.

PRC commissioners will have their work cut out for them rewriting the rules of exigency in the weeks ahead. “The Commission recognizes the importance of its role in this case and is striving to provide as much clarity as possible in a meaningful time frame for all of the parties involved in this case, including the Postal Service and its customers,” said a written statement from the PRC in response to a query from Direct Marketing News.

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