USPS Files Petition with Court of Appeals

Last Monday, January 4, the Postal Service™ filed a petition with the U.S. Court of Appeals seeking a review of Postal Regulatory Commission (PRC) Order No. 2623 and asking for it to be remanded. Issued last August, Order 2623 ruled that the Postal Service has justified the recovery of a total of $3.957 billion as an exigent rate adjustment. The Postal Service wrote that it filed the petition because the PRC “declined to resolve the question” of what the Postal Service said are “inconsistent findings” on its ability to adjust to the permanently lower level of mail volume (the “new normal”).

This argument is significant because it impacts the exigent rate adjustment amount and how long the current exigency rate surcharge may remain in effect.

The Postal Service argues that for the $3.957 billion to be an accurate accounting of the loss “due to” the Great Recession, it must have been able to adjust to the resulting shortfall in mail volume in the year that mail volume permanently settled at the new normal, which is a test that was established by the PRC. This conclusion is inconsistent with findings and observations the PRC already made, argues the Postal Service.

More specifically, the Postal Service said what is unresolved is exactly when it could have adjusted to the new normal. The PRC’s position is that the Postal Service should have adjusted to the new normal by 2011. The Postal Service said the PRC never explained how the Postal Service would have been able to adapt to the lower volume by then. The Postal Service added that this was not consistent with the PRC’s own discussion in Order No. 1926, which explained why the Postal Service was limited in its ability to adjust its operations in response to the reduced mail volumes. In addition, the Postal Service said the PRC recognized that cost-cutting efforts did not produce any stability until FY2013. As a result, the Postal Service argued that it did not gain the ability to adjust to the new normal no earlier than the end of FY2012.

The PRC rejected the Postal Service’s arguments, states the recent petition, and declined to resolve the issue.

“It is facially absurd to conclude that the Postal Service gained the ability to adjust its operations at the moment when the Great Recession caused the overall level of mail volume to settle at a permanently lower level, or that the Postal Service gained the ability in different years to adjust to the loss of different classes of mail,” states the petition. In addition, because the PRC did not resolve the “inconsistent statements”, the PRC’s order should be remanded, said the Postal Service.

The Postal Service gives a detailed history (from its point of view) of the PRC Orders and U.S. Court of Appeals rulings around the exigency rate surcharge in the “Statement of the Facts” section of the petition

GHS Informed will keep you updated on this petition and the Court’s actions.