Industry Watchers Question Legality of 2011 Exigent Postal Increase

As mail volume is predicted to keep plummeting, Postmaster General John E. Potter said in an address earlier this week that a modest exigent postal rate increase will be proposed for 2011.

But some industry watchers questioned if an exigent price increase early next year would be legal, based on the interpretation of the circumstances needed to qualify for exigency.

“The mention of an exigent price increase, and saying it will happen definitively in early 2011, is very disturbing,” says Joe Schick, director of postal affairs for printer Quad/Graphics. “I’m also not sure an exigent price increase is legal, based on the interpretation of the circumstances needed to qualify for exigency.”

Don Landis, vice president of postal affairs for catalog printer Arandell Corp., says he believes an exigent price increase can only be implemented under unusual circumstances like a natural disaster, not during a downturn in the economy or a decrease in mail volume. “I have heard rumblings about the possibility of challenging the legality of an exigent price increase,” Landis says.

Postal Regulatory Commission Ruth Goldway says that the law provides that the U.S. Postal Service may seek a rate increase beyond the rate of inflation “due to either extraordinary or exceptional circumstances.”

It’s no surprise that mailers concerned about higher rates might challenge whether “extraordinary or exception” circumstances exist, Goldway says. “Should that issue be raised, the commission will evaluate all parties’ arguments and make a decision.”

The concern that the current situation does not meet the requirements for an exigent rate increase was discussed before the PRC on Feb. 23, says Jerry Cerasale, senior vice president of government affairs for the Direct Marketing Association. “So we will argue that again once USPS files its request, which we expect in September or October,” he says.

Cerasale says several mailer groups would make their case before the PRC against the legality of an exigent price increase given current circumstances. “Even if not successful, it would lay the groundwork for fighting any future exigent case,” he says.

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