PRC Decision Threatens Financial Viability of Mailers

The Direct Marketing Association has joined with partners representing nearly the entire mailing community in filing an appeal at the U.S. Court of Appeals in Washington, seeking relief from the recent Postal Regulatory Commission decision to allow an exigent postal increase set to take effect on Sunday.

In December 2013, the PRC announced that it would grant the United States Postal Service (USPS) request for an exigent postage increase of 4.3 percent (Order No. 1926 in Docket R2013-11). The 4.3 percent exigent rate is scheduled to be implemented simultaneously with an inflation-based rate adjustment of 1.7 percent approved earlier by the PRC. Thus, mailers are facing a total price increase averaging 6.0 percent.

The PRC decision deals a serious financial blow to both commercial and nonprofit members. “The Commission’s decision, unless overturned by the court, will gut the only real protection that mailers have,” said Peggy Hudson, DMA’s senior vice president of government affairs. “The 6.0 percent postage increase — three times the rate of inflation — will not help the Postal Service shore up its financial base. It will simply drive mail from the system, which harms the financial viability of both the Postal Service and its business customers. It is a lose-lose proposition.”

Rather than filing separate appeals, DMA, along with the Alliance of Nonprofit Mailers (ANM), American Catalog Mailers Association (ACMA), MPA—Association of Magazine Media (MPA), and other mailer entities, joined together to pursue a joint appeal on behalf of both commercial and nonprofit mailers.

In its appeal, DMA and its partners argue that the grounds upon which the PRC granted the USPS an exigent increase are faulty and self-contradictory. The Commission acknowledged that the USPS failed to distinguish properly losses caused by internet diversion from losses that were a result of the 2007-2009 recession. The finding is inconsistent with the Commission’s decision to impose a $2.8 billion above-inflation rate increase on mailers.

In a separate case, DMA, ANM, ACMA and MPA also filed jointly a motion to intervene in a “petition for review” (i.e., appeal from agency decision) that the USPS filed on December 20 in the U.S. Court of Appeal for the D.C. Circuit. The case is USPS v. Postal Regulatory Commission, No. 13-1308, in which the USPS challenges the PRC’s decision to impose restrictions on an inflation-recovery rate increase sought by the Postal Service.

 

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