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EcommerceBytes-NewsFlash, Number 2601 - August 04, 2011 - ISSN 1539-5065    2 of 4

PRC to Revisit 'Due to' Language in USPS Rate Increase Request

By Kenneth Corbin
EcommerceBytes.com
August 04, 2011




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Before the U.S. Postal Service will be permitted to implement rate increases above the rate of inflation, it first must convince regulatory authorities of its definition of an operative legal term.

By statute, the Postal Service can only raise mailing prices in accordance with the rate of inflation as measured by the Consumer Price Index. Any so-called "exigent" rate increase above that level requires the approval of the Postal Regulatory Commission (PRC).

That agency last year rejected such a request from USPS, which in turn took the matter to court. On May 24, the U.S. Court of Appeals for the District of Columbia sent the case back to the PRC, directing the agency to determine how the statutory language "due to" should be interpreted. In its initial request for exigent rate increases, the USPS argued a causal relationship between the recession of 2007 through 2009 and its dire financial predicament, asking the commission to approve the rate hike based on a sharp decline in mailing volumes "due to" the poor economy.

Now, the PRC has decided to first conclude a proceeding that would define that operative term, while holding off on issuing another ruling on the exigent rate increases of between 2.1 percent and 2.3 percent proposed for next January that the Postal Service argues are needed to boost revenues by around $2.3 billion annually.

"This past Friday, the commission issued an order basically saying we are bifurcating the case and will only deal with the legal exploration of "due to" for now," PRC spokeswoman Ann Fisher told EcommerceBytes. "We have no comment yet on USPS request for more money."

The PRC closed its window for reply comments on the interpretation of the language Aug. 1. "The Commission believes that a prompt resolution of this proceeding will be facilitated by limiting reply comments to a discussion of the proper interpretation of (the statutory) "due to" language as a causal link in exigent rate cases," the agency said in its order.

The proceeding has drawn the attention of a group of four mailing associations, which are arguing that the rate increases are not necessary, and that fundamental reforms in the Postal Service's cost structure are the more prudent path to fiscal solvency, including shrinking its workforce and network of locations and securing congressional approval to escape the burden of having to prefund the health-care benefits of retiring employees.

"The court left in place the commission's findings that the Postal Service had submitted no evidence indicating that its request was causally related to the recession, and that the Postal Service's financial problems were caused in large part by long standing structural issues, not the recession," the Alliance of Nonprofit Mailers, Direct Marketing Association, Association for Postal Commerce and Magazine Publishers of America said in their filing.

About the author:

Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.

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