The U.S. Court of Appeals has issued an important decision on the lengthy exigency rate battle. In its ruling on Alliance of Nonprofit Mailers et al v. Postal Regulatory Commission, the court agrees with the Postal Regulatory Commission’s mandate that the US. Postal Service coming to terms with a “new normal” is reasonable and justified. But it rejects “count once,” a key PRC contention that limited the Postal Service’s ability to recapture lost revenue through rate hikes. The ruling grants the USPS a partial review of the PRC exigency decision of December 2013.
The exigency battle flared up last June, when the USPS and the Alliance of Nonprofit Mailers challenged the PRC’s exigent rate decision, which approved a 4.3% increase in Standard Mail charges for two years. The two-year restriction was a result of the PRC’s “count once” directive, which stated that USPS could only recognize revenue impact of lost mail revenue for one year after the loss occurred.
The PRC contends that the USPS must adjust to the “new normal” of permanently lower demand for certain mail services. This restriction capped the total amount of revenue to be raised by the exigency hike at $2.8 billion. USPS challenged the “count once” rule, while mailers wanted the hike struck down entirely.
The ruling explains that the PRC so eloquently stated the case for a “new normal” in its Order to USPS that the companion one-year “count once” rule was unnecessarily arbitrary and mechanical. So, although the court upholds the PRC’s notion that exigency is not permanent, USPS has successfully challenged the initial limits imposed by the PRC.
When asked for comment, PRC communications specialist Gail Adams said that the commission’s legal team was reviewing the court’s decision. A USPS representative could not be reached for comment.
Hamilton Davison, president and executive director of one of the appellate action’s petitioners, American Catalog Mailers Association (ACMA), was unsurprised by the decision. The judges focused significant attention on the “count once” rule during oral arguments, telegraphing today’s ruling. “The court said the PRC was too aggressive and needs to provide more time for the postal services to adjust to the new reality,” he says. “It’s nice to have some unknowns and uncertainties clarified so we can move forward. But we still don’t know when the exigency surcharge will roll off, or for that matter, how.”
The DMA’s response was a call-to-action: “DMA now calls on the Commission to quickly act on the remanded portion of the case,”Peggy Hudson, DMA’s Senior VP for Government Affairs, said in a statement, “establishing dates for the new normal for each class of mail and setting the specific end date for exigent postage rates.”
The PRC and USPS each have some reason to be cheered by the decision. Less so the mailers who petitioned the court to overturn the exigency hike. The court took a dim view of industry arguments challenging the forecasting models employed by USPS and the PRC, ruling that the models fall under authority granted to the PRC by Congress and are therefore taken as given by the court. “[T]his court is not a rubber stamp for agency actions, but neither are we a peer review board for an academic journal of econometrics,” Judge Patricia Ann Millett writes in the decision. “The Commission’s analysis of the econometric evidence was reasonable; we need decide no more.”
