ACMA Head: Don’t Rule Out Exigent Postal Rate Hike

The U.S. Postal Service probably won’t use the pending exigent rate case to raise catalog rates any higher than it would otherwise. But the USPS is “under some pressure” from the Postal Regulatory Commission to increase rates for Standard Mail flats, according to Hamilton Davison, the executive director of the American Catalog Mailers Association.

The U.S. Court of Appeals for the District of Columbia Circuit is asking the PRC to re-examine a section of the statute that led to the panel’s rejection of the Postal Service’s exigent rate case price request. The PRC had rejected the proposed exigent rate case last September, and the USPS appealed that decision in October.

So as the case awaits further adjudication, Davison views it as a “win for the USPS.” The USPS obviously saw something in the exigency decision that set a precedent that the USPS was concerned would affect these types of cases in the future,” he says. “I suspect the PRC will now provide a public comment period and give the USPS (and others) the opportunity to enumerate specifically what they want the PRC to clarify as to when exigent circumstances are met.”

In its appeal, the USPS sought a review of the PRC’s interpretation of the law that governs how prices can be set under “extraordinary and exceptional circumstances.” The USPS claims that the PRC misread the statute and applied an incorrect standard in evaluating the request for an exigent price increase.

After a comment period, Davison says the PRC will clarify its decision with the input it receives and the court’s direction. “The court is basically tightening the definition of exigency, making the PRC lay out its policy, and narrowing the options for the future use of exigent circumstances. That is probably a good thing for mailers.”

If nothing happens in Congress, Davison thinks the USPS “may need to use exigency to address its liquidity crisis it has now.” It’s possible the USPS will file an exigency case later this summer for impact as early as January, he notes. “I am pretty sure the Postal Service does not want to do this, and understands the damage that will be done to its customer base,” Davison says, “but Congress may not leave it any option.”

Davison says this issue, along with several others, will be discussed at the ACMA Forum slated for June 21-22 in Washington, D.C.