NNA to appeal postal rate increase

Feb 4, 2014

By Tonda F. Rush

The National Newspaper Association expects to join an appeal of the Jan. 26 postage rate increase, said NNA President Robert M. Williams Jr., publisher of the Blackshear (GA) Times.

Publishers are facing postage increases at levels that triple the current inflation rate, hitting Periodicals rates particularly hard. The increase was granted in December by the Postal Regulatory Commission, which said it was granting the unusual “exigent” or emergency increase out of necessity for the U.S. Postal Service’s revenue need.

The PRC, however, told the Postal Service it could not add the $2.8 billion from the exigent rates to its rate base forever, which would allow it to elevate annual inflation-based increases. The PRC said the extra money should be backed out of the rate base within two years and ordered USPS to report by May on how it would accomplish the weaning.

The Postal Service announced in January it would appeal the two-year ruling to the U.S. Court of Appeals for the District of Columbia. Numerous organizations representing mailers said they were contemplating a countersuit.

The appeals, which customarily take about a year to reach a ruling, are not expected to halt the January increase. Rather, Williams said, NNA expects the dispute to be about the addition of the $2.8 billion to the USPS rate base, as well as the commission’s repeated findings that USPS financial woes are because of Internet diversion more than the Great Recession. Previous PRC and court rulings have granted the recession as a basis for emergency rate increases, but USPS is expected to manage its operations to adapt to the gradual Internet diversion.

Williams said NNA understands, from postal economists, that the $2.8 billion could add $60 billion to the USPS rate base over time, unless the court upholds the two-year rule.

“This exigent rate carries a double wallop for our industry,” Williams said. “First, it hits Periodicals when the economy remains very soft in many places. Second, it lets members of Congress continue to avoid dealing with a Postal Service in crisis. Congress must act to update postal reform laws so USPS can hold down its out-of-control expenses. This postage increase simply perpetuates the notion that businesses using the mail should forever foot the bill for a system failing to provide acceptable levels of service and adapt to new digital competition. It isn’t easy to change and still serve customers, but counting on hefty price increases as a solution just drives away more mail.”