June 5, 2015 The US Court of Appeals for the District of Columbia Circuit issued a decision on “Petitions for Review of an Order of the Postal Regulatory Commission”
Below are excerpts from the decision:
The Postal Service filed its first request for an exigent rate increase in 2010. The Postal Service claimed that the last recession (which the Commission dubs the “Great Recession”) caused a “dramatic, rapid, and unprecedented decline in mail volume,” and sought to raise prices by more than five percent.
The Commission denied that request. Although it agreed that “the recent recession, and the decline in mail volume experienced during the recession” counted as an “extraordinary or exceptional circumstance,” the Commission concluded that the Postal Service had not shown that it needed a rate increase “due to” the recession.
The Postal Service petitioned for review. This court affirmed the Commission’s determination that “the plain meaning of [39 U.S.C. § 3622(d)(1)(E)] requires a causal relationship between the exigent circumstances and the proposed rate adjustments.”
On remand, the Commission issued Order 864 — Two years later, the Postal Service renewed its request for a rate increase, seeking an open-ended 4.3% increase in rates.
…..the Commission granted the Postal Service’s requested rate increase in part
No party challenged Order 864 when it came out, and all parties agree that it provides the framework for this case
…..the Commission calculated that roughly $2.8 billion in losses could be attributed to the recession.
Both the Postal Service and an array of groups representing major mailers sought this court’s review of the Commission’s order.
“Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds.” But a bad economy might. Or so the Postal Service worried when the recent recession caused mail volumes—and thus Postal Service income—to plummet precipitously. Citing exigent economic circumstances, the Postal Service sought a 4.3% rate increase from the Postal Regulatory Commission.
The Commission agreed that the recession that started in 2008 was an “extraordinary or exceptional circumstance” that warranted some rate increase, but the Commission only permitted the Postal Service to recover $2.8 billion in lost revenue. The Commission reasoned that, by 2011, the Postal Service should have adjusted to a “new normal” business environment in which mail volumes appeared to be permanently lower than their pre-recession levels. The Commission also concluded that lost mail volumes could only be counted in the first year they occurred, even before the “new normal” arrived.
The Postal Service says the Commission’s decision did not go far enough; mailer industry groups say the Commission went too far; and the Commission says it got the order just right. We hold that the Commission’s “new normal” determination is reasonable, but its rule that lost mail volumes should be counted only once makes no sense on this record. We therefore grant the Postal Service’s petition for review in part. Finally, because the Commission’s econometric analysis was well within the wide bounds of agency expertise, we deny the separate petition for review filed by representatives of the mailing industry.
We grant the Postal Service’s petition for review in part, vacate the “count once” portion of the Commission’s order, and otherwise deny the petition. We also deny the Mailers’ petition for review. The case is remanded for proceedings consistent with this opinion.
Read Appeals Court Decision (PDF)