PRC is Closed, But Mailers Contend With Exigency Threat

Last week the Postal Regulatory Commission (PRC) was given 90 days to decide on the U.S. Postal Service’s (USPS) request for an 4.3% exigent rate increase, but the PRC stands closed today as part of the federal government shutdown. If the shutdown lingers, the PRC’s deadline could be extended, but mailers are at work mulling contingencies surrounding the proposed increase.

“If the shutdown is temporary, we’re assuming that the PRC will try to keep within the original deadline, and if they decide to move forward we’ll be quickly able to file some things,” says Jerry Cerasale, SVP of governmental affairs at the Direct Marketing Association (DMA). For now, the DMA is busy crafting a written statement for the PRC’s deliberations, but it is also girding for a more severe confrontation down the road.

“Yes, we’re talking about a legal challenge should it approve the increase,” Cerasale says, “just as we’d expect the Postal Service to challenge the PRC should they turn the increase down.”

The American Catalog Mailers Association (ACMA) will be taking its case for postal reform and against exigency directly to legislators in a membership fly-in to Washington next week. “We will reinforce to them that the Postal Service is a vital piece of the national infrastructure and that there are unfunded Congressional mandates levied on it that the Postal Service is unable to afford,” says ACMA President and Executive Director Hamilton Davison. “Even the Postmaster General admits that putting up prices will drive volume out of the system. The cure for that is reform legislation.”

But with the government on hiatus and implementation of the Affordable Care Act dominating the attention of Congress, passage of postal reform does not appear imminent and mailers are left to contemplate contingencies: Will the PRC deny the USPS’ exigency request, as it did in 2011? If it decides the increase is warranted this time around, will it approve the full 4.3%?

Cerasale, a former staffer at the PRC, says the body has the power to adjust the rate hike downward if it approves it. “They can look at some of the allocations and make some adjustments,” he says. “They have some discretion to reduce the amount of increase. I don’t think they have the discretion to raise it.”  No verification of its powers was available from the PRC at press time due to the shutdown.

Davison and the catalogers he represents retain some trepidation from the rate increase in 2007, when they were hit with 20% increases that put many of them out of the catalog business. “This was the last increase made before the rate cap came into play, when the PRC had the power to set rates for different products whatever way they wanted,” Davison says. “You had mailer fighting mailer in a zero-sum game.”

But Cerasale, for one, doesn’t see that happening should the exigent increase be granted. “We see it as a peanut butter increase, with the 4.3% spread evenly across the board,” he says, “Of course, if the Senate [Postal Reform Act] were to pass, rate-setting will take place at the Postal Service level and you could have some conflicts among the different classes of mail.”

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