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Exigent Rate Increase will NOT be Permanent

The US Appeals Court ruled today that the Postal Regulatory Commission (PRC) was reasonable to determine that the impact of the 2007-2009 recession is exceptional only for a limited time until it becomes the “new normal.” In other words, we prevailed on our most important endeavor—that the exigent surcharge will not be permanent.

Given the Accountability Act’s central focus on tightly restricting Postal Service rate increases and increasing efficiency, the Commission sensibly concluded that the statutory exception allowing higher rates when needed to respond to extraordinary financial circumstances should only continue as long as those circumstances, in fact, remained extra-ordinary. The Commission’s “new normal” test is designed to capture precisely the time when the exigent character of a circumstance dissipates—when its effects lose their exceptional character—even though the effects in some literal, but-for causal sense linger. In other words, the Commission permissibly reasoned that just because some of the effects of exigent circumstances may continue for the foreseeable future, that does not mean that those circumstances remain “extraordinary” or “exceptional” for just as long.

The court remanded the case back to the PRC to do more work on its methodology to determine how much lost volume and revenue should be counted and therefore recovered through a surcharge. They did this by rejecting the PRC method called “count once” which the court described as: “In enforcing a “count once” limitation for lost mail, the Commission refused to recognize the cost to the Postal Service of lost mail volume beyond the year in which it first disappeared.”

The PRC is reviewing to determine the date. We are hoping an early August time period for removal of the exigent.

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