Decision could push postal rates down

Jul 6, 2015

By Tonda F. Rush

NNA CEO and General Counsel

WASHINGTON—Could postal rates actually go down? That is the question now faced by the Postal Regulatory Commission after the U.S. Court of Appeals for the District of Columbia Circuit kicked back the PRC’s 2013 decision on a 4.3 percent postage surcharge.

The surcharge was part of the U.S. Postal Service’s attempt to recover revenues it said it lost during the Great Recession. Generally, USPS is not permitted to increase rates by more than the level of inflation during a year, unless it faces exigent circumstances. The Postal Service considered the recession such an exigency. But since it first announced the surcharge, groups of mailers—including the National Newspaper Association—have fought back, saying USPS was papering over losses from other causes and blaming them on the recession. The commission ruled in December 2013 that USPS was owed extra money by mailers, but the PRC limited the number of months extra charges could be imposed. After USPS had recovered an extra $2.7 billion, the PRC said, it had to remove the surcharge.

That number will be reached sometime in August. So, will USPS lower rates?

Possibly, but not likely, according to NNA’s Postal Committee Chair Max Heath.

In early June, the PRC received the court’s ruling. The court agreed with every party in the case to some degree. Yes, the Postal Service deserved extra money. No, it could not charge the extra rate forever, as mailers had argued. But yes, the commission had undercounted how much money could be recouped because its estimate of the recession’s effect was too low.

USPS immediately asserted that it was owed $3.9 billion, actually, and that it should not reverse the charge in August. NNA and other mailers cried foul and urged the PRC to recalculate. NNA did not urge a reversal of the rate, but instead promoted the notion that delaying the next increase would be fairer to the mailers. Now the PRC is beginning a new examination of the actual effects of the recession on postal revenues and says it will finish its deliberation by August.

The possibility of yo-yo rates created concern for NNA, Heath said.

“With the court taking so long to make this decision, USPS already put off its 2015 increase way into May. But it clearly is on track to collect too much with this 4.3 percent charge, and we hope the commission forces that number back. We are urging some common sense in this ruling. As the situation appeared in early June, we could have had the May increase, then an August decrease, and then another increase after PRC figured out the proper exigency charge, then another decrease after the Postal Service collected enough revenue, and then the 2016 increase. It would have driven our industry nuts. We would rather see the commission get tough about this surcharge and apply the extra money toward a lower increase next year, or perhaps a decrease all at once,” he said.

NNA President John Edgecombe Jr. said the Court of Appeals case had already left NNA members in a state of uncertainty for rates and service in 2015.

“We expected this court decision much earlier in the year. When it didn’t come and the Postal Service finally put the 2015 increase into effect, we knew we might be facing another period of uncertainty. What we really need right now is not just for the commission to act sensibly, but for Congress to get serious about postal legislation.”

NNA Government Relations Chair Deb McCaslin, publisher of the Custer County Chief in Broken Bow, NE, agreed.

She said: “The Postal Service’s grab for revenue right now isn’t as much about the recession as it is the overcharge created by Congress to prefund retirement costs. We have argued for nearly a decade now that no other government agency is required to do that. We know the Treasury Department likes having this extra money on hand, but it is unfair to the Postal Service and to all of us who pay postage. This situation is creating crazy rates and devastating service cuts.

“I’m urging all of our members to talk with their congressional delegations over the summer about service problems. Congress’ inaction is hurting our readers with late service, and creating this rate uncertainty for us and the Postal Service.”