Appeals Court reaches mixed decision on USPS/PRC IMb dispute

The Court of Appeals for the DC Circuit today handed down its decision in the lawsuit brought by the US Postal Service against the Postal Regulatory Commission (PRC) over the PRC’s attempt to regulate new Intelligent Mail barcode (IMb) rules. Mailers had claimed that the regulations increased their costs, and therefore were price increases that needed to be counted against the postal service’s rate cap for “Market Dominant” services. The PRC sided with the mailers, so the USPS appealed to the Court, claiming that the law clearly prohibited the PRC from “characterizing mail preparation requirements as changes in rates.”

Today’s decision rejects the postal service’s claim, finding the law “ambiguous” on that point. But while the Court found that the PRC could determine that a change in the rules amounted to a rate hike, “The standard enunciated by the Commission to determine when requirements changes are ‘changes’ in rates” seems boundless and, thus, unreasonable; and the Commission’s inconsistent application of the standard in this case proves the point.” The Court went so far as to find that “The Commission’s judgment in this case ‘lacks any coherence. We therefore owe no deference to [the Commission’s] purported expertise because we cannot discern it. We therefore remand the case to the Commission to enunciate an intelligible standard and then reconsider its decision in light of that standard.”

The entire decision is available here (.pdf file).

PRC Approves USPS Price Adjustments for Certain Market Dominant Products

prcWashington, DC – Today the Postal Regulatory Commission issued Order No. 2472 approving the Postal Service’s price adjustments for Standard Mail, Periodicals, and Package Services. The prices are scheduled to take effect May 31, 2015. In Order Nos. 2378 and 2398, the Commission remanded the price adjustments for Standard Mail, Periodicals, and Package Services to the Postal Service for non-compliance with applicable statutory and regulatory requirements.

In today’s order, the Commission approves the Postal Service’s revised price adjustments and classification changes, which now comply with applicable statutory and regulatory requirements. In addition, the Commission directs the Postal Service to propose several methodologies relating to changes approved in Order No. 2472. The Commission approves several changes to workshare discounts and the Mail Classification Schedule in Order No. 2472, some of which necessitate the development of methodologies to be used in data reporting. The Commission directs the Postal Service to file the following within 90 days:

  • The Postal Service is directed to file a proposed methodology for determining the costs avoided for the Presorted FSS workshare discounts.
  • The Postal Service is directed to file a proposed methodology for determining the costs avoided for the 5-digit pallet presort Standard Mail Carrier Route flats workshare discount.
  • The Postal Service is directed to file a proposed methodology for determining the bottom-up costs for the new Periodicals Mail Carrier Route bundle and container entry options.

The Commission’s regulations require that the Postal Service use accepted analytical principles in its data reporting to the Commission. 39 C.F.R. part 3050.

The Commission’s complete analyses of the Postal Service’s Market Dominant price adjustments for fiscal year 2015 are located at in Docket No. R2015-4.

PRC Releases Its Analysis of USPS Financial Health: Report Highlights Continuing Losses

prcWashington, DC – The Postal Regulatory Commission yesterday released its second Financial Analysis report of the Postal Service’s financial results and 10-K statement. The report was developed using information from the Postal Service’s FY 2014 10-K and measured against its FY 2013 and 2014 Integrated Financial Plan; Cost and Revenue Analysis report, Cost Segments and Components report, and the Revenue, Pieces, and Weight report.

In FY 2014, the Postal Service had a total net loss of $5.5 billion. This is the Postal Service’s eighth consecutive financial loss, bringing its total net deficit since FY 2007 to $51.7 billion.

The report notes that in FY 2014 the Postal Service recorded $1.4 billion in net operating income, the first positive net operating income since FY 2008. This net operating income was primarily due to Market Dominant rate and surcharge increases implemented in the second quarter of FY 2014. First-Class Mail revenue increased 0.5 percent compared to FY 2013 and Standard Mail revenue increased 3.0 percent compared to FY 2013. The Postal Service was also able to reduce operating costs through a reduction in work hours and average hourly compensation in addition to reductions in purchased transportation costs.

The Postal Service also increased its volume and revenue for Competitive products by more than 10 percent in FY 2014. However, those Competitive products only make up 2.0 percent of total volumes and generate a lower markup than First-Class Mail. The decline in First-Class Mail volumes continues to drive overall net income.

The Commission, in a qualitative assessment of Postal Service finances, determined that:

  • Postal Service liquidity is insufficient to significantly improve operational efficiency.
  • Current assets are not sufficient to meet the payment of current liabilities.
  • The Postal Service has no further access to borrowing under the current law.

The Commission’s complete Financial Analysis report is located at

The Postal Regulatory Commission is an independent federal agency that provides regulatory oversight over the U.S. Postal Service to ensure the transparency and accountability of the Postal Service and foster a vital and efficient universal mail system.  The Commission is comprised of five Presidentially-appointed and Senate-confirmed Commissioners, each serving terms of six years.  The Chairman is designated by the President.  In addition to Acting Chairman Robert G. Taub, the other commissioners are Vice Chairman Tony Hammond and Commissioners Mark Acton, Ruth Y. Goldway and Nanci E. Langley.

USPS to delay April 26 rate adjustments

The US Postal Service announced today that it will hold off on rate adjustments scheduled to take effect on April 26. The adjustments, which involve First Class Mail, Special Services and Competitive Products, have already been approved by the Postal Regulatory Commission. Rates affecting Standard Mail, Periodicals and Package Services, however, have not been approved, after the PRC twice rejected USPS rate requests for those classes of mail, saying they were “riddled with errors”, and failed to comply with the law.

The USPS says it doesn’t want to burden customers with multiple implementation dates for different classes, and will set a new date for implementation once it manages to sort out the faulty submissions. It did not offer an estimate of how long that might take.

PRC wants to know why USPS ignored exigency revenue reporting requirements

The Postal Regulatory Commission has been getting tough with the postal service lately, rejecting a negotiated service agreement with Discover that didn’t make financial sense, and twice returning USPS requests for rate adjustments that the PRC said were “riddled with errors”.

Now the PRC wants to know why the USPS hasn’t bothered to file a report on revenue from the exigency rate adjustment that was due over a month ago:

prcThe Postal Service has not filed the report that was due February 16, 2015, and as of today it is 36 days late.

The Commission is concerned about the Postal Service’s failure to comply with Order No. 2075, failure to inform the Commission and mailers when its report will be filed, and failure to explain the circumstances that gave rise to the omission… The Postal Service’s delays to date, especially the most recent delay in providing this information, cause the Commission to question the Postal Service’s ability to submit necessary reports on the exigent surcharge revenue collection in the future.

Therefore, the Commission orders the Postal Service to: comply with Order No. 2075 by filing the quarterly surcharge revenue collection update as soon as practicable, but no later than March 27, 2015; explain, as soon as practicable, but no later than March 27, 2015, the circumstances giving rise to the delay; and provide, as soon as practicable, but no later than April 3, 2015, its plan to ensure that future submissions, including the quarterly reports and the future bi-weekly estimates, will be timely and in compliance with Order Nos. 2075 and 2319.

Document Details | Postal Regulatory Commission.