Good morning feds! Hope you had a great Memorial Day. I’ll be filling Ed’s big shoes this week.
The U.S. Court of Appeals for the D.C. Circuit has sent the Postal Service’s request for a significant rate increase back to the regulators who denied it, ruling that they erred in rejecting revenue losses from the recession as the main factor driving the rise.
The Postal Regulatory Commission must take up the case again and decide how much of the agency’s financial losses stem from the bad economy and whether rates should be adjusted to reflect that “extraordinary” circumstance.
In the rate request filed with the commission in July, the Postal Service sought a wide range of increases that would have far exceeded the inflation rate. It was the first time the agency had sought to raise prices to address financial losses it said resulted from decreased mail volume — an “exigent” need to help recoup more than $8 billion in revenue in the past fiscal year.
The price of a first-class stamp, for example, would have risen to 46 cents from the current 44 cents.
Postal officials said the agency’s financial situation qualified as an “extraordinary and exceptional” circumstance and predicted that the rate increases would help raise about $2.3 billion in the first nine months of this year.
But the regulatory commission unanimously denied the request in September, ruling that the Postal Service failed to justify an increase beyond a cap tied to the rate of inflation.
Despite the agency’s staggering financial losses, its “cash flow problem is not a result of the recession and would have occurred whether or not the recession took place,” the commission said.
It called the financial problems structural in nature.
The Postal Service appealed the ruling, seeking a review of how the commission interpreted a 2006 law governing how mail prices can be set in “extraordinary” circumstances.
A spokesman for the commission could not be reached for comment.
The court’s decision left some ambiguity over whether a rate increase will be instituted and, if it is, how big it will be.
Postal Service spokesman Greg A. Frey, said in a statement that the agency is “encouraged by the court’s decision.”
“While we continue to evaluate the court’s opinion . . . we have renewed confidence that we are entitled to a rate increase,” Frey said.
But Sen. Susan Collins (R-Maine), who filed a brief with the court siding with the commission’s decision to deny the rate increase, called the ruling a “win for American postal customers.”
“I am pleased the court correctly upheld the [commission’s] decision — and my belief — that the Postal Service needs to prove that the exigent circumstances caused the effects” that made a rate increase beyond the rate inflation necessary.
Collins urged the commission not to “open the door” to allow the Postal Service to cover financial shortfalls from any cause that could be considered “extraordinary or exceptional.”
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